and some of the most powerful financial leaders are in saudi arabia and they will join andrew live in rejad. it it's wednesday, october 25, 2017, and "squawk box" begins right now. live from new york where business never sleeps, this is "squawk box. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen andrew is reporting live from the future investment initiative in saudi arabia. there he is. good morning >> good morning, becky we've been having a heck of a time here. we have a lot more to bring you over the next couple hours >> we'll get to andrew in a moment back here in new york, our guest host is guy adami, cnbc "fast money" trader. great to be here again

joe's excited. you are excited. >> he comes bringing orange juice, coffee for folks. >> clapping. >> it's energy, man. it's energy. >> really loud >> you're not that old >> time for the global markets report we will look at u.s. equity futures. yesterday the dow was up by 167 points 80% of those gains came from two stocks 3m and caterpillar gm and others were also reporting. >> which is great news finally you're starting to see earnings and not financially engineered earnings, actually seeing real earnings with the commensurate revenue growth now the question becomes are the stocks that you just mentioned getting expensive on valuation that's what the market decides right now everything is -- the tailwinds are significant for the market >> who were you eluding to financially engineered earnings? >> many. many of these companies. >> you were not talking about general electric specifically?

>> if you would like me to speak about it. >> they're doing a lousy job of it. >> of financially engineering. i was wondering if has risen to the level of ge where you object to -- >> this is a wells fargo >> i was wondering whether you decided -- >> it's 6:01 >> bang. >> came out of the block >> now it's 6:02 >> has it risen to that level? >> no. >> the next day i thought about what we discussed about wells fargo. i reconsidered a lot of the things you said. you made cogent points, as you want to do. >> as i want to do you know what? i wish you could be here -- are you here every week? >> it's funny, you are the steve garvey consistent good looking >> yeah. hair >> davy lopes. becky, solid hall of famer you have been together a long time andrew is like clayton kershaw gets paid a lot of money but here once every five weeks

>> we have to defend andrew. his mike not be on if someone compares andrew to clayton kershaw -- >> he wouldn't know any way. >> exactly last night, unbelievable a houston team that's been really hitting >> yes >> clayton kershaw -- >> shut him down >> so he hits it hard when necessary. >> you think i'm bill buckner, right? >> no, i didn't say that if i thought you were bill buckner -- >> who got a bad rap >> he did. >> he a long career. >> a storied career. it's another show. >> let's talk about the ten-year yield. look at treasuries now you will see that at least right now the ten-year is yielding, wow, 2.448%. that's the highest we've seen that yield into quite awhile pushing higher a lot of expectations out there that the fed will have to raise rates. we'll see what happens a lot of this based on good economic news because of the earnings we've seen coming out

overnight in asia, the nikkei finally closing lower after 16 days in a row of closing higher. a huge winning streak. closed down by less than half a percentage point a decline of 97 points to 21 21,707 the hang seng up by a half percentage point in europe, in the early trading, you will see that it looks like things are mixed. barely budging for the dax the cac is up by a quarter percentage point the ftse down by 0.2%. stocks are higher in italy and spain. >> i can't look at japan without thinking 40,000, 38,000. >> highest level in 21 years, but almost half. >> i remember those days, too. you might barely remember them you probably don't you were too young probably. >> i remember when it seemed like japan was taking over pebble beach i do remember that all the buildings they were buying in manhattan.

>> we thought we could never compete against japan. that shows you economies and stock markets can -- >> stall >> after 20 years, 25 years. >> you're cal ripken, that's who you are. >> great >> because you show up you're always here consistent >> i play hurt >> cal rip conditiken senior >> among other stocks to watch today, the price of crude which is not a stock, but it's something to watch you can watch stocks that are affected by it 52 now wti hit a four-week high yesterday after saudi arabia said they were determined to end the supply gut the saudi arabia oil minister raised the outlook of production cuts when we do have andrew there, he

says he's been having a great time i want to know how i want to hear he's not a big drinker any way >> are you comparing him to the rest of us. >> adami is here on today's -- it's all relative, right? >> noted remember that whole thing? noted? we talked about that >> yeah. >> noted >> i owe you for that thing you -- >> that helped you >>twitchy thing. it's bizarre like jumper cables >> it's shaquille o'neal -- >> bizarre you sit there, you're going -- it's like doing something to your -- stimulating your muscle. >> it's called the electronic stimulation, it overrides the muscle that's spasming >> we have to do this. i didn't believe you're not allowed to pull it off until you pulled the thing off i pulled it off --

>> you get electrocutelectrocutd >> i did. >> i should have read you the warning label. >> i read it, i didn't read it september durable goods earnings are out at 8:30 a.m., followed by september new home sales at 10:00 a.m. how about these, boeing, coca-cola, glaxosmithkline, northrop grumman will report before the open as well you made that point, when the market was flat yesterday, we had a technician tell us, maybe it's time for a pullback but then caterpillar and there's no way the dow is not going up >> the caterpillar story is interesting. that was the third time they raised guidance this year. you think about that that's uncaterpillar-like. >> it's always darkest before the dawn a year agoremember what we thought? what did they buy the mining stuff for?

commodity glut all the stuff they had done. >> they were facing off -- >> got rid of poor doug. he's still chairman. >> yeah. you have to think what doug was doing over that time to get it moving >> look at it now. >> it's not a great comparison, but you wonder if ibm is sort of nine months behind where caterpillar is >> do you? >> i do. look at the last quarter of ibm. very good. showed finally maybe they're starting to make this turn after four, five years one quarter does not a trend make caterpillar started somewhere as well six months from now, if you have me back, if we're thinking about ibm -- >> come in every week. >> as long as you bring things to electroshock him. >> and i'm back to ge again. where is ge -- that was supposedly being restructured and turned around for the last 15 years when it comes down to it, it

looks like maybe they were playing some kind of shell game with the pension expenses. >> i want to be careful how i answer this question you look at general electric for years, always beat earnings by a penny or so. >> with revenue below. >> extraordinarily consistent. you wonder what was being tweaked on the real estate equation from time to time they zigged when they should have zagged. they sold financial products at the low. they got into the energy business at the top. honeywell which has been extraordinary has done everything right ge has done everything wrong the change in management will help but they're way behind the 8 ball now >> i wonder what the multiple really is on ge now. >> you can argue that the right multiple for a company like general electric, given where they are -- >> what's the earnings power today? >> yeah. >> a dollar a share? >> i'll look it up i will tell you that the right multiple is low teens if not

11.50, $12 you start doing the math it's probably a sub 20 stock >> our top corporate story, chipotle, i've had it. it's like fresh or something i like tacos with fritos and doritos on them. we have david novak coming on. >> he knows how to make burritos >> crazy nachos. i eat anything taco bell i love it. the company reported -- chipotle reported third quarter profit and same-store sales below forecast the chain was hurt by food borne illness outbreak at a store in virginia the store also cited high prices for avocados and lackluster

response for its new item, the queso. hot cheese -- >> with stuff in it. >> the gop is working on its tax reform plan. now the democrats have their own proposal that's nice. you know, i don't know what -- why would do that. ylan mui has more. they have a proposal for us? just to do it? to show they can got to give them credit for trying >> not really. >> they are doing this even as the house is making real progress on an actual bill so democrats are focusing on four areas they're looking at middle class tax credits, education, child and elder care and retirement. now, representative rich neal is a ranking democrat on the ways and means committee, he called this a tax code founded on fairness not based on who you

know or how wealthy you are. he was taking a swipe there at the republicans plan some of his proposals, like expanding the earned income tax credit are staples of the democratic platform. they want to allow you to exclude student loan payments from your taxable income the plan calls for bigger tax credits for child and dependent care now, there is one issue on which both democrats and republicans overlap, and that is the tax credit you get for having a child. this is one of the major priorities for first daughter ivanka trump and for marco rubio. they're holding an event today on capitol hill to try to build support for this democrats say they are on board with this idea, but most other parts of their plan are just not going to suppfly with republicas democrats want to use revenue from tax reform to go towards infrastructure that's something republicans discussed early on and dismissed. democrats say they have not

gotten much input into the republican plan. they say these principles they released this morning are parameters for the discussion, and they are willing to negotiate. we'll see if the train has already left the station back over to you >> i don't get a lot of that i know during a campaign, if you talk to one candidate, you have to give equal time to the other candidate. we're probably not wrong to focus what's going on with the republican plan, right that's just me i just think -- that's where all the action is. that's the one that has the possibility of passing this is moot, isn't it this is completely moot. >> the democratic plan that just came out this morning, this is completely new i think it's important to remember that republican passage of tax reform is not guaranteed. what happens -- >> i guarantee this will not pass the republicans might not be guaranteed, but i can guarantee this is not going to pass. >> what happens if we get to the

end of 2017, there is no tax reform, president trump is looking for other answers. maybe this is a document he goes to >> wow >> we don't know what happens when president trump flips the script >> because he approached the side about other things. maybe that's fair. we'll do both sides. we're all waiting for next wednesday or whenever it is. i think you confirmed that that's when brady will have the details. is that wednesday? >> november 1st. not sure the day of the week november 1st >> i think that's wednesday. yeah i think i'll wait for that one thanks earnings are out from visa looks like they're coming in with earnings of 90 cents a share. expectations were for 85 cents a share. that's better than anticipated also talking about revenue coming in above forecast revenue of 2$2.1 briillion >> dow component >> i said that >> you did. >> transactions processed, up

13%. that's the news headline you wanted >> for me. for me that was the headline that it is -- >> dow component >> now, that's an old -- we've been doing that for a while. which ones do we use united healthcare? goldman sachs? nike i forgot about nike. they change them so much, adami. >> they shouldn't. it should be locked in >> we'll have at&t earnings, greg moffett will be on. >> yes >> it's not a dow component. >> yeah. >> madness >> i don't know. >> let's get to riyadh andrew ross sorkin is at the saudi vision summit. he joins us with a special guest. i'm told, andrew, that you can have a drink in hotels i didn't realize that. so you -- it's not totally -- is that true? >> i don't know if that's true i have not had that experience thus far but i have had some amazing

apple juice. i've had some amazing watermelon juice. they do some extraordinary things with juices here. smoothies. you know i like smoothies. so we've been having -- >> wow >> dates >> you've had a date >> dates the food >> oh, my god. you're on national tv, your wife could be -- >> nonetheless -- i know i know >> dates >> we have ronald o'hanley here of state street global advisers. we can talk to him about dates, watermelon juice as well you have been here a lot you know the answer, can you have alcohol in hotels. >> not that i know of. i have never seen alcohol in a hotel here >> i've not seen that either you are here there's a lot going on here. a lot of conversations about the markets, the global economy, what's going on in saudi you are doing a panel this afternoon about policymaking and

what investors want to see do. what do you plan to say? >> what policymakers need to do, if they want growth there's a system involved in creating growth it's not just one single thing the way i think about it when i focus on it, the foundation is your capital markets you need well running capital markets. good governance and thoughtful regulation >> are you a believer that this tax plan is going change the dynamic in the united states >> i think we do need tax reform i think we need to start with corporate tax reform i hope it goes further it's more comprehensive. >> further in what context >> to think about how the overall tax plan works we all know we have an inequality problem we need to think about the middle class so i think if we can have a system that lowers corporate taxes, and stimulates business

and particularly small and medium-sized business, yet makes sure we have the proper safety net in place, that's good. >> we had a conversation with larry fink yesterday you saw him on the panel he talked about the idea that 4% for the average investor is all you can expect over the next decade do you buy into that >> i don't necessarily buy into the number i think it's highly likely what we'll see going forward is less of what we've seen in the past as investors we need to be prepared for a lower return environment. >> given your business, how do you sell that? >> it means, if you think about the livers t erlevers to accumu the return is one, how you start saving is another part of that we have to change the mindset on how we invest and save for retirement >> you are the king of passive investing to a large degree. how do you think of the debate between active and passive now >> i think the debate is ov

overwrought. for every dollar that shifts from active to passive, 2 1/2 dollars shifts from active to another form of active we have a long way to go before passive overtakes active i'm not sure it ever will for technical reasons. >> you're not sure it will for technical reasons? what do you mean >> at some point if everything is passive, by definition you have an opportunity for the active investors to come in, figure out the anomalies and invest against that. >> if you're a company now, you have to be in an index the big conversation for saudi aramco is what it will list on because people want to know what index it will be a part of >> just because it's in an index doesn't mean you can't have active management. being in an index by itself doesn't mean that we should only have passive management.

>> i have to ask you while you're here, you were the sponsor of the fearless girl >> right >> down on wall street got a lot of attention you've been a big supporter of women, women in the workplace. >> yes >> in terms of corporate governance and the like. you also paid a $5 million fine for discriminating against women and african-americans. just take us inside that >> this related to something happened that in 2010 and 2011 but i would be the first to say we're not perfect. we're committed to equal pay for equal work and we stand by that and i think if you look at us now, there is no discrimination based on that. we have not been perfect we recognize we haven't been perfect. we paid the fine, we're moving on >> okay. we'll move on and thank you for this conversation. >> thank you good to see you. >> get you some watermelon juice, hope to see you back in new york >> joe, back to you. >> maybe it's dubai or

something. that may have been -- that information -- the watermelon -- >> dubai, that's possible. >> okay. ronald, alcohol in dubai >> uae >> ronald says alcohol in dubai. >> all right that's not a day trip for you, is it? you better just -- >> we could do a day trip. you want to do a day trip to dubai? joe is inviting us to drink in dubai. >> when you get back, i'll have something on set for you when you get back we'll make an exception. i don't care if it's 6:00 a.m. you will be like this. thanks stocks to watch including an earnings miss from at&t. this morning's biggest movers when we return

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and online competitors viewer upgraded their phone also ahead of the iphone x. we will talk with craig moffett about this in a few minutes. juniper networks third quarter results were in line with the profit warning the company gave two weeks ago they also project fourth quarter numbers that fall short of analyst estimates. capital one's third quarter profit beat forecasts. the credit card issuer was helped by rising interest rate as consumers took on more debt in news out of washington late last night, the senate narrowly voting to repeal an obama era rule allowing class action suits against banks mike pence cast the final vote to break a 50/50 tie the banking industry lobbied hard to roll back the regulation the rule banned financial companies from requiring companies to surrender their rights to sue to open checking accounts or credit cards

>> i hate that a lot of internet companies force you to do the same thing if you use them, you have to agree i will never sue you, i'll be forced into arbitration you have to give up your right to sue i understand the customers -- they say it's the customers, we're helping them by making sure they don't have to face hefty lawsuit fees but you should have your right to sue you shouldn't have to give that up to be a customer of any company. the senate approved a 36$36 billion disaster relief package. this includes a bailout of the troubled national insurance flood plan more money will be needed as the u.s. recovers from hurricanes, harvey, irma and maria. when we come back, shares of at&t sliding after the company posted weaker than expected inrngs we'll dig through the report

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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, take a quick look, we'll have a lot of dow components reporting in. now, through can see, the dow moved positive it was down earlier. the s&p continues to be indicated lower, down two. the nasdaq down just under 10. >> one of those dow components already out this morning visa, credit card issuer earning 90 cents a share, beating

estimates by 5 cents that stock looks like it's bid at 110 ask is 111 after closing at 108.41 last night. china's ruling communist party broke with precedent revealing a new leadership lineup the president and the premier were the only ones to retain their positions amid sweeping changes to the standing committee. the party elevated one close ally of the president and removed two potential successors from the ruling committee. at&t posted weaker third quarter results missing analysts projections on the top and bottom line. joining us is craig moffett. thank you very much for being here >> good to be back >> we knew there were concerns about at&t coming into the quarter. they already told us they were losing video subscribers despite new people signing up for directv. what did you think when they showed us what those numbers

were >> you got the mix of video subscribers and saw the breakdown between the satellite business and their old legacy, u-verse business but the bigger picture, step back for a second and they have a bundling strategy that talks about how you can add media and pay tv services to their wireless customers and try to retain wireless customers. all that is fine, but first you have to run the businesses that you got. you have three big pieces of this business, a wireless business, a wire line business and an entertainment segment which are each about the same size now the problem is all three are shrinking now. and so you have a business with tremendous amount of leverage, about 1$180 billion of debt add $70 billion of off balance sheet debt, call it 2$250 billin of pro forma market cap, you're talking about a business with

5$500 billion enterprise value. levered at 3.7 times when they come out of this transaction and shrinking at 3%. that's a problem it's a problem they have -- they're really struggling with the fact that they're -- the businesses that make up at&t are shrinking businesses >> what is not working the bundling package, some people thought they were impacted by the hurricanes adversely. >> they were >> when you look through, what is not working that's what it sounds like you're getting to. >> unfortunately bundling is all too often a euphemism for discounting. that's what they're doing. offering tremendous discounts on directv and o. tt service direcv now in order to support wireless wireless numbers were good, but the ebita of the entertainment unit where directv sits was down 10% year over year

9.9% >> because of discounting. >> massively discounting the service. >> i guess it goes to -- i have not heard this from them i guess their thought is if you build it, lock them into things, they will stay is that it >> yes and no. it makes sense to reduce the churn rate of the wireless customers, wireless customers are worth a lot. >> the numbers were about what the company said last week >> the subscriber losses were what they said >> they also contend from here, when you do comparisons from here on out, they'll be back to gaining subscribers? >> yes and no. they said they'll be gaining subscribers, but that gain includes the subscribers they have to their over the top skinny bundle service where they don't make money >> comcast is tomorrow >> comcast is tomorrow and charter. >> comcast talked about -- do you remember the numbers due to the hurricane? >> they could lose 150,000 u.s.

subscribers. what do you expect tomorrow? >> they have effectively said it >> will they then say that they will be addtii additive after ts >> i don't think so comcast suggested that video subscribers are likely to run below zero they'll continue to shrink in video. but remember there's a big difference between the cable operator and the satellite operator a cable operator is primarily in the business of selling broadband. they're infrastructure providers, not media companies satellite operators are solely in the business of selling video. if the video market starts to contract the overall pay tv industry is shri shrinking, you have nowhere to turn if you're a satellite operator at&t is trying to bundle those subscribers with wireless and increasing wired footprint, but you just spent $60 billion two years ago to buy directv in a

pure satellite distribution business that's a problem >> what do you think about time warner >> good asset. but they fully paid for it just as with directv, the problem is multiples for the rest of media have compressed sharply since at&t struck that deal the problem is what you pay for the assets >> so you're sure that this is just an inexplicable decline over time. maybe i don't change -- >> for which one. >> bundling. i have 70-inch tv, i like my cable channels i like netflix i can see how i can go there i found something yesterday called "the hunt" all these predators of unbelievable photography. so i watch netflix, but i constantly go back, i'm on the

cable grid i'm looking at a bunch of -- >> you're a product of somebody who grew up with cable >> i want to have that, i don't want to watch anything on my iphone as to how i get content i'm not unbundling dammit. that's what i'm telling you. i'm not moving into the future i won't do it. >> fundamentally these businesses are about what are the implied terminal growth rates. >> don't use the word terminal >> what do you think of these stocks at these prices >> i think at&t we had been negative on it all year. we recently upgraded it to neutral. >> because of the decline? >> because it got cheap enough we thought neutral valuation but i think the market is starting to discount at least a nontrivial probability of an end cut. so there's still a fair amount of risk in at&t stock. verizon is probably a little better you can't point to verizon and say things look great. i think verizon strategy --

>> because of fios >> not necessarily because i think at&t is i have verse fied diversifying away from the business we have a big hour coming up our guest host at 7:00 a.m., david novak, former ceo and chairman of yum brands he's a comcast board member. we can speak about this. and barry sternlicht will join andrew in saudi arabia davos in the desert. we have our own davos man there. senator rob portman will join us live from washington on tax reform the next fed chair and the battle between president trump and senators corker and flake. stay tuned you're watching "squawk box.

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welcome back to "squawk box. let's get back to riyadh andrew is live at the saudi

vision summit. he joins us with another special guest. hello, andrew. >> great to see you. we have howard marks here, co-founder of oak tree rare opportunity to speak to him about what is going on in the markets. you have occasionally scared people recently with your prognostications with where the market is headed, saying the market is overvalued that was over the summer has that changed >> i don't remember any markets retreating i would say -- by the way, let me say i'm not predicting where it's going i'm talking about where it is. >> okay. >> i think if you look objectively at the market, you see cautionary signs that's all i was writing about >> what are you doing about that >> we had a mantra for a while -- this is nothing new -- move forward but with caution. we are investing, fully invested where we can find reasonable

investments but with more caution than usual and we consider ourselves a cautious investor. >> but if you think things are overheated -- >> yes >> that would pore tend thtend would go down. i think would try to position yourself for that. >> there are degrees of overheated some people in what we call the media try to get to you say buy, sell, on, off, black, white. there are degrees. we should adjust our risk position given the level of prices, the type of behavior going on, the fundamentals in the world. it's not so bad that one should be out of the market i think, for example, in the u.s. our economy is trudging along. it's likely to continue to do so for a while. and i think that the danger is on the side of being out of the market i wouldn't want to be out of the market >> do you think if there's some form of tax policy changes that

will boost the market or are you of the view that it's already baked in, and that if it doesn't happen, the market retreats? >> i think that given expectations, i think we're unlikely to have a favorable surprise i don't think we'll see tax reform rising market unless something happens, which is better than i think can happen expectations were high in tax reform and infrastructure. my guess is that at best we'll get close to ek peckstati my guess is that at best we'll get close to ek peckstatipectatt not surpass. >> one of the big superstars here is masa son you have made some comments that you're a little anxious about him putting 1$100 billion into the technology world all at one tile >> i think that if he does it well, it will be the first time. that's not to say that he won't.

but it's an aggressive thing to do and it has to be proved. >> have you seen him here? >> i know he's here. i haven't seen him >> would you have that conversation with him? >> of course but i mean i would assume he would admit that it is aggressive anything is aggressive which has never been done successfully in the past we'll see what can be done >> which leads me to the final question, which is this country is going through remarkable transformation, diversifying away from oil and planning to put a lot of money to work in the same way that masa son is, if not even more so this government is a client of yours, i believe. how do you think about them putting all that money to work now given where i imagine you think we are in the cycle? >> first of all, i think that putting money in his fund is not the same as putting money in the

market today i assume it will go in over a period of time, and that that will constitute averaging in to some extent. but, look, there are low-risk low-return investments, low-risk high-return investments. there are not many low-risk high-return investments. they have decided to optt for what i call high-risk high-return. i wish them the best >> one final question, because it's come up here a lot. we talked to larry fink a number of other people. over the next decade, where do you think an average rate of return should be for the average investor who is watching now >> it depends on whether they have access to non-traditional investments and the ability to make intelligent use of them with them i think they can get up to -- i understand most people are coming out at 3, 4. i will give you 5, 6 normal nall

with so nominal with some alternatives stock and bond markets are not likely to deliver that howard marks, thank you. i like the optimism amid some pessimism. guys, back to you. >> thank you very much when we come back, quarterly results just in from the nasdaq. we'll talk to the ceo next on we'll talk to the ceo next on "squawk box. under our museum. we'll talk to the ceo next on "squawk box. eight priceless corvettes had plunged into it. chubb was there within hours. they helped make sure it was safe. we had everyone we needed to get our museum back up and running, and we opened the next day.

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>> revenue also topped forecasts. i've got some comments here from the president and ceo of the nasdaq adina freeman -- why am i reading this why am i -- do you know what you said >> i do. >> you achieve strong results in part due to a lot of execution priorities i need you to explain that you integrated acquisitions in 2015 successfully, and you improve competitive positioning across the franchise and also some key technologies. i like the sound of all that stuff, and it's enough for me. i believe you. can you help -- can you fill in some of those -- i don't really understand everything you are talking about. what went well >> well, first of all, we're growing in some of the key areas of our business. most notably our market technology business year-to-date

is up 8% that's where we provide technology to other exchanges around the world and to the broker dealer community. in addition -- >> i didn't know that part did you know that part >> i know you feign ignorance. i'm here every single day. i know you >> you're selling technology to all these other exchanges. they're not just here. >> all right >> we provide software to allow them to -- risk management surveillance that's what we provide for our own iks changes, and we also supply it on to about 90 other markets around the world that's been a great growing business for us. >> on the back of strong performance in the market as well as demand for our smart indexes. >> we talked to the ceo of a company who actually switched from the new york stock exchange

to the nasdaq just in the last couple of weeks, and he said it was because of the index thing because he wanted to be a part of that, and -- >> it was important to be so because so much more buying is going through the indexes. >> in fact, we -- the nasdaq 100 is i adraw for companies that qualify. they find it to be an appealing part of the value proposition here at nasdaq, and we have had very strong aum. we tend to end up owning around 1% of the company as a nice passive investor in -- when they are in the nasdaq 100. it's -- >> there have been so many people who have been indexing in the last few years because it's paid off it's been better to be a passive investor in some of these situations you think that would change if the markets go a different direction? >> i do think that some of that is the nature of it being a long bull market. it's hard for an active manager reason to outpace the beta in the market i think that in general if you have more volatile markets, then the active managers can do things that are different in both the passive, which are done

by growth mechanisms i think it's difficult to be an active manager i did like ronald, though, that for every dollar that's going into passive, $2.30 will going from one active strategy to another. that's interesting there is general rising tide in envestable assets in the world already. there is a lot of money flowing into the system in general >> you have heard that people would love to have our financial system do you think about that every day? >> i would think that we are incredibly vigilant, and we do talk about it very frequently. we have a lot of, obviously, internal meetings about it our ceo is in constant communication with the government >> can you monitor how many times they try >> yeah. we do. >> it's every day, i guess, huh? >> always. i think that that's been the case for many, many years now. >> so we went -- i remember the crash, but we make a big deal. when it's 30 years >> 30 years. >> you saw the coverage of that,

and we have people tell us that, you know, well, it can't happen because of the fed, and it can't help because of the -- you know, the circuit breakers it can't happen because of this. it seems more automated than ever, and it seems like there's rule-based strategies that if everyone tries to leave at the same time, that there's going to be something do you feel confident that this could never happen again, at least -- >> i would say this. we have put protections in place in the market, so it's in terms of thesis circuit breakers, which to me is apretty -- it's one instrument in order to be able to keep the markets from declining to such a degree

>> is there a mention of "squawk box" any mentioning of the crew >> no, for good reason >> i have to say we are really pleased because we just launched our new branding campaign, and we've used at cnbc as our flagship -- >> "squawk box." there's another show that comes from here too. i don't even -- >> apparently there is >> fast money. >> it happens to be in the afternoon. >> i'm sorry >> 5:00 to 6:00. tune in. >> do you have all love all your children the same? >> of course, we do. >> i have to say, though, i do, in fact, love all my children the same i will have to invoke that thanks for being here today. >> thanks for having me, as always >> thank you very much >> things are kicking off now. >> when we come back, our guest host for the rest of the show will be david novak. he is the former chairman and ceo of yum brands.

he will join us to talk leadership, politics, and much more squawk will be right back.

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. >> live from egt beating heart of business, new york city this is "squawk box." >> good morning, everybody welcome back to squawk bok here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernan andrew is in riyadh for the future investment initiative, which tries to elevate the kingdom to a global investment hub. we're going to be hearing from him in just a moment with more on saudi arabia's vision in the meantime, check out the futures. they have been looking higher at least for the dow futures today after question w he got strong earnings from visa s&p is down by about one point

below fair value nasdaq off by about six points below fair value let's get to another dow component right now. that is just out with earnings that's coca-cola it's coming out with its quarterly results. sarah eisen has the numbers on that good morning, sarah. >> good morning. looks like a strong quarter for coca-cola. this is the second one under the new ceo, james quincy. i'll go through some of the numbers for you guys coca-cola beating 50 cents per share. the estimate was about 49. bottom line. revenues also coming in better $9 billion $9.07 billion versus 8.7% estimate if you dig below those numbers, you get a solid picture. organic rev any growth of 4% they are refranchising some of their bottlers, and that's impacting the overall numbers,

but they are seeing growing market share in their sparkling, which is carbonated beverages. a lot of people got excited about coke that coke was taking market share. that seemed to be happening. zero unit volume, but 3% pricing. that tells you one thing quincy is continuing the strategy of smaller packages in other words, squeezing more profits out of those smaller cans i did have a chance to talk to james quincy, have some comments and color to bring you on the quarter. he did say we're coming to the end of the structural changes in a couple of weeks. that's referring to the refranchising of the bottlers and so that is set to end by the end of the year as targeted. he says he is slowly rebuilding momentum on the top line he saw developed markets kind of reasonable it was actually the improvement in the developing markets. places like china and india, which return to growth he said what we saw in the u.s., the weakness or the less than

stellar results were pretty temporary. blamed it on the weather and on softness in the convenience stores brazil is still disappointing. guys, they launched coke zero sugar in the u.s. this quarter replacing the coke zero. i they said they doubled the growth rate. people weren't confused by it, and the fans, actually, like it better >> how many calories in a coke zero >> is it a new coke zero is that what it is they tried that one other time i thought they put it -- i thought -- no, but i thought they put a couple in with pepsi light. if you get the app -- you remember coke classic. they still sell it is it not a domestic seller? is it more international like tobacco? how much of the total -- i know they sell it here. how much of the total is like a

u.s. >> just in the last few weeks i found some in -- that we have in can says, and it's still so good i have one maybe every other week it'sic, like, 200 calories >> the bigger problem with that is that you change your taste buds so that you are accustom to that again they're selling it as an indulgence, as a treat smaller package thing. you know, treat yourself, like a dessert. the growth is coming from high-end teas, plant-based beverages are very big right now. this is coca-cola. the majority of their business -- >> what's different about the coke zero sugar, and why are they calling it sugar? >> you should try it i mean, apparently, i never drank the sort of zero sugar, zero calorie drinks, but -- >> it tastes more like --

>> i like the real stuff >> than diet coke. >> they thought it might have been confusing because it's in the red can, like regular coke, but actually it turns out that people are really into it. >> it's also a fast grower overseas they're doing well with that >> sarah, thank you. >> you're welcome. >> some other headlines that we're following this morning let's get you caught up. a notable winning streak came to an end overnight in japan. the nikkei actually falling just about half a percent, but that ended its record 16-day winning streak over that 16-day period, the average gained a little over 7%. also, anthem out with an upbeat earnings record this morning that was well above what the street was expecting of $2.42. also gave a full-year forecast that exceeds what the street was expecting. anthem's results have been helped by higher membership numbers as well as an increase in the premium

here with more -- this is -- if i were advisory to do this. this is not necessarily surprising, because i think david and some of the other ceos are at an age where you might consider this. significant leadership change announced at carlisle group. co--ceos david rubenstein and phillip conway will become co-executive chairman. >> it's a time bh it becomes logical to think about you can is session everybody would like to work,

you know -- would like to work forever, but this is not -- this is a logical -- >> this is a good time >> i believe that 65 is too young for a mandatory retirement what do you think is a reasonable age now >> 70. >> first of all, i think you can go to 75 i think the age is really not the point. the question is can you keep putting on the uniform like you did when you were growing the business, building the bess. >> i think if you have that energy and passion the minute you can't put the uniform like you did before, i think you got to think about the transition

>> you just don't want to throw the baby out with the bath water. >> do you still -- with yum, do you look over the taco recipes anymore? you don't -- >> i'm disappointed because i couldn't bring you taco bell breakfast. >> do you have any advice? >> i know my roots go deep into the company. i know a lot of the people i stay in touch with people. they give me a call every now and then, but, you know, as soon as you retire, you know, people are on to the next thing you know you're not that top of mind as you would expect it to be. i think you're there as a resource, as a leader. you want to help the transition. you want to be -- you know, you still -- i still owe my yum shares, and i'm very passionate, committed about the success of the company, and yum, for example, just celebrated the 20th anniversary last week,ing

and, you know, i met with greg creed, the ceo of yum. >> it's only been 20 years >> 1997 where. >> you're kidding. >> we were spun off from pepsico. >> look what you have done a ton. >> it's been a lot of fun. >> you don't call any of your former employees and say you're great. >> i think -- i call brian -- >> >> i think you want to tell -- a lot of the research we've done has shown that peers want more peer recognition you want to create an environment where everybody is looking for it and that you can freely recognize other people. when you do that, you get much more involved, much more

commitment from all levels of your organization. i think recognition is something that you want to have coming from the top down to the organization >> looking back at the financials of yum, would tax reform make a difference to that company? >> i think absolutely. i think, you know, the more you can strengthen the balance sheet of any company, the more they're going to be able to invest, the more they'll be able to impact the world and their results. >> i mean, the -- this is the broader question the trumppresidency, $5 trillion and $5.4 trillion in market cap what do you as someone that, you know, knows how to manage and probably is a little more delicate in terms of his persona than president trump would, where are you on the state of

the presidency after 9/11? snoo dtd won because he is authentic, which is a great strength he had a great message that people wanted to hear, which was america first. he won because he was great as a marketing campaigner he was the best i have ever seen at repositioning competition george bub bush with one line. lying ted. crooked hillary. he repositioned everything when you become president of the united states, i think everybody voted for him, everybody wanted him to raise his game. pivot and tuly be the president. you know, i think that's the big challenge that i think he has. i don't think he has pivoted enough for the majority of americans. >> in terms of -- >> take the high ground, joe >> what about -- okay. here's where i -- i tip on that a little and that's the cabinet appointments people in general, conservatives look at those and say what a great cabinet. >> it's not about policy

>> i had ted cruz in here. i said as a conservative, as people question trump in terms of being a conservative, is there anything you would have done differently up to this point? >> you talked about policy alone. >> you talked about employment you look at where the stock market is. you look at where -- if you didn't see -- if you didn't read twitter or if you didn't read mainstream media coverage, you would think, wow, yes, america is improving, you would think. >> unemployment is down. >> leaders cast a shadow if you like it or not, people do what the leaders does. i think people expect the president of the united states to take the higher road versus

get down in the gutter calling people names, you know, the -- what seemed to be like off the cuff tweets, those kinds of things don't really raise his game >> on the one hand, we have to get tax reform done. we didn't get health care done we have to get infrastructure done that will not happen if he doesn't align people >> the skirmishes with senators corker and flake impact his potential to get something like tax reform done or not >> my question is why? if it's really needed. do we have to have this? leaders have to align people of all levels of the organization you can have to get your cabinet align and get your key republican leaders aligned, and then you have to bring in people from across the line that's what leaders do >> david, if you -- i don't know there's turning the other cheek,

and there is just fighting back and i think a lot of people in his base are happy when he does it he talks about draining the swamp. he talks about problems being with establishment republicans he has -- in the case of flake, flake didn't even endorse him for the presidency he didn't endorse the nominees of the republican party. those guys are out they won they're both leaving on their way out they're making a lot of noise, but i don't know >> they elected george w. bush look at the response to george w. bush. it's dig need. it's sort of -- look at the way -- look what they've done to reagan over the years. >> i think his authenticity, his ability to take off the gloves, that's what makes him. >> they have a knife fight

the democrats know exactly what they're doing, and they -- >> they know exactly how to play things, and you go to a knife fight with a tooth pick after a few years. you finally, you know -- you see anything to that >> i see that. >> you are the ultimate canary in the coal mine they couldn't run fast enough from it. they have to worry about -- >> they have to worry about customers on both sides. >> i think it's because you have to set a bottle for your organization you have to -- you have to be sensitive to other people. >> okay. >> you have to -- i'm not saying that trump is not that or he doesn't have that in his heart i'm not --

>> i think you got to take people with you to get things done, and that's the challenge that he has. it has nothing to do with -- he could keep his tough style he could take the gloves off >> do you see that ever happening? >> i think it's hard to teach an old dog new tricks i think of it as dna he likes to fight. you don't need to win every argument >> it's only nine. look what we've been through >> what does it mean that i'm going to take him out? does that mean on a date i don't think so i think it means something entirely different that you shouldn't be -- >> on the other hand, parents don't want their kids to be bullies, and they don't want to have name-calling.

they don't want any of that. >>. >> when we come back, glen hutchins it's not just a donation.

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welcome back we are live with our guest host this morning david novak. we were just continuing a conversation that we were having as we headed into a break. looking to call -- >> i got it. >> i think we to get tax reform done now i think america expects it there's a real opportunity here. we need to get that done we need to get that done that will be a step in the right direction. i think we need to attack, you know -- go after the infrastructure opportunity we have in this country i think trump's policies and what he wants to get done, i am 1,000% aligned on it i feel that he could make it a lot easier on himself and the country in terms of how he goes about doing it

i don't think he will ever lose his soul i think being authentic is a key trait of a leader. that's one of the reasons he got le elected. what his big challenge will be is how do i preserve the core, my core constituency and stimulate progress and to move things along i this he that's only going to come from doing an even better job of getting people aligned and getting people moving in the right direction. >> let's talk about the economy. what we hear from so many people that come in here is that the economy is doing so well around the globe. you can look at china. you can look at europe you can still going to be seeing growth in places like china, but now we see it in europe. is that what you see from what you have been watching too >> i see everything that everybody else sees. you know, i see our economy here as solid it hasn't taken off to the extent that people hope it would. there are a lot of factors unemployment is at an all-time low. i think things are moving in the right direction. i think we've got a real

opportunity in the next three years to get some things done. that's all i would like to see happen >> we'll continue this conversation david novak is our guest host for most of the morning. in the meantime, let's get to andrew. he is in saudi arabia this week at the future investment initiative, and, andrew, what do you have for us now? >> hey, becky. i have an old and good friend of ours, glen hutchins. he is here from north island it's great to see you.

>> i have been told that 70% of saudi arabiaians are under the age of 30, and the country has a high youth unemployment rate they have been run by an aging leadership for a very long period of time, and now they need to make a big move forward. i think conceptually it's a good idea and what they're doing symbolically is making that announcement and committing to it as a technology investor, they seem to have the right kind of technology path. is supposed toe solar. it is remarkable if it happens the way it's been deskriekd.

>> it's hard to call something $500 billion in scale a microcosm. >> right >> but i think it is, right? >> has a good track record >> you balance these things out. it's fun to watch, and you wish them really well >> that's the other person that's here. >> that could get him to $1

trillion the funds were much smaller, and i think we have even had a conversation about the danger of size and scale >> some of my asian friends here have observed. that scale of investsing in technology is something that's unprecedented. it reminds me a little bit of about five, six, seven years ago when people started investing in late stage venture at scale. facebook was one of the first examples i thought that was too big the robot just went viral. >> i'm supposed to see sophie later on a panel it's about the robot >> i would pay to see that, but i gather it's free the -- where were we

i was skeptical about that scale. it turns out to work i'm suspending judgment. the one thing that's really important here is venture will always be in the start-up phases it's still a small business. >> right >> and some very small number of biz will graduate to the scale of uber or wework. that can absorb capital of that scale. all right? that's not changing the nature of the venture business. it's almost adding a private market of the scale, even bigger scale in a role that the public markets used to serve. >> right >> two quick questions you did mention weworks. there's an article in the "wall street journal" last week about weworks, and then yesterday they did a deal with lord & taylor. i don't know if you saw it out here are you a believer -- is weworks a technology company or a real estate company >> i think that's distinction is irrelevant today almost everything we do will have a technological capability. broadband, wireless, artificial

intelligence >> there's a difference between a fraud and a bubble mortgages from 2005 to 2007 were both a fraud and a bubble. the internet stock from 1999 were a bubble, but not a fraud >> all right fair enough. thank you. appreciate it. great to see you we'll send it back to you guys thanks >> andrew, thank you coming up, boeing earnings "squawk box" will be right back.

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>> the expectation is for revenue of $23.92 billion. 9.8% is the profit margin. both the operating cash flow and free cash flow better than expected operating cash flow $3.4 billion. drars p00 million greater than analysts were expecting. free cash flow of $3 billion that's $1 billion better than analysts were expecting. the goidanuidance has been fullr earnings this guidance is primarily due to a lower than expected tax rate as a result, the new guidance is $9.90 to $10 .10 full year earnings per share the current street estimate is at $10.04. again, it was at $9.80 to $10 before the raise in guidance one last note, guys, there is another charge for the tanker

program. this is a program that has had several charges over several quarters over the last couple of years. the charge in the third quarter for that program as they continue to try to get things right there. $329 million guys, back to you. >> okay. phil lebeau, thanks. we'll be watching the trade in boeing one of the great manufacturing companies domestic manufacturing companies. we'll see how -- see about tax reform and how it affects boeing meanwhile, president trump just tweeting the reason flake and corker dropped out of the senate race is very simple. they hit zero chance of being elected. now act so hurt and wounded. dot, dot, dot. outside of flake ask corker, it was a love fest with standing ovations and great ideas for the usa. those are -- there was one more. oh, i guess we're not going to do this.

11 minutes ago clinton campaign and dnc paid for research that led to the anti-trump fake news dossier the victim here is the president. he put that in parenthesis actually, it says it here. @fox news. that's what it says. >> it's the story we've seen plenty of the papers today as well >> i mean, after hearing for a year that it was not -- i want to know which republican -- >> you don't know. unidentified republican. >> we started paying during the primary season >> coming up with the dossier saying all these things about trump with the russians. yeah it's been interesting. let me go back to business news. tesla has begun making -- helping them rebuild the energy grid after the devastating hurricane caused massive damage on the island. tesla announced via twitter that

hospital del neeno in puerto rico is the first of many energy storage going live there are several tesla power pack units being installed the project will allow the hospital to generate and store energy when we come back, barren sternlich, and then senator rob portman. take a look at the u.s. equity futures. after a gain of over 160 points yesterday for the dow, you can see the dow futures are indicated up by another 13 points dow component out with earnings th watere helping earlier. s&p futures are down by close to three points the nasdaq off by 11 stick around "squawk box" will be right back. that make everything from cell phones to rail cars more efficient. which helps improve every aspect of advanced rail technology. all with support from a highly-educated workforce and vocational job training. across new york state, we're building the new new york. to grow your business with us in new york state,

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[ bloop, clicking ] and connect, as a family. just, uh one second voice guy. [ bloop ] huh? hey? i paused it. bam, family time. so how is everyone? find your awesome with xfinity xfi and change the way you wifi. >> david novak is yum brands chairman and ceo novak is also the founder of -- is and author of "oh great one, a little story about the awesome power of recognition."

david, we've been talking about leadership, but let's talk a little bit about business here too. i realize you're not running yum now. when we look at chipolte, it's not easy to be a huge chain and to continue to open places throughout the country there are strong same store sales that tapered off a bit >> i think chipolte is a great brand. they had some food safety issues when you are a strong brand and they have a customer following they continue to have it, but not as great you'll come back over time i think what they need is to the gift of the team that's usual will you how anybody recovers from a food safety issue i haven't seen numbers recently, but they had a big delta in terms of what they really needed to have to open up new units i think they are a strong concept that will rebound.

>> i think about pepsi and coca-cola and mcdonald's everybody out there has to try and deal constantly with these changes. >> i thought it was interesting looking where they said that one of the reasons why they weren't doing so well was their queso product. that just -- you know, that didn't really ring that true to me because what really made chipolte work was the entire concept work >> we would open up a taco bell,

and we wouldn't see any cannibalization. there are two different segments never envious. >> i remember the taco bell incident was weird it was not really a health concern. it was like a weird media report remember i was kidding you about it when you were in one time >> i was upset about it because it wasn't true somehow we had to weather through it, and we did we have a strong brand when you have a strong brand -- >> it's a virus issue.

they had just gotern past the point where people had forgotten about all those issues they had a while ago. >> their problem is they built their whole concept on being whollier than thou when you're not and it comes back once, that's a problem. if it comes back twice, it's a bigger problem if it comes back again in any way, shape, or form, you are in a bigger hole that you go the to dig out of i this i that's really what they're trying to do right now >> it's the concept of locally grown and not having to centralize it's probably part of the problem too. you don't have centralized controls over how this is being produced or where it's going >> yeah. well, they have their challenges there's no question about that i do believe it's a strong brand with fairly decent food. overpriced in my view. that's where i always went to taco bell. still do >> for, like, $4 >> it's great. >> david will be with us for the rest much the show >> never talked to you about pizza hut or kfc really. >> kfc, i need to know how many colonels are there i'm confused

>> they get for expensive and then prima donnas. by trading out the colonel, we're able -- >> that's what buffett says about the gecco. can't ask you for more money gecco versus flo, you know, and some of your competitors >> people are always looking forward to -- they get to be prima donnas colonel sanders? >> if they had -- if they had that role forever, you become a celebrity. >> the verizon guy is now a sprint guy senator rob portman from the tax

timeline futures this morning, once again, the dow was in positive territory. it's down now, though. maybe we'll look at some of the individual connell poenents today. we head to break, here's a look at european markets. quk x"ilbeight back.

>> dow joins is right above flat line s&p indicated down the nasdaq indicated down too. let's see your wallet. capital one, third quarter profit beat forecast credit card issuer is helped by rising interest rates as skurpz took on more debt. that offset an increase in loan losses at&t third quarter profits fell 9% and missed forecasts. the wireless carrier lost more video subscribers to traditional and on-line tv competitors and fewer customers also upgraded their phones ahead of apple's launch of the iphone 10. dow component visa, the credit

card issuer earned 90 cents a share for the third quarter. beating estimates by a nickel. revenue also came in above forecast >> the l.a. dodgers opened the world series last night with a victory over the houston astros. it was dodger pitcher clayton k kershaw that had 11 strike-outs and only allowed three hits. they win 3-1 game two of the world series is tonight. dog gone it. doesn't start until 8:00, unfortunately. >> when we come back, senator rob portman talks tax reform stick around my name is jeff sheldon,

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snoo it was a 50-50, and it became 51 after the veep voting on that. the banking industry has lobbied heard to roll it back. the group had banned financial companies from requiring companies to surrender their right to sue in order to open checki checking accounts or credit cards. >> the senate approved a disaster relief package. this includes a bail-out of the financially troubled national flood insurance plan that bill also includes money for the california wildfires, and it extends emergency credit to puerto rico to keep its

deposit functioning. lawmakers say more money will be needed as the united states recovers from hurricanes harvey, irma, and maria. republicans hopeful for a november 1st tax bill now unveiling. putting them one step closer to tax reform before the end of the year joining us now not just from the great state of ohio, but from the best part of ohio. ohio senator rob portman cincinnati thanks for joining us today. >> good to be back on with you snoo we would need you until 9:00 you're here to talk about tax reform that's what i want to do i want to start with that lunch. president trump tweeted out this morning that there was a lot of, i don't know, enthusiasm in the room it's not necessarily senator flake and senator corker, but he said there's a lot of applause and a lot of enthusiasm for the prospects for what happens with

tax reform were you at the lunch? >> i was at the lunch, and there was a lot of enthusiasm in the room, including from bob corker and jeff blake, about tax reform you know, you and i have talked about this so many times this is an opportunity to help the people we represent in very tangible ways. it's going to increase wages, increase jobs. help the middle class that are going through a period where there's flat wages and higher expenses and so it's -- you know, it's something exciting. we're finally getting around to doing what we should have done a long time ago. i know you, and i know you are a mild-mannered dignified gentleman. i figure you might share some similar thoughts about this. do you think it needs to be -- if you weren't going to run for re-election, would you -- is that why you are in line with the president, or do you not think that as a man of good

conscience, do you not think it's necessary for you to speak up, which is what flake was saying yesterday >> i -- i do speak up when i disagree with his policies, and i speak up when i agree with them, and my job is to represent the folks in ohio, including in your hometown of cincinnati, and you got to work with the president. i worked with barack obama i got 50 of my bills signed into law by barack obama, as you know our job is to put our head down and start legislating. that's what people hired us to do that's what i'll continue to do. >> do you support that do you think it helps the party? do you not ascribe blame to them do you ascribe wram for what people are calling disunity in the republican party >> both those guys were friends of mine. they're both good friends because they do focus on what's right. by the way, both of them are for

tax reform the notion this morning that they're somehow going to vote the other way because of their views about the president, it's crazy. >> it helps the middle class in their state. i think everybody ought to focus on tax reform and getting health care costs down, dealing with this opioid crisis we have a real problem in cincinnati and ohio. i think you got to decide what is best for the people you represent. focus on that. if the president is successful, the country is more successful you have to disagree with him on policy issues as they come up, and i continue to do that as well >> i know. policy issues are one thing, but, you know, whether you disagree with, i don't know, whether he is a moral, you know -- an example for our children, et cetera, et cetera, you are not really commenting on that you are not going to resign from the senate because of a tweet, i

guess, are you >> we saw that 401k exploded then trump said, hey, this is not going to happen. we thought, hey, that's a good use of twitter, and then we heard corker say you should stay out of this. we're going to write this ourselves. you shouldn't be weighing in on that >> the reason is the idea of changing to a roth rather than a traditional 401k or ira treatment, is to be able to save money in this ten-year window. it's kind of a gimmick longer term, they get less

revenue. the way to try to pump up the revenue, which is important to try to get tax reform done i think it would have resulted in fewer people having access to retirement plans take-up rate among 401ks and ira's when they're offered as roth is less than traditional ones if you were to tell people you can't get a traditional retirement plan, contribution plan, you would see less take-out >> there's a lot in the tax bill that we need to get to sfat and local taxes. how do you stop everyone from going to 25% i don't know if we can add to that discussion. let me ask you something that's not about the tax reform you saw the other news yesterday i was alluding to that a couple of investigations -- one into the iranian deal and another one

into the way comey came up with that letter, like, two months before he interviewed anyone you know, the justice department then the gps fusion news that came out you saw that too it wasn't some nebulous force giving money to the steel. it was the dnc and hillary clinton. you just keep your head down we don't have time, senator. you are lucky. >> let me just say one thing i think the senate intelligence committee will roll these up into one package >> thank you we have to take a break. thank you. good to see you, senator thanks we'll be right back. energy is changing fast and we're changing with it.

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>> the president asks senators who should head the central bank we'll talk to jimmy dunn who said this last year. >> you think yetten should be replaced i think you just said >> yes >> i'm live in saudi arabia with an exclusive interview with billionaire jim coulter of tpg we're live in riyadh as the final hour of "squawk box" begins right now

live from the most powerful city in the world, new york. this is "squawk box." >> good morning. welcome back to "squawk box" live from the nasdaq market site in times square. i'm joe kernan along with becky quick. andrew is live in saudi arabia we'll hear from him in just a bit. >> it's a predigital leadership program. i do bi-weekly pod casts with leaders like jamie dimon we did weekly blogs. the whole idea is that we really want to make the world a better place by helping people become better leaders

>> what i'm trying to do now is help develop leaders at all levels for example, i created a program called lead to feed, which is we dock our taking people with you leadership learning. they apply the learnings with project teams ever to solve problems in the community with a specific focus on hunger we support a million kids the last five years, and it's the largest, fastest growing privately funded leadership program in our country >> we're going to try to get inside of their heads, and make

sure that you attack the perceptions and the issues that exist as leaders that's my alma mat mater. i got a journalism degree before the fake news thing came into play yes, i did i majored in advertising he found that to be very helpful. >> there's a whole idea here to help in particular millennials of 75 million people they want to have more leadership wisdom, and so you can get that from the podcasts and the blogs. all the -- i'm in the process of developing a leadership program that we'll be offering to them i really believe that this is -- >> it's where the -- >> through internet -- the internet yeah, the internet training. millennials really want the training that way. i just ran across, interestingly, this lady that we're going to partner with, and she's got a program called global game changers, where actually you start teaching leadership in elementary schools

and teach kids to understand what their true talent is, and then apply that talent with all their heart, and that ends up being their super power, and then you ignite good i really believe that you can develop leadership you know, leaders aren't necessarily born i think what you have to do is give a high self-awareness, understand your talents, find your passion, and apply that as aggressively as you can into the area that you love and take people with you along the way. you know, there's a big leadership gap, though, right now. 70% of employees are not engaged at work, which is i think a fault of leadership. whether you like it or not, the perception of leadership in government isn't really where you really want it to be whether you are democrat, republican we need to develop better leaders. i think we can get better leaders coming along in the pipeline in the united states. you know, we're going to have better success as we go forward. that's what i'm passionate about now. >> i was worried if everybody was a leader there would be no one to lead. >> i studied all of the great

companies when we were spun off of pepsico my team went off and met with all the companies at the time and had great results. the single biggest thing that they all talked about and they hung their hats on the most was their culture. they really felt that they had a culture where everyone counts. where everyone no matter what level you're at, you make a difference i think -- i always said be a leader, act like a leader. it doesn't matter what kind of job you have, where you are at in the organization. take the lead. be proactive help in the enterprise grow. >> i think culture is the most important priority for any ceo you have to get that work environment. if you get the work environment right, you are going to have a lot -- longer tenure i think i read somewhere 40% of ceos fail within their first 18 months, and then more than that really don't live up to the expectations of the people that hired them this is, like -- this is a major

problem. we have to develop better leaders. i would say that the leaders that are failing don't have the culture, don't take the time to create the culture, don't take the time to get people aligned, and that's what we're going to try to teach people how to do and starting at the very youngest age and moving up to people who are in business >> great david, thank you we're going to talk more about this we'll be here for another 55 minutes. there's a flat line today. now down four. s&p down four as well. nasdaq indicated down 13.5 >> let's get you caught up on earnings this morning. boeing came out with quarterly results. the profit moved $2.70 a share that was 6 cents better than the street was expecting revenue also beating forecasts

coca-cola topping earnings and revenue estimates. the quarter was helped by cost setting and higher demand for sprite and tea and coffee in north america, which is coke's biggest market visa earnings 97 cents a share that beat estimates by 5 cents revenue also coming in above forecast, and the credit card issuers citing strong cross-border volume and process transactions that dow compoen ebt is up by 1% >> and check outthe shares of chipolte the burrito chain reporting third quarter profits and same store sales below forecast the company is hurt by food-borne illness outbreak at a store in virginia that happened over the summer. it cited high prices for avocados also, the new menu item queso, lackluster lackluster response. >> you don't buy that? >> what has made chipolte in the past has been their entire concept.

for them to be tapping into the great need of queso and it not meeting their expectations, it doesn't exactly ring true to me. >> all right another company out with quarterly results this morning international paper. earnings coming in 2 cents above forecast revenue also beat estimates. results were helped by price increases and lower maintenance costs, despite the business being impacted by two hurricanes let's bring in the ceo of international paper, mark sutton marcus, it's good to see you this morning i was reading what tax reform could do to -- i use it as an example earlier since you export 100% of your pulp to customers globally, and if you could be -- a slight change in your competitive position would be big for you. it would -- we could connect the dots easily between tax reform and ip doing better and hiring more people.

>> our tax rate does create competitive issues relative to some parts of the world where we compete. we would be a big beneficiary if we could get lower tax rates that do two things obviously, help from an export standpoint, but more importantly for us, our business is really driven by the economy and the consumer if lower tax rate for people and for businesses spurs economic growth, which we believe it will, we will benefit from the demand signal. more than we will from the tax reduction. >> you see there's quite a disagreement among the democrats and the republicans on whether really it does help consumers. you have seen the estimate that

the average person could keep $4,000 more per year, and it's hard to. >> i think what happens is two things one, people do have more money that's discretionary money, and if they believe it's going to be there for a while, then companies like ours and others you don't have to work for us to benefit. >> all the people who support us will hire more people. for example, the export business for international paper. we have 700 employees working for our company, directly related to making products for the export market. there's another 3,500 to 4,000

that support that 7,500 coming into our business with input materials and taking our product away in the lonlist istlogisti. as we sell more, as we have more demand, all of that supply chain will hire more >> you said that really what's more important in terms of earnings power is what's happening in the economy what do you see happening in the economy right now? >>. >> our biggest business is corrogated packaging we serve every segment it usually tracks just below maybe 50 to 70 basis points below gdp. we see an economy that looks and feels from our perspective like a 3% gdp economy

>> some sectors are slow, and they're off set by those that are very strong. the rest of our company in europe, we had a good quarter, and in latin america, it's mostly brazil for us still in a recession >> you think we have wind at auerbach, and we are hoping that some of the policy issues that you have been talking about this morning can get sorted out and get businesses and peopleation more certainty. >>, and i think that will lead to stronger economic growth. >> i think about how much cardboard comes into my house these days because of how much ordering i do on-line. does that matter for you on-line shopping, or is that a wash because you are sending cardboard boxes either to the stores or directly to me >>. >> the boxes that comes to you replace a box that went to retail a lot of that is being shipped instead to a retail store, to a digs bugs center where it's been

unpacked and repacked to the individual consumer. >> the resources are renewable it can all be renewed. 0% 90% of those boxes are recycled into the stream to be made into new boxes. it's a pretty good business model for the practical nature of getting the product to use safely, and it's a pretty good business model from a sustainability standpoint. >> mark. >> do you need 20 or would 25 be enough to make a difference? >>. >> we're usually a little less than the statutory we are a company that does actually pay taxes >> 20 to 25 would be in the zone

that we would be supportive of recognizing to get to 20, you have to make some trade-offs earlier in the year. you remember the discussion about the border tax adjustment that worked for some it didn't for others >> we would trade for lowering the tax rate to the 20% to 25% range. >> zbloolt you have decided to put a plant -- you were almost forced to do that, because the bottom line would be enhanced by that >> well, the -- the thing you have to remember about our products is they tend to largely serve the local market because of the nature of the product >> there are some cases where we were competitive, but maybe the supply chain got so long with ocean ships and all of that that

we made a service decision to put a plan closer to the end use market >> that's the other thing you hear companies manufacturer where they need to be, and it won't help that much >> lower in part because of foreign taxes. >> right >> that's what i meant when i said we pay a few points below the stat our rate. >> well, i don't know. >> we appreciate thank you making that clear for us today thanks for coming on today appreciate it. >> my pleasure >> okay. >> have a good day >> you too >> a big hour still ahead on "squawk box. up next we'll be checking in with andrew. he is in riyadh this week, and he joins us next with billionaire jim coulter. also at 8:30 a.m. eastern time, another newsmaker will be joining us long-time deal maker jmy dimunn will be here in studio with us

stay tuned you are watching "squawk box" right here on cnbc 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.

skbro thank you for being here >> nice to be here snoo most of the investors have not left this bubble that we're in right now people going to davos in the desert he ventured out last night. >> for years i taught at stanford, and a number of my students reached out for me and invited me out to a dinner at the edge of the desert >> i found myself with a group of 30 or 40-year-olds eating barbecue on a hill what i wanted to find out was whether whachs happening in the room, which is quite special is happening outside the room sometimes you go to davos, and people are skiing unaware anything is going on the question is the mood here.

>> the mood outside. the conversations reminded me of the -- talking about the future. talking about technology talking about growth >> he think the moods has moved which is promising for this area >> do you see your firm ultimately doing business here >> i think the first thing that should happen is they need to get a local investment culture going. you know, again, i'm from san francisco, and part of what makes the bay area great is the local investors investing in local companies. before they should worry about international investors coming in, i think they need to build from bottoms up. ultimately, given the population here, given the growth, given the demographics, we should absolutely be investors here that may be still a few years in the future >> i mentioned his name several times on the show today. we're going to see him on a panel in just a little bit

>> do you see an age of super sized and venture capital? >> i think what's interesting is if you tie what he is doing with what the kingdom has also done with blackstone, on the infrastructure side, the idea of creating market leaders to meet their needs is an idea that i think will resonate and perhaps we'll see more of. what other sectors health care? who knows? >> are think the general direction is a little bit away from generalest ideas and towards more specific ideas. i think it's fascinating that the vision fund is more focused particularly on technology >> people often say that size is the enemy. >> size is ov p the anyone

it's true. it's also the enemy of people like the kingdom who have to size in order to really meet their needs. we are ultimately going to have private markets at large scale to meet what the king doll is trying to do here. it makes sense that they're trying to -- >> are there other sovereign wealth out there that could do stuff to this scale. >> there are certainly other poles of capital equally large and equally visionary. >> i have to ask, travis is here we saw him walk past us just earlier. former coo of uber you are a big investor in uber one of your folks is on the board.

>> i can't say it's okay with me, but i'll let you go. thanks, again. joe, i'm going to send it back to you >> hey, andrew thanks notre dame just got its biggest gift ever. we're going to tell you how much was donated. in the next half hour we're going to talk to someone on the board of trustees at notre dame. jimmy dunn a long-time deal maker he will join us at 8:30 a.m. eastern time wow. we'll be right back. draws youthful populations to mobile banking and e-commerce.

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notre dame just received its biggest unrestricted gift ever private pilot committed $100 million to the indiana-based university the transfer of money won't happen until the 1987 graduate's death. the school can use the donation for any purpose it wants there were only two gifts of $100 million or more to universities last year up from eight in 2015. when we come back, we've got some breaking economic news. durable goods orders are about to cross the tape. we'll bring you those numbers.

plus, "squawk box" newsmaker jimmy dunn a notre dame graduate and a member of the ard boof trustees there. a donor in is had own right in a big way there. he will be joining us too. "squawk box" will be right back. prevagen helps your brain n and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

>> down nine on the nasdaq the ten-year is in that area where if the yields break through here, it could be significant. $2.46. rick santelli probably has some comments on that he is standing by at the cme in chicago. what are the numbers you have for us >> all right september preliminary durable goods read is over twice expectations 2.2 expecting. no revision. transportation still up nicely up it's the best proxy for business spending. up 1.3 following 1 .3 revised upwardly from 1.1 that is really good news if you look at shipments versus orders, also up smartly. up .7. 1.1 revised to 1.2

these are pretty good preliminary numbers. you are darn right i have something to say about 2.46. a lot of people are saying things >> we start to visit the higher end of the range we've done that the last several dwreerz. we're faebl one and a half, two basis points above where we said last year. how many percent of the stock market above where we said last year it's not a bad thing it's a good thing. if john taylor's potential to be fed chairman is pushed this long, great. it's a wonderful discussion. >> you have seen so many things that should have moved the ten-year, rick, that didn't.

there's only a few things that mattered with the ten-year you know what i mean overriding things. i can't believe they're attributing this to -- >> think it's john taylor? you think it's the earnings that we saw >> people are saying that -- i saw it yesterday the bond market is more volatile because of the way the fed chairman is being chosen that's why i didn't know we could move it. >> the participants can age out. okay it's been a long time. the fact of the matter is this isn't a bad thing. this isn't, oh, my god, you know, brim and firestone this is a good thing stock markets are going higher earnings are pretty good the potential for legislation is good on the tax side that's an inherent positive for the equity markets i just don't see it. it's inevitable. i really do think if you look at the last three or four years, we always tend to see the higher former rates as we get into the last door. the back half of the last quarter. >> all right i'm with you, rick

well, we'll see. maybe by the end of the year i've been waiting for three for, i don't know, my whole life, it seems. >> waiting >> waiting for three >> yeah. >> let's tell you about some other news this morning. amazon unveiling a new program for prime members that allows delivery drivers to drop off packages inside of the customer home make that possible amazon has introduced its own internet connected security camera, and an accompanying smart lock that will allow delivery people to open the door. the company is offering free inhome setup for those that don't want to offer the lock and security cameras themselves. oh, yeah got to be trusting, i think. now to president trump's pick for the next fed chair rick was just talking about, during a lunch meeting yet with republican senate leadership, the president asked which senators would like to see him nominate the lead -- which candidate the senators would like to see him nominate to lead

the fed. he asked for a show of hands vote president trump didn't say who came out on top. >> it was not four or five of the other names. it was just general poul or john taylor >> he didn't raise his own hand. >> no. >> there were people making the argument that he might still like -- >> he is a real estate guy he should be a poul guy. he should be a low interest rate guy. during the campaign, he was a taylor guy he said there's a lot of assets inflation. by keeping rates low for so long >> i have no idea whether he just goes with -- neither one would surprise me, kevin or poul >> or somebody else. it wouldn't surprise me if he goes with somebody else outside of those two as well all right. let's get to our next guest. jimmy dunn is senior -- sandaler

oh nightly partners. thanks for being here. >> good morning, becky nice to be here. >> let's talk about a lot of things that have been happening, but, first of all, let's talk about business and how deals have been going. plus, what you see on the pipeline right now how are things >> market has been very good i mean, we've led 30 months. we've been very active there's been a lot of deals done this year the three largest deals we've been involved with, and the flow has been pretty consistent it doesn't feel quite as full as it has, but i think you'll see more of the same in m&a, which i've been saying for years, and that is what's been happening. you are going to see continued consolidation. >> as we've been talking about tax reform and as we've been kind of watching it play out on capitol hill, do you think that's had any impact on what business leaders are willing to dpo right now? are they waiting to see what happens? it seems like something could be imminent >> i don't think it's had a lot of affect. i think there's more concern -- i think the biggest worry in the

market now is that nothing will happen that would really be unfortunate given the way the stars have lined up down in washington. the reality of it is the market is fairly priced, and if we can get deregulation and real tax reform, i think we could be undervalued. i don't think that's in there as fully as it could be it would be a real by lift to the market >> deregulation seems to be happening on its own it doesn't take a vote in congress to get any of that part done

>> for the banks and even greater leveraging affect for them if we don't get some, i think it's bad, but we won't get anything, i think, until the next year. >> hey, jimmy. your firm has been consistent every year and every market. you know, what makes -- what makes it different in your view? is there anything you are doing different with your culture? >> well, i hope so good morning, david. we've had the same -- the same basic framework. we've always had the client in the middle and trying to service the client and figure out what he wants and get it done for him. we've never been involved in massive principle trading. we've never worried about leveraging our own balance sheet.

>> we were aggressive and able to do that, and we continue, although at less of a frantic pace, by during the crisis, it was like a mash unit for our firm because there was somebody in every -- in every office trying to figure out a way to get capital into the system. now it's a much more organized and systematic and much more deal with debt now we've always sort of -- we've always had the client in the center, and everything revolves around him not so much our own balance sheet. >> you have never deviate from financial services has that ever been a temptation, or have you basically -- you see this as a major strength in differentiation? >> well, we -- you know, we probably could have. you know, we've been doing this now for it will be 40 years the next august.

>> to be an expert in the area and to know what's going on, but the secondary institution has been a big benefit to us, and we don't have anile thattent migration in our place i mean. >> ef we have to figure out a way to get -- ultimately it's been a strength. i probably could have been more aggressive maybe in hiebd sight that worked out okay >> you want taylor you would love a nice yield kuv, wouldn't you >> things change >> right >> you need -- with david in there, it's a good thing to

think about to talk about leadership you need someone that can really handle an environment that will be very different than the one he is entering i think we need more of a leader i don't think it's taylor, and i think poul is a good man, buh rl capability that can handle a lot of different problems at one time >> he likes warsh , i think. >> that's by far the best choice i mean, it doesn't -- you know, there's no question about it i mean, he can -- he can handle an environment that is going to be very, very different in five years. all right? he has the depth and the ability to be able to do the right thing when we need it the most, and that's what a fed chairman will be known for not the environment he has when he comes into. >> why is that -- why do you think that about warsh >> talk to him i mean, he is -- read what he has written.

>> he has the confidence and the depth that will matter the most. i'm completely sure about that >> if it's not, kevin -- if it's one of the other candidates that we've mentioned. go ahead yeah >> by the way, what? no, i was going to say, by the way, joe, you mentioned that -- in 87 graduate i'm thrilled with what he did, but i graduated with ken he is more successful to me. he is more generous to me, but he is not jung younger than me he graduated in 1978 not 1987 >> -- you didn't quite do well enough in your s.a.t.'s to get here i'm sorry, becky

i'm sorry i interrupted you. >> if he can give 100, you can give 500 that's what i immediately thought. >> he has been tremendous to the university >> that kills you that he was supposedly nine years younger. that was -- that's, by the way, came out of left field we talk about that >> he is fact-based. that's just silly. she's done -- we need to take -- get out of -- we're well out of the crisis you know, the reason why the stock markets are roaring is that we've had interest rates so low for so long. we need to -- we need to take

the training wheels off and let the economy go to work and go let the ten-year go to the level it's supposed to be at you know, we -- it's time for a change, and we need to get a real effective leader that has the depth and not just woertd about the status quo, and in five years when things are very different, we'll have -- we need very sure hands in that office >> the president, donald trump, has been on this show and told us that as a real estate guy, he likes lower rates. he has said that publicly. it's hard when you start thinking about being the president and being in an environment of rising rates. that's typically what has led to economic concerns along the way. >> but, becky, he is not a real estate guy anymore he is the president of the united states. okay so obviously real estate we have

to face this, and we can have -- we can have an environment where low rates is just absolutely benefitting the upper 1% that owns the assets -- we have a broader, deeper, better economy for all of americans, and not just for a certain few including myself >> all right >> not going to say anything about where you are either i know you -- >> i'm working >> yeah. i know you are very close to somewhere where if you weren't working, you could easily be there in, like, five minutes, i think. >> that's true, but it's not open yet >> okay. you know what, when i played that particular place, i wished it wasn't open anyway, you know, that was a low

blow with the notre dame stuff i do have -- you know i have a brother, a father, and a sister all went to notre dame i didn't know them jeff flake with an 18 measures approval rating in arizona. a lot of my colleagues have spoken out really they just gave me a standing o they just gave me a standing o coming back are the day's top stories. "squawk box" will be right back. his advisor ran the numbers and showed that he wouldn't be able to retire until he was 68. the client realized, "i need to get back into the markets- i need to get back on track with my plan." the financial advisor was able to work with this client. he's now on track to retire when he's 65. having someone coach you through it is really the value of a financial advisor.

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york stock exchange. more stuff to talk about in the dow today, jim anything that raised your eyebrow, whether it's coke or visa >> once again, visa. you have al kelly just doing an unbelievable, unbelievable job at visa. she's continuing what charpie sharp was doing that's so seamless and visa is maybe the great technology and finance company out there. it's been straight up. the european acquisition was great. you got double digit growth. we're seeing double digit growth from gigantic companies. i saw goldman sachs had a sell on 3m, had to admit it was to great. these american companies are

delivering i know there are a lot of smaller companies that didn't do well yesterday but i'm impressed with what some of these big cap guys are doing. >> what did you think of the results of at&t? they said they expect additions instead of losses. at&t kind of threw the entire media world for a loop a week or two ago. >> look, i feel that at&t is a company that's got a yield that is in vie lat. the cash flow's gotten better with time warner if you want to have income as an individual investor you got to feel good about what they're doing. i know that the chart's bad. i know someone who doesn't like the subscriptions. i like yield when we're yield starved and the balance sheet's better after time warner than before look, i'll take the other side of the trade if i want income.

>> jim, you're a mexican food connoisseur because you own a restaurant were you a taco bell or a chipotle guy deep down >> you know what, taco bell late at night is just an unbelievably good thing to have. >> man. >> amen. >> good answer, jim. >> amen. >> what can i say? kfc by the way, kfc this weekend. you know what, i have the bucket i wasn't going to have four pieces i had the darn bucket. >> jim, just like with a cocktail it's always late night somewhere too for taco bell. >> good food, nothing like it. >> make him the next colonel. >> he would be a great colonel, that's true. thanks, jim. >> oh yeah >> thanks, jim we'll see you in a few minutes up next, ann has a surprise for us. >>eay? rll >> we're going to head back to saudi arabia right after the break. >> cocktails

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we'll bring you that video and we have a host of videos that we're going to show you, behind the scenes stuff we had a great opportunity to have an interview with the ceo of aramco. i think we have a picture from that i had a great opportunity to speak with prince al walid i know joe will probably rib me, this is us on the dunes in the desert and then you said are we having fun here i want to show you how much fun we're having first of all, you said drinking. you know me and food here's my watermelon drink. >> looks like a bloody. >> great better than alcohol. and then there's a tradition here, arabic copy and dates which i'm going to bring you guys back. here's some beautiful dates. >> those are pretty. >> come on over. we're going to show you how this

is done. this is the traditional way it's done he's going to pour it and then what i have to do is drink it but then the rule is if you want more you just keep pouring, right? but if you want it to be done, you have to do this. so thank you by the way, he went to unlv to give you a sense of just how small the world really is. anyway, that's -- thank you so much for that. we've had an awesome time here we will see you back in new york, guys for now, i will bid you farewell. >> that was a rugged looking shot of you out there. >> calendar worthy. >> peter o'toole is like, i thought i was a good -- andrew of arabia you kind of look like. >> swimsuit edition. >> yeah. >> god almighty. >> i knew i was stepping in it by showing you that picture. i knew i was stepping in it. >> be still my beating heart >> i think that's something you should -- on cosmo you should

fold that out sort of. that's calendar worthy i'm not kidding. andrew, thank you. our guest host this morning is david novak paul ryan is making comments about the tax plan we know we'll be seeing the house plan next week he said the u.s. will have a rash of corporate inversions if congress does not get tax reform done final thoughts on this >> jimmy dunn said it right, the world is expecting action and it's time to have it anything less would be a failure. >> jimmy was classic about warsh, wasn't he, wow. >> kevin is unbelievable he's got the balance he reads everything. i think he's the best choice myself. >> recently he's worked with druckenmiller and stan is a guy you might like to pick his brain. >> kevin has everything. he's got the broad diverse base of experience that you really need to have he's thoughtful.

i think jimmy's point about being able to handle what we don't know is important. he's got that metal to do that. >> you want a steady hand so the market doesn't get spooked but that's a different market. >> i think he's a steady hand that will do the steady thing through all times. >> thank you so much for being here today. >> spending time with you for two hours, thanks, david and you look great. >> thank you. >> hair is awesome make sure -- is this me? >> yeah, go. >> make sure you join us tomorrow "squawk on the street" is next ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer futures off on blue chip earnings we will get to coke,