Transcripts For CNBC Squawk Box 20121025

Stories. Im looking forward to seeing that interview. We have new news on apple. A judge ruling that samsung infringing on four apple pat te ents. And best buy is shaking up its management ranks. Saying head of its u. S. Business will be leaving in february and its chief Administrative Officer at the end of the month. Best buy warning its Third Quarter results will fall women well short of forecasts. Shares coming under pressure in after hours trading. And former Goldman Sachs director gupta has been sentenced for two years for insider trading. Gupta has been hit with a 5 million fine. Of course he plans to appeal. Rajaratnam begins his appeal today. Where is scott cohn when you need him. Thats one heck of a story that a lot of people on wall street were looking at. Mr. Kernen. Whats weird is a guy that can be so sort of respected and distinguished and its just weird that you can actually be surrounded by other prisoners for two years. And as weve seen it so many times happen again and again. I was struck by bernie kerrik. Hes been in the sbhir tientire. Hopefully were in a position where we do our best. The only thing that scares me if you have a couple of cocktails and someone gets hurt or then youre headed to thats why no way. Stay home. Right. Need a designated driver. Yeah, stay home. I dont want to see anyone anyway. I like drinking alone. Thats one of the questions i will answer on my are you going to promote that . No, im not hes doing office hours on facebook. Whats the question. Do you like to drink alone. There it is. Are you fast. Is that the shirt that and he on . It sounds like if i drink alone yorks want to be around anybody else. When i drink alone, i prefer to be by myself. P go right. Me, too. One bourbon, one scotch and one beer. Jack can yelldanielss john, youre the fastest guy. I wasnt even planning this. I wanted to get off this chest. What else . I want to talk about you and your maria. Oh, wow. Anyway thats in the post. Youre famous. It didnt say erin sorkin. Its wrong anyway. I know. They just write about the endorsement. C ceos from more than 80 top u. S. Companies are urging congress it doesnt say tax increase. It says tax revenue increases and spending cuts to reduce the nations deficit. Because it would lower overall rates. This we keep mixing up the two things to make it almost sound like the ceos are in favor of raising on the top 2 . Theyre not. The Simpson Bowles lowers overall rates and raises tax revenue, it doesnt raise tax. It raises tax revenue by getting rid of the deductions. Without knowing whatever loopholes youre going to close, its hard it say who will wind up paying more. There will be more tax. Referee revenues but lowering all rates. Its whats in simpsonbowles. Youre missing the point. It ultimately raises effective tax rates. Thats what it does. For some people, but not for all. If youre paying 35 now and you dont have those, all wind up paying less. If you were paying across the board if you want to bring in more revenue, ultimately the average effective tax rate goes up. If you want to talk effective. Do the math. But it doesnt do it necessarily on the journ sal smaal is smart to say that it will reduce it with tax revenue increases. Goes to say if the average effective tax rate is going up, why wouldnt you just say that tax rates are effectively going up . Because youre con fwlating it with obamas plan to let the bush tax cuts expire on people in the top 2 . There are people that want to go back to i dont think theyre suggesting that there t. Tis about personal income. This is simpsonbowles. The ceos say they can succeed both financially you have to include comprehensive and progrowth tax reform which broadens the base. The entire base of people. Lowers tax rates, raises revenues and reduces the deficit. Because the left is jonesing for the clinton top marginal just so we can get back to that they walk a fine line and the campaigns obamas campaign has not agreed to cut entitlements. Romney campaign has not talked about higher taxes on obamas entire this walks you throughout middle of both. The 20 page thing that he wasnt going to release, that talks about nothing with entitlements. All talks about is raising taxes on the top 2 . We had bob shrum the other day once again with the talking points about back in the 90s im not trying to conflate it with clinton. All im suggesting is the average effective tax rate goes up, so i find it odd when everybody walks up and says we want to lower tax rate, raise revenue. And get rid 6 all tof all the because they dont get in trouble with grove ar norquist one other element whether theyre thinking about this as a supply side thing. When you dont get in to the details, you avoid all the arguments. But they are trying to find Common Ground in the middle and they dough do go with simpson plan. Its lowering marginal rates. I cant say it more clearly. Marginal rates. If you want to factor in all the deductions ultimately this is all going to be a fight over deductions. Thats the real battle. But all the plans include lowering marginal rates, not raising them back to your 39. 6. And i was not advocating that. You dont want to raise back to 39. 6 . I have said i would not be against that. I know you. Youre totally fooled as if everyone who comes on here and talks about the 90s without mentioning the internet bubble or the republican congress. We have a few stocks that well watch this morning. Zynga reported a Third Quarter loss that was expected. Struggling online game maker announced a 200 million stock buy back. The company also assigned its first real money gaming deal in the United Kingdom with bwinparty. Zynga will provide some poerk and casino titles with the games set to debut next year. The shares rose more than 13 after wednesday. And were watching the shares of visa booi iboosting its quarter dividend. Most corporations do not think theyll be paying more under reform. For jeff immelt to what it you pay last year in the u. S. . I dont know. You know what the wrap is on ge. So for jeff toed a met he might pay more ill get you the number. I think it was up to about 11 . So the point is it will be but his point was if you mad a territorial system there were big bills in other countries. But no one else has this territorial system. They want to get rid of the territorial system, as well. I think you look at a lot of companies and these are ceos who say even if we end up paying more, even if loopholes that we use are taken away, were okay with that because we need a more understandable tax system. This one wants to go back to the 50 and 60 percent marginal rates with all the deductions. It opens it up for the lobbyists to come looking for special interests. They find ways to get around it. You talk about back in the eisenhower years, the rich people werent paying anything. The only reason i even make the comment is because certain politicians will say, look, im going to lower tax rates, im going to get rid of the deductions and im doing that by the way because i believe it will spur growth in the country. Because it will release cash into the system. If you ultimately tell me that my effective tax rate goes up, it sdw doesnt necessarily mean there is more cash in the system. So there are two sides who say how well get higher revenue. And thats sort of the supply side side. And it depends on who is effected by it and whether people that are involved in creating wealth are the people that have more to invest in the private one thing is for sure. Its treated better in the private sector. Yesterday when rand paul was saying its a simple. A lot falls through the crack. Money is better left in our system here. In other systems around the world, they may do it differently, but in our system, its better left in the private sector where theres economy tigs and where you have to mind your ps and qs. Unlike the post office where it all falls through the tracks and nobody is accountable for anything. Sorry. There is a debate about that in certain parts of our government. Theres people who with a argue that in the medicare world it isnt not as far as fraud. Do you think medicare is something that we want to institutionalize for our entire Health Care System . Im not going to make the argument this morning. Im just suggesting that there are two views on this. P. If you want to get rid of all administrative costs in all businesses because it works better, lets just make everythingnationalized. Because everything has administrative costs. So theres no benefit to having competition from different im not arguing the point with you this morning. The only thing im suggesting there are two sides to this argument. If doing health care and getting rid of administrative costs is the way it to do it, why would any private sector business be better if you could get rid of administrative costs in all businesses . But he doesnt want to make the argument. Why make it for one and not the other . You make the argument for one side and doctor would you say health care is better if the go. Runs it you want to do the argument . We have to check the markets this morning. There is no argument. Dow futures up by about 60. S p 500 up by about 8. Green arrows across the board. Europe, youll see green arrows there, as well. A little more muted. Ftse up by about a quarter percent. The cac up by a half percent. Dax overnight, we saw mixed markets. Hang seng up by 346. The nikkei up by better than 1 . But the kospi and korea was down. You do see, wow, what happened to oil prices yesterday . I clearly wasnt paying enough attention. Oil prices are up 52 cents, but 86. 25 is where wti crude is. Ten year note, yields 1. 833 right now. And the dollar at this point is down against the euro and the swiss franc. Euro at 1. 30 almost on the nose. Dollar is up against the yen 80. 13. And gold prices up about 13 this morning. Time for the Global Markets report. Ross, good morning. Good to see you. Good morning to you. You said slim gains for european stocks. Advancers are outpacing decliners here by around 7 3. And you can see were near the best levels of the day. We have a spike where we have Third Quarter gdp came in stronger than expected. Another big earnings day here. Some of the key report, unilever up nearly 3 today. 5. 9 rise in underlying sales in the Third Quarter. That beat analyst forecasts. Strong demand for its goods in emerging markets. Wpp down 2. 6 today. Cutting its full year outlook for the second time in two months. Slow duone in in trading. Credit suisse up nearly 3 . Third quarter profit shrinking by more than a half. Daimler saying earnings will miss forecasts. Gilts are weak. Sterling is stronger. Ten year gilt rising in value. Consensus forecast was to be up 0. 6 . And the year was flat. Its the strongest quarterly growth in over five years for the uk. Helping it, all the ticket sales for the olympics. There was a bounce back as well from the jubilee. Plus services and production doing fairly well. But we are still over 3 break the total output in 2007. So we havent regained that. But a good number today for britain. Back to you. Thank you for that good number. Thank you, mr. Westgate. Coming up, will sandy be trick or treating up the east coast . Thats the question. And is halloween in jeopardy. The Weather Channel will track the storm next. Plus is it time to be bullish on china . Well check out some multinational names. And its an event many thought would never happen on squawk. And it is coming today. Squawk Box Office Hours with joe kernen. Mr. Kernen will be chatting right after the show, 9 00 a. M. Eastern, get on facebook asap. Squawk box coming back. Hurricane sandy picking up a little more steam overnight and the path could lead to the east coast by early next week. Just in time for halloween. Lets get the forecast from the Weather Channels al leex walla. What are the odds that it moves up the coast like this . Its not unlikely. Certainly something that were watching very, very closely. We dont know exactly where its going to hit, but the potential is certainly there anywhere from the midatlantic coast all the way up into the new england coast, as well. Sandy is impacting cuba right now. Sustained winds at 105 miles an hour. So its a category 2 hurricane moving to the north at 18 miles an hour. It made its landfall here second landfall actually in cuba late into the overnight showers. And you can see it has weakened a bit. Those deeper purples is indicating where we have some of the stronger winds as well as the intense rain. Those have disappeared a bit. So there was a slight weakening, but as it emerges back over the open waters, we could be talking about a strengthening here. Its a rather large system. Look at the clouds stretching all the way now even into south florida. So well watch these areas pick up in the rain and wind department. For today through the early weekend, effects will be felt here along the coast of florida with gusty winds and rain, waves will be penning up, and certainly the rip current risk will be high heading into the waters will not be recommended. So the projected path of sandy has we head through time, maintaining that category 2 status and then maybe weakening over the bahamas. Curving to the northeast, but then early week, heres the potential here from the midatlantic into the northeast. Watching it closely. Dont like to see that. Go away. And youre right, this is a repeat of last year. Every time i hear sandy, i think about the little in the spacesuit with the flower on her head from sponge bob. I think of grease. Sandy and danny. No, i dont at all. I have the grease album. I think of the little squirrel with the two teeth. Whats after sandy. Iits different every yea. Tony . Do you pick that next . Hey, tony. Next ones tone any. Okay. Global markets now theyre naming winter storms. With the crazy names. A thethenaathena, yeah. Al gore said every year would be like this after 2005, we went all the way through the regular alphabet. Went through 26 or whatever. Anyway, Global Markets are moving higher this morning. U. S. Futures are indicating a stronger opening following four days of losses out of the past five. And remember yesterday we had some more positive numbers. Looked lining we would rebound from that horrific monday. And by the time it was all said and done, we were down yesterday. Lets get the prospects for multinational he companies in this environment. Joining us is managing director of equity investments. Do you like big cap stocks to start with because of their stability and safety in. We do. We think big caps are going to be Great Companies to own and well didity verse filed high quality portfolios. One area that were focused on is china. We think thats going to become an increasingly hot topic over the next year. In a positive way. In a positive way. As we move through the transition of power in china, its going to be crucial for the new government to put the right reforms in place in order to accelerate growth. And if theyre successful in this, then china could be the final piece in a revival of Global Equities as u. S. Macro data remains strong, europe stabilizes, and we get through the fiscal cliff. And if tiaa, were what were trying to do is use any periods of volatility created bay these events in order to find the right names to own for the long term. So china as it transforms to a more domestic Consumption Society or as it gets its export back on track or both . Good its bo go its both. Export data came in better than expected and import was positive. So both happening in china and there are great names that you can own right now that are exposed to china for the long run in order to make like who . We like yum brands. Theyre based in the u. S. , but 45 of their profits come from china. And theyre experiencing really strong pricing in china in a period of low inflation which is allowing them to grow profits by over 15 . Theyre growing unit growth by 15 . So theyre well positioned to do well in china. Basically what water loere loor is companies with strong cash flow and profitability. Yum brands has a billion and a half in free cash which is a 5 free cash and 2 dividend yield. Any presence for taco bell over there . I think there is an opportunity for all of their brands. If you can get 2 billion people tasting a tack company, 80 of their profit would be from over there. Ok company, 80 of their profit would be from over there. You do have the currency problems, but basically you focus in on on companies that have their own edge so they can come well over time. So another company we like is lenovo. They have the number one market share in the pc business and number two market share in the smartphone industry. In pcs, theyre actually growing units at 10 and this is going to allow them to leverage mar n margins. And in the smartphone industry, that is growing over 50 for them. Do you have one more quickly . We also like samson nigite. People are just buying new all the time to get lighter and lighter suitcases . Increased Global Travel and theyre capitalcapitalizing. They have a strong Balance Sheet and making acquisitions to continue to leverage their presence overseas. Ive been shocked with some of their numbers. Saira, thank you. When we come back, would apple could be telling investors after the bell today. Well get a preview of the big report and how the new products that theyve been shipping out will be impacting the Fourth Quarter. And sammy hagar has found success on and off the stage. I had a chance to catch kaccatc ohio to talk business. Hes made more money in his Business Ventures than he has with all of his bands combined. That interview coming up. And take a look at yesterdays winner and losers. If we want to improve our schools. What should we invest in . Maybe New Buildings . What about updated equipment . They can help, but recent research shows. Nothing transforms schools like investing in advanced teacher education. Lets build a strong foundation. Lets invest in our teachers so they can inspire our students. Lets solve this. Oh, hey alex. Just picking up some, brochures, posters copies of my acceptance speech. Great its always good to have a backup plan, in case i get hit by a meteor. Wow, your hair looks great. Didnt realize they did photoshop here. Hey, good call on those mugs. Cant let em see what youre drinking. You know, im glad were both running a nice, clean race. No need to get nasty. Heres your honk if you had an affair with taylor yard sign. Looks good. [ male announcer ] fedex office. Now save 50 on banners. Good morning. Welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. You remember grease. Why do i remember sponge bob . Sponge bob square pants remember sandy, shes under water, shes a squirrel . But is an decide better. Sandy is better from grease. Now i sorry. I live with big bird and elmo. Thats all i have. Theyll move on to sponge bob. In the headlines this morning, investors will get a look at two key economic reports before the open. At 8 30 eastern, the government will release both durable goods orders and the weekly jobless claims which have been really interesting the last two or three week. Economists are looking for a 7. 8 rise in durable goods. A drop of 23,000 in claims. How far we went all the way down, and some state, didnt know what happened, and then all the way back california cant hadidnt ha bump that they were expecting. Didnt show up. And the next week it did. Should be interesting this week. Went back to 380 or something. Well see. Hyundai is reporting a 13 increase in quarterly profits. In spite of labor strikes at home and a weak european market. And aetna is posting quarterly profit of 1. 55 a share. 21 cents above estimates. And the aetna guy has really got a lot of play here. He hasnt been ceo for that long. Hes come in a couple times. Hes been actively involved in making acquisitions, changing the composition of the company and speaking openly on the fiscal cliff. I think we he definidefiniteo make most people assume well kick the can down the road, but we have the grand right. Exactly. We need to rise above to fix. Well check on the markets this morning because yesterday the markets did end down again. Dow back done at 13,077, but this morning the futures are indicated higher. Up 56 for the dow. S p 500 and nasdaq futures indicated higher. In europe, they have some green arrows. The cac up by and a half a percentage point. The ftse in london up by a quarter percentage point. In asia, markets ended mixed. Big gainer was the nikkei. Oil prices are rebounding slightly. 86. 28. The ten year note, yield above 1. 8 . 1. 82 . And the dollar is a little bit weaker against the euro and swiss franc. Euro right at 1. 30. Dollar stronger against the yen which is at 80. 15. Gold Prices Higher up by about 15. Right now 1715. 30 an ounce. Lets get a preview of apples earnings. Apple has unveiled a list of starstudded products this week. Announcement right before the holidays and before the Company Releases fiscal fourth quality results after the market closes today. Joining us with a preview, collin gillis. Welcome to the program. So give us a preview. I gather youre bearish. They make fantastic products. The stock has had a nice run, but you do have to be careful coming into what were calling the refresh quarter. Because you have the refresh iphone, refreshed ipad line. So when you have a refreshed quarter, two things happen. One is sales of the older products tend to slow down because of all the publicity that happens. And you also have to remember there is a big channel inventory. North of 8 million iphones sitting in the channel and north of 3 million ipads. Excuse the pun, but in terms of an apples to apples comparison from last year to this year quarter over quarter, last year, if i remember correctly, the 4s came out in october. Now its september. On so there will be an impact in terms of how you think about those two numbers. Well get a little pop from the iphone 5 sales in the Current Quarter, but we also know we were supply constrained so they did not sell as many units as possible. So it wont be a good look as to the total potential. Supply constrained or not, they still have to head their numbers. Whats your sense on margin compression . Apples done a great job of putting the stake in the sand and saying well maintain our margins. We saw that with the new ipad mini. A lot of people thought 329 is too high. But the competition has one lever. And that lever is price. And theyll use that to their full advantage. We have somebody selling something for a dollar, somebody else comes along and says youre making 50 cents on that, im going to sell it for 55 cents. When you have that kind of a price gap, theyll get a certain segment of the market and thats what amazon and google is doing. So when you think about apple as a premium tier player, how long can they hold that position . Thats a great point. The premium tier position, they can hold that forever. Thats their spawn. Twll always be a market for that. Can can they do that and also become a massive Scale Company . Thats the question. When you see this 200 million iphone estimates over the next four quarters, that may be a bit aggressive because weve sold already over a billion smartphones. We may find consumers around the world are a bit more price sensitive and that that next billion will be more towards the mid and lower end of the range. Is this company ever a trillion Dollar Company . I dont think so. If they really want to hit a trillion dollars, they need to expand to a whole new area of growth. You mean go low margin . Apple should by tesla, bring their technology into it. A whole nother set of products. Im not suggesting that they do that but im giving you a sense is for they need something more than a tv. They need another significant something transformational. Thats right. P. We have to run. Well have to have you you back. I want to know what you do with all that cash if you were in charge of the place. But thank you for being here. If you have any comments or questions, squawk cnbc. Com. Still to come, well get on the road with auto nations mike jackson as the Company Releases earnings. And finding success both on and off stage. Rock star sammy hagar talking business, booze and music. And in the next hour, bob johnson will talk about his wide variety of business holdings, the consumer, the economy, the fiscal cliff and much more. Later in the morning, microsoft set to unveil windows 8. Well talk to the ceo Steve Ballmer at 8 30 eastern time. [ female announcer ] i found the best cafe in the world. Nespresso. Where theres a coffee to match my every mood. Where just one touch creates the perfect cup. Where every cappuccino and latte is made with fresh milk. And where clothing is optional. Nespresso. What else . Take a look at u. S. Equity futures. Dow would open up about 57 1 2 higher. Nasdaq 19. Microsoft windows 8 about to be unleashed on the world. Cnbc cameras were there first to get a look inside store zero, the secret staging area it uses to layout its Retail Stores nationwide. Jon fortt talked to Steve Ballmer about pcs versus tablets. You asked me whats going to happen to the pc market and the say the pc market and tablet market, we cant tell them apart. But with one arrow, windows , weve kind of, if you will, gotten two birds, but we didnt want to let any of the innovation surface of that not be exploited. And thats really the only statement were making. Steve balmu ball steve ballm here at 8 30. Sammy hagar is still rocking. His latest band is called chicken foot, but hes actually made more money with his businesses than with all of his bands combined. His biggest success was the t e tequila brand that he created and later sold. Now he has sammys beach bar rum. Whats so great about your rum . Its made from sugarcane from that hawaii. The ground and water is so clean. You pick it up and smell it and taste it and it smells like pineapples and coconut and just so all the different tropical flavors are in that rainwater that comes down and it goes right into the sugarcane and it sucks it up and it has flavor. So you just juice that up, dont did anything else to it, and you have the best white rum in the world. Lets talk about the music business because what music business . Apple has changed things drastical drastically. Is it for the better or worst . I sold almost 100 million records and made a lot of money, enough to put me in all these other businesses and make me secure for the rest of my life. So i cant complain about whats going on. I like playing music for free. I think it should take the best out of it so now you got it reinvent yourself. And im fortunate that i have other ways to make a living. So i no longer play music for a living. I play everybody else, but i dont look for it in my income, so therefore i dont have to do it. Could you have done it today if you were starting today trying to get into the music business . Not the way i i did it because i had to make a living. I mean, i had to. I was starving. I was sleeping on peoples floors. All kinds of bigger stars than me that got to higher peaks than me. Right from one hit on the internet and get like 100 million hits. Im going i put my stuff up there, i get 30,000 or 40,000. Whats up with that . Whats the one lesson that youve learned that you would impart to others . Go with your gut. If you feel uncomfortable about going into a business relationship with someone or youre going something just dont feel right, if you feel that right away, if that thats your first feeling you get out of it, man, walk away. Its never served me wrong. By the way, his gut is a very good gut. He started out with a travel agency because he saw guys just how expensive it was for the bands that he was into travel on the road, how much they had to pay for it. About 10 on top for having hundreds of people on the road for a year at a time. So he started a travel agency to cut out the mafr begmargins. He has a couple different restaurant chains and the tequila brand, built up the c cantina, sold it for 100 million. So his idea this time around is hell do it with rum. He says people keep challenging saying you cant create lightning out of a bottle twice, but he says that fires him up even more. He doesnt do enforcements, just things he really believes in and that he creates. He had a clothing line with p jcpenney that didnt work out. He has a bicycle line. And amazing to see what hes doing behind the scenes. Rum is not ttequila. I asked why rum and he said theres a lot of bad rum out there. He will only do something he thinks he can do better than whats out there. He drinks wine mostly, but says there are such good wine, he would never do that. And its white rum. He said most white rum is horrible. But the other stuff is you better only have one drink with that really dark stuff. Stuff that causes the bad thats what people tell me. His favorite drink is a margarita and second favorite is the mai tai. Coming up, auto makers reporting their best Monthly Sales in more than four years. And who better to ask than the ceo of the nations largest auto dealer whether this bullish Economic Trend will continue. Well have mike jackson coming up next. The sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. I thought we won at everything . By losing, we win. Win what . Business. And cdw designs Technology Solutions that keep us winning. They set us up to win. While you. Set us up to lose. Oh, a classic winlosewin situation. Exactly. Governor of getting it done. You know how to dance. With a deadline. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. This is awesome. [ male announcer ] yes, it is, business pro. Yes, it is. Go national. Go like a pro. Hey, its sandra from accounting. Peter. I can see that youre busy. But you were gonna help us crunch the numbers for accounts receivable today. I mean i know that this is important. Well, both are important. Lets be clear. They are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows its better for xerox to help manage their finance processing. So they can focus on keeping the world moving. With xerox, youre ready for real business. Bp has paid overthe people of bp twentythreeitment to the gulf. Billion dollars so they can focus on keeping the world moving. To help those affected and to cover cleanup costs. Today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. And bps also committed to america. We support nearly 250,000 jobs and invest more here than anywhere else. Were working to fuel america for generations to come. Our commitment has never been stronger. Between listening to the numbers. And listening to your instinct. Duff phelps finds the sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. Welcome back, everybody. Auto nation posting Third Quarter result thi morning, owning of 66 cents a share, short of consensus. Joining us is ceo of auto nation, scott jackson. Looks like a penny below expectation but an alltime record. Did the street get alittle ahead of itself. 66 cents, tying alltime record from the second quarter. Thats an increase of 38 . A penny difference is on share repurchase. We did not repurchase as much share as the street expected in the Third Quarter. But overall fantastic results. Almost 4 billion in revenue, up 12 , 160 million of operating income, retail 114,000 cars plus 13 , led by strong asian recovery in new vehicles up 35 . So, an excellent quarter overall. The new total unit sales up 21 . That is versus overall of the industry only up about 15 , so whats happening at autonation . Is it the areas are you in . Is it the cars youre selling . Whats making you sell more than the National Average . Yeah, i would say two factors. One, our mix is weighted toward the asians and asians are in rove mode from the earthquake the prior year. Our asian business is up 35 . Then we have a big position in california, which is a huge asian market. And our business in california is up 28 . So, its our asian mix combined with our geographic mix, combined, of course, with our operating strength. If you were to say where we stand in terms of the economy, in terms of the consumer, it sound like very good things coming through, at least what you see from your perspective. Yes, i called out from the becky, beginning of of the year, risk in Fourth Quarter from disruption in the election, of course, and fiscal cliff. So far the consumer is still in our stores and is still buying. I expect the industry to average in the mid14 range here in the Fourth Quarter. And the consumer seems to be saying, you know, as exciting as the election is, its not a distraction from going out and buying a car. And thats a big deal if theyre not and they believe the fiscal cliff will get solved. That the democrats and republicans will join hands and rather than jumping off the cliff, will shake hands and make some sort of deal. So, thats a very interesting insight as to how the consumer is looking at the situation that is going on in washington. Well, what do you think would happen if we went off the fiscal cliff . What would you see in your business, mike . Oh, it would be extremely disruptive. Even for a short period of time. And i am concerned about december. December is our biggest month of the year. The last ten days of the year are the most intense Automotive Retail period ever. And if we get the situation where were teeters over the fiscal cliff or over the fiscal cliff even for a short period of time, in that very crucial period, thats a concern. It could be disruptive. Mike, if you got your i mean, are you the Biggest Company in florida . I think you are, arent you . Publicly traded company in florida on a revenue basis. Do chads still hang down there . Do you got some new machines or something . Were not going to go through that again, are we . No, weve really figured out how to count votes down here. Which way is florida going to go . Youre on the ground. I think florida is going for governor romney. Do you care . And i think thats and very interesting, joe. Seniors are probably going to make that difference. Down here in florida. And the seniors down here are really voting for the longterm strength of america. We dont give enough credit. We think theyre just going to vote for exactly. You can appeal to you know, well keep it coming and never stop. That is not the case. Im predicting right here now, florida will go for romney. Great. Coming up thanks, mike. Did you want to thank him . Thank you, michael. This mornings top stories and Quarterly Results from dow component Procter Gamble. Well see what sales of diapers and laundry detergent tell us about america. The Quarterly Report card on another dow component. Procter gamble is set to report. And the companys cfo john muller will be here to give us instant reaction to the numbers. First on cnbc. Top ceos calling on congress to take drastic action. Robert johnson will weigh in along with honeywell ceo david cody. Were gie giving you the transactions you need to know. The second hour of squawk box begins right now. Weve got Procter Gamble earnings hitting right now. For the current period the quarter is 1. 06, that was 10 cent above expectations. Revenue was in line. 20. 7 billion, the actual street number is 20. 78, so thats you know, thats kind of rounding there as well. For the First Quarter, and this is a fiscal im sorry, for the second quarter. This is a fiscal First Quarter. Second quarter the company is forecasting 1. 18 to 1. 25. Versus expectations for 1. 10. Then for the year its in line with where the treat is. For the second quarter, they expected is that a gap number . Allin number. 1. 07 to 1. 13 is what theyre looking for for the allin number. Theyre raising the allin gap number for the year by 17 cents, but thats not on an operating basis. Maybe more important is the organic sales growth estimate for next quarter is 1 to 3 . I dont know whether that is above or below. We should get as long as hes here, lets talk to john muller, proctor and gambles chief financial officer. Is the 1 to 3 organic growth, is that where you already were for the next quarter . We were guiding 0 to 2 previously so thats a 1 increase. Well take that. You should be happy. You should be smiling. Youre going up a point. Yes. P g could use some good news. Youre not the ceo. I dont see you getting tarnished. Your ceo is under fire, isnt he . Well silence some people, do you think . Weve got a lot of good news. Earnings beat on the quarter. A big driver is effort on productivity and cost savings. We pushed 150 basis points of cost savings which drove 90 basis points of operating margin improvement. We have very Strong Innovation out in the market. Tide pods is now projecting to 500,000 sales, one brand, one country. And our work to continue momentum in developing markets is going very well. China on the quarter, organic sales. And were starting to see a turnaround in our market shares in our Core Development markets as well. A lot of good news. You said what did you say tide pod . Theyre right behind oh, i see them. Right behind my left shoulder. Now theyre for the washer. Yes, i exactly, becky. Actually, yesterday i was trying to figure out whether one second, jon. Buffett said some positive things about mcdonald. He said he was a very good human being. And then kidisappointed. Laffley has been gone for a while. I think the stock is trading higher. Tell me globally, why a lot of other dow components have missed on the revenue line. You must be dealing with the same macro factors, right . Yes. Its tough. And certainly, as youve been talking about, all morning, high degree of uncertainty as we round the corner here in the u. S. And with the situation still in europe. And that degree of uncertainty selling affects spending, of companies and individuals. And given that, were trying to focus on those things we can control that are within our purvey. Again, thats a very strong focus on cost savings, given the uncertainty in the environment, ensuring we can continue to bring strong values to consumers to continue to grow the top line. And then continuing to expand our footprint in developing markets, where, frankly, Growth Continues to be extremely strong. Not just for our company but on a market level. This is the First Quarter. You beat by 10 cents. For the year youre not raising core guidance, are you . Thats correct. It is our First Quarter so its a little early to start mucking around with the forecast. Because of both earnings and cash beat, were going to lean forward a little bit in terms of equity building marketing spend to drive a very strong second Half Initiative program. And thats why were not taking the number up. Jon, some analyst investors are concerned about premium pricing on your products. Are you comfortable with the portfolio in terms of pricing . Are you doing anything around pricing . So, we took 3 3. 6 billion of pricing last year to recover 3. 6 billion of commodity increases over the last two years. In most cases where weve priced competitors, including retail brands have priced, were in very good shape. There are some cases where weve priced, others havent. We need to adjust, which is easy to do. Of the 3. 6 billion pricing we put in the market last year, were pulling back about 400 million of that. Were trying to be smart and make the right choices. And on a category level, theres very low price elasticity within consumer products. So as long as were competitively priced, were in good shape. Where were not, we know what we need to do. When we compare to the estimates, the apples to apples comparison, i see when you talk about core, you talk about 3. 80 to 4. Thats the number that does compare to 3. 91 for the year. For the Current Quarter the 1. 06 is core but for continuing operations it was 96. A ten cent beat or in line . Do you use continuing operations or core . We compare core, which was a 10 cent beat. Can you give us an update on where your conversations stand with bill ackman and pershing square, who has been agitating for change, to say the least . We share the same objectives, top line, bottom line progress and strong cash efficiency. We have an incredible amount of opportunities on the top and bottom line. Weve built the largest and most profitable Household Care company in the world and we have a 20 market share. We built the largest beauty and groom, company in the world, only an 18 share does that mean youre telling bill ackman to talk to the hand or bringing him under the tent . Whats happening . We keep conversations with all investors confidential to protect their proprietary interests and thinking. The conversation is good. We share the same objectives and were making strong progress in our plans to deliver against those objectives. Youre fairly close to your high. Ackmans got not a big stake. Big for him, but 900 billion company. Dont be afraid of him, jon. Thank you for coming on today and explaining all of that. We appreciate it very, very much. Thank you. Lets get a check of some other headlines. Microsoft is set to unveil new windows 8 operating system today. Thats going to be taking place at an event in new york. Well talk first on cnbc to microsoft ceo Steve Ballmer. A widely anticipated Earnings Report is due out after the apple from apple, after announcement of the apple ipad mini. Earlier this week, amazon. Com well be hearing from amazon later this week after the bell with those earnings as well. Electronics retailer best buy says Third Quarter earnings will fall below those from a year ago and same store sales will fall as well. Its announcing a management reshuffle this week and that will see two Key Executives depart. Weve been watching futures and after hearing from dow component Procter Gamble, futures up by 68 points. S p futures are up by 10 points. Some improvement over what weve seen in the last several trading sessions. If you got comments or questions about anything you see here on squawk, shoot us an email squawk cnbc. Com is the address. The lead story in todays wall street journal, ceos calling for deficit action. Bob johnson of rlg companies is joined by honeywells david cody, a member of the fix the debt campaign. Were coming back in two minutes with these two handsome men on a thursday morning. Comments, questions, send them to squawkcnbc on twitter. Follow the show and look for updates from andrew, becky, joe and the squawk staff. Squawk box on cnbc and on twitter. Mike rowe here at a ford tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. Welcome back. Weve been keeping an eye on futures and so far looks a little better for the bulls this morning. Whoa. Dow up 66 points and change. S p are indicated higher as well as nasdaq. This came after we got better than expected earnings from dow component. Lead story in todays wall street journal, about 80 Big Name Company ceos putting pressure on congress to embrace spending cuts. The fix the deficit action has been brought. David cody, honeywell is one of those ceos. Joining us in this discussion, here for the remainder of the show, robert johnson, founder and chairman of rlg companies, and a cnbc contributor. Welcome to both of you. Nice to be here. Im reading this story this morning about this call for deficit action. David wesle, the writer, says what i thought was the most interesting piece of it. We were debating this around the table. He writes, the declaration what you are suggesting differs sharply with those of other business groups which urge washington to deal with the deficit and avoid across the board spending cuts and tax increases. Theres a suggestion here youre willing to raise revenue. And sort of a debate weve been having around the table of what that means. Raising tax revenue but lowering overall rates to broaden the base. Heres the way i would describe it. When it comes to business groups, i would say any group down there thats a lobbying organization, they all want to wait until the action begins so that they properly positioned for the negotiation. And theres a group of us saying, okay, its fine to do that when the time comes, but youve got to get the country to that point where you can have that discussion. When you start to do the math, and most business groups know this, most groups on the left would know that, the only way you solve this thing is with tax increases and spending cuts. Have you to do both. And anybody who ever says, no, you can just grow your way out of this, just raise the top two brackets, just cut spending, its baloney. The math doesnt work. Have you to do both. Were trying to be the radical middle, if you will, that says, no, really, you have to be logical about this. You have to fix this problem, take the uncertainty out of the economy that bob economy were talking about earlier, youve got to be able to do this. Sounds like Simpson Bowles. Sounds like the same thing. It is. Thats what i mean. And in terms of what were advocating, were not saying, okay, the tax revenue increase needs to look like this, spending cuts need to look like this. Were saying it has to be 4 trillion. You have to find a way to do it soon, because if you let this uncertainty condition, people like me dont invest, we dont hire, and we just wait to see whats going to happen. The argument was about the 39. 6 and going on the higher end of of marginal rates. The Simpson Bowles and both plans call for raising the top to 26 , getting rid of deductions and broadening the base. Its not going to get back to the 39. 6. You have to let it go. Let it go. Let it go. Im just let it go. Thats not what i was suggesting. What i was saying you tell me if im wrong on this, david. Well, of course. Effective rates might go up. We to want raise more money. The question was, it sounded like Business Leaders, including justifiy riry riry riry riry not for all companies. Depending on one thing you have to take into account is you cannot get top earners out of corporate america. A lot of what i call sacred cow deductions have to be put on the table. Mortgage thats where the devil is in the detail. Some of these deductions go right to the heart of this countrys social framework xhshgs is which is mortgage deductions, charitable deductions, benefit deductions theres a way to do it. If you establish an artificial number, everybody below 250, nothing magical is about 250 how much is different between Corporate Tax rates whenever i see something that says, gee, we need to do corporate reform first. Thats baloney. Everything is intermingled today. If you look at the volume of scorps or ccorps that have actually filed returns its down by a third on a percent to total basis because everybody reports as individuals now because it makes more sense. Thats why at least in Simpson Bowles we advocated a top rate the same, whether its cap gains, individual or corporate. Broadened the base, eliminate all the baloney. Those are all market distortions. Everybody has their favorite market distortions. Everybody signed off on this letter but when it comes back to baloney, dealing with nose deductions, do you expect all 80 ceos not to be fighting tooth and nail to keep theirs . I would say not just ceos, its everybody, theres a really good reason thats important to the american economy. At the end of the day, what were all saying is you need to start the discussion. You cant just keep sitting back, watching the country go down the tubes because were overspending and saying, well, as long as i protect my piece, even though the countrys down here, ill have my piece as opposed to what it could be. Theres a number you could get where you could maintain a lot of the valuable deductions for the middle class and low income people. You could maintain them by letting them do 17,000, 20,000, cap it there and then you would get so much mortgage Interest Deduction right. And then you get rid of the real lucrative ones for high end. You would i mean, thats buckoo bucks. I wouldnt call it simplification but its an idea. You have to you have to do more than that. Have you to decrease the rate of increase in the growth of entitlement. And means test them. Right. You have to means test entitlement, look for cuts where you can the issues are so demogog we shouldnt confuse means testing with solution. It helps the psychology. Helps everybody feel like doesnt go to the numbers. If you want to solve medicare with means testing you have to go down to 30,000. Doesnt work. You have to do it to get the psychology of the country right, but we shouldnt confuse that with being the solution. How impactful do you think this campaign youre pursuing, many of the other campaigns other ceos in the Business Community are pursuing in washington . Do you feel like this one has shocked not just us but most people in the congress. For one reason. The money we were able to raise. Because this is if its its the sort of thing where somebody was telling me down there, if you can raise 2 million for a cause in a year, people are shocked and say, we have to take notice. We actually raised 30 million in six weeks. And weve got over 35 million committed now. Thats what got everybody took everybody by surprise. We got this ad hoc group we created. They have over 30 million. It got everybodys attention. We need to know more, i need to understand it, but that was the biggest that is that why senators were five showed up theres a growing awareness. Some say Simpson Bowles failed. It didnt get 14 votes but changed the discussion in the country because nobody was talking about this before. Nobody was aware of it. Those discussions have begun. You put on top of that 30 million that says were focused on this, ceos are interested, this is not an official group, an ad hoc group pulled together, wow, that gets people paying attention. I know youre still backing the president. Right. Okay. Ill let you say that. I know weve had our discussion. But do you how do you think so, youre on you want the president to be reelected. Do you care which candidate wins in terms of helping us get this closer oh, i dont declare im more focused on we have to solve the problem. Let me ask a different question. You know is it you i believe in the Business Community if romney wins the fiscal cliff, at least the can gets kicked. The issue gets forced, if obama win. Is that an accurate way to no. I dont think you should look at it like this. If the president is reelected, which i expect he will be, the president has is going to look at this and say, now ive got four more years to focus on the clear problems of solving the debt and the deficit and at the same time protecting a certain level of entitlements. Hes going to do that. I think the Republican Party is going to be faced with the fact that we have to address this problem or well be the cause of a significant decline in the u. S. Economy at a worse time in the global environment. So, i believe cooler heads prevail. Either way i can tell you right now, before december 31st, the can is going to get kicked down the road. Either way. Because nobodys coming out with a mandate, and anybody that says we have a mandate is foolish. Either side will say they have a mandate. The opportunity to do something in power, youre not looking to be reelected four years later, will drive the discussion for the president of the United States. I differ a little bit with that. I do think theres the possibility that as a collective group, 536 independent contractors, that they dont have the collective wisdom to kick the can down the road at a minimum. I worry they could go off. I do agree that no matter who wins, this problems still there. We have to leave it there. Thank you for coming in. Rising above and keep giving us updates on this because were happy with your progress. The more you talk about it, the greater the chance we get something done. Thank you for coming in. Stocks wiping out early gains yesterday. Weak corporate guidance hit equities. Well get an outlook for today. If you like me and love me, you will love chatting me up. Make my day. Ask me about my hair, dyed, fake, weave or your underwear. No, some ladies dont like that. We dont either. You dont either . Send in a comment about that picture. Whats wrong with it . Its manly. Ill be answering comment, questions and more. Duff phelps finds the sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. We create easytouse, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius we knew you needed a platform that could really help you elevate your trading. So we built it. Chances of making this . Its a lot easier to find out if a trade is potentially profitable. Just use our trade probability calculator and there it is. For all the reasons you trade options from income to Risk Management to diversification youll have the tools to get it done. Strategies. Chains. Positions. We put em all on one screen could we make placing a trade any easier . Mmmm. Could we . 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Well get more news from the housing industry coming up at 10 a. M. Nbc time. Were going to have much more to come from our guest host, bob johnson. Up next, your tools of the trade. Well put oil and equities in focus as we get set up for another day of trading. It does look a little better for the bulls this morning. In the next hour, Steve Ballmer live. This is america. We dont let frequent heartburn come between us and what we love. So if youre one of them people who gets heartburn and then treats day after day. Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morning. 24 hours. Zero heartburn. Welcome back to squawk box. In our headlines this morning, dow component Procter Gamble out with earnings, with 1. 06 a share when you strip out certain things, 10 cent better than the street was expecting. Ceo has been under fire after bill ackman bought shares but the stock is indicated higher, up 1 , 68. 08 and helping out dow computers this morning, which are higher after a few rough days of trading. An hour away from the latest reports on durable goods and initial jobless claims. Durable goods expected to jump 7. 8 for september. They dropped up above 380 last time. Well see where they stanld because weave had a few volatile weeks. Microsoft expecting a splash when they unveil windows 8. Well talk to the ceo Steve Ballmer next hour on squawk. Is it possible applelike splash is what youre laughing at . Yeah, for an operating system. Do you remember the windows operating system that launched with a mick jagger theme that went with it. Start me up. And it they turned the Empire State Building the four colors for do you remember what feature of the operating system really caught your attention and made you think this was i think it was the little paper clip did you ask it a question . No. Start me up i think that was 85. Do you get excited is it hard this one is supposed to be really different. Does that thing just turn around and around and around and freezes. I have a mac and i never see anything going forever. Then i restart it and well be speaking with Steve Ballmer. Its not start me up, its restart me up. He cant cancel now. Restart me up because everything is spinning did swub ask you about your singing . No. Did someone tweet how terrible you were . Yes. I didnt have a chance to warm up. You sing . He said my schools not a real school, it didnt have an alma mater, didnt have a song and i sang it. When you play a ranked team arkansas, we played them and beat them. Was arkansas ranked . Yes. What college . Rutgers university. She sang the song and shell sing during the break. Scarlet knights. He even knows because were undefeated because his colorado stinks this year, so hes a little mad. Thats that school in jersey, down the road from princeton. Thank you. He thinks im terrible. I stink at singing, whistling hes fat oh, thanks. Better back off. Lets get to our trading block and find out what traders are looking for in todays session. Joining us is president of ceo capital and scott nations, options action trader. Also, lets talk about this quickly. Lets start off things, scott, talking just about what weve been seeing lately with earnings. Theyve been terrible so far. Better news this morning from Procter Gamble but how does this shake out in the markets today . I think were going to continue to watch revenues. It sounds like about 60 of S P Companies have missed on the top line, which is unfortunate. Im not going to use the old joke about about Procter Gamble being a soap opera, but it is. Its its own thing. Im not sure it gives us much insight. Apple out later today is going to have much more information. Apple will be huge because not only what it tells us about te technology, just what it does with his size and what it does to the indices. Youre expecting Major Movement no matter what, one direction or the other . I think that apple is going to shake things up a little bit. They got clocked last time they reported. The stock was down 5 . I think the iphone 5 is going to really help. I think the interesting thing as far as the s p is concerned is that we cleared the we went right through the 50day moving average of 1434. That had been a floor. When we got underneath there, we went through there convincingly. I think the s p is going to probe the 1400 level. The next technical level is 400day moving and thats a little far away. I was interested in the oil prices. What do you think when youre watching whats happening there . I think shorter term well see a bounce in oil. I think if you take a step back, two big themes driving the oil market in 2012. The first is the relationship between brent and wti and the next is with Energy Products themselves, looking at reformulated gasoline, down 2 on the year, ti is down 10 on the year. While the oil market seemed to consolidate for long periods of time f you look at the relationship between the spread, the spreads are driving the oil market and what most Energy Traders are paying attention to. What does that mean . If you look at relative performan performance. Reformulated gas is down 2 on the year so far through october 25th. Yet the underlying oil is down 10 . Thats these are historical ratios, at least substantiative ratios where its much stronger than wti why. A couple reasons. You look at overall glut out there. With supply. Shale technology is a big reason behind that. A number of refineries just came online again so choke point in term of refinery capacity. Wti brent, you understand the spread, between the two democrat contracts, reflection of the geopolitical risk out there what does this mean to me as a trader or a consumer at the pump . At the pump its beneficial for you as a consumer because now that the refinery capacity has come online well see lower prices at the pump. As a trader, wti brent spread, theyve had a lot of range between them. Guessing the direction of wti outright has been problematic, the direction well see a continued uptrend as far as brent outperforming wti. Thank you very much. Scott, thank you. Gentlemen, we appreciate your time today. By the way, you can catch scott on options action every friday on cnbc. Rlgs founder and ceo, a make or break moment for microsoft later. Will windows 8 live up to the hype . We cant wait to have microsoft ceo Steve Ballmer join tech reporter john fortt to talk about this companys unbelievable operating system, tablet and future of the finest operating system on the planet, windows. [ male announcer ] at scottrade, we believe the more you know, the better you trade. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. Bp has paid overthe people of bp twentythreeitment to the gulf. Billion dollars to help those affected and to cover cleanup costs. Today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. And bps also committed to america. 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You talked about in last time you were yeah. We closed the companies, traded on the nasdaq under rlge. Our goal is to become the largest independent distributor of content both on bluray, dvd and digital. See the Digital World being the new pathway, content being far more diverse and dynamic in terms of what people want to see, how they to want see it o a global basis. Thats why im very excited about being back in media after starting, you know, Black Entertainment Television went public in 1980. The hotel reith went back last may and now the Third Company. You know, this is ill take a don king line. Only in america can you think about this, is that the Stock Exchange has been around 200plus years and i have the honor of having three companies on the New York Stock Exchange. As a media guy that understands the business and, obviously, b. E. T. , with every with every change and disruptive technology, its very frightening. But theres also opportunity, i guess. Im still in the frightened side. Im on opportunity side. Every time theres a change in technology, it impacts the way content is delivered. You need to make money, right . Well, yeah. If you look at what happened in Cable Television thats what im saying. Salt light and cable came together. It created all these niche to cable channels. Look at espn. But what happened in cable over the last year, at viacom, at cnn, headline news. You look at the way numbers are trending. Are people going to digital outlets to get all the same information . Yeah. I think whats the challenge for cable, as i said before, is the whole question of ail al la carte per bundle. The price will always go up. The question is, how much are people willing to pay and how do they access it. How have b. E. T. Ratings been bee been its great. Theyre not down . No. Because you keep adding more choices, more device, people can see it in different places. Does digital make up for thats a digital pennies for analog nickel. Exactly. Quarters. No. The digital doesnt make up for it, but the point is, you cant put the genie back in the box. Digital is here to stay. Those companies with content find ways to adapt because production costs have to go down because talent we shouldnt talk about talent costs. I mean were not the problem there. Whoa, whoa, whoa. Im just trying to understand i dont see 25 million on my contract. Talent costs is always like the airline industry,ist the pilots. You cant run the planes without the pilots and you cant run the show without the talent. The broader point being, how do you bring costs in line with revenues . In digital . Digital. First of all, you simply have to produce content in a way Consumers Want to see it at a price that you can afford. And you dont have gatekeepers, so you could do just about anything you want to do. You dont have huge transmission costs. Youve got a global marketplace right out of the bat. So, the economics of it is, you produce what the market wants. Nobody said that you have to have, you know, a 20 million movie to garner, you know, a million, 2 million, 3 million viewers. Theres a channel a digital site that has korean soap operas, charging people ten bucks a month, has 100,000 subscribers watching it. They are repurposing content they cant get. Korean consumers in the u. S. So, can you come up with content that will appeal to an audience that is at the right price and people pay for it. I think you have to go more to a subscription model, not necessarily an advertiser model. If you do that, i think the opportunity is there. We keep saying content. Thats what we have to thats what i mean, what these two companies ive got, theres a Company Called acorn tv that shows british dramas and starting an acorn subscription channel for people liking a ini agatha christie. We own 60 of the library. Its delivered for a low price of between 2. 95, 3 a month and thats your thing. I think i can do the same thing, perhaps with other digital brands. Were looking at doing an africanamerican subscription channel. Hispanic is a possibility on rlg. A hispanic channel that would compete with the other ones out there . On a description basis because you give them what they want to watch. A lot of africanamerican talent, hispanic talent is underemployed in the broad media world. Not utilized because nobody is going after that audience in a directed targeted way. Is apple a friend or foe . I ask it because they take a third, traditionally, if you sell your content on itunes. Correct. Well, apple is part of the window, the various windows you can deliver product to. I talked to tim cook out at herb allen as krompconference, i saie key thing you need to do is make the apple tv ubiquitous. Once you do that, then you can become you can collect a ton of content because everything ultimately gets to the tv. You know, hes theyre not a programmer. They dont want to own content. But that technology of creating a way of make it plug and play ease to content is the smartest thing if im a manufacturer of technology. Thats the smartest thing in the world to do. And then if you want to buy content, you go out and buy it or you want the Music Companies might say that didnt work out so well for them, right, because it changed their model so drastically that it well, the a lot of pain. The Music Companies got around the idea that their product somebody came with the notion their product was free. And once people started getting the notion they should get it free, its hard to change it. Movies have always been paid for it content a lot of that gets ripped off, too. Pirated in places it does, but the consumer wants that kind of creative content, the story line. They dont get it except by paying for it and theyll continue to pay for it. All right. You will were going to talk about these ties. You have to talk about ties. We will the next time because half the worlds population are still suffering from could get malaria and 3 billion people can be effected by malaria. Mostly in subsaharan africa. Still die. 600,000 children under 5 each year die from malaria. Malaria is a curable disease. Totally. By having, as you know when you went to africa, malaria can be prevented, not cured, can be prevented by having netting over bedroom with insecticide theyve had problems with that, too. Early diagnosis and treatment. If you can do that, you can cut down malaria in the United States like we did. These are what im really excited about. Nice. Its designed to promote awareness. And everything goes to malaria no more. Every dollar goes to support malaria ending malaria. I got all you guys ties. You can look im going to take two. Is that okay . You wont wear this. Ill wear it. You wear thin youre so fashion forward. Ill have my tailor cut it down. Thats your color. You think thats my color . Pink . I appreciate that. Ill take that to my pilates class later. Well talk with bob throughout the morning. Still to come, we have jpmorgans cooperating officer on the success of hiring vets. Well talk to him about the state of the mortgage business. 8 20 interview of the morning microsoft ceo Steve Ballmer on window 8 operating system and dive into tablet. And well talk to Td Ameritrade ceo joe moglia. Tired of watching your assets slide . Feel like youre kneedeep in [ bleep ] . Stocks to watch is next and well help you make it to the opening bell. Lets take a look at oh, peter. Sprint nextel reported quarterly loss, 26 cents a share. That wasnt as bad as people thought, 42 cents. Sprint was able to retain 59 of customers from nextel platform. That was more than people thought. That was positive. You can see all the other news about sprint has been really dictating trading in those shares. United, Continental Holdings say its pretty good, except it was below 1. 47. Revenue was above. That stock is indicated a little lower. Pss world medical, the its a Health Care Services provider, being acquired by mckesson, 34 premium over yesterdays close and mckesson estimates 104 million in savings by the fourth year after they close the transaction. Was that in the deal book . No, it wasnt. It is now, after i said it. You want to mr. Johnsons right here. I want to ask him a question about his ties. Good, good. Which is, who actually manufacturers the ties . The ties are manufactured how this got started, a friend of mine introduced me to mark snyder, the Group President over at pbh for the ties. He said, i was looking for a social cause to align with my product in some way that will sort of give us a chance to do something good as well as at the same time provide a profit. I approached him about the idea of designing a tie under the rlg brand. And i was looking for someone to design the ties. One of the guys who works at rlg companies in the private equity fund, cara johnson, no relation, was a design he of ties. She designed an original obama tie in 08. I said, can you design a tie for africa that would speak to the issue of africa and where can we buy these . At macys stores around the country. Not selling at macys in new york but im appealing to the macys tie department to start stocking these ties. Im going to ask mark to get the ties into macys. Well have to talk to Terry Lundgren about that. Get them in there. The whole idea all the money goes to combat malaria. Very attractive ties. Ive got them for all of you here. I want everybody to wear im wearing a beautiful red. You see each one has africa, the continent is imbedded in the tie, the symbol here, to remind people 665,000 children under 5 die from malaria. Were making inroads into reducing that dramatically, mainly led by peter chairman. I want to ask you about no buddy mellon thats who wrote about your singing . I went to my junk mail. I didnt see it mel kamazon he said, thats why im listening to sirius because hi to listen to singing like that. Give me his email. We get a read on the Housing Market and how this low rate environment may help homeowners get back on their feet. Why microsoft may have zero wiggle room when it comes to the success of windows 8. Microsoft ceo Steve Ballmer will join us in a special interview. We were just driving along, comin back from the lake, and all of a sudden, kaplam. It blindsided us. What is it . Our College Savings account. How do you think it happened . Not sure. I think something we bought a while ago turned out to be something else, annnnnd, i remember a lot of other stuff in there had the word aggressive in it. Is everyone okay . Well, now, yeah. Who knows later. Qui windows of opportunity. Microsoft ceo Steve Ballmer on the latest version of its operating system. A first on cnbc interview you cant afford to miss. Breaking economic news. Investors paying close attention to jobless claims and durable goods numbers. The numbers and reaction just ahead. Getting america back to work. A closer look at jpmorgans efforts to hire vets and an outlook for the Mortgage Market from jpmorgans cocoo as the final hour of squawk box begins right now. Welcome back to squawk box on cnbc. Im with becky quick and andrew ross sorkin. Our guest, robert johnson, founder of rlg companies. Also a cnbc contributor. Some billionaires dont like to cop to that. You dont mind, do you . No, i like you, joe, becky and you like being a billionaire, right . Well, i if i call you that ill take that as a negative if i call you a billionaire . Ill tell you what i say. Ive tried poor and ive tried rich and i like rich better. Enough said. Excellent. Lets get to our headlines this morning. Dow component Procter Gamble out with earnings earlier. First quarter profit came in at 1. 06, 10 cents better than the street was expecting. Profit margins increased thanks to cost cuts and higher pricing. Microsoft set to unveil windows 8. Steve ballmer will be joining us to talk about the much balandeb. Apple will have fresh news as it reports latest Quarterly Earnings after the closing bell. U. S. Equity futures have been higher throughout the morning. Dow futures up by 68 points. S p futures up 10 points. In asia overseas we saw mixed market. Japan, nikkei up 10 , kospi down by 0. 9 . In europe youll see green air rose. The ftse up by a 0. 3 . In the german the dax up by 0. 5 . The Unemployment Rate continued its downward trend. Cochief operating officer at Jpmorgan Chase and ceo of jpmorgan banking. Jpmorgan chase is leading the coalition called 1,000 jobs mission. The goal, hire at least 100,000 vets by is that true, 100,000 vets by 2020 . Thats amazing. For some reason i thought it was its mindboggling. How is that going to happen . Well, its interesting because were actually evaluating whether this is 100,000 jobs program the way originally designed. It was originally designed with five companies coming together and saying we have a commitment. We have to put veterans to work. That was really 100,000 jobs by 2020. Weve had 82 Companies Sign up. Some just as recently as yesterday. We ourselves have hired 4500 veterans since february of 2011. And the coalition will announce today, has hired 28,000 veterans. So, its no longer 100,000 jobs by 2020. Its 100,000 jobs so we can do the next 100,000 jobs. Give us a little bit of a sense of the experience so far. So, 4500 vets have been hired. Its all worked out across the board . Talk about some of the issues in terms of how its working. I think whats important is before we went on the journey we did a lot of conversation. Colonel sutherland came in and gave me great guidance. He said, you are to assimilate them into the work force. Weve created training programs. We have body armor to business suit. We have military 101. These are programs getting them ready. We also created an Advisory Board with roger staubach, brendon hall, the spouse of a veteran, to give us guidance. A business, although well intended, can start a program but its important to hire them and keep them all. In terms of the resources for training, easy, hard . Other Big Companies can do it. Smaller companies can do it . I think the good news, the coalition now up to 82 companies, shares best practices. Thats one of the big commitments. We do have military and Veterans Affairs group that reports into myself, seen by great executive tom higgins. John donnelly, who runs hr for us, does a fabulous job bringing the hr resource. But the recruiters, 13 of 15 of them are veterans, so they know what it takes and they run the preparedness. We have a fabulous gentleman named rick oliver, iran, afghanistan, national guard, went to grad school. Is one of the main leaders in bringing these people in. So, i think the assimilations a big deal. And lots of companies are participating. We just started on this. This is really an american commitment. Where do you think this could go, go . You say 100,000 is nol longer relevant. 500,000 . Should i have introduced the segment differently . You shouldnt have introduced it differently. Were learning. We made this statement in february of 11. Were up to 28,000. We are completely building programs still. We have a gentleman that runs branch network, ryan mcanerny, hes going to hire 20 Branch Managers and train them. The companies we partner with, at t, target, cisco, toys r us, theyre all working together. This is a start. I think also the department of quens defense, we met with joint chief of staff general dempsey, general oh who runs the army has been hugely helpful. Were talking to them about getting to the military before they come out. Can we start thinking, you know, in advance, six months before they come out, begin the training. Give us an update on the Mortgage Market. This is your business. How hard is it to get a loan now . I think loans are appropriate. Loans are appropriate. So so lending it isnt easy either . Well, its let me give you some statistics. 49 billion in new loan we did ourselves last quarter. 49 billion. Were the number two originator. So, i really do believe theres a commitment. I do believe that weve worked close with the housing secretary and with the agencies. The credit box is better than it was. Are your standards, jps standards, different than Community Banks . Higher, for example. You often hear big banks its much harder to get a loan at big banks. No. First of all, theres fannie, freddie, ginnie. We right to that standard. I think its highly probable those that get loans with us, could get them at Community Banks, vice versa. I think were on the margin in that conversation. When you look at the are you looking for a higher spread . Is that part of the issue . No. I think when you look at it, i think when you look at it and look at what weve generated you know, weve helped 750,000 americans buy homes since 09. So, i think theres been a tremendous amount of lending thats gone on in business. Are you a believer quick question on ben bernanke. Keeping rates where they are ultimately gets more people in homes or not . Is it really going to move the needle at this point . I think at this point in time we see mortgage lending up. On new homes, were not talking on new homes. Weve put 25 more Loan Officers out there to do business in communities. Were facing off to realtors where we see movement to buy homes. In terms of principle and from a business standpoint. What would happen if we were to reduce the mortgage deduction or in some cases eliminate it for certain buyers or home . What would be the consequences, you think, on the consumer but equally what would it mean for your business . How would you adjust . One of the important things to love at right now in homeownership, in many markets, it is more economical to buy than rent. So, start there with a basis. Where homeownership is right now and where you have rates, it is beneficial for people to be homeowners. I believe right now in this environment, youll see people buying homes. I dont think the deduction is the driver to homeownership. But you dont think it would have any impact if we got rid of the mortgage. That would have some factor, of course. My macro is you look at rates, home prices are, where Consumer Debt is, you know, 1 trillion has come out of mortgage debt. If they got rid of it in a Simpson Bowles type of plan . Well be as bullish the american dream, homeownership, can still be attained even if we were to eliminate the mortgage deduction . I believe thats correct. I couldnt believe there wouldnt be a massive pushback from the industry im answering the question asked not whether there would be a massive pushback. Your opinion on whether or not it would directly impact the prepare of homes. Im on the board of kb homes, the home builder, clearly we like the mortgage deduction. The point im saying is at some point there has to be some tradeoffs. Choices have to be made. The mortgage deduction is a big one sitting out there. And its discriminatory in a way to people who rent. Right. Can you say one way or another jpmorgan would be out lobbying against this . We havent talked about what well be lobbying for or against. We believe homeownership is very important in america. We stayed in the mortgage business, weve invested, weve become, by j. D. Power the number one ranked large originator and large servicer. Thats a commitment we made during a crisis. Frank, thank you. We have to leave it there. We would love to have you back, though. Good luck with the veterans. Appreciate it. When we come back, the latest version of microsofts old operating system but enough for investors to hold onto the stock . Well talk to Steve Ballmer about the companys move into the tablet market and latest version of windows. Also as we head to a break, check out squawk box market indicator. Dow futures up by 60 points. Tdd 18003452550 when im trading, im totally focused. Tdd 18003452550 tdd 18003452550 and the streetsmart edge Trading Platform from Charles Schwab. Tdd 18003452550 gives me tools that help me find opportunities more easily. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 and with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 until i choose to focus on something else. Tdd 18003452550 trade at Charles Schwab for 8. 95 a trade. Tdd 18003452550 open an account and trade up to tdd 18003452550 6 months commissionfree online equity trading tdd 18003452550 with a 50,000 deposit. Tdd 18003452550 call 18008368799. Welcome back to squawk box. Futures right now, up all morning and indicated up about 68 points or so. Procter gamble, i think, is still indicated higher after a pretty good number. Kind of surprising, i guess, with all the recent hoopla and activism and everything else. Check the record on something. I think this is true. Every time i come on squawk box, the market goes up. You put me in a good mood. Go back and look at the list. I think the market goes up. Bob, can we talk quickly about what we were just talking about on the last break with our guest from jp mother sg pchlt m mortgage deduction. The mortgage Interest Deduction is one of those that gets thrown out there. If you start Closing Everything we call a loop hohole, its goi to affect them. The mortgage Interest Deduction is a big one. Youre on the board of a housing company. Yeah. What would it mean . You have to look in item of you have to stop have you to sort of take on the sacred cows. Thats a sacred cow thats been around forever and a lot of others that are around. Have you to start someplace. For me i think you start it in terms of means testing. You lower the Mortgage Rate or eliminate the Mortgage Rate deduction for people who have over a certain income. Theyre still going to buy homes and invest in furniture on income not the mortgage income. The personal income of the individual. What ive heard talk about is limit if at 500,000 for a property . Right. Right now its a million bucks so if you lower it to 500,000 if youre saying i would get rid of if your income is less than 100,000, you get a deduction. If you its over 100,000, you dont get a deduction. Thats a pretty low number. I thought you were going to say 500,000 or 1 million or 2 million for income my thing is, first of all, its discriminatory in a couple ways. If you want to rent, you dont get to take advantage. If you cant afford a home in fact, youre subsidizing a whole group of people who can afford to buy housing. Its reverse discrimination. We have to slip in a break. Mr. Steve ballmer coming up after the break. Coming up next, what you need to know about Microsofts Windows 8 and tablet. Steve ballmer joins us ahead of the release of those two items. And well have numbers for you at 8 30. Duff phelps finds the sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. Mike rowe here at a ford tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. And you dont want to miss it with thinkorswim by Td Ameritrade. You get knockyoursocksoff tools, simple oneclick orders, realtime paper trading to hone your skills, plus anytime you need it support. Stocks, options, futures, and forex. Get your trading on track. Thinkorswim by Td Ameritrade. Trade Commission Free for 60 days, plus get up to 600 when you open an account. Plus get up to 600 between listening to the numbers. And listening to your instinct. Duff phelps finds the sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. Welcome back to squawk box. Here with bob johnson. I mentioned you, bob, before the last last break two breaks ago, mel carmazon whos leaving sirius in this battle with jon meloan. Malone. I know youre good friend with mel and john. And john. What do you make of that . The cultural issues between sirius and liberty. I know both guys, great guys, brilliant business people. My feeling is that somehow it just didnt work. One thing i know about mel. Mel loves to run his shop. Mel firmly believes if hes the ceo, every decision he makes is his decision and hes accountable for that decision. He doesnt want anybody looking over his shoulder. He dent liidnt like it when hed with sumner. Job will be with us for the rest of the morning. We also have a very special guest that john fortt, our technology correspondent, has sitting with him right now. Take it away. Thanks. Were actually standing. Im here with microsoft ceo Steve Ballmer. Big day for microsoft. Windows 8 launching. We have a bunch of pcs were going to look at in a bit. I want to set the stage. The pc market down more than 8 . Traditionally i think since 1995, new windows operating system hasnt spurred them in but you think this time might be different. Why . Windows 8 is about enabling new creative, imaginative devices. Pc notebooks, pc desktops, pc laptops, but now pc tablets as well that you can touch and interact with and are alive with information in a way, frankly, no device is available on the market today. And you got the surface tablet that youre also launching. Microsoft made this, first time youve made and sold your own windows hardware. Tell me, why is now the time to do that. Youve let partners do it before. Its a unique opportunity. Weve remanaged windows end to end. We knew our partners who make computers were going to do a great job but we werent going to let any branch of innovation go uncovered. So with microsoft surface, we ventured out to do an Innovative New design for tablet cum pc. Apple sort of defined this market with the ipad. A couple days ago we saw them come out with the ipad mini 39 329. Am sdmron in amazon in this market, google. How are you going to compete them when youre coming out at 500 and theyre coming in at three and two. Nobody is the product i see customers wanting. You can go through the product from all those guys with strengths and weakness. Not apple, not goodegle, not amazon, nobody has a product that can let you work and play that can be your tablet and pc, not at any of those price points. As were looking at the surface here. Tell me about the market. Weve had a lot of earning disappointments, revenue shortfall, uncertain global economic. As you launch this product, how do you feel the next few months . How will people receive that based on what youre seeing in the market . I feel good about our product cycle innovation. The economy is a second vector. We rise and fall relatively how exciting the product is. Heres a firstclass tablet people can enjoy and appreciate. Ill check in on the most recent news, which you notice is live and the information is coming to me over the oops. Yeah, live and coming to me over the internet. I can stop and consume and enjoy. But with the builtin kickstand, i can just set it down. I want to watch a movie, i want to set it aside. If its time to do some work, i click it in. You hear that . Simply and easily, click it into the cover and now i have a full pc. I can bring up microsoft word, excel, power point and go to work in the way that im used to, very simply. When im done, by the way, the keyboard is, in fact, the cover. Its a pc. Its a tablet. Its for play. Its for work. Its a great price. That product doesnt exist today zhou get the last word. I sat down with you a week ago, well have more of that interview throughout the day. Back to you, guys. Got everybody on that, john. We like the keyboard. Were appreciative of that, especially those who cant type very well. With the cover, its thin. And bright colored. Were minutes awe from two key data points. Weekly jobless claims is a biggy. As you head to a break, u. S. Equity futures are higher today. Youll see right now, dow futures up by 70 points above fair value. Welcome back. Lets take a look at the market. Things have been strong this morning for the bull. Dow futures up by 70 points above fair value. Nasdaq up by 20 points. S p futures higher after a rough week. We did get a better number from Procter Gamble after lousy earnings, reports and outlookings all week long. At the end of last week, too. Markets have been surprised by the numbers theyve been seeing from these companies. Some people say you cant read much into Procter Gambles numbers in terms of a broader gauge, what it might mean for other companies as well but its given a boost. Europe you see green arrows right now. If you take a look, youll see right now the ftse is up by 23 points. Cac in france is up by 16 points. Germany, the dax is up by 42 points. Big number coming up is this jobless claims and durable goods. I want to say we want durable goods. Im interested in durable goods. Were just seconds away, by the way, from jobless claims and durable goods. Rick santelli standing by and Steve Liesman joining us from the conference in new york. You know, durable i guess of the claims number could be back in the 60s probably, rick. Lets see this durable goods number. Is it out . Down 13. 2 before was wild. All right, here we go. We are up 9. 9 on durables on the headline. Thats september. We see that august, which was a very large minus 13. 2 was downgraded but minimally. Only 110 to minus 13. We all know things that are supposed to last three years or longer are very volatile. Of course, many were looking for a little makeup ground on this. Kind of look at it in a twomonth. As you dig through it gets more enlightening. The 9. 9 headline diminishes 2 when you take out transportation. Now, if we look at capital goods orders, not shipments, orders, nondefense, exaircraft, a proxy for capital spending, that indeed was on the weak side. That was a goose egg, unchanged. Were looking for that to be close to 1 . If you look at shipments versus orders, that was down 0. 3 , up close to 1 expected. Jobless claims moved from revised 392 to 369. Down 23,000 on that. That is a bit of a shocker. Remember, that was revised up. Its been volatile. The week before last was our lowest going back to 08. Looked like a state that im still not sure of, everybody keeps pointing this way, but didnt get the data in correctly, seasonal adjustments, whatever. If we look at continuing claims, that really is kind of boring. About 3. 25 million. Whether you look at revision, last weeks orange release or this one, theyre within a few thousand of each other. Jobless claims will be perceived as better. Durable goods is going to be average. Definitely better than we were expecting. Is that reflective in the marketplace . Stocks are already pricing in some better earnings and whats going on overseas to some extent. That didnt move much. Interest rates were up half dozen basis points on the long end as many think theres something going on in the Interest Rate complex. After the fed statement, it looks like weve run out of gas on some of the benefits. Back to you. Thank you. For more, lets get to Steve Liesman at buttonwood conference in new york. Hey, steve. Reporter joe, i was interested in your conversation there. Was it becky you were having the conversation with, which is more important jobless claims or durables. What is it . Reporter economists ared about in the relationship between the two because typically the number that rick highlighted, what rick highlighted was this unchanged number for business investment. Typically when this number falls, have you a decline in employment or rise in unemployment. And right now these two numbers are at odds. Weve been talking a lot about split economies out there. Weve had better retail Sales Numbers and lousy manufacturing numbers. We have really lackluster Capital Investment numbers and decent employment numbers. Not terrific, not off the charts. So, this split continues this 369 number from the revised, the number that was revised higher in line with expectations, 365. Should suggest, i dont know, 100, 150,000 jobs being created every month. What we clearly see f you look at a chart of yooefr other yooefr business investment, i think this chart will not update the current data but still the same. Its been down year over year for three state months. Weve had a definite falloff in business investment. Typically what you see is a decline in employment. To follow that we havent seen it yet. Its a matter of whats going to shake out here . When i look at whats happened, clearly the 9. 9 the result of civilian aircraft bouncing back. I think i see a number here that says 2,640 . I think thats what it says, the month to month change in civilian aircraft. Boeings orders did not show up in the prior month. They showed up in this month. The other stuff is very mixed and negative. Computers, computerrelated, communications all negative. Im trying to find some positives. Metals were positive. Manufacturing with unfilled orders is positive. Defense, positive. Capital goods. But that was not exaircraft. A mixed picture coming from the business sector. Meanwhile, we still watch decent jobless claims number. A good number from boeing because of deliveries. They match up with durable goods. When boeing counts a delivery, then durable goods counts that delivery and thats why theyre both up for that reason. I believe its the orders, joe, that orders, not deliveries . Thats the number that that the street really follows here. Shipments, by the way, feed into gdp. The markets very cued to the orders numbers because its a sign of where things are going. And, joe, this gets to that whole conversation that weve had for a long time now, which is private sector versus government data. They dont line up on a monthtomonth basis. They come sometimes late, sometimes its early. But we knew we knew boeing was going to have a lot of orders. We knew it was going to juice durable goods report today. Phil is going to talk to us now. He always talks autos but it was deliveries that did it for boeing. That was one of the dow components. Thanks. Right. They count the revenue from deliveries. They do you can go on their website, joe f youre interested and they list orders every month. Thats how economists know whats going to happen to this particular part of the durable goods report. Thats okay. Steve, thank you. Reporter if you were if you were i am, but, you know, i dont know if im going to click on all that stuff. Thats why we have you tell us. Weve got you and lebeau. Were going to him right now im at 30,000 feet. Im not sammy hagar, i saw him yesterday, he said hello. I have a video. We raised a lot of money for the coming home project. When yir back in studio, well play the video. Lets get over to phil lebeau with breaking news on ford. Reporter three pieces of news coming from ford and it all revolves around the mess in europe. Lets start first off, Company Announcing it is closing a second final Assembly Plant in europe. This one is the southampton plant in the uk, which means they are now over the last few days announced theyre closing two of six final Assembly Plants. The second piece of news, widening expectation for losses in europe this year. It continues to spiral lower. They now expect to lose at least 1. 5 billion. Remember, the previous practical was for a loss of roughly up to 1 billion. Thats widened considerably. The final piece of news is one that investors want to Pay Attention to. Ford says they had a strong finish to the quarter and as a result, the 3q earnings number that comes out next week will match if not beat what they posted in the second quarter, a patriot profit of 36 cents a share. A Conference Call coming up in the next half hour with ford ceo alan ma lally. Theyre pulling the trigger on europe, taking out 18 of capacity, forecast being profitable in that continent by the middle of the decade. Thank you. Well keep an eye on shares of ford. Up about 7 cents. Ford out with Important News phil was just talking about, including raising guidance. Coming up, well get a read on retail investor, taking a stand against liberty, joe moglia. Find out why. Mike rowe here at a ford tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. Nespresso. Where theres a coffee to match my every mood. Where just one touch creates the perfect cup. Where every cappuccino and latte is made with fresh milk. And where clothing is optional. Nespresso. What else . Hey, its sandra from accounting. Peter. I can see that youre busy. But you were gonna help us crunch the numbers for accounts receivable today. I mean i know that this is important. Well, both are important. Lets be clear. They are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows its better for xerox to help manage their finance processing. So they can focus on keeping the world moving. With xerox, youre ready for real business. Welcome back to squawk box. Take a quick look at futures. Green arrows across the board. Dow looks like it would open 57. 5 points higher. S p 500 would be higher as well. Mr. Kernen . Lets get down to the New York Stock Exchange. I want your latest comments on Procter Gamble. It looked like i dont know, maybe weve thrown that guy under the bus too early. Is this a good number . Yes, i took him off the wall of shame after analyzing i think we wanted to come in and be differential to previous management. Didnt make the cuts he had to but was a tough guy. Hes exceeded the cuts. This is the soft good stock to own. Kimberly clark blinked yesterday. I predict the stock will be up even more after we hear more details. Mcdonald is back. Hes done a great job in a very quick time. Was it a recognition he had to make a lot of firings . Its working. And i think people are kind of in disbelief it could work, joe. I know. But in guy is real. Hes real. Its like one i looked at it. Its almost on a high and then i went back to see what the alltime high was. Not that far from that, jim. I dont know. I had this idea that ackmans in there and that, you know, its totally totally adrift. With that quarter and listening to moeller, the ceo, it was organic, some initiatives are paying can you imagine trying to run this thing . Well, it is so hard. I spoke to management behind the scenes. Said, listen, isnt it too tough . They said, look, what happened is we got fat, we had to make the cuts. The cuts are coming rather rapidly. They had this pod, this tide pod that took more share in a threemonth period than any product in history. The olympic advertising campaign, which was i think we were all excited about it, frankly, because it was peoples lives, worked. They picked up a huge amount of share this summer at the same time they cut a lot of people. Mcdonald came in, didnt realize how fat the place was. Boy, he has acted. This is not a jobsaver. This is a stock youve got to own. And following laffley, right out of the box it will be tough, right . Yes. And i think that he showed great deference to laffleys decisions but he piled company on after company. Procter got fat unileaver came on, colgate took a lot of emerging markets. Procter came in, watch strength in china. Thats going to develop. Raw costs coming down. This is the first mcdonald quarter of many good mcdonald quarters. Look, i was very tough on the guy. I saw things happen in the last three months that showed me, he got religion, hes a good hes an army ranger guy who was initially muted, who is now on top of his game. Look out, kimberly, look out i unilever, procter is back. Mcanerny is the driver, he said, come o if you dont deliver, youre gone. Ackman caught that wave. This guy delivered. Wait until you see the number of cuts that can still come. I cannot believe how fat procter was. I dont think mcdonald could either. It took a while to get organized. He himself has been very humble about the First Six Months and how he didnt have it together. Its all coming to fruition. I dont think people realize the kind of earnings power that procter used to have and will have again. Hes real, mcdonald. He screwed up. He admitted it. Hes moving forward. One thing i couldnt figure out, i thought i saw a headline that said they were actually able to get pricing power. That was important, too. Part of what happened is innovation. So, they were actually you dug through more than i did. They were able to get some that stuck this time . It was innovation. I wish Warren Buffett had seen this quarter. This quarter says, look, the problems are behind us. Now were in growth mode. Were going to reap and harvest the innovation we started out with. If you take a look at the units that had been underperforming, mcdonald quietly, quietly, not a big fanfare, changed the people who run those divisions. I mean, the panteen decline, unforgivabl unforgivable. Understands that. Tide is a great product, has to be reinvigorated. Church and price had been taking share from procter for a while. And church and dwight give you the shortfall, thats a sign procter is playing hardball everywhere. Everywhere theyre coming out a winner. Prospect ter. And unilever and procter versus colgate. I predict procter wins. If i hadnt asked you about Procter Gamble, your head would have exploded. We didnt plan that. No. I took mcdonald off the wall of shac shame about three points ago. I said, im going to look bad on the wall of shame. I have to get rid of this gooi guy before the quarter happens because i think hes real. You may touch on this in squawk on the street i think. I just like what mcdonald is doing. This is a comeback guy. It would be confusing if he ran mcdonalds. People are thinking, what are we talking about . Procter gamble run by mcdonald. What a quarter. What a quarter. Coming up same thing, people dont know which dow component were talking about. Joe moglia next. A consistent series of wins. With millions of americans out of work, a record high number of College Graduates drowning in debt, it may be hard for some to remain hopeful about a bright future. But our next guest overcome challenges to be ceo of two careers. The book fourth and goal written by monty burke, it talks about your story. Its an inspirational read. Why dont you offer a little advice to people who are struggling today, students out there thinking, how do i do it in a job market like this . Beck y one of the things we talked about with our team, one of the things ive talked about over the years, is that you really have to know who you are. You have to know what your strengths and weaknesses really have to know who you are. You have to understand your skill sets. Youve got to take the time to understand what skill sets are required to be successful in a certain career path. If they dont match up with you, you got to go down that career path. If they do match up, you have to ask yourself one more question. If both of those answers are yes, the probability that youre going to be productive and happy in your career path is far that process. As a business leader, joe, what do you think right now about the job market . Are we at the point where were going to see it turn soon . Are businesses feeling more confident . Are you . I think i have done a good job over the years of cutting out costs, the Balance Sheets are pretty good. But there isnt any question that as a business person, youre worried about the uncertainty of the election, europe, china, the middle east, earth. As long as youve got those issues, youre still going to have some caution as far as moving forward. What would you make you feel better . What would resolve things . The election, right, i think you get the election behind us, you take care of the fiscal cliff and you start to see stability in Real Estate Housing and employment start to pick up and everybody feels a lot more comfortable. Were hoping were working twarz that. Were getting towards the election and towards that fiscal cliff. We have watched the market really hang in there despite all of these big issues that are out there, despite concerns about a global slowdown too. Where do investigatives stand right now . We were asking that and i think they feel a little bit like the Business Leaders do, in that they see light at the end of the tunnel, theyre reasonably optimistic, but the younger part of our account base has concerns about whats going on with social issues that actually exist and the other group are worrying about the economy and the fiscal cliff . Are they looking for the stock market right now . Are they still trying to get money in cash. They till have money in cash, about 17 of all of our assets have been in cast, thats comparable of what its been over the last few months. The individual investor is a lagging indicator of what goes on in the market. As the market improves over time, the investor is going to get back in. This is bob johnson, i have a question in terms of consumer attitude, in terms of the impact of the past, deep, deep recession on peoples behavior, is this going to be a lingering effect on a generation of consumers having gone through this crisis so that means theyre going to spends less, save more, be very cautious about how they spend and this is going to be something of a little bit of a drag on how this economy comes out of this cycle . Yeah, i think, bob, its a great question. I think you cant go through what we went through in 2008, i mean, you think barks the world was actually challenging the stability of the Financial System of the United States. I mean, thats mindboggling and we had the worst recession we have had since the great depression, you cant go through that without there being some lingering effects. But memories become short as we start to experience better times. As we go through this, i think the economy becomes stronger than usual. You know big 8, its not big 8 anymore. But you know that oklahoma team, is notre dame going to be okay . And is rutgers really a top 20 . This is what we were arguing about when we came to you, joe. Its kent state. Do we care . Well, number one, rutgers is a top 20 team, they deserve to do well this season, but im not worried about rutgers and notre dame, we have our own homecoming this week, we played liberty on saturday and thats going to be a big one. I expect all of you to come down for this . Joe, youre a brilliant man, youre welcome to come down here any time. Because of the rutgers point. You know we love you, the book, everything should take a look at this too, 4th and goal. Joe, thank you for coming on and well see you again. Were going to give our guest host bob johnson the floor. Mike rowe here at a ford tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. Welcome back, everybody, our guest host today bob johnson, were arguing about what the last word should be. Fiscal cliff. And ill tie it into something, its leadership. We have got one of the challenging Economic Crises facing this country on the globe in a long, long time. After listening to the debates and obviously i got my own candidate, and i still do feel that a true leader emerged thats going to give people the confidence not based on whats going to happen in the past, but whats going to happen in the future. If youre going to say whats a major concern for me, is what is the future . We cant go through life looking in the rear view mirror. But when we come out of this election, whoever wins, somebodys going to face a divided nation, the government thats this size, in terms of expenditures, the government to shrink to meet the needs of the government. That decision has not been decided. Is that the number one issue for you . Thats the number one issue that happens after the fiscal cliff. But its more the attitude, whos going to stand up and say i will give up on being reelected, i will give up on my legacy, but what my legacy is to fix the problem. But its fair to say you think government should sh rain income. I think government should shrink in terms of spending more than government t