Transcripts For CNBC Squawk Box 20161013

Look at crude, which has been dictating terms for equities lately. Relatively unchanged on wti, about 50. 18 per barrel. For brent, 51. 88, barely higher. Rbob gas edging up a bit. Well get back to the markets in a bit. Breaking overnight, the u. S. Military launching tomahawk cruise missiles against radar sites in yemen after incidents earlier in the week where a navy ship was fired on from a rebel controlled area. Now to this mornings top story, embattled wells fargo ceo john stumpf is out retiring Effective Immediately. Tim sloan taking over the top job following the highprofile scandal involving their sales practices. News came out after the market closed yesterday. Looks to be up about 1. 5 in extended hours. Notably above 46, a level we havent seen in some time. Helping. Helping. Yeah. Wilfred frost spoke with tim sloan late yesterday and asked him if stumpfs departure was a necessary condition for the company to move on. I think johns decision to retire is one that, you know, is clearly sad for all of us. We think so highly of john and his leadership in the company over the last decade and longer. But he concluded this was the right thing to do for the company, to allow it to move forward because he felt that the focus on him was becoming a distraction and hindrance to the operations of the business. Senator Elizabeth Warren is not satisfied with the ceo shakeup. Shes sounding off in a series of tweets last night. Saying john stumpf should resign, return every nickel he made during the scam and face dodge s. E. C. Investigation. Hes 1 for 3. If stumpf is leaving with all of his illgotten millions, thats still not real accountability. I have a lot of views i want to share. Jeff sonfeld is here from the dean school of management. We have not talked. What are you thinking this morning . I think the board acted wisely and late. I think john stumpf did the right thing. It seems like this was voluntary. He offered his resignation. You should never surprise your board. There are many misdeeds are. Many directors were surprised by his initial Senate Testimony. And disappointed with his house testimony as well. Thats a crushing blow. Of course the loss of trust with customers should be at the top of the list. Concealing information from his board and investors, auchl. He knew about stuff for over a year. He even testified to it and didnt tell his board that they didnt even begin investigations until a week after his Senate Testimony, legal investigations. Thats extraordinary. He kept the person on the job who was responsible for overseeing this systematic fraud and rewarded her handsomely on her departure. What happens from here . You heard the comments from Elizabeth Warren. This is not accountability. I have a soft spot for john stumpf. I like him. I think hes a smart guy. Genuinely i think hes a good person and tried his best but messed this up royally. I give him credit for stepping down. Thats a high bar in terms of what i would consider accountability . Is the next step dodj or the s. E. C. . He erode his base and bailed out on them, even Warren Buffett talking to becky quick had undercut him by saying, im not complaining to the board, im just complaining to the entire investing public, im disappointed. He didnt do it to jamie dimon. He didnt have very strong credibility to stand on here. But he didnt stand up and say this is a complete and utter mess. I recognize this is a complete and utter mess, ill fix it. Instead he tried to tap dance. You had to squeeze any apology out of him. What was astounding, you might think this is an error, by to think they threw the Senate Testimony, and he kept this misguided sales practice alive and were going to keep it through april. And then after the Senate Testimony they were going to cut it off in january. Finally they stopped it. To some who argue this was inconsequential it was only a small number of people involved, thats like saying that little hole the size of the refrigerator in the titanic wasnt inconsequential to the size of the ship. From his point of view he might have thought, sure, they took it too far, but this is why were valued higher to any other bank and why weve been ability to skate through the rebound period when everyone is el concerned. Youre right. That this was core to their strategy. So many of these investor calls Elizabeth Warren, many people grandstanding, but Elizabeth Warren was correct in saying this was not a large amount of money in terms of their earnings, but he was using this to head off or embed deeply in quite a number of investor calls talking about building this plat for of cross selling for the future. Several s. E. C. Chairman told me privately there could be some serious sarbanesoxley clearly. Wed like to push you. Name some names. Richard breeden, republican appointee has been clear that section 301 and 401. They signed off on he and the cfo, a yale alum, hopefully hes fine, signed off on these disclosures without disclosing they had systemic fraud in there. They knew some of this to be misrepresented. You have an issue of whether or not they concealed material information. This was obviously materially troubling. 5,300 employees fired and millions after fraudulent accounts, but also what this had done to the stock price is significant. And the lost business in 16 different states, other charitable institutions, investors are relooking their businesses. This is huge. Theyre in the business of trust, as kelly was saying. Ones you separate the fingers, that trust is forever gone. Real quick n terms of how this was managed, part of me wonders whether john stumpf was tone deaf in part because he was he was part of the financial crisis, but not one of those ceos who lived through this, felt especially because they were on the west coast, felt the way the country felt after that. So that when this happened, it didnt feel to him as big a deal perhaps as it should have. Do you think theres credence to that . Yes. I think its a shame we dont have two hours with the knowledge you have to top on that. To your earlier point yshes, hes a very nice guy. Hes not an overtly corrupt bully, but many people lost their jobs. The whistle bloblowers suffere badly. He was ill equipped to this ambassadorial role. If you think of exxon dvaldez, r ken lewis at bank of america, a lot of times you have a dutiful bag carrier but doesnt have the ability to frame or investigate. So shame on him, shame on the regulators, but shame on a fantastic board in terms of their individual credentials, but this board process initially circled the wagons. Sth they should have started this investigation years ago, months ago. And the fact theyre starting now shows the contrast between them and yahoo and marissa maren. Jeff sonnenfeld, great to see you. Thanks. Now in todays economy agenda well get weekly job liz claim numbers, along with the budget at 2 00 p. M. , plus some fed speak. Philadelphia fed president , Patrick Harker will discuss his Economic Outlook at 12 15, and tonight at 9 00, neel kashkari. Morgan stanley and Goldman Sachs lead underwriters for an ipo for snapchat. The film could be vying for a 25 billion ipo valuation. Signs of this ipo happening sooner or lat sooner rather than later is likely. Do you snap . No. But i saw with the dogs yeah. We do that with our kids. Are the glasses out yet . If you have a snapchat is squak on snapchat . I dont know. Guys, are we on snap . You guys have to snap. Working on it. Shares of samsung are rising in the asian session, rebounding for the first time after three Straight Days of declines. Offering financial incentives for customers in south korea who exchanged galaxy 7s for other models. Samsung began sending fire proof boxes and protective gloves to customers returning the potentially explosive devices. Its an explosive story. Oh, yeah. Coming up, donald trump has been a constant presence in the headlines since he announced his president ial run last year. How has the added publicity affected his businesses . The surprising answer when we come right back. Welcome back to squawk box. The Trump Campaign fighting back against new zeksexual assault allegations. Today hes rallying in south florida where a woman claims he groped her years ago. Shes one of several coming forward. Tracie potts has more. He was like an octopus. It was like he had six arms. Reporter jessica leads tells the New York Times that happened when she sat next to trump on a plane. Pageant contestants also coming forward. He turned to me, embraced me, gave me a kiss on the lips. Reporter several women making allegations including one in south florida where trump rallies today. Nbc has not verified their claims. The Trump Campaign denies any of it ever happening, and questions why these women waited years until weeks before the election to report it. Hes doubled down. He doubled down on his excuse, its just locker room talk. I have to tell you, after he said that in the last debate, the most amazing thing happened. Athletes and coaches starting speaking out. Reporter trump says the allegations are distracting from leaked emails from Hillary Clintons aides. The latest wikileaks document shows conversations that trump calls anticatholic and down playing terror. The wikileaks email show the department of justice fed information to clinton. She deleted the emails. She has to go to jail. Reporter the Clinton Campaign calls it a faux controversy pushed by Russian Hackers determined to get trump elected. Tracie potts, nbc news, washington. Trump has events planned in florida and ohio today. Hillary clinton is campaigning out in california. Robert franks joins us now. Hes taking a closer look at trumps run for the white house and how its affecting his businesses and his brand. Welcome. Its too early to tell how the events of the past week will affect the Trump Organization, trump real estate may be holding up well, traffic at his hotels and golf courses may be under pressure. An analysis by zillow found that trumps 16 branded buildings in manhattan have seen price increases of 5. 5 in august over the previous year, while the broader Manhattan Market saw prices grow 1. 7. Real estate has long lead times for sales and listings, theres been high profile defections from trump buildings including Keith Olbermann who sold his trump apartment on the Upper East Side for 3. 9 million tweeting that now i have escaped i can report that the market in new york city trump apartments is in a freefall, apparently not so much. Since the Trump Organization is a private company, we dont have reliable data on sales and traffic at his hotels, golf courses and winery. But according to foursquare in june and july traffic fell 14 . Hip munk says traffic declined up to 27 at those propertiy ie since the start of his president ial campaign. According to him, the Companies Increased Revenue theres by 190 million since he started running for office with gains at his golf courses leading those increases. The Trump Organization declined comment on what the revenues are today vers last year. Of course we do have the trump hotel at the Old Post Office opening in d. C. This month. That could provide trump some welcomed Revenue Growth. Guys . Thank you. Well continue this conversation. Stay here. I want to know about brand trump. Were joined by shelby holiday, senior video reporter with the wall street journal. Heres my question for you. We were just talking about this during the commercial break. Is this a cosby situation . If you read some papers last night you would think hes being painted as bill cosby. On the other end, if you read drudge this morning, the headline is clinton is fed up with rape protesters fear voter disgust, meaning people are going to these events and suggesting that bill clinton was involved in you see where this is going. Right. Completely and utterly different sides of the world. So when you hear these allegations about brand trump, does it matter . Matters to a certain degree. We saw some of these Trump Supporters start to peel off after the audio tape we heard on friday. Their reasoning was, well, we always knew he said lewd things, now hes talking about doing lewd things. Were not really on board with that. Now that we have these allegations, if theyre true, he is actually doing these lewd things, that takes more of his supporters. There will always be people who stand behind trump. They stood behind him with his attacks over his ban on muslims, theyve been all for that. They wont go anywhere after these allegations. Its an interesting dichotomy when you look at how conservatives are painting this as a problem with wikileaks and bill clinton. The other question is when you think how bad it is, frankly for some reason this story this about the two women they have names, its not anonymous people. They have names, they went on video. But given Everything Else weve heard, not to say this doesnt sound worse, but it seems like its just part of a if you look at how his brands were growing, he was an aspirational brand, building the new forbes brand, the american name that stands for wealth. When you have the political overtones about the wall and immigration, that was one level of test for clients. This over the past week is a whole level of test because you look at mara lago, the real estate. Wealthy femamale clients are an important part of his company. How many wealthy female kleins aklein s a clients are there to vote . From the beginning weve always said this could come down to suburban women. Typically these white educated women vote for republicans, but in this election theyre heavily behind Hillary Clinton, increasingly turned off by these things trump is saying. Now were seeing ivanka go on a blitz to some of these suburbs to win those women back. Those will be significant to counter Hillary Clintons strong holds in urban area. Did you see this 538 map about the men and women map . If just men voted, it would be a landslide for donald trump. Yes. But women have outnumbered men in voters by more than 10 million in the most recent election. If we see that, it will be on participation. But women, there are more women voters voting than men. 10 million more. Breaking it down, its so simple. Clinton has a strong lead over women. Trump cant make that up with men. Provided they all vote. Right. Flipping it around, were been talking about trump, make this clinton wins because of this for trump, but what about all the leaks . Is this changing the dynamic at all . The leaks are being overshadowed by trumps story after story right now. It is theres troubling stuff in there. Its troubling stuff. Thats the thing thats bugged the trump people and the Republican Party who might be behind trump, every time theres been something that could damage Hillary Clinton, hes done himself more damage in the meantime. Could be argued, those clinton things are more significant for the country than these personal allegations. But this is what People Choose to focus on. Last piece, the financial piece, if you look at some of these emails, conversations with podesta, shes at a completely different place on wall street than she made it out in the primaries. Maybe republicans say maybe she likes finances look at the money flow. Wont hurt her votes on wall street. But what about these progressives that were Bernie Sanders people that came along . The thing about the progressives, theyre not going to a third party like gary johnson. He wants to deregulate banks. Hes fiscally conservative. If you care about wall street youre not voting for gary johnson. Andrea, you didnt need leaked emails to know that Hillary Clinton is raising so much money from wall street and hedge funds. Of course she is. People have nowhere else to go, but going into the conventions their hate for donald trump is so much more intense than their uneasiness with hillary thats probably true on both sides. Its true on both sides, when you look at the latest wall street journal poll, the protest vote is there for people. People voting for clinton, 49 . Of her supporters voting against trump, 46 . She has more people backing her than just opposing donald trump. On Donald Trumps side, 39 of his supporters actually support him. 53 oppose him. Dare i ask you to speculate, we have 3 weeks, 3 1 2 weeks to go. What is the worst possible thing that could come out on either side . Why ask that . Its not over yet. Clearly. Theres going to be more videos, something will happen with trump and more email also come out on Hillary Clinton. I dont know what that could do with this whole situation. Its too painful to think there could be anything worse. Theres so much time left. Theres 27, 28 days left. Right. Who knows what could happen. It would be a game of who has the worst press. Who has the least worse press. Going back to his companies, the speculation was this was a winwin for trump, and this is trump inc bigger than ever. That i think now is an open question of whether that company can thrive and grow after all hes been through. Thank you for coming on. Thank you. Coming up, stocks are under pressure. U. S. Equity futures last check had the dow implied to open lower by 100 points. Down by 106. The s p 500 lower 14. The nasdaq would open lower 30. Weak trade figures play nothing that. As we go to break, a look at yesterdays s p 500 winners and losers. 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S p 500 down about 14 points. The nasdaq looking to open off 30 1 2 points. Our top story, embattled wells Fargo John Stumpf is out. Hes retiring Effective Immediately. Tim sloan taking over the top job ahead the high profile scandal. Shares were up just a little bit, about 1 on the news. Wilfred frost spoke with the new ceo, tim sloan late yesterday in an exclusive interview. Heres what sloan had to say about the Management Changes ahead. Oh, theres a lot to be done. Wells fargo is a company thats made up of 260,000 team members, all across the country and all across the world. And no one individual is necessarily going to make the difference. We all have to Work Together to restore the reputation of the company, to continue to focus on moving the company forward. So, one person, whether its john stumpf or candidly me is not going to make the difference. I said Management Changes ahead, its management challenges ahead. More on Management Changes coming up in a bit. Well talk about this with a wells fargo analyst. Potter heads are in for a special treat starting today. All eight harry potter films are hitting imax chetheaters. The oneweek Film Festival building up to the new ef film. The exclusive screenings include a look at fantastic beast and a greeting from the films stars. I didnt know there was a new harry potter movie coming out. The new play, that was a big deal in london, this new movie. Its amazing the output of wr k. Rowlings. You know who owns this . What . Is it universal . Yeah. Look at that. You can go on the harry potter rides and stuff at the theme park. Synergy here. Squawk booze news, were having coffee, but starbucks iced coffee versus duncan, just in the morning, i want to make it clear, more caffeine per that may be true. It is true. But im just saying, dunkin is delicious. It is, but if youre trying to main line caffeine then you have problems. Talking about main lining Something Else. More than 200 jim beam employees have voted to strike following failed contract nexus with the parent company. Worker the at the facilities in boston, kentucky expected to begin the strike at midnight friday what that means for your jim beam, i do not know. Nor do i want to. People have mixed it now with coffee . The irish coffee thing. Yes, its weird. Would you ever yeah. I heard the story when i was in ireland. It started because a guy had been on a ship all night sailing across the atlantic, he landed on the west coast, he was given a coffee, and there was some booze in it because it helped take the edge off from the rough trip. The markets are a little antsy this morning. We are joined by doug kotey, along with alison deans. Guys, welcome. What is going we have the dollar strengthening, Interest Rates moving up. What do you think is happening here . The economy is improving. We have had on again offer again fear of recession. I think people are acknowledging were on a positive trajectory, though its not a steep upward slope. Now that the fed is acknowledging they almost raised rates sooner than expected, it is a good news bad news. Higher rates could wind up strengthening the dollar and create things that were at headwinds and finally abating to make earnings more positive which is what you need to drive the market forward. If rates drive up,inishes a bit. But the good thing is the fed thinks the economy is strong enough. I would have thought with how ugly the political season is, they would have been more cautious in commentary. Well see how that goes over the next couple of weeks. How you are guys investing around it . If you look at it, last year around this time we expected the fed to raise four times this year. Now were maybe looking at one, maybe not. Right now, as you talk about the dollar, talk about oil prices, the fed they are two mandates, inflation and unemployment. Now theyre looking at theyve become the worlds central banker. So can they raise and then have other currencies get hit hard . Have the dollar get out of control . Im not sure. Im not sure they can raise in december. Seems like the market is pricing that in but weve seen this before. The way i would invest in this lowyield environment, the s p 500 has had a fiveyear run. Now this year global diversification, everything is beating the s p 500, mid caps, small caps, global reads, emerging markets. Once this usually happens, weve seen this before, globe diversification tends to continue to outperform for years. Well, the s p 500 has been much stronger than other markets. Its in my opinion fairly valued. Unless you see a robust earnings outlook which is tough to imagine and you need the rest of the world to start doing better, particularly if the dollar is going to get stronger for the s p 500 to move up. If the rest of the world is going to get stronger and the rest of the world is cheaper, i agree with you on the global diversification. They can raise rates if they do a tiny bit to send a signal that theyre more comfortable with the environment. I dont think they do a major increase in rates. Can i ask a political he can for both of you . I was at temple yesterday. A temple when youre in the hallways, everyone talks politics, it becomes a conversation about the stock market. No, no. Some very smart people i was with were suggesting that they were thinking about whether they should go to cash, literally, about a week before the election because they dont know which way it will go. Maybe it will change in the next three weeks, well have a different view. Do you have a view it was espoused by steve ratner last week or two weeks ago that the market would fall off materially if donald trump would win or hillary wins no, dont washingtonproof your portfolio. Weve been here before. Its always two words, remember fiscal cliff, everybody was not investing, holding the government at bay. Then fed taper, my gosh, the fed will taper. A flaunevent, market moved up. This time dont go to cash. What i believe is that any investment below the rate of inflation youre basically causing your clients to lose money slowly. You have to be over the rate of inflation . So you have to be in the market. I actually think the the corporate earnings are in the five consecutive quarters of negative growth. We could have a sixth. But if you look at low yields, low yields, the risk premium between equities and bonds favors equities and from that metric it looks like equities are cheap. Im glad you said that. I said that to these folks in temple, too. Im more nervous about the trump win in the markets. You are . A little bit. I dont trust his policies, i dont think he has any. If you were to wake up wednesday morning and he won, so the peso theres Certain Industries or certain countries you can clearly see something. If youre an investor or analyst in the morning, do you sit there and say what . How would do it . File like his tough talk about the way hes going to handle our multi decade global relationships and some of the International Trade policies we have, people think he might actually put some of those into place. Thats really bad for our economy. How would you actually math that out in any real meaningful way the next day . I think people would just sell. People would hedge or sell. Broad swaths of indexes. Yeah. We have balance of powers. So whatever they say, will they be able to implement. You have a Republican House and senate, and theyre not going to its hard to get legislation unless you have we have that now, all they talk about now is a democratic sweep of the white house. Thats a good point. Thats what the markets should be pricing in. I think both parties, trump and clinton are making a mistake not passing tpp, the transpacific partnership. Trade with 40 of the global economy. Guess who will pick that up if we dont . China. I dont think the house will turn. Its way too entrenched from the Republican Party perspective at this point. I think the senate, yes, but not the house. These are the odds everybody is following now in the market. Thank you, guys. Coming up, celebrities continue earning millions for years after they die, and each year forbes compiles a dead celebrity top earners list. Apologies for being morbid. Well tell you who is getting the most money at least after the fact. Coming up at the top of the hour, Delta Air Lines set to report. Ceo ed bastian will join us in a cnbc exclusive interview after the numbers hit the tape. Thats at 7 00 a. M. Eastern here on squawk box. Go after it the same way . Many chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming ecialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential for decades, investors have used a 60 40 stock and bond model, with little in alternatives. Yet alternatives can tap opportunities that traditional assets cant. And even though theyre called alternatives, theyre actually designed to help meet very traditional goals. Thats why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. Translation . Goodbye 60 40, hello 50 30 20. Welcome back to squawk box, and Andrew Ross Sorkin along with kelly evans and wilfred frost has joined us for the rest of the show. Making it from jersey to here in record time. Its easy at this time in the morning. Jump in the car, shoot over the bridge. Excellent. Youre up. Im up. Thats why youre pausing. I was like dont know if i have much more to say on this. Youre up. Im done. Thanks for coming in. The wake for Sony Playstations vr is over. They are releasing the addon for the play station 4 today. Best buy and gamestop Opening Doors early to meet demand. Amazon already selling out of the unit and encouraging gamers to sign up for email updates when the vr bundle is back in stock. Playstation vr is going for 499 that price includes everything you need to plug in and go. I cant wait to see how this does on the market. Could be interesting. Vera bradley says its Payment System has been hacked. Hackers may have accessed Customer Data from Payment Processing systems at Stores Including credit card numbs, names, expiration dates and internal verification codes this between july 25th and september 23rd. The exact number of cards affected is unclear. Cards used to shop on the website were not affected. Michael jackson topping the Forbes Annual list of the top earning dead celebrities. The fourth Straight Year he topped the list. This year jacksons estate sold its remaining stake in its music catalog for 750 million, bringing earnings to 825 million. Coming in second, charles schulz, his take, 48 million. Rounding out the top five, arnold pal nmer 40 million. Elvis presley, 27 million. And prince with 25 million. David bowie was 11th coming in at 10. 5 million. I read that Arnold Palmer was starting to drink his Arnold Palmer with a little cranberry in the weeks before he died. Halloween is big business for 1031 productions. Their haunted hey ride brings in big crowds and the sharks on shark tank smell blood in the water. The companys ceo is up next. European markets are selling, moderating a bit. The german dax off a little more than 1 . Squawk box will be right back. This car is traveling over 200 miles per hour. To win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley heres a scary stat, americans are expected to spend more than 8 billion on halloween. Our next guest a haunted hayride not only attracts thousands of ghoulish visitors but got the attention of a few sharks. Melissa carbone is the ceo of ten thirty one productions which got a 2 Million Investment from shark tanks mark cuban. Here to talk halloween and more. Good morning. Good morning. This is a crazy business. Kind of the business nobody knows is a big business. How did you get into this . You know, it was very organically. I at the time i had been working at Clear Channel entertainment in los angeles. And also creating these massivee displays. Just organically i was a home haunter. I didnt know i was at the time. People hire you to decorate your houses for halloween . No. Thank god. How ghoulish do you get . How ghoulish do we get . Yeah. Pretty ghoulish. The whole thing . Yeah. Theyre extravagant, very extreme sets. And theres one here in new york, right . There is. Its our second year on randalls island. Were open tonight. How much does it cost . Anywhere from 35 to 55 depending on the ticket. And what do i experience as im going through this . So, the haunted hayrides are we create these worlds. Very immersive worlds. Theyre different from haunted houses which i love. But our attractions from the moment you step foot on the property to the moment you leave, youre never taken out of this world. As you approach the orange glow comes from the trees and the fog on your skin and the hay, youre loaded onto these hay pulled wagons. Theyre pulled by tractors and youre brought through this trail of hundredfoot castles and burnt down churches, smoldering this is not a family affair. It is. I have 6yearold kids who love halloween, but this seems more like a rave or something hey, look, we have some 6yearold kids that come to the attraction. How brave they are. Braver than i am. Depending on the kid. We recommend for kids over 8. But an 8yearold will not be too scared . Again, it depends on the kid. Were counting on the parent knowing what their threshold for fear is. How long is the experience . Our hayrides are two to three hour long. Theyre full evening its an event. So they take the whole night to go. So youve expanded to opening in new york last year. Could this expand globally or is halloween something americans are obsessed with. You dont have it . We have it, but people take it much more seriously here. Can you expand it further . Definitely can expand further. Asian markets are becoming super focused on this. Were getting a lot of inquiry about people wanting to bring these two asian markets. Its definitely moving. As a business, this is a lumpy business. Like a one quarter a year business. Do you think theres other either holidays or other types of things you can do throughout the rest of the year . For sure. This is what i hear the most. That its seasonal. Its still an 8. 4 billion industry. Theres a lot of money there to be had. Were focusing on those dollars. But yes we have attractions all year long all over the country. And were not just how involved is mark cuban . Very. Hes very involved. He loves this venture of his. I think its one of his favorites that hes invested in. And so hes a guy that likes to exit. He likes to make investments with exiting. What do you think happens to a company like yours . Do you sell to somebody else . How does this work . Yeah, i mean, we all start a business to make money. The ultimate objective would be to drive the Company Value up and eventually move into a group where we can have a bigger global footprint. But for sure theres definitely an ultimate goal there. Overall the experience of being on shark tank, what was better. Guidance from mark cuban or the exposure . I think its the exposure. I love mark. Hes been an incredible mentor. He has a lot of definitive ideas about the way things should be which i love. But the exposure has been great. The learning curve on finding locations and creating models in the funnel come to you come to fruition more quickly has been awesome. Quick live experience question for you. And technology question. Any chance or worry maybe its an opportunity too that vr changes all of this . Meaning people will want to experience this literally in their living room in a totally different way and what that does to the experience of going somewhere live. I know a lot of people in the sports world are thinking about this both from the opportunity set but also from the risk perspective. Yeah, i mean, i dont think theyre mutually exclusive. I think there are people who want to have vr horror experiences and people who want live experiences. I think vr is going to augment our experiences. Were already dabbling with it. But, you know, its also for me, like, i dont think the world is just into this spectator Sport Entertainment anymore. Were this live theater experience that people can move through. And thats much different than someone who just wants to strap a device on their head. So our target is what about the creepy clowns . Are you adding them . This is a big thing. Weve had creepy clowns since 2009. So no new thing here. Thats a new thing for everyone else, but not us. You should do a christmas one. In london theres a Winter Wonderland around christmas. Its awesome. We know. Final, final question. What are you going as on halloween night . My kids got me a gorilla costume. I havent dressed up in ten years. How can you not . Youre in the halloween business. Its because im in the halloween business. Im working. Its a big night. Thank you, guys. Good luck. In sports news, a debut for the number one draft pick in the nhl draft. Matthews scored not one, not two, not even three, but four goals in his first nhl game. The 19yearold from scottsdale, arizona, is the first player to score four goals in his nhl debut and his proud parents were on hand to celebrate. 54 they lost in overtime. Wow. Coming up when we return, Delta Air Lines set to report. Well bring you the numbers and interview with the ceo. Well talk about that middle seat. Then later, more on the shakeup at wells fargo. How the change will affect the company. More coming up. Etwork. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your small business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Wells fargos bosses stepping down. John stumpf is out. A look at his replacement and what the street is saying straight ahead. Delta reporting quarterly results. Ed bostian tells us if there are clear skies ahead. And a look at how advertisers are trying to jump on the vr bandwagon as the second hour of squawk box begins right now. Live from the beating heart of business, new york city, this is squawk box. Welcome back to squawk box right here on cnbc. Im Andrew Ross Sorkin along with kelly evans this morning and Wilfred Jones has joined us. Take a look at the futures right now. Dow looking it would open up off 97 points. And the nasdaq off about 28 points. Take a quick check on crude right now. Wti is now above the 50 mark. 50. 15 at this hour. Rallied in the last half hour or so. Heres what else is happening. Wells fargo shares moving higher this morning. Ceo john stumpf has retired Effective Immediately following the sales practices scandal thats engulfed the bank in the past month. Well have more on the new tim sloan in just minute. In 15 minutes, marty mosby will be joining us to talk about the changes at wells fargo. Were about 90 minutes away from the days first two econ reports. Remember the china data on that last night is one reason why markets are a little jittery this morning. Amazon says it will hire 120,000 Seasonal Workers this season. They hired 100,000 last year. John stumpf stepping down as pressure mounted over the bank sales tactics. Coo tim sloan taking over the top job following the highprofile scandal over sales practices. Shares of the financial giant up 1 . Do bear in mind that futures are down over half a percent. So its a reasonable relative move overnight. I spoke with the new Ceo Tim Sloan late yesterday in an exclusive interview. I asked him about mr. Stumpfs departure and whether or not it was a sad or proud day for him personally. Its a sad moment because john stumpf is retiring in a situation that i think he would have never imagined. And he has done such a great job in managing this company notwithstanding some of the things that i think he wish head would have done differently. Having said that, i feel a great responsibility and im looking forward to being the ceo of this company. We have an amazing 164year history. And we are not going to allow the last five weeks to define the success the future success of a very well regarded and well known 164yearold company. Focus of course now turns to the companys earnings. Theyre due at 8 00 a. M. Eastern time tomorrow morning. Delta air lines just releasing quarter results. Phil lebeau has got the numbers and a special guest. Phil . Thank you, andrew. Were going to talk with ed bastian in just a second. Let me run down the numbers first. 1. 70 per share versus the estimate of 1. 65. 10. 4 billion. Lets bring in the ceo of delta for an exclusive look at not only the Third Quarter but the outlook going forward. Strong numbers considering everything that happened in the quarter. Thanks for being here. We had a solid quarter. Despite the outage and despite the weakest pricing environment, we had a strong quarter. Second best quarter in our history. So now its up for us despite those challenges to prove the resiliency going forward. You and i have been talking about this earlier. The market is not giving the airlines any love right now in part because of the pricing environment. I know you and other airlines were hoping to see the bottom by this summer. That hasnt happened yet. When do you see the bottom on pricing . Its hard to call on the bottom. Weve been looking for some time. When you look at the what the drivers are. Certainly the capacity environment and growth in excess of demand are one of the challenges were facing. Were announcing today well be reducing our growth rate and keeping that throughout 2017. Our guidance on revenue are better than Third Quarter. Were looking at down 4 on q4 revenues compared to down 7 in the Third Quarter. So much whats driving this pricing is jet fuel and oil prices. Oil above 50 actually starts to help that argument a little bit that you see the bottom, correct . It provides stability to the pricing platform. When fuel went down, it had a disruptive impact. Right. You had airlines that were dumping fares not really dumping but cutting fares so low that that was the negative factor there. We had a 50 price point for fuel. I think its a stable price. Itll allow us to price our product as an industry in a healthier way. Lets talk about the outage in august. It cost you guys about 100 million is what you guys announced today in terms of the revenue impact. A lot of people looked at this and they said, why is this continuing to happen in the Airline Industry that we will see an outage at a particular airline and they are crippled for two, three, four days. Is it the complexity of the technology . Or is there a lack of redundancy that hurts you in getting back up to speed . I cant speak for my competitors. I can speak for delta. It was the redundancies. Now theyre in place. It took us a long time to recover. The challenge at delta is that period of time we went out. It was early august monday morning. Business jest travel time. We had no backup capability to put passengers on new airplanes. So we were at 95 load factor set that period of time. So the Recovery Process was slowed also by where we when it happened. Ed, pilot question. I know you redid your deal with the pilots recently. Looks over a fouryear period their pay is going to go up 30. 2 cumulatively over that period which is a lot. Im curious when you think about the next four years in terms of what those numbers might look like. Because some investors have asked that question. Thanks, andrew. Were right now in the midst of an evaluation by the pilots. Its a tentative agreement. Its not a ratified agreement. I dont want to get out in front of the process. I want to respect that process. That said, the marketplace clearly has moved up for oil labor groups in the industry as youve seen profits rise. And we consider the deal that we did with our pilots to be what the market is today. Is that driven in part because of the shortage thats out there worldwide. In other words, they have the Pricing Power right now. Theres short supply out there. If you want to keep your most valued employees in the perspective you need them to fly the planes. Youre going to have to pay up. I dont think so. Were not facing a shortage at delta. This is reflective of the results were having. 19 operating margin. The employees are getting raises and they should get raises. You have Richard Anderson announcing his retirement, caught a few people by surprise. From your perspective, this was expected. When he stepped down, he made it clear hes not going to be lingering around here for long. Correct . Thats correct. This was part of the succession planning. Richard was a great friend. Hell always be a great friend. He wanted to stay on the board for about a sixmonth period while you had a new ceo come in as well as a new lead director in frank blake. We have a great new chairman in frank. We had a great chairman in richard. Were blessed to have another in frank. That atlanta connection showing itself again. Hi, ed. Just a question for you about whats happening in aerospace broadly. Weve seen the warnings from alcoa and honeycutt and others. Will you describe whats happening in the Passenger Airline business . Or is there a general cycle in which everybodys participating thats softening here . Well, the demand was strong this quarter. In fact, we had some of the strongest days in our history. In the margins, second best. So i dont see any softening on our outlook. With that said, investors are looking at not only your airline but all Airline Stocks right noup theres no love for you guys. What does it take for you to convince the investing public that this is an area where they can get the returns in the future . Is it sustainability on the margins . Sustainability on profits . What do you need to show over the next couple of years . Its sustainability and resiliency of our margins. The only way we can do that is get back to a Fourth Quarter we expect to be down four. By the year end, hopefully its going to be better than that and go into a positive trajectory. I think thats going to be the key. The investors rightfully so are asking the question as to wheres the bottom. One last question. A lot of people look at whats happened with the airline outages. The question i hear from people is are the airlines being hacked . Do you ever have these instances where there is an outside player that has hacked your systems . Were under attack as all Industrial Companies are under attack on a daily basis. They dont penetrate the fire wall. There was no cyber outage. This was a failure on our part. We didnt have the redundancies in place that were needed. And we had an electrical issue. Weve taken care of it. As far as the economy going into next year, obviously the election plays a role there. But whats your outlook. I think its solid. Cautiously optimistic. Its not strong. I wouldnt call it robust. But when you have the strongest demand in our history going on this summer. Ed bastian. Ceo of delta joins us for an exclusive look at the Third Quarter. A Third Quarter where they beat the street earning 1. 70 per share versus the estimate of 1. 65. Thank you, phil. And ed, i hold onto my sky miles with great i try to use them. Im cheap is really that. Arent we all . Yes. But we should talk to him about it. They keep getting devalued, it feels like. Coming up when we return, were going to talk about wells fargo. John stumpf stepping down as chairman and ceo. Wont receive a severance package. The move comes after two grillings on capitol hill over the accounts scandal. The future of the bank, and its peers. And later, as Companies Like sony ramp up their Virtual Reality experiences, the advertisers are doing the same. A look at how ads are hitting that part of the market. Weve got that straight ahead. Back in a moment. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows like at t. Welcome back to squawk box. Just happening in the past couple of minutes, some bob dylan fans will be happy this morning because bob dylan has now won the 2016 nobel prize in literature. Cited the american musician for, quote, having created a new poetic expression in the song tradition. Very cool. Very cool, indeed. Less cool, wells fargo. The fallout continues. Ceo john stumpf deciding to retire Effective Immediately. Now tim sloan is at the helm of the banking giant. Wells fargo is a company thats made up of 268,000 team members all across the country and all across the world. And no one individual is necessarily going to make the difference. We all have to Work Together to restore the reputation of the company, to continue to focus on moving the company forward. So one person whether its john stumpf or candidly me, is not going to make the difference. For more on what the move means for stocks and investors, were joined by marty mosby, director of bank and equity strategies. Thanks for joining us, marty. Good morning to you. Overall, is this enough of a change for the bank to be moving forward . Of course he is an insider himself. Well, when you look at it, this move in and of itself is just a step along the process is not enough. The company will have to address some key issues out in front of them. And basically it wont be john stumpf answering those questions. Well have tim sloan. So we have the next batter up, so to speak, as we go through the next leader for wells fargo. One minor point in terms of the changes that have been made. There are Board Changes too. Are those something you think is sufficient in that light as well . I do. I would think that those steps are even more pronounced and will have a better impact on starting to heal the reputation. When you look at independent directors. In these types of situations, it is good governance. Wells fargo has done that with this move. And theyve also put a vice chair in place that has a lot of banking experience. So i think those two appointments are as important if not more so than what we saw in the change of the ceos job that we saw yesterday. Of course now were focusing on the earnings numbers tomorrow and the Conference Call after that. Will we see specific changes in the numbers because of this scandal . Or is this still just a pr issue and what are you focused on in the numbers tomorrow . Well, i think youre dividing this issue appropriately in a sense that if you look at the franchise with customers and employees or the financials, those things are intact. We dont expect to see a big impact on the announcements of earnings tomorrow. Actually, i think they could, you know, beat with banking being relatively strong in the Third Quarter. Its a reputation and regulatory issue that they have to move forward and make sure they address appropriately here. We know were still expecting lots of pressure from politicians on the bank senate. Warren was quick to tweet last night this isnt enough to move forward. An interview last night, tim sloan saying they theyve had further requests from congress for information. So that will continue. Will this change and the changes help to see improvement on that front . The political scrutiny front. Or is it still going to potentially get worse before it gets better for wells fargo . In our opinion, this move especially with board appointments could help on the reputation side. On the regulatory side, i dont think it really moves the needle significantly. I think therell be pressure. Theyre going to have to deal with the culture that they had. The relationship between executives and front line employees. I think that is an opportunity for wells to reassert thems as a leader as they evolve that culture and show banks how they move more towards full Customer Satisfaction and engaged employees. In terms of accountability and given the comments that Elizabeth Warren made, do you think there could be additional clawbacks on john stumpf in terms of money . The compensation issue still is one thats out there. The board has said that theyre going through the process of looking at that. You want that to be independent as wells fargo set up for the board to look at it, management to be set aside because you need an independent review. But he already gave up 40 million just three weeks ago, right . Sure. That was only one piece. Which was unvested equity compensation. So there are other pieces to that puzzle that will continue especially as you see the process unfold over the next several months. What about criminal charges, marty . Do we think him falling on the sword whether it was completely on his own decision or with a bit of pressure from the board or not, does that pull him out of the limelight from calls from people like senator warren for him to Face Criminal Charges . Again, i dont think that this change will affect that regulatory and political environment. So i think the criminal charges that could or would have come about will still kind of proceed as they would have on the timeline thats already being set at this moment. Marty, where does the growth come from now from wells fargo . If youre scrapping this model which had worked to give them Revenue Growth and numbers better than a lot of their competitors for years now. As an analyst, where do you see that going now . Well, its important to remember that they already started making these changes a couple of years ago. So when you look at the process and how theyve been addressing customers and how the employees have been reacting to the culture, this isnt something that theyre just now beginning to change. That process has already been under way. When you look at growth, what youve seen with wells fargo is a couple of things theyve had to fight in headwinds. The low Interest Rate environment has impacted their Net Interest Margin later in the cycle because they have a much more longer duration portfolio which has repriced the Interest Rates over a longer period of time. Mortgage banking has seen a trough in earnings which is now starting to rebound. So when you look at those two things, those are things that wells fargo can benefit from over the next couple of years which has been a detriment to the earnings over the last couple of years. Marty, sum it up for us. The recent share price weakness for longterm investors, is it a buying opportunity . We think its a buying opportunity because you look at the dividend yield above 3 . Its one of the strongest in this group. When you look at the current profitability, it justifies the price at book value. And the last word id like to say is if you look at the last ten years in which john stumpf was leader of wells fargo, stock price is up 30 . Thats the second best performs large cap u. S. Bank. The average is down 30 . So there is value in the franchise. That will continue to show through for the shareholders. And we think as the reputational and regulatory pressures begin to subside over the longterm in a sense of over the next year that some of that value will begin to come back. Thanks very much for joining us this morning. Marty mosby from viking sparks. In the next hour of squawk box, csa managing director mike mayo will join us to talk stumpfs departure. Coming up when we return, harry potter fans have something to celebrate today. What they can expect when they head to imax theaters. Squawk returns in just a moment. D aflac pays cash. Aflac isnt Major Medical enough . No whos gonna help cover the holes in their plans . Aflac like rising copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay at aflac. Com boat urlbrlblrlbr remember here at ally, nothing stops us from doing right by our customers. Whos with me . Im in. Im in. Im in. Im in. One, two, wait, wait. Wait wheres tina . Doing the hand thing . Yep we are all in for our customers. Ally. Do it right. Potter heads are in for a special treat. Starting today all eight films are hitting imax films across the country. For the first time they will show the sorcerers stone and chamber. I dont like this. Youre making faces. Whats the problem . I love harry potter. I love the original movies are in the imax. I dont like films are being made not based on the books. Is it done with her blessings . Yeah. But its not good for the purists. Im skeptical. Where are you on game of thrones now that its past the booked . Im not so much a purist with that one because i havent read the books. They did a good job on the films but well see what happens. Anyway. Imax for the originals im into. In squawk booze news is this a regular thing . Yeah, we do. You can mix it with your coffee in the morning as well. Oh, good. Doyle that shortly. More than 200 jim beam explains a lot about what happens on this program. Yeah, it does. Have voted to strike that follows failed contract negotiations with beam parent company. Workers in the facilities in boston and connecticut are planning to begin the strike on midnight on friday. Coming up, when fed investors might hike rates. And the chances of a december hike and where you should be putting money to work. As we head to break, a look at u. S. Equity futures. Dow looking to open lower by a hundred points. Whats going on here . Im val, the orange money retirement squirrel from voya. Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . More of a spokes metaphor. Georganized at va. Com. Were drowning in information. Where, in all of this, is the stuff that matters . The stakes are so high, your finances, your future. How do you solve this . You dont. You partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. Morgan stanley. Welcome back to squawk box. Among the stories front and center, crude oil off session lows after losing some ground on oversupply worries. Heres where prices are right now. Wti crude is about 50. 14. The weekly supply report from the Energy Department is going to come out at 11 00 eastern time. It was delayed a day by this weeks columbus day. Also, the topics have been chosen for the third president ial debate coming up next wednesday. The las vegas event will feature questions on fitness to serve as president , the economy, the Supreme Court and foreign policy, and yes, a lot of mud slinging along the way. You have to imagine. The s. E. C. Set to approve new rules for mutual funds today. To show they have enough liquidity to cover redemptions. The feds september Meeting Minutes affirming expectations for a possible december rate hike. Steve leisman joins us now with more. Steve . Wilfred, a divided fed saying its ready to hike rates, quote, relatively soon. But markets have come to view relatively soon meaning december, not the more relatively sooner month november. The fed split 73 with an unusual three dissenters voting to hike rather than than the stand. Heres what dudley said yesterday speaking for the dovish side. I think were at a point where the economic expansion has plenty of room to run. Inflation is a little bit below our target rather than above our target. So i think we can be quite gentle as we go in terms of gradually removing Monetary Policy accommodation. So i think the economic expansion can last a good while longer. Heres how the minutes described the hawks. Quote, several participants expressed concern that continuing to delay an increase in the based on the committees past behavior or risked eroding its credibility. Markets are so convinced that soon means december that theyve driven down the probability of a november hike to just 8 . Thats according to reuters. The december contract around 60 . My opinion, the fed has not played this well at all by constantly putting the market on edge for more than a year that rates would go up. It got none of the benefits of raisie ining rates if the marke would have pulled forward. I dont think its underplaying it. I think at this point i got to tell you one other thing. Im getting a message in my ear. Tomorrow we have one of the dissenters on squawk box. 7 30. Eric rosengren, boston fed president. Used to be one of the doves. Now on the other side. Stick around, steve. Lets bring in mike ryan chief investment strategist Wealth Management on the americas for ubs. Good to have you both on board. All this back and forth about the fed and yet it is still probably the central question for investors, right . Its certainly one of the three. I think what youve seen is these kind of series of setting the markets up for rate hikes only to kind of basically step back at the last moment. What i think the fed is doing now, i think bill dudley categorized it appropriately. What theyre doing is going to take a prudent approach to raises rates. I think what they want to do is also send signals around the ability to communicate better with press conferences. Thats why i think the probability of november is so low and why december is so much higher. Not only do you have the ability to communicate better in december, lets also not forget not that this matters at all. We have an election right after the november meeting. I dont think they want to necessarily get ahead of that. What about you, david . And by the way, is there a way to get around this . Is there a way to get we look Interest Rates have been moving up. Rick was saying yesterday on air, theyre going to move up whatever the fed is doing. Whats the way it should be, right . Right. I do think the fed hikes in december, not november. If the fed doesnt hike in december, its going to leave investors very confused. But i think with the message from dudley and others is that the hikes after december are likely to be very slow. I think the next hike is 6 or 12 months after. Not until june the earliest of next year. Let me provide their point of view. Which is that the notion of strong job Market Growth on the payroll side unchanged and even a little bit higher unemployment is a relatively new phenomenon. 150 to 200,000 means sufficiently to bring down the unemployment rate. It didnt come down. We also know weve gotten an inflex to workers. 3 millionplus have come from were not sure where. Maybe off the sidelines, maybe its some strange demographic growth we didnt know about. But whatever, theyre coming back to work. This has changed the calculus for them nap would be their defense as to why they continuously forecast rate hikes that didnt happen. I also think one of the things you have to recognize, of course, is that, remember, theyve cautioned all along that hikes were conditional. But what theyre also doing is keep it in their peripheral vision. Especially when you have negative let me cut you off on that right now. Right now the stronger dollar, what europe and japan are doing. Has the market and the other Central Banks and the dollar and the Exchange Rate already tightened enough for the fed . Well, the question of whether theyve tightened you haenough,s what well look at. I want to be careful here. The fed is in the process of resetting towards rate norm normalizati normalization. This is a multiyear process that has to be done in a prudent manner. This is not what happened relative to other Central Banks. Its a multiyear, multistep process but they have to continue to follow through on it. So david, and if we could talk i dont want to put the fed aside, so to speak. But its going to drive us insane. Weve got the markets and the election coming up. You know, some of the best performing parts of the market were now the worst in the Third Quarter. What horses do you bet on . Okay. I think one of the things i see is a classic mistake. Looking at the direction of fundamentals like Interest Rates which is the fed likely to hike in december. And oil prices have climbed a little bit. You need to keep in mind whats priced in. If you look at Something Like utilities, it came under some pressure. I think its priced right now far 4 or higher yield. Its still attractive unless you think that rates are going to surge. You look at oil and Energy Stocks, i think Energy Stocks are priced for 70 oil. Theres a long way to go to make those equities attractive. This is what im advising investors to do. Stick with what i think is the core attractive part of the market. Health care and tech. The sales and Earnings Growth is decent. Can you go back to that, i dont know if you heard, i had a great conversation at temple yesterday about whether you should be in cash ahead of the election. So the praise going on, the rabbis up there and youre talking politics in the back. Yes. And there was a number of pretty smart people who were asking can i borrow a term from donald trump. Disgraceful. Hold on. Most of this conversation happened afterwards. While i was in temple, i was not. This is more part of the break fast. Whats the question . The question is whether there was this conventional wisdom that somehow if donald trump were to win, the market would go down. If Hillary Clinton would and theres another before you ask the question either the the odds, they say, of a hike go up with the clinton probabilities. Right . So the fed is more secure in hiking rates given the uncertainty of a Trump Presidency. Yes. Although many people think youll get more hiking under a Trump Presidency over the longer term. Wednesday morning in november, you wake up, either side and well be equally confused. Youre an investor sitting there trying to math it out. The Political Risk is not over. It might just be beginning at that point in time. We need to see what happens in the first hundred days and this economy does not fiscal stimulus and we might not be getting it. All i want to say here is lets not obviously this has been a traumatic, charged, polarizing election. But lets not forget the day after the election, heres what were likely to see. Still likely to see divided government, division of power, and only incremental change. Because were not going to have a mandate no matter who wins. With two candidates whose unfavorables are higher than a favorable, youre likely to see more people disappointed than happy. Whoever wins is going to have to work for the divided congress. Were towards the end of the rope. Are we going to get some fiscal stimulus . For example, like infrastructure. Is earnings season more important than both of these factors . No, actually. But earnings season is upon us, so it is important and the earnings will be flat year on year. So why is the fed hiking . Because the feds so because they havent hiked in some solange. Thats the worst reason. I think trying to get the Participation Rate up theyre trying to risk higher inflation. But the point is theres plenty of scope for that even with the hike in december. When are the hikes after that . I think thats going to be slow. One thing the fiscal stimulus, im concerned thats not enough and its not timely enough. I think we need tax cut ifs were going to hand over the baton. Going to make one quick point. Its within the feds mandate to try to raise the employment in the country. Theres two notions of central banking. One is it can pick inflation rate which is not doing a good job of. The other is it can nudge employment back towards the long run rate. And whats going on now was essentially an experiment with what is the long run rate. And it gets to the work of alan krueger and others we do not know, we have no experience with the 94 Million People who are not in the labor force. Some are retired, some are in school, and some have dropped out. We dont know how many of the dropped out can and will come back. Guys, thank you for joining us this morning. Coming up, mike mayo joins us. First, though, oral box will join robert frank with a look at one of the rarest watches in the world. Squawk box will be right back. Things about the network. All the networksre great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most cuent National Carrier rates. Save money on your phone bill, invest it in your small business. Wouldnt you love mo customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most rrent verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. Its been over 100 years since the first stock index was created, as a benchmark for average. Yet a lot of people still build portfolios with strategies that just track the benchmarks. But investing isnt about achieving average. Its about achieving goals. And insco believes doing that today requires the art and expertise of highconviction investing. Translation . Why invest in average . Across new york state, from long island to buffalo, from rochester to the hudson valley, from albany to utica, Creative Business incentives, infrastructure investment, university partnerships, and the lowest taxes in decades are creating a stronger economy and the right environment in new york state for business to thrive. Let us help grow your companys tomorrow today at business. Ny. Gov welcome back to squawk box. This next segment is about time. Real expensive time. And robert frank joins us now along with oral box of the phillips watch company. Did i get that right . Phillips auctioneers. Good to see you. Were going to show you one of the holy grails of the watch world. Its the stainless steel 1518. Only four of them are known to exist and one of them is coming up for auction. Here it is. Phillips in association with box and russo is planning to put it under the hammer in geneva with an estimated price of more than 3 million. What makes this watch worth more than 3 million. Excellent question. If we analyze watch collecting, what is it all about . Scarcity, quality condition. Originality, aesthetics, the complexity of the movement. This watch ticks in every discipline each bacs top scores. Interesting story about where this watch was first sold. And how it was sort of unearthed in the mid90s. Where was it first purchased . We know through the archives it was delivered to budapest, hungary, in 1944. Imagine the russians on one side, germans withdrawing on the other side. Someone had the amazing idea to make a stainless steel 1518. And buying it that time at around 2,000. Indeed. We have old price lists that shows what it was costing at the time. And the watch resurfaced out of hungary in the mid90s. Weve seen a lot of weakness in the collectibles markets. Theyre all under pressure. Whats happening with the watch business and what kind of collector do you think is going to end up buying this . We have seen that there is continued demand. Actually, weve seen even an increase in demand for the very best, rarest, vintage watches. What were focusing on. So i dont think you can just say theres a market for collectibles. You have to zoom in and look at it in detail. In terms of where a potential buyer could come from, we have about 40plus nations competing at our auctions. We see strong interest from asia, the middle east, former soviet states, russia, azerbaijan, et cetera. And of course all over europe and north and south america. Its Truly International these days with very Strong Demand from different types. And in the americas, the big collectors right now, are they hedge fund guys, private equity, Silicon Valley guys . Who are the big money spenders right now in the u. S. . So we see a lot of entrepreneurs, pharmaceutical, tech, of course money finance clearly. We see trading and commodities. Family offices. Old, new money. Its so vast. When you said family offices, are people buying these as straight up investments as a portfolio of assets in the same way some people throw art into that mix . First of all, what is the investment . I think for a collector the investment as a dividend the pleasure and the passion of owning it. Right. Now, once you talk in excess of 3 million, you obviously do your homework thoroughly. And i see that there are families who have a collection in art that say we need to expand into watches. Watches is really one of the future collectibles to now focus on. These are family decisions. I dont know if youre allowed to touch that. But someone who buys this, theyre not going to wear it, right . Who would buy a 3 million watch and wear it to an event . Are they going to wear it . Absolutely. The majority of collectors were working with, they enjoy owning and wearing such an important watch. And i can assure you all of the previous owners that i personally know since the mid90s, theyve always worn this watch on special occasions. Really . And theyre not afraid to wear it . Youve got to travel with security. Is it water proof . No. You cant go swimming with this. The good thing is its so so discreet you would have no other idea. Normally other watches wouldnt be featured on the set. This watch is potentially more than 1 million watch, right . Correct. This is a quarter Million Dollar watch. All these three together, thats a watch collection. I mean, these are all 1518s in different metals, right . The 1518 is the dream for any educated watch collector. In yellow cold its as you said quarter million to half a Million Dollars. Are as you go up to pink gold to stainless steel, its a like ferrari its them and everybody else. The prices that patek gets for vintage watches, theres nothing else close. Patek philippe is a great name. And the 1518 is the patek philippe. Thanks for coming in. Thank you so much. Wow. Wow. Yeah. Nothing else. Thats all hes got. Coming up, sonys playstation Virtual Reality headset being released today. Set to take on htc. Now advertisers are looking at ways to take advantage of the sector. And check out futures this hour. Some weak trade numbers out of china last night. It helped to spook things. The dow implied to open lower at 99 points. We got a tempurflex. And its got the spring and bounce of a traditional mattress. You sink into it, but you can still move around. And now that i have a tempurflex, i can finally get a good nights sleep. Buy the most highly recommended bed in america for as low as 25 per month and a 90 night free trial. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Welcome back. We have news just crossing the wires. Thailands king has died at age 88 years old. Thats according to a statement from the palace. He was the worlds longest reigning monarch. And check out the price of the thai baht which had been under pressure in part because of speculation about his health. Down marginally there. Hes an important figure for keeping peace when there are military coups and stuff like that. Theres questions over who transitions. Emerging markets had a horrible day monday. One of the analysts said monday one of the biggest risks is trump, not necessarily the dollar. But both of those factors playing in right now to create pressure on these places. So again, whether its just this catalyst. Somebody who was able to hold together a country internally rife with religious conflict, could be one of these where that risk comes to the floor. Well see what happens there. Some corporate news. The wait for sonys playstation vr is over. For the playstation 4 today. Stores like best buy and gamestop Opening Doors early to meet the demand. For those hoping to buy online, the queue has already begun. Playstation vr is going for 499. That price includes everything you need to plug in and go. Quite an expensive addition, but clearly a huge demand for it. Handbag and accessories maker vera bradley says its Payment System has been hacked. May have hacked from Payment Processing systems in its Stores Including credit card numbers, card holder names, expiration dates, and verification codes. This was between september 23rd. A spokesperson says cards used to shop on the companys website were not affected. And Michael Jackson topping Forbes Annual list of the top earning dead celebrities. Its the fourth Straight Year the king of pop has topped that list. This year they sold the last of the sony catalog. That brought his earnings to 825 million. Coming in second, peanuts creator charles shulz. Arnold palmer with 40 million. Elvis presley with 27 million. And prince with 25 million. David bowie was 11th on the list. The interesting thing here would be to see what the recurring is over a period of time. The Michael Jackson one boosted by a single sale. The likes of bowie and prince i think jackson might still win. Its four years in a row. And whats going on in vegas. Im sure hell always be close to the top. But as we said earlier, its a slightly morbid thing to discuss but quite interesting. Huge moneymaker. In sports news, an amazing debut for the number one overall draft pick in the nhl draft. Auston matthews scored not one, not two, not three, but four goals in his first nhl game. The 19yearold from scottsdale, arizona, is the first player to score four goals in an nhl debut. But it was a bittersweet night. Actually toronto lost to ottawa 54 in overtime. Meantime, lets take a quick look at some stocks to watch in todays trading. Check out pfizer downgraded to hold from buy at jeffreys which says it doesnt see any immediate catalyst to drive the stock price higher. Separately pfizer lost a uk court appeal in a patent case involving its pain drug lyrica. It does say it intends to seek a further appeal. Also kellogg buying control over parety. As it cons its expansion into emerging buying stock buybacks for the year to preserve flexibility. And Deckers Outdoor was cut to negative. That firm says that the footwear maker is at risk due to increasing promotional activities surrounding the ugg brand. Youre wearing uggs right now. Come on. Show em. Everybody thinks underneath that nope. Nope. I think were out of time, unfortunately. Well just have to go to break. Banking analyst mike mayo is going to join us when we return on the departure of john stumpf. And the new ceo and what that means. Take a look at the futures this hour. S p off about 12. And the nasdaq off about 27. Back in a moment. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. With the help of at t, and security that senses and mitigates Cyber Threats, their Critical Data is safer than ever. Giving them the agility to be open secure. Because no one knows lik at t. What are you doing . Getting your quarter back. Fountains dont earn interest, david. You know i work at ally. I was being romantic. You know what i find romantic . A robust annual percentage yield thats what i find romantic. This is literally throwing your money away. I think its over there. That way . Yeah, a little further up. What year was that quarter . What year is that one . 98 thats the one. You got it nothing stops us from doing right by our customers. Ally. Do it right. Lets get out of that water. Ceo shakeup at wells fargo. John stumpf is retiring after the banks fake account scandal. Were going to get the streets take on the future of the company. Raising the roof. House flipping is hitting a multiyear high and sales are risking millions of dollars. And folk singer bob dylan is officially a nobel laureate. We have the details of that as the final hour of squawk box begins right now. Live from the most powerful city in the world, new york, this is squawk box. Welcome back to squawk box right here on cnbc this morning. Im Andrew Ross Sorkin along with kelly evans and wilfred frost. We are in the red this morning. Dow looks it would open off. Keying off some of the things taking place in europe overnight. Youre looking at things looking down across the board there. I dont know if were going to show you wti crude, but thats now up over 50. At about 50. 15 just a couple of minutes ago. Yeah. That chinese trade data weighed on. Thats given a risk off sentiment this morning. Risk off, risk on. Making headlines, wells fargo ceo john stumpf is out Effective Immediately. Tim sloan is taking over. Shares of wells fargo up 1 Early Morning. Mike mayo is here with more on that. Snapchat lead underwriters for an ipo. The offering could come as early as match. Reports say the firm could be vying for a 25 billion stock valuation. And in earnings news, Delta Air Lines posting better than expected results. Earnings, i should say. Revenues fell short as the key metric of revenue per available seat mile fell from a year earlier. Delta says an august outage cost the airline 100 million. Ed bastian was on squawk box earlier. We had a solid quarter despite the outage as you mentioned and despite probably the weakest pricing environment weve seen in recent memory. 19 operating behalf gin. Now its despite those challenges. And delta shares look largely flat here. Again theyre down about 17 on the year. Breaking news overnight, the u. S. Military launching tomahawk cruise missiles against radar sights in yemen. Richard engel joins us with more now. Richard . Reporter well, good morning. This is a fairly complicated story that goes back over a year. But which escalated quite dramatically overnight. What happened overnight is the u. S. Navy fired tomahawk cruise missiles. The pentagon in a statement said several tomahawk missiles were launched to destroy radar installation in rebelheld areas of yemen. These are relatively remote areas according to the pentagon. Not areas where you would expect to see many civilians or potentially civilian casualties. But the reason i said its complicated is you have to understand what is happening in the larger context. For over a year, there has been a war between saudi arabia and rebels in yemen. The United States is backing the saudi government in that war. And because of that support for saudi arabia in rebel held areas of yemen, theres been a lot of antisaudi, antiamerican sentiment. That sentiment boiled up. The rebels fired first over the weekend. A failed attack on u. S. Warships in the red sea. At the time the u. S. Said if this happens again, there would be a response. It did happen again yesterday. There was another failed attack from the yemeni coast on u. S. Warships. And then in the Early Morning hours we saw this response with tomahawk cruise missiles being launched. Richard, is this in any way related to the developments in syria over the last month or so. And if its not related, gauge for us the level of importance versus those developments. Reporter its not related. Its related only in so much that the its another conflict in the middle east. But if you look at the conflict in syria, so you have the conflict in syria being led by the government of president Bashar Al Assad backed by russia. And that alliance has received worldwide condemnation because of the mounting civilian casualties. Well, there is also a parallel war going on with the saudi government attacking the rebels and killing many civilians in yemen. Except, in yemen it is the United States backing the saudi government. And there are some in the u. S. Who are worried about this alliance. Worried that there could be legal implications because the saudi government is using americanmade weapons to carry out this campaign. So it is a parallel war, but a war where many civilians are dying in which just escalated this morning with the u. S. Taking over this military action. Should the u. S. Expect any kind of response, either from this country directly or any of its patrons . Its possible. I think it will be difficult for them to launch more attacks on u. S. Warships because these Radar Systems that were targeted, these three Radar Systems that were allegedly destroyed according to the military in rebelheld territory were the same Radar Systems that were used to target the american warships. So now that the Radar Systems are gone, one would assume it would be more difficult for them to launch the attacks. But it is certainly not over. Will we see more of an escalation is an open question. Another thing to keep in context, there was a particular incident in yemen over the weekend that seems to have triggered all of this. There was a saudi air strike that killed 140 people at a funeral. Saudi arabia later said it regretted the incident, Human Rights Watch said its a possible war crime. And it was right after that incident which outraged many people in yemen that the yemeni rebels launched their first failed attack on the u. S. Warship. And then again launched the other one. So perhaps this is a limited incident, a response to that very violent incident, a very risky and aggressive response from the yemeni rebels. But maybe there would be more. Opposed to an escalation. Richard, thank you for joining us this morning. Thats richard engel. Some stocks to watch today, theres a report from Piper Jaffray saying a pause in gopro sales to amazon. Gopro plans to resume shipping to amazon at the end of october, but those shares down 3. 5 . And back to todays top corporate story today. John stumpf announcing he will retire in the aftermath over the sales practices. Wilfred spoke to new Ceo Tim Sloan in an exclusive interview. Heres what he said about moving the company forward. Wells fargo is a company thats made up of 268,000 team members all across the country and world. No one individual is necessarily going to make the difference. We all have to Work Together to restore the reputation of the company to continue to focus on moving the company forward. So one person is not going to make the difference. Joining us now is mike mayo from clsa. Good morning to you. Does this do the trick . What is this how does this change the game . Well, it helps wells fargo move to the next chapter. The old chapter, i still cant believe whats taken place in the last 34 days since wells fargo had the regulatory settlement. They struck out looking. They didnt swing the bat. I mean, the appearance before the banking committee, before the house, the reactionary manner they behaved in, it just made the old ceo john stumpf a distraction. And, you know, wells fargo is bigger than the ceo, bigger than any one person. Turn the page, new chapter. Move ahead. The question is does the page really get turned or are we still going to hear about the doj, s. E. C. , are there going to be clawbacks perhaps on john stumpfs income from before . Is it really over . Well, they addressed many of the concerns i raised on your shows a few weeks ago. When you ripped up his testimony. What was amazing about that, when i ripped up the ceos testimony, i would have done the same thing after the hearing. Thats what i mean about striking out by not even swinging the bat. Look at what wells fargo has done since then. They did clawback 41 million from the ceo. They are now the only top 30 bank with an independent chairman and independent vice chairman. So theyve changed the board. Theyve changed senior management. And we think theyre poised for a plan b. Ahead of delivery on par with the head of community banking. I think theyre poissed for a plan b at the next chapter here. Thats your point youve made in a couple of notes recently. That there could be a positive not just for wells but for the industry out of all of this. They use it as an excuse to shut down some of the branches. Maybe arent as necessary today in the head count within them as it was a decade ago. Why is the Banking Industry needing 87,000 branches . If you take the level of branches back to the 1950s, youd have a 40 reduction in branches. Wells fargo, they still have 6,000 branches. Bank of america had 7,000 and now they have 4,700. We think wells fargo could reduce a thousand branches. As painful as it is, they might reduce tens of thousands of employees there. So what happened here is wells fargos revenues havent grown this decade. Okay . Revenues are still around 89 billion. Community banking revenues havent grown. Their cross sell didnt really change much. Rather than trying to squeeze blood from a stone, you say lets reduce the number of branches, ease up on the pressure were putting on the front line employees, and get our Earnings Growth by becoming more efficient. Right. Is there any chance that stumpf is a scapegoat for the sort of larger issue . Well, you know about the financial crisis. And analytical term is transference. So i think we have collective transference of emotions. No excuses for him. But the degree of the reaction, speed of the reaction, magnitude of it i think results from leftover emotions. Sheila bair told us much the same thing a couple weeks ago. She thought he was being a fall guy here. Well, theres no excuse. He knew about the problems in 2013 and wells fargo didnt fix this problem. Thats still one question i have. The last 34 days, there was no Conference Call for analysts. Look at what jamie dimon did. He immediately held a conference. Was the underlying problem in a weird way the response to the problem . Well, the problem itself but absolu absolutely. This is the worst Crisis Management ive seen in my three decades in the Banking Industry. If we look at earnings, clearly defined 185 million fine was taken into the q2 numbers. Are there going to be more numbers relating to this that we hear about tomorrow . Or is this still just a pr issue and its not going to come up in the numbers tomorrow . Its more than pr. Reputation is very important. I think youll see the benefits of wells fargo being the largest Mortgage Company at a time when mortgage has performed better. They might have to have one off charges here and there. But we think the basis is quite sticky. But this is an opportunity. Heres my solution or one of many solutions. New Ceo Tim Sloan stand up there and say were going to make 1 million phone calls to every impacted customer. Were going to give 100 million to every impacted customer. That would be for each . Total . 100 million would match the fine they paid the cfpb. It would give 1,000 to each impacted customer that was charged a fee. Then you say 100 accountability going ahead. If we do this again, youll get quadruple the charges. Theyre a great Marketing Company but theyve been silent for the last 35 days. Come out there and swing the bat a few times here. Its stale good company. By the way, cross selling is okay if done correctly. Say we have Good Business and in relation to that they need to come out with a more positive message. Theyve been quiet the last 35 days. Whats been the impact on the other banks with things going on around the cross selling broadly . Youre seeing massachusetts and others, now they throw cross selling into any lawsuit. Just the phrase. I saw the crucible on broadway a couple weeks ago, i hope its not a witch hunt. They had the most focused krcro selling culture. If youre going to have resources focused on trying to find the next bank that did this, you know, i think that might be a waste of time. Look. You never have a zero defect rate. We dont want our banks to function for zero defect. Clearly wells fargo is high. They should have shut that down sooner. Can you find isolated cases . I dont think youre going to find anything close to this magnitude. Going into top earnings season, your top pick . Well, look. Wells fargo with this nice dividend yield is a nice defensive name on a day like today. But citigroup needs to turn around here and theyre treated like its still a financial crisis and its not. We still like citigroup here. Both at 8 00 a. M. Tomorrow. Thanks very much. Thank you. Still to come, House Flipping is heating up. Buyers are betting big with millions of dollars at stake. That story next. Squawk box will be right back. 3w4r whats Critical Thinking like . A basketball costs 14. Whats team spiritorth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your small business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. When legalizing safe, responsible adult use of marijuana, the most important question is how . By voting yes on prop 64 adults 21 and over could only purchase marijuana at licensed marijuana businesses. And prop 64 bans advertising directed at kids. Requires strict product labeling. Childproof packaging. And bans edibles that appeal to children. Smart provisions to safeguard our families. Learn more about the safeguards at yeson64. Org. Learn more about the safeguards sharing a ten by ten room,ng threestruggling. Nding, i rent this place and then i started home sharing. My roommates help out all the time. They are glad to meet the guests and that opportunity that airbnb has given me is such a priceless gift. I was able to take three months off to take car of my family during a family tragedy. The extra income that i get from airbnb has been a huge impact in my life. Welcome back to squawk box. Believe it or not, House Flipping is heating up with todays home prices. Now flippers are betting on more expensive homes. Diana olick joins us from bethesda, maryland. Say it aint so. Reporter well, it is so. Im sorry. This socalled industrial style farmhouse went on the market last weekend for 1. 469 million. Thats what you call a high end flip. One of a growing number nationwide in the increasingly competitive housing market. Now, the flipper is a local Real Estate Agent named dana rice. She bought it for 600,000 and put 400,000 into it. So a Million Dollars is at stake here. She renovated and expanded the 1938 home doubling its size and adding high end finishings and landscaping. She used all cash and is confident the reward will be worth the risk. In this particular area for this particular house, im very confident. Because i feel as though the product we delivered, we really sweated the details on it. And im already getting great response from people who are look at fixtures, colors, textures, and things like that. And its not what they see in a general renovation flip. Reporter now, there were more than 51,000 flips in q2 of this year. Thats the highest level in six years according to adam data solution. Investment rising to nearly 49 thanks to fastrising home prices and tight supply. Homes in this market can sell in just a few days. So far, though, no offers yet on this house. But rice says shes not concerned. Mostly because of the location, the location, and the location. Back to you guys. And the renovation, i get that approach. If a lot of these houses are getting kind of old and theyre able to bring them up to modern standards, maybe theres something that needs to be said for it. Reporter yeah. And we talked to people coming through the house last sunday. They said they really loved the idea of an older home that had everything done inside. New systems and everything. And thats the idea here. Thats why she thinks she can command such a great price. All right. House flipping is back. Thanks. Coming up, we have a winner. Singer and song writer bob dylan awarded one of the highest honors in literature. Weve got the details right after the break. Coming up, shredding the slopes. Twotime olympian tiger shaw is here to talk about the big business of skiing and snow boarding. Both on and off the snow. Squawk box will be right back. Bob dylan has won the 2016 nobel prize in literature. Hes the First American to win the award in more than two decades. He has created new poetic expressions within the Great American tradition. Congratulations to him. And the advertising world is headed to the next frontier augmented in Virtual Reality. Julia boorstin has more on that. Reporter with Sony Playstation launching its system today, so is the ad business. Aol inking a seven figure deal to create Virtual Reality branded content for American Family insurance. Its part of the 12 billion spent projected spend on Virtual Reality ads by 2020. Driven in large part by augmented reality which works on any smartphone. Augmented reality ads are already poking up in pokemon go and advertisers pay millions for snapch snapchats sponsored filters. And consumers can test drive any audi model with this experience. As well as ab solut vodka. This is the beginning of the potential for marketing. Foresters jenny wise says amazon will piggyback on its echo device. What if they also created a Vr Experience so you could look around your house and see the products that need to be fulfilled and order them that way . So were going to see a lot of opportunity come from the big players youd expect, also device, hardware players, and of course gaming. Reporter so which Tech Companies will profit . And amazon and apple will move into the space as well. This could just be the tip of the iceberg. A Paris Company is actually working on a Virtual Reality nose mask to promote a southpark video game. Christmas is coming up. You can buy some of these headsets already. But then theres still the old card board headset to put on with the phone. Which way do you think this ultimately goes . Reporter look, i think youre going to have the very high End Experience which is what the google oculus is about excuse me. The facebook oculus. On the other end, you have the low End Experience which is the google card board. If you have the playstation, adding on that headset seems like a big investment. But for the hard core gamers who have the consoles, it might make sense. Then theres another category of hundred dollar headsets. Thats what the samsung vr headset is about. So for 1 100, you could turn yor phone into a pretty good Vr Experience. So theres a bit of something for everyone. Well see which ones become most popular. Okay. Julia, thank you for that. I did a oculus prototype thing recently where i played this game. With the box . A shooting game. And its unbelievable. I mean you could hurt yourself. How did you feel when you took it off. But you sat down . No. I was standing. There was a guy next to me to make sure i didnt call. I dropped my gun at one point and had to get it. Theres another one where youre on the edge of a building a feet in the air and the guy says take a step forward. I said could i hold on b because i thought i would fall. Its that immersive. Its amazing how quickly it develops. Very realistic. Coming up when we return, breaking economic news, weekly jobless claims, and september import and export numbers. Were back in a moment. Short term returns. Asing r instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars thisay, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential with sleep number, you choose the exact firmness and comfort you want and so does your partner. Amazing sleep for all. Its the final days of t t columbus day sale, with the queen c4 mattress set now only1399. 98. Len more at sleepnumber. Com i am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the mputer traitor i wont. cannon sound welcome back to squawk box. Good morning to you if youre just getting up. Were just seconds away from weekly jobless claims from september import and export prices. Lets have a look at futures. We have slipped a little bit more beyond the triple digit level in dow in the last few minutes. Down 113. The 10year note falling to 1. 75 . Weve seen a general risk off move this morning following disappointing chinese data. Rick santelli standing by at the cme. Youve got the number for us stateside. Absolutely. Thanks, wilfred. Its unchanged on jobless claims. But only after revised last week down three. So originally reported at 249,000. Dropped to 246,000. Anything under 250,000 is significantly low. Now, is that going to make a huge difference . Well continue to monitor jobs flow through productivity and of course growth. The other big number as wilfred pointed out, september import prices. Remember, weve seen Energy Moving up a bit. That is reflected here. Up 0. 1 month over month. But pretty much as expected. Last look, down 0. 2 remains unchanged. Lets take a bigger view year over year. Also makes sense considering were comping to before some of these Energy Prices stabilized. But theres more than just energy coming on here. Last look was double this minus 1. 1 . It was down 2. 2 . That stands unrevised as well. The talk of late has been stronger dollar and rising global rates. Especially on the long end but not exclusively the long end. That took a pause. What always seems to make Interest Rates pause a bit . The response in other markets. Notably the equities. Wilfred did talk about china and trade numbers. Not looking very optimistic on global trade. But then again, weve seen that come through from some of the research as of late. We have our last option. Well se if this little buying spree enhances some of the demand that has been lacking on the 3year and 10year. Now back to the squawk box gang. Andrew, wilfred, back to you. And kelly. Thank you, rick. We have a special guest with us this morning on the set. Michael porter is Harvards Business School professor and direct ore the Schools Institute for strategy and competitiveness. This is where i want to start the conversation. Last time you were here, we were talking about how good or terrible the economy is. Ive been going out on these squawk the vote fridays. Talking to people about how they feel about the economy. One of the takeaways from me and im curious where you come out on this, their own experiences seem to be better. Ive been going to major cities like des moines or columbus. And in the city, these have been actually booming cities. But they feel that Everything Else around them is terrible. And so the question is sort of how to square that circle. Are we really in a malaise or are we in a better place we should otherwise be in . And by the way, is life relat e relative . Meaning, it seems terrible but its worse everywhere else. I think theres a tendency for life to be relative. I totally believe that. And in pockets of our economy, there are things that are doing well. And theres innovation going on. And progress being made. And people flipping houses. And all kinds of things happening. But actually, if you look at the facts, the performance of our economy is extremely weak. On almost every dimension. Productivity growth is declining. What about life is relative . Meaning what are we . The cleanest shirt in a dirty hamper . Whatever that phrase is supposed to be. Best house in a bad neighborhood. All of that. Yeah. I think life is relative. And what were finding is that people on the lower end of the distribution in general are not doing well. And people on the upper end of distribution are doing okay. Or sometimes i think actually moving forward. What concerns me is that were not taking any action in this country on any of the fundamental problems that we know are holding back our economy. Were doing nothing. Were not improving the we havent fixed Corporate Tax system. We all know thats a big problem. We havent invested in infrastructure. We cant get a decent bill passed. We have no progress on the deficit. We have a bunch that say spend whatever you want. Its okay. Ive got a question for you. If you take the personalities and temperament out of this and go on the policies we know about, which would be the better candidate . Well, you know, its im speaking now as an individual, not as a Harvard University representative. But i would say that id give a slight edge to hillary on a somewhat better set of policies that on average i think are a little bit more closer to what we need to do. But even hillary who knows better is talking about how bad trade is. And she sort of is criticizing big businesses. I thought you were going to say trump. Because i was going to think between all the tax issues weve talked around in corporations and what to do there that hes that at least on a policy perspective, you just take it as a strict policy, you would think that would be better. But if you look at what he actually says, it actually makes no sense. Yes, he wants to slash taxes. We cant slash taxes for everybody. It doesnt make any sense. Weve got to be thoughtful about how we do that. We dont need to bring Corporate Tax rates down to 15 . If we could bring them down to 23 , that would be fine. If we cut some loopholes, we can do that in a revenue neutral way. Theres a set of sensible sort of compromises here that we need in a whole variety of areas across our economic policy. And we havent been able to get to a place where were even talking about those. And what concerns me is that our year after year, election after election you know, the last three president s said they were going to do bipartisan collaboration when they were president. It didnt happen. This election is really a low water mark in terms of the politics of division, its not about getting things done, its not about solving problems. Its just about, you know, getting somebody to be scared of the other side. Thats what this election is about. You said on trade secretary clinton knows better. Are you hoping if elected she changes her mind on that topic . Im hoping she will, you know, remember that she led heavily the negotiations for the tpp. America is open. Other countries can trade with us. Were already open. A trade agreement by definition for america with asia is going to help us more than its going to help them. Why cant we understand that . And its all about peoples fear of losing jobs and fear of imports. And the campaign has sort of whipped up the fears of america about the future and about what we should do. And the public is completely confused. Weve done some surveys. The public doesnt know what to do. The number one response was dont know. And when the public is so confused they cant see whether its good or bad. Its not a party issue. Its even become a well, its the same thing thats happened in the uk with the brexit vote. But people are somehow looking for someone to blame for everything thats wrong. The brexit vote wasnt trade. It was immigration. It was immigration. And now youve got the government enforcing brexit but still trying to seek as much free trade as possible. So it is an interesting dichotomy. Theyre saying we want to keep as much of this trade as we can. Yeah, yeah. Well, the problem yes. Thats what they say. And they say they want britain to become this great trading nation and sign all kinds of free trade agreements with the rest of the world. The reality of that is its going to take decades to put all that in place. In the meantime, the uks core competitive advantage was its access to the european union. That was one of the key reasons businesses wanted to be in london and the uk. And that has now been undermined. And immigration has been a tremendous boom to the uk. Absolutely. In terms of economic policy. So here we are. Immigration actually helps the british citizens. But now they think its bad. And were well, they have reason to be fearful and to feel like there needs to be some line. Theyre hardly alone. Look across europe and this country. You can make the case that, hey, immigration which Angela Merkel has tried to do. That its good for you in the longterm. Its easier for the politicians to get up and tell us we need to do this, that, and the other. They dont necessarily have to deal with the fallout in their communities. Lets stick on that point. The big, you know, concern in the uk was immigrants are coming in and, you know, sopping up all the Public Services and british people were not being able to get their needs met. Well, all the data is very clear. The reason that Public Services in the uk have gotten challenging is that the uk Government Cut spending by 25 . Theres no evidence whatsoever that e the immigrants were using the services at all or causing problem. So were deflecting sort of were trying to deflect the real issue in a different direction. The Public Services point is interesting. It comes back to what you said stateside. Its an issue both uk, u. S. , all of the developed world when you say are we addressing the key problems the country is facing . Isnt the big one demographics and how do you address an aging population . Its a massive issue in japan as well. Yeah. Well, there is a big issue in demographics. Thats actually somewhat of an advantage to the u. S. Because we have more demographic more positive demographic future than other countries. Nobodys talking about reducing government. Thats not on the table. We were just talking about it two days ago. Usually its an election issue. We all know its going to explode. We have to do the Social Security reform. We have to do the, you know, health care reform. We have to do we have to modify the tax structure. There was a call recently for a new Deficit Commission which would be great. But Simpson Bowles you know didnt turn out as well as we hoped. Andrew, i think the fundamental question is our political system. We are incapable at this moment in history of compromising. Were driven by ideologies that are so simplistic they have nothing with the economy and what needs to be done and what peoples real problems are. The number one problem we have in america at the deep longterm level is skill. Thats the real issue. All the people that are having trouble getting jobs just dont have enough skill. We dont talk about that. We make it seem like theres Something Else some bad actor is getting in the way of job creation and suppressing people and reducing their opportunity. But it actually is skill. Ive never seen this. Thank you for the open and honest discussion. We appreciate it. Professor porter. Dr. Porter. Thank you. Coming up, hitting the slopes. The world cup ski racing competition is back on the east coast for the first time in 25 years. Well talk to twotime olympian tiger shaw about the business of snow sports next. Stay tuned to squawk box. Tomorrow on squawk box, inside the squawk reserve. A cnbc exclusive interview with boston fed president Eric Rosengren. Well ask him about the rate hike timeline, the economy, and much more. Thats tomorrow starting at 7 30 a. M. Eastern. Right here on squawk box. Ur banks app. Now what . How will you keep up with the new demands of todaythe fact is conomy . Some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. gasping are you all right . I was in a room full of light. You were there. You were financially secure it was glorious. How do you know that . I work at ally its my job to know about finances. What else did you see . Did i have a speedboat or anything . Toss me back in, ill check. Hes finding out if i have a speedboat nothing stops us from doing right by our customers. Ally. Do it right. Negative on the speedboat. Welcome back to squawk box. Heres whats making headlines this morning. Thailands King Bhumibol has died at age 88. He was the worlds longest reigning king having served since june of 1976. The thai baht has been under pressure over concerns about his health. Its slightly lower here as we keep an eye on it. Amazon. Com hiring 120,000 holiday workers this year. Thats 20,000 more than last year. And of last years 100,000, 14,000 remained as permanent employees. Now check out ulta cosmetics. Raising above consensus estimates. Those shares up 3. 3 as the makeup craze continues, andrew. Were going to get to talk about my favorite sport right now. People around the country are still picking up their pumpkins or shopping for halloween costumes. But in kylington, vermont, its all about the snow. Playing host to world cup skiing. The first time in 25 years in late november with skiing luminaries like lindsey vonn slated to compete. We bring in tiger shaw who is president of the ski and snowboard association. Were thrilled to have him and talk skiing. Good morning. What are you doing in new york . Well, actually, were here on one of our major fund raisers. We raise about 1. 5 million in an event called the new york ski board ball. Its honoring gold medalists and mayor michael bloomberg. So we have more than 25 gold medalists and olympians here. And you use that money to train the athletes to we do. We do. Well, were the only country competing on the world cup tours that isnt government funded. So the way we make that happen is we raise money through commercial partnerships with many of our sponsors and then also through philanthropy, basically fund raising in the United States as well as help from the usoc and a few other sources. We compete without government funding. Whats the popularity of skiing right now relative to snowboarding and other sports . Going up, going down . Its pretty stable. Skiing and riding are pretty mature sports. So its not growing wildly. Its stable. It goes up and down with the weather. Do we need a star . Do we need another star . Is there snuff stars in skiing . Talking about you, i just saw eddie hes british. Have you seen this with hugh jackman . It was great. I saw it on an airplane. It was a fun movie. I didnt want to say great. It was fun dpp you see it . They did a great job. Did that give a whole sort of thing to the sport . It did. Theres a lot of Great Stories like that in skiing and snowboarding. Eddie the eagle happens to be the best one. Its great for the sport. Everybody who isnt necessarily a skier or rider gets to learn about the sport that way. Why no government funding . Is that true for all olympic sports . There is no government funding for all olympic sports. Thats why britain caught up so much in recent years. That and cycling. We we talk about snow making on the east coast . You bet. Already making snow in kylington and out west. Theyre able to make snow up to about 36, 37 degrees. Did you realize that . That you could do that . Not to those levels. It can be done. And the key thing at kylington, is they have such a huge snow making system that when we have the event after thanksgiving, theyll do an amazing job. Their ability to pump water and compress air. Makes three feet on two or three days is extraordinary. I know weve got to go, but consolidation in the industry for those of us who actually ski. Were down to now three or four companies that basically own all the slopes in the country. Its a little more than that. Amongst the mature industry. And the ones that are you know, the ones that we do have that are operating well, are doing a great job. Is there real synergy . There is. There is. You can go from mountain to mountain . Yes, learning and being able to operate the areas in a consistent way. I mean, its tough. Theres a lot of smaller ski areas and snowboard areas that have gone out of business in recent years. But the ones operating are doing pretty well. Its a solid industry and were lucky to have them. For someone who only skied in the alps, which is the best resort in the United States . Im from vermont and new england, so i love the ones in new england, of course. But out west, you know the mountains are bigger. Its a little different. But the east and west both have their best attributes. For someone whos only skied in the alps. Hes being politics. Ill give you an answer. Alta by a mile. What do you think . I live 40 minutes from there so i know minutes from there so i know well enough. Fair enough. I stand corrected. Comes with the accent. The accent. Appreciate it. When we return, jim cramer will join us live from the New York Stock Exchange. Well get his take on todays top stories as futures are poised to open lower, triple digits today, dow in fact looking to drop 130 right now. S p down 17. Nasdaq 35. Well be right back with more squawk box. Guess what guys, i switched to sprint. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your small business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people wh hearing loss, visit sprintrelay. Com. Welcome back. Lets get down to the New York Stock Exchange where jim cramer joins us now. I guess a barrel of bad news this morning, jim . Well, look, i just think theres a lot of negativity. It started in china. Not getting good numbers out of the europe, bank stocks looking bad. Congratulations to wilfred on the interview with tim sloan. I dont know if its enough. Important caveat if sloans up from a different side of the bank. At the same time i dont know if congress will understand those subtleties and it is a subtlety. Theres just a lot of what i regard as being suboptimal news out there at a time when i still think people were kind of hoping this period would be the beginning of a good feeling given the fact i thought earnings would start out okay. Theyre not. Jim, the stock of wells fargo certainly relative to what futures are doing is looking pretty good overnight. And of course they report numbers tomorrow. Even if politicians still keep the pressure on them, do you think this could be the start of the end of the issues for the stock price at least . Well, i think so. Great point. Look, the stock price is hostage to fed. And the more fed hike talk you get, the higher wells is going to go. Thats far more important than whatever theyre going to do cross selling. Cross selling was just something that kind of we never really valued as much as i think that the company itself valued. What does matter is the mortgage market, how much they have of it and why they were uniquely positioned for rate rise. That was the point of all the different acquisitions they made. So in a certain one were not going to be talking about this, Elizabeth Warren will be talking about it because its great fodder. Everyone hates the banks. Terrific story. Everyone understands, someone ripped you off. Oftentimes its atheer yal to know what the Justice Department was doing on the mortgage department. This isnt. They put money in your account, they took it out. Nobody likes it. Jim, i know were talking about these concerns about earnings season getting off to a poor start, but look at csx and delta. Is there some good news to be gleaned here . A shift in a trend maybe, or no . Id like to hear more from the companies itself. I think you picked two industries, one csx, the railroads have been on fire and they didnt give more reason to be able to hate them. Delta is down 22 for the year and inexpensive multiple. I think csx coal didnt go up, i thought coal would go up or stabilize because of china. Delta, still just the same old bad. The most important number this morning is ulta. Ive got ulta on tonight, mary dillon, because there the guide up was significant. And retail led yesterday. Theres really not that much thats exciting. Amazing to see ulta continue to execute. Mary is the best. People go in and put on the makeup, they love it. Its a selfie generation. I like going outside, no one cares. Most people go outside first thing that happens theyre taking pictures for facebook, snapchat snap, not snapchat anymore. What an amazing story . Stock up better than 3 this morning. Well let you get to it. Thank you. Tomorrow, dont miss boston fed president Eric Rosengren joining live on squawk box 7 30 a. M. Tomorrow morning. This morning shares of gopro dropping sharply. New report from piper jaffry says new for amazon estimated 12 to 14 of gopro sales that according to the report. Gopro plans to resume shipping to amazon at the end of october. Youre looking at that stock down. When you go skiing, do you have a gopro . I dont, yet. One of my very good friends who often skis with us has one. But the problem is what do you do with the video . Why are you taking the video . Whats the point . You get a good shot here and there, but a lot of video. Im not good enough to want to record myself skiing. If youre like a top professional, its pretty good idea. Thats a big if. Thats a big if. Wilfred, we want to thank you for being here. Kelly, thank you. Thank you for having me. Join us tomorrow. Squawk on the street begins right now. It may mean some people say that you have to resign. Well, jim, i think the best thing i could do right now is lead this company. And lead this company for in fact, today we made actually an announcement about Product Sales goals. We never intended for Product Sales or any dynamic or any part of a form of Management System to be misinterpreted. One month from that appearance john stumpf stepping down as the head of wells