good morning welcome to "squawk box" on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. it's time for the global markets report check out the u.s. futures things are flat. but this comes just after the dow set a new record level yesterday. you can check it out right now the s&p futures are down by just under 2 points. dow futures barely positive. the nasdaq down by 5 points. in asia, the nikkei closed at another high the highest level we've seen in about 21 years up 57 points after making those gains the day before now sitting at 20,881. hang seng was down by a third of a percentage point the shanghai was up by just under 0.2% in europe, you'll see that in the early trading that's already underway, things are mixed the dax is relatively flat

the cac and ftse are weaker. but spain has picked up, 1.2% gains there after the catalonians did not go ahead and declare independence let's look at what's happening with crude oil prices. yesterday another gain in crude oil prices this morning up 41 cents now talking about wti above $51, 51.33. >> a couple other stories we're watching china urging the united states to halt the threats of violence against north korea. china's communist party own newspaper saying the war on the korean peninsula would be craftic and dialogue remains the best option. concluding trump's strategy could backfire bigley. >> they used bigley? >> they used bigley. yesterday the u.s. flew two bombers over the korean peninsula in a show of force

fireeye reports that hackers linked to north korea north korea recently targeted electric power companies using fake invitations to a fund-raiser to target victims on today's wall street agenda minutes from the fomc meeting come out at 2:00 p.m. eastern time we will hear from charles evans, bill dudley and san francisco fed president john williams. on the earnings front, blackrock and delta air lines both report results before the open we'll bring you an exclusive interview with blackrock's ceo, larry fink at 6:30 eastern time. delta's ceo, ed bastian will be at 7:00 p.m. >> probably in english probably wrote an english version. >> i assume. >> you can't translate bigley. >> would you want to do a translation? >> back to chinese

>> right >> i don't think there's a way that there could be -- it's big league is what it's really saying >> maybe it's part of the lexicon. >> i bet they wrote it -- they had to write it in english otherwise there's no way to translate it nfl team owners will consider requiring players to stand for the national anthem. they'll discuss the issue at the fall meeting which begins next tuesday in new york. yesterday on twitter president trump questioned tax breaks for the nfl and sarah sanders clarified yesterday that federal tax doesn't apply as we talked about here, but said the nfl receives tax subsidies on a variety of different levels. i read -- i was reading in the "journal," the actual story. it's on page a3. the way they said it i thought was interesting. >> the nfl -- goodell said he would like to see players stand.

>> it's just the way they -- the decision to consider an adjustment reflects the mounting concerns among owners that the controversy could have long-term financial implications >> yes >> yes >> that's exactly -- that's the only thing these guys respond to high and mighty, this and that everything else. the minute they see the ratings, they see things drop, they see the fan backlash -- >> get us out of this. >> it was funny the way the "journal" put it that might be a factor we're continuing to follow a developing story out of northern california at least 17 people are dead, thousands of structures have been destroyed as fast-moving wildfires ripped through the heart of california's wine country. more than 20,000 people have fled their homes authorities hope for cooler weather and lighter winds that would help firefighters. we have a live report from napa later. the white house just

releasing details about a speech president trump will give tonight in harrisburg, pennsylvania the topic, taxes ylan mui has the details good morning >> president trump will debut a new argument for tax reform during that speech in pennsylvania tonight he will say the typical american household will get a $4,000 pay raise in f. f we move from a wod wild to a territorial tax system and repate yacht friate foreigns kevin hassett has already done a lot of work in this area and the administration may release a report today the number gets to the heart of the administration's case for tax reform that cutting the rate will lead to more jobs and higher wages for middle class workers. president trump will speak in front of about 1,000 workers in pennsylvania today many will be truckers. if you remember, trump turned

tow truckers for help with the healthcare bill back in march, that's when he climbed into a mac truck on the south lawn. this time he will be talking about trucking as the bellwether for the american economy it seems like a strange audience for a pitch on the territorial tax system, but white house officials say this is the point. the new system will lead to investment which leads to more manufacturing, which they say means more goods tow truck across the country back over to you guys. a quick programming note, the chairman of president trump's council of economic advisers, kevin hassett will join us at 7:40 a.m. eastern time >> he's been with us for years from ai, now coming to us from the cea. >> we have to show him that -- >> the new picture >> yeah. cea. that's big look at that that's like marquee billing there. he will like that.

he does already. he can see that. >> he's smiling. >> big smile let's talk about another issue we've been focused on. that's the fourth round of nafta talks. they begin today in washington sources tell as soon as scnbc t. will require stricter standards for goods to be called duty free, those include content of origin requirements as much as 785% auothe origins like mexico canada and the u.s the white house says that president trump asked congress for a nearly $5 billion loan to try to help puerto rico in the aftermath of maria an administration official says the loan would include a 1$150 million advance to help with

payrolls and pension payments. but this money would not pay down puerto rico's debt. the white house and congress have so far focused funding efforts on immediate disaster relief the house is expected to consider a request this week for an additional $13 billion in funds for victims in texas, florida and puerto rico. alibaba making a $15 billio investment in research and investment the company plans to launch eight centers in china, israel, russia, singapore and the u.s. researchers will work on ai, quantum computing and fintech. shares of kobe steel falling again today. a unit of the company was found to be falsifying data. kobe steel eventually admitted that it falsified records to show aluminum and copper products met customer specifications that stock is down more than 30% just this week alone down 17%, almost 18% in the premarket today. shares of china's great wall motor rising 15% in hong kong.

reuters reporting bmw is exploring a joint venture with the company and may open an assembly plant in eastern china. let's get back to the broader markets. joining us is jeff knight, global head of investment solutions and co-head of global asset allocation at columbia thread needle investment which has 4$473 billion under management and chris cordero from regent atlantic i see there's a lot of financial institutions, talking about in the media that need to churn out a lot of information the latest sti efest stuff is ts crazy. we have not seen a stock market run like this in years and years. some of them say it's overheated others seem to think that there are reasons that this is going to continue. do you guys disagree on this

will it continue or is it overheated >> history shows that periods like there tend to persist more than reverse and reveal a sort of strength and stability in the real world. that's what i think we have here >> it's 24% since the election every morning we come in here, you know there used to be days where the futures would be done 100. we know about september, one of the least volatile months in years. is there a -- is there buying support underneath is it the fed? is it really the notion that less regulation and some legislative changes are a positive >> if you think about bull markets, bull markets don't die of old age there's something that has to happen to them they die because interest rates are rising precipitously high. they die because of irrational exuberance the fact that we're wondering about this, that means we're not

irrationally exuberant we're looking at this, does the economics support it you have economic growth low inflation, low interest rates. if you looked at the numbers without looking at the past eight years you would say there's room for more. >> do you see complacency at this point that's why you get a 5% correction people are too sure. we have not even needed that, because people have not been so sure that the market will continue there's been a skepticism all the way. we have not even needed a shakeout >> not the same kind of complacency in past highs. we are late in the game. if you think about bull markets, what tends to correlate with the lows and the highs, the bull market starts when things are terrible, unemployment is high, credit spreads are wide, valuation is cheap all of those things have traveled a long way. we're at close to the limits of how far those things can move. it's reasonable to con ttemplate

the end game of the bull market. nothing disrupts it as we sit here today >> if we had to guess on how this would -- how this would end, in terms of when and in terms of how, can you give me either >> i think when, when you start seeing corporate earnings declining. >> what would cause that >> the greater economy starting to decline i think -- you'll see when consumers start to be spending less, when earnings start trailing off as we enter into this earnings season, all the expect takes are that we'll have another good quarter. >> would inflation and if profit margins start to get squeezed from either input costs or wages, would that be the peak of profit nors sis for this cycle >> would be a classic. >> that the way it works >> that's the way it tends to work >> that's why the stock market won't go down. i think tends with a policy

mistake. whether that's central bank policy mistake or too much of an urgency to normalize policy, when maybe normal is not the same -- >> banker's policy mistake, not some -- >> could come from anywhere. lots of avenues for policy mistake. >> 50/50 that the central bank mistake would be tightening too quickly or staying easy for too long >> interest rates are a big part where else will you go you going to go to the ten-year treasury >> staying too long at zero and they're already behind the curve? or krugman -- >> krugman said he would not be raising rates. >> many people are saying that mark grant a lot of people are saying that. even some people who wanted to raise it two years ago are saying that. >> depends on whether you're paying attention to output gaps or attention to -- losing my train of thought, paying attention to financial conditions if you're paying attention to output gaps, you think about

tightening now what do you mean, n >> what do you mean output gaps? >> unemployment is very low. >> so not being able to find people >> you say now we have to be careful because we'll get inflation for the reasons you suggested, wages will take a bigger share >> but what about the financial conditions th what is so frightening right now? >> the reason not to tight season if you're worried about debt and leverage and disrupting an equilibrium >> disrupting an equilibrium that you helped create as a central banker by pushing money into this. >> right >> and the rest of the world is easing you will cause the dollar to strengthen >> we were the first ones to go into qe, which means we have to be the first ones to come out. would expect we would be doing this while the rest of the world is behind. >> we can lead the way out

if the rest of the world is still easing t will cause the dollar to get really strong, then we get completely unco uncompetiti uncompetitive. >> so we are stuck we can't get out of this -- >> you make it sound bad let's keep drifting along. >> we thought we would get out of there by letting the balance sheet roll off we have not done that rapidly. we don't have plans to do that rapidly. they're only talking about minor adjustments, then you have the whole issue of trying to get rates back to a normalization level. we don't even think normal is 5%, 6% anymore normal is 3% >> it's a struggle to get there. when you look at how to end the bull market, there's nowhere else for investors to go with their money. stle to sthey have to stay in s. >> what is it called there's an acronym >> t.i.n.a., there is no alternative. >> who made that up? >> jason

>> trennert. >> he said he inhavenvented thc salad. >> no, he does not. >> he said he used the mother of all as the -- >> he was the first person i heard use t.i.n.a. >> really? >> yes >> i think cramer was the first to say f.a.n.g >> maybe >> can you confirm that, sorkin? >> i think that may be true. >> i think that may be true. i don't know about trennert. thank you. thank you. >> very quickly, just looking at blackrock's numbers crossing here it looks like they came in with earnings per share of $5.78 a share. street's expectations was for 5.58 depending on which source you're looking at, though 5.56 is what thompson is quoting. in either case, it's a big beat. the adjusted earnings are 5.92 that is a bigger beat.

they are coming in with revenue of 3.23 billion versus 3$3.1 billions that was expected in ref knrevenue numbers it looks like that stock is is trading up by 1.51 already. we have larry fink joining us to be talking more about the results in just about 13 minutes time when we come back -- >> yeah. >> yeah. investment giant blackrock out with those earnings. >> we will talk to larry fink. we will talk to larry fink about those issues and more. >> is he a soccer fan? >> don't know. we'll hear where he sees the markets moving. at 7:00, we expect results from delta ed bastian will be joining us for an exclusive interview on "squawk box. stick around we'll be right back.

not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan.

throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. just, uh one second voice guy. [ bloop ] huh? hey? i paused it. bam, family time. so how is everyone? find your awesome with xfinity xfi and change the way you wifi. welcome back facebook dispatching coo sheryl sandberg to washington this week the social media network trying to contain the political fallout from news that russian agents

used facebook to spread disinformation during the elections. sandberg will reportedly meet with members of congress her visit comes weeks before the house and senate holds hearings with facebook and other tech companies about russia's role in the 2016 election. "time" magazine cutting circulation. the magazine industry has been struggling the company will reduce weekly circulation of the flagship magazine "time" by one-third to 2 million properties it will reduce print frequency of seven titles. shares of time inc are down more than 27% year-to-date. >> that's what they send out to be bought in stores? >> to be bought in stores? >> or to subscriptions >> why -- >> you won't reduce subscriptions. >> if people subscribe, you send it out that's my question you wouldn't reduce that that might be the stuff you're not sure you will sell >> they will reduce -- >> it's the number of issues

they're cutting the number of issues from 38 to 27 which is not just in store >> my understanding was that they were cutting the number of issues, but they were separately also cutting the physical number of copies they will be printing in that there are stores that are not selling enough copies. >> for "sports illustrated" in particular, they're cutting the titles from 38 to 27 it will basically be a biweekly with one extra magazine that comes into the play. >> they were -- >> it was coming out 38 times a year >> okay. >> i did hear the number for "sports illustrated.." >> "time" is weekly. >> "time" with weekly. >> do you ever see when they try to return the magazines? that's the problem it's effectively consignment business sometimes you see people, they rip the covers off, that's how

they get the money back. they give that back to get the -- if they want the money back to say we didn't sell this. this is how we prove we have not sold this copy oftentimes now, i've seen, even the hudson news at the airport, you're seeing them put them back into boxes to get rid of them. >> revenue down 9% from the beginning part of this year. >> i feel bad for the trees, too. >> that got killed for naught? >> no reason at all. >> it's true let's talk about some fake news right now dow jones sending readers haywire yesterday after the news wire falsely reported that google was going to buy apple for $9 billion that was followed up with more wires that read google says yea. google gets 9 apple shares for each goggle share. google will take over apple's headquarters dow jones apologized saying the wires were sent out in a technical error. >> this doesn't make sense

>> unless somebody was practicing with somebody on the news feed, so they came up with the most ridiculous -- having worked at dow jones, seeing how sausage gets made, when you play with some proto toptypeprototyps >> microsoft takes over the world, or -- in the old days, we were trying to put web stuff together >> same thing. when we started wsj.com, you were playing around with these things assuming nobody would see them >> i would believe it if i saw amazon takes over the world. >> if that was the headline? >> would you know that's not true >> the deal was going to close tomorrow then what? >> i would still want to check >> google says yea >> i was talking with a trader ai listens to our show, they take it and they -- people try to trade off of it. >> alexa stop doing that >> that's scary. because --

>> amazon takes over the world >> the opposite of what we're recommending that's what i'm worried about. mm-h mm-hmm. president trump is awake he's tweeting. stock market has increased by 5$5.2 trillion since the electin on november 8th. a 25% increase lowest unemployment in 16 years. we'll bring you the update to this tweet in a moment >> this could be like family feud we should have five things -- >> that could be fothe follow up -- >> top five answers. >> last time we totally missed what it was. and it was big remember >> no. >> there was something dot dot dot, then later we ended the show >> yeah. >> at 9:00 it came out. >> it was big news we had no idea let's not. ♪ coming up, blackrock

quarterly results are out. chairman and ceo larry fink will join us for an exclusive interview. before we head to break, here's yesterday's s&p 500 winners and losers ♪

( ♪ ) whoo! ( ♪ ) woman: class, let's turn to page 136, recessive traits skip generations. ( ♪ ) molly: i reprogrammed the robots to do the inspection. it's running much faster now. see? it's amazing, molly. thank you. ( ♪ )

and the wolf huffed like you do sometimes, grandpa? well, when you have copd, it can be hard to breathe. it can be hard to get air out, which can make it hard to get air in. so i talked to my doctor. she said... symbicort could help you breathe better, starting within 5 minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. symbicort helps provide significant improvement of your lung function. symbicort is for copd, including chronic bronchitis and emphysema. it should not be taken more than twice a day. symbicort contains formoterol. medicines like formoterol increase the risk of death from asthma problems. symbicort may increase your risk of lung infections, osteoporosis, and some eye problems.

you should tell your doctor if you have a heart condition or high blood pressure before taking it. symbicort could mean a day with better breathing. watch out, piggies! (child giggles) symbicort. breathe better starting within 5 minutes. get symbicort free for up to one year. visit saveonsymbicort.com today to learn more. welcome back

you're watching "squawk box," live from the nasdaq market site in times square. good morning u.s. equity futures at this hour, a bit mixed. unlike -- now positive when i first looked, there was some red the dow has turned positive up three points s&p down less than two points. i would say we have no idea. the dollar was weaker again. back 118 versus the euro i read that the ten-year is back down testing some support, 2.32 or something larry fink is here i won't talk anything interest rate related, because we have someone who knows so much more than i do. i will stop right now. larry. we'll get to you in a second

>> thank you >> we do have -- we should mention we have the second part of the tweet there was an ellipse before the commercial break the top stock market has increased by 5$5.2 trillion sinc the election on november 8t. he says a 25% increase, lowest unemployment in 16 years, and the new part, if congress gives us the massive tax cuts and reform i'm asking for those numbers will growby leaps and bounds, #maga. i was going to guess there was going to be a #maga. >> we figured out the last time and our twitter people figured out, they were watching, he was talking about north korea and then the next one was about a transgender ban. that came out. that's what we were talking about we had no idea no one could have seen that one obviously. i don't know we might have gotten this one if we had thought about it. >> if we thought

>> yeah. >> back to business. blackrock earnings just out. the numbers are $5.92 a share, better than the $5.56 the street was expecting. 3.2 billion in revenue, also above expectations joining us is blackrock ceo larry fink thanks for being here. >> great to be here. >> let's talk about the numbers, better than the street was expecting. is that a sign of strength in the markets or strength you versus your competitors? >> we'll find out about our competitors in the next few weeks. we're generally ten days two weeks earlier than competitors >> you know if you're taking market share from people >> we just closed quite close to 6 trillion in assets >> up from 5.7 to 6 trillion >> 5.98 trillion >> that tells you something. >> up 17% year over year in

terms of assets. we're seeing a change in market sentiment. we're seeing continual growth in china above trend line growth in japan. when you have the second and third largest economy doing better than anticipated, alongside greater political stability in europe, aggressive central bank, strength in the banks, you have a europe growing at 2.5%. you're seeing the economy doing so much better >> the global economy. >> the global economy. as a result we're seeing clients looking to put more money to work one of the greatest problems we still have in the world is how much money is sitting on the sideline even in places like japan, there's $5 trillion of cash earning negative return. germany, 72% of the savings is in a bank account. we're seeing some of that unlocked people putting that money to work companies are being squeezed,

putting money to work. we're seeing more investors putting money to work. we had $96 billion in growth over the quarter a high percentage was still in fixed income we're seeing growth in cash to multi asset to equities and fixed. >> one more tweet from the president. it says it would be really nice if the fake news media would report the virtually unprecedented stock market growth since the election. we need tax cuts i guess that's okay. at the top of the show we were talking about that i mentioned -- >> larry was talking about this as this tweet came out >> we are not the fake news media. >> guess not >> he's not talking about us, because i did talk about the unprecedented -- we talked about it at the top of the show. november 8th until now, 25% a

quarter of the stock market evaluations. unbelievable really is unprecedented. we hope it's trickling down. most -- a lot of people who own assets have done well. the fed for whatever reason. but the -- i don't think anyone -- people that look at that, you know, maybe it doesn't redistribute itself as much as you would want, but a lot of people in middle america have pension plans. you know, we would rather 25% up than 25% down. >> absolutely. >> ceos behavior change when they see stock prices up they invest more and hire more you're seeing that obviously in employment numbers and all that one of the big changes between a rise in the equity market of 20 years ago and today, much has to do with so many individuals

don't have a defined benefit plan but defined contribution. we're not addressing most of that money is overweighted in bonds. so they're not participating like they did 20 years ago as i said, you see this in japan. you see this in germany and the uk and the united states this is the singularly biggest problem we have in the world the fear of the future because the under performing retirement plans. more importantly in the united state states >> where do you stand on evaluations broadly? especially the past couple of months, a lot of the increase has not been so much -- earnings has been part of it, but a serious multiple expansion is taking place >> i wouldn't call it serious. i would say the u.s. -- >> meaningful. >> maybe three multiple points meaningful so the u.s. multiples are higher

than any other part of the world. we are seeing a surge in interest and emerging markets in asia and europe. if you're doing an asset allocation over an intermediate cycle, that might be an allocation the united states deserves a premium. i actually believe the u.s. deserves a premium to the other markets. i do believe europe and asia represent more a higher valuation today. i would also say we need to see like we saw in the second quarter. the second quarter i was nervous into the earnings. earnings were good i would say the same thing today. earnings, if we see earnings validate the high stock prices, then we will continue with the market rally my greatest fear, we have not

got into it, joe wanted to talk about interest rates a bit my greatest fear, i'm not giving a high probability, but there's certainty -- certainly some probability of this, that we have a very aggressive federal reserve. let's -- right now people are assuming another tightening this year, another three next year. could we see an inverted yield curve late next year, early 2019. >> signaling recession >> the inverted yield curve is mainly because demand and intermediate long assets the insurance companies are sitting with liabilities longer than assets. the underinvesting in pension funds. i did a world tour, i'm going on another one starting next week demand for long assets is unprecedented. we talk about the growth in private equity, real estate

investing, people are looking for investments. this is where the federal reserve has to pay attention the demand is high as the federal reserve begins its process of unwinding qe, the preponderance of assets are five years or short erer could we see a modest reversal of qe continue demand in the long end, could we see this yield curve flattening to possibly inverting that is not a good scenario long-term for equities >> which means you're probably very concerned about who the next fed chairman is once janet yellen's term is up. >> no. economies get better, we should pay less attention to central banks. that's good. over my career central bank behaviors were in the background

they were not forefront. >> the last decade >> they're prominent the central banks of the world were the organizations that restabilized our world economy i would like to be back to a world where the central banks are back in the background doing their job. >> you got me thinking i always thought the inverted yield curve was a chicken/egg scenario i thought it came from weakening economies causing inverted yield curve. it's a sign recession could be coming you said the inverted yield curve could come first, which could then bring on a recession. that's bizarre that makes me think at the inverse of how the fed usually causes recession they go up too quickly they could cause recession by staying low for too long >> the federal reserve focuses on the short end >> this could be a policy mistake of the fed >> she keeps that yield curve

tethered down. you don't see that -- >> that's the problem with trying to unwind this. >> it's dealing with investor psyc psychology, right? >> the engineering of this is not easy >> we have never done it before. we assume we would be fine you always wanted to raise rates. >> i believe it's a tax saver. i did not say i'm against the policy changes all i'm saying, as we raise interest rates and normalize them, please pay attention to the demand on the immediate and long end we want to avoid an inverted yield curve. not a high probability but something i'm worried about. >> we'll continue this conversation with larry many a moment we'll take a quick break still to come, delta air lines expected to report at the top of the hour.

we have the ceo ed bastian will join us. and donald trump to talk tax reform tonight we will talk to kevin hassert. wee ck'rba in a moment with larry fink that's why i rent from national. where i get the control to choose any car in the aisle i want, not some car they choose for me. which makes me one smooth operator. ah! still a little tender. (vo) go national. go like a pro. ♪fly ♪e to the moon ♪and let me play amon--

(ding) (bell mnemonic) pthey don't invest inn stalternativesds. or municipal strategies. what people really invest in is what they hope to get out of life. but helping them get there means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more.

. the united states won't be playing in the world cup next year the americans were eliminated in their final qualifying match last night the men's national team lost 2-1, all they needed was a tie to qualify for the world cup it's the first time the u.s. will miss the world cup in over 30 years i didn't realize it's really good it's not nbc, it's a blow for fox. the network outbid espn -- i was worried, i didn't know who was televising it. any way. the network outbid espn for the english broadcast rights paying 4$400 million for the 2018 and 2022 cups. with the u.s. eliminated for 2018, the broadcast rights are likely significantly less

valuable schadenfreude is a horrible thing. coming up, more with larry fink here's a quick check of what's happening in the european markets. stay with me, mr. parker. when a critical patient is far from the hospital, the hospital must come to the patient. stay with me, mr. parker. the at&t network is helping first responders connect with medical teams in near real time... stay with me, mr. parker. ...saving time when it matters most. stay with me, mrs. parker. that's the power of and. something we all think about as we head into retirement.

it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife. looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

ronoh really?g's going on at schwab. thank you clients? well jd power did just rank them

highest in investor satisfaction with full service brokerage firms... again. and online equity trades are only $4.95... i mean you can't have low cost and be full service. it's impossible. it's like having your cake and eating it too. ask your broker if they offer award-winning full service and low costs. how am i going to explain this? if you don't like their answer, ask again at schwab. schwab, a modern approach to wealth management.

♪ >> black rock -- we're talking off camera i actually was sort of fascinated in hearing that financial firms to some extent can control their own destiny more than you think. it's not just the whims of the markets that you need to deal where. you would think the low interest rate environment is a real problem for banks or for other companies, but you pointed out you were able to raise margins, and it's evident in the latest report, based on controlling what you can control, and that's the expense side of things, right? tell us what you -- >> it was a combination of having real growth in our aum and having real growth in

revenues we're doing that mainly through technology. it's becoming one of the world leaders in technology. >> who did that? >> totally in house. >> what did you do, hire people that knows how to write code >> when we started the firm, two out of the original eight people were code writers, and so that was all foundation of the firm to start that platform >> i just wanted to ask you in the context of what's -- because computers are now doing a lot of this work, how do you think about active versus passive, and i wanted to read you something because we were talking about the peltz situation and just sort of how you guys are having to vote or not vote on some of these things >> right >> and what it means paul singer just gave a speech at grant's conference.

>> okay. >> and was actually praise-worthy, i think -- he didn't use blackstone in particular, but of the idea that you guys are now trying to do more with corporate governance he said on a company-specific level where investing is done with hundreds and even thousands of companies to be evaluated, is simply impossible for these groups to do a comprehensive look of all or even most of the situations that zdeserve scrutiny i wanted to get your sense of how this was all supposed to work given the sort of large land that you are living in. >> let me just address the first point you raise, and then i'll get into the second point. the first point was we're a big believer in active management. we actually believe active management is going to continue this most recent trend of outperformance we actually believe as more money moves into index, you're going to have greater opportunities than active management that's a foundational presence, and that's why we're active.

we have the largest team in the world of investing the team has close to 40 people now. now, you're right in saying how can 40 people call through all financial statements, see all the companies? once again, it is -- a lot of it is technology. we do have technology that is assisting us in the evaluation of companies, their metrics, and performance, and we do encourage throughout the year to have dialogue with clients. we cannot wait until proxy season we -- we are asking all the clients, all the firm that is we invest money in, please come talk to us throughout the year come talk to us before our proxy. if you have something that is going to be unusual, talk to us now. we're fully engaged. there's -- i would say every day there's four or five leaders of companies or boards of companies coming and visiting our people now, that doesn't add up to the thousands of companies we invest

in, but i think we do as credible a job as anybody, better than any hedge fund, better than any other firm, and this is something that i have spoken about, i write letters about. we are very committed on corporate stewardship, and we believe the responsibility is greater for passive management than active management because in active management if you don't like a company, you can sell it. >> right >> in a passive, i need to own it i can't sell the asset -- or the company. therefore, my only power i have is my power of the vote. >> you are the biggest shareholder in so many of these companies. >> and so we take a huge responsibility in trying to navigate this, and sometimes it's very difficult. sometimes the vote is a very razor thin differential between saying yes or no for a company, but we are commended repeatedly

by companies about the engagement and more and more companies are looking to us in their engagement throughout the year >> is your vote on procter & gamble going to become public? >> i don't -- normally we don't publicize how we vote, so it's not something that we do as a -- >> can you whisper to us >> can we what >> can you whisper it? >> i could whisper it to you, but not on air >> but if you whisper on air, maybe they won't hear. >> i don't know about that >> okay. that was -- >> connie chung. >> i think the larger question in sort of the passive-active debate is can 40 people really be able to -- not oversee, but actually be as good as having real active managerswho are involved in all these corporate -- these corporate governance issues across the board, right that's the fundamental question. >> well, i think there's a bigger fundamental question. >> should we be listening to the paul singers of the world, or should we be listening --

>> we are not -- we're active. we're not going to discuss openly and publicly about our opinions that's the role of an activist >> we got to go. just in a real quick question, would you be okay with some dynamic scoring on this tax plan >> sensible dynamic scoring is important. >> okay. >> but my only issue related to how we look at the tax reform -- first of all, we need tax reform we need to modernize it. we need to make it -- >> some dynamics >> i don't want this short-term stuff, but the issue -- we have a $20 trillion -- >> it's going to be $25 trillion, according to the cbo my biggest worry is -- >> got to go >> forget about my biggest worry. my biggest worry is china and japan own 22% of our debt. foreigners own 41% of our treasury dead. we cannot be that self-reliant on funding our deficits, and if

we -- i would just say demographically, china and japan will be pulling back their investments enough over time >> thank you >> we need to be there thank you so much. we appreciate it we'll be right back. we'll have delta's earnings. hey, i've got the trend analysis. hey.

hi. hi. you guys going to the company picnic this weekend? picnics are delightful. oh, wish we could. but we're stuck here catching up on claims. but we just compared historical claims to coverages. but we have those new audits. my natural language api can help us score those by noon. great. see you guys there. we would not miss it. watson, you gotta learn how to take a hint. i love to learn.

live from the beating heart of business, new york city, this is "squawk box." good morning welcome to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm andrew ross sorkin, along with becky quick and joe kernan. take a look at the futures right now. the dow looks like it would open up higher. about six points higher. the nasdaq, however, off close to two points. s&p 500 looking to open off about a point and a half

we have some other earnings that are just crossing the tape joseph >> delta airlines rolling out quarterly results. fill lebeau joins us now with the numbers, and a special guest from atlanta good morning, phil ed >> thank you very much, joe. i am joined by ed bastion, the ceo of delta airlines. we will talk with ed in just a second let me run down the numbers. the beat on the top and the bottom line for the third quarter, $1.57 per share the street was expecting $1.53 revenue coming in at $1106 billion. a little better than the estimate of $11.023 billion. they were expecting between 2% and 3% the impact of the storms, obviously. then, finally, the guidance for the fourth quarter when it comes to passing revenue up 2% to 4% ed, give me some perspective on the third quarter. i think some people were worried about it given the storms, but it actually turned out to be a very strong quarter. >> it was a strong quarter first of all, thanks for coming down, phil when you think about in the past

we had -- if we would have had three hurricanes, says which we did this season in september, including a tropical depression, first one in the city of atlanta's recorded history that hit this quarter, and an earthquake in mexico people would have thought our numbers would have been gutted for the quarter. in fact, $1.7 billion pretax profits at an operating margin the thing i'm most impressed with, though, is the demand for our product is really great. 17 of the 20 busiest travel days in our history we had this summer people are traveling on delta. they're loving the product the outlook is strong on demand. >> let's talk about that demand. particularly the trans-atlantic side you swing to a positive resu result -- is the demand coming on the corporate travel or leisure side where is the strength at on those trans-atlantic flights >> it's all of the above, and currency is having a benefit with the weaker dollar in terms of the desire act of the travel going over to europe

it's the first time in about three years where our international unit revenues outpaced our domestic unit revenues we feel good about that trend going forward. >> you have passenger revenue up 2% to 4% in the fourth quarter we were here two quarters ago, and there was concern that pricing, because of the competitive pressures, we might not see it stay positive for the remainder of the year. do you think we've gone through that period, and now we look at the industry you guys in particular of 2% to 4% in the fourth quarter, where pricing remains strong >> well, pricing is very -- you know, our market we're very competitive, and, you know, to me it's very much about demand when you have the strength of the demand for the product and the quality of the service that the delta team is providing, that is overcoming some of those pricing skirmishes that you read about in our industry. >> let's talk about bombardier you called it absurd that the department of commerce has said essentially we're going to slap a 300% tariff on the

bombardierc-series planes because we think they were basically dumped in the u.s. and sold to delta at a ridiculously cheap price. do you still feel that way >> i do. it was very disappointing. first of all, it was a preliminary ruling it's not the final ruling on the tariff we're in the early stages of where that negotiations eventually are going to go the bombardierc-series product is innovation. it brings 1 00 seat product to our market that no u.s. manufacturer produced. boeing stopped producing it, in fact, ten years ago. the 717. we're the largest user of the 717. it creates over 20,000 jobs in the u.s., and it's innovation that this marketplace needs. it's one of the most environmentally friendly aircraft on the market, and we're looking forward to taking it >> you know the argument from boeing that the price on this, the list price, $80 million per plane, is not what they're selling it to you for.

>> of we have a great price on the aircraft, but at the same time it's great innovation that boeing defendant's exhibit have a product to compete with. >> can you give me a price there? >> i will not give you a price >> you will not give me a price. let's talk about some of your other comments that we're getting a fair amount of attention last week. you were at a conference in new york you talked about the question of how many of these award seats should be given away by an airline, and as you guys were saying, hey, we're going to be cutting back on upgrades or award travel in the future you pointed out before we went on the air, that's not the case at all >> that's not at all the question i received at the conference was more a comparison to the old days, ten years ago,

where 90% of our first class seats were given away, and i said no wonder the industry was having challenges when you are getting 90% of your best product in your airplane away for free we've metered that back. we still have the substantial amount of our seats that are eligible for upgrade for free in first class. we also have the most first class seats in the market of any carrier in the marketplace and the upgrade tick for those that want to actually purchase the upgrade is about $125. it's not a substantial price point for people that actually want to confirm rather than go through the lottery with an upgrade. >> when you see people coming in at the most basic economy rate, how many of those, what percentage, are saying, you know what, it's nice that they offered me this price, and i may have bought it, but second thought, i want a particular amenity. therefore, i'm going to upgrade. is the take on the upgrade a little higher than you expected? >> i would say it's about 50%. >> 50% of those are then moving up to the next one >> yeah. >> one last question, europe

swinging positive for you guys there has been so much attention to these lower cost european carriers coming into the united states are you noticing an impact is it nibbling away at the edges in terms of taking away traffic? >> i don't think so. they're stimulating new demand it's a different product it's a low cost model. it doesn't have any amenities attached to it it's bringing new passengers to the market, but as i mentioned, europe particularly and international as a whole was our best producing entity in the third quarter. i think from my standpoint, it's good for the market to bring that innovation, and we compete heavily with them, and it's good for consumers. >> ed bastion, ceo of delta airlines on a day when they beat the street on the top and the bottom lines guys, you have passenger revenue for the fourth quarter that's going to get a fair amount of attention from investors today. expecting it to be up 2% to 4% in the fourth quarter. back to you. >> all right phil, thank you very much. ed, thank you. folks, another headline this hour the fed is out with the minutes of its september meeting coming this afternoon.

the central bank left rates unchanged at that meeting, but it did lay out a timetable for normalizing its balance sheet. the minutes will be released at 2:00 p.m. eastern time today we're also watching shares of black rock this morning after the investment firm beat estimates on both the bottom and the top lines for the latest quarter. ceo larry fink told us in the last hour that the strength of the global economy is helping attract even more investment dollars. black rock, by the way, now has nearly $6 trillion in assets under management that stock is up by $1.51. and some more worries related to the equifax data hack. the "wall street journal" is reporting that driver's license information for are about 10.9 million americans was compromised. equifax has said publicly that some driver's license numbers were stolen, but it hasn't said how many, and if you are waiting for the company to tell you if you were one of them, good luck. >> coming up when we return, strong winds could bring more destruction to northern california today a cluster of devastating wildfires continue to grow 17 people have been killed in

the fires have destroyed more than 2,000 structures. we have the latest from napa valley and what it means for real estate in the area and, of course, the human toll then, later, nelson peltz was denied a seat on the p & g board. where does the consumer giant go from here, and is their business strategy working for investors we're going to cover the vote, the business, anmo wn quk" comes right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

team owners will require their players to stand for the national anthem. they will be talking about the issue at their fall meeting, which begins next tuesday right here in new york president trump just tweeting this morning it is about time that roger goodell of the nfl is finally demanding that all players stand for our great national anthem, it respect our country. roger goodell out with a statement yesterday saying that he would like to see them stand again. this issue will be brought up to the owners >> the dow coming off another record close in the last hour. black rock larry fink talked about valuations in the u.s. compared to overseas markets joining us right now to talk market valuations and more, sam stillwell, the chief investment officer. i apologize. >> go ahead, andrew. well, make up something good

>> what do you want me to call you? >> chief investment strategist cfr. >> that's the way to do it >> mike lipford is here. thank you both for joining us. we were just having this conversation with larry fink earlier in terms of valuations, whether we think that they're getting stretched, whether we think it's a multi-expansion story or whether the -- especially when it comes to the comps effectively a year from now. >> i think if you remember the movie "raiders of the lost ark" why did the nazis dilg in the wrong spot because they were only looking at half of the equation, half of the medallion. if you look to where we are now in terms of inflation, we're in the lowest quintile since world war ii, and on average the pe is where we are right now yes, it is an earnings story, and i think the growth going forward will be based on that earnings growth.

>> the next tweet out of our president is hard to figure out. i was thinking about -- talking about raiders of the lost ark. go back to an election a bunch of years ago >> those stock prices, it as long as they're not crazy valued, will go up >> tech valuations is where the growth is. >> i think tech valuations are reasonable you certainly have companies that are expensive you have others that are very attractive for example, google. google trades at a lower free capture multiple than disney or time warner. it's goingto grow its free cas flow four times more than time warner at least double disney which company has better growth prospects for the future, legacy media or google. ask yourself that.

>> where do you put amazon >> being loo, amazon has always been expense i you have had me on the show over the years. you always say amazon is an expensive stock. look at the chart. if you are a trader, yeah, there's a lot of ups and downs you can strayed, but if you are a long-term investor, how long has am zplon been? there's a retail market and cloud computing market what company out there has bigger market opportunities than amazon they're laser focused on that. growing 20% even at this stage in their company's development >> understand everything you say, but when you go et to either amazon or google, is there a point where it does seem to be people are kind of questioning how big these companies are and should they be allowed to get that big? is there a point where you worry that federal regulators will kind of get involved and slow down some of their growth projections or some of the industries that they would like to break into? >> as an analyst, you always worry. you always look at that, but if you look at history of when regulation of when anti-trust is really interrupted in industry development, there's not a lot i mean, even what microsoft went through, you know, microsoft losing their way wasn't because

what happened in europe or what happened here. it was because they didn't understand they were moving the internet, moving always on i think there's going to be some pressure on amazon and google, but i think they can get past these things >> do you think that was a function that they actually strategicallically missed or th their eye was so focused, unfortunately, or had to be on the ball of what was happening in europe, what was happening in washington, but just to say sheryl sandberg will spend much of her week in washington this week, and so how much time can you be spending on the advertising business versus meeting with, you know, members of congress, right that's what happens. >> these companies have large management teams we only know of the top one or two people they have experts in every area of the company someone has to we are about dealing with washington. other people have focused on just running their businesses. running the advertise. running the targeting. you know, for google all the opportunities they have now, right? self-driving, voice-enable assistant, youtube becoming an

over the top network there are so many opportunities for that company even today, 20 something years into their development. >> he talks on a very micro-based -- where are you on what may or may not happen with interest rates >> oh, my feeling is that the rates will probably go up in december, and as larry fink had said maybe three times next year, but let's put this into perspective. we're still in a negative real rate environment, even if the fed raises two more times because we're below or would be below the year-on-year change in core cpi even with three rates next year, we're going to be well below the long-term differential between inflation and interest rates >> how important or not is tax reform to either of you? >> i think tax reform is very important because that is one of the elements propping up the market >> it is >> it is >> you think that's already baked in, and it's happening >> no. i think that it's -- well, it's baked in -- well, hold on. it's baked in, and it's happening, but i don't see it in the actual earnings numbers because there's not enough detail

>> right, but you are saying -- but you are saying it's propping up the market. what kind of premium do you think exists in the market based on the fact that tax reform happens, and, therefore, if it weren't to happen, would the market, therefore, drop? is that what you are saying? >> calling for a conclusion from the witness. that's good. i think that based on where we are right now, yes, the market would probably need to go into a pullback a 5% to 10% decline, but based on where we're looking for earnings to beat the end of 2018 combined with the world is changing we're getting into a digital world, and the companies that i invest in at barron are capitalizing in the way -- we're changing the way we shop and communicate. the way we inform ourselves. the way we drive or are driven these companies are capitalizing on that whether or not there's a taxable change

>> mike and tim, thank you appreciate it. >> thank you >> the wildfires in california have destroyed more than 2,000 homes and businesses diana takes a look at the real estate impact. diana. >> just over 172,000 homes with a combined reconstruction cost value of more than $65 billion are at some level of risk from the wildfires in the napa and santa rosa metropolitan areas. that's the big picture >> falling in the high and extreme risk categories according to cord logic. that doesn't mean that the homes in the low or moderate risk

areas couldn't see damage if the wildfires were to expand, which they often do with the shift of the wind reconstruction costs are based on 1 00% destruction, so this is not the projected cost it's just the maximum risk from this event i would add that after this season's massive hurricanes and the housing destruction they left behind, the cost of labor and materials is only going up we saw it in houston >> a lot of tough stories. well, at least this whole year, it seems like. coming up, kevin has et, chairman of the council of economic advisors will join us, and bill akman reaching out to retail investors of adp. the next big proxy fight draws near details are straight ahead "squawk box" will be right back.

hey steve check out this guys leg. yeah looks like a real nasty moving back in with his parents. what? no. i just broke my leg. no, this is a full blown move in to the basement, you're gonna be out of work without that money from... aflac! you might miss your rent. aww i just moved out. bummer man. hey i used to have my own place. yeah? no, no i live with my mom, but it's cool. health can change but the life you love doesn't have to, keep your lifestyle healthy with... aflac!

your bbut as you get older,ing. it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

sfliechlt welcome back the fourth round of nafta talks begin today in washington, and sources tell cnbc that the united states will be requesting stricter standards for manufactured goods to be treated as duty-free those standards include content of origin requirements of as much as 85% from the united states, mexico, and canada, and could include an american content requirement of as much as 50% in order to be exempt from tariffs >> and the white house says that president trump has asked congress for nearly $5 billion loan to help puerto rico in the aftermath of hurricane maria the administration officials saying the loan would include $150 million advance to help with payroll and pensions, but this money would not pay down puerto rico's debt the white house and congress have so far focused funding efforts on immediate disaster relief the house is expected to consider a request this week for an additional $13 billion in funds for hurricane victims in texas, florida, and puerto rico.

we mentioned it earlier, time magazine cutting its circulation. the company will reduce weekly circulation of its flagship magazine "time" by one-third to two million copies it will also reduce print frequency of titles including "sports illustrated," "entertainment weekly" and "fortune." it's down 27% year-to-date, and as becky mentioned, says some magazines like sports illustrated will come down in the physical number of issues per year plus they're going to stop printing the physical number of copies of "time" and others taco bell and forever 21 are teaming up for an unlikely partnership. the brand is launching a line of taco themed clothing the collection includes hoodies, body suits, graphic t's, t-shirts, and a jacket ranging in prices from around $13 to $30. it will be available starting today at forever 21 in stores across the country >> i know what i'm getting you for christmas. >> yeah. this must have been the story th

that. >> it's "squawk box" not -- >> he makes it sound so nice the way he makes it roll off his tongue >> it sounds much classier >> it does when we come back, bill akman's message to adp plus, a news-making interview you can't afundraiser on to miss kevin is the chairman of the conditions of economic advisors. he will join us to talk about the president's tax plan which he will be talking about in pennsylvania today his thoughts on the economy and much more are straight ahead right now, though, as we head to a break, take a look at the u.s. equity futures things have barely budged. slightly negative. the dow futures down by 1.5 points after closing at a record icarndy.sterda stk ou stk ou "squawk box" will be right backt what people really invest in is what they hope to get out of life. but helping them get there

means you can't approach investing from just one point of view. because it's only when you collaborate and cross-pollinate many points of view that something wonderful can happen. those people might just get what they want out of life. or they could get even more. there was no magic up hisgends. sleeve. what they want out of life. he didn't have wings, or a cape. he was but just a man... with the will to go beyond.

good morning we're live at the nasdaq market site in times square among the stories front and center at this hour, a couple of

things to tell you about mortgage applications, they fell 2.1% last week that's spurring new figures from the mortgage bankers association due mostly to a drop in refinancing activity with new purchase applications. down just slightly the average 30-year mortgage rate rose four basis points during the week to 4.16% also, personal computer shipments fell 3.6% during the third quarter. that compares to a year ago. it's according to new figures from gartner it marks the fourth consecutive quarter that pc shipments have declined van garde signed nearly $300 billion in investor outflows during the first nine months of the year that's nearly equal to what van garde took in for all of last year van garde now manages $4.7 trillion with a t. we just heard from larry fink that black rock is closing in on $6 trillion. it's remarkable to think about these numbers with t's next to them >> and we are watching someone that works on this show is

watching roku this morning the stock -- i have not, but i'm willing to do this with you now, and i can react to it as -- >> real-time >> as a viewer would react i had not been -- what about you? >> not really. join in with me. >> the stock is trading higher after the company announced it will launch its popular roku express streaming player in france the company is also launching two new streaming layers approximate for the u.k. market. be honest with me. were you watching roku this morning? >> no, but thank you for bringing it to my attention. >> andrew. >> i was not that's why i asked somebody here to -- >> leslie. >> watching roku or watching shares >> watching roku shares. >> oh, you were? >> on my roku player maybe maybe. >> yeah. all right. yeah if you have roku, you can watch what we -- anyway. bill ackman getting another presentation on an adp this time reaching out to retail investors, and leslie picker, listen to the whole thing.

sorry. and has the highlights you okay >> okay, yeah. >> you stay awake? >> i stayed awake. you know, this is a different side of akman that, you know, we haven't seen much lately his sleeves were rolled up he spoke with anecdotes in addition to his power point, and he kept his presentation at a manageable 60 minutes after the work day ended that akman was reaching out to mom and pop investors who own about 28% of adp stock he thinks their vote is important as he tries to win three seats on adp'sboard next month. akman emphasized that voting for his slate is sending a message to the current board that change is needed and change has been slow to come >> you don't want to screw it up making significant changes or doing things differently from the way you are done them in the past, that might be something that is difficult for you to do without the backing of a major

owner. >> he fielded questions from investors assuring them that he didn't intend to lay off employees and that he would be able to grow the dividend along with earnings. he actually included this two-minute animated video so that viewers knew how to vote for his slate. that was my personal favorite part after trian close results at p & g yesterday, akman emphasized that every vote counts guys >> so -- is this one as close? >> it's unclear because they still have a month to go the voting hasn't really commenced at this point, but, you know, it's safe to assume that it will be a pretty contested voting process >> so he is mad at those adp numbers that we get on wednesday before because they've been so wrong? is that -- you need some changes in the way they're calculating those? they've been so far off recently you have noticed that, right >> we've talked about just the recent numbers is this akman's main gripe, or does he have other problems?

>> he has other gripes that i don't know if it's as much of a contributor, you know -- >> dent even give me the number it's so far off. it's throwing me off it's like a caddy that can't read a put tell me what you think >> he is focused on the payroll -- the market, he thinks it needs to be more efficient, and it's suggesting ways to achieve operational efficiency there. ang rasy of the number within the ballpark. thank you. >> we go from one proxy battle to another procter & gamble shareholders it electing not to vote nelson peltz to the company's board >> they did not want me. you know why >> why >> ego >> ego >> ego okay i threatened the hallowed walls of that boardroom and how dare i do that, and the fact is that

the board needs refreshment. i didn't even call for that. they're looking at what's wrong with this picture. >> joining us now is lauren lieberman. she's managing director at barclay's. lauren, you have some empathy for nelson peltz's points, but you're not convinced that you would have wanted him on the board either how do you break that all down >> it's been a long period of underperformance for protect procter. it's been a checkered ten years. i think the discussion about external influence started several years ago. perhaps at a different point in time maybe the outcome would be different, but david taylor hads articulated a clear and compelling plan. i think they're on it, where

again, i think timing is everything >> you so think they're on it meaning they're well underway to iks iffing things, and what would have been wrong with putting somebody else in to change this process? would it have slowed things down if nelson peltz had won that seat on the board, do you think? >> that is tough to know you know, the -- from the boardroom request for data, request for asking different questions, i don't know the degree to which that really slows things down or not, but p & g took a perspective of why not isn't good enough. i think rather than being backward looking though at this point, maybe it makes more sense to look forward, right i mean, it was a very, very close vote p & g can turn this into an opportunity, but they also have an obligation. you know, the opportunity is to say, you know, we had an externally created sense of urgency created for us let's use that let's use that to cat lies change and accelerate the pace of change. the obligation is that shareholders on both sides of this argument have had a lot to

say. p & g has had incredible outreach they've had an incredible number of interactions with their shareholders over the last several weeks and months to shows that voted in favor of procter, it's to headache them feel in favor of their vote. where he heard and you understand the frustration, and we're going to take that home, and we're going to accelerate what we're doing >> do they do that by continuing to engage nelson peltz, or do you think this is something they'll do and not have his voice at all in the decisions they make from here? >> you know, again, tough to say. i think it's a lot less about decisions they make from here rather than continuing the path that they're on. i mean, there has been enormous change put into place at procter over the last 18 months. i think it is underappreciated for good reason. i mean, it's been very difficult to say the least to see that in financial results, but some of the changes they're putting in place are things that take time to manifest. cost cutting, you get the benefit right away in theory

when you start from a place of fixing the organization structure as a foundation to fix the business, that doesn't show up over time >> it sounds like the plan that nelson peltz wanted to implement is different than what the board wanted when he joined us last week, nelson peltz, he talked about how they should be buying more different brands, new brands, that millennials like and bringing those in house. p & g has gone to consolidate and really build around their core existing brands destroying to beef them up. what zdo you think is the right path >> i think -- i mean, i have talked to nelson peltz and his team about it too, and, again, from a high level, i think everything they laid out, they are fair questions i think there are elements that are perhaps, whether it's overly simplistic or not is maybe unfair to say, and i think that nelson peltz has a history of asking great questions and pushing boards and companies to think differently. in terms of what p & g is

looking to do and in terms of the core versus small brands and so on, small brands mathematically cannot be the answer the number of brands that procter would need to buy or build to move the needle is impossible, and the cost to do it i mean, most of these small and disrupter brands out there, they don't make money procter has to get the core right, has to fix the core that comes through innovation. that comes from better marketing. that comes from not having a duplicative infrastructure it does come down to work structure. things that procter is already doing that i think are really misunderstood or underappreciated by the market, and, frankly, by the trian team, it has been that the categories are now enabled to go out and to pursue m&a, to understand what's going on in the marketplace, to say what are consumers doing, where are the trends, where are the gaps in our portfolio? do we do it through tuck and m&a. they have the right to develop local brands everything doesn't have to be global anymore at p & g.

this is enormous change. again, it's early, and there's very -- there's a couple of examples three or four. they're big ones there need to be more. that is what i'm hopeful we'll see. >> very quickly, when do you think the market does appreciate these changes? when do you expect to see it in the stock price? >> i mean, the tough part is that, you know, stock price -- stocks moved on this proxy battle >> on the proxy battle to this point. still, if you are looking over the longer term, it has not kept pace with its competitors. >> no. absolutely not i think that, you know, i i mean, our numbers don't have procter kind of growing in line with the market or i would say ahead of the market for another 18 months to two years i mean, it will take time to rebuild the innovation coughers. there's been enormous cost cutting, and that comes at the expense of ini don't he vegas. >> thank you for your time >> thanks. >> when we return, the tax reform timeline. we're going to talk about the recipe for a better tax policy with the chair of the council of economic advisors.

kevin has et check out the futures and where they are right now take a quick look. red again. just a lite. ua wl tu ia moment what is the power of pacific? it's life insurance and retirement solutions to help you reach your goals. it's having the confidence to create the future that's most meaningful to you. it's protection for generations of families, and 150 years of strength and stability. and when you're able to harness all of that, that's the power of pacific. ask a financial advisor about pacific life.

looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock.

we have a question about your brokerage fees. fees? what did you have in mind? i don't know. $4.95 per trade? uhhh and i was wondering if your brokerage offers some sort of guarantee? guarantee? where we can get our fees and commissions back if we're not happy. so can you offer me what schwab is offering? what's with all the questions? ask your broker if they're offering $4.95 online equity trades and a satisfaction guarantee. if you don't like their answer, ask again at schwab.

welcome back to "squawk box. the futures this morning have been relatively muted after the dow futures -- or after the dow jones industrial average closed at a record level once again yesterday. this morning it looks like the dow has indicated to open down by 10.5 points s&p futures are a little bit lower. down 3.5 points. the nasdaq off by close to ten as well. president trump will give a speech later today on the need for tax reform here with a preview, council of economic advisors chairman kevin h hasset great to have you again. it hasn't been that long this is the way we should be your last appearance should be fresh in my mind during your next appearance, kevin it's great to see you. thanks for joining us. i am worried because i don't know how things work in washington we all sort of look at the way the sausage is made recently, and, you know, these things that seem to be wanted by everyone, that doesn't matter.

the act of getting it done, the devil sometimes is in the details. you have said, you have been in a room for 20 years with just about everyone coming to the consensus that broadening the base lowering corporate tax rates will be good for growth. you can't ever recall anyone in the room arguing that this is not a good recipe for growth, and, yet, i'm worried that the devil is in the details and you might not even get all the republicans to go along with a single plan. >> hats off to the president for crafting a procedure that has a great deal of hope for success what the president has done is he has agreed a framework where there's some rates and the republicans in the senate, if they feel like they need to hire a top rate at 35% in order to get a deal done or get the revenue that they want, then the president, you know, would look into that. on the corporate side we've got a rate of 20%, but there is details about, like, what do you

charge for repatriating your earnings and so far that are being worked out any serious people on both parties have to be able to come together to say if you put the levers here, i'll support it, and that's hopefully the conversation that we're going to see. >> think about this, the acrimoney. i don't know whether -- it shouldn't matter since republicans control congress, but you've got, like, larry sommers at a washington post column this isn't just business as usual. this is -- i don't know what to call this. he called you, gary cohen, and steve mnuchin, ignorant, disingenuous, and dishonest. he went on to say hasset, whoos job is stos stand up for rigorous economic -- had the temerity last week to accuse the tax policy center of scientifically independent -- it's nasty, and that's just the democratic side of things. i have had -- they've come in and said there's not a single economist -- mainstream economist that says they can end

up paying. all kinds of things that they say definitively that trickle down doesn't work. >> right >> you're not going to get those guys on board, i don't think >> joe, thanks for mentioning that you know, as you know, if you come into a place like this, then people are going to take pot shots at you i think that what i would like to see folks like you do and do it to me too is say what's your evidence show me the data what paper are you talking about that says that hasset is out to lunch. if you push guys like larry sorms who gave us cash for clunkers, for goodness sake, if you push guys like that and say what did hasset get wrong, there's not one thing that he mentioned that i did wrong other than make sweeping statements of how there's no economist those statements are just false because i'm an economist, and he is already wrong anyway, it's just, you know, part of the game you know, i'm going to taematte to remain graceful if somebody comes on and says something about that like that about me, then just say, hey, what are you talking about >> i don't think larry is the problem. that's it. corker might be the problem or who knows? i mean, take your pick in this

whacky gop senate that you have got. you have everybody's -- everybody loves to be on the front page of the washington post, it seems like. >> can i just respond to that? this circles back to the president's speech today in harrisburg in front of a bunch of truckers who will really be helped by this because it will bring so many activity home. i have a lot of friends in the senate that are democrats, that are republicans, and to main or woman, everybody in the end does what he this think is right. sometimes what they think is not what i think most people just do what they think is right for the country when push comes to shove, and i think that the case that the president is going to make today in his speech that we're going to make over the next few weeks for this tax reform is so strong, it's so overwhelming, i mean, every country in europe has already done what we're doing. in greece the radical party of the far left has a lower rate than us. right? all of the people around the world are agreeing that we should do something like what president trump is proposing because it works if you are to accept larry sommers' view, then come up with a theory why every other country

has cut the corporate rate are they being stupid? they're doing it because it works. >> i'm not going to debate the rate itself with you i do want your help on this. the pass-through rate of 25% creates all sorts of issues, and you know many of them, including the possibility that encourages what might be described as large scale tax avoidance, but even putting that aside, the argument has been made that that particular piece of this tax plan truly does benefit the wealthy the most 80% of the tax cuts would go to millionaires andabove. can you explain why that pass-through rate makes sense given that the largest majority of small business owners that would be affected by it already make less than $100,000 and would already be at that 25% rate so you are taking people who would normally be paying 35% and bringing them down lower >> right le with, first of all, secretary mnuchin and the people on the

hill are working very hard to put guardrails around that 25% rate to make it so that it won't be, you know, an anchor of lots of avoidance and so on if they're successful at that, then you should think of the 25% rate as being analogous to the business tax rate that we're cutting to 20% or the corporate side i think you could account for the double layer of dividends. that makes the rates on capital income through those sources about the same if we go look at the 20% rate, then we know that that has a big affect on wages. it's going to drive up wages of middle class blue collar people the most there's a massive amount of literature that supports that. so i think that the way to think about it is not just the narrow incidence of the tax change, but what kind of demand for workers is going to create and what kind of wage growth it's going to create i think that both of those are a key part of the formula. >> kevin, how anchored is that 20% number we've had a lot of people, as you mentioned, who have all said that the tax rate, the corporate tax rate, needs to come down we had larry fink on with us this morning, and he said that he thinks if you get a business rate down to somewhere around

27% that that would be enough to make us much more competitive. we've heard that the president was not happy with that number going from 15% to 20%. is there any wiggle room for that number to move above 20%? >> you know, i'm not the one doing the negotiation. i'm not the president. the president has been pretty firm that he wants a 20% rate. there's so many other things that can move to help fund a rate like that and the dynamic affects of the corporate rate are so strong that i think a 20% rate is really easy to justify on economic grounds. i'm not the person that's making those calls. what we want to see is something that can pass the house and the senate and the president can sign into law. if we can get something that looks like what we've got then the economic growth and wage effect will be significant the president will talk a lot about that today >> kevin, where do you think the state and local deduction issue is right now it seemed like it was going to be in and then if people were, like, wait a second, and then, you know, then if it's explained

really well, it kind of doesn't make sense for everybody else to be sort of subsidyizing the states that can't control their own spending you need border adjustment or you need the $1.2 trillion one way or another is that back in completely now, or is it going to be modified in a way? do you know? >> you know, i'm not an expert on the inside of what's in and what's out i can talk about the economics of that one, sure. the fact is it's exactly like you said, joe. you got something right for a change right? the fact is that the state and local deduction is taking money from the maybe poorer towns and poorer states that don't spend a lot of money -- >> again, you are talking about people that, you know, that are already way up here. what about retroactive any chance that you would have to do it this year, i guess. i guess it could be retroactive for 2018 >> that's something we'll have to watch the details as they come out >> all right how about making it permanent if it's -- you can't make it permanent if it's all republicans, can you

>> you know, it can be permanent if it's revenue neutral outside of the budget window, and it's possible that the judgment for that could be based on a dynamic score. you know, i think that everything is up in the air right now, but, you know, people are working hard up on the hill to get things together, and i think that we'll see -- have a lot more clarity and have a complete plan relatively soon. >> remember with obama care a lot of people told me, kevin, that it had to pass because the american people don't really know what's good for them and, of course, they don't like it, but we know best i worry about tax reform because i don't know whether the polling of the average american -- i don't know whether you can get that up to even a majority on everything that you want to do with the tax plan. in this case -- i mean, i didn't agree with it back then, but in this case i kind of do think that you might -- they might not know enough about it, necessarily to see the benefits long-term of this move, but does

the president need to convince the public per se that you need to get their approval to get this through congress, do you think? >> the president is really, really good at that. you know, he is a lot better at that than i am, and that's why he is out speaking today in front of a bunch of truckers who are exactly the audience for this tax bill. the fact is it will bring jobs home it will bring manufacturing home, and it will fill up the trucks and send them all around the country delivering stuff to people like me and you >> working on it here on the set. have i convinced you yet, andrew >> we're all working on it >> he is not going to answer i can't even get andrew. >> "squawk box" returns in just a moment >> thanks, kevin

throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host.

when you have the right financial advisor, life can be brilliant. ameriprise it's a warm blanket. it's a bottle of clean water. it's a roof and a bed. it's knowing someone cares. it's feeling safe. it's a today that's better than yesterday. every dollar you can spare helps so much more than you can imagine. please donate now to help people affected by hurricane harvey. your help is urgently needed. or a little internet machine? it makes you wonder: shouldn't we get our phones and internet from the same company? that's why xfinity mobile comes with your internet. you get up to 5 lines of talk and text at no extra cost. so all you pay for is data. see how much you can save. choose by the gig or unlimited. xfinity mobile.

a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. >> coming up, a live report from northern california where wildfires have been spreading and destroying homes and businesses bluechips in focus after big announcements from honeywell and ge this week look at industrials with nick heymann straight ahead squawk returns in just a moment. we come into this world needing others. ♪ then we are told it's braver to go it alone. ♪ but there is another way to live. ♪ a way that sees the only path to fulfillment- is through others. ♪

at ally, we offer low-cost trades and high-yield savings. but if that's not enough,

we offer innovative investing tools to prepare you for the future. looks like you hooked it. and if that's not enough, we'll help your kid prepare for the future. don't hook it kid. and if that's still not enough, we'll help your kid's kid prepare for the future. looks like he hooked it. we'll do anything... takes after his grandad. seriously anything, to help you invest for the future. ally. do it right. excuse me, are you aware of what's happening right now? we're facing 20 billion security events every day. ddos campaigns, ransomware, malware attacks... actually, we just handled all the priority threats. you did that? we did that. really. we analyzed millions of articles and reports. we can identify threats 50% faster. you can do that? we can do that. then do that. can we do that? we can do that.

earnings alert black rock beats the street. >> one of the greatest problems we still have in the world is how much money is sitting on the sideline >> why ceo larry fink says clients are looking to put more poen to. >> taking flight delta airlines topping estimates. plus, the company's ceo responding to customer criticism. telling cnbc the airline isn't cutting back on upgrades >> and talking taxes president trump takes his pitch for reform on the road today as the final hour of "squawk box" begins right now ♪ live from the most powerful city in the world, new york. this is ""squawk box."

welcome back to cnbc, live from the nasdaq market site in times square do we play this song typically i think we kind of do. you know what i mean >> i learned by watching you >> along with becky quick and andrew ross sorkin the futures are down a little bit this morning eight or nine on the dow down ten on the nasdaq down three on the s&p. that's rare to see that's just red across the board. red. change the fair value, and the implied open all red oil prices take a quick look this morning see where west texas is.

$50.93 >> making headlines this morning, a couple of things to tell you about about black rock posting better than expected earnings in revenue this morning total assets under management rising 17% in the latest quarter to nearly $6 trillion. ceo larry fink joining us on "squawk box" in an exclusive >> i think what's going on is we're seeing a change in market sentiment. we're seeing continued growth in china. above trend line growth in japan. you have a europe that's growing at 2.5%. you are seeing the economy doing so much better as a result -- >> the global economy. >> the global economy. as a result, we're seeing clients looking to put more money to work. >> shares of black rock up about 22% so far this year in other earnings news, delta airlines reporting better than expected earnings in revenue, and leaving its current quarter guidance unchanged storms cost the company $120 million in the third quarter ed bastion on "squawk box" in the last hour talking about all of this.

he also addressed recent customer criticism that the airline is cutting back on upgrades the upgrade tick for those that want to actually purchase the upgrade is about $125. it's not a substantial price point for people that actually want to confirm rather than go through the lottery round and upgrade. >> check out shares of delta year-to-date you can see they're up almost 10%. up this morning 2.25%. >> that's pretty interesting what you just said >> about the first class seats having more than anybody else? if you want to pay for it. $125 >> you know i fly out of newark a lot. >> yeah. >> it's changed in recent years. you got to, like, promise your first born son to even have a chance of getting an upgrade in some lottery, and it doesn't matter when you do it, and it's

never happened >> even no matter how early you have it -- >> when you do go through, if you are checking in, once you're purchasing the tickets and then again when you are checking in, if they have seats available, they do tend to make them open to you for -- >> what if you are going on a pretty long trip, and you are willing to use miles or whatever it is where you really want to make sure that you and your wife can -- >> this is where the airlines have become a better investment. >> because they're supper great competition in the industry? >> this is where you are going to lead with this? i'm not sure why did it happen? why did they -- >> because they can. >> it was less competition >> he makes more money and becomes a better investment vehicle, better stock. >> you can use your miles to just buy the tickets outright. >> you can >> but itstcos, like -- >> it's a lot. >> it's $50,000 for a coach seat, i think. >> right >> so delta, huh okay tech news this morning alibaba is making a $15 billion investment in research and development. the company plans to launch eight centers in china, israel, russia, singapore, and the u.s

it will hire researchers to work on artificial intelligence, quantum computing and fin tech very loyal to united i have the -- >> credit card >> you are loyal to newark airport, which they have the majority of the flights coming out of >> right it's really a function of just the robust competition in the industry >> oh, be quiet. >> that's really -- >> roku -- >> jiu-jitsu using your words against you, joe >> roku is trading higher after the company announced it will launch its popular roku express streaming player in france the company is also launching two new streaming players for the u.k. market, and snap shares are rising this morning. credit suisse is raising its price target on the snapchat parent to $20. the analyst says snap is boosting advertising technology and calls a platform a scare asset that offers advertisers access to a younger demographic. andrew, you -- if you were a carrier, you're finally getting some, you know, return on your investment the first class seats, you don't want to give them away if you could sell them for

revenue seats, you would want to do that, right am i right or am i right it doesn't just mean that they're just -- they've got monopolies and they can -- >> stop being such a complaining customer >> i'm already on the united's side now >> only if -- >> right >> in washington news this morning, the forty rouurth roun nafta talks -- the u.s. will be developing stricter standards for manufactured goods to be treated as duty-free those standards include content origin requirements of as much as 85% from the u.s., mexico, and canada it could include an american content requirement of as much as 50% in order to be exempt from those tariffs president trump will travel to pennsylvania today to talk taxes. in a speech tonight he is expected to make a new argument for reform, saying that the typical american household will get a $4,000 pay raise if the united states moves from a worldwide tax system to a

territorial corporate tax system, and starts to repatriate foreign earnings as well >> what the president has done is he has agreed to a framework where there's some rates and the republicans and the senate if they feel like they need to hire a top rate than 35% in order to get a deal done or get the revenue they want, the president would look into that there are so many levers that basically any serious people of goodwill on both parties ought to be able to come together and say if you put the levers here, i'll support it. that's hopefully the conversation that we're going to see. >> president trump tweeting earlier this morning stock market has increased by $5.2 trillion since the election on november 8th. the 25% increase lowest employment 16 years, and if congress gives us the massive tax cuts and reform i am asking for, those numbers will grow by leaps and bounds >> you know, it would be nice to know what's gotten us here it's almost like if we just had someone to do, like, a report on

the dow or blue chips or some of the main movers. >> funny you should ask. >> another record high for the dow yesterday. this is fantastic that you are here >> i love being here with you guys you know that much >> it's fantastic you are here because this is something i just said i want to know about this. how did it happen? wal-mart yesterday what has powered the dow's last 1,000 point advance? blue chips >> yes, wlu chips have, and wal-mart has been a big component of it, but it hasn't been the most important one over the last thousand -- >> no way. >> something else has been the biggest component. take a look at this. if you look at the last thousand points, it's only been about a month, september 7th we'll call it the last 1,000 points since then

>> 3m on the industrial side as well 86 points what we haven't talked about, though, is apple apple is the single biggest detractor from the last thousand points it actually subtracted about 40 points off of that 1,000 point run. 15 of the 30 stocks on the dow make up the entire thousand point move that we've seen the headliners up there, caterpillar, i didn't mention, travellers, wal-mart, those are up there as withal if you look at the valuation side of things, we also talk about things like maybe dividend yields for the dow stocks, right? we often talk about the dog and the dow. those that are out of favor. thief fallen enough in price and they've boosted up the dividend yields the biggest -- they're verizon maybe no surprise. tel coms tend to be that way ge, jeffrey borenstein, the cfo resigns. retires, right you get that drop in the stock all of a sudden ge's dividend yield is above 4%. you wonder if it's going to stay there. they've been pretty consistent about their dividend x the financial crisis, ge capital

days im, we know it's been one of those up and down ones mostly down for the last few years. could it be one of those ones people buy for the yield exxonmobil on the oil side of things, 3.7% as for the price to earnings ratio, we often -- we look at those things in terms of trailing pe ratios to see which ones are the most cheaply valued ibm at that list as well about 12 times earnings. travellers, 12 times earnings as well goldman. travellers, goldman, the financial side of things maybe we understand the valuation side they're trading a little cheaper from an earnings basis, and then verizon as well. as people take a look at a dow that sits in statistically unlikely territory, its average price over the last 50 days, it's now trading well, well above that traders are now looking for whether or not this dow can keep going at its current pace or whether or not people are going to look for some kind of a rotation that somebody is underperforming names, and those, guys, are the ones that we're taking a look at for sure. >> can't believe the coincidence of you doing -- how timely >> it's almost like it was all

part of a grandmaster scheme >> goldman goldman. bla blankfein still doesn't like trump. >> goldman is not at record highs right now, but y is p morgan, a dow compoen enent is. you wonder if jamie dimen likes what's happening if they get the wall street reform it would be pretty good. >> we're going to talk ge now. you mentioned ge you mentioned the dividend too i got nick cayman here if you called an act, it's a good thing that means you're like the analyst that people listen to, right? you have been that for a while i think. i think it's the wisdom that comes with that gray hair. anyway, market moving news concerning the future of two big american companies this week honeywell deciding to spin off two of its businesses, and ge adding ed garden an activist investor from trian to its board nick cayman is here to discuss the two conglomerates. i will start with what i just saw here, and that's jp morgan it's not that psyched about

general electric cutting the price target to 20, nick, from 22. reiterating an underweight rating and d many, the analyst there, steven, says that in his view, a dividend cut is increasingly likely. you don't think so >> no, i don't i think that will be the last thing that will be, you know, reduced at the company they've basically said we need a world war, you know, to basically am could back and look at cutting the dividend. they're going to cut capital spending they're going to cut cost radicily we've seen evidence of that emerging i think it's very clear that there isn't one aspect of the makeover in transformation of ge that isn't being done, whether it's the board, the senior management, the cost structure they'll see the business portfolio pruned not structurally ajustdjusted. >> you mentioned the spiral that would come from that, right? >> that would certainly shake a lot of people's confidence >> what is your consensus estimates for -- what is your estimate for the third quarter because another morgan stanley,

that's confusing not jp morgan, but you probably know this guy too. he is one of your peers. nigel, he is third quarter below the consensus due to weakness in ge's power and aviation business also full year will come under pressure and be below where the guidance is right now. >> i don't think the 34 is where the weakness is going to be. i think it could be 15 cents of restructuring. not six. that's where your biggest delta is going to be >> you have a buy on ge or a hold >> we have an outperform

>> how long have you been holding that >> we did that in the fall of 2015 it's been so far the wrong -- it worked for a while for the middle of last year, and then -- >> the rating itself is not perform. >> it's not been correct since the middle of last year. sfroo but you are going to stick with that and you think the stock is in the beginning stages of making a long-term bottom that will reward investors from here on out? >> i think right now you have a fear factor that is basically pushed this yield back up over to 4.1%. a normalized rate would be 3%. >> do you think the dividend or the stock could go up? >> i think you're going to end up, you know, it's going to be a balloon held under water, and that yield is going to normalize. >> a balloon held under water. what about honeywell their stock chart doesn't look anything like general electric >> it's probably the inverse of ge considered the best management diversified industrial, and has

basically achieved three quarters of its earnings growth over the last decade from improving margins. now they've got to shift gears, and they've got to be able to do more out of sales and more -- certainly still from margins, but they really want to be able to restructure the portfolio so you can have market outgrowth from software upgrades and from the ability to take and connect honeywell's hidden asset, which is its huge installed base >> you like ge more than honeywell? >> there's valuation differences. honeywell is up 24%. ge down 25%. >> i'm not even going to show a ten-year or 20-year chart. it's just too cruel. >> that's for sure just right now i think you've got, you know, extremes. i wouldn't say in honeywell's valuation, but certainly in ge's undervaluation, and if the dividend isn't cut and i think that's what the buyers of the stock and the holders of the stock are focused on whereas, a lot of the folks like myself on the sell side are how much are the earnings going to

change the earnings right now are in the process of certainly being under pressure as you implement the change at ge that's every corner every corner >> got to go i guess. nick, thank you. >> how did he do >> he did great. what i wanted to hear later on down the line is what ge is like going forward without ge capital? we know ge capital has not been a part of the picture for a while, but is that the reason why the financing arm side of things, the cash flow arm side of things, all of that maybe puts the dividend at more risk that's a conversation for perhaps another time >> i don't think so on that. >> he doesn't think so >> you put all the money in place for the really big new products, and so that's behind you, and so you have state-of-the-art products. this company isn't broken. it's massively bloated in terms of its cost structure. in terms of basically foeking on its core end markets >> ceo john flanery has his plan that's going to come out next month. >> jp morgan with the recently added board members pushing for

a quick fix all outcomes are on the table, including a potential for more comprehensive break-out. >> i agree with nick, though if that happens, that is going to send all kinds of shock signals, which will keep them from probably wanting to do it if they did that -- >> i think you would have titanic events as far as shaking up confidence about what's going on in the world because that's not what -- this isn't the -- >> this isn't big or titanic as in -- >> titanic to the bottom >> that's scary. >> that was a good name until it happened >> we have this macro environment. >> titanic was a good thing until the titanic. >> until it went down. >> coming up, thanks, nick dom, thank you, man. >> thanks, guys. >> coming up, facebook coo sheryl sandberg will head to washington this week we'll tell you why stay tuned you're watching "squawk box" on cnbc i think it's terrific.

your kids go to college and you start trading. >>yeah, 5 years already. 5 years, hmm. you ever call your broker for help? >>once, when volatility spiked... and? >>by the time they got me an answer, it was too late. td ameritrade's elite service team can handle your toughest questions right away- with volatility, it's all about your risk distribution. good to know. >>thanks, mike. we got your back kate. >>does he do that all the time? oh yeah, sometimes he pops out of the couch. help from real traders. only with td ameritrade. ♪ to err is human. to anticipate is lexus. experience the lexus rx with advanced safety standard. experience amazing.

zbliefrmt "squawk box. facebook dispatching its coo, sheryl sandberg to wash wish the social media network trying

to contain the political fall-out from news that russian agents usedfacebook to spread disinformation during last year's election. sandberg recordly will meet with members of congress. her visit comes weeks before the house and senate hold hearings with facebook and other tech companies about russia's role in the 2016 election. sandberg took the stage at the wall street journal women in the workplace dinner last night. julia borestein joins us with the highlights >> sheryl sandberg spoke not as coo of facebook, but as founder of leman.org it's the results of a new survey about women in the workplace, and also weighing in on the revelation of movie mogul harvey weinstein's alleged decades of sexual harassment. >> we can't tolerate harvey weinstein-like behavior. sexual harassment -- [ applause ] >> it's not just about him it's not just about the other men that do it it's about all the people around them that know and don't do

anything whim hold 20% also showing that half of men believe that if one in ten women hold senior leadership roles at their country that's sufficient. >> i think what it is is the tyranny of low expectations. this has been happening for so long, and it's on gender, and it's on race that we actually don't think more is achievable or expect it could happen, and so when we look and see one in ten, we think that's pretty good >> now, sandberg didn't do a q & a or comment on the russian purchase facebook ads saying manipulating the election, but we will hear from sandberg again tomorrow when she sits down for an interview with axios's mike allen in wash ur washington d.c., and it will be streamed as well as on facebook. back to you. >> okay. julia, thank you very much julia borestein. when we come back, could the nfl

soon make all players stand for the national anthem? it's a story at the intersection of business, sports, and politics "squawk box" is covering it straight ahead markets." something we all think about as we head into retirement. it's why brighthouse financial is committed to help protect what you've earned and ensure it lasts. introducing shield annuities, a line of products that allow you to take advantage of growth opportunities. while maintaining a level of protection in down markets. so you can head into retirement with confidence. talk with your advisor about shield annuities from brighthouse financial established by metlife.

but we should be seeing ymore range of motion., i'm fine. okay, well let's see you get up from the couch. i'm sorry, what? grandpa come. at cognizant, we're uniting doctors, insurers and patients on a collaborative care platform, making it easier to do what's best for everyone's health, every step of the way. you may need more physical therapy.

ugh... am i covered for that? yep. look. grandpa catch! grandpa duck! woah! ha! there you go grandpa. keep doing that. get ready, because we're helping leading companies see it- and see it through-with digital. >> nfl team owners are going to be considering requiring their players to stand for the national anthem. they're going to be discussing that issue at their fall

meeting, which begins next tuesday in new york. president trump tweeting earlier this morning it is about time that roger goodell of the nfl finally demanding that all players stand for our great national anthem. respect our country. talk more about that and a lot more in just a moment. coming up this morning's top stories, including firefighters battling deadly wildfires in northern california. stay tuned you are watching "squawk box" right here on cnbc

good morning welcome back to "squawk box" here on cnbc live at the nasdaq market site in times square. among the stories front and center at this hour, a notable event in the japanese stock market overnight the nikkei 225 closed at its highest level nearly in 21 years. rising three-tenths of a percent to close at 20,881 that is, however, well below the all-time high reached in december you ready for this 1989 >> by the way -- >> just under 39,000

>> that's twice what it is now >> time inc cutting back on the circulation of frequency of some of the well known magazines. it is part of a broad cost cutting and restructuring. among the publ kegs affected, time, sports illustrate, entertainment weekly, and fortune magazine also, da commissioner scott gotlieb saying the u.s. may see a number of drug shortages that's because of sh delays in restoring manufacturing operations in puerto rico where about 10% of u.s. prescription drugs are made the reuters interview gotlieb says it is unclear when drugmakers in puerto rico will be able to get back to full capacity >> general electric is responding to a jp morgan analyst report saying that it viewed general electric dividend cut as increasingly likely that's something the analyst was saying ge now tells cnbc that the dividend remains a top priority. the quarterly pay-out is currently at 24 cents. that pitts put the yield at 4 .11% >> i wish they would have said maintaining the dividend --

>> maintaining the dividend at current levels a top priority. because i could say -- >> that's how i read it. that's how i -- >> i think that's what they mean i think that's what they mean. >> i do believe that's what they mean >> argtdaccording to the analyst could mean you know what, if we want to take this company forward with the new activists we have and we want to redeploy more cash and not be strapped by the pay-out. >> maintaining the dividend at the current level is a top priority >> that's what we suggest. >> we're looking at that thing and thinking about doing something of that as a top priority this was, like, too much >> that wasn't my read on it that was not my understanding of what they meant. if they would like to clarify, we would be happy to do that

>> and we will immediately the wildfires in northern california are having a big impact on the state's wine country. adidi roy joins us nor with more on the damage. we've heard not just houses, but businesses too i imagine that includes wineries and supporting structures as well, right? >> absolutely, joe we are actually at sigorella winery in napa, and it seems like a total loss here with everything burned to the ground. it's rubble that remains here. you can see some of the smoldering ashes here. might be kind of dark to see this is one of four wineries, at least four whiners that we know of, in napa that have been either completely destroyed or significantly damaged by the wildfires. that list could grow, and i not just napa wine makers that are grappling with this. obviously in sonoma, they're bearing the brunt of some of these wildfires as well. yesterday we caught up with the owner of paradise ridge winery in sonoma. that's another one that was burned to the ground he says despite that loss, he

does plan on rebuilding, and he is not worried about the long-time -- long-term crop damage because he says that the soil is regenerative here in napa, actually, there are dozens of hotels and restaurants and also wineries that will remain closed. not necessarily because they were burned but because of the impact of the wildfires. many of these were iconic brand names in the area. they include the hotel side the meadow wood resort, also the silverado resort and spa, and carneros resort and spa. the wineries include cake bread, hess, opus one, just to name a few, and that could have a material impact here economically last year tourists spent close to $2 billion in napa alone. there is one small silver lining to all of this, which is that 90% of the harvest has already been brought in.

that's one solis here amid all of the damage and destruction, and not to mention all the deaths back to you, guys. >> adidi, thank you very much. right now let's get to political news the washington post has a new piece this morning about billionaire tom barrett calling him trump's loyal whisperer. he told "the post" that he doesn't like trump's rhetoric. we are joined with more, and elan, we know thomas barrack from all the way back to the nomination where and the speech says that he was giving then >> that's right. is he shocked and stunned by the president's controversial statements on twitter. he opposes some of trump's signature positions that include a border wall on the travel ban, and he said that he has told that to president trump straight up here's one of the statements from barrick in the washington post he says he thinks he has to be loyal to his base. i keep on saying, but who is your base? you don't have nail base your base now is the world and

america. you have all these constituencies show them who you really are in my opinion he is better than this the washington post says that the private equity and real estate investor talks to trump at least once a week, and he was the one who pushed trump to hire paul maniafort that was trump's former campaign manager, who is now under investigation over his ties to russia he also reportedly turned down an offer to join the president's cabinet "the post" says, and there is still speculation, though, that he could be chief of staff if john kelly ever leaves his interview in "the post" is revealing because barrack has been until now one of the president's most loyal cheerleaders on the outside, but in this interview he does still say that trump is learning to govern back over to you >> you know, elan, we've had tom barrack on the set with us on plenty of occasions where he has talked things through. it is unusual for him to kind of reach out and offer criticism through the media.

in an interview he gave to the post he said this is actually one of the values that he brings to the president, their long history of friendship. he was at president trump's father's funeral and that allows him to stand up to the president and not just be a yes man. >> i like that, though he is still learning how to govern maybe he can get some more pointers from mcconnell maybe or some of the other guys in the senate, mccain or -- yeah. have those guys learned how to govern yet do we know everybody still learning how to govern does anyone know how to govern >> i'm not sure that president trump was looking to mitch mcconnell for advice right now >> i just wonder who do we look to is it in this country? i don't know anyway, thank you. >> in geopolitical news tensions between the u.s. and iran remain high as president trump is expected to refuse to recertify the iranian nuclear deal joining us right now is carnigy endowment senior fellow karim.

thanks for being here today. >> thank you >> this has been very interesting to watch some of the president's own top advisors, secretary of state, secretary of defense, saying they would rather see it certified, but it's probably not a huge surprise to anybody who has watched this coming. trump has been opposed to this deal since he was running for the presidency how do you kind of boil it all down >> well, to the extent there is a coherent trump doctrine, a coherent trump foreign policy, i think it's simply to oppose what president obama pursued, and the iran deal was one of president obama's signature foreign policy legacies as you mentioned, trump is not only acting in contrast to almost all of u.s. allies in the world with the exception of israel, but also as national security brain trust people like general mcmaster, secretary tillerson, general mattis who all argue that the iran deal has up until now been working okay, and if the u.s. were to pull out of it, it would

be isolating the u.s. more than iran >> a lot of people in congress a lot of people in the senate. plenty of outsiders who were saying we should have never let them get this deal to begin with because we gave too much away. now that the deal is here, it seems that it's a little more complicated. it could be a little bit of a catch 22 what happens if the president does not certify this? what options does that leave the iranians >> so if the president doesn't certify, it kicks it over to congress, and congress will have 60 days to decide whether it wants to pass new sanctions against iran, and what you said earlier, becky, is absolutely right. this deal was highly contentious. many members of congress were opposed, but my argument is essentially that the iran deal was a good deal with a bad regime, and the trump administration's argument or president trump's argument is that this is a bad regime which we all know.

the concern i have is that if the u.s. were to pass new sanctions against iran, iran would then recommence its nuclear activities they're smart enough not to go from zero to 100 they may go from zero to 20, but what you really need to pressure iran is international unity because almost 100% of iranian trade is with countries other than the united states so if it's simply the united states, which is pushing new sanctions against iran, but china, russia, india, japan, europe are not on board, it's going to be very difficult to deter iran and then we're -- we slowly get into an effe escalating cycle that could he wanted up in conflict. >> the people have pointed out, and you just conceded, it is kicking the -- it's not -- dessert fewing doesn't mean he is getting out of it he is putting in congress to maybe do what should have been done in the first place and give them a say in it the other thing that occurred to me as you are talking to and

just to say that he appeared to be doing the opposite of anything the obama administration did in foreign policy, that doesn't necessarily -- given the results, that doesn't necessarily sound like a bad strategy for trump you could almost as a republican if you are trump, it's some of the economic policies by definition that would be the opposite raising tax -- cutting taxes instead of raising them. you know, a lot of things republicans do by definition are the opposite of what president obama wanted to do i'm not sure that that necessarily is a criticism might be a pretty good strategy. >> the way i look at it as commander in chief, any president's job is to mitigate security risks, which the united states faces, and my concern is that blowing up the iran deal would really be gratuitously increasing risks to the united states >> not facing down sear gentleman and not doing the red line and not doing the reset with russia. did all those things -- i mean,

admittedly, it didn't -- you know, it didn't get us into further confrontation, but that -- did those things increase our security by appeasing and leading from behind, karim? is that increasing our security? >> i actually think it was a big mistake for president obama not to react after bashir al assad used chemical weapons, but my point about the iran deal is that i actually think it's very important for the united states to counter iran's maligned activities in the middle east. i think it's very important for the united states to stand up to iranian human rights abuses at home, and the problem is that we have to do that with the united international coalition. it has to be europeans on board. the chinese to some extent, the russians, our asian partners >> yep >> and if we go to those countries and say, listen, iran is complicity in one of the greatest humanitarian catsas if is in modern times -- >> we didn't extract any

concessions out of the deal on those points that you just raised that was one of the big -- you know, it's like we gave away the store. we could have asked for a lot of that stuff during the original deal >> i'll tell you, the challenge was -- >> okay. >> did you hear that >> we still have you >> can you hear us >> i think the challenge here is that the russians are essentially in agreement with iran and its syria policy, but i think what the trump administration could do is go to these countries and say, listen, you want us to continue to adhere to the iran nuclear deal. for that to happen, we need you to do more to counter iran in the region we need you to do more to counter iranian human rights abuses use that as leverage, their fear of america pulling out of the iran deal. i don't think that -- i think that trump's white house and state department understands that i haven't seen yet the president understands that >> okay. >> karim, thank you for joining

us today >> thank you >> coming up, the road ahead for procter & gamble we'll talk about the company's brands and ammortizing challenges with the ceo of ad quk x"ilamd.n, harris dion "sawbo wl be right back.solete? s powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.

is. >> procter & gamble just wraptd up the world's most expensive proxy fight. for more on what this means for p & g's ad approach, we want to

talk to harris diamond, the chairman and ceo of mccannn worldwide group. good morning to you. >> good morning. >> one of the things that happened during this proxy contest is that nelson peltz made what seemed like a pretty compelling argument to suggest that there's a brand problem at procter & gamble and that these large brands don't resonate with a new generation of millennials. that millennials want to spend time with unique sort of new brands but that tide or something like that might not -- might not be it. does that make sense to you? >> not really. you know, without commenting specifically on procter & gamble and a of m products, reality is we don't see that much i difference between millennials and everybody else 70% of millennials will say that what they buy is a product or a brand says something about their identity >> right >> similar numbers with respect to the general population with respect to baby boomers and everybody else globally it's even closer.

82% of millennials 79% of everybody else. >> you don't think there's a sense that it's like the oldsmobile ad. this is not my father's -- >> there was some truth to the fact that when they looked at it, they decided to go into that program, and they basically designed a car that was more atune to a different demographic. it doesn't mean that the demographics were walking away from cars. >> there's hope for "squawk box" and cnbc >> you guys still have a chance. i don't want you to think that you're going to disappear. >> andrew knows everything millennials know do you think you're -- are we reaching out enough to millennials? will had they watch cable tv >> millennials at the end of the day are looking for the same things to a certain extent everybody else is. maybe with a little more focus on are you socially adept? are you doing things in a right manner is your product actually trustworthy? that's an issue for you guys at the end of the day when a millennial is looking at a product, it's basically saying does this product sort of fit my lifestyle? >> we're the tide of business news, i think.

i don't want the method soap and these other -- >> that would basically mean you have the largest volume, greatest amount of resources, and ability to inyo innovate ber than anybody else. >> do we need "squawk box" in pods -- >> let me ask you about digital spending announced recently that they're reducing that spending >> they did. >> does that make sense to you is the -- do digital ads work as well as we thought >> they don't work as well as we were hoping they were going to they worked pretty well. >> is it the issue that they don't work as well or that we're not sure that we believe the numbers coming from the facebook, coming from a goingle? what's the -- >> i think the combination is the reality we once thought that digital to a certain extent was going to give us person to person type of a relationship. the reality is digital gives us an ability to reach people better than we've ever been able to reach them before, but it's not a panacea. at the end of the day you still want to buy large reach. that sort of requires television keeps you guys basically in business you still want to basically try to have in store you want to have billboards.

you want to have all the marketing programs possible to surround the consumer. >> weigh in on this nfl controversy, and president trump tweeting about it again this morning. the nfl owners are apparently going to be meeting next tuesday to discuss whether effectively to require the players to stand. as a marketer or if you were representing a sponsor of the nfl, what do you want them to do about this >> well, listen, they have to obviously quiet it down. the reality is if you are an owner standing by with labor, always makes sense the nfl has clearly been damaged. there's no doubt about it. >> you say standing by with labor has always made sense. >> absolutely. listen at the end of the day they need their players to believe that their teams believe in them. this is obviously something that is heart felt. it's emotional it goes beyond business issues >> can they walk a fine line, though you are talking about, as you mentioned, some damage that's been inflicted on the brand. the nfl owners, i'm sure, would like this to just go away. >> sure. >> is there an artful dodge that can be had here? >> i think time heals all wounds the reality is people still want to see football games.

truth of the matter is ratings had been improving over the last couple of weeks. notwithstanding the controversy. i do think that time will actually heal this the reality is we also have to get beyond this. the fans are annoyed by the political back and forth between the president and a problem. >> how do you think about that more broadly in terms of politics and advertising today, the role that corporations play perhaps we've had discussion with ceos have become a new moral arbiter of this country. how do you think the public is responding to these political issues because people are on both sides. >> going back to your question about millennials, 27% say trust is really key, in the product's attribute and what the product stands for clearly corporations have an ability to have a voice today, to a certain extent they are being looked to to talk out loud about issues that people believe are important to them, working

conditions, gender, and fairness, all of the issues that everyone talks about late at night. but, for corporation to get involved in that political area, dangerous, highly charged and the reality is most corporations would still prefer to sell their products and make sure they are well understood -- >> final question from me. do you think the creative element of advertising is as good today as it was 20 years ago? i remember back to the old ads for nike or ads for remarkable. >> where's the beef. >> fearless girl. >> i would argue that advertising and marketing today as creative or more creative. >> it doesn't have as broad of an audience ---ed ads we used to know, harder to come up with them because there's so much more media and different places to see. >> i don't think that's necessarily true >> why are those ads seared in

my memory? >> you're remember certain slogans of the past that weren't necessarily as breakthrough at the moment as they became over time there's always ads, hill top we did at mccann, madmen ends their show with it i would argue that today creativity is broader than it's ever been before you see things now online that you never could have done, things in the street never in the past happened and see statues like fearless girl having the impact it's having on society, that's marketing and that is all creativity and creativity today is as big and as broad as ever >> mistakes are always made. don't know what happened there. >> i think business news in the morning is better than it's erev been i really do as an objective -- i think business news is better than it's ever been in the morning.

♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

the worse the performing sectors in the month

let's get down to the new york stock exchange. jim cramer jones us now. you saw jp morgan, i assume you did, under weight and a 20 price target the company came out and said

the dividend is a priority where are you on that? >> well, you know, i thought that your question about whether it would be maintained at the same level was pertinent i know that they would like -- they've gone from saying that this is violet, being the top priority being a top priority. what are the other priorities? the guy from jp morgan has been so right it's scary. you can imagine, you've got these guys at these major firms and they are all like possibly their companies trying to get business from ge but the analysts are so darn honest because they know the company is wrecked. wrecked is the correct word. ed garden from trian is a good thing because they have a lot of fat. i like john flannery very much i think he'll do whatever is necessary. but i do think the earnings should come in about 1.50 and the dividend will be a concern for next year. >> if they take the dividend

down, nick suggested it's like the titanic, going to the bottom, is that the case >> i don't know, this is not the lus taken ya. >> thanks, wll se'ee you in a couple of minutes. >> we'll be right back [vo] when it comes to investing, looking from a fresh perspective can make all the difference. it can provide what we call an unlock: a realization that often reveals a better path forward. at wells fargo, it's our expertise in finding this

kind of insight that has lead us to become one of the largest investment and wealth management firms in the country. discover how we can help find your unlock. aggressive styling, so you can break away from everyone else. the bold lexus is. experience amazing. when it might be time to buy or sell? with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today. fidelity. you myour joints...thing for your heart... or your digestion... so why wouldn't you take something for the most important part of you... your brain. with an ingredient originally found in jellyfish,

prevagen is now the number one selling brain health supplement in drug stores nationwide. prevagen. the name to remember. flexshares etfs are built around the way investors think. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

all right, let's take a final check on the markets the futures this morning have been around the flat line all morning long the s&p indicated down by 1.5 points and nasdaq 3.5. 10-year noeld yielding 2.337%. >> that's it make sure you join us tomorrow "squawk on the street" is next ♪ >> good wednesday morning, i'm ca carl quintanilla >> wildfires in california and president speaks on tax cuts tonight. road map begins with wall street in rally mode watching q3 earnings and the president will make the case that his