Transcripts For CNBC Squawk Box 20141021

Well get more on all of it. An rue, apple reported report earnings. Strong iphone numbers,. Apple shipping nearly 40 million iphones and with a 16 year over year and better than analysts estimated the rt yeaher including only about a week or so or iphone 6 sales, but cook telling me demand so far for the new iphones has been, in his words, off the charts. Here is what cook told analysts on the call. Today, weve launched in 32 countries, including china, and our new iphones will be shipping in 69 countries and territories by the end of this month, making this our fastest and most successful iphone launch ever. Another high lie of the quarter, mac ships, the best in the history of mac. So what didnt work . Ipad clicking in at 12 million. That was a 13 drop. Consumers dont buy ipads as frequently as iphones and its increasing competition with smartphones from bigger screens. Looking ahead, coke is bullish on his companys prospect. I think this will be the best Holiday Season we have ever had, he tells me. Guys, back to you. Thank you, josh. It is amazing how many phones sold. And the revenue number is like for a quarter and its not christmas. Thats 40 billion dollars, wasnt it . Its the launch of the new phone, which is impressive. Im its a gadget. Its amazing. And everybody already had an iphone. I still bought an iphone. I like the bigger screen. I have to tell you. I know youre not thrilled with the bigger screen. The big, big it doesnt fit in the pocket. Youve got a problem. You cant put it in your back pocket because youll bend it. You cant put it in your front pocket because youre pierce your nads, basically. Thats not the issue. The issue is you will its too big to have in your pants and sit down. How about that . Once again, thats been the story of my life. Chipotle, your entire life has been too big, it couldnt my god. This squadward moment has been brought to you by Andrew Ross Sorkin. Thank you. You were not talking about anything untward at all right now. Apple, remember they introduced everything. And it was exciting and you did one more thing and it was at 99. And it didnt really budge. So its hard to move that stock. A lot of finishes, a lot of love for the stock already. The results that came in were so staggering, just simply the law numbers thems themselves. How do you sell 39. 6 million phones . They didnt even need that. The plans arent up yet. We should close down the patent office. I dont see anything after the iphone that would be as popular. What is the next wave that people will use . That is the thing. Monitor your heartbeat on my watch. But thats not new. Theres nothing and everybody already is Walking Around on the street like looking at the internet or how about talking to it . Just read your mind. That would be new. Nothing would surprise me at this point. Theres swiggels every where are going into the phones to do all this stuff. Something i do understand much better is mexican food. Chipotle, Mexican Grill beat earnings and revenue in the quarter. But as shares fell sharply after hours after the Company Forecast a drop in Comparable Restaurant sales from current double digits. The company says higher beef, higher dairy prices. Diners appeared to shrug off most of these price increases, just like the markets yesterday shrugged off the ibm. Even with, i think when the closing bell range, i think it was pressure. So if its up 20, how much was ibm you dont want to say. You dont want to say single best at the end of the day was tend of the market. At the closing bell. Maybe people should at a say at the closing bell. That is. Wait a minute. Ibm was down how much . 10 or 11 at the end of the day . At the end of trade, yeah. So you can add that in. So the dow was actually up like 80 points, probably. You look at the s p, a nis day for the s p yesterday and down again today. And the nasdaq was up a huge amount, so if ibm in any way if ibm in any way represented technology, why was the nasdaq up 40 points . Because here is what happened. Remedi says shes not sure, but they thinks they have to say its ibm specific. Thats what she told david faber yesterday. I think everybody already knew, didnt they . Why didnt we play drucken millers comments yesterday . Everybody else played it. Squawk on the street played it. It was not something that we really no, i think anything over well, it hasnt been six months. At the end of the day. At the end of the day, a number of cars recalled from potentially problemic air bags has been up to 5 million. That defect has been linked to extended exposure to high humidity. Toyota is warning ownerings that the recall ed vehicles not to carry passengers until theyre replaced. I think this is a weird thats a weird lead story. The headline itself is weird from the New York Times i saw. It looked like a stabbing, but the air bag was the killer. Isnt that weird . It seems like a weird headline. They usually have bigger although i the picture for you. It does. I would have been more serious about i dont know. How do you find out if its in your car . Bad air bags. They made a big deal on the nightly news last night about it. A terrible situation, russian officials are investigating the air crash that killed the ceo of total. Stephane pa drazis has the latest from paris this morning. Good morning. Well, the french raters have decided to open an official inquiry and will send an Investigation Team to russia to assist the local team on the ground based on the early indication the plane crashed at takeoff with a snow removal truck which was operating on the r runway at the time. According to russian investigators, the driver of the truck was also drunk at the time of the accident. In paris, total will organize a Board Meeting as soon as possible to appoint a new ceo. The new ceo will likely come from within total. Will the new ceo use the same strategy as de margerie . He also insisted on the need for Oil Companies to operate in all countries, even when the threat of sanctions from conflict makes it difficult, for instance. He was a strong dvenlder of russia on the back of the ukrainian crisis and were planning to double the production from russia by 2020 despite the sanctions. So the whole question now is about the name of the ceo and the future strategy of the company. Stephane, before you go, clarify one thing for us. You said there was a drunk driver involved. Was this the pilot of the plane or was this this was a truck on the tarmac . No, the absolutely. According to reports we have this morning from russia, the driver of the truck on the runway was drunk. It hasnt been confirmed yet, of course. Okay. Stephane, thank you for that. Okay. I understand now. All right. We had 120 points down, but most of that, probably 100 of it was due to ibm. Purely, do the math. At the end, 87, so it was up over a hundred. And then it rebounded to close higher. Going in now for some perspective, steve sacks and richard steinberg, president and chief Investment Officer of global asset management. A lot of people, ill start with you, rich, said capitulation last week was to noteworthy, that that basically put in a bottom on equity prices. Was that it for this most recent attempt in a 10 correction . We have to settle for 7. 5 , i guess . Yes. I think when the pendulum swings as far as it did, joe, that was reflected in that sub2 number. Now i think the market has some work to do and well probably settle it around the 1920 to 1950 level. Earnings are coming in good. We have to see whether or not the u. S. Is going to decouple from europe. So we did put in about you dont think we need to get back down and test the lows and then maybe go lower to make a real bottom . You think we already made a bottom in this correction . I think we made a bottom, but i would anticipate one more time just to test investors involved. Then again, we could focus on earnings. Earnings are coming up from next year since my last appearance. The street was at about 130. And, tale, earnings are almost close to 132 right now. So the real key will be whether or not the u. S. Dollar strength starts to affect earnings and well start to hear that this week. Steve, what do you think happened last week . Was it the fear of ebola . What do you think caused all the volatility . Are we beyond that now . I think there are a couple of things, joe. Theres been a big chase on for a lot of growth in the marketplace. Youve got ebola fears, all the talk going on in september about a big correction. Didnt happen, right . So ultimately, i do think that were probably closer to the end of this than the beginning. Volatility last week, headline headwinds, if you will. I think all this is about revenue growths more than anything. The other big chase that was going on was the u. S. Dollar chase. I think that unwound last week. We have some risk reduction. The so europe is not trying to or slowing growth elsewhere is not going to cause the u. S. To go into another slow period . I dont think so. I think at the end of the day, right, chinas gdp number was, what, 7. 3 . Europe is a different story. Europe is in a tougher position. Its a fairley precarious position theyre in relative to growth, are they going to slip back into recession. At the end of the day, the u. S. Is economy is stronger to lead the rest of the world and resilient enough that its not going to matter ultimately what europe does. Do you agree with that, too, rich . It seems like were having trouble making new highs. I guess its hard to ever see why the market goes to new highs. Do you think we can do that before the end of the year . Yeah, i think were going to settle in, joe, by yearend at this 1920 to 1950 level. Next year, i think we could be at 2100. Investors, when they get these kinds of huge swings like this, you need some time of healing. And for people to regain confidence, that earnings stocks with a 2 yield in the s p brings more for the 2. 2 tenyear. I think its going to be slips and starts and i think slowly confidence will regain. Europe is only going to grow hotelly at 1 next year. Were carrying 2. 5 to 3 year. So the only way that earnings continue to work is if europe doesnt go into a deeper recession. And it would be reflective of u. S. Companies. We repatriated a lot of our International Holdings to be back in the u. S. Because if theres a rebound globally, we think clients will make more money in the u. S. Than they will overseas, especially if the dollar starts to strengthen further. And the fed leaves, steve, and Oil Prices Stay where they are so maybe that offsets each other . I think it does. I think thats the offset to the oil in the economy. I think at the end of the day, the unwide winding of the fed balance sheet, its a big uncertainty. But at the end of the day, we have enough clarity on whats going to happen. I think its a timing question. Okay, great. Rich, thank you. You dont need to be back here. You dont need to be in new york. You can be you can do all this in ft. Lauderdale . I love seeing you and i am in new york. Oh, youre in new york now . No, i wish i were. I would be visiting you. I will loaf you on one point. I wish i had taken andrews advice to start to learn how to meditate, because it would have helped over the last couple of weeks. There you go. Thank you. And you should. Have you we can talk about it during the commercial. Well, i take a 15minute power nap instead. Thats my meditation. I met the guy that you meditated with, partner. You did . Yeah. Bob long. And i asked him about it, are you sure when im in that neglecter world of a nap, are you sure thats not do i have to the a word to meditate . And what did he is . He said its different. And i told him i was mad at you because you didnt trust me enough to tell me your word. My mantra . Yes. Youre not supposed to tell anybody your mantra. Did you ask him why . I want to know your mantra. I did not even tell my wife my mantra. I agree with that, but you can tell me. This says a lot about our we think to ourselves no. Now the story about the passing of a fashion icon. Oscar dela renta died at the age of 82. First ladies Hillary Clinton and laura bush both wore his gowns to their inaugural balls. The cover of the New York Times has a picture of him, called him the designer who stars and became one. It was peter tiels book party. You met him there . Yes, and arianna was a big meditator. Thats one of the places i go. Yeah. And he accosted me and said that he was well, not accosted me, but he said and he mentioned it. Okay. I dont know. Well get you going on it. Well get becky going. We will do a show all squawk meditation. Its not an elitist . Its not sort of the upper no, no, they do it in jersey. Of all places. Wow. What do they meditate on, the factories . Lets talk about apple. When we come back on mock power. Well be dialing up apple, the break down the results and the Holiday Shopping season. And the verdict is in for oscar pistorius. He was sentenced to five years in prison. Five years . For the negligent killing of his girlfriend. She was killed last year when he fired reef ya stein camreef ya steenkamp . He allegedly shot her three through the bathroom door. Apple beat street expectations on both the top and bottom line, and reported a whooping, as joe would say, at a 39. 3 million iphones have been shipped. The one downside . Ipad sales falling 13 from the year ago quarter, selling just 12. 3 Million Units. Joining us now to break down the results, will power, Senior Research analyst. Good morning. Good morning. You thought the earnings were great. I still dont understand the ipad thing and whether thats longterm going to be an issue or whether we should just forget about it. The ipad weakness has been a continuing trend for the past several quarters. I think in a lot of respects, its anybodys guest. Probably a flatter revenue stream moving forward the last several quarters. The good news is, they beat handling the mac side. What it suggests is expectations were the iphone 6 plus might start to at this pad, youre seeing mac and tim made a comment on the phone that hes just as happy if people are buying mac. Whats the difference in margin differential between a mac, a laptop, for example, and the ipad . That margin, that differential probably starts to close. I think on whole, you know, at this the ipad margins have been whole overall. Tim made a comment on the call that got him some attention, which was when the iwatch finally does arrive, in terms of how those numbers and Sales Numbers will be broken down, that he doesnt plan to issue them, if you will, in an individual column so you can see it clearly. He says hes pretty much in the other category, with all sorts of other stuff. He says hes doing that for competitive reasons, but theres been questions about do you think hes trying to tamp down expectations or do you think he really is worried about what samsung and google and everyone else are going to think . Its a good question. I think that did raise some eyebrows on the skaul. I think the reality is out of the gate, its going to be a small segment and probably not big enough to report. But it will be interesting to see if they actually break out the unit. If they start to succeed, which we expect they will at some point they start to break that, im not reading too much into that. And he does it ahead of time. If you do it before you have any idea what the expectation res going to be, its one thing. The ones who pulled it, like a walmart or a home depot or something, theyre always good in the period of bad Sales Numbers. So pulling information when things arent going well. Will, your expectation as an analyst, what are you modeling for the watches . As we look over the next couple of years, were looking close to 10 million unit s witha slow launch, starting at 10 million and growing gradually from there and reaching 20 millionish in the 16 time frame. Really quick, impasse, saw a lot of people using it already. Thats right. We got out and tested it last night, and it worked seamlessly for us. I think thats a nice opportunity. I think its a revenue driver for them. How much iphone 6s and 6 pluses do you think will be out in the ecosystem by lets say june . Obviously, it only works on those phones. Does it work on a 5s . I think its just 6 and 6 plus. Well, the key is going to be the 6 Going Forward. I think there is some backwards compatibility. I tried it with 56 plus last night. Weve used it with the 6. If they can sell 64 million, you know, this december quarter, which is what were speccing, youll be up to 150 million plus. So that will help. Thank you for joining thus morning. Appreciate it. Thank you for having me. Coming up, more concerns about a global slowdown. Chinas growth falling to a fiveyear low. Levels not seen since the financial crisis. Find out whats dragging china down at this point next. And then five dow components getting ready to roll out results. Will the numbers push and pull the markets this morning . As we head to break, here is a look at yesterdays winners and losers. Theyre coming. What do i do . You need to catch the 4 10 huh . The Equipment Tracking system will get you to the loading dock. There should be a truck leaving now. I got it. Now jump off the bridge. What . In 3. 2. 1. Are you kidding me . Go. Right on time. Right now, over 20,000 trains are running reliably. We call that predictable. Thrillingly predictable. receptionist Gunderman Group is growing. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. I just talked to ups. They got expert advise, special discounts, new technologies. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome all awesome i love logistics. You know how fast you were going . About 55. Where you headed at such an appropriate speed . Across the country to enhance the nations most reliable 4g lte network. Hows it working for ya . Better than ever. Howd you do it . Added cell sites. Increased capacity. And your point is. So you can download music, games, and directions for the road when you need them. Whos this guy . Oh thats charlie. You ever put pepper spray on your burrito . I like it spicy but not like uggggh spicy. He always like this . You have no idea. At t. The nations most reliable 4g lte network. Get to the terminal across town. Are all the green lights you . No. Its called grid iq. The 4 51 is leaving at 4 51. They cut the power. Itll fix itself. Powers back on. Quick thinking traffic lights and self correcting power grids make the world predictable. Thrillingly predictable. Do you understand . Yeah. No. Good morning. We dont like when the futures are up . People at home are going, something must be wrong. Should i sell . Should i call my broker . Listen to that music. Its foreboding. Its danger. Welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and Andrew Ross Sorkin. In the headlines this hour, a busy morning for corporate earnings. These five dow components are set to possibly report results that nobody knows. Listen. Oh, thats better. Whew there we go. Anyway, im expecting some good results now from travelers and United Technologies. And then who doesnt love coke . Have a coke and a smile, cocacola. Verizon, which brings you a lot of data through fios. And then a happy meal report at 8 00 with mcdonalds. This is much better. They left this stuff in from last week. From yesterday. The ibm trouble. Maybe that was it. We complained about this music yesterday. Oh, we did . Thats not try that. Also out this morning, september existing home sales figures from the National Association should i just say realtors because everyone puts an s. In there . Yeah, realtors. Everybody does. You shouldnt, though the. Its like nuclear. And the biggest takeover deal officially is dead. Abbvie, 65 billion takeover of shire was scrapped. So now other companies will just come here and buy us. I would think that if you love america, you can love this i should love this as much tax money as the government can get, i should be ecstatic about. This is a substantial American Company and you would like them to remain a patriotic member of our patriotic . You think that giving we should give the government extra money, an nd rue, we should. China gdp coming in at its lowest rate since the financial crisis. Lets get more on all this from eunice yoon who is live from beijing. For us and for her. Eunice. Hey, guys. On wall street, you guys have your bulls and your bears. But here in china, he like to have you have your panda huggers and your dragon slayers. These days, you see a lot more Economic Growth for the Third Quarter came in at 7. 3 . This is the worst number that weve seen in years and a lot of people, in fact, more and more people think were going to see a further slowdown. What is the problem . The problem is the weakness in the property sector. The problem is the Energy Secretary we shall theres a lot of debt in the system and excess capacity that a lot of economists are worried about. The government put on its best face. Its expecting positive changes in the real estate sector. A lot of that is due to their targeted measure. It also was very optimistic and confident about employment and the entire employment picture. They said its very stable. And the reason why all of this is important is because it tells us authorities here are still comfortable with the current level of growth in the economy. And that is, in turn, important, because it means were probably going to see china continue with targeted measures of stimulus snid instead of anything dramatic. So, anyway, guys win wasnt sure if you guys were panda huggers and dragon slayers. I am definitely a panda hugger. I dont know about these two. Im a panda hugger who wants to be a dragon slayer. I like the meaning, theyre animated. But i dont personally think you cod teach a panda kung fu, personally. You did a great job. Find what you are good at and using that to your advantage. Im skeptical of the praying mantis. Who was the bug . Lucy lu. Why do i know all this . Anyway, eunice, thank you for joining thus morning. Emerging markets being hit with a lot of the turbulence were having here in the United States. Msti is down 10 over the last two months. But the question now is how will the wind things in the dollar impact the performances in the weeks to come . Joining us now is jeff bennet, head of emerging markets equity strategy at ubs. Jeff, what do you think . Will everything that weve been through in the last couple of weeks, does that make the eme e emerging markets more or less attractive . I think it makes them more attractive, especially in the shortterm. Because, actually, whats happened since the beginning of october is emerging markets have been a little bit out of the limelig limelight, to be honest. We said our big selloff in september. If the dollar has flattened off a little bit in october, and weve seen most of the negative news in october coming from the developed world, particularly from europe and, of course, we had that oneday tremendous selloff in stocks partly on the retail Sales Numbers in the u. S. I think you have to be a little bit on the sidelines lately. I think theres a buying opportunity here between now and the end of the year. I guess you have to be specific when it comes to that. Emerging markets, that is a pretty broad loss. Look at places like russia, india, chiend na. Which places specifically do you think of buying opportunities and are there other markets you would steer clear of . Certainly. We think if you expect a rally at the end of the year, some of the risky markets would do relatively well. But some of those are looking risky, indeed. Brazil being an obvious case. No one is going to take any additional betts. Russia looks very, very weak because of the sanctions in the weak economy and their deteriorating levels of resrves. Oil is a big negative for russia. We like korea, taiwan, and partly because they have leveraged to the best powers in the neighborhood which is the u. S. Economy still. We also like mexico for the very same reason that its closely tied to the u. S. Economy. And we made a call at the beginning of september so that we have october, its been a good call. We like that market. Its very cheap. It fell back sharply earlier in the year. We think the economy is doing relatively well. Youre not worried about whats happening with turkeys neighbors and syria in particular and impacting normal life there, as well as the economy . I dont think it will impact the economy, to be honest. Clearly if we got into a major conflict, i think that would increase the risk of investing in the economy. We think the economy is going to be relatively munl to that situation. Also, the currency fell a long way. We think its fair value now and the market is cheap. So were playing, really, more on the up side based on a strong corporate sector and a strong domestic economy. You can look at some of the domestic economies for the emerging markets. I would think that the Federal Reserve and any of these for the market. Weve heard the central bank in india complaining for some time about what the Federal Reserve has been doing in terms of ending qe. Hes been complaining snap that leechs places like oind ya in a real lurch. We know last week what changed the momentum here was the potential fed speak, the idea that it brings that rough year to q4. Thats not likely, though, and what most are saying is that they dont expect that to happen. We expect higher rates next year. If that is the case, how does that decision affect the emerging markets . Thats an enormous question, outline. A lot of ramifications from it. Whats interesting is this selloff was triggered by worries the fed might move sooner. Now that weve kind of gone the other way, theres some talk that its either delayed to the feds move expected in june next year or of qe4. How quickly the fed does move would be important. What we think, however, is that what really matters when the fed starts moving, not just the fed moving itself, what does it do to the u. S. Dollar . If the u. S. Dollar strektsens on the back of the fed beginning to raise rates next year, that is typically bad because it sucks money out of the emerging markets. But if we get what weve had in the last two or three years through the dollar being softer, that isnt quite so bad. So to a certain extent, it will be in the context of what the fed does. Needless to say, were watching that carefully. And the timing of feds first rate move will be important for next year if thats when this occurs. And thats going to be the big decision for markets around the world. Thank you very much for joining us today. Thank you. Lucy lu was the snake. Youre right. Seth rogen was the was he the orangutan or whatever that was . Seth rogen was the praying mantis. Who was the monkey . I dont know. But the preying mantis, couldnt he just squash it . You guys are all way bigger than i thought. Couldnt you just pull its arms off inspect then it cant do anything, right . Who is the monkey . Former pimpco adviser mohamed elerian, he will join us. Is he heading back to pimco . His take on bill grosss departure, the future of pimco and how investors can keep their money safe in this market and how i should stick with the bengals. Author vicki ward is set to join us. Liars ball is about the its an inside look at the drama behind the sale of the gm building. As we head to break, a quick check off whats happening jackie chan was the monkey. Who . Jackie chan. We know someone of that was easy for him. When change is in the air you see things in a whole new way. 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Donald trump. Hes calling the book very boring. His beef and vicki ward has a response. Back in a moment. And the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. The all new, head turning cadillac ats coupe. Its irresistible. Over the next five years, well see a huge revolution when it comes to higher education. Instead of having 500 people sitting in a lecture hall, those are classes, those interlevel classes, those oneonone classes that can be taught over the next 25 years, employers will begin to accept that as legitimate credentials. Youre seeing huge changes take place in the way that technology is interrupting and disrupting higher education. Cnbc is the place to be over the next 25 years to watch this happen. Welcome back to squawk box. The fierce battle over one of the priciest buildings in america, the General Motors building in manhattan. It is the subject of a new book out today called the liars ball. Vicki ward exposes what she of the building. Donald trump already coming out swinging on this. On twitter he wrote the book was, quote, poorly written and very boring. Im going to disagree for now. Joining us now to share her side of the story and tell us about her book is vicky ward. And we were just discussing if donald actually liked the book, that might well, i think the biggest insult would have been silence from donald. So the fact that he acknowledges hes read this very boring book, ill take that as a compliment. I have to say, andrew, that most people who read this think that it actually is very fair to donald. And i tried to be very even handed with everybody. But i actually think there are some insights into donald in the book that would surprise people. He was quite a human boss to a man with troubles. We get to see donald doing what he does for a living. We see him building. We get him being obsessed by the architecture. And the history is he owned this building for a period of time. Coowned the building. The bulk of the money came from a partner Steve Hillbert who ran the biggest Insurance Company at the time. Good for donald, he put up a fraction of the money. Steve hillbert put up the bulk of the money. But the main story is about harry. And how should we think about him . I think harry maclar is a tragic, shakespearean character. Harry comes from nothing, arrives in new york. Using leverage to try to amass a real estate portfolio. Is successful but leaves a stench in his wake. There are buildings in the 1980s that get knocked down in the middle of the night, the gas is still on. Banks are wary of doing business of him. But he still wants to make it to the big leagues. In 2003 out of really nowhere, he won the bidding war for the gm building with a rather daring view. He stapled a 50 million check to his offering bid and in the 30day closing period, he actually switched banks. So there were two closing rooms. Wachovia, deutsche bank. And people still thought, well, hes overpaid. He hadnt. He went on to negotiate with steve jobs and put apples most famous store in the world there. Theres a great story in this book about how he actually tweaked the sign of the apple store. Yeah, he did. What was the tweak . The tweak was steve jobs had said i want a cube in the middle of the plaza. This is the first time apple had done those cubes. Absolutely. And harry thought it was too big. Hes never going to believe me if i just tell him. So they all assemble in the plaza outside the building. They looked at steve jobs model and went, oh, its too big. And harry said, aha. And inside there was a smaller 30 foot model. And they went, thats perfect. And thats what were going to do. Those were the golden days. And i call it paradise in the book. He was riding high. And the created a billion dollars worth of value then he made a risky bet and he had a short amount of time to repay a debt which he had personally guaranteed. That was his undoing. Hes 80 years old now . Hes 80 years old. The reason hes a tragic figure is that his family had made him he still would have tried to hold onto the building. But his family to whom hed given a lot of money and assets made him quit. And that was really he had come to identify with the building. Now hes trying to come back. And now hes coming back. He seemed fine. He does seem fine he sings a lot. Cracks a lot of jokes. Yeah. Thats something, yeah. Anyway, congratulations of the book. The book liars ball. Thank you for coming in. Thank you for having me. Youre surprised donald was human to an employee . He says the book was not bad to me, but it should have been great. He says he doesnt he said to me he doesnt like talking about the General Motors building because he wished he still owned it. So i dont know. These guys all have very big egos. They do. Hes great to his friends, the donald. Anyone you talk to, they will tell you that. Yeah. And he was very, very decent to me. Very loyal. So im really not sure what the problem is. Like you said, youd rather have him Say Something than not say anything at all. Thanks for coming in today. Thank you. There is a parade of results expected from five dow components today. Weve got travelers, United Technologies, coke, verizon and mcdonalds reporting in the next two hours. Plus the perfect guest to have it all in the middle of this volatility. Muhammad elerian. Keep it here. Squawk box will be right back. Act i. Scene 3. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. 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. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business intern, on the other hand, can be a roller coaster white knuce thrill ride. Youre promised one speed. T do you consistently get . You do wh comcast business. Its reable. Just like kung pao fish. Thank you, ping. Liably fast internet comcast business. Built for busiss. Welcome back to squawk box right here on cnbc, first in business worldwide. Im Andrew Ross Sorkin with becky quick and joe kernen. Our guest host, muhammad elerian. We are expecting five dow components to report over the next hour. Lets look at travelers. Theyre coming in with Third Quarter profit of 2. 61 a share. Compares to 2. 27 the street was looking for. The revenue also beating estimates. And the chairman and ceo is talking about how this is strong underwriting performance across all of our business segments. Basically saying that the writing insurance premiums are fair policy so theyre not losing on what theyre writing. It does look like its beaten on the bottom and top lines. But you never know. We always have fun with that. So many Different Things that go into so many moving parts. But just because its Insurance Companies with assumptions and actuarial assumptions or premiums and all, its almost impossible to ever get it right. That shows punch. What do you have . Did you look at it . Let me see what i have on it right now. Yeah. I got it up about 42 cents off. Just on the bid. And then higher on the ask. Also beating estimates this morning and looking like a significant is United Technologies. The company earning 1. 82 for the quarter. That must be the adjusted number. Excluding certain items. That is compared to estimates of 1. 81. Continued expansion of Profit Margins and strength in its building and businesses. I dont know why, you know, the person that writes this should obviously we should put in the revenue number and compare that to expectations. I would want that information if i was at home. I have travelers up here right now. Yeah. The revenue expectation is 16. 16 billion. I saw a sales number. 16. 17. In line with expectations. Were talking about things like helicopter, engines, otis elevators, and theyve got the individual breakdown for all of those. The company backs a fiscal earning per share of 6. 75 to 6. 85 for the year. And we are right at 6. 84. If we look at the futures this morning, these are both dow components and it is helping things out. Up by triple digits right now. Utx shares on my board look like theyre indicated up 102. 50. The bid was up 95 after closing at 93. 20. Okay. So were definitely results for the Current Quarter at 22 minus 204 is 182, right . Okay good. By the way, if youre watching it and talk tho muhammad about this, 2. 21 . So higher yield. Never thought id be hoping for a rate to go up. But the market place is being crushed as they look at the 10year when the rate got down. And then oil, we never thought wed be in the business of oil prices to stabilize and go higher. But we were last week. Because that was indicating the stress on all the different markets. Fwoo 83. We didnt get it through the Holiday Season. Lets look at a couple other headlines at this hour. Apple posted better than expected earnings and revenue. 16 jump in iphone sales. Ipad sales however, they declined by 13 . Told cnbc he still seeds ipads as a potential growth driver. Thats the weakest level since the 2008 Global Financial crisis. And beijing will need to avert a sharper lowdown. Directv customers are missing a few kpanls today. No longer carrying several turner broadcasting channels after the companies. Dish removed are you ready for this . Cnn, hln, cartoon network, and several others. Wow. So laying down the gauntlet. There it is. Not quite getting rid of like a big playoff game or something in the nfl. I dont know, has there been a big outcry . The cartoon network. Youre going to hold your tongue. I am. October has been a wild ride for the markets. Lost 3 over the last few weeks. Many say this kind of volatility is not uncommon. Joining us now for the next hour, muhammad elerian. Former pimco ceo and cocio. Hes also one of our esteemed squawk masters. I could use a lot of adjectives. Esteemed is one. I mean, youre eloquent. Youre i mean, dignified. What are you setting me up for . Nothing. Would you ever go back . No im really happy with my life. Other than the jets. Does that make any sense to you . Nothing but upside. So youll never say anything about that. Were you surprised when bill left . I was surprised. What i wasnt surprised about, joe, is theres a very solid team of people to step in. Each of these are known these are people i work with. You have a couple of winners. You have incredible people that delivered performance. What i wasnt surprised at is the ability to have people to step in. Let me ask you one question. Youre talking about arguably the greatest fixed income manager in history. Was he still or had he what many people thought, had he sort of jumped the shark in certain ways . A few weeks ago, few months ago i thought he is a brilliant investor. And he remains a brilliant investor. For someone who thought bonds had peaked three or four years ago, that might have been the biggest miss of his career not knowing we were going to stay in this period. Thats his job. To see something someone as stupid as he couldnt see. This is going to speak to the volatility. A few months ago you had a bet doing. Do you remember that bet . I am shocked it went below 2 . I think anything is possible. At the beginning of the year everybody was talking about 3 at that point. So this covered 90 of investors. Do you live in Interest Rate space . No you get pushed out. Or do you live in overvalue ed risk space . And investors go back and forth and you get enormous volatility. We have a good number out of china. We have good earnings. And we have policy makers continuing to reassure. So were going run to the overvalued space for awhile until we get news and then like we did last week do you believe the fed officials that were saying they could do qe 4 if we needed it. Not that we did. All those things, does that make you think were not going to see rates raised by the middle of the next year . I do not believe were going to delay the exit from qe3. Nor do i believe we will see qe4 any time soon. What we will see is low rates for longer. More aggressive policy guidance. What about zero rates . We will say here longer than we have otherwise. And we will have aggressive markets. I do not believe we change b from exit for qe3. Qe3 doesnt do it for me. It was basically qeinfinity. So we need another name for q qe3. It would be six, seven, or eight at this point. But youre not going to get it. We just need a new name. It doesnt summarize it. People call it qeinfinity . It was. This is Infinity Plus one then. Youll say Infinity Plus one. You can do that. You know theres a time Space Continuum that curves around and thats why you can go in a black hole and end up with matthew mcconaughey. Can i go back to bill gross on this . Because thats the tabloid issue you cant get past. It relates to the mindset of an investor like bill. I wanted to ask actually not whats happening at pimco. But bill as an investor in bonds Going Forward with janus. And the psychology of somebody who extensively has gone through a rough time. Would you invest in somebody who has i dont want to say been broken but at some point there was a broken moment in all of this. And what happens to and then the pressures that sort of arrive on your shoulders at that point. Does that make you better or does that make you worse or does that make it just more complicated . I cant speak for bill because i havent seen him for awhile. But i can tell you the bill i know is someone who is anchored by three things you hardly find in an investor. Strong fundamentals including economics. A really good feel for the market. And strong bond math. That is what has made him so successful. But i cant speak to recently because i havent seen him. Lets go back to what you think is happening right now on the continent and do they finally qe . In europe . Absolutely. How do they convince germany to do that. How do you convince france to stop, you know do different questions there. One is will the ecb do something en thoi they dont believe it will be effective. We will get more qe but it will not help fundamentally the european economy. To your second question, the structure reforms we need, wont get those for awhile. So this is a low growth equilibrium. Just think of what jegermany di. Were in october and they revised a number. You know, weve heard from ibm yesterday. Jenny rometti wont say much. But weve heard from weak factors in other areas. Ncr warning that the semiconductor mie ro electronics was a huge warning earlier. Are these small blips in a world otherwise doing okay . Or is there something you need to see some trend. Stow the ibm news, i was watching you yesterday and looked at the statement. It was a frank statement about how difficult it is for a company to adjust to a world thats transforming. Ibm is all about adapting to a world. And its changing because of mobility and social media. And if you are in that space or near that space and cant adjust quickly, youre in trouble. Yesterday i came up by train for washington. And i looked at the lines for taxi. Im not going to stand in that line. In four minutes hi uber car come get me. This is transformational. You can look at legions of companies. Look at our sector. Im working with argue startup payo payoff. Again, using the combination of the internet and media. There are plenty of sectors getting disrupted. Some more quickly. Others more slowly. But that is, you know, adjusting to these transformations are key. A 13point drop in ibm with those comments would have been a lot more would have caused a lot more damage to overall sentiment. Didnt cause any damage at all yesterday. It didnt because of the loss week. I still dont think eibm its more of a service company. The Positive Side of ibm is they reinvested themselves. Now they need to do it again. And the jurys out. Maybe the jury isnt out. Maybe its back. I mean, they might not be able to do it as easily. Thank you, mohammed much more from you throughout the hour. Do you like giants or royals . Do you know the singer lorde . She has a song called royals. Its banned by law for the length of the series. They banned it in the city you cant play royals. For me thats a tough one. I guess San Francisco is god and im a National League arent you a National Leaguer . I dont like designated stuff. But theyve had a lot of riches, the giants recently. Weve got to run. This is the song right now. Our guys are great. This is the song. Why you got to run . You want it to play . If youre on radio right now, just begin the song. Coming up, more big results from cocacola and mcdonalds. But first has the market opened up for Business Travel . Weve got that when we return. Sculpting the sleek body of the allnew mercedesbenz gla took nearly 600lbs of high strength steel. Setting industryleading Safety Standards took 20,800 crash simulations. And perfecting its engine took over 1. 1 million miles of extreme driving. But, this may be the most impressive number of all. Introducing the allnew mercedesbenz gla. Mercedesbenz. The best or nothing. Welcome back to squawk box, everybody. Weve been watching the futures this morning. After hearing already from two dow components this morning you can see its helping with the dow. Right now futures indicated up 113 points above fair value. Also lets take a look at the shares of those two dow components that did report so far. Travelers earning 2. 61 a share. That beat estimated with revenue also above expectations. The insurer was helped by better investment results and lower catastrophic losses. The ceo saying theyve been getting the right premiums. Also United Technologies beating by one cent for earnings. Revenue was very slightly above forecast. That stock right now up by 1. 5 . Big question, are the skies going to remain clear for the private jet business . Phil lebeau joins us with that story right now. Phil . Thank you very much, andrew. Im joined by ken ricky who is the chairman of flex jet. Were in the mockup of a g100 gulf stream. One of the many jet flex has just bought. This question, has this market fully recovered from the recession when it comes to the executive corporate decline . The market decline 30 in 2008. The overall market has creeped its way back. For us individually the market is back to where it was in 2008. Weve seen about 6 growth year over year. About 15 or 16 of market share. So i think that reflects some of the consolidation. I think we still have a long way to go. But the consolidation has helped. And also were seeing tremendous growth. So whos flying right now. And especially international. Well, theres huge demand internationally. People ask me all the time who are on the planes. Yes, its all of the above. Its theres people have become accustomed to a certain convenience. Theyve been used to that domestically. Now as their needs have gone more international. I think ive seen the needs become more International Since 2008. But as thats happened, they want the same as they had domestically. I think theres a misconception thats still out there. People simply want to fly from point a to point be, b in a corporate jet. The ceo and the executives need to say in the office in the air. They absolutely do. When we fly the airplane, having them being connected, having the wifi is the most important thing. They love the chairs. They want to have a nice dinner. But being in touch all the way around even on long distances all the way around the world which we are capable of doing is important. And the other thing they want to do is they want to go fast. If they have a 4,000, 5,000 nautical mile trip, were seeing the demands for people to save an hour or 30 minutes. Time is money. You used to follow the airline model. Not anymore. Youre shifted towards if you can get there faster, people will pay that price. We get to give you more time in your life. Thats what they want. They want to go fast. Real quick, are you noticing that the individual, the entrepreneur, is that market starting to come back . Its starting to come back. That would be at the lighter oend end of the market, but we are seeing that. Ken ricci of flex jet. One of the aircraft they have bought 50 of these and they are going to be in demand when they start being delivered. Back to you. Okay, all right. Thank you, phil. Speaking of private jets and the like, thats what this young woman is talking about in that song. Everybody likes krissal, were not caught up in your love affair. Well never be royals. So theyre not allowed to play it in San Francisco. Coming up, waiting on results from verizon and coke. Plus the futures are even higher. Squawk will return in a moment. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. The all new, head turning cadillac ats coupe. Its irresistible. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. 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Front and center this morning, travelers reporting thifrd Third Quarter profit of 2. 54. Also chipotle Mexican Grill, shares falling after hours. A drop of sales from current double digit sales. And then the number of cars recalled on potentially defective air bags rising to nearly 50 million. The air bags manufactured can rupture and spray metal shrapnel into driver faces and chest. Earnings reports are hitting just i havent seen them yet. We got verizon. Verizons on it. Looks like 89 cents. Let me see if i have the estimate yet. The estimate was for 90 cents for verizon. Okay. I dont have the actually numbers yet. So 89 cents. Let me see if theres anything in here. 31. 59 billion which is right in line. Just a little bit above expectations. Wireless retail postpaid arpa, 160 im sorry. 161. And the postpaid churn 1. 5 . Fios tv customers up 114,000. Looks like 89 cents came in. They do talk about how theyre looking at least when it comes to new connections. They added 1. 5 million new connections. Which was up from the Third Quarter. It was higher than what analysts had been suspected. Still thats a miss. Comments from the chairman and ceo saying they have great confidence heading into the Fourth Quarter. They say theyre continuing to deliver consistently. Continued healthy customer demand for wireless and broadband services. You said the fios numbers already . Yeah, i did. Im looking at because they give an adjusted earnings. 77 cents. Normally wed use it adds justment. They are calling it a penny shy of expectations. Okay. Yeah. All right, good. Lets go to our trading block. We are talking oil and currencies this morning. Right now 46 of all u. S. Gas stations are selling fuel for less than 3 a gallon for regular. And aaa says it could fall further. Crude is down about 10 over the last month. Hear to break down the energy trade is Senior International strategist at wells fargo. Kathy lian is a cnbc contributor. Samir, did you have any idea that over the last six months we would be here almost below 80 at one point . I think below 80 is a bit of a surprise. We were telling folks back when it was 108 when there were supply fears that oil didnt deserve to be trading up there because growth is still a bit sluggish. And demand were fairly in balance. Weve had people come to the high 90s. In our opinion, this is an opportunity. Whatd you miss . The strength of the dollar . The weakness in germany . What do you think was the wild card here . It couldnt budge above 90 with all the geopolitical stuff happening with isis and worry about supply coming from the middle east. Had so many things that should have gotten oil above a hundred. And it looked sort of top heavy didnt it . It wasnt the dollar we missed. Weve been calling for a higher dollar all year. It goes back to libyan supply. Rebound probably a bit faster. And whats going on recently with the saudis. Basically saying we wont be the only adult in the room anymore to let other people take market shares. I think that was a surprise was them being more fed up with being the only one to cut production. So thats probably the biggest factor that caught people off guard. They messed it up. Cocacola now. Tell you about those numbers quickly. Looks like cocacola is coming with with comparable numbers. 53 cents. That would be in line with expectations. The actual number is 48 cents and thats a comparable number that takes things into effect including comparable currency neutrals. You need to look at the outlook because this matters. The Company Warning about these head winds. Obviously currency with the strong dollar. Thats got a big head wind. Its talking about how they continue to respect Currency Exchange rates to have an unfavorable result on 2014. Theyre looking at things including spot rates and their existing hedge possible. They now expect a sevenpoint head wind on the Fourth Quarter of 2014. Theyre looking at currency being a sixpoint head wind. They say thats at the high end of the income. They expect to be below their shared growth target. Didnt hurd theyre not giving a specific number with this. 11. 98. And estimates 12. 119. So thats below. Looking at the global case volume unit, that may be below too. I think the expectation was for worldwide unit case volume growth of 2. 2 . Looks like it came in 1 in the quarter and 2 year to date. Why arent we using 48 cents . This is what theyre called. No, no, no. Im not buying that. Okay. Theyre saying depends on what analyst. Actual number is 48 cents zplp analysts know about the dollar exchanges and things. If they know about it then theyd be looking for i dont know why you would add that in currency change. I dont know. Id like to hear a call. I would too. And so many times if its 20 how many analysts are we talking about . Were talking a lot of analysts and maybe ten of them do and ten of them dont. But i dont know whether youre able to say well put the currency back in. They earned 48 cents. The outlook is significant here. Its down like a buck 43. Lets get back to kathy. Sorry for the shortened edition here, but we had coke come in. And its good youre here. This is all about currency translations. What about the dollar . We heard elerian say about qe in europe. Will that keep the dollar strong . In the new term weve seen a bit of a peck in the dollar. Well see oil down to 75 at lowest. We got the meeting next week. Weve heard a lot of commoning words from officials that suggests theyre going to down play the need for immediate rate hike. I think youll see continued adjustments. Its not something unique to cocacola. Currency translations have always been a big factor in corporate earnings. And the strong dollar is going to be a head wind for many corporations. Youll see more and more of that. And we have seen it through the years as well. So there is a story here. In the longterm, i dont think even if we get a bit of a near term peak in the dollar, its going to benefit earnings all that much. The fed will be one of the first Central Banks to a raise rates. Even if its towards the end of december 2015. And that will continue to put a strain on some of the corporate earnings. I just wonder if we put off the rate rise, if the fed puts it off whether that mutes the strong dollar. You say were counting on that along with europe going into a qe phase. Maybe weve seen the best levels of the dollar already. Right. Thats why i think we could see a shortterm selloff in the dollar. And get a position properly because wier also going to see a bit of additional weakness in the euro. Especially with the market talking about buying corporate bonds. Maybe next quarter we could see support from a pullback from the dollar. The Federal Reserve is going to be the first to raise rates. So the dollar uptrend story isnt over. Big question to coke and other companies is do you post hedge at this point. Where are you on the debate whether Lower Oil Prices is good news or bad news. The consumer now has purchasing power. But those say its bad news bautz its indicative of how weak the economy is. Where do you come out on that issue . Were in the good news camp firmly. I think the lower prices portend for a Brighter Future in the growth trajectory. I think its a bit of both. It was just yesterday if you look at what gasoline prices are. An additional 600 into the pockets of households. It caused at least a temporary boost. So from our standpoint, its indicative of the current sluggishness. All right, thanks. Thank you kathy and samir. 5 cents is not currency. Theyre saying its currency neutral. But the items, the 48 cents, the items that are backing out you have to get the release to see. Impact compare tyly. They shouldnt tell you to see reconciliation of gap. So it is 53. When youre including the effects of currency. So thats already in it. What they do is on the front page they tell you it increased 56 . It did. Because there are other items that you are able to im trying to look where they beat volume growth. If youre trying to say were putting back in the adjustments from the strong dollar, i understand. But in this case ive gotten to page ten and not to the gap statement yet. So theres Something Else that brought it down to 48 that you cant exclude. With the unit case volume trying to figure this out. It was for an increase in america. Looks like it was down 1 there. In the pacific region, it was for up 5 . Looks up 2 . Overall that case volume was a little light. I saw two things in the last week. One is it takes you got to run four miles to work off one high test coke. And the others, there are a variety of Health Effects that seem to be prevalent in those with lots of sugary drinks. Water and sparkling water seems to be doing the best. When we come back, were going to have some instant analysis of cokes results. Also get some Health Warnings on those drinks. Dont drink sugar drinks, andrew. Not the big gulp. And then the cold war to mcdonalds. 40u67 did that hurt the companys bottom line . Im going to try to get joe a 16 ounce drink. I love them. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. receptionist Gunderman Group is growing. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. I just talked to ups. They got expert advise, special discounts, new technologies. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome all awesome i love logistics. Cocacola reporting just moments ago. The revenue was slight sli breaux and the bigger issue is going to be the outlook. Its worried the outlook will be below what it previously had been expecting. Shares of coke trading sharply lower. Stock down about 2. 5 . That will have an impact on the dow futures. Joining us with reaction is john faucher. John, what do you think of this so far . What jumps out at you . Yeah, i think our expectations were on the quarter specifically that the global macros were going to create a difficult environment. And we were below consensus on volume and revenue. Its been a difficult environment out there. Coke isnt able to perform the way they want to. You think this is something . The Company Seems to be thinking these headwinds are going to last for a i while. You think the same thing . Yeah. Were seeing this across most of our companies coming in light. And so what i think were seeing is he headwinds are going to be around for awhile. Both Company Specific and industry specific. You have to cut faster. The encouraging being the cost cutting theyre going to be taking on . Yeah. Theres not much thats encouraging in the underlying fundamentals of the quarter. Although latin america wasnt as bad as feared. Whats your price target on this stock . Its down sharply this morning. We have a price together in the mid40s. We have been more cautious on this name because of the global macro head wind. So from our standpoint, i think investors need to be patient with all of these big multinationals. Either simply not a lot to get attracted from a fundamental standpoint right there. Be patient. Does that mean if you own the stock, hold onto it. Or hold off and wait to buy it . Is yeah. I think if you own it now, you can hold on. I think coke is working to get the plans in place to survive in this difficult environment. I think the market will be encouraged by that. You need to expect until Earnings Growth really starts to grow high Single Digits, its not going to take off. Its not quite cheap enough for me to get excited. What would be cheap enough . I think if youre looking at something closer to the 40 range, there you feel like youre pricing in more of the headwinds that are facing the company right now. David winters was quite critical. What do you think of management . You know, i think as we look at the Restructuring Program thats coming out today, its a sign that coke management is beginning to realize as you said that these headwinds are going to continue. None of these big multinational Consumer Companies have been able to grow revenues at the same rate they did before the recession. And Everyone Needs to understand this is the new normal. I think coke is finally beginning to come to that conclusion. And takes a little less revenue. You see them going out and doing some of these partnerships. If they start being more aggressive without a different business model, then i think theyre going to be fine. Thanks for joining us today. Thanks for having me. Mohammed. Youre here with the new normal quoted. Takes us back. Ahead, we have stocks you need to watch ahead of the opening bell. And is the wild ride over . Why investors could be spooked before the end of the month. Check out this futures. Cocacola coming out and missing not missing expectations but lowering the outlook because of the headwinds theyre seeing. Dow still up 88 points. S p up 13 points. Nasdaq up by 34. Squawk box will be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back bb everybody. Todays guest host mohammed elerian, post pimco ceo and cocio. What do you expect to see . If we need markets to consolidate in the middle. Instead they go one way or the other. That makes fed officials nervous. Because they have excessive risk taking. And they dont like down days either. So what we need is a period of consolidation. The trouble is the marketing wont stay in the middle. Either discouraged by low rates and going to high risk taking or switch it around. Heres what i dont get. Why didnt they allow only down 6 . Youre not even in correction territory at that point. Why did fed officials get nervous with just a 6 decline . Because the policy depends on keeping valuations high. Its an impossible task. But when valuations come down, you worry about overshooting on the way down. Therefore youve got to stop it from coming down. Thats why they get nervous so quickly. As i mentioned, thats an impossible task. If youre waiting for that. Maybe they should stay silent and stay out of it for awhile. Then the valuation will come down too quickly. They want to keep valuations up here so the fundamentals can validate. So theyre going to keep ripping this bandaid off one hair at a time. Correct. And the question is can the market stabilize or swing one way or the other. Im worried it will swing one way and then the other. Do you agree where theyre talking down the market but also propping it up . I dont think they have a choice because the policy mablgers are silent. And therefore the fed is carrying the burden of policies without the you mean a dysfunctional government . Yeah. We have three branches of government. Its the congress. I dont want to do the things that the executive branch wants to do. Thats not dysfunctional to stop an executive branch from doing things i dont agree with. Were not even doing the things that both sides agree on. Who put off Immigration Reform . What im saying is even the things we agree on this knee jerk and this hack Dysfunctional Congress said gosh wed be doing so many great things if it wasnt for congress. Its the dysfunctional government. And the white house has plenty of blame. But with the popularity of whats the popularity of obama . Its about 30 at this point. How do the people viewing the path of the country look to you right now . Almost 70 on the wrong track. Yeah. We got plenty of problems. Not just congress. Do you think anythings going to change in 2015 . No. I think were going to get the same out of washington, the same out of the policy makers, and the issues with the private sector. I dont think we can stay in this middle. Can i ask you a question . When we had the last election, we said we have to wait two years, get through 2014, then the whole world will change. All of a sudden this new opportunity will emerge for real reform to take place. And now it feels like, well, were here, elections are almost upon us and if you ask whats going to happen after the elections, now nothing is going to happen. It will be more dysfunctional. It will be more dysfunctional. And then wait until 2016. And who knows whats going to happen then. Have we decided its just never going to work . But i would think that you would argue as long as it doesnt work, thats a good thing. No. Thats not what i argue at all. Theres things in terms of tax reform that we need to do. Theres all kinds of things that we should be doing in terms of, you know, cutting back on a lot of overregulation. Theres a lot of things. I dont need to explain the differences between where the two parties stand on doing all these things, right . So, joe, the important thing is its not just a u. S. Issue. If you look around the world, the political system cannot keep up with the realities on the ground. Its not responding fast enough. And the key correction is whether the private sector can compensate for government. It seems to me youd be arguing to unfedder the private se sector. And enable them to respond better. Mohammed, thank you. When we come back, were just minutes away from mcdonalds quarter. Well talk about that and more when we return. From fashion retailers to healthcare providers, jewelers to Sporting Good stores, we provide Financing Solutions for all sorts of businesses. Banking. Loyalty. Analytics. Synchrony financial. Engage with us. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Start building your confident retirement today. Can you start tomorrow . Yes sir. Alright. Lets share the news tomorrow. Today we failrly busy. Tomorrow were booked solid. We close on the house tomorrow. I want one of these opened up. Because tomorow we go live. Its a day full of promise. And often, that day arrives by train. Big day today . Even bigger one tomorrow. When csx trains move forward, so does the rest of the economy. Csx. How tomorrow moves. Mcdonalds shares are under pressure right after the company is reporting numbers that have a lot of things in them at this point. The estimate was for 1. 37. When you include if we were just to include all the items the companys reporting 1. 09. However, the significant decline according to don thompson results and its a significant decline from a year ago is from a higher effective tax rate, unusual events in the operating environment in asia pacific. And underperformance in the u. S. Which is the companys largest geographic segment. It looks like u. S. Comps were down 3. 3 . Thats a startling number. The Comp Store Sales in the u. S. Down 3. 3 . From negative guest traffic. So they had fewer people coming in. Thats global, yeah. Thats in the u. S. We have the ceo saying short of our own expectations. That must be the same as that must be the same as global then. Globals down 3. 3 . U. S. Is down as well. So 26 cents due to an increased tax reserve. 15 cents due to the estimated impact of the suppliers issue. And 1 cent due to the impact of those remember when putin decided im going to answer your anxiouses with acting like with implying that mcdonalds isnt healthy. My guess would be the analysts probably included some of these some included some and some didnt include others. A year ago 1. 40. I take that back. 1. 52. Earnings per share would have been relatively flat compared to last year. When you take the supplier issue that you know knocks it, to take the shutdown in russia at another, i think some analysts ner considered it exactly. The company would probably like to exclude everything and analysts would say its an art. Its not a science as to what you include. I am confident by the end of the day you wont be able to say what the analysts estimates were. Some will include some numbers, others will include others. That right there tells the story. The idea the guest traffic, negative guest traffic in the u. S. , Third Quarter sales down 3. 3 . That is significant. Thats been one of the markets they have been seriously trying to turn around. That impact in what happened with the asia pacific, we know thats out there. We know that thats something other competitors have struggled with too. But in the u. S. There were other competitors that were sustained competitive activity. You wonder whats happening to the mcdonalds customer. Yeah. Wheres the futures now. Yeah. Lets take a look. We have five dow components that have come in. Utx, travelers, verizon, coke, and mcdonalds. At one point before we heard the last two, futures were up triple digits. Now the dow still indicated higher but just 50 points. Which is not like the other . Travelers and etx. Id say ibm, coke, and mcdonalds all have problems specific to their own corporations . Yeah. Although the strong dollar, you wonder how big of an impact it has. Thats true. But we know for a year now that mcdonalds has been grappling with things like that. Do you want a company like this . Do you want a company thats it depends what you use the shares for. Then they say theyre going to revamp their marketing approach to Link National messages around food quality, brand transparency, and people initiatives. Thats not exactly why im going to mcdonalds. I dont know whether they need a 3. 7 yield before the increase certainly will cushion the blow in a 2 Interest Rate environment, right . It makes it more attractive. Thats what i mean. I think they increased the dividend by 5 cents. Is that correct . 5 . 85 cents per share. Gets it up above. When the yield for the s p was higher than the 10year note. And thats when people turned around and said wait a second. Maybe its worth it to take a risk if im getting paid that. Mcdonalds went through a tough period when, you know, ceos had some stock was is 12 or 13. It wasnt that long ago. So its tough to navigate when youre a Fast Food Company in this health pc environment and Everything Else. Lets talk apple. 34u67 better than expected earnings yesterday. Handily beating expectations and the ceo tim cook telling the street demand is off the charts for the iphone 6 and 6 plus. Not just here. But in china as well. Shares of apple are up indicated to open about 2. 31 higher. Then theres ibm shares tumbling. Here to break it all down, managing director at ubs. Is text is ibm still a tech stock . I recently saw a post that argued that peter seal was saying that its not. He was even arguing maybe apples not in terms of in ibm youre betting against the technology and Silicon Valley startups coming to disrupt you. Its been a cash flow machine. But theyre going to take multi years to figure it out. Will they figure it out . They have historically. Theyre the only tech company that made it through each wave. They almost went bankrupt but were pulled out. I think they understand whats going on now. Its just hard hard to turn the tanker. Theyre going to survive. But it may take awhile. How long have you followed it . Youve be on it for 15 years or so. More like 20. But yes. Think about eastman kodak. Remember westinghouse . I mean, you cant just assume that it will also be here because it deserves to be here. They need to get some things right. Thats correct. We have the top market caps over the years. Its amazing how much it changed. You have a short competitive advantage periods. But again they do have a lot of software revenue. Theyve got good customer relationships. Theres worse positions than ibm. The rate at which theyre moving is too slow. I think jenny has talked about that. I think they will come out of the other side. What duss the other side look like . What does the entire company how are you valuing the other side of this company . Well, theyre getting out of hardware businesses. But the way they deliver those is changing. Clearly cloud is a major part of that. Arguably a year or two late. So theyre still catching up. Theyre making longterm bets like wattson moving into africa. Again, i think you look out a few years in terms of hardware architecture. But total value. You look at the stock right now and say its horribly overvalued or fairly valued . I think if things completely fall apart and it goes the digital equipment route its overvalued. It sells at about ten times earnings. What about hp . I think the same thing. I dont think watsons jepty earnings are going to keep that afloat. Some argue they should be making large acquisitions. Cutting back on the purchases, buying back other companies. Maybe theres a lot of Technology Companies out there that wouldnt do anything for ibm. Then some of the new guard where they have to get more ae gressive. How long does apple got . Thats a good question. Theyre a chief stock. The stocks up a bit premarket. But its like why isnt it up more . Looking out to fiscal 16. The bigger this cycle is, the tougher to compare next year. I think youve got to get conviction its becoming more than a hits business. I think thats hard to argue right now. To me its still its a hit business. And theres no more inventions left. I dont know whether you realize that. I dont think tim cook would agree with that. We are bullish on the watch. But hes talked about apple working on things that people arent even speculating on. Like what . Well, we dont know. What else . After the watch, whats next . Thats a good question. Wearables i think could become a big category. Why . I know my heart rate. Its about what it was the last time i had it checked, right . Well, blood levels. The next generation to watch could be different from a health standpoint. What are you monitoring right now on yourself . Andrew monitors everything. Im monitoring your heart beat. Hows it going . Its like Hannibal Lecter when hes biting that nurses tongue off. Not even moving. Real quick because we have to go, what do you make of the fact that tim cook suggested he doesnt want to break out the watch numbers. Does that mean youre going to lower expectations for what the watch sales are going to be initially . Or do you think its for competitive reasons he hasnt called. I think were at 24 Million Units the higher end. I think over time they would break those out once theyre meaningful. Right now he wants to hide what its doing. Theres going to be a lot of competition over that point. Why isnt it higher . You put any valuation on it and its trading at like 60 of what Everything Else trades at. It makes no sense unless theres something that people just and its been that way for awhile. Thats why i think they should spend time buying back shares. Theres an opportunity here. All right. You were at merrill for a long time. Whered you hang your hat for most of the 30 years . Both Morgan Stanley and merrill. Youre like me. Thank you. We appreciate it. Thank you. When we come back this morning, verizon unbundling cable and the iphone. Plus is the burrito market about to drop . Never. And as we head to a break right now, look at five of the big reports out this morning. These are the dow components who have all reported in the last two hours or so. Two of them in positive territory, three in negative territory. Squawk box will be right back. 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That stock is roaring up by about 10 in early market trading. 69 cents beat the average estimation of 60 cents. Harley was helped by stronger u. S. Sales of its motorcycle. Theres a positive one there for you. U. S. Consumers. On the other hand youve got americas biggest government contractor. Theyre headed lower. Thats lockheed martin. Heres the thing. Sales were 11. 1 billion. Just missing expectations. But heres the concern. This is its ninth straight quarter of declines. Thats what happened when the government is cutting costs. A notable downside move a yesterday a chipotle. Best beat in some time here. Revenues also better. Expecting same store sales growth to slow to Single Digits in 2015. And well end on verizon, americas Biggest Telecom company. Narrowly missing for profit. People were expecting 90. It did add more wireless customers than expected. A narrow miss, but a Large Cap Company to Pay Attention to. Yeah. What did that say there . 50 cents . Down slightly. Were going to continue to talk about verizon thank you, dom. Were going to break down veriz verizons latest quarter. Mike, going through some of these numbers it is a miss but youve got to be happy on the revenues side. Parts are a good miss. Theyve got stronger editions and Higher Quality. So looking at subscribers at 457 versus us in the street around 378. And the handset not being the oer priced per month tablets. The weakness id say to some degree on the top line is more on wire lines. Seeing weakness in both enterprise and Small Business. You know, one of the things you just mentioned, tablets. We heard yesterday from tim cook, apple not selling as many tablets. Yet verizon giving credit to the tag let market. The idea is to get those tablets, take them on the streets and get video and get higher data usage. Verizon has been aggressive with the 10 per month for tablets. But again theyve had a Strong Quarter here as well. You said youre concerned on the enterprise side and Small Business side. Is that a verizon problem or does that Say Something larger . Its something weve been tracking for some time. On the enterprise side, the carriers have been saying lets hope for a better economy and have been through a couple of cycles and not had real improvement there. So our view is continue migration of product and systems into ethernet. Small business we can debate there whats going on. I think the Cable Companies are having Great Success in taking revenue away in the Small Business market. And last but not least, the fios numbers. They came in good. Theyve been talking about weakness on the video side. The video side hit 113,000 net additions. And broadband is strong. 160,000. If the whole world goes over the top, do they make any margin on the actual video service. To be fair its probably a bit of a sloppy transition. Thats being said they bought intel on businesses. So the video market themselves, the margins are quite low. If they can get revenue, thats going to be important. All right. Okay. Mike, were going to leave it there. Thank you for helping us through this. Thank you. Coming up this morning, we will introduce you to the Worlds Largest spider. This is a picture you have to see to believe. Plus, the stairway to a lawsuit. Did led zeppelin steal a song from a band called spirit . I bet you can guess which song were talking about. In the meantime take a look at the futures. This morning after all the components the five we expected before the bell reported, still looking at the dow in positive territory. Up 65 points. And the nasdaq up by 36. Squawk box will be right back. Cute little guy, huh . This guy could take down your entire company. Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. 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. The allnew mercedesbenz gla took nearly 600lbs of high strength steel. Setting industryleading Safety Standards took 20,800 crash simulations. And perfecting its engine took over 1. 1 million miles of extreme driving. But, this may be the most impressive number of all. Introducing the allnew mercedesbenz gla. Mercedesbenz. The best or nothing. Welcome back. A lawsuit claiming led zeppelin plagiarized stairway to heaven moved forward after a move for dismissal failed. Why now . A suit claimed the band stole the song from Randy California founder of the band spirit. Now his heirs are suing for credit and royalties to the iconic rock song. A lot of hair back then. In the plaintiffs complaint, it says that Randy California deserves writing credit for stairway to heaven and to take his place as an author of rocks greatest alltime song. So now its coming out it was Randy California. Its like 40 years old. Isnt it . The idea its his heirs doing it and not him. Exactly. Also lets check out this picture. A Harvard University entomologist taptured this picture. Take a look at this. This is a south american goliath bird eater spider. Thats right. Its a bird eater. Probably called that for good reason. According to the guinness book of World Records it is the Worlds Largest spider. It has fangs up to an inch. It spits out hair with microscopic barbs on them that get caught in your eyes and other membranes. That can be very painful and itchy. Although it doesnt really eat birds, it will puncture and slurp bird eggs. Not poisonous though . You know, i dont think you need any extra stuff nap guy is crazy putting his hand next to it. Oh, they are venomous. Ive seen larger spiders in middle earth. All the ones in the hobbit. Thankfully we dont live in middle earth. Still to come when we return, what do fruit spreads and helicopters have in common . Plus what will 70 million get you in the private jet market . Phil lebeau unveils a new jet thats ready to take off. Take a look at u. S. Equity futures. Were looking up, by the way, guys. Dow looks like it would open up 60 points higher despite mixed news this morning. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back to squawk box, everybody. Here is whats happening now. Shares of cocacola under pressure this morning. Its per share profit matched estimates but the company warned headwinds impacting its bottom line for the year. That stock is down. Another missing by one penny. Verizon did add 1. 5 million new connections during the quarter. But that stock down by about 1. 25 . And shares of mcdonalds are slumping today. The latest Quarterly Results were probably below when you factor everything in on many items. Revenue was a big shy of estimates and Global Comparable Store Sales fell 3. 3 . Mcdonalds says by all measures, its performance fell short of its expectations. For more on mcdonalds, lets talk to an analyst peter saleh. He joins us on the news line. What was the key thing here that was worse than people thought . Because mcdonalds problems have been well discussed at least on this show over the past year or so. Was it actually worse than we thought . Thanks for having me on. Yeah, i think it was a little bit worse. You know, theres a lot of noise in the earnings numbers, but i would tell you the u. S. Numbers are down definitely worse than expectations in the month of december which is the only month that has not been reported. You can factor in at least 250 basis points of a menu price increase in there on a year over year basis. So i think that continues to be a thorn in their side. Okay. So in september, global comps im u. S. Comps were down 4. 1. That was worse than the average for the quarter. And then also what did you say . It was cheaper so it will be down that much. It had to be traffic was actually down. Not just the pricing was cheaper. Thats your paint . The point here is in their comp youre in higher menu prices. Higher year over year. So it would be down that much. Okay. I see. It meant that the traffic had to be even worse than you were thinking. Correct. Why . Well, i think theyre still a losing share. When you look at Companies Like a chipotle and fast casual that are gaining share with Higher Quality food. I think the millennials are moving in that direction. And mcdonalds just isnt resonating with that younger crowd. Yeah. Everybodys talking about september was definitely. And theyve been aware of the problem. In july, june, july, august, they were trying to deal with it. And it got worst in september. That must have people worried they dont really have an answer. Yeah, i dont know there is an easy fix for a company of this size on the food quality or on the food side. Not very easy to fix that overnight. It takes a very long time to do. Is this a time for longterm that people should enter the stock . I would say not quite yet. I dont see a turn yet in traffic whether it be in the u. S. I dont see a turn in traffic in europe. They still have a lot of issues in asia pac. And earnings numbers are still coming down. So id be a little bit more patient and wait for at least some stabilization in the traffic numbers on a global basis if not in the u. S. If i was a technician, id say 84 or below looks good looking at these. Thats a multiyear low back in 2012. And were still up at 80, almost 90. Peter, thank you. Thank you. All this recent volatility leading to plenty of buying opportunities in the markets particularly when it comes to individual stocks. That means its the perfect time to check in with one of our platinum portfolio managers. Joining us is john rogers. He oversees about 9 billion in assets under management. Hes also the former chair of president obamas Advisory Council on financial capability. John, thanks for joining us this morning. Good morning. Lets get a look at what your three favorite picks are right now. The first one in lazar. Has you liking this stock right now . I think lazar is extraordinarily well managed and diversified. So we really love the fact they have the restructuring business for tough times. They had the Investment Banking operations that are doing really well. And of course theyve got their Investment Management business that focuses on international markets. Thats actually become over 50 of the revenue. Or a big part of the problem over 50 of the profitability of the business. So lazard is a good investment. When did you think this was a good buy. We thought it was a good buy when it was in the 30 range. But at 14 times next years earnings, the stock is still extremely cheap. And people really undervaluing this great brand and franchise. How what sort of multiples do some of its competitors trade at . It depends on which ones. It depends which part of the company you look at. Aditionally sold at a higher premium to the s p 500. They are so consistent. I think people havent realized how important the Investment Management business has become at lazard. I think its helping to differentiate themselves from competito competitors. Weve looked at Consumer Products companies have have struggled thorpg. Namely cocacola and mcdonalds. You have one that you think is a good buy. And thats smuckers. Its so much fun to go to orville, ohio, and meet with the smuckers brothers. A well managed companies. But they dont do just jellies and jams now. They have jif Peanut Butter, folgers coffee. A lot of its peers are selling in the s p 500. Are you worried about higher prices or anything like that . Maybe the health of the american consumer. I think the consumer is going to be fine. I think as the economy recovers, people will be spending more in supermarkets. I think the only thing is coffee can be volatile. Its a commodity at essence. That does have some quarter by quarter volatility because of that. But its so well managed, so well diversified, we think its going to be able to please the consumer for the long run. This is a play you have on the oil and gas industry. But its kind of a play thats often an ancillary play. It is. Bristow is the worldwide leader when it comes to providing helicopters for the industry. You need to get workers out safely and quickly. They have the major brand. And theyre terrific worldwide. Also search and rescues have become more important. A lot of governments are outsourcing that work and hiring firms like bristow to provide the products they need and provide the helicopters to be able to get out there and search in e the oceans when someones lost and needs to be rescued. Okay. John, thank you very much for joining us. Lets talk quickly about some of your old plays you liked. Western union, janus capital. You still like those stocks . Well, igt has been in a transaction, so its done well because of that. Thats off the table for us today. But we think janus is very well positioned. We think the positions that they are already taking to diversify their product line have better performance in their core products. Just sets the stage for this bill gross announcement that was shocking and surprises. But very positive for asset flows at janus. And finally western union, we do think its a very, very cheap stock. People are really down on it. With longterm we think its got a great influence worldwide though. Okay. Great. Thank you for joining us. John, you know, figures out pimcos got 3 trillion, janus starting with 12. Thats a good idea. I see opportunity. And for me, smuckers buys a Peanut Butter company, thats all i need to know. Perfect. Together. You believe you think pepsi you want coke to buy the chips. When smuckers bought jif you didnt think that was brilliant . Thank you, john rogers. Next, ceo of Home Services of america on Mortgage Rates with the fed rates and getting existing housing numbers. Also speaking of housing, heres a look at the Home Builders over the past year. Sectors up 17 over a oneyear period. Squawk box will be right back. Financial noise financial noise financial noise but what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Welcome back to squawk box, everybody. It has been a busy morning. Weve had five that have reported. Helping the averages. Verizon missing by a penny. Coke and mcdonalds have had issues of their own. It plays out to the dow futures being up 58 points above fair value. S p up 12 points and nasdaq 35. Existing home sales out in just over an hour from now. This number, though, has been disappointing trending downward. While on the bright side, fixed Mortgage Rates falling. Here to walk us through the ups and downs of the Housing Market is home service of americas ceo. Good morning to you. Good morning. Help me with this. Firsttime home buyers with, that market just completely dead at this point . And what do we do to revive it . Well, its not completely dead. Clearly the challenge is for particularly first home buyers is the challenge of getting a mortgage. And thats been a constant problem for the last couple of years. I think what were seeing when we look back at this start of the recovery two years ago, we were seeing a large percentage of the home purchases being transacted by buyers by investors and private equity. The good news is we are getting a more normalized mix of buyers. They are users and they intend to occupy the home. Do you believe the private equity guys have created an overhang on the market . There was a debate that the blackstones of the world had bought up so many Single Family homes they had cornered the market. And as they try to sell this stuff over time if thats what they decide to do, its going to create this bad overhang on the business. No, i dont believe that at all. I think they have bought those Distressed Properties and theyre fully rented. And you know, people need shelter. And whats happening given the very challenging credit standards and Mortgage Market is that people are opting to rent either Single Family homes or the distressed homes that were purchased or apartments. And at some point in time when the Mortgage Markets loosen and, you know, the credit standards get more normalized, we see that those people will move into, you know, purchases of homes. To the extent that weve all been surprised at the direction of Interest Rates, how has that impacted all of this . Well, clearly Interest Rates at these very low levels are almost becoming normal. And its a great opportunity for people that do have the credit and do have the down payment. You know, we are seeing purchases. As i said, i think what is really positive is the mix of business that has changed over the last 24 months is that we are seeing discretionary sellers. People that their home has some equity and theyve decided to trade up or sideways. And discretionary buyers get moving into the market to own an occupy a home. And these low Interest Rates are a boom to that and certainly help people, you know, with manage their Monthly Expenses by a lower Interest Rate than what weve experienced. Youve spoken out about the sort of mortgage process. I think describing it as broken. We heard from ben bernanke he had a tough time refinancing his mortgage. What do we have to do to change or at least improve the process . Well, i think we have to bring common sense back into the market place. I think what chairman bernankes experience and his Statement Last week, how can you understand the wisdom or the logic of former fed chairman not being able to qualify for a refinance on a relatively small number given hes in the 1 . That doesnt make any sense. And i think, you know, now factor in the average american that doesnt have that high profile, does not have the ability to, you know, to pull any strings. The process is to mechanize. It doesnt allow for common sense to enter into the mortgage qualifying process. And the standards are just too high along with the down payment. I think if we got back to the type of mortgage, you know, industry and process that we had prior to the boom and prior to lowering the standards, i think we would see that defaults were de minimis and frankly people made commitment to pay back their mortgages. Thank you for joining us this morning. Thank you. And when we return, jim cramer from the New York Stock Exchange with all the numbers weve gotten this morning. Heres a look at the big names which have reported. More on these names and some others. Harleydavidson also posting sharply higher. And tomorrow on squawk box, quicken loans chairman and owner of the Cleveland Cavs dan gilbert. Thats starting at 7 00 a. M. Eastern time. Squawk box will be right back. And new blind spot monitor and a 2014 top safety pick plus rating. Cost of entry . A fortune. Until now. Hey sarah, new jetta . Yup. Can i check it out . Maybe at halftime . Introducing lots of new. The new volkswagen jetta. Isnt it time for german engineering . I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. I have exactly the amount of postage i need, the instant i need it. Can you print only stamps . No. First class. Priority mail. Certified. International. And the mail man picks it up. I dont leave the shop anymore. [ male announcer ] get a 4 week trial plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Iits a lot of haggling and itan stakes so long. Ship. Scale. Craigs experience is completely different than mine. Yeah. Yes, mike has used truecar. At truecar, well show you how much others paid for the car you want, and how much you should. Because i used truecar there was no haggling about the price. They treated me so well, and it was just such a quick, easy experience. Get your car, and get back to the life you love. Welcome to the future of carbuying. Lets take a look at shares of harleydavidson. Earnings per share 69 cents beat the 60 cent estimate. Harley was help bid stronger retail sales in the United States of its iconic motorcycles. I dont know how is that luxury . Its not. Its a dream buy for people that arent necessarily buy for peopt arent necessarily luxury. For certain people its a luxury. In 2008, that was one of the ones that got hardest hit. Its a discretionary item. But its not like a private jet or something. No. You dont need to be a royal. You have to be doing pretty well. Its to certain degrees. Lets get down to New York Stock Exchange. Cramer must have owned a motorcycle in his life. I do like them. I go out with my buddy haley in summit. Hes got a bunch of harleys. Way like about this harley quarter, they did a bunch of launches that are just doing incredibly well. This may be more of a Technology Company than we think. Some of these things, the roadster, project rushmore. It reads like a fantastic semiconductor company. Harleydavidson is a Technology Company, ibm is not . Ibm is a Share Buyback company. Thats what they do, they just buy back shares . Would be good if they innovated. They have watson. Come here, i need you. This is an amazing quarter. He won a lot of money on jeopardy. Polaris and harley. Asia pacific was up really big. Didnt they close for business this quarter . Sales up 12. 8 . 7 gain in latin america. I dont even see them on the globe any more. So harleydavidson is something we make that the world takes. Kind of like trenton. I like it. I like the symbol. Its good. Okay. So we had mcdonalds, i say we knew mcdonalds had issues. Maybe worse than we thought. We knew coke had issues, too, didnt we . Coke, this is totally no coke pepsi. I am floored. Cocacola put out a bad quarter. Its a bad quarter. We are restructuring, we are restructuring. This is one that maybe its like you can restructure dog food but they just wont eat it. Do you think buffet should sell coke and ibm and buy harley . Swap out of coke. Hell never do that. Ibm, i dont know. If he is reading over that conference call, he is thinking to himself, you know what . Im going to stick with this another quarter because maybe this is just ramen east recognizing the palmisano game plan to buy back stuck. It took great courage to admit it. Maybe he gives pass on the next quarter. Wow, ibm, the best thing about ibm was they have a relationship with apple and introducing 16 new products. They have something in security. They buy a lot of companies. They have no social, no mobile, no cloud, no interactivity. Every one of those will say they are up double digits. The base of what they are up on is so small. Is it cumulus cloud, ive got to get a weatherman. This is a cloudy story. How about verizon . The ads are good. The penny misses. The one that dazzled me last night, no one talks about texas instruments. Texas instruments, micron, sky works solution. Texas does have some apple. These quarters are remarkable. I think we put behind microchip. Some companies are doing really well in the business of tech. Ibm is not one of them. I question whether it is tech at this point because on the call, it is open rebellion on that call. You guys are a second rate i cant take it. They are so mean and horrible. They were bullying apple. Ibm. Ibm was a love affair. They are bullying ibm. Apple is a love affair. I felt bad for ibm. I almost shed a tear for ibm. It was kind of like you felt like wow, how could you pick on them like that. Would you buy the stock . Ibm . No. Okay. What are you kidding me . So i just want to make shedding a tear. The parts arent worth more than the whole. Your piece today was great. My sympathy for apple comes from the fact you have guys who are analysts who are very good guy. Are you going to watch the world series . I love the royals. Do you know where lourd got the name for that song . She saw a picture of george brett signing autographs and came up with the song royals. Do you remember the pine tar incident with george brett . Weve got to go. We dont want to be royals. Crystal . No. When we come back this morning, a horse on the loose in new york city. Plus, find out what 70 million will buy you in the private jet market. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. E financial noise financial noise financial noise financial noise an Unprecedented Program arting busithat partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. See how startupny can help your business grow at startup. Ny. Gov what can you get fore 70 million in the private jet market . Bombardier unveiling a new jet at the National Aviation conference. Is that a challenger . What is that, phil . No. Its not a challenger. It is the global 7,000. Global express. Our photographer is going to take us on a little tour here. Consider this your eye candy at the end of squawk box. What stands out at the end of the global 7,000 we are seeing the first time here in the u. S. Wifi operations, joy sticks to the side. What they consider a proper galley. If you go towards the back, you notice this is the First Business jet that has four cabins. Four cabins within the area. There is the business area we are watching right now. Oh, by the way, full connectivity when flying around the world. Then you move into what they consider the dining area. Then finally, in the back we want to show you, its got its own bed, a suite. If you are flying from beijing to washington, you can take a little nap. Just a little eye candy all for the price of 72 million. That competes with the gulf stream 650, i think, right . They would tell you that it is better than the gulf stream g650 because of the range. When youre looking at this price category, it flies up to 17 people. Take care of my plane. Thats too many. See you back at hq. Weve got to run. Thanks for joining us. Now its time for squawk on the street. Good tuesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer, david faber at the New York Stock Exchange. After the first threeday win streak in a month for the s p, futures suggest we may make it four. Nearly half a dozen dow components reported earnings this morning. Tenyear yield back above 22. Crude oil looking for stability. Our road map begins with a slew of earnings this morning. Sales light at coke