now. live from new york where business never sleeps, this is "squawk box. good morning, everybody. welcome to "squawk box" here on cnbc we are live from the nasdaq market site in sometimes square. andrew will join us live from saudi arabia later this hour >> steady as she goes. >> oh, president xi. >> that's a good one i did not get the connection ♪ >> very clever >> 6:00 a.m., one person got the connection the producer no, he told me >> i thought you got it. >> no. i still don't get it >> i think it's president 11 i'm still confused let's check the markets.

u.s. equity futures have been indicated higher after the markets were down yesterday. the first time in seven sessions that the dow and nasdaq were down this morning a rebound from that these were modest declines yesterday and this morning s&p futures indicated up by three. the nasdaq indicated up by 2.5 overnight in asia, we have seen some gains in some asian markets. the nikkei up by a half percent. how many winning streaks is that 16 in a row that we've seen for the nikkei now trading at 21,805. hang seng closed down bay half p percentage point in europe, as you look at some of the early trading, you will see green arrows across the board. modest advances. ftse up by 0.4%. the cac is up by a quarter percentage point the dax up by 0.2%

look at crude oil prices looks like crude this morning is up wti up by 444 ce cents, brent u 57 cents. news out of china's communist party congress, members confirm president xi jinping's status as the most powerful leader since mao by writing his name into the par party's constitution. underwarm ser armour is exg the exit of its tennis and other outdoor categories as it struggles to grow in an increasingly difficult sports wear market kevin plank's first fulks will take a sabbatical from the company

we're watching shares of general electric this morning. the stock coming off its biggest one-day drop in six years. this after that dramatic reversal in friday everybody was behind it then it sold off >> we were talking on friday that we would have to cut the dividend >> again, worries about the dividend got a lot of downgrades yesterday. analysts wary of this. all the same concerns that came back yesterday they sold it hard. i don't know >> i don't understand. >> someone downgraded it yesterday and threw in the towel. >> ubs >> did morgan stanley upgrade it >> i think there was an upgrade. it depends on what perspective you have you can see this as a deep value stock or a company going through an existential moment. what are we? what will we be after we -- >> if you're going to cut your dividend, you have to deal with some pain. you have to swap out the

shareholder base the shareholders there, a lot of them count on that >> morgan stanley downgraded bank of america upgraded if they cut the dividend now, people will be relieved >> before yut it's the churn -- reduce the dividend, it reduces that churn >> on friday, in talking to jack, it convinced me if they cut the dividend, they need do it now and it will give additional leeway to the new management team to figure it out. you still have people that you have been promises that you wouldn't cut the dividend. >> they're hanging on for dear life if it gets booted from the dow, that's the concern that's a real concern. >> the index funds >> was that -- is that your show last night

pension obligations that i was watching or -- i get confused. it was half time and -- >> they are different parts of the day entirely >> but similar traders and talking -- >> they're completely different traders. but i'll let that go >> let me think of which -- >> thanks for watching >> was it last night were you not talking about the pensions >> we led with ge and we talked about the pension obligations. >> i was watching your show then i was watching your show >>tice if i was on it >> i did but a bunch of guys were talking about stocks >> wasn't half time report an offshoot of your show? >> yes >> i shouldn't mention the offshoot in terms of the original >> it is like joanie loves chachi and happy days? >> i watch throughout the day. >> i'm sure you do if i dvr'd it, i replay it while

i'm sleeping some of it goes in i wake up for a second >> whirlpool's third quarter results missed forecasts they are cutting their full year guidance citing higher costs for raw materials. this is the other thing, i have some antidotal experience here i was in a sears store this is probably not good. the "wall street journal" reports that sears will stop selling whirlpool brands which includes may tag and kitchen aid due to a pricing dispute which further isolates sears the retailer will sell the remaining inventory in its stores and has stopped listing whirl po whirlpool products on its website. >> whirlpool is down 8% on this. >> saears will end up like a rel estate investment trust. >> not soon enough

>> it was not a pleasant shopping experience. >> that was the case for years with kmart, they have not reinvested in the business hess is selling its oil and gas assets in norway for $2 billion. they will start the process to sell interests in denmark. the move is expected to reduce hess' debt by $500 million the ceo of tenet healthcare is leaving the company five months earlier than expected this comes amid pushback over the hospital operator's strategy the chairman will assume the ceo role as the company searches for a replacement. president trump is heading to capitol hill today. they will have lunch and talk tax reform eamon javers has more. >> the president is heading up the policy lunch at 1:00 p.m he will try to rally the troops on tax reform. it comes at a delicate moment.

the senate passed their budget last week. the house will take up the senate's budget on wednesday they expect to pass it by thursday that will unlock reconciliation so they can move forward with tax reform at a 50 vote flesh hothreshold. that's a key threshold because they don't have the 60 votes needed to pass it leaders say they will unveil the specifics once the budget is out of the way. we could see all the details once that happens, maybe later this week, more likely maybe next week, we would actually see that one senator unimpressed with the president coming up to capitol hill to lobby senators, that's bob corker here's what he said yesterday about the president's visit which will happen today. he said he doesn't think this is anything but a photo-op. he said tomorrow is a photo. nothing more, nothing less after we get the budget done, then the real fighting is going to begin over each of the policy proposals inside the bill. we saw this happen yesterday

where the president took on this idea that had been floetd ated capitol hill by getting savings by getting 401(k) tax cavings. he didn't like that idea he shot it down over twitter that knocks out one potential offset each of these ideas, to raise revenue in the proposal will be subject to a bitter fight involving the lobbyists and interests affected by it all the political parties around the outside will take positions on it it will be a big old political fight. we'll see where it all ends up >> eamon, obviously it's too early to know some details on these things, but they do keep releasing the trial balloons that we get an idea for. if the pay for is not coming from 401(k), not coming through v.a.t.f we water down the state and local tax issues with the deductions on that, are there other places have you heard that we could be looking for pay fors

>> my gut is that you could go away of paying for it altogether >> so looking at dynamic scoring? >> or looking at dynamic scoring. i think they could just let the costs sort of run here limit the overall effort from broad reform to a tax cut with a high deficit impact. that's where they would land that's the least politically painful. each time you fight for one of these pay fors, there's a lobbyist and interest group -- >> i think the president was right in shooting down the 401(k) idea. and we have a problem with retirement savings in this country. not the time you want to take away incentives. are we looking for lower tax rates overall? are you still looking to incentivize behavior through the tax code that's one of the battles that has to play out. >> the other issue that will sort of be a trick throughout

the process is the president, you know, he can change positions fairly quickly there's been a lot made of the fact that during the health care debate he celebrated the house passage of the healthcare bill and later said it was mean so a lot of lawmakers worry about they'll be put in that box by the president that they'll embrace a proposal and it will be deemed to be mean or nasty or terrible they'll be on the other end of that so there's a lot of caution in really embracing any of these things up on capitol hill. that makes it much more difficult to get to a deal >> thank you now to today's wall street agenda five dow components will report today 3m, caterpillar, mcdonalds, united technology and at&t other companies also out eli lilly, fiat chrysler, lockheed martin and chipotle and eli lilly's david ricks will

join us at 7:00 a.m. and general motors ceo chuck stevens will be on at 7:45 a.m. eastern. is lebeau in for that? okay thank god. >> why >> i don't know. >> he didn't study up. >> he's not ready for it >> at&t is not a dow component >> they took it out >> yeah. >> really? at time i remember thinking that it was crazy they took it out. >> international paper old habits -- >> alcoa >> you like 1980 dow >> honeywell, dow component. >> i had to look it up i'm like at&t is not a dow component. >> i have trouble with the new ones. >> i was shocked they took it out. >> kraft in there. i don't know >> travelers, united healthcare. >> those guys at dow have messed around with it too much. they're not iconic anymore >> they're changing it

now the question is about will ge stay? >> when will they put apple in there? >> talk markets now. you know what? whenever i do that -- >> somebody will write in. doesn't joe know -- >> aquaman >> happens all day >> i don't know. joining us for that is karen cavanaugh, senior market strategist at voya, and jeff cores of fifth third private bank i try to bond with you when you're here, on the fifth third thing. aren't you based in chicago? >> i'm based in chicago. >> fifth third is a cincinnati based lender >> cincinnati based but we have senior people in charlotte, office in new york >> why chicago when based in cincinnati not big enough not monster enough you have good chili in chicago >> not as good as cincinnati >> what about the ribs this is old territory for us >> not for all the millennials

that have recently joined up okay at this point, just in terms of what we have seen, i saw something today, did you see 250 days since a -- this market has been -- you know, in the past we talked about beach balls, you try to take them down, water, they come back up. not only has it been trending higher consistently, but there's been very little volatility. looks like something weird >> this is the market, the bull market everyone has loved to hate so when i am out speaking to high net worth individuals they tell mir they' tell me they're holding cash aside. >> so there are bears. they're not investing. >> that's correct. it's many wealthy individuals. they're feeling squeezed and pushing into the markets as it goes higher. people used to wait for a 10% pull back, 5%, now they'll take 2% >> just summarizing for what i see in your notes. so rates are low earnings are good. global growth is good.

what's not to like >> the fact that we have priced in pretty -- those high expectations >> but you're not saying prices are this overvalued given the back drop. >> no. but there's a level to which the investors are not prepared for things that might come out of the blue our -- we believe inflation, which is not our base case, but this is a market completely unprepared for even modest levels of inflation. >> karen, i know what you're asking yourself. fifth third. how did fifth street and third street intersecting, they both got same way >> they are parallel >> but it was the fifth national bank of cincinnati and the third national bank of cincinnati. >> in 1908 >> i think it was an elementary school >> now i know. thank you.

thank you. >> okay. yeah yeah real funny you heard all that is that where you are? or are you different >> i would say i'm more bullish than jeff. i don't think, lacking something that can go wrong is a reason to not like the bullamentals are g stronger, earnings are continuing to accelerate, the manufacturing numbers have been extremely good consumers are feeling good the university of michigan sentiment numbers, highest since 2004 so what is there not to really like then i think if we get tax reform, that's icing on the cake so the bias is to the upside so those bears are getting -- they're getting the dirt sandwich every single day as the market continues to move higher. >> you hope it's just dirt >> yeah. >> if you step in it -- oh >> it is

investors are missing that people say what's the biggest risk >> if you have two dogs, you know that. >> the risk is not being in the market i don't think investors want to hear that. i think we have been starting to get more optimism. we don't have euphoria people are still not happy about the bull market. the bull market is basically a bulldog that just keeps moving ahead. >> what does worry me is what i'm hearing from business owners who tell me this cycle is just getting started. you can't take a 4.2% unemployment rate in our ninth year of expansion and tell me it's just getting started. while there's no immediate risk, what we worry about is people over investing, getting out overseas in terms of the real economy that could s eshow the s to the end of the cycle. >> we could be in the beginning of a doubleheader. this can continue to go for quite some time. it's easy. eventually things -- the cycle

does move on things do end. i don't see that anywhere in the near future. i think things will be good for a while. >> we used to -- i loved using the word moral hazard. we used to talk about it all the time i can't believe the fed and central bankers are around the world, there's no day of reckoning. so any time there's a problem we just flood the system and we're fine, and okay, so seven years later stleshgs done th lat later, they have done this we stay at zero? >> i think the fed will raise in december and continue to -- >> they can be successful in getting n extricating themselves perfectly and the market will be at 30,000? and it all works >> i don't think the road will be smooth, but the fact that the fed is trying to get out of the way is normal. >> whether they were in too long too big -- >> if we could do this all the

time, we don't we do ten times the easing >> we have continued low growth and we took on so much debt. >> here's the hazard that we see. the combination of high burden -- regulatory burdens which are brought by by low interest rates inspired share buy back if you look at levels of corporate debt, they're quite high that debt has been taken on not for capex but share buy backs. so corporations should be thinking about capex to magnify a limited labor force and they may not be in a position to borrow >> that's complicated and esoteric that's like a chicago thinking >> they have cash overseas so money is fungible f it's over there, they're borrowing here, what's the big deal? >> the tech companies have the money overseas it's much of the real economy

that does not. >> thank you, karen. thank you. >> thank you >> you've been to cincinnati >> i go to cincinnati once a month. hasbro shares plummeting yesterday, the bankruptcy of toys "r" us partially to blame "squawk box" will be right back. is this a phone?

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a new kind of network designed to save you money. call, visit, or go to xfinitymobile.com. welcome back some stocks to watch today novartis reporting third quarter profit beat forecast on strong growth for its company business and eye care business, alcon novartis' ceo says the company has made progress on preparing alcon for a possible spinoff in 2019 >> you look at the strength of the market, if we did make the decision to exit through capital markets, we would want to exit at a time when the market was strong the market is strong now but we expect that that will continue so what we're doing is in the near-term, we're really focused on ensuring that alcon continues to grow sales, operating income and margin in a way that creates a sustainable business, if it

did come to market it will really be in demand. >> jimenez says he is considering a separate listing for alcon. he said u.s. tax reform would come into play in deciding where the shares are logitech's seconr results beating expectations the company is backing its outlook for sales growth of 10% to 12% they are upbeat about the current quarter which is traditionally the biggest of the year. toshiba is considering various measures if it can't complete the $18 billion sale o its memory chip unit by march. the sale needs to close by then or toshiba would report a loss for the second straight year. steve wozniak spoke out

about the apple x. >> iphone x is the first iphone i did not upgrade to my wife did, so i'll be close enough to see it i am worried about what it provides me. i'm happy with my iphone 8 which is the same as the iphone 7, which is the same as the iphone 6. >> the first iphone x shipments are expected to total 20 million units. half of what apple initially planned. >> i don't know what to think of that stock has been weak any way. you would think the woz, if the woz is -- people are using that as, oh, my god, woz is not upgrading. he would know. he said there has been no upgrade since the 6. >> all the same he said. >> i have the 6, i want the 10 >> you're due for an upgrade >> i have an 8 maybe i don't know >> did you just get it >> got it in the last two

months two, three months. >> could be. that's the problem, you don't even know. you can't tell >> that doesn't mean anything if i can't tell coming up, the ceo of saudi aramco weighs in on the oil market and the shale boom. and later, flood of earnings probably caused by climate change we'll get reports from eli lilly, united technologies, 3m, caterpillar, gm and more before we head to break, here's yesterday's winners and losers for your heart...

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welcome back you're watching "squawk box," live from the nasdaq market site in times square. good morning u.s. equity futures at this hour indicated higher that would get back everything we lost yesterday in that rare down day that we saw, which i'm not sure what it was all about yesterday. started out positive >> ge was the big issue. when that turned down, everything turned down there's no relationship. >> pension worries >> everybody is looking at a 2% world. >> ge pension went from a huge surplus 11 years ago being to being down

>> there's no return on your investments with rates that's one thing we don't -- when we talk about policy mistakes about the fed, we never talk about savers or retirement planners, insurance companies. it's tough to operate in an environmentment with ra environment with rates that low. earnings just in for eli lilly revenue above street forecast. the company raise td its full ya outlook. lily says it is reviewing options for its animal health unit david ricks will join us at the top of the hour to talk about all these things the new guy. andrew ross sorkin is in saudi arabia this week and got access to saudi aramco he spoke to amin nasser in a rare tv interview and asked him about the global market and crude prices >> i think the market did

dictate the price of oil, not the company. even if production is dictated by the ministry of energy, rather than aramco aramco does not dictate. when there's an agreement within opec, we will adhere to whatever the ministry asks for. >> do you feel any pressure to the degree that you have any influence over the price to keep it at a certain price given the dynamics at play with aramco and the kingdom? >> we -- we -- what we are doing is making sure that we deliver our commitment and optimize our costs and delivering more revenue to shareholders. saudi aramco is profitable and at any price scenario. even when market went down in 2015 and '16, our capital program was not affected what do you make of the u.s.

shale boom >> i think the shale boom is increased the contribution of oil from the u.s the number when the prices went down, also went down significantly. we can see for the last six weeks it's balanced. it's going down slightly it's different place different quality of shale they require different margins so different costs per barrel. so, shale contribution is good but it's maybe offset additional demand not to mention there's a national decline >> joining us now to talk crude, matt smith, director of commodity research at clipper data good morning to you. so, are we going to lock back on this ipo and say that was the

peak for crude oil prices? >> i think there's a long way before we get to the ipo i think what saudi aramco is doing is trying to buoy prices as much as they can. >> so once they sell, what happens then to crude oil prices >> they could be pushing more on to the market. until that point we'll see them reigning in the exports, trying to keep it as high as possible we know from them that their long-term plan is to eke away from oil, the reliance upon that we will see oil demand growth continuing for the next few -- perhaps next decade or two so we're in a situation where we still need the oil and we'll see prices likely moving higher because of that. is there an aramco premium in the oil markets? what do you think that premium could be by the time we get to the second half of next year. >> because we see them reining in exports -- because the opec production cut deal, they're

leading the charge there we see that particularly to the u.s. last year there were exports of 1.1 million barrels a day, this year it's 7 00,000 barrels a day. u.s. inventories have dropped from 536 million barrels to 456 million barrels. we've been seeing crude coming from the spr into commercial stocks they are trying to drain those stocks in the most visible and most transparent market of the world. and because of that we're seeing prices supported all that said, we're still only just above $50 despite their efforts, they're only managing to hold us slightly above 50. what does that tell you about the underlying weakness of the oil market >> tells us we still have a good amount of oil in the market. yes, global inventories are being drawn down we have a way to go before opec reaches its goal of hitting that fi five-year average, as the curve moved into backwardation, that

disincentivized storage and pushed more oil out on to the market. >> a push/pull on the market >> it's a vicious cycle. that's part of the pain they're going through, to reduce the stockpiles both offshore and onshore. to do that it means we're seeing these prices around where we are. >> for an energy equity investor, if you told me oil prices would remain approximately where they are now or drift higher into the second half of next year, that doesn't seem like a terrible back drop to be investing in at least you know what cost of materials are. >> especially in the u.s. from the perspective that u.s. shale, if it's $55 to $60, price of oil that should incentivize more ei production >> will you see a fade from the aramco ipo from the price of oil into that ipo, or knowing they're only selling 5% of the company, does that make you believe they'll keep prices higher for longer?

>> i think we'll be in a different environment this time next year. we will be that much further along in the rebalancing process. by that time prices so move higher >> matt, very quickly. i know what's putting a ceiling or cap on prices, that's every time prices fall to a certain level, you just continue to see production coming from the united states what provides the floor that tells us that oil won't go below $40 or something? >> demand growth is really strong so, not from the usual suspects. we heard about china, india, neern emerging markets, but real strength from europe we haven't seen it for years demand growth has come through from them so we're about 1.5 million barrels of growth this year likely to continue that through for next year. especially as the macro picture looks well that is supporting it, too >> thank you >> thanks. when we come back, inside eli lilly's report we'll hear from the ceo, david

ricks. he'll join us at the top of the hour then blackrock's larry fink is with andrew in saudi arabia he will join us to talk markets at 7:15 eastern time. and later, the battle over tax reform senator marco rubio will talk about the negotiation process that's been going on in congress what progress they've made and what it could mean for your money. stay tuned, you are watching "squawk box" on cnbc and high-dividend strategies. sure, these are investments. but they're not what people really invest in. what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more.

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welcome back right now it's time for the executive edge hasbro shares slammed after the toy company reported third quarter earnings the company noting some uncertainty connected to the toys are us bankruptcy filing. here's the ceo talking to jim cramer last night about the impact of the toys "r" us bankruptcy >> we didn't know it was going to happen. and obviously when you first hear about this, you take a few days off, we wanted to understand what the impact might be it has taken us a month to get a plan together and a new agreement with them. which we signed just a few days

ago. we wanted to be clear that we are making a new plan with them. we are shipping to them. they're partnering with us we are partnering with them. we believe we can grow together. we had to relook at our plan for the rest of the year given how close we are to the holidays and how important these months are to the business. >> joining us is the senior consumer products analyst at jeffries steph, what do you think about hasbro's future? how big of a deal is this bankruptcy filing? >> well, it's a big deal for everybody. i think there's two points first, toys "r" us was an important retail partner for developing the industry. so we knows there a reliance on that ecosystem online and offline in terms of building out the toy brands that these companies are reliant upon the second thing is that it was a fairly meaningful piece of the business, about 9% for hasbro, slightly larger for other peers. for as bro, it's an important piece of their business.

navigating through this bankruptcy right into the holiday season means they had to make a game day decision about how to operate it took several weeks to get a servic service agreement in place now that it's in place they can go forward >> i understand the disruption it was a selloff on the stock. i looked through the names of hasbro, trolls, spider-man, tickle me elmo, avengers, jurassic world, many noply, play-doh, "sesame street," you can go on and on anybody who has kids has these toys in their house what does the future look like for this company? they have a portfolio of brand assets that are significant in the industry what's interesting about this quarter, you had two conflicting messages you had a very strong quarterly report beat on sales and earnings then you had this cautionary look related to their single retailer that is in trouble in the u.s.

and it doesn't necessarily change the consumer outlook. the statake away is still doubl digits i find interesting that we are look at an isolated incident, a near-term effect, and a company making a decision to protect its own brand assets and its portfolio. but the consumers are unfazed and continued to buy these brands in a double digit broet way. so that gives us confidence that there is a plan forward and this company is in position to take share in the industry. >> you have a buy rating, $125 price target is any of that subject to change based on what we heard >> not really. as we went through the model, the company beat by 15 cents or so the fourth quarter revision takes the numbers down by 10 or 12 cents so net-net our numbers stayed relatively consistent for the year as we looked out it was interesting to peek around the corn near 2018 and hear about

the product pipeline and films on the way that gave us more confidence to take our revenue numbers up next year as you look at 2019, that's another big power year for the company in terms of the film slate and the initiatives around gaming, in particular the magic and gathering franchise, and many of their own brands where they have contentcoming. it doesn't change our view at all. who is the second biggest. if toys "r" us is 9%, walmart, target what's the biggest online component? >> it's a great question walmart would be the largest amazon is quickly pushing up to that top spot. could be a very strong holiday for the online business. and then target and toys "r" us would round out the top four the dollar trade value and discount and certainly some club stores like a costco have become powerful within the holiday season it's an important retailer

within the top four to five, but not nearly the largest walmart and amazon pushing to become a very strong vendor or a very strong retailer what percentage of sales are direct to consumer i'm asking because you look at nike, where once upon a time so reliant on a finish line and foot locker, now basically circumventing the channels, selling direct to consumer, could we see hasbro go that route? >> they do have a toy shop online but i would say if you look at their business, just from a composition perspective, about one-third is sold outside of the kids category, to teens, betweens, fans and that is where you could see the direct to consumer business evolve if you were to look inside the toy box for most kids, it's so brand diverse the retailer still have an important modality in helping the parent find the right drek collection

of products. over time you will see the online platforms which provide that multi brand experience for the consumer continue to grow. particularly this category is bought by parents, the fan economy secondary to that in terms of size and scale. >> steph, thank you. coming up, the dow up nearly 27% since last year's presidential election. but what should we expect now? pullback or more gains on the upside we'll get a new call, a new call from technician katie stockton after the break. as we head to break, here's a quick check of what's happening in the european markets right now. when this bell rings... ...it starts a chain reaction... ...that's heard throughout the connected business world.

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>> we've been following this daily here 27% from the dow since election day. our next guest says maybe just maybe -- maybe -- maybe just maybe? does that make sense maybe we could be prime for about a 3% pullback. here to tell us more, katie

stockton she is frequent guest here chief technical strategist for btig you kept us long, katie, with s&p targets much higher than most people thought for the entire time. what was your old target for the s&p? around where we are? >> 2,640 was the interim target. >> is still is >> it still is >> we're 2,564 right now when we were talking in the past we were below 2,400 at one point. >> that's correct. >> all the way up. >> it's still bullish, and that's the right way to be, and use pullbacks as buying opportunities. that framework -- >> 3%. i thought we could do that in a day theoretically. it would be scary, i guess >> it would be good if we do do it in a day because the swifter the pullback, the more likely it is a counter trend move. the initial support for the s&p 500 is about 2,485 that's based on its break-out point from september, and with a pullback of that magnitude, i think we would have a great opportunity to take advantage of a year-end drought >> there was a reason that you

short-term have come to this conclusion the friday rally was -- you called it exhaustive what is -- >> that's right. >> what indicates that >> we saw a gap up in the major indexes, and really there tends to be exhaustive in nature when they occur after prolonged debt moves. the s&p 500 had been up for six consecutive weeks. that's a prolonged debt move certainly. you know, the momentum is still there, but that gap up does have that sort of exhaustive look to it if you go back to march 1st on a bar chart of the s&p 500, it's a similar setup. after that exhaustion gap we saw pullback of about 3.5% or so over the course of three weeks, and then back off to the races i would have expected something similar this time around >> i mean, you almost wonder if it has to come in a day because every time there's a down market, buyers seem to flood in thinking that that's their only opportunity before prices start to march higher again. >> there's definitely something keeping the floor under this tape, and it feels much like 2013 where you got these swift

sort of shallow pullbacks. they were enough to refresh the up trend it feels similar what's important about the pullback is that it should relieve what has gotten to be overly bullish sentiment or extreme greed in the marketplace. a little pull back should be enough to relieve that condition. >> if we march back through it again and then higher, are we not looking over bought again? or a little greedy in the short-term >> over baltimore is okay as long as you have the momentum. i think you'll see renewed momentum with renewed break-outs we saw so many break-outs in september, and they've seen such good follow-through. now maybe it makes sense to take down a little exposure or at least wait to add exposure

>>. >> at the same time you'll see the high beta americas you'll see the fang stocks pull back more than the major indexes. 3.5% for the s&p 500 it probably means more for the russell 2,000 and the like >> does it break trend, though >> it wouldn't not at that stage. >> what has to happen? i mean, how long are you going to wait around for this? if it just is sideways, let's say. then is it -- will you push out your -- okay it's still going to happen, and we don't see 2,650 in the fourth quarter, and, i mean, how long are you going to wait? >> i think it depends if you see a consolidation phase, that's enough to see some relief from that overly bullish sentiment. >> it could be -- >> it doesn't have to be that to me is down side risk i think that's what we position for. certainly we can work off the bought condition via

consolidation, and then all the better >> i would rather not go down 3%, katie. >> i'll try to arrange that. >> just keep going actually, i don't really care. i was just sort of kidding, but, you know, what -- >> we all have a good santa claus rally, and an icy run push >> thanks for bringing that to us as well, katie. >> when we come back, pharmaceutical giant eli lily just out with earnings the stock this morning is up just slightly. we're going to be joined by the ceo david ricks in a first on cnbc interview that is coming up right after this quick break energy is changing fast and we're changing with it. building a smarter grid, investing in new technologies, that's aep's road to the future. and the international brotherhood

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global stocks edge willing higher after the dow snapped a winning streak

a sixth session winning streak yesterday. earnings coming in this hour from general motors. caterpillar and 3m, the numbers and reactions straight ahead eli lily quarterly results are already out this morning, and we'll be joined by the ceo david ricks in a first on cnbc interview to discuss the quarter and debate over drug pricing it's the return of the home equity loan. as the economy improves and home prices rise, does the number of homeowners borrowing rise as well, and is that a good thing that story, plus your corporate headlines as the second hour of "squawk box" begins right now. we are live from the nasdaq market site in times square.

>> good morning. >> we'll see him in just a minute in the meantime, take a look at what's been happening with the futures this morning they are picking up a little bit of steam yesterday was a down day for the markets, but you can see already the dow futures are indicated up by almost 70 points this morning. s&p futures are up by about 3.5. the nasdaq up by 4.5 all of them picking up a little bit of steam very recently part of that might be because of what we're hearing from utx. let's tell you about that dow component just out with earnings it says it expects to see $6.58

to $6.53 in earnings a share that's up from the $6.45 to $6.60 that it had been looking at before, and it compares with the street estimate of $6.57 that stock right now up to about 31 cents we'll bring the latest numbers from 3 m and caterpillar coming up in the next half hour along with automaker general motors. then just before 8:00 eastern time the latest numbers from mcdonltd's will also be hitting the tape the record run that we've seen for japan's nikkei average continues. the nikkei rising a half a percent overnight to another 21-year high it's now been up for 16 sessions in a row that is its longest winning streak ever. 21,805 some stocks to watch today whirlpo whirlpool's third quarter results. the appliance maker is cutting its guidance saying higher costs for raw materials. it's raising prices across products the "wall street journal" reporting that sears will stop

selling whirlpool brands as well as kitchen aid and -- it will sell the remaining inventory in its stores we're also watching shares of general electric this morning. the stock is coming off its biggest one-day drop in six years. analysts still worried that ge may have to cut its dividends. stephen nicolas and oppenheimer downgrading the stock yesterday. >> let's get back to andrew in riyadh he has been covering the future investment initiative there, and, andrew, good to see you >> hey, becky. we are live in riyadh in saudi arabia during really a remarkable transformation of this country we have some breaking news for you to bring you right now, in fact klaus kleinfeld, the former ceo of alcoa, now getting a new job working for the crown prince here in saudi arabia he will be working on a $500 billion economic zone that's going to be created in the northeast of saudi arabia. it's going to be announced, we're told, this afternoon the project has been announced

his role in it has not you might remember the klaus kleinfeld was in that battle with hedge fund elliott management got ousted as part of that he has now found this new role here, and we hope to try to find him and bring him to you we've seen him around the halls here already lots of other news coming out of this meeting this morning. a panel discussion that i hosted included a conversation with the head of the public investment fund here. we talked about the aramaco ipo. continued questions given our interview with prince alawaleed. also with the ceo of aramco about if, in fact, if it was going to be delayed, when it was going to happen, whether it was going to get pushed off by potential investment from china. he, again, suggestedinsisted, in fact, that the aramco ipo was on track for 2018 and as the ceo said, it should be in late 2018. we will see whether -- how

investors react to that. that's what's going on in riyadh we'll come back to you with a lot more >> andrew, just wondering with klaus kleinfeld, that's a lot of money that you are talking about, you know, says and i'm wondering, you know, the saudis, those guys are, you know -- they got some serious money i mean, i wonder what klaus is looking at in terms of

compensation just fantasizing about what it could actually be. i'm wondering if one of these guys approaches you over there and says, sorkin, i've been watching you, and i think you could do something over -- is there a number that -- >> i might not be coming home. i might not be coming home >> you're right. >> if there is a number, what would the number -- what would the number be? >> a man can wish, right a man can wish >> what would the number be? >> we should put that out there. >> if you turn it down, i want you to -- i want you to -- >> the family is watching. >> if you don't want it, at least tell me what the offer would be >> what do you think the price tag should be, joe how are you going to value my services

snoo what's the tax rate going to be? >> it depends what happens the next couple of months, i think, andrew you know what it looks like? probably higher from what i'm hearing right now. you may be in sixth bracket by then >> with the fourth bracket i might be staying here. we'll see. >> i'm just wondering. i'm sure it's a good -- $500 billion. got to be pretty lucrative, i would think. >> it's going to be a new economic zone. they're going to really try to pull a lot of business into saudi arabia there's been a lot of talk about all the investments they're making outside of the country, but this is really an effect to try to bring employment here to saudi arabia >> all right keep your ears open. that's all i'm asking. keep your ears open. thanks we'll be back with you, andrew eli lily out a couple of minutes ago. drugmaker beat on the top and bottom line. adjusted a full year outlook to reflect upbeat performance lily also says it's reviewing strategic options for its elonco

animal health unit joining us now is david ricks, ceo of eli lily. some strategic initiatives that you are looking at that we want to talk about. we want to talk about the president's comments on drug pricing as well. let's just talk about approximate the quarter. diabetes, the complex up almost 40% in sales that was a bright spot don't understand cialis is still a great drug, but down 4% and below expectations can you kmernt on both of those things, dave >> absolutely. great to be on this morning. lily had another strong quarter in q3, drifb p ven by our newes products, and your question characterizes the pivot that the company is making towards the latest innovations really in our diabetes business, we've had many products. products like gardian. 39% growth in diabetes this is great news for patients because more options are there to treat this serious condition. on the other hand, some of our old friends, cialis, you mentioned, olympta growing

slower that's normal as these products sort of crest late in their life cycle where, we've said to investors next year we expect generic if competition for cialis that's not surprising to us that that product is slowing down, and we're moving to new products like taltz, trulicity and we launched a new drug for breast cancer this month. >> you did boost the outlook is it above now your outlook above analyst expectations, or does it just get to where analysts were already? how much of a boost was it >> i think the range includes what i saw a few days ago of the expectation, but i think the high end is higher than the midpoint of the analysts >> over the years we've seen a lot of the major pharmaceutical companies sort of swapping things with each other in this case it's animal health. was this a business you liked for a while? why does it not fit in anymore >> we like this business we like it now

lanco grew up from inside of lily more than 50 years ago. really over the last ten years that ep joid through the years, through the y, z years it's more than tripled the last three years. we've combined it with other inat this time novartis's animal health business and the u.s. vaccine business now we have a globally competitive full line of products, and because of that we think now is the time to step back and look at the best alternatives to maximize value for it going forward >> and for lily as well. let's talk while we have time about some of the president's comments about drug pricing. he talks about drugs are cheaper in other parts of the world. that has to do with price

controls on our drugs that we develop here in this country, and the price controls there, they didn't need to spend the money to develop them, and put price controls on them bringing them back here doesn't make sense how do we try? what would you suggest to president trump in terms of controlling pharmaceutical drugs? maybe it has to do with generics or larger groups being able to negotiate prices or something. drug price controls are not the answer, are they >> they're not the answer. we're concerned about the idea of importation we've been working with congressional leaders and the administration to work on three things first, increasing competition. starting with the generic marketplace, which you just mentioned. actually, the fda is doing just that they're on a record pace to clear the backlog of generics so they they can't take advantage of the backlog that exists we think there's need to speed up the drug for novel drugs, drugs that lily is focused on to increase competition, and their big payers can do their work to negotiate the best deal for the

government or corporations we've suggested as well that it's time to have a real conversation about patient out of pocket costs. patients pay too much out of pocket for medications versus other health care services four times as much for prescription medications versus hospital costs there's no good reason for that. it's just the way the systems evolve what's really grown isn't the list prices of the drug, but what patients are paying out of pocket we need a national conversation about if passing through rebates that are negotiated by pbm's, and other intermediaries to patients at the point of sale. finding ways, as well, to rebalance that hospital costs versus pharmacy cost all the while protecting the incentives to innovate our country does us better than anyone we're the world leader in pharmaceutical innovation. >> can you walk us through the step-up in new products, the once that beat analysts consensus. cymbalta and that's versus the step down, the drugs that will

lose patent protection such as cialis that was the root of the credit suisse downgrade they are concerned that sales will be flat because of the step-up, step-down hand off. can you walk us through that >> we're seeing it this year some of our brands that have been with us for a while, like -- they're losing their intellectual property here in q3 we're growing through that 9% growth. if we exclude the old products, our newest products, drove almost 14 points of growth for the company. that's the power of our innovation story the newer products are getting bigger faster, than we're losing revenue on the patents next year we have a big one in cialis that will slow our growth rate we have not given guidance we'll do that to the end of the year on 18, but what we have said is between now and the end of the decade we're going to average 9%

those products go on to become very kmeep for the consumer, and it's there to treat serious disease for a long time. that's part of the ecosystem we're in we're on a roll with new product launches, and that's so far been able to overcome these patent laws, which we expect and when which are inevitable >> gottlieb, people think he is great from what i have been hearing. >> i think you listen to enough people he has the populist -- we all want cheaper health care, obviously, but you don't want to kill the goose that lays the golden egg either. that's american innovation in your sector, david

>> comments on the state of global investment. plus, the cfo of general motors will join us to talk about its latest quarter "squawk box" will be right back. stay tuned the governor has declared a winter weather emergency... extreme risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages from happening in the first place. at cognizant, we're turning the industry known for processing claims into one focused on prevention with predictive analytics, helping them proactively protect the things that matter most. get ready, because we're helping leading companies see it- and see it through-with digital.

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>> get back to riyadh, saudi arabia, and andrew is there. he is covering the initiative conference where they'll be discussing global investment trends he has a special guest that you need to give our best to andrew, i don't think mr. fink is wearing a headset, so tell him that we all say hi >> thank you, joe. larry fink is here from black rock, and i should tell you, he is wearing an ifb. he just heard you, and he can hear that, and i'm sure you say hello back >> joe, that was very nice of you. and becky. >> melissa is back in studio

>> you say the number for you is 4% i think that there was sort of a momentary pause in the room when you said that. >> we have publicly stated that. we're talking about over a ten-year horizon we're making far better this year because the equity market return there will be some markets where you lose 20%, 30% of the market, and we're talking about a balanced portfolio too that composes of bonds and equities and alternatives >> if you are right, at least in the united states, the big pension funds, if you think they're underfunded today, they

will be remarkably underfunded ten years from now >>. >> it's a combination of how the cost of their liability is, and that's determined by the ten-year rate, and so if the ten-year rate goes up 100 basis points from here, much of the degradation of the asset return is going to be offset by the higher -- the higher interest rate for -- >> one of the big discussions here is what this country is going to do with so many investment managers here they're putting a lot of money to work very quickly we just talked about klaus kleinfeld running a $500 billion expansion economic zone here where do you think we are in the economic cycle -- >> for saudi >> for saudi, and i would say for the globe writ large in ermz

it of asset values, given these folks are going to put a lot of money into work in the next two and three years. what inning are we in? >>. >> with the prince they're trying to really push the whole society forward, including much more equality with women women will be able to drive cars next june. if you are talking about the global economy -- >> they're putting a lot of money to work in the global economy. they're giving money to blackstone and to soft bank and i imagine they're investing with you and bridgewater. everybody is here. >> i think -- they are also

expecting lower returns too over the long run here in saudi to answer your question related about the global economy, the global economy was -- we're in our eighth year from the recession. the global economy is actually starting to see acceleration i think i said this on your show two weeks ago. we're seeing japan and china accelerating now with the abe election, you may see even further acceleration of the japanese economy. you have europe. i'm told europe is actually accelerating right now you see, many parts of the world that's actually starting to exhibit much more accelerated growth now, much of it has to do with increased domestic consumption, so what we have seen in these -- in this anemic world, we saw people hoarding cash, and that's a worldwide phenomenon that i talked about we are starting to see some of

that money being put to work maybe it's being put to work in personal consumption, and some of it is going to be being put to work in investment. my view of the world is still that we are in a very upswing economy, and what we continually see is investors have a lot of money to put to work >> right one of the big conversations here and we had a conversation with prince alawaleed on the show yesterday is about u.s. taxes and what tax reform ultimately looks like and what it means for the market. he suggested he thought that u.s. tax reform is actually relatively baked in, and, in fact, if we didn't have u.s. tax reform, that about a quarter of the gains we have seen thus far we might lose. >> well -- >> what do you think >> i have a different view i think -- i think very little is baked in.

>> i think if we get tax reform, which i think we're going to get, whether it's in the fourth quarter or first quarter, i think we're going to get it. i think the market will see another leg up if we did not get tax reform, we would have a major setback that would disprove if we could get anything done in our -- in washington it would put a negative psychology on to the u.s. markets. at the same time we would be feeling pretty -- the rest of the world would be looking pretty good. >> want to ask you about 401ks and taxes. i don't know if you have -- >> very disappointed >> spent enough time looking at this recently.

>> i was thrilled president trump came out against the republican plan. i said for years on your show, the greatest problem we have is the lack of savings for retirement be rye stricting it down to a proposed 1,500 or something small amount was crazy it went against everything that we believe in. we need to encourage more safings, and by eliminating that deductibility, really it's very harmful. now, if the republicans need to mean test it, maybe i don't get the tax deduction, but we should encourage more people putting more money -- >> just to put a fine point. >> you would

snoo should i have a deduction of $18,000 with my income? no should we means test should we means test social security there are many ways of getting around some of these big issues. you know, i'm turning 65 next month. should i be collecting social security the answer is no, but i'm entitled to it under the current tax code i think it may be 67 now we should look at means testing as another mechanism to try to help the people who need to invest more. >> great to see you. guys, back to you. >> andrew ross sorkin in riyadh. coming up, with home prices on the rise, so are a number of

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zbliechlt after a down day yesterday, you'll see that the futures have been picking up steam throughout the morning right now dow futures up by 78 points >> all right gm rolling out quarterly results. phil lebeau has the numbers. phil >> joe, for the tenth straight quarter general motors has be beaten the street, beating it by a wide margin, earning $1.32 per share. 20 cents better than the street was expecting. revenue also coming in stronger than expected at 33.6 billion dollars. the street was expecting revenue at about 32.7 billion. some of the key numbers within the numbers, remember, there's a 5.4 billion dollar charge for opal that's a non-cash charge that has been expected by the

street that's rolled into the third quarter. in the u.s. the company made $2.1 billion on a margin of 8.3% $500 million profit in china south america swung to a profitable $100 illion, but free cash flow will get a fair amount of attention from analysts they expected it to be negative. especially with the huge drop in wholesales especially in north america. it was down $1 billion 26% decline in wholesales is the key thing to watch there gm financial up 60%, and a couple of other notes. one of them being that the company's guidance for all of 2016 is now to be between $6 and $6.50. so at about $6.25. the street is examining them to earn $6.19 a share for all of 2017 don't forget, what a lot of people want to know about is what chuck stevens has to tell us coming up in about 20 minutes regarding the company's efforts

to monotize its mobility solutions. that's everything from cruise automation to robo-taxis that's what's moving the stock right now. not the old business as much as what the potential is in terms of those mobility businesses we're going to be talking with him about that coming up in about 15 or 20 minutes guys, back to you. >> thanks, phil. another dow component. i was watching the dow futures, and they seem to be upticking two because kalt pillar is reporting $1.95. i don't know if that's the adjusted earnings. there may be a gain. i don't know that's usually the number you would use, but the estimateis only $1.27 that's way above expectations. this stock is on an absolute roll that's a new high where it's indicated right now. the revenue number, $11.4 billion, was also above the estimate of somewhere around -- >> 10.66 >> 10.66 i'm looking at the june quarter. exactly. that was well above. i don't know when mining turned

around because that was the problem, remember? they got into that in a big way, but look at that >> it's raising sub-17 for sales. remember, back in july they raised their outlook in july things must have materially changed between july and now, and now sees $44 billion for 2017 back in july gave a forecast of $42 billion to $44 billion even more bullish on the revenue outlook for the full year. >> $8.2 billion virz the $7.9 billion estimate 3m beating on the top and bottom lines. several strong earnings reports. already 3m is up by 3.8% it's updating its 2017 full year outlook gap eps.

9 to 9 .10 that's up from 8.80 to -- it is raising it for the full year not slur where consensus stands right now. we are seeing that trade higher strongly in the market all right, folks remember the days of using your house like an atm. you could do it with a home equity line of credit, but those loans fell out of favor during the housing crash. really never came back strong until now. diana ohlich explains why. diana, good morning. >> good morning, becky look, with home values rising fast, homeowners have regained more than $1 trillion collectively in home equity, but they haven't been tapping it the way they did in the past now, part of that is stricter mortgage underwriting. part of it may be the hangover fear from the housing crash, but that is now changing about ten million homeowners are expected to take out a home i equity line of credit in the next five years. that would be more than double the 4.8 million in the last five

years. now, just this year and next year they expect a 30% jump from the previous two-year period why? well, people have a lot of equity, and they're not moving so much because of the limited housing stock and some overheated home prices also, lenders had really moved away from offering home equity lines after the crash, but now they're looking for more business, to be honest, and trying to entice good borrowers back to these loans. what will people do with the money? well, number one, renovate that's the most popular use. take the money out and put it back in again. they're also using it to consolidate other debt and lower their interest rates finally, they're refinancing home equity lines they already have that may have aged past the draw period. that's when you have to start paying principal along with interest back to you, guys. >> all right, diana. thank you. zblierjs coming up, earnings expected for more dow components mcdonald's still -- i love mcdonald's that's another stock that's been -- i told you that suddenly

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zbrierjts take a look at the fauts. when we started the show this morning, we were looking at the dow futures up by about 50 points or so since then we've heard from three dow components all of them beating expectations 3m, caterpillar, and utx as a result you see the dow futures indicated up by 121 points above fair value. s&p futures have picked up nominally. they're up by just over four points above fair value, and nasdaq looks like it would open up by six points here. snoo amount zblon has received 238 proposals. cities and regions all across north america are vying to host the company's second home base the on-line retailer says it will invest more than $5 billion and create up to 50,000 jobs for its hq2. coming up, we head back to riyadh and hear from steve schwartzman. andrew caught up with him earlier this morning, and then chuck stevens will discuss his company's quarterly results. "squawk box" will be right back. zar: one of our investors was in his late 50s

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welcome back to "squawk box. it looks like it could be a pretty strong rally here on the street the dow is looking to open higher by 131 points a lot of that is being fueled this morning by caterpillar. shares are up by 7%.

we got beaten raies from 3m, gm, united technologies. all of them are trading much sharply -- sharply sharply higher in the p-market session. utx up 1.5%. >> you know, 3m is not up nearly as much as caterpillar, but it has twice the weighting in the dow, so it's contributing pretty heavily to that. >> yeah. it's a big number, right it depends on the number it's five points caterpillar, ten now >> i'm just talking about the weighting. >> yeah, but by number of points >> it's gone from, what was it, six originally up to now ten >> yep caterpillar is up ten full points let's head back to saudi arabia. at $141 on caterpillar now andrew, a new high oh oh, he doesn't -- andrew, we're

not going to take a shot of him because he is, like, looking around right now doesn't hear it. i don't think we're in his ifb getting crickets he is going to have schwartzman, i think. we're going to have some comments from steve schwartzman. all these guys are over there. it's an important part of the world. >> it is you just heard larry fink say he has been going over there three to five times a year for the last 15 years. it's been -- >> a lot of money there. >> -- a constant place where people are going to do some fundraising. >> the quality of these earningsing, because we're seeing such a bid for the future >> strange >> the quality is -- >> we're talking about just not eps but revenue beats, and also raises not just on the es line, but on the revenue line that's a departure for this earnings season, and that's really -- i mean, no wonder why the dow is up so strongly. >> lockheed martin making comments we haven't gone into depth, but it accident loo like it's $3.24 versus the $3.26 the street was expecting brsh they are raising for the full year. they're looking for $12.85 to

$13.15 street was only at $12.64. they're also talking about a record backlog that they have. the strength that they've continued to see it. >> katie was on earlier. i was going to say, you know, we're right in the middle of earnings season, and, you know, i can see how a technician with can forecast a pullback based on an exhaustive rally on friday. right in the middle of what are expected -- it would be weird. then you see earnings take over the override the technicals from friday i mean, this is not the underpinnings of the overall market then suddenly change caterpillar is up ten points the dow is going up no matter what you know, no matter what the technicals say >> you ask katie you asked her what would happen? how long would you hold to this expectation that you see a 3% pullback she's still looking for higher numbers in the fourth quarter. >> isn't it almost november? le. >> she thinks saunta clause rally is coming, for sure. >> right the 3% she said one day could do it >> yeah. >> i don't know what would cause it >> it's important for these

particular stocks. bev seen a strong run. a lot was riding onthese earnings reports in order to sort of validate how far these stocks have come such as a caterpillar. we're seeing that in spades. >> and 3m, up six now. >> all right let's -- i got my fingers crossed. can you hear me, andrew? caterpillar up ten points. ten points to 141. >> i got my fingers crossed here too, guys. we are in saudi arabia i wanted to bring you just a couple of clips from an interview we taped with steve schwartzman of blackstone just moments ago. how it all came about, in part because steve schwartzman had a meeting with the deputy crown prince in new york at the plaza hotel, and this is what steve schwartzman told him about how he should approach --

>> to improve its infrastructure it's a nice thing to do. it's a positive thing between the two countries, and you'll make a satisfactory return it's not foreign aid it's investment. >> we got also into a pretty meaningful debate about carried interest and how carried interest is going to be treated under whatever the new tax reform package looks like. this was steve schwartzman and what he had to say about that where. >> some things happen. some things don't. what i would say is carried

interest from the last 100 years has been treated the same as a capital gain, and we'll see where it goes. 100 years is a long time it's not a recent, you know, sort of tax preference it's 100 years we'll see. >> and, steve, who has been a supporter of president trump, also madethe campaign and made his support known for a tax reform package especially when it comes to the corporate rate >> if you just look at corporate taxes with the u.s. stated rate at 35%, we're about the highest in the developed world that can't be good because people will try to avoid paying those 35% taxes, and it puts the u.s. at a real disadvantage.

for example, we've got somewhere between 2.5 trillion and 3 trillion u.s. dollars, which could be working in the u.s., trapped outside the u.s. because we have 35% taxes if you bring it back, and zero if you don't imagine if you were running a corporation. when you bring that money back and do things about it or build your factories somewhere else. >> we're going to bring you a lot more live from riyadh throughout the show. masason will be speaking in just a little bit we'll bring you whatever news comes from that as well as the crowned prince of saudi arabia we'll bring you a lot more over the next hour. back to you, guys. >> all right, andrew thank you very much. we'll see you in just a moment when we come back, though, gm's cfo, chuck stevens will join us after the break to talk about the company's quarterly results and the state of the auto sector stick around "squawk box" will be right back.

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>> let's get to phil lebeau who has a special guest. >> let's bring in chuck stephens you beat the treat by a wide margin revenues stronger than expected. does this set up for the fourth quarter where you look at the market right now and you say you've had some production cuts, but we think we're close to perhaps at least in the near

term that will bottom in terms of production reductions, et cetera >> yeah. i think, phil, when you look at the third quarter very, very much on plan significant production reduction, as you mentioned. 26%. with that we still generated very solid results we're very pleased with the position of our u.s. dealer inventory. we reduce that by 120,000 units, and i think that sets us up not only for a good strong fourth quarter, but going into 2018 very, very much on plan. very, very much, you know, in line with the guidance we've provided for a very strong year in 2017. >> so quickly, no further production cuts than what you guys have already announced, correct? >> well, i would say that we're going to continue to monitor the market, continue to align supply and demand we expect production in the fourth quarter to be up versus the third quarter. there are some down weeks associated with launch not to the magnitude that we have seen in the third quarter

i think importantly in that context we still expect to see another strong year in north america with ten plus percent margins and another strong year from an enterprise standpoint. >> let's talk about what's moving your stock and has been over the last six weeks or so. the idea amongst investors that they finally get it. that the potential for you guys to monotize, cruise automation, self-driving cars, the idea perhaps eventually moving towards more shared. there's nothing in your earnings report about monotising, but give us a sense of where general motors is at and where investors can say, uh-huh, i see it and how it's filtering down to the bottom line. >> i think there are two drivers of what we've seen in the stock price movement number one and importantly, foundationally, it's the continued strength and resillance of our core business, and the actions that we've taken over the last number of years is really established a strong

foundation to launch from. when you think about the future of personal mobility and transportation as a service. we've been out talking about where we are in that journey, and we believe that we've got the assets, the capabilities, the technology to lead that's starting to resonate with investors. there's a big prize when you think about the potential total addressable market we like the position we're in, and, again, i think that's starting to resonate with investors. we'll certainly have more to say on that in the coming months and coming quarters. >> but no guidance in terms of when we can affect some of the monotization of some of the investments? >> i would say more to say on that in the coming months and the coming quarters, so stay tuned. >> chuck, real quick you have a 10% stake in lyft, and i know you are also talking with other ride share companies as well as basically spreading your chips around. ultimately when it comes to ride share services, let's say two, four, five years down the road,

does general motors own both the car and the platform when you look at where ride share might ultimately lead? it. >> yeah. as we think about this, phil, what we've said consistently is it's very important that we own the customer relationship, that we don't become disintermediated from the customer. whether or not we partner, own, develop our own network over time, you know, a lot of people talking to a lot of people, and there's a lot of potential outcomes there, but the most important aspect of approximate it is we want to make sure that we control the customer relationship, the customer experience in the vehicle on a go forward basis, and the structure at the end of the day will be what drives the best long-term shareholder value. again, you know, undecided at this point in time, and, you know, a lot of people talking to a lot of people, and we're keeping our options open >> chuck stephens, the cfo of jern motors joining us first on cnbc from the gm headquarters in detroit on a day, melissa, where the company beat the street by

20 cents, earning $1.32 a share. >> the stock just gained about a percent during the course of your interview up to 3.7% gain in the premarket. thanks for that, phil lebeau coming up, canyon partners co-founder joshua friedman talks with andrew live in riyadh, and then senator marco rubio has his pitch on expanding the child tax ua bcrit sqwkooks will be right back. 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. ♪ ♪ gglobal bonds, and high-dividend strategies. sure, these are investments. but they're not what people really invest in.

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nor marco rubio says passage of reform will rely on one thing. he will join us straight ahead plus, i'm live in saudi arabia with a line-up of newsmakers we've got hedge fund titan joshua friedman and the coo of ravian that and a lot more as the final hour of "squawk box" begins live from riyadh right now. skblienchts live from the most powerful city in the world new york this is "squawk box. good morning welcome back to "squawk box" here on cnbc live from the max market site in

times square i'm hot, hot, hot. we know that, though i'm also joe kernan along with becky quick and melissa lee. andrew is in riyadh this week. we're going to hear from him in a couple of minutes. he is hot, hot, hot. always has been. let's get a check on the futures right now because they, indeed -- i wasn't really serious about me or andrew, but they are hot today up 140 points. a lot of that is caterpillar some of it is utx. some of it is 3m >> yep >> and maybe some of that is mcdonltd's the trade is volatilecdonald's t adjusted earnings per share at $1.76. the fact set estimate is $1 .76. thereby other estimates that are a penny higher roughly in line. revenues were in line. the bright spot in the report, u.s. comp store sales coming in at 4.1 % the estimate had been for 3.6% we do have a mixed bag so far for mcdonald's we are seeing the shares hugging the flat line right now.

>> there's a lot of different things that are happening here the global comps were up 6%. apparently there is an accounting quirk in this, which may be part of the reason you're seeing things fluctuate as people try to figure this out. total sales a little lower because the company accelerated refranchising to the tune of about 10%. down 10% if you look at the system-wide sales, though, that includes both the owned and franchise locations. those sales are up by 7% that's probably the number that is a better apples to apples comparison >> 10% on a global basis >> 7% total. >> the ceo of the century. up 70% in a year >> yeah. >> it's a company it with that size mark of 60% whatever i mean, i'm not a smart man, but there it's at 1 00, and it's up at 1 64, and that looks lake a one-year chart it's at 64% on a big cap, the sizes of mcdonald's, and the dow component. unbelievable >> yeah. >> it is especially with the headwinds from the kale eating quinou

michelle obama lunch crowd that would never -- >> you know what they have >> what? >> some comments from steve easterbrook. he said our velocity growth plan is the right strategy for mcdonald's to achieve long-term profitable growth, and we are on track to succeed with our commitment and focus on executi execution. goes on to talk about the progress they've made in many areas of the business already, including what he says optimizing our restaurant ownership mix, which is i'm sure what you are talking about with prefranchising faster than expected what he says is running better restaurants. >> yeah. i mean, they basically have a barbell approach it's really interesting. they've got this signature sandwich as the higher end on the mcdonald's, and then the mc-pick promotions, and they're gaining attraction there >> what about the fries, melissa? come on. >> the buttermilk chicken tender where's. >> nobody has matched the fries yet. >> that is true. they're very thin and very crispy >> even without the -- even

without transfats. remember how long they worked on that they were getting the transfats out. they didn't bring it they will sell no fry before it's time. they did all kinds of innovation to make sure you could match the old fries with the transfat-free. i'm not even sure -- i'm not -- >> but it sounds good. >> i think they finally said, look, we can't do it it's like the diesels in germany. >> by the way, mcdonald's shares are trading higher now $1 .64 is the bid. $1.64 -- it closed yesterday at $153.24. >> people have written you remember when they lost -- i don't know ifyou do -- they lost a couple of ceos, unfortunately. tragic, health reasons it was a $12 stock then it was that mcdonald's days have come and gone i don't know if you ever are really going to see mcdonald's days -- >> this had mccaffkaccafe. >> they're more crowded than they are here. >> the last ceo we had questions

that were raised again before easterbrook came in >> that shows you, management makes a difference management makes a difference. >> all right let's get you caught up on some of the other earnings out this morning. first up, united technologies. that company earning $is.73 a share. that was 4 cents better than expected revenue also beating estimates and united technology raising its full year outlook. you can now see that that stock dow component up 1.3%. check out shares of 3m the company behind scotch tape and post-it notes earning $2.33 a share. revenue beating estimates and 3m also raising its full year forecast after seeing organic growth across all of its business groups. dow compoenent up 3.1% plus, another dow component that's up very sharply caterpillar beating on both the top and the bottom line after it saw a significant increase in demand for its construction equipment. that stock up by 6.2%. that's a gain of $8.22 then general motors beating

street estimates for the tenth straight quarter shares of gm at this point looked like they are up by 3.8%. you are right, joe tough time to be looking for stocks to fall when you have earnings that are coming sharply. >> yeah. technicians are -- you know, they don't want to know anything about fundamentals >> sometimes that helps. >> sometimes it helps. you know, this market this morning was a little firmer when we were coming in, but then you can get these numbers coming out, and suddenly we're 140 points let's get to riyadh. andrew ross sorkin is live at the saudi vision summit. he joins us with a very special guest, but the little engine that could the market another 140 points again we're already at 23 and change it's nuts. >> it may very well be

>> saying hello. where do you think we are? to some degree, for you to succeed, i imagine you have to hope that some of the -- at least the way the equity world works, that it actually has to go down. >> well, we do like disruption, andrew that is absolutely correct we like either disruption at the market level, such as when bank debt was being sold by commercial banks or when the mortgage market was melting down, et cetera, or we like disruption in it individual companies, when there are bankruptcies, when there are distress situations. a lot of the disruption we have right now because it's such a bullish market because the market itself is anything but disrupted. it really takes place more in m&a where people take advantage of low prices -- or take advantage of high prices, low yields to issue debt or issue stock, and there are a lot of corporate transactions which cause debt to be upgraded and

downgraded tail ends of restructuring, et cetera we sure would prefer a more disrupted market >> you are a value player. i'm curious on the value side, you know, some of the industries that are being disrupted right now is retail. that's probably the biggest. do you look at that as an opportunity or do you say i don't want to touch that >> that's one of the scarier ones simple is expensive. complex is schecheap. how cheap does it have to be to decide you're going to wade into that some of the companies are companies that will be permanently gone, and so you have to value them in many cases if they're liquidations. maybe we do a dip loan or a prebankruptcy financing. over secured lending makes you a little bit of money, but not much we're very cautious in that area >> is there a space right now that you think actually does present an opportunity >> we've deployed a fair amount of capital recently in oil services we don't want to make a closet bet on the price of oil, and god knows there are many people who are focused on what the price of oil is there are a lot of companies that are very competent service

companies that couldn't survive the transition from $100 oil to $40 or $30 oil without having to restructure their balance sheets those are the places you go to pick up dollars for 50 cents >> we're here in saudi arabia. you've long had investors in the region would you invest in this region? >> i don't think we have the kind of competitive advantage to be investors immediately in the region we're global investors we do a lot in western europe when there are distress situations we have to let the marketplace evolve so we can understand the rules of engagement. >> you do play the m&a game, mergers and acquisitions game. one of the things you've been involved in for a long time now is the alibaba yahoo situation how do you think it's going to play out >> well, if we get tax reform, it seems like the discount is certainly going to narrow. right now essentially yahoo now retitled alibaba owns nothing but cash ultimately that capital structure simplifies and the

discount more or less has to narrow from where it is today. particularly if this tax reform is sort of -- it would narrow quite a lot. >> you have a bet going on time warner, at&t >> yeah, we've always been active in the tmt space, and i think our view is it echos some of the other views in the conference that companies that have good content are desirable not just among people like at & t, but also a lot of new players, the large yahoos, the fangs, et cetera, are all active in the contents space now. we like that merger a lot. >> josh, we want to thank you. appreciate it. it's great to see you. thank you so much. thanks >> hey, joe, back to you, sir. >> okay. thanks, andrew up next, florida senator marco rubio pushing for an expanded child tax credit he will join us to talk about that and much more right after the break. plus, mcdonald's just out with earnings we'll dig through the quarter with an analyst. stay tuned you're watching "squawk box" on bc ekpredictable income in an uncertain world? pgim sees alpha in real assets. like agriculture to feed the world. and energy to fuel its growth.

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welcome back to "squawk box. futures have been gaining steam

ever since some of these dow components have reported now the dow is indicated up 141 points the s&p not quite the same type of gains there, but up just under five the nasdaq indicated up six -- 6.67 almost 6.66. >> about 90 points of that dow gain is from caterpillar and 3m combined >> the dow futures were only up by 50 points when we started the show, before we started hearing from all the dow components. >> really getting bolstered here senator marco rubio will join us mcdonald's serving up quarterly results. reaction from the street coming up later, silicon valley style plan to make healthy food affordable,, and you might recognize the last name of the man paving the way kimbl skiljo u an's brothers.

a couple of entries down, i see, that senator bob corker blasting president trump on foreign policy -- you take them back he said let the adults handle foreign policy for a while now president trump just moments ago -- three minutes ago,

tweeted bob corker who helped president o give us the bad iran deal and couldn't get elected dog catcher in tennessee is now fighting tax cuts. all right. >> there's a dot, dot, dot >> got more coming got that going for us. we'll keep an eye on this thing. then i'm looking at my next twitter entry was the crowd at andrew's panel, which did you see this huge it's a big deal. i would be nervous all those people meantime, president trump's daughter ivanka stumping for tax reform she was at a town hall in pennsylvania to make the pitch for expanding the child tax credit >> the cost of raising a child has gone up so much while wages have stagnated, often frustrating a parent's ability to provide for their children in that regard. joining us now to discuss the child tax credit and more, florida senator marco rubio.

i guess you have an ear piece. you heard the latest tweets. yeah you heard the latest tweets between what the president and then you heard some of corker's -- let's -- we'll -- let's talk about what we were going to talk about and try and use tax reform, senator, to make it family-friendly, and pro-family in tax reform how can we do that >> first of all, we have to understand that what you just heard ooich ka trump say is something i've been talking about for three to four years, and that's how expensive it's gotten in the 21st century to raise a family for working people, and so the tax code should take that into account. by some estimates, it costs over $250,000 to raise a child from the time they're born to the time they turn 18, and that doesn't include college. child care costs are extraordinary. actually, i think it keeps some people out of the labor force. we need a tax code and expansion of the child tax credit and make it applicable towards payroll tax up until their payroll tax liability. these are critical things we need to do if we're going to provide middle class tax relief

to working families. >> i'm glad you bring this up because i'm thinking about the larger debate around taxes, and there's two things we can do as a nation, or maybe there's a way to do both of them one is to bring the rates down as low as possible so that you have a very low corporate rate, very low individual rates. the other is to use the tax code to really incentivize people or reward people. working families who are working so hard to raise people or people who you want to incentivize to save money like the 401k plans is there a way to keep all those behavioral sort of things in the tax code and also get rates lowered, or is there a tradeoff that has to be made there? >> i any there is, and that's what we're working towards in fact, some of the outlines provide that what we need is two things on the business and corporate side, we want to make sure that we have a tax code that's globally competitive. on the personal side that we're delivering relief to the people that need it most to help them with the cost of living. that's what we're working towards. that's what the framework begins the work of doing, and the details are something we're going to have to work through. that's the goal that i hope all of us are working towards.

>> if history repeats itself, at least to some extent, senator, the sacred cows are always tough to deal with, and if you don't have a total pay for, you're going to need to rely more on dynamic scoring. is that the way this is headed, and is that -- you've got enough republicans to pass this will everyone be on board? >> well, tax reform has to be graded dynamically, because that's the reason why we're doing it the purpose of doing this is to create economic growth by making us globally competitive. otherwise, you're not accountsing for the very reason why we're doing this >> i hate to do this to you, senator, but the second part of the tweet came out this is the world we live in there's a dot, dot, dot, and then the president went on to say corker dropped out of the race in tennessee when i refused to endorse him, and now his only negative on anything trump look at his record. you figure corker just now that we're talking about it, is he on board with tax reform when it's all said and done? do you think --

>> i think he will be. i think he will be all that other stuff is interesting to cover, but it has nothing to do with the work we're doing. i'm going to stay focused on the task at hand, which is fixing our tax code, reducing regulations, working on our debt ultimately, restoring our national security, and i'm making sure we have a good foreign policy let's stay focused on the task he'll leave the drama to other people >> senator, i don't know if you saw the "wall street journal" today. this is totally off topic, but it's something that is getting kind of interesting. that is it's an opinion piece. comey and mueller imperil the rule of law. it basically says the remember forrer fbi directors historically have been much tougher investigating republicans than democrats this comes at the same time that in recent days it's been postulated that it's been a while for the russia collusion story, and even some democrats aren't talking about it as much. they're talking about facebook or ads meanwhile, this uranium deal -- >> i don't think -- >> go ahead. it's back in the --

>> putin seeks to undermean our democratic institutions. he is not a republican or democrat we need to let people know how they did it so they can keep it from happening again i have never viewed it as part zbl partisan issue >> the collusion story is depending on that to make this not a full term presidency the house intelligence committee doesn't need necessarily comey or mueller or the fbi. neither does the senate. why aren't they looking closer can't they get information about what really happened with between the iranian deal and -- >> i think that's going to be a part of any inquiry that's ongoing, and that includes the special prosecutor let's get the truth. wherever it leads us, let's get the truth and get it out there there shouldn't be any part of this that isn't covered or shown to the american people for part zblan reasons. >> there's really good -- there's smoking guns, but there's lots of money that we know changed hands, and we

know -- we know all that i don't see how -- >> we just need to lay all the facts out, let the american people reach their own conclusion the soorp the better >> is it a business relationship >> i wouldn't know it's a special prosecutor doing their job independent of the congressional branches, and that's the way it should be. that's why it's called an independent, you know, investigation. >> all right we'll go back to economic issues i don't know that's in the wall street journal. it's not just -- that's a business newspaper do you care who the next fed chief is, senator? >> i just want to be somebody that brings stability and long-term certainty so that people can plan for america's economic future. that's the president's decision to make. we'll let him move forward on that and go from there

>> all right, senator. you may be working 24-7. i don't know maybe you can send some stuff home for christmas, but there may be some long hours ahead do you think -- >> that's what we're here to do. >> you think it gets done this year or next year? >> i do. tax reform i think hopefully the goal is to get it done before thanksgiving. that's ambitious, but that's the goal >> what kind of support do you have we mentioned i've been p vanka been pushing credit for working families >> a lot of the support has grown over the last few weeks on it, and i think it's because the realization that the only way we're going to be able to deliver middle class tax cuts is through an expansion of the tax child credit it's amazing to see the number we've got real momentum. we got to run it through the finish line to get it in there and get it done. >> i have one more michelle carusa cabrera, she says you know a lot about venezuela, and there's a big bond payment coming up on friday

there is where they were going to wind up anyway. the sakes only accelerated it. they are incompetent they're tyrannical, and their moment is coming >> senator, thanks >> thank you >> we'll see you around. thanks appreciate your time today >> thank you when we return, a roundup of all the earnings out this morning. plus, we're going to be going live to saudi arabia andrew spoke to the ceo of rathion. we will bring you the highlights from the cnbc exclusive interview. stick around "squawk box" will be right back. my name is jeff sheldon,

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good morning welcome back to "squawk box" here on cnbc rooif from the nasdaq market site in times square among the stocks on the move this morning, following quarterly earnings in addition to all the ones we've highlighted. also, stanley black and decker

reporting profit of $1.95 a share for the third quarter. 8 cents above estimates. they also raised the full year forecast after seeing growth across all of its business categories drugmaker eli lily has quarterly profits of $1 .05 a share. it raised its full year forecast and said it was considering a couple of strategic options. one, for its animal health business recreational vehicle maker polaris industry earned $1 .46 a share for the third quarter. beating estimates by a full 23 cents. also gave a full year forecast above the street on strong growth in both north american and international markets. well, mcdonald's just out with third quarter results the fast food giant earning an aus judged $1.7 of a share that's a penny shy of revenue forecast beating estimates global comp -- u.s. comps rose 4.1% joining us now rj, senior analyst at morning star. rj, great to have you with us. shares are up about half a

percent premarket. how did you interpret the quarter? >> i think first and foremost, looking at that u.s. comp number it came in at 4% street was looking for about that, and i think that the key thing here is that that's even with the impact of the hurricane during the quarter that means a lot of initiatives they put in place, whether it means new products, whether it's better in store experience, whether it's the tlifry initiative they seem to be working, and that's a lot of momentum heading into the fourth quarter. we're going to see mobile order pay, and some of the experience of the future. the kiosk ordering and some of the technology aspects start to hit the stores >> there are also a lot of promotional activities in the quarter, correct, that drove u.s. comp store sales. national beverage. mc-pick two. can they keep promoting to that level, to that degree going forward? >> yeah. i think they need to right now i think that it's got a balance. you did have a lot of promotions, but you also had a lot of success from the signature craft and the more premium line you had both ends of the barbell working for the company this quarter. i think it's one that you have

to have the promotional activity to drive traffic the iced beverage platform was very successful. at the other end there's traction on the premium side and that's bringing back customers that may have lost it's the broader playbook to regain a lot of those lost customers, and i think they're going to continue to see that in the next couple of quarters. >> shares are up 35% so far this year what's the next catalyst >> yeah. i think the next catalyst is this mobile order and pay. if they get traction, it could be successful. i don't think it's going to have the same one-time pop that all day breakfast had, but i think if you look over the next probably six to eight quarters, that's going to have a real meaningful -- real sustainable impact on same store sales that's the next big catalyst also, the experience of the future the other take-away from the quarter for me is looking at the international segments, u.k., australia, those are the areas of the world they have already put in these experiences of the future type restaurants. if we see the same success in the u.s., this thing is set up pretty well for mid single digit comps for a nice period of time. >> what's your top question on the conference call for the ceo?

>> i think how to build awareness for a lot of these initiatives in place how to get consumers more aware about mobile order and pay and dpet them excited about that you know, are the restaurants ready for it it's one thing to say that we're going to put all these things in play >> that's another thing. yeah, exactly. a lot of restaurants have struggled with the idea of mobile order and pay that's very difficult to do. it seems like they've been very thoughtful about the process, but in reality it's very difficult to pull off. i want to hear what the plans are on that front. >> all right r.j., thanks for your time >> thank you >> r.j >> let's get back to riyadh. andrew sat down with the ceo of defense giant rathion. he joins us right now with some of the highlights from that. andrew >> thank you, becky. this is his first ever interview. tom kennedy speaking out of course, rathion maker the of the patriot missile. the stock is up on a remarkable ride, and so is his business for lots of good and bad reasons

take a listen to what he had to say. >> if you go to europe you see a lot of countries concerned about their sovereignty, the safety of their citizens you go over to the middle east, north africa reasonable. you know, you see syria, iraq, yemen, libya a lot of concern by the countries in the region. relative to the counter insurgency and the counterterrorism efforts going on there there's also concerns about bigger powers in the region. not only is it counterterrorism, but there's also a major deterence affect that has to be taken into account then you go over to the asia pacific region you have kim jong un creating a lot of concern for countries you just saw the recent election in japan and the outcome of that they've essentially driven to protect their sovereignty and the safety of their citizens the bottom line is that the region is much more dangerous around the world that's creating the opportunity for defense companies to provide

solutions. rat ratheon provides solutions to protect the safety of their citizens >> since the north korea situation has really escalated, what's happened to your business what are you doing on a daily basis? >> we do have the capabilities and the competencies to counter the north korean threat. we just need to make sure we continue to fund that capability we have the systems in place that can counter >> as an american citizen if you are living in california right now, should you be worried based on the technology that you and others are providing >> i say relative to north korean threat, you shouldn't be worried. you should insure that you talk

to your congressman and congresswoman to make sure they it continue to defend the united states and their allies. this is not a time to be cutting defense budgets. this is a time of significant turmoil around the world, and if any time in the history of the united states, where where he need to support a strong defense, it's today. >> let's talk about the defense budget what are you expecting right now? >> well, we're expecting i think a bipartisan support to go beyond the budget control act of 201 1 below -- beyond sequestration, what they call the caps to decrease the defense budget to the point it needs to be to protect the united states and our allies >> there's been a remarkable amount of consolidation in your business are there things that -- or pockets of the business that you think you would like to fill in? >> right now we call it gaps if we have any gap areas, we look at that continuously.

snoo there's speculation about -- >> we are -- that's not on the table today. >> it's already changed our business back in may we established 100% to own raytheon company in the kingdom. that was something not allowed before the kingdom is changing its laws to essentially make saudi arabia a much more attractive place for -- especially u.s. business. they do business in the kingdom. >> what's the one thing that you worry most about from a defense perspective. >> understanding the needs of our country and being able to defend our country and our citizens >> the cyber threat versus the

threat of missiles which is bigger for you right now? >> it's the physical domain and the cyber domain i think one thing a lot of people don't realize is that the cyber threat and everything we've been talking about and, in fact, the equifax is just the tip of the iceberg people below the tip, we have infrastructure issues relative to our power grid, relative to our water sflie, relative to our petroleum and oil supplies being jeopardized by the cyber threat. then autonomous vehicles autonomous vehicles are going to have to communicate. they're go to have to be connected. anything connected is vulnerable there's a whole area of cyber security that a lot of folks don't talk about, but it's a major threat to our economy and to the future of our cut and to the future of the world. >> that was ceo of raytheon making the case, of course, for

congress to fund the defense budget, but also talking about some of the serious issues taking place how that's actually impacting in a good way their business. of course, adding more risk to the world. i felt better, guys, about certain part of the conversation we talked even off camera about the patriot missile and what it's capable of. at the same time even when you started getting into some of the cyber security stuff, it may made me, dare i say, more nervous. there we have it back to you, guys. >> we've heard a lot of the cyber security stuff this week, including those industries that are being attacked that we were warned about by the government just this past weekend we've been talking about it this week andrew, thank you. we'll be back with you in just a little bit when we come back, entrepreneurship is all in the family elan musk's brother kimbal isn't talking about electric cars. he is in the kitchen instead, and he has some really big plans 'lexairit teod wel pln ghafr this right here on "squawk box. hi, i'm the internet! you know what's difficult?

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snoo let's get you caught up on some of the biggest movers 3m revenue beat estimates company also raised its full year forecast after seeing organic growth across all of its business groups. check out the shares of m. the automaker beat the street estimates for the tenth straight quarter.

food is the new internet at least that's according to our next guest when he starts talking about opportunities in the kitchen and what it could mean for kids in particular kimbal musk is the co-founder of the kitchen restaurant group he is in new york right now appearing at the fast company innovation festival. kimbaal, thank you for being here today >> thank you very much >> i want to talk about what you are doing with food. you started your first restaurant in boulder about 13 years ago. >> yep >> and you have built from there, but what's the concept behind your restaurants? >> so because it's a broader pigs of real food for everyone the kiv started in 2004. we work with local farmers trying to bring trust back into the food system. industrial food has been a real disaster for society we don't know where our food comes from when we opened the kitchen we have a mission to help local farmers to bring food from our

community for our community. >> you trust to nourish the farmer you trust to nourish the planet at a price that's affordable >> dpig out how to grow into communities where we can actually match what the farmer is growing with what we put on the menu it's been a really cool process. you get to know farmers. you convince them on to grow fingerling potatoes. you do that and you commit to it for a few years where they'll give it a try, and then you can create a smashed fingerle dish,

which is a more nutritious version of french fries. delicious and tasty, but also nutritious >> there might be -- go ahead. >> can you make money selling these kiepds of meals for $10 or less in other words, can you actually achieve that scale of a national chain restaurant >> it does have to do it in partnership with the farmers cost is not the issue, actually. we were able to get very affordable real food, you know there's no supply chain you have to deal with you can get food at a lower cost because the farmer is right there. there are a lot of advantages to also having a menu that matches what the farmer is growing because they'll give you a good price for it the issue is really just getting more farmers on board because you run out of supply after a little while or if you go into a community, you have to encourage farmers to grow real food

>> you can get them -- >> we don't sell truffles. we're afundraisfordable real fo. >> other places are good at low cost this seems like something that only a really wealthy society can even imagine doing and whether the benefits are, you know, maybe oversold in terms of nutrition and things like that it just seems like a really rich country's sort of approach to doing things >> i mean, i am not sure that's true we work in memphis, for example, which is the poorest city in america. we have next door, which is affordable real food we have the kitchen, which is more upscale they're both incredibly

successful next store more so because it's more affordable product. the farmers we work closely with, they're growing cotton in that area, which is a total money loser. they just have been doing it for generations and generations and generations. they make a lot more money if they grow real food, but they have to have a buyer that's where it comes to the building -- the journey of getting the farmers on board you know, importing our real food from australia, that's insane that's what we do. >> meaning that it's not fresh by the time we get it. >> it's not fresh. it's frozen or it's just shipped for thousands of miles when we have the most fertile farmlands in many cases in the planet right around you are on cities, but they're used to grow chemical cotton or corn for ethanol. that's a very bad use of land. it's the only reason we're doing that is through government subsidies. >> let's talk about the entrepreneurialship gene >> sure. >> you come from an incredibly successful family with entrepreneurs. you have done this before yourself you and your brother, elan

what did you -- >> for me i grew up cooking and loved food always, but in 1995 my brother and i just said, you know, the internet thing is this awesome, amazing thing, and we couldn't ignore it at least for him he loves the stuff, and for me i was, like, okay, i'll give technology a shot i really do -- i love the internet i'm a technology gist as well, but nothing like my brother. we did that for four years we built the underlying maps and directions technology for the internet >> you did it because you were taking a road trip, right? >> we brainstormed on what we could do, and then we found this company called nav tech, which was an unknown company to most people nowadays it's more well known. it had built a database of mapping around the country, that was unused, and it was about $300 million worth of assets, and we were 22, 23 years old they just gave us all the data because wouldn't it be cool if this was on the internet you know, once we got it on the

internet, then we got venture capital funding, and we built it in 1999 when we sold it, eventually it got acquired by yahoo and yahoo maps and so forth. i went to new york to learn how to cook. yeah it was amazing i actually was here for 9/11, and i had the incredible opportunity to cook for the firefighters during this very difficult time, but what a beautiful way to see how food could bring firefighters together you know, they go into the giant piles of melting metal it would still melt for weeks and weeks afterwards, and then they am could out, and we would feed them, and they would sit and connect with each other, and then they would go right back out again. from then i was, like, wow, food is so powerful let's figure out how to get people sitting down together eating real food >> kimbal, thank you so much for being here today we hope you'll come back >> thank you so much >> kimbal, thanks. >> when we return, jim cramer joins us fresh off his big win again, last night 6-1, i think, the eagles join us from the new york stock exchange we'll get his take on today's

top story. >> the hasbro ceo. >> oh, yeah. >> that was a big win too. >> with cramer, i don't know i'm sure he enjoyed hasbro ceo, but i think he might have enjoyed the game a little more here are the futures right now up 151 points. be right back. with objectives like building capital for the future, managing portfolio risk and liquidity and generating income. that's real etf innovation. flexshares. built by investors, for investors. before investing consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

let's get down to the new york stock exchange and jim cramer joins us now. jim, are they one of the elite teams? i think maybe so or is there a day -- are you going to finally say i knew this was coming what do you think? >> i did know it was coming, i was looking for an underpromise overdelivery of 8-8. wentz is very real there's fabulous video even the announcer said he was down and he's a gamer we've got some powerful weapons on "d. it's a real team and it's not -- it's a team that plays tough but is not overconfident why i really like them they under promise. >> i saw your tweet last night what happened to caterpillar, did that sneak up on us? >> it did. >> it got through 100 before i realized something good is happening somewhere. >> i think what happened is that

they let so many people go at the same time the dollar got weak and rest of the world got a little stronger and you're seeing mining did get better china is a little -- asia is a little better but the united states is strong i think that united states being strong, europe being strong, these do matter. conference call at 11:00 when you have that sales explode and you've laid off so many people, you have tremendous leverage this is finally what happens we've been looking for this for 30 years for this to happen to cat, where they finally are lean enough, inventory is lean enough, raising prices it's their time. >> one thing you didn't -- i didn't say you missed caterpillar but you knewesterbrook was the real deal the day he was appointed. >> he's more of a science guy. he understands you have to make the place as simple as possible and that's how you get the buy into the franchisees and can start latyering on good things,

stanley black and decker may be the best one i don't know, other than caterpillar greg hayes did a fantastic job, gm is good it's a lot of good earnings and the numbers are excellent. >> i still try to figure out mcdonald's what was the key difference between him and his predecessor? >> i think that -- i know it sounds strange because when i talk to easterbrook he keeps saying mojo. what it was, the people who ran, the master limited partnerships were very confused they didn't know how to make the menu a lot of mistakes being made it was really hard to get through the lines. the company really had kind of lost its way, other people didn't want to work for them and what he did was he kind of energized it it's not that much different from what doug mcmillan has done mcdonald's is a place where franchi franchisees are ready to work, it's all in the secret sauce of making the franchisees like.

>> i think it might be block chain, i don't know. >> it might be carson wentz, we don't know. >> we'll see you in a couple of minutes. don't miss hedge fund manager leon cooperman at 12:00 p.m. eastern time "squawk box" will be right back. today, smart planning is helping the new new york rise higher than ever. as the world leader in unmanned aerial systems, we're attracting the world's best talent to central new york. and turning the airport into a first-class transportation hub.

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bbc is testing out a new mirnny series concept. they'll have the option to follow the plot line of characters they like the most rather than take in the full cast and storyline at once it's designed particularly for commuters and already a strategy for the series "home front." the newest iteration is a series from peeky blunders. >> the fast food chain is testing something called a chocoladilla s it is available in wisconsin through mid november are you a buyer? >> is it a taco bell >> it is. >> the worst thing i've ever had there was great so --

>> yes this was a day we saw a huge turn in the futures, futures were up 50 points and got beat after beat with earnings and now you see the dow is indicated to open by 151 points caterpillar, 3m, mcdonald's uxts tx helping things out. thanks for being here. >> my pleasure. >> we'll see you later today right now it's time for squawk on the street. ♪ fly eagles fly >> jim cramer celebrating from last night's victory over the redski redskins. >> i'm sorry. >> call it turn around tuesday, we get a beat and raise from caterpillar, 3m, utx and lilly and more and cat and 3m at 100 points at the open the 10-yea