we'll talk to larry fink after his company is made famous on jeopardy and the nba's biggest star and what he said that is sparking some backlash on twitter tuesday, october 15. "squawk box" begins right now. >> announcer: live from new york where business never sleeps, this is "squawk box. >> good morning. welcome to "squawk box" here on cnbc we are live from the nasdaq marketsite on times square you'll see things are indicated up open today. we saw slides on the concerns of additional negotiations ahead of the deal coming through with china. dow futures up

this comes after a decline of about 29 points. s&p indicated up by 12.5 you want to take a look at what's happening in the presidentry market yields look like they are a little weaker. >> dow component is reporting. company is reporting a quarterly profit $3.88 a share increasing the full year out look we have a nice gain in the stock there. this is a dow component. that's the headline. it is going to help the dow. that is one of the reasons 3.5 points adding nicely we wouldn't be up without united

health a lot of different view points on how they'll fare. depending what happens they have been weak. won't mention any names. >> we have an update -- let's do black rock first we have a lot going on >> earnings coming in from black rock looks like they earned $7.15 better than they were expecting. revenue looks like they are about in line with expectations. couple other things, they say the long-term net flows. $52.2 billion. this is a company has has

$649.64 trillion >> this company's ceo will join us >> who is larry fink >> i was watching live it might have been a five-minute delay. they are not there that long if it's going to be jeopardy james. we don't want to get too attached just show me the numbers alex asks these questions. the first guy was wrong. blk, it was kind of funny. it was a $7 trillion in assets company, the first guy said who is h&r block >> considering what we pay in taxes, $7 trillion would be

small. they don't hold assets for long. >> were you excited screaming at screen >> he was sure it was black stone. >> in other news, an update on the wework saga. from sources i have spoken to, there is now a major fight going on about which way to lean in terms of the potential next step many are leaping towards a $5 million financing effort led by jp morgan rather than selling to the softbank announcing jp morgan would be the offer that would be taken.

>> i guess the point is that people internally would lose their stake. >> by default, if soft bank comes in, everybody else gets pushed out >> softbank already has 30%. it depends on who gets washed out where. >> if you take the jpm deal, there is high risk involved. how are they on the hook for that >> jp morgan is going to go out and market this. on the debt side potentially >> you are smiling with sort of

a cynical grin >> i think lean forward, that's taken. >> yes it is. >> do they still use that? i never understood. >> better than leaning back. >> got to lean in. >> separately, the guardian newspaper reported wework is expected to layoff about 13% new projects are getting put on hold they closed about 2,300 phone booths those are quiet, private spaces for people to make calls in these shared spaces. they are calling it

densifications >> thesehave formaldahide. >> how does that happen? >> i cannot tell you that. there are people who spend lots of time in those phone booths. >> really? superman actually, he doesn't spend a lot of time. he's going to be ob today. fed speaker will be on this morning. making a case for more rate cuts he said insurance rate cuts may help resenter inflation expectations sooner than otherwise. as we've come to expect, he adds

that a decision will be made on a meeting by meeting basis >> pimco cofounder says a new warning. out with the first investment out look since retiring in march. he said with trillions around the world, investors should hold stocks that promise secure pay outs he says bull markets and equities are run off the rates >> i thought the warning would be sign a prenup but that was not the story >> you just wonder how i think

you kind of laughed at that. there but for the grace of god, we all need to worry about these things this become very public. he was putting fish in the house where she was. >> it wasn't fish. it was dooty >> can we go back to his market calls. >> if you have negative interest rates, that seems like catalyst for pushing equities higher. he's had horrible calls on stock. he's never been right on stocks ever in recent years, his bond funds all underperformed

i guess we care about what he says >> i think the opposite. i get his point that it is real low rates that have driven bull markets but we are in uncharted territory. if you have to pay somebody to hold your money in bonds, i don't understand why that wouldn't continue. >> let's talk about lebron james. he had some choice words for houston rocket general manager asked about the nba's ongoing dispute. the star player said he believed morey was miss informed or not really educated on the situation. he was praised by those in china

and in the u.s. got some slack he tweeted i'm not discussing the substance, others can talk about that he continued, my team and this league just went through a very difficult week and people need to understand what a tweet can do to others i think nobody stopped to consider what could happen or would happen and could have waited a week to send it >> i think part of what he is saying is if he would have waited a week until they were out of the country, it would have been okay >> he got up and said, you want us to go out and talk about there and you haven't put out a statement. you shouldn't be asking us to speak on your behalf until you have a coordinated effort.

he's saying thank you for your response >> think about who was working for who? >> and the money involved. to apiece the ccp is pretty bad. >> that's right. in a world without money is a big thing. you would never do that. >> lebron is doing it. seth curry is doing it >> i know. i understand i do think the league could have orchestrated that better

then you've got to call out everybody. >> anyway, the nba is in a tough spot 550 million fans >> this is the world we live in. but if you are an american company, do you stand up and say america first. >> the wokest of the woke leagues suddenly got bit in their rear end by their wokeness >> but you are >> i said nobody should. >> there are people who have said to him, you know the quote, shut up and dribble. >> you could say shut up and act. >> shut up and read the

prompter >> thats what i'd say to you right now. you are very woke. read the prompter. >> they do have those phone booths at cnbc i'm told. >> with formaldahide i'll tell you later what they call them. >> we cannot tell each other to shut up. we are getting very direct >> we have new news out on walmart. courtney is here they want to deliver groceries directly to your fridge. we have details. >> announcer: and later, black rock larry fink will join us that interview is minutes away "squawk box" will be right back. obvious.

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♪ >> walmart rolling out new details of and in home delivery program. courtney has the latest. >> starting now for those in kansas city, pittsburgh and other areas will be launched today after the program was announced with penalties shoppers will need to buy a smart lock kit for $49.95.

you pay $19.95 a month it is a membership fee walmart employees with a year of service that are background checked and trained get a one-time code and have a camera attached it works via blue tooth. walmart is an investor in level home nor tech security makes the garage door. the program will roll out nationwide over time in december, you'll be able to leave walmart returns on the counter and walmart employees will do the rest >> i don't know.

>> the argument is, you give keys to the dog walker, cleaning people >> i know who those people are >> walmart says you get a little fact sheet about your delivery person >> there has to be a limit >> gosh, if i could get over that factor, wouldn't it be nice to have your groceries in your fridge >> it would be more difficult if i was home >> if you were home, why would you need to have somebody put your groceries away. >> i saw that fresh direct was being shopped around i was panicking, nobody can do it to the level they can

i was like, man, somebody else will buy this and mess this up they will deliver in a two-hour window >> the on line grocery business has picked up in the u.s some people don't want to pay for it >> what about air bnb, come on in get in my bed. or uber. a stranger, get in my car. >> amazon has an at home delivery >> i thought they should come up with a movie and have them be the suspect. >> okay. coming up, did you see jepardy >> i do watch but i haven't seen it in a week in a half jeopardy james is long gone.

>> the bar tender, he was fabulous >> check this out. >> the big statistic for $1,000. >> blk on the new york stock exchange has more than $6 trillion in asset management. more than any other firm >> what is h&r block >> no. >> what is black rock. >> i just love h&r block $6 trillion. and making his way to the set. larry pink joins us. you got it right we knew. ♪ from the start, the c-class was ahead of its time.

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>> welcome back. black rock out with quarterly results. larry fink is here good to see you. >> good morning. you came in with earnings better than expected. $7.15 versus $6.96 the street was looking for. what happened? >> the same consistent theme, clients are moving away from products to solutions. we raised $84 billion. more impressive is that over the last 12 months, we raised $350 billion. it was across the board from fixed income even in parts of active

equities that puts us around $46 billion over the last three years. our cash organization has crossed over $500 billion. across the board, we have been penetrating more clients i think it is showing up in so many ways. >> clients new to wall street or taking clients who used to be at other firms? >> i think we are winning the market share unquestionably. probably the most important thing is that clients are awarding more and more in the portfolio. it was announced we will be responsible for announcing $50

million for bravo bank that is just the solution to help them and working with and providing that policy. >> who was managing that for them before? >> all in-house. in other examples, they are looking to go from six managers to two what more organizations are finding out is having dozens of firms is not proving to have them receive higher alpha. more concentrated organizations who can do more for them >> it has been an uncertain time in the market. with the economic slow down, we are looking at markets that haven't really gone anywhere what do you think when you look

around >> this year to date and 12 months would be flat. what is going on in the market, emerging markets are down three. 6% is pretty significant we have central banks resuming the federal reserve is buying short-term instruments >> but it is they are buying more instruments. we have a supportive central bank regime worldwide. u.s. growth is at least 2% china is somewhere between 5.8 and 6.2. we have so much going on with

geopolitical issues, we lose sight that world is moving forward. it is not great but not as bad as we field. >> all of these negative interest rates around the globe, he thinks that is going to put a real limit to the upside there is too much other things happening. if you have negative interest rates and you are paying somebody to hold your place in bonds. that looks more attractive >> what i believe the problem is is the transmission of rates in europe and japan, they don't have a mortgage market most consumers there own their home if they own their home, they don't have a mortgage. you see the transmission that

translates to a lower mortgage rate in europe and japan, i'm struggling with the concept of negative rates because you don't see that consumer transmission in addition, you have the banks who are struggling with their net interest margin. they are not going to be out there lending and lending. i don't believe negative rates translates to more negative activity es spashl especially in europe and japan where 82% of banks are in a savings. they are not enjoying the low or negative interest rates. >> can you stay with us? >> i'd love to >> he's love to stick around >> we are going to talk about jeopardy

who is larry fink. >> that would have been a more difficult question >> when we come back, we have more with blackrock ceo larry fink >> announcer: later this hour, the official kick off to earnings season. citigroup, goldman sach and wells fargo all due before the opening llbe keep watching for up to the minute earnings news and market reaction for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy.

>> announcer: welcome back you are watching "squawk box" live from the nasdaq marketsite in times square. >> good morning, u.s. equity futures up this hour up about 72 points on the dow. nasdaq indicated up about 26 and the s&p up as well >> strong earnings already for blackrock. futures are down from where they were >> meantime, we want to get back to our very special guest. ceo of black ross rock, larry fink

we want to ask you about the ipo market the wework ipo that wasn't has the bell wrung on the ipo market >> it says something about the private growth valuations. i think that's the bigger issue. this is why i believe in the public market. it is harder to hide reality is shown every three months, that's why having exposure is the best outcome for all companies. >> firms like blackrock which historically vested solely in the public markets now some are getting access through your funds to private markets. >> true. >> how should they think about that especially with situations like

an uber. >> it's a wake-up call there was way too much money flooding in through private growth valuations. it is to be set. there was a mantra about growth at all costs i believe that is a bad culture. if you don't set a culture of building a company with long-term profitable having a culture of only growth at all costs produces a bad outcome. i think this reset in the private growth valuations, hopefully they'll be more about the real operating concern i think there will be a big reset on these valuations. >> what are you telling them

>> they need to be more thoughtful about what they are telling companies. are they real or just being sustained by private capital i think this dove tales into everything going on. these private companies are staying private longer they should try to respond to that this is why i've been repeating the whole mantra of transparency >> you don't think this is a sign of something larger in the economy? people say are we in 2000 or 2001 or is this '99? people look at this as economic indicators again, this is another negative. i don't think that will carry on

through the whole economy. it can be mod rated quickly through this process i do believe this is not something that will be systemic but it is a problem. >> you can make a point that it is cheap money >> we'll see >> this is the investment perhaps everyone is concerned about. if we can figure out where the other mal investments are. >> i agree the transmission of that produces bloated valuations. we saw that in the credit markets in 2007 and 2006 we saw that in the growth equity i don't believe for the size of our economy, that will be something terribly systemic.

>> when you have looked to historic vesting in election years, what do you think >> election year is next year. >> well we are pretty much there. >> unfortunately, yes. >> you look that capital expenditures often go down because companies are waiting to see what happens >> i think that has changed. cap ex has been mod rating other elements are transcending whether it is an election year i also believe the enthusiasm over the tax cut is transcending into something different a tax cut i have said on this show is a one-time event you have an 18% cut below of

line that is a one time thing there after that, if you want waging more. that is what has gone on reality sets in. should i spend more money on cap ex a lot of people believe you'll have more profitability but that is below the line. >> it sounded to me like you thought the market is not overvalued here and there are a lot things going on and the market is properly valued. >> the market is properly valued overall. the central bank is going to be highly accommodating for the year

what i'm worried about is 2021 and where the economy will be there after. the federal reserve, they have very little tools left they are continuing to use those tools. the ecb only has the tool of more qe. hopefully, our new eqb president christine lagarde starts core ersing and usi ersing >> are you a banker that has warren phobia? >> i haven't thought about -- >> who are you, steve kerr >> hasn't occurred to you? haven't thought about it have you heard of her?

>> not much. i haven't. you may question that. >> you really haven't thought about -- >> not yet >> your share holders would consider >> i promise i will. until we see who are the candidates and what they stand for after the primaries, i'll pay a lot more attention okay sorry you didn't like that answer >> we will not be watching the debates tonight. i'll be watching jepardy >> i'll be taking my wife out to dinner because i'm traveling starting tomorrow. >> okay. thank you. a whole slew of earnings coming your way jp morgan, citigroup, johnson and johnson all set to report in the next hour. don't miss our interview with

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>> we have earnings now from johnson&johnson. earning $2.12 per share for the third quarter. we'll walk through that release and bring you some of the new as we get it. a lot of questions about some of the lawsuits still outstanding we'll bring you some of those numbers in just a bit. >> like whack a mole >> some on the street as recently as last week who say they were outperformed because the worst skas scenario has been

priced in. you keep seeing more about the hundred thousand lawsuits. >> $8 million in punitive damages claiming that a boy on the drug got abnormal breast enlargement. >> the boy happened to have autism it was not labeled >> it is an anti-psychotic >> but punitive. >> i can understand. a boy with autism. the jury award on that a lot of thoses, those get struck down. you can understand a jury have being an emotional reaction.

>> which is one of the problems having a jury decided. we are expecting jp morgan with us mike santoli is here with us what are we expecting? >> some pressure on the interest market that will be weaker given more red in the year. we have the summer swun we go through. not the strongest performer this quarter. what we want to see is the super regional banks being more aggressive in deploying liquidity. we'll see a little more of the strength in the earnings season. >> we do there every quarter make this exciting for us.

>> excitement would be steady. the message is probably going to be, look, they have the remend -- tremendous window. the stock is high. there is not a lot of swing. historically, the stock does not trade well that is really just the short term give back usually after the numbers. >> between the banks, marty, where do you expect to see differentation >> which of the banks have been either able to start repricing sooner, restructured their assets or put on derivatives take regents bank, that will

start to show through. the other thing is credit quality. we have a credit quality costs y low through 2020. >> right. >> so if we can see that still happening. so the real excitement is the delta on these stocks is going to be credit if we don't see credit costs going up, that's where investors should be much more optimistic than they are right now. >> we're going to take a break >> what date will we have enough earnings to know -- >> date? >> this week next week? the week after >> i think bythe end of next week we're going know whether the earnings are set and whether there's a problem? >> yeah. the tone is set. the percentage of companies. >> the early numbers -- we've got two documents out this morning that both beat expectations. >> they're beating expectations that got hacked away.

>> johnson & johnson raised their guidance they're looking for 862 to 867 >> where was the street, do you know >> don't know. we can guess somewhere in that area all right. we're going to take a quick break and then we wille ck bba and marty will be here you're going to stay, too? >> yeah. >> all right of outperformance. 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. every day, our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.

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welcome back, everybody. we have a report from jpmorgan you're looking at a beat jpmorgan coming in with 2.68 street was looking for 2.45. managed revenue came in at $30.1 billion and that's compared to $28.4 billion that the street had been anticipating. beat on the bottom and the top that's three out of three. you guys are looking through the numbers. mike, you pointed out that fix came in better. >> it came in as an up side

beat a few hundred million dollars. the estimate was 3.1, 3.2 billion, it came in at 3.8 maybe that was the margin of beat the stock indicated up a little more than 1% in the wake of the other results. it seems like it affirms a relatively strong picture, just unclear whether the market's going to seize on that the markets kept them in the penalty box. whether it's true or not. >> right marty, what do you think >> fix was the area we thought would have a late quarter surge. as you're seeing that reinvestment starting to happen amongst yield investors, that is something we could see this quarter. that will be across most of the center >> mike, maybe worth pointing out, three dow components out with earnings all beating. >> unh is up $8. >> right these are big gains that you're watching going into this. >> they are. the pattern matches the prior

two quarters the first and second quarters which is in the last two or three months estimates have gotten sliced away pretty deeply companies on balance are going to beat them by a fair, healthy margin in aggregate. the question is stock's going to react in the proper way or is it going to be -- in april and july they were strong months for the market because you had that dynamic playing through as you had reporting seasons going on. >> j&j up 2.5. >> they set an unusual discount because of all of the litigation stuff surrounding it it's an interesting setup. >> those are interesting gains dow futures indicated up by 103 points above fair value. you're watching some of these turn around. we had seen higher prices throughout the morning and better than expected earnings across the board mike, marty, want to thank you both going to see both of you again a little later in the next hour. coming up, we have two very big hours ahead and they are big, joe i know sometimes you think i over state the case, but this time -- >> really, today is different?

>> today is different. >> today you're telling the truth? >> today -- johnson & johnson out with earnings. we're going to talk about it the company's cfo is going to be joining us. >> he's woke >> right after the break >> joseph woke. >> one of the brains behind elizabeth warren's tax plan is going to join the show to talk about her candidate's plan it's a conversation you don't want to miss as we head to the break, cckhe on the futures back in a moment

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big moment for earnings. johnson and johnson reported earnings a few minutes ago. the warren tax plan in depth. and amazon's manifesto responds to critics of the company's stance on a smorgasbord of issues. we dive into the bezos plan as the second hour of "squawk box" begins right now live from the beating heart of business, new york. this is "squawk box. good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equities at this hour. a number of big dow components all hitting with news this morning.

let's show you what's going on right now. the dow looks like it would go up higher. 98 points higher nasdaq looking to open up 22 points higher. the s&p 500 looking to be open about 8.5 points higher. let's talk about what's in our headlines at this hour j.p. morgan chase out with earnings moments ago came in with earnings of 2.68 a share. that pretty handily beat the consensus by 23 cents. revenue came in better than the street was expecting the dow component is indicated up by 1.3% for more high profile earnings out later this hour, we'll be getting goldman sachs at the bottom of the hour and then citigroup and wells fargo. we'll get you the street's instant reaction as well all of these dow components that have reported have beat expectations and as a result you see the dow up by 100 points. united auto workers union leaders throughout the nation are going to bemeeting in detroit on thursday. they will be giving an update on negotiations with general motors with a strike against the automaker now in its fifth week.

the talks are continuing but no agreement appears imminent johnson & johnson quarterly results out. meg tirrell joins us with more. >> hey, it was a big beat for j&j. coming in 11 cents ahead of consensus. revenue beating by $700 million. as a result you are seeing the stock up nowmore than 2% in th premarket. let's dig into j&j's business units. they have three units, pharma, consumer and medical devices pharma is the largest coming in at more than $10 billion 10.877 billion for the third quarter versus analyst estimates of about $10.4 billion driven by their immunology drugs remicade came off of patent but beat in the quarter. medical devices also beat at $6.38 billion in the quarter consumer also came in ahead, a little bit ahead of estimates but that is the space that isn't

doing quite as well for j&j right now on their babycare line they relaunched that last year they're facing pretty tough comps. they raised guidance on the top and bottom lines but our data team notes the raise isn't quite as big as the beat in the quarter on the eps line. they beat by 11 cents, they raised by 6 to 7 cents. >> being conservative. maybe holding on. >> based on this last quarter. >> thanks, meg joining us to break down the numbers, joseph wolk, johnson and jon johnson cfo it's great to have you on. is that the correct characterization you beat by a bigger number than you raised the full year by, conservative forecast? >> hey, joe, it's great to be here with you this morning i would say that's maybe a little bit of an over characterization we had a currency headwind so on the year it's about worth 22

cents. previous guidance had it 20 cents. we've challenged our teams to look for investment that kind of catapults this quarter's strong performance into future quarters going forward. if we can find investments rather than give a penny or two this quarter this year, if we can give 20 cents two or three years from now, we'd much rather do that. >> okay then the outperformance for the year is really based on a quarter that ended not necessarily continuing to beat expectation >> we see great momentum for the balance of this year we think that's going to cat a pull the us into 2020 with 2020 with a strong performance in pharmaceuticals which we've done well above the market growth we were able to hold on to some products that were subject to excludes sisivity risk. we've done better there. our broader portfolio continues to do extremely well the medical device story is really a nice turn around for us we're much stronger than we were a year ago this time

5.3% growth when you exclude acquisitions and divestiture impact that's the best quarter we've had since 2015 then lastly in consumer, we continue to optimize our portfolio there focusing on skin health while improving profitability. we think we're very well positioned not just for the balance of this year but well into the next few years. >> employees have their eye on the ball you're in a risky business obviously. you're designing medical devices. you have drugs for horrific diseases, antipsychotics where there are side effects you have a lot of different things where there's liability and we're seeing some of that come home to roost at this point. i think the stock price, joe, would you say is already reflecting some of that overhang how do you keep your wits about you with all of this external -- all these external events happening from employees you just keep plugging away.

good results. >> we realize, joe, our core business is to make sure we're bringing innovation across the three segments of our business we can't get side tracked by some ancillary activity that's going on right now we know that it's big business right now for plaintiffs' attorneys. if you look at life sciences and the outstanding cases in the courtrooms today, 50% of the cases are against life sciences companies in a time when the products have never been more efficacious, they've never been safer. so we're going to continue to have a majority of organizations. we've got a small great legal team working on some of these matters but the bulk of the organization as you see in today's results which are really emblematic of the entire year continue to be around innovation and delivering medicines and solutions for patients. >> joe, as a cfo how do you account for the legal risks that you face obviously some major headlines the $8 billion verdict last week on rispiradol which everybody doesn't expect to stand.

there's a judgment of $5.2 million which i know you're fighting and appealing there's a hearing on that today in the opioid world. a lot of these things are piling up is there a fund that you've set aside? how do you account for these legal risks? >> we've taken a responsible approach, meg. we follow the accounting standards. it's got to be likely to happen, reasonably likely and reasonably estimatable. and in the cases that you just mentioned, the risperdal one, supreme court is highly suggestive that that won't stand. in oklahoma we do have -- plan to appeal that we have filed appeal for that particular judgment. we think it was bad theory of law ignoring the facts so when we have a liability that we've got to lean into, we certainly approve for it, but right now in some of the cases that you mentioned there's not that predictability, that reasonableness test that's met even for accounting standards. >> hey, joe, i'm just curious about the reputation of j&j and

to the degree that i'm sure you're measuring it constantly polling people, trying to understand what kind of impact these lawsuits and headlines have been having on the company and also what kind of marketing spend you imagine you may or may not have to pursue in the future to try to either recast or defend the company's reputation. >> yeah. so that's something that we pay close attention to, andrew it's a company that's been founded on its reputation for transformational innovation across health care for decades now, 133 years to be exact if you look into most recent most admired list we're still well within the top 20 we always aspire to be number one. that's what our employees are motivated by, engaged to do. we monitor this closely. i can say that we're still -- the expectations around our company are still the same and we're going to continue to do that and focus there. >> do you anticipate having to -- when i say market,

advertise against some of these issues >> you know, andrew, we've had some campaigns out there currently so it's part of normal course of business for us. you know, we are more than a baby company we've got great innovation in pharmaceuticals and med devices. you know, all throughout life. that's what we really try to emphasize. whether that's in response to any particular initiative on the outside or ancillary activity, it's really a part of who we are in getting our story out there. >> one of the nearest term i guess legal risks that j&j potentially faces is in the open soids world. you reached a settlement with two counties in ohio for $20 million to not go to trial next week there are thousands more cases out there. a lot of people are talking about the prospect of a global settlement with all of the plaintiffs do you expect that j&j could be part of that is there progress being made towards that >> yeah. so, meg, i would say in oklahoma we found ourselves in a

situation where the theory of law and the facts of the case, even the attorney general himself said during the proceedings, this has nothing to do with johnson & johnson. a reasonable settlement wasn't to be found. we found a different situation in ohio where the funds were going to patients and victims of opioid abuse and addiction and so we had two very different situations we're open to a reasonable settlement, some sort of proportionality. remember, our drugs were less than 1% of the market share of all outstanding opioids. so we want to make sure it's in proportion, but where it makes sense for all stakeholders we'll look to have a settlement. >> it is pointed out that you don't -- you hear about the big losses but you don't hear about reversals, you don't hear about wins. >> that's a great point, joe in the talc cases we had three cases decided in favor of the company. it doesn't make the headlines or the ticker. >> right you made a point about the

plaintiffs' attorneys. i don't know whether to read anything into that do you think that -- i mean, obviously they've performed very essential role in society, but is there -- does it get overdone, do you think is there something that needs to be done to try to rein in some of this? it's such a big dollar sign on the pharmaceutical industry. >> yeah. we'd love to see tort reform over $400 million is spent year to date by plaintiffs attorneys often funded by venture capitalists to drum up caseloads. >> really? >> it's a $36 billion industry based on some of the numbers we've seen from that perspective we think tort reform is in order. we all talk about the price of drugs. this is adding to the cost of the health care system overall so i think, you know, if washington can come together and find some measures in tort reform, that would go a long way, not just for the life sciences industry but industry at large. >> bill wolk, thank you for joining us. >> thank you.

>> meg, good to see you. >> thank you. >> we went all over the quarters here today >> i know. >> never been so happy to see our reporters coming in. thank you. before we head to a break, let's get a check on the markets this morning we've been watching all morning. you have see stronger implied opens. dow futures at this point indicated up by triple digits. a gain of 114 points after we've heard from three dow components just in the last hour or so. united health care, johnson & johnson, jpmorgan, all of them beating expectations on both the bottom and top line. all of them indicated higher unh up by 2.6% j&j up by 1.8% s&p futures up by close to 10, nasdaq up to close to 20 bite my tongue and knock on od "squawk box" will be right back. what are you doing back there, junior?

since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. coming up, amazon's jeff bezos releasing a 10,000 word company manifesto with its position on a number of issues facing america's top companies we're going to take you through some of his ideas with frank fore of "the atlantic.

he's written a cover story on bezos' master plan stay tuned, "squawk box" will be right back. still to come, goldman sachs quarterly results. the numbers and the market reaction plus, the brains behind elizabeth warren's tax plan on tax ve ahansnd how much money is actually hidden. "squawk box" returns after the break. we call it the mother standard of care.

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welcome back to "squawk box. amazon recently released a manifesto on a variety of issues in which it has received scrutiny for a closer look at amazon and the founder, jeff bezos. frank fore a profile of jeff bezos that's worth the time, folks, i spent with it titled "jeff bezos's master plan. he spent more than five months speaking with current and former employees for the piece. frank, thank you for joining us. >> pleasure. >> for those who haven't read the piece, i'll ask you the question but i know the answer to some degree already what was the biggest surprise for you in this reporting process? because i think you came to this with some pre-conceptions, dare i say, that changed in the process? >> right

i've been a critic of the big technology companies i've written a book that describes them as an existential threat i walked away from the process extremely concerned about the concentration of power within one corporation and within one man, but i think what surprised me was the extent to which my admiration for the company and fear were so tangled up with one another that when i look at the company, the thing that is so truly impressive is that one guy is able to press his values out through all 600,000 of his employees. and he's created this business that is spanning off in all of these various different directions which sometimes seem seemingly disconnected from one another and yet what is the thing that connects this massive sprawling enterprise called amazon together? it's that they all embody the values of jeff bezos and that is both something to look at in awe and marvell at and he may be the greatest ceo

in the history of american business but it's also something that's problematic because one of the things that our founders stayed up late at night sweating about was the concentration of power. and they worried about the concentration of power in the executive branch and they worried about the concentration of power outside of government as well. >> so i hope he's a good guy. >> i was going to ask you two questions. did you walk away from this experience and reporting it thinking, okay, i like the values of this guy or not? >> i like some of his values i didn't like some of the other values i think the point is that you look at something and i'll give you one example, which is space exploration. >> right >> this is an area where the government has basically sat down we're not really in the business of exploring space anymore and here's a guy who from the time that he was in high school had a vision of what space colonization -- >> you quote his girlfriend, his high school girlfriend saying the reason he wants to make all

of this money is so that he can go to space. >> right that's a thing that he's -- he's not especially open to talking about amazon but he's very open to talking about his company blue origin and what he wants to do it's a utopian vision for how we'll all live in these giant cylindrical tubes stationed between the moon and earth and it's in response to this grave crisis that he sees when the earth runs out of resources generations from now he's chosen to sell a billion dollars of amazon stock each year in order to fund his utopian vision, which is great except that there are all of these questions that we should ask about what happens if he starts to realize his vision and here's one guy using all of his money to set the terms by which we shape the future of the heavens, which is both -- >> yeah. here's my question to you. having lived through this reporting process and coming to this with some of the views that you had about breaking up big tech to begin with, has it changed your view?

>> no. i mean, i -- you know, so -- for starters, i think it should be said that when we talk about applying antitrust law to these companies, there's a sledge hammer that we can take but there are also more subtle things we can do to deal with their power. for instance, we've just been lax about reviewing mergers over time and when you look at a company like amazon, some of its growth is organic, indigenous and stems from the creative genius of the people there, but a lot of times they're just simply buying potential competitors or buying their way into owning various verticals. and so i think without -- you know, without even having to think about what it would be like to smash amazon apart we could more rigorously apply antitrust enforcement to the company. i also think if we -- you know, i think that eventually bezos, who is seeing around corners, is going to break up his own company.

that aws exists as its own fantastically profitable business, there's no reason that he needs to be connected to amazon, the eretailer. and as he looks at what's happening in politics where there's this increasing bipartisan consensus that big tech is a problem -- >> right. >> -- i'm pretty sure he's going to say, all right, fine. >> is that based on just a supposition? is that based on people inside -- >> no, i heard people -- i heard people -- i heard people who are close to bezos, you know, throw that out there, not necessarily channelling him but saying that that would be the obvious thing for him to do in the face of this. >> it follows what they did with headquarters, too? >> yeah, exactly >> okay, fine. we'll take our ball and go home. >> when you talk about that different headquarters, i -- you know, one of the things that was interesting to me, it was a theme in my reporting was looking at the reasons why they chose to locate outside of washington, d.c. and you look at aws and its

growth and you look at the public sector is clearly this huge opportunity for amazon that they're going after it not just by uploading the federal government's cloud, they're trying to become a major vendor for the federal government where the federal government buys water bottles and office seats from amazon. they're selling facial recognition software to law enforcement and -- >> how is that effort going in a trump administration given some of the comments obviously that the president has made that have been largely critical of jeff bezos personally if not the company as well? >> it's been a herky jerky process. this jedi process at the pentagon has been held up because of this animosity between trump and bezos. i think when we step back it's really interesting we have these two foils because in some ways they represent divergent responses to the crisis in american democracy, that trump

comes in and he's got his emotional populus appeal and bezos represents a different response, which is that when we look at bezos we say, all right, rather than having this world governed by this emotional populism, wouldn't it be wonderful if we could have this utopia of rules and technocracy. >> is the space exploration gene linked to the billionaire gene >> no. >> what the hell's with these guys bezos, musk and everything i like it here >> well, look, i think there's something beautiful about exploring space. >> i understand. >> and exciting about exploring space but i don't want to ditch planet earth. >> in terms of existence it's one thing humans can aspire to and have for thousands of years. i guess i get that i want to let someone else do that, i think. i don't know. >> of all the crises that we

face right now as a species, i'm not sure that i think escaping from planet earth ranks as my highest concern. >> and no one's won a malthusian bet. not one person has been paid off to -- a couple of hundred years who knows. we seem to have -- maybe we'll go mine an asteroid if we run out of stuff anyway, are you going to say gooid goo good-bye >> i am. we have goldman sachs out with their own earnings we appreciate your time and perspective. >> and it's a dow component. >> the fourth dow component of the morning. this one missing on the bottom line by a couple of cents. $4.79 versus $4.81 the street had been expecting it looks like revenue came in right in line with expectations, $8.32 billion. the street was at $8.31 billion. the numbers they're calling out on this, they are looking at

annualized return on investment or return on equity of 9.9% for the third quarter. looking at book value per share, $218.82. just looking through some of these numbers again, 4.79 versus 4.81 but revenue in line with expectations wilfred frost is standing by wilf, what jums out at you in the goldman sachs numbers? >> basically every single sub line is in line or fractionally investment banking was 1.7 billion as expected. institutional client services, that's trading, came in pretty much in line fic was slightly beat, equities was a slight beat, 1.9 versus 1.8. investing and lending, 1.7 as expected investment management, 1.6 versus 1.7 billion it's coming in pretty much in line on each of the sub levels

jpmorgan had a couple of beats in there that's where they differ the biggest area where they differ was fixed income and currencies and commodities trading where jpmorgan, only about 2 months into the quarter was a big beat that hasn't come through to the same extent for goldman sachs. the question now i think for the other banks is whether just jpmorgan had that big beat or whether goldman sachs was the one to miss out on that area either way, a beat for jpmorgan, which has dragged most of the other bank stocks higher goldman sachs at the moment the only one that is missing out on that pre-market trade. i guess investors are taking this as goldman's in line, jpmorgan more representative of that pool. >> jpmorgan a dow component. up 1.8%. you can see goldman sachs indicated down less than 1%. citi numbers out at 8:00 and that will give us more insight as well. wilf, thank you. coming up, two big stories in the world of sports and

entertainment. first as we head to break, take a look at u.s. equity futures which has been solid all morning long up triple digits on the dow after a slight pull back yesterday. nasdaq's up 25 s&p up 10. we're coming right back. when you move homes, you move more than just yourself.

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lebron james had some choice words for the houston rockets general manager darryl morey asking about the nba's ongoing dispute with china the star basketball player said he believes either morey was misinformed or not educated on the situation. james was praised on social media in china for the comments. probably got a lot more over there. you know, just in terms of sheer volume -- >> 600 million people. >> yeah. 1.3. >> 600 million people like the league. >> yeah. >> and none who are allowed to say they don't like what he said so let's just -- >> but it was -- >> perspective. >> wouldn't that be great if twitter were only positive. >> i only say positive things. >> really? >> by now. >> blocked >> criticized -- he was criticized in the u.s. with some

tweeting emoji bags of money at him. lebron followed up on twitter saying i do not believe there was any consideration for the consequences and ramifications of the tweet, i.e., those bags of money. >> he meant morey's. >> i'm not discussing the substance. others can talk about that he continued in a second tweet, my team and this league just went through a difficult week. i think people need to understand what a tweet or statement can do to the others and i believe nobody stopped and considered what would happen could have waited a week to send it. >> sounds like he's not mad about the sentiment. you should stand with the hong kong protesters, don't do it the week before i show up? >> you want to have a bad weekend, check out the dolphins. they've had about six weeks that have been pretty difficult we'll have patrick on later. did you see the end? you didn't see the end of the redskins/dolphins game >> i did not. >> so bad.

they went for 2 points they were down for 1 six seconds left they decided to go -- >> went for a win. >> guy had a clear entrance into the end zone hit his hands and he was already running and dropped it the receiver >> that is painful. >> painful. still to come on "squawk box" this morning, a big focus on financials. we'll break down jpmorgan and goldman sachs, the two dow components we've already heard from at the top of the hour we're going to add citi and wells fargo to the list. we've got the numbers and the market reaction straight ahead. plus, one of the creators of elizabeth warren's wealth tax will join us economics professor gabriel zukman is hereo ttalk about tax havens, the warren tax plan and much more. "squawk box" will be right back.

welcome back to "squawk box. want to show you the futures this morning we've had a number of earnings

reports. j&j, goldman out dow now about -- well, we'll call it -- looks like it would open up 88 points higher nasdaq looking to open 22 points higher s&p 500 looking to open 8.5 points higher. joe? >> jpmorgan reporting less than an hour ago. shares of the dow component are up almost 2% wilfred frost joins us with more details. we were talking about you yesterday, wilf, whether you were anxious, excited. i think a combination of these as you look ahead. >> tilted towards the excitement. >> yes >> given the forum one morning, it was quite a lot of nerves coming in today. let me get to these numbers. jpmorgan, eps, 268 big beat compared to the expectation of 245 revenue slight beat, 30.1 billion versus forecast of about 28.5 big question coming into this quarter was how much a fall in the yield curve was going to

impact earnings. the net interest margin did fall and fall more than expected. it was down 9 basis points from q2 from 249 to 241 it was expected to be 2.44%. it did miss slightly net interest income overall did not miss it beat expectations albeit just slightly, 14.4 billion compared to expectation of 14.2 billion decent loan growth which was up 3% overall year over year. offset that's shrinking in the margin and that area of the business provisions for credit losses was fine now the beat mainly therefore coming in the other part of the business, the fee income in particular as mike said earlier. fixed income, commodity, currency trading was 3.6 billion. it was expected to be 3.1 billion. that's up double digit percentages. it seems like the final month of the quarter really beat expectations relative to the update they gave during the quarter. equities was a slight miss investment banking was in line

the bottom line with stocks overall, revenue growth of 8%. net income of 8% year over year. that's why you're seeing the shares jump in the premarket. >> wilf, thank you we're going to dig deeper. we bring in jeff hart. he's a principal at sandler, o'neill. marty mosby and our own mike santoli. marty, why don't you start off telling us about the comparison between jpmorgan and goldman. >> this is a natural comparison of what you have with a commercial bank and really more of a -- still more of a broker dealer goldman sachs so if you look at the difference, the jpmorgans being able to see in the positive, part of that's related to income related to selling loans, their tax rate was a little bit lower so that's about 1/3 of it. you look at the other third, that's loan loss provision which is going to be lower

the credit costs are staying flat every time you see the market anticipating that next leg up, it hasn't happened yet those credit costs are low goldman sachs doesn't get that benefit. they haven't built a loan book lastly what you have is the investment banking and what we saw in thefic business that was the other third of the benefit. >> jeff, do you think goldman is going to be the standout, the one that is the exception to the rule or you think jpmorgan is? >> boy, it's tough not to like jpmorgan's results here. even if you back out the mortgage sales, we're still looking at a 7, 8% beat. the standout is jpmorgan's results. the read through the peers is pretty positive as well. >> i'm sorry, that's what i mean who's the exception to the rule here is jpmorgan a much better operator than everybody else are you going to see a situation

where goldman is just in a different position >> i think it's somewhere in the middle when you look at trading you have to remember jpmorgan had an easy comp versus last year their trading looks good but it's versus a depressed comp stuff like investments, that's a big business for goldman sachs it wasn't such a good quarter for inl. i think part of it is kind of business mix when you kind of look between the two. i think as you look forward, this should be good news for the peer group but as i kind of -- i think marty said earlier, certainly better for the commercial -- the more commercial bank heavy players than necessarily investment banking center players. >> wilf, you had a point >> becky, i think you're seeing the likes of them higher because of the impact of the yield curve on jpmorgan's numbers was less bad than feared and less than priced into the yield sensitive banks in recent weeks and months the other thing that will be interesting to see what comes

out for the likes of citi whose trading department is tilted towards more of the fixed income side than the equity side is whether jpmorgan's beat was just them or whether goldman's miss was them standing out and if there's a beat, then it works well for citi. morgan stanley's down a little bit. that tilted more towards equity trading and wealth management. those two areas haven't been particularly strong in either goldman or jpmorgan. >> mike, just in terms of kind of seeing how this is going to play out what this means for the rest of earnings season. how much do we follow the financials and say this is going to be an indicator. >> it has implications for the financials after jpmorgan, citigroup stock popped nicely. after goldman sachs numbers came out, you're trying to figure out what this means. goldman sachs, choppier results. they don't have the massive base of the consumer business pretty much as expected they're holding their kind of investment banking franchise levels if you

look at market share it's not been that great of a quarter. and it trades -- the stock trades at exactly tangible book value. so it shows you the street is very skeptical that they can earn a great return even though they're earning 10, 11% on tangible book. >> jeff, very quickly before we let you go what stock would you be telling investors to buy based on this news >> especially if goldman's weak, you've got to be looking at goldman sachs here the point earlier, 12% roes with a road to higher roes and trading at tangible book value any weakness you get today, especially coming into the season with a strong first quarter, that's a place to be looking. we'll check in with all of you when we get the numbers. we have a lot more coming up in a moment. the push for more taxes on the wealthy. a special guest on the plan we talk a lot about you don't want to miss this conversation i can't believe it. what? that our new house is haunted by casper the friendly ghost? hey jill! hey kurt!

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what are you doing back there, junior? since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this.

which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. >> a list of emergencies the democratic campaign. they are then the new economic.

a triumph. a professor at university of california the corporate tax revenues also raising the tap. >> the plug in is different.

>> the americans the warren tax plan.

>> and those numbers are there. >> that's there. the u.s.a. is there. it's two there.

>> the cbo only looks at federal taxes. when we do that we find the total tax revenue in the u.s., 20% national income. today each group pays around 28% of their income in taxes except billionaires who pay 23%. >> there's some regressivity in federal taxes you're talking about the lowest quinn tile is at 1.7% of federal taxes now in state taxes it's 11.7 versus 8% for the higher quintiles. you get from 1.7% to 25% taxes paid by the lowest quintile. that's mathematically impossible. >> we can have a mathematical debate but you need to realize the working class pay a lot in sales taxes, consumption taxes. >> what about the earned income. >> they get the refund when tax time comes -- >> did you have the earned -- did you just back that out and -- did you back that out

>> i know that what i'm saying is reality of american society is that poor cash constrained people pay a lot of taxes throughout the year. >> one of the ways we deal with this to make it more progressive is with the earned income tax credit that's a huge -- that makes it much more progressive, much less regressive and you backed that out entirely which makes people think you're trying to skew the numbers to show a certain result is the earned income tax credit backed out of these calculations >> what we're doing is we're distributing 100% of tax revenue and 100% of government spending as well. >> so you don't include the earned income tax? >> no, we do both. what you don't want to do is just to subtract some transfers from taxes and not others. we are looking at comprehensive perspective. all taxes and all government spending that's the specificity of our approach. >> can we talk more broadly about the issue of taxing the

wealthy? do you think there should be a maximum income or a maximum wealth in america? >> that idea has a long history in u.s. society. you have to realize that the united states invented income and wealth taxation with top measure income tax rates of more than 90% in the post world war ii to the state tax rates of close to 80% in the 1970s and 1980s. that's a u.s. invention. that's not a european invention. no continental european company had -- >> what's your personal answer to that question >> the answer is -- >> would you go back to that >> what we say in the book is extreme wealth is corrosive. >> so what's the upper limit then for you >> that's not something for economists to decide >> let me ask you a separate question if you'd indulge me >> yes, sir. >> you've helped design the

elizabeth warren plan. there are lots of questions of how you could effectuate a plan like that. the biggest issue is how is that kind of plan not going to be gamed by people? and effectively how would you on an annual basis effectively value each individual's total net worth at any time? by the way, i don't know what you would do with michael jordan's brand on any given year or, frankly, donald trump's brand given some of the valuations he's -- but, i mean, how you would actually do that. >> so 70, 80% of the wealth, .1% is listed securities, bonds, mutual fund shares 30, 20% is in unlisted equities. in that case we have a solution. we are saying first the come up with the best valuation possible and if the taxpayers disagree, they can pay in kind with shares so if the wealth tax is 3%, you

give 3% of their shares. >> so the government would become -- >> then they sell their shares on the market and create the market that's missing. >> see, this was an explosive proposal in the book and i don't think people focused on it you're saying the government would become a part owner of the private companies where there's a disagreement and then try to resell the shares. >> resell. the point is not for the government to own shares it's to resell immediately but to create the market value, that's missing that's, you know, a service that the irs could provide. >> and you find that the top optimal rate for taxing the very rich is 60%? 75%? on the laufer curve where do you find the optimal rate for taxing the rich >> the revenue maximized tax rate is 60% in terms of average effective tax rate in reality depends on enforcement. governments can choose to make taxes fail, and we've seen that.

>> what would you do with philanthropy what would you do with bill gates and warren buffet? >> that's a good question. that's a debate to have. we don't talk about that a lot in the book. you could have a wealth tax for foundations, especially for foundations that are controlled by, you know, living individuals, by founders to prevent, you know, tax avoidance, moving money to their foundations. >> giving it away to avoid taxes? >> people are giving money away. you have to pay gift taxes if you give -- >> the methodology itself is -- there's -- the cboe is not -- the cbo's not going to come to this, larry summers is not going to come with it. >> an hour ahead on "squawk box." in the next hour of "squawk box," the focus on financials continues. wells fargo and citi both ready to report. and later, the ceo of the nation's largest pension fund on the global markets, the trade war and shareholder activism marcy frost of calpers is our

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. live from the most powerful city in the world, new york. this is "squawk box. welcome back to "squawk box. on a very big day of earnings, citigroup just crossing the tape right now. we've heard from jpmorgan and goldman sachs. wilfred frost joining us with the numbers. >> revenues in line at 18.5 billion. eps is fractionally ahead once you strip out a one off at 197 per share. the expectation was 195. now the net interest margin has declined like it did for jpmorgan but more than expected. unlike for jpmorgan it's down 11 basis points to 256. it was expected to be about 266. and the other standout factor there compared to jpmorgan is that the net interest income has also declined. citi does have good loan growth but not enough to see the net interest income miss

expectations 12.1 billion was the expectation. 11.5 billion is where that has come in. they do have a couple of beats on the fee income side as well fixed income trading like jpmorgan was a beat although not quite to the same magnitude. equities a little softer again like the others. investment banking was a slight beat the bottom line here for citigroup is that that decline in the net interest margin has not fully been offset in other areas so you're only seeing eps kind of come in in line. citigroup trading down having traded up for jpmorgan now it's only jpmorgan standing out. revenue basically flat year over year for citi. for goldman sachs down 5% year over year. for jpmorgan, up 8% which kind of tells the whole story for the three banks for this quarter guys >> wilf, wells fargo also just crossing the tape and what would the special items be >> i don't know. i've only gotten headlines i haven't seen the results they say 92 cents.

the street was looking for $1.15. revenue came in better than expected 22 billion versus the $21.18 billion. again, i'm still looking for the actual relieves that would explain that >> marty, must be some special items that would cause a 20 plus cent miss? >> a transition period with wells fargo, right it's going to have some restructuring. it's going to have some of that reputational and regulatory issues so as you're going through this process there's got to be that period of time when you kind of rebase the company what are the earnings and where is it going to come out? as charlie gets there and it starts to get on the other side of this transition. >> let me tell you about a couple of other numbers. net interest margin, 2.66% net interest income $11.36 billion. how does that match up with what you were expecting >> when the look at the nii, it's close we were at $12 billion they're at 11.6. netter's margin looks low at

2.66 that number looks out of kilter with what we would expect. being where it is, there's probably some earning assets and other things that are compensating for that. nii is not too far off what we were expecting >> we're going to get it right from the horse's mouth on "closing bell" from wells fargo's cfo. he will be live on closi "closi bell" at 3 p.m. eastern. the stock is not acting like a significant miss. >> before we let marty go, let's talk about this in the context of jpm and also goldman. i know we're listening to -- we're looking at 9 whole spread here >> yes yes. >> if you will is there -- given how much some of these guys have run and some that haven't -- >> sure. >> -- where's the opportunity from an investment perspective goldman, you say that's a great opportunity? >> well, you really do have to take in the valuations as we heard earlier. so if you look at jp morgan, it's trading at a premium to the

group. deserves the premium. >> okay. >> when you look at where you're going to actually see your best returns, you have to look at where the market's discounting what the banks are going to be able to do. >> wells then? >> wells has a longer term story. we've got to go through this transition there's going to be a period of time where earnings are not going to have the traction frmgt i feel like we've been hearing that for a couple of years. >> you throw it into the kitchen sink for every quarter. >> when you throw in a ceo change -- >> he gets a couple kitchen sinks. >> you do. you get that you get that this quarter in particular what you're looking at, we believe, is you have some longer term turn around stories that's goldman as what they're doing in their business mix. >> yes >> that's what you're going to see with wells over time that's what you're going to see with state street actually we thinkstate street may be ahead of those other two in their inflection point if you look at where we think they are in banking, they can perform better than the rest it's the super regional banks that have restructured the balance sheet and haven't really

gotten credit for that regents, citizens financial group. next week when the earnings come in, those are going to be telltale signs of what's happening. >> i mean, it's a similar story. we asked jeff harper who his favorite stock was, his favorite buy and he said goldman sachs. >> there is an underlying business shift where if the returns stay where they're at or impro improve, you're not getting any of that in the valuation. >> you buy the strategy? >> yes. >> you do? >> yes. >> where do you sit with bank of america? >> bank of america's been a great turn around story over the last five years. their expense focus. what i think they did so well is brian focused the rest of the company on generating business and revenue while he was cleaning it up >> right. >> and as they came out from under that pressure you saw the revenue growth begin to take -- in line with the rest of the peers. they didn't have to spend five or ten years catching up he had the business units in place. so -- but the valuation with bank of america right now is caught up with the story and

they don't have as much of the self-help improvement over the next couple of years >> final question from me. do you believe that there are any fin tech companies out there that are ultimately going to buy -- not maybe a bank of this size but another bank and take a run at these guys? >> i don't what i believe they would like to do is develop the process and then use the system that the bigger banks have in order to leverage that franchise. >> right. >> if you look at what happens with bank customers, it's very difficult to get them to change over because think of your bill pay. >> yeah. >> you're using bill pay, it's already set up, it rolls every quarter, every month for you changing that is very difficult. >> you don't think there's a whole new generation of millenians using the fin tech companies and they get bought out by the big guys or is there a fin tech that gets big enough to buy one of the smaller regionals and elevate themselves >> yes. >> what we've heard of is

there's a much easier pattern to be incorporated up into the system than changing the whole paradigm. >> one bank we haven't mentioned at all, morgan stanley. >> yes. >> why >> morgan stanley has a little bit more of this net interest income we're talking about the wealth interest business and it was doing well when rates are going up it's a little out of favor because that piece of the fluff or that little juice they were getting the last couple of years when rates were up is going to be pulled out. relative to the rest of the money center banks, it has more of that transition now once rates stabilize, their valuation is low enough and they have other pieces of the business to support their returns. >> right. >> it will be a good investment as we get into next year. >> great marty, thank you. >> thanks. >> thanks very much. beyond the banks, a couple of other big names reporting results this morning dow component unitedhealth reported $3.88 a share that beat by 13 cents. revenue above the forecast in unitedhealth raised the full

year forecast as well. you can see that dow component up by 1.6% now. also johnson & johnson another dow component beat estimates by 11 cents with quarterly profits of $2.12 a share. revenue beat with the results there by growth in pharmaceuticals and medical devices. that stock is up by 1.2%. when we return, the big business of sports 15.8 million people watching nfl games on average during last year's regular season. 2019 is off to a strong start as well we'll talk about what this means for everything from advertising to merchandising right after this stay tedyoreatinun, u' wchg "squawk box" on cnbc

welcome back to "squawk box. the futures have pulled back a little up 75 points this morning. >> i have a coffee problem not drinking problem >> that's the drink -- >> i spilled the coffee.

>> you haven't really copped to a drinking problem but i just watched it and you were unable to do it. >> the problem is the liquid decided to go down my tie and face. >> drinking problem. a good kind of drinking problem to have. >> some people think -- coffee actually i think is good for you. it's not a bad thing >> back and forth. >> back and forth. >> let's -- oh, what's happening here >> we're on tv. >> we are on tv. >> it happens. >> you have a spotted tie. >> you like that additional color. the green bay packers knocking off the detroit lions late last night in monday night football we don't have the ratings yet, the season so faris off to a strong start julia boorstin joins us from los angeles. she has the big story of the nfl. good morning, julia. >> reporter: good morning to you, becky high scoring games and a slew of young players are driving viewers and the nfl is having a great start to its season. through thursday night ratings are up about 6% over last year and up slightly more from the 2017 season.

142 million people have tuned in and digital viewership up 51% over last year streaming allows them to watch in market games through the teams' apps as well as the nfl and yahoo apps moffettnathanson writes the strong 2019 nfl ratings growth allow people to watch. they say espn pays the most for nfl rights estimating an average of $1.9 billion a year followed by fox and cbs paying around 1 billion each annually for their sunday packages followed then by nbc and then again by fox which also pays for a thursday night package now the nfl has now seen two straight years of ratings gains reversing previous declines which does bode well for the league ahead of negotiations for tv rights which have become

available after the 2021-2022 season and then the nfl sunday ticket deal with tv expires next year. >> thank you, julia. stay with us let's bring in patrick gricci. director of the sports business program at washington university and a professor of practice in sports business. i have so many things to talk to you about and we'll talk about some other stuff i'm going to start with this that jets game, my -- >> that was your first mistake. >> they won. they won they did but i do notice, man, there's a lot of down time for tv commercials. there's a lot of tv commercials. people are watching this live. it's the last place for live advertising. it's always worth it a lot >> absolutely. we talk about this in our sports business class all of the other you can stream it on hulu, netflix, but sports you have to consume it live and that's why you have such great opportunities for advertisers.

>> i have some other ideas i think when fox or nbc or cbs has different games to show in different areas, i think they should stagger the starts of them lately i've been seeing they go to the end of other games when a game that i'm not that interested in is over i can see the end of all of these really great games. they've been doing that more and more do you notice that >> absolutely. every weekend you've got two games starting a little bit later in the afternoon about 15, 20 minutes later going back to one of the things we're going to talk about, they've had the good luck the last couple of years of being a little bit more strategic of making sure you have the marquis match-ups. >> we don't know who the best teams are anymore? are the rams any good? suddenly san francisco is like some great team? i don't understand too much parity. too many flags too many weird -- is a block in the back really a penalty? weird blocks i don't know what's a penalty. too much review. too many plays are being reviewed now too. >> when the ratings went down a few years ago, i don't pin it to the kneeling i pin it to the change in how

consumers are consuming sports they're streaming it these numbers that we're looking at, 6% increase, that's looking at the true traditional nielsen ratings. part of it this year is this is the 100th year of the nfl and they marketed the heck out of that you had peyton manning doing all of these webisodes to draw people into the history of the game. >> the refs are deciding a lot of games every single play. >> it's not pretty >> there was like a third and 26 -- >> i know. >> -- and who knows whether it's really pass interference either? half the time it is, half the time it's not. >> most of these guys this is their full-time job. >> objective calls. >> are we talking about the nba. lebron james. >> he came on to talk about -- >> i know we want to talk about the nfl. what do you make of this this is lebron james show the tweet show the tweet choice words he goes after the houston rockets general manager himself. this is the same guy, because i just saw this other tweet come

up, who a year ago, year or two ago, saying injustice anywhere is a threat to justice everywhere our lives begin to end the day we become silent about things that matter. >> oh, boy oh, boy. >> same guy. >> it is really a situation, look, andrew the nba is business, it's sports they should be promoting their sport. they have the right to promote their sport all over the world i think the way they've tried to handle this, i'll go back to commissioner silver's comments i think commissioner silver is the most outstanding commissioner of any of the leagues we have. he may have stepped in it the first time through but the second time through he said we're going to back our players and executive's rights to say what they want >> i think adam said many of the right things but then what i don't understand is what exactly lebron james is doing. what steve kerr is doing, what stef curry is doing. >> protecting their own. >> i get that. this is true money talks my question from a business

marketing perspective is does it come back to haunt the players does it come back to haunt the league or do american consumers not really care? >> i don't believe it comes back to haunt the players or the league when you look at the relationship with china, we, the nba, has the leverage. china's an important part of the business, but it's only about 5 to 6%. >> we are bending over backwards. >> we are not acting like it. >> it feels awkward. i understand that, but we are all -- we all work atplaces where we have to be careful what we post, what we say and i -- >> you say something bad about the chinese communist party, maybe there should be more human rights and freedom we have to be careful about saying that? >> i understand. i understand where you're coming from it is a delicate situation. >> you don't want to be caught currying favor with the communists. >> i don't understand how we have the upper hand. why bother to go through the extent of these back flips and match shin nations. >> if lebron has the leverage he

should stand up and say about every other political and polarizing thing he doesn't like. >> it's tricky for the nba. >> i don't get tricky. >> it's money. >> it really is. that's the bottom line the bottom line is the bottom line. >> are they eventually going to be seen as a global league not an american league >> they already are, becky they are the most global league apart from -- you know, soccer is the global game but in terms of a singular league, the epl, english premier league soccer and nba. >> you're being very tactful how about espn there hasn't been a political issue that they haven't -- they got to the point where i can only watch on saturday morning, that's the only time i can watch espn, they're so political forbidden to talk about this that's as bad as lebron. >> i'm not in the politics of broadcasting. >> here you go. >> i can say this. jimmy pittero, it is an ex executi executive's right -- >> what did you think when kaepernick was taking a knee

did you think no one should talk did you think kaepernick should be not allowed to play -- >> i see the parallel. kaepernick should have been allowed to express his opinion and i think that david -- or adam silver has said that players and executives should be allowed to express themselves. >> unless it's china. >> again -- >> it's a delicate situation >> it's bad. >> joe doesn't buy it. >> i don't. >> i don't buy it either sorry. we don't agree on much but this we're together. >> then again, u.s. companies, their relationship with china. we've been in bed 20 years benefitting. our inflation rate has been a point lower because of what we get from china so we're all complicit in, you know -- >> absolutely. >> back to "godfather 2. we're all part of the same hypocrisy. don't think it involves my family. >> when we spoke about kaepernick two years ago you did

have a view it might affect the nfl, ratings, how consumers think, all of it. >> right >> explain the distinction between that and why you think consumers and everybody else related to the nba, at least in the united states or the rest of the world, is not going to care? >> yeah, i think it's important. there is a slight -- a big distinction in the fact that the kaepernick situation taking place here in the states, that's going to impact people here in the united states and how they consume content. >> are they? >> no, they're not. >> kneeling before or -- >> that's right. you talk about an issue that's in another part of the world that many american citizens i think it's fair to say aren't perhaps as well educated on that particular matter than they were the kaepernick situation that's why i believe it's not going to have a major impact on how american consumers consume the sport of basketball. >> the world's a much smaller place. >> it is. >> that means we all get to see all of these things. >> it is. >> i think americans are sitting up paying attention because of how china reacted to that gm tweet that nobody would have

seen, the houston gm's tweet, had china not picked up on it. >> you don't think millennials don't know about that? they don't know about the chinese communist -- >> huh >> they know about the wiegers, internment camps. >> sure. i haven't done a pole to know what their interest level is the other interesting thing is if you look at the back end of this with respect to is china going to back off just a little bit because, of course, what are they hosting in 2022 they're hosting the olympics and so how hard -- they pursue this going forward i think is going to be mitigated. >> how much do you think the players will be influenced by their agents, their sponsors is nike calling them saying, don't stay a word. >> that would be a fascinating thing to know. my sense would be there are probably some executives that want to say something to their players. whether that's actually happening, i don't know. i could see why some would.

>> you would think you wouldn't want to put that in an email you don't think nike is -- >> nobody's told him. >> let's go back to what did commissioner silver say behind the scenes to darryl morey what did -- fertita say to darryl morey we can only wonder. >> don't you think here darryl morey comes off in a much more favorable light than anyone else after all is said and done or do we look at him and say that was a foot in mouth -- i don't see how you can get criticized for saying stand with the freedom fighters. >> you shouldn't be. i agree with that. >> you think silver looks good i'm not so sure. >> it's such a delicate balance. it's a tight rope that no one wants to be on. >> but a lot of companies are. >> sure. >> that's just the reality when you're doing that much business in a market that big, you set yourself up for that. >> actually, a prior commissioner, david stern, had indicated this several decades ago when the nba first got into

china. >> can i ask you a separate question this relates to nike i don't know if you saw this news nike is closing this oregon project? did you follow this? this track and field program that nike had sponsored, was overseen by a guy who was found guilty by the u.s. anti-doping agency why do you think nike, which has been accused over the years of being involved in doping or supporting doping or supporting things that you would think that consumers would be unhappy about has managed to not be implicated, at least by the consumer >> that's an interesting case. again, nike has tried to stand for virtue. >> right nkts in a lot of different areas. the fact that they've been able to avoid this is, you know, a testament maybe to the brand that they've built up over time. i also think we talked about kaepernick earlier they built a lot of street cred, more street cred bythe way the took a stand on how they essentially promoted kaepernick's cause i don't know if all of these

things helped them deflect some of these issues. >> they built street cred or they created a situation where they're going to have to show the same resolve so they don't look like they're complete hypocrites >> you're right. what's lebron's twitter account look like? are any of his followers saying, way to go, lebron? you stood up for -- >> i -- >> that's what i mean. >> in china. >> in china he's getting positive comments in china you can't read right to left it's much harder to -- >> this is obviously a very divisive topic. >> you sound like you're in the nba. >> 20 seconds because we're going to get in trouble. does the jay z nfl partnership mitigate all of this stuff that happened before? >> that's a tough call i think that it's a partnership that, again, you try to separate church from state. >> right >> i think that's -- >> this is church and state

coming together here. >> for sure. i think at the end of the day the jay z nfl partnership is a positive one. >> are the cardinals still going to win >> joe, the fact that the blues finally won their first stanley cup in52 years. >> the cardinals and the blues. >> i was more upset about the islanders beating the blues than i was -- >> going to get wet? >> we've gone way over time. thank you for being here. coming up this morning, stock movers lots of earnings reports first as we head to a break, don't forget to subscribe to our new podcast. if you miss any of the show, you need to list ento this interviews from our guests, special behind the scenes content and of course the latest head lines everything you expect. look at us on apple podcast. subscribe today. we areacinusa me bk jt mont

welcome back to "squawk box" on cnbc. we are live from the nasdaq market site in times square. let's get you caught up on some of the stories investors are talking about today.

first up, black rock reporting earnings that beat the street's estimates of $6.96 revenue essentially in line with forecast ceo larry fink was on earlier to comment on the quarter and what he sees in the markets right now. >> the market is properly valued overall. i don't see that many extremes and that's because of central banks are going to be highly accommodative at least for the coming year. what i worry about is more 2021 after the elections and where is the economy thereafter. >> checking shares of blackrock this morning, looks like they're unchanged right now. also, take a look at shares of wells fargo. a number of one-time items in the banks' earnings report when you sort it all out it looks like earnings came in at $1.12 a share on an adjusted basis. that's 3 cents below what the street was expecting revenue came in below and that

stock down .8 of a percent walmart has kicked off the so-called in home service that delivers groceries directly to a consumer's refrigerator. that was kicked off in june and debuting in three areas. vero beach, florida, kansas city and pittsburgh. >> that's got to be an accident waiting to happen, doesn't it? come all the way in and stock your refrigerator in. >> give them free rein. >> i better put gunther away. >> that's a threat for the people who are bringing in and delivering groceries, too. god knows what happens with the dog or anything else there. >> forgot about that could be an issue. >> i'm still -- my thing is could i -- taco bell is 25 minutes away can i get that -- someone to bring it to me >> yes door dash. >> won't be -- >> uber eats. >> how much does that cost >> whatever the thing is. >> the question is will it be cold >> that's the thing. >> it will be fine cost you 5 bucks extra. >> 25 minutes away, no, it won't. >> okay. >> all right that was the headline for me

but in other headlines, the united auto workers union has called a thursday meeting of leaders from around the nation to update them on the negotiations going on with gm. strike against the automakers now. time flies, doesn't it it's in the fifth week supposed to go nearly this long. stocks down 8% since the work stoppage wilf is going to be around. >> he is we're going to get to him now because he just wrapped up being on a call with the folks at jpmorgan and has some of the highlights for us now. hey, wilf. >> yes, indeed i counted four different questions or attempts to get them to comment on wework, all of which were declined really wouldn't take the bait or just any answers at all on that topic. i felt jamie dimon came across as a little bit more bearish or maybe frame it as less constructive he said of course a recession is ahead. that was a little tongue in cheek. is it going to be soon we don't know that he said the trade and china are

hurting business confidence and business expenditures. the u.s. is still growing but we will see, he said. the u.s. consumer, he said, is not under stress and is doing fine on brexit he said a hard brexit would be tough for the u.k. economy more so than it would be for the u.s. still on the topic of china, he did say regardless they are continuing their plans to take full control of their businesses in china and that the chinese seem to make that clear last week that they're still going to allow financial companies to increase the size of their stakes in their subsidiaries in china. and then we also discussed the repo rate a little bit and the way that spiked over the last quarter. a lot of comments and factors that inference it. they did say that on the margin that jpmorgan was constrained by the liquidity, by the regulations and that that was one of the contributing factors to why the repo rate did spike and they did say that they feel like the fed is doing all that it needs to do to fix that.

>> okay. wilf, thank you for that appreciate you staying on the line with the folks at jpm. meantime, when we come back a lot more on squaw"squawk. the story of ticktock poaching mark zkeerucrbg's employees. we'll talk about that and a lot more when we return. ♪ ♪ ♪

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two high profile ipos have their lockup expiration today. leslie picker joins us. >> hi, leslie. pinterest and zoom are two companies that have their debut prices today a flood of share supply actually hits the market as their lockup agreements expire about 180 days after their recent ipos allowing insiders to sell pinterest has about 538 million shares available to be sold this morning. that does not include the shares held by employees who are still looked up until pinterest reports earnings on october 31st zoom has about 230 million shares that are free to hit the market today so combined we're looking at upwards of about $30 billion worth of stock available to be sold on the market of course, there will only be a fraction of that that's sold today. there's no guarantee that will

pressure the stocks at least in the short run. any additional supply that hits the market would need to be met with an additional surge in demand in order to prevent some sort of pressure on the stocks, meaning that they could take some kind of hit over a certain amount of time now given the heightened level of ipo activities in the first half of the year, we're looking at about $140 billion worth of stock being released from ipo lockups in the remainder of 2019 so now investors are gaining out whether that makes for a small or large risk to post ipo performances guys. >> leslie, thank you for that. nice to see you on the west coast this morning for more on the other big tech stories that are making some waves right now, ed lei is with us "new york times" media reporter and joanne littman very distinguished fellow from princeton. >> the whole combo.

>> the princeton thing is what's impressive. >> no, i'm going to give it to princeton. >> okay. >> let's talk about -- >> include you >> let's go to the distinguished fellow first on ipo lockups, how much does this really matter >> you know, i think the issue here is if the core valuations of the company are correct, it's not going to matter, right you might take a short-term hit when you start flooding the market with stock but if your core valuation is correct. it's going to be fine. >> do we think the core valuation is correct >> that's the problem. if you look at so far this year the vcs have actually done a terrible job of valuing companies. almost half of all companies that have gone public this year are trading below their offering price. what does that tell you, right the vcs are valuing these companies at these crazy -- >> i want to play -- i don't want to play the blame game. is it the vc's fault, softbank's fault, we had larry fink on

earlier. >> blackrock. >> t. roe price, there are a lot of huge firms that got into these very late in the game. in the private space that have pushed the valuations up. >> there's a lot more money that had been flooding into the market, not from softbank but others, lie fidelity, big mutual funds found their way into some of these things. i think, you know what, when you have a much smaller constituency of evaluators is what we think of them, the valuation is going to be way off. the whole point of a public marketplace is that you have a lot of people buying into the system and sort of figuring out where it should really be. if it's a handful of investors with a few more tacked on, it will be inflated or grossly distorted. that's the tension we're seeing now between the public and private when these lockups expire, all of a sudden you have to rethink what is this company worth? why are we thinking about three months or six months after the ipo? that's a bad sign. >> pivot to the other favorite

story, wework. adam neumann joe is not -- i thought you would do a little neumann. >> newman. >> that's expected to happen this week, layoffs it may not stop there. we're learning the company is now favoring, it appears, at least there's a report out there, favoring, a fight going on inside the company, whether to take a jpmorgan debt deal or effectively to sell the company. that's really what would be going on, to softbank which you could argue is putting good money after bad or trying to save their earlier investment. >> i don't know why soft bank would go for that. >> it's going to have -- >> they're saying this. >> that's the other question >> aren't they one of the biggest hold -- >> you guys still get shouted down. >> they can get shouted down. >> there you go. >> softbank's deal would squeeze everybody else. >> the bigger question here is what is wework at the end of the day, what is this company you had these huge aspirations

to do we school or whatever it is they're closing down the school. you had this massive prediction about we live, this cooperative living space that was going to have tens of thousands of units by now >> right. >> i think they've had two buildings and they're using them as airbnbs at this point. >> the word -- what is it again? densification in a sentence? >> i haven't used it. >> is that what they're -- >> it's to uplift the -- >> i don't know what it is >> to dens i -- it's in the rea estate industry where you bring people in an open floor plan and have people sit on each other's laps. >> that sounds like an hr problem. >> de-densification. >> back to the offices >> the old school. >> do you like densification. >> people have been densifying

for years. >> totally. >> that's the trend. >> you knew it was a word? >> i have never used that word i think it's a ridiculous word. >> to transplant what is wework? it's a real estate concern i think if you want to compare correctly, you want to lack at all of the other real estate businesses out there that's their -- they're probably valued more accurately. >> worth $55 billion or less and in some cases have much more space, much more -- many more clients than wework has. >> let's not forget, wework at its peak was valued at $47 billion which it never should have been under any circumstance. >> by these private investors. >> by the private investors. >> what's the phrase they're using. smoking their own supply no, that's the -- because really they were fake valuations because it would be one valuation, they would raise the valuation by putting more money into their own thing. >> to their own thing. >> nobody else is credenti credentializing it. >> you're smoking your own supply. >> with the expectation they

would unload on all of that in a retail investor through an ipo. >> that tells you something. >> that's not coming. >> the market did its job. >> if that's the end game -- >> exactly right >> exactly right >> finally, quick final take on this story cnbc learning that tiktok has moved into offices in mountain view, california, previously occupied by what's app ticktock has hired two dozen people from the social networking giant since last year, guys what do we think of tiktok everybody thinks this is an arm of the government. meanwhile, we should tell you sequoia, kkr, general atlantic, there are a lot of u.s. investors. >> the chinese government. >> yes, the chinese government. >> the chinese government. >> it has a lot of activity. as soon as there's -- it happened with snap chat when people in the valley saw their middle schoolers were on snap chat, what is this we need to invest. same thing is happening in tiktok in terms of the ownership, yes that is what makes this different from all of the

others there's concern -- >> if you're worried about facebook taking your information, i mean, this is like a -- >> beijing coming in. >> very, very legitimate concerns about the ownership of tiktok but as ed is saying though, you know, we are going to see this, right facebook is already what your parents use. then people went to instagram. now the instagram generation, they're getting older. their younger siblings, they have to move onto the next thing. it's just a continuation. >> it's very addictive it's easy to keep scrolling through. >> you're making me sad. we're all -- >> you're old now. >> i am. i'm not -- i'm not on tiktok yet. are you? >> why would you be when the chinese government owns it >> who wachblgnts to be on. >> i'm not on my space yet >> we'll get you on friendster >> we'll start you with friendster. >> i found an application where i can get taco bell and earn

bitcoin while it's being delivered. have you heard about that? >> no. >> someone sent it in. >> i'm unaware. >> coming right now. >> you like the al fresco. >> i think someone is scamming you. >> i'll tell you what it is. >> we've got to go. >> must be true, you read it on the internet thank you. when we come back, investment ideas from maie os cpers ceo tations, there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪ i that's the retirement plan.e, cool. with my annuity, i know there is a guarantee. it's for my family, its for my self, its for my future.

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this morning dom chu joins us now with some names. how's your computers, dom? you got all of your stocks ready to go? >> it's like a hit a lottery this morning people said it's a 50-50 shot. my computer is working. >> no way! >> none of ours are. >> i walked in, there was no blue screen of death, no sad screen >> system wide. >> it is system wide not the chinese. >> mine worked no, no, i'm going to blame them actually for the whole process like you said, joe, we have a lot of movers on earnings and analyst calls. let's kick things off with a couple of dow components johnsod johnson, higher by nearly, well, down 1.5%, down 100,000 shares a beat on earnings and revenues. it also boosts its full year forecast as well, helped along by strength in prescription drugs and medical devices and other areas. those shares on the move right now. fellow dow components, united health group up around 2% or so,

roughly 50,000 shares premarket volume, health insurance and managed care company also posting a bullish trifecta, better profits, better sales and then it raised its full year forecast united health helped along by core health insurance and farm sy benef insurance. and shares of lowes, up 1.5%, 3,000 shares of premarket volume not an earnings report, but america's second biggest home improvement retailer, upgrade to overweight it w overweight it was neutral they look a better outlook for the housing and home remodeling industry into next year and rebound in gross profit margins. a lot of green on the screen we'll see if that carries into the broader market back over to you. >> dom, thank you very much. our next guest runs the nation's biggest pension fund.

marcy frost is here. thank you for coming. >> thank you for having me >> great time to are you here. so many questions circulating and nobody probably has a better feel for this than you do in terms of running a public pension fund, trying to make sure you get a return when you're dealing with negative interest rates and extrabanks lowering rates all the time, what people are calling the new normal i know your fund has an assumed rate of return of 7% how do you do that when there is $17 trillion in negative interest rates in terms of the bonds being sold from governments. >> it is quite challenging and it was in december of 2016 when we actually lowered the discount rate or the assumed rate of return from 7.5 down to 7. we have a new chief investment officer dr. ben ming and ben is running 7% scenarios as we speak. if you think about global equity and equity markets, and our asset allocation, basically giving us around 6.1 to 6.2,

still a delta that has to be made to get to that 7% we believe in the private markets are really the only way we can make up the difference. >> you -- >> it is a huge amount of pressure so many people who are counting on this to be able to say this is our retirement, our funds out there. for the last fiscal year, you didn't achieve at those, 6.7%. how nervous are you about thinking -- by the way, still phenomenal when you look at the rate of return for a lot of markets out there. how do you get to that point what are the scenarios you are laying out >> multiple scenarios, one thing that we do, i think we do quite well, we don't think about short-term market volatility too much we can't overreact to it we have to think long-term, we're a long-term investor, very patient capital. but back to private assets and private markets, we do know that we cannot hit that 7% unless we can get more private equity. >> you can get some serious diversification at calpers so you can smooth out the bumps i was wondering whether you are

mad at central bankers, do you think jay powell is a bone head. as a safver. do you wish -- do you wish they hadn't been cutting? do you wish rates were higher? would it make it easier or has it helped with your equitys? >> as an investor, it is the building blocks of how we build out our asset allocation when you're dealing with negative interest rates as they first building block, it makes it extremely difficult to attain that -- i have to think about it from an investor perspective. >> do you think they should have been cutting >> they have to pay attentiont the economy and inflation. i think they have to factor in a lot of things that it is what it is we have to respond accordingly. >> what about the whole esg push, which you have been a leader on, but now real questions about whether that's your returns >> we don't believe that esg has

specifically hit our returns we do believe that environmental, social and governance issues are important to the long-term health of the fund and those are both short-term and long-term risks that we pay very close attention to. so, you know, i think there has been some coverage out there that esg around investment, engagement, had an impact on the fund it has cost the fund some money, the investments done around tobacco, for example, and coal but -- >> has that made you rethink your approach to all of this >> i came in three years ago and it was something that i wanted to rethink immediately and i think the board as well as the management of the organization, we believe we get a lot more out of engagement with companies than we will out of investment from companies the number one reason for that is the moment we take our money away, we lose our voice. we have to stay engaged in the markets and think about how do we work with these companies in long-term -- >> should they be using the investment dollars of your

pensioneers to have a voice at the table of certain types of companys >> yes >> you have to be woke if you're operating in california. even if the expense of your poor pension people. >> the board of directors opposed moves to divest stocks and private prisons and gun retailers and companies tied to turkey because of all of these reasons. >> the last 18 months. >> mob outside your building yeah >> our number one focus is 2 million members need to rely on us for pension and healthcare. that's our focus. >> yeah. >> just in terms of what you look to with china, i know you mentioned your new cio who s could from a background of investing money there too. do you look at that as an opportunity? >> tensions are tough. markets like predictability. we like predictability, we do not like extreme volatility. you have to look to the emerging markets. we're not that exposed to china. we're exposed, less than 2% in our global equity, we have some exposure in private equity

but very small exposure into china today. >> marci, thank you for coming we would love to have you back >> crypto yet? >> not yet >> not yet >> okay. >> she said yet. >> not yet >> okay. >> thank you >> thank you >> when we return, we have this morning's biggest movers and tomorrow on "squawk box," don't miss lee cooperman he will join us live at 8:00 eastern time stay tuned "squawk box" will rhtac beig bk.

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final check on the markets for us today up 85 on the dow lots of dow components stay tuned for "squawk on the street," which will be looking at all the different results from the banks and from johnson & johnson. united healthcare. the dollar, if you will. or we can just go "squawk on the street" is next ♪ >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with david

faber, mike santoli. cramer has the morning off busy morning of earnings, banks included first, some breaking news from the imf. to steve liesman in d.c. steve? >> carl, thanks very much. saying we're in a synchronized slowdown, the imf downgrading global growth to 3%. the lowest level since the financia