Transcripts For CNBC Squawk Box 20171101

Korea higher by a percent overnight. Looking at the action in the European Equity markets. The futures picture here, the dax higher by 1. 6 italy up by 1 green arrows across the board. Looking at the action in crude wti, highest level yesterday since february of 2017 today up by 1. 2 55 is the level. Brent is at 61. 59, up by more than a percent we will have more on the strong markets in a moment first were getting new details on yesterdays terror attack in new york city. Eight people are confirmed dead. Dozens of others injured after a man deliberately drove a truck down a bike path in lore manhattan. Lets get toContessa Brewer live on the scene with the latest good morning good morning the home depot truck used as Deadly Weapon still sits in the intersection behind me, blocked off by crime scene tape and surrounded by investigators. This is a tactic that isis has called for, turning everyday vehicles into Deadly Weapons and it was successful yesterday. Eight people dead. The number of injured in the hospital now up to 16. Just as local schools were ending, police say the driver turned on to that popular jogging and cycling path along the west side highway, mowing down pedestrians and cyclists. Swerved off the path, slammed into a small school bus, two adults and two children hurt on that bus the driver got out of the rented truck, pulled out a paint gun and pellet gun and was told to drop those weapons by an nypd patrol officer, when he didnt, he was shot in the torso he emerged from surgery overnight in Critical Condition at Bellevue Hospital the investigators learned that the driver rented that heavy duty truck from the home depot in passaic, new jersey. We have chopper aerial footage of that home depot where his minivan was found. They found a note inside the rented truck indicating the driver intended to carry out the attack on behalf of isis the driver is sayfullo saipov, originally of uzbekistan, a 29yearold. He came to ohio in 2010. Hes a permanent legal resident of the United States he had been in tampa, pennsylvania in missouri he received some traffic citations, failure to appear, so he was arrested he had a commercial drivers license, and for the last six months he has been an uber driver uber said they are horrified by the event and they have kicked him off the app. Uzbekistans president has called donald trump not only to offer condolences but assistance in the terror investigation. Again, at this point, Authorities Say this is a lone wolf attack, why they are saying that and what the evidence is leading them to that conclusion, we dont know. We still dont know the names of some of the victims, but we know five of them were argentineans celebrating a 30year High School Reunion in new york contessa, in times square, every day were watching barriers theres a lot of new things happening in response to what happened in nice and some other times that a truck has been used hasnt been in this country yet, but bike paths, trying to figure that out no barriers, i guess you can freely drive up do you live nearby . Arent you in tribeca . I love a short walk away. Im here all the time. I use that bike path with my small children weekly. So this is an area i know well its possible for you to turn in where the cross roads meet that cycling path occasionally theres an opening, where a vehicle can get through or a business where delivery trucks use that theres been instances where people have been killed on it before from vehicles crossing it but driving down the bicycling path. And there are barriers on either side of the path if people saw that truck barrelling through, theres little way for them to escape and get out of the way. Its astonishing knowing how traveled that path is and how heavily used that is by pedestrians, cyclists, tourists. The tourist toll among the injured is remarkable. Its amazing theres not more people injured in this attack. The west side highway is closed down for two miles this morning. That will impact Lower Manhattan and affect wall street this morning, thats a major thoroughfare into wall street that will create gridlock in Lower Manhattan. As it was happening in realtime, i read road rage, a dispute between a truck and some other motorist was there a hesitancy with officials to when did deblasio finally say looks like terrorism . I dont know thats what you think immediately, but then youre sort of talked out of it by officials saying, no theres no evidence of that looks like road rage do you know the timeline if it happened when schools were letting out around 3 00, and they know there was a people were hearing shots. For a Police Officer to be involved you know, im sure its hard to tell when they learn, they emerge from the car screaming right it was about two hours. It happened about ten after 5 00 p. M. When officials declared it an act of terrorism. It happened more when we learned about what the shooter proclaimed after he got out of that truck thats how long u. S. Officials took to declare it an act of terrorism. Couple of hours. The marathon has been in boston, that was a target. The new york marathon is coming up, is it not . That must have officials a little bit concerned yet if you look at what happened last night, they came out on the ta of thday of this hours later, the mayor saying the village halloween parade will continue. The schools are open this morning. I got a note from my kids school saying were in session. We take security very seriously. We will alert parents immediately if there was a security concern but as you know, this is a pervasive back of mind threat that exists for new yorkers. You know when you live here, you raid your family here and work here that it could happen. 9 11 changed all of that for new yorkers. We take it seriously and were on guard, but you hear well live our life. We wont let the fear of terrorism get in the way of tha that okay. Well talk to you again. Well see you every hour this morning for updates. Turning to our top story out of washington. House republicans are delaying the release of their new tax bill it was lated for todaslated fory m ylan mui has more on this. One of the big holdups is what to do about the state local Tax Deduction. There was a compromise that would have kept the property Tax Deduction but got rid of the one for state income taxes some republicans from hightax states like new york and new jersey are not on board with that idea. Last night brady announced the rollout of the tax plan would be pushed back to thursday. He said they are making progress and they intend to begin debating and vote on this unseen bill next week President Trump tweeted last night the Republican House members are working hard and late towards massive tax cuts they know you deserve. These will be the biggest ever yesterday two sources briefed on the plan told me that the corporate rate would be lowered to 20 , and it would happen immediately. It would not be phased in over several years. That spooked the markets earlier in the week. It was clear whether the reduction would be temporary or permanent. Clearly this bill is still in flux and theres doubt whether republicans can get this passed by thanksgiving. Not a good sign when you cant make your first deadline joining us for more on the tax drama in washington is jonathan swann, political reporter for axios they missed the first deadline how can they make the vote by thanksgiving deadline. Do you think this spells trouble for the road ahead sure does most republicans have not seen this bill. Leadership and house ways and means, they often get in their own little bubble. Theyve been thinking about this for months and months, working through all these issues they take a lot of stuff for granted. Most republicans on the hill have not seen the text, and theyll find a lot of nasty surprises when it comes out. Theres all these politically toxic issues like meddling with retirement savings, state and local deduction, theres all of these compromises theyre making to get down to 20 presumably theyre taking this extra time to make sure some of these issues are ironed out so theres enough to appeal to the republicans from the high income states to get them on board. Maybe this is a precursor to a smoother passage, no if they can work some of these issues out behind closed doors and delay that deadline to make sure the bill has a better chance from the start. Let me disagree with you. Sure. They are working this out still within the committee they still have not socialized this among the members mark meadows, the head of the Freedom Caucus, he has not seen this text. His members have not seen this text yeah, they can keep hammering it out in the committee, and they disagree on a lot of stuff, but at some point they have to lift up the kimono. And its not pretty whats under there. Yeah. Okay jonathan can i say one more thing . I dont know. Im worried about you. You are going to go into details on that . No no mo, no more kimono we will break this morning in the news letter, theres going to be an absolutely eyepopping ad spend from some of the biggest dmoerns republicbig e biggest donors in republican politics to support this bill. Republicans on capitol hill in the white house and in treasury, they see this as existential if they fail to pass this exactly thats what i was going to say i will stick with like food analogies. They work for me better. We have front end loaded the dessert, now you will hear about the vegetables these guys say again and again in 1986, every single interest groout group had to feel they were getting screwed over. We cant possibly survive if you guys do this its got to be equal and spread to everyone. Im wondering whether these guys really know this time its just the way its going to be. The mortgage industry and everybody will have to have pain to get this done for the greater good maybe this time because its so well known by republicans they dont whimp out and they know they have to do this not everybody will be happy, but its got to be done. Do you think thats a possibility . No. No, i dont. You wonthey wont eat their vegetables no, theyll eat three and put the rest in the bin. 1986 was bipartisan. You had serious commitment from serious players on both sides who wanted to get this done and who wanted reform. You have a president at the top telling members in Conference Calls he hates the word reform its all about cuts. Already they wussed out on eliminating the state and local deducti deduction. Kevin brady told some conservative leaders last week they had already, because of their compromises to appease these blue state members, they had given back more than half of that trillion dollars. At the first seen of trouble they already are wobbling. The first was the v. A. T exactly exactly. Yes. I live in new jersey, i work in new york. Its going to hurt but i understand how a lot of states should not be these other states should not be subsidizing all the spending of these coastal states that blow all the money with their freewheeling spending i can understand how you can do that why cant they just suck it up because theyre trying to get reelected this year or next year members are squealing their members are squealing. So he your odds on anything getting voted on by thifg is wha thanksgiving is what it still could happen, but i have never seen this as being a substantive reform bill. Well let you go. The ive been watching axios. Im still following you. Axios on twitter ive been disturbed a little really. Youre not going politicos route. Youre trying to stay somewhere just reasonably close to center, right . Have you got any say in that am i right ive been advocating for more of a far right neonazi angle is that what the far right is oh, god. I want us to be a platform. Im joking im joking okay. Okay you go the antifa route like politico no comment. No comment thank you keep it in mind. Thanks for the advice appreciate it. Cover both sides. Tell mike allen. I will. In other washington news, executives from big tech and social Media Companies were in the hot seat on capitol hill facebooks chief lawyer was the target of most of the questions, he called the fake accounts to spread misinformation reprehensible. You cant put together rubles with a political ad and go, hmm, those two data points spell out something bad . Senator, its a somethiignale should have been alert to and in hindsight one we missed. Okay. Okay yeah stretch said facebook would double the number of people it has working on issues from safety and security from 10,000 to 20,000 by the end of next year executives will be back on the hill today just just i just still see stewart smalling any way. Walmart pulling out all the stops to take on amazon this Holiday Season the retailer is rolling out massive deals and throwing party force cu parties for customers who decide to come in stores to shop. Well talk more about walmarts plans with Courtney Reagan at the bottom of the hour it says anchor now im ready. You go for it. Im thinking about taking a personal day tomorrow. Game seven in the world series is tonight the dodgers beat the astros in l. A. Last night, 31 they keep their hopes alive. I saw the first couple innings, verlander is so good. He looked i guess they got to him a little bit finally i dont know 31 is not 1312 or 1211. The series coming down to tonights game in los angeles. Its not until 8 20. Thats way too late for you yes it is. Its not its just not fair you cant i cant watch cant you cant watch the replay of it knowing what happened . No. Its all new to you, right . When youre watching how could you not know who won the world series if you you watch it the next day . Is the point of the game to actually know who wins or enjoy the players and sportsmanship do you watch . No. Okay. Baseball and the postseason, you even foul balls, youre like every pitch is important. That thrill is decimated. And the count will be 32 full count you know the guy has or if bases are loaded its every pitch the crowd is into it it comes down to one game. It is really exciting. I go back to 75, 76, 1991. If youre not here tomorrow well know why ill be here. I wish i could watch. Coming up, todays agenda on wall street. We have a rundown of the earnings, Economic Data and stall branch news. And at 8 00, two newsmakers. Former treasury secretary, jack lew, and activist investor bill ackman squawk box will be right back. Not rebalancing your portfolio. Focused on what you love, not how your money will last through retirement. We make it easier to plan for retirement with day one target date funds from prudential. Look forward to your 401k plan. Yes or no . Gin. Do you want the same tools and seamless experience across web and tablet . Do you want 4. 95 commissions for stocks, 0. 50 options contracts . 1. 50 futures contracts . What about a dedicated service team of trading specialists . Did you say yes . Good, then its time for power e trade. The platform, price and service that gives you the edge you need. Looks like we have a couple seconds left. Lets do some card twirling twirling cards e trade. The original place to invest online. Stocks to watch today. Honda motors posting better than expected Quarterly Results and raising fullyear forecasts. They expect to sell more cars and motorcycles this year, particularly in asia it says the weaker yen is boosting the bottom line. Shares are up 1. 5 shares of envision healthcare plunging. Earnings coming in below forecasts. The company says it has hired advisers to review Strategic Alternatives with all options on the table. Thats about a third of market cap gone right there 3d systems shares taking a hit after the company withdrew its guidance for the rest of the year the computer manufacturing companys earnings and revenue fell short of estimates. 3d systems blaming a reorganization during the quarter. Shares down 20 now. The fed is set to announce its decision on rates today. For more on that were joined by charlie dibel from aviva investors in london and here on set is rob martin, u. S. Economist at ubs charlie, ill start with you, since i know we have a delay well take as long as well sit here as long as it takes to hear your comments do you expect surprises from the fed today . Even in the comments or what happens . I think the interesting bit today is not the decision. Nobody expects them to move. The interesting bit is the narrative around inflation we continued to see an undershoot from the infralation metrics in the u. S for now the fed are continuing to go in the direction that inflation will show up so ill be listening for anything to do with how theyre theyre worrying more profoundly that inflation is not showing up and that they should be potentially less aggressive on future rate hikes. The whole notion that that is the priority for the fed, i can understand it if youre not seeing Consumer Confidence or other economic metrics which do seem to indicate we might be shifting into a higher gear, not just here in the u. S. , but partly because of the Global Growth as well the fed is supposed to be somewhat predictpredictive cant we assume that inflation will get to where its supposed to be and not something to worry about . Thats clearly the stance theyre adopting. Having as if io will show up, but if there is a downturn and if inflation has not shown up with such solid metrics, the risk in any weakness is that inflation ticks down sharply you get into the whole deflationary mindset again thats the risk. Rob, i think of not all inflation is the same. Theres a lot of positive things with technology and the digita age that may be keeping inflation it appears to be lower than it is arent through enough signs that the economy is solid and that should not be what the fed is thinking about the economy is solid. Theres no question about that the economy has been solid for a long time. We expect inflation to move up this year just like the fed does why dont they look ahead they do our view is the fed does not hike where inflation is today but where they expect it to be tomorrow they think it will move up now there are technological forces, theres competition in the retail space, prices are being held down. Theyll look to that to an extent but still expecting inflation to move up to the 2 target over the next year or so. Theyre not in a hurry for that really everything that they have seen over the last few month also give them confidence theyre right. So we should view where Interest Rates are set, that should be the only determinate, inflation. Shouldnt there be rulesbased idea about where Interest Rates or just leave it at zero do you leave it at zero . No such things a hurting savers, no such thing as making it impossible for Insurance Companies to plan on what to do with thats why its a hard job. Shouldnt it be something other than inflation that you look at that they say its too low and too long for too long . They look at activity, only now you dont have to worry about activity the job market is moving sideways gdp is staying close to 2. 25 . Nothing to worry about in the nearterm on nick activity that means that two parts of your manmandate, you flip over the part not performing well thats assuming that the only thing you can do is look at coincidence or trailing indicators they should be able to figure this out everybody else can figure out a year or two from now rates are too low. If they dont do it immediately, they have to catch up. Thats the fear, theyll far behind the curve, have to crank up rates and kill the activity theyve been working so hard to get back we heard that republicans like higher rates or something or republicans would be more would be tightening more than the doves. I heard someone say that earlier today, in fact is that the way it is . Do republicans want john taylor or kevin warsh some people think that would trigger activity, get things moving on that fear of if i dont invest today, tomorrow when i try to get a house or invest in who do you want theyre all great candidates. They are. My personal favorite is jay powell did barclays tell you to say that. Im at ubs now. So they wouldnt be telling him to say anything. Or no. Theyre all excellent. Will anybody change the path . Will any candidate change the path that yellen set forth theres a lot of chatter in the market that kevin warsh and john taylor are more hawkish and they would move that up. To me, what were talking about, given everything we talked about with inflation and activity, youre talking about the difference between two and three hikes in 2018. To us, thats just not a meaningful difference in policy. After all, the fed dots are at three dots our forecast is two. Which one you choose is quite similar for outcomes any last words, charlie we have to go. But who do you prefer . I think powell would be the markets preferred choice because it would be viewed as a safe pair of hands, if youd like i think there is that concept that hes perhaps more Balance Sheet oriented and rates oriented, that matters for rates, but its about trying to take away the excess liquidity slushing around the system in terms of how markets respond, thats the better outcome. Largely because we have so many uncertainties drifting around with the tax proposals so i think we have to hope for a steady course, shall we say, just to maintain at least some sense of stability in the markets. Gentlemen, thank you. Rob, i think youre mistaken, i have the notes here, youre at barclays senior u. S. Economist at barclays want me to show you this i totally went to the wrong office this morning. Youre all screwed up are you the senior u. S. Economist at ubs i am. I am thank you i was hoping for the u. Senior u. S. Economist at barclays its all downhill. Stocks to watch this morning, shares of u. S. Steel jumping. Earnings and revenue beat the streets estimates the steelmaker benefiting from higher prices and improved operations at mills. Electronic arts shares are trading lower. The companys revenue forecast for the Holiday Quarter is short of wall street forecasts the game developer says it is gearing up to face tough competition from rival such as activision and blizzard. And shares of Checkpoint Software getting hit. Its revenue forecast falls below consensus. They blame a restructuring of the u. S. Sales force messaging slack is back online after suffering a service outa outa outage slack is a popular mode of communication among the Silicon Valley big swinging guys out there that love slack. Swinging guys the big dont know what youre talking about. Fortune 100 companies you ever heard of slack . Yes, they use it in the newsroom. The newsroom . Weve been down here you dont go back there much, do you . Every day i do power lunch. Okay. I got all thrown off by ubs and barclays a record 28. 5 Million People will fly u. S. Airlines during the holidays thanks to a Strong Economy and low airfares it would be a 3 increase over last year. Coming up, put your money where your mouth is we have a run down of the restaurant chains reporting Quarterly Results today. What it could mean for your portfolio. And dan roth is here to unveil the list of the top startups to work for before we go to break, heres yesterdays winners and losers six in the morning. She thought it was a fire. It was worse. A sinkhole opened up under our museum. Eight priceless corvettes had plunged into it. Chubb was there within hours. They helped make sure it was safe. We had everyone we needed to get our museum back up and running, and we opened the next day. Gglobal bonds, and highdividend strategies. Sure, these are investments. But theyre not what people really invest in. What people really invest in, is what they hope to get out of life. But helping them get there takes a pure focus. Because when you invest their money without distraction, hidden agenda or competing interests, Something Wonderful can happen. They might just get what they want out of life, and maybe even more. Welcome back youre watching squawk box live from the Nasdaq Market site in times square. Good morning u. S. Equity futures are sharply higher this morning. We say it so easily, but the dow keeps, you know, it was 21,000, 22,000, 23,000, 25 since the election, 26 since the election were supposed to get 4 a year. Thats what every sell side guy has told me. Maybe 5 a year. Dont expect more than that. We must be 26 light now, arent we since since the election. Probably just that. Thats more than a quarter. Its a stellar gain seven straight months of gains for the dow. The nasdaq will also be another record people are saying, oh, Global Growth a lot of it you do the multiples on the earnings that these tech stocks are reporting its real, its there. Overnight in asia did not hurt things. That was part of the reason for the good feelings this morning with big gains in the nikkei and hang seng. Time for the squawk planner. Federal reserve policymakers wrap up a twoday meeting with the latest decision on Interest Rates at 2 00 p. M. The fed is widely expected to keep rates unchanged as for the Economic Data, adp employment report, private jobs, manufacturing pmi, ism manufacturing, Construction Spending and auto sales. So a busy day. Results from facebook, kraft heinz, qualcomm and tesla. Shares of papa johns suffering disappointing guidance domestic samestore sales increased just 1 , lower from the previous range from 2 to 4 guidance was weaker than expected shares of papa johns has had a rough year, down 23 this year agone. Domestic sales increased only 3 i dont know how they did that im efforting not to say the word space Going Forward thats your plan . I dont like saying space isnt that a journalist term like efforting more names in the restaurant world. Restaurant universe or more restaurants are reporting today. Brink international, thats chilis, right yes thats your beat. She would know that i was happy i knew. Brinker international, Cheesecake Factory, shake shack, all of these are sounding good to me. Gains in the fast food space are continuing to i did say it again, didnt i kate rogers is joining us more to talk about whats happening here the names reporting today illustrate that point. Qsrs gain is casual dinings loss wagers are lower among consume who are being more careful about where they spend casual changes have raised prices and shifted menus around but not necessarily increasing quality while fast food names like mcdonalds are lowers costs and increasing options for diners secondly, its continually cheaper to shop at the Grocery Store than go out to eat the third one is teen spending food and restaurants are real focal points for teens who tend to migrate more to the fast casual and quick fast food space. You can see this play out in some of the names reporting today, Cheesecake Factory down 25 year to date brinker which owns chilis, down 40 for the year shake shack is faring better up around 6 year to date. The biggest Success Stories in the space are macdonalds, rent Brands International and yum there are some outlies like chipotle which are down 30 year to date after the latest Earnings Report showed continued slowing growth chipotle has some issues. Bill ackman will be on later today. They will be opening one near my hous house. I understand you like taco bell, but chipotle is a different thing. It wont do it to me. If you were out talking to normal people, would you ever hear anyone say were efforting to do something. How about space . Have you ever heard people say space other than refer together heavens . I had it in my script i will never do it again i would like to come back on the show you can come back i love talking about this space. I look forward to talking more about this space in the future thank you oh, no all eyes will be on the restaurant space Going Forward im telling you, i wont stop efforting to stop using these things coming up, we have a huge lineup still ahead at 8 00 a. M. , well talk to jack lew about the prospects for tax reform at 8 15, an early indicator for the friday jobs numbers, the adp private payroll report and bill ackman will join us at 8 30 a. M. To talk about next weeks shareholder vote and his track record, names such as chipotle in his space. Yes throughout my career, ive been fortunate enough to travel to many interesting places. Ive always wanted to create those experiences for others. With my advisors help along the way, its finally my turn to be the host. When you have the right Financial Advisor, life can be brilliant. Ameriprise the countdown to christmas is on. Walmart rolling out its holiday plans. Courtney reagan has the details. Good morning walmart is hoping that everything its done so far this year to blend the online and instore options for shoppers will help it to win the Holiday Season thats the strategy. The largest retailer hoping shoppers are attracted to options like order online, pick up in store for that discount, or find joy in the online selection. Walmart has three times as many Items Available on its site compared to this time last year thanks largely to the marketplace sellers. One thing theyre not doing is waiving the 35 minimum threshold for shipping the retailer is hosting parties like this weeks toys that rock event for kids increasing product demos in store. This year santa will make thousands of instore appearances and holiday helpers will lend a hand when it comes to having enough of the hottest items, the goal is to never be out of stock. When it comes to black friday and cybermonday, like other retailers, walmart plans are still secret you have to wait for those this is her beat. Yes, it is. It is, indeed we have ackman on later. We talked about how stocks that hit new highs, hit new lows. Stocks that hit new lows tend to hit new lows wasnt jcpenney better at 8, then six but never was, was it . Yeah. What should we ask him about that i think a lot of people now, hindsight is 20 20, looking at ron johnsons strategy wasnt all bad, it was just too much too fast comps down 25 a quarter, that will spook everybody you have to worry about everyone now in that space coming up you know what people used to say to me, i need my space yeah. Get away from me, i need my space. I can relate to that. Rays always been different. Last year, he said he was going to dig a hole to china. At t is working with farmers to improve irrigation techniques. Remote moisture sensors use a Reliable Network to tell them when and where to water. So that farmers like ray can compete in big ways. China. Oh. He got there. Thats the power of and. [lagale force winds,s absolute chaos out here accumulations up to 8 inches. Dont know if you can hear me, but [monica] whats he doing . [lance] can we get a shot of this cold front, right here. Winter has arrived. Whooo hahaha [vo] progress is an unstoppable force. Brace yourself for the season of audi sales event. Audi will cover your first months lease payment on select models during the season of audi sales event. Today, innovation in the finger lakes is helping build the new new york. Once home to the worlds image center, new york state is now a leader in optics, photonics and imaging. Fueled by strong university partnerships, providing the worlds best talent. And supported with Workforce Development to create even more opportunities. All across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. The Top Companies listed compiled from billions of responses from over 530 million professionals on linkedin. Here to break down the key factors, editor in chief at linkedin, dan, good to see you these are the startups that people most want to work for we looked at three big. One is what kind of companies are getting the most engaejment from job seekers and professionals . Are people following the company . Are they following the employees of the company are people researching them, and are they applying to jobs and what rate compared to their competitors . The last one is attraction how well are they able to pull top talent from some of the biggest names in the world facebook, google, amazon these are companies that people spend their entire life treeing to get into. These startups are able to yank that talent out and bring them to their startups. This list was released three minutes ago. Uber is number one air bnb number two wework number three. Lyft number four slack known five these are basically unicorns is there any surprise to this . Its only 40 of the companies that end up being unicorns the top ones are not surprising names. When you start getting into it, you see some surprising things for instance, onethird of the companies on this list arent from Silicon Valley. Thats unusual wouldnt have been true a few years ago. Now you have a situation where startups, if you are an entrepreneur, you can build your company, attract talent, and raise money outside of Silicon Valley theres a company from chattanooga. Has uber moved at all are you surprised at all that uber is number one given problems its had and the spotlight on its culture, treatment of female employees. We asked the same question and did some research into why people go work for uber, and just dont see the impact of the talent brand people want to work at uber because there are challenges that they can take on and they think they did change the company. If you look, axios just had a survey that said that only 17 of people have an unfavorable view of uber this is not a company that has massive consumer unhappiness towards it theyre chord a lot in the press, but people want to work somewhere where they can go to a company that is growing. Uber is one of them. How does salary correlate to this list . Higher sal have i. Most sought after startup. People want to take on challenges and do things loo look good on their resume. People are going to change zwrojobs a lot. You want to show that you can do Something Big and you can explain the company to your parents. Salary, you dont get out of bed in the morning because of your salary you have to love what you do on. The reap im not saying yes i thought about rejoining so i dont have to reject. Has anyone ever done that . You can thats certainly an option. You can also just come on and read, share. You dont have to do this to build a profile. I can get in and see someone . Absolutely. Of course. You can see the articles. Over 1100,000 articles a week being written. What a picture. Dan, thank you thank you i thought you were really social media savvy im not on facebook im want on linkedin Going Forward i will not be in it either coming up, the gop tax code has been delayed by a day. Well talk to house budget chair diane black about the sticking points and what the bill could mean for your money. Then, later, a beg hour coming up starting at 8 00. Jack lu and bill ackman are here on set squawk box will be right back. Zar one of our investors was in his late 50s right in the heart of the financial crisis, and saw his portfolio drop by double digits. It really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Good morning terror in new york new details on the attack that killed at least eight people the latest from the scene straight ahead developing overnight, meanwhile, the house, gop pushing back the rollout of the new tax bill what it means for the markets and american businesses, straight ahead plus, the ceo of Southern Company, tom fanning, will join us to talk Quarterly Results and Energy Policy. Plus says, he knows a little bit about the fed. Its wednesday, november 1st game seven of the world series is tonight as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Good morning welcome back to squawk box here on cnbc were live from the Nasdaq Market site in times square. Im melissa lee along with joe conce kernan, along with wilbur ross, who im supposed to watch very carefully. Very carefully. Very strong showing this morning for the dow and s p, which just came off of seven straight months of gaenz the futures do hold up at the open we will hit an intraday high for all three major averages the nasdaq can add 29 at the open dow up 138 at the open s p looking at about 10. 5. Lets take a check on the treasury picture ahead of the fed decision due out later this afternoon. Not expected to raise rates this time around. We look we will look for commentary surrounding the outlook for the economy and the prospects for this that december Interest Rate hike weve got the tenyear yield yielding 2. 394 two years and 1. 608. These futures this morning are fueled by gains around the rest of the world. Nikkei up 2 there are no other catalysts other than the fact its the first day of the month maybe more cash going to work. The fwakt it comes off such a strong october, its kind of baffling, very encouraging beg gains in the markets we have more on that in a moment first were getting new details on yesterdays terror attack in new york city. Eight people are confirmed dead and a dozen others are injured after a man deliberately drove a truck down a bike path in Lower Manhattan. Lets get straight to cnbcs Contessa Brewer live on the scene for the latest contessa wilford, good morning to you. Behind me the crime scene stretches some two miles off the west side highway along the hudson refr and over to a home depot in new jersey. This driver barrelled down a popular bicycling and jogging path along the hudson refr yesterday just careening through the pedestrians and the cyclists there. He had veered off the path, and the children attending a Public Elementary School were actually outside when he crashed into that school bus. They began running in the courtyard where they were. The police say after the crash with the school bus, the driver emerged from the rented home depot truck shouting all yea and pulled a paint gun and pellet gun an nypd officer told him to put down those weapons and shot the attacker when he refused the 29yearold was taken to the hospital he had surgery overnight were told he is now in Critical Condition. Here is what else we know about him this morning neighbors say he had lived in patterson with his wife and two Young Children on and off for about three years. Local muslims say they have seen him at their mosque only once or twice. He came here from uzbekistan in 2010 he is a permanent legal resident of the United States first going to ohio, but heres a guy who got around right . Law enforcement authorities have now placed him in multiple other states maryland, pennsylvania, florida, missouri where he had traffic citations and then was arrested for failure to appear so theres a mugshot of him from missouri new jersey and, of course, now new york he has a commercial drivers license, and for the last six months had been driving for uber, but he rented that heavy duty truck that he turned into a Deadly Weapon in manhattan he rented it from a home depot in passaic, new jersey officers found his minivan there. We have the aerial view from overhead of that home depot as investigators were there and began combing his minivan for any kind of clues. We should mention that they also found a note inside the rented home depot truck claiming that he had carried out the attack on behalf of isis and, of course, isis has been calling for these sort of improvised attacks using vehicles now police are investigating his associations, whether he had a more specific target, and if so, how close did he get to it weve also learned that the fbi has been searching a home associated with hem in tampa in new york sundays marathon will continue as scheduled they are changing some of the activities that were planned for today along the west side highway, but otherwise, carrying through as usual people are returning to work this morning traffic is likely to be a nightmare in lower maent may not as two miles of the west side highway and major thoroughfare two Lower Manhattan are blocked because of the investigation again, school back in session this morning new yorkers, of course, resilient. Guys. Well check back around the 8 00 hour. Once again, we appreciate your reporting. Following a developing story out of washington. House republicans delaying the release of the new tax bill. It was slated for today. Nbc news is reporting that not all republicans on are the same page on what the final version of the bill should look like house weighs and means chairman kevin brady issuing a Statement Last night saying that the rollout will now happen tomorrow President Trump also weighed in on twitter last night. He tweeted that the Republican House members are working hard and late to give you tax cuts they know you deserve. Theyll be the biggest ever, and well have more coming up from wash wash. Joining us now Budget Committee chair diane black. She also serves on the house weighs and Means Committee i saw the president tweeted a shoutout to you, when was that, last week . Yes gem black yes. Can you add to what i just said in terms of whats really happening behind the scenes here should we see this as ae harbinger of negative things to come, or is it just kind of the when sausage is made, there are some things that you maybe dont want to see . Is it going to be tomorrow for shoor . Yeah. Let me add to that it will be tomorrow morning at 9 00 a. M we have already posted that. Folks will understand that we still have just a few finishing touches to do, and any time you make a little bet of a change, especially in does that is that large, it does take a number of actions, both with the writers of the bill and also the scoring mechanism. We wanted to be sure we had this right when we approximate put it weve been working late into the evening. I know the Staff Members work all night long this is going to be ready tomorrow we have a lot of people on your side of the aisle that sort of maybe not on camera, but there is some trepidation about whether there is the resolve on some of the very difficult issues that hold the line, and they talk about how there has to be some real pane felt across the board, whether its whether i the mortgage industry or the Mutual Fund Industry or, you know, republicans in blue states that have the big, you know, all the spending that they get to deduct essentially. Yeah. Are you optimistic people know what theyre in for here when they say that you have the dessert frontend loaded it tastes gooed to get these tax cuts, but you havent eaten any of your vegetables yet, and it might be Brussel Sprouts or worse. Well, i am optimistic because i know having worked on this for the last seven years since i have been here in congress that this is something that we needed to do. Its something that once everyone sees all of the parts and how they fit together, its almost like a puzzle if you are only seeing the elkz or you are only seeing one piece of it, you cant see the full picture. Now, when we put this out and youll be able to see it, of course, there are going to be winners and losers there are going to be some pleases where people say i really like that, but when they really understand how you put all that together, it will be something that most people give us one detail. What about state and local deductions how are you going to satisfy people in new york and new jersey that are republicans . Is there going to be, you know, some modification to that, or is it just youre not allowed to do it some property tax adjustment whats it going to be . We are working hard to make sure we can help those in new york and new jersey, california, and those places where they have very high taxes, and, by the way, these are for the most part places where you have democrat governor that is keep raising these taxes. Its unfair to the rest of the country. Where our taxes particularly in tennessee are low, but were subsidyizing places leak new york and california where they have their governors continuing to raise their taxes and then just write it off because they can write it off in the federal government then is responsible rather than those that are governing the states with wanting beg government it is something that we have to gets our members comfortable with chairman, how confident are you that youll be able to garner the support of the Freedom Caucus oh, i think i think youre going to see that were going to have good support, whether this does come to the floor of course, well put it out tomorrow we have a week worth of what we call markup where we come before the committee and discussion, and then the following week we will have a vote on it, and im confident that were going to pass this tax reform because it is good for the American People. And tim, you were critical of the senate recently in terms of how active theyve been. Are you confident that both houses will get together quickly once this is published well, i really hope that the Senate Continues to do they are work, and when they put their product out, that weave been talking to them that it will mirror what we have. Of course, there will be differences, and well go to conference i want them to just do their work give us a product so we can move forward. Thats the important thing even if we dont match exactly, thats what conference committees are for so we can get together, get the product to its final stamp so we can give relief. Especially to the middle income people here in the country and give them relief, and let them see the economy grow wages will go up and more jobs well see whats happening in the market right now i think its responsibilitying to what were doing. Chairman, it gets a little disconcerting i think to someone after seven years, oh, maybe well phase this in over five years, the Corporate Tax rate, or, you know, maybe well add a higher bracket or maybe well well go to 42, maybe 44 youre at 39. 6 the republicans foldle on getting rid of the obama care because they thought, you know, that would satisfy democrats they wouldnt say its, you know, that you are helping rich people anymore it didnt. Theyll always say its a teal find a reason to say its helping the rich are you considering a higher tax bracket, which would put most people over 50 when in that brackets in most states . Does that seem reasonable when we read that theres going to be another bracket added . Is that the way to do it yeah. I think when this comes out tomorrow, and i cant give those details because i want to be careful and honor the committee. Do you know tell me. Oh, come on. Whisper. Its kind of like christmas you know the anticipation to pull the ribbon and get the paper off of the box. It could be a lump of coal. Christmas i want a gift. I dont want the lump of coal. Were going to give the American People a gift were going to give the American People a gift because youre going to see that where we focused this on the middle income and making sure they have tax relief, but yet, across the line youre going to see that every one of the tax brackets are going to have areas where theyre going to be happy about what we did. Will the gift be executed upon by christmas . Thats another thing. Tomorrow youre going to see our product at 9 00 a. M. Christmas 2017. Just to be clear. Thank you we appreciate your time. Hopefully you come back. Were going to 23450 i was log forward to it today. Youre going to have it tomorrow its kind of like Christmas Eve and the anticipation cross your heart . Cross my heart. 9 00 a. M thank you thank you zblienks a few other stories to tell you about this morning. The nations are set to report their october sales edmonds expected Industry Sales to fall. Ford and toyota are expected to buck that trend, however, by posting sales gains. Adp is set to issue its widely watched report on private Sector Employment at 8 15 a. M. Eastern time consensus forecasts call for 190,000 new private sector jobs during the month compared to 135,000 in september u. S. Gasoline demand hit a record high in august according to new figures from a department of energy. However, these numbers are likely to decline for subsequent months due in part to the series of hurricanes that hit the u. S you havent been here in a while. I see you in the morning, and, i mean, you strike quite a good pose i mean, i will say that. Your hair seems like have you changed barbers . Is it shorter i havent changed it might be a little bit shorter. Its different, isnt it . Its tighter. Have you noticed that its tighter. I have noticed also. I just wondered whether theres any what was the thinking behind it my accent my appearance. Never my content does he talk. Other than it nows him so youre not going to lets go to break, and then you tell me what your thinking was, okay of the hair its great. The jobs report focuses this week well find out what investors should be watching for in the markets next tom fanning will be here to discuss shhhhh. Those Quarterly Results and how hurricanes impacted results. 8 00 a. M. Eastern time im talking. Hello. Treasury secretary jack lu is our special guest. He joins us to talk taxes and more youre watching squawk box on cnbc ah, dinner. Throughout history, the one meal when we come together, break bread, share our day and connect as a family. [ bloop, clicking ] and connect, as a family. Just, uh one second voice guy. [ bloop ] huh . Hey . I paused it. Bam, family time. So how is everyone . Find your awesome with xfinity xfi and change the way you wifi. Zbliefrmt we have a big week ahead. Well, i know theres a lot of people out there waiting for a correction you know, its constantly talked about, whether its 5 , 10 . We havent had that in a long time you know, its emblematic of we all talk about geopolitical risk and whats going on in washington and whether or not we get the tax cut. Theres an engine called the profit cycle that continues to gather momentum. The middle class in asia is spending like theyve never spent before europe is going to grow above 2 the u. S. Is going to get close to 3 . Merging markets are out of recessions and bear markets. You know, these new highs are being used as an excuse on valuation. Valuation is at 19 times, and if we fast forward two more months, we get to 17 times the calendar is in your favor. At the end of the day there are still trillions much dollars in the world earning close to 0 . The areas of the market that are healthy are the equity side of the equation whats not healthy, though, is european high yield. Look at the areas that people should be concerned about. Its european high yield, which is below the tenyear treasury right now. Thats massively extended and theres still fundamental risk there hidern by ecbs no question the supply is dropping the demand is there. They have to biuy assets, and its filtering into the credit spectrum those are areas that are very, very limited in terms of their impact if something were to go wrong there. At the end of the day when someone talks about valuation, thats the valuation i would be worried about. Brad, what, if anything, could the fed do to derail whats going no the markets . I ask because obviously were expecting a fed decision in which were not really expecting much cant really reverse direction that quickly overnight. Remember, he has to he or she has to bring along an entire committee tloes in the near term i dont see them getting more aggressive than the three hikes next year. Do you see that the same . Do you think that the fed in terms of the market action, is the fed the biggest risk thats the area that causes more impact the fed is theyre well entrenched here. You dont hit 1. 7, 1. 8 and not even close to their target yet, they have the window open reason because of where asset prices are, but not where price pressures are. Could we see a speak in yields that the markets are not prepared for given the hike in december, plus that. I dont think the markets are prepared for anything on the yield side that spikes very aggressively and sharply what theyre prepared for is still this gradual movement or drawing higher on rates. To your point, melissa, i think the markets would have a small correction if the yields would sharply increase like that, and that would be the reset that everyone is looking for in my opinion. Are you encouraged we havent had a correction based on the rate hikes that weave alreave had . It has been encouraging you have to think back, though, to the october 2015 meeting when the fed was saying were going to hike at the next meeting. They were expecting to go about eight times by this point. Theyve gone much less than that you know, feds expectations have come down to the market at some point is the market going to have to come up to the fed expectation because right now were only pricing two hikes between now and end the end of next year where are the fed is saying were going to do four, and if john taylor was in, maybe do five. The fed has been coming to the market, and the at some point is the market going to have to come up to the fed and what are the consequences . To chriss point, theres 8 trillion of debt in the world. Thats trading with a negative Interest Rate. Negative handle on it. The ecb unwind its fairly well known at this point. I think people have a sense of where that is. You know, the market is not pricing them to a rate rise until late in 2019 at best. The boj is kind of the last shoe coming up, dodgers forcing a game seven then tom fanning, Southern Companys ceo, discusses the latest quarter and Energy Policy squawk box will be right back. Check out this new duckchat from aflac the duck is answering my benefits enrollment questions in real time, without any confusing mumbo jumbo. Thanks duck yeah honey, im sure thats the duck. In fact, hes probably working overtime, just wingtyping away about premiums and deductibles. The duck is working 24 7 to help answer all your benefits questions. Aflac duck chat. Lets chat in messenger. Flexshares etfs are built around the Way Investors think. 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The Los Angeles Dodgers beat the Houston Astros in l. A. Last night in the best soccer game ever it was like a soccer game score 31. Thats happened once in soccer, i think, where they actually there were four scores anyway, this is trying to keep the dodgers hopes alive. I think it was when honduras beat the usa oh. The series now comes down to tonights game in los angeles. The first pitch is at 8 20 eastern. You recall the night before was, like, 1312 or 1211 thats a game. Thats a game, right where its arbitrarily they just want lots of points no, no, no. A test cricket match, you get, like, 500 per side. I set up the false scrum. You cant do it back to me 500 in the cricket match. Really . Yeah. I like that fascinating coming up, Southern Companys ceo tom fanning talks Quarterly Results, the president s tax plan and much more as we head to break, take a look at u. S. Equity futures stay tunedds what people really invest in, is what they hope to get out of life. 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Welcome back to squawk box here on cnbc were live at the Nasdaq Market site in times square among the stories front and center, Mortgage Applications fell 2. 6 last week according to new figures from the Mortgage Bankers association. Both new purchase applications and refinancing activity fell during the quarter the average 30year Mortgage Rate rose four basis points during the week to 4. 22 thats the highest in three months weve heard Numerous Companies cite the negative impacts of the hurricanes. Thats not the case of maker and home and commercial generators theyre up 5 cents above estimates. Revenue beating foerkss. Generac said the hurricanes helped accelerate the pace of sales. Hensarling said he will not seek reelection. He was first elected to congress in 2002. His career actually before that in politics, i would say. I dont know the background behind the scenes on this. Why he wasnt he wasnt facing was he im not sure. All right Southern Company, one of the nations largest utilities reporting Quarterly Earnings this morning joining us now tom fanning, chafrm, president , and ceo of Southern Company and chairman of the atlanta fed. Obviously, rafael, bob bostic, the president has been on with you, and i said earlier i dont know why i gave you more although maybe a charm, thats okay i mean, you kind of like youre not really his boss, though, are you, tom not really i think he is your boss. Let me tell you something, Rafael Bostic is he is good. He is doing a great job he hasnt been there that long thats right. Thats right one of the great things one of the great things about him is he is one of these guys he is not just an economist. He makes this bridge between kind of policy and people. As far as what you want to talk about today, obviously the fed is meeting, and i always reference the atlanta fed, and i guess we can combine your you know, both of the things that you do the ceo of Southern Company and the fed. Right now weave got back to back 3 we had that for gdp, but we had that in 2014 do you get do you feel like weve moved up from 2 or 2. 25 as a basal rate for gdp do you think were in a higher gear now do you think as others have said on the show, we immediately go back to average 2. 25 again look, im one of these guys i say we should be better than 3 are we, though . Theres a lot going on. Theres a lot going on right now. The economy still looks sloppy to me. A lot of the when i think about inflation, its persistently low when you look at those kinds, how do people feel statistics, those look good. Ill bet you a lot of that is predicated on the belief that theres going to be taxes. If theres tax refofrm, i think this economy has a chance to really do well how are your zsh you say your numbers were in line with expectations better Southern Companys numbers . Yes oh, yeah. Look, on an x item basis, were 1. 12 for the quarter, which these are estimates and it beats our consensus. Weve done really well we had an exceedingly mild weather for the whole year rail. For the quarter it was 10 cents, and what weve done is been able to make that up on really kind of expense management. Not just cutting costs modernizing the company. Actually, improving efficiency reliability and Customer Service through investments largely in technology so how will this latest sort of uptrend in crude how will that affect the results . Does the whole energy complex, your margins, i mean, do you do better when you make more money when you charge more for something . Southern company specifically is reasonably indifferent to fuel prices. In other words to oil. We have fuel clauses throughout our system where we pass those through at cost, so we dont make money up or down the resurgence in crude, though, has had an affect in primary metals people are creating more pipelines, et cetera the prices are stable for a longer period of time. Primary metals is up largely in the pipeline you saw they delayed the tax bill again or not delayed it, but it was supposed to be wednesday maybe not a big deal do you think that it sort of indicates that after six or seven years they still dont have a final blueprint for exactly what they want to do you know what, joe, listen, i have been bullish on the prospects for tax reform you know, i always make the joke that theres enough chemicals in the sea here on both sides for something to crawl up on the beach. You know, i believe something will happen. You know, in working with the really fine leaders that we have, i would say kevin mccarthy, kevin brady, they are poised and ready to move with some dispatch, and i think there is enough support to get something not oonl you have in the house, but in the senate just going back to your numbers just real quickly, some analysts are talking about you feel as far as the Financial Flexibility for Southern Company, one analyst is worried about the high leverage from the debt to capitalization ratio, which is you have made a ra lot of investments obviously is that a lot of concern for the stroo et just with your company itself no. In fact, weve demonstrated our ability to raise equity on terrific terms for a long period of time. You know, our ability to deploy capital is really a sign of strength in other words, weve had a terrific growth track record in our competitive generation business you know, weve been among the largest owners of solar in america. Weve made an acquisition last year that i think is Just Brilliant in terms of moving into Gas Infrastructure. That was ago resources now Southern Company gas wei we added a 50 interest in tinder morgan. Southern natural gas pipeline. You know, all those have been a good thing when you think about how the generation portfolio of america is moving, we are playing well and continuing to be the only company now to hopefully develop new nuclear. Weve made Big Investments in natural Gas Infrastructure were one of the biggest participants in renewables when you think about our ability and, frankry, our optionality to move in that directions, i think its a driving story for southern one last point, because technology is enabling it. Because customers are requiring it we are seeing a centurys old model of making, moving, and selling energy to a meter to jumping over the meter now were locating that on customer premises through a subsidiary we have called power secure, and were making lots of inroads and potentially creating a new Business Model for the future essentially Creative Destruction of a centurys old Business Model. Do you know bezos have you begged him to come to atlanta . Atlanta is a pretty good i think they should be in the top running, dont you think and look at georgia football right now too. Well, yeah. Wait a minute. Atlanta is a terrific place. I understand, you know, if you look at the las vegas betting odds, were pretty well positioned with respect to georgia, joe, you got to know we certainly celebrate their rise to the top, but come the first saturday after thanksgiving, the fighting Yellow Jackets and georgia tech may take them down, baby wow you are now i question everything that you said up to this thats just yeah. Okay all right. Thats your theres always hope one mans opinion a lot of football to be played still zroo there is, but that was something. Notre dame, thats one point or else notre dame would be i know. Yeah, yeah i thought the rankings that came out last night were really pretty good. I bet you did made sense. Thank you we have a trump tweet. You should listen to this, tom this is in the president s own words as it always is. The terrorist came into our country through what is called the diversity visa lottery program. He goes on to say, a Chuck Schumer beauty he says he wants the president wants meritbased entrance yeah, the diversity is this new what . The no. I saw it earlier and looked at the Actual Program there are an interesting program. To some extent it just so happens that the perpetrator of yesterdays attack came in through there still to come, facebook ready to report Quarterly Results after the bell today mobile appetizing will be in focus. Investors, among other issues. A closer look at what you need to be watching when those numbers come out, coming up. And jack lew is our special guest. Squasquawk box will be right. whoo woman class, lets turn to page 136, recessive traits skip generations. molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. thank you. This is not a cloud. This is a tomato tracked from farm to table on a blockchain, helping keep shoppers safe. This is a financial Transaction Secure from hacks and threats others cant see. This is a skyscraper whose elevators use iot data and ai to help thousands get to work safely and efficiently. This is not the cloud you know. This is the ibm cloud. The ibm cloud is the cloud for business. Yours. It is a busy day at facebook. The Company Reports earnings after the bell julia borstein joins us now. Pretty heated testimony on capitol hill yesterday, julia. Yes despite all of that testimony, facebook and its stock and its ad sales have been teflon. The stock is up dramatically over the past 12 months. Over 40 despite the barrage of negative headlines from a number of mismeasurement issues to the latest on its role on russian manipulation of the election over 90 of analysts have a buy or overrate rating on the stock. The consistent track record of beating expectations, the bar for earnings which are reported this afternoon is high Analysts Expect facebook to grow earnings 17. 5 to 1. 28 per share, while revenue is projected to grow more than 40 to over 9. 8 billion analysts are watching to see how much instagram and video ads can drive growth well also be watching to see how much cost will be pushed higher as the Company Expands its employee base. Its also hiring thousands of employees to block offensive, manipulative ads and content we will also be listening carefully on the Earnings Call for any commentary on the impact of this scandal over russian purchased ads and what the Company Expects from proposed regulation thats in the works back over to you thank you very much for that preview. For more on facebook, were joined by rob sanderson, senior internet analyst at mkm partners in terms of the earnings themselves, is there much to extrapolate from those blowout tech earnings we got from facebook, or is it a slightly different kettle of fish its a little different kettle of fish except for the google. The google results can point to a very healthy environment for internet advertising, and facebook is not, you know, exactly the same, but definitely draws from the same pool unlike the tech earnings we saw at microsoft or amazon, for instance, but the google results should be encouraging for facebook to what extent are we going to start to see a lot of pressure on facebooks margin based on investing more and more in their own content, particularly video content, in a way that weve seen pressure on netflixs margin, for example . Yeah. I think theres a lot of speculation and question as to the i guess the vigor at which they will invest in premium content. If you look at the sell side expectations now, the expectations for an incremental 6. 5 billion dollars in spending next year, a lot of that i think is on the presumption that they will be aggressive in the premium video space. I think thats yet to be determined i think the company is definitely hiring, you know, executives down in los angeles theyre putting some money behind a video push, but just to the extent to which thats going to go beyond an experiment and end up spending billions of dollars per year on premium content i think is still to be determined it is in the forecast. I think thats sort of one direction in terms of risk exposure i think it can be better than, ie, less margin diluted than reflected in consensus the stock didnt flinch yesterday based on some of the legislative hearings whats your view on what the possible fallout of these hearings could be . Will we see serious laws and regulation go up against these internet companies, including facebook it remains to be seen i think its doubtful that well see serious regulation to curtail, you know, the potential for bad actors i think on the flip side of this it highlights the power of the platform in many ways. You know, these big social media platforms do have a lot of influence. There will be bad actors and good players whenever theres a groundbreaking technology. I think the company is doing the right thing to address the issues head on and take steps proactively to curtail the influence of the bad actors. I do not expect there will be a heavy regulatory add, at least at this jurng tour i want to get your take on messenger and what the impact could be on the Second Quarter call they did say they werent expecting monotization for the medium term or so. What are your expectations as to when this will contribute . Thats a great question i think the multiple of the stock, i think, has a lot of potential up side once the messaging pathway looks a lot more clear and they start demonstrating that theres a large opportunity beyond just it is use case, but monotization case, i dont think thats a near term event. I think theyre going to be slow and methodical in opening this opportunity, but once it gets moving, you know, both of these platforms, facebook, messenger, says and whats app, are two of the Worlds Largest messeninging platforms and weve had Great Success in asia in terms of monotization thats a future story, but not one that we hear a lot about it could change opinions in the near term. Overall, youre a little behind consensus on top line growth the main reason for that just modelling. I dont think that theres a message to be extrapolated from our ten basis points lower in top line growth. I think they will deliver up side to both my number and the consensus number tonight i think this quarter is very important for the stock. The up side that they reported in q1 and q2 was really didnt change peoples concern about the rate of deceleration coming the cfo has been warning for the last four quarters that when they stop growing their add loads, ie, june, you would see a deceleration in growth thats reflected in the consensus numbers. Theres 1,800 numbers in the next six quarters. I think an up side result this quarter potentially changes the consensu deceleration, and that could lead to a lot of earnings up side a big revision thats what were looking for coming out of the results tonight . Rob, thanks for joining us. Much appreciated facebook will report lighter today. Coming up next, stocks to watch. Then at the top of the hour, we welcome former treasury secretary jack lew were going to talk tax reform, the economy, and who he thinks should be the next leader of the fed. 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Get the iphone 8 and with all at t unlimited plans, get hbo for life. Only from at t. Next fed chair in this day and age is that appointment one of the most powerful appointments a president gets to make i think the fed chair is always enormously important appointment. The fed is one of the most powerful institutions that we have, and the chair is the most powerful individual in it. I had the privilege of working with outstanding chairs from both parties who were took a long view and managed Monetary Policy i think quite well i hope that this decision will reflect those virtues that you need in a fed chair. I know you have seen some of the numbers coming in. Not necessarily to your great chagrin, but you know that the dow is up 26 since trump was elected. You saw Consumer Confidence at the highest level in 17 years. Youre seeing a lot of maybe business investment. You saw it back to back gdp quarters of 3 what do you attribute the two quarters of 3 because we seem to be stuck around 2 in the previous administration. Will it continue, and what do you attribute it to . You know, joe, i think we left the economy in pretty strong shape the benefit of the Strong Economy we left is putting us in a place if we dont make mistakes, the economy will continue to grow i actually think the steady state will continue to be positive unless we we moved in from the 2 to 2. 25 are we now 2. 70 to 3 i always try to be an optimist when i was in office. I still try to be an optimist. I think potential gdp is north of 2, but its not 3 do you attribute that to how you left it, or will it be something we saw borders that hit very good numbers, and actually, we had orders better than the quarter we first saw you expect it to go back down weve seen over the last five, ten years the trend of quarters being very uneven right we got to be careful not to take a short, narrow view. You got to take the long view. Lets say we get two more quarters i hope that we can achieve, you know, a higher gdp growth. It is very hard for an economy to consistently grow beyond its potential unless you see the population growing and productivity increasing. We have demographic issues that are just a constraint that anyone will face right now, and i think denying that could lead you to make some big mistakes. Lets say that tax reform, as theyre saying theyre going to do it, and lets say we do move to 3 and we stay above 3 will you then say that was due to trump and the tax cuts, or will it then youll go back to saying we left it in pretty good shape and were just going to do it on its own . I think it would be an enormous mistake to have a tax cut that we cant afford based on numbers that are unreliable on the hope that we get where youre going if we get to the point where the economy is growing faster, i would cheer for a stronger growing economy. You have to let experts like the joint Tax Committee and the economist and treasury do honest numbers. You cannot base a tax cut on numbers you make up. If you do, youre going to end up with a deficit that just straps the next generation to a wake that they cant get rid of. You think 1. 5 trillion is its huge i dont believe their appear tut is 5 trillion to 6 trillion do we see gains being played so its a 1 or 1. 5 or 2 trillion or 3 trillion hold. These are enormous numbers when we were looking at proposals for folks like dan camp, the question was can they spend hundreds of millions of dollars . This is many times over that if the tax plan passes, as you understand it, as we understand it to be right now and granted, thats fluid, in your view, will that harm the economy . Will it derail the economy from clinching the two quarters, 3 that joe is hoping for i think you get a sugar high from a tax cut you might see some quick, you know, benefit of macroeconomic stimulus at a time when we dont need it. The economy is at full employment potentially it could lead to inflation if it goes on. I think in the long run if we end up seeing our debt to gdp go from the mid 70s to 100 in a rapid period of time, that will have a very bad affect on the longterm environment for Interest Rates and the stability of our economy what wolf mentioned about that going up for the eight years, at total 10 trillion of debt we pulled back some later on we had two wars that we were paying for without raising taxes. We had a financial crisis that threw the economy into recession. Economic spending went up. What we did im proud of this is we stabilized the deficit in the neighborhood of 3 of gdp. We stabilized debt in the mid 70s. We now have a period of time to look at the future and say how do we make sure were in a good place ten years from now this tax cut could make that almost impossible. You think the stock market is just a sugar high as well . Larry summers, a year ago, told me, you know, unequivocally in the early stages that this is a sugar high it was a big day of reckoning coming now were at 26 you know, i have always resisted predicting where the market is going to go because its not always day to day decisions are not necessarily driven by longterm fundamentals you know, do i think that were going to see a correction at some point we always see a pattern of, you know, growth and then corrections. What i worry about is taking an economy thats very stable and kind of putting it into a place where you could see it collapse, and thats the kind of edhayoconomic policy tt u ne to worry about. Markets are going to go up and down mr. Secretary, thank you. Thank you we can see that theres a hurricane rebound. Up 45,000. Up 39,000. Manufacturing, though, also doing quite well up 22,000 with a decline in trade and transport down by 50,000 maybe that was also hurricanerelated. Guys, if i take the two averages and i average in the past two months of adp, i would get 170,000. If i average in the estimate of the bls report, i get 140,000. Not a lot of difference between the two when you take the two months together. Adp lost less than in the hurricane month than the bls did. Maybe, like, three months, guys, before we figure out exactly the right level or the right strength of the job market here. In terms of what this tells us about what friday jobs friday jobs reports could say, what would that be it will be a big number theres a conceptual difference between adp and bls. Adp counsels people on payrolls. Bls counts people that are on payrolls and get paid during the week bls will be much more volatile than adp adp didnt follow as much last month. The increase in bls will be greater this month steve did the right thing when he took the average, and the average is 170,000, and in my view thats unrelying job growth what kind of economy does that correlate to . Thats a good one the labor force is growing 80,000, 90,000 at 170,000 unemployment, which is just over 4 , continues to decline. Were going to go sub4 im pretty confident about that. Last time we were there was in the late 1990s ive been a professional economist for 30 years the best labor market we ever experienced was late 1990s right from the tech boom bubble. This is going to rival that. Theres theres no bubble today. This is fundamentally very strong yeah. Steve, youre in d. C. Presumably for the fed. Will this change, do you think, anything in terms of what the fed could say about the prospects for december it sort of confound the feds conundr conundrum, which it has for a while. Mark laid out that number, and weve reported this quite a bit. The average fed thinks the steady state job growth is 80,000 as we continue to post the 170,000, nobody begrudges that thats a good thing that were employing americans. The idea is the Unemployment Rate keeps coming down, and at some point the fed is going to step up and say, you know what, this is too much were really worried about that. Again, we havent necessarily seen it in ways. A little pop the other day in the employment cost index, the eci, running 2. 5, 2. 6. Its not exactly all that hot. I punish bash back on that. If you go back, say, two, three years ago, it was 1. 5 to 2. Eci is a really good one, but there are other ones 1. 5 to 2 now were two and a half to three, and were accelerating. On a real basis, you know, after are we going to get a pop tomorrow normal productivity the idea of a differential between eci and productivity is not really that much weve got 1. 35 to 2 is fine if youre not growing productivity, but if you are growing productivity, workers should be getting more, and maybe they are now. I think were going to get over three i think were seeing a steady acceleration in wage growth consistent with the tightening in the labor market, and were going to see more of it. If we go sub4 , were going to be over 3 by the Time Next Year i think its already happening. The real question i was getting to, mark, and i love your comment on this, is this notion that Paul Macaulay wrote a column in the times that the only way to get wages up is to let the economy run hot. Theres back wages that people ought to have gotten and are not going to get it, and the question becomes will the new fed chair, if its the same as the old chair or new fed chair, let the economy run hot to let rate wages rip for a little bit. I would say were letting it run hot. Were at 4. 2 even if you consider underemployment, were beyond full employment, at the current rate of job growth, were going sub4. By the way, you know, markets arent discounting this. If you are going to look at futures markets, they do not theyre not discounting any of what the fed is going to have to do over the next year. The fed is going to have to normalize policy you are saying more than three rate hikes thats whats priced in right now . Markets are saying december, and then maybe, you know, one next year, maybe two, where the fed is saying december, and three next year. Thats a big gap its even bigger when you go out to 2019. The markets say one more at 2019 the fed says three thats a very significant gap. Its got to close. So you are saying the market has not even priced in the 75 basis points for next year no, no. In fact, thats the biggest threat to markets. The equity market, the credit spreads, everything. You know, markets have been more right than the fed up until this year 2017 the fed has been more right. I think the markets are is manying it thanks. Steve, see you later steve, what are you doing down there got the fed meeting there was supposed to be a tax bill today, joe. Theres also maybe going to be an announcement of a fed official tomorrow. Tomorrow. There were reasons to be here you know oh, okay. Nothing you dont have any specific lined up today, or you do i have the fed meeting. All right you mean like a meeting with somebody yeah, ill meet with a few people some guy at the deli or something, ordering a sandwich wherever we get our economic information, joe you know that. We take it any place we can get it taxi drivers deli owners. Theyre all Small Business owners i cant miss you. That cant be the only reason im asking why youre not here play the violins to break coming up, bitcoin smashing through 6,600 earlier this morning. I think its 184 billion crypto currency that scares me. Good for halloween, though the big iv sait eadrertrghahd. 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Bitcoin hitting another alltime high now, yesterday the cme said it would launch Bitcoin Futures before the end of the year that led to speculation that the cme stamp of approval could lead it a growing list for request for bitcoin ets, which would mean an influx of investment into bitcoin the s. E. C. Has rejected a highly publicized etf request from the winklevoss twins citing lack of infrastructure regulation to prevent manipulation terry duffy talked about uses for bitcoin both above board and illicit. Im not quite sure, i do know one thing for sure that we are going to list the product under our rules and if it doesnt work, we have the ability to eliminate it were not going to be part of what some of the people that talked about that this product was being used for thats not what were going down that record high, by the way, took bitcoin above 6,500 earlier this morning it is now up, the crypto currency, up to 500 yeartodate the value of all crypto currencies, 184 billion, which is a record. Its a lot more than it was this is a vote of confidence getting a company like cme to start to use it. Its still a million miles away from the crucial criticism that the likes of jamie dimon has when it gets to a certain size, theyll shut it down its still a positive development. You cant argue against that still to come on newsmaker of the morning. Bill ackman here is here to sign off on adp the activist investor locked in a bitter proxy battle with the company. Well be speaking exclusively to him when we come bac alpa in the, driving specific sectors of out performance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Everyday our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Good morning. Welcome back to squawk box here on cnbc live from the max market site in times square. Adp reports the u. S. Economy 235,000 new private sector jobs. October u. S. Sales numbers shortly. Overall Industry Sales are expected to fall 3. 5 from a year ago, though ford and toyota are seen as posting salsz increases. 20157 has been full of activist disputes, but this is one of the biggest this year the proxy battle between per shing square and adp will be decided at the shareholder vote next week. Bill ackmans hedge fund has a stake in the Payroll Company joining us now bill ackman, founder and ceo of Portfolio Manager at Pershing Square im glad we have a lot of time, bill, because its very detailed, very nuanced i want to do all we can to generate as much information from you, but i worry that for some viewers its going to be so arcaine that it gets difficult in the most recent letter, you have some problems the letter was embargoed until 8 00, and we have it now your main points here are is that adp has not been totally forthcoming and is actually at i dont know that i think theyve taken a low road in certain nstances . I think its pretty common. You saw this in p g. As you get closer to the vote, it gets more contentious i think the issue is very simple one, we think adp is not as efficient as it should be. The result is its narjins are half of paychex, for example. They compete with adp in 35 of its business if you apply that same 41 margin to the portion of adps business, it would mean they make almost no money in the rest of their operation its very unefficienunefficient. This whole you tried to get iss to come to your side theyre saying that they rejected you, although youre saying iss iss reports me for the board. They dont havent supported all three of our nominees, like the other you are saying at this point that adp totally misled iss in many different areas, and one of them in calculating, this is where i worry about, you know, how detailed to get, but the peo passthrough revenues are excluded that makes the margins that theyve been able to do better sure. Is there a way to explain this that everybody can understand it . Are they misleading . Are the margins worse than what theyre portending adps productivity, a measure of how much revenue they generate per employee,is 28 lower than their competitors on average, and adp is a vastly Bigger Company you expect a Bigger Company to be more efficient, have more productivity, and adp weve asked adp why, and theyve been unwilling to answer. Weve asked a series of public questions, and theyve been unwilling to answer. They told iss, when you do the calculation, you shouldnt compare us to companies that are in the peo business, and you should look at us on a Gross Revenue basis. On that basis adp actually looks like theyre reasonably comparable with competitors. The problem with adp, 28 of its revenues come from its peo Pershing Square has outsourced its hr why . Because were a small company. Weve got 60 employees we can buy Health Insurance much more cost effectively if we outsource our hr to a company that becomes whats called the coemployer of our employees, and then they can negotiate Health Insurance rates on our behalf we pay them, you know, a couple of hundred thousand dollars for Health Insurance, and they, in turn, remit that 200,000, whatever the number is, to the Health Insurer that counts as revenue under the accounting rules, but its really not revenue because its passed through the company directly out the door. When you measure the productivity of adps employees, analysts exclude the passthroughs and the calculation. In fact, adp itself, when it calculates margins, excludes those passthroughs because it makes the margins look better by excludeing them, and we think thats the right way to look at the business when they talk to iss, they told iss, oh, you have to look at Gross Revenue basis, and the problem is when they compared adp with competitors that did not have peos, it made the productivity the revenue productivity look better than it really is. We thought this was disingenuous because publicly they dont make those arguments. Unfortunately, iss accepted those arguments and didnt give us a chance to rebut them. Thats partially why iss didnt support all three of our nominees they just supported me for the board. Glass lewis, to their credit, understood the issue, did the proper adjustment and werent misled a little disappointed here in iss. Reading some of your comments, you know, i almost felt like it was gordon gecco talking about bureaucracy. In the peach he says theres over 200 Vice President s all making over 2 million a year. I dont even know what theyre doing. Your argument is that adp has layers of bureaucracy. Its insular, and theyve never worked anywhere else, and its been that way forever. Theres a lot of truth to that im focused on the top the top 12 executives in the company have an average term for 20 years, and they havent worked anywhere else if you think about adps business, this was a Payroll Company. It was a processing company. In the last ten years an industry has developed which people call Human Capital management its sort of the managing your relationship with your employees. Managing benefits, 401k plan, managing the recruiting process, managing the exiting process time and attendant software when you have employees at burger king, for example, and you want to track their employment at the company. Thats become automated with new software, a lot of cloudbased Companies Like work day have built products and services to address that marketplace anyone late to that market didnt have the innovation internally to compete and bought up components of products from smaller Startup Companies and kind of packaged them together in an offering that offering has not been competitive to the likes of Companies Like work day, and work day has taken huge market share from adp for their larger customers. We think that is, you know, a disappointing outcome for the business two prongs one, the company has become bureaucratic and inefficient, and, two, theyve missed the boat on technology, and the big part of that is the the cto of adp is not a technologist he was a Business Unit leader. He was promoted internally our understanding is that the company looked outside for candidates the kind of cto that you want at a business spending 860 million a year they have 9,000 people in their technology department. This is a Major Technology company, and the top person in the job is a business guy and not a technology guy would you not have expected them to lose market share to new, more innovative Smaller Companies anyway how much market share is acceptable so to give you an idea, adps National Account business used to be 30 of the revenues in the company. Today its down to 20 of the revenues of the company. In the last six or seven years, revenues have declined, and thats an industry thats growing rapidly. I think thats totally unacceptable, and the reason is these competitors with tiny resources are competing with a company with massive resources, and you see this you know, you look at businesses think about kodak, right kodak had such a dominant market position it was so profitable that they became complacent, and inswraiv companies innovated with Digital Technology kodak ignored it they were complacent, and kodak died adp is not where kodak is today, but theyre at risk if they dont innovate and compete, and they have a huge income bensy. Theyve had clients theyve had for decades that theyre losing to companies its the best publicly traded branch paychex its the only truly mature competitor the right way to benchmark paychex is just against adps small and midmarket customers its not fair to compare paychex against the entire adp what weve done is weve said there are companies that compete with adp in the small marketplace, companies that complete with midmarket, companies that compete internally weve taken theres no one that competes across the full spectrum one second the way they weve said, look, 35 of the revenues of their Employee Services paychex directly competes. They should earn similar margins to paychex in the enterprise space, they have ultimate software, work day, and others. When you compare against the benchmarks, it becomes clear that the Employee Services shouldnt be 19 they should be more like 35 Employee Services is the vast majority of their business when that translates into the operating margins of the whole country, the margin should be 60 higher than where they are, and that is an unacceptable number its fair to say that economies of scale should deliver better margins in a sector thats not being threatened by new Technology Technology has enabled disruption, and its shown that it can take the Bigger Companies time to change direction perhaps replace workers with this new technology, and that was a later Stage Company under threat in that sense it has to deal with that in what sense does that apply here in what sense do you think theyre allowed a bit of time to catch up and will it lead to firing workers in order to replace them with Technology One of the things that happens in a proxy contest is eventually the ceo comes out and starts to scare employees. If Pershing Square wins, thousands of jobs will be lost, and i think the best examples we give are so thats not the case, and there are no we would have no plans to fire loss of workers. If you take a look at paychex, paychex generated about the same revenue for employee of about 160,000 employee up until six or seven years ago, and they use technology very effectively, and their employee head count continued to grow but at a slower pace, and now paychex is generating 280,000 per employee this is a growing industry i not a dying steel business in the midwest. You think of that in the past where there have to be large scale layoffs because the business is declining. Biggest risk to adps employees are the competitive threats from Companies Like work day. If the company doesnt inyo inn, doesnt launch a competitive market, theyre going to lose market share in that business. One of the examples we give, which is a powerful one, is when you look at businesses that adp has sold, after theyre no longer owned by ap, the businesses do much better. Theres a Company Called cdk its a public company. We spun off of adp three yoerz ago. It was what they called their Dealer Services business it was almost 20 of the revenues of the company. They spun it off to shareholders he this inc. Chaed the name on the door the shareholders changed there was a new board put in place. The same management ran the company, and theyve taken margins from 16 to 26 in three years on their way to 35 approxima35 . Wouldnt you have a better chance if you owned all how much youve got 8. 3 . Adp points out if you had converted it, if it was all com, and you could vote over 8 , wouldnt that help in your proxy battle why havent you . Why is it all derivative we are one of the biggest shareholders of the company. We own 2 . That makes us the ninth largest shareholder of the company were the Third Largest investor in the company in terms of capital that weve invested. We cant vote shares so we own some of our shares through 55 and 56 strike options with stock at 150 its effectively a way for us to finance part of the decision we would have to put up another couple of hundred billion dollars and it would be disproportionately larger. Were relying on the vote of other shareholders to lead were not going to win with 8 were not going to force this through. Were going to win because we have the better ideas on how to fix this were going to slip in a quick break. Well have much more with bill ackman straight ahead when squawk box comes whereby stay tuned life happens. Thats why feeling safe is priceless. With adt, you can feel safe with an adt starter kit professionally installed for only 49. 00. Call today, and install an adt starter kit that includes security panel, keypad, key fob, entry and motion sensors and for a limited time, get a camera included and installed at no additional cost. Thats a 449. 00 value, installed, for just 49. 00. Lets head back to our special guest, bill ackman, Portfolio Manager at Pershing Square Portfolio Manager the vote is november 7th you mentioned youre the ninth largest shareholder. Have you had discussions with shareholders one through eight, and whats your sense of where that contest stands right now . Yeah. Weve, of course, im meeting with all the big shareholders. Were also doing our best to reach out to the retail shareholders here. Theyre at 28 of the stock. Thats held by small individual investors, and theyre going to play a very Important Role here. We did a first Conference Call ever for the individual investor we did it at 7 00 at night its very, very important. Does Pershing Squares own recent relative underperformance make it harder for you to convince those shareholders that you will deliver on the promises theyre focused on is there a margin of adp. Would adding a major shareholder to the board increase the prolkt that thatopportunity is identified would adding two directors with significant operational experience to this board be helpful . Two, has the company missed the market in terms of their National Account or Enterprise Business i think widely throughout the shareholder base, people think theres a big margin opportunity, and actually Sandra Bernstein did a survey of investors. Thats the best indicator we have, and more than 80 said one the pressure were putting on the company is positive two, they believe theres a significant margin opportunity three, that the company would benefit by one or more of our directors. Do you feel this battle is a crucial one for your longterm future i mean, theres 25 of u. M. Exposed in adp and clearly, you promised better share Price Performance Going Forward, so do you feel you have to deliver on this one given 2015 and 2016 its certainly important for us its one of the Largest Investments weve made the stock is up about almost 20 a share. What we like about it is high quality, safe, unlevered business, and we think the down side is limited, and we think the upside is substantial. Was the money well spent in buying back some of the Pershing Square stock yes several people think that its down, and theres some limitations on our ability to talk about this publicly traded entity, but buying back stock at a discount to the Net Asset Value is lnl always a good thing to do. Both adp and Pershing Square talk about plans to increase margins. I think both say that the other the plan is flawed or what is yoo you are problem with adps plan . Its a threeyear plan its just not ambitious enough not ambitious enough . The companys plan is to take margins from 20 today to 21 or 22 in three years 100 to 200 basis points over the next three years we think margins can go from 20 to 32 by beginning of year five a fairly steady march upward not dissimilar to whats been achieved at cdk. Adps First Response to us to say if we didnt do our homework, we didnt know anything about the company theyve heard from shareholders that our ideas are resonating. Theyre pivoting and starting to talk about a number of 5 . Its a fictitious number they havent been willing to support it they dont show any evidence for it in their written materials, their guidance for shareholders is 100 to 200 basis points over three years. Theyre not showing any progress beyond the Operational Network with growth dwrsh. Would there be i mean, you point out as you have in a lot of the situations theres real estate that they dont even need theres real estate everywhere this is a remarkable thing about the company that they operate at a ten million square feet. Thats the ekwifl i want of two World Trade Center towers. Those locations are spread there are 130 of them around the country. Again, its a vestage of the companys history. If you thought about the old days, this was a Payroll Processing company you take your magnetic tape. Your cfo would hop in the car, drive, it or the employee would drive it to a Service Bureau they would generate a check run. The checks would go back to corporate and, you know, use to be fun in the old days the guy would hand you your payment. They still have the 130 offices and necessity have 80 or 100 people operating out of it think how inefficient the business to run a business like that. The company like work day might have two or three offices where, it doesnt operate out of 130. It makes no sense. Adp has a massive sales force and sales growth has been Employee Services last year was at 4 . Theyre projecting 2 to 3 . The convey theyre trying to solve the problem is by adding more salespeople were hearing from adp salespeople. They do not have a competitive product, and you can have the best salesperson in the world, but if you are not a good product, you cant sell it at the salt Hedge Fund Sell you give very humbling speech and said that youre poised for a comeback, effectively, its been a humbling year, et cetera. Are you on that comeback, do you feel sure. We had a very difficult twoyear period of time but the last, you know, several months weve made meaningful progress off the bottom so we are well off the bottom, more than 20 off the bottom we have just turned positive for the year but we have a ways to go and i like our portfolio. Adp is an extremely attractive risk reward. Weve been entirely right on our herbalife investment a big part of that is that there are a huge amount of shares outstanding. A big part of this is trying to cause a short squeeze. What we did was so i think people mr. Icahns thought was, what we did in the last few weeks, shorted our entire short position into a put position and as a result we can no longer theres no longer an opportunity to squeeze Pershing Square i looked at the portfolio. Things have heard us, like herbalife. Do you look at pennys share price . Ron johnson was a very smart, capable leader and had had a lot of very good ideas and, unfortunately, the company did not have patience for those ideas. Its sad what has happened to retail the headwind is so enormous. I get back to the adp. A company like macys, so dominant, they have become an Innovative Company this is not what we want to have happen to the adp businesses. Does that provide more opportunity for you . I think its a biforcation of the market money is being managed passively so its more important for the activists of the world to push corporations but the actors are not supportive of the major shareholders. Quickly back to herbalife before we go, how big is that position 3 of capital 3 of capital because its in the form of derivatives, the upside is great and we dont have the risks associated with the short squeeze. Bill ackerman, great to have you back on squawk box. You got extended time here. I didnt know the address you moved. Were close dont be a stranger. Thank you. When we return, jim cramer joins us from the Stock Exchange what we do every night is like something out of a strange dream. Except that the next morning it all makes sense. To power global ecommerce Fedex Networks are massive, farreaching and, yes. A little magical. Fedex. Com slash dream today, the new new york is sparking innovation. You see it in the Southern Tier with companies that are developing powerful batteries that make everything from cell phones to rail cars more efficient. Which helps improve every aspect of advanced rail technology. All with support from a highlyeducated workforce and vocational job training. Across new york state, were building the new new york. To grow your business with us in new york state, visit esd. Ny. Gov. Lets get down to the new york Stock Exchange with jim le one question, where are you on adp ackman always presents a good case but i need to think about it a lot and come to my own decisions on things. Certainly every company could be more streamlined but the problem is with adp, its not that bad and i understand ackman wants to make it better. I think paychecks is doing a better job with their automated data but in the end, i always thought that the activists should go after the Bad Companies that are undermanaged. This is a pretty good company that may not be as managed as well but its not perfect. Its like when you go after honeywell, try out ge for size. Exactly go in for General Electric soonhatomee s go after that beast. Holy cow see you in a couple of minutes. Thanks tmobiles unlimited now includes netflix on us. Thats right. Netflix on us. Get 4 unlimited lines for just 40 bucks each. Taxes and fees included. And now netflix included. You myour joints. Thing for your heart. Or your digestion. So why wouldnt you take something for the most important part of you. Your brain. With an ingredient originally found in jellyfish, prevagen is now the number one selling brain Health Supplement in drug stores nationwide. Prevagen. The name to remember. We have no time. No time anyway, thank you, melissa. Make sure you join us tomorrow squawk on the street is next good wednesday morning im Carl Quintanilla futures are up on this first day of the month earnings from facebook and tesla tonight. Auto sales on the hill again and well watch for developments at last nights terror attack in new york city. Bonds are in focus well get ism in about a