final check on what's happening today. there's the first apple. apple shares down about 3% after the results last night. and then we'll look at the futures one last time. the dow indicated now down about 62. s&p down 7. nasdaq down 21. >> thank you to melissa lee. and make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. attention remains on the micro this morning as earnings dominate. boeing, coke, chipotle and of course apple with its first revenue decline in 15 years. we're going to cover it all. europe's largely in the red as was asia overnight. ten-year around 1.78. oil lower after api inventories showed a build. and we'll get d.o.e. numbers

today. road map begins with apple. shares falling after that first revenue decline for a year since 2001, but its cash hoard swells to a new record. coca-cola's poised to open higher, this after a quarterly beat. north america showed signs of strength, and that did offset sales weakness abroad. >> and shares of chipotle and panera going in opposite directions, both reporting earnings. we're going to break down those numbers. but first, apple shares falling. quarterly earnings did beat consensus but profit and rove knew fell for third consecutive quarter as apple sold fewer iphones than a year ago. apple is banking on iphone 7 to boost holiday quarter. and on last night's conference call tim cook talked about prospects for growth in china. >> it's very hard to gauge demand, as you know, when you're selling everything you're making. and so we'll find out more through the quarter, but we're confident enough to give you guys guidance that we're returning to growth this

quarter, which obviously feels very good for us. and from a longer term point of view out of the 90-day clocks and so forth, we are very bullish on china. >> service revenue accelerating from the prior two quarters, but galaxy it's hard to benefit from it when you were already selling everything you can make. >> yeah. and the key point was they did not play up the galaxy. again, we always have to preface it's the note 7, it's not all of galaxy, but they could not really talk about it because that is the current quarter. now the analyst therefore took maybe things aren't as good, but the theme over and over again -- there two themes on that conference call, one is sa dishs to the analyst community and other is complimentary to tim cook. this was a quarter they were constraint, supply constraint. 90 days ago all we heard inventory glut, couldn't sell the phones, that narrative completely wiped away. these analysts put that behind

them. second is the incredible amount of disrespect on the conference call. >> for? >> for tim cook. what almost like a -- as a matter of fact, i thought it was like -- if you didn't know any better thought it was an orchestratedd -- who are withou a plan who don't know what's going to happen, who frankly it was a tag team. to to to to to toni saying do you have a plan, katie normally mild mannered basically saying, hey, guys, what is the deal? are you guys ever going to become a growth company again. and i'm listening to this conference call and i listened to it twice, frankly, because after i read it i couldn't believe it could be this negative even after tim cook was not beating his chest. and i come back and say, are you

kidding me? one congratulations by gene munster? this was a conference call where you thought that they missed and they missed big, if you read it. i think that the chinese demand question was the only real question i thought was very good. there was without a doubt contempt dripping with contempt conference call. tim some investors are antsy apple not acquired new -- in recent years says steve blan vich. so he wants to know about antsy investo investors. do you have any idea what you want to do over the next three to five years of which then tim cook says we have a great pipeline because at that point he was so disgusted with this kabal of people, interlookers if they had to interview their ceos and cfos at the firms they look at would have absolutely nothing to say -- >> my, lord, you are -- >> microsoft no growth -- have

you ever listened to the congratulations those gentlemen get? i've had it with these analysts! >> wow. you're getting so upset. >> you want to go back to the congratulations on the quarter -- >> this was supposed to be the worst quarter in history. this was the whole quarter. this was the quarter where the best is behind them. and i happen to like these guys. by the way, here's what you really need to know -- here's what you need to know. every one of those people has a buy recommendation on that stock! a buy! what were they saying? sell, sell, sell, it will go lower. what do they think it's going to be 88? can you imagine what if they didn't like the stock what they'd be saying? >> do you disagree with the notion that the supply constraints are a problem? especially when it's rating from samsung? >> maybe tim cook's biggest sin was he believes some of these analysts, that he actually believed them they didn't make enough. if you talk to t-mobile behind the scenes or sprint, i'm

unfortunately stuck with the reporting to use a phrase i think you may have to say. >> i know. well mark said positive things about continued demand when we spoke about a month ago when the 7 was introduced. >> it's not a vast international conspiracy. i'm saying it was one after another of complaints, complaints, complaints. >> is that going to be the message that wall street gets? >> these people raised -- raised their price target after basically saying the company has no growth and with no plan. what do they want him to say? try it, you'll like it. honestly this was a conference call where, no, they did not get together beforehand and say let's humiliate tim cook and make cfo -- but given all the major products running below targets from morgan stanley.

and what does she do this morning? she raises her price target. the duplicity of these people. does anyone ask about the service revenue stream and how good it is? the only thing i wanted to know hey watson, but they didn't get into that level detail. they were too busy, oh, tim, what happened to the car? oh, tim, what happened to the tv? i mean, honestly, you go down the list and basically said these people hate this company. >> those are not reasonable questions to ask? it's a device company. every cycle that comes around they've got to -- >> it has to do with intonation. it has to do with the dripping, dripping contempt they felt for this man and this team. you have to listen. if you read the conference call it's bloodless. i mean, cook, if it's going down the whole narrative, near the end it's like, oh, gosh, one more question. >> well, complaints about capital management, complaints about a breakout product,

complaints about supply. that's not new. that's been going on for a long time. >> yeah. >> what do they have to do? they have to buy the lagging pandora that had a terrible quarter? am i asking to be able to say, look, it's true you can -- now i'm gripping from the chief from salesforce, they can buy all nba and still have $28 billion left. >> goes a long way hence why they actually borrow when they pay -- oh, it is absolutely real money. and, i mean, it's larger than market cap of all, but i don't know how many companies in the world -- there it is. round up to 238, jim. >> yeah. >> but to this point still that the analysts are focused on in terms of future growth. you've got it on your wrist right there. it hasn't gone that well. it hasn't gone that well. the car. i mean, there are valid points that they're making here in terms of what's going to be next, what's going to drive it.

agreed, you're right. >> i'm not an expert at cars. i don't know how to make cars. i don't know how to make watches. i don't know how to make ipads, but i don't knknow to go from 9, you do that continue to make a product they love, which people did, the buy side was so far ahead of the sell side. they can raise price target all they want, but when you're offline with them, heck, this thing, it's finished. do not -- dnr, remember, on the door in the hospital? >> yes, do not resuscitate. >> so is 115 the top of the range? >> you got to settle now because these guys are going to start the say the same thing, call the buy side, there is no growth, china is worried, i do think the service revenue now a sandbag to say it's going to be a fortunate 100 company. i think excess to that 50% gross margins are good, the amount of money -- there was a question put on the call about you're spending -- this was a sly negative one that huberty snuck

in. >> tell me. >> could you help me figure out below targets and then she says basically the question was you spent all this money on r & d, are r & d investments just less investment than they were in the company's history or should we think about incremental spend? in other words you're even blowing the r & d money. of course tim cook says maybe the r & d money's being used for the service revenue stream but they don't regard that as anything. >> from my perspective as you guys might imagine apple's certainly still in focus as will it do anything big in merger and acquisition land. >> they come up. >> it did come up a little bit. yeah, its name of course has been out there for time warner. i have nothing that confirms they have any interest it would be unlike them to go after an enormous company and a contested situation, but even if they had interest they'll probably wait, see how the regulatory goes, see how the stocks go. this is though an interesting answer from mr. cook when he was asked about large deals. and it did differ a bit because it didn't have that caveat he

typically includes that we like to focus on. take a listen. >> we are open to acquisitions of any size that are of strategic value where we can deliver better products to our customers and innovate more. and so we look at a whole variety of companies, and based on that we choose whether to move forward or not. we're definitely open and we definitely look. >> and finally on television specifically given the conversations we've had at this desk about netflix, for example, he said the following. i'll read it it was a long quote. i would confirm that television is has intense interest with me and many other people here in terms of owning content and creating content, we've started focusing on original content as you point out and i think it's a wonderful opportunity from a creation point of view and an ownership point of view so it's

an area we're focused on. >> you're right. two issues i wished analysts had followed up on because i think there was a change in tone about the size of acquisition. and i think he's basically saying in response to what a lot of people think which is that they've just cooled on tv, he may have something cooking. david, in this over the top world he obviously would be the gorilla who if he wanted to come in. the question is they are inscrutable. when me lan vich pressed on the idea they have no plan whatsoever to use the sub text, you bunch of jokers you don't know what you're doing i think in response save some of that $200 billion hoard and buy, i don't know, anything he wants. >> anything they want. >> thank you. the people rest. >> with that the case closed i guess for now. >> no d.n.r. needed, though for a minute i thought we might. >> people are wondering if we have defib ri laters at the desk. when we come back, we'll get to boeing, more earnings including coke and boeing as

well. more problems for chipotle as sales slide more than expected. weighing on that stock. we'll talk all things tech with bret taylor, cocreator of google maps, former ceo of facebook, take a look at the market as the dow and s&p are down three out of four. back in a moment. hey gary, what are you doing? oh hey john, i'm connecting our brains so we can share our amazing trading knowledge. that's a great idea, but why don't you just go to thinkorswim's chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders? i know. your brain told my brain before you told my face. mmm, blueberry? tap into the knowledge of other traders on thinkorswim. only at td ameritrade.

so what else is new? humm..she's doing good. she needs more care though. she wants to stay in her house. i don't know even where to start with that. first, let's take a look at your financial plan and see what we can do. ok, so we've got... we'll listen. we'll talk. we'll plan. baird.

- i was diagnosed with parin early 2013.lly it took awhile to sink in. we had to think a little more seriously about saving money for the future and for the kids. - the income of airbnb really helped to mitigate the stress. - but we have that flexibility of knowing that if you know things get worse, we have this to help keep us afloat. - so that's very, very important for us.

chipotle's down in the premarket, missing on quarterly revenue. comps down almost 22% as the company tries to recover from those food safety issues. the burrito chain sees comps down in the low single digits although next year they see high single digits. two-year stacks down 9.7 for three quarters now, jim. >> 18 months after a typical scare like e. coli, 18 months is when the numbers term. remember this doesn't annualize until december. i think they're on course with what happened with taco bell and jack in the box. they're spending a lot of money trying to innovate again with health and safety, this is right on target. they didn't buy as much stock back, but they did close shop house because it was a drag on management, i think it was a good idea. analysts increasingly negative.

j.p. morgan says buy 3.75. jefferies down to 300. you have to understand the trajectory. 18 months before december is when it starts going up. however, i think it can put in a bottom. why? because the actual trajectory as we saw barring a couple weeks of storms in october was pretty good. they got down to about 19%, 20% same store sales declines. that sounds like a lot but now you're annualizing the height of the issue. was it a good call? it was very matter of fact. do they have problems? undeniable. will they get through the problems? equally undeniable. >> what is bill ackman thinking on a morning like this? >> these are very independent fellas and i've dealt with both of them behind the scenes and in front. and i think ackman probably is recommending certain -- ackman's i think very good on actual the supply chain, on rationalizing

costs and throughput. i think he has something to say. i say that because of what happened with burger king, where i know he was involved. >> yeah. >> i have to tell you when it comes to trying to understand the business, maybe he did say i think you should stop with the shop house, you know, with that distraction of 14 stores. but this is really about the american psyche and how long it takes to forget. and ackman cannot change that. >> no. no. he came in where a management team was already quite motivated to get things done. it was not clear at all that he was going to really try and shake things up. >> one of the best cfos in the country. >> i can tell you he's thinking how do i get my down 21% year better before in the last two months of the year. >> do you have a box on morton salt you just like to pour it? that was just from reaction to i think you're somewhat critical analysis of my acclaimed performance that said that maybe tim cook has not buried this company. >> i enjoyed every second of that. every second. >> should tim cook have been

more like steve els in the chipotle call basically saying try to make a silk person there out of a burrito? i don't know. >> that's a tough call. the chipotle call is a tough one. >> wow. i mean, wow. my daughter still goes there. >> my son goes too. >> yeah. i think first she wanted to put a paper bag over her head and sneak in, but now she goes without the paper bag. >> i haven't been back. >> you haven't? >> no. >> i've been back multiple times. >> really? >> that's why i've gained about five pounds. it's natural organic, but i eat. this is a briani suit. >> it's beautiful. >> you like this? >> you like your threads. >> until apple makes a suit -- >> as we know now it gives a lot, too. >> so i got a little animated. i'm from philadelphia. >> when we come back cramer's mad dash and count down to the opening bell, take one more look

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♪ all right. time for mad dash on what we like to call hump day here at "squawk on the street." and you want to go to the coca-cola company of america. >> yes. international because i've got to tell you it's international that's on fire including this absolutely sugar -- this zero no sugar, which is double-digit

growth in the uk and does matter. 3% organic growth is really darn good for this, operating margins up 50 basis points. little quiz. how many employees before the reorganization that mu tar been doing? how many will they have when the transformation is done in 2017-'18? >> i have no idea. >> 170,000 down to 40,000. >> wait, do that again for me. >> 170,000 employees down to 40,000 as they refranchise. then you have to start thinking what will this -- >> that doesn't mean all those jobs are gone. >> no, they all flow into the bottlers, and bottlers is a good business. what's important is you can see 3% to 4% real growth. and you get a situation where that cash flow stays the same because of the incredible reorganization, where's that cash going to go? it's going to go to the shareholders. that's why this stock is going up even though it's pepsico, we heard from the great indra nooyi yesterday at net net. they're doing so many things right, but that's frito-lay. this is a reignition of

carbonated soda. the cash flow is amazing and muthar is reinventing the company but in an organizational way. not in a way they can say that was smart they bought mondelez. shrinking growth. >> we haven't heard shrink to grow in a little while. but as you point out and i was kidding at the outset of america, they are an international company. in fact, he is almost like head of state when he goes to some of these places and opens them up. >> i have to tell you he is an ambassador. when gaza is doing poorly he opens a factory there. he visits iraq. this is a man who goes around the world and is a -- yes, should he be an ambassador for our country? he's an ambassador for the world. one of the reasons why i think he's stayed as long as he has is when you get to know him, what he's about is coca-cola looking great everywhere. >> stayed as long as he has? >> yes. >> meaning when does he go? >> eventually everybody will

retire, but i think he wants to wait for this transformation 2017-2018 to go. he's delivered in the confines of a space of a drink i think the world has turned on, it's rather incredible. >> well, jim mentioned mondelez, we have earnings there. we'll look at that stock when we get the opening bell along with our parent company comcast and pandora shares down sharply. all of that coming up on "squawk on the street." i'm a veteran. so when drug companies spend $100 million dollars lying about how prop sixty-one will affect veterans... i get angry. sixty-one will help lower costs for everyone, including vets. believe me. not them. vote yes on sixty-one. we need to be ready for my name's scott strenfel and r i'm a meteorologist at pg&e.

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you're watching cnbc "squawk on the street" live from the financial capital of the world, the opening bell in just under two minutes. we've gotten through coke, gotten through apple of course. touched on boeing yet? >> boeing's very hard. >> very hard. >> historically what happens with boeing people get very excited, they print the numbers and people go under the hood and don't like the numbers as much. i absolutely love it when any company raises as much as they did. and in a group by the way with lockheed martin that is on fire, but 51 beats 267, the operating cash flow very good $3.2

billion, continued cost reduction, nice guide up, 610 to 630, but remember they are building a lot of planes -- the wide bodied planes are selling at a dramatic discount, the used, wide body i don't want to call it a disaster because that sounds like someone running for president, but there is a problem here. wide bodies aren't selling, it's narrow bodies. if you have the wrong inventory, you get hit. i think as we get to know what happened with boeing, i think they have too much wide and not enough narrow. >> tax benefit backing out the current quarter looks to be below consensus. >> people have to be careful. i mean, boeing has -- a lot of these companies are making the right aircraft and the wrong aircraft at the same time. if for some reason the airlines just don't want wide bodies anymore. and boeing made a very big bet on wide body. they do, they want narrow body, david. >> why though? >> i have talked to some great experts in this industry and can't figure it out frankly. no. when you put the wide body, if you merge, you save a lot of

money in fuel but it doesn't seem to matter. they want narrow and boeing has a lot of wide. and discounted value if you talk to the ayrs is very big. delta said that on the call. when you see southwest this morning saying we're slow in growth, you don't have a thesis. i'd rather by the suppliers. >> yeah. i mean, with the number of new people coming into air traffic every year, that may change over time. >> i think the long term thesis is in tact, but you have to have the right planes. and a used 777, used 757, i'm not saying they're giving them away. i am saying that you judge boeing by the used market. the same way you can often judge cars by the used market as people are so negative on general motors. >> here's the opening bell, the s&p largely negative this morning. at the big board ey, formerly ea earnsten young, over at the nasdaq, the indonesia stock exchange doing the honors. it does bring to mind

year-to-date gains for brazil 85%. canada 19. >> i'm glad you mentioned this because i'm hearing on a lot of these conference calls, you know, tailwind from brazil, not a headwind. if you're doing business in brazil, you've got good news to tell. don't forget the rial has moved up dramatically. >> yes. >> one of the reasons whirlpool was so shocking you thought they'd get a kicker from brazil when the u.s. was slow, but brazil is no longer the black hole it was. it's actually been spoken positively by analysts i deal with. >> four-year highs. >> yes. >> we are getting our own parent comcast beating by a penny. our boss, steve burk, saying right now doesn't think online pay tv entrants are going to be material to tv growth in the next year or two. >> online paid tv entrants. meaning bundles of over the top programming, i guess, streaming bundles is what he's referring to. that's interesting. i mean, comcast had a good quarter it looks like. operating cash flow up 10.5%.

you can see the stock though is down almost 3%. they also added 32,000 video subs. i've spent a lot of time, a lot of oxygen talking about the unbundling that is taking place. slowly, and really starting now kind of suddenly it would seem, but not for comcast. they added 170,000 video subs this year, which begs the question, jim, where are they coming from? because there are people who are not taking the video subscription any longer. it may be dish, it may be at&t's uverse, may be vios, but doesn't appear to be coming from comcast. >> no. i own the stock, i did not think -- i'm not on the conference call. i know xfinity, the actual technology it is lauded, but i feel remiss i'm not on the call right now. the release certainly was i felt a reason to own the stock. and the stock is telling me that i'm wrong.

>> it has had a very good year up roughly 15% over the course of the year. point out it is down. >> when we have these running including apple, a lot of stocks are running the quarter. i happen to like alphabet, google, but when they've run into the quarter we've had a little resistance with the exception of netflix. had a better story to tell. >> $4 billion worth of stock bought back in the quarter as well by comcast. >> we've swung into growth on the 150 names we've gotten. 75% are beating. so that would break that five-quarter streak of negative s&p earnings comps. >> we're seeing certain international companies do quite well. we're not -- we don't have a lot of domestics yet that are reporting. but i'm calling it mixed because yesterday was just a bad day whether it be for under armour, whirlpool, sher wwin williams quite bad, you kind of lost the domestic housing theory with the

exception of panera you've lost the go out, right? the restaurant go out. >> you have. you have. >> these are facts of life. >> yeah. worth looking at mondelez which also reported. i know we're going to be speaking, i think, with irene. >> in the 11:00 a.m. >> in the 11:00 a.m. looked to be a bit better than expected, at least the analyst weighing in -- there she is. joining us on "squawk alley" later. 52 cents, that was ahead though sales were a bit light. doesn't appear to have been a big surprise to most investors. you see the stock up about 2%. organic sales growth not what people were hoping for, but guidance looks like it was not bad. so overall at least a couple analyst notes i'm looking at here seem to indicate generally positive when you take everything into account. >> and where does that put hershey? >> hershey's alone, and will probably be alone for a very long time. >> they wanted it that way, and

they got it. >> it's so interesting with bill leaving -- we forgot him too. there's been so many exits for various reasons, whether it's oberhelman or stumpf or leaving for personal reasons, that's such a unique company given the relationship of the company and the trust which controls it and whether or not that trust will say, hey, the time is now to diversify our holdings and actually be part of something larger. mondelez had hoped that would be the case, it was not. >> and reminds me that bewkes said no to fox, saying listen, it's worth a lot more. and then att comes along. i don't know whether hershey is able to get this stock to where mondelez was going to take it given the fact this has become a very challenged industry. other than bng foods which reports this weekend, stock run a great deal, i'm not seeing the kind of growth i like to see from this industry. con agra shrink to grow is working, but you're talking

general mills campbell's soup doing poorly, i don't think kellogg's will have a quarter to write home about. mondelez, it's not that bad. i would have liked to see -- it would have been a win-win i think with hershey. >> yeah, shares of pandora were down in the after market last night and continue to be down about 7%. the company did report lower than expected revenues, negative ebitda, worse than had been anticipated citing advertising softness across the telco and national entertainment verticals softness in digital advertising. that has not been a particularly strong story, only hope one day serious we'll get an answer though unclear if they're still leaving interest, i don't know, haven't checked in with them. >> why doesn't someone put together spotify, pandora -- >> spotify will probably go public next year by far the leader when it comes to

streaming. sirius has been interested in buying pandora previously, but it's not clear that's the case. you have an activist in the shares of pandora, don't forget. >> i was on with him -- continued congratlation fifth year scott wapner has kevin plank on tonight. >> stock's down this morning. >> yeah, not just about the new rollout of the whiskey, which may not be as coincidence as you would like. wish there was another timing for that. but i do think when i look at pandora and i think about the music numbers from apple and how much i pay for music every month, apple certainly doesn't help the situation. >> no. no. and finally, guys, just want to take a look at time warner and at&t as we will often do here. spread's closing a little bit, but still a huge discount there. continued a lot being devoted to analysis of whether or why there should be any real antitrust fight here, jim stewart writing today, listen, you and i have

discussed it already. it's vertical integration. they may get conditions. they can probably avoid the fcc entirely if they sell some satellite licenses and their one broadcast license out of atlanta -- or their station. we'll see how much politics creeps into the process. christine varny yesterday of course one of the lawyers on the antitrust front making the case to why she believes this will go through. there are many who agree. but that doesn't mean there's going to be a big spread there in terms of the value of the deal and where that stock is trading. by the way, directv now is going to be at a price of $35. that is so cheap. >> geez, i paid much more for it. >> their streaming service they're going to be rolling out at at&t. >> i got to redo my bill. >> hear they're losing money on that. do you want directv now? >> i have drft. >> you have directv, but this is the streaming service. only get one stream. you only get one stream, you can't stream throughout the

house. just one stream. >> it's too complicated. i'll let the wife handle it. she says we have to save money. >> it's not a skinny bundle, has like 100 channels. >> she's in italy buying stuff, but we have to save money with the skinny bundle. how do you like the way google -- alphabet cutting back on the fiber? what do you think of that? >> that was interesting. in a number of cities. southwest air has risen -- >> oh. >> -- 15% since mid september, giving almost all of it back today as unit revenue forecast is disappointing, jim. >> yeah, it's funny. this was a tale of two airlines, united continental did a very good job under oscar. i happen to love kelly at southwest and i like the fact he's not going to add capacity. that's the green light you need to buy these stocks on 2017 basis, but the revenue per seat down four or five is a little shocking for the best run airline in america. and they are. >> yeah. oil did drop below $49 for a second there. >> it's very weird that oil of course trades directly with the

airlines. if oil goes up, the airlines go up. there are some numbers coming out that i got this morning from -- chinese numbers of a 6% year over year increase in china. i get a lot of stuff from rbn. that's a very big number. by the way, the chinese car sales were very good. the gm deflation was really u.s. that was a rather shocker from 33 all the way down to 31. but this increase in gasoline use in china and oil use is really rather -- really a stand up and take notice. don't forget natural gas prices are up big in part because mexico, thank you rbn, mexico importing a lot and we're exporting a lot now. so there's a lot of influx, but i don't think oil will go back to low 40s. there's too much demand overseas right now. kind of interesting. >> yeah. we'll get inventories in less than an hour. let's get to bob pisani on the floor see what's moving. hey, bob. >> good morning, carl. generally down open. 4-to-1 declining to advancing stocks. most sectors are down. let's take a look at what's

going on. you see technology down. you can't get tech up when apple is down 3.5%. that's pretty simple. energy a problem with oil at 49. remember, traders believe the new trading range for oil should be somewhere in the $50 to $60 range for 2017, certainly that if we're in $40 to $50, that's a bit of a problem. industrials and materials also a bit on the weak side. i want to concentrate on some of the aerospace stocks because the numbers were terrific, and the earnings beats and the guidance generally well above expectations. northrom grumman raised estimates, ingersoll-rand, little different, general dynamics, guided slightly higher on earnings call full year. 9.70 was prior guidance, still to the downside. here's my point about these companies, they're beating by pretty wide margins. normally company beats by about 3%, sometimes 4%, but most of

the companies are beating by wider margins than that and that's why earnings margins are going up. ingersoll-rand beat by almost 7%, boeing, and when you get out of there and look at other companies like tech companies, a big earnings beat and guidance on the current quarter on demand for their cloud security product akamai and juniper, both doing well. juniper networks up tremendously. they had earnings beat and spoke positive about current quarter outlook. they beat by 12%. these are way above, we all know they beat, but these are way above. that's why you're seeing earnings estimates -- put up s&p 500 earnings estimates, we were negative a few days ago. that's yesterday's number 1 #up 1.7%, we're going to be over 2% this morning and break that earnings recession we've been talking about for practically a year. that's my key point earnings beat stronger than expected. you mentioned airlines, not much

you can say with love down about 10%. i would note they spend a lot of time talking about the technology outage in august they had that hurt them in addition to that unit revenue metric jim was referring to for the downside. you see airlines to the downside. ipos, we'll get the biggest one of the year pricing tonight, at least scheduled to price tonight, zto express, a chinese delivery service here, sort of like the u.p.s. of china. it's a big one 1.3 billion shares. overall here a lot of expectations this is that access to the chinese consumer everybody wants. so here's the key thing, china of course is the largest delivery market in the world, they're in that market. they have a 14% market share. and they are number two by volume, there's another competitor, yto express that's number one. they're growing about 24% year over year driven by very strong e-commerce growth. and of course they're alibaba's main deliverer as well, about 75% of their revenues depend on alibaba this according to to renaissance technology.

so overall a lot of expectations for this one. and we'll be on the floor covering it tomorrow here. more ipos are still coming. on friday a couple more should be trading, blackline, cloud based software platform for accounting and finance, we've seen a lot of these type of companies come in the last few months here. and acushnet, that's golf and everything in the golf universe, expectations for that still pretty high as well. so the bottom line is hopefully we'll get the biggest ipo of the year. they'll be another chinese tech company coming in the following weeks. of course we'll be here covering that. right now the dow to the downside 78 points. carl, back to you. >> bob, thank you very much. part of that is due to what oil is doing. for that we go to bertha coombs at the nymex. hey, bertha. >> good morning, carl. we have both brent and wti nymex crude under $50 a barrel and continuing concerns that this tentative opec deal to try to reach some sort of cut when they meet the end of next month could fall apart. you've got iraq wanting an exemption. you're likely to see libya,

nigeria, venezuela with their own troubles saying they want an exemption. that would leave a big burden to the arab producing countries to cut. and for them to try to convince russia to also join in on a cut as well. for wti nymex crude the other issue is inventories. the government numbers due out bottom of the next hour, but the api, the industry reported a very bearish build last night of 4.8 million barrels for crude. a lot of that due to imports having bounced back despite the fact we did see a drawdown, they say in cushing. nonetheless bearish build when it came to gasoline. numbers we're watching for in terms of the expectations for eia numbers at 10:30 we're looking for a build of somewhere in the range of 1 million to 2 million barrels for crude. that's more in line. and a drawdown of 500,000 to 1.5 million barrels when it comes to gasoline. also watch that $49 area. john kildof says we fall below

that next level is somewhere in the $46 range for support. back to you. >> bertha, thanks so much. when we come back mondelez ceo irene rosenfeld, snacks rising on the earnings beat, dow with the worst losses in about two weeks, apple dragging it down by about 30 points. back in a minute. ♪ 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.

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♪ fascinating discussion last night cnbc's net-net. it was our great summit. and u.s. attorney preet bharara talking about cyber crime. take a look at this. >> i think the government is a little bit behind on understanding technology. and we're doing the best we can to take ahead of it. and some of the hackers who are hurting all of you guys and

causing a real existential threat to you guys and to the government and to our infrastructure are way ahead of the game. >> sheesh, you know, i felt that one of the things we were talking about is the longer discussion about the idea that people who are in these offices are very good, top of law school class, whatever, but the hackers are from a completely different ilk. and the hackers are ahead of everyone, ahead of the fbi perhaps, ahead of -- >> services also focused on it. >> right. i was very concerned. i told him this internet of things, denial of service which basically shut down the country and preet was pretty honest in saying, listen, this is -- they are ahead. and i don't want to hear that. obviously you're speaking a lot of cfos at net/net, and the idea that you have to spend money on the cyber security which produces no revenue is something that is in a challenged time you have to go to the ceo and say, look, you have to keep up with the bad guys, and the bad guys don't look like guys we know. they're not in suits.

you mentioned this, the bad guy -- it's hard to take them seriously. >> no. i will say over the last few years it's changed tr being an issue that was not dealt with at the board to one that is absolutely a focus of boards of directors right now. and the ceo and the cfo in terms of spending that money. but on the government side those were interesting words from mr. baharara and a bit worrisome. >> i felt the same way, a bit honest. we want to hear they are already with this team of people who are computer scientists who graduated from harvey mudd and from stanford, they're going to get the top of the law school class at stanford, but they're not going to get the top of the computer science class. >> how about the piece in the times about a.i. and autonomous weaponry at d.o.d. and fears of those weapons falling into rogue hands. >> it's coming, man, i'm telling you. they are way ahead. and, yeah, we're going to have robotic armies and we're going

to merge with machines if we're lucky or we'll be their prey. >> we got to hope when t-2 happens that once again we've got good on our side, you know? do we have the right kind of machine working for us? >> i know. >> like arnold. >> there's going to be an arms race of robots and how do you control them? >> by the way "terminator" debuted today. >> did it really? >> the answniversary of t-1. >> remember that quick clicking he says we're going to a commercial, aren't we? >> we'll get stop trading with jim in a moment.

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hour after hour of diving deep, touching base, and putting ducks in rows. the only problem with conference calls: eventually they have to end. unless you have the comcast business voiceedge mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions. i've never felt so alive. get the future of phone and the phones are free. comcast business. built for business. time for cramer and stop trading. >> sometimes your record gets in the way of your numbers. whether be ulta salon or yesterday -- today in edwards life sciences, ew, the device you don't have to open the chest cavity to do open heart surgery. they've been beating numbers, beating numbers, beating numbers and today they did a very good number but didn't beat enough. the analysts are standing by it and i think you should standby it and buy it.

but this is one of those situations where they just didn't talk up enough and we saw it with when ulta salon did it the stock dropped 40 points. this is on a relative basis, somewhat actually could go down a little more frankly. but i don't think the thesis has changed because they have the better mouse trap. that's important. >> what's on mad tonight? >> the rails are a great conundrum. and norfolk southern this morning reported a number people thought wasn't so bad, i don't think it's as bad compared to the rest of the book, nick pinchuk, making so much money snap on, part of overall ecosystem, and richard pops, this may be the most important interview we do this week about a drug designed not for weight gain treating depression. no one's been able to come up with that. i think richard pops has come up with it. he's a very dedicated man. >> a lot to work with today. >> yeah, i'm going to do more, maybe facebook live on the apple

situation. when i say cabal, of course i'm being -- of analysts, i'm being a little facetious. >> combine calisthenics with your discussion. >> you know, i didn't get enough on the stepper this morning, so i had to do it here. >> we're going to need to get a standing desk. >> done, your way, my friend. did you see the new ones by herman miller? they're excellent. >> jim, see you tonight. "mad money" 6:00 p.m. when we come back, as jim said, a lot more on apple's slide today down more than 3%. reaction from a tech investor and a former board member at twitter in a moment.

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other blue chip earnings like boeing and coke, and chipotle this morning at a new three-year low around $380. >> our road map starts with apple reporting its first annual decline in revenue in 15 years. results did beat the street, but we've got highlights and analysis. >> as we said, boeing reporting an earnings beat raising commercial airplanes delivery forecast for the year. details on that. >> and hurdles ahead for the at&t-time warner deal. we'll be joined by former u.s. attorney general and former fcc commissioner. >> got some economic data crossing the tape. for that we'll go to diana olick. hi, diana. >> hey, sales of newly built homes up 3.1% in september, month-to-month. but before you get excited about this as being a beat, it's at 593,000 annualized because august was revised down pretty dramatically from 609,000 to 575. so we have that increase, but still the 593 number is below expectations. the street was looking for

600,000. we have a 4.8-month supply, still pretty low, but hasn't moved much. the bigger issue here is price. we have a price of $313,500 the median price of a home sold in september. that is up year over year from $307,600. that's up about 2%. we were looking for home prices for newly built homes to come down a bit, get more affordable at least for biltders to start building more affordable homes. but clearly they're not. we did see housing starts in september rise slightly for single family. that was a good sign. but still the builders are operating well below where they should be. we saw sales of existing homes bump up significantly in september, but remember those are closings which are based on contracts signed in july and august. this number is based on people out shopping and signing contracts in september. so, again, it was a 3.1% move from a very downwardly revised figure in august. back to you guys.

>> diana, thank you very much for that. diana olick. as we said earlier apple reported its first annual revenue decline since 2001. quarterly results though did beat expectations. our josh lipton joins us this morning having listened to the call last night. hey, josh. >> hey, carl. so this was the third straight quarter of declines for the iphone, but when i talked to tim cook, he was as upbeat and confident as ever, especially about customer response to the new iphone 7 and iphone 7 plus models. but he was also quick to point out that demand is outstripping supply. in other words, you might want that new iphone 7 plus, but that doesn't mean there is one to buy. so when will cook be able to meet demand? by the end of this quarter? right now it's not clear. >> it's hard to say. i believe that on iphone 7 we wi will, on iphone 7 plus i'm not

sure. i wouldn't say yes at this point because the underlying demand looks extremely strong on the -- on both products but particularly on the iphone 7 plus versus our forecast going into the product launch. >> now, the challenge of not being able to meet demand evident in apple's q-1 guidance. the tech giant expecting revenue between $76 and $78 billion. piper's gene munster says that is about 77 million iphones, but this year's q-1 includes a week of sales that last year's did not. after subtracting that extra week, apple's guidance approves growth of about 1%. that suggests an iphone business that is stabilizing, but after the stock ripped 20% in three months, some seem clearly disappointed this morning. for investors there are two ways

to look at apple's challenge. if apple does remain supply constrained and that has a negative impact on overall growth, on the other hand bulls say what's important here is that there is demand for these new iphones. and cook will figure out this production problem eventually. that's why munster is estimating iphone unit growth of 13% in the march quarter. guys, back to you. >> josh, thank you for that. our josh lipton out west. we'll talk to you later on. for more this morning we're joined by citi's director of investment research and lee portfolio manager of the river park wedgewood fund. good morning, guys. >> good morning. >> good morning, great to see you. >> you too. we had a robust debate this morning about whether the street is being too harsh on tim cook, whether the supply constraints are a fault, whether it's a missed opportunity, visa vis samsung, what's your take? >> my take is simply apple wants to create the best user experience, have a lot of

innovation out there to get customers to be able to buy their product and stay on the apple operating system, which goes way beyond simply the phone. it includes apple pay, it includes photographs, videos and basically putting your whole life and wallet into the apple community. we think the demand is outpacing supply simply because apple is innovating. and we think that's an appealing characteristic. whether supply catches up with demand it just time will tell, but any time you launch a new product and people want it, that's a good problem for apple to have. >> yeah. david, some believe by the time they can create more supply samsung will have recovered from all of this. >> well, that could be. again, we at wedgewood we've been shareholders continuously in apple since late 2005. and we try to take a little bit of a longer view. just a comment or two on the recent results and your earlier commentary with jim cramer. i've been reading jim cramer at

real money for years, and i actually think jim didn't go far enough. i think that despite what tim cook has tried to do over the past couple of years, he probably can't please many on wall street. but as a shareholder we're very pleased by the results. and customers apparently are very pleased by these products. it occurs to me that if apple was a private company and after $16 billion in operating cash flow a record this past quarter, $12 billion in free cash flow, we might be popping champagne corks instead of maybe obsessing over the next quarter or two. again, i don't think jim went far enough. i think perhaps that tim cook needs to take a page out of warren buffett's book and maybe dispense with the quarterly conference calls and just have one big analyst day, one big shareholder day like buffett has in omaha. i'm sure cupertino would like to have an event like that. >> you know, there's certainly some companies who've taken that

advice to heart, but jim, when you look at just the numbers for apple, the guidance for the next quarters for revenues to grow at the midpoint just 2%. is that apple doing something wrong, or is that just what happens when a company gets this big and it's market is this saturated? >> well, great observation, but you have a couple interesting characteristics. first of all, foreign exchange is a real headwind to the company. apple ses its products globally, and they sell those in local currencies. so foreign exchanges a real headwind for apple. second, keep in mind that they have not updated their mac product lineup for three years. and the macs have materially disappointed investors. we'll be there live tomorrow, which we believe they're going to update their macbook lineup, wait for update for that, but tomorrow we expect more news coming out of it. but the iphone 8 we believe next year when apple hits its ten-year anniversary for the iphone is going to be a very big super cycle.

we believe the results and outlook are quite encouraging but do note the stock was up over 20% in three months. >> but, david, there is a question of whether apple underestimated demand for the iphone 7, whether they'll be able to appropriately gauge the demand for this generational shift in iphones next year or if all the people who had been waiting to upgrade already did, even ahead of that. >> yeah, that's a great question. the days of apple really getting really tight with their forecast and gauging demand, those days are over. when they were rolling out new carriers and filling the channel for new carriers, they had obviously significant insight on what that demand is going to be. but think about where the iphone franchise is right now. when you're thinking of unit sales over the next couple of years, at a minimum, with an installed base approaching 600 million, people upgrading every say two to three years, at a minimum you're going to pencil

in 200 million units per year. at 40% gross margins, even 38%, 39% gross margins across an iphone product line, that's a great business to be in. and as shareholders, we remain very bullish going forward. i would echo jim's comment, fiscal 2018 should be a really big year. >> david, real quickly, are you happy that they're sitting on $237 billion in cash and securities? would you rather see them do something with some of that money? >> i love that they're sitting on it. they're going to be patient. they're going to be smart. i wish we would have some better tax policy to bring that money back on our shores. i would love it if they would do a huge dutch auction and buy back a bunch of stock. if the tax rates were lower to repay tra repate rate that, that would be my number one recommendation and they could slowly take this company private -- not slowly, maybe over the next five, six,

seven years. i love that they're sitting on that cash. wall street's giving them zero credit for having that ft. knox like liquidity. >> guys, good discussion. we'll see what the rest of the day brings, at least in the short-term. jim suva, david rolfe talking apple, guys, thanks. >> thank you. coming up, earnings parade continues. boeing, looking at it right there, that had a beat. tesla getting ready to release earnings after the bell. we're going to have the latest on that. plus, apple's on the move. you just heard us talking about it. we're also going to speak with a tech investor, smart capital, take a look at where stocks are trading this hour in the broader markets. you can see we are down across the board. a lot more "squawk on the street" coming right at you. i'm a veteran.

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♪ welcome back to "squawk on the street." boeing on the move after reporting earnings beating on both the top and bottom line. our phil lebeau joins us now with more. phil. >> kayla, as boeing down, shares down for the rest of the market today, boeing saying look we're making improvements in both in terms of execution, costs involved as well as airplane deliveries. there you see the earnings per share beating street by 19 cents. revenue also coming in better than expected. on the cost side keep in mind that in the third quarter boeing cut its costs particularly with

the 787, which is now finally profitable. they cut those costs by $151 million. at the same time boeing has raised its overall plane delivery forecast for the commercial side of the business adding i think another five deliveries is the total expectation for this year. so as you take a look at shares of boeing, keep in mind that conference call will begin in about ten minutes. we're going to hop on that, let you know if there's any more guidance in terms of what's ahead as they go into 2017 at boeing. the other earnings story that we're watching today, tesla. this comes after the bell. tesla will be reporting third quarter earnings and the keys to watch when it comes to tesla third quarter, positive cash flow. remember, there was a big push to deliver as many vehicles as possible. and they delivered more than expected. current liquidity at the company they've been burning through a lot of cash as they ramp up production for the model 3 as well as for the gig factory. and what's going on with their plans to raise capital? there are mixed messages sent a few weeks ago about whether or not they would have to do a capital raise in the fourth

quarter or maybe in the first quarter. remember, boeing's target for deliveries of vehicles this year between 80,000 and 90,000 after strong deliveries in the third quarter, the expectation is that we should see them get close to making that delivery target of 80,000 vehicles. don't forget, boeing is reporting after the bell. and as always, when it comes to the conference call, we will be on it. those comments from elon musk coming later on today, guys about 5:30 eastern time is when that conference call starts. >> phil, i assume we're going to be listening for an argument for solarcity that doesn't add unneeded complexity to musk's job, right? >> right. and they've got a lot of interesting benchmarks or dates to watch coming up with solarcity. they've got a product announcement coming up friday night in southern california. and then you've got investors for both tesla and solarcity voting in the middle of november. so they've got a number of things coming up here. and that question is out there looming in terms of you're

adding this complexity, will you have to raise capital at some point? >> all right, phil, we'll see what happens later today and tonight. our phil lebeau covering a lot today. when we come back, we're going to sit down with the co-founder of spark capital bijan sabet, take on apple, twitter and a lot more. stay with us, you're watching "squawk on the street."

apple is of course the big story of the day reporting its first decline in annual revenue and profit since 2001. shares this morning are down 3.5% taking about 30 points off the dow. but ceo tim cook was upbeat on last night's conference call, especially about the company's services business. >> we have almost doubled the size of our services revenue in the last four years. and as we've said before, we expect it to be the size of a fortune 100 company in fiscal 2017. >> tomorrow we hear from twitter on its latest quarter. and of course we'll hopefully get some details on the future of that company.

unpacking all the tech and media news this morning, we're joined by bijan sabet, he led spark's early investments in twitter and held a board seat until 2011. bijan, the big picture debate we're having this morning is whether there's some secular decline going on for these companies or whether expectations have simply gotten too high? what do you think? >> look, i think in the case of apple it's about expectations. you know, we're past the days where they can launch into a new country, a new market and a new carrier and have this, you know, extreme year over year growth. it's still a company that has the best phone, the best tablet, the best tv experience and the best watch. and they generate something like $100 million a day in profit. it's a great company. they beat their earnings estimate. and i think this is all about expectations at this point. >> but so many people already have those phones and have those tablets and have those products. and the company is actually

investing more in research and development than its sales have been growing. when do you think we'll see the fruits of those labor, or have we already? >> i think you're seeing it. i think apple watch 2 is looking like a big hit. it's the best watch on the planet. you know, iphone 7 you can't get them, they're out of stock. i think each generation of phone and services, i think the company is benefitting from all the r & d. they have hundreds of billions of dollars in cash and it's great they're investing in it. >> is services as we just heard tim cook say, i mean, is that going to be the next fire power for apple? or is that just a nice to have? >> you know, i think it's showing very promising growth. i think one interesting open question for the company is do they use their cash position to launch it to new businesses. right now i feel like it's been tentative. you know, they bought beats when they could have bought the market leader in spotify. they took a minority interest in a ride sharing service in china,

they could have bought lyft or another big company domestically. so it just feels like, you know, when it comes to new markets and new areas of growth they can continue to invest in things like apple services, which is showing great signs. but i'd love to see them do something very inspiring and daring on the cash position. >> yeah, it could have done all of those deals you just listed and still had probably $100 billion or more leftover. >> right. >> or more. i want to talk about twitter though because that company reports tomorrow. something you obviously know extremely well. what's the challenge for twitter right now? >> you know, i think in many ways the company is amazingly valuable. you can see it in the election cycle the impact it's having around the world. hundreds of millions of people use the product routinely. its impact on media, pop

culture, news is unbelievable. and i think this is also about expectations. i mean, the company is, you know, has operating income, it has something i read 400 years of runway given their cash position. at this point i think it's just be heads down and forget the critics. and keep building a great company. >> but the stakes are so high for this quarter specifically, bijan. you mentioned the election. there's a line of thinking that if twitter can't monetize the election, if it can't monetize the fact that the nfl is the most watched property in this country and second to that or perhaps first to that in this quarter was the election, then what can it monetize? what can it do well if not those two things? >> look, it's a company that already is generating billions of dollars a year in revenue. i think it is monetizing. is it growing as fast as some people would like to see? you know, i think that's, you know, different people have different opinions. but i'm a personal shareholder.

i plan on holding the stock. you know, i don't think this is about quarter to quarter. i think this has got to be a long term point of view similar to what bezos at amazon did, you know, in the late '90s in really telling his employees and his shareholders that this is a long term point of view and less about quarter to quarter. >> as a shareholder though, bijan, what's a takeover price that would be attractive to you? >> you know, i'm not on the board, so i don't want to speculate. but i'd rather see this company, you know, remain independent and build something durable. i think it deserves to be. i think it has the brand and the user base and more importantly the impact on the world that, you know, a takeover, i guess there may be some sensible future scenario that's possible, but right now i think it has the opportunity to be a stand alone, strong independent company. i think the world needs twitter. >> bijan, at what point would you begin to worry about user growth beginning to affect

revenue growth and cash burn? as we look at now these reports of layoffs going into the year end. >> yeah, i mean, the layoff rumors that we're hearing, it could be true, it may not be. we've seen different companies announce layoffs all the time. google's about to announce a layoff with their fiber division. you know, amazon's laid people off in the past. i guess this is all interim noise to me. i think the question is, you know, does twitter have a chance to be an independent, durable big company in the future. i think it does. you know, if we saw dramatic difference in its impact on the world where it didn't really matter for news and the election and entertainment and information, then i'd be worried. but i don't see any signs of that. i mean, i saw the cubs win and twitter went crazy. i saw the debates and twitter went crazy. so if that starts happening, then i'd be worried, but i'm not seeing any of that. >> do you agree or do you think there's any merit to a comment

by an analyst, bob peck, that twitter remaining a stand alone company is plan c? >> yeah, i mean, i don't know. i'd hate -- i'm not on the board anymore. if staying independent is plan c, that would be disappointing to me for all the reasons i mentioned. but i can't comment on whether, you know, that's plan a, b or c, but look, if my opinion is pretty strong i think plan a should be build a great company. >> and you know the company well. so we will take your word for it. bijan, always great to have you. thanks for joining us. >> thank you. pleasure. >> bijan sabet of spark capital. when we come back, regulatory hurdles ahead for at&t-time warner. we're going to speak with a former u.s. attorney general and fcc commissioner. tomorrow sarah eisen will sit down exclusively with the ceo of proctor & gamble. david taylor, his first-ever tv

interview since becoming ceo about a year ago. you do not want to miss that. stocks slightly off the lows, dow's down 60 points. don't go away. ♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪

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upgrade to wifi pro for only $19.95 a month. call today. comcast business. built for business. good morning everyone. i'm sue herera. here is your cnbc news update at this hour. that huge makeshift migrant camp in calais in northern france burning this morning. french authorities dismantling the site to discourage those risking lives by walking through the channel tunnel. in canada, a nurse has been charged with the murders of eight elderly people at care homes in the province of ontario. 49-year-old is charged with eight counts of first-degree murder, which police say she carried out over a seven-year period. all right. take a look at this school yearbook quote from 1993, marcos meza says his friend michael lee wrote back then, chicago cubs

2016 world champions. you heard it here first. well, as we know the cubbies are one down after game one in the world series against the indians. they have an early start today. winter coming in japan. mt. fuji covered with snow this morning. a beautiful but chilly sight. let's send it to bertha coombs with the eia inventory report. good morning, bertha. >> good morning, sue. we're seeing a turnaround here when it comes to crude prices, much better than anticipated drawdown of crude inventories of about 553,000 gasoline inventories down about 2 million barrels, that was well below the expectation of about a 1.5 million barrel draw. the expectation had been for a build, and we got from the industry a build yesterday. so this is a big divergence here. distillates down 3.4 million. so overall a fairly bullish

number, nonetheless there's still concerns in terms of inventories here in the u.s. because we do have that seaway pipeline that is out, and that could see a bit of a buildup of inventories this week for next week's report when it comes to that cushing, oklahoma, wti nymex hub. nonetheless though a much better report than expected. back to you. >> bertha, thank you very much. you are looking at a live shot here of the trump international hotel in washington, d.c. the trump family hosting a ribbon cutting ceremony this morning. robert frank joins us this morning with more on that and how it applies to the race. hey, robert. >> good morning, carl. what trump has made the most of his political campaign to market his companies and today's event at the d.c. hotel marks the 32nd time he's held a campaign event at a trump property. but rather than helping the trump brand, his political run may actually be damaging it. new data from brand keys, the brand research group, found that while in the early stages of his campaign that trump name gave it a boost, the value has quickly

fallen. now, the premium for the trump brand, that's the added value of his name, last october was 43% in tv and entertainment, 40% for golf courses and 30% in real estate. now, all of those numbers have fallen this month. that premium down 18% in tv, 10% in golf clubs and 10% in real estate. now, more than 300 residents at the trump place buildings in manhattan west side have all signed a petition asking for the trump name to be removed from the biltdings. the building's owner say, quote, they will assess the name when the contract with trump expires. meanwhile, his name has already been taken off a golf development in dubai. developer of the trump tower in toronto is trying to strip the name from his building. and the mayor of vancouver is pressuring to rename the new trump hotel in that city. the trump organization itself dialing back on the trump name. it's launching a new brand of hotels that will be called scion rather than the trump hotels. and that new d.c. hotel shows that his talents for leverage

remain. now, he used the 60-year lease from the federal government to get a $170 million construction loan from deutsche bank to help that $200 million renovation that he's announcing today. he also received a $40 million tax credit from the national park service under his historical preservation program showing once again as he always reminds us that no one knows the tax code better than trump, guys, back to you. >> all right, thank you, robert frank, from headquarters. well, antitrust concerns and of course a number of regulatory hurdles lie ahead for the at&t and time warner deal. for more on the challenges that they will face or at&t will face in closing that purchase, we're joined by former u.s. attorney general judge michael mccasey and former fcc commissioner roger mcdowel. gentlemen, good to have you both with us. judge, let me start with you. this is a vertical integration which typically is something the antitrust authorities allow. >> correct. >> and yet the market at least at this point seems to be very

concerned that in this case it will not be allowed. is the market getting it wrong, or are they right to be concerned about the broader politics of this getting in the way of at&t's ability to finish it? >> oh, i think they're right to be concerned about it. theoretically, which is the predicate to your initial statement, theoretically it's not supposed -- what the political atmosphere is isn't supposed to matter, but -- and a lot of the tests are objective. and it's supposed to be, you know, very transparent. all of that said, what politicians are saying can matter to the people who are applying the rules and the regulations. the fact is this is going to get very close scrutiny from both antitrust standpoint and from a regulatory standpoint as your other guest is going to tell us. >> i'm sure, like to think of the justice department as perhaps beyond politics. maybe i'm naive. >> i would too. >> and the people there who've been working in those jobs for a long time are going to apply the law as they see it. and of course be concerned at&t might go to court if they were to try and challenge something

that was not what they wanted. am i wrong in assuming that? and if politics play a role, how does that actually work? >> i don't think you're entirely wrong in assuming it. i don't want to get too far down the stem of cynicism scale. the fact is that the career people do take the rules seriously, they try to apply them objectively. on the other hand they are supervised by people who are political appointees. and that's perfectly normal. that's the normal course. if everybody at the top is saying that because there's a populist wave in the country, that this is too big a deal -- again, antitrust laws are not supposed to be about that. they're supposed to be about competition. is this going to diminish competition or not? and so it's obviously going to influence how closely they look ate. in addition, the acquisition by -- of nbc universal, by comcast, contains some restrictions, which is perfectly

normal. and there are some suggestion that some of those restrictions are not being applied as tightly as they might. so they might look more carefully at what restrictions they apply to this deal the terms on which at&t can offer time warner product and so onto make sure that they stick. >> mr. mcdowel, of course judge mukasey raises, there was another deal unable to be completed because the fcc cited broad market power particularly as it applied to broadband. market power is one concern people keep bringing up, is that a valid concern, and perhaps the fcc if they rule here will keep in mind? >> as the judge pointed out and you pointed out at the outset, this is a vertical merger. they're buying a supplier, not taking out a competitor like with the at&t/t-mobile attempt. it's hard for me, i'll defer to

the judge, i can't think of when a merger was blocked. it's ancient history at best. so there is jurisprudence here. there is legal precedent. there is the rule of law. and really doj's only remedy is to suit a block or threaten to suit a block transaction from happening. if they do that, then all of a sudden you do have case law to interpret. in this case at&t i think is in a very strong position. from the fcc's perspective, it looks at something that's more in general the public interest standard. here you have one tv station, a few satellite uplinks, there aren't a lot of hooks for the fcc here to say there's a public interest problem from its perspective because there are so few licenses over which the fcc has sway. so it's hard to say that it's going to get hung up somehow at the fcc. but back also to the judge's point which is, you know, the obama administration approved the comcast/nbc universal deal, your parent company, that's the marriage of connectivity or distribution and content.

here, if you want to counterbalance to a big national competitor like that, this makes perfect sense because you're going to have competition not necessarily from fixed residential broadband but on your 5g smartphone, which is coming over the horizon. and there are already rules in place such as the fcc's net neutrality rules to guard against discriminating in favor of your own content. so these are all things they'll have to consider, which is do they want competition in the space or not, the comcast/nbc universal merger conditions expire in 2018. that's just a breath away, so they need to think about how consumers are going to be best served, through competition or through one vertically integrated giant. >> of course this is an industry that's changing rapidly, judge, which is what makes this conversation so hard to pin down. but if you're comcast or netflix, how reticent will you be to weigh-in against this deal not knowing what your future m&a plans look like? >> well, i think that the

present particularly when the future is uncertain, current precedence can take over for future interests. but in a sense as mr. mcdowell pointed out, this brings at&t up to speed. they don't have content. so this brings them kind of levels the playing field a little bit, although they are obviously so strong and so substantial that once they do get control of content, it changes the game substantially. >> yeah. well, mr. mcdowell, interesting to listen to you and the judge here, many experts we've consulted i've spoken to separately not just on air agree essentially say this deal should be allowed. and yet the marketplace seems very concerned. >> well, sometimes the markets are wrong. sometimes they are bullish on comcast/time warner cable, they were initially bullish on at&t/t-mobile, so the markets don't always predict -- you know, there are other issues at play here which is will there be another suitor that comes in, what's the debt load, there are

other factors to be considered other than regulatory approval. >> there are. although that would argue for the stock being higher and not lower in terms of potential other suitor comes in. but the fcc is not going to have a real role here, is there any scenario under which you think they could still try to sort of apply their regulation to thwart the deal, or is it really simply those satellite licenses and that broadcast license as you mentioned are simply not going to allow them to get their hands on it? >> you never know, as the judge pointed out. you never know in washington what the political aspect of this is going to be. you're going to have a new administration, you'll have a new attorney general, a new assistant attorney general for antitrust, a new fcc chair probably by next june or so. and maybe one other fcc commissioner who will be new. or maybe two even. so we don't know exactly what's going to play out, it all caveats there. but if we follow the rule of law and the facts, to say you're going to set a precedent of striking down a vertical merger that actually could help with

competition, that's going to be an interesting story to tell how they're going to spin that will be fascinating to watch because that ultimately is the substance behind this. and you can say, well, is the big getting bigger, i don't like big getting bigger, but you already have the vertically integrated comcast/nbc universal, how do you counterbalance that in the marketplace? >> yeah, judge, any advice you give to either of these companies as they move ahead of course to get the regulatory approvals they need? >> keep your head down, fill out your forms. try not to be -- try not to boast too much about how substantial a revolution this is going to be. >> and not get drawn into perhaps the political back and forth? >> oh, for sure. and they've already followed one piece of advice i would have given them because apparently they've contributed to both sides. >> that can help. >> that can help. >> gentlemen, thanks to you both. judge michael mukasey and robert mcdowell. as we head to break, look at shares of chipotle. earnings fell substantially short of estimates, comp sales

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welcome back to "squawk on the street." stocks are trying to get back to positive territory. real estate though standing out as the worst performing s&p 500 sector down almost 2% in early trading. nearly all 28 components are negative with simon property, boston properties lacking the most on earnings reports those stocks down about 3% and 4% respectively. the vanguard re-etf also down 2% on the day, so far this month the real estate sector is the second worst performer just before telecoms down more than 5% on a month-to-date basis, carl. back to you guys. dom, thanks for that. microsoft hosting an event in new york showcasing new developments for windows 10. that operating system. our jon fortt is there today and

joins us with a look at what's coming up. we'll talk about it on "squawk alley" this morning too, hey, jon. >> hey, carl. yeah, so far a lot about 3d, that's going to be a big part of the spring windows 10 update, how it works together with a hollow lens, how it works potentially across mobile devices and pcs, and of course we're anticipating some sort of surface update. rumor has it perhaps a surface desktop all in one pc. we could see throughout this program. so we'll continue to watch it and of course i'm going to bring you all the news throughout "squawk alley" as it comes, carl. >> jon, see you in a few moments. jon fortt. meanwhile, stocks managed to erase what was essentially a 90-point loss, a lot of that happened as oil recovered after inventories at the bottom of the hour. big week ahead, fed meeting of course, monthly jobs number. vincent reinheaart joins us liv at the schwab impact conference in san diego. vince, good to have you back.

welcome. >> thank you. hey, it's 30 degrees warmer here than where i work. >> yeah, winter is definitely coming to the northeast. let's tackle the fed meeting first. we're always told every meeting is live, but you do sense some hypocrisy we're going to hear in terms of how they're going to have to communicate. >> i don't think you should believe everything you hear. this is a group of people that didn't act in june because they were worried about the brexit election. they didn't act in september, why do you think they'd act in november just six days before the election? >> so then what is the guidance that we can reasonably take away? and do you believe the market is truly becoming comfortable with a december hike as they have put out there again and again? >> they've tried to talk a december hike into the market as many different ways as possible. there it's actually true that all decisions are data dependent and made meeting by meeting. the presumption is they will

hike. but if we get two bad payroll reports between now and then, not our forecast, then that would put them on pause. but the bar is pretty low before they act. i think what you expect for next wednesday when the fomc statement is out is do they do any better in explaining why they didn't act in november in a way that makes december more credible. >> vincent, how do you read what the dollar's been doing, what the two-year's been doing and the fed funds futures have been doing? even though you say the fed is hypocritica hypocritical, the market is positioning for something to happen soon. >> so the problem with the fed is the main reason they will not act next week, as they didn't act in september, is they don't want to act just in advance of an election. the election is -- will be extremely informative about what the economy will be like next year. perfectly reasonable for a policymaker to wait until that uncertainty's resolved.

but the fed doesn't want to appear political, so they don't give you the real reason they want to wait. and if they don't give you the real reason, everything else sounds kind of artificial. so the question is, can they explain themselves any better next wednesday than they have over the the last couple months? >> people are thinking back to last fall when we got that december hike last year, and then we all remember how much turmoil stocks endured in january. would you expect a similar performance, if, in fact, december happens? >> past returns are not predictive of future returns. i think there's a big similarity between december of last year and this year but a big difference. similarity is basically janet yellen is reluctant to move. she's got to wait until mostly all of her colleagues pull a tightening out of her. that's what happened, they ran out of runway in 2015. same thing's happened this year. they said they're going to tighten in 2016. there's just not that much 2016

left. the big difference is, last year when they raised the funds rate 25 basis points, they were guiding for four more 25 basis point hikes in the next year, and that was a big tightening of financial conditions. this time around, they'll raise the funds rate 25 basis points, but they'll talk down the rest of the yield curve. they'll keep emphasizing that is going to be slow and gradual and accumulate not too much of a tightening. so, 25 basis points this december doesn't have as much of a revision to expectations as it did a year ago. >> right. finally, it does not sound like you are expecting great things from this coming gdp number. >> so, here's a little thing to put on your calendar. the folks at the federal reserve bank of atlanta and at new york do the bean-counting associated with trying to figure out what

current gdp is, and their estimates forecast, they're now cast for third quarter, is around 2% to 2.2%. so, 2%-2.25%. everybody's estimate on the street's higher than that. and some of them have a pretty long tail. you see numbers like 3%. so, i think we're primed for disappointment. >> vincent, we'll see what friday brings. thank you for your guidance today. good to see you. enjoy the weather. vincent rhinehart, standish melon analyst. thank you. coming up, kevin plank joins scott wapner and the team. and tomorrow at 10:00 a.m. eastern time, our sara eisen sits down exclusively with p&g's ceo, david taylor. it is his first ever tv interview since he took the top job at the company just about a year ago. you're not going to want to miss that, or what we've got left for you on "squawk on the street." stay with us.

when you're on hold, your business is on hold. that's why comcast business doesn't leave you there. when you call, a small business expert will answer you in about 30 seconds. no annoying hold music. just a real person, real fast. whenever you need them. great, that's what i said. so your business can get back to business. sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. stocks have climbed back to the flat line after being down 90 points or so. one stock to watch is going to be chipotle. of course, with earnings last

night, hit a fresh three-year low today around $381 and is below that now, although some on the street still holding out hope for 4q comps. rbc has a same-store sales growth estimate of minus 2, which would be a will the better than the minus 21, guys, that we just got. they're talking a lot more about a more pragmatic approach to marketing spend, obviously unit growth. but as cramer said this morning, it's a lot about how long it takes americans to forget about a food safety scare. >> yeah. perhaps you could argue that panera is one company that's benefiting from the reputational damage chipotle has suffered, not only beating the bottom line, revenue also beat and the company raising its guidance. you can see the stock is basically flat. it's down as the broader market had been down, certainly a hat trick of a quarter for that company. >> all right, well, that does it for us here on "squawk on the street." we're going to have a lot more ahead, of course, on "squawk alley," including the markets and that interview with

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headquarters out west, 11:00 a.m. on wall street, and "squawk alley" is live. ♪ ♪ uno, dos, tres ♪ ♪ ♪ lights go down, it's dark, the jungle is your head ♪ ♪ can't rule, your heart welcome to "squawk alley" for a wednesday morning. kayla tausche and me at post 9, jon fortt at the microsoft windows 10 event in lower manhattan. joining us at post 9 this time, inside.com founder and ceo jason calacanis and out west, market asset management president mark morris. good morning, gentlemen, all of you. our top story this morning is apple releasing fiscal fourth-quarter numbers after close. first annual revenue decline in 15 years