Transcripts For CNBC Squawk Box 20131024

The jolt report coming out at 10 00. Then we have the Kansas City Fed survey, as well. Equity futures this morning, at this hour, at least, are indicated higher. Dow futures indicated up by about 50 points above fair value. S p up by about 6. 5. Andrew, back over to you. Good to have you back. Thank you. Its good to be back. This is a very different place than cnbc asia and bernie. Well talk about that in a bit. Rr done nelly is going to buy consolidated graphics for 620 million. As joe was just mentioning, bank of america lost a fraud trial over u. S. Mortgages yesterday. Live on fraud for claims related to defective mortgages for funds sold to its countrywide unit. And finally, Lehman Brothers, remember them . The Lehman Brothers holding company, this is the one that sort of went through the bankruptcy process is suing giants stadium. It wants to recover more than 100 million of a canceled Interest Rate swaps contract that would used to hedge bonds issued to the arena. The lawsuit came about as lehman. Giants stadium couldnt agree on the settlement amount to swap contracts after lehman fooird filed for bankruptcy. Mr. Kernen. Andrew, good. The tape i wanted, didnt bernie lowecall you a socialist . He called me a sociologis sociologicalist. It was during the obama care discussion . He is proud proudly righter than right. Hes right of me. Absolutely. 100 . Wow. Hangs out in seattle. Thinks everyone should have a gun. Wow. Its true. Sounds like a soulmate. You guys should get together. They have a it was a lot of fun out there. While you were traveling, did you notice the tenyear yesterday . I was on an airplane yesterday. I dont know where it is today. It was 2. 49 yesterday. Its back above right now. 2. 50 , though. It was pretty amazing. So it was about obama care when bernie called you that. Its been so long, the Government Shutdown. What was it that the republicans were insisting on and the white house wouldnt do it . Do you remember . Something about obama care being delayed. The mandate. Something like that. I dont really i cant really recall now what it was. But i think thats its something about that. Hit me with a feather. Was the it the individual mandate they wanted to why couldnt they have said a week ago, lets do eight weeks and the republicans would have said, yes, victory. It would have been a compromise. Because i think the Obama Administration didnt want to be seen to be caving for this. They have to admit, though, when you look at the problems for the website, not everyone is going to be able to sign up. But what about all the people who are trying to get health care and arent going to have it because its getting dumped january 1st by their existing plan. Do you remember, though, when i was saying both of these sides are in a tenable position. The one side, it was in the democrats side to delay it so they could get it together. And it was in the republicans best interest to not delay it to let it roll out before it was ready. Thats how stupid both sides are half the time. Theyre in positions that are undercutting their longterm goals. Number of stocks to watch this morning, at t earnings beat the street by a penny revenue, just sightly below estimates. But the internet content delivery, theyve got to be resolving with the cloud at this point i would think. Outlook was on the conservative site citing uncertain outcome of negotiation with its biggest media client. This is likely apple that theyre talking about. Shares originally spiked on results and fell. I wonder if they have anything to do with the nsa . They would knot know. That got ugly yesterday. The last thing i remember is w tried to give her a back rub. Now we have a spy problem. Meanwhile, i tried to work excel. He had used excel. He has all these Democratic Candidates and he increases his contributions each year by 5 . Come on. And its a spreadsheet. Its representative. The control of this guy. Youve never done microsoft excel . Never. You have used it . Yeah, over the years. For what . Stocks analysis . No. Not huge analyses, but political candidates. Party lists. Party lists. So not democratic party, but parties. Exactly. Put yes or no in each box. It was a rough after the bell session for tech names, some of them. Sa man tech reported lower than expected Second Quarter revenue. Below expectations. This Company Makes that norton antiVirus Software. Sometimes i see that come up and i dont know how to get rid of that. Its a little x. People laugh at me for not using excel. I dont know how to make an icon move or to make it bigger. What . If it gets bigger on the laptop at home, i dont know how to make it smaller. Im not in that generation. Im sorry. I never learned how to use windows very well. I didnt. Then i got a mac and everything is sort of different. Yeah. You feel how to do it. Right. The Virus Software was hate by low demand for storage and security in a weak pc market. Other movers include angies list. Ive seen angie in commercials. Shes young and rich. The Online Review Company Posted lower than expected quarterly revenues at first Year Membership renewal rates fell. It forecast Current Quarter revenue sort of market estimates and medical devicemaker varian, medical systems reported lower than expected Fourth Quarter results. Demands for products that fell due to uncertainties. Something else thats slashed, its earnings forecast for the full year. Were going to do a lot about the stock market today. Were going to have marty on, a great stock picker. Lots of 8 billion, 9 billion, hes been in the business a long time. What i want to ask him, macrowise, now that we know the jobs report, Everybody Knows why should the stock market go up at this point . Same reason. But if theres no more multiple expansion, then maybe we start going up because its what we do. Companies do better as time goes forward and earnings go up and you the stock price should go up the same amount that earnings go up. So you find companies increasing their earnings because they have the right idea. They have good demand. Do you think it has something to do with qe . Everybody knows now that were not saying its that good or bad for the process of qe. At least this year. I believe march is the soonest that theyre going to taper on any of this. Right. Mark faber was on earlier. You heard him saying when they get up to a trillion dollars we saw randy k can rosner in hong kong. And he said, you know, when your grandchildren are born. He thought this was going on way longer than anyone hes that guy, too. And faber said during a crisis, anything the government introduces as a program to deal with the crisis in the past has stayed permanent. I never really thought of qe that way. Greenspan. That was his point, to surprise new a good way. It cant be gasoline for the engine. It has to be a prime of a stalled engine. You prime the pump and then to keep it running again. Thats what Richard Fisher said all along. The white house said it may announce revised guidance about the date by which americans are required to Purchase Health insurance. Its not immediately clear whether the adjustment would need to be approved by congress. Full damage control today. John, do you want to take on what joe was saying . Im sorry, i missed your question, andrew. Given the practical problem that clearly the administration is confronting, why didnt they make this a piece of whatever was happening two and three weeks ago . Well, i mean, they are trying to make this thing work. Whatever was happening two or three weeks ago was an attempt to destroy the law and theyre trying to make the law work. If they cant make it work, theyre going to reap some of the consequences that republicans were trying to voice on them. But their goal was to try to make it functional and thats still their goal. Well see whether they can do it. Its not good prwise, john. My point and it would have never happened, but my point was why didnt they say, well give you eight weeks of a delay. Republicans would say, theyre throwing us a bone. All along, the white house could have used more time to get this thing more ready to go. Its weird that both sides were in these entrenched positions where neither one of them could move off of their position and both of them would have been at an advantage if they had. It was counterproductive. Well, look, this situation is counterproductive, no doubt about it. But, you know, were going to see whether they can have their tech surge be effective. We still dont have the reason to think that the basic idea behind the law and the basic mechanism at the heart of the law is functional, so far as we can tell. It is a technological problem. Exception think about the types of premiums here seeing in other places. What about the prices . I saw last night, one of the insurances in michigan, 40 increase is what it was going to be in detroit. For who . Your paper, poor are going to pay more often. Im not sure how that works. It may be in states that had not expanded medicaid, there are some people who are going to fall between the gaps. But my understanding of the way the price increase rate increase situation is going to work is that because of the individual mandate and the higher standard for individual market policies, that some people who have bought very bare bones policies, especially who are young men, because of the ways in which price, Insurance Companies are allowed to price policies and charge women more than men and charge becky has been saying this for three years. The analysis suggests that the ambitions to increase comp tegz evenly have unfolded uneachly and at least in the early have not addressed any factors that kuhn attribute to higher they havent done anything about lowering the prices. Thats it. Insurance companies are reluctant to enter challenging new markets because rates are high fair enough. As a result, particularly in rural areas, it ends up being a little more difficult. Yes. Look, theres no doubt that some markets are more difficult and less profitable for Insurance Companies than others. But, you know, its not like this health law was going to solve all of the problems that weve been wrestling with health care for decades. You know, john, im less concerned with the politics and how that all plays out. But more with january 1st. There are a number of people who have been told that their existing insurance will no longer cover them, that they have to go to these exchanges. You may say give them a six or eightweek delay, but what if someone is legitimately trying every day to get Health Care Insurance and doesnt have it by january 1st and has to have some gap of time where they have no Insurance Coverage . Well, you know, the way the Enrollment Period is working on the exchanges is that you have to originally, there was a sixmonth enrollment, from october 1st to the end of march. And they had been saying initially that if you you need to sign up by february 15th in order to be covered by the end of march and be in compliance with the insurance requirement. Now theyre saying because of some of the technical problems, if you have applied by march 31st, you will then be in compliance. And that is one way of sliding in. Look, it may slide more. If they cant get the computers to work, if you cant get on the website and find your insurance what do you think is the timeline . Is there a timeline at all . I dont think anybody knows. Different insurers are trying to verify stuff. Theyve tried to resist giving a timeline and i think that is probably smart on their part because they dont know when theyre going to work. Theyve got all these people, you know, its an incredibly xhex thing involving interaction between federal governments, insurers, state governments and i dont im not a tech guy. I dont understand how it goes. Some tech guy somewhere, john mcafee, will know you saw that crazy story, right . I dont think so. Theres so many moving parts, andrew. It depends on what they choose to do. They have so many tech people involved in it. But i read something the other day that you could do with old software and old nuggets, you could do everything you need to do, but it would be better if squeak emanuel was one of the architects of the entirety thing saying he thinks there needs to be daily updates and Weekly Performance of how to check some of these things. So its enough to concern even some of the architects of this plan at this point sflp. This is a realtime experiment in Crisis Management by government. And, you know, so far, its not looking very good. This is just a rollout. This isnt even providing the health care for everyone. I cant wait until thats happened. Thats the easy part. Is that the easy part when theres no doctors left. Anyway when theres no doctors left . Its going be that was one of the pieces that was around yesterday, yeah. Youre increasing demand, but not supply at this point, john, right . Youre increasing demand and well, we need more primary care doctors and there are things in the law which encourage people to go into primary care. But. There are some states, it is true, where because of scope of practice restrictions, the shortage of primary care doctors is more difficult than others because, you know, Nurse Practitioners cant do as many things in some states than they can in other states. Thats one way in high demand states you can deal with some of the increased demand for medical care. But you know, i can deal with a glitch in signing up, but hopefully the Actual Administration of helth care. Getting treatments you know, this is just a bad omen in my opinion. If this part is that difficult, well get through this, its not hurting anyone at this point, but when youre trying to see a specialist, is he covered, is the procedure covered . Will there be reimbursement for this drug . When all this starts happening and hopefully true, joe hopefully not every corporation farms it out to obama care. And i know the people in congress and the senate are hoping that, too. But joe, just to clarify, though, even if people go on the exchanges, were not talking about government doctors. Were talking about im not saying that. Youre talking about that youre talking about who there will be experts that panel that decides whats covered and whats not, john. And there are going to be, you know, decisions about whos in the network and who is not. I think youre going way down the road. All right. If you feel like this is going well so far, we dont have to worry about anything else, then thats no, no. Have you heard me say everything is going well so far . No. But this is the part where this part i dont even care about. I care about how five years from now how the entire system is running. But, joe, let me just pose this question to you. We work for nbc. Whats happened to our health care since obama care . Nothing. Nothing at all. So already get health care, the vast majority of employers get health care. We dont know how that works, john. For most of those people, all this stuff doesnt really make a difference. Were going to have our open enrollment for nbc, you know, around thanksgiving time like we do every single year and its not youve seen how many people are trying to go to defying contribution. You know, this is going to be an alternative for most companies to look at, which may cause them to change what they provide right now. That is true. And its an interesting question to see how much that happens. If that does, in fact, happen its been happening quite a bit, right . Well, not as much as people have been describing. We have a longterm wait. Hold on. We have a longterm trend in which employers have been trying to shed benefit costs, but it is not i dont i havent seen it dramatically accelerated. Remember, firms have dropped insurance, firms have changed benefits. Premiums have gone up for a long, long time before this law was passed. All right. Coming up thanks, john. The icahn family house of cards, an interesting bet between carl icahn and his son. They are going about their netflix. But first, squawk sports news, game one of the world series going to the red sox. David ortiz and mike napoli drove in three runs apiece. Boston really did pound waynewright, i thought he was the best pitcher around, 81. Thank you orville and wilbur. Amelia. Neil and buzz for teaching us that you cant create the future. By clinging to the past. And with that youre history. Instead of looking behind. Delta is looking beyond. 80 thousand of us investing billions. In everything from the best experiences below. To the finest comforts above. Were not simply saluting history. Were making it. 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. Time now for the executive edge. This is a daily segment focused on giving Business Leaders a leg up. A father son drama over netflix. As we discussed yesterday, investor carl icahn sold more than half of his netflix stake and made a pretty penny in the process. Esz said to be so convinced that he is right to sell is shares that he made a big bet with his son, brett, who disagreed with that decision. Brett and his partners say they believe the streaming company is still undervalued. If his sons views are proven right and it turns out he sold the netflix shares too soon, it was his sons ideas that carl get into netflix in the first place. When he first spoke about it, he spoke about it as if it was his idea because he was mr. Blockbuster on the down side. Apparently brett is also the inspiration behind the apple investment, too. There you go. Maybe youre an investor. You buy it at 50. It goes to 330. You sell avenue v half your position. Thats not huge stretch of the imagination. Maybe these young fellows, its 30 years old. I think hes 34. Maybe they have different outlooks. Its kind ooh a the tempest in a teapot. He has 20 billion. Who cares about a couple million here and there . It lives through times when you see collapses in stock market prices, as well. When you hear the ceo talking about this is a very exuberant time in 2003, that might give a long season some investor to pause. In general, you buy a 50 stock, it goes over 00, you sell half your position, thats like a graham and dodd book almost. So we give him credit if hes right or wrong . Im not going to talk about this story again. Sometimes stocks act ir yashlly, anyway. Oh, dad, you sold . The whole thing is theyre too rich to talk about. Theyre not us. You know, the rich rpt like us. Theyre not. Theyve got money. Theyve got money, thats right. Lets talk about blackstone founder steven swartzman. He is breaking ground on a college in beijing housing a 300 Million Scholarship Program bearing his name. Its expected to rival the rhodes scholarship. Swartzman says hes setting up the program to train leaders with better understanding of china. He talked about those plans on squawk box last spring. Right. I sort of came across just thinking about the Rhodes Program and the enormous impact of the rhodes with 84 students a year. Right. Have. And we look at what bill clinton has done by way of impact. And if you go through the list of those people, its pretty remarkable. So i figured if we could attract the same caliber of people to go to china, learn that, and then feedback in their societies what was going on, it is a good thing. And so that is how it happens. Thats the way its structured. Very quick turn around, though. Six months ago, he was talking about it here on set and now hes breaking ground today. Right. And at the time he answered, you know, people that said, well, you know, will it help you that you do blackstone does a lot of business in china . And he goes, no, there should be a cheaper way to do it. But a hundred million to its pretty good for everybody. It is. Its a lot for him, but its not you know, i know theres cheaper ways to do it. Who gave that 150,000 prize and acted like it was a lot . Was that ice isner, do you think do you remember . Not even 200. When people give to charity, im going to give them credit for do it doing it. Really . You want to do everything you can to prison them from getting wealthy enough to give to charity and yet its okay when they do. You try to prevent them from making more and and then we give them credit when the government certainly has a better idea what to do with the money when they do. Of course they do. When we come back, were going to talk about earning wes, the economy and well be joined by david and barry after this. But first, the few Quarterly Results hitting the tape this hour including generac. Earnings beating the street. The companys ceo will join us tomorrow morning. Earnings estimates, Diamond Offshore fell short. Finally, a beat for Starwood Hotels. Stick around. Squawk box will be right back. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. 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. We pulled back yesterday base odd some weakness in asia. The major averages today, though, are called higher. Where do we stand at this point . Lets get a couple of guys take on this. Barry knapp is with barclays. David bianco, deutsche bank. Start with you, barry. Seven months ago, you said were near the highs. We probably might pullback and then for a while i said you look stupid and then for a while you looked right. Now i think you look stupid again. Where are you at this things look like theyre going pretty well here and the market wants to move high per. Well, our idea and the reason we would get a pull back in the second half the on the year was you go back through every Business Cycle going back to world war ii, you get to a point where the fed decides the economy is on the selfis us staining stage in a normalized policy, right . That never happened. Right. Until how could you know . If youre 159 and 18th within we still thought that was the outcome for the markets. Now weve obviously pushed that back to at least march. And, you know, youre into favorable seasonality. So i definitely think theres an argument to be made that core fundamentals are improving, but the expansion of multiples has way outpaced that. And were we in the spring or the summer, id probably be pretty cautious at this point. But going into favorable seasonality at the enof the year, its hard to see your way clear towards the market getting disrupted. Plus, anyone that was recalibrating an equity multiple based on Interest Rates being at 3 on the tenyear, now youve gotten a reprieve there, too. Were back down to 2. 5, which makes the stock market less expensive versus bonds. Yeah. You know what . I think thats fair, although i think theres a real subtlety to that in the sense that where qe has worked, where that Interest Rate differential argument has worked is on the defensive sectors. The ones with high dividend yields, the bond like characteristics. Not so much in the growth sensitive names. Now, those growth sensitive stocks industrials, tech have been performing exceptionally well since may. I still take that as a sign that underlying trends are Getting Better, that all of the headwinds associated with Public Policy uncertainty, the mortgage credit channel being impairsed, the tax hikes are going to fade and growth will be stronger in 14 and the market is telling you that thats the case. However, the argument that just stocks are cheap versus bonds, to me, only works in the names that are bond like. So, david, what im hearing from barry, and i expect to hear from you and i know were going to hear from marty seth is its night when a rising title, all shifts, there may come a time when you need to find companies that are well run, in good positions in their markets to increase earnings and thats why you buy. Are we there yet where you need be pretty good at this . Well, in all times, its good to be a stock picker. It is. Not as important as others. Were at a point in time when the Earnings Growth is going to be about normal, which is better than weve seen in the past handful of quarter. But i expect to see more. More Earnings Growth. Were at a normal pe. When youre in an environment like that, the market is fairly valued, should give you normal returns from here and insurance. You cant count on if you cant count on multiple expansion, maybe a little multiple expansion, it would be nice to find companies that grow at 15 or 20 a year. Then you would make maybe that right. The price is locally demanding. The way we see it is that there is most likely going to be further gains from here that are driven by healthy Earnings Growth, about 7 for the overall s p 500 next year, 2 , 2. 5 dividend yield. Theres some potential for further pe expansion, but we think if that occurs, if it occur necessary a justified way, its because Interest Rates rise, yields rise, but they plateau at levels beneath historic norms. Were not, like, on a big ship in the night like cruising along like things are pretty good but not seeing something . You know who im thinking about . Yeah, the titanic. Not the titanic and leo and all that, but are there icebergs . Were not worried about europe . Did you see 7 on the earning egg growth . Right. What would derail all this . What were counting on to us us to that type of earning egg growth is healthy growth out of china, an improvement which were seeing in u. S. And Global Manufacturing activity, some u. S. Exports and most importantly where the improvements have been slow, theyre expected to get better next year and investment spending. We have oil prices that justified, cam ex, china is not growing as quickly as it was but its healthy and its demand for capital goods are there. I dont see anything happening. Do you, andrew . Im not worried about a darn thing. Are you worried about the government in three months . What are you worried about . That will surely be an issue. Even if they dont taper, which they may well not do. They may go up. Theyre not going to go up. Faber sets were you here for that . I was not here. I was in hong kong. You would look cool, now that a ponytail . Yes. So head on you look business like. Then you turn to the side and people go whoa you can add them into your hair, a weave, an extension. And by the way youve got a different kind of stengdz, didnt you . No. Okay. Keep going. Sorry. I dont even know where that i dont know. I dont know, either. But you talk about someone getting an extension. You temper tizzy they didnt play the music at least. No squadward moment yet. Weve had dress rehearsals for all the mashlg risks out there, government shut yoens, fiscal cliffs, tapering. I think youre asking a good question, what is one of the risks that were not aware of yet. Members are like, wow, this is a great. I hadnt thought of dress rehearsals. Its such a great boat were on. Its so big. Its beautiful. So when youre keeping an eye out play the violin. Music playing, caviar. I think the iceberg is china, but its the credit cycle in china is the problem. So even what the market was upset about yesterday, its not so much yeah, theres a risk that the Chinese Government tightens to choke off the property bubble, but they have a much bigger financing problem over there. When the tapering talks started wsh the hot money flows came back out of china. Thats whats financing small and medium sized businesses there. The state run enterprises, they have around bad loans. That was part of yesterdays selloff, as well. When the most money flows start to get pulled away from china, away from india and away from brazil, all Thoughts Companies that rely on credit, so their expansions over the last ten years are going to have a significant problem. So that is the spot. For two hours, well have look, do you see how many situations he has . And a lot of the stocks have already been moving and marty seth, you know marty seth, right . Good. All right. You guys are more macro. I would make the point that you hear the music, right . Rur going to make another point. One more point . You cant. Come on back for the next point. You think we just talk to music all the time . Its been nearly one year since Superstorm Sandy devastated the east coast. One of the big issues . Power. Were going to talk about what has been done to skurch the future of the National Grid. And its a virtual whos who of Corporate Leaders on squawk box this morning. At 6 50 eastern, southwest ceo gary kelly, his company posting earnings in line with estimates. Well talk about that. Then a number of big executives coming up later. Were coming right back. Is the east coast better equipped to deal with a hurricane at this point than it was a year ago . Steve holiday is with National Grid. Steve, what do you think . Are we better prepared than we were a year ago . Well, sunday, of course, was an unprecedented superstorm. Superstorm sandy. It was the first time the u. S. Saw a storm that affected both the electric and the gas system. My colleagues here did an awesome job. We had 16,000 people involved in recovering from that storm. It was an extraordinary event. The reason why we have to think about the future, of course, though, worldwide, we had 800 storms worldwide last year. Clearly, we have to think about whether in a different way going forward. So two things that weve been going in particular, one of those is coordinating with the industry the ability to get people to the sites faster. Huge amount of coordination is now resulted in a better plan. I think than ever existed for the east coast before. And the second area that im particularly excited about is advancing our own ability to predict where the storms are going to cause most damage. So our folks here work with m. I. T. To look back at the history of storms, why the damage was, and can we get a tool that predicts the weak spots. Those two things are going to make a difference. Would it change your mind about whether or not it would sht down ahead of the storm, ahead of the water hitting the ground . On the gas system, unquestionably, to isolate parts of the system to make sure that if you keep the gas flowing where the storm isnt going to hit. Its part of the Emergency Response plan. Particularly down say the new york. I ask that because there is an 80 million lawsuit that was brought in july by the 120 homeowners in breezy point. It was brought against us and the long island power authority. They say you were partially responsible for this because you didnt shut off the gas in time. Your company has fought back and said it was the ohm owners negligence. That lawsuit, i dont believe theres any responsibility on National Grid or liek. We shouldnt forget the impact on sandy on human life and on property. There are still hundreds of people who are not back in their homes yet. Right. And i guess thats part of my question, though. If you look at this in hindsight, would you change it so that you can shut down power and electric before the water actually hits . Thats what happened. When you water hit, thats why maybe it was the homeowners responsibility to turn it off, but im wonder fg your company could have done something differently, too. No. There wasnt any indication of isolating a piece of the situation to make a difference. The point im making is its unprecedented to get water into underground gas systems and filling up with water causing damage. There has been something going on within the industry is are there ways to isolate parts of the system far faster than the system is designed to be done today. Its unprecedented. The emergency on the gas system was the first of its kind where there was a National Need for gas crews to come from across the u. S. To help on the gas business. Electricity business, weve seen that on storms in many, many years. The mutual aid on goes was the first of its kind ever. Its clear, though, we have to get good at that as the future of the industry, as well. Im looking at a Washington Post piece, steve. Its just its the Washington Post. Dont blame Climate Change for extreme weather. It goes on to say that in popular well, you see that as in the popular media, but the science does not support it at all. Hes quoting people from youre just is it a given for you now that Climate Change is youre taking corporate actions based on more extreme weather based on Climate Change . I would not get into the scientific im not qualified to do that. You used to be in the hydro carbon event. You caused all this Global Warming at some point, didnt you, when you worked at exxon . Now youre preparing for that. Youre getting it coming and going, steve. Lets put the science just to one side. It is Crystal Clear to me in my company that we have to prepare to protect our customers with their Energy Supplies for the expectation were going to have more storms, more frequently, of higher intensity. Why . That would be the prudent and acceptsble thing to do. What is causing those storms is irrelevant. We need to protect against them. Thats why were making the investments were making. Were making investments. Thats crucial. Gavin smith. Showing the reliability of what we need. Gavin smith of nasa streams are almost nowhere to be found in scientific literature. But its a popular perception that Global Warming means all extreme ves increased, even though anyone that thinks that for ten seconds thinks its nonsense. Anyway, we appreciate it. I just dont want you doing all this stuff for your company if its not necessary. Anyway, coming up, the view of the economy from 35,000 feet. Squawk will take flight with the ceo of southwest airlines. His companys earning eggs and outlook, next. I know what youre thinking. 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. Welcome back to squawk box. Southwest airlines reporting in line with estimates. Joining us now first on cnbc. Happy to have him here, gary kelly the ceo of southwest. You carry more did you realize this, guys . They carry more passengers in the United States than any other airline . Is that true, gary . Absolutely true. Its been that way probably since about 2006, 2007. Yeah, its unbelievable. Give us just given that, give us a sense of where you think the consumer is right now. Weve had a decent year. We started out the year very strong. We saw some impacts in the spring in early summer from the tax increases and sequestration. But you had a really good summer. Had a great Third Quarter, alltime Third Quarter record of 241 million. And consumers were out there buying and flying. And we were having having a grand time until the Government Shutdown in october. But were looking at a good Fourth Quarter. Lets talk about that until the Government Shutdown in the Fourth Quarter issue. Because people are going to be satisfied i imagine with todays results but theyre going to be looking forward trying to understand whats happened this fall. Give us a little bit of a read. Well, you know, if you look at our fuel price per gallon for the first time and i cant remember when, we had two quarters in a row of very stable fuel prices. 3. 06 a gallon in the Second Quarter and the Third Quarter. So lets start there for the fourth, were looking for another stable quarter in the Fourth Quarter. Demand for the holidays in particular bookings look really strong in november december. A lot of the thanksgiving travel falls into december. So were taking that into account, obviously. So still looking for increase in unit revenues here in october, although not as high as i think it would have been had the government not shut down. And give us a read also on ticket prices. They continue to go up. I always thought of you, gary, as a discounter, but ive got to tell you, i took a trip to denver on you guys and it was not a cheap trip at all. Youve got to book early. Get a great fare. Were the low fare policemen in the country. And its always been the case and its still true today. Were adjusting to Higher Energy prices. But were still by far the low fare leader in america. But prices are higher because Energy Prices are higher and fares are up yearoveryear probably 5 , 6 . Quick two quick questions for you. Integration on airtran. Its been some analysts have said its gone slower than you expect. Where are you there . Were right on track. Our plan always was to have airtran fully integrated by the end of next year. And thats what we reported again this morning. The major activities that remain are to rotate the boeing 717s out of the airtran fleet. That is just now beginning. So theres no way we wouldve integrated airtran before we got that down. And then were bringing up International Operations on southwest next year. And thatll complete the integration. All right. Thank you very much. Appreciate it. Thank you. You bet. Thanks for having us. Ceos keep coming on squawk box. Well get travel trends ahead with the ski season, with the ceo of vale resorts. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. The earnings parade in full gear. Dow chemical, ford, and gm ready to set the tone for the market. But will they hit their notes . Or miss a beat . Guest host martin sass is hear to talk us through todays results and tell us where hes putting money to work. Could obama care be delayed. Reports that the deadline to have insurance could be postponed after technical glitches at the governments websites. Well talk about what it means for americans trying to plan for Health Care Insurance coverage. Plus, we hit the slopes. Find out what you can expect this upcoming ski season from vail resorts as the second hour of squawk box starts right now. Good morning and welcome back to squawk box here on cnbc. Im andrew ross sorkin. In studio this morning, guest host martin sass is the ceo and senior Portfolio Manager, hes going to be sharing his stock ideas throughout the hour. Also, take a look at futures this morning, see how things are setting themselves up with green arrows. The dow looks like it would open up about 69 points higher. S p 500 little over eight points and nasdaq up close to 15 points. Ford earnings are just hitting the wires and well go over to phil lebeau in chicago. And hes got those numbers. Good morning to you, phil. Hi, andrew, better than expected numbers by ford from a wide margin. Ford beating the street earning 45 cents a share versus the estimate of 38 cents. Thats a record 2. 6 billion pretax for the Third Quarter for ford. Revenue coming in a smidge lower than analysts expected at 33. 9 billion. Thats about 800 million less than what analysts were expecting. Also, the guidance being raised for profits as well as Profit Margins for the entire year from ford. So in the past, they said they would be equal to, perhaps better, now theyre saying they will be better than last year, both in terms of profits and Profit Margins. And when you look at the numbers in terms of why ford beat the street, two things stand out, strong sales and revenue in north america. In fact, they made 2. 3 billion in north america. Thats not a huge surprise. But the real surprise, europe. They were only losing 228 million in the Third Quarter in europe. Thats well below what the street was expecting. Most on the street expected ford to lose at least 450 million. You put those two together and you have a company posting better than expected numbers. Again, ford earning 45 cents a share versus the street at 38 cents. Guys, back to you. All right, phil, thank you very much. Well continue to watch that stock. We do have other earnings out this morning, as well. Dow chemical reporting Third Quarter results just moments ago. Profit of 50 cents a share, that was 4 cents shy of what the street had been expecting. Revenue below estimates, as well as revenue in the middle east impacted some of those results. Cash flow is strong and momentum is positive. Joining us right now from midland, michigan. And andrew, can you explain some of what happened here . Sure, becky. Caused hydrocarbons in september. The on again, off again war in syria. But that means for us, were going to get price increases out there and you run out of quarter. Fundamentally those price increases are out there right now. With the volatility being up and down. That four penny miss is what we buy in hydrocarbons every day. What we should look at is the yearonyear. Were up 19 year on year on earnings per share which is a very strong result. And so the underlying business was strong, cash story as you mentioned was also very strong. So momentum going into the Fourth Quarter and certainly 2014. Let me ask you this, if it was hydrocarbon prices, thats come down sharply over the last several weeks, right now down around 97 a barrel and change. Thats the lowest level weve seen since june. Does that mean this quarter were in right now is shaping up to be much better because of the shift in hydrocarbon pricing . Well, certainly the oil to gas ratio is what we look at a lot. And its less about the absolute number, becky and more about the up and down. So the hydrocarbons go up and come down when its off. So actually, we prefer stable even if its a higher number. We like high oil versus low gas because of our very positive exposure here in the United States. Our u. S. Business is very strong, our plastics business was very strong because of our stock advantage here in the United States. Q4 slow for us. But the momentum, u. S. , china, emerging asia, all positive momentum stories and then our focus markets, electronics, agriculture, packaging and plastics all very positive going into our Fourth Quarter of next year. You also mentioned price increases that you can put on because of the higher prices for hydro carbons. Will those stick with your customers if, again, its not necessarily the down or up youd like a steady price, but with high prices coming down for wti, isnt it harder to make price increases stick with your customers . Another reason price increases stick is supply demand gets tighter. Improving economy mean demand goes up. And automotive is going up, housing and constructions going up. So theres some markets that are tightening that enable price and value share to occur. And thats really the packaging plastics business. The ones that are exposed to wti are really propeline derivatives. Thats a strong result. And its the first time weve seen hydrocarbon based codeines also go up. That all goes as well for the paint season early next year. Look, this is our fourth consecutive quarter of yearonyear Earnings Growth. Thats pretty strong momentum. So whether we get it from price or low feed stock costs or both and what we prefer to get it from is our technology then, you know, frankly march gin expansion should continue. Marty sass is our guest host today and he has a question for you, as well. Hi, andrew. Hi, marty. When you mentioned your feed stock cost advantage in the United States and assume youre referring to the very low Natural Gas Prices that we have as a result of unlocking the shale gas thats caused the supply glut and caused the United States to have a tremendous cost advantage in natural gas versus the rest of the world. Can you discuss the impact thats going to have on your operating margins . I would think its going to be a huge opportunity for you and how you expect to capitalize on that. Marty, its a phenomenal question. And so the gas produces gas liquids. The gas liquids are what we use to make 95 of all products that all of us use every day. With advantage usa, advantage dow, were putting 4 billion to 5 billion of capital on the u. S. Gulf coast as we speak to take advantage of that advantage so to speak. Thatll enable us to export from here. Were exporting right now. That value chain right now, the plastics packaging value chain, were running that flat out and its got great margins. But to beckys earlier question, as demand tightens, as we get the consumer back in the economy, those margins should expand. In the next two years, we consider our margins should double of that advantage you just asked about. Andrew, also, i wonder what you think about whats happening over at dupont. Pushing to split that company up into two different pieces. Other similarly related products. What do you think about a split like that . And what do you think about how youre doing things at dow. Well, look, i make it i do definitely can tell you about what we feel about the dow story. The integration of chemistry and biology and physics and material science is the domain of Large Companies that can take the integration and provide value to a customer base. If youve got focus markets which we are doing with packaging, with agriculture, electronics, these businesses need the integration to get better answers and higher value. Most of the world is commoditizing, becky. And so the chinese are overbuilding, the chinese are taking technology from us. The chinese are basically averaging out the average. Its going to be a commodity world unless you put intellectual property at play in key markets. In our announcement today, i hope you picked up. Were announcing 3 billion to 4 billion of divestments of commoditized business. In essence the chinese have overbuilt. Youve got to stay ahead of that commoditizing trend by playing science in r d to key markets by being focused. Thats the domain of large integrated Companies Like a dow. Thats an argument for bigger is better as long as youre focused on areas you think you yeah, sorry to interrupt you. That focus is where you focus your r d and marketers and you go with the world trends like feed the world, provide better infrastructure, better housing, better medicines. The world needs all those things but you need r d, you need to afford that r d be being focused on the key markets. Thank you for joining us today. Always good to be with you, becky. Andrew liveris of dow. We introduced marty as the senior Portfolio Manager of md sass. Arent you md sass . I am. How did you get that job . I would be the grand thats it . Senior portfolio. I like that title. Team, you hear that . Change the business cards. Id be a hell of a lot higher than a senior. We at 7 30 are going to talk about some of your individual issues, which weve talked about before and the individual situations. I want to get to youre not a macro guy, but you have really smart macro thoughts here. And number one, you think were in this in the u. S. At an inflection point. Yes. I dont want to put words in your mouth. Growth still sluggish, tapering postponed, waiting for the economy to accelerate, which will happen some day . I personally think youll see it in the first quarter. What were seeing and thats why i call it an inflection point. Weve had this very sluggish growth, as you know. And thats been extended through october 17th with the Government Shutdown. Right. Next year, we have much less fiscal drag. So just from that, the swing factor of less fiscal drag will accelerate Economic Growth. People have been making that point this week. And then in addition as you know, were seeing the world recover. Ford just reported earnings which doesnt surprise me. The european operation has been a big drag on results. Its improving because we have a recovery underway, stabilization and recovery starting in have you mentioned ford in the past . No, i havent. But i think its indicative with whats happening. We have a synchronized Global Economic recovery that where i think were going to see gradually improving Economic Growth throughout the world. And i think the u. S. And europe are actually going to be the ones with the biggest increases for very sluggish, you know, recession in europe or sluggish growth here. You point out that the weak labor market and the large output gap from the what weve been through for the past few years, this is a longer runway than normal for the economy to come back. But that doesnt mean that somehow its never going to come back. Its noninflationary growth. Weve seen this in the past. It could be a good time for stocks, right . Yeah, exactly. I think we have a situation as you point out, joe, a lot of slack in the economy. Not only with production but excess capacity. We dont have the inflationary pressures that would put a stop to the runway of Economic Growth. Also allows our new dovish fed chairman if she gets elected to perpetuate this policy which i think well see around the world. Of Central Banks fighting deflation, stimulating growth, injecting continued monetary accommodation. That allows this economy. The economy and the stock market. And the recent pullback in yields, the 249. You figure people ought to get out of the long stuff. Allows them to do Different Things and fixed income. Exactly. I think what were seeing is a countertrend rally in the bond market. So as you know, the fed surprised the street by not by postponing the tapering i tr yesterday. Yeah. And i think maybe it goes down to 2. 3 to 2. 2 up toward the lower end but up to the 3. 5 level. No more we may not see multiples contract but expansion is not going to be what drives things higher. Its going to be Dividend Growth and Earnings Growth. Exactly. Weve seen multiples go up here to 15. 7 times on 13 earnings and 14. 7 on the following year. We would say that maybe it could go 16 times, slight increase in multiples. Not a contraction, but a slight increase. A slight increase, but earnings as you point out driving 7 30, weve got five good ones to talk about and then we actually have another five or six of some of your biggest positions. How much are you managing . 6 billion. Just you . The firm, not me. A team. Youve got to change it, g. P. General partner. We do have other corporate headlines. Plus obama care delayed. The Administration May delay enforcement of the Affordable Care acts individual insurance mandate. What that means for your coverage come january 1st. Squawk box will be right back. Did the Government Shutdown and debt ceiling debacle leave a bad taste in your mouth . Were asking corporate america, investors and political thinkers what washington needs to do to avoid another debt debacle. Can a grand bargain be reached . Are we headed for another doomsday . Daily analysis and fresh ideas starting at 6 00 a. M. Eastern time daily. Watch squawk box. Tell washington to rise above and win us back. [ laughter ] [ female announcer ] each one of us is our own boss. And no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. Welcome back to squawk box this morning. Lets catch up on the earnings reports this morning. First one being Starwood Hotels earn 71 cents a share. Beats estimates by 8 cents. Revenue also above analyst estimates and starwood is raising its fullyear guidance, as well. Also, generac holdings. You already bought your stuff . A year ago. Earned 1. 06 a share, revenues beating forecast by a wide margin and the company raising the fullyear sales guidance. Seen strong increases in the last few years. The companys ceo is going to be joining us on squawk box tomorrow. And home builder, earning 43 Cents Per Share for the Third Quarter. Because they put the two together. They did. They Beat Estimates by 9 cents, revenue beat forecast. Net new orders fell 17 from a year ago. And finally, xerox earning 26 cents a share for its latest quarter 1 cent above estimates, revenue was shy, though, above consensus as is its Current Quarter forecast and well see what happens to that stock. You can see in the premarket action there, we have a yellow. Now we have the yellow thing next to it. Thats the indication . Premarket, yeah. That is premarket off now over 6 . Joe . Thanks, andrew. Every newspaper today has some lead story on the Affordable Care act. Its there on the cover. We are joined by a couple of gentlemen right now. Tom miller, the American Enterprise institute. Ill start with you, you arent going to debate and yell at each other. But you do have differing viewpoints. Igor in reading what you say, this is a, perhaps, a small incremental step being taken to allow people to not incur penalties if they are unable because of some of these problems to sign up by the deadline. And nothing more than that. And in your view, a positive development for implementing the law. I think so. They had this weird glitch that if you bought insurance after about february 15th, you would still be penalized even though the Enrollment Period lasts all the way through march 31st. So they are going to align those two things to make sure if you buy insurance the very last day that its available, you dont get penalized and it makes sense to me. And if you talk to them, they say, look, this is as far as were going to go for now. Were not going to expand the Enrollment Period, not going to delay the mandate. The question, of course, is can they fix this in time . And if they cant, if the problem problem is bigger than they imagined, theyll have to do more. But for now, theyre saying were taking a small step. Depending on where you like so many things, where you stand depends on where you sit. Are you allowed the president has changed this a couple of things about this law and there are some people who say, look, you keep arbitrarily changing parts of the law and you arent allowed to do that. Are you of that mind . Or you cut the president some slack here . Well, youre assuming normal procedures apply to this administration. Weve got other track records of the law being delayed, distorted, changed around. Not just the employer mandate, delay from last summer, there are all kinds of things where the dog chewed their homework and they had to do it differently. Now, in a technical sense, you have a lot of latitude, administrative guidance, regulations, interim guidance where if things are a little bit out of whack for a short period of time, you can claim some extenuating circumstances. What this administration is scared to death of is actually having some legislation move again on this law because they dont know what type of political mess theyd be in once they open that door. So they will say let us fix what we already broke. Just you stay out of the way and well make it up as we go along. And making up a lot of stuff. You cant make this stuff up, though, it actually is happening and thats the sad part of the way the laws unfolding. Igor, you know, getting off on the wrong foot, thats an expression. This is a small but important part of rolling out the Affordable Care act what were seeing right now. What some people that dont like the law are at least arguing is that if you cant even do this right, what happens when youve got 19 of the economy under your watch and, you know, youre actually providing health care for people at that point. People that may have lost their old health care because companies dont want to do it anymore . Is this a good for the government having such a large role in providing health care . Well, theyve got to get this right, absolutely. If they dont fix the enrollment problem in the next three weeks, theyre in trouble. But i think, really, the good news here is that when people get to the Actual Health care product for the most part in an area where theres a lot of competition, they seem to like it. They qualify for the subsidies, theyre paying less than theyre paying now. And, remember, these are private insurers who are going to be providing this coverage. Theyre going to be working with private providers. While the government is facilitating the competition, theyre really not controlling the delivery of health care or how health care is paid for. So that still remains within the competitive market. But youre absolutely right. If they cant figure this website out, you know, theyre going to be in trouble moving forward. The president has addressed the issue of the governments problems with these exchanges. Can you either of you or both of you speak to the private exchanges, Companies Like we own Towers Watson which has private exchanges, others who are offering these exchanges and what you see as the potential for those exchanges . Sure. What theyre doing now and how effectively theyre operating now and what you see in the future . Well, you named a couple. And id add mersa rolling out for this next year. Thats the counter model and that might be the next evolution of employersponsored insurance to provide a wider range of choices and an effective environment. That model doesnt seem to be running into the same things. Partly because its not trying to do everything in the world and have all of the adjustments in income and trying to regulate every plan possible, at least the ambitions of the exchange. Its early in this stage. Weve had a lot of predictions in the past. This is the next wave of the next version of Health Insurance. Its got some potential and some possibility. I think itll take a couple more years to know how far embedded it becomes. But as employers feel under greater stress and pressure from the wave of regulations of the Affordable Care act, particularly if theyre selfinsured, selffunded, this might provide another vehicle to provide something more effectively. And itll be an interesting contrast to whats happening with the government run exchanges which have the black flag that Consumer Reports put out recently saying stay away from the exchanges for at least the next month. Thats not what Consumer Reports said and they put out a statement saying its being misinterpreted. Again, there is some good news when you look a little deeper. Yes, the federal exchanges are having a lot of problems. But if you look at the staterun exchanges, the 13 states in the district of columbia, theyre having a lot of success. Theyre signing people up. People are now going to be covered. And i think the hope is if you can scale that up. Scale that up to the national level, you can get this thing fixed. And look, you know, weve had a lot of these kinds of problems in the past. I seem to remember when Medicare Part d was first rolled out, the website for that for seniors to sign up for prescription coverage was delayed three different times because it just wasnt working. So, you know, its still not clear how deep these problems run but there is a chance that were going to be, you know, two, three months removed and all of this will kind of be in the past that this thing could actually work. But we just need some time, some money to figure it out. Tom miller, thank you. Hey, igor. Is it igor . Its igor. Does anyone pronounce it igor like that movie . Its igor, right . Yeah. You got it. Okay. Because i dont want to if its igor. Could be raining. Its igor. Frankenstein. Gentlemen, thank you, very cordial. Igor was like youre like some under 30 guy, right . 30 top under 30. Smart. Still under 30, thankfully. See you guys later. Thank you. When we come back, highlights from game one of the world series and then the earnings parade continues. Ford, dow chemical, 3m and much more. Which names will you be watching today . And later, vail resorts for the upcoming ski season. Squawk will be right back. Time now for todays aflac trivia question. Which u. S. Representative participated in big brothers, big sisters and had Michelle Obama as her mentor . The answer when cnbc squawk box continues. Ready to run your lines . Okay, who helps you focus on your recovery . 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. [ male announcer ] when youre sick or hurt, aflac pays you cash. 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. With my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Now the answer to todays aflac trivia question. Which u. S. Representative participated in big brothers, big sisters . And had Michelle Obama as her mentor. The answer, democratic representati Representative Terri Sewell of alabama. At 8 30 eastern time, the Labor Department will be out with a report on initial jobless claims. Well be watching that closely because the fed will too. At 10 00 eastern time, the government will issue new home sales figures, as well. Ford came out with earnings of 45 cents a share, that Beat Estimates by about 7 cents. Raised the yearly profit forecast and says the situation in europe is improving although it still does have posted losses in that region. And john skully is said to be mulling a bid for blackberry. This is according to the toronto globe. Scully says he sees value in blackberry but it needs experienced management. Joe . The st. Louis cardinals let me mention well get to the cardinals in a second. 3m, 1. 78 versus 1. 75 is where the estimate was. Also have a forecast for the year from 3m. Company is narrowing the fullyear view from 665 to 675, and the estimate is 670. Shocking. Thats right in the middle of where the they have narrowed their estimate. The Sales Numbers is going to be probably something people look at here. 7. 854 and they did 7. 92. And thats above expectation. Yeah, and thats, you know, people are interested in revenue and Revenue Growth in this environment at this point. The operating income, 1. 7 billion. Display and graphic sales, they do a lot more of that now. Health care sales 1. 3 whats that . Thats where the business is. Forget about the postits. Nothing to do with anything anymore. Scotch tape and postits. Sponges. I bet you postits, you know how to do things on your electronics, right . I dont know how to do that but you dont use them anymore, do you . Not much. Sad its like the New York Times sort of dont. Well, its a business thats going away. I will tell you, i think the postit business has continued. It has. You can still buy them. I still use the blackberry. Yes. Okay. Back to the cardinals man, they were scoring so many runs against the dodgers. What happened . The st. Louis cardinals flew in one of baseballs great cathedrals, fenway park to begin the 900th edition of the classic. The red sox got an early upper hand, staked to a 50 lead after two innings and red sox pitcher jon lester with eight strikeouts and it was 81. John lackey will pitch tonight, game two for the red sox while the cardinals will send rookie sensation, who is this guy . Andrew michael why would you even try . Michael wacha. Hes going to be on the mound tonight. Going to be looking for that. Its on too late. Its on too late. But there are two games this weekend. We can show clips. Whats today . Thursday. Todays thursday. Yeah, two games we are going to be able to watch but then theres College Football and everything else. Coming up, more stock ideas from our guest host marty sass, also, then, High Expectations for the upcoming ski season. The ceo of vail resorts on how the companys handling the economy. Squawk box returns right after this. [ 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. Were in the middle of earnings season. Covering a lot of them. But what are some individual stock picking ideas from someone who has been doing them for how long . Oh we dont talk about that. Last time you did hesitate a little bit. I did say that when i started, you were legendary. As a broker. That was 1981. Yeah. I had been in the business quite a while. All right. So lets do the rationale behind. Youre long ebay. You would buy ebay . Why . So, you know, its very hard to find in a market thats up 24 this year s p. And a leading internet company, the leading ecommerce and mobile Payments Company that is actually up 2 . Its lagged its gotten so hot that sector in ebay thats correct. Although, it doesnt look horrible on that chart. It was up 56 or so last year. And its up nothing this year, 2 . So whats by the way, one of the themes that i look at is situations where investors perceptions lag reality. So the perception is that ebays growth is slowing. I spent an hour with our analysts yesterday going through every single key metrics at ebay, nothings slowing down. Its just very consistent. Was he nervous . A senior portfolio, the guy that owns the company . We were grilling. You were . Yeah. Thats what we do. Exactly. Thats my job. We went through every metric. It must have been 50 different metrics for the company and we looked at the growth sequentially yearoveryear and everything is just beautifully steady strong double digit growth. Every part of their business. Ebay. Ebay. You know, everybody talks about amazon which is up 42 in the last couple of years. And the difference is, theyre losing money, theyll report earnings today, that would be a loss. Probably a bigger loss than people expect. Nobody cares because theyre accelerating the top line. Right. Ebay is focused on very profitable business, they just acquired a company in the uk which very interesting little Startup Company that has thousands of couriers that can allow same day delivery. So theyre going to extend that. Theyve already extended that to 25 markets in the United States. Theyre competing headon, innovating constantly. Theyre trading at, if you forget about cash which is 8 a share. 16 times our estimated earnings for 2014. If you back out the cash, its 14 times earnings. Its less than the market. And we think itll grow 18 to 20 a year compounded annually for the next five years. Adt . Adt. Theres another laggard. Again, focusing on situations where perceptions lag reality. Adt is down roughly 14 this year, the stock. And thats because theres subscriber acquisition. This is a recurring revenue model business. Its security. I have it, yeah. They their subscriber acquisition costs have gone up, which suppresses earnings. And people are concerned about competition. Lets take the subscriber acquisition cost. The big driver there was a new product which theyre branding throughout the country. They have over 6 million customers, 4,900 salesmen and 400 distributors. 6 million customers. 6 million customers in the United States. All right. And theyre rolling out this service which is a home order mason ecosystem, kind of like apples where you have on your ipad you can control everything in your home. And its called pulse. And its 45 a month. Its an affordable price for a very sophisticated system to control everything in your home. Itll control energy, itll control health care. It has many dimensions to it. Thats why their acquisition costs are up for future earnings. Okay. Theyre going to buy back 23 of the company through share buy backs, through the end of 2015. They see the value, we do too, we think its a great situation. In the past, youve mentioned u. S. Air. Yes. And youve mentioned activists and Sinclair Broadcasting. Can you mention all three of those in like 30 seconds . No. But like 40 seconds apiece. Something like that. Good. U. S. Airway . The whole industry is going through youve been making money since you told us thank god. They keep beating consensus. All the major carriers are beating consensus. The industry has changed. Gone from a period of chronic losses to sustaining and improving earnings. Consolidation, which has strengthened this industry in a sustainable basis. I think well see a u. S. Air, which is trading 5. 8 times our estimate of earnings, getting a bigger expansion whether they merge or not with american, as you know, its being contested now. In the generic area. Generic, you mentioned there was a mckesson did something. Yeah, i read that mckesson, which is not a surprise, its been in the press. Biggest distributor, yeah. The United States the worlds biggest pharmaceutical distributor, roughly 125 billion a year in revenues. And mainly in the u. S. , they just acquired a major distributor and Retail Pharmacy in germany, based in germany, 5. 4 billion deal. Its going to be major accretion to mckessons earnings. You like mckesson too . I do like mckesson. Where it plays is whats hidden in this whole picture is that this plays into the whole consolidation of the generic industry. The interesting thing about generics for distributors is that the profitability of generics is roughly two times that of branded drugs, people are surprised by that. They think generics because theyre cheaper have lower profit margin, much higher Profit Margins and much higher dollar profit per generic. Thats expanding their bottom line and profits. And this will help accelerate that. Well do sinclair and some of the other ones you can talk about dow chemical some more. Sure. Okay. Good. Well have more from marty sass. Were going to give you a preview of the upcoming ski season in a moment with the ceo of vail resorts. And then in the next hour, also were going to talk about more about the possible delay of the individual insurance mandate for obama care. What its going to mean for companies and individuals looking to sign up. Squawk box returns with that and a lot more in a minute. Nice car. Sure is. Make a deal with me, kid, and you can have the car and everything that goes along with it. So, what do you say . Thanks. But i think i got this. [ male announcer ] the allnew cla. Set your soul free. Welcome back to squawk box with the start of the ski season almost underway. The leading industry transformation, our next guest usually joins us from the rockies, today on the set. Robert katz the chairman and ceo of vail. You want skis or snowboard . Im on skis, but we like them both. We want to go places there arent any. The shredders . No, we welcome the shredders. Out of control. My kids are like, you can hear them coming. Oh no, no, no they bring excitement, actually. The shaun white generation. Because youre worried about your life. No, no, no. Lets talk about ticket prices. What are they going to act like this winter compared to last winter . Theyll be up. No question about it. Theyve got them up there. Well, we have a strategy that says for the skiers who are really loyal and want to ski all season, we provide a season pass. Right. The season pass is an incredible deal. Its about 700. You can ski 26 mountains all season long no restrictions. Well get to the epic pass in one second. Like us, we show up for, you know over a week. For a week. Were on the fiveday, maybe even daily depending on the situations. How bad is it . Over 100 a day. 100 a day . Over 100. You should be buying a season pass. If youre coming out a week, its an easy deal, nobrainer. 700 a day, right . And its probably going to be over 120 a day at vail. Come out for your second trip, its free. What percentage of your customers are now buying the epic pass versus either daily tickets or some kind of week long deal . So its about 50 of our visits actually come from season passes, 40 of our lift ticket revenue. And we have almost 400,000 pass holders around the world. 80 countries. You started this epic pass thing and the idea is to expand the business globally. How many people are actually using the pass at multiple at multiple mountains. A pretty big percentage probably in the neighborhood of about 20 . One of the things with skiing, though, people like that option. Its kind of like golf. Theyre going to be able to go to multiple places. Whether they make that trip how do you make sure it doesnt get used by someone else. I have a picture. If im wearing my helmet and goggles. Then we ask you questions trying to find the deceptive ways to do it. That price point. Ive got my wife and two kids and i just did it. Were going to be there, i think, for five days and it comes out to exactly 700 and were only going once. It makes sense, sounds like a good deal. But im only going once. So im paying for a season pass for five days. Thats all im looking at. Great powder day, two weeks later, one month later, youre skiing for free. Have you seen the farmers almanac this year . I have. Why are you laughing . Its terrific. Weve had a great early season. I have an app and every day you look at it . It alerts me. Ive got two things to go over with him. One is margin, comes from the ticket or rental stuff . Margin comes from ticket first and foremost and then ski school. Talked about where your moneys going to. Last question, most important because this is a colorado issue. Yes. You see this story about pot smoking . I have seen it, yes. And what are you going to do . We dont allow that on the mountain. You dont . No, theres a big thing about it. Just on the list. No, no, no. No, its not. And we operate on federal land so its not permitted on federal land. And, two, cant be were, you know, the primary guest thats coming to our resort you dont want people going off the mountain. You wont outlaw the knuckle draggers theyre called too because theyre always like this this happens every time im on. Now you know why. Try to get him a discount on a ticket. No, i dont want coming up, an update from phil lebeau on ford. He spoke to the companys cfo. Hell bring the comments a of this. And we dont stop until you get enough of the Auto Industry. [ male announcer ] this store knows how to handle a saturday crowd. [ 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. Lets get back to phil lebeau. You know, joe, really two stories stand out from ford this morning. One, they beat the street by a wide margin, 45 cents versus the estimate of 38 cents. Thats a big tip of the hat. Not only whats happening in north america, but International Operations. First time since the Second Quarter of 2011 that ford posted a profit in large part because it cut its losses in europe. Thats the main story here and the other story is that ford is raising its guidance both in terms of profits as well as Profit Margins for the entire year. So they made 8 billion pretax profit last year, theyre going to make at least that this year. In fact, theyve already made 7. 2 billion. Were going to be talking with bob shank, cfo of ford. Well talk with him coming up, squawk on the street a little after 11 00, guys this will be one of the stocks to watch today for sure. Back to you. Thanks, phil, coming up, well talk about obama care being delayed. More reaction by the white house. And then auto nations going to be recording. Well go under the hood of the nations largest car retailer. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. My mantra . Trust your instincts 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. Where are you putting your money to work . I get my money advice from pbs. Where should i put my money . In tech stocks or the Housing Market . Tech stocks. Well ask martin sass if its time to take money on or off the table. The rollout of obama care marred by glitches. Now, can you say the alphabet for me . Well, a very, very heavy we had a very well ask the former director of the Health Exchanges how long the problems could delay the mandate. And breaking economic data. Jobless claims and International Trade numbers are hitting the tape at 8 30 a. M. Eastern. The third hour of squawk box starts right now. Welcome back to squawk box here on cnbc. First in business worldwide. Im joe kernan along with becky quick and andrew ross sorkin. Back together. The round trip is like 25,000 miles, isnt it . Yeah. A lot of miles on united. Im hoping that frequent flyer stuff. Im right there with you. Our guest host, martin sass, chairman and ceo of md sass. First, though, andrew who as i say is back from asia. A little bit of earnings news to talk about. The dow component 3m reporting 1. 78 per share, 3 cents above expectations, revenue of 7. 92 billion, slightly higher than expected. A lot of postit notes. We dont know about that. Ford reporting a Third Quarter beat earnings per share 45 cents versus expectations of 38 cents. Thats a stock you like, sir. Revenue was in line with expectations. Ford also raised its yearly profit forecast and says the situation in europe is actually improving though it still posted losses in that region. Also, we talked to gary earlier on this one. Southwest Airlines Reported Third Quarter earnings of 34 Cents Per Share, that was in line with estimates, revenue was also in line with expectations. Shares rising in part on the companys strong holiday forecast. He did say things would be Getting Better than some people anticipated. And finally, xerox, 26 Cents Per Share for the first quarter. Revenue was shy of consensus as is Current Quarter forecast. Shares there, though, falling in early trading almost 4 . Lets get a quick check on the markets, take a look at u. S. Equity futures. Dow looks like it would open about 60 points higher, s p 500 up about six points and nasdaq about 11 1 2 points. New ultrahigh for 3m. The dows at an alltime high. Most of these dow stocks youve got to check. Most of them yesterday, boeing, that was yeah. Right and 3m today, an all time high. Thats what you would think. In fact, as joe was mentioning, the s p 500 snapped a fourday streak of record highs on wednesday. Is it time to play it safe and take money off the table . Joining us right now is chief Investment Officer at bmo private bank. And our guest host today is martin sass who is the ceo and Portfolio Manager of md sass. You actually think the market is fairly valued at this point. Why is that . Yeah, i think its fairly valued based on the huge liquidity we have, 1 trillion injection from the fed every year. And positive momentum. You know, if you were to just strip that away for a minute and look at valuation, were only growing earnings and revenues at around 2 right now. And i do think that the market could drop, say, 10 or so once we get back to kind of the basic fundamentals. But for now, you know, riding this liquidity and riding the momentum is not a bad place to be. Thats not necessarily how you see things, is it . Well, i think were in a secular bull market thats going to last for several more years but i do think its going to get interrupted by corrections. And one of the triggers of looking at, you know, what could go wrong because weve talked about what can go right is in march, theres two events that are likely to occur. One is tapering, the initial start of tapering. If i had to put a bet on it, id say march is the meeting theyll start the taper. And i think that can get people shaken in anticipation of that. The debt ceiling debate again, its not going to be the scary scenario that we saw last time. But i think were going to see bickering down in washington again. I would expect therell be a correction. Weve had a straightup market, unbelievable, up 24. 4 . And, you know, a lot of stocks have gone up a lot more than that. So 10 correction would not shock me in this bull market. But i wouldnt let i wouldnt have investors try to, you know, trade that because one doesnt know when thats going to happen or when you get back. So i think the big picture is stay invested and good, sound undervalued companies. When you see a correction, you would say buy into that . Yeah, exactly. And you would say the same thing, i think i heard you . Yeah, the interesting thing is, it seems now that untractability in washington is like a car wreck on the side of the road. Slow down, look at it and keep going. I think investors are starting to realize this is more or less business as usual and not getting fussed by it. I do think, you know, the other thing in washington is the only thing left really are entitlements. There isnt much discretionary budget for these guys to work with. I do think if we do make substantial progress on the entitlements and try to get, you know, that down plus perhaps raise a little revenue move toward the middle, i do think those are the ingredients for a multiyear market. We do need to make substantial changes in washington. And who knows if we have the wherewithal to do that right now. Hey, how do you think the economy really stands right now. Were getting all of these numbers after the delay from the Government Shutdown. But have you seen a dropoff in the numbers . And do you expect that to continue . Well, we did see a dropoff in numbers in early october because the American Public was a lot more spooked about the shutdown and the debt ceiling than the stock market was. We did see in early october that the Weekly Chain Store Sales came off the Mortgage Applications were weak. We also saw confidence numbers come down. What we have seen in the last couple of days, though, in looking at daily confidence numbers, for example, like the index. This shutdown is something with a very temporary impact. The federal workers who were furloughed were going to get paid anyhow. No real impact on their consumption. And i think of course you know we had this cutback in government ordering during the period of the shutdown, but then the contractings going to snap right back. The shutdown was the first two weeks of the quarter. We have the rest of the quarter to make up for whatever the shutdown took out of it. I think for the quarter as a whole, the shutdowns not going to be a big event. All right. Thank you both. Thank you. Lets get more from marty sass, our guest host today. When did you start buying Sinclair Broadcasting . We bought it in july, joe, when the stock declined 25 . What happened in july . What happened in july was there were rumors that a memo was being circulated by the federal communication commission, which it was indeed that would limit would change the discount that they apply in accounting the amount of stations,ing the percentage penetration tv stations could have. So theres a 50 discount for uhf versus vhf in accounting that 39 cap. This is media, andrew, pay attention. Locked and loaded here. All right. So that spooked people because sinclair if you do that count and they if that went through, sinclair has capped out the amount of stations they have. Theyre right up at 38 penetration on that change in formula if that happened. First of all, i dont know thats going to go through. And even if it went through, they may make other changes that will liberalize it. And there are other ways to increase penetration without the like what . Like having deals to manage stations. And the economic benefit which they already do have. So even forgetting that, just looking at this company which generates. Its got a double digit Free Cash Flow yield. Its earnings are exploding. Earnings this year will be double last year. There are a number of stations that have gone up to 162 from 58 2 1 2 years ago. Theyre going to roll out a new channel 8, which is a 24hour local National News channel. Its not going to cost them anything. Theyre going to take all their stations and put it altogether. That going cable or local . Thats going to be licensed throughout, cable to satellite to every provider and tcharge retransmission fees. Theyre raising retransmission fees at 30 a year compounded. Right. Theres another kicker here for the whole industry. Sinclairs the biggest beneficiary. And that is their ceo is leading a move to approve a new technology that will take tv spectrum that is unused and allow it to be television to be broadcast directly to your mobile phone instead of downloading it, your station will go right into the mobile phones. That alone we estimate can be worth as much as the whole price of the stock and its not priced in at all. Its a hidden asset. Either on or off air. He probably has some thoughts on just media in general. The way things are moving and the way its going to go even the barry diller project. All that stuff. Media the landscape is daunting. One thing i know is i like spending time watching great content on a really clear tv. Thats as far as leisure time, thats never going to go away. I just dont know who wins and loses . Do you know . The problem is you can now watch your big screen tv and see all that stuff. I watched gus slit someones throat with a box cutter. This is the First Episode of the Fourth Season of breaking bad. Im not spoiling the last season. You spoiled the last season. Anyway. Thats neither here walking dead sunday night, you know what else im watching . Blacklist on nbc. And modern family. I like watching i like to watch. Just like chauncey. You know i like to watch. You do. Problems with the rollout of obama care now expected to force a delay possibly. Were going to talk to the former head of the Health Insurance exchanges. And later, a read on the auto sector. Mike jackson will join us. You know this company too, dont you . Hes going to join us to talk about the companys Third Quarter results. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. A Research Tool on thinkorswim. I have obligations. 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Whered you get that sweater vest . Your ford dealer. Good morning. Welcome back to squawk box. Technical glitches in the rollout of obama care could force a shortterm delay of the individual mandate. Joining us now with more is joe ariel, the former director of the health office. The Office Rather of Health Insurance exchanges at hhs. Hes now a managing director at phelps and phillips. Good morning. Good morning, andrew. How long will this fix . I dont think anyone knows the answer to that. It seems every time theres a problem with this law, it gets magnified into a major crises. This one could turn into a major crises, but at this point, about a month to fix it. And if its fixed in that month, no one will remember. Where do you get the idea this is going to take a month . Some say this is a very complicated problem. So many different Insurance Companies, different states, this is not just something where you can go in and tweak a couple of lines of code. I dont know how long this will take. Thats for the experts to figure out. But what we do know is that the business fundamentals here are sound. The president used the imagery of a health store and thats appropriate here. These exchanges really are Health Stores and there are a lot of people shopping, 20 million on the federal side and millions more on the state side. There is a problem with the checkout lines now. Nobody really wants to go to the checkout lines today. They want to wait and shop and browse. And most people dont want to pay money for a product that wont take effect until january in october. They would rather pay late november, early december. Thatst the window to fix this problem. The experts are working on it. Id have my hair on fire if i was still there and one of the experts working with those experts. For the rest of us, take a deep breath and relax and know theres a good product out th e there, people can go to the website today, check out the product, shop and browse, look at what they may want to buy and hopefully its fixed within a month and theres no harm to this law. Are you a believer theres been a suggestion that young people especially who go to the website, have a hard time checking out as you might describe it, decide you know what, im not going back . Well, theres certainly an issue in that the people who most need the coverage will wait however long they have to wait to get through the lines and get the product. And people who dont need it as much today who are very important to have inside this law will maybe be a bit more impatient. Again, as long as that problem is fixed at the time when people want to go to the checkout line its fine. I dont think those young people are looking to buy today. They will be looking to buy in late november and into december and the problem needs to be fixed at that point. But theres another aspect to this which is that way to get to the checkout line easiest is an online functionality. There are multiple ways to get through the checkout line here. You can do it on paper still, you can call somebody on the phone and work through it in a phone call, you can go to an Insurance Company still, web brokers, all kinds of different avenues to access this product. And really, if you think back in time, traditionally thats how people get insurance. They go to their insurer, a web broker, get on the phone, they do it on paper. This online functionality very important, its a key to the success of this law longterm, but it is by no means the only way in which people can get through the checkout line. What do you think the governments going to have to do to explain to the public, a, what they have to do and, b, what the new deadlines ultimately mean. Are you going to be youre going to see a lot of advertisements, online advertisements. What do you think theyre going to have to do given you pick up the paper every day. I think i do a lot of reading. I dont really even understand where we are anymore. Well, its a very good point, this is a very consumer oriented law. Consumers are going to be in the driver seat in terms of these Health Stores and Health Exchanges. A lot more advertising is going to be directed at the consumer. In the past its mostly been directed as employers, thats the main way people buy insurance. Therell be a lot of that although as your earlier guests pointed out, even for employers, they like this Exchange Idea so much theyre looking at doing private exchanges. A previous guest described that as kind of contrary to this law. In fact, its exactly the same type of operation as this law. Its imitating the public exchanges on the private side so that ten years from now many millions of people more than the ones on the public exchanges will through private exchanges having that same kind of Shopping Experience and the advertisement will go directly for the consumer and will just have a Better Health care system for it. If you were still at hhs, would you have gone ahead with all of this . Absolutely. There are people who have waited many, many years to get this kind of coverage to tell them that, sorry, we have to delay the law, particularly in the 16 states that are running their own exchanges that have succeeded. If every state is doing what kentucky is doing today, we would be well on the way to the 7 million enrollees already. Theyve enrolled more than they need to move towards that number. So the states succeeding, we certainly dont want to stop them from going ahead right on time. And once thats true in the federal government that has an obligation to make sure the law goes forward for everybody else, as well. So i think it goes forward on time. Its just a question of whether well have full online functionality. See whether people actually sign up. Thanks so much for joining us this morning. Thank you. Coming up, talking about breaking economic data, weekly jobless claims and International Trade numbers, they hit the table at 8 30 a. M. Steve liesman has new exclusive cnbc data. Steve . Yeah, very excited to bring you the allamerica corporate awards. The most loved company starts with an a, a tech and retail company. Its not maybe who you think when we come back. Here we are, me and you on the road and we know that it goes on and on [ female announcer ] youre the boss of your life. In charge of making memories and keeping promises. Ask your financial professional how lincoln financial can help you take charge of your future. Oh, oh, all the way oh, oh Steve Liesman is crunching survey data this morning searching for americas most loved company. He joins us now with the allamerica company awards. Good morning to you, steve. Yeah, a new part of the survey, andrew. We asked 800 americans to give us a favorability rating on 20 companies we wanted answers for. And here were their answers. First, lets start off with the most loved and were going to see the runnerup. Ford coming in with a 67 on a scale of 0 to 100. Who is the most loved . Its amazon, believe it or not. Gets the highest favorability rating of the 20 companies. Lets move on now to the least loved and not a big surprise here, we asked about four banks, jpmorgan was the runnerup in the least loved category. And, of course, you know, the least loved actually was Goldman Sachs coming in as the least loved company with a 37. Remember, scale of 0 to 100. Amazon gets a 67, goldman gets a 37. Heres an interesting one. We looked at the most average, gm ties with walmart. I think if youre gm or walmart, thats kind of like where you want to be. You want to be right in the middle, both of them coming in with a 57. The average of the 20 companies. And here we go, most mars and venus award. The biggest difference between men and women. Runnerup is microsoft which has a sevenpoint advantage among women. And the winner is facebook which has a ninepoint advantage. I guess that bottom is not moving right now. That bottom piece. Most partisan runnerup General Motors and for reasons i dont know, verizon has a what was the number here . It has a 12point advantage among the gop over democrats. I dont know why that is. Maybe somebody can explain that. How about between rich and poor . 75,000 in income up and below. The runnerup is amazon and the winner, you probably guessed this one, apple. Apple has the biggest difference in favorability rating between rich and or. Finally, one other category i want to add. We call it the mason dixen award. Cocacola enjoys a 12point favorability rating in the south compared to the north. Guys, were going to have to put all this online, the 20 companies and later on today at fast money, well give you head to head. What do you think, andrew, nfl versus mlb . Oh, nfl by right. Large margin. Not as large as you think. One question, one region in the country where its even, where do you think that is . Thats a good boston. Well, right here in the northeast. Right here in the northeast. Its even. Of the four regions in the country where the nfl and Major League Baseball are even. You said amazons the most loved . Thats the next step, andy. The most loved. And all the guys at the top of our list, their stocks are all doik well. Now, its not like if youre not loved, youre not doing well, but if you are loved, you are doing well. Well be watching that throughout the day. When we come back, we do have breaking economic news. Were just a few minutes away from the weekly jobless claims for august. That was a report delayed by the Government Shutdown. Right now as we head to a break, take a look at the u. S. Equity futures. They have been higher all morning long. Those dow futures up by about 60 points above fair value. Squawk box will be right back. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Welcome back to squawk box, everybody. We are just seconds away from the weekly jobless claims and the International Trade numbers for august that were delayed by the Government Shutdown. Weve been watching and waiting for this because the jobless claims are numbers that obviously the fed will be watching very closely. Weve already gotten the last jobs report before the next fed meeting before the end of this month. Right now the u. S. Equity futures are indicated higher, after a little bit of a selloff last night down by about 50 points. The dow futures indicated up by 68 points above fair value. Steve liesman is here, but jim, take it away. Thanks, becky. The jobless claims come out as 350, as expected 2340. Last week was revised higher to 362. Continuing claims, 287. Last week was revised up to 2882. The one thing thats somewhat decent is the trade balance is a little less negative. But i dont think people are concentrating too much on that today. I think theyre more concentrated on the claims number. And remember, the market seems to want numbers that arent bad, arent good, but somewhere in the middle. I think the market would love numbers that continue to give us a lack of clearity. The stock market did nothing on that, still up 525, yields are 2. 485 which ticked down a hair. Isnt that a bit of a setback if the market is looking, still, for that goldie locks . I thought wed gotten to the point where we were okay with that and wanted good news again. Yeah, weve blown by that. We did get to that point a couple of months ago. Now most economists talking about march for the first talk of taper. As soon as you get three or four months out, it doesnt at this point in time, tapers just off the table until it isnt in my mind. That also means when taper is back on the table, then the market has to readjust again. There will be some shock to it. My thinking, though, by the way, there might not be as much shock with the janet yellen fed chair because she has such a reputation, i think she might get a little more leeway than another chairman might. Youre not going to believe it until you actually see it . Im not going to believe it until i see it. All right. Lets bring Steve Liesman. Youre looking through the jobless claims. Yeah, im looking for the word california. I dont see it. Remember, weve had this problem with california tech, a Technology Problem with their system. Im not seeing it. I see that california i see this is still elevated by california backlog. You see that, i read the story, i didnt see still elevated by california backlog. I dont know if that means the ones we hadnt seen to this point are coming online or maybe talking about the revisions. Those were revised a little higher. Heres the problem, we had a rampup to 373, its come down three straight weeks, 373, 362, 350. Looks like we had an initial surge perhaps from the Government Shutdown or Government Shutdown related. But what were looking for and maybe not seeing is the extent to which there has been a private Sector Impact here. Let me tell you im not sure i see it. A Labor Department analyst said claims in the backlog in california are still working their way through the system. Technical problems as california converted to the new Computer System have distorted the claims since september making it difficult to get a clear read of labor market conditions. Californias a big state. This has been running for well over a month. Maybe need to get someone needs to go and take over the system and get it to work. I know weve got another problem with another Computer System in the country. Maybe its going around. But i dont know, it seems its been a very long time that californias been distorting the data here. Remember, though, the lack of clarity is part of what the market probably likes. And over the last month, this number has been invalidated by a glitch every week. A lot of months have to pass before the market really begins to trust this number again. The one thing thats important to it, it certainly isnt showing block buster jobs growth. The fed is back. In 11 years, jim, ive never heard a person say that we like lack of clarity. Its the first time. Ive never said it before. Theres a trade on because the fed cant see, then they have to keep thats the sad thing about qe. Sad thing about qe, it is a new word. But were starved for any data. Did you see the ten year . Again, were below 2. 48 again. This was a weak, i think this was a weak number, right . And suddenly, i dont know if the concerns you still have the numbers, they raised it to 3. 52. Well take 10,000 surprise weakness and well actually trade on it. We need our were spoiled too. The trade deficit coming in is something that will help gdp a bit which the fed will like to see. If its lower than what was baked in. Wow, look at that, wti below. I aint going over there. Thats going to be good for profits, low oil prices. Bad for traveling over there. Joe, theres so many beautiful places in america. National parks. Theyre open. Go there. Theyre open in the wintertime, yosemite. Im going to vail, paying full price. You didnt get a deal . Nothing. You have people on tv to get your daughter into college but you dont get anything. No. I havent gotten anything. Do you get a donut at least . Ive gotten a pen. I got a pen. Steve, a question, the threshold ive been waiting for is this sixmonth payroll at 200,000 or more payroll gain. Its an evans test. Yeah. Is that still the right threshold to be looking at the fed tapering . I think theyre going to be, whats the right word a general feeling. Its not like you can say here are the goal posts and when we hit these, were done. I think that concept is would be right if they did 200,000. But if you had like the Participation Rate going up. Right. And you were able to find jobs and the Unemployment Rate were coming down but maybe not so fast. And there was a sense the word evans keeps using and other guys is momentum in the economy. And you kind of know it when you see it and feel it. And maybe the work youre looking for is wholistic. Wholistic and general sense of the atmosphere of the economy. And thats a way that Monetary Policy is way more art than science. What is it . What is strong in this case, its going to be a whole bunch of different factors, claims will be going down. Youll know that. Youve been there before. We have been there before. We can get there again hopefully. But a couple 250s. Going to spook jim eurio. To put a finer point on what youre saying, we may know what happened. We saw good earnings from ford. There is the lack of clarity, but one thing we know for sure, were not in that right now. So thats all we have to go with. Now, things could obviously change and the fed, they dont know when things are going to change either. Theyre hoping just like we are. And just the timing of the stuff, it may well be until december you get some clarity on the momentum in the economy. I hope so. Weve got another big number coming for us on november 8th. Second week, second friday in november. Yeah. Theres an election in new jersey, too, i think. Is that the same day . That week . Its on a tuesday, though. It would be the tuesday before. Okay, guys, jim, steve, thank you very much. The ads now in new jersey are that the guy that is running im running against. Basically saying hes such an incredible governor hes able to be the favorite to run for president. This isnt a guy you want for governor. Our point is hes not going to be there to finish. I know thats what the point is but nobody thinks youre running for president , you know, anyway. It was a weird back, you know, the backhanded compliment. Coming up, were going to do Quarterly Results from the nations largest car dealer. 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It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Auto nation rolling out Third Quarter results, the countrys largest auto dealer reporting profits of 75 cents a share. 14 up from a year ago, but 2 cents shy of expectations but revenues beat forecasts coming in at 4. 5 million. Joining us mike jackson. Mike, would you say that the bottom line was below what you were forecasting . How do you beat on revenues and not hit the analyst number . Can you explain it . Absolutely. Its our fourth consecutive alltime record earnings per share. And since we dont give guidance from time to time, well be outperformed guidance and sometimes well be lower than what the analysts have said. So youre talking to a guy thats basically won the super bowl four times in a row and you want to talk about the point spread. The fact of the matter is its four consecutive alltime records in a row, its a great performance on the part of the company. How do analysts get it wrong . How many follow the company . Do you know now . Of course i do. The info from you, dont they . Dont they get body language and direction from the company . Well, im not an analyst. So its not my expertise to talk about what the. I think what the analysts do, joe. The fact of the matter is. Its the fourth all time record in a row. And you have to think about companies that formally give guidance and those who do not. We do not give guidance. Good. All right. And stock goes higher and revenue has become more important in this market than a lot of times. We know how items can factor into earnings per share on any given basis. Martin sass is here. He told me about auto nation. This is what he said, mike. The largest new car dealer in the u. S. , youre going to benefit from the wealth effect of higher asset values and also highincome consumers after so many cars are so old. Thats a tough one, isnt it . Im going to try to twist your arm to get you agree with that. I really like marty, hes very insightful and to the point. Astute. Absolutely. As far as asset valuations, well, we own 80 of our assets in the u. S. Im not saying were a real estate play, but we think were well positioned. As far as whats happened in luxury as you know we have a big position in that with a third of our profits coming from premium luxury, primarily the germans. We think thats going to grow faster than the value market. But the underlying fact is theres huge pent up demand, genuine replacement with the average age of the cars, now 11. 2 years old which is going to drive this business going forward. Now, there was some difficulties going into october with the Government Shutdown. Definitely the pause button was hit out there in america. But we fully expect to get that behind us and our forecast of Industry Sales of mid 15s will probably come in at the high end of the range by the time the year is over. Whats that word oreilly uses opine. You like to opine on washington. They messed you up this time, they get another chance in three months, what do you make of whats happening. What do you wish would happen . Well, i think its a new low of dysfunction. One is the issues, i have issues with obama care, we can talk about that. But what the Republican Tea Party did, it would be like if youre playing a game of poker and you know you have a losing hand, you know it and you push all the chips on the table, well, thats just stupid or crazy. Neither of which are very good. And i have to tell you, iffer the business community, it was very unsettling to see the tea party overplay the hand so poorly, you know. Its almost incompetent for politicians to negotiate that way. So it was not the finest moment for the republican party. And i think a business is genuinely reflecting on whether there are enablers of this dysfunction and whether we have to be more supportive of the entire center of the spectrum. Whether its democratic or republican. I hear that conversation going on everywhere. And i have to tell you, thats where i am at. Does auto nation got to prepare for obama care . How would it how is it affecting auto nation . Well, its a lot of preparation work. First, as far as why it was pushed out a year for employers, i can tell you unequivocally the systems are simply not ready. That it would function and you would have whats going on now for individuals in corporate america, it would be a massive revolt about the dysfunction of the systems to meet the law. And they probably shouldve postponed the entire thing for a year because theyre simply not ready. The complexity and the requirements to meet the standards are absolutely mind boggling. We have difficulty getting our arms around it. Were doing Everything Possible to prepare for it. If the systems are there, its probably manageable. Without the systems, its going to be just a huge mess. For corporate america. Mike, my perception is that strong sales for you and for the Auto Companies is being driven really by the higher income consumer. Lets say 100,000 plus who are much more likely to buy a new car than the lower income. Is that what is the big driver . And if we broke it in between income classes, is that where youre seeing the strength . Well, we have to look at the entire spectrum of the sales, which when you include used cars, our total sales in the quarter for new and used are up 14 . So people who cant quite make it to a new car are in the preowned market and the preowned market is extremely strong. And what is supporting it is we have the full spectrum of financing available. From a 10,000 used car that has a subprime Credit Customer right through a bmw with a customer with a credit score 750. To leasing the full spectrum of credit is available because the Financial Institutions have seen that the American People pay for the car first. All right. You know i love that, preowned. Youre the kind of guy that couldve come up with that, you know. Did you do that, jackson . Yeah. Huh . Thats your thing, isnt it . Preowned. Yeah, im a car salesman from new jersey. What do you expect . Its good to see you. Yeah, youre going to be up today. So right about, i guess yeah. Theyre selling the analyst, not the stock. Well see you later. Thanks. When we come back, it is cramer time. Two mad minutes. Squawk will be right back. 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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He said if you look at the Auto Industry and in housing, theyre going to have Pricing Power and theyll have higher rates and he thinks the rates will stick because of the strength in autos. I think thats exactly whats happening. Theres a couple of segments that are good. Take a look at a couple of the big cap companies. Ford was good. Im looking at 3m. You have unbelievable growth particularly in emerging markets. There are great things happening in big cap companies, provided you know where to look, which is companies that are not dependent upon america. Did you see the southwest numbers today . I just know every airline has been terrific. Would you still love the airlines . Look, the airlines, you get another whole wind at your back because of whats happening in oil. You just mentioned oil still going down. But southwest air is good. I think usair getting respect. This is a group that continues to act well. You know why that is. They doesnt want to call it oligopoly pricing but theres just not a lot of competition anymore in the Airline Business and that is fantastic for the seat revenue per seat. You long the airlines . Were long delta and usair. I think one of the things going on is going to be a revaluation of the multiples on the stocks. When you look at delta, who is now going to be buying back stock, is in the s p, paying dividends, all the good things that big cap Strong Companies do, when you compare them to, say, fedex, fedex delivers packages. Usair delivers people. You look at the spread in multiples, fedex is 14 times earnings, usair is five times earnings. Almost every metric, delta is at or beats fedex. Wow. Today. That longterm negative perception exactly. I hated airlines my whole career until now. This last year. We will see. Its been disastrous till now. I dont want that extra seat. If i ever fly coach. Kidding. Kidding. Kidding. If i ever fly commercial. If it were only true. What are all these people doing on a plane . Thats what the kids say, who are these people, dad . Well get in the last word on the market when squawk box returns. In todays markets, a lot can happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Lets gets back to our guest host martin sass for the last word. Dow chemical . Its down today. Im not invested there. And you wouldnt . No, i think theres more interesting things. Microsoft. Theyre suffering from pc sales down six consecutive quarters. How about amazon . No earnings. Buy ebay instead. Buy ebay instead of amazon. How about ford . Doing well but not interesting enough risk reward for me. Its up almost back to its high post bailout. It was a little over 18. How about 3m . Anything like that . Im not involved. None of the big caps realreall really what about netflix . No value. Apple . Cheap stock. Not sure that they have the innovation anymore, unlike say an ebay that does. Whats your biggest position . Activist is number one. Ebay is number two. Sinclair is number three. Everything ive been talking about here. Major positions. Usair. We got to go. Martin, thank you. We got what we could out of you. Were out of time. That does it for us. Now its time for squawk on the street. Good thursday morning, welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber at the new york stock exchange. Some big time bellwethers are out. We have a sevenmonth high on chinas pmi. Breaking news on carl icahn and appl