for him to now be paying him, i don't get it >> maureen, we are out of time today. thank you for calling in >> thank you for having me >> thank you >> we got to go. it is already 8:59:52. futures up 13 now on the dow a lot of dow components. more tomorrow. join us with the aforementioned day. "squawk on the street" is next ♪ >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. free market watching and waiting here futures flat procter, utx among the standouts. big brexit showdown today, the house of common votes and the ten year around 1.77 road map begins with a slew of corporate results. four dow components reporting. mcdonald's, p&g, utx and

travelers. >> biogen, set to seek regulatory approval for a treatment for alzheimer's for early next year. >> u.p.s. shares sinking ahead of the open, despite a pretty nice e-commerce boost to profit. the ceo will join us later this hour. >> the ceo of verizon as well will be here at post nine in a few minutes. an interesting announcement, another guest as well, but i guess it is a mystery. we'll wait to solve it in a few minutes. >> let's start with earnings, dive right in. tale two of dow components, p&g up, quarterly beat helped by strong demand by premium beauty brands and mcdonald's falling on an earnings miss as growth on us comps came in below forecast u.s. mcdonald's 4.8, looking for 5.2. jpmorgan told us the quarter would run light. >> i'm glad you messengered that a lot of people are saying this is a big surprise, a negative surprise if you listen to what jpmorgan

said, you would have been ready for exactly this number, which basically to me says not as bad as feared. 5.9%, that's a number that is just extraordinary i've seen this stock down 8, now down 6 what can i say if you read the release, you think there is nothing wrong and i don't think the release is far off the mark we have come to expect things from mcdonald's just not possible he's not hercules. this is a very good number and if people think that it is a big downside surprise, just go read what jpmorgan said. didn't they change the bar they lowered the bar these guys hit the lower bar and we think that easterbrook didn't do a good job? i like wendy's they announced breakfast, the big analyst meeting last friday, very good. easterbrook didn't screw up. this is fine fine number. i'm okay with it >> three cents off eps

by the way, the stock, year on year, is three times the s&p it is 20 some odd percent gain over 12 months. >> the charters tell me it is rolling over you know what, every company has been -- apple was the biggest rollover in the world at 210 i like, in light of what i got, in light of what i heard, from jpmorgan, this is a good number. and i think that if you ever -- i'm trying to figure out when you ever got 5.9 globally. the two stars this morning are procter and mcdonald's one is dimming procter -- >> procter is amazing. organic revenue 7, looking for 4.5. you got organic volume grooming and gillette was the only hard part healthcare up 6. fabric and home up 6 >> i look at -- it is almost as if david taylor stumbled on some sort of fountain of youth.

you see organic sales numbers for a beauty, plus 10%, i mean, were people -- did people want to be ugly, david, and suddenly, like, hey, i'm sick of being ugly let's go buy procter stuff that's 10% this isn't practice, this is a game 10%. >> very impressive. >> i don't hear a single ghost at procter do you hear any ghosts >> no. >> not one. >> they raised their guide of organic sales 3.4 to 3.5 which kmb does as well >> people don't like kmb that's crazy i saw that kmb was bad? >> what wasn't bad >> kimberly-clark. >> yes. >> kleenex. >> anytisometimes you mumble a little >> you want mumble i'll give you mumble. >> hasbro wasn't good. it was bad biogen is pretty amazing >> this is a drug, by the way, not only was it in nobody's numbers, that was because they -- the fda is pvery

proactive. >> this is a story of the morning. >> you're right. i wasted time. >> we're talking about a potential drug here that could treat tens of millions of people, we talk all the time about aging populations, the world over if in fact you actually were really making progress on treating alzheimer's, let's tell people what actually happened this morning yes, biogen did report earnings. but what was most important and why the stock is going to be up 82 bucks at least is this phase three emerge study they -- remember back in march, the stock dropped like a stone from the 320s because of the -- they failed to reach a primary end point. they met the primary end point showing a clinical reduction support the findings from emerge they experienced significant benefits on measures of cognition and function, such as

memory, orientation, and language they say this decision, which they are not going to file, on new drug application for with the fda is based on a larger data set from the phase three clinical studies discontinued in march of this year, following a futility analysis, the new larger data set includes additional data that became available after the prespecified futility analysis showed the drug is acted as determined by dose dependent effects in reducing the am lloyd in brains and clinical decline this is a hugepotential advance. >> you know who will take this drug >> everybody >> you can make arguments -- >> i read that, i want to pay. >> -- to prevent the progression of alzheimer's, you tell me how big this company could be. >> the biggest drug ever it would be the biggest drug ever. >> it would. >> biogen -- >> by the way, long-term care.

you think about all the different impacts, long-term care, think about that, the cost for insurance, because of this -- >> think about our lives how about that let's be really selfish. this was incredible. this drug we all gave up on. we didn't think it worked. >> we know how hard this is to crack. >> you're not supposed to be able to. i remember major ceo of -- major drug ceo told me never never. will never crack. >> bespoke looks at -- bespoke says their earnings tracker of stocks above $200, no stock above $200 has ever gapped u 30% plus. >> that's incredible the story of the morning. >> yeah, it is no doubt about that. >> wework is not the story. >> i think wework might be the story. >> no, this is the story listen, in terms of -- come on, if approved, it will become the

first therapy to reduce clinical decline in alzheimer's >> no one is -- >> no offense to wework, it is a great story. i'm glad i broke it yesterday. moving on. >> who is going to make more money, biogen or neuman? >> biogen. a lot more, yeah. >> fine. >> biogen will make a lot more money. >> all right >> let's move on we have some really interesting guests >> okay. >> who have snuck on while i'm looking for my notes we have a busy morning at post nine hans vestberg, and kevin mayor joins us as well >> how did you get these guys? >> you pick up the phone and good things happen. >> i said i think i know those guys can we get them? they're right here >> thanks for being here today you got some news, we're going to break it right now in terms of disney plus, which kevin you oversee at disney. november 12th the rollout date a lot of people may have already

seen the advertisements. and hans, as well, you were partnering with them to provide your wireless customers, your unlimited, your fios customers as well with disney plus tell us about the deal. >> we are, of course, extremely excited to partner with disney we offer to our customers basically exclusive with disney plus, we'll bring that one year for free and, of course, this is part of our strategy and we're extremely happy to partner with disney with the super content they have and extremely exciting disney plus they're coming out with. >> why is disney doing this deal and we should make it clear, it is going to be free for a year to unlimited wireless customers of verizon >> correct. >> that's amazing. >> why are you doing that? >> we like to partner with some of the -- with the top brands in industry verizon is at the top of the game with wireless

we think we like to offer their customers the opportunity to look at disney plus and experience it. and we think it is a great channel. we have other direct to consumer channels, we have partnerships with microsoft or xbox, google for chrome cast and android devices and roku and others. we think this is a great wholesale partnership. >> it would seem, so much focus on the rollout of disney plus, how many subskrcribers youmetri big potential subscriber number. >> it will boost our numbers somewhat we also think it is great for consumers. it is a brand that we're happy to be in partnership with. >> we want to give our consumer choices. this is one of the best choices we can give them on top of our network, we have a great network we're building -- our fios network, on top of that, giving

our customers this opportunity is a great sort of consumer experience. >> i want it sign up for disney plus starting the 12th, i'll spend 84 bucks a year. i can pay less if -- >> $69.99 a year. >> for the whole year? >> yes >> you -- there is some expense going to disney as a result of this discount you're giving your customer base. >> i think we have a really good commercial agreement with this we both are happy with it. we think it will boost the customer for disney and verizon. and i think that's the most important for us i think, again, it is part of our strategy basically we have the best network, we have the best brand, and we have the distribution we work with the best brands and disney is there. >> are you going to spenars as supporting this? >> yes we're going to jointly market this to our customers. >> it is a good win-win deal and very great process to work with --

>> why verizon as opposed to another wireless provider or others out there -- >> hans? >> easy question. >> just you. just you. >> we think it is -- it is the world class network, great brand, the kind of brand we're proud to be associated with. that's why we did it with verizon. >> everyone is talking about the twitter threat right? the disney plus made, all day long, all the content. it makes it feel like the tone is going to be about legacy content as posed to new original content. what -- where should our heads be on that. >> we have both. large library. very proud of the content we have that we already produced and has been exposed to consumers over decades a lot of original content. we have more than 25 original series that we're come out in the first year, more than ten movies and specials and as we go forward in time, a lot of originals that we produced we'll produce over a billion dollars in the first year and over $2.5 million five years out. we're spending a lot of money and creating great content. >> is this go to be it

are we going to see more deals, t-mobile, at&t or -- >> exclusive >> and why was it -- there are very few things kept as secret, i didn't know. i kept thinking -- >> you got a problem with that >> no. i just want to mention that it is seminole. disney was going to break down i didn't think they had -- >> i would think right out of the box, a potential audience and subscriber numbers that are going to be very strong. you don't know how many investors are focused on early subscriber numbers, what you share with the investment in the ki-moon ty in te community in terms of expectations. >> subscriber numbers for sure we got a third domestic, two-thirds international and we feel confident we'll hit that and over time we will be releasing numbers. >> what have the early -- can you give us a sense in terms of -- i heard there was some --

in the netherlands you have been offering -- i'm not sure exactly what i'm hearing, 450,000 people have signed up >> we're not announcing how many people signed up in the netherlands. a trial launch to test the technology and the product and see how consumers like to interact with that it is doing very well. we have a lot of free trialists. >> over the couple of -- not even six weeks or so, any takeaways? >> big takeaways, consumers like it good feedback. good press about it. a technical test we wanted to see if there were technical issues with the app. >> the netherlands a lot of broadband, we have a lot of -- our content is not

unemcoupu unencumbered in the netherlands. >> it is much to your existing base of customers who are -- >> it is also new customers. >> my point is, how do you view it from a -- it is a plus for those of us who are already verizon wireless unlimited customers. but at the same time, you believe it is going to allow you to attract new customers >> definitely. i think we learned a lot we have an exclusive agreement on music, and we learned a lot about how it is resonating with our consumers. i think this is now we can offer it also to the home people consumers and the fios. we have hundreds of millions of subscribers on wireless network that want to get this offer. and for us, using our strength, we also are doing other things from our partnership dense populated areas, like theme park, we talk about 5g we're having drone discussions as well. how we want to use our drone

technology >> what does that mean drone discussions? >> we have a company doing drones, we are discussing how that can be moved on movie sets. >> different. >> different areas of business in general we think disney is a great family to partner with we're very different assets. >> i got to tell you, i pay a lot of money for this espn plus. am i going to wake up and find that if i subscribe with at&t, i get espn plus for free it is one of the bills i get >> that's not in our plan. >> why don't we break some news? >> we can talk about it. i don't know. >> you can -- give this to me free, right, right here, can't you approve that you have to talk to iger first >> i have to talk to iger first, exactly. well said. >> kevin, again, a great deal of focus on this from your investor base given the importance of it

for overall for disney there is also concern about how much money you're going to be spending opportunities for more partnerships, similar to this, where you're going to get marketing dollars spent not by disney itself? >> there is a possibility. there is nothing in the works right now. we feel pretty good about our own marketing efforts. throughout the company, we have many, many millions of touch points with consumers. we utilize all of them we spend marketing dollars of our own too. we feel good, the awareness is high we do benefit from the brands, disney, marvel, pixar. "star wars," national geographic, all the brands are in net service and benefit from that too we think our marketing efforts and direct to consumer touch points will work really well. >> netflix premarket took a spill. i wonder whether or not you think some of the costs of ten pole series is getting excessive or the cost of show runner, is it getting stretched >> clearly getting more

expensive. but i think talent like that has value. it is a scarce commodity the price, the cost has gone up, we think we can stay in the game, make great product, do it a reasonable price and monetize it through the direct to consumer relationship. the business we are getting into has good economics. >> it is going to be diluted for some period of time. >> yes, fy 24 break even. >> this is still in keeping with bob said that 24 is the -- this doesn't send it back to 25. >> not at all. 24 is when we break even it is all good. >> how is espn plus now? what numbers do you have >> our install, so that's when we announce the numbers. it is doing well doing fine. >> on netflix, as carl mentioned, down a bit on this announcement, when is all of your content going to be off of netflix? i know some deals have certain

expiration times >> we do 2016 to 2018 movie slates on netflix. that's pay one and pay two deal. goes on for 18 months after in theatrical and home video. and then has a hiatus where comes to our service and some titles go back in several years for us, short period of tim. >> and, hans, what are your expectations for your customer base how many people do you think will take this offer >> i think we have good experience from when we did our exclusive on music how we are materializing that together with our partner. we're oidoing this with the best partner. it is transformative for us. it is part of our strategy at the beginning of the year. i'm happy with it. i think i'm satisfied with what we're doing now. >> we'll be watching closely thank you for joining us, for breaking the news here. >> we're breaking the news here. >> that's worthwhile.

>> do it again we're ready. anytime. kevin mayor, hans vestberg. still to come, u.p.s. this morning, the earnings announcing some new drone delivery agreements we'll talk to david abney on a first on cnbc interview. premarket, got to get to hogg and polti and under armour and a bunch of others. don't go away. ♪ ♪ or trips to mars. no commission. delivery drones, or the latest phones. no commission.

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we heard an amazing deal with verizon and disney let's talk about united technologies here we go again greg hayes greg hayes is doing -- he bought this -- collins aerospace, that market sale is up. amazing synergies. he marks zknocks it out of the there. in production, still, the max. that will hurt them if the max goes offline here is an odd one china inconsiderabredibly strong you have a story everyone is giving up with china you have stronger numbers in china climbing too i think raytheon will have good numbers later. i think this defense juggernaut that is united technologies, defense and aerospace, pratt whitney and raytheon amazing you buy the stock.

you buy it. >> it is important to remind people, emerge with raytheon, this company gets split apart. carrier and oates go their separate ways and as you say the main part of it. >> let's plan out, i'm into esg these days, some people think that your eyes glaze over. i'm not going to let them. 38,000 people put through college. through higher education we think that business isn't the greatest source of a platform of change isn't that amazing 38,000 people go through school, because of greg hayes. let's not forget business isn't just for capitalism. >> the other proxy for china is carrier, orders were down 11. >> carrier was weak. it was weak for residential too. it is a disappointment i'm not going to -- i can't hide that i was surprised. but, you know what, maybe the climate control business was

just in the end a security climate control up .5% year over year disappointing. but in the enough to make it so people say, i don't want to own this stock instead, they say, raytheon, united technologies, pratt and whitney is amazing. >> you mentioned boeing. some headlines on reuters now, they have completed a dry run of a certification test flight. faa says still considerable work to do. several more weeks before a key test flight. but if you can see a better path here to return to service, that's all anyone cares about. >> yes i want to hear what gary kelly says at the end of the week, southwest. i know that a lot of the suppliers to boeing are not as optimistic as boeing has been. boeing is what i would say an influx story, like i haven't seen in a long time. >> influx story. >> each day you wake up and there is some sort of revelation. >> they kept the dividend.

maintained the dividend. >> they kept the dividend. they kept the dividend that does matter and if it weren't -- look, it does -- we still await -- there is a piece in the seattle papers saying you shouldn't conflate what was the text messages with mcas they're not related. i want to give boeing its due on that the paper has been critical about boeing but, look, anything that makes this plane go in the air will be a gigantic spur to the u.s. economy. right now, of course, let's put it this way, if they stop producing, the reverberations are just huge. so still producing them. >> talking -- i think yesterday told us 900 suppliers, just an en enormous amount of product feed. >> here is something people might say, jim, you're in the pocket of the administration it is amazing that the economy

can be so strong with boeing in flux and gm on strike. >> yes which today the journal says, watch it, rank and file might balk we'll have to wait opening bell, s&p, cnbc real time exchange, at the big board, nordstrom, celebrating the opening of its new york city flagship this thursday this thing is a monster. >> yeah. a lot of people have been to the -- they'll order you pizza while you're there, have a cocktail, a lot of people like it. >> i've walked by the construction site, sometimes on my way home, it is quite a thing. central park tower will be the second tallest building in new york city. >> he's walked by it i know people that have gone inside >> men's store across the street >> maybe it is better to -- >> it is a great time to build a department store. >> to members -- to people watching, listening on podcast,

david is being facetious what happened to that takeover bid to go private? >> it didn't go anywhere at the time doesn't mean there is still desire yesterday we were talking, gerald storage, stores are us, ran hudson bay, he was making the point sometimes it is easier to make the changes you need to in private i would add to that, though, do you want to add debt in this environment? >> if you're a department store, no bruce nordstrom was the inspiration of the interview, fantastic. >> we'll talk to eric nordstrom. >> that's great. >> dirt environmental solutions, you mentioned toys, hasbro down 15%. >> i do have ryan golder there a lot of it is point blank -- i'll just read -- they said that

the -- the threat of tariffs reduced revenues in the third quarter, increasing expenses deliver product to retail. we all have been waiting for some company that is just going to get head slammed by the tariff here we are. and it is really impacting things this was a big massive top and bottom line miss from the get go caused by the entertainment deal i have to listen to more tonight. this stock had quite a run he did say, listen, we're getting out of china you're a toymaker, you can't get out of china fast enough toys are made in choina. >> even if you bring it in early, you have to put it somewhere. they're getting slammed on ware housing costs. >> a lot to not like before everybody throws it away, you have brands, power rangers doing well, play school, mr.

potato head. >> nothing wrong with mr. potato head. >> there you go. i want to hear tonight, remember, there are things -- there were good numbers, nerf, my littleplay-doh, but not good this quarter. they had all been real good, play-doh had been unbelievable and nerf was great there is a reversion, some of the games that have been -- some toys are not as hot. we have to find out more that's why you got to watch "mad money. >> harley, the comments on the call now, business under pressure, international markets continue to face substantial head winds stock still up 7%. >> hand it to them, it is funny, isn't it, some companies, we like the cost control more than we like the revenue, lack of revenue growth harley showing some -- in

cutting employment there are, boy, things are all over the map today you messenger edmentioned polti i thought it would be good it is selling off. housing stocks have been so strong. >> i was going to ask you whether you thought it was extended here. >> they're extended. >> i saw the boost from first time buyers, orders up 39 among first time buyers. people finally leaving their parents' basement is working out. >> millennials are fickle, sick of their in-laws i don't blame them one bit it is probably an advised strategy i'll tell you what is incredible david talked about this strength of biogen correctly in alzheimer's. how about bristol-myers coming through with success in their drug this morning. and by the way, dr. cafario said that on "mad money" and people says, please

>> novartis, also -- >> i think they had a good quarter. people are selling it for no reason >> yeah. >> bristol is going higher they love, they love, they love, they love, they love abbvie and that combination with allergan, which you said was overmanaged >> right >> that was quick. i like that. i do just putting words in my mouth. >> of course >> as though i said it a thousand times i did want to mention howard hughes corporation, a company if you recall on the 27th of june, they confirmed they announced a review of strategic alternatives to what they said was maximized value, which there was hope to sell the entire company, didn't happen yesterday they announced that following that review, they will execute a transformation plan. they're going to have a new executive team, so the long time ceo david winerib is out

grant herlitz will step down as well they fail to sell. they hoped, bill ackman, large shareholder, they hoped that brookfield and blackstone would be there at the time when they first announced toward the end of june this plan. that they hoped would end with a sale but it was too much for either one of them. apparently nobody can find the right fund to put the asset in has an irr that isn't as high as might have been desired. but it has a fairly certain structure to it that would need to be long dated but it simply proved to be too large an asset for any of the hoped for potential buyers and they couldn't sort of break it apart in a way that would have made any sense i am told south tree seaport which they also own, great, by the way, beautiful but doesn't fit with this.

it has a lot of retail which is not necessarily had they want. the woodlands is one of their biggest properties, huge thing down in houston. but that's getting hit as a result many who believed exactly what would happen did happen would happen and so had been betting against this company ever since they announced a strategic review >> we haven't mentioned under armour, kevin plank stepping down january 1 patrick frisk, the coo will take over good interview with courtney about how they will turn around north america. >> do we have a clip so much good one thing that i learned from that, and, kevin, of course, very self-effacing he told us frisk is the man. every time i spoke with kevin, he said, look, you should be focusing on frisk. i did an interview with kevin, i only wanted kevin to give you the behind the scenes. stop and frisk was my thing.

turns out frisk was the man. and, look, i think that kevin is talking about -- talking about an iconic brand, the company has not done that well remember what happened, i've always felt the colossus of woe that mark parker said i had enough of under armour and look at nike. it is amazing. up 30% >> i did want to come back to biogen the move in the stock -- >> you're focused on that. >> i am focused on it. we're talking about a potential therapy to treat alzheimer's it would be by far the largest single drug we have ever seen. >> more. >> you can see biogen's market cap is responding to the news, they plan to pursue regulatory approval for a aducanumab. that's what they're calling it if you go back and look at march, you can see what happened to the stock when the results

came in, and it looked look a fail they have gone back. they have gone back. they expanded. they did new analysis on those phase three clinical studies that were discontinued in march and the new analysis of a larger data center included additional data that was available after the prespecified analysis showed that it is farm clopharmacologi active this is not just about treating alzheimer's. this is about the aging demographic in this country, think about a place like japan, where they're dealing with enormous healthcare costs. if you actually can find a drug that would really treat alzheimer's, you're talking about cutting healthcare costs, you're talking about just a

meaningful change in so many different areas, obviously the main one being the impact on loved ones of treating for and caring for somebody who has alzheimer's. it is early. but this is significant. >> reversing brain plaque. >> yes there have been some debate whether that's really where -- whether that's really indicative of the disease itself. the beta am lloyds or something that shows but is not really at the base of what is causing. >> those everyday needs, the everyday needs that have been -- have stymied people. i know that in the netherlands, they treat alzheimer's very differently. they try to get them to do everything that you just listed, and just do it by rote this is a pill that would take care -- nursing, the whole concept of senior living would change. >> they are also, by the way, going to offer the drug to eligible patients that were previously enrolled in the phase

three studies. if it is working, why wouldn't you want to take it? they plan to file for the license for the drug in early 2020 and they'll continue a dialogue as well with regulatory authorities and markets that include europe and japan all these aging populations the world over one can only imagine what this drug could actually mean if it does work. >> i'm going to say -- >> if it does get approval and does successfully retard the progression of the disease and if or roll it back >> i'll say something nutty, but maybe 80 points is not enough. maybe it deserves to be even more you have the number one drug of all time, potentially. >> meg tirrell just talked to the ceo, has more on what is an important story this morning good orning, meg. >> good morning. talk a reversal. jpmorgan out with a note saying shocking, simply shocking. i did talk with michelle, the ceo of biogen. there are already questions

about is this the data driving this, the fda taking a different tact he said this is the data we're following the science here there was a futility analysis. they looked at the studies at an interim basis. as companies always do and try to figure out if the drugs la s look like they will k you saw the drug take a massive hit on the news. everybody thought this drug was dead and even more than this drug itself, the whole hypothesis that targeting am lloyd beta plaques was the right way to go after alzheimer's disease. i talked with him and the lead of the program who said the science drove this it is extremely rare after a futility analysis suggests the drug isn't going to work, it actually will work. so the company saying they're going to file for approval in early 2020 after guidance from the fda. the ceo telling me they dotted all the ts and crossed all the is with the regulator. on the call, the head of r&d telling analysts that the fda

did see the full study analysis and gave them the feedback that based on essentially one positive clinical trial, in the latestages, phase three, it does make sense to go ahead with that regulatory filing in early 2020 this will be the first alzheimer's drug to affect the course of the disease to potentially slow the cognitive declines you see here. so it would be a massive potential drug if it is appro approved they are also -- they said on the call starting to have conversations in europe about filing for approval there as well it will be a story to continue to watch and one next huge catalyst for biogen in december, they present the felt resuull r. more to follow here. check out the stock chart. the fomo of all trades, the fear of missing out, it appears to be back, guys back over to you >> meg, we have been trying to explain how important this could be and appreciate your help in trying to do that. meg tirrell coming back to her i have a feeling throughout the

day. let's move on to u.p.s the shares are under pressure this morning company reported earnings as well it was a beat on the epps line slight miss on revenue announcing the expansion of its drone delivery service, partnering withcvs, amerisour amerisource, kaiser permanente to deliver subscriptions via drone. thank you for being with us, david. >> glad to be here. >> you had a good deal of success in terms of capitalizing on the investment u.p.s. made over the last few years. this quarter, though, there seems to be a little bit of disappointment, can you characterize the quarter for us and what you're seeing in the current moment as well as we head into the holiday season not far from now >> we had a very solid quarter this time. our positive operating leverage was at a very high level. we actually reduced our unit costs 2.5% in the domesting business i can't remember the last time

that we did that so we have a lot of momentum going into the peak season so we're encouraged by the results. >> i think that some people are concerned about your concerns about the future and the economy, because candidly, this stock should not be down six do you think there wasn't anything revelatory about the future that was negative for u.p.s. going forward >> that's right. it is a dynamic environment. that we're living in there is no doubt about it and there are macro concerns we also believe it is how we react to those concerns. our international business had margins of almost 20% and still grew the top line. would we like to see trade developments going in a more positive direction

but we do thing there is some raise of sunshine when you hear about the first level between china and the u.s., brexit, there seems to be a path so we believe there is opportunities there. >> you guys, u.p.s. is one of the most consistent companies everyone knows talking about one of the great companies in america we have come to believe that when we see people from u.p.s. who are being groomed, they're going to stay. there is an amazing man, jim harbor, chief operating officer, he's leaving and we always felt make he's going to be the heir to you. we all -- nobody lives forever and why did he leave he's pretty great. >> jim is a great guy. and he's been with the company 35 years he started as i did at very early level. and then he's just had good success as he's gone through but, you know, that is the normal progression cycle that we have at u.p.s.

people normally spend their entire careers and then they retire and then there will be other people that will step in we have a solid bench. we talk about secession. i've been the ceo for five years. we talked about it for all five years. tass it is a very active process, and we feel really good about the leadership team. >> you got a question on it, on the call about it, a little surprising, about your succession plans are you surprised to get questions about it >> i've been with the company for over 40 years and i'm 64 years old. there is always going to be questions. my answer is that i'm having so much fun doing this. and i'm so involved that of course we're going to have a succession process in place. we're focused on taking care of our customers, doing the job we

need, and we have a deep bench we're not worried about it. >> next day air volume up 24 versus prior 30. is that sequentially normal? >> 30% was like an extreme high. to follow that up with 24, of course people are trying to see where they can position inventory to where they can hit next day ground as much as they can, which is a fast growing part of our business and -- but next day air, 24%, second day at 17%, our results have really taken flight because our air business has really gone up. >> you mentioned unit costs, how did you do that? how do you take unit costs >> it didn't happen by luck. it was our strategies. it was our initiatives in transformation and our

investments. we have invested in 400,000 in our additional capacity the last two years. so all those things combined, we have done exactly what we said we would do and we would bring the cost down. >> there are many situations, emergency situations, where we have cell phones we know where people are someone in our party gets h s by a snake, otherwise they might die, drone >> the drone opportunity just something we're really excited about. and our flight forward subsidiaries has gotten off to a good start we already have done over 1500 commercial flights but the example you gave jim is a good one take the raleigh, north carolina, area it doesn't happen often, it is very expensive and it has an expiration date. with drone technology, being

able to move that from one facility to the other could make all the difference in the world. it is those kind of opportunities multiplied by the thousands of times that make drones such an exciting strategy >> i think the people don't understand i'm involved with a i'm involved with a medicine where literally if it gets warm for an hour it goes bad and it's a $250 a month medicine i can't find a way to get it to me and when i was in a jam in mexico, i would love to call cvs and say here's where i am, check my gps and i will pay anything if i don't have the medicine many things happen drone, you. >> yes that's why we're partnering and announced with three different health care companies, large, multinational companies, and really there's so much more to come here. this is just at the very opening part of the particular of this. >> as we head into the holiday

season fairly soon what are your expectations in terms of volumes and your preparations in terms of additional employees that you always move toward at this time of year? >> peak season will be here before we know it, no doubt about it it's mid-october our volumes will, from an average daily today, will go up over 50% if we're delivering over 20 million a day, it will go up over 30 million. but we are prepared and we are ready. we're collaborating closely with our customers. we expect to have another solid season. >> always appreciate you joining us. >> thank you. >> david abney, ceo of ups chairman and ceo i should say. guys, did want to hit wework briefly here they were talking about it on the last hour of "squawk box." it was yesterday around 3:45 i reported softbank was going to take control that has been confirmed by others reporting this morning.

we haven't seen a press release from softbank. it's a complex deal. i report it as being an equity infusion late yesterday of some 4 to $5 billion, but then i was hearing it was more just general funding. the journal has different stories in terms of the makeup of said funding. but the end result here will be, of course, again, as we did report yesterday, adam neumann selling some shares, being able to repay, for example, that personal loan from jpmorgan, as well, reducing significantly his ownership stake in the company and softbank having what will be an 80% economic stock in wework. marcella coming in as its chairman, the long-time ceo of sprint who is the senior member of the management team at softbank to oversee it and put in new management to try to get this company, guys, to some level of profitability in the

future while maintaining a growth rate fueled by enormous amounts of capital they were running out of the capital and need this infusion of significant funding from a softbank perspective it has not been a good investment to say the least add it up between debt and equity they will be at 14, $15 billion in terms of money put in terms of a company that has a valuation -- >> pre -- >> pre 7.5 to $8 billion saying yesterday. valuation pre. >> unwinding voting structures like that is expensive no doubt about that skribl story. the dow would be about 120 points higher without travelers and mcdonald's they are in the blue trips don't go away. ♪

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jim, what's tonight besides h hasbro >> esports is gigantic and logitech you need their apparatus to win it. hasbro, that's down 20 maybe that's a buy maybe that's a buy. >> release the bracken >> yes good job on getting hans. >> thank you hans and kevin. >> what a great get. >> good hour. >> very good we did a lot this hour. >> yeah. >> you, you. when we come back we'll discuss retail and the consumer with nor strom ceo erik nordstrom dow is up 13 is the monolithic view of emerging markets obsolete?

at pgim, we see alpha in the trends driving specific sectors 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. . welcome back to "squawk on the street." i'm diana olick with breaking news from the national association of realtors existing home sales in september down 2.2% to a seasonally adjusted annualized rate of 5.38 million

units. that's a miss. the street was expecting flat. sales up 3.9% year over year the realtors know it's coming off a low comp because mortgage rates were 4.8% a year ago, now 3.6% sales were down. what's the problem it's prices. the median existing home price in september, $272,100 that is up 5.9% year off year and the strongest annual price gain since january of 2018 we've seen prices up now for 91 straight months. that's over seven years. inventory also down 2.7% year off year to 1.83 million units for sale, a 4.1 month supply the realtors are saying because of the low inventories we're seeing prices heat up again, also because of low mortgage rates, that is cause morgue weakness in sales. existing home sales unexpectedly down 2.2% month to month

back to you guys >> all right thank you. diana olick. good tuesday morning welcome back to "squawk on the street." i'm carl quintanilla with david faber, leslie picker in for sara eisen. we're live at post nine of the new york stock exchange. s&p 3012, highest since september 20 as the earnings picture is mibsed. >> our road map starts with the earnings mcdonald's, and hasbro reporting. >> under armour ceo stepping down we'll talk about the future of the company. >> a first on cnbc interview with discovery ceo david zaslav talking about treaming, conten wars and all of the content they've got there. >> first a bunch of earnings to get to this morning as you can see, the market is mixed this morning. starting with p&g, helped by strong demand for the beauty brands, the stock up more than 30% so far in 2019 on the opposite side, shares of

hasbro plummeting after missing their earnings expectations with tariffs boosting costs you also have dow component travelers, also moving lower today after reporting mixed results. bob pisani joins us now, taking a look at today's numbers. >> and leslie, several notable beats and raises, but a couple disappointments. take a look quickly here procter & gamble nice beat, raised guidance. sherwin williams had a better year and beat and raised guidance as well united technology, had a nice beat and raised guidance but the beat was what -- the raise guidance sort of what the q3 beat was look at this carefully same with kimberly clark, raise guidance, but all in the q3 beat they had mcdonald's that was an outright miss by 10 cents and lower, u.s. same-store sales was the key, part of the disappointing report from them. we had good numbers but very hoddest gains amongst the companies that beat because

they've had amazing years. sherwin williams up 40%. how much are the earnings up 12 or 13%, and they're one of the best earning performers for the year united technologies up 30%, but up mid single digits, 6% on the earnings growth. procter & gamble, maybe 6% or so kimberly clark, 4 or 5%. amazing returns here from these companies on mid-single digit earnings growth and they're doing better than almost everybody else 2019, basically a flatish year for the s&p 500. what does flatish look like, up or down 1 or 2% every quarter. q3 down 3% that will probably be better closer to flat, but this is what flatish looks like, coming down, the fourth quarter, 4% two weeks ago, now 2.7%. that's what flat looks like. and the first quarter of 2020, it's been coming down. they're talking about 10%. those numbers are coming down here we were at 9% almost october 1st for the first quarter of 2020. now it's 7.7%.

where we are is flatish 2019 earnings growth, some hope for europe, maybe the numbers will get higher, because christine lagarde will promote a fiscal stimulus program and we'll see how we do here in the united states the bottom line here is, we've got a phase one deal potentially for china and maybe some fiscal stimulus coming in europe. that's the hope for stocks right now. carl, back to you. >> so much to get to today thanks got to hit mcdonald's as well. shares sliding on this earnings global comp miss in the u.s. with us at post sign, managing director david palmer, welcome >> thank you >> stock is off 20 bucks in two months was this expected? >> the u.s. did slow in the last couple months. july was strong for mcdonald's they had the toy story 4 happy meal since then things have slowed and a lot of competitor activity throughout you saw popeye's with the chicken sandwich and the spicy chicken nuggets from wendy's and

impossible whopper from burger king they were a sitting duck in august and september the industry is fine good to be global. you can see the global names out there. the cash flows are great for the franchisees. it was a slow down through the quarter. >> less of a macro story and more of everybody has their turn at the menu, right >> yeah. >> everybody has a turn at breakfast. you get a nice publicity stunt from a shortage of popeye's or something like that? >> right these guys, mcdonald's, they just replaced their advertising agency, the same one they had since the i'm lovin' it campaign in the 2000s there's going to be a new marketing direction for this company. for particularly the u.s. in 2020 there was a shift away from breakfast and value by mcdonald's you can expect a little more focus back on that, a little bit more on the regional basis those are ways to compete regionally they need to focus on those parts and get a new advertising direction. >> in terms of these busy competitors that you're talking

about, i don't want to brag, but i do live next door to a popeye's and for the last few months, they've been sold out of this sandwich. >> right. >> how much of a threat is it to mcdonald's business, some of these kind of headline grabbing new additions from their competitors, versus just kind of buzz and nothing more than that? >> well, first of all, the good news is that advertising and marketing and innovation works this is an area of the consumer that the consumer responds, the drive-through augmented with delivery works these guys have digital advantages they're trying to improve upon they have the tools. they just need to get in the game a little bit more on the innovation front and the marketing front, which they probably will. also, traffic has to get in the game for these guys too because traffic has been void of the 2019 story that's where value has to come in and breakfast, which is very trafficy in the day part.

>> i wonder if you think their investments in a.i. can drive traffic. traffic is everybody's problem. >> nothing like having a direct tether into the consumer when they do incentivize that consumer to do more in their app, whether through delivery or loyalty, that can then turn into personalized marketing and all sorts of suggestive selling. that's going to be great particularly if they do some of that stuff through the drive-through which is approaching 70% of their sales. >> right. >> 4x, we've been asking people if you can build cases on the potential breaking of a dollar >> that would be really good, like the 2000s a great era for earnings revisions for mcdonald's used to be the key driver was earnings revisions this year has been about the multiple that's been a hold back for them and the likes of the mondelez of the world out there, all the global guys have had the currency, but with two-thirds of the business outside the u.s., or about 60% outside the u.s., we could use some currency

weakness. >> when is the last time we had a 59 global? we were trying to think? have there been six handles on global comps in the last -- >> they've been near this level lately and the -- what's been happening is they've had strong international growth the u.s. is now approaching that international result the developmental areas, you don't really want that to lead you because that's where less of the earnings are tied up you want the international lead markets and you want the u.s. to really lead that for the real earnings juice >> does it feel to you like 200 will be a floor or is it too early to tell? >> that seems like a relatively good floor because i don't think you're going to have negative earnings revisions beyond a little bit here. i think the company is incentivized to get the earnings growing the next year because that's in their bonus contracts. they really made that a bigger part of their bonuses in 2016. so we expect them to have a near earnings algorithm year this next year. that's going to be drama going

into the 11:00 a.m. conference call. >> which we know you will be all over thanks for the head's up on that. >> thanks, carl. >> under armour announcing the founder will move to an executive chairman role. patrick frisk will take over as the company's ceo on january 1st. courtney reagan spoke with both on a first on cnbc interview this morning courtney >> hi, good morning to you, david. that's right so kevin plank says he's still going to be very involved in the company that he founded, in addition to being the executive chairman, he's also still going to be what he calls the brand chief. as patrick frisk takes over as only the second ceo in company history. i sat down with both gentlemen this morning in a first on cnbc interview. >> first and foremost this is my decision to get to this moment of the ability to work and frankly have enough partnership where patrick and i complement each other so well and the ability for the business as we said the last time we talked with you, the company is really

moving from defense to offense. >> we believe we have a strong plan in place and we now want to be able to free up kevin to be more strategic in terms of how he thinks about what he does and then lallow me to do what i do with more freedom as well. we think it's a perfect combination. >> plank, of course, has been the ceo of the company he founded in 1996 out of his grandmother's basement and he took underarmor public in 2005 frisk joined the company in july of 2017 from aldo where he was the ceo and also worked very closely with that company's founder. frisk has played a key role in the company's transformation plan and helped reshape the supply chain, operations, retarget under armour's customer the company never did fully outline or get to that until we got to today's announcement.

a number of analysts are out with their takes on today's move piper jaffray reiterating overweight, oppenheimer says we see today's news as a signal the company continues to struggle somewhat in its repositioning efforts. north america has been a pain point for under armor as they work to stabilize the sales. remember, shares are down about 25% since the last earnings report after noting that that did not yet reaccelerate shares are higher today on the announcement back over to you >> all right courtney, thank you very much. big story. curious to see how plank maintains his involvement in operations courtney reagan covering under armour shares of biogen, a big story on news it is set t meg terrell talked to the ceo and will bring us details later

on nordstrom with a new flagship in new york city. the company's co-president and don't miss a first on cnbc interview with discovery's david zaslav a big show ahead as p&g is helping the dow down only 6 points back in a moment (soft music) - when i see obstacles, i create opportunities. - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals

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nordstrom's new flagship opening here in new york this week it comes as the seattle-based retailer looks to use physical storefronts to increase sales

across their business amid what some view as a retail slowdown for more we're joined by nordstrom co-president erik nordstrom. thanks for joining us today. >> thanks for having me. >> big news in your world. seven years in the making. of course this comes after neiman marcus opened their new flagship store in new york we've gotten renovations of sack's and other stories in new york city. what are your plans to stand out here in new york city? >> well, first of all this has been our biggest on-line market for some time, manhattan is. we look at our business market by market. and to compete and really serve our customers here, we needed a big flagship presence. it's hard to come by, though the space and the right location we looked a long, long actually decades to come up with the spot we have and to be able to build a new building and bring what's really a modern flagship store, true flagship store, that can serve the market and bring together not only our physical

experiences but our digital experience as well. >> well, what we've heard from so many people for years now is that retail is on the decline, especially in that department store space. so when you say you're bringing a modern store to new york city what do you mean by that what is modern in a way that can actually bring foot traffic into your store here in new york city that can make the investment worth it >> sure. well, first of all, being able to build a building from the ground up we can build the technology and the connectivity, often in big urban corridors in buildings there's not good wi-fi or cell connectivity customers use their phone in particular during physical journeys as well customers don't think about channels they don't think about physical and digital. it's just a shopping journey for them they are increasingly in control. so being able to build a building around these connectivity and bring digital into it, we know that, you know, over half of our store visits

are on-line and over a third of our on-line sales come from a visit to the store first making that seamless, things like alterations and buy on-line and pick up and same day delivery are becoming important. >> why is it important to have such a large real estate footprint to do that you've been successful in l.a. with your nordstrom local stores which are a smaller retail footprint, don't hold any inventory. how can you see the large presence in new york city as necessary to achieve that synergy between on-line and in store? >> yeah. well, we look at the menu of assets we have and that we can bring to bear to serve customers better it's really not about opening a store here we look at it as a market. to have a big flagship and this is really special flagship it's architecturally something that's going to be compelling people who want to come visit. merchandise, we can do things we haven't been able to do in some of our stores.

it's part of the mix we have here in manhattan not only do we have our flagship store but two of the local nordstrom stores that opened in the last month two of our rack stores, trunk club clubhouse and in all of those six locations we can take returns from however we've sold it we can do -- order pickups, we can do alterations and all of them it's about leveraging that since we have bigger or smaller digital to serve customers as they want to be served. >> we keep hearing from analysts we should brace for a new round of closures industry wide once we get through the fall holidays is that true >> well, i don't know about the industry for us, you know, we have 120 stores we've had a few store closures each year the last couple years. as the world changes, centers go up, go down, we've had afew. for us, there's nothing unusual like a spike in closures we're

anticipating. >> if the focus is on flagships where does it leave the mall what's left in terms of mall interests? >> i think there is a tipping point of you have to invest in the physical locations to keep them up to date, keep them modern, to have enough inventory in them and there's a tipping point where the store is not compelling one thing that we've been working on in our market strategy is connecting the stores in services and connecting in the inventory we have inventories are our biggest investment a lot is in stores near where most of our customers live in los angeles, we piloted being able to connect all the inventory in our stores in l.a. and orange county, 16 stores, a customer can have next day buy on-line and pick up in store and pick it up at any store they want, including our local stores where we've seen the biggest lift is in the smaller stores, they're more convenient for

customers, but they want the selection of a bigger store and being able to move the inventory around very quickly, which we have the systems ability to do that, and we're planning on doing that in new york starting thursday, we found that customers have really responded to that. >> is it becoming increasingly difficult to invest in a department store business model in the public markets? we saw yesterday the news hudson's bay, the owner of sak's taken private and a $1.5 billion transaction. you had your own plight to try to become a private company at $50 a share, which is about 30% below or higher, i'm sorry, than where you're currently trading is it -- do you still believe that this type of investment and this type of movement forward for department stores is best served in -- as a private company? >> well we're a public company our focus is being the best public company we can be we're excited about the opportunities that we have

change is part of it our industry is going through a lot of change. we needed to change. we've been an early investor in digital capabilities that set us up well. our market strategy that we have piloted, we're starting to roll out, we are in position to scale that it is working for us it's really the model for the future for us. so for us, being a public company is great >> it's great. even though you did think about going private? >> well, yeah. we're a public company and we embrace that and we're looking to be the best public company we can be. >> finally, i mean i guess i wonder given the overall headwinds in the business, i'm sure you get it all the time, are you not facing an uphill battle here? this store, the flagship, i'm sure it's beautiful, awful lot of square footage, i'm sure it's not cheap in terms of paying for the lease. what do you tell people that say i get it all, i get the omni channel and everything else, but

at the end of the day, there are changes going on in your business that mean people won't walk into a store at all >> well, if we're talking about new york, i think this goes for all of our business, we don't sell commodities this isn't something people have to have to get through their day. it is something we have to create a want. and having newness, having a broad offer of fashion and price points is an important part of what we do and certainly serving customers with great service is the stuff that's been part of our history for 118 years. does new york need another store? no no one needs another store will a great store do well yeah think about new york, it's -- there's opportunity here we need to be great. we need to be differentiated we need to give terrific service our customers haven't seen we need a compelling mix of product that's unique to us. we need to serve customers in digital ways and physical ways

we look at it, it's this tremendous opportunity and something again, we've been looking for for decades. we've had to be opportunistic to have the right location and right box and we're super excited about what we do if we do it well we'll be successful. >> that box opening in a couple days >> thursday. >> thank you, erik nordstrom for joining us. >> thank you. when we come back, we'll have a first on cnbc interview with discovery ceo david zaslav. he worked for cnbc once. it was a long time ago any iroing to be live from the "vitfa" summit in beverly hills. "squawk on the street" will be right back

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oh, and happy birthday... or retirement... in advance. good morning, everyone i'm sue herera prime minister justin trudeau winning a second term in canada's national elections despite losing his majority in parliament he thanked canadians for sending his party, quote, back to work for you. >> my friends, this election was about you and about the world your kids will inherit

tonight we chose to move canada forward. tonight, canadians have chartered a path for the future and i know we will walk it together >> at least two people were injured in oslo, norway, struck by an ambulance. the vehicle had been stolen by an armed man who was injured when police opened fire to try to stop him. the attacker was apprehended not in critical condition. police are looking for a woman who might have been involved in that incident. here at home former president jimmy carter was hospitalized this morning after suffering a minor pelvic fracture in a fall monday evening. he was at his home in georgia when the accident happened it is the second time the 95-year-old has fallen this month. we wish him a speedy recovery that is the news update for this hour i will send it back downtown to you, leslie. >> speedy recovery indeed. thank you so much. time now for our etf spotlight today. taking a look at biotech the ibb surging with a gain of almost 3% and now up more than

10% so far this year the group getting a lift today from biogen, soaring on its news it is seeking fda approval for its alzheimer's drug along with biogen, celgene, gilead and amgen participating >> shares of biogen are up megterrell has been following the story. a question to you, many of us remember when we initially got the results from this same trial back in march andthe stock fel dramatically this morning we get the news that they're going to submit perhaps as an early 2020 a new drug application based on additional data on different dosing explain to me what changed as to why something that seemed to be a fail is now potentially going to be seen as a suck es? >> it is a fascinating story, david. this was a drug that everybody thought was completely dead. we can keep scrolling up

the news in march wiped more than $15 billion from the market value and quashed the hopes of millions with alzheimer's disease and targeting the amyloid buildup in the brain biogen says a further analysis of more data that became available after its initial analysis showed the drug called aducanumab appears to work slowing in declines in memory, language and ability to think clearly that are hallmarks of alzheimer. i spoke with the biogen head of development samantha bud and david, here's how they explained what happened. biogen was running two large phase three clinical trials and in december conducted a futility analysis a way of trying to determine whether a study is likely to work based on the data available then, in about 1750 patients, the analysis predicted both studies were unlikely to meet their goals and in march biogen stopped the trials between those dates, december and march, biogen got more data.

more than 2,060 patient base in time and based on those results one of the phase three studies met its goals the other failed biogen says patients on a higher dose of the drug in that trial also showed slower declines than placebo which the company says supports the data set overall. biogen plans to file for approval in the u.s. early next year for the drug and if it's approved this would be the first drug to slow the course of alzheimer's disease. david, it's an incredible sort of reversal, a really shocking story and this almost never happens. when a futility analysis says a drug is not going to work in a trial it never seems to work afterwards people are raising questions about this, digging through the data and we'll get more in december right now that's what the story is >> it's so fascinating so the increase dosage as you said, the additional data that came in as well, i mean meg, we could spend hours talking about the implications for a drug that truly works in terms of retarding the progression if not

rolling back to a certain extent alzheimer's disease. it would be enormous. >> that's right. there was sort of waterfall effect across the pharmaceutical industry when the trial failed because it was one of the last bastions of that amyloid hypothesis apropose. targeting the buildups in the brain would target the disease you've seen failure after failure from merck, from gentech and companies and a lot of programs were discontinued after the trials didn't work you have to wonder is everybody going back to the drawing board. lily another big company that's been in this and starting to look at their drugs again. so there will be a lot to consider here for a while. >> all right meg, we'll watch the price action has been skribl off the session highs, though, up 28%. meg terrell on an important story. as we go to break, a look at the markets. one of the days where the overall indices are frozen in place around 3012 on the s&p "squawk on the street" is back in a moment. ♪

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if it's connected, it's protected. call, click, or visit a store today. "vanity fair" is hosting its sixth annual new establishment summit in beverly hills, california julia is live there from the event and has a special guest for us as well. >> thanks so much, david i'm joined now by david zaslav, ceo of discovery >> hi. >> thanks for joining us here at the "vanity fair" summit you are about to go on stage with martha stewart and announcing today that food network kitchen is going live. consumers can sign up. >> right. >> tell us what you've seen so far in terms of early demand since you announced last month and what this says about your direct to consumer strategy going forward. >> sure. it's a very unique product it was born last thanksgiving when 85 million people came to us on-line in the three days before thanksgiving asking for help in making their

thanksgiving meal. so we looked at that and we looked at the fact that we have most of the great chefs around the world are working with us, and we hired the guy that built marketplace for amazon and we built this very unique product 25 live cooking classes a week, about 1,000, the peloton of food, but allows you with one touch to get your groceries delivered to your house. functional and nobody needs to be alone in the kitchen anymore. >> since you announced it and based on the response you've heard, can you give us a sense of how many subscribers you expect to get in the first year? do you have an indication based on demand? >> the beta has gone great and people love it and using it extensively. we think we have a terrific product. you know, it's really -- food is unique it's one of the reasons we bought scripps a huge fight over who will own the home and people spend their most emotional time and important time in the kitchen and we're fighting to own the

kitchen. most media companies are trying to get into the home with content, with story telling, with scripted series and scripted movies. for us this is a practical way to help people everybody asks the same question every day in every language everywhere in the world, they always ask what's for dinner we think this -- the actual scale of how this could be over the next tens of millions we think over the next several years in the u.s. and a multiple of that around the world remember, we have food network here in the u.s. and cooking the food network is the number two or three channel for women like a funnel. the people that love food and cooking are watching our channels and now we can tell them to come to us and we can help you make your meals in the kitchen. >> you're telling the people who are watching on tv to come to you and subscribe directly is it possible you could drive cord cutting because you're telling people who are subscribing to a paid tv bundle they don't need to get your content? >> but the distinction this is a different product.

these are cooking classes. martha is going to be cooking for four consecutive days going up to thanksgiving it's cooking classes on four dinners. this isn't really -- this isn't competing with diners and dives. it's not competing with our traditional content which people love to watch in a one-way experience it's also interactive. if you have questions about a recipe or about a meal you can call in and get it answered. >> you mentioned hg tv, a chip and joanna gaines direct to consumer service launching, three sports direct to consumer services do you see a world in which you're going to bundle these services to give consumers who like your types of products a new type of mini bund untle >> we own almost all of our content globally we have full flexibility for now what we're doing is watching the seven or eight great media companies that are fighting over entertainment whether that's hbo or showtime or disney plus or netflix,

they're all doing entertainment scripted and movies. we see ourselves as differentiated right now, we're offering a lot of our products individually like we're offering golf and cycling. in europe we do have an aggregated sports probability. we have the ability to aggregate and we've never been stronger in the u.s. we're now the largest media company for women in the u.s >> will you work on a bundle where there's going to be a bundle for women of home and cooking and all of that? >> an i.d. >> look, i think everything is on the table the interesting moment for us is that everybody in the -- on the entertainment side need morse content. we're talking to each of the major players about -- they've been talking to us whether we want to provide more or some content to them. for now we've decided not to we think we can go individually with food and home and oprah and chip and jo and crime or we could aggregate here in the u.s.

and we'll look over the next year and determine what we want to do. right now, this food network kitchen product we think could change the game in the kitchen. >> in general you're not interested in selling content to these giants >> no. we haven't been selling our content because people come to us and i think, you know, the idea that we own all of our content globally gives us i think real power and scale. >> david faber wants to jump in here. >> hey, david. >> hello, mr. zaslav you know, question to from me on the stock price, i'm looking at a five-year chart. you had lows in '17, well off them, but in the multiple on your stock keeps coming down the entire group is trading at ridiculous -- i shouldn't say that at very low multiples. is there anything you think you can do to change the narrative that will get investors to pay a higher multiple for companies like your own? >> good question the first thing we did was when we bought scripps, we were making $1.4 billion in free cash flow and they were making 700.

we have a target of $3 billion in free cash flow over the next two to three years and we took -- we said we were going to take our leverage from 4.7 to 4.8 to less than 3.5 in one year we were below 3.5 times levered and now at a trailing 2.9, $3 billion in free cash flow. one, we view ourselves as a free cash flow machine. over the next three to four years we will be generating 10, 12, $14 billion in cash. you know, that's a metric. on the metric of free cash flow we're incredibly cheap the other thing we can do is we own all of our ip and, you know, this product that we're talking about today, food network kitchen, you know, that has real terminal value the issue with our whole industry is people are concerned who owns the right ip and are people going to be watching tv and how often are people going to be watching tv five years from now if we can get the food network product working and our content globally distributed to all the

devices, then you'll see i think not just an acceleration of our multiple, but people will recognize we're a very different media company. we're not an entertainment company with expensive content we have between food, home, crime, discovery, animal planet, we have content that people love in every language in the world and we own all of it. >> but you are smaller than some of these media giants especially after the consolidation we've seen over the past couple years and there is a question when competing for eyeballs and competing for ad dollars and dealing with a shinging are viewer base for television with cord cutting, do you need to be bigger to really compete and to that end, do you need to sell or would you consider buying more assets >> we have a lot of free cash flow we're looking -- always looking to buy assets. >> what type of assets >> that are -- that will help us grow faster. ip basically we have 10 to 12 channels in every country around the world

our business is growing low to mid single, generating a lot of free cash flow our overall strategy over the last five years has been to get more compelling content and own it globally. but in terms of this question of how big do we need to be, if you're one of those eight entertainment companies trying to do scripted series and scripted movies they're all fighting over one pie and it's crowded. when it comes to food, we own almost all the great chefs and all the great food content we own almost all the home content. in science and natural history, we did a deal with the bbc global deal where we own almost all the science and natural history in the world in our niches we're the aggressively overly dominant player. >> but you didn't answer my question, what types of content, companies or studios or media companies, would you want to acquire and is discovery for sale >> discovery is notfor sale. >> at the right price? >> as a public company, every

public company is for sale, but we think we have great free cash flow, balance sheet, good assets we bought -- we taught bought a partnership with the pga tour through 2030 where we own all of golf, most of golf around the world. golf digest and did a deal with tiger woods. we did a deal with the bbc for all of their ip in the natural history space. opening more and better ip gives us a much clearer path to get on to every device and it's a -- more of a reason why people are going to want to hang out with us and our content. >> we will look out for more deals for discovery down the road david zaslav, thanks so much for coming to talk to us today before you head on stage with martha stewart really appreciate it >> thanks. >> back over to you. >> thanks. when we come back, jeff bezos taking the stage down in d.c. from one of the biggest space conferences of the year. we're going to fill you in when "squawk on the street" comes back don't go away. rigorous fundamental research.

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if you want to save fifteen percent or more on car insurance, you switch to geico. it's what you do. let's go to the cemetery! . let's get down to morgan brennan for a look at what's coming up on "squawk alley." we've been getting rare public comments from jeff bezos >> we certainly have, leslie we're here at the international astronautical congress, one of the biggest space conferences of the year, where jeff bezos this morning took to the stage to receive an award for his other company blue origin, laying out his long-term vision for space we're talking hundreds of years with earth zoned for residential and light industrial use, space a place for heavy industry but saying his purpose for starting blue origin was to drive down the cost to get there to unleash creativity >> this is the kind of thing that cannot be done by a single

company. these kinds of initiatives, what we really want to do, the things we really want to do in space have to be done by industries. and, in fact, they have to have entrepreneurial dynamism i have witnessed that on the internet over the last two decades. on the internet, you can have a kid in his dorm room start a company that today with no resources start a company that today is worth half a trillion dollars. >> that company that bezos is referencing is facebook and mark zuckerberg, but also talking about how when he started amazon, there was infrastructure in place, whether it was delivery networks or payment systems, and that really is a big part of what he is looking to do with blue origin establish that infrastructure to basically unleash future space entrepreneurs, generations of future space entrepreneurs bezos also making some industry

specific news here today as well it involves this prototype behind me, the blue moon lunar lander we will get into all the details around that announcement coming up in the next hour on "squawk alley." all right. morgan, what is that lander's purpose on the moon? just to give us a preview. i know you'll get into it on "squawk alley. just out of curiosity. what is that going to do >> so this is blue moon. it's been in development and funded by the company, by blue origin over the last couple of years. it's what the company is pitching now for nasa's artemis program to bring americans back to the surface of the moon by 2024 as we'll talk about on "squawk alley," they're partnering with a number of heavyweight long-established space companies to realize this possibility.

>> all right 2024 countdown is on. thanks as we go to break, look at shares of harley davidson. they are up after reporting a better than expected numbers despite taking a hit in the bottom line, stock is up double digits this year more "squawk on the street" when ce ckweomba can tell you this. when one student gets left behind, we all get left behind. this is a problem that affects each and every one of us. together with ibm, we created a whole new kind of school called p-tech. within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. you know what's going up today? my poster. today, there are more than a hundred thousand p-tech students around the world. it's a game changer.

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welcome back stocks are mostly higher the s&p 500 is moving within striking distance of those record levels. we're near the high of the day so far a range of sectors leading us to the upside today including health care and energy but also defensive groups like consumer staples and utilities both of those sectors hitting fresh all-time highs let's drill down on one of the relative underperformers that is the consumer discretionary sector strength in shares of harley davidson is offset by weakness in other earnings reports like hasbro and mcdonald's. hasbro on pace for its worst day since 2000 after missing on profits and sales.

i will send it back downtown to you guys at the new york stock exchange >> 2,000 that's bananas as we continue to watch has and biogen, another multi decade landmark on pace for its best day ever back through 1991 david, i know you're fascinated by this story. >> i am because of the implications of it megan pointed out some questions you have to raise in terms of biogen that stock is coming well off the highs it saw this morning. it would be good news if, in fact, they were able to introduce this drug or get it approved early next year as they say they will and if it is seen as being effective in stopping the progression of alzheimer's disease, one could imagine an enormous market. wanted to look at shares of netflix. at the top or near the top of the 9:00 hour, hans vesberg and

kevin maher joined us with a new announcement saying verizon wireless customers, new fios customers, you will get disney plus free for a year >> we are, of course, extremely excited with this partnership. we will offer to our customers, both the wireless customers, the fios customers, exclusive with disney plus. we will bring that one year for free of course this is part of our strategy we're extremely happy to partner with disney and that super content they have. >> that super content, it will give disney an immediate boost one would think when they're offering it to that many tens of millions of potential customers who will get it free for a year. those subscriber numbers will get an immediate boost we see netflix shares down by 3.5% conceivably on this news. >> one would think there's stickiness in those partnerships there were partnerships between

hulu and spotify where people would get their foot in the door amid all these streaming wars that we're seeing from the likes of disney and others this seems like one possible thing for them >> didn't even talk "rise of skywalker" and the trailer that dropped last night >> that's true the marketing dollars that verizon will put behind it is helpful for disney >> what a morning of news. it's not over yet. when we come back, we'll go back out to the "vanity fair" establishment summit and hear from jon favreau "squawk alley" starts in three minutes.

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