Transcripts For CNBC Squawk Box 20131022

For what happens next. In corporate news, becky, apple hold ago product event in california today. The company is expected to unveil the latest event to the companys new line. Mavericks operating system. In other tech news, nokia launching its first tablet today along with two large screen smartphones. These are among the last products the company developed to compete with apple. And samsung. Before deciding to sell its hand set business to microsoft. Microsoft, service 2 and service 2 pro tablets go on sale in 22 initial markets today, including the United States. Both are updates of the first generation surface tablets released last october. Improvements include increased battery life and higher resolution screens and camera peps joe, get your geek glasses on today. You know what, steve . I am more interested in this jobs report than the next one. I dont why . Because im not interested in what the shutdown did. Im interested in the basul level of the next two will be a mess. The expectation is in the Third Quarter when you started seeing more concerns of the tax increases that came in and the sequester numbers. The report brit was already weak. Right. So was it slowing down . This is like when you put in the shutdown, its like reporting earnings with onetime items. The onetime items coming in and then the next one going out. More interested in reference to what janet yellen and the new fed next year is going to be dependent on what the underlying economy is doing. Not what the shutdown did, too. Steve, is it fair to assume, especially prosecute what we have we heard from Charlie Evans, is it fair to say that theres no way theyre tapering this year . Theyre going to have to get more numbers. No, i dont think thats fair. Its fair to assume Charlie Evans has numbers. I think charlie is a little bit kind of left of center. You put the doves there. I dont think look, what he said makes sense, that if youre looking for a real picture of the economy, youre going to have to wait. But whether or not the center of the board doesnt want to wait, thats what we need to hear from guys like dennis lockhart, we need to hear from the chairman about how much they want to wait. If we get a number thats weaker than 180, then would you say its fair for id say below 150 would be a threshold that we would give the fed pause and i think theyll be looking at the Unemployment Rate and why its moving either way. Dupont is out and the stock is trading right near a 52week high. So im not sure how this is going to be taken today. But the revenue number was okay. 7. 7 billion. But theres two numbers to compare to the 41 cent estimate for earnings. One is 30 cents, which is the net number, and the number from continuing operations is 28 cents. So 41 cents was the estimate, both of those are below. The company is backing full year net of 385. And the estimate is 380 on the nn here. So theyre going to need to make some theyre going to need to make some up because this is the Third Quarter. So the Fourth Quarter would have to be better than the 55 cents that people are looking for. And then the companys comments, none of them are really saying that things are better. Like theyre trying to explain things. We see slightly lower full year growth rates for global gdp. Industrial production. We now see a larger negative currency impact and a lower base tax rate. So thats a little bit better. A Fourth Quarter operating earnings will be substantially up from last year. Well, they earn eed 1 1 cents l year. So that was already factored in. And the bid and the ask on the stock is too wide at this point. But it looks maybe thats a real number down 16 cents or so. Operator earnings 35 Cents Per Share . I didnt see that one. From continuing operations, its 28 cents. That would make sense if it was 45 because they know thekdz easily deliver on the full year. This is operator earnings of 45 cents a share. And the Business Wire for that number appears nowhere. Its not in any of the headlines all the way down. Yes. Its a 28 cent number and a 30 correct number. I dont know how theyre going to hit their year number if they missed it by that much. A few comments from ellen, she says Industrial Market demand will remain smooth. They say Fourth Quarter operator earnings will be up substantially from last year. Because it was 11 cents. Third Quarter Sales volumes and operator earnings, stronger compared to most businesses last year. After the bell, theres a couple of things, but netflix is the one we really want to talk about. Its a different Business Model just starting on the content side of things. But the companys earnings beat the street, but it was the Largest Subscriber gains that thats the metric that people watch for netflix. And you can that that stock was up 40 after hours. Its still you know, if you want to talk about the potential for more growth, its only a its a big market. It was 20 billion. But its still you know, i look at other companies and if theyre already at 80 or 90 billion, you wonder how many more times theyre going to double. They did say theyre hopeful that the company will reach a deal with comcast. We had an analyst that said they probably wouldnt get it for the host boxes, but hastings saying theyre hopeful they can do that with comcast and the others in the industry. Im resentful, dont like them. Why . Because its 20 billion cap of market cap comcast could have had. If they do no, remember, if we want to deliver comcast at home, it was the rental dvd thing. Its in the mail. Suddenly they have the software to deliver it directly to their home. The kids watch it over playstation. They firgd it out before i did. Because they were an upstart, they were able to sign a lot of the upstart deals that allowed them to carry all these things. If comcast or time warner had tried this, they wouldnt be able to do this. Id like to take their business and put it on infiniti. That sounds like perfect monolistic behavior. At first, it was a little over 5 . Even if it was space that think about amc buying all of those black and white movie thats no one wants. Its like you know, what was the one with Joseph Cotton and Teresa Wright or whatever, shadow of a doubt or something. And thats whats they had black and white. Then they do breaking bad, walking dead, mad men, suddenly its netflix has followed with its own original content. One. And orange is the new black. I met all the people from that show when i played a benefit for the Womens Prison Association in new york. They all came and the author was there. I met the woman whose life it was based on. Thats even cooler. Well delve into the sensitive you say womens prison to me and i dont know why, but its just what do you mean you dont know why . Its sensitive material that i i want to talk about tech which reported earnings in revenue that topped consensus. Current quarter guidance fell short of estimates. And discover financials earnings and revenue both fell slightly short. Well watch that stock today. Tjx is issuing a full quarter outlook. Sounds like tjmaxx, right . Because its the parent of tjmax dx. The quote now doesnt match the its given up on these. I dont know why the stop is not related. 59. 50 is the number. But its down. No, it was down before the markets closed. After hours is when you saw the move. Its like the obama care website, some of these charts that we have. We have the same people we hired. Internet and revenue disappointing. I shouldnt say that. Thats not nice at all to our people. They have access is to your emails. Thats way too nasty to the people to our people that develop this stuff to compare it to obama care. Anyway, the street under rental company slashed its full year profit outlook and shares of vm ware getting loose. The cloud softwaremaker reported a higher than expected profit as it sold more licenses to enterprise customer. That one looks fine. That was up. Except it looks like it closed at no, 89. 75. All right. Lets get a check on the markets this morning ahead of all of the earnings that were going to be yeah, listen to what he says, not what hes pointing to. Take a look at the futures ahead of earnings. Youre going to see right now those dow futures are down by about 15. 5 points. S p futures down by 2. Nasdaq futures are up once against this morning up by 8. 5 points. Take a look at whats been happening with oil prices. Its not just the jobs numbers that were going to get today, but Oil Inventories that had been delayed. We will be getting a look back at some of those numbers today. Oil markets ahead of that, once again, wti below 100. This time, its below 99. 98. 89. Theres been a massive amount of pressure. Weve had different guests who said, a, its the economy thats weakening. Weve had other guests saying, no, no, thats not it. Take a look at the fundamentals because theres so many energy thats been pumped. Probably some of the tensions in the middle east, not that theyve gone away, but theyve gone off the front pages of the newspaper. Thats why youve seen some of the action, too. The tenyear note is yielding 27606 . The dollar at this hour is up a little bit against the yen. 98. Approximately. Euro is trading at 1. 3673. And gold prices right now are down by about 3. 80, 1,120 an ounce. Did you see Steve Liesman is here for us . I didnt. I was on a plane to check and i ended up here. I dont know how that happened. Have people are tweeting that andrew is anchoring asia squawk box. Like bernie low and apparently it was unbelievable, those two guys together. Chemistry. A total crackup, bernie and why are you looking at me like that . Im just wondering where youre going with that. Im not going anywhere. Not going anywhere at all. Staying right here. Im convinced i was here because you have a story on baldness later. It was cute and endearing last night because harry smith did the piece. Did he . You know my problem with how we talked about this, right . Its the cure for baldness, right . Like a cure for herpes or like its some disease. Lisp to me, they made that very clear that it is. Supposedly it would be the biggest remedy for the most terrible affliction thats ever be set man kind. And i sat there, why did they ask me to come in today . Then i saw the baldness story when i came in. I watched it. It involves stem cells. And cloning. And you put it on their butts. And you grow mice hair. At this point, its great news for any mice that might be hairless. That whole group. Theres celebrations and thats right. On their what . No, just somewhere. Nowhere special. You said put it on their butt. No, i didnt say put it on their butt. I said she has frequentels on her butt. She had freckles on her but shes nice. Have you heard that one . No. Have you ever heard that. She has freckles on her butt no. No. Lets bring in ross westgate. Hes standing by in london with our Global Markets report this morning. Ross, how do you want to tackle this one . Sne she has freckles on her butt its nice to see steve sitting there. Where are we . Five to four decliners outpacing advancers. Not a huge margin for european equities. The Dow Jones Stoxx 600 is completely unchanged. No one really wants to do anything ahead of the tuesday. Jobs report has been talking out this morning. The ftse 100 yesterday we were up just a little bit. 31 points. Just up 9 points. Pretty flat elsewhere for the german french markets and the ftse mib, as well. There are some individual stocks worth taking note of this morning. Perhaps the most surprising investment this year is into this, fcc, fomento de const. Why . Bill gates has push chased 6 of this Construction Group for around 155 million. It now makes him the second biggest shareholder behind the chair woman. Fcc, of course, is a huge hit from the spanish property crash. Since june, though, its shares have doubled in value. So there we have interesting investment. Arm holdings, a chip designer up major ideally this morning. This is a company that designed chip processors that are used in the majority of smartphones including the iphone. They announced today they had a record 48 licenses from 24 separate companies in the last period. Which boosted Third Quarter revenue up 27 . Pretax profits up 36 . There is some concern that as we get more cheaper smartphones, their margins will go down a little bit. But the kre o came out this morning and said, no, thats an opportunity. And lufthansa, down 0. 5 today, as well. The 2011 operating profit will not rise on the year. The reason i mention it, its coming out talking about the problems associated with the strength of the euro. The German Companies are starting to produce a little bit. Back to you. Okay, ross. Thank you. Thank you. Reading about all this pressure on Ellen Coleman to split the company up because the agriculture business is and pelt. We should talk about that. We have an analyst coming up soon. To talk about dupont. 45 cents is okay. The earnings are there, but apparently the company is going to hear it from analysts that its time to spin off the the agricultural portion. From analysts or active investors . From nelson and says here in the journal increasing pressure from analysts or investors, the sell or spinoff of the cultural portion of the business which has been generating most of the growth. Michelle is here. And i dont mean that michelle, i mean this michelle. The internal jobs was played, according to the shutdown. Michelle gerard why do you have two names now . Most people dont go down. They just keep adding, dont they . You know who has a lot of names, if youre in the Spanish Royal family. You actually i think hit every single i know, i know, because it used to be a beautiful name. When she was at rbs. It still is, managing director. Here is my question and its deep. Im saying i want to see the where we were before the shutdown. And then i have people writing in saying that the shutdown isnt a onetime item, that its going to hurt us for a long time. Theres lasting damage. Theres not any lasting damage from this. What, because we think it might happen again . I think first of all, i think youre right. I think you raise a good point. I know lynching to you earlier. It is interesting to see whether or not the economy had momentum going into the shutdown. So that is true. I have to say, ive been a little dismissive of it like, well, what i really want to know is where we are when we come out of this all. The shutdown is going to be more i think the impact is going to be more than a month or two. It took u. S. Sentiment four months to get back to where it was. The whole thing will be drawn out and because when we do it all in january no, we wont. I dont think we will, either. But that point may linger and keep and consumers dont have four months this time because they have to start shopping for christmas like in two weeks. Exactly. There will be less. Less because of that, exactly. There was one other thing i wanted to follow up on with that, but now im thinking about christmas. Anyway, john lynch, which take do you have on this . Oh, i know what i was going to say, john. That last report that we did get was so bad that we were all like, whoa, and it was the revisions and Everything Else. It gave us a whole new idea and it cause today fed to make that crazy decision to, you know, all the preparing it did for us, the tapering, then they didnt taper because of that report. We were already in a slowdown, werent we . Your point about revision was pressure. But i suspect he had misgavings about the political process, as well call it. So i think that was in retrospect the smart move. I think confidence will be more an impact than Economic Activity. If you get 800,000 people with a koump back paychecks, by the time they get that, that could help spending going into the holidays. Of them are getting their backpack plus unemployment insurance. There is an article about that. They get to keep it. Given some of the rules in the states, i guess some of them are able to keep it. Ill tell you, talking about that last report, there is a strong historical tendency for the july august data to get revised up. So that is something. We had come into the second half of the year expecting upward movement. That last report seemed to put a nail this that. We were abandoning hope that the second had a was looking better than the first. I want to ask you a question becky asked me yerlt. October almost impossible, december is going to be tough. I think so. Are you start toog dial in . The fed chief, right . And a new fed chief. I mean, we have gone in september all the way into march. Before we knew we may have concerned in january with all of this being pushed out in terms of the government issues, into january, i think its doing it this year is going to be tough. And the data, too, maybe called into question. So the fed may not feel like they have a clear read. Its the wrong day to quit sniffing glue. We do. Theres never a good day to taper. Never. John, im going to ask you a question just to highlight a point. Is the next move by the fed to do less than 85 or more than 85 . Because thats what we heard yesterday from mark faber. Theres not going to be a taper, theyre going up. I saw that interview. I questioned whether or not they would have to buy more. I do think december has been pushed off, also, because if you remember this Super Duper Committee is die december 7th and then i guess the fed no, december 13th, i think. And then the fed meets a couple of days after that. So i suspect right after thanksgiving were going to have a lot of headline risk as i suspect or anticipate, you know, both sides dealing that into the grounds to think thats going to ask for volatility. Just putting forward that question shows you we were in wonderland. At this point, i dont know. The last two days of trading were really an erie calm. Wouldnt you agree . If 85 billion is going to go in, and the other thing faber called it something, theres a crisis, the government puts in the program to handle a crisis and then the program is permanent. Theres a name for that and economists talk about it and you can go back 8el 0 years and see erchl theres been a fanl crisis and you put in something to deal with it, it becomes a berm program. Im ready for the economy to run on. Im ready for us to have a permanent qe why not . We asked evans what the limit was. His answer is really there is no limit. I think he would have said a hundred trillion, quad trillion. I think one of the largest weapons is here p. America runs on dunkin and qe. Qe is the coffee for the economy. I dont know what evans is saying, too. He can sort out this number that qe is only going to be 1. 25 trillion. And you do the mrarth. If theyre not tapering this year, theyve only got another the 200 maybe you should explain that. He does suggest maybe you ramp up the speed of the tapering. But hes focused in a way that janet yellen is focused, i might add. They stay that way for a while, which like i said, we were in wonderland. Keep it going. John lynch, thank you. Michelle colley lauf lynn gerard. You like Michelle Gerard now . Lets just keep it simple. Sure, all right. Coming up, why the government needs verizons help. But first, a stock to watch this morning. Whirl pools earnings beating the street by 11 cents. Revenues falling a bit. Is the chart right, joe . In squawk sports news, new york is finding getting their first win of the season. Giants beat the minnesota vikings. Bad beat worse. Eli manning threw for 23 yards happy for the giants, no doubt about it. Were tracking showers, moving closer to the east coast. You can see along the cold front thats activity moving on through. Were starting to fizzle out as it heads east. Ee dont anticipate that to make its way to the 95 corridor. Joining us to see the showers through the interior. Places like syracuse, al ban knew, towards state college. Could see the better chance for the rain today while we stay dry in d. C. Philly and new york. Behind all of that, things chilling down a bit. Look at these high temperatures for the day. 40 in minneapolis to chicago. Minneapolis, your average high this time of year is 60. Well watch that cool ir air. This morning, getting ready for 20s in the twin citys in chicago subfreezing. So cold times ahead and this is all going to work its way into the south. Be ready for it. Thats your national forecast. More squawk box coming up next. Mercedesbenz has pioneerd many breakthroughs. Breakthroughs in design. Breakthroughs in safety. In engineering. And technology. And now our latest creation breaks one more barrier. Introducing the cla. Starting at 29,900. What do you do when you can no longer get around like you used to . When you fear losing your independence . Who do you call . Call hoveround now, to see if you qualify for americas premier power chair. Hi, im tom kruse, inventor and founder of hoveround. Now you can do more, see more, enjoy life more. Heres why hoveround makes it easier than any other power chair. Hoveround is more maneuverable to get you through the tightest doors and hallways. More reliable. Hoveround employees build your chair, deliver your chair, and will service your chair for as long as you own your chair. And most importantly, 9 out of 10 people got their hoveround for little or no cost. Call now for your free dvd and information kit. And now every hoveround comes with this tote bag and cup holder for handy access to your favorite items. You dont really have to give up living because you dont have your legs. Call now for your free consultation. And right now, get this limited edition hoveround America Travel mug free with your hoveround delivery. Call or log onto hoveround. Com right now time now for our executive edge, a daily segment focused on giving Business Leaders a leg up. Verizon has reportedly been asked to help the government fix the federal health exchange. The company has been tasked with improving the performance of the healthcare. Gov website. This sa big story, one that is not going away anytime soon. Even squeak emanuel, yesterday on msnbc pointing out that he thinks there need to be daily briefings and weekly measures of how much progress theyve made. Yeah. Its been at this point, becky, i dont know what more we can say. The journals lead editorial about it today, i havent tried to go on the website. The one thing that was interesting is i guess you can call you do one or the other. You call the thing and it refers you to the website and you do the website and it might refer you to the call center. Well, the president yesterday said go ahead and call the call center. You never do get to actually do anything. Whats interesting is theres these rumors that you hear like in some states they have zero people successfully signing up. And theyre not telling us. The Obama Administration has not given numbers so far. The glitch, they can use that and say we really dont know and theres a glitch. But you wonder how much of it is a smoke screen. Its bad. But the bigger thing is, if the website is that messed up, they need to do some very sophisticated things in terms of act ewe aerial stuff. Here theyre going to get about 19 of the economy. Uarial stuff. Here theyre going to get about 19 of the economy. You dont want the gop government really doing important stuff, i dont think, if your life. The idea was for the government to facilitate a market. Thats how you talk about it, yeah. But they these are all Heritage Foundation ideas, right . Theyre the ones that came up with some of these anyway, the bottom line is, i agree with you. The problems on the front end create serious issues on the back end. If the young dont sign up, then the whole concept of spreading out the risk thats too but what about when youre actually in sort of one of the programs and youre trying to call. You know, if you find a lump and you get on the website and cant get you call smp, you cant get ahold of anyone. What if its the same order of efficiency or the same competent level . I dont know that the front end is reflective of the back end. At least i hope. But well you sign up once and then these are beginning problems that you dont you sign up once, you dont sign up all the time. That makes me feel better. The government does not do things efficiently. Im going to keep running every day. Nobody stands here and argues that the government runs efficiently. Lucky theyre going to run 20 of the economy. The government does things in an equitable way, not an efficient way. Hopefully they get the right people in to fix these things. The guy, one of the founderses of coming up with a simplistic design for all the websites, the modern website theory and his point was basically you need to get a few of the right people in and get rid of 99 of the people who have been working on it. The way that it was set up is a clunky, difficult to use, asks you pages of questions before you get into it. It need to be set up more like when youre shopping for a mortgage rate. You put information in up front and quickly get some pricing. And then you go through the process. And then you go through the process. And i wonder if the conversation it probably should have been made and to the president or the administration, were really not ready. We should delay this a year. And hes like, delay it a year . No, no, thats what ted cruz wants. Well have to show a picture of ted cruz when we in fairness, its been 3 1 2 years since the law was passed, but we spent most of that time arguing whether it was going to be hundreds of millions. Theres places that have set up websites for 30 million that worked pore infectly. The states did it perfectly. It screws me up when the president goes no one is more frustrated than me. He didnt have to go and sign up for it. And the ft, water carrying he is so rangery over what happened. No one is more angry than him. Hes not its not the glitches is not the headline. Its just that hes angry. Angry about this, angry. When we come back another speech with has there ever been a speech where there arent people mind him going like this . Did you see the whom would fainted, though . That was a good catch on his part. When we come back there we go. Normal crosssection. He turned around and caught her. That was a good catch. Wa consumers and investors can expect from todays apple event. First, though, andrew is in hong kong today. Hes spending time with our colleagues in cnbc asia. Here is just a little sample of that experience. We sit around on the squawk i just lost my mike. Theres always that piece. They havent changed him in 12 years. No, no. Apple is expected town veil the new it rest ipad today. Joining us from San Francisco is tom fo orte. Tom, the new ipad, do you have any thoughts about what its going to look like . Sure. The way i think about todays product announcement, i think its phase two of three phases. The first one was the updates for the smartphone and the addition of a less expensive smartphone. Today i think youre looking for a product refresh on both the ipad mini and the ipad with retina display. And the third face could see the i watch and an actual apple television. But for today, im looking for a thinner, faster processor and the core retina display ipad and then for the mini to also have a retina display. Is that a big driver of sales for the Holiday Season . I think the big driver is going to be having a product refresh. So if you look at the june quarter, sales on the ipad were a little on the slow side. So i think that having new products, both at the upper end of the tablet market and an ipad mini, that could be a big driver for holiday sales for apple this year. What does it mean for the prices of the existing products . It usually comes down. What does it mean for apple after this . I think theyll lower the price of the existing mini and the existing you know, the tablets have continued to produce some of the last generation devices, even when they roll out a new product, which isnt always the case for the smartphone. They may keep the most recent iteration of smartphones, but discontinue earlier versions. So this could give them an opportunity to have slightly lower priced tablets out there, as well. Tom, do you buy the stock as you approach this important Holiday Season . And that because of the new holiday products or because of what youre hearing from carl icahn and some of the active investors. You 100 buy it for the new products. I look at the buyback for create ago floor for apple. Its going to be the update on the smartphones, today the update on the tablets and potential lay watch or television that would drive the stock higher over the next 12 months. Tom, thank you. My pleasure. Coming one the street is going to react today to duponts Quarterly Results and to calls to spin off part of that company. And analysts will join us next. But first, another clip from andrews visit to cnbc asia today. Hello, everybody. Welcome to this tuesday edition of the call. Im bernie lowe in hong kong. And im andrew ross sorkin. I cant believe im here with you. This is great to be with you here in hong kong. Great to have you here. Very cool. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. 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. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Welcome back, everybody. At 8 30 eastern time, the september jobs report, we finally get those numbers. Forecasters say that the economy likely added 180,000 jobs last month. Also, on the bls catchup list, we have septembers ppi. Thats coming up at 8 30 eastern, as well. And on the earnings front, weve heard from dow component dupont this morning. Analysts will be joining us to break down the numbers in just a minute. Set to post results before the bell this morning, we have united technology, travelers and lockheed martin. Former fed chairman alan greenspan, his new book goes on sale today. Its called the map and the territory. The maestro will join us live on squawk tomorrow at 7 30 eastern time. Hes going to be right here on set with us. People are pretty excited about that. Sounds great. And a lot of questions to ask all alan greenspan. Will you be back . Id be happy to do that. I love talking to alan greenspan. Dupont reported Quarterly Results just a short while ago. Joining us now to break down the numbers, mark gully at bgc financial. What did you think of the markets this morning . Theyre basically in line. A tax rate benefit of 4 cents, steve, made the underlyiniying earnings 411 cents. Pretty much in line with consensus. Mark, for an old Line Industrial company, theres a lot going on with this company here. Theres an investor in play here. Theres the idea of a split. What do you think of the future here of this country . Certainly activists have been active in the industrial sector and chemicals recently. Dupont is one of targets. Trion investment, Nelson Phelps reported 2 of the company. And hes calling for the same thing we called for back in november. That is a breakup of dupont into the two pieces, ag and industrial chemicals. And i think that nelson peltz is right on with his idea. Because theres greater value if you break it up . We believe. Some of the parts naturalsies tend to suggest a target price that may be in the 60 65 area. But i think performance is just as important as value. You take a look at duponts peers and the ag sector, you take a look at sangenta. M monsanto. I think a separate ag could do just as well. Do they step on each others feet . Something like berkshire, you buy companies that are doing really well. Was wrong with a company doing something in its portfolio, if it doesnt cause certain people not to deal with one of the other companies because of a conflict i never understand this, mark. And some of your peers will try to come back in two years and try to sell dupont on buying an ag company. All good points, joe. Investors typically have a good reason for buying something. You like the ag sector, you like the protection chemicals business. But if you buy dupont and youre like all those businesses, you may be bothered. Performance materials going into the auto industrial. So if you have a choice, if you like the ag business and you dont like ko2, youre going to buy monsanto, youre going to be sangenta. Why bother with dupont . This is a biology mergelinging with chemistry story . Thats the story that management has talked about for about a decade. I think the results are a little bit short of expectations. Yes, they have a biobased materials business that goes into the carpeting area, going into the apparel area. Those fibers are biobased. But after ten years, i would have expected to see more progress in this area and i think thats the issue. No multiple in the stock is what youre saying. You got it. Which is why you would play that. Mark, back to joes point, though, are you opposed to conglomerates in general . If you look at berkshire, general electric, a lot of different companies, its the same theory. Yeah. For those of us that have been around a little while, we can remember peter lynch, named Portfolio Manager at fidelity. He called this deworsification. You take a look at the success of its peers, 3m, for example, and performance materials. People like 3m because of the problem there. I think duponts industrial materials business could compete with 3m. If i remember, itt and rand harris and all that stuff. Deworsifi deworsification. Thats an Economics Nobel Prize . Yeah. Is there anyone who didnt win one of those . Theres plenty of people, joe. That work is really interesting. I like the idea of biology and carpets. You dont have to mow the carpets, do you . No, you dont. But if they wear out, do they selfregenerator something . Okay. Well talk ive got to go. Got to go. Still to come this morning, a new york penthouse you have to see to believe. Robert frank joins us with the details and how it can be yours for the mere price of 80 million or so. And later, well take a flight with the ceo of Delta Airlines, Richard Anderson talks about the state of Consumer Spending 8 00 a. M. Eastern time. Plus, two of wall streets best known investors gathering in the screen room. Cofounder blair efron will be joining us at the top of the hour to talk deals and the global economy. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Ttrust your instinctsdo to make the call. To treat my low testosterone, my doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. One of the greats in the fashion world has put his new york penthouse on the market. Robert frank broke the story and joins us in chairs this morning. Robert frank i just broke a story. Okay. The great no, the great that were talking about, the great man is tommy hilfiger, the man that defined preppy cool. Hes defining the ultimate classic real estate. Hes putting his penthouse at the famous plaza hotel on the market. The apartment is on the 18th and 19th of the plaza right there in the golden corner of central park. Five bedrooms, four baths, sweeping terraces and hilfiger bought two apartments, combined them in 2008, spent about 25 million for the accommodation and spent an additional more than 17 million to renovate it over three years. The asking price on this, 80 million. If it sells for that, it would be the second most expensive condo ever sold in new york. He told me he wanted to sell the apartment because hes spending more time in greenwich and wanted to renovate this, looking like the old plaza with those red carpets, the brass, the wood panelling, the mirrors. Its filled with artwork, a lot of warhols as youll see there. He says, these are not for sale. Now, in addition to these artwork, he has a lot of pieces in the apartment that could be negotiated that used to be owned by the duke and duchess of windsor. Hell if anythi selling this property, his neighbors include bob craft who is a friend of squawk box, you know, jimmy cane from bear stearns. You know when hes home. Did hilfiger say im selling it for two i have two words for you . No. Deblasio. No, he didnt say that. And you know, whats interesting about this apartment. He actually has the old New York Times banner from the New York Times building in his library. So i think, you know, one of your favorite papers. Couldnt be more of my favorite. He has a young wife, gorgeous wife you saw there and theyre spending more time in greenwich with the kids. The cool thing about this apartment, you know the dome on the plaza, he built a room where the administrator did murals. You dont it has anything to do with the shifting political winds . He didnt say anything. He didnt mention that. Hes got a lot of properties. Miami, the plaza, greenwich lets call it a love story. Thats so weird. Like the last time i investors falling head over heels for netflix. Well talk about the move to mobile and the stocks huge runup. You want a glass of wine . I love wine. Red i love red wine. Same thats insane. Is Corporate America ready to climb aboard . A closer look at whether or not companies are signing back on for private aviation and what it says about the economy. And its a special jobs friday on tuesday. Guest host ceo of evercor join us to help investors rise above in this liberal love fest as we get ready for september data. The second hour of squawk box begins right now. Good morning, everybody. Welcome to squawk box here on cnbc. Im becky quick along with joe kernan and Steve Liesman. Andrew is in hong kong this morning where hes been hosting squawk box asia with bernie lowe. Here he is. Hes going to be back with us on thursday back on the u. S. Set here. The futures this morning have been indicated a little bit weaker. At least, well, just barely. Things have barely budged. Dow futures down by about 6 1 2 points, nasdaq up by nine points. In our headlines this morning, we do have dow components hitting the wires right now. Travelers reporting profits of 2. 35 a share. The street was looking for 2. 07. Revenue in line with estimates, but the Insurance Company also thunderstormsed an additional 5 billion in share repurchases. You know what happened here, they were able to raise premiums because of all the bad weather wed seen in some of the rough circumstances. You didnt see a repeat of that weather this year, they havent had to pay out like they did before. Yeah. Stock up 3. 85 . United technology 1. 55 a share. That was a penny better than the street expected but the revenue came in short. The company says the revenue coming in short because of ongoing weakness in military Aerospace Markets and the slow pace of recovery in europe. United technologies did raise the lower end of the fullyear earnings forecast by 10 cents now looking for 6. 10 to about 6. 15 a share. And in the last hour, we heard from dow component dupont came out with Third Quarter profit of 45 cents a share, 4 cents better than the street had been expecting. Dupont sees modest Earnings Growth for a few year despite a significant decline in the results for chemicals unit. Joe, couldnt you play your global warm skepticism by going long the insurers and the reinsurers which are maybe trading i wasnt going to bring it up. Storms anticipated. Its been the lowest year in decades. So thats you could make money. And someone did this already. Did they . It was our friend Warren Buffett after the katrina year. Do you remember we needed new letters. We had to go to the greek alphabet. We ended with wilma or i cant remember there was a w that was big the katrina year and was like, do we raise premiums and the next year they made a bundle. Working together on a blueprint for tax and spends policies. And joining us now two leading financiers speaking with the president and congressional members on whats needed to help grow the economy, ralph is ceo and blair efron is cofounder and partner at center view partners. Both id call you guys kind of legendary to some extent in the business world. Just kicking butt and taking names and its a great time for a niche player. Were doing okay. Thats what you said last time. Is it modesty or something . No, its just every day. You dont want to jinx it . Every day you have to rebake the bread in our business. And the moment you start taking whatever modest success we have for granted, you slip. And we say every day. Same with center view. Well, the worst thing about this business and the most exciting is you announce a deal or you close a deal and the next day you get up and you say, okay, now what do i have to do . January 1st is never a the good day in banking. Were going to talk a lot about hopefully well focus on business. Well talk a little bit about that, as well, since you both do advise people that are in high places. And we were just you asked me where i was from. I said new jersey, i was kind of like kidding and you talked off camera about whether someone like Chris Christie can garner enough support in the core of the Republican Party to actually get the nomination. And what do we decide . The party is possible. Maybe the mentality is rubbing off on me. I think well know more as we start to see 2014. What happens in a state like kentucky, theres mitch mcconnell. He actually primaried and is there ramification of that. I think in 2016, it would be nice to think the debate really does go back toward the center. And that we are going to be talking from a centrist position. If you look at all the trends, thats not happening today. Look at a state like indiana in the last election. Dick lugar, really fantastic senator was defeated 6535. In the primary. Well see these guys challenging and the latest challenge after the last shutdown thats going to come from the right. Let me ask you something quickly. Weve heard that now that the president has been able to put on the table some sacred cows to his base that the republicans should look at that and say, wow, we need to move a little bit and try to meet him half way. Then we saw the piece yesterday that there are large parts of his base that wont say he better not touch Social Security. He better not touch medicare. And have you seen druckenmiller, what we are promising, how are our young people . Theres nothing left. Even tom friedman im sorry, we ate it all. Thats what were doing right now with how much were promising in terms of medicare and Social Security. Theres nothing left for the young people. We have some really serious intermediate and longer term. They come around to see weve promised too much. You cant raise taxes enough to pay for it. Over time, i dont think we have a choice. 2 1 2 times the spending of discretionary. 2 of total outlays of the lowest weve seen since the eisenhower era. Its not sustainable f. Youre going to reinvest in the country, look for longterm growth, you want health care, you want education, school lunch to nasa, youre going to have this debate. Is that debate going to have to happen sooner rather than later. The president has made it clear that immigration is the next issue he wants to move on and thats an important issue too. Its one that forward u. S. Well, we have as its agenda. Well, i think, going back to your question and joes, i think we have to get to a point where the wings of both parties get marginalized and the center, the middle of both parties works together to produce a solution. And if we dont get that, were going to have continued lines in the sand. And, you know, immigration is a great issue. What i believe they need in washington is to get a little practice at working together. They have to succeed at something but ralph, when you talk about both sides have to come to the middle. What you mean, if im not mistaken is entitlement cuts and tax increases. And thats the way that the middle, i think, believes we get there. Well, weve done a lot on taxes already. And not as far as entitlements. No, what i would say is we have to erase the lines that both have drawn in the sand. The democrats as you saw in the journal yesterday, dont touch entitlements. There is no path to longterm competitiveness for america and fiscal stability without seriously addressing the entitlement problem. And the truth is, its a much worse problem in the second and third dade frecade than it is i next decade. The aarp has come out and said they dont want to see anything happen other than lifting the payroll tax, taking off any limits on it and that will easily solve the problem. Is that true . No, i dont think so. I think Social Security, it may be. Medicare and medicaid. Social security. But similarly on the republican side, this idea, you know, no new taxes. Not a dollar of revenues is not a helpful idea. Let me explain why. Weve got over im going to disagree with you. Over 1 trillion of tax expenditures. If you take that position, no new taxes, youre basically saying, okay, if we get rid of the tax subsidy for ethanol, we dont agree with that because thats a tax increase. If we had a Spending Program for ethanol, oh, we could cut that. They do the same thing. Its not a sound position. Same concept. Were supposed to get rid of and werent we talking about simplifying the tax code and getting rid of loopholes so that we could lower rates to broaden the base . Well, weve raised rates and now you want to keep all the money from closing the loopholes. I think we would all agree that the real debate cant happen until 2016. What you want to see is at least talking about these issues sooner than that. Obviously the next several weeks are going to be an interesting challenge, the sequester. Do you think the president is uncomfortable with the wings that we just talked about i think hes closer to that progressive wing than the president has already put out 400 billion on medicare, already put out 230 billion from cpi as concepts. Hes been very clear theres someone to discuss the issues on the other side. He just doesnt like republicans then . Because he certainly didnt get in that room and roll his sleeves up and try to theres a lot of animosity on both sides. The atmosphere right now, clearly is not what we need for constructive dialogue. When they they wouldnt give him a victory on, you know, the smallest victory there are some that never they cut their nose off despite their face. And if i could disagree slightly with blair, i think we have yet another chance to do something of consequence. And im not sure it has to wait until 2016 election. I really believe that every couple of years we kick this can down the road, we make the adjustment harder and the landing is a steeper landing rather than i guess what id say is this, though. We have made progress on the budget, right . 150 billion, 4. 5 , thats gdp this year. I think one, the Business Community would look at any incremental progress now because the bars been set so low as a win. And, two, you have some basic near term issues around sequester that if you could actually make some progress and republicans also, running corporations in the house, already said that. You would prove that you can get small wins. Yep. All right. Just getting past this next threemonth deadline is going to be a win which is no way to run up. I think one thing we have to really emphasize is if you go back to 2011, you know, the downgrade of the u. S. By s p, the watch list this time, were not getting, you know, put on watch list by the rating agencies because we dont have an ability to pay. Its a willingness to pay. Its an ability of our government to function. But the bonds never sold we were still it didnt matter. If you travel around the globe, you know, where we get today 5 trillion of purchases of treasuries, you know, people look at the United States and see this kind of governing. Anyway i look at you and say 20 hard and youre like, excuse me . Up next, can netflix do no wrong . Better than expected outlook. Were going to talk to rich greenefield next about the companys prospects and take a look at oil, wti still below the 100 mark. As we head toward the september jobs data. Its jobs friday. Not really. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. 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I think whats really happening now, youve got netflix is now larger than hbo domestically with 31 million subscribers, looks like 33 million plus by the end of this calendar year. But the real issue here and what has investors excited and i think why the premarket trading, becky is the way you talked about is the excitement over international. And international, not so much even where they came in did they come in better . Yeah, some of that due to some discounting they did latin america. But i think the real excitement is about 2014. During the video call that we did, management talked about getting into some of the large broad band markets. You know, theyre only in three of the top ten u. S. Broad band subscriber markets worldwide right now. The u. S. , uk and brazil. Theyre not in big markets like france, germany, japan, south korea and russia. And i think the implication from last nights call is theyre going to go into some of these large markets versus like scandinavia and the netherlands where theyve gone over the last 6 to 9 months. Is it your expectation they can move easily into those markets . Are there barriers to entry . I think those are more difficult markets in terms of gaining the leverage of u. S. Content. You know, one of the things netflix has done so well, they talked about this last night is the ability to make a show like house of cards and have it play so globally across their footprint. Whether the markets we just discussed will be as accepting or as interested in that content meaning you can create content in the u. S. But benefit from it globally is to be determined. Id say investors are looking at this much like amazon in a sense theyre basically allowing Reid Hastings to run with international. They have confidence that they actually, that he will be able to execute well before hes even proven the ability to execute in some of these Large International markets. They dont make any money and they dont. And i dont know how they ev ever it seems like as we to start out and dick parsons made the point that a Small Company was able to do this to start out. But to get where they are now, it seems like a lot of different people could do this. And seems like its almost a commodity to deliver content over, you know, over the internet. An income of 32 million. Well, its a 400 stock and make 50 cents. Thats what i mean. Its 200 times earnings. On 1 billion in revenue. And on a 20 billion market cap company. And, you know, and then, rich, weve got to talk about will the deal with comcast. Will that get done . I would think that would make sense for netflix. Lets break it into two pieces. Start with, first, they do make a lot more money than they show on paper. They are consciously deciding to go overseas. Two years ago the discussion was would they ever make money on the u. S. Streaming business . Margins were in the single digits. Now theyve got low 20s percent margins on the domestic streaming business. Theyre choosing to take their dvd cash flow, streaming cash flow in the u. S. And plow it into building international. If you think internationals never going to work, you should clearly be selling this stock, it is not worth where it is today. The investors that like this stock believe its going higher on executing overseas and getting those margins from losing, you know, call it 70 million in a quarter to getting to a 20 , 30 margin internationally the way theyre already at that margin in the u. S. Thats kind of the big rub there. Do you believe in their ability to Scale International the way they are domestic . On the question in terms of the set top box, theyre clearly talking, they clearly have cleared up some of the confusion about how their contracts prevented them on being set top boxes whether it be comcast, charter or others. I think the question becomes how soon does that happen . And, remember, most of the set top boxes across the country, theres 100 million meaning with cable, satellite or verizon fios type service. Most of those boxes are not easily upgradable to have netflix on them. These are a lot of antiquated hardware. I think as they mentioned on the call, its going to take a long time to roll out even if they could get a deal in the u. S. Across a wide swath of the u. S. Given the state of boxes in the country. I would never sell Reid Hastings short of ive heard him speak, hes a brilliant speaker. Hes going to succeed one way or another. But when you look at stock up 40 in the premarket, would you buy it here . Especially when you lay out the idea that, look, this is the market thinking that theyre excited about this launch expecting that they will be successful internationally. I think you have to look at the very end of the netflix statement that they made last night. They read a letter to shareholders. And at the end of the statement, Reid Hastings talked about the euphoria surrounding the stock. We asked them about that statement. And you know, he usually doesnt comment about the stock. And i think that is what concerns us is that weve been a huge bull on netflix, put a buy on it at 170 back in april. When it broke through, i think it was 312 in mid september, we thought that valuation had gotten relatively full. Obviously thats 80 points ago now listening to where the stock is this morning. Theres clearly momentum here. We thought it was a little too rich to be aggressively buying it at these levels. One thing that strikes me as content is really worth a lot. And even though we hear about digital nickels, you know, versus analog dollars. Its amazing. The whole international story. It has to be stuff people want to watch, right . Well, you cant look at it as domestic. You cant look at it as Digital Content versus traditional consent. When you watch house of cards or orange is the new black, you dont appreciate youre watching digital or television, its just content. Their ability to create content that looks like it could be amc, fx, or showtime, orange is the new black is a good show. Theyre definitely coming out of the starting from scratch and original programming and doing a lot better than anyone expected. And thats a large part of where the stock is where its at today. And rich points out that netflix usage is 93 minutes per subscriber per day. If you look at total minutes per household, it was below disney now above disney. The only thing it has in its sights is nbc, cbs. Richard, thank you very much for your time this morning. Thank you. Coming up, oil hitting a 3 1 2 month low. We find out whats driving the move. And then our corporations ready to get in the buying and Leasing Private jets. Cnbcs phil lebeau has the tough assignment at the National Business Aviation Association conference. Hell tell us if americas Biggest Companies are getting onboard. Time now for todays aflac trivia question. How many incumbent u. S. Governors are female . The answer when cnbcs squawk box continues. Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. Now the answer to todays aflac trivia question. How many incumbent u. S. Governors are female . The answer, five. Up next, a closer look at oil and the move lower for the second straight day. And dont forget, it is jobs tuesday. Thats right, its a tuesday. Were getting a big jobs number. We had that Government Shutdown out of the way finally. The markets are starting to see some of the delayed numbers from that. The september jobs report is just ahead. Squawk box will be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. My son just got a job going to beckys house to hook up her netflix. Welcome back to squawk box. Apple holding the event in San Francisco later today. The Company Expected to unveil new versions of its ipad and the ipad mini. Itd been thought that apple might release a new version of the apple digital tv receiver. Im looking forward to the new mac book pro. Microsoft also with product introductions today, the newest models of its surface tablet computer are available today as microsoft tries to make in roads into the highly competitive tablet market. And, of course, just an hour away, from jobless friday on tuesday as we finally get the september jobs report which was delayed by the Government Shutdown. Its out at 8 30 eastern time. Thats good. Our next jobs report is on a friday but its not the first friday. Not the first friday. Jobs reports put me in a good mood. Does that mean youre drooling right now . Yeah, because i think its friday. I have a feeling its a jobs its jobs friday, were about to be done for the week. Every month for how many years. For a long time. Take a look at crude Oil Prices Falling below 100 a barrel. This morning its even lower. Lets get to the trading block on this. And much lower, 98. 97. Matt smith is joining us. On gold, we have frank holmes, ceo and chief investment officer. And matt, lets start out talking a little bit about oil. This is a big story. This has been a pretty rapid drop. Whats the reasoning behind it . Is it the economy or Something Else . Everything that rallied prices last month from libyan supplies coming offline to syria to ongoing tension with iran, thats all dissipated somewhat and thats why weve seen prices drop lower. How quickly could those tensions return . Very quickly, indeed. And so while a lot of people are thinking that prices could move lower from here, i think we could well see prices bounce. Especially even just yesterday, we heard from the militant group in nigeria so they could bring supplies offline in terms of sabotage. Theres these pockets of geopolitical tension everywhere. I guess it makes you wonder what the fair price is given the economy and given global demand. Is it 98, 95, 90 if you dont have these continuing geopolitical problems popping up. Thats the thing and the Government Shutdown here impacted prices here in the u. S. We had a delayed report yesterday for the eia and we saw it increase by 4 million barrels. We have another report tomorrow, well see another build there. And thats also influencing things, as well. Prices have considerably dropped in the last few weeks. How did the Government Shutdown hurt demand . It didnt necessarily hurt demand per se, we werent getting the data coming through and really we were just flying blind. And so the impact of that data is now going to was seen yesterday and it will be seen again tomorrow, as well. So your bet for where oil prices are headed, lets say over the next three months . Im not as bearish as some people are. I think theyre going to kick around about this sort of level. Even this level, though, i would think, gentlemen ill ask around the table here. A level like this could be good news for consumers as you head into the Holiday Season. Absolutely. Weve had a consumer since labor day that has been weakened. You see the retail sales, i think this is very good news. Okay. Same thing. Its like a modest tax cut. Thats good news there. Frank, lets talk about gold prices. What happens . We saw all kinds of moves around the Government Shutdown. Where are you betting gold is heading . Well, ive always advocated a 5 in gold stocks. And thats a key part in a diversified portfolio rebalancing that. Now, what happens each year in october is gold takes a correction move just like in oil. Its 35years seasonal pattern that both of these commodities go through a shoulder month correction. And i think the last thing, becky, really important for investors is this bizarre highfrequency trading taking place in the commodities. Commented on this, shows a very detailed chart of this pattern of flashing 43,000 contracts which is a multibillion dollar trade and then cancelling and 3,000 creating a cascading Commodity Prices down. But the physical demand in india and places like that is still robust and healthy. If this is an annual correction you see every year, do you sell it every year headed into this . No, its just best to be diversified portfolio, longterm investing, for the past 3, 5 and 10 years having this 10 waiting and rebalancing each year has been helpful to investors to improve the longterm performance and lower the volatility. You should have 10 for just a zombie apocalypse, really. Right . Just in case, right . If the grid goes down. If you buy gold jewelry for your daughters. 5 what about crude . I want to have something i could actually use to bribe someone if i needed to some day. I dont know, to get somewhere. Its a zombie apocalypse, no one cares not necessarily zombie. U. S. Dollar silver coins, theyre not expensive, theyre beautiful to look at and theyre cashable anywhere. Accepted by border guards, things like that . Absolutely. Will it placate the zombies, though . You need a quiet generator, number one. Ive got generac working on that. Are they going to take silver or gold . They just like intestines. So its irrelevant. Its not irrelevant. Well, you take a look at india, gold for the past three years is up almost 70 in rupee terms. Theres political turmoil. Youve always got an answer for why its really not a 1,200 an ounce. Youve got an answer, holmes. We always call him holmes. You always call him holmes. Im agreeing with you, 10 , holmes, 10 . Im agreeing with you, 10 is just to have it. You dont want to buy it the way he p wants to buy it, joe, you want to have it in your mattress. Hes not telling you to buy physical gold, is he . Yeah, jewelry. No, i say buy gold jewelry. Beautiful gold jewelry. You want 10 of my portfolio to be physical gold . 5 in jewelry. 5 . 5 . 5 of your portfolio, no it couldnt you could buy a partial. An opportunity for joe to make fun of my salary. Gentlemen, thank you both. Im waiting for the zombie apocalypse. Go to the border guard. Heres my statement, ive got this gold in the cjf. Its great. Coming up, is Corporate America ready to hop back on that g6 . I think thats the new one, the composite one. Phil lebeau from henderson, nevada, with a look at whats coming up after the break. Hey, phil. Reporter hey, joe, were out here at the National Business Aviation Convention where all of the latest corporate jets are shown. And well explain why executives are finally saying, you know what, sure, lets put down a couple Million Dollars or several Million Dollars for a new jet. Well explain when squawk box returns. announcer at scottrade, our clients trade and invest exactly how they want. With scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottradeproud to be ranked best overall client experience. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. I dont know how to say this. Group from the 90s. I feel like i know. With Michael Jackson is sort of my speed. Thats why you have people of my era. May have been too sexy for their shirt, i do remember that song. But is your hyundai too sexy for you . What car . Hyundai. He doesnt drive a car. Thats why. But over there, you should know how to say hyundai. Hes only filling in for a day. What did he go there for a day for . He was there for the deal book conference yesterday. He was there today. That was andrew hosting squawk box asia today. They actually do call bernie the joe kernan do they really . Of asia. Years ago, they did, bernie lowe. Great guy, compelling, funny, genuine. Then how come hell be back. Werent you called the bernie lowe of america . I was. Andrew will be back with us on thursday. And we cant wait to hear about his trip, literally we cant. When he goes to these places, he checks the entire area out. Anyway. Our Business Leaders ready to get back on board that corporate jet. Phil lebeau joins us now from the National Business Aviation Association convention in nevada. And i just saw something the other day, phil, that actual manufacturer of these jets has still got before it gets back to where it was, weve got another ten years, which is weird because there are some signs of life just in the leasing market, right . Right, were seeing some signs of life. That backlog that built up in 07 and 08 and saw a huge drop in demand. The worldwide sale of business jets, you can see its been trending down over the last three to four years. This year, theres some optimism that perhaps they might eclipse the number of jets sold last year. Overall, business jet sales are expected to top 18. 4 billion this year. Thats according to a study out by honeywell. The business jet makers are seeing greater range or greater demand i should say for longer range, larger jets because theyve got to go more international than in the past. Still, when you talk with the executives of the jet makers, all of them say theres a little bit of concern about the uncertainty of the economy. Okay. We just went through a pretty tough patch. This one sort of selfinflicted. And i think the biggest concern a lot of our customers have, this was selfinflicted. All weve done is push off another bunch of uncertainty to january. What do you hear about from ceos in terms of their view of the economy right now and their hesitancy to put their name on the line for a new aircraft. Uncertainty present in their mind. Clearly the last episode in washington with the shutdown the debt did not help them being more comfortable. The ceo yesterday they announced the 5x, which is their newest corporate jet. It will be holding, it could hold anywhere from 12 to 14 people. Have a range of going a pretty far distance internationally. Take a look at shares of embarar, they are up this year. This is the most optimistic theyve been in a number of years. They believe a number of executives realize theyve got to get on these planes even through fractional ownership or finally saying, you know what, we need to either upgrade the fleet or finally buy a new corporate jet. Were going to be here all day long. Lots of interesting stories out here, guys and the take from the executives about the economy, almost everybody says the same thing, washingtons got to get its act together because a lot of their clients are saying until we get certainty in washington, were holding off signing on the line for a new corporate jet. Guys, back to you. Thanks very much. Coming up, still to come, final thoughts from todays guest host. And the top of the hour, Richard Anderson. Hell talk Quarterly Results, the effect of the Government Shutdown and the strength of the commercial airline business. Looking at futures right now. Right around the flat line there. Well, actually turned around. We were negative, now were positive. What else . Nasdaq also. S p on the downside. [ male announcer ] eeny, meeny, miny, go. More adventures await in the new sevenpassenger lexus gx. Lease the 2014 gx 460 for 499 a month for 27 months. See your lexus dealer. Lets get some final thoughts from our special guest today. Gentlemen, weve been talking in the commercial breaks about resurgence in activism. Activist investors have been on the rise. Carl icahns out there. Theyre two of the more visible ones. But this is something that Major Companies that never had to worry about these things before. A company like a dupont, a company like a microsoft, an apple, a company like a pepsi. Whats going on here . Whats new . Whats different . And is this really a resurgence . Well, i think the first and most important thing is that Institutional Investors are investing in a big way in these activist pools of capital. Youve got lots of capital and theyve generated good returns because they have a catalyst that produces activity that produces shareholder value. So the first thing is youve got a lot of capital chasing opportunities and the size of that capital has allowed them to go after much larger companies. The companies you mentioned p g, companies that historically would have been absolutely impregnable to that kind of activity. And would never even have been discussed in the board room the idea there would be Shareholder Activism or a hostile base. Is that for the good or bad . First of all, embedded in the whole question of activism is the notion that boards arent doing what they should be doing. Its not true. Most boards today at most companies are their own best activists, point one. I think most companies have to figure out the balance between what is good for the shortterm and what is good for the longterm. Any company can cut its way to greatness on the margin. But at some point, youre not going to be able to reinvest in the business. Youre not going to know whats good for 100 of the business. Is there something theyre exploiting here in the sense of go be obnoxious and youll make money rather than, youre saying if the boards are doing the job and i figure there are cases where theyre not. And i was going to say, its not every case and not every case that the activist is obnoxious. But, for example, jc penney, i think most people would argue that jc penney is not as good a company today before the activism. Irrespective of some of the issues they had. And then theres another point. Shareholders dont appreciate how much time a Management Team spends over many quarters thinking about this when actually thinking about how to grow the business today, how to get to tomorrow. We should point out, blair, you also represent pepsi. Right. Lets talk about apple. They come in and say, you have all this i think theyre right in that regard. Apple needs to be pressed to do something with its cash. Whats wrong with activism when it comes to apple . Im not saying every situation is wrong. The question is with apple on its own, with its board get to a place with its Balance Sheet. And number one, number two is the issue just the Balance Sheet or is it the company doing what every company is doing. They spent so much time thinking about carl icahn, thinking about before that green light that i cant believe that some part of tim cooks mine share could have been better devoted to figuring out the next ipad. In a vacuum you could say maybe the activism was worse. On the other hand, you look at the decline of other Great American companies without activism. Jc penney was tough. That was a tough one. Every company is Different Number one. Number two, every activist is different. Companies doing their job better be focused on Balance Sheet efficiency, better be focused on productivity, better be focused on reinvestment and thinking about the portfolio generally. The best companies, a lot of the companies youve mentioned do that. But to say every companys doing that, of course thats not the case. Its new theres so much money behind it. Yeah. Are companies coming up with defenses against the money . Is that a new trend, as well . Well, i think, first of all, every company this is on the agenda for management and for the board. And to the extent they are doing their job well, that additional aspect of it is a distraction. I think the concern we should all have is that the longterm effect of this makes it harder for companies to invest in things that have shorter term bane for shareholders and longer term gain. Ill give you a very simple example we dont have an activist, anybody would be crazy to be investing in our firm. Thats not true. I would invest. But, you know, every year we have to decide how many partners do we add . Every time we add a partner, its dilutive to our earnings in that particular year because we have the expense, they dont generate revenue. We add good partners, it adds unquestionably to the value of the company two years ago out. But you sit there and say how much of this investment can i tolerate . Take the company we talked about earlier, netflix, heres 20 billion of market value thats been created out of whole cost effectively. No big company could afford to make the investments, you know, particularly with an activist looking over their shoulder in, you know, with no earnings, no cash flow. To build that 20 billion of value. And, you know, it makes it more challenging. At the same time, an insulated way, thats really the reason. And maybe this is a good counterbalance in the market. I think the only thing, then, to underscore blairs point, you know, boards of directors today are as a general matter, you cant say every board. Today. Maybe because of the activism. Well thats not id say this, much different situation today than even five, ten years ago, one. And two, i think everybody should be proud of Corporate America generally in terms of the competitive gaps these best companies have created versus companies anywhere else. And i have to tell you, it is hard to walk into a bedroom today generally and not be impressed. You take the job very seriously. Will you remember what you just said . And next time youre in with the president or some of his people talk about how proud you are of corporations in the private sector, can you just would you mind, can you see if you can convince them . Happy to do it. I think he knows that and feels that in his bones. I know that stuff he said about insurance companies, oil companies, Drug Companies hmos, pipelines, i know that was all sort of for his base. Maybe just reemphasize it, would you do that for me . Deal. Thank you. Coming up he said Assault Rifle not a handgun. Thats overdoing it a little bit. Thank you. Coming up, Delta Airlines ceo Richard Anderson. We have Richard Anderson on the companys latest Quarterly Results and keep it right here on squawk box for jobs friday. Im sticking with that. Because im not were going to get a delayed jobs report thanks to the Government Shutdown. The numbers in the Market Reaction just ahead. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Call 18882800149 now. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Its jobs tuesday. Well get the september employment numbers delayed by the Government Shutdown. Mark zandi will tell you what to expect. Plus, well see how my employment estimate stacks up with the actual government numbers. September payrolls according to the squawk box team of economic reporters 158,000. And Delta Airlines releasing Third Quarter results. All the Electronic Devices have to be turned off. Ceo Richard Anderson joins us to talk earnings, jobs and americas debt crisis. I just found ways to leave my phone on and nothing happens. Yeah. As the third hour of squawk box begins right now. Welcome back, everybody, this is squawk box here on cnbc where we are first in business worldwide. Andrew ross sorkin is in hong kong where he hosted squawk box asia and the call earlier today. So youre saying that oba obama socialism, you got me. You got me nice. There you go. A lot more of the show to go. He is the joe kernan of asia. Why didnt andrew ever say i got him on socialism . He never cops to socialism over here. He did did you see that . Didnt think anybody was watching. We also have a lot more of the show to go. We are counting down this morning to 8 30 a. M. Thats the release of the delayed september employment report. Economists are looking for an increase in nonfarm payrolls of 180,000. The Unemployment Rate seen steady at 7. 3 . Mark zandi and kevin hasset will join us soon about what they expect from the jobs report and what we can take out of it. Bernie could move here theoretically, did you hear him. Right now, lets get a check on the markets. U. S. Equity futures are now. Theyre not doing anything, theyre up three points. Yesterday wasnt that bad. Probably true if youre up on the s p as weve seen recently. If youre 1 in a million here in the United States, theres probably four of you in china just by population. Well more than that. Theres four joe kernans somewhere. There might be an actual me over there. Thats right. Theoretically. Like a billion i think things are, i mean, 85 billion a month, rub it all over and its not going anywhere, liesman. I dont think so. Some earnings to tell you about. Dupont reporting a Third Quarter profit of 35 cents a share, 4 cents above estimates. The company says it sees modest growth in earnings for the full year despite a significant decline in results for its Performance Chemicals unit. United technologies, the dow component a reported Third Quarter net. 1. 55 versus estimates of 1. 54. Revenue was slightly shy of expectations. The company, however, attributed the ongoing weakness to the military Aerospace Markets in the slow pace of the recovery in europe. Not here necessarily. United technologies did raise the lower end of the earnings forecast by 10 cents. And travelers reporting profits of 2. 35 a share. Well above estimates, revenue in line with estimates, the Insurance Company also authorized an additional 5 billion in share repurchases. Airline stocks have taken off lately and Delta Airlines going along for the ride. The Company Reported Third Quarter results earlier this morning earning 1. 41 a share. Joining us now is Richard Anderson, the ceo of Delta Airlines and thank you for being with us this morning. Thank you, becky. Richard, we saw some of the numbers that came in. Passenger revenue up 6. 7 and passenger unit revenue was up 4 . Yet an improvement in yield and 4. 5 , those are all pretty strong numbers. Whats happening here . Is this strength in the economy . Or is this something you guys are doing once you get people in the door . Both. The domestic economy has been really quite strong over the summer and we saw good strength in europe particularly. The only weakness around the world really has been japan with the yen. But separately, delta has performed well above the industry in terms of unit revenue, Free Cash Flow and margin expansion. How have you been able to do that . What specific operations have you been able to improve to show that growth . Well, first we have run a really good operation. Weve had 40 days this year with no cancellations on our main line and our employees are doing a very good job with customer service. Second, weve really done well with our Alliance Partners around the world in terms of expanding our network through alliances in europe, latin america, mexico and in asia. And lastly, weve done a really good job of matching capacity to demand in our markets. Looking through cargo revenue, i see it was down 6. 1 . Whats that a reflection of, commercial or well, its really thats really been a global phenomena. Weve seen cargo, weakness in cargo yields around the world. I think its even reflected in fedex and u. P. S. Numbers. And i believe because of higher fuel prices and fuel surcharges, much more the freight is moving by ocean or other means. Richard, you point out that you have for delta, thats a relatively go ahead, sir. Go ahead. I was going to say that for delta, cargo is a relatively small part of our business, byproduct of our business about 1 billion a year in revenue on a 40 billion top line. I think theres a little bit of aedly delay on the line. I apologize. Let me ask you what youve been seeing in the economy. We have Charlie Evans, the fed president from chicago on yesterday. He said one of the numbers the feds going to be watching most closely or at least hell be watching most closely is whats happening with Consumer Spending. Its been a little bitd we weak. You havent seen any signs over the last few months of consumers kind of pulling in their wings . Well, becky we did see an impact, we believe, from the Government Shutdown in october. We saw about 20 million to 25 million of weakness versus where our forecast had been. But as we look out over the remainder of the year and into the Holiday Season, were seeing good booking patterns and weve issued guidance for 7 to 9 margin up for delta about 300 basis points year to year. If you look around the world, asia seems to be strong. The yen weakness hurts us a bit. Europe was our strongest performer this past summer. And the latin america and mexico markets have been strong. So overall while not, you know, 4 growing economy, we do think, you know, were in probably 2 to 3 range. And i guess that gets us back to where things stand with the government talks. These talks have been put off that youre going to see them come up again in january and february. Do you worry that if theres a standoff again it will take an impact it will have an impact on your bottom line . It will have an impact on everyones bottom line. And as a nonpolitician american, i just think the government should figure it out. And the fact that we go from we lurch from one event to another in this country every 90 to 120 days is not acceptable regardless of whether youre a republican or a democrat. It just needs to stop and they need to fix their business the way were required by our shareholders to fix our business. Weve had some ceos who have come on and called for a grand bargain where you see cuts to entitlements raising revenue, raising taxes as a way of offsetting some of that. Would you be in favor of that . Or do you think its more important to have any sort of a deal and if its not a grand bargain, its not a grand bargain. Im not smart enough to know about grand bargains, i just know that as an american citizen and someone that has responsibility for 80,000 employees, you expect the most powerful, wealthiest government in the world to figure out their problems. Richard, i want to thank you very much for joining us and we appreciate your time. Thank you a lot, becky. Its always nice to be on your show. Thank you, sir. Coming up after the Government Shutdown forced a delay, were finally less than half an hour away from the september employment report. Mark zandi, Kevin Hassett will tell us what to expect from the government job data. Squawk box on friday coming right back. The partisan bickering during the shutdown have Many Americans fed up with politicians. I wish i knew how to quit you. But cnbc isnt ready to give up. Were calling for a grand bargain in washington to fix the debt crisis. Were calling for compromise. Were calling for politicians to win us back. Washington, show us that you deserve a second chance. You had me at hello. Who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Welcome back, everybody. It is jobs tuesday but it is also tablet tuesday today. Apples holding a product event in california where the company is expected to unveil the latest updates to the ipad line, a new imac pro and an osx operating system. Nokia released the first tablet today. These were among the last products the company developed to compete with apple and samsung before deciding to sell the handset business to microsoft. And Microsoft Surface two and surface two pro tablets go on sale today including the United States. Both are updates of the first generation surface tablets released last october. Improvements include increased battery life, faster processors and higher resolution screens and cameras. And watch out, google, microsoft is reportedly testing prototypes for web connected eye wear similar to google glass. Microsoft has asked component makers to supply cameras and other key components for eyewear prototypes. I have no idea what i just said. Coming up, before we get the september employment report, were going to tell you what to expect. Kevin hassett is the director of economic policies studies at the enterprise institute. And our guest host for the rest of the show is mark zandi. Making his way to the set right now. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. We are minutes away from the september jobs report. Joining us now with a preview, our guest host for the rest of the show is mark zandi. I look at him, i get happy because i think its friday. Me too. Wednesday well, because its a jobs no, but we have to work tomorrow. Thats, you know, thats Kevin Hassett lately has become associated with good weekend feelings. Usually were with you on a friday. This will be the only time because the next one is on a friday. But its a week later. But its still followed by a saturday. But this one we got today. The labor markets clearly slowed down from the pace earlier this year that threatened to give us 200,000 a month. I think the s p and moodys report. What is this . I dont know what that is. Whos talking . I think thats kevins notes. Kevin. Kevin. Joes going to you can go home. You can go home. Its always interesting. Anyway, im going to ask both of you, gentlemen heres my both if we had no shutdown, i can see how that would be an important report. I still say the one preshutdown is still the more important report. Because the shutdown report is like a onetime item. Because of that crummy number we had with the bad revision. I want to see if this confirms that the job market has slowed before the shutdown. Yeah, i think that makes sense. The number in two weeks will be a mess. This number will give you a clean relatively clean read on whether the job growth has been slowing or not. What do you think its going to be . I think itll be slowing. What do you think this number will be . 150,000. I came in at about 160,000. When you look at what they said when they decided not to taper, things slowed marketedly. Were going to hover around 150. So, yeah, i think a little bit better than mark said but 150, 60, probably lower than the markets expecting but what you ought to expect given Everything Else. Gdp growth sub 2 . And its difficult to get job gains much north of 150,000. Right. And while the shutdowns an october story, everybody was expecting the shutdown in september and you hire people because you think the worlds going to be better tomorrow and people definitely didnt think that in september. Yeah. Do both of you think the shutdown will impact more than just the one jobs number . I mean, did it hurt us . Is it taking still taking growth away and jobs away . Well, you know, the shutdown per se, i think well get over that pretty quickly. If not in october, certainly by november. But i do think the brinkmanship and the uncertainty created by whats going on in washington. And thats a broad statement. Not just the shutdown and its not just the debt limit. Everything going on in washington has weighed on the collective psyche and the willingness of businesses to engage. The last time it didnt happen again for a long time. Everyone learned their lesson last time. Why would you think this is cathartic . Well, im hopeful. You listen to the sunday talk shows listen to the senators talking, it sounded like change. It wasnt the senators fault the last time around. Thats true. Well, yeah, all right. We know whose fault it was, Steve Liesman. Senator ted cruz. Senator ted cruz. Senator ted cruz. Were going to call this the senator ted cruz jobs report. We are. And the jobless claims of senator ted cruz. Do you remember how many times there he is. Can we get music to go along with that . If we had a picture of w ready to go every time we talked about what happened in the for the first five years. Preempting the excuse. You cut off the means of the excuse. Every bad employment report for zandi. If we had a picture of w to bring up, we couldve used it. Now we replace it with ted cruz. I think, though, what youre talking about, though, is a reoccurring onetime item. And i thought last time we had you on, mark, one of your most interesting comments i thought was the idea this was a big reason for a long time weve been underperforming. And i think theres a lot of reasons. But you can go back and succe successively shave off points of gdp because of this uncertainty. Theres a lot more research coming out trying to measure what uncertainty means. Its an opaque concept and then relating that to Economic Activity and increasingly the studies are finding it had a significant impact. Richard anderson was just on, just saying 20 million to 25 million in weakness they saw in october because of the Government Shutdown. He knows theres another one coming up. If we could just stop lurching to the next crisis for the next 90 days or so, that would be huge. Just stop with the crisis well, this is the point i was trying to make when we were in washington last week. It would be great if we had a grand bargain. Fantastic, but its not necessary. I mean, we need to just get a deal so that this uncertainty abates and keep moving forward. Is it worth the fight when we talk about what was done in order to reduce the deficit . Oh, sure. Was the cure worse than the illness . Was any reduction in the deficit going to add to gdp to the extent that the fight over the deficit took away from gdp . Theres a sense in which we had this conversation exactly wrong. And mark and i were talking about this testifying before a joint Economic Committee hearing last week. The thing is, if youve got a massive deficit, we know youre going to have to cut spending a lot or increase taxes a lot. Somethings going to have to change. These showdowns are spikes in uncertainty. The uncertainty is more than just the fact were going up close to the edge every few months. If you look at the spike that happened in markets uncertainty and t bill rates and stuff around this shutdown, it was actually lower than what we saw the last time in 2011. I think the fundamental problem is if we dont fix our big problems, therell be lots of uncertainty about when well get around to doing it. Mark and i both agreed in this hearing, i think my estimate was it was about 2 million jobs right now havent happened because all this uncertainty. Kevin, the Federal Reserve we talked to Charlie Evans yesterday, said, yeah, you need medium term and longterm deficit reduction. But the best and brightest minds for what thats worth. Think now is not the time to reduce the deficit. You look at the markets. The markets do not seem spooked by the size of the deficit. They take down with some assistance from the Federal Reserve the monthly and annual issuance of the federal government. Why is it that some people in the Republican Party believe they know more about economics than all the people i cited. Thats a little harsh. First of all, you agree that the big thing we have to do is address entitlements and if i tell you, steve, look, ten years from now, your Social Security benefits going to be lower. Im doing you a favor. I wouldnt shut down the government in order to get entitlement reform thats needed ten years down the road. Well, youve got to get it some time. And the point is this is the only angle the republicans tried to get the democrats to talk about it. And in some sense, they succeeded. Obama had 400 billion on the table back the last time around and they walked away from that. Because they didnt like the way they did it. This grand bargain has to happen. And you should use every bit of leverage you have to make it happen. And if you dont, the uncertainty from that is going to be bigger than the shutdown uncertainty. Yeah, but the reality is, we have a deficit problem, a longterm deficit problem. Well, 2020, whatever you want to call it longterm, medium term. The deficits are coming in. It was 1. 4 trillion in 09, its 600 billion in the last fiscal year. Under reasonable economic assumptions. Well be down to, you know, 200, 300 billion in a couple of years which isnt perfect. But thats enough so that the economy can get moving forward. What happens post five years if were looking seven years. 2020s only seven years away. I think we can all agree we have to bend the Health Care Cost curve. Yes. Saying were going to solve the problem presupposes we know how to do that. We do know how to do that, people have to pay more out of pocket, people need a deductible in medicare if they can afford it. There are simple things to do if they can fix this. Its not rocket science. I think Social Security, thats straightforward and i think we have pretty clear understanding of how to do that. But to bend that Health Care Cost curve, you know. Right, have people pay more out of pocket and theyll be careful about what theyre spending their money on. Give people 5,000 more Social Security and youre going to bend the cost curve. Kevin, in obama care, you do have those elements, right . The cadillac tax. Well, they changed the entire Health Care System when they could have done just this targeted thing. They could have tried to insure the uninsured and fix medicare and they wouldnt have had to create this website that doesnt work. The macarena, thats what someone emailed should be the music for ted cruz. Thats what kevins saying and its true. Anyway, coming up, well get the september employment report. Both of these guys will stick around and really make us feel like its a friday although, you know, its going to make it harder to get up tomorrow. As we head to break, take a look at u. S. Equity futures. Welcome back, everybody, were just a few seconds away from the september jobs report delayed by the Government Shutdown. Ahead of those numbers, the dow futures this morning have barely budged. Well, right now, the dow futures up by about 13 points, s p up over one point. Hampton pearson joins us with the numbers. Up 148,000 september nonfarm payrolls increased by 148,000 jobs, the Unemployment Rate is 7. 2 . Average Hourly Earnings up 0. 1 . Below the Consensus Forecast looking for gains in the neighborhood of 180,000 jobs and a tic down. And revisions, july was revised downward from originally 104,000 job increase to 89,000. However, there was an increase in august, we vised upward from 169 to 193, a net gain of 9,000 over those two months. September, private sector job to that Unemployment Rate, its the lowest since november of 2008 when the Unemployment Rate was 6. 8 . The Labor Department says we got there because the number of people who got jobs went up. The number of unemployed persons went down, the Labor Force Participation rate stayed flat at basically 63. 2 . There was no impact on the shutdown and the gathering of this data. It had already been gathered and pretty much analyzed, no impact on the Government Shutdown in these numbers. September job growth by sectors, Construction Plus 20,000, wholesale trade plus 16, professional and Business Services plus 32, transportation and warehousing plus 13. Biggest job losses, leisure and hospitality down 13,000, the employment and Credit Services losing 8,000 jobs. The number of longterm unemployed stands at 4. 1 million, 36. 9 of the labor force. Back to you guys. Hampton, thank you. Lets get to the rest of the panel for a reaction to these numbers. Steve liesman, mark zandi. Steve, anything else that jumps out at you . The job growth looks to be broad based. Theres only a couple of negatives, financial activities and leisure and phospitality an government up 22,000 after being up 32,000. Is that state and local . I dont know. I have a top line government number. The revisions were not worse. Took away in july. Id think this is maybe youre saying it below expectations but maybe its not as bad as people thought. The markets reaction was to go up. Qes here to stay. Youre going to get your qe and jobs too. We want some jobs, i think. And its not as bad no, i know but the market, these people these warped people in the market. Ill tell you one thing i dont like is the earnings. What was earnings . Average i think on a real basis, mark, thats going to come down to negative. Right if you take away. What did hours worked do . Average weekly hours . Yeah. 33. 7, unchanged. Labor force participation still 63. 2 . Right. Is that good or bad news . Wed like to see that number go up. It didnt go up. The Unemployment Rate fell despite the participation rate. Well, the Household Employment number was stronger looks like. Its a soft report. Average monthly job growth is you want 200. You need 200. Sooner or later you have to change your tune. Weve been averaging 200 for the last two years. Sooner or later. Really . Its been 150,000 to 200,000 has been the range for three years. I thought 180,000 was what you were giving me. Through thick and thin, what was your average . Over the past three years, its about 175,000. Its better at 148,000. We just had two straight below that. Was it unusual they had this long to work on the number and only came up with 148, couldnt they have done something someone just said itd already been cooked by the time it was supposed to come out. Well, apparently, and the only thing i wonder if its a more complete survey in that more data comes in from establishments over from the course of a month and thats what leads to the revisions . I wonder if they ignored that . Ill have to call the bls later. They had the numbers pretty much in the cake. Three days away. I dont think they probably had anymore. In august, was the government up in august . Its all timing, right . When teachers go back to school so they probably went back early. Why would you have the number in september . Im sorry, i got it backwards, they were a little later than normal. More in august, less in september. Yeah. Why dont you tell us what you think about this . 148 is still not a great number. He wants better than 200,000. Thats what the feds looking for, at least what hes looking for. With the revisions right about where mark and i were. If a couple of morons like us think, thats where it is, then the market felt that too. And thats why were not seeing the big move in the market in response to this number. The consensus was probably a bit high. But weve seen enough since the consensus was formed that number was not surprising. I think the earnings going down. You can argue for employment thats a positive sign. What needs to happen, when you hire people, youre bringing people in at a lower wage than the people that are already working there and you can sometimes see these averages go down because theyre actually cutting wages which, you know, the reason you have unemployment in some sense is because wages are too high. If were going to start to see job hiring pick up, weve got to see wages go down a little bit and well see that. In my view, its the fiscal austerity, right . Its the tax increases and the spending cuts. If you add all of that up, its about 1. 5 Percentage Points of gdp. And its in q3 of this year. You would expect, you can see in the gdp numbers and now the employment numbers. The bad news is its a major drag on the economy. The good news is that under current law policy makers do nothing, the net fiscal drive will fade into next theres Something Else thats starting to pick up thats concerning me. If you look at the percentage of Small Businesses in the nfib survey that say theyre worried about regulation, its tripled over the last couple of years. And its spiking. I think this obama care mess and Everything Else thats going on in washington is still a concern for hiring going forward. This 1 1 2 number weve been saying since february, we decided to agree on that. Just so you know to round out the last conversation we had. State and local education both up, federal down. Okay. This september, right . Before the shutdown effects and the brinkmanship effects and feels like were going into this period with not a lot of momentum. So right. And then you see the other things that have compounded. This is the last big number the feds going to be getting before the meeting at the end of this month. Is this meeting on hold for now . I cant imagine they would taper in this environment. The economys weak, the job growth is weak, inflation is below well below target. And our october number is going to be 120, 130 once we account for this government. We take the government, the raw calculus of it. Its got to be a 120 number. Its not going to mean a lot. Were heading into more weakness. Where did you say ted cruz was from . Texas. Before that, hes cuban, right . I didnt say that. Oh, but he is . If youre wondering why this was a weak report, i think knowing knowing if we could bring him up again. You are bringing him up. Theres the i feel terrible, joe, youre blaming all this on ted cruz. I think this is unfair. Walks like a duck i still think hes got this is on his watch. Anyway kevin thank you very much for joining us today. Great talking to you. Mark zandi will be with us for the rest of the hour. And well have more reaction from the jobs report of the ceo of the nations largest held staffing company. Were you here last time when he said obama care was hurting . You might not agree with this guy. Bob funk will join us next. Hes former chairman of the Kansas City Fed. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. At a ford dealer with a little q and a for fiona. 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. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. We did get the september jobs report a couple of minutes ago. Joining us now bob funk, ceo of express employment professionals. The nations largest privately held staffing company. Also former chairman of the kansas city Federal Reserve. Bob, its good to check in with you again. And lets first just talk about the shutdown and how your business was affected by the last month or so. Was it hurt . Well, our business was not hurt on the shutdown. Of course, its nice to see the Unemployment Rate coming down a little bit. But i have a problem with the reliability of it. Last month, we put 30,000 new people to work and the total numbers 148,000, it cant be that accurate. And the Labor Force Participation rate stayed flat. And thats what were really concerned about because theres a lot of people out there really not looking for jobs and consequently the unemployment is much higher than whats been reported. I talked to mark, mark looks for like he wants to use actual data to try to prove theres a parttime issue with obama care or that some people are holding back with obama care. I remember you were very certain last time, bob, that at least in terms of running your business that youre seeing an effect. And mark has said it doesnt he thought it might, but he says it hasnt really shown up anywhere where you can definitive point to the Health Care Law as actually dampening employment. Well, in previous years the 60 of our employees went fulltime. And now only about 40 are going fulltime. The companies are reticent to hire at this point in time because they dont know what their costs are going to be and dont what their expenses are going to be in the future and, of course, i had one franchisee whose health care went from 300 a month to 1,000 a month. And that type of shock is really troublesome to small and medium sized businesses. They dont know where theyre going to be in the future with their bottom line. It is affecting it. Theres no question about it. And, of course, the people are not coming back into the labor market. And our educational system has let us down on the semiskilled. I would think it would show up in parttime employment. But if you look at the data of bureau of labor statistics from all parttime workers, it hasnt shown any significant increase. You know, its high level because of the recession so there are a lot of parttime workers relative to a more normal time, but it hasnt risen in the last couple of three years. When you would think it would in response to the Health Care Reform. It has, were up 123 since the recession. Thats risen with us and, of course, our competitors have risen as well. Last month, the American Staffing association reported that were up our industry was up 5 for the month. So it is showing up and i dont know why the numbers dont show up at the bls because maybe they dont even take us into account. I dont know. Yeah. What the longterm people not looking, why, bob . Thats got to be more than just its not all government activism, is it . Things have changed demographically . Well, it has changed demographically. Of course the more matured retired individual come back into the workforce trying to find a job. And theyve taken many of the jobs the younger people normally wouldve taken. Because theres more people who are needed to needing to support themselves and support their retirement programs and support their families. Its really an anomaly, of course, that the mature individuals are looking for jobs and its squeezing out, of course, the younger people who have now decided not to look for jobs because its too difficult for them to find something. Bob, is this increase that youve observed in parttime employment across all the Different Industries you service. Or is it concentrated in specific ones . Can you well, we serve about 90,000 clients on a regular basis. And so its across all industries. Its not just one. The whole uncertainty of the obama cares really affected the mentality of the entrepreneur who as you know, the entrepreneur is concerned about their bottom lines. They dont know what its going to be and they cant analyze it and know whats coming ahead. Theyre not going to hire permanent people. They may hire flexible staffing individuals but not the permanent heres what i wonder. I mean, if you thought it was the Health Care Reform that was having the impact here, wouldnt this be most noticeable in the industries where Insurance Coverage is low . Like leisure hospitality, retailing, construction that sort of thing . Across all industries indicates i may be something broader than simply Health Care Reform. Well, 92 of most of the companies that we deal with anyway have Health Insurance for their people. For them to change and lose their Health Insurance is dramatic, of course. Consequently it is a factor out here on main street. I dont know whas l wall street out here on main street its really affecting business to a large degree. Ive got to ask you a quick question on the Federal Reserve. Why does the board of directors of the Kansas City Fed keep putting president s in place that descent and vote against qe. What is it about you guys out there . Well, i think we have a system out here where we go to our businesses on a regular basis on a monthly basis and ask for input into the system as to whats really happening out here. And consequently, their thoughts are the thoughts of the regular Business People in the communities in omaha, denver, oklahoma city, and kansas city. And so we have a better feel of whats on the ground, of course, and what we think might happen in the future. Whats happening out there that makes it so you guys out there dont want qe . Well, i think the fact theyre concerned about inflation being a real factor going forward. Thats the real issue. And talking withester la est ee week, she feels the economy we need to be concerned about the economy. Midwestern and western common sense, steve. You know that. Is that the answer . Some Business Leader your liberal east coast elitist. From the San Francisco fed. I rest my case. Great. We know about the two coasts. Thank you. I think were close to the ground out here and were very entrepreneurial. And thats whatever affects us up in the cloud. The best the best social program is the job and were anxious to get more jobs and the economy to improve. Amen. Amen. Thank you, bob. Thank you, joe. Coming up, jim cramer thank you. Youre welcome. Jim cramers getting ready for the trading day ahead. What stocks have been fired up this morning next. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box, everyone. The futures have been a little bit higher after we got some numbers from the employment. The futures are up. Jim cramer is standing by at the new york stock exchange. We have some dow components. You want to talk about dupont, travellers . Travellers is incredible. The ceo reported a great quarter last time and everyone read through a couple of numbers and thought they werent so good, maybe they didnt like auto. He basically showed people that was the buying opportunity of a lifetime. The buyback here is so impressive. If you look at the share count, its gone down from 48 to 48 million just a couple of years. This remains the best financial that is in the dow. Theyve had strong results for a long time that have come through. Theyre now talking about how theyve been able to raise premiums and we havent seen the big catastrophic events that you might have had to pay out for so and these guys are so well run. They really are the its very funny because a lot of companies of the dow, they pick the companies of the dow that arent doing that well and then along comes travelers, which has been a total stalwart. This is the best run Insurance Company, no offense to Warren Buffett, but these guys really get it right. And theyre not the cheapest, but they may be, along with chub, the best. Utx also out. Earnings beat expectations. They did talk a little bit about some weakness in some areas, which may be why we saw the revenue lighter in some areas. Youre starting to see the real problems with the government now. Some guys prepared you, some didnt. The military drag on some of these companies is rather extraordinary. You did not see it in ge, you did see it in honeywell. I think the stocks they sell off for military are buy, not sells. Even with january coming up, weve seen all kinds of lobbyists circling in washington, trying to make sure its not their constituency that takes the cut. The military is scheduled for a big cut then. Yes, it is. I dont fret over those numbers. Aerospace play. Nonresidential construction is coming back. Thats the driver for utx and honeywell. If you give netflix that valuation then Companies Like fox or disney it just seems like one of them, maybe you could set um a hedge or something, jim. Netflix is a cult stock. A guy came out and said maybe the stock is too high, and its reed hastings, the ceo. Its a cult stock. Youre buying because they beat certain metrics, not because its inexpensivnexpensive. Its case of we offer great con tonight. It was a remarkable quarter from the metrics. But is it cheap . No. Its obviously incredibly expensive, as is amazon, sass sol as is solar city, as is tesla. I guess he said 80 ago he said the price was a little rich. Hes facebook, too. Rich, a very nice man. You said that before. Well, you agree with this call on netflix, right . I think netflix is a cult stock. I never opine on cult stocks. Thats like tesla. I mean, these are stocks that are owned by Retail Investors who love the product. You on netflix, you like orange is the new black, you buy the stocks. These are the stocks of the future for kids but when you go to high school and speak to the kids, mr. Cramer, i own netflix. Why . Because its really good. One of those thing. They got the womens prison thing going, you go along. Coming up, our guest host has been mark zandi. Were going to give him the last word when squawk box returns. 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Lets get back to our guest host, mark zandi, for the last word. Well, the bad news is the job market was soft before the shutdown. The good news is that the fiscal drag is going to start to fade. If congress and the administration can just simply, tend that debt limit and fund the government, i think well be okay. I dont know why you say that. I think theyre going to do more deficit reduction in january. I dont think so. On the edges. What about we see you. Im Carl Quintanilla along with jim cramer and david faber at the nyse. Futures hanging in there as three dow components report earnings today. 10year yield down to 255 and europe as well, keeping an eye on the continent with a mix of red and green