"squawk box. 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. let's look at the u.s. equity futures. stocks closed higher yesterday after we got those minutes from the nafederal reserve suggesting they think everything will withstand another rate hike coming in december stocks closing up. s&p closing at a record close. the dow up about 40 points yesterday. this morning a bit of giveback with the dow futures down about 8 points in europe, the nikkei up to another record high, 20,954. hang seng ended higher, up about a quarter percentage point

shanghai composite was flat. in european trading, things are barely changed the dax and ftse slightly higher cac down about 0.1%. italian stocks down as well, but in spain stocks are slightly higher checking out wti, still above $50 a barrel sitting at $50.84 a barrel we're following a developing story out of northern california deadly wildfires burning unchecked there. officials say 23 people have died from those fires. more than 3500 structuring have been destroyed leaving hundreds missing in chaotic evacuations firefighters are battling high winds as they try to contain two dozen blazes spanning eight counties yesterday a mandatory evacuation was enforced in sonoma county. we'll get an update from

northern california later in the program. >> i didn't understand why this had been so hectic why people didn't know to leave and confused they were dealing with winds that were above 70 miles per hour on sunday night when you think about that, that means the fire is moving over 70 miles per hour, getting pushed, jumping over barriers that you wouldn't expect and blowing in different directions sounds like a terrifying situation. >> we were just there two weekends ago, our friends were staying at a house that was rented that has already apparently been -- >> in napa >> you were there. >> for a wedding there president trump making the case for tax reform in a speech last night in pennsylvania and house speaker paul ryan will be making his pitch to conservatives this morning ylan mui has more on that story. >> ryan will frame tax reform as a call to action for grassroots conservatives when he speaks at the heritage foundation later

this morning he'll talk about the army of lobbyists already at work on provisions like the state and local tax deduction. will he say the foot soldiers of the conservative movement need to see this through. republicans are under enormous pressure to score a win on taxes and trying to energize their base behind this issue president trump held a raucous last night in harrisburg, pennsylvania his message plasted on eered on 18-wheeler behind him. he talked about a conversation he had with bob kraft, owner of the new england patriots >> as he's leaving the white house, he said donald, i know you're soon going to be doing tax reform and tax cuts. give it to the middle class. don't give it to us. give it to the middle class. that's what we're trying so hard

to do. >> many analysts disagree with that the left-leaning institute on taxation and economic policy found the richest 1% of households would get a $68,000 tax cut under the gop plan, the bottom 20% would get a $70 tax cut. back over to you guys. >> thank you very much for that. a quick programming note, we will talk taxes with steven mnuchin, he will join us at 7:45 a.m. he has been with the president for that speech and more >> the race for the next fed governor, the chair, seems to be tightening fed governor jerome powell is the front-runner today according to predict it, the

betting website. they have his odds at 48%. followed by former fed governor, kevin warsh at 25%, and janet yellen at 13%. politico is reporting that treasury secretary steve enough season pushing for powell to take the job we'll hear more from secretary mnuchin coming up at 7:45 a.m. eastern. >> apparently they worked together on some regulatory stuff. mnuchin feeling comfortable with powell >> warsh i thought was a long shot in the "journal" today, i like this headline, warsh seen as pick for bank's leader then i looked into exactly what they're saying so warsh was at 28%, and then yellen 22%, and powell at 21%. if i wassed ethe editor -- as w

guy, do you think that's a good headline. >> i would say warsh in the lead >> that's different than the predictive markets and -- >> let's say there's four people in the running and they each get 25%. >> race too close to call, you're saying? >> they talk three here. one got 28, one 22, they're really that good at the difference between 28 and 22 just shooting -- just speculating -- i just think it's -- >> headlines are often -- >> stupid. >> right and made to fit a small space. >> if i was just scanning and i read that, then i went somewhere for lunch, i would say warsh is likely the pick. >> you can't just read headlines. >> but it's not really the story. >> we run headlines all day. i won't throw stones >> ours are much more -- >> nuanced

>> we have numbers and stuff here then again it is all economics i talk about the economics >> ours is jerome powell seen as the favorite >> there you go 48 is better if there's four people running and they're in the mid 20s, there's not a favorite >> there you go. >> president trump suspected to sign an executive order on healthcare while the president has not revealed the full details it will likely relax rules on small businesses that band together to buy health insurance earlier this week he said he plans to allow people to buy health insurance across state lines, a goal of people on the right more than the left president trump is expected to sign the executive order at 11:15 eastern. i watched that speech, i knew treasury secretary mnuchin would be on.

very populous. >> yes, it was >> but once again, we have to flesh out the details. didn't mention state and local taxes. didn't mention is it retroactive? permanent? a lot of things that -- i thought it was a good speech it rallies the troops, but we'll have to hear -- >> the devil is always in the details. there's news that suggests it will be tough to give significant tax break without those breaks going to the wealthier americans because of who pays taxes if you look at it, 45% of all individual income taxes are paid by the top 1%. >> top 10% pay 70% ylan said people at the bottom only get a $70 tax break, and people at top get 58,000 nobody at the bottom -- you couldn't give the people at the bottom a $58,000 tax break, because this would put them at a tax credit of whatever

>> 57,000. >> yeah. >> it's like -- you can't say it -- >> there's commentary from someone who is a tax analyst in the obama administration saying it's hard to have a tax benefit not go to someone in the top 11% of the group because they also pay taxes. >> now the question is who >> adam looney it's numbers strait straight numbers. >> we do have treasury secretary mnuchin joining us at 7:45 a.m. eastern. president trump is expected to make a major announcement on the iran nuclear deal tomorrow sources tell nbc news that the president will refuse to serlt fi th certify that iran is completely adhering to the deal but that the united states will not pull

completely out of it president trump making headlines on another deal. he says he's open to bilateral trade talks with canada and with mexico if the naft da taa talksl apart. he made those remarks at a meeting with justin trudeau at the white house. trade representatives from canada and mexico are in washington for a fourth round of nafta negotiations wilbur ross saying late yesterday that the trump administration does not want to walk away from the deal, but he has said that the president has been open to that approach from time to time general motors warning leaders of canada's uniformed labor union that it will wind down production at an ontario factory unless workers call off a month-long strike. this has been fueled by opposition to nafta. the shift in production would take place if the walk-off was

not stopped. joining us now on the markets is jurien timmer and lisa ericsson. i'll ask both of you a similar question do either of you differ with what we're hearing just about every day, that's risk on and the market -- this trend is likely to continue unless there's a shock or policy mistake. while valuations are high they're not out of control do you differ with anything i said >> we do, actually generally agree with what you just said.

as you say, that's a consensus view the two things that we would point out in addition to that are, one, the fact that actually when we look at the economic indicators globally, we're seeing some signs of deterioration. and even though the absolute readings on those indicators look good, it's important to monitor that rate of change. while we don't see sustained trend yet, we want to keep our eyes on that the other thing is around the complacency levels in the market if you look at the vix or pe or do emotional sentiment indicators, they are definitely at highs so we think that's another risk within the market. >> i think jurien will echo some of that in terms of sentiment. sentiment has gotten more bullish, and also i think you make the point that earnings while strong, the warate of chae

is a second derivative, and that's starting to come down a bit. >> yeah. for the last six quarters or so when this global inflation began in 2016, the markets have had the best of both worlds. earnings growth has been double digits, financial conditions have eased even though the fed has been in tightening mode. when you combine earnings growth, easing liquidity conditions t drives valuations higher if valuations go up and earnings go up, price will go up a lot. that's what's happened the s&p is up over 40% since february of 2016 we are at an inflection point, not that the market will go down, but that that very powerful twin tailwind will blow a bit less strong. as you indicated, earnings

growth went to plus 11% in the second quarter, right now at the cusp of earnings season, the consensus estimate is about 3.5% usually that number will drift higher during earnings season. companies tend to underpromise and overdeliver. if that goes up to 6%, 7%, we have come down to the long-term trend growth rate for earnings which is about 6%. still a positive story positive earnings growth is good for the market it's not -- they're not the numbers that will push evaluations higher now with the fed presumably on board to hike in december, and with this still lingering disconnect between how little the market is expecting the fed to hike and how much the fed is suggesting it will through its dot plot and balance sheet, chances are they may tighten moderately, then you have still

the two tailwinds, but certainly softer as a result i expect a much more two-sided market with a more normal risk return distribution than what we've seen over the past six quarters. >> i wish someone would have told me. you know, we've done 25% in the last year, i was under the impression that all we would get were mid single digit returns in the stock market that's what everybody has been saying now you're back to that, you're saying the multiple stayed at 20, but we were getting earnings growth that was much higher. so the 25% might make sense. now in hindsight -- now you're back to what they told me last year, mid single digits is all you'll get that's what they were saying a year ago two years ago, three years ago. why didn't anyone tell me that earnings would grow like they did in the past year that they would grow 25% did you tell me that >> i was pretty bullish.

>> 25 is hard to call. >> few people including myself could have found it hard to predict that the fed would hike three times this year and liquidity would ease up. usually it's called tightening for a reason the fed is tightening to tighten up conditions. >> so i was talking about earnings -- but the fed is part of this whole equation you can never forget that. >> the fed is a huge part. >> all right >> think about this, over the long-term as policy normalizes in the years ahead and the balance sheet is expected to come down 1$1.5 trillion over te next three years, what is that going to do to financial conditions what does that do to the ten-year treasury? what happens there will feed into the valuation of literally every financial asset on the planet that is an existential question. and the fed looms large on that discussion >> so, okay. does that make sense

we'll give you the last word, lisa now we're back to mid single -- we're back to the same thing that we've been saying so mid single digits for the next year. i wanted anoth another 25% how will we get there, probably not, right >> yeah. we're more cautious as well. sorry for that the fed is an important factor to watch that being said, we're probably more positive than that. the reason why is while we are agreeing that there's likely continued rate hikes, and then not looking just at the situation in the u.s., but also globally, we'll see some easing being taken off the table in the eurozone as well these things are gradual we still see all of the central banks being data dependant and giving communication because of those gradual paces of how that monetary policy will be unwound, i think we're a

little bit more optimistic that things will go right on that front. >> all right great. thanks when we return, cyberthreats we will talk to the ceo of a security firm who says the companies are not just doing enough to protect customer an employee data. that's next. and later our newsmaker of the morning, treasury secretary steven mnuchin will join us to talk taxes and a first on cnbc interview. "squawk box" will be right back.

. the equifax data breach compromised information like social security numbers and as many as 145 million americans. a new report says that breach may have compromised the driver license data for 11 million people joining us now to talk about data and privacy is james foster of privately held cybersecurity firm zero fox. thank you for being here >> thank you >> equifax has by blood boiling, but it seems like every day we're opening the newspapers, turning on reports, reading about another firm that has been

compromised, that has compromised our information, not theirs >> i think that's right. we've seen more high profile breaches in 2017 than the past years combined why? >> i think it's simple economics. the number of new types of targets available is going up. the costs of attack is going down outcomes are improving attackers are flooding the market >> outcomes are improving because hackers have gotten better or companies are not doing enough to protect data >> i think both. you heard stories about artificial intelligence getting built into tools to attack companies. attacks are faster now than before companies need to change companies need to become more agile and they have to be more proactive. what are they not doing? i realize it's hard to paint everybody with one broad brush some companies i feel like, okay, maybe they got taken advantage of and nation states

may be attacking their information. but lately are the companies just not rising to the occasion? you hit the nail on the head one of the problems is they're still working on the basics. i talk to tons of security officers, i say how are things going? what projects are they working on they say we're getting our arms around the basics. what does that mean? >> patch management, installing end point security, firewalls. >> if joyou're just doing those things what are you not doing? >> attacking the new attack surfaces out there >> what are those? >> social media -- >> a lot of new entryways into the company. >> exactly if you are working on the basics, you have not covered those. >> where would you grade equifax? >> it's hard to say. they're not alone. >> when you say they're not doing the basics, so deloitte is

not doing the basics >> i'm not sure i said that. but a lot of companies aren't -- >> i think there's two levels here there are -- fortune 500 or fortune 1,000 companies who may be doing the basics but are playing against an actor who is in a different world, and then people who truly are not doing the basics, and the question is are there massive companies, truly massive companies that you're aware of not doing the basics >> are truly massive companies that are still grasping with doing the basics well. i think you'll start to see a shift in the types of companies out there. those who have masters cyber and those who haven't. >> you put these companies into two categories. companies who have specific information, than other companies like whole foods, if somebody rips off my credit

card, the bank will take care of that. >> i think that's right. part of the challenge is will you put regulation around that >> yes do you think that's required >> i think they have to have regulation around companies that hold sensitive information europe is taking that charge with gdpr. what is that. >> general data privacy. they say if you want consumer information, we will hold to you a higher standard. point blank. >> that makes sense. >> you will get fined and there's real financial ramifications if someone breaches that data >> i think it should be more than fines, that's not even my money i'm paying with. >> here's the question what should the liability be for a company that loses the information where it's unclear at first instance what the true loss is to me. if my account was breached at equifax, my data may be stolen, but unclear it's been used, so there's a monetary liability, yet could be a monetary -- could be a liability coming five years

from now, maybe somebody could use a piece of that information to somehow do something else terrible to me how from a regulatory standpoint, if that's the direction you think we're going, should we be the fine could either be too much or too little potentially >> i'm not sure if anybody has been hit with a fine that's too much yet until we start to lean towards steins getting too much, i think you can continue to increase them and see what the market will bear. at some point it will trigger action you'll start to see companies move beyond the basics and go to a really pro active strong, agile environment. >> thank you >> thank you coming up, why amazon is helping fuel the bull market in commercial real estate that story next. plus jpmorgan is expected to report in the next 20 minutes. gather your spouse, gather your children, bring them over to the television set you need a bathroom break? take it now. this will happen within the next

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welcome back you're watching "squawk box" live from the nasdaq market site in times square.

welcome back, everybody. right now it's time for the squawk planner look for weekly jobless claims and the september producer price index, those hit at 8:30 a.m. eastern. the federal budget statement is at 2:00 p.m. we'll hear from jpmorganin the next few minutes citi group will report around 8:00 a.m. and lots of fed officials will speak today rafael bostic, jay powell and lael brainard giving speeches. don't miss an exclusive interview with eric rosengren, he's sitting down with steve liesman at 4:00 p.m. eastern today. futures are down today after the dow and s&p set new records the nasdaq looks to be down

marmg nall l marginally by a half point this morning. e-tail has been a boon for commercial real estate, which is now the third biggest asset behind equities and bonds. for more on the sector we bring in the president of private equity real estate firm glak creek group, also a -- the view is amazon is killing the commercial real estate market. >> amazon has made the warehouse sexy ten years ago they didn't have five warehouses, today they have 250 warehouses around the country. this is the biggest driver of the industrial asset class in real estate. >> in terms of price increases, what's happened? >> rent growth in industrial is

up 6, poi7 points total returns north of 20% >> good news for markets that are not big cities >> it is good news a big part of the whole foods transaction was the last mile. so amazon warehouses are on average 30, 50 miles outside of a city, seven football fields large in terms of scale. whole foods gets them within ten miles of 45% of the country. >> how do you think the whole foods deal changes the dynamic for them how many more of these warehouses do you think they build as a function of that? >> it changes the -- there was a debate bricks versus clicks for a long time. retail suffered, industrial benefited within real estate the deal put a floor under retail it can be repurposed now and help them get to the last mile is there probably so low some o

the traditional warehouse growth >> i said it was counter intuitive, but we should accept for a second or acknowledge many reits have gotten killed in large part because the retail piece, the shopping malls where people go in the streets are empty now. >> yeah. within real estate, retail is the largest sector you can have a class b mall or a single tenant grocery location and the value proposition, the return prospects are very different. as you would expect. >> so what do you think will happen to the shopping mall world? >> i think there's capacity and yet -- we've yet to see a bottom in terms of demand for the traditional shopping mall. in terms of commercial real estate, are there certain markets that are hot, hot, hot that we're not appreciating? >> industrial is the hottest

>> no, not just sector, i'm saying regionally. >> sure. cities like dallas have been on fire nashville, we've seen tremendous demand in denver i think you'll continue to see, as you mentioned before, these cities start to grow away from the traditional markets. new york city is expensive new jersey is attractive >> are there places that are doing much worse than we know? >> i do think new york city is the one city we've stayed away from you can see relative value versus international opportunities, but we've got a property in new jersey that we consider the sub market that has much better value. >> we talk about the amazon effect are we just talking about amazon or are there others? there's walmart, but is there

anybody else out there doing anything else like this? >> amazon is by no means alone all the retailers have to have an omni channel strategy >> nobody is doing this at scale at this level. >> i would say that no one has their scale. >> no one has their scale, but i keep thinking about it t seems more and more online shopping, more and more people are going to online shopping as a result, even if it's done small scale over lots of places, it seems like the play is going from the malls to the distribution centers as a place for where you're going to see the new building that comes in >> that's right. a big issue with e-commerce are returns. 60% of what's ordered is returned that's a key part, being able to facilitate the exchanges >> what about europe and china >> they're big buyers, china, canada, japan, big buyers of u.s. real estate, when you think

about how expensive new york may be, it is attractive compared to london, hong kong. for years international funds have been big players in u.s. real estate. they continue to be. it used to be just hotels and prime office buildings, now they're involved in some of these other sub sectors. >> in terms of the stuff you are buying, are you buying anything in europe? >> no. >> totally domestic? >> we run a domestic play. you buy the s&p, and a lot of earnings are exposed to international earnings if you wanted a pure u.s. play, commercial real estate is the way to do it >> given where reits are, and how they have come down, is this -- do you look and say there's great value or this is knife is still falling in. >> public reits are different than what's actually the biggest part of that asset class and public reits were put in place years ago so you could get

dividend and have saying that fits your portfolio different than stocks and bonds. now the correlations are so high, if you own a reit, you will move with the market. you can invest in a lot of private real estate opportunities, where you don't have the volatility and correlations, and that's a place where we like to play. >> thank you for coming in >> nice to see you guys. >> black creek blackstone, blackrock, black creek. >> there's not many left >> there aren't. >> what is the origin story on black creek? how did that happen? >> blackstone was part -- they came up with that -- >> we're based in denver, there's literally a black creek. it was named after that. >> what's your gamble that amazon makes its second headquarter city denver? >> i think denver or boston. >> no detroit? you think they're out of the running. >> i think they'll want regional

diversity. that's why boston has a shot >> you think the flight all the way from seattle to boston is just too long? >> just as much as it is long, i think they like the idea >> weather is much better in denver >> i just moved to denver recently >> 300 days a year of sunshine >> we like the idea of the sort of -- i like the denver/canada pitch. >> detroit/canada pitch, you get the cross border pitch that's interesting >> i don't know. then you have to deal with international -- >> do you think people are buying real estate based on this, based on what amazon may or may not do? >> yeah, probably, developers are for sure people will look for land. in denver, if they were coming there, they have to be 20 miles outside the city >> do you have to make that call right now or make the call the

sk th second they announce it? >> do you remember when you let your guard down and you said denver is not a real city. then you said my sister lives there. >> it's not that it wasn't a real city, it was not dense like this los angeles is a city, but it's spread out >> there's places to sprawl in denver you insult somebody every hour >> thank you, becky quick. when we come back, jpmorgan is set to report we'll bring you the numbers and reaction our newsmaker of the morning, steven mnuchin will be joining us at 7:45 a.m. eastern time on a first on cnbc interview. and later, joe lonsdale backed companies like oculus and plated he will join us to talk about his newest ventures at 8:40 a.m. eastern time you're watching qu"sawk box" on cnbc

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box. it's time for the executive edge when brick-and-mortar retailers close up shop what happens to the workers? courtney reagan has some answers. she joins us now >> it's a big question we've been digging into. when you account for the planned store openings this year, the u.s. will still lose 2700 retail stores those jobs are disappearing along with liquidation sales a peak in retail jobs was in january of this year, 107,000 jobs have been lost in the sector in 2017 few sales associates are taking warehouse or distribution center roles, so it's a miss match when it comes to skills and location. zip recruiter's coo says the number of job seekers crossing over from retail to something else is getting higher often they go to food service or

leisure and hospitality. current retail employees are most interested in jobs in beauty, hairstylists, cosmetologists, followed by job searches i tellers third. there's a spillover effect, that the service related industries should be paying attention to. with more workers vying for nonretail jobs, competition increases making it harder for wages to grow across the board in those sectors andrew >> thank you for that. news in washington this morning. people will be talking about this she will be sitting down, sheryl sandberg will be sitting down with axios this morning since revelations of russian groups buying ads to influence the 2016 election the house intelligence committee says it will release some of the thousands of ads that the company turned over to congress.

yesterday the chief technology officer says the company has begun handling how it deals with political ads and may make some changes before the u.s. elections next year. "60 minutes" over the weekend had how facebook offered to both sides to actually put their own people in -- >> imbeds were offered to both camps. >> fascinating the trump campaign took them the clinton campaign didn't. and the idea that they have imbeds where they ask you what your political affiliation is. >> so you're aligned with the party you would supposedly be helping. separately, facebook announcing a cheaper version of its virtual reality headset, the oculus go. it will cost $199, it is offered without use of a desktop computer the chief technology officer says he expects to see the device on airplanes for people who want a better experience in

the seatback entertainment system they are decleereasing the pricf the oculus system which does need the computer. >> the only good thing is people can't see what you're watching but i don't want people thinking think can play tennis behind me. >> on the oculus rift, with the triggers in your hands, you start going around -- >> you get punched in the face by the guy next to you >> or worse. groping. >> on an airplane? >> yeah. right -- especially in coach how could you not? you could grope a whole aisle. >> having a public screen makes people watch things they shouldn't be watching. if you took a shot of the entire plane -- >> if it's just a movie, it's okay >> unless you get scared five hollywood film studios

joined together to allow users to collect digital movies across different platforms. disneys developed the movies anywhere service to have a single website where customers can find movies that they purchase from a variety of retailers including apple, amazon, and walmart. comcast universal pictures, warner brothers, 20th century fox and sony pictures entertainment. the service launching yesterday in the united states. we're still getting ready for the jpmorgan report. we'll have that shortly. and later, treasury secretary steven mnuchin will join us live at 7:45 a.m. eastern time. first a quick check of what's happening in european markets.

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welcome back to "squawk box. j.p. morgan's results are out. we're going through the numbers in an 8k instead of through a press release but it looks like the company earned $1.76 a share which is better than had been expected the street had been looking for

$1.60. i've lost my page. >> $1.65. >> it looks like revenue came in better than expected, too. >> 25.229. >> there's a managed revenue number that you have to look at to compare apples to apples. 25.29 was test mat, $25.3 billion but i'm not sure if that's the correct one 2 26.2 is the managed revenue number and that's the number we compare to apples to apples on this comments from jamie dimon talking about this he says j.p. morgan chase delivered solid results in a competitive environment with steady core growth across the platform he says for the first time the firm led the nation in total u.s. deposits as consumers and businesses continue to view us as their partner of choice return on investment -- return on equity is 11% common equity tier was a lot of these metrix we'll look

through but it was up 2% quarter over quarter. >> didn't we used to say that wells was -- had a higher market cap? it's not even close. >> wells has run into problems over the last year or so. >> but j.p. morgan is near an all time high. it's not doing much today. the all time high is 97.64 when i looked i was like wow, it's up in the almost 100 because it was at 40 and 50 for so long if you look at the long term -- citigroup has done well, too. >> so has bank of america. >> but citigroup at 70 is seven. >> you have to remember the one for ten. other headlines coming out on this because we look to j.p. morgan as a readier on the broader economy. when it comes to consumer, they say card sales were up double digits loans and deposits continued to grow strongly. when it comes to corporate and investment bank they say they continue to lead their peer in

treasury services and security services generated a billion dollars in revenue commercial banking, strong result there is. long-term investment, dimon says, in the business are bypayg off. now we're up a third of a percentage point, 97.64 is the old high. >> wait, this is what i was looking for. his comments on the economy. we always care about this for big banks, dimon says the global economy continues to do well and the u.s. consumer remains healthy with solid wage growth, unfortunately natural disaster ins the united states and abroad have impacted many of our customers and we have responded with enormous financial support. >> and bitcoin is still a bubble oh, no, he didn't say that. >> not this time. >> okay. >> and he'll fire you if you're trading it. coming up more bank -- no, seriously? did you know this? >> yeah. >> more bank earnings on deck,

citigroup expected to report around 8:00 a.m. i did know that and that's why i looked up the price of that in the 70s. we'll bring you those numbers. great job, buddy, fortunately there was the 10 for one reverse split. first, though, treasury secretary steven mnuchin will join us at 7:45 a.m. eastern time, "squawk box" will be right back your muscles look good, but we should be seeing more 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?

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here come the earnings, j.p. mortar zban the first big financial to report as we get market reaction? just a few minutes chaos in california. wildfires fuelled by strong winds continue to spread while hundreds go missing and 23 are

confirmed dead we have the latest on where the fires are moving straight ahead and the president's tax reform push. treasury secretary steven mnuchin will join us for a news-making interview as the second hour of "squawk box" begins right now >> announcer: live from the beating heart of business, new york city, this is "squawk box." ♪ good evening welcome back to "squawk box" on cnbc i'm andrew ross sorkin along with joe kerr anyone and becky quick. we have a couple big interviews in just a moment we'll show you futures the dow looks like it's going to open off about -- well, we'll call ill about 18 points, nasdaq off a point and a half s&p 500 off 3.5 points >> j.p. morgan results out just moments ago. wilfred frost joins us with more

on the numbers it looks like the stock has turned down after initially trading up on these results. >> the stock was up 0.7% an hour ago and flat before the numbers came out the epsb 176 against forecast of 165. revenues slightly ahead of expectations during the middle of the quarter the numbers guided down 20%. q-3 was very strong last year. it's slightly worse than that, down 21% so that sounds in line but given that the other banks have guided down mid-teens, they're down 21% is a little disappointed fixed income commodities and currencies down 27% year on year, equities down 4% year on year so trading is as bad as it was guided some hoped it would be better than that. loan growth is interesting

because this has been slowing. we knew it was slowing, 2016 was a good year for this but it's continued to slow, it was around the.3% for the industry last quarter, looks about 2% quarter over quarter for j.p. morgan not a terrible number but a trend where it is slowing. investment banking has done well. >> $1.7 billion and diving into the other numbers in terms of where the disappointment comes out. treasury services something they're always keen to talk about. solid revenue over a billion there and jamie dimon talking about the fact they were number one in u.s. deposits in the consumer business in his comments we just need to dive into why they slipped a bit, only 0.3% or so that trading number probably in part due to that because they guided down heavily and some hoped they would do better than that but indeed they are down 21% for trading. >> trading number, the most important one. thank you for that, we'll see you in just a bit.

we have other headlines we're watching with jane morgan chase in the books our attention turns to citigroup that bank will reporting its numbers at 8:00 a.m.ee earn time analysts say they should be earning about 1.32 per share we'll see whether they get there. a key stat for fed watchers also coming at 8:30 eastern time. the september producer price index expected to most an increase of 0.4%, twice as much as it rose in august and prospects for inflation and how they play into this rate increase decision a major part of the minutes in the fed's september policy meeting amazon hiring more than 120,000 workers for the holiday season, in line with the number of 2016. the retailer expects that like last year many of those workers will become permanent employees at amazon. when you see a number like that, do you say that's great or bad given how much they've grown is it strange they're not hiring

more people for the holiday season is that a function of technology and robots what is going on i would have thought given the amount of just increase in their business and everything going on with whole foods -- >> i don't think it's seasonal i think their business has increased rapidly. if you look at how many people they had employed first quarter versus now, it's grown every quarter. every time i try to keep track of how many employees they have, it goes up drastically you can't assume there's any steadiness there i've been shocked every time i've looked. they are not a fourth quarter story. most retailers the fourth quarter is the bread and butter, that's when they go into the black. that's not the case with amazon. so they may need a similar number of seasonal employees for a little bump but i think they are ramping up every quarter. >> other stocks -- >> i forgot i ran into that number a month ago. >> other stocks on the move, we didn't get excited about this

but southwest airlines plans to add service to hawaii as soon as next year. the long-anticipated move will see southwest bring its no-fee model to one of the most popular and competitive vacation destinations in the u.s. >> i was supposed to read this last hour and i read it -- pre-read it and it said southwest is saying aloha to -- >> that's lever. but you know aloha means hello and good-bye. >> and i was all ready to say and then melekalikimak -- >> ♪ is the right thing to say on this bright hawaiian christmas day ♪ >> so you knew it was -- >> yeah, we knew used to listen bing crosby. i had that ready and now we can't use it i forced it in there but we didn't prepare this. >> no, we used to listen to

that that was part of our christmas carol review that we would do every year. >> can i be the captain and you be tenile? or sonny and cher? i got you, babe. at&t says third-quarter results took a hit from the string of hurricanes that hit the u.s. and the earthquake in mexico we should do mamas and papas, we'll bring you in, too. >> thanks. >> or peter, paul, and mary. andrew, joe and becky. the company says it lost 90,000 video subscribers in the quarter due to competition in traditional pay tv markets. >> stocks closing at record highs after the fed signals it will probably raise rates in december joining us for more on that is tom atabury, portfolio at new incomes fund and we have the chief investment officer at oppenheimer funds which has $243

billion in assets under management welcome to both of you seems like every time we turn around there is a any high sitting on these markets, people keep questioning can it continue what do you think, tom >> you look at the new highs and you think about the bond market or stock market, it just appears at this point it's flows of money. >> meaning many people are coming off the sidelines >> no you had a tremendous amount of money pumped into this system by the fed that needs to find a home and you were talking about amazon, that's one of the places it somewhat found a home. not a lot of plant and equipment but stocks and bonds and real estate being bought. >> so it's the place money is going to naturally flow? >> money will flow somewhere, where it thinks it can get the best of its returns or protect itself around that's what appears to be happening because valuation, especially in the bond markets, seems to have untethered itself. >> he can point to the money flows the fed has unleashed,

others say it's the fed holding interest rates down and there's no alternative, it adds up to the same thing. >> it's fair to say that liquidity helps the market but i think saying that equity markets are up primarily because of flows into the equity markets in my judgment is incorrect because flows in equities have been very, very spotty where the flows are coming in are in the fixed income markets and nobody is getting money into the fixed income market looking to get rich so yes there are flows and liquidity driven flows clearly help the markets but overall the reason the markets are up is because on a global basis we are going through a synchronized global recovery and growth is pretty good, earnings are very good and things are getting better internationally in emerging markets. >> larry was here yesterday and said very similarly that he is seeing the global economy really pushing money and that it's

making investors he talks to more confident, making ceos more confident, too, more willing to put money to work, investors are more willing to bring money off the sidelines to jump back in. do you see that, tom >> i would agree you have an attempt at synchronization of growth you've got all your central banks being accommodating, we may not be as accommodative in the u.s. as you find in europe and that brings you to look at okay, i can understand why people think growth will work, i'll by equities when i look at u.s. gdp growth i go it's not particularly that great. it's not horrible just not great so i look at that and think through that, i look at valuation whether i'm looking at a high-yield bond or the equity markets and go this doesn't look like a tremendous amount of value to me. >> so you think things are getting expensive so you're not putting additional money in? >> we have been taking money off the table in risk from a fixed income perspective which is credit holdings, things are

becoming less and less part of our portfolio. we find fewer things we feel like we're being compensated for the risk something might go wrong. >> there has been a lot of money that's gone into those areas other investors have said the same thing about the high yield bonds. krishna, when it comes to stocks are they overvalued or not >> valuations are not cheap but they are reasonable in the context of where bond yields are. if you look at valuations overseas, especially in emerging markets, they are reasonable in the context of what we believe the growth trajectory and earnings trajectory is for those companies. >> the fed seemed to indicate it will raise rates in this next meeting in december. does that impact what you might be doing >> that is pretty much built into the markets the market has been pricing in a december increase for quite some time the real question is what are they going to do in 2018 and as

the discussion and the fed minutes that came out yesterday indicates it's far from certain that they will tighten the three times they have been talking about for some time. growth is good inflight hasn't picked up and that gives them to room to be more discretionary than they would be otherwise. >> if it's a 2018 picture, we don't even know who we're dealing with as chairman of the fed. >> if you look at risks you're dealing with from a fed perspective and a monetary policy perspective, look at 2018, you've got three individuals, you know jelyellen you know what would happen if she was appointed, warsh, you know about him, he's said some things and we look at what he said and go this is someone who is not model driven in his decision-making process. the previous group -- >> was very model driven which means it's hard to anticipate what he's going to do. >> and that's the idea >> it concerns me from the

standpoint that we're going to go in a different decision-making process, it could be wetter, it could be worse. >> but it's an unknown, the markets always react. >> yeah. i've got rates at an extremely low level, never seen those before, i've got the most debt outstanding i've ever seen before and i might go to a different decision process on how to deal with monetary policy. >> that should be concern for an investor. >> tom, krishna, thank you both for being here. when we come back, street reaction to j.p. morgan's results. an analyst will join us to talk about the numbers and the sectorover all then later steve mnuchin is going to join us to talk about tax reform it's a big interview you cannot afford to miss stay right here. they don't invest in alternatives 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

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welcome back to "squawk box," everybody. we've been watching the future this is morning. yesterday both the dow and the s&p closed at record levels once again. this morning there is giveback that has stepped up since j.p. morgan's release dow futures indicated down by about 25 points and it looks like j.p. morgan is trading below where it closed yesterday at 96.84 that could be putting pressure on the dow futures slightly. s&p futures down by almost five,

nasdaq down by almost four. >> president trump making headlines on trade the president says he's open to bilateral trade deals with canada and mexico if nafta talks fall apart the president making those remarks at a meeting with justin trudeau at the white house trade representatives from canada and mexico are in washington for a fourth round of nafta renegotiations. >> in other trade news, gm warning leaders of canada's labor union that it will be winding down production at an ontario factory unless workers call off a month long strike that strike has been fuelled by union opposition to and a half g -- nafta. gm officials said they would ship production to two plants in mexico if the strike wasn't called off we'll keep watching that one. >> around hopefully, hopefully you saw this, you were -- you knew it was coming, j.p. morgan out with better-than-expected

earnings and revenue a short time ago joining us for more jim senegal, a senior analyst at morning starr around when you try to just write a headline about this, jim, what i'm seeing is that lower-than-expected trading which as i said we expected that, that that was offset at least a little by little bit better lending and, yeah, i thought loan growth was supposed to be weak as well. was it better than expected? >> i think that's exactly the story. loan demand came in pretty well this quarter their core loan balances are up 7%, looks like broad strength consumers and corporations are both willing to borrow to some extent and i think loan demand will drive results for the banks and to a large extent what will drive further improvements in the economy and movements in interest rates going forward.

>> so they were -- how do we view loan growth it was expected to be average and it was a little bit of better than average or expected to be below average and it came in meh was it a nice uptick or just better than the lowered expectation? >> i think better than the lowered expectation. i think a lot of people were worried that loan demand would drop a bit this quarter. we didn't see that it seems fairly solid across the board. nothing to get overly excited about but i think steady growth in loans at this point is all you can ask for. >> so the banks weren't necessarily the biggest -- stocks weren't the biggest gainers after the election but in recent weeks and months they've pitched in and led the market why is that? is that anticipation of tax reform is it anticipation that some of the regulatory loosening is finally going to come about? what caused them to pick up in

terms of the last couple months? >> it's interesting. i think a lot of the excitement around the election took a while to kick in you know, it was a delayed reaction but eventually people started getting excited about the prospects for lower taxes and redelegation, maybe a little bit faster growth and higher interest rates under the new administration it's interesting because as the general public i think tends to be -- has gotten more skeptical those things are going to happen in the near term, bank stocks have been doing well and i would argue that in a lot of cases they've gotten a bit ahead of themselves you look at j.p. morgan's valuation at 1.5 times tangible book value, they only reported a 13% return on tangible this quarter so things need to continue going well and to be honest there's a lot of things that could reverse at this point. >> what do you need for loan growth to really go from, like, a three or a four to a six or seven? would that be tax reform would

do it? you need individuals to feel more flush because consumers feel good anyway, don't they >> i think it depends on the consumer, one thing we've been watching a lot is the millennial generation it's a huge generation they're moving into their 30s. you would expect borrowing to pick up. they would be buying houses and spending on their credit cards but what we're seeing, it's an extremely frugal generation, we're not seeing that activity and we're waiting every year for the millennials to start acting like previous generations. >> they're in a streaming strans. >> things are happening later. they're buying houses later, getting married, having kids later. >> they're looking at the screens! their eyes are hypnotized. >> they're dealing with massive amounts of debt. >> all their money is in bitcoin, they can't do business with j.p. morgan. >> is there any way some of their banking activity isn't captured from the new ways they do banking

>> they don't have any money they don't work. >> yes, they do. >> i think some of the activity is taking place on the edges you look at peer-to-peer money transfers, things like that. but we're not seeing millennials take out mortgages or start businesses or do any of that outside the traditional financial system to some extent a lot of the activities that drives j.p.'s results will come through the traditional banking system for a few more years. >> what's after millennials? >> millennials are scared. >> my kids are x. >> they don't want to start businesses because they've seen what happened growing up in a horrible financial crisis. >> eight years of you didn't build that all my money is on generation x, jim, you got kids? >> that's not gen-x, i'm gen-x. >> what's after millennials? z? no, those are zombies, that was brad pitt. my hopes and dreams are on them. i'm giving up on the others.

drives me crazy. >> not usually but i'm starting to get more empathy. >> with the millennials? >> yeah. >> well, you're going to have to -- get rid of your kids, your husband and your house and then you can be a millennial. >> they're not hippies. >> we're going to hear from citigroup in the next hour andrew, what's coming up >> coming up, wins continue to fan catastrophic fires in california the death toll rising and the fires expanding. we'll get an update after the break. 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.

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california deadly wildfires are burning unchecked. officials say more than 23 people have died from those fires. more than 3500 structures have been destroyed, leaving hundreds of people missing and chaotic evacuations. firefighters are battling high winds as they try to contain nearly two dozen blazes spanning eight counties winds are expected to continue for the next several days and those winds are the huge issue no break coming from mother nature on this when we come back, after decades of work, the first gene therapy is approaching the market we have the details right after the break and treasury secretary steven mnuchin joins us to talk tax reform the president's economic agenda and the state of business. right now, though, as we head to a break, look at the u.s. equity futures under pressure dow futures down 30 points, s&p off by 5.5, the nasdaq down by close to 9 it really scared him out of the markets. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68.

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market site in times square. among the stories front and center, we're an hour away from two key economic reports the government will be out with its weekly initial jobsless claims and the september producer price index at 8:30 eastern time jobless claims are expected to fall, the ppi is seen rising by 0.4% ireland's high court has given its approval for apple's plan to build a one billion data center it was delayed by environmental challenges however the court dismissed those complaints and said construction may proceed. at&t says its third quarter results were hurt by the recent hurricanes as well as earthquakes in mexico. it puts the impact at two cents a share. at&t says the disasters impacted service in the affected regions, as we know at&t says it lost 90,000 video subscribers because of intense competition. the company is scheduled to report third quarter results on october 24 the first gene therapy

approach is coming to market meg tirrell has the story of spark therapeutics. >> an outside team of at visors to the fda i is meeting to discuss this new drug that could come to the u.s. market. there have been a couple approved but this is new gene therapy aims to fix the genet genetic root of the problem. it uses a virus to deliver the healthy copy of a gene spark therapeutics is working on ge gene therapy for a rare inherited form of blindness. we visited two kids part of this trial, caroline and coal carper. they were ten and 12 we talked with caroline about what her sight was like after she took part. >> i remember these kids. >> they're fantastic listen to how caroline describes

this change. >> before, i couldn't see snow when snowflakes were falling and i went outside when it was snowing and i was like, oh, i can see the snowflakes. >> really? >> yeah. >> what does that feel like? >> it was really cool. like to actually see something that i've never seen in my life before. >> she can see snowflakes for the first time her brother cole could only read braille and he was like a champion braille reader. after taking this therapy he's been able to read large text so they don't have perfect sight. they were expected to eventually go blind. >> what's the long-term prognosis? >> that's an open question with gene therapy because this is so new. it's not known how long the effects will stay with them but it's been a couple years, their mom tells me they're still doing well and they are headed to the fda to talk with advisers today. >> i love that story coming up, when we return,

rising stockpiles and opec's latest report weighing on oil. we'll break down the reports then steve mnuchin is going to drive us to talk about tax reform and much, much more he will be with us in just a couple minutes

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welcome back to "squawk box. we've had a little news, dow looks like it would open off 23 points, nasdaq off 8 points, s&p 500 off five points. we have j.p. morgan's earnings we have citi coming up and steve mnuchin who will be with us in just a couple of minutes. >> you were born in 70 what? >> '77. >> you're a millennial >> it depends on which way -- there's different variations. >> 1996 and later you are generation z an i general or centennial. >> centennial? >> and then millennials or generation y, sorkin, is born 1977 to '95. >> i thought it was '72 but it's different depending on which

ones. >> and if you're not this, you're generation x. >> i thought i was part of generation x. >> i would refer to you as generation triple x. >> because it sounds school in. >> yeah, because it sounds cooler doesn't it >> it's a family program. >> i just barely got in under the wire, baby boomers '46 to '64 i'm like the last one of the -- and then the traditionalists, the silent generation born in 1945 and before. >> by the way, the great folks at wicked say generation x, which is what i would be part of -- >> triple x. >> in the day and age saying triple x seasoned s a bad idea but it says it ends late '70s to early '80s. >> so you're claiming -- you don't want to be a millennial? >> i'd go with the millennials.

>> you've got wisdom and experience. >> you got both, the tech savvy and the triple x wisdom. >> like being on the cusp for your horoscope. >> which you also are, right >> right. >> you're on the cusp for your horoscope, right you're a fishese >> pisces. >> sorry. >> he likes to talk about oil. do you want to talk about oil? >> the usda is expected to provide its first forecast for citrus, for florida citrus production many expect this will be the smallest crop since the 1940s. storm damage to florida's crop coupled with decline in fresh citrus production is expected to result in higher prices for oranges this season at the supermarkets before hurricane irma florida was expected to harvest more than 75 million boxes worth of oranges. one strayed group estimates that's more than cut in half and that could raise prices as much as $2 a pound.

florida's governor is asking congress to provide disaster assistance to orange growers. >> i love our viewers. rob nichols, the american bankers association, they always weigh in to let us know about when things were right he says millennials 1981 to 2001 most commonly used >> thing, rob nichols for correcting my -- >> our viewers know everything but they write in to tell us about things including the -- >> generation z is what my hopes and dreams are -- that's -- they're going to have to save us. >> your children we all look toward our children to save us facebook announcing a cheaper version of its virtual reality head said. the oculus go will cost $199 and will operate without the use of a desktop computer facebook's chief technology officer says he expects to see the device on airplanes for people who want a better experience than the seatback entertainment system facebook is decreasing the price of the oculus rift system from

$500 to $400 of course airplanes half the time won't even pay for an entertainment system so the idea that they'll cough up money for oculus is difficult to get your head around now to sports the, producer of this hour is a big fan but i am happy about this. the deciding game in the american league division series between the yankees and the cleveland indians and the yankees completed an impressive comeback, bailing joe girardi out. after losing the first two games of the series they won three straight and the shortstop was the hero two home runs by didi grigorus in last night's game as the new york yankees beat cleveland 5-2 and they'll face the astros in the american league championship series starting tomorrow a couple other heroes, too i mean, i -- cc sabathia pitched great in the other game that they ended up losing when they were ahead 8-3 and they pulled

him but he pitched great last night, too, and it's -- i don't know why i hate the yankees but i'm happy. i don't know i live here, the reds aren't really -- so it's -- i'm interested looking for a new sport. >> in the meantime, let's talk oil. opec releasing its monthly oil report projecting a tougher and tighter market for 2018 joining us to break that down is john kill duff founding partner >> i know you're talking about orange juice, they yugs it had market to the upside in terms of impacting several of the biggest refineries in the u.s. along the texas gulf coast in the face of good demand for refined product that's badly needed so we've gotten some sport but we're heading back under $50 a barrel

right now. there's a lot of things percolating in the region. we have the kurds fighting for -- voting for independence and every other country is lined up against them. waiting to see if president trump pulls out of the iran nuclear deal that could be a problem for the market but i don't think unilaterally u.s. sanctions are going to do much to iran's oil production so i see us heading lower. >> do it this way. southwest had their earnings today. they've done a very good job of hedging oil prices if you were talking to the ceo of southwest, you would tell them to do what? you said oil prices will go down but how far down >> i think we'll head back to $42 a barrel over the next several weeks. >> over the next several weeks >> before the end of the year. and i would tell him to wait for that but i would tell him to lock in a good substantial amount of their needs like any -- like i would tell any other corporation

like i did when i worked for the banks to lock it in. don't take the chances because the risk of going from $42 to $30 let's say, he'll still do great in terms of hedging but you really get hurt if you're not hedged and things go to 50, 60, 70, 80 if there's some kind of supply disruption event which there are some things in the offing like venezuela, like iran like i talked about. in that same regard, andrew, i would tell people exxonmobil has a great dividend yield, that's also worth looking at. >> thank you, good to see you. when we return, the president's push for tax reform. sem earyhear frotrsu cretary steve mnuchin after the break. bonds. they don't invest in alternatives 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

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president trump making the push for tax reform at a speech in harrisburg, pennsylvania, last night. >> our framework ensures that the benefits of tax reform go to the middle-class, not to the highesterers it's a middle-class bill that's what we're thinking of, that's what i want. >> joining us now to talk taxes and more, treasury secretary steve mnuchin. mr. treasury secretary, great to see you again, thanks for joining us this morning and.

i know you were there, i saw the president reference you and pointed over and i thought as far as a speech goes it was populist, broad brush, i thought it hit on a lot of great points and i liked the speech but i still think we need more details to really make a determination on prospects for it and we got these -- you know what the senate is like, you know what we're dealing with here so can we talk about more details that you can bring us today or is it going to be broad brushing it. >> good morning and first of all it's great to be here with you and it was great to be with the president yesterday. he really likes to be out on the road connecting with workers we had over a thousand workers with him yesterday talking with him about the importance of tax reform as you know, this is about a middle-income tax cut and it's also about making business taxes competitive and as the president said yesterday there is over 30 million small businesses as pass throughs that are going to have their lowest tax rate since 1931

so this is about making american business competitive and passing on those benefits to workers. >> already -- i think it was the "l.a. times" that there's already pushback on the 20%, it's going to end up at 22% or 23%. do you think if you could get 52 or, i don't know, cruz and corker and rand paul, if it was 23%, would the president accept that >> the president made it clear he wants 20% that's the one part of this bill that's not negotiable, we want 20% on corporate taxes, that's what we need to make america competitive. >> do you -- are you hearing from -- continuing to hear from blue state republicans that it's a no-go for the state and local deductions >> well, that's one of the issues people talk about and i understand that issue very well as i said before i lived in new york and california

i understand the issue we're sensitive to that issue and that's why we're discussing where we set the top rate but we don't want this to hurt new york and california and new jersey and connecticut and illinois too much but on the other hand we can't have the federal government continue to subsidize the states and that's a major loophole we're trying to close in simplifying taxes. >> one more and then i'll let you go the dynamics aspect of it, mr. treasury secretary you said it will pay for itself but the reality is, the gentleman i mentioned, the senators i mentioned, whether it be corker which there's been other stories swirling around senator corker and he's not running for reelection be but you have other deficit hawks, rand paul and ted cruz, is there a number that you think they'll accept in terms of if it's not paid for is there a number of dynamic assumptions of revenue growth

above which they won't go? i don't know if they think the whole thing will pay for itself if it's $2 trillion or $3 trillion have you talked to them on what they'll sign on? do you know what that number is? >> i have talked with them in particular i would signal out senator corker who's been enormously helpful in this process, him and toomey were helpful in negotiating the agreement to get this out of the senate committee and they agreed on the trillion and a half static number the trillion and a half i want to make sure people understand the math, there's about a half billion dollars difference between baseline and policy. we think we should score it to policy so that takes the number down a trillion. we believe there's $2 trillion worth of growth that will take this to a trillion-dollar positive but even if you don't believe that, you only need about four or five tenths of gdp to get to this break even so the senatorsunderstand this math we've been having discussions with all of them the president is having

discussions with them and we're confident this will get done. >> mr. secretary, i wanted to go back to the state and local deduction issue to try to understand, i know you're trying to work on it. give us a framework of what kind of fix there is could be if you don't want to hurt new york and california and you talked about not wanting to subsidize new york and california and other states like it it is worth noting that new york and california and about 11 other states pay more into the federal government in taxes than they receive in a meaningful way. >> you know, i've heard that statistic but that's because a lot of rich people live in new york and california and they pay higher taxes so as i said, i've lived in new york and california and i'm sympathetic to that argument but that's as much because of the demographics of where wealthy people live than anything else. >> mr. secretary, back again to this idea of who the tax breaks are going to go to we know the middle-class is who you said you're targeting, the idea of $4,000 going to the

average family is the one the president has been talking about. but there is this idea that if you're going to have a large substantial tax cut that goes through, it's automatically going to go to the people at the top because they're the ones paying taxes at this point there is even a former obama administration official who was saying look, the only way this can happen is -- it's impossible to have a large tax cut that doesn't involve most benefits going to the high-income agenda because that's who pay taxes if you consider the top 0 .1% of taxpayers pay more than the bottom 80% i realize we don't know the details yet. it's people trying to figure out around the edges. >> obviously if we cut taxes and the high end pays the majority of the taxes they'll get some relief as well we're talking about on a relative basis where theory leaf goes and what we're focused on and working through the details, the details are very important the ways and means committee is

having listening sessions, developing some details, as i mentioned before we have over a staff of 100 here in treasury working with the house and senate but that's what we're focused on and what the president did a great job yesterday is connecting that business tax reform is about helping workers and i think you heard specifics of people in the crowd with businesses and what it will do, kevin hasset at the council of economic advisers has done a lot of research in helping us and focusing on that $4,000 number. we're trying to make american business competitive and that's good for american workers who haven't had any real increases in wages. >> mr. treasury secretary, so we get it out before we talk more about taxes, number one, you confirm that powell is your preferred choice for the next federal reserve chairman and -- or even if we just assume, what

qualities of jerome powell, what does he bring to the table that you might find attractive as the next fed chief. >> i gave you guys a lot of credit because every time i come on the show you ask me the same questions and i answer them the same way which is -- >> that was a different question >> i'm pleased -- you always ask me about the fed chair. >> if you did pick him >> i'm pleased to be meeting with people, with the president, it's the president's decision but i am participating with him. there has been no decisions made and it would be inappropriate for me to comment on any people being considered one way or another but i give you guys credit for trying. >> when do you expect we might hear a choice for the next fed president? >> i think given the timing of this, this is something the president is focused on trying to make a decision in the next month although we don't have a specific deadline. >> mr. secretary, i wanted to ask you about the estate tax we have talked about that before but try and understand this.

is removing the estate tax a philosophical -- driven by philosophy or driven by economics and trying to understand how you believe it would help middle-class workers rising that at least according to the tax policy center only roughly 50 small farm and business estates will owe any estate tax in 2017 and according to them most of them have sufficient liquid assets to pay the tax already without selling a farm. >> well, i think it's both a philosophy and economics i can tell you we've literally met with hundreds and hundreds if not thousands of small business owners during the campaign and in the last year with the president of people who pay estate taxes and have problems passing on their business whether it's farms or small businesses, but there is also the philosophical issue that we tax people during their lifetime and should there be another tax at death.

>> right right. you work your entire life and they let you keep -- i don't know the whole idea is that it almost sounds like the government has a -- somehow they have allowed you to keep half and now you should feel grateful if that are and then they'll take another half it's -- i don't understand it's your money to start with. i don't think the fore fathers thought of it that way but i don't know philosophically it's a big deal. >> the reason i ask is i think -- my personal is that it's driven less by the middle-class. >> i agree but in terms of property rights it makes -- i don't know. >> well, one of the thingings it would also do is a lot of people also hold productive assets throughout their life waiting until they die and if you get rid of the estate tax it will take care of that. >> is the amt still gone >> it is but the amt is offset with other deductions. >> and any new info you can give us on the pass through issue >> the pass through issue?

25% rate, lowest rate in over 80 years become to 1931. >> but you said you were trying to put guardrails around it so people wouldn't abuse it. >> we will have guardrails around it so it can't be abused. i assure you of that. >> i'm already starting on my fed chief question for next time it's going to be a different way i phrase it and i'll get you next time. thank you, we appreciate it. thanks for being on this morning when we come back, we've got citigroup's earnings stay right here. s they just dro. 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.

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earnings alert citigroup set to release results. we'll bring you the numbers and the stock reaction the tax battle. >> as you know, this is about a middle income tax cut and about making business taxes competitive. congressman diane black weighs in on the prospects for reform straight ahead. plus, breaking news from virgin group founder sir richard branson. he shares his big announcement first on cnbc. the final hour of "squawk box" begins right now ♪ >> announcer: live from the most powerful city in the world, new york, this is "squawk box."

good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square, i'm joe kernan along with becky quick and andrew ross sorkin the futures right now are indicated down a little bit at about 21 points on the dow, down five on the s&p, the nasdaq indicated down about six we got citigroup, we already had in the dow j.p. morgan, i haven't checked where it is. it looks a little lower but that's not -- you know, 22 points on the dow is -- when it's at almost 23,000 isn't much of a move. >> citigroup is just hitting the wires and our own wilfred frost has those numbers. >> revenue $18.1 billion, expectation of $17.9 billion eps is higher. it was expected at 1.32. that includes a one off $500 million sale of fixed income

analytics business but that was baked in just looking down into the tradings, first thing i have my hands on, it's down 16% year on year for fixed income commodities and currencies, that's in line with their forecast of down mid-teens of course down around 25%, 2% for j.p. morgan so better than them on the fixed income side. this is a smaller part of their business but it shows how they are gaining market share in that the -- some of the behemoths in that area struggling in a relative sense they've gone up 16% within that. i have to dig into the numbers and the key areas like the cards business which we are looking for but overall eps beat and shares are flat at this moment. >> okay, thank you for that, wilf here's what's gone on thus far. j.p. morgan reported quarterly

profits of $1.76 per share that beat forecast by 11 cents revenue top expectations, the bank saw weaker trading results during the quarter but its bottom line was helped by a boost in lending dominos pizza also out with results. domestic same store sales rose 8.4% and international comp sales was 5 .1%. an amazing chart remember when dominos was left for dead it's a remarkable story. you don't want to miss this, ceo patrick doyle on "mad money" tonight at 6:00 p.m. eastern time in political news, president trump is expected to sign an executive order on health care while the president has not revealed the full details, it's very likely going to relax rules on small businesses that could band together to buy health insurance. earlier this week, the president said he plans to let people buy health insurance across state lines. president trump is expected to sign the executive order at 11:15 a.m. eastern time. just moments ago on "squawk box"

we talked with treasury secretary steve mnuchin. here's what he had to say about the corporate tax rate. >> the president has made it clear he wants 20% that's the one part of this bill that's not negotiable. we want 20% on corporate taxes that's what we need to make america competitive. joining us now is budget committee chairman diane black congressman black, thank you for joining us today. >> you're welcome, thank you for having me. >> let's talk about the details. we've heard about where we want to go directionally, it's still trying to figure out the details that will be the devil in these issues that come down. what do you see in terms of what you could put together that would pass the house and then pass the senate, too >> i'm very excited about the possibility of doing tax reform as we all know it hasn't been done since 1986, it's very complicated, and to give the american people more money in their pocket which will stimulate the economy and increase opportunities for the everyday working person so it's exciting to think that we can

move this country ahead with tax reform. >> and what will this tax reform look like? we've heard around the edge what is it looks like, where are the difficulties in terms of trying to find the pay fors for some of these things to get the corporate rate as low as 20% which treasury secretary snoo.en told us is non-negotiable i had someone from the uk in my office and i said "you're eating our lunch with your taxes. and he said "they're going to go lower. we don't want that to happen we don't want that intellectual capital to leave the country so it's important we are competitive and that's what this tax reform will do. >> again, in terms of how we get there, that's been the issue, trying to find something the

house can sign off on that the senate can then sign off on. we've heard senator corker say he's concerned about this. if it looks like this is giving money away, if it's going to blow a hole in the deficit how do we pay for those issues to get the rate down to 20%. >> we have to be careful we don't blow a hole in the deficit. i'm one of those people who believes we ought to be doing mandatory reform and getting our mandatory spending under control since it's two therds of our spending and debt and deficit is not where i want to be i want to be careful we use dynamic scoring in the right way and don't overshoot. yet at the same time we have to understand there will be dynamic effect as a result of lowering those taxes so we in the house of representatives are very careful. we took cbos number and looked at economists from one end of the spectrum to the other. i think it will be larger than

that but we wanted to be conservative so we have to make sure that that's one of the things we look at. then you say the devil is in the details. the ways and means committee will be working for long hours today. we have a little retreat within our own conference to hammer out the last details and a piece of that is the brackets and where will bewe land and what will we be doing on those little minute details we have left to put out there that are important when people look al this and say whether they think it will help them in their own lives so we've been listening for seven years, it's time to put the product out. >> let's talk about that the baktrackets. i assume you're saying will there be three brackets or four brackets that keeps the top rate on the wealthiest americans? >> well, that's part of our discussion there are a lot of tiles and when you move one dial you have

to consider another but i'm not just talking about the brackets that would be reduced to three, possibly four, i'm talking about the ranges of income they may change from where they are right now so we can make sure the middle income families do receive a tax break and that they'll have more money for things like saving for their retirement and sending children to school, to college so these are things that as we move those dial wes just have to be sure we're cognizant of what the end goal is and that is to give the middle income a tax break. >> does that mean you're in favor or not in favor of keeping a fourth tax bracket at the highest level? >> as i say, it's the devil in the details and we have a few things since we've put out our framework that we continue to hear back that we have to dial so that will make a difference on whether we put that fourth bracket in there or whether we keep it just three and we're working hard to get that tax plan out we have to pass the budget

first. that's the golden key to unlock tax reform so that is something i want the senate to do is get their budget passed so we can get together and myself as the budget chair i want to be sure i'm involved in that conversation so we can make sure what we're doing on the house side stands in the senate and that is mandatory reform as well. >> we've also heard a lot about the state and local taxes. that's going to be a big pay for with the border adjustment tax off the table. if you have state and lowal taxes that add up to $1.4 billion in savings if you get rid of those deductions, the question then becomes how do you make sure you get republicans in some of these states that benefit greatly from the state and local tax deductions there was an idea floated that it sounds like congress is considering the idea of saying anybody who earns $200,000 or less could still claim those state and local tax deductions, anybody who earns more would not be able to is that indeed the plan being considered >> well, there are lots of things being considered but we

have to watch the dials because we want to keep the corporate tax down we want to make sure small businesses get that tax break at 25% and we want to make sure the middle income are the ones protected and so all of these make a difference in making that decision but that's one of the pieces of the conversation out there about the state and local taxes. >> chairman you mentioned the budget has to come first where are we in terms of getting a budget pass that can be approved >> well, the house has done its work we put out a budget that i'm proud of it's the most conservative budget since 1997. we address what we haven't addressed around here for a long time and that's the mandatory spending and we hope that the senate is going to like wise be cautious about the kind of deficits that we have filed up around here in just the seven years i have that been here in congress. >> chairman black, thank you for your time today. >> you're very welcome thank you for having me. coming up when we return, billionaire richard branson has a very big announcement and he's going to share the exclusive

details. you don't want to miss this. he'll be here on "squawk box" after the break.

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welcome back to "squawk box. futures continue to be in the red to a little extent 23 points on the dow after another record s&p down five, nasdaq down just under six points making headlines, gm is going to reportedly idle a detroit car factory for six weeks because of slow demand dow jones says the company will cut the plant's output by 20% and also eliminate 200 jobs. >> citigroup posting a better-than-expected earnings and revenue just earlier this hour the bank's results were helped by a gain on an asset sale lower cost and better-than-expected trading revenue. shares will see how the market is reacting to it. we'll just call it up marginally coming up, joseph? >> a rare interview with the co-founder of silicon valley's most secretive startup pal lann

tier do you remember that that orb on "lord of the rings?" >> oh, of course, i forgot. >> you knew this, i told you this i was never a big "lord of the rings" guy. >> that's hers resy. joe lonsdale is joining us then richard branson has a big announcement x"'ll break the news on "squawk bo coming up soon. stay tuned we'll be right back. for your heart...

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welcome back to "squawk box. alphabets waymo reportedly demanded $1 billion in damage and a public apology from uber in settlement talks, the two are fighting in a high profile trade secret lawsuit reuters reports uber rejected those terms as non-starters. >> a quick update on uber's roadblock in london. the city's mayor saying regulators will defend their decision to not renew the ride share company's license to operate in the capitol after uber's ceo traveled to the city to hold talks with officials and released a public apology. uber has until friday to submit its appeal it can continue to operate there until the process plays out which should take several months but somewhat surprising to hear that part because there was some expectation given they'd gone over there, made this public apology and hoped to get something -- >> to be resolved rather than battle this out.

>> at least for the language between the two to be closer this seems like maybe there's more space than we thought in the meantime, our next guest is reinventing the way we use technology through a series of venture investments in emerging companies joe lonsdale joins us right now, he was a co-founder of big data security firm palantir as well as platforms like open dove and financial management software so it's great to see you. we haven't seen you for a while. >> i'm great. >> let's talk valley and investments. you're spending time and putting money into the bio i.t. world is what you're calling it. >> yes, i think the big question in venture capital is what's possible now that wasn't possible three to five years ago. you think of bvc as the way we evolve the markets and the economy so you have to figure out what can happen now? for example if you want to invest in ride sharing in london and did that before the noble phone existed, doesn't make sense, if you do it now, probably too late. so the big question is what's going on now and that's the fact

that biological sciences have become information problems. >> what do you mean information problems >> basically we have all of a sudden hundreds of thousands, millions of data points from being able to edit genes, read what bacteria is in your system and say what's your health with what bacteria and how does it line up. we have so much data that figures out biological scientists and to build value requires data modes in estate driven companies >> is that a reason for investors to play into big data? the only way you'll make sense of this information? >> it is but the lesson from big data is that these vertical enterprise platforms is where values have been created so you need vertical platforms focused on the biological problem so great scientists working with great engineers building these companies. >> is it possible you're still too early? >> some of this is a little bit early but some of this is starting to make a lot of revenue today. for example u biome invested in last year had no revenue, last month we did 10 million of

doctor's test. so there's a lot of things out there that are being used by doctors in the clinics and are possible that you couldn't have done three or four years ago. >> and this being processed on the cloud? >> totally. >> is the big winner still in this no matter what going to be an amazon and google >> i think these things are processed on the cloud and there's infrastructure tax there and how do you perform gene editing, companies that are being used by hundreds of universities to be the layer so there's new infrastructure to invest in. >> we have people coming in here all the time talking about amazing things we can do because we can read the genome and what strains of bacteria are in your gut. i have a hard time figuring out who's for real and who's pitching me a line of garbage. >> when you look at the success we've had in building companies in venture capital it comes down to talent so historically when we were building palantir we

were focused on the best engineers, now the question is who are the best scientists and getting to know the top scientists, a woman named jennifer dudna, who does she work with and think is great who are the best people at m.i.t. you have to work through the top people to figure it out. >> you don't believe in the black box theory where we've run into problems with elizabeth what's her face? >> no, i think it's a good thing. places like u-biome that they are publishing with academics. >> the venture capital community has long tried to shun industries that are regulated or that will become regulated. >> yes. >> this industry perhaps seems prime to ultimately be regulated. how do you think about that? >> that's a great question and maybe a difference of my background as an entrepreneur with a lot of other venture capitalists give than i started off in the government financial areas with palantir and a lot of our investing has been in health care so if industry is regulated

it's harder but that means there's more barriers to entry so more opportunity there. >> sheryl sandberg is in d.c. today seasoned is going to be talking to mike allen at about 9:00 on facebook live taking questions. what do you think in terms of how regulators may think about the big tech giants and where this is going? whether it be facebook or google >> it's interesting. there's a populist strain on the right and left that want to go after facebook and google and it's a big question for our ecosystem. it doesn't hurt venture capitalists at first but the scary thing is as we're building these companies if they're going to be big winners will they be valuable winners, too or worth less because we're not allowing anyone to be winner take all. >> you just sold plated to albertston's amazon is in the whole foods business do you worry about the businesses you may own that these guys basically either take them over or put them out of business >> that industry got to be very, very difficult because of what

amazon was doing and that was a big challenge. i think there's a lot of these platforms that are still valuable and the big guys can't necessarily play in and that's where we have to invest. >> becky's question about whether it's too early let me ask whether you think this is right. the amount of raw data we have of the genome and all the base pairs, obviously you put that into a computer and you have it all there but the basic science that you still need on gene, gene graxs and everything -- such a complex system that you can sort of understand the sequence and even know what protein to make but there's so much basic science that still needs to be done how many years before the tipping point goes to where it really is a suture computer problem instead of a basic science problem? >> that's a great question the intuition you need to build is science using information so one of our friends we work

with, a professor at m.i.t., he was able to write a program -- >> what's his name >> tim lu. he and his colleagues wrote a program and they were able to put it into the cells of a mouse with ovarian cancer and the program told the cells that if you have ovarian cancer tell the cells to kill it and the cells died and then you pull the data out, you test thousands of things and see what's happening so i think it's computer scientists derive ago lot of -- the. >> do you know tyler 15 years ago they brought him in specifically, i think he replaced sal luria, a nobel laureate they brought him in but it was too early. >> kite just sold for $11 billion if programming blood cells to attack cancer so there are things working >> just the basic science, you have to do the leg work before this makes -- you have the data. >> and to do the science you need your scientists you can't be a biologists without having great computer

science. >> 30 seconds, bitcoin, is jamie dimon right? is it a fraud or real? >> i've been long on currencies. i think companies are early and i think you can't build a company but saying it's a blockchain company that's like saying it's a cloud company. bitcoin, blockchain, very early. they have to be solving real problems >> since we mentioned uber, if you could buy it at this valuation -- >> what's this value wagts >> call $70 billion 50 >> i'd be buy a 30 or 40 all day lo long higher valuations include structures but -- >> people -- >> no, that's true but these are global networks that should exist and these are well-run companies overall. >> joe lonsdale, come on back. >> appreciate it. when we return, some breaking economic news, we're a few minutes away from the weekly jobless claims and the september ppi, we will bring you those

numbers as they hit. plus our big interview with sir richard branson is coming up in a few minutes, he has big news a few minutes, he has big news he will break on "squawk box." real estate such as e-commerce warehouses. and private debt to finance transportation and infrastructure. building blocks of strategies to pursue consistent returns over time from over $120 billion dollars in real assets. partner with pgim. the global investmen businesses of prudential.

price index. other people like becky call it the ppi. >> some of us in the know -- >> i don't say pee-pee the futures are -- rick santelli is standing by at the cme in chicago. rick, the numbers? >> all right, joe, no matter what you call it, it's up as expected, up .4. up .4 is lofty even though it matches expectations it's up .2 from august if we look at x food and energy, whoa, it's always up four-tenths. before we look at the x energy year over year, that's 2.1 year over year, trade is 2.1. these are lofty numbers. a lot of 2s up there this is going go a long way.

to those who were questioning the december rate hike considering the minutes and the preoccupation with ppi and cpi tomorrow, i like what peopler bookvar calls it, cost of living adjustment on jobless claims, last week reize reize iffed to 2.58, lop off 15,000 it's now at 243. and if we look at continuing claims, you know, they actually dropped rather substantially so the numbers are getting back on track after all the weather-related events it went from 1.92 to a whisk around 1.89 million. a week in arrears always important to pay attention to. has the market framed out this number in a way that would be beneficial to those of you that went on short rates? not really, the interest rate side hasn't moved.

233 is where we marked it before the number but this is ppi, let it sink in, might be a delayed move but it sets the table for the more important cpi we get tomorrow morning, we get to do it all over again. becky, back to you. >> rick, let's talk about the peep yay for a minute. we used to talk about the inflation numbers, we stopped for a while because inflation has been basically nonexistent the fed was saying they're not sure that the inflation numbers, it's just transitory, it won't come back, it will come back what do you think if we get the 0.4% read on the ppi >> i think that you're starting to see pricing pressures in a variety of industries. i also think that there are potential labor issues that could figure into this overtime. if you recall, the last report that was so much question about the last report that the earnings side is going to be

important. it will be important to see if we do that again i personally believe we are finally starting to see the economy here start to bubble a little bit maybe do better than an average of slightly above or below 2% and what i've said all along, you could argue about your definition is that real inflation at the time of fiat money and quantitative easing and all of that. in the end what it amounts to in my opinion is if growth an productivity are bubbling, it shouldn't be shocking that pricing pressures are going to bubble up with it. >> and we'll try to figure out what the fed does in response. rick, thank you very much. we'll get more on the data from steve leishman in a minute but first wilfred frost is here, he heard from jamie dimon on the conference call and the stock looks like it's picked up after initially dipping on that news. >> we were talking about various factors and he started on tax reform jamie dimon said over the long

term period of time of say five years, for example, all other things being equal that j.p. morgan will be boosting jobs and wages more than than otherwise would if corporate taxes are cut so things don't necessarily drop to the bottom line on day one but dimon added if we had done it five years ago we would be growing much faster. that on the issue of tax reform. on regulatory reform marianne lake said it helps to have people in leadership positions but that these things are complicated and take time. things like randy kwibeing confirmed recently but she said they expect to see some new things in the next couple of months now jamie dimon was asked about bitcoin as well from one journalist he said i wouldn't put bitcoin high on the category of important things in the world. i'm not going to talk about bitcoin anymore. so perhaps he's learned a lesson from making big headlines a couple weeks ago on that topic and then in terms of the issue

of markets and trading, maryanne lake cfo said it's quiet and competitive. that environment and jamie dimon was asked about the situation in catalonia in spain but he said spain may only have a small negative impact on growth but it's not going to derail growth in europe. he was upbeat about the steady and positive growth we're seeing around the world right now. >> wilf, thank you let's get back to the economic data who should we get that from? yes, our chief economist steve leishman is in boston this morning. steve, i've elevated you again. >> thank you, joe. did you send me the address i was supposed to send that payment to we've been discussing as a result of this? >> i will do that. but i don't want it to be traced can you send in the bitcoin. >> well, no, it's all about your daughter and helping getting her to school. we've discussed that

although she's so bright and such a great prospect that she's not going to need help. >> she doesn't need any help. >> that's true my son, on the other hand -- i shouldn't say that. >> i'm working on that, too. >> let's talk about the data for a second but the first thing i want to point out is the jobless claims data ticking down to 2.43 folks, two major hurricanes hitting the united states, we never even quite hit 300, we were at .298 it's been coming down ever since. i can't say and i don't know how they're treating puerto rico it appears as if somebody of the people on jobless claims from texas and florida have gone back to work so what i'm reading in the story that's throughout is that the jobs market -- and i have to say ex-puerto rico and i don't sigh that without emotion knowing what's going on down there, but expuerto rico it looks like the job market is seemingly back to strength which is quite remarkable. but again i think we're seeing

some hurricane effects in the ppi number so i'm not quite so excited as perhaps rick was about the inflation data we've got this -- we've got this 3.4% hike in energy. we have another hike in trade and transportation i have to wait but becky you asked this question about inflation. we've seen the ppi number or producer price index number be higher but we've not seen impact on the consumer price level so it hasn't translated what's interesting about that is when you have high producer prices and no gains at all on the consumers, you would expect to have a profit crunch but of course the data we've been getting both from the prior quarter and the current quarter shows companies are making money just fine despite what should be something of a margin squeeze, we're not seeing that. it's something to look out for if you have wholesale prices go up and you don't have consumer prices along with it we want to take a quick look at

the imf which is a lot of meetings today but their global outlook, they're up on global growth, that's good. we've been getting flatter by that by the united states, u.s. down a little bit because what they did is they backed off the expectations for fiscal policy gains this year, next year, and then europe up a it will and china unchanged. there it is, back to you. >> thank you for that, steve coming up next, we've been teasing it all morning, we will stop teasing you billionaire richard branson has a very big announcement. he's going to share this qunterone announceme he "sawk box. stay tuned in a moment gift for. and every year, we split it equally. except for one of us. i write them a poem instead. and one for each of you too. and one for each of you too. helen: cool. that actually yours... that one. yeah. regardless, we're stuck with the bill. to many, words are the most valuable currency. last i checked, stores don't take words. asend dayis october 17th.

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. welcome back to "squawk box," there's breaking corporate news this morning, we've teased you before about it but here's what it is the virgin group announcing an investment in strategic partnership with hyperloop, the high speed transportation company, it's rebranding and they'll be called virgin hyperloop 1 with sir richard branson joining the board of directors and joining us in an exclusive interview is sir richard branson, founder of the virgin group also hyperloop one's co-founder and co-founder of sherpa capi l capital. we welcome them both to the program. richard, thank you for joining us and bringing us this news tell us what persuaded you to

get involved with us. >> well, hyperloop one i had the privilege of going out into the las vegas desert to see them running for the first time and it's incredible what the team there will have done in developing a tunnel and a machine that can travel over 600 miles an hour and as a train owner i felt this is something that i want to be able to operate at the moment. our trains are limited at the moment to 125 miles an hour and i know that there are -- our consumers would love, for instance, to go from london to edinburgh in 25 minutes and that would be possible. and if you extrapolate that worldwide, there are literally

thousands that -- cities and things that i think will want virgin hype lorloop in the yeart come. >> the technology, of course, is awesome. the question, of course, we've always asked is what is the cost of truly digging these tunnels or doing it above ground to make it work. the capital cost is huge how quick ly will in become a reality? >> well, it could happen as soon as we could start building and as soon as two years, but between two and four years if governments move quickly, they can get to the front of the queue. it's a lot cheaper than building conventional rail networks and it's a lot faster and i think it will be a lot more reliable. so -- and, of course, you can

tuck it underground or you can tuck it above waterways or you can tuck it alongside current rail networks. so there's a lot of places that you can use this. >> this is a big deal to get them involved in this. how did this all happen? and how did you decide to rebrand this business around virgin >> well, today is a historic day for hyperloop one. as you all know, sir richard branson and the virgin group are visionaries. they have changed the landscape of transportation for many, many years and they've created not just from the design of the products, i still remember the first time i went into a virgin atlantic flight and i never saw air transport the same way again. that's because of richard's incredible vision. and for hype loop one to be able to enter into this phase of

commercialization after we've proven the technology works we feel together in this partnership now as virgin hyperloop one we'll be able to design products with consumers in mind. the customer experience of the pod is something that we definitely want to lean on richard and the virgin group's experience to create an experience when you walk into a hyperloop pod from virgin hyperloop one you should feel comfortable. you should feel like you are -- you've been there before this is not futuristic technology this is happening now as you see. we've done this in vegas and when richard came and visited over the summer, he saw it firsthand and that was a very critical part of how this all came together because he saw that it's actually real. >> we've talked about this being used for transport of goods as

well as people. >> that's right. >> is this a true pivot, though, towards people >> no, it's about people and things always. we're doing with virgin hyperloop one we're doing cargo and people so we're focusing on that and i know that richard has deep vision around both sides of that. >> what's going to happen next both in terms of the technology plain other money. walk us through the next steps >> we started this three years ago, we're now 300 people strong we've raised over $240 million at this point. richard and the virgin group investing in the company is a big insignificant step richard joining the board of directors is an important step for us the next phase is going from proving technology as we already have to now commercializing it

around the world and being able to have the partnership with virgin group and being able to take it to governments around the world is really this next big phase for us and now we will begin to construct it in many places around the world. >> sir richard, can i ask you a question about this as well? i just wonder, you have so many different ventures, so many different things, do you expect ghoul into space first or ride on hyperloop first >> i would be very disappointed if i haven't been into space within six months or so so i think it's more likely that i will go into space before i get into my pod which i -- to just give you a flavor of how exciting this is, you can have a pod outside your office which you and your colleagues can jump

into the pod goes down the tunnel, it connects up and off you go at 600, 700 miles an hour up to your destination and then going faste airpla airplane i've gotten so thrilled and excited by that that we'll make sure this is a great success and as soon as possible. so it's a very, very exciting thing, i think. >> shervin, how soon is as soon as possible? an idea like that that richard just described could we be doing that in five years? ten years. >> as richard said accurately, it's between the next two to four years that we'll be able to break ground and begin construction our first projects around the world i think it's also significant that a visionary like richard has changed transportation in the airline space is talking about that we can do airline speeds now through hyperloop we can turn cities into metro stops and all of it is green it's clean and good for our planet. >> how much is the investment?

>> the investment from virgin group is part of the $85 million run that we announced. >> as you disclose what the virgin piece of it is? >> no. and that's up to richard >> richard, do you want to say what the dollar amount is? >> no, i'm not going to go into figures but all i can say is that we are absolutely delighted that hyperloop is now going to be called virgin hyperloop and we'll be putting a lot of energy and effort into making it a great success. >> in terms of a market, is it more likely this will happen in the united states, more likely it happens in europe asia the kinds of conversations you've already started to have >> that's a great question

basically we already have projects in place. construction will happen somewhere abroad, most likely in the middle east, most likely in. and we'll have those announcements in the coming year or so. but, we remain hopeful that in the u.s. and in the uk and in europe, we'll also be able to actually begin to make a lot of progress, as we already have, but we'll leave those for announcements in the future. >> okay. sherman, we want to thank you. richard, we want to thank you. and i know we're going to see you -- >> can i -- >> yes, sir? >> i just want to -- just -- i'm just going to give you one other taste of what's -- what's possible and that is that, let's say you've got a big pod in a beautiful part of your country let's say you build a little island, just off that pod, where

instead of bringing all these cargo boats into this beautiful country, you just dump all of the stuff in the -- on this island, and then you whisk it by hyperloop under the lorries don come anywhere near your pristine port area. and you can turn that port area into beautiful flats and houses. that's the kind of thing that's happening and the discussion that's happening and again, it hoped my eyes to the exciting possibility of this so you can actually pay for hyperloop by getting rid of all of the messy stuff that goes on in ports and put it far inside your country and things can be just as quick and efficient. >> okay. sir richard branson, sherman, thank you. we should say, we will be seeing sir richard again next week. he's going to be right here on the set in new york, talking about his new book, "finding my virginity. that's coming up on wednesday. we'll talk about that. i'll be talking a little more

hyperloop, as well and really great to see you. whe return, our good friend jim cramer will join us from the new york stock exchange back in a moment helping keep shoppers safe. this is a financial transaction secure from hacks and threats others can't see. this is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. this is not the cloud you know. this is the ibm cloud. the ibm cloud is the cloud for business. yours. ♪ ♪

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. let's get down to the new york stock exchange. what do you like better, jim

who had a better quarter corbett or jamie dimon >> citidy. corbett had, almost every line was better than expected, the buyback was really incredible. jamie's buying back a lot of stock up here. sy citi showed the dollars equities are really good there's really just a kind of strong international growth story, too, emerging markets, and mike corbett continues to be underrated i don't get the deal they will buy back $60 million worth of stock when they're finished here. this is the company that is probably the most underrated bank jamie, once again, ho-hum, did a great job. what can i do? citi is the bank that people keep underestimates. they should have their head examined >> and we talked about the recent strength in the big banks. what do you tie it to, jim, specifically >> strong economy, both here and worldwide.

much more acceptance that they're allowed to lend, less much of a jackboot on their necks. much better idea that perhaps banking isn't a sin. this is about attitude and climate. and it's good. >> very good, jim. we will -- >> thank you >> -- get a lot more from you, i'm sure, in a couple of minutes on "squawk on the street." we will see you tomorrow on "squawk box. our guest host will be senator ted cruz that is tomorrow, starting at 8:00 a.m. eastern time "squawk box" will be right back. 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.

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before we go, check out shares of domino's domino's pizza reported quarterly profit of $1.25 a share, that was 5 cents better than expected. the pizza chain also reporting better than expected comparable store sales. however, the stock is moving lower after gaining more than 30% year-to-date as of yesterday's close, you can see it's off about 5.8%. and i believe the ceo will be on with jim cramer tonight on "mad money. not making that up, right? >> no. and you were right about domino's, andrew you remember, don't you? you remember what they did it was about ingredients and they listened to customers, they like redesigned their pizzas and people were obviously skeptical,

but you would have to call that a pretty -- that like almost reminds me of when your buddy, howard schultz came back to starbucks. that also rejuvenated starbucks. >> steve jobs, too >> jobs, yeah. >> all right, everybody. have a great day today make sure you join us tomorrow right now it's time for "squawk on the street. gad thursday morning welcome to "squawk on the street." queeintanilla with jim cramer europe is mixed. september, wholesale inflation, a five-year high on an annual basis. we'll see what that means for cpi tomorrow our road map begins with earnings jpmorgan and citi. we'll dig through the quarters the trump white house on tax reform what the treasury secretary is not negotiable and facebook's cheryl sendberg