november 1st, 2017 "squawk box" begins now. ♪ >> live from new york where business never sleeps, this is "squawk box. >> good morning. welcome to "squawk box" on cnbc time for the global markets. u.s. equity futures now reporting to a much higher open. 116 points up at the open. the nasdaq looking at about 35 points s&p up by 10 s&p and dow coming off a seven-month winning streak after the close of october overnight in asia, a 1.9% gain there. that was the highlight in asia, sending asian stocks to a ten-year high. kospi worth noting here, south

korea higher by a percent overnight. looking at the action in the european equity markets. the futures picture here, the dax higher by 1.6% italy up by 1% green arrows across the board. looking at the action in crude wti, highest level yesterday since february of 2017 today up by 1.2% 55 is the level. brent is at 61.59, up by more than a percent we will have more on the strong markets in a moment first we're getting new details on yesterday's terror attack in new york city. eight people are confirmed dead. dozens of others injured after a man deliberately drove a truck down a bike path in lore manhattan. let's get tocontessa brewer live on the scene with the latest good morning good morning the home depot truck used as deadly weapon still sits in the

intersection behind me, blocked off by crime scene tape and surrounded by investigators. this is a tactic that isis has called for, turning every-day vehicles into deadly weapons and it was successful yesterday. eight people dead. the number of injured in the hospital now up to 16. just as local schools were ending, police say the driver turned on to that popular jogging and cycling path along the west side highway, mowing down pedestrians and cyclists. swerved off the path, slammed into a small school bus, two adults and two children hurt on that bus the driver got out of the rented truck, pulled out a paint gun and pellet gun and was told to drop those weapons by an nypd patrol officer, when he didn't, he was shot in the torso he emerged from surgery overnight in critical condition at bellevue hospital the investigators learned that the driver rented that heavy duty truck from the home depot in

passaic, new jersey. we have chopper aerial footage of that home depot where his minivan was found. they found a note inside the rented truck indicating the driver intended to carry out the attack on behalf of isis the driver is sayfullo saipov, originally of uzbekistan, a 29-year-old. he came to ohio in 2010. he's a permanent legal resident of the united states he had been in tampa, pennsylvania in missouri he received some traffic citations, failure to appear, so he was arrested he had a commercial driver's license, and for the last six months he has been an uber driver uber said they are horrified by the event and they have kicked him off the app. uzbekistan's president has called donald trump not only to offer condolences but assistance in the terror investigation. again, at this point,

authorities say this is a lone wolf attack, why they are saying that and what the evidence is leading them to that conclusion, we don't know. we still don't know the names of some of the victims, but we know five of them were argentineans celebrating a 30-year high school reunion in new york >> contessa, in times square, every day we're watching barriers there's a lot of new things happening in response to what happened in nice and some other times that a truck has been used hasn't been in this country yet, but bike paths, trying to figure that out no barriers, i guess you can freely drive up -- do you live nearby? aren't you in tribeca? >> i love a short walk away. i'm here all the time. i use that bike path with my small children weekly. so this is an area i know well it's possible for you to turn in where the cross roads meet that

cycling path occasionally there's an opening, where a vehicle can get through or a business where delivery trucks use that there's been instances where people have been killed on it before from vehicles crossing it but driving down the bicycling path. and there are barriers on either side of the path if people saw that truck barrelling through, there's little way for them to escape and get out of the way. it's astonishing knowing how traveled that path is and how heavily used that is by pedestrians, cyclists, tourists. the tourist toll among the injured is remarkable. it's amazing there's not more people injured in this attack. the west side highway is closed down for two miles this morning. that will impact lower manhattan and affect wall street this morning, that's a major thoroughfare into wall street that will create gridlock in lower manhattan.

>> as it was happening in realtime, i read road rage, a dispute between a truck and some other motorist was there a hesitancy with officials to -- when did deblasio finally say looks like terrorism? i don't know that's what you think immediately, but then you're sort of talked out of it by officials saying, no there's no evidence of that looks like road rage do you know the timeline >> if it happened when schools were letting out around 3:00, and they know there was a -- people were hearing shots. for a police officer to be involved you know, i'm sure it's hard to tell when they learn, they emerge from the car screaming -- >> right >> it was about two hours.

it happened about ten after 5:00 p.m. when officials declared it an act of terrorism. it happened more when we learned about what the shooter proclaimed after he got out of that truck that's how long u.s. officials took to declare it an act of terrorism. couple of hours. the marathon has been in boston, that was a target. the new york marathon is coming up, is it not? that must have officials a little bit concerned >> yet if you look at what happened last night, they came out on the ta of thday of this hours later, the mayor saying the village halloween parade will continue. the schools are open this morning.

i got a note from my kids school saying we're in session. we take security very seriously. we will alert parents immediately if there was a security concern but as you know, this is a pervasive back of mind threat that exists for new yorkers. you know when you live here, you raid your family here and work here that it could happen. 9/11 changed all of that for new yorkers. we take it seriously and we're on guard, but you hear we'll live our life. we won't let the fear of terrorism get in the way of tha that >> okay. we'll talk to you again. we'll see you every hour this morning for updates. turning to our top story out of washington. house republicans are delaying the release of their new tax bill it was lated for todaslated fory

m ylan mui has more on this. >> one of the big holdups is what to do about the state local tax deduction. there was a compromise that would have kept the property tax deduction but got rid of the one for state income taxes some republicans from high-tax states like new york and new jersey are not on board with that idea. last night brady announced the rollout of the tax plan would be pushed back to thursday. he said they are making progress and they intend to begin debating and vote on this unseen bill next week president trump tweeted last night the republican house members are working hard and late towards massive tax cuts they know you deserve. these will be the biggest ever yesterday two sources briefed on the plan told me that the corporate rate would be lowered to 20%, and it would happen immediately. it would not be phased in over

several years. that spooked the markets earlier in the week. it was clear whether the reduction would be temporary or permanent. clearly this bill is still in flux and there's doubt whether republicans can get this passed by thanksgiving. not a good sign when you can't make your first deadline joining us for more on the tax drama in washington is jonathan swann, political reporter for axios they missed the first deadline how can they make the vote by thanksgiving deadline. do you think this spells trouble for the road ahead >> sure does most republicans have not seen this bill. leadership and house ways and means, they often get in their own little bubble. they've been thinking about this for months and months, working through all these issues they take a lot of stuff for granted. most republicans on the hill

have not seen the text, and they'll find a lot of nasty surprises when it comes out. there's all these politically toxic issues like meddling with retirement savings, state and local deduction, there's all of these compromises they're making to get down to 20% >> presumably they're taking this extra time to make sure some of these issues are ironed out so there's enough to appeal to the republicans from the high income states to get them on board. maybe this is a precursor to a smoother passage, no if they can work some of these issues out behind closed doors and delay that deadline to make sure the bill has a better chance from the start. >> let me disagree with you. >> sure. >> they are working this out still within the committee they still have not socialized this among the members mark meadows, the head of the freedom caucus, he has not seen this text. his members have not seen this

text yeah, they can keep hammering it out in the committee, and they disagree on a lot of stuff, but at some point they have to lift up the kimono. and it's not pretty what's under there. >> yeah. okay jonathan -- >> can i say one more thing? >> i don't know. i'm worried about you. you are going to go into details on that? >> no no mo, no more kimono we will break this morning in the news letter, there's going to be an absolutely eye-popping ad spend from some of the biggest dmoerns republicbig e biggest donors in republican politics to support this bill. republicans on capitol hill in the white house and in treasury, they see this as existential if they fail to pass this -- >> exactly that's what i was going to say i will stick with like food analogies. they work for me better. we have front end loaded the

dessert, now you will hear about the vegetables these guys say again and again in 1986, every single interest groout group had to feel they were getting screwed over. we can't possibly survive if you guys do this it's got to be equal and spread to everyone. i'm wondering whether these guys really know this time -- it's just the way it's going to be. the mortgage industry and everybody will have to have pain to get this done for the greater good maybe this time because it's so well known by republicans they don't whimp out and they know they have to do this not everybody will be happy, but it's got to be done. do you think that's a possibility? >> no. no, i don't. >> you wonthey won't eat their vegetables >> no, they'll eat three and put the rest in the bin.

1986 was bipartisan. you had serious commitment from serious players on both sides who wanted to get this done and who wanted reform. you have a president at the top telling members in conference calls he hates the word reform it's all about cuts. already they wussed out on eliminating the state and local deducti deduction. kevin brady told some conservative leaders last week they had already, because of their compromises to appease these blue state members, they had given back more than half of that trillion dollars. at the first seen of trouble they already are wobbling. >> the first was the v.a.t >> exactly exactly. yes. >> i live in new jersey, i work in new york. it's going to hurt but i understand how a lot of states should not be -- these other states should not be subsidizing all the spending of these coastal states that blow

all the money with their free-wheeling spending i can understand how you can do that why can't they just suck it up because they're trying to get re-elected this year or next year >> members are squealing their members are squealing. >> so he your odds on anything getting voted on by thifg is wha thanksgiving is what >> it still could happen, but i have never seen this as being a substantive reform bill. >> we'll let you go. the -- i've been watching axios. i'm still following you. axios on twitter i've been disturbed a little >> really. >> you're not going politico's route. you're trying to stay somewhere just reasonably close to center, right? have you got any say in that am i right >> i've been advocating for more

of a far right neonazi angle >> is that what the far right is oh, god. >> i want us to be a platform. i'm joking i'm joking >> okay. okay you go the antifa route like politico >> no comment. no comment >> thank you keep it in mind. >> thanks for the advice appreciate it. >> cover both sides. tell mike allen. >> i will. in other washington news, executives from big tech and social media companies were in the hot seat on capitol hill facebook's chief lawyer was the target of most of the questions, he called the fake accounts to spread misinformation reprehensible. >> you can't put together rubles with a political ad and go, hmm, those two data points spell out something bad?

>> senator, it's a somethiignale should have been alert to and in hindsight one we missed. >> okay. okay yeah >> stretch said facebook would double the number of people it has working on issues from safety and security from 10,000 to 20,000 by the end of next year executives will be back on the hill today >> just -- just -- i just still see stewart smalling any way. walmart pulling out all the stops to take on amazon this holiday season the retailer is rolling out massive deals and throwing party force cu parties for customers who decide to come in stores to shop. we'll talk more about walmart's plans with courtney reagan at the bottom of the hour it says anchor now i'm ready. >> you go for it.

>> i'm thinking about taking a personal day tomorrow. game seven in the world series is tonight the dodgers beat the astros in l.a. last night, 3-1 they keep their hopes alive. >> i saw the first couple innings, verlander is so good. he looked -- i guess they got to him a little bit finally i don't know 3-1 is not 13-12 or 12-11. the series coming down to tonight's game in los angeles. it's not until 8:20. >> that's way too late for you >> yes it is. it's not -- it's just not fair you can't -- i can't watch -- can't -- >> you can't watch the replay of it knowing what happened? >> no. >> it's all new to you, right? when you're watching -- >> how could you not know who won the world series if you you watch it the next day? >> is the point of the game to actually know who wins or enjoy the players and sportsmanship --

>> do you watch? >> no. >> okay. baseball and the postseason, you -- even foul balls, you're like -- every pitch is important. >> that thrill is decimated. >> and the count will be 3-2 full count you know the guy has -- or if bases are loaded it's every pitch the crowd is into it it comes down to one game. it is really exciting. i go back to '75, '76, 1991. >> if you're not here tomorrow we'll know why >> i'll be here. i wish i could watch. coming up, today's agenda on wall street. we have a rundown of the earnings, economic data and stall branch news. and at 8:00, two newsmakers. former treasury secretary, jack lew, and activist investor bill ackman "squawk box" will be right back.

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stocks to watch today. honda motors posting better than expected quarterly results and raising full-year forecasts. they expect to sell more cars and motorcycles this year,

particularly in asia it says the weaker yen is boosting the bottom line. shares are up 1.5% shares of envision healthcare plunging. earnings coming in below forecasts. the company says it has hired advisers to review strategic alternatives with all options on the table. that's about a third of market cap gone right there >> 3d systems shares taking a hit after the company withdrew its guidance for the rest of the year the computer manufacturing company's earnings and revenue fell short of estimates. 3d systems blaming a reorganization during the quarter. shares down 20% now. the fed is set to announce its decision on rates today. for more on that we're joined by charlie dibel from aviva investors in london and here on set is rob martin, u.s. economist at ubs charlie, i'll start with you, since i know we have a delay we'll take as long as -- we'll sit here as long as it takes to hear your comments

do you expect surprises from the fed today? even in the comments or what happens? >> i think the interesting bit today is not the decision. nobody expects them to move. the interesting bit is the narrative around inflation we continued to see an undershoot from the infralation metrics in the u.s for now the fed are continuing to go in the direction that inflation will show up so i'll be listening for anything to do with how they're they're worrying more profoundly that inflation is not showing up and that they should be potentially less aggressive on future rate hikes. >> the whole notion that that is the priority for the fed, i can understand it if you're not seeing consumer confidence or

other economic metrics which do seem to indicate we might be shifting into a higher gear, not just here in the u.s., but partly because of the global growth as well >> the fed is supposed to be somewhat predictpredictive can't we assume that inflation will get to where it's supposed to be and not something to worry about? >> that's clearly the stance they're adopting.having as if io will show up, but if there is a downturn and if inflation has not shown up with such solid metrics, the risk in any weakness is that inflation ticks down sharply you get into the whole deflationary mindset again that's the risk. >> rob, i think of not all

inflation is the same. there's a lot of positive things with technology and the digita age that may be keeping inflation -- it appears to be lower than it is aren't through enough signs that the economy is solid and that should not be what the fed is thinking about >> the economy is solid. there's no question about that the economy has been solid for a long time. we expect inflation to move up this year just like the fed does >> why don't they look ahead >> they do our view is the fed does not hike where inflation is today but where they expect it to be tomorrow they think it will move up now there are technological forces, there's competition in the retail space, prices are being held down. they'll look to that to an extent but still expecting inflation to move up to the 2% target over the next year or so. they're not in a hurry for that

really everything that they have seen over the last few month also give them confidence they're right. >> so we should view where interest rates are set, that should be the only determinate, inflation. shouldn't there be rules-based idea about where interest rates -- or just leave it at zero do you leave it at zero? no such things a hurting savers, no such thing as making it impossible for insurance companies to plan on -- what to do with -- >> that's why it's a hard job. >> shouldn't it be something other than inflation that you look at that they say it's too low and too long for too long? >> they look at activity, only now you don't have to worry about activity the job market is moving sideways gdp is staying close to 2.25%. nothing to worry about in the near-term on nick activity

that means that two parts of your manmandate, you flip over the part not performing well >> that's assuming that the only thing you can do is look at coincidence or trailing indicators they should be able to figure this out everybody else can figure out a year or two from now rates are too low. if they don't do it immediately, they have to catch up. >> that's the fear, they'll far behind the curve, have to crank up rates and kill the activity they've been working so hard to get back >> we heard that republicans like higher rates or something or republicans would be more -- would be tightening more than the doves. i heard someone say that earlier today, in fact is that the way it is? do republicans want john taylor or kevin warsh >> some people think that would trigger activity, get things

moving on that fear of if i don't invest today, tomorrow when i try to get a house or invest in -- >> who do you want >> they're all great candidates. >> they are. my personal favorite is jay powell >> did barclays tell you to say that. >> i'm at ubs now. >> so they wouldn't be telling him to say anything. >> or -- >> no. they're all excellent. >> will anybody change the path? will any candidate change the path that yellen set forth >> there's a lot of chatter in the market that kevin warsh and john taylor are more hawkish and they would move that up. to me, what we're talking about, given everything we talked about with inflation and activity, you're talking about the difference between two and three hikes in 2018. to us, that's just not a meaningful difference in policy.

after all, the fed dots are at three dots our forecast is two. which one you choose is quite similar for outcomes >> any last words, charlie we have to go. but who do you prefer? >> i think powell would be the market's preferred choice because it would be viewed as a safe pair of hands, if you'd like i think there is that concept that he's perhaps more balance sheet oriented and rates oriented, that matters for rates, but it's about trying to take away the excess liquidity slushing around the system in terms of how markets respond, that's the better outcome. largely because we have so many uncertainties drifting around with the tax proposals so i think we have to hope for a steady course, shall we say, just to maintain at least some

sense of stability in the markets. >> gentlemen, thank you. rob, i think you're mistaken, i have the notes here, you're at barclays senior u.s. economist at barclays want me to show you this >> i totally went to the wrong office this morning. >> you're all screwed up are you the senior u.s. economist at ubs >> i am. i am >> thank you >> i was hoping for the u.senior u.s. economist at barclays >> it's all downhill. stocks to watch this morning, shares of u.s. steel jumping. earnings and revenue beat the street's estimates the steelmaker benefiting from higher prices and improved operations at mills. electronic arts shares are trading lower. the company's revenue forecast for the holiday quarter is short of wall street forecasts the game developer says it is gearing up to face tough competition from rival such as activision and blizzard.

and shares of checkpoint software getting hit. its revenue forecast falls below consensus. they blame a restructuring of the u.s. sales force >> messaging slack is back online after suffering a service outa outa outage slack is a popular mode of communication among the silicon valley big swinging guys out there that love slack. >> swinging guys >> the big -- >> don't know what you're talking about. >> fortune 100 companies you ever heard of slack? >> yes, they use it in the newsroom. >> the newsroom? we've been down here -- you don't go back there much, do you? >> every day i do "power lunch. >> okay. i got all thrown off by ubs and barclays a record 28.5 million people

will fly u.s. airlines during the holidays thanks to a strong economy and low airfares it would be a 3% increase over last year. coming up, put your money where your mouth is we have a run down of the restaurant chains reporting quarterly results today. what it could mean for your portfolio. and dan roth is here to unveil the list of the top startups to work for before we go to break, here's yesterday's winners and losers six in the morning.

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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 are sharply higher this morning. we say it so easily, but the dow keeps, you know, it was 21,000, 22,000, 23,000, 25% since the election, 26% since the election we're supposed to get 4% a year. that's what every sell side guy has told me. maybe 5% a year. don't expect more than that. we must be 26% light now, aren't we >> since -- >> since the election. >> probably just that.

>> that's more than a quarter. >> it's a stellar gain seven straight months of gains for the dow. the nasdaq will also be another record >> people are saying, oh, global growth a lot of it you do the multiples on the earnings that these tech stocks are reporting it's real, it's there. overnight in asia did not hurt things. that was part of the reason for the good feelings this morning with big gains in the nikkei and hang seng. time for the squawk planner. federal reserve policymakers wrap up a two-day meeting with the latest decision on interest rates at 2:00 p.m. the fed is widely expected to keep rates unchanged as for the economic data, adp employment report, private jobs, manufacturing pmi, ism manufacturing, construction spending and auto sales. so a busy day. results from facebook, kraft heinz, qualcomm and tesla.

shares of papa john's suffering disappointing guidance domestic same-store sales increased just 1%, lower from the previous range from 2% to 4% guidance was weaker than expected shares of papa john's has had a rough year, down 23% this year agone. >> domestic sales increased only 3% i don't know how they did that >> i'm efforting not to say the word space going forward >> that's your plan? >> i don't like saying space isn't that a journalist term like efforting more names in the restaurant world. >> restaurant universe >> or more restaurants are

reporting today. >> brink international, that's chili's, right >> yes >> that's your beat. >> she would know that >> i was happy i knew. brinker international, cheesecake factory, shake shack, all of these are sounding good to me. gains in the fast food space are continuing to -- i did say it again, didn't i kate rogers is joining us more to talk about what's happening here >> the names reporting today illustrate that point. qsr's gain is casual dining's loss wagers are lower among consume who are being more careful about where they spend casual changes have raised prices and shifted menus around but not necessarily increasing

quality while fast food names like mcdonald's are lowers costs and increasing options for diners secondly, it's continually cheaper to shop at the grocery store than go out to eat the third one is teen spending food and restaurants are real focal points for teens who tend to migrate more to the fast casual and quick fast food space. you can see this play out in some of the names reporting today, cheesecake factory down 25% year to date brinker which owns chili's, down 40% for the year shake shack is faring better up around 6% year to date. the biggest success stories in the space are macdonald's, rent brands international and yum there are some outlies like chipotle which are down 30% year to date after the latest earnings report showed continued slowing growth >> chipotle has some issues. bill ackman will be on later

today. they will be opening one near my hous house. >> i understand you like taco bell, but chipotle is a different thing. >> it won't do it to me. if you were out talking to normal people, would you ever hear anyone say we're efforting to do something. how about space? have you ever heard people say space other than refer together heavens? >> i had it in my script i will never do it again i would like to come back on the show >> you can come back i love talking about this space. >> i look forward to talking more about this space in the future >> thank you >> oh, no! all eyes will be on the restaurant space going forward i'm telling you, i won't stop efforting to stop using these things coming up, we have a huge

lineup still ahead at 8:00 a.m., we'll talk to jack lew about the prospects for tax reform at 8:15, an early indicator for the friday jobs numbers, the adp private payroll report and bill ackman will join us at 8:30 a.m. to talk about next week's shareholder vote and his track record, names such as chipotle in his space. >> yes throughout my career, i've been fortunate enough to travel to many interesting places. i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise

the countdown to christmas is on. walmart rolling out its holiday plans. courtney reagan has the details. good morning walmart is hoping that everything it's done so far this year to blend the online and in-store options for shoppers will help it to win the holiday season that's the strategy. the largest retailer hoping shoppers are attracted to options like order online, pick up in store for that discount, or find joy in the online selection. walmart has three times as many items available on its site compared to this time last year

thanks largely to the marketplace sellers. one thing they're not doing is waiving the $35 minimum threshold for shipping the retailer is hosting parties like this week's toys that rock event for kids increasing product demos in store. this year santa will make thousands of in-store appearances and holiday helpers will lend a hand when it comes to having enough of the hottest items, the goal is to never be out of stock. when it comes to black friday and cybermonday, like other retailers, walmart plans are still secret you have to wait for those >> this is her beat. >> yes, it is. >> it is, indeed we have ackman on later. we talked about how stocks that hit new highs, hit new lows. stocks that hit new lows tend to hit new lows wasn't jcpenney better at 8,

then six but never was, was it? >> yeah. >> what should we ask him about that >> i think a lot of people now, hindsight is 20/20, looking at ron johnson's strategy wasn't all bad, it was just too much too fast comps down 25% a quarter, that will spook everybody >> you have to worry about everyone now in that space coming up -- you know what people used to say to me, i need my space >> yeah. >> get away from me, i need my space. >> i can relate to that. ray's always been different. last year, he said he was going to dig a hole to china. at&t is working with farmers to improve irrigation techniques. remote moisture sensors use a reliable network to tell them when and where to water.

so that farmers like ray can compete in big ways. china. oh ... he got there. that's the power of and. [lagale force winds,s absolute chaos out here! accumulations up to 8 inches... ...don't know if you can hear me, but [monica] what's he doing? [lance] can we get a shot of this cold front, right here. winter has arrived. whooo! hahaha

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>> the top companies listed compiled from billions of responses from over 530 million professionals on linkedin. here to break down the key factors, editor in chief at linkedin, dan, good to see you these are the start-ups that people most want to work for >> we looked at three big. one is what kind of companies are getting the most engaejment from job seekers and professionals? are people following the company? are they following the employees of the company are people researching them, and are they applying to jobs and

what rate compared to their competitors? the last one is attraction how well are they able to pull top talent from some of the biggest names in the world facebook, google, amazon these are companies that people spend their entire life treeing to get into. these startups are able to yank that talent out and bring them to their startups. >> this list was released three minutes ago. uber is number one air bnb number two wework number three. lyft number four slack known five these are basically unicorns is there any surprise to this? >> it's only 40% of the companies that end up being unicorns the top ones are not surprising names. when you start getting into it, you see some surprising things for instance, one-third of the companies on this list aren't from silicon valley. that's unusual wouldn't have been true a few years ago. now you have a situation where startups, if you are an entrepreneur, you can build your company, attract talent, and raise money outside of silicon

valley there's a company from chattanooga. >> has uber moved at all are you surprised at all that uber is number one given problems it's had and the spotlight on its culture, treatment of female employees. >> we asked the same question and did some research into why people go work for uber, and just don't see the impact of the talent brand people want to work at uber because there are challenges that they can take on and they think they did change the company. if you look, axios just had a survey that said that only 17% of people have an unfavorable view of uber this is not a company that has massive consumer unhappiness towards it they're chord a lot in the press, but people want to work somewhere where they can go to a

company that is growing. uber is one of them. >> how does salary correlate to this list? higher sal have i. most sought after startup. >> people want to take on challenges and do things loo look good on their resume. people are going to change zwrojobs a lot. you want to show that you can do something big and you can explain the company to your parents. salary, you don't get out of bed in the morning because of your salary you have to love what you do >> on. >> the reap i'm not saying yes -- i thought about rejoining so i don't have to reject. has anyone ever done that? >> you can -- that's certainly an option. you can also just come on and read, share. you don't have to do this to build a profile.

>> i can get in and see someone? >> absolutely. of course. >> you can see the articles. over 1100,000 articles a week being written. >> what a picture. dan, thank you >> thank you >> i thought you were really social media savvy >> i'm not on facebook i'm want on linkedin >> going forward i will not be in it either >> coming up, the gop tax code has been delayed by a day. we'll talk to house budget chair diane black about the sticking points and what the bill could mean for your money. then, later, a beg hour coming up starting at 8:00. jack lu and bill ackman are here on set "squawk box" will be right back. zar: one of our investors was in his late 50s

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good morning terror in new york new details on the attack that killed at least eight people the latest from the scene straight ahead developing overnight, meanwhile, the house, gop pushing back the roll-out of the new tax bill what it means for the markets and american businesses, straight ahead plus, the ceo of southern company, tom fanning, will join us to talk quarterly results and energy policy. plus says, he knows a little bit about the fed. it's wednesday, november 1st game seven of the world series is tonight as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." good morning welcome back to "squawk box"

here on cnbc we're live from the nasdaq market site in times square. i'm melissa lee along with joe conce kernan, along with wilbur ross, who i'm supposed to watch very carefully. >> very carefully. >> very strong showing this morning for the dow and s&p, which just came off of seven straight months of gaenz the futures do hold up at the open we will hit an intraday high for all three major averages the nasdaq can add 29 at the open dow up 138 at the open s&p looking at about 10.5. let's take a check on the treasury picture ahead of the fed decision due out later this afternoon. not expected to raise rates this time around. we look -- we will look for commentary surrounding the outlook for the economy and the prospects for this that december interest rate hike we've got the ten-year yield yielding 2.394% two years and 1.608. >> these futures this morning are fueled by gains around the rest of the world. nikkei up 2% there are no other catalysts other than the fact it's the first day of the month maybe more cash going to work.

the fwakt it comes off such a strong october, it's kind of baffling, very encouraging beg gains in the markets we have more on that in a moment first we're getting new details on yesterday's terror attack in new york city. eight people are confirmed dead and a dozen others are injured after a man deliberately drove a truck down a bike path in lower manhattan. let's get straight to cnbc's contessa brewer live on the scene for the latest contessa >> wilford, good morning to you. behind me the crime scene stretches some two miles off the west side highway along the hudson refr and over to a home depot in new jersey. this driver barrelled down a popular bicycling and jogging path along the hudson refr yesterday just careening through the pedestrians and the cyclists there. he had veered off the path, and the children attending a public elementary school were actually outside when he crashed into that school bus. they began running in the

courtyard where they were. the police say after the crash with the school bus, the driver emerged from the rented home depot truck shouting all yea -- and pulled a paint gun and pellet gun an nypd officer told him to put down those weapons and shot the attacker when he refused the 29-year-old was taken to the hospital he had surgery overnight we're told he is now in critical condition. here is what else we know about him this morning neighbors say he had lived in patterson with his wife and two young children on and off for about three years. local muslims say they have seen him at their mosque only once or twice. he came here from uzbekistan in 2010 he is a permanent legal resident of the united states first going to ohio, but here's a guy who got around right? law enforcement authorities have now placed him in multiple other states maryland, pennsylvania, florida, missouri where he had traffic citations and then was arrested for failure to appear so there's

a mugshot of him from missouri new jersey and, of course, now new york he has a commercial driver's license, and for the last six months had been driving for uber, but he rented that heavy duty truck that he turned into a deadly weapon in manhattan he rented it from a home depot in passaic, new jersey officers found his minivan there. we have the aerial view from overhead of that home depot as investigators were there and began combing his minivan for any kind of clues. we should mention that they also found a note inside the rented home depot truck claiming that he had carried out the attack on behalf of isis and, of course, isis has been calling for these sort of improvised attacks using vehicles now police are investigating his associations, whether he had a more specific target, and if so, how close did he get to it we've also learned that the fbi has been searching a home associated with hem in tampa

in new york sunday's marathon will continue as scheduled they are changing some of the activities that were planned for today along the west side highway, but otherwise, carrying through as usual people are returning to work this morning traffic is likely to be a nightmare in lower maent may not as two miles of the west side highway and major thoroughfare two lower manhattan are blocked because of the investigation again, school back in session this morning new yorkers, of course, resilient. guys >>. >> we'll check back around the 8:00 hour. once again, we appreciate your reporting. following a developing story out of washington. house republicans delaying the release of the new tax bill. it was slated for today. nbc news is reporting that not all republicans on are the same page on what the final version of the bill should look like house weighs and means chairman kevin brady issuing a statement last night saying that the roll-out will now happen tomorrow president trump also weighed in on twitter last night.

he tweeted that the republican house members are working hard and late to give you tax cuts they know you deserve. they'll be the biggest ever, and we'll have more coming up from wash wash. joining us now budget committee chair diane black. she also serves on the house weighs and means committee i saw the president tweeted a shout-out to you, when was that, last week? >> yes >> gem black yes. can you add to what i just said in terms of what's really happening behind the scenes here should we see this as ae harbinger of negative things to come, or is it just kind of the -- when sausage is made, there are some things that you maybe don't want to see? is it going to be tomorrow for shoor? >> yeah. let me add to that it will be tomorrow morning at 9:00 a.m we have already posted that. folks will understand that we still have just a few finishing touches to do, and any time you make a little bet of a change,

especially in does that is that large, it does take a number of actions, both with the writers of the bill and also the scoring mechanism. we wanted to be sure we had this right when we approximate put it we've been working late into the evening. i know the staff members work all night long this is going to be ready tomorrow >> we have a lot of people on your side of the aisle that sort of maybe not on camera, but there is some trepidation about whether there is the resolve on some of the very difficult issues that hold the line, and they talk about how there has to be some real pane felt across the board, whether it's -- whether i the mortgage industry or the mutual fund industry or, you know, republicans in blue states that have the big, you know, all the spending that they get to deduct essentially. >> yeah. >> are you optimistic people know what they're in for here

when -- they say that you have the dessert front-end loaded it tastes gooed to get these tax cuts, but you haven't eaten any of your vegetables yet, and it might be brussel sprouts or worse. >> well, i am optimistic because i know having worked on this for the last seven years since i have been here in congress that this is something that we needed to do. it's something that once everyone sees all of the parts and how they fit together, it's almost like a puzzle if you are only seeing the elkz or you are only seeing one piece of it, you can't see the full picture. now, when we put this out and you'll be able to see it, of course, there are going to be winners and losers there are going to be some pleases where people say i really like that, but when they really understand how you put all that together, it will be something that most people -- >> give us one detail. what about state and local deductions how are you going to satisfy people in new york and new jersey that are republicans? is there going to be, you know, some modification to that, or is it just you're not allowed to do

it some property tax adjustment what's it going to be? >> we are working hard to make sure we can help those in new york and new jersey, california, and those places where they have very high taxes, and, by the way, these are for the most part places where you have democrat governor that is keep raising these taxes. it's unfair to the rest of the country. where our taxes particularly in tennessee are low, but we're subsidyizing places leak new york and california where they have their governors continuing to raise their taxes and then just write it off because they can write it off in the federal government then is responsible rather than those that are governing the states with wanting beg government it is something that we have to gets our members comfortable with >> chairman, how confident are you that you'll be able to garner the support of the freedom caucus >> oh, i think -- i think you're going to see that we're going to

have good support, whether this does come to the floor of course, we'll put it out tomorrow we have a week worth of what we call mark-up where we come before the committee and discussion, and then the following week we will have a vote on it, and i'm confident that we're going to pass this tax reform because it is good for the american people. >> and tim, you were critical of the senate recently in terms of how active they've been. are you confident that both houses will get together quickly once this is published >> well, i really hope that the senate continues to do they are work, and when they put their product out, that weave been talking to them that it will mirror what we have. of course, there will be differences, and we'll go to conference i want them to just do their work give us a product so we can move forward. that's the important thing even if we don't match exactly, that's what conference committees are for so we can get together, get the product to its final stamp so we can give relief. especially to the middle income people here in the country and

give them relief, and let them see the economy grow wages will go up and more jobs we'll see what's happening -- in the market right now i think it's responsibilitying to what we're doing. >> chairman, it gets a little disconcerting i think to someone after seven years, oh, maybe we'll phase this in over five years, the corporate tax rate, or, you know, maybe we'll add a higher bracket or maybe we'll we'll go to 42, maybe 44 you're at 39.6 the republicans foldle on getting rid of the obama care because they thought, you know, that would satisfy democrats they wouldn't say it's, you know, that you are helping rich people anymore it didn't. they'll always say it's a -- teal find a reason to say it's helping the rich are you considering a higher tax bracket, which would put most people over 50% when -- in that brackets in most states? does that seem reasonable when we read that there's going to be another bracket added?

is that the way to do it >> yeah. i think when this comes out tomorrow, and i can't give those details because i want to be careful and honor the committee. >> do you know tell me. oh, come on. whisper. >> it's kind of like christmas you know the anticipation to pull the ribbon and get the paper off of the box. >> it could be a lump of coal. christmas i want a gift. i don't want the lump of coal. >> we're going to give the american people a gift we're going to give the american people a gift because you're going to see that where we focused this on the middle income and making sure they have tax relief, but yet, across the line you're going to see that every one of the tax brackets are going to have areas where they're going to be happy about what we did. >> will the gift be executed upon by christmas? >> that's another thing. >> tomorrow you're going to see our product at 9:00 a.m. >> christmas 2017. >> just to be clear. >> thank you we appreciate your time.

hopefully you come back. we're going to 23450-- i was log forward to it today. >> you're going to have it tomorrow it's kind of like christmas eve and the anticipation >> cross your heart? >> cross my heart. 9:00 a.m >> thank you >> thank you zblienks a few other stories to tell you about this morning. the nation's -- are set to report their october sales edmonds expected industry sales to fall. ford and toyota are expected to buck that trend, however, by posting sales gains. adp is set to issue its widely watched report on private sector employment at 8:15 a.m. eastern time consensus forecasts call for 190,000 new private sector jobs during the month compared to 135,000 in september u.s. gasoline demand hit a record high in august according to new figures from a department of energy. however, these numbers are likely to decline for subsequent months due in part to the series of hurricanes that hit the u.s >> you haven't been here in a

while. i see you in the morning, and, i mean, you strike quite a good pose i mean, i will say that. your hair seems like -- have you changed barbers? is it shorter >> i haven't changed it might be a little bit shorter. >> it's different, isn't it? >> it's tighter. >> have you noticed that >> it's tighter. i have noticed also. >> i just wondered whether there's any -- what was the thinking behind it >> my accent my appearance. never my content does he talk. other than it nows him >> so you're not going to -- let's go to break, and then you tell me what your thinking was, okay >> of the hair >> it's great. >> the jobs report focuses this week we'll find out what investors should be watching for in the markets next tom fanning will be here to discuss -- shhhhh. those quarterly results and how hurricanes impacted results. 8:00 a.m. eastern time -- i'm

talking. hello. treasury secretary jack lu is our special guest. he joins us to talk taxes and more you're watching "squawk box" on cnbc ah, dinner.

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zbliefrmt we have a big week ahead. >> well, i know there's a lot of people out there waiting for a correction you know, it's constantly talked about, whether it's 5%, 10%. we haven't had that in a long time you know, it's emblematic of -- we all talk about geopolitical risk and what's going on in washington and whether or not we get the tax cut. there's an engine called the profit cycle that continues to gather momentum. the middle class in asia is spending like they've never spent before europe is going to grow above 2% the u.s. is going to get close to 3%. merging markets are out of recessions and bear markets. you know, these new highs are being used as an excuse on

valuation. valuation is at 19 times, and if we fast forward two more months, we get to 17 times the calendar is in your favor. at the end of the day there are still trillions much dollars in the world earning close to 0%. the areas of the market that are healthy are the equity side of the equation what's not healthy, though, is european high yield. look at the areas that people should be concerned about. it's european high yield, which is below the ten-year treasury right now. >> that's massively extended and there's still fundamental risk there hidern by ecbs >> no question the supply is dropping the demand is there. they have to biuy assets, and it's filtering into the credit spectrum those are areas that are very, very limited in terms of their impact if something were to go wrong there. at the end of the day when someone talks about valuation, that's the valuation i would be worried about. >> brad, what, if anything, could the fed do to derail what's going no the markets? i ask because obviously we're expecting a fed decision in which we're not really expecting

much >> can't really reverse direction that quickly overnight. remember, he has to -- he or she has to bring along an entire committee tloes in the near term i don't see them getting more aggressive than the three hikes next year. >> do you see that the same? do you think that the fed -- in terms of the market action, is the fed the biggest risk that's the area that causes more impact the fed is -- they're well entrenched here. you don't hit 1.7, 1.8% and not

even close to their target yet, they have the window open reason because of where asset prices are, but not where price pressures are. >> could we see a speak in yields that the markets are not prepared for given the hike in december, plus that. >> i don't think the markets are prepared for anything on the yield side that spikes very aggressively and sharply what they're prepared for is still this gradual movement or drawing higher on rates. to your point, melissa, i think the markets would have a small correction if the yields would sharply increase like that, and that would be the reset that everyone is looking for in my opinion. >> are you encouraged we haven't had a correction based on the rate hikes that weave alrea've had? >> it has been encouraging you have to think back, though, to the october 2015 meeting when the fed was saying we're going to hike at the next meeting. they were expecting to go about eight times by this point. they've gone much less than that you know, fed's expectations have come down to the market

at some point is the market going to have to come up to the fed expectation because right now we're only pricing two hikes between now and end the end of next year where are the fed is saying we're going to do four, and if john taylor was in, maybe do five. >> the fed has been coming to the market, and the -- at some point is the market going to have to come up to the fed and what are the consequences? to chris's point, there's $8 trillion of debt in the world. that's trading with a negative interest rate. negative handle on it. the ecb unwind it's fairly well known at this point. i think people have a sense of where that is. you know, the market is not pricing them to a rate rise until late in 2019 at best. the boj is kind of the last shoe

>> coming up, dodgers forcing a game seven then tom fanning, southern company's ceo, discusses the latest quarter and energy policy "squawk box" will be right back. check out this new duckchat from aflac! the duck is answering my benefits enrollment questions in real time, without any confusing mumbo jumbo. thanks duck! yeah honey, i'm sure that's the duck. in fact, he's probably working overtime, just wing-typing away about premiums and deductibles. the duck is working 24/7 to help answer all your benefits questions. aflac duck chat. let's chat in messenger.

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zbliefrmt the world series is headed game seven. the los angeles dodgers beat the houston astros in l.a. last night in the best soccer game ever it was like a soccer game score 3-1. that's happened once in soccer, i think, where they actually -- there were four scores anyway, this is trying to keep the dodgers hopes alive. . >> i think it was when honduras beat the usa >> oh. the series now comes down to tonight's game in los angeles. the first pitch is at 8:20 eastern. you recall the night before was, like, 13-12 or 12-11 that's a game. that's a game, right where it's -- >> arbitrarily they just want

lots of points >> no, no, no. >> a test cricket match, you get, like, 500 per side. >> i set up the false scrum. you can't do it back to me >> 500 in the cricket match. >> really? >> yeah. >> i like that >> fascinating coming up, southern company's ceo tom fanning talks quarterly results, the president's tax plan and much more as we head to break, take a look at u.s. equity futures stay tunedds what people really invest in, is what they hope to get out of life. but helping them get there takes a pure focus. because when you invest their money without distraction, hidden agenda or competing interests, something wonderful can happen. they might just get what they want out of life, and maybe even more.

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i paused it. bam, family time. so how is everyone? find your awesome with xfinity xfi and change the way you wifi. >> good morning. welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square among the stories front and center, mortgage applications fell 2.6% last week according to new figures from the mortgage bankers association. both new purchase applications and refinancing activity fell during the quarter the average 30-year mortgage rate rose four basis points during the week to 4.22% that's the highest in three months we've heard numerous

companies cite the negative impacts of the hurricanes. that's not the case of maker and home and commercial generators they're up 5 cents above estimates. revenue beating foerkss. generac said the hurricanes helped accelerate the pace of sales. hensarling said he will not seek re-election. he was first elected to congress in 2002. >> his career actually before that in politics, i would say. i don't know the background behind the scenes on this. >> why >> he wasn't -- he wasn't facing -- was he >> i'm not sure. >> all right >> southern company, one of the nation's largest utilities reporting quarterly earnings this morning joining us now tom fanning, chafrm, president, and ceo of southern company and chairman of the atlanta fed. obviously, rafael, bob bostic,

the president has been on with you, and i said earlier i don't know why i gave you more -- although maybe a charm, that's okay i mean, you kind of like -- you're not really his boss, though, are you, tom not really i think he is your boss. >> let me tell you something, rafael bostic is -- >> he is good. >> he is doing a great job >> he hasn't been there that long >> that's right. that's right >> one of the great things -- one of the great things about him is he is one of these guys he is not just an economist. he makes this bridge between kind of policy and people. >> as far as what you want to talk about today, obviously the fed is meeting, and i always reference the atlanta fed, and i guess we can combine your -- you know, both of the things that you do the ceo of southern company and the fed. right now weave got back to back 3% we had that for gdp, but we had

that in 2014 do you get -- do you feel like we've moved up from 2 or 2.25 as a basal rate for gdp do you think we're in a higher gear now do you think as others have said on the show, we immediately go back to average 2.25 again >> look, i'm one of these guys i say we should be better than 3 >> are we, though? >> there's a lot going on. there's a lot going on right now. the economy still looks sloppy to me. >> a lot of the -- when i think about inflation, it's persistently low >> when you look at those kinds, how do people feel statistics, those look good. i'll bet you a lot of that is predicated on the belief that there's going to be taxes.

if there's tax refofrm, i think this economy has a chance to really do well >> how are your zsh you say your numbers were in line with expectations better >> southern company's numbers? >> yes >> oh, yeah. look, on an x item basis, we're 1.12 for the quarter, which these are estimates and it beats our consensus. we've done really well we had an exceedingly mild weather for the whole year rail. for the quarter it was 10 cents, and what we've done is been able to make that up on really kind of expense management. not just cutting costs modernizing the company. actually, improving efficiency reliability and customer service through investments largely in technology >> so how will this latest sort of uptrend in crude -- how will that affect the results? does the whole energy complex,

your margins, i mean, do you do better when you make more money -- when you charge more for something? >> southern company specifically is reasonably indifferent to fuel prices. in other words -- >> to oil. >> we have fuel clauses throughout our system where we pass those through at cost, so we don't make money up or down the resurgence in crude, though, has had an affect in primary metals people are creating more pipelines, et cetera the prices are stable for a longer period of time. primary metals is up largely in the pipeline >> you saw they delayed the tax bill again or not delayed it, but it was supposed to be wednesday maybe not a big deal do you think that it sort of indicates that after six or seven years they still don't have a final blueprint for exactly what they want to do >> you know what, joe, listen, i have been bullish on the prospects for tax reform you know, i always make the joke

that there's enough chemicals in the sea here on both sides for something to crawl up on the beach. you know, i believe something will happen. you know, in working with the really fine leaders that we have, i would say kevin mccarthy, kevin brady, they are poised and ready to move with some dispatch, and i think there is enough support to get something not oonl you have in the house, but in the senate >> just going back to your numbers just real quickly, some analysts are talking about you feel as far as the financial flexibility for southern company, one analyst is worried about the high leverage from the debt to capitalization ratio, which is you have made a ra lot of investments obviously is that a lot of concern for the stroo et just with your company itself >> no. in fact, we've demonstrated our ability to raise equity on terrific terms for a long period of time. you know, our ability to deploy capital is really a sign of

strength in other words, we've had a terrific growth track record in our competitive generation business you know, we've been among the largest owners of solar in america. we've made an acquisition last year that i think is just brilliant in terms of moving into gas infrastructure. that was ago resources now southern company gas wei we added a 50% interest in tinder morgan. southern natural gas pipeline. you know, all those have been a good thing when you think about how the generation portfolio of america is moving, we are playing well and continuing to be the only company now to hopefully develop new nuclear. we've made big investments in natural gas infrastructure we're one of the biggest participants in renewables when you think about our ability and, frankry, our optionality to move in that directions, i think it's a driving story for southern one last point, because technology is enabling it. because customers are requiring

it we are seeing a century's old model of making, moving, and selling energy to a meter to jumping over the meter now we're locating that on customer premises through a subsidiary we have called power secure, and we're making lots of inroads and potentially creating a new business model for the future essentially creative destruction of a century's old business model. >> do you know bezos have you begged him to come to atlanta? atlanta is a pretty good -- i think they should be in the top running, don't you think and look at georgia football right now too. >> well, yeah. wait a minute. atlanta is a terrific place. i understand, you know, if you look at the las vegas betting odds, we're pretty well positioned with respect to georgia, joe, you got to know we certainly celebrate their rise to the top, but come the first saturday after thanksgiving, the fighting yellow jackets and georgia tech may take them down, baby

>> wow you are -- now i question everything that you said up to this -- that's just -- yeah. okay all right. that's your -- >> there's always hope >> one man's opinion >> a lot of football to be played still zroo there is, but that was something. notre dame, that's one point or else notre dame would be -- >> i know. yeah, yeah i thought the rankings that came out last night were really pretty good. >> i bet you did >> made sense. >> thank you we have a trump tweet. you should listen to this, tom this is in the president's own words as it always is. "the terrorist came into our country through what is called the diversity visa lottery program. he goes on to say, a chuck schumer beauty he says he wants -- the president wants merit-based entrance yeah, the diversity -- >> is this new >> what? >> the -- >> no. i saw it earlier and looked at the actual program

there are an interesting program. to some extent it just so happens that the perpetrator of yesterday's attack -- >> came in through there still to come, facebook ready to report quarterly results after the bell today mobile appetizing will be in focus. investors, among other issues. a closer look at what you need to be watching when those numbers come out, coming up. and jack lew is our special guest. squa"squawk box" will be right .

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>> it is a busy day at facebook. the company reports earnings after the bell julia borstein joins us now. pretty heated testimony on capitol hill yesterday, julia. >> yes despite all of that testimony, facebook and its stock and its ad sales have been teflon. the stock is up dramatically over the past 12 months. over 40% despite the barrage of negative headlines from a number of mismeasurement issues to the latest on its role on russian manipulation of the election over 90% of analysts have a buy or overrate rating on the stock. the consistent track record of beating expectations, the bar

for earnings which are reported this afternoon is high analysts expect facebook to grow earnings 17.5% to $1.28 per share, while revenue is projected to grow more than 40% to over $9.8 billion analysts are watching to see how much instagram and video ads can drive growth we'll also be watching to see how much cost will be pushed higher as the company expands its employee base. it's also hiring thousands of employees to block offensive, manipulative ads and content we will also be listening carefully on the earnings call for any commentary on the impact of this scandal over russian purchased ads and what the company expects from proposed regulation that's in the works back over to you >> thank you very much for that preview. for more on facebook, we're joined by rob sanderson, senior internet analyst at mkm partners in terms of the earnings themselves, is there much to extrapolate from those blow-out

tech earnings we got from facebook, or is it a slightly different kettle of fish >> it's a little different kettle of fish except for the google. the google results can point to a very healthy environment for internet advertising, and facebook is not, you know, exactly the same, but definitely draws from the same pool unlike the tech earnings we saw at microsoft or amazon, for instance, but the google results should be encouraging for facebook >> to what extent are we going to start to see a lot of pressure on facebook's margin based on investing more and more in their own content, particularly video content, in a way that we've seen pressure on netflix's margin, for example? >> yeah. i think there's a lot of speculation and question as to the -- i guess the vigor at which they will invest in premium content. if you look at the sell side expectations now, the expectations for an incremental 6.5 billion dollars in spending next year, a lot of that i think is on the presumption that they will be aggressive in the premium video space. i think that's yet to be determined

i think the company is definitely hiring, you know, executives down in los angeles they're putting some money behind a video push, but just to the extent to which that's going to go beyond an experiment and end up spending billions of dollars per year on premium content i think is still to be determined it is in the forecast. i think that's sort of one direction in terms of risk exposure i think it can be better than, ie, less margin diluted than reflected in consensus >> the stock didn't flinch yesterday based on some of the legislative hearings what's your view on what the possible fall-out of these hearings could be? will we see serious laws and regulation go up against these internet companies, including facebook >> it remains to be seen i think it's doubtful that we'll see serious regulation to curtail, you know, the potential for bad actors i think on the flip side of this it highlights the power of the platform in many ways. you know, these big social media platforms do have a lot of influence. there will be bad actors and

good players whenever there's a groundbreaking technology. i think the company is doing the right thing to address the issues head on and take steps proactively to curtail the influence of the bad actors. i do not expect there will be a heavy regulatory add, at least at this jurng tour >> i want to get your take on messenger and what the impact could be on the second quarter call they did say they weren't expecting monotization for the medium term or so. what are your expectations as to when this will contribute? >> that's a great question i think the multiple of the stock, i think, has a lot of potential up side once the messaging pathway looks a lot more clear and they start demonstrating that there's a large opportunity beyond just it is use case, but monotization case, i don't think that's a near term event. i think they're going to be slow and methodical in opening this opportunity, but once it gets moving, you know, both of these platforms, facebook, messenger, says and what's app, are two of the world's largest messeninging

platforms and we've had great success in asia in terms of monotization that's a future story, but not one that we hear a lot about it could change opinions in the near term. >> overall, you're a little behind consensus on top line growth the main reason for that >> just modelling. i don't think that there's a message to be extrapolated from our ten basis points lower in top line growth. i think they will deliver up side to both my number and the consensus number tonight i think this quarter is very important for the stock. the up side that they reported in q1 and q2 was -- really didn't change people's concern about the rate of deceleration coming the cfo has been warning for the last four quarters that when they stop growing their add loads, ie, june, you would see a deceleration in growth that's reflected in the consensus numbers. there's 1,800 numbers in the next six quarters. i think an up side result this quarter potentially changes the consensu

deceleration, and that could lead to a lot of earnings up side a big revision that's what we're looking for coming out of the results tonight? >> rob, thanks for joining us. much appreciated facebook will report lighter today. >> coming up next, stocks to watch. then at the top of the hour, we welcome former treasury secretary jack lew we're going to talk tax reform, the economy, and who he thinks should be the next leader of the fed. plus, the latestdetails on the terror attack in new york city a live report straight ahead be right back. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss when you have the right financial advisor, life can be brilliant. ameriprise

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next fed chair in this day and age is that appointment one of the most powerful appointments a president gets to make >> i think the fed chair is always enormously important appointment. the fed is one of the most powerful institutions that we have, and the chair is the most powerful individual in it. i had the privilege of working with outstanding chairs from both parties who were -- took a long view and managed monetary policy i think quite well i hope that this decision will reflect those virtues that you need in a fed chair. >> i know you have seen some of the numbers coming in. not necessarily to your great

chagrin, but you know that the dow is up 26% since trump was elected. you saw consumer confidence at the highest level in 17 years. you're seeing a lot of maybe business investment. you saw it back to back gdp quarters of 3% what do you attribute the two quarters of 3% because we seem to be stuck around 2% in the previous administration. will it continue, and what do you attribute it to? >> you know, joe, i think we left the economy in pretty strong shape the benefit of the strong economy we left is putting us in a place if we don't make mistakes, the economy will continue to grow i actually think the steady state will continue to be positive unless we -- >> we moved in from the 2 to 2.25 are we now 2.70 to 3 >> i always try to be an optimist when i was in office. i still try to be an optimist. i think potential gdp is north of 2, but it's not 3

>> do you attribute that to how you left it, or will it be something -- >> we saw borders that hit very good numbers, and actually, we had orders better than the quarter we first saw >> you expect it to go back down >> we've seen over the last five, ten years the trend of quarters being very uneven >> right >> we got to be careful not to take a short, narrow view. you got to take the long view. >> let's say we get two more quarters >> i hope that we can achieve, you know, a higher gdp growth. it is very hard for an economy to consistently grow beyond its potential unless you see the population growing and productivity increasing. we have demographic issues that are just a constraint that anyone will face right now, and i think denying that could lead you to make some big mistakes. >> let's say that tax reform, as they're saying they're going to do it, and let's say we do move to 3% and we stay above 3% will you then say that was due to trump and the tax cuts, or

will it then you'll go back to saying we left it in pretty good shape and we're just going to do it on its own? >> i think it would be an enormous mistake to have a tax cut that we can't afford based on numbers that are unreliable on the hope that we get where you're going if we get to the point where the economy is growing faster, i would cheer for a stronger growing economy. you have to let experts like the joint tax committee and the economist and treasury do honest numbers. you cannot base a tax cut on numbers you make up. if you do, you're going to end up with a deficit that just straps the next generation to a wake that they can't get rid of. >> you think $1.5 trillion is -- >> it's huge i don't believe -- their appear tut is $5 trillion to $6 trillion do we see gains being played so it's a 1 or 1.5 or $2 trillion or $3 trillion hold. these are enormous numbers when we were looking at proposals for folks like dan camp, the question was can they spend hundreds of millions of dollars? this is many times over that

>> if the tax plan passes, as you understand it, as we understand it to be right now and granted, that's fluid, in your view, will that harm the economy? will it derail the economy from clinching the two quarters, 3% that joe is hoping for >> i think you get a sugar high from a tax cut you might see some quick, you know, benefit of macroeconomic stimulus at a time when we don't need it. the economy is at full employment potentially it could lead to inflation if it goes on. i think in the long run if we end up seeing our debt to gdp go from the mid 70s to 100% in a rapid period of time, that will have a very bad affect on the long-term environment for interest rates and the stability of our economy >> what wolf mentioned about that going up for the eight years, at total $10 trillion of debt

we pulled back some later on we had two wars that we were paying for without raising taxes. we had a financial crisis that threw the economy into recession. economic spending went up. what we did -- i'm proud of this -- is we stabilized the deficit in the neighborhood of 3% of gdp. we stabilized debt in the mid 70s. we now have a period of time to look at the future and say how do we make sure we're in a good place ten years from now this tax cut could make that almost impossible. >> you think the stock market is just a sugar high as well? larry summers, a year ago, told me, you know, unequivocally in the early stages that this is a sugar high it was a big day of reckoning coming now we're at 26%

>> you know, i have always resisted predicting where the market is going to go because it's not always -- day to day decisions are not necessarily driven by long-term fundamentals you know, do i think that we're going to see a correction at some point we always see a pattern of, you know, growth and then corrections. what i worry about is taking an economy that's very stable and kind of putting it into a place where you could see it collapse, and that's the kind of edhayoconomic policy tt u ne to worry about. markets are going to go up and down >> mr. secretary, thank you. >> thank you

>> we can see that there's a hurricane rebound. up 45,000. up 39,000. manufacturing, though, also doing quite well up 22,000 with a decline in trade and transport down by 50,000 maybe that was also hurricane-related. guys, if i take the two averages and i average in the past two months of adp, i would get 170,000. if i average in the estimate of the bls report, i get 140,000. not a lot of difference between the two when you take the two months together. adp lost less than in the hurricane month than the bls did. maybe, like, three months, guys, before we figure out exactly the right level or the right strength of the job market here.

>> in terms of what this tells us about what friday jobs -- friday jobs reports could say, what would that be >> it will be a big number there's a conceptual difference between adp and bls. adp counsels people on payrolls. bls counts people that are on payrolls and get paid during the week bls will be much more volatile than adp adp didn't follow as much last month. the increase in bls will be greater this month steve did the right thing when he took the average, and the average is 170,000, and in my view that's unrelying job growth >> what kind of economy does that correlate to? >> that's a good one the labor force is growing 80,000, 90,000 at 170,000 unemployment, which is just over 4%, continues to decline. we're going to go sub-4% i'm pretty confident about that. last time we were there was in the late 1990s

i've been a professional economist for 30 years the best labor market we ever experienced was late 1990s right from the tech boom bubble. this is going to rival that. there's -- there's no bubble today. this is fundamentally very strong >> yeah. steve, you're in d.c. presumably for the fed. will this change, do you think, anything in terms of what the fed could say about the prospects for december >> it sort of confound the fed's conundr conundrum, which it has for a while. mark laid out that number, and we've reported this quite a bit. the average fed thinks the steady state job growth is 80,000 as we continue to post the 170,000, nobody begrudges that that's a good thing that we're employing americans. the idea is the unemployment rate keeps coming down, and at some point the fed is going to step up and say, you know what, this is too much we're really worried about that. again, we haven't necessarily seen it in ways. a little pop the other day in

the employment cost index, the eci, running 2.5, 2.6. it's not exactly all that hot. >> i punish bash back on that. >> if you go back, say, two, three years ago, it was 1.5 to 2. eci is a really good one, but there are other ones 1.5 to 2 now we're two and a half to three, and we're accelerating. on a real basis, you know, after -- >> are we going to get a pop tomorrow normal productivity the idea of a differential between eci and productivity is not really that much we've got 1.35 to 2 is fine if you're not growing productivity, but if you are growing productivity, workers should be getting more, and maybe they are now. >> i think we're going to get over three i think we're seeing a steady acceleration in wage growth consistent with the tightening in the labor market, and we're going to see more of it. if we go sub-4%, we're going to be over 3% by the time next year -- i think it's already happening. >> the real question i was getting to, mark, and i love your comment on this, is this notion that paul macaulay wrote

a column in "the times" that the only way to get wages up is to let the economy run hot. there's back wages that people ought to have gotten and are not going to get it, and the question becomes will the new fed chair, if it's the same as the old chair or new fed chair, let the economy run hot to let rate wages rip for a little bit. >> i would say we're letting it run hot. we're at 4.2 even if you consider underemployment, we're beyond full employment, at the current rate of job growth, we're going sub-4. by the way, you know, markets aren't discounting this. if you are going to look at futures markets, they do not -- they're not discounting any of what the fed is going to have to do over the next year. the fed is going to have to normalize policy >> you are saying more than three rate hikes that's what's priced in right now? >> markets are saying december, and then maybe, you know, one next year, maybe two, where the fed is saying december, and three next year. that's a big gap it's even bigger when you go out to 2019. the markets say one more at 2019 the fed says three that's a very significant gap. it's got to close.

>> so you are saying the market has not even priced in the 75 basis points for next year >> no, no. in fact, that's the biggest threat to markets. the equity market, the credit spreads, everything. you know, markets have been more right than the fed up until this year 2017 the fed has been more right. i think the markets are is manying it >> thanks. steve, see you later >> steve, what are you doing down there >> got the fed meeting there was supposed to be a tax bill today, joe. there's also maybe going to be an announcement of a fed official tomorrow. >> tomorrow. >> there were reasons to be here you know >> oh, okay. nothing -- you don't have any specific lined up today, or you do >> i have the fed meeting. >> all right >> you mean like a meeting with somebody yeah, i'll meet with a few people >> some guy at the deli or something, ordering a sandwich >> wherever we get our economic information, joe you know that. we take it any place we can get it taxi drivers deli owners.

they're all small business owners >> i can't miss you. that can't be the only reason i'm asking why you're not here >> play the violins to break >> coming up, bitcoin smashing through 6,600 earlier this morning. i think it's $184 billion -- >> crypto currency >> that scares me. good for halloween, though the big iv sait eadrertrghahd. it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish. in clinical trials, prevagen has been shown to improve short-term memory. prevagen. the name to remember.

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welcome back to "squawk box. bitcoin hitting another all-time high now, yesterday the cme said it would launch bitcoin futures before the end of the year that led to speculation that the cme stamp of approval could lead it a growing list for request for bitcoin ets, which would mean an influx of investment into bitcoin the s.e.c. has rejected a highly publicized etf request from the winklevoss twins citing lack of infrastructure regulation to prevent manipulation terry duffy talked about uses for bitcoin both above board and illicit. >> i'm not quite sure, i do know one thing for sure that we are going to list the product under our rules and if it doesn't work, we have the ability to eliminate it

we're not going to be part of what some of the people that talked about that this product was being used for that's not what we're going down >> that record high, by the way, took bitcoin above $6,500 earlier this morning it is now up, the crypto currency, up to 500% year-to-date the value of all crypto currencies, $184 billion, which is a record. >> it's a lot more than it was >> this is a vote of confidence getting a company like cme to start to use it. it's still a million miles away from the crucial criticism that the likes of jamie dimon has when it gets to a certain size, they'll shut it down it's still a positive development. you can't argue against that >> still to come on newsmaker of the morning. bill ackman here is here to sign

off on adp the activist investor locked in a bitter proxy battle with the company. we'll be speaking exclusively to him when we come bac alpa in the, driving specific sectors of out performance. where a rising middle class powers a booming auto industry. a leap into the digital era draws youthful populations to mobile banking and e-commerce. trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.

. >> good morning. welcome back to "squawk box" here on cnbc live from the max market site in times square. adp reports the u.s. economy 235,000 new private sector jobs. >> october u.s. sales numbers shortly. overall industry sales are expected to fall 3.5% from a year ago, though ford and toyota are seen as posting salsz increases. 20157 has been full of

activist disputes, but this is one of the biggest this year the proxy battle between per shing square and adp will be decided at the shareholder vote next week. bill ackman's hedge fund has a stake in the payroll company joining us now bill ackman, founder and ceo of portfolio manager at pershing square i'm glad we have a lot of time, bill, because it's very detailed, very nuanced i want to do all we can to generate as much information from you, but i worry that for some viewers it's going to be so arcaine that it gets difficult in the most recent letter, you have some problems the letter was embargoed until 8:00, and we have it now your main points here are -- is that adp has not been totally forthcoming and is actually at -- i don't know that -- i think they've taken a low road in certain nstances? >> i think it's pretty common. you saw this in p & g.

as you get closer to the vote, it gets more contentious i think the issue is very simple one, we think adp is not as efficient as it should be. the result is its narjins are half of paychex', for example. they compete with adp in 35% of its business if you apply that same 41% margin to the portion of adp's business, it would mean they make almost no money in the rest of their operation it's very unefficienunefficient. >> this whole -- you tried to get iss to come to your side they're saying that they rejected you, although you're saying iss -- >> iss reports me for the board. >> they don't -- >> haven't supported all three of our nominees, like the other -- >> you are saying at this point that adp totally misled iss in many different areas, and one of them in calculating, this is where i worry about, you know, how detailed to get, but the peo pass-through revenues are excluded that makes the margins that they've been able to do better

>> sure. >> is there a way to explain this that everybody can understand it? are they misleading? are the margins worse than what they're portending >> adp's productivity, a measure of how much revenue they generate per employee,is 28% lower than their competitor's on average, and adp is a vastly bigger company you expect a bigger company to be more efficient, have more productivity, and adp -- we've asked adp why, and they've been unwilling to answer. we've asked a series of public questions, and they've been unwilling to answer. they told iss, when you do the calculation, you shouldn't compare us to companies that are in the peo business, and you should look at us on a gross revenue basis. on that basis adp actually looks like they're reasonably comparable with competitors. the problem with adp, 28% of its revenues come from its peo pershing square has outsourced its hr why? because we're a small company. we've got 60 employees we can buy health insurance much

more cost effectively if we outsource our hr to a company that becomes what's called the co-employer of our employees, and then they can negotiate health insurance rates on our behalf we pay them, you know, a couple of hundred thousand dollars for health insurance, and they, in turn, remit that $200,000, whatever the number is, to the health insurer that counts as revenue under the accounting rules, but it's really not revenue because it's passed through the company directly out the door. when you measure the productivity of adp's employees, analysts exclude the pass-throughs and the calculation. in fact, adp itself, when it calculates margins, excludes those pass-throughs because it makes the margins look better by excludeing them, and we think that's the right way to look at the business when they talk to iss, they told iss, oh, you have to look at gross revenue basis, and the problem is when they compared adp with competitors that did not have peo's, it made the productivity -- the revenue productivity look better than it really is. we thought this was disingenuous

because publicly they don't make those arguments. unfortunately, iss accepted those arguments and didn't give us a chance to rebut them. that's partially why iss didn't support all three of our nominees they just supported me for the board. glass lewis, to their credit, understood the issue, did the proper adjustment and weren't misled a little disappointed here in iss. >> reading some of your comments, you know, i almost felt like it was gordon gecco talking about bureaucracy. in the peach he says there's over 200 vice presidents all making over $2 million a year. i don't even know what they're doing. your argument is that adp has layers of bureaucracy. it's insular, and they've never worked anywhere else, and it's been that way forever. >> there's a lot of truth to that i'm focused on the top the top 12 executives in the company have an average term for 20 years, and they haven't worked anywhere else if you think about adp's business, this was a payroll company. it was a processing company.

in the last ten years an industry has developed which people call human capital management it's sort of the managing your relationship with your employees. managing benefits, 401k plan, managing the recruiting process, managing the exiting process time and attendant software when you have employees at burger king, for example, and you want to track their employment at the company. that's become automated with new software, a lot of cloud-based companies like work day have built products and services to address that marketplace anyone late to that market didn't have the innovation internally to compete and bought up components of products from smaller start-up companies and kind of packaged them together in an offering that offering has not been competitive to the likes of companies like work day, and work day has taken huge market share from adp for their larger customers. we think that is, you know, a disappointing outcome for the business two prongs one, the company has become bureaucratic and inefficient, and, two, they've missed the boat on technology, and the big part of that is the -- the cto of adp is not a technologist

he was a business unit leader. he was promoted internally our understanding is that the company looked outside for candidates the kind of cto that you want at a business spending $860 million a year they have 9,000 people in their technology department. this is a major technology company, and the top person in the job is a business guy and not a technology guy >> would you not have expected them to lose market share to new, more innovative smaller companies anyway how much market share is acceptable >> so to give you an idea, adp's national account business used to be 30% of the revenues in the company. today it's down to 20% of the revenues of the company. in the last six or seven years, revenues have declined, and that's an industry that's growing rapidly. i think that's totally unacceptable, and the reason is these competitors with tiny resources are competing with a company with massive resources, and you see this -- you know, you look at businesses think about kodak, right kodak had such a dominant market position it was so profitable that they became complacent, and inswraiv

companies innovated with digital technology kodak ignored it they were complacent, and kodak died adp is not where kodak is today, but they're at risk if they don't innovate and compete, and they have a huge income bensy. they've had clients they've had for decades that they're losing to companies -- >> it's the best publicly traded branch paychex >> it's the only truly mature competitor the right way to benchmark paychex is just against adp's small and mid-market customers it's not fair to compare paychex against the entire adp what we've done is we've said there are companies that compete with adp in the small marketplace, companies that complete with midmarket, companies that compete internally we've taken -- there's no one that competes across the full spectrum one second the way they -- we've said, look, 35% of the revenues of their employee services -- paychex directly competes. they should earn similar margins to paychex

in the enterprise space, they have ultimate software, work day, and others. when you compare against the benchmarks, it becomes clear that the employee services shouldn't be 19% they should be more like 35% employee services is the vast majority of their business when that translates into the operating margins of the whole country, the margin should be 60% higher than where they are, and that is an unacceptable number >> it's fair to say that economies of scale should deliver better margins in a sector that's not being threatened by new technology technology has enabled disruption, and it's shown that it can take the bigger companies time to change direction perhaps replace workers with this new technology, and that was a later stage company under threat in that sense it has to deal with that in what sense does that apply here in what sense do you think they're allowed a bit of time to catch up and will it lead to firing workers in order to replace them with technology >> one of the things that happens in a proxy contest is

eventually the ceo comes out and starts to scare employees. if pershing square wins, thousands of jobs will be lost, and i think the best examples we give are so that's not the case, and there are no -- we would have no plans to fire loss of workers. if you take a look at paychex, paychex generated about the same revenue for employee of about 160,000 employee up until six or seven years ago, and they use technology very effectively, and their employee head count continued to grow but at a slower pace, and now paychex is generating $280,000 per employee this is a growing industry i not a dying steel business in the midwest. you think of that in the past where there have to be large scale layoffs because the business is declining. biggest risk to adp's employees are the competitive threats from companies like work day. if the company doesn't inyo inn, doesn't launch a competitive market, they're going to lose market share in that business. one of the examples we give, which is a powerful one, is when

you look at businesses that adp has sold, after they're no longer owned by ap, the businesses do much better. there's a company called cdk it's a public company. we spun off of adp three yoerz ago. it was what they called their dealer services business it was almost 20% of the revenues of the company. they spun it off to shareholders he this inc. chaed the name on the door the shareholders changed there was a new board put in place. the same management ran the company, and they've taken margins from 16% to 26% in three years on their way to 35 approxima35%. >> wouldn't you have a better chance if you owned all -- how much -- you've got 8.3%. adp points out if you had converted it, if it was all com, and you could vote over 8%, wouldn't that help in your proxy battle why haven't you? why is it all derivative >> we are one of the biggest shareholders of the company. we own 2%. that makes us the ninth largest shareholder of the company we're the third largest investor in the company in terms of capital that we've invested. we can't vote shares -- so we own some of our shares through

55 and 56 strike options with stock at 150 it's effectively a way for us to finance part of the decision we would have to put up another couple of hundred billion dollars and it would be disproportionately larger. we're relying on the vote of other shareholders to lead we're not going to win with 8% we're not going to force this through. we're going to win because we have the better ideas on how to fix this >> we're going to slip in a quick break. >> we'll have much more with bill ackman straight ahead when "squawk box" comes whereby stay tuned life happens.

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>> let's head back to our special guest, bill ackman, portfolio manager at pershing square portfolio manager the vote is november 7th you mentioned you're the ninth largest shareholder. have you had discussions with shareholders one through eight, and what's your sense of where that contest stands right now? >> yeah. we've, of course, i'm meeting with all the big shareholders. we're also doing our best to reach out to the retail shareholders here. they're at 28% of the stock. that's held by small individual investors, and they're going to play a very important role here. we did a first conference call ever for the individual investor we did it at 7:00 at night it's very, very important. >> does pershing square's own recent relative underperformance make it harder for you to convince those shareholders that you will deliver on the promises >> they're focused on is there a margin of adp. would adding a major shareholder

to the board increase the prolkt that thatopportunity is identified would adding two directors with significant operational experience to this board be helpful? two, has the company missed the market in terms of their national account or enterprise business i think widely throughout the shareholder base, people think there's a big margin opportunity, and actually sandra bernstein did a survey of investors. that's the best indicator we have, and more than 80% said one -- the pressure we're putting on the company is positive two, they believe there's a significant margin opportunity three, that the company would benefit by one or more of our directors. >> do you feel this battle is a crucial one for your long-term future i mean, there's 25% of u. m. exposed in adp and clearly, you promised better share price performance going forward, so do you feel you have to deliver on this one given 2015 and 2016 >> it's certainly important for us it's one of the largest investments we've made the stock is up about almost $20 a share.

what we like about it is high quality, safe, unlevered business, and we think the down side is limited, and we think the upside is substantial. >> was the money well spent in buying back some of the pershing square stock >> yes >> several people think that it's down, and -- >> there's some limitations on our ability to talk about this publicly traded entity, but buying back stock at a discount to the net asset value is lnl always a good thing to do. >> both adp and pershing square talk about plans to increase margins. i think both say that the other -- the plan is flawed or -- what is yoo you are problem with adp's plan? it's a three-year plan >> it's just not ambitious enough >> not ambitious enough? >> the company's plan is to take margins from 20% today to 21% or 22% in three years 100 to 200 basis points over the next three years we think margins can go from 20% to 32% by beginning of year

five a fairly steady march upward not dissimilar to what's been achieved at cdk. adp's first response to us to say if we didn't do our homework, we didn't know anything about the company they've heard from shareholders that our ideas are resonating. they're pivoting and starting to talk about a number of 5%. it's a fictitious number they haven't been willing to support it they don't show any evidence for it in their written materials, their guidance for shareholders is 100 to 200 basis points over three years. >> they're not showing any progress beyond the operational network with growth dwrsh. >> would there be -- i mean, you point out as you have in a lot of the situations there's real estate that they don't even need >> there's real estate everywhere this is a remarkable thing about the company that they operate at a ten million square feet.

that's the ekwifl i want of two world trade center towers. those locations are spread -- there are 130 of them around the country. again, it's a vestage of the company's history. if you thought about the old days, this was a payroll processing company you take your magnetic tape. your cfo would hop in the car, drive, it or the employee would drive it to a service bureau they would generate a check run. the checks would go back to corporate and, you know, use to be fun in the old days the guy would hand you your payment. they still have the 130 offices and necessity have 80 or 100 people operating out of it think how inefficient the business -- to run a business like that. the company like work day might have two or three offices where, it doesn't operate out of 130. it makes no sense. adp has a massive sales force and sales growth has been -- employee services -- last year was at 4%. they're projecting 2% to 3%. the convey they're trying to solve the problem is by adding more salespeople we're hearing from adp

salespeople. >> they do not have a competitive product, and you can have the best salesperson in the world, but if you are not a good product, you can't sell it >> at the salt hedge fund sell >> you give very humbling speech and said that you're poised for a comeback, effectively, it's been a humbling year, et cetera. are you on that comeback, do you feel >> sure. we had a very difficult two-year period of time but the last, you know, several months we've made meaningful progress off the bottom so we are well off the bottom, more than 20% off the bottom we have just turned positive for the year but we have a ways to go and i like our portfolio.

adp is an extremely attractive risk reward. we've been entirely right on our herbalife investment a big part of that is that there are a huge amount of shares outstanding. a big part of this is trying to cause a short squeeze. what we did was -- so i think people -- mr. icahn's thought was, what we did in the last few weeks, shorted our entire short position into a put position and as a result we can no longer -- there's no longer an opportunity to squeeze pershing square i looked at the portfolio. things have heard us, like herbalife. >> do you look at penny's share

price? >> ron johnson was a very smart, capable leader and had had a lot of very good ideas and, unfortunately, the company did not have patience for those ideas. it's sad what has happened to retail the headwind is so enormous. i get back to the adp. a company like macy's, so dominant, they have become an innovative company this is not what we want to have happen to the adp businesses. >> does that provide more opportunity for you? >> i think it's a biforcation of the market money is being managed passively so it's more important for the activists of the world to push corporations but the actors are not supportive of the major shareholders. >> quickly back to herbalife

before we go, how big is that position >> 3% of capital >> 3% of capital >> because it's in the form of derivatives, the upside is great and we don't have the risks associated with the short squeeze. >> bill ackerman, great to have you back on "squawk box. you got extended time here. >> i didn't know the address you moved. >> we're close don't be a stranger. thank you. when we return, jim cramer joins us from the stock exchange ♪

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let's get down to the new york stock exchange with jim le one question, where are you on adp ackman always presents a good case but i need to think about it a lot and come to my own decisions on things. >> certainly every company could be more streamlined but the problem is with adp, it's not that bad and i understand ackman wants to make it better. i think paychecks is doing a

better job with their automated data but in the end, i always thought that the activists should go after the bad companies that are undermanaged. this is a pretty good company that may not be as managed as well but it's not perfect. >> it's like when you go after honeywell, try out ge for size. >> exactly go in for general electric soonhatomee s go after that beast. holy cow >> see you in a couple of minutes. thanks t-mobile's unlimited now includes netflix on us.

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we have no time. >> no time >> anyway, thank you, melissa. make sure you join us tomorrow "squawk on the street" is next good wednesday morning i'm carl quintanilla futures are up on this first day of the month earnings from facebook and tesla tonight. auto sales on the hill again and we'll watch for developments at last night's terror attack in new york city. bonds are in focus we'll get ism in about a