♪ live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" here on cnbc. i'm andrew ross sorkin. a look at u.s. equity futures at this hour. looking at red arrows. not terrible. dow off about 5 points, 6 points. s&p 500 off about 3 points, nasdaq off about 25 points. in asia, let's show you what happened there. again, a bit of a mixed picture. nikkei up a half of a percent. hang seng off, shanghai down as well. european equities now also a mixed picture. mostly down on the margins. look at crude. i imagine we may be talking about baker hughes and ge in a bit. i think there's something to be

said there. wti, 49.54. you rolled your eyes. >> i'm trying to figure out -- i initially thought that ge was going to sort of double down and cost average in, because now things are cheaper to buy. it looks like this is sort of if response to trian, trying to get more focused on turbines and medical imaging and the other businesses, sort of maybe offload something they've been trying to get in in such a big way since 2007. they've been adding to oil and gas, right? >> now they're getting out. we don't know. >> though the company picked all the wrong times to get into all the wrong businesses. >> i wasn't going to say that. >> being a big bank, energy company, or a media company. >> which makes me think they own all these -- what i think are valuable oil and gas assets, now it's cheaper to buy them, the ones you bought for too much, you can buy them at a better

price. now they will offload some of the stuff they bought at higher prices? >> put it into a partnership, spin it off. unclear. >> have you made calls on this? >> i've made calls. >> your job does not end. it never ends. i see that. >> thank you. >> coming back from atlanta -- >> do you have an accent? >> i have no accent. no accent. had a peach, though. did have a peach. >> someone said yesterday there was more -- maybe we -- >> i didn't want to give it away. >> are more peaches produced in south carolina than georgia. though we have the moniker. >> i had one at the airport. >> you liked atlanta. people are nice. >> very, very nice. >> even to you. and they know you. they know your whole -- >> we have some great fans in atlanta. >> i know that. i do. >> you do. you do. >> you do, too? >> they came over to the okay cafe, not only kayla's parents, but others in addition who watch the show. >> just making sure you were doing okay.

and you had everything you needed. >> my fans are kayla's fans. >> fans of everyone. >> they said you were sitting back by the take out? >> we were sitting behind -- yeah. we weren't in the main area. >> okay. >> because they still had business to do. they weren't trying to shut don't restaurant. >> good stuff. we did have a scary moment last night for mike pence. the campaign plane carrying the governor skidded off the runway after landing in heavy rain. about 30 passengers were evacuated off the plane. the plane did not strike any of the fencing and was not in danger of going into the water. no one was injured. we're thankful for that. governor pence will join us at 8:00 a.m. right here on the squawk set. a lot to ask him about. >> don't have a lot of time, i

guess i remember that plane going into the water. that was probably 10, 15 year s ago. >> at least 15 years ago. that was on takeoff, though. >> laguardia shgt t, the run wa >> do you still go inand o and f there? >> constantly. >> another reason to move to new jersey. >> because newark -- >> a longer run way. president hillary will have a lot of infrastructure, some of it might find its way down to -- right? >> that's what they say. that's what they say. >> as we -- i'm coming to dealing. i'm dealing. you tell me, when you were down there, even georgia is gone for republicans, right? >> no, no, no. close, trump will probably win down there. >> okay. all right. >> i felt like i was very much in trump country. >> did you really?

>> i did. >> how did you find those people -- >> came in with the masks. how did you like that? >> the other one, that just is going to get more votes than people think. the lady was pretty strident about not liking donald trump. >> but the other guy on the other side, the trump supporter -- >> he was great. >> he was good. >> i evinvited him up here. he said buy me a plane ticket. i liked him. he sells jewelry. nice guy. >> yeah. >> yeah. >> as we -- yeah. you got a christmas -- a present, holiday present for -- >> i did not. i'll have to order it there him. >> general electric is in discussions with baker hughes on potential partnerships. ge said while nothing is colon clueded, none of the options being discussed include an outright purchase. the "wall street journal" would actually merge the oil and gas business with baker hughes and

could be a deal worth $20 billion. the paper reports the businesses could be combined and spun off into a new publicly traded company. last week ge said the oil market bottomed but the demand for infrastructure equipment would take longer to recover. ge's oil and gas operations have higher revenues than baker hughes. baker hughes, the market cap is 23, but the stock immediately ran up 20% and came back down -- >> after it was clear it was not an outright sale. chipotle building a team of high profile investment bankers to defend against bill ackman. chipotle hired goldman sachs, as well as a law firm and crisis pr from joel frank. ackman has not made public demands of chipotle.

shares of chipotle are down more than 12% in the last two months. >> we did have big earnings out after the bell. amazon and alphabet reported for the latest quarter. amazon missing on the bottom line causing the stock to sink. currently down 12%. alphabet beating on the top and bottom line. joining us to break down the results, james chocmok. great to have you. >> thanks. >> what should we start with? >> start with the bigger news, amazon. >> okay. >> were investors too greedy to expect address much profit as they did? >> i don't think it was greedy. what you saw in the first half of this year was the performance in the stock driven by fundamentals. in the second half it got ahead of itself because of the scarcity value of high quality growth names that are in the tech world. i think that drove it a bit more than it should have. when you look at the profit

expectations for the fourth quarter, which is the biggest seasonal holiday shopping period, it left a bit to be desired. >> shipping costs up 43%. the company says that's just an investment in the holiday. was that roughly in line? >> it's not just shipping, the content, rapid expansion of fulfillment centers. they had 18 fulfillment centers this year. the last time it was that big was 2012. they're positioning for the future. it's not something that i'm too worried about. i'm neutral on the stock, but as far as the long-term trajectory, i'm not that worried about it. >> prior quarters when the spending ramped up that much, the investment ramped up that much, cloud canceled it out. >> sure. >> is cloud as big as it needs to be? >> cloud is on fire. that was -- what you're seeing in the cloud is 45%, 55%

incremental margins. we hear from customers that price. i think the bigger issue is the international segment. because to justify some thoof te 1,000 plus targets, you have to assume that replicates north america, and it's difficult to see that path because of the fact that india is a question mark. >> you sound bullish. if the stock is down 5%, why not buy here. >> i sound bullish because it's hard not to love amazon. being an avid customer, but you have to look at the numbers. you give the benefit of the doubt to north america, fine. give it to aws, check that box, but it's difficult to do it to international. when they try to go into hollywood, grocery, when you think of the cost of refrigeration. >> trying to go to mars.

>> trying to go to mars. >> you read about all this brick-and-mortar idea. do you like that? does that excite you or scare you? >> it excites me. the refridge pageration part of whole grocery thing scares me. that's another beast dealing with that. they could be the new omni channel. they can optimize the products on their shelves based off of demand and turnover they expect. >> does that mean they ultimately look more like walmart than walmart? that's the idea. >> i think it will still be delivery driven, right? >> well, now they're also talking about -- at least the report suggests they'll be having stores on the corner of the street. >> but that's for -- when you think about densely populated markets, i think it does make sense. you can use it one as a mini fulfillment center for one-hour deliveries and have higher turnover goods being sold. >> quick comment on google. $7 billion buyback doesn't hurt.

>> it doesn't. you saw acceleration across the core metrics, paid clicks on a tough comp. we still saw acceleration. pricing iffy, overall, it's a positive trend. i think the bigger point for google is they need two major cultural shifts at the company. one is they have to -- if they're going to go into hardware, they need to be able to spend tons of money and have a high tolerance threshold for marketing spend. and, two, they need to have an enterprise sent trick cloud strategy, which is a high touch experience. and that's not something they're totally -- they don't have an 800 number for customer service. >> well, a lot of these companies don't, that's one of the big gripes. james cakmak, thank you. now talk about my favorite topic, i was so excited about this.

after months of rumors, apple finally unveiling the newly designed macbook pro. i'm still sporting a macbook air legacy 2010/'11. >> right there with you. >> i've been thinking whether i want to buy the macbook the small, baby one, or do i wait for the 13-inch, this thing with the magic strip. >> right. >> should i be excited or not? >> i think so. it's been four years since they updated the macbook pro, their higher end laptop machine. we heard a lot leading into the announcement that them have a touch bar, this strip above the keyboard. sounded gimmicky, but after just demoing it a bit, versatile. i like that they brought touch

id, the fingerprint sensor to the mac. >> are you disappointed that the laptop doesn't look fundamentally different? in a world where people moved towards microsoft has the surface, you can go from being a laptop to being a tablet, literally going -- it's the equivalent of having mac os to going to almost ios, being able to flip back and forth, to having the touch on the screen. >> a lot of overlap there already. >> this is so different. this is not that different. >> it's not that different. >> you know, you can say if it ain't broke don't fix it. but their business has been struggling. the mac business has been down. >> will this help it? >> i think so. there was a lot of pent up demand. people like you and me waiting for this. >> but the pricing is high. much higher -- >> 1799 for the 13. then you can go up to 2400. you're going --. they used to have a great price point, under $1,000. if you were a student going to school, this was a great system.

>> but the macbook pro was always a premium. >> now they're getting rid of the macbook airline, line. >> it's still there but they're phasing it out. the macbook will be the lower end. i loved the lightness, but the keyboard never did it for me. we'll have to see how good the keyboard is on the macbook pro. >> did you play with it? >> i banged on it a bit. i want to spend more time with it this is all nerdy. this keyboard thing is an issue. the keys accidedon't travel. normally when you hit a keyboard, it goes down and up. the new keyboard, it's so thin, it feels like you're typing on glass. >> that's right. judging a few minutes typing, it does feel better, but need to spend more time. >> you wouldn't know whether you hit it two or three times? >> sort of. kind of sort of. >> ed is like a tv star.

"usa today" is the only place they put their main people -- >> i know. you know where they buy the commercial space? >> right here. >> i know where i'm going with this? >> the deal book, tuesday column you have. >> yes. >> you could be on tv. >> i could be on tv. >> on the "new york times." you, krugman, collins -- >> we're saving our shekels. >> aren't we all? >> yes. yes. >> you want to comment on the deal? >> i'd rather not. >> he told me he's comfortable, but 400 takes on that commercial? >> yeah. for a 15-second commercial. >> all right. all right. print and radio, there's a reason for it. >> what's the name of your column? >> deal book. >> deal book. >> we try to leverage the brand. >> all around the deal book brand. >> yeah. >> you can produce. >> talk -- talk --

>> that will help your career. >> coming up, there's a lady in the elevate their people are afraid to talk around. what is that about? the other commercial. >> yeah. yeah. >> that's -- that's sports. >> it is sports. >> christine brennan. >> you go. >> important data point on the economic calendar. we'll tell you what to expect from our first look at third quarter gdp due later this morning. coming up, 30 minutes, three ceos. the heads of choice hotels, party city, and seal dare join us on the economy, politics and more. it's a ceo triple play on "squawk box."

welcome back. time for today's executive edge. we'll start with the european edition of stocks to watch. ubs posting a 60% slump in third quarter net profit. the bank citing risk aversion. the swiss banks security unit was hurt by a slump in equities trading. royal bank of scotland warning that lower profits are eroding profits. lets they were weighed down by legal costs over settlements

with u.s. authorities over u.s. mortgage backed securities. sanofi lifting its profit for the year after better than expected earnings. they announced a $3 billion buy back since 2017. those reflected efforts to cut costs to make up for poor diabetes drug sales in the u.s. the first report on third quarter gdp is out at 8:30 a.m. the forecast is for growth of 2.5%, versus 1.4 in the second quarter. economists raised their outlook following positive trade and housing data. it will be interesting. usually not too far off. i thought we were worried about the low, 2.5.

maybe it is chevron and exxonmobil lead the list of earnings today before the opening bell. also we'll hear from drugmaker, abvi, mastercard and hershey. joining us now is j.j. kinnahan from t.d. ameritrade. i thought we ended up yesterday, but we ended down. 18,169 on the dow. similar numbers in terms of a trading range on the s&p 500. last time you were on, i think we were happy about the small move, not that we want things to go down. nice for something to happen. nothing is happening. is it the election or the fed? >> as we look at clients and talk to clients, combination there of. it's the election, which sectors will be winners out of that. you talk about this range in the z s&p 500, we're at 2126 would be

a number we have bounced off. that's one where i would be looking. on the upside, like 2178 area. that's a tight range that we've been in for a long time. >> we've been in the range for months. we've been at these levels for years. >> absolutely. but every morning we say there could be -- the next meeting could be the one. we're at a point where on last night's close, talking 75% probability of a rate hike in december, based on fed funds. we need to get stuff out of the way. one of the problems for retail traders, they get caught up in what's happening now. not looking forward. it's a great time for people to be looking for if we do have the rate hike, i think we'll all agree financials should do well. they're off a nice earnings

season. what are the sectors that will get hit? we saw housing suffer yesterday with bonds in the massive selloff. that might be one people look at not doing well. one other thing people miss is not only what's going to happen shorter term, but longer term and how it will affect personal finances. a quarter point on a mortgage is probably about 4 bucks a month on an average mortgage. not a huge difference. overall, i don't know if people -- as you guys know, rate rises tend to come in chunks. >> you must -- i don't know if you have a technical idea about it, but in the old days, 5%, 6%, 7%, techs wouldn't mean anything. i saw 182 today. i was like oh, my god. look at the ten-year, these are -- i guess these are intermediate terms high in yield. it's 185, andrew!

it hasn't been 185 in a while. >> it was at 187 yesterday on its absolute high. >> some people said above 177, it's going above 2 if it gets to there. >> we bounced off this 187 one time. >> it bounced down. >> the yield bounces down as bonds rally. the gdp number today will have a lot do with it. when you're in a 75% probability, and we know the fed wants to save face. when you talk about four rate hikes and we had a grand total of zero, they have to do something in december. they're under pressure from the economy. >> ain't no face left. there's like a -- like a single point. >> it's halloween. a horror show. >> we all thought the fed would be hiking into a strengthens economy and that equities and bonds could outperform in tandem. but the move in yields la been

ci has been cited as a head wind. how does that add up? >> because of the free money. when we see it, we'll see an initial reaction from the stock market. because of the free money is gone. to joe's point, people are so used to the low rates, haven't seen anything in such a long time, the lightest move means a lot. a quarter point is not that big a deal in the grand scheme of things, it's just been a year since we saw it. it was a long time before that. ten yo ten-year rates are still r relatively low. >> we have seen before, the economy never seems to get stronger and all we get are higher rates. >> short-term. i think sometimes we all, you know, your job is to have a shorter-term view. you have to talk about the market every morning.

>> that's not true. no one ever told us that. you think people are telling us -- anyone ever told you be short term? >> never think short term. >> they don't even care about ratings anymore. that got a big laugh. >> any way -- >> we're done. that's why the music is playing. see how that works? >> i don't have an ear piece. >> you don't have one in. >> you don't need one. >> there you go. >> always a pleasure. coming up, 30 minutes, three ceos, our triple play starts after the break with the ceo of choice hotels, the big bucks behind halloween. the ceo of party city talks about the holiday. and the ceo of sealed air, behind many of the ship prognosing products you use every day. as we go to break, a look at the s&p 500 winners and losers.

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nasdaq will have trouble overcoming amazon, which was down, like, 5%. based on where that stock is, it's like 40 points. did you see that? >> i did. >> anything else? >> not bad. >> that's why the markets are good. anheuser-busch. >> thank you for that segwauseg. inbev cut guidance as sales declined in brazil. the second largest market. the world's largest brewer and maker of budweiser said core profit fell 2% versus 4.5% growth that the street was expecting. the firm announcing it would cut its outlook for brazil for the second time this year. ab inbev bought sabmiller for nearly $100 billion earlier this month. these results are for the pr

pre-takeover group. shares of ab inbev down almost 4%. choice hotels international beating on the top and bottom lines in the third quarter. the company working to refresh its well known comfort inn brand and making a new push into the upscale category. choice owe tells also announced a more generous parental leave benefit package. joining us is steve joyce, ceo of choice hotels international. let's start with earnings. stock was up sharply yesterday. impressive beat for the quarter. where did you see the demand from? >> couple things are going on. we are adding new hotels in a significant number. we did a 25% increase in new deals, and leisure is holding up much better than business. we have a significant leisure component in our hotels. as a result people are still traveling for their vacations, even though they may be doing less for business. and that added with the fact that we put some new things in place, particularly some rate management tools and ways to

optimize revenues. we did significantly better than everybody else in the business. so that all combined got us to a fairly significant rev par increase, which is how much you're selling per room, at 11% when everybody was middle to low single digits. >> when you say you're doing rate management, promotions? rewards? >> a bit of everything. one thing we're doing, we decided we want to stop this nonsense with the online travel agents about where the lowest rates are. we have put on our site for our choice privileges members which we have just redone, we said to you, you know what? you keep looking at all this advertising. but the lowest prices are on our site. we guarantee you it will be up to 7% lower. so, we're getting significant push from that through yoour channels. >> why did you choose 7% in.

>> because 8% seemed lhigh and % seemed low. typically 7%. >> i give people 50 bucks if they find a lower rate. >> people take it seriously. they look, we tell them it's the lowest price. they look all over to try to find a lower run. rarely, sometimes they do sh, t get 50 bucks. >> 8% is too much, 6% is not enough. >> the question is what would move a consumer to be meaningful. we asked them. >> people are staying. what does that mean, no business -- does it mean gas prices are cheap?

people are not going to europe? are people saying here and going to disney or wally world? >> our customer is a drive market customers, lower gas prices put on average $600 in their pocket. so they're using that to visit family go to national parks. >> my husband just did a two week tour of the national parks, stayed at a couple of comfort inns. >> see america. he went to atlanta, ohio. now bring the wife and kids -- >> i think we stayed at one of his -- >> i love those. >> that's something that is coming out of what millennials want. people want to be able to take. we went to 12 fuel paid well pa for maternity, four weeks for their partner and to take care of parents. that's been well received.

when people saw that, people are coming to us saying we would like to work for you. >> only slightly off topic question, would you want to own a trump hotel chain right now? i'm curious. this is a big issue. a lot of stories about what's happened. >> the answer to that is no for precisely that reason. the political positioning that he's taking is not a good thing in the hotel business. you want to appeal to everybody. >> my view is two years from now, if you're going to chicago, you want to stay in ang upscale hotel and you're on expedia, and you want to stay at the trump hotel, very nice hotel. >> beautiful hotel. i've seen it. >> would you say that's a good rate, i'll do the other one because -- really? >> here's what will happen. there are -- people move in groups. companies book based on a certain way. depending on your political orientation that will affect

your buying decision for hotels. we try -- what we want to do, we represent the 99%. that's at a pretty rarefied air up there. i think that it's going to affect him long-term. >> i had a different idea. you're so close, steve joyce, you can either be joyce hotels, or you could just -- steve choice. choice hotels. you could be a key employee -- >> i have had that suggested to me. >> have you? >> yes. >> with doug mcmillan at walmart -- >> when i took the job, the first headline was joyce's choice's choice. i was like that's not good. >> someone thought of this? why i do always think i'm the first one? >> thinking with your noggin. >> joyce hotels. >> steve, good to see you. >> thank you. when we come back, scaring up profits at party city. the retail chain depends on halloween for 25% of its revenue. its ceo jim harrison will join us after the break.

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welcome back to "squawk box." twitter announcing it will discontinue its mobile sharing app vine, it's part of cost cutting efforts that will include a 9% cut in the work force worldwide. twitter introduced vine in 2013 as a way for users to share snippets of videos that were six seconds or less. never really figured out how to monetize it. there is some warning on the internet today. >> there is we'll talk about halloween flonow. should i put it on? >> yeah. >> i will get space -- >> that will get tweeted out again. >> it's officially the spookiest time of year, halloween sell

bre celebrations about to kick off. consumers expected to speed about $3 billion on costumes alone. total spending will hit the highest in the survey's history. i think you're getting a phone call, sir. jim harrison is here, ceo of party city, they get 25% of the annual revenue -- >> look at joseph 679. >> look ridiculous. >> you lock great. >> this is nice. that's ridiculous. >> my kids want to be an astronaut. they'll enjoy this. i wanted to be an astronaut. >> you're a third of the way. >> now your hair will be messed up. you'll have to wear this the rest of the show. >> nice to see iment. >> you look great. >> you think? >> not really. >> when you look at this particular halloween season relative to others what do you

see? >> halloween comes later and later every year. halloween for us represents north of 20% of our -- almost 25% of our total retail revenues, about 20% of our total revenue. >> how fierce is the competition from amazon? i will admit something that will make you unhappy. the sorkin boys, including this one, so there's three of us, are going as a gorilla family. we purchased our costumes, i hate to say this from amazon. the fum f the full fur. >> i'm disappointed in you. >> i apologize. i didn't know i would be seeing him. if i knew i would have -- do you sell a good gorilla costume? >> we sell a good gorilla costume. >> do you know what it cost? >> not off the top of my head. amazon is a competitor in halloween. they sell costumes. but what we do at party city is

similar to what we did before we owned party city, we take something and blow did out with multiple open shtions. if you go into party city for a berth day party, you pick a princess pattern, you could have north of 50, 60, 70 different skews that you could buy around that party. we've done the same thing with halloween. what we've done, in addition to the costume in a bag which is what you bought, that's the click and pick purchase. >> that's what we did. >> we give you the opportunity to be more creative. you go to party city and buy separates, be anything you want to be. for instance, for bat girl with all the separates we have, spider girl, you could have five or six people go to a party, and they all look entirely different. >> why are the costumes so much cheaper than they used to be? we used to rent costumes, now people buy them because it's not that far off.

>> most factories are owned in china. we own a factory in madagascar. >> my favorite economic indicationer is how much people spend on costumes for their dogs. >> i don't want to upset anyone, i'm not a dog lovlover. i grew up in the bronx. >> i had this on backwards, you should try that on backwards. >> thanks. thanks. we have to go. 25% of your business is halloween. what are the other two or three holiday there's a do it? >> big graduation. summer. there's a holiday every month. you have from -- >> thanksgiving, christmas, nothing in. >> they're holidays, but not big holidays for it's. you do look good.

>> thank you. >> you can get a small dog, chihuahua. nothing? >> when you grow up on arthur avenue, you don't want to walk around with a chihuahua. >> look good. >> good to see you. >> i played along with you. i usually don't. but i like this one. >> i was going to wear that. >> no, no, here. here. i was going to take it off. >> they wanted to choose the one that wouldn't mess my hair up. >> me too. our third ceo of the half hour, bubble wrap inventer sealed air gives us a business update. the stock is down more than 9% the last year. we'll talk about that and other things when the ceo joins us next.

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sealed air wrapping up its third quarter. the investor of not surprisingly bubble wrap reported better than expected profits. but revenue missed slightly. the company is citing a slump in emerging markets for the decline. joining us is president and ceo of sealed air. i think about how i would -- if

i were ceo -- try to manage the company. it seems like you are sort of held hostage by economic conditions around the world and how it -- you know, currency translations. whether people are packing and shipping for things. so it almost seems like you maybe don't control your fate as much as other companies. am i wrong on that? >> well, actually, we do control our fate, yes. we have had negative translations around the world. and we are a very global company. we have about 60% of our sales outside of north america. and therefore we have the global environment in mind. having said that, we have the second quarter of record ebida percentage at 7.7%. we have generated 10% increase cash flow in the third quarter. we are on par for our $550 million free cash flow guidance. and we are very pleased with

some early signs that our innovation are really making it in the market place in food packaging. we are the world leader of protective packaging and number two in the world for hygiene. so those are very good signs. we lead the industry through our innovation everywhere we play. so we're pretty encouraged as to where we see the future. we're not happy with our 1% currency sales growth since the beginning of the year. we have announced that we're going to move to 3% in the coming fourth quarter. which should be approximate for next year. >> so when did you take over as ceo? what year? >> september 2012, exactly four years ago. >> so somebody else bought diversicare in 2011 and it makes sense now -- you're spinning off a third of the company into a separate company. and you can focus better that

way, do you think? >> actually, interestingly enough, that's exactly what we're doing. because there are not very many synergies between our traditional business and our diversicare business. we're not doing it because we don't like it. we're doing this because we believe that this division is now going to be able to fly from its own wings. what is very interesting is that diversi and our hygiene business has basically revolutionized the industry with technology. we are the first one introducing the internet of things which we call the internet of clean. we are leading the industry with natural products. and we are the first company which has introduced robotics into cleaning equipment.

and not only that, but we have just announced a research agreement with carnegie melon and also a commercial agreement with discovery robotics to leapfrog and increase our leadership in that industry. so when you're going to see at your corridors at cnbc some robots cleaning on themselves or vacuum cleaning on their own, think about us. because they're probably going to be ours. >> wow. hear that, sorkin? >> yeah. >> robot custodians. that would run the gamut of custodial services? >> it is amazing. nobody was talking about robotics two years ago. we acquired a start-up company in april of 2015. since then we introduced those robots around the world.

very big business in australia. very growing business in europe. same here in the u.s. very much for health care in hospitals, in offices. everywhere you have about $15 to $20 an hour man power costs, you can bring that. and our new alliance with discovery robotics is now giving an eight-hour autonomy to those robots which is phenomenal. >> okay. j jerome, when you're -- like, if you're walking around your facility would you pop the bubble wrap? i'd do that. >> this is an iconic brand, iconic product. it is a smaller one today because we have moved to the next generation. >> i still do it. you didn't answer my question. do you still do it? >> oh, i still do it. joe, i can send you little

boxes. a day you might be stressed, we have little boxes where we can send you those and you pop them. >> can i tell you who doesn't like it? dogs. dogs do not like -- if you want to do something funny. put it down on the ground and they walk on it and they're doing it and they run away. it's really cruel. >> but you love to pop them? >> i do. and he's the ceo, he loves it. >> my kids love it. all day doing that. >> why? >> i don't know. it's a fascination. >> thank you. >> we're going to pop some bubbles. meantime when we come back, the guest host for the next hour is arthur brooks. always fun to be with us. and we're going to be joined later by republican vice presidential nominee governor mike pence. "squawk" returns in a just a moment.

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inside the numbers. amazon's latest quarter giving a reason for concern ahead of the big holiday shopping season. we're going to speak to a top analyst about the results and what you should be watching for in the fourth quarter. plus we talk homeland security and crisis in the middle east. we ask which candidate brings more to the table. and wireless infrastructure company american tower making a play in europe. the ceo is here to explain. as the second hour of "squawk box" begins right now.

live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and kayla tausche. the futures at this hour, i can't even necessarily -- okay. now they're up a little. i wasn't going to guess. i'm talking about the dow jones because the s&p is down fractionally and the nasdaq is down. some of the blowups we've seen this quarter have been tech stocks. but it depends on who you are. netflix was, like, awesome. speaking your language. >> millennial language? >> no. purely manhattan. or new york type thing. >> wicked. how about wicked? >> what's that?

>> like boston. >> wicked. >> oh. >> i thought you were talking about wicket. >> my daughter says everything is lit now. have you heard that? >> yes. it's hot. >> is that good? >> yeah. it's hot to be lit. >> history repeats itself. remember in my generation it was groovy. or -- >> bring it back. >> okay. we better go on. here are some headlines for you this morning. we're less than 90 minutes away from the third quarter gdp. consensus says the economy grew at a 2.5% annual rate. a new airfare increase appears to be taking hold. american airlines has now matched the increase. apple has introduced new versions of its macbook pro laptops. a so called touch bar screen can be used for a variety of

functions. some models include the new touch i.d. features that have been on iphones and ipads for years. now they're going to be on your laptop. when governor pence gets here, we will ask him just how scary this was. because it sounds pretty scary for the vp nominee governor mike pence. 40 people on this charter jet. the campaign plane carrying governor pence skidded off the runway in la guardia after it landed in heavy rains. emergency personnel evacuated about, i guess it was 30 passengers on board the plane. governor pence was traveling from ft. dodge, iowa, and headed to a fund raiser appearance at trump tower. fortunately no one was injured and donald trump who was on his way to a rally near cleveland reached out to governor pence after the incident to make sure everyone was safe. i know the governor was shaking some of the first responders' hands.

so it was a scene last night. and a programming note. as i said, governor pence will join us at 8:00 a.m. eastern in studio for an interview. and amazon and alphabet results are officially out. amazon missing on the bottom line causing that stock so sink. joining us now to break it all down, gene munster. he is piper jaffray's senior research analyst and one of our favorites. gene, help us through this. you saw the numbers on amazon. you saw where the stock went. was that the appropriate reaction? >> no. i think it's going to bounce back here. and the reason is that all of the areas that they're spending in are areas that have produced revenue growth in the past. so these fulfillment and content are no surprises. so the stock was down 7%, it's down more or less 5% now. i bet that in a week or two it will be up from where this is at. so yes, this brings back some

bad memories for investors about some investing they've done in the past, but i think it's wisely spent money for amazon. >> when you make a prediction like that, explain to us how you map out amazon. when you look at the multiples, they never make that much sense. what is the math you're doing on this? >> we think they're going to continue to gain shares. that was consistent from the previous quarter. sop they continue to gain share. the overall market is going 15%. we think they continue to gain share, continue to have margin expansion. we think that's going to drive margins higher. as far as the stock coming back, is this basically creates bigger comps for next year. even though this is anxiety for investors, the reality is this is setting up for a good position for 12 months from now. so those are the types of things we look at when we talk about the ability to bring back -- >> amazon has always been a bit of a story stock.

i'm trying to understand. when you make a spread sheet to the extent you do on amazon, what multiples are you looking at to get on the numbers you get to? >> well, we're using 14 times our 2018 ebida to get to a $900 target. that's the exact number. and we're assuming that margins go from 3% today to 10% in the next four years. so i think some investors we meet with think that's very aggressive. they have not shown that in the past. but when you start to think about the investments they're making in robotics, now half the fulfillment centers have robots and they tend to pay off in a year and a half's time. so where do we get that margin expansion? that's the core question. and the answer is that we think that continue ed efficiencies a going to drive that. >> and do you have any concern about just the capital spending? i mean, this is becoming a truly capital heavy, capital intensive

business at this point. >> well, we're concerned on days like today when it makes investors nervous. but as far as the real investments, we're not. they opened up 18 fulfillment centers. the most they've done in comparison to that was 12 in a quarter in 2012. so this is a significant jump up. the reason we're not concerned about this, this is part of the reason why amazon can continue to dominate over the next 10 to 20 years. is this capital spending makes it almost impossible for somebody to compete with them. and so to be able to replicate this is nearly impossible. and i think that makes investors uncomfortable with this. >> as investors and i want to get to google in a second. but as investors, how much focus should be on the retail operation versus aws. and also the spinoffs i imagine of aws in terms of other kinds of software and things we haven't thought of yet. >> aws is 9% of business.

it's about 30% of profits. so the answer is that we should probably spend 30% to 40% of our time thinking about aws and 60% thinking about their retail business just in terms of profitability. over the long haul that's going to kind of drift back to 50/50. and so i think that -- i forgot what the second question was, but that's how we think about that mix. >> this gets right into google. if you're thinking about buying shares of google or amazon right now, which do you like better? >> i would take amazon over google. both are great names to own for the next five to ten years. i think the reason why amazon is different is this infrastructure play is hard to replicate. both great companies though. >> when you think about google's earnings, were you pleased, happy, unhappy? >> i was pleased. compares to 25% last quarter. they had a different comp

because they added an extra link in their mobile results that made the september quarter a little bit more difficult. so they powered through that. i think the setup here to amazon, the buzzword bingo it was all about machine learning and artificial intelligence. and ultimately some of those things are going to make you use google more. so i think there's reason for optimism beyond just the near term on google. >> you like the buybacks or you think they could reinvest that money in rnd in a meaningful way long-term? >> we're more in the camp of invest in great businesses, other bets. there's so much room they can do in automotive that i think the money would be better spent and investors longer term would like that as an rnd investment. >> gene, they always do these cryptic announcements about things like even buybacks which are normally so simple. and they took the buyback number to ten digits. do you know the significance of

that? >> i don't know the significance about this one, but there are inside jokes that they play -- the megageeks at google. i don't know what the interpretation of this inside joke is, but it is -- it's an inside joke. >> so us outsiders can only guess. >> yeah. >> we've been struggling with what to do with twitter for some time. since we're talking about google, i wonder whether you think it would make sense for them to buy and at what price? >> i don't cover twitter, so i've got to be aware of that. but at the end of the day is that, you know, everything is for sale at a price. i think that google may be interested in this kind of longer term. i could see them fit it in. but i think twitter has issues. they just talked about cutting their vine business. i think that needs to settle out before there's going to be m&a. >> okay. gene -- >> yeah.

hundo-p. that means 100%. >> oh. that was a lit interview, wasn't it? >> that was a lit interview. i'm not going throw any shade at you anymore. jk. just kidding. did you know jk? >> i did. >> i will never use dope. ever. i will never use the word dope. people use that word. it's a good thing, right? >> yeah. >> really? >> yeah. >> gene munster, if you're still with us, thank you. >> thank you. >> i like this one. people say fomo. fear of missing out. now they're using jomo for things that a lame. it's the joy of missing out. people at home that aren't watching this discussion are probably jomo. probably. i got some other ones if you want. or not. >> let's save them for the rest of the show. >> yes. >> spread them out. >> people will -- yeah. people will definitely try some really weird ones in here. anyway.

now i know. my kids are speaking -- i think they're talking about me sometimes. when we return, just ten days now to the election. we're going to ask arthur brooks of the american enterprise institute about this unconventional election cycle and who would be better for business. ? the meantime, let's get a check on futures. they've added to the gains in the dow. up 29. s&p now positive. nasdaq continues to be weak relative to the others. we'll be right back the first stock index was created, as a benchmark for average. yet a lot of people still build portfolios with strategies that just track the benchmarks. but investing isn't about achieving average. it's about achieving goals. and invesco believes doing that today requires the art and expertise of high-conviction investing. translation? why invest in average?

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. welcome back. after yesterday, could have checked for that himself. anyway, trump has repeatedly said he'll give $100 million to his campaign by election day. but he gave just $30,000 in the first weeks of october bringing total contributions to a little more than $56 million. in corporate news, chipotle is bringing a group of lawyers to defend against bill ackman. that's according to reuters. hired goldman sachs and morgan stanley. it's also hired pr crisis firm

joel frank. ackman hasn't made any public demands of chipotle after becoming its second largest shareholder last month. shares of chipotle down more than 12% in the last two months. so roughly spanning that investment horizon. but still down about half a percent. they did have earnings this week too. and general electric is in discussion with baker hughes on partnerships. while nothing is concluded, none of the options include an outright purchase. last week believes that the oil market has bottomed. but demand for equipment that the company makes would take longer to recover. we discussed whether ge is getting in or out of this business at exactly the right or wrong time given the prices of

crude at the moment. >> and twitter announcing it's going to discontinue vine. you ever done it? >> no. i've watched vines. >> all right. i i was going to make a joke but i decided not to. >> about vine? >> yeah. it's part of twitter's cost cutting efforts -- you can figure it out. a 9% cut in its workforce worldwide. the vine website will stay active after the mobile app is shut down. giving users a chance to download and save their videos. twitter introduced vine as a way for users to share snippets of videos that were six seconds or less. >> now -- >> now -- >> i'm not that clever. >> but if you ever were to make it, you could do it on vine. but i decided i'm not going to make that joke. >> i know the way you think.

>> i thought about it immediately. you would never do it anyway. all right. as if halloween wasn't enough a reason to binge on candy, today is national chocolate day. the average american spent $86 on chocolate last year and consumed 9.5 pounds of chocolate. that's a lot of chocolate. coming up, the viral pen pineapple apple pen now going into the guinness book of world records. as we head to break, also take a look at futures.

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among the stories front and center, corporate earnings as we wrap up the busiest week of earnings season. xerox matched estimates. revenue fell below street estimates. it also plans to split into two separate companies is on track to be completed by the end of the year. newell brands beat estimates with earnings of 78 cents a

share. revenue slightly below forecast. maker of sharpie markers and rubbermaid food containers also raised its outlook. and on national chocolate day, hershey came in 11 cents above forecast. it was a coincidence, hershey reporting earnings on national chocolate day? >> makes sense. >> any national day -- there's like ten other national days. one is national chocolate day. i did not know that. >> should be handing out hershey kisses today. >> i will eat some chocolate today. >> you're going just really commemorate. >> i'll make it a point. have some stuff at home already. this is a tough time of year for me. >> the holiday season. >> starts with -- let's say nobody comes to your house for halloween. >> then you have no choice but to eat it all. >> then what's next? >> thanksgiving. christmas. >> then january 1st, you're

there. i've got ten pounds. >> got to carb load ahead of january 1st. >> then the january juice cleanse. that's after that. >> does that work? >> debatable. all right. gdp is going to be out in a little over an hour. steve leisman joins us. i'm confused because i thought people were below two. >> i've got to look up the atlanta fed because they did not update when i updated. then they updated later. they were at 2% then the durables came out. we are at 3%, our rapid update is at 3%. the consensus is at 2.5%. and the question you want to ask yourself, are we setting ourselves up for another disappointment in i was just looking before i came on. we have disappointed on gdp -- in other words, the forecasts were below the actual numbers that came out. seven quarters in a row now for an average miss of 0.5%. a half a point. if you're doing 1% or 2%, that's

a lot to miss by a half. yet, here's the thing. it later gets revised upward. so the miss is actually 0.1%. so i don't know. it's one of those slapstick things you could walk in and hit the rake and it hit yous in the head every time. >> murphy's law we the fed trying to raise in december would mean it is weak. >> so it won't happen. do you get a feeling if you look at the 10-year and the 2-year, is the market feeling more inflation or a touch more -- is that the best explanation out there? >> we can accept it if it's a good reason. i wish it finally would be a good reason. but we've been disappointed every time. >> we're looking for a bit of strength in the consumer. we're looking for a bit of strength in business. and of course there's the famous soybean story we've been talking about all week. those are things that we are going to be watching. >> but you have not factored in

avocados. i'm very confused. >> i have to research the avocado story. >> the shortage is a big issue. price is going up. >> but is it helping gdp, allen? >> andrew. who's allen? >> i really haven't been through the first -- >> who is allen sorkin? the interesting thing is most avocados for the u.s. are actually grown in mexico. >> you can get more expensive ones. >> how does nafta factor into this? >> that's a good point. all i know about avocado is how to pick them for guac. let's say you're set on it for night. bring home an avocado too hard, there's no way. it's too hard. but then if you get one that's too soft, you can't do that either. so i know. i will go through the entire

thing. >> you know how to keep your avocado green once you cut it? >> no. >> that's another one. >> how? >> lemon juice. >> 2.1% is the atlanta fed. i thought i'd completely ruin this avocado conversation by giving you a number. >> you didn't either talk to me about -- it's a whole complex. it's soybeans, soybean oil, soybean meal. >> i'm all over the soybean oil thing. because that has been up because it's replacing palm oil that has been hurt by the southeast asian countries because of el nino. it's just one great big world is all it is. >> palm oil, when you say that it makes me laugh. i don't know why. but anyway. allen, you go -- >> thank you. sal leisman, i appreciate for all that. look at what they've done. can we get a shot of that?

well, when we return former israeli prime minister is going to be our very special guest from the crisis in the middle east to politics here in the united states we've got it covered. as we head to a break, take a look at u.s. equity futures. dow looks it would open up 17 points higher. we are back in just a moment. this man creates software, used by this bank, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician, who works across the street from this man, who creates software. they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured.

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welcome back to "squawk box" this morning. donald trump sending a message to israel this week that a trump administration would stand side-by-side with the jewish people to fight enemies like iran. joining us now to talk about u.s./israeli relations, former israeli prime minister ehu dba rack is here. >> i'm half an hour late to my favorite show. >> this gentleman got here on time so we're going to start with him. >> what do you think of what donald trump has said? we are on television. we are on the air. >> i don't think it's appropriate for a former israeli leader to talk about concretely

before the 9th of november especially since i happen to know one of the candidate for more than 20 years and highly appreciate and i never met the other candidate. cannot make comparisons. you know, all candidates happen to be post election ended up being supporting of israel, its base. not just on world views but on a wide foundations of common and shared values between the israeli people own the american one. >> let's put ourselves after the election and suggest that whoever is the president is going to support israel. but they may support israel differently. they have at least hinted at different directions. you want to weigh in there? >> the government, never voted to any of the parties which consisted -- on the opposite

side of the aisle. it's up to the israeli public to decide the election. and the israeli leadership. so there might be differences. i think that it's healthy. israel is in a tough neighborhood. it's nothing to compare -- middle east is nothing to compare to the midwest. tough neighborhood. i can't understand all the worries. and also israel is strongest country and we can be self-doft make up our mind and act. the greatest risk is sometimes being unable to take one. >> what is the greatest risk right now? is iran the greatest risk? >> iran remains a great potential risk in the future. if they try later to break the deal. we always have a new rival. the recent one is isil. but the old one is hamas,

hezbollah. all alive and kicking. but i think there is no -- with all respect, there is no existential threat around israel right now. israel is the strongest country and i say it not just as a political position but as a matter of professional judgment. >> how would you measure the relationship the united states has had under barack obama with israel? >> i think in terms of israel, most of his two terms. and in terms of the cooperation between our respective intelligence communities. as well as some exotic request we raise behind closed doors from time to time supporting our missile defense. he was extremely spoerptive in almost unprecedented way. but that could not save us from

other political issues that happen from time to time. >> you're kind of -- you've written some things about the current prime minister. you see not the polar opposite, but i would imagine any problems that netanyahu had with the president, that you wouldn't share the same feelings. >> i never try to hide my criticism of our government. i thought all along the way that with all differences or debates that we might have administration. president obama, biden, kerry, hillary at the time. they will also -- is part of the solution, not part of the problem. >> what about the iran deal? you know how anti-iran netanyahu was. >> and i'm asked about how i feel about the iran deal, i

respond with mixed feeling. it is when your mother-in-law takes your new bmw and drives it over the cliff. >> it's like the catskills in here. >> we feel that it's a bad deal. but it's a done deal. all the talks about someone that can come out of the blue and just consulate. it's a little bit hollow because it's not just american/iranian agreement. it's china not follow, russia not follow, germany and france will not follow. >> is it as simple as prime minister netanyahu in your opinion is more hawkish and you're more dovish? simple as that? >> no. >> what's the mood of the country right now? because he's -- >> look. filtration in the middle east is always complicated. with the possibility of the need

for a hawker than netanyahu and others. there's a deal now the iranian are not going to break it for five or six years. because they want to harvest the benefits of it. so it will be with us for some time. they will keep developing the new generation of long range missiles because it's outside the deal. they will keep being very active on the cyber warfare arena. but all these elements are out of the agreement. no one knows what will follow six or eight years from now. my personal judgment is that the iranians have in mind following in the footsteps of north korea and pakistan who ultimately defied the whole world. rather than following libya or south africa who voluntarily gave up their nuclear intention. >> that's a pretty scary forecast. >> i'm having a hard time seeing

the good part of your mother-in-law going over the cliff with the bmw. >> i was talking about your mother-in-law. >> i love my mother-in-law. but i don't see the good part about the iranian agreement. i understand your worries about it. couldn't we agree it's a terrible deal and it would be a good idea to renegotiate it? >> the difference between the two elements. i said loud and clear, it's a bad deal. i thought even at the time. 15 or 18 months ago. we had to say it bluntly to the american public. even the president. but there's a thin fine line. rather than individuals. in the american political process, we expect the united states to respect the sovereignty of israel. i sat down with three different presidents and told all of them

at critical moments to say. when it comes to issues which are critical to the future of israel in security or future of the jewish people. we will not delegate our responsibility to anyone including our best friends who happen to be you. we will take our decisions as a sovereign and we will act upon them. i used to tell our government behind closed doors and to public the same way we expect the united states to expect the sovereignty of israel, we have to respect the sovereignty of the united states. so when it comes to internal political processes, the american arena be it the congress or whatever, we shouldn't belittle. it's one step too far. >> but the iran deal is not a

domestic united states concern. i would say it had more to do with what happened to israel. we were perhaps spearheading a deal. >> of course. >> but it affected you more. so i don't see that as respecting the sovereignty of the united states to do what it wants. >> no i mentioned the sovereignty of united states in regard to the political process. when it comes to a political process inside the congress, we shouldn't be there. the same way when we discuss how much, how far to go in building the settlement -- >> andrew talked about the last eight years and whether it was positive or negative for you in israel. it seems like some of these things where maybe you had some cooperation are dwarfed by this overall deal that was done that maybe wasn't as advantageous. i would think there are a lot of people in israel and prime minister netanyahu that would think that was the defining moment of the obama presidency. the iran deal in terms of

israel. >> it was a bad deal. and we shouldn't hide it. but we are looking at practical terms. of course it's closer to our face. we look at it totally different way. that's why we had such disputes with the american administration all along those years in regard to it. but at certain point you have to realize, it's a deal. it's a done deal. >> but terrible rhetoric coming out of iran afterwards. still with the great state. still with the we have to annihilate -- all of that after the deal. >> never -- we cannot control the minds of others and their dreams. i just kept thinking strategically and concretely israel is the strongest power thousand miles around jerusalem. from benghazi and now everyone

knows where benghazi is to tehran. including these two nations. we will remain. so we have to think to compare, i sought for example it is much more practical to sit behind closed door with the president without hiding our position. and making sure that enough intelligence assets are invested knowing what the wrooirns are doing and when. back to the table or even surgical operation back to the table. i believe it was missed to do just that immediately after the signing of the agreement. and the choice of netanyahu to fight the congress rather than to sit down behind closed doors with the president of the executive branch without hiding our positions.

the same speech would have the same impact. not the same impact but the same connection with the members of american legislature. because 80% of them now appeals to -- >> we want to thank you. this was a great conversation. come on back. >> thank you. >> by the way, he's also now an investor and entrepreneur. >> does your mother-in-law have cable? >> my mother -- >> she's off. >> i'm a little bit older than all of you. >> my mother-in-law lives in spain is presumably not watching this. but still. >> great to see you. >> thank you, all. coming up, american tower owns and operating nearly 144,000 broadcast towers around the world. the company recently announcing new plans to expand into europe. the ceo joins us after the break. keep it locked to "squawk box."

at the top of the hour, indiana governor and donald trump's pick for vice president will be our special guest. we'll be right back.

the at&t/time warn er merge.

joinings now is ceo of american tower which owns and operates 144,000 communications towers around the globe. welcome. good morning. >> morning, kayla. >> at&t is the biggest share of your revenue. 16%. so have you weighed in on how you feel about this and what it means to you? >> well, we don't really comment on our customers' transactions sfe specifically. but the broader trend we're seeing is a convergence between broadband access to the home, a mobile operation and spectrum. and branded content. and that's the characteristics, i think, that are included in this particular transaction with at&t. >> how do you gauge how many more towers you might need to satisfy a certain of what they're bringing to the table. >> it's based on the growth rate all of us are using. across the entire spectrum of

mobile operators in the u.s. and all of us as consumers, the data growth is 30% to 40% of the year every year over the last 5 to 10 years. it's really increased the amount of data going through the mobile network. and that drives equipment onto o sites. >> can you explain this? the future of 5g. the idea -- the next generation lte, if you will. that everything is going to go at super fast speeds and this idea that they will compete head on with the cable operators. now, some of the cable operators like comcast and verizon. we haven't seen how that is going to play out. but how expensive is it to pursue 5g and how fast is it really? >> the mobile industry spends about $30 billion a year for 4g diplomat. we expect that $30 billion a year is going to roll roughly into the same amounts for 5g.

5g standard is not going to be retd i did until 2019. until then, it's 4g. >> and how long does it take to get to 80% of the country? >> it'll take probably six to eight years to roll that whole network out. i think it's going to come in stages this time that's different. the first will be fixed wireless. that is a cable and fiber to the home substitute. in other words, instead of trenching or hanging cables over telephone poles for the last block to your house, there'll be a fixed wireless transmitter using 5g that will be a competitor. >> andrew's question is the most interesting one. how are we going to know the difference? i just want my call to go through and want to get my data and come down fast when i'm trying to do by gps, et cetera. how am i going to know the difference? why should people watching this care? >> you'll care because you can get a lot more bits through a piece of given spectrum.

so you're viewing a video is going to be more robust. you can go to hd type of transmissions. on a wireless. >> right now it's eight seconds and it's bumming me out. i want it in four. >> there are places still 2g around the world. >> people talk about how the wireless folks could be the winners. but i also understand that the cable guys could be -- so much still has to go over a wire at some point along the way. >> that's the bad call piece if you will. so the cable wuch the comcast and time warners, et cetera, own could be used for that connectivity. it's now the last hundred yards. >> but will you always be able to have more data on it and then in the future if you think we're going to go to vr and have even more data that we're going to

want, that 5g or whatever will always be marginally slower? >> not necessarily. that's the breakthrough of 5g. you can get ten to a hundred times the through put. >> talking like he's an engineer or physicist. you know all this stuff, really? >> of the six people that run our company, four of us are engineers. >> how many employees do you have? >> we've got about 5,000 employees. >> how many climb those towers to do maintenance? >> probably among all the countries we have, probably 500 at most. >> and who the hell are these people? >> they are pretty fearless. many of them are ex-military. >> have you done it? >> i've been up to about 250 feet. >> i see the ladders that people climb and i get scared from the ground thinking of someone else having to do that. >> well, the exciting part, joe, when you get up there a couple hundred feet, the wind is actually moving the tower. >> oh, good. >> you would really have a good time. >> i wish i hadn't asked that. would you ever? >> we should do a segment.

jim can take joe. >> no way. >> hat, harness, you'll be set. >> you're all tied off all the time. one of the funnest parts of the climb for the training is the instructor will tell you at some point, while the tower is swaying in the wind, take your hands off and lean back. >> let's go to break. coming up -- seriously i feel nauseous. coming up we wrap up the hour with arthur brooks. check out the futures which are up a little bit. vertigo. we'll be back.

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ten days until the election and the presidential race has proven to be one of the more contentious in u.s. history. arthur brooks is here. saying it's one of the most contentious is probably an understatement. you were just talking about newspaper coverage of this. >> for sure. media coverage of this, it's been an unusual media coverage season for sure. but for me the interesting thing, particularly for here -- people watching "squawk box," is the underreported part of this election cycle which is this incredible connection between the economy and political populism that we've seen over the past 150 years. so there's a great article. there's a great journal article but a technical article. i read it so nobody else has to. it's from the journal called the economic review that looks at

140 years of financial crisis data and then connects it with political populism looking at 800 elections in 20 countries. bottom line, here's how it comes out. at this point in a financial crisis, you tend to see a 30% increase in populism among the american and other western countries publics. in other words, this is donald trump by the numbers. we would expect to see this. now, exacerbate that with earned media at 80% levels and 16 other candidates in the circular firing squad. but it's not a big surprise. >> how long or short lived is that? >> this is the interesting thing that happens. whether or not it persists for a long time has to do with what actually solves the problem of populism. we have populist candidates who always say i'm going to kick out foreigners, build walls, all these things as the solution. it turns out what is in populism is economic growth symmetrically spread across the population.

you can get strong growth, 3.5%, 4% growth and figure the right wa i to push that to society, the interest in immigration issues, trade issues, foreign policy issues, and we'd have our game back on. >> too bad that, you know, that the populous is the one talking about the -- and the globalous is the one that wants more -- >> it depends on your point of view whether we're screwed or not. but my point of view is we need somebody who is aspirational, has conventional views about foreign policy and politics but is an inspirational figure and is a warrior for pushing the ideas. >> are you more or less hopeful irrespective of who wins on december -- not december. november 9th you wake up, irrespective of who wins, you think we'll be in a better position after this? >> i think we're in the position of starting to repair things. and i think -- look.

there's a movement of us in washington, d.c. and i know everybody is easy to slam washington, d.c. these days. but my colleagues and i at the american enterprise institute our big dedication is bringing the country back together. how could i not be hopeful? >> looking at 2020. >> we will see, joe. >> we have to get ready for 2020. >> i know it's depressing for you. but we got to have content, brother. >> good for cable.

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your money your vote. ten days from election day and we have a special conversation with republican vice presidential nominee mike pence. that interview is minutes away. breaking news on the economy. we'll get a first read on third quarter gdp. the numbers and the market reaction straight ahead. plus behind the wheel with autonation ceo mike jackson. the largest auto retailer in the u.s. with quarterly results. the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and kayla tausche. we're getting ready for governor

mike pence, the vice presidential candidate making his way to the studio. a lot of people would like him to be the vice presidential candidate. but for you guys in the control room, he's the vice presidential candidate. meantime let's bring you up to speed on the top market stories out. 63 cents, this just hit. looks like it's about a nickel ahead of expectations for exxon. a revenue number is always difficult to compare to analyst estimates. but company is talking about $58.68 billion and if you remember, they used to actually do $100 billion in a quarter. with where oil prices are, that's no longer the case. looks like it's below the current consensus estimate of $63.8 billion. so it's very hard to compare apples to apples. also sorky, you might remember

this. the company -- do you remember in the -- that's not the right days? is it the salad days that you want to return to. >> younger, better years. >> it used to be a ten number at times where they'd make $10 billion in a quarter. but now a far cry from that. did we look at the stock and see what's happening? >> fractionally down. >> the other thing you look at is how much of the reserves you replace and what production looks like. you look at upstream. and then you look at downstream obviously which is refining. so that's a multifaceted company. we'll get more on that. but we've got other things to do including the first read on third quarter gdp which is coming at 8:30 eastern. and polled economists are looking for growth of 2.5%. better than the 1.4% the previous quarter. we had positive trade and positive housing data this week. the futures this morning will

take a quick look. up 21 now on the dow. nasdaq continues to be weak. s&p up just a third of a point. this is something we've been looking at because it hasn't been here in awhile. and now it's 1.86%. like we said, when we were 7% or 8%, if you moved ten basis points, no one would notice. but you move from 11.6 to 1.86 and it's a much more noticeable. it's an uptrend. maybe the bond market is doing its work for the fed. >> again, stocks will react cautiously. >> probably. you know what? this is a day where maybe we'll see whether there's a reason we're at $1.86% with the gdp number. then we wouldn't feel bad about rates moving up. joe mentioned amazon. earnings falling far short of

the street's estimates. not only that, but its holiday forecast is disappointing investors. the company warned that high spending on warehouses and video production will continue to drag on profits. amazon's cfo discussing the company's investments on its conference call. >> what you're seeing essentially in the second half of this year is a stepup investment around content and the film center investment. but also things like echo and alexa which are adding a lot of resources. india and aws as people there look for rapid growth in that business. >> sales in that business, amazon web services increased by 55% in the latest quarter. and google parent alphabet beating expectations. strong sales on adds might help drive results. company also announcing plans to repurchase $7 billion of its class c shares.

discussed on the conference call. >> our move to alphabet was motivated by our belief that revolutionary ideas drive the next big growth areas. long-term success requires a equipmentment to making bets, putting the right talent and resources behind those bets, and remaining flexible and dynamic as we pursue them. >> shares of alphabet up about 5%. lagging rivals like facebook and apple. a string of european banks are out with quarterly results this morning. ubs which is the biggest money manager in terms of financial assets. a 60% slump in third quarter net profit. citing risk aversion, lower trading volumes, and negative rates as head winds. skip those last two words. royal bank of scotland swinging to a third quarter loss. warning investors that low rates are eroding its profits.

kurdish bank also said it was weighed down by legal costs related to its settlement with u.s. authorities over the sale of mortgage backed securities. and bmt paribas beating results and that offset flat revenue from the retail banking business which was hurt by persistently low rates. all right. as we have governor pence here, i'm going to get right to it. our news maker of the morning with only ten days left to the election. joining us now governor mike pence of indiana. the republican vice presidential nominee who joins us in one piece this morning. we only have ten minutes, we want to say we're glad you're safe and everybody on the plane was safe. >> thank you. >> it made me immediately think you could be a king or whatever and if you're on a slippery runway, you're just like the rest of us. amazing. you must think of that.

>> well, we feel very thankful this morning that our pilots and the first responders at la guardia responded so professionally and so quickly. there was about ten seconds of uncertainty. we landed and you could tell they were getting on the brakes pretty strongly. we slid and when the mud came up on the windows we knew we were off the runway. but it seemed like those first responders were there before the plane stopped rolling. >> luckily you weren't thinking about previous la guardia incidents where there is water eventually. hopefully that wasn't even -- didn't enter your mind. >> didn't enter our mind. we had a peace about it. our family says the safest place in the world to be is in god's will. we couldn't feel more happy to have the privilege to run and. >> for cnbc as you can imagine, our viewers are focused on the

economy. so we're going to go through a quick list of questions there. but before we do, just overall, you were -- i know about what you and governor daniels did in indiana. people know about the success story. you were in congress. you're a governor. so you know a lot about this stuff. when you're talking to donald trump about all these issues, he's the boss. do you defer to him? does he say to you, you've done all this stuff. i defer to you? or is it somewhere in the middle. how does that work? >> well, he's the nominee. and he'll make the play calls we ha -- if we have the privilege to be president and vice president. >> what if you absolutely know better about something? >> i do think one of the reasons he tapped me was because of the success we've had in the state of indiana. in the state of indiana, we demonstrated you can live within your means, balance budgets. we're one of a handful of states with a aaa bond rating. and we've signed into law $3.5 billion into tax relief.

$2.5 billion into infrastructure investments and education. we call indiana a state that works. because we demonstrate that you can have growth even while you're making critical investments in the life of your state and maintain a sound balance sheet. we talked about that a lot. >> will that extrapolate to the nation as -- what plans do you have to get the overall economy growing out of the mud? 1% to 2%? we may get 2.5% today. that would be the greatest thing ever. how do we get back to 3% or 4%? >> level with the american people. a 1% economy is not good enough. and the american people know it. donald trump's got a plan very different from hillary clinton's plan. hillary clinton wants to raise taxes by a trillion dollars. she wants to continue this failed policy of obamacare by adding single payer and more government-based health care solutions. she wants to continue the avalanche of regulations on washington, d.c.

donald trump wants to do in part what we've done in indiana but especially what ronald reagan did in the 1980s and that is cut taxes across the board for small businesses and family farms. lower the corporate tax rate in this country to 15%. the truth of the matter is as you all know here on this program, we have one of the highest corporate tax rates in the western world. we're going to make sure america can compete with lower tax rates, going to repeal obamacare. we're going to repeal every single unconstitutional executive order that barack obama has put into effect that's stifling american jobs and growth. and we're going to have the kind of trade deals that really put the interest of the american people and the american economy first. >> given you've been a hawk on debt, on adding debt, how do you square the circle, if you will, of what the economists say. both conservative and liberal, that your plan ultimately in the

long-term will add more debt? even if it juices the economy in the short-term? >> number one, we take issue with some of those projections certainly. and look. the truth is we are never going to tackle a nearly $20 trillion national debt unless we get this economy growing again. we're never going to meet the needs of providing for the common defense, meet the infrastructure needs, or all the challenges our nation faces unless we get america's economy out of this ditch. i think what you have in donald trump is a leader that understands everything begins with growth. and getting this economy growing again through tax relief, tax reform, and getting this albatross of obamacare off the backs of the american economy has got to be job one. i mean, hillary clinton wants to tinker around -- earlier this year she said before they called it obamacare they called it hillarycare.

they want to change it around the edges -- >> hillarycare is obamacare on steroids. i don't know where you were. but i remember this diagram of what hillarycare was. >> i was campaigning in iowa yesterday. the american people know how we can meet the needs of our health insurance and our health care economy and that's through more consumer choice, free market solutions, health savings accounts, association health plans. i mean, why don't -- donald trump and i are committed to allowing the american people to buy health insurance the way we buy life insurance, the way we buy car insurance. that is across state lines not with the top-down government takeover of health care. which is what obamacare was from the beginning. >> it's like an october surprise for you. the last weeks -- gift that keeps on giving. >> i have to tell you, the projection of average increases of 25% premiums. and you look at places like arizona where it's multiples of that. it's just a hardship on working families, on small businesses.

this is something that i can tell you the crowds as i'm out campaigning, they're aware it, concerned about it. and they want to see obamacare repealed and they want us to have a free market solution to the health care needs of our economy. >> part of the economic plan is trade reform and bringing jobs that are overseas back here. how do you convince companies -- how do you make companies move their manufacturing back to the united states when in many cases they're manufacturing for an overseas consumer? how do you make sure they don't pass along price increases to the consumer? and how do you make sure the trade deals we end up with aren't new trade deals that would benefit china or other countries even more because china doesn't like tpp. china doesn't like the deal we have in place and they're not part of it. >> when i was in china last year, they were interested in being part of the tpp. i met with the vice premier over there, he made it clear they'd like to be part of that deal. donald trump made it clear we're going to get out of that deal.

we're going to look to expand trade, but we're going to do it one country at a time so we can have the accountability in those relationships that's been lacking in many of these multi-national trade agreements. but i think the answer to your question is going to be found first in let's make america a more attractive environment to grow jobs and grow businesses. >> apple would say we have to make iphones in china because that's where that skilled labor is. it doesn't exist in the united states. >> but that's part of it. donald trump and i are talking about the kind of education reform that in the state of indiana one of the things we focused on was career and technical education. let's improve the overall environment in the -- this is the most powerful economy in the history of the world and yet we've seen too many businesses

to locate overseas because of taxes, regulation, because we're not investing in the right ways. that's going to change under donald trump. and that of itself is going to bring jobs back, onshoring jobs. keep them here. >> i want to do infrastructure quickly. you've seen hillary clinton's ads. we're going to tax the rich and spend all this money that's going to do infrastructure and have all these jobs forever. donald trump was a builder. he probably has a soft spot for infrastructure. is public infrastructure tax and then have the federal government build things. is that going to be part of the trump administration? what would you tell him about that? what did you think about that in indiana? >> well, not only donald trump was a builder. donald trump is a builder. >> he wants to do infrastructure just like a democrat. right? >> i think he's more comfortable talking to bricklayers and, you know -- >> will that be productive? >> there's no question we've made a commitment to the

infrastructure but not just the standard approach. one of the things we've done in the state of indiana is public and private partnerships. martiali that's what donald trump is calling nationwide. we're going to make a real commitment to make sure that we've got the infrastructure to support a growing economy. >> i've got two quick questions for you. one, was it appropriate for donald trump to come out ahead of the announcement of at&t and time warner's merger and say he was against it even before it's gone through the review process? >> i think one of the things that's appealing about trump didth is that he speaks his mind. speaks it plainly. the american people don't have to doubt where he stands on the issues. i think speaking skepticism on that as washington, d.c. evaluates that merger was more than appropriate. but i think that's something that's very refreshing about him. when you campaign with donald trump and for donald trump, i think he's made a connection to everyday americans like no one in my life time since ronald reagan. he speaks straight from his heart, straight from his mind.

and the american people are grateful for that candor. >> the campaign has used so much of the information that's come out from wikileaks. i want to know what you thought of the appropriateness of that. i put it in the context when donald trump's tax returns came out, when some of the women came out and made some of the allegations, he said that was inappropriate to be published. he had lawyers try to sue -- or threaten to sue "the new york times." how do you think about that? >> well, i think the whole issue of unsubstantiated allegations is a separate issue. and obviously his tax returns were stolen and made public without any objection in the national media really speaks for itself. >> which could be the same case with the wikileaks. >> sure except the national media are buying into the argument from e the other side that the issue here is where they came from and not what's in the e-mails. i mean, what we're seeing in this avalanche of e-mails which some have come from freedom of

information request and some have come from various media sources. what we see is this relationship between hillary clinton as secretary of state, a family foundation that was taking millions of dollars in contributions from foreign governments and foreign millionaires and then the presence of a private server presumably to keep all of what was being said and done about that out of the reach of public disclosure. i think the american people are very, very troubled by what's becoming more clear as they call it clinton incorporated now. the pay to play politics. and it's exactly the pay to play politics that's going to end when donald trump becomes president of the united states. >> great to have you. especially right here on set with us. >> good to be with you all. thank you. when we come back, our mike jackson is going to join us for the rest of the hour. make his state on the state of the auto industry, the economy and much more. stay tuned. you're watching "squawk box" right here on cnbc.

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we could focus on bigger issues, like our passive aggressive environment. we're not passive aggressive. hey, hey, hey, there are no bad suggestions here... no matter how lame they are. well said, ann. i've always admired how you just say what's in your head, without thinking. very brave. good point ted. you're living proof that looks aren't everything. thank you. welcome. so, fedex helped simplify our e-commerce business and this is not a passive aggressive environment. i just wanted to say, you guys are doing a great job. what's that supposed to mean? fedex. helping small business simplify e-commerce.

proposition 61 is a very, very it is time for theward. pharmaceutical industry to stop the entire nation is looking at pharmacepacalifornia.ry. e... let's go forward together. thank you all very much. welcome back to "squawk box." our guest host this hour mike jackson is the ceo of autonation. it's great to see you. you're wearing your pink tie.

we're going to talk about this in a second, but we're -- put them up here. guess what's going on here? >> where's yours? >> this is how i'm doing the interview. like this for the rest of the show. >> you just put them on so they're clean. >> you want to talk earnings? if people tweet this out and retweet it, you're going give some money away. >> and with our drive pink effort across the enterprise, we have raised or donated $8 million so far to various cancer causes with the principle one being finding a cure for press cancer. >> like this shot? it's you with my feet. let's talk earnings. >> we matched the record third quarter from last year with $1.05 a share. revenue of $5.6 billion up 4%. we did have two challenges in the quarter which actually are for the entire year.

we have certain manufacturers that are using very disruptive marketing strategies that leads to multi-tier pricing. >> can you name some names, please? >> let me describe what it is first. you end up with various dealerships with very different pricing. again, this is from certain manufacturers. that initially would seem to improve sales. but over time were very corrosive. customers are very unhappy because customers of today crave fairness and transparency in price. and these strategies actually create big discrimination in pricing between various customers. and eventually lead to a decline in sales. and a decline in resale value and a decline in value of the brand. so we are struggling with those challenges. we don't think they're

sustainable. but while in the midst of it, it's very disruptive. >> for those who don't know who you're talking about, who are you talking about? >> well, the leading would be nissan. they have the most aggressive with the most disruptive activities. and if i look at nissan sales, the retail sales are down 5% to 6% in a flat market. their resale values are declining. if you don't run these programs after three years on average, cars have a resale value of 50%. and those with the disruptive practices are down 44%, 43%. so you're undermining the resale value of your existing customers. and that hurts the brand ultimately. but while we're in the midst of it, it's very difficult to manage. takata had a significant impact all this year and in the third quarter. it was about 6 cents in the quarter for us. it is a safety device that's been recalled.

that is causing serious injury if not death. and the number of evils involved is staggering. can you -- 14% of our used vehicle inventory is on sales hold during the quarter because of takata air bag. and the issue is we cannot get replacement parts. >> that's what i was going to ask about. can you speak to what's going on on the ground on this issue? i know so many people that have cars that have arguably been recalled, they call up their dealer, and they say i need to get it replaced and they're still driving on the street because they can't do anything. there is no replacement part. >> it's an extreme frustrating situation. you have two manufacturers that have done an exemplary job. to move parts to get into e the marketplace and care for customers in a proactive way. on the other end of the

spectrum, we have manufacturers where we're not even allowed to order the parts. you cannot enter an order. there's no availability yet and we'll let you know. and it's a very opaque situation we don't know what to tell customers. >> when the customer calls you, what do you tell them? >> we tell them we're waiting for instructions as to when there will be availability. sometimes some manufacturers will let us place for the customer. but the idea that autonation can call up and say i'd like to place 100,000 orders. they say you can't. and i don't think the industry on a safety device is moving fast enough to get parts into the market place. >> we're going to continue this conversation. is there anything that could be done to expedite it either from a government perspective? what would you do? >> well, there needs to be consequences for the manufacturer to not supply the parts. they either -- if they can't supply the parts, either have to

have some sort of compensation system, a loaner vehicle system. where there is a cost to the manufacturer for not having supplied the part. as long as there's no cost, they're just -- it's just moving way too slow. >> mike jackson going to be sticking around. we're going to continue wearing our pink socks for the rest of the hour. >> we have a lot more to talk about. coming up, breaking economic news. we're minutes away from the first read on third quarter gdp. we'll bring you those numbers and market reaction. "squawk" will be back. happy home in exile♪ ♪oh which way should i go? ♪home is where i want to be ♪home we love being green. so the nest learning thermostat connects to your phone, and learns what you like, to help you save energy. and that's something everyone can appreciate. ♪

breaking economic news, a first read on third quarter gdp. rick santelli, the numbers, please. please. >> this is a biggie, joe. our first peek. and it is quarter over quarter up 2.9%. that's better than expected. atlanta fed -- excuse me. atlanta gdp now at 2.1%. 2.9% is the number that follows the look last quarter at 1.4%. let's go there u the internals. on consumption side, a bit of a surprise to the downside. 2.1%. that's less than half the 4.3% from last quarter and 2.6% expected. if we look at the price index, 1.5% versus expectations. but down a bit from the 2.3%.

finally personal consumption expenditure 1.7%. 0.1% cooler than our last look. so 2.9% isn't too bad. when you look at 1.4% and then factor in 2.9% even though it's our first look, gives a more true glimpse of what we're looking at. for those of you saying it's terrific we're back on track. yes, earnings a little bit better. maybe the best quarter since 2014, but let's keep everything in perspective. if we look at the third quarter of '14 it was 5%. the third quarter of last year was 2%. so it isn't bad. we've had some better. the average still puts us below 2% but it is better than expected. but here's what's really noteworthy. a number that's better than expected should have pushed yields up. granted, it's only knee jerk, but only 1.86% is where they were. they were at 1.87%.

who out there uses percentages? who uses them in the wrong instance? bunds would be the whereon instance. continue to monitor how this filters through. pretty much doubled down. we'll see what it looks like when the full breadth opens in about an hour. back to the gang. and of course pretty wild word series action tonight, huh? >> you know what i? i just looked it up. 8:08. i get to watch it. it's a really important game so i'm looking forward to that. i saw the futures go up, and like so many times now i'm trying to figure out -- do they stay which i wish they would. then i said maybe there's something weak in the data that i didn't hear about yet and that's why they're up. because these guys are still -- whether it's machines or whatever. but they still don't want the fed to hike. maybe they just got it in their

head that it's 75% that they're going to do it in december. and maybe now they do want stronger economic activity and don't need to sell off the stock market now. >> well, you know, listen. let's be fair. earnings season, half over, is better than expected. it's the way we see it. right. but you know what? it's still better than we were expecting. i'm not saying that i think the price of equities is equitable with fundamental economic activity whether it's domestic or global. i don't think it is. and i think interest rates are going to be the great divining rod that tries to get them back in sync. why? because the sovereign market is pulling away. it's at the end of the tarmac with regard to central bank policy. the logistics of everybody positioned for what central banks have done for years. that game is over. and how all of that adjustment affects equities, that's going to be the key moving forward. >> i mean, you're in chicago. you should know about soybeans.

leisman is telling me it's soybeans again. >> let me chime in quick. exports up 10%. so when joe suggests this idea that this number is not around -- it's a snapback for sure from some of the weakness that was probably indicative of the economy by itself. but a 10% increase in exports. >> did you aempbl the three? what'd it come out to? >> the average is 1.7%. >> so we're growing -- >> probably 1.5% to 2% is the right number. but what's interesting here is goods exports contributed 1%. i don't know if that's all soybeans. one of our economists ian shephe shepherdson has suggested it's a big part of this with the outsized amount of exports of this one particular product and you can have that -- remember we multiply every quarter to quarter change. let me go through real quick, rick. and i'll get you back in here. you're right underperforming on

the consumer side. 2.1%, over performing on durable goods. we'll get to mike jackson on that in a second. business investment puddling along 1.2%. structures, equipment still down 2.7% with a big question have we finally reached the bottom of oil prices, have we seen the big decline to equipment spending done in the -- as ge suggests, done in the economy finally. government 0.5%. it was down the prior quarter. i see this stuff all evening out and you want to find the zen with all this. we were running below what we think is trend in the economy. we snap back. i wouldn't get overly excited that 3% -- by the way, rapid update going in, the average of all was 3%. we beat gdp now by 0.8%. i want to point that out. i want to make sure we all understand that. >> you were pointing out earlier that gdp normally gets revised

upward. >> it has been, yeah. >> what are the odds that this gets revised down? >> i don't know if the trend is broken, but seven quarters now we've come in below forecast. you're shaking your head. the reason they wouldn't necessarily get it wrong on a continuing basis. they come in below, it could be revised up a little bit. i don't know there's any anomalies here. that export number looks a little bit squirrely to me. >> you like reversion or regression? >> they're both the same. >> let me get this straight, steve. we get an anomaly on exports, we get excited. >> i said the opposite, rick. >> listen, you lump it all together, it's like non-gap accounting. soybean is good if you follow the soybeans. there's a lot of questions maybe with these. but in the end, it's about what's the consistent, sustainable growth rate of the u.s. economy. >> right. >> and that means you lop off anomalies in both directions. what we're left with is not

enough but it's better than we were hoping for. that's the way i look at it. >> i agree. you step back and look at it. less than 2% growth. steve, if i said to you i'm going to give the u.s. economy free growth and gasoline, you'd say it's going to be 4%. here we are with free growth in u.s. economy and -- >> mike, you sell trucks into parts of the economy. your business is sensitive to construction. you see some of that. and also i'm guessing a little bit of the oil and gas. what are you seeing there? >> what i see -- >> is it bottomed out? >> i see plateaued to modest growth. if you're talking the energy states, oklahoma, texas, they're struggling. >> still struggling. no sign of a bottom there? >> maybe a bottom. but if you look at year over year comparisons, the rate of decline has stopped. but it's still a -- >> how about construction? >> construction is going along okay. everything's okay. but to say the u.s. economy is growing as it should, i mean,

the shackles are on this thing. we don't have the right trade deals. regulation is out of control. the tax system is broken. the list goes on and on. this economy should be grower faster than less than 2%. >> speaking of oil and gas quickly, quickly want to tell you exxon reported earlier this morning. earning 68 cents a share handily beating estimates that called for 37 cents a share. chevron says the latest results show the first two quarters of the year. chevron shares up about 1%. exxon shares had been low ir by a third of a percent. we will dig into into those numbers. yeah. little bit later on. when we return, we're going to talk about ge and discuss things with baker hughes and a partnership. when we return here on "squawk box." the greatest population shift in human history is happening before our eyes.

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general electric is in discussion with baker hughes on potential partnerships joining us steven wanoker. so this is a deal that -- does

ge wish they hadn't bought so much gas or is it strategic for both companies? >> to be clear, what they're talking about are partnerships right now. they've ruled out an outright sale. but this is a need for them defensively -- they're already in the business, right? so given they're already in the business, the question is how do they position against schlumberger and others pursuing these collaborative partnerships. they don't have the full spectrum and they need to if they're going to create this digital oil field. if you put them together, they're much stronger and can be more defensive. >> timing make sense? >> given where we are in the cycle, isn't this the best time to enter these discussions? wait until things are at their most highest paying points, right? and you're in a stronger position in ge's case, this is now a $13 billion revenue

business. >> they're getting out though. let's say they buy and combine the entity, that's not what's being talked about? >> that's not what i'm talking about. >> to me it made sense you bought up a this other stuff from 2007 on and paid top dollar. average it down now with everything so cheap. but it didn't look like -- >> no. they're not con ten plating a purchase of the business. >> what does it look like in your mind? >> dm my mind, a large partnership that allows them to get better deep water access. in a digitized way. >> not spinning it off? >> it could be. that's one of the options. i could see them doing it down the road. but they're not going to do that in the down part of the market. negotiate the partnership today if you're going to spin it.

as we talked about before. right. so i think they're going to probably get the partnership established. and down the road maybe consider that as an option. >> but this is not trying -- this is not focused on -- >> look. i think trien is a great focus for ge. i think that can only help. i know there are other activists in baker hughes. as long as the board is using that input in the right way for the long-term value of the company. then it's a good thing. >> what's your rating? >> market perform. >> you have a price on it? >> now since the stock's retreated about 13%. >> you might go back to a market of outperform. >> that would depend on their performance and outlook. so we need a little bit of

reinvigorati reinvigoration. >> good yields. >> thank you, sir. great to see you. when we come back, autonation changing the way it sells cars. you're watching "squawk box" on cnbc.

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♪ up next we'll head down to the new york stock exchange. jim cramer will join us with his look on today's top stories. stay tuned. "squawk box" will be right back.

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let's get down to the new york stock exchange. jim cramer joins us now. lots happened since amazon, but i'm still looking at it and wondering are we back to saying we don't trust them for spending too much money? i think they got -- everybody just says it's fine, jeff, do what you got to do, right? >> i think they've earned some

respect here. i think if people want to sell it down 35, 30 points, be my guest. usually when you're down much, get another weak opening on monday, maybe that's the chance to buy it. the idea they did anything other than say they did what they typically do is spend more the opportunity's great, everybody runs from it, that's when historically you've been able to buy it. they create these buying opportunities for you, everybody gets fearful and then they deliver on their spend. i just think, let's give them the benefit of the doubt. they're smart guys. >> how about ge baker hughes, jim? how does it finally end up looking? who is it good for? both of them? >> if ge did buy high and offload low, that would be just terrible. >> yeah. >> that's what it looks like. i mean, i think the dynamics got to change pretty soon or looks like obviously baker hughes -- listen, ge will be sensitive about what i'm about to say but looks like baker hughes got the better end of the deal. this is a level to be the buyer, not the seller. >> it's friday.

margaritas all around. >> yes, the aldama, a spicy margarita i'm going to make tonight. >> whoa. message me maybe tell me what makes it spicy. i'm willing to try it. thank you. >> all right. thank you. >> and i'll try it until i get it right. and coming up on "halftime report," don't miss former yankees first baseman mark teixeira. he'll be live at 12:30 eastern. stay tuned. "squawk box" will be right back. surprise!!!!! we heard you got a job as a developer! its official, i work for ge!!

what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. so you're going to work on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is? there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here. fidelity -- where smarter investors will always be. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

autonation says it has a new retail brand strategy. one price negotiation free and transparent pricing on all pre-owned vehicles and ceo mike jackson is our guest host. not only that, but i mean, you have a lot to tell us, mike. >> so if i look at our company today, we have largest in america premium luxury business. almost 100 franchises from coast to coast. and today we announced six additional franchises. then we have our volume franchise business, 280 franchises. and we branded all those dealerships autonation back in 2013 to build a digital capability autonation express. on those building blocks the free standing preowned and

customer care centers branded autonation usa. so we have tremendous success with customers from new car sales through year six. now we're going to expand our business into year six through ten. so we'll have a compelling value story and a compelling experience for our customers in these autonation usa centers. and in order to do that we've also launched autonation precision parts, branded parts, autonation accessories, autonation collision centers, autonation auctions to support this bigger preowned platform. and so if i look at the business, we'll have our franchise luxury business, our franchise volume business, and we're going to have a whole new business autonation usa. >> so you know who they talk about this deal being accretive or dilutive, is this dilutive initially? >> brand extensions is one of the most compelling -- >> but it costs money to start, doesn't it? >> but i've already paid to

launch the brand. >> right. >> and have it recognized by over 80% of the marketplace. >> i'd say you've already got that. >> i've already launched and built autonation ek press. now i'm reaping the opportunities for what i've already done. because to have the degree of confidence that these stores will be successful, to have a brand out of the box, have digital muscle out of the box gives me a high degree of confidence. so those are costs i've already paid. in the initial start-up the next few quarters of course as we're building the first store, we're going to do five stores next year, another 20 sites in development, but within the second year those stores will be profitable. and a brand extensions that we do, parts, accessories, collisions, are immediately beneficial to the company because we've already paid -- we've already invested in the brand. and the brand's only going to get stronger from this point. >> so the used car business as well, that's something -- >> well, if i look at the marketplace, the new vehicle market retail is around $14 million a year. it is cyclical. however, the preowned business

is $40 million a year. >> preowned, i said used. >> preowned is $40 million a year. so it's a much bigger marketplace. and we talked about earlier the customer very much desires a much fair more transparent experience. so we're one pricing the entire preowned business. >> look out over the next five, ten years, people talk about the remarkable transformation of technology that's going to be put inside of these vehicles. and what does that do to the preowned market, which is to say people may today say, you know, a car if i bought off the lot today may be similar to a car i bought two or three years ago, maybe the some of the safety features are a little different, but five, ten years from now talk about autopilot and tesla, i know you have your own views, but as that change comes how does that change the preowned business? >> there's no question that innovation is one of the main attractions to the new vehicle business. we again will remain with a big position in the new vehicle business. that innovation comes at a price. the most expensive innovation

comes in luxury. we have a big business there. and then eventually it makes it into the mass volume market. but there's a cost for it. >> you don't think there's going to be some major tipping point? >> no. there's a value story within the preowned business. and there's 260 million vehicles already on the road that people who want transportation with a value component is very compelling. and we'll will larger than the new vehicle business. and so to have a big presence in that marketplace with a strong brand that gives the consumer an experience that's much -- >> can we get a shot of that? look at that great logo you got there. so you're going to be like mobile. so you're not just auto dealers, auto parts, batteries, collision centers. does wayne know -- wayne must be psyched? >> wayne's thrilled. i'm a humble car salesman from new jersey. >> right. >> i sell cars. but what is exciting is that --

you know, the hardest thing to do in business is open a sustainable competitive advantage. >> once you do that you extend it. >> any brand capabilities competitors don't have, we've done that. and now we're extending and seizing the opportunities that come with it. we are much more in control of our destiny because we have a brand. >> we need to thank you. we need to go. and most importantly we need to thank you for supporting breast cancer awareness and research. >> i appreciate. >> i put up my socks last time. >> more feet on the desk. >> for a good cost. >> join us on monday. a very good cause. "squawk on the street" begins right now. ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. a big morning as we get gdp for the third quarter, 2.9, that's the fastest in two years, and above expectations. we'll dig into tha