Transcripts For CNBC Squawk Box 20141023

And the nasdaq up by 28 points above fair value. Right now, well send it over to andrew with more on the chaos in canada. Thank you. There are questions this morning and concerns in canada after a gun man killed a soldier. And he walked into the halls of parliament and began shooting there. Its the Second Attack by a suspect with ties to radical islam this week. And comes after the Canadian Air Force joined the coalition carrying out air strikes against isis. Jay gray has more from ottawa. As the first shots rang out, just pow. Pow. And bystanders rushed to the side of a fallen soldier. But were unable to save nathan cerillo who had been standing by at canadas national war memorial. Theres no greater pain that go than z looking a loved one. To have it happen this morning is underlined by sad anger within my hearts. Next, the gunlman hijacked a car and drove to Canadas Parliament building, walked inside and opened fire in the central hall of honor. Three people were injured as lawmakers scrambled and the suspect was shot and killed by the sergeantatarms. A bystander says this video shows the Gunman Police have identified as Michael Joseph duvall, a recent muslim convert. Last friday, officials in canada raised the terrorism threat level from low to medium. Just three days ago, a man drove his car into two soldiers in montreal, killing one. This weeks events are a grim reminder to the types of terrorist attacks we have seen elsewhere around the world. As investigators continue to try and find out how and why it happened here. Joining us now with more insight, retired argument colonel jack jack jobson. I think yesterday, colonel, so many times we just dont know whats happening. For i watched most of the coverage for the entire day. And most of the time i thought there were government hiden somewhere else. Thats always the assumption that its a plot and a conspiracy. Its been years in the making and more frequently than not, its exactly the opposite. And you hear Shopping Malls was one of the targets which is our biggest fear down here, one of our biggest fears, a lone radical that is armed, maybe converted here, maybe even a u. S. Citizen thats in the mall. We get a large, open society, you cant close everything down. And our Immediate Reaction is to lockdown everything. And thats not going to i would say canada was a little bit more open, at least in terms of their government offices. Yeah. You can walk right into parliament. And without the sergeant at arms who, you know, what a hero. Without them, he was a doorway away from parliament, some members of parliament. It says more about what we either have to do or are inclined to do about public buildings and Public Places than it does about lunatics and radicals. At least we have better security here. Someone couldnt walk into the white house. They released the dogs, apparently, yesterday, right . Yep. They got the guy. Ill tell you a funny story. When i was decorated, so thats 1969, and you do the math, we were on the south lawn of the white house. The floor was decorated at the same time. For different actions, but at the same time. And it was a Beautiful Day in october. They opened up the gates to the white house grounds and anybody who wanted to to come in and watch. At that time . Yeah. Things have changed now. Youve got to climb the fence to get in. At this point, it makes me wonder, its almost like i dont know, if this is isis, but he hijacked a car and does not hurt the occupant in the car. So theyre only looking for government and military targets at this point . No, no, i think the i dont think. I think this gooi is a loan lunatic. It doesnt mean there are people who wont put specific targets in focus. But the most obvious symbol, are government buildings. Do you think thats why canada has been the object of these we have tighter security . Canada doesnt seem to at least raise the ire of the jihadists to the same extent the United States does. Theyre easier. They are easier. Im not so certain that there arent more organized cells in places like canada than there are here. We dont know who is lisping to what. At the end of the day, you need good intelligence. If youre not listening to the bad guys, youll never be able to pick up on any of the conspiracies. Do we have none of our guys guarding the tomb of the unknown or military, any government office, they dont have fake guns like they have real weapons, but theyre not loaded. Theyre not loaded . Correct. They march back and forth. So this guy is not ceremonial dead at this point, is he . No, thats true. But it was the sergeant at arms inside. The solar not armed than the guy got him searching. I couldnt have let you do that. Colonel, you bring up an interesting point, this idea that maybe in canada there are more organized cells because maybe the canadian government isnt lisping quite as closely. Just opening that door makes me get back to the point that its a huge defense for everything thats been done here presnowden. Is this a defense for that continuing . And the government is complaining now about the software that appreciates eavesdropping on cell phones. We have to listen to people, if you want my opinion. And if you assume youre going to send your voice out on a radio frequency out into the stratosphere that youre entitled to privacy when all your signals are out there in the public space, thats ridiculous. And you dont listen if you dont listen, youre not going to be able to pick up on the things that are going to hurt us the most. Youre going to have some trust, government oversteps its bounds, it oversteps its bounds. We have to keep an eye on government, as well. We shouldnt be able to listen to people who are talking with signals out there, everybody can hear. Colonel, the news cycle seems to be contracting on a daily basis, but, you know, last week it was all ebola all the time. This week, now were back to isis. But thanks for your viability. Thanks for having me. If thats not enough for us, dwroent we take a look at some other headlines in the news this morning. Federal prosecutors reportedly investigating japanese auto partsmaker takata over an air bag defect. The wall street probe says this centers around possible misled statements about its contact with regulators. Its up about 4. 74 million. Guys, in some cases, they have said you should not even be in the front seat of the car as a pass nger. What i dont understand is why theyre saying you just shouldnt be driving these things because its been drivers who have been killed at this point. Theyre not only going to disable the Passenger Air bag but theyre saying until you get it disabled, dont have anyone in the front seat of the car because it would be impossible not in the front seat on the passenger side. But its the idea that the driver is still going to have to be on the front side until they get those fixed. Crazy. If that is one of my cars, i would not be driving. How many years have people been driving around clueless about it . Were probably overstating database i dont think anyone gets struck in the neck with shap natural. No. More likely in some states than other because theyre saying its due to high humidity. Procter gamble is shuffling management. Its nom sure thats the word. I think theyre shuffling management. Last weekend, that was a pretty big show. That was over a year ago. Reshuffling, id be okay with that. I think that shuffling has fallen off the hill. Its not like you to quibble. Resufficientlying after a key executive decides to leave, healy, who apparently headed up the countrys north american operation, probably in cincinnati, will retire in june. She is one considered a potential successor for at t. The Management Team is putting together a in you attempt. We will hear from the companys cfo around 7 00 a. M. Earn time. At t reported results that Mission Dollars 16 cents of revenue versus estimates of 64 krentsdz on 33. 2 billion. Right now, shares of at t are down slightly after hours. The dow losing more than 150 points. Other major averages following suit. Joining us right now with more on this is joseph tanneas. Also steven freedman, who is Senior Investment strategist at ubs Wealth Management research. Gentlemen, welcome to both of you. Joe, why dont we start off talking about the headlines that continue to really push down stocks. Last week, it was ebola. This week were worried about isis again. Is this a legitimate concern pressuring stocks . Is this something that you think is distracting from earnings . I think its a combination of several things. Right . Theres certainly no shortage of headlines out there to create volatility in the markets. Having run in the equity markets so much over the past few years, its easy to understand why many investors begin looking for reasons to sell. Some of these are warranted. Some of the Economic Data we got last week was less than inspiring. But if you take a look at the underlying macro picture, that narrative hasnt meaningfully changed. We still think growth will continue the move higher. As a result of that, we think these represent buying opportunities for investors. Are these something that have a greater potential happening than some of the ones weve water about in the past . I think any of these, if you ask yourself, could this get worse . Then whats going to happen . Youre slightly right. They warrant being nervous about and watching over. But if you take the sort of at face value, do they justify the market . Do they justify the vix in levels of 30 or 31 inspect im not so sure i would agree with that. Steve, how about you . I think its very hard to the market gyrations weve seen over the last few days to fundamentals. Its a situation where the market had become one sided after volatility. And where you have a number of body blows which in isolation probably didnt matter. The combination ultimately led to this correction. What surprises me the most about this is even though we looked at it as a huge shock to the markets last week, if you look at where weve come back, its only a 6 decline at the weakest. And weve bounced back, regaining almost all of that ground since then. We talk about this as if it was a major impact and, yet, we are looking at stocks that still continue to climb. Well, if you take a look, there are quite a few bright spots out there in todays economy, in todays role. Youve got lower gasoline produces. That bodes well for the consumer. We think thats a good thing heading into the holiday season. We see these retail sales coming in better obviously than what we saw last time. You also have a very accommodative fed. Now, i know that were talking about the fed essentially taking its foot off the gas pedal. But i suspect youre probably going to hear a dovish fed when they come out as far as raising Interest Rates and one that might actually we already have from all the fed speak that happened at this point. Is that the underlying most important thing . At this point, all the things that means as a source of a weakness, i think in terms of europe, probably the ones that netted the most. Too, i think the market probably got ahead of itself. Weve got pmi numbers today that are not great, but theyre confronting in terms of holding it down and improving a little bit. And i think in your view, we have a situation where shots can bring session concerns, but ultimately, we dont think a recession is in the cards. How would you judge earnings season so far . We have had had spectacular high flyers that have really surprised to the down side. Have warned, have issued terrible outlooks and missed specations. You think about some of the big dow components. But maybe beneath that things are better . If you look at this, broadly speaking, you look at the averages, i mean, about twothirds of companies are beating. The average is about corporates which i think has developed solid. I dont think were seeing weakness. Is that average of the s p or clearly not the dow . No, the s p. Were looking at as broad aggregates, not so much the narrow ones. And we job he, you say this is a buying opportunity. Is it still a buying opportunity with the s p at 1927 or are you talking about last weeks levels . Last weeks levels are a better buying opportunity than todays levels. Its the quick math skills. You buy, you want to buy cheap. Pie cheap and sell high, thats the goal. Would you buy at these levels, too . I think you would buy at these levels. If you are, in fact, a longterm investor, the valuations are certainly not cheap. I think thats just a sale. Having said that, as you take a look at the global economy, you take a look at risk assets between the equity market. We continue to think there is some upside in the equity markets and more specifically in the u. S. I think earnings season is just kind of confirming that deal. You are seeing earnings numbers come in, probably Growth Numbers that will be in the high single digits. Youre seeing revenues, youre seeing actually, youre seeing margins hold tight, which is a good thing. And youre seeing continued share buybacks. As an investor, looking at my return, i have to realize the majority of it here in the u. S. Is probably going to come from earnings. And earnings so far are looking okay. Gentlemen, thank you both for joining us today. Coming up next, apple pay went live this week, but word of a major glitch already. Some customers paying double, thats right, theyre paying twice. Then, one of the last places in Corporate America where you can smoke at your desk has decided to kick the habit. Smoke if you got them. Squawk will return in just a moment. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. A single ember that escapes from a wildfire can travel more than a mile. That single ember can ignite and destroy your home or even your community you cant control where that ember will land only what happens when it does get fire adapted now at fireadapted. Org welcome back to squawk box. We have a followup to an auction we told you about last month. An early Apple Computer has sold for 905,000. That was well above expect ages. It is expected to be one of the first apple 1 machines built in steve jobss garage back in 1976. The buyer . The henry ford museum. They plan to display the computer in its museum. The only case of Technology Actually getting more expensive at this time, right . You know, im a pack right. Anyway, an early glitch for apple pay causing some users to be charged twice for purchases. This is a little bit of a problem but but its being resolved. The problem affected some bank of america customers who took the twitter to complain about the error. The Statement Apple told nbc news, they are, quote, aware of bank of americas impacting, a small number of apple pay users. They are working on a fix that would be available shortly and reversing any duplicate transactions. A spokes woman said the issue affected only about a thousand transactions. Apple shares were trading near an alltime high right now. There it is. Alltime high. Also, camel cigarettemaker Reynolds American will no longer allow smoking in its offices and buildings. The Tobacco Company currently allows employees to smoke at their desks, in conference rooms, hallways and elevators. The ban will take aefk next year. Once they build indoor smoking yaes for whose what wouldnt to smoke, they can do that. Kwlug electronic cigarettes. Right. I cant even imagine. You really believe an actual high test soda is bad for aging yourself . A soda . Thats the latest. Youre telling me the fuses on the end that control cell proliferation. What . People think soda sodas are just as bad as cigarette. Not diet, but causing cancer . At causing cell aging. Look it up. That came out last week. Im not kidding. So i eventually see people who have a coke and theyre like, you have to go outside now to drink a coke. I dont think its secondhand smoke, but thats one of the things warren bust with his cherry coke is a genetically gifted man, then . Exactly. Oh, okay. Im supposed to take viagra and drink avenue of being if i had to pro create. Is that what they said yesterday . Not enough where you have a gut and you cant make it move. There was Something Else i saw recently that other air bags the wind bags are bad. Move on here. Your money, your vote, john harwood paying us a visit today with some of the key races that could Impact Capitol hill. Were both, you know, redskins fans, so we have that to talk about. Great win on sunday. And it turns out that ebola is bad for business. Especially for Texas Health Presbyterian in cladallas. The financial hit, next. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Good mortgages and welcome back to squawk box here on im joe kernen along with becky quick and andrew ross sorkin. Today, erp. Ings from caterpillar, gm,3m and comcast. Amazon is set to release after the closing bells. The Labor Department will release initial jobless claims at 8 30 every thursday. And the Conference Board will release leading Economic Indicators and that is out at 10 00. Also, comcasting results for two overseas automakers. In germany, daimler reported a big jump in profits amid certain demand for mercedes. But south koreas hyundai or hyundai, like sundae. I have to call my friend in asia about that sxvrnd out. The steepest decline in a year and a half due to slowing sales growth. A lot of hyundais on the road. As youve noticed lately. They got it together in the past five years. Weve had the ceo on a few times. I drove one in a rental place. I drove one. It was great. The ebola cases in dallas are taking a toll on the hospital where patients were treated. Emergency services at texas hospital presbyterian fell by 53. 3 since october 1st. The average daily patient occupancy dropped by 21 . Surgeries performed there decreased by 25 . Has lost 8. 1 million in net revenue due to the recently ended policy of diverting er patients to other hospitals. Im not surprised by these numbers. People have been saying for quite some time that there was a decline. What surprises me is that half the people would still go given what happened. When you have your choice of hospitals, newer not talking about not that theyre weird about subpar care, that they think theres some viruses still when youre a week out of two newses having been found with it, treating others up and down the ward, its common sense when you have a choice about where to go. A cnbc freelancer, he doesnt know how he got it, either. No. And hes free and clear at this point. Utz unlikely snau pick it you up aft of something that youre going to find, though, not just in dallas, but all of the hospitals that have any type of even the ones preparing for ebola are going to be reporting huge losses. One of the things thats happening is taking huge areas of the hospital effectively out of service. Theyre taking the machines, advertising all day long by whether its an xray machine or whatever taking it to these special wards. Are the says going to reimburse them . Or the federal government would reimburse the states. If youve got the cdc ordering you and saying, please help us out with this. Are the statsz in charge of the cdc and such . It always comes back to money. But you looked at me with a weird look when i said i was surprised half of the people would still go to the er room. You would go . Yeah, i think i would. And you would take your kids there, if one of the kids needs Emergency Care even though you know its rational, you still might not do it . I dont know. I dont know. Because it most likely you have to have some pred close caught with bodily fluids. But its period to pick mike waking up with some of the heart systems. I was thinking the hospital didnt know what it was doing. No. I think it was an irrational fear. Initially, i was a it can show up at any hospital. Right. It should have shown up at any popt first. Patient zero. No one was expecting that. Check on the markets, dow futures up by triple digits, 103 points after the declines we saw yesterday. Yesterday happened to be the first time that he with saw the s p and the nasdaq down for the first time in five sessions. Dow snapped a threeday winning streak. You can see s p futures are up by just over 10 points. Nasdaq up by about 21 points. In oil prices, yesterday, oil was down once again. It closed at 80 a change. Something like 80. 52. That was its lowest close since june 28th, wti. This morning, up to about 26 a barrel. At this point, you can see the yield is at 2. 23 . The dollar looks like it is down against the euro, up against the yen, up against the pound. Gold prices are trading down, 1,239. 30 an ounce. Another security issue for the white house, late yesterday, toous secret service apperehendd a man who jumped the white house feps. The man was attacked by secret service dogs. He punched one of the dogs that attacked him. Two of the dogs received injuries. The man was taken on a hospital volume evaluation and the white house was put on lockdown nor about 90 minutes. The incident came roughly a move of an intruder with a knife scaled the white house fend and people have asked. Good morning, becky. In many of the country, people are already voting. This close to election day, we can start to make sense of how those votes are likely to fall. First, here is the senate that weve had now. 55 democrats, 45 republicans. That puts harry reid in charge. But now, if you project forward beyond what we have right now to the senate thats going to exist after the 36 seats now up are decided, weve got a senate where you are probably sure 45 democrats and 44 republicans are going so be there. That leaves 11 seats left to be decided. Those are going to choke the balance of this case. Lets look at those 1 1 races. Three of them, new hampshire, north carolina, kansas where greg orman, a businessman, democrats think hes one of theirs has a narrow lead over pat roberts. Republicans have gotten lead in all eight of those. More br aelg in alaska. Arkansas is behind tom cotton. Mark, you all in colorado, in is a state thats been trending sharply. Corey gardner has a lead there. Iowa, fraley is a democratic conwoman. Had high hopes. Joni ernst is leading. Louisiana, caddie over landrieu. The marquis race is Mitch Mcconnell against allison grimes. He would be the leader if republicans take the senate. And in south dakota, Mike Pressler is leading in that race. Where does that leave us . 52 republicans, 48 democrats. Mitch mcconnell will be in charge. You dont know that all those leads are going to return. If youve got favorable trends for republicans in, say, kansas where pat roberts was behind significantly, now hes narrowed that lead. So the best guess that we have based on Current Conditions if the polls are decent this year theyre not always were looking at 52 48 republicans. Come over here. He hes on his way. He looks good. I know to ask you who kwenl. Is needy a Research Center . Is that a right wing uhhuh. So i dont know whether this is true or not. The point they say the nations big three tv networks, of which we own one of them here, in 2006, they breathlessly reported the democratic takeover of capitol hill in the antibush election of 2006. Theyve done analysis this time and cbs, abc and nbc, the coverage of this current situation, 6 1 disparity. There were 159 stories about the democrats taking over in 2006. That was in 25 on the big three. Is that a real criticism. And you, youre looking at me like im nuts, yanking your chain. You told the truth. Im not arguing with that. Okay. As a straight down middle guy, does this bother you . Is it fair scientists no, look, i dont know what data theyre using for that. There are a couple of things that i would point out. One, 2006 was an election where you had auto dominant overriding issue and that was the iraq war which was extremely koovent verbal, in everybodys faes. This is an election where there isnt a dominant issue. Youve got a whole bunch of little issues. Democrats are trying to use the war the outcome. Even iraq is back, right . Yeah, but its not back the way it was in 20306. I was going to say, what about the last time when it was a vote on obamacare . There was a fever in 2010 given where the economy was, where the deficit was, with the pass edge ofback of obamacare. I think all of the much of the media is less interested in washington at this moment because washington has been stuck for a couple of years. Youve got an election with an agenda. And a lot of resources have moved jorchb line to digital been that happens if i aur theres not an exiting in any midterm election, youre talking about candidates who are many, many smaller but people have much larger ambitions themselves. If you had a chance to knock off Mitch Mcconnell and its not even in the space, its hard for a Senate Candidate to command the breakdown. Which name are you talking about that was big in 2006 . The Mitch Mcconnell thing hasnt even gotten a look. Consistent leads. Now, the race is actually sort of close. He has a stable lead. Everybody considers him the favorite. The one thing we have to keep in mind, polls are a little bit more jumpy in neat races by the time were there, pef its not the same as the president. No, no, it never is. There will be surprises. There will be people who had been trailing in the polls who are going to win. Let me ask you one more thing. The Editorial Board of the New York Times says to task the democrats from running from the president. Theyre really, really mad. The Editorial Board says all of these candidates should be sag it loud and saying it froproud. Talking about all these great things that have happened. But if they do that, theyre going to lose. The New York Times is basically telling them to put themselves at the americans is he of the motor and say, yes, im an obama sparter atar suppo proud of it. This is the difference between being look, some of this is a peer game, all right . Everybody knows that Allison Graham voted for obama. Shes a democrat. Shes a delegate for her convention. The whole point of the exercise was to get her to say it out loud so it could be used as a division ad. Do those Democratic Senators believe in obamacare . Of course they do. Thats why they got all 60 votes to pass in the senate. By not standing firmly with their own policies, democrats send a message to voters that the unending public criticism is legitimate when its not. Well, look, republicans are the same way. When theyre down and they have an unpopular president , they have to pretend that theyre not with the president. But eats notally pretend except or the journal and fast moves. Whose victorian guard are you . Do i not stick out like a sore thumb . Who are you guarding . I am guarding the american way. How is that . Z. Oh. Isnt that right. The American Initiative earns success. Read it. I cant speak for anyone else. Okay well, not just failure, european failure. Yes, yes, euro, social, you know what my favorite term is what crudeman told me he was. Hes a welfare status. After watching the history of the world over the past hundred years, these are still your ideas and opinions . I saw something yesterday that we need a 90 tax break here. Everybody is better off with a 90 tax rate. We understood to the win. Oh, you read it oh, you coauthored. Ghost writer. John harwood, thank you. Coming up next, what investors want to hear from amazon as the company gets ready to roll out results. And were going to be joined by todays earnings blitz and Mario Gabelli will have names hes loving right now. Big day . Ah, the usual. Moved some new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. Boib. U. S. Equity futures at this hour rebounding a little from yesterday. We opened fine but around 10 00, the news flipping out over the situation in ottawa. And another negative from earnings and other things that usually it keys off of and ended down. We are indicated up 82 points on the dow. Up 9 1 2 points on the s p. Getting back on the nasdaq and up 19 on the nasdaq. Shares of eli lilly this morning, take a quick look at what is happening. Up 32 cents this morning. Its a penny below estimates that revenue was above at 4. 88 billion. Those are the other individuals we have. Doug oberhelman from cat peller and gary kelly examine Chuck Stevens. We may ask him about the air bags. Up next, am i a clown . Huh . Dont answer that. Do i amuse you . Tell me how. An actor wants his cut of the simpsons fortune. 250 million is at stake. And what is turning into a real life drama. Someone is going to get whacked, perhaps. Thats next on squawk box. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. With the easytouse suite of tradintrading tools. Tures. At optionsxpress by charles schwab. And well give you a one hundred fifty dollar amazon. Com gift card when you open an account. If youre looking for a trade idea, start at the idea hub. Where options and futures opportunities are organized by volatility, earnings, market activity and income strategies. Then run your new idea through the trade and probability calculator to get a quick look at the possible upside and downside. Streaming charts give you the realtime quotes and customized views of the market that can help you make your final decision. And when youre ready to make it happen, walk limit helps you save time by searching for the most favorable price. Find new ideas, analyze and execute your trades with just a few simple clicks, with optionsxpress. For a one hundred fifty dollar amazon. Com gift card when you open an account, call 18889805745 today. Optionsxpress by charles schwab. Actor frank sivero is not amused by a mafia character on the simpsons. I need to see a picture because he played frankie carbone. He filed a 52 million lawsuit for basing one of the three animated wise guys on his character. Sivero said he lived next to the simpsons writer that producer james l. Brooks, he was highly aware of who he was. Louie. All right. Louie appeared in 19 episodes of the simpsons. According to the lawsuit, they have gotten 12 billion of revenue because of that one actor. Several Revenue Streams including video games i think that they should just give him the money 250 million . Easy. Slam dunk case. Wouldnt the writers of good fell fellas be the ones that get it . Right. Why would he get it . The whole thing is preposterous. But anyway. There it is. The legal system in america. Amazon set to report after the bell later today. And analysts are expecting the Online Retail giant to post a big loss. But also big gains in revenue. Here to handicap todays after the bell report, managing partner here. Its so hard to figure whats going on at amazon these days because they have 10,000 different businesses. If were looking for one or two or three things, what do we Pay Attention to . I think investors will be looking at the quarter. I think right now the streets a little over 20 growth. But you are seeing a lot of changes on the side of what google is doing in their product ads and shopping and delivery. But which piece of the puzzle do you care about . The retail piece . Any of the new media stuff theyre talking about . Do you care only really about the web services which are very difficult to measure. I think im really caring about mostly the retail side. Amazons core business. The enterprise side of it is important because it gives them more ability to move into the seller base, but if youre talking about them as a retailer, they are similar to google in the fact you are going to that experience to search for your product. And if its efficient for you, she seller in terms of selling through that channel, then youre going to focus there. For the buyer, theres benefit from that. Youve taken them off your conviction list. We still have a buy on amazon. We dont add it to our super conviction list. We are seeing a lot of changes in the environment that are not good for amazon. I think 20 of amazons traffic does come from google. Theyre making it harder for places like amazon to take that consumer off of googles experience. Google really wants you to look for that product on google. If you dont see it on google, you find another product on google. And i think that the integration that theyre doing right now with sellers and the direct feed of inventory that google is piping into its platform is a big concern for amazon. Thats why thigh feel they need to invest so much in content, hardware, locations in terms of physical stores. And i think they have to move that much close tore the consumer. We got to run, but do you want them doing physical stores . I think amazon has to figure a way to look at this whole package for the consumer. We have to help them find the item, get the item, and they have to be happy with it. What do we have to do to make sure our channel is the best channel . Ken, thank you for this. Well revisit you after the bell. Still to come this morning, supermario is set to join the conversation. Two more big hours of squawk box straight ahead. Well be right back. I take prilosec otc each morning for my frequent heartburn. Because it gives me. Zero heartburn prilosec otc. The number 1 doctorrecommended frequent heartburn medicine for 9 straight years. One pill each morning. 24 hours. Zero heartburn. Visit tripadvisor rome. With millions of reviews, tripadvisor makes any destination better. So visit tripadvisor. Com now. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Earnings central overload. The biggest day of the season for Quarterly Results. From gm to 3m. And from pharma to flying. The ceos of southwest airlining talk to us first on cnbc. Plus the love connection. Dr. Love himself picking stocks and giving us the market playbyplay. The second hour of squawk box begins right now. Welcome back to squawk box, everybody. It is earnings central today. Number of earnings just hitting the wires including comcast which is out with its numbers. Out with an adjusted number of 73 cents a share. Revenue looks in line with expectations at 16. 8 billion. We should point out operating cash flow. Operating cash flow at the company up 7 to 5. 7 billion. Free cash flow up 26. 7 to 2. 5 billion. The Company Points to a number of Different Things that have helped lopg the way. Brian roberts is the chief executive officer saying the video customer results for cable were the best for a Third Quarter in seven years saying thats because of higher Internet Speed service, also Business Services and video results that were strong as well. Some of it im noticing, there was higher spending on some customer experiment. Which i have talked about. Which more than 5 million boxes deployed to date. Im not going to go over it again, but i love my ive got a few of them. A few of them, like, nine . I think you actually have nine. Thats bad to say you have nine cable boxes. But i get a deal. If i didnt work here, id have a problem. That is true. Id have a cable bill that i couldnt id have to itd be like the government. Id have deficit spending. Zb but the idea theyve increased video runs counter to the narrative that nobody is going to buy Video Services anymore. There are if you look closely, its still declining. But customer net loss is improved by 36 . So declining by 81,000. In the year ago period it was 127,000 in the Third Quarter. Its going to be a much slower burn than i think people anticipate. With all the conversations around hbo, well talk to mary over this, im not sure the whole thing breaks down. I worry that it breaks down, but i dont think it breaks down as quickly as people think. Nbc universal operating cash flow was up 13. 3 . Nbc, theme parks continue to outperform. 18. 7 increase in revenue. There werent as many good movies. Despicable me 2. Youre playing off of comps. About how successful that movie was. Right. But mario, we want to bring you in. Nbc universal, this is something where there was comcast saw a lot of opportunity because it was an underperforming asset. Up 13. 3 . Thats pretty good. Not bad. I dont have any particular insight. Youve got the numbers. But on balance, the stock at seven times ebita, thats cheap. Is video marginal and is voice marginal . But speed is the king. And obviously the main event shortterm is consolidation in the cable business. They go from 24 million customers to 30. Time warner cable. And they have major markets. And thats a pretty good deal. And that deal has been pushed out probably towards what do you think . The summer . Spring . We have an election coming up. And to have some of the individuals in various positions in the senate and the house change and thatll be interesting. In terms of the stock price, though, is there any type of overhang that you see as people await to see what happens . No, i think theres a lot of other dynamic tensions. For example, last night somebody carried a story that alibaba is looking to buy content, go into hollywood. Make jack ma is in love with the casting. Who knows. The policy is hes bringing content over to china. Its a window he can exploit. So nbc has been giving universal has given good content to comcast. So brian did it right. Do you own either one of those stocks . I own time warner cable. We sold our aol but kept most of the time warner cable. And the arbitrage part of our firm are buying more. Our guest host again today is mario gavelli. Lets look at whats going on in the headlines. Apple says theyre aware of issues with Apple Pay Service thats doubling charges for bank of america charges. They say a fix will be available and theyll be reimbursing any customers. Probably only about a thousand transactions took place where they were charging you twice. But that will be fixed. At t could be under pressure today. Quarterly profits missed estimates by a penny. As revenue per phone user fell 8 from a year earlier. And u. S. Prosecutors are investigating japanese automaker parts maker takata. The probe centers around whether takata made misleading statements to people who drive around with this for years. There it is. And the big story yesterday, im sure i actually this is when you do watch some cable news. Many questions remain in canada this morning after a gunman killed a soldier and then just walked right into the halls of parliament and someone had a camera and began shooting there yesterday. I saw that video. Probably 20 or 30 times yesterday. I never gunfire is loud in an echoey tile but like a marble interior. And you can see all the Law Enforcement agents ducking and clearly fear ful of what was going on. The police are not releasing a lot of information about the slain gunman. Just his name and age. But one has found out a lot about michael zehafbibeau. He was charged with a robbery in 2011. They quote unnamed sources saying he intended to return to libya but was not given a valid travel visa. They quote a friend of zehaf that said he wanted to study arabic and religion. A man with the same name as zehafs father is quoted in a Washington Times article. He was in libya to join the rebel fight. Heres the one thing to remember about libya in 2011, this was the fall of gadhafi. We saw many try to restore that country and there are conflicting groups still now. There are antijihadist groups. Its a mess. So its unclear what his mission is. The same friend interviewed said zehaf is disturbed saying at one point the devil was after him. His mother works for the canadian federal government as vice chair of the refugee board. She was divorced from zehafs father back in 1999. The soldier killed, nathan zarillo. He long dreamed of a career. Did you see his picture on the front of the daily news. A good looking young guy. Unarmed. They started putting guards there recently because of vandalism issues. Its a onemonth rotation they go through. Just infuriating. I think ultimately the bottom line on what we saw on the market reaction. Was there a shooting in a Shopping Mall or not . No. There was not . No. The toronto police, the Royal Canadian police say absolutely no. And the mall says as well only the parliament building. Okay. But it so to bring up an unseemly conversation, the market moved to its lows on those fears, the mall was a big plot when it became increasingly lone wolf possibly, then the market came off the lows. He was a canadian national, the shooter, right . I believe so. Where was he born . That, i have not seen. But some arab descent. Middle eastern descent. All right. Thank you, michelle carusocabrera. Lets take another look at stocks. You know investors have been on a stomach churning ride this month. Check out the vix. It measures fear. Since the start of october, it surged to close to 30. Then it came back to earth. Yesterday it shot back up again. Its been at incredibly suppressed levels for the last five or six years. The dow posting a double digit decline after the shooting michelle was just talked about. The terror fears north of the border at this point leads to questions about how quickly we will move on a single bad headline that comes out. Joining us now to talk more about this is mario garive rks will li. We know you are a bottoms up guy. But with everything thats happened with the slides in stock last week. I have to imagine you start reassessing this saying they look better when theyre cheaper down 6 . The dow was a thousand. It took 16 years to get past the thousand. We should be used to that volatility. And youve had these corrections like 1907, 1929, october of 1987. And so on. So you get this volatility. And why shouldnt there be volatility . Bernard quoted back in the late 1920s saying the market goes up and down, it fluctuates. So we look at the Intrinsic Value over a period of time. What do we know . Then we look at mr. Market, the psychological of the market and the volatility around that. You do your best to try and keep clients staubl. Im guessing that last week you were buying stocks. I was on an airplane wednesday from tokyo to new york. Unfortunately theres no wifi. That was an interesting time. The market did rally a thousand points. Youre obviously sensitive daytoday. As much as we think longterm, we were also very sensitive to deals. But what happened to sectors of the market. For example, when the inversion, you know, undermined the deal with i meant for good prices. A deal. And knowing you were value investors. Knowing you personally in everything, you know. I know things about you. You know that. I should have a wand like men in black and come in and wand you to get you to forget some of those. You showed up at a dinner and you had scoured the Garment District to find a gift for someone that i mean, it was a raincoat for like 200. Not that theres anything wrong with that, but you are a man that looks for value in all parts of your life. Thats all im saying. Theres nothing wrong with that. Theres no doubting i would ask Oscar De La Renta for a discounted price. From my point of view youve got an Interest Rate back to 225. Youve got oil at 83. 80 and change this morning. You have selfcorrecting mechanisms in the market. But looking at a global gdp, europe is 20 , u. S. Is 20 in rough numbers. China and japan at 20 . So we focus on whats going to happen in that part of the world. Then you look at earnings. Then Corporate Cash flow. Pension costs are rising dramatically because of the lower Interest Rates. Even with the highway transportation bill extending some accounting issues. Then b you look at profits. And the Earnings Releases that are coming in are pretty decent. So then we look at the multiple and the psychology. And mr. Market goes up and down all the time. Thats not bad. No margin of safety at 1900 on the s p. Its a reasonable place to start. You kind of pick your place and start buying stocks. For example, yesterday, ggg, 60 million shares. Stock closed at 72. Its an ignored stock. No debt. Great cash management. And theres so Many Companies like that that we like and if the stock with come down ten points with point, that would make it more interesting. Can we get a shot of that crappy thing you bring in here every day . The briefcase . Have you seen this vinyl thing the infamous briefcase. People in his position typically get something that costs i think its endearing. Its not endearing. Its a shtick. He makes his clients think hes frugal. Thats not a shtick. Thats the crappiest i dont want one. Never bring me one. People show it to me dont ever bring me one of those. Relax, joe. Youll never have it. We got to go. Well have a lot more than him. You criticized the bag and now we got to go. I know. John lickliter will join us to talk. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. E financial noise financial noise financial noise financial noise eli lilly reporting earnings at 66 cents a share. A penny shy of estimates citing as we have watched over the quarters patents. They have been on a healthy streak so far this year outperforming the Broader Health care index by almost 15 . Joining us first now on cnbc to talk about the numbers, john lickliter, chairman and president of eli lilly. We talked to you specifically about eli lilly. And i understand a lot of it is specific to your company, but can you just talk about your view on the Overall Economic backdrop as we watch the fed deal with when to raise rates and whats happening in europe. Is it better than it was a year ago . Is it the same . Are you expecting a better Economic Activity . I think our outlook, joe, for the u. S. Is were pretty bullish on the situation here, the economy seems to be recovering. I think europe is a little bit more of a challenge as the economy sort of remains stuck in many countries in europe. That, of course, affects the government decision about things like reimbursement of medicines. So our business in europe has been somewhat flat. On the other hand, this quarter we reported 21 sales growth in china. Were still doing a very Good Business in japan. Our actual Sales Performance in japan was muted by the weakening of the yen. So i think all in all we feel the economic the current economic circumstances are really not going to be not going to affect our business in a negative way to any great extent. Okay. So the dollar is something i guess you need to you have headwinds based on currency fluctuations too, right . We do. The stronger dollar amongst the currencies have had the impact of depressing our sales outside the u. S. But were sort of naturally hedged in other parts our income statement, for example, the way we calculate our manufacturing costs. We rise and fall with these exchange rates. But again, you know, we tend to look at the underlying performance. Even though our sales was down 16 this quarter. If you take out the two big patent losses we had in the last year, our underlying sales growth was 7 . Most of that was from volume. John, you rently did you recently restructure a few not restructure, but your portfolio, you were out of something and went into Something Else. Animal health or something . When was that . Is it done . Is it paid off . Well, we havent exactly restructured our portfolio. We have, i think, been quite clear in recent years that were interested in growing that Animal Health business. We acquired the Novartis Health unit. That was it. That will make us the number two Animal Health company globally. Its a god business. And were glad to be in it. You know, Mario Gabelli is here. I always think hes kind of whacky, but he is very smart and always ends up being right normally. You brought me you never brought me a gift. Thank god you didnt bring me a crappy bag, but you brought me catnip . No, cat litter. Ten years ago. Nothing but the best. It was clumping cat litter. You knew pets were going to be huge. Its whether youre in production animals or whether you provide products for the veterinary channels with regards to companion pets and cats and dogs. Thats 170 million. You still like that whole area. Yeah. Somebodys going to put their arms around in not too long the distant future. What eli lilly did was put their arms around that. Clearly companies are buying pet foods. What doesnt work for Procter Gamble may work for someone else. How much for you is pets . Globally its a 30 billion business. About 60 is food animal, 40 pets. Once we complete the novartis acquisition, it will be in companion animals. And in other parts of the world theres gray area on what is a pet and not food. I dont know how you never mind. John, we appreciate it. We got to go. And mario, we may talk mar because whats wrong . Im right. Pets and food. Im not saying specific places. Its a big world. You watch walking dead. When we come back, a flood of quarterly reports coming in at 7 30 eastern time. Gm, 3m, caterpillar, several airlines and more. Were going to bring you uptotheminute earnings news as it happens here on squawk box. Take a deeeeep breath in. And. Exhale. Aflac and a gentle wavelike motion. Ahhh ahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters at aflac. Com. [sfx] duck snoring sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. Up next, ready, set, report. Whatever you want to call it, this is a flood, a barrage, an overload. It is happening. Next we have Quarterly Results from all corners of Corporate America. Gm, 3m, and many more. All coming up after this quick break. Squawk box will be right back. As we head to break, look at the futures. Dow still in triple digits. 102 above fair value. S p futures up by 13. Squawk box will be ragt back. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. Its in this spirit that ingu u. S. Is becoming a new kind of company. Ing u. S. Is now voya. Changing the way you think of retirement. Welcome back to squawk box this morning. A flood of earnings hitting the wires including 3m. Dominic chu is here to help us wade through this wave of earnings reports. Dom, walk us through what weve seen so far this morning. If you look at the overall picture for whats happening with earnings, look at the number of earnings that have come out. In the past weve talked about this idea that earnings season was going to save us. And it has for the past three or four quarters. Every time weve seen issues of whats happening with regards to the economy in europe, asia, or anything else in terms of the home front here. Earnings have always seemed to come back during this season and bail us out of whatever worries that weve had. And weve seen these markets go to record highs. The question then becomes whether thats going to happen. We want to hit the pause button because oh, i thought we had phil lebeau on the phone from gm. I interrupted you. You can go on. Thats okay. Because thats going to be big. Anyway, this idea we have earnings coming out right now is something of a huge focus for investors. Only because with all the volatility weve seen over the past couple of weeks, this idea that you can actually have earnings come out and say, all right, things are actually doing pretty well for the economy. The one theme a lot of traders and investors will be looking for with a lot of these large cap Multinational Companies is whether dom, 3m is out. It looks like they beat the street. 1. 98. I was assigned 3m. Well, its a fluid block. 3m is out. Thats two cents better than expected. The revenue numbers nope. Im interrupting all of you because revenue, sales, it was 8. 14. Usually you can use that. But they have other ways, but that would be below. Because its 8. 238 was the estimate for 3m. Im looking at the shares which it looked like theyre trading sharply higher. Even though it wouldnt be necessarily on the two cent beat or whatever it was. I guess theyre bragging about their margins too. 23. 34 f 23. 34 . And local growth which is, you know, i think gm is now out. Phil is ready. So were going to go to phil lebeau. Mr. Lebeau is on the telephone. Hes got gms earnings zbp we have General Motors beating the street by two cents a share. Reporting 97 cents a share earnings for the Third Quarter. That excludes 16 cents special items. Revenue coming in lighter than estimates. The street was expecting 39. 8 billion. 38 million in special charges, 1030 coming from that and you have a writeoff of russian lones about 94 million. You break down the different areas of the world where General Motors does business. They continue to be the Growth Engine coming in at 2. 5 billion in profit in north america with a margin of 9. 5 . Thats extremely strong in the auto business. 1. 4 billion in net income in china with margins of 9. 6 . Two other areas we want to focus on. They lost 400 million in europe. Thats basically break even to where they were in the Third Quarter of last year. And they were break even for the Third Quarter of this year in latinamerica. But again, General Motors beating the street by two cents a share. We have Chuck Stevens coming up first an cnbc. Well be talking with him in about 20 minutes. Lots to talk to him about. I would think the futures must have gone up on cat. Cat is getting it done here. Cat on a hot tin roof. Lets look at the chart. 1. 72 as the adjusted number and the street was looking for 1. 36. Sales also higher. Above 13. 5 billion. What was it . 13. 55 billion and the estimate for sales was 13. 188 billion. Then in front of the guidance, the Company Seals full year net at 650 and the street oos only at 626. They had a big beat here in the current quarter, but to see an adjusted forecast a good. Theyre looking for revenue in sales to be about 55 million. Whats interesting, caterpillars chairman and ceo whos going to join us in about 25 minutes talks about how currency impacted were actually they worked hard to make sure they have a broad geographic reach. That they have a broad manufacturing footprint. Theyre making a lot of the stuff where theyre selling. As a result that has helped out significantly. Weve seen most of these big multinationals with huge headwinds when it comes to currencies. That is not the case for caterpill caterpillar. Look at this. We were up 100 points before we got this. At this point up 140 points. And then the gm trade up as well. Whats interesting about this, too, is they 3m is up 2 too. They say in here from an Economic Perspective we believe there is a reasonable likelihood that World Economic growth could improve in 2015. Growth oriented Monetary Policy should support continued modest improvement. We believe the infrastructure for places like india, turkey, and the United States. So thats good for caterpillar. They said cautious optimism for improved Economic Growth but significant risks and uncertainties could temper growth. Stop the presses on that one. We talk about that on a daily basis. Dominic, youre getting the headline earnings of these big companies. But the ignored ones like dana earlier, the stock had been beat up. We think the stock could be up 50 the next 12 months. And they supply parts and components to the global auto industry. Which do you think is up 50 . Dana. 170 million shares and they reported results and announced a buyback. Going from 2. 50 to 2. 75 over the next five years, those are the ones ignored. You dont talk about them and thats the real dynamite companies that we like to look at. I did mention mueller industries. But a whole bunch of Companies Like that that are yummys. Let me tell you about United Airlines. Announcing its Third Quarter profit. Looks like an adjusted number of 2. 35 a share. Thats better than the street was expecting. Also taking a look at what theyve talked about in terms of revenue passenger miles. Up 0. 4 . Consolidated load factor of 85. 8 . And so take a look at whats happening with that stock. It looks like it is actually, its mixed at this point. I think that is this morning. And that is in a nutshell you can see the whole market in the last two weeks with where ebola took that all the way down. It went down to 40. The minute it seemed like the cloud lifted a little bit on whether anyone else was going to come down with it last week, it snapped back 25 . It should have because it had lower oil prices. But they were only being held down by the prospect of people not flying. This is not a big stock, but because we talk about it all the time. You see underarmour down. They beat on the top and bottom line. Yet im trying to understand whats happening here. They also boosted the outlook. Is that what happened is this. If you look at the profit and sales, they did better than expectations. Oftentimes for this company like a company like under armour, often times it is because the outlook looked better. Depends not only on the fundamentals. Dana was expecting a lousy quarter. Stock came in, did well. And boom, you get a bounce. Zblo do you see youre supposed to oh, youre going to do that. Also recap comcast. This is the first time weve done earnings that were assigned. Its usually the fly by the seat of our pants. That was two cents above estimates. I think it was higher. It was like 99 cents. Revenue was slightly below expectations. Results were helped by a jump in earnings at nbc universal. If you look at the for the total company. Free cash flow up 26. 7 . Alg r. And mario has talked about how well the company will do with the merger. Which the company says its confident it will close on that deal early next year. Not in the summer. Do you have an indication it might not be until the summer . Theres been a debate. Whether theres a First Quarter of the year. But theres a chance it wont be the First Quarter . What the government is going to do with it and what that would be. Focus on the neutrality. And theres going to be give and take. But on balance theres no logical reason this shouldnt be approved. Just give something back. The company for its part say in the calls today when theyre talking about it, they will say theyre confident the deal will be done early next year. And i hope thats the case. Unless youd just like to say theyre blowing smoke or something. I hope theyre right. Okay. I want to give you the chance to Say Something about it. Andrew, it wont be a valentines day present, but it may be there for easter. So thanks. There you have it. When we come back this morning, investors feeling the love for southwest. Find out how the company is positioned to improve. Look at the futures. A lot of help here coming from big dow components with big beats along the way. Check it out right now. Dow futures up by 144 points. Caterpillar helped out tremendously. Well talk to their ceo in about 20 minutes. Nice day, beautiful tomorrow. Tomorrow is full of promise. We can come back tomorrrow. And we promise to keep it that way. Driven to preserve the environment, csx moves a ton of freight nearly 450 miles on one gallon of fuel. What a day. Cant wait til tomorrow. Introducing synchrony financial. Bringing new meaning to the word, partnership. Banking. Loyalty. Analytics. Synchrony financial. Engage with us. Dovisit tripadvisor new york. This is the life. With millions of reviews, tripadvisor makes any destination better. With the easytouse suite of tradintrading tools. Tures. At optionsxpress by charles schwab. 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At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back, everybody. Southwest Airlines Flying high this morning. The company reporting 55 cents a share. Thats two cents better than the streets were expecting. We have Southwest Airlines chairman and ceo. Great to see you. Great to be back with yall. We have watched what has happened with the airlines stocks. As we were just talking about, the ebola scare really putting pressure on a lot of those stocks. The results were getting from you from United Continental this morning really kind of offsetting some of those concerns. What happened during the quarter that was so positive . Well, you know, for us a lot of things are coming together here in 2015. Its a historic time. Its a historic year and a great year for us to celebrate. The economys been more stable this year. Energy prices have been very stable for close to the last two years until the recent drops. And then travel demand has been very strong. Obviously the results go through the end of september. Even beyond the end of the quarter into october, our demand has continued to be very strong. So all things look really positive. Thats a key question, its worth noting that you are in dallas. Thats where so many of these scares originated in the hospital there in dallas. And some of the nurses traveling from that area. You point out that even since the quarter ended, youve seen Strong Demand. You have not seen any downturn in passenger demand . Absolutely correct. Were continuing to see very strong load factors. Great on time performance. We Just Launched on october the 13th, new flights from love field. Theyre running at above 90 load factors. So bookings for the rest of the quarter looked very good as well. So everything looks really good. One of the nurses cleveland came back. I mean, you didnt convene any meetings in dallas with your staff in the middle of that just to say lets just talk about whats happening here and what our response would be . I mean, youre a smart ceo that thinking about all contingenci s contingencies. Did you guys have meetings about it . Well, joe, thats a different question. In terms of our preparedness, absolutely we talked about it. We talked about it and talked about it and talked about it. I feel were very well prepared. I think the media deserves a lot of credit here. The public is very well informed on the risk. Thats one of putting it. Because oh, yeah. When you were watching oil prices go down and watching your stock go down, it was clear what that was, wasnt it . Well, it seemed to be. Again, there are different factors. Declining oil prices actually presents a concern to many in the Investment Community that economies around the world are weakening and therefore travel demand will weaken. But thats not materialized and i dont expect that. Gary, you guys are famous for hedging your fuel costs. Youre on that hedging committee of the company. How has your hedge worked out thus far and whats it going to look like over the next 12 months . Where do you see fuel prices going . Past couple years it worked out as intended. If you go back to the 1990s, we were very consistent. Hedging was a modest activity for us. And really didnt garner headlines. Until Energy Prices took off in the 2000s. So it feels like thats the period were in. Its insurance coverage. Weve got some modest hedging gains here in the Third Quarter. Weve got a great hedging position. It goes out through 2018. Its designed in the way we participate in those declines. But weve got a long way to go to see how it is over the next years. Gary, just a quick question. Anything particular with regards to your fleet that we should be thinking about in terms of orders for boeing or air bus . Well, were an allboeing carrier. We will soon be an allboeing 737 airline. I would underscore thats the fact and we have no changes planned there. Were in a fleet modernization phase where were retiring older aircraft, replacing with newer that are more fuel efficient. Were also planning to launch the new boeing 737 max in 2017. Theres no change in those plans. Were retiring boeing 717s in favor of a lot more efficient 737. That will help our cost, our fuel consumption, our Greenhouse Gas emissions, and our earnings going forward. So fleet modernization is a Big Initiative for Southwest Airlines. Thank you. Gary, thank you for joining us today. It looks like the stock is up by about a dollar right now. Thanks for your time on this busy morning. Thank you all so much. Up next, we have another first on cnbc interview with the ceo of gm. The latest on the companys results and what you need to know about the big air bag recall after the break. Also at the top of the hour, caterpillars ceo on the landscape of the economy. Squawk box will be right back. Gm was out with quarterly earnings. Two cents above estimates. Revenue maybe lighter than expected. Joining us now with a first on cnbc interview, gm cfo Chuck Stevens. Good to see you. Thanks for joining us. My pleasure. We saw strong north american numbers. Thats not a surprise i dont know if anyone was predicting wed snap back to this amount of vehicle sales. But really Strong Demand in north america. And gm back as a name people are buying to satisfy demand. Were pleased with the numbers in north america and overall. Revenue in north america was up about 10 year over year. And really that underpinned our performance. 2. 5 billion of profitability. 9. 5 margins. Fifth straight quarter of year over year margin growth. So overall very pleased, strong results at north america for sure. I mean, gm, you know, chevrolet, apple pie. You guys got to figure you cant win for losing. Youre finally getting out from behind the old recall situation. Now air bags. Can you comment on was that kind of a blind side hit for you guys . You dont buy all of them from takata, but some, right . Yeah. If youre talking specifically about the takata issue, you know, i think largely we have that behind us. Because we had done and read across on where we might have had those issues. So this recent news beyond the impact announced in the saab and vibe vehicles are not really a major issue for us. So its not for gm, but might be for some of the japanese automakers at this point. Certainly looks like its in front of a lot of automakers, not behind them, right . It could be. Well have to see how this plays out. All right. Our phil lebeau points out that just a couple weeks ago youre pretty bullish over the next five years. While ford seems a little bit more cautious about the future over the next five years. And people are wondering. Whether it will be justified. We laid out a specific plan a couple weeks ago at the Global Business conference. Really driven by three drivers. And north america continuing to execute to our path to 10 margins. Thats a plan weve been pointing to the last couple years. You can see it the last year up very much on plan. As we said, we expect our revenue to grow faster than the industry and to maintain those margi margins. We have clear initiatives under those critical drivers or critical Profit Improvement initiatives to take us from where we are today to the objectives we laid out which is 10 margins in north america. Profit in europe. And 9 to 10 margins in china. I was going to ask you about the volt as gas prices go down. But were out of time. Anyway, i appreciate it. Gm cfo Chuck Stevens, thank you. Hope to see you next quarter. Thank you. When we come back, the ceo of caterpillar Doug Oberhelman and what hes hearing from his biggest customers. Also check out the futures this morning. Caterpillar, big beat. Gm beats street expectations. Comcast beat, United Airlines beat, 3m beat. Right now dow futures up 152 points. Squawk box will be right back. 3w4r57. Welcome back to squawk box. Im andrew ross sorkin. Look at the futures this hour. Things look like they are going to open up higher and dare i say a lot higher. Dow looks like it would open up 158 points. Nasdaq higher as well looking like it would open up 36 points higher. And the s p 500 would open 17 points higher as we get a stream of earnings this morning. Lets recap, andrew, some of those earnings reports we have that are already out. Comcast earned 73 cents a share for the Third Quarter. Helped by better performance at cnbc. Wait a minute. Go back. I like the way that was going. Helped by better performance at cnbc parent nbc universal. They didnt segment us out. No. I will mention one thing. We did mention about cable networks. Even though and its well documented across the universe of cable news networks, tough comparisons because of elections or whatever. But ratings have come down. But distribution is up and alltime highs for financial results. Not necessarily charging for advertising, but still a great business. You got a higher multiple today too. Youre 12 times your cash flow opposed to nine times. So youre worth a lot more, joe. Really . Us individually are worth more . Collectively. Youre a team. Will you keep me updated on what were worth . Whatever you like. I want a mark to market. Except in the bad times. Then dont call. Dow component 3m earned a is this you . This is you. It was a reaction shot. It was a good one. Were you ready for that . Okay. Dow component 3m there was a mario one. You look clueless. Got to get the eyebrows up. You just look confused. Never. 1. 98 a share. Revenue was slightly short of consensus, but you wouldnt know it from what the stock is doing. The company also narrowed its financial targets for the year. Citing the negative impact of currency fluctuations. And United Continental. The ceo says the company is still in the process of improving efficiency and increasing Profit Margins as they have put together two really giant airlines with different systems and cultures and sort of different interest groups. Youre okay with them in. Its newark. Its where you fly out of. I love continental. Its coming around. Right . And the margins are getting better. They need to get back. Because the other guys have done really well. I think it was difficult but worth it. I think its working out. Among the other stories that were following at this hour, we do have more details on the shooter who killed the soldier during an attack on Canadas Parliament yesterday. That man 32yearold michael zehafbibe zehafbibe zehafbibeau. We have more details and will bring them to you as soon as we get them. The Labor Department releases their numbers at 8 30 eastern time. And apple is increasing stores in china. Cook said in the future china will become apples biggest revenue contributor. Caterpillar out with results moments ago. And this is one of the big movers in the dow helping to propel that average. Its up four points, caterpillar after it handily beat street estimates. Shares of the heavy equipment maker are surging in premarket. Says here, Doug Oberhelman, lets dig deeper. Thats what i have to deal with every day. Were going do you get it . Dig deeper, caterpillar . Someones pretty clever in there. Right . We really cant dig deep enough most times in our business, joe. Thank you. Ground breaking results theyre just saying in my ear now. Give me some more. Doug, youre on a lot when and we appreciate that. And its not always this positive. What would you say changed in the last six months or so with your business globally . A couple of things have really gone our way this year. Its all about internal operational efficiency, our team addressing in a really flat sales environment. Top line for two years now. Getting after operational improvement, safety, quality. Just daytoday blocking and tackling that you have to do in a business like this. I was thinking about this the last couple of weeks. The boom west saw in 2000s. When things are booming its hard to catch up on operational efficiencies and do the things like manufacturing around standard work. When things are collapsing when things were last year, we gave up our top line as we saw mining go down. Youre scrambling just to catch up. So in a kind of a positive perverse way, this years been great because weve had had steady sales, steady productions. And were getting after lean manufacturing. It shows were getting good Cost Reduction from our supply base as well. Operation is really what makes me feel good about this year and certainly this quarter. Doug, looking at this cycling coming out of it over the next two or three years, whats different as you expect incrementally versus previous cycles over the previous 20 or 30 years . Its no question that the recovery is going to be slow. And if you look at our sales history over my career, almost 40 years at caterpillar, most recoverys come out of the blocks pretty fast. We even saw that in 10, 11, and 12. Its good for the world arguably. But slow growth, recovery from this i think will kind of keep a break on anything above 3 to 4 around the world for the next couple of years. That gives us a chance to work on market share, new markets, new products that were introducing the next few years. You just got to keep your eye on the ball every single day. Its a really interesting world out there as you know and you reported on this morning. Doug, your stocks up more than 4 today. Obviously the street likes what it is seeing with this. But doug kass points out part of the reason you got there was because of share buybacks. Obviously your revenue came in. Youre now seeing for the full year. You expect revenue to be at 53 million. Because of the beat youre seeing in this quarter. I just wonder because this is a conversation thats taking place all over right now. One is the good news, every share the shareholder owns is worth more when you buyback shares. The other is the accusation from some corners that when youre buying back shares, its financial engineering. Thats what people have accused ibm of this week. How do you know the difference . Thats a great question. In our view we look at share buybacks and really return to shareholders a bit differently. We absolutely have to focus on a strong Balance Sheet. And we have that. We went into 2009 with a debt equity over over 50 . We barically saifd our credit rating. We barely held our dividend. What were looking to do is really make sure our debt to debt equity is solid. Today its in the low 30s. Thats about all the cash we really need to have on our Balance Sheet. But we think thats where we need to be financially in the strength of our Balance Sheet to weather any storm that may come. It also gives us flexibility for any growth that may come up. Whatever is left over, we are going to return it to shareholders. Youre not borrowing money to buy back . Thats what ibm does sometimes. Youre not borrowing money to buy back shares but youre spending less money on capx. Do you borrow money for the buyback . Weve not borrowed any money to buy back shares. Our debt to debt equity ratio has improved as weve taken cash flow into the Balance Sheet. Our capx is down. We invested fairly heavily since 2010. So our footprint around the world today is in good shape for the next two or three years without a big drain an capx. I hope we get back to big capx spending. What do you think about buybacks versus dividends . Thats a great question, andrew. Our Shareholder Base is just about split evenly. And some of our funds like dividends, some like buybacks. Thats a balance. Weve communicated with all of our shareholders that our Balance Sheet really takes priority in the strength of that. Because we go through such cycles and maybe on an increasing basis. If we could find things to buy, well do it. But whats left over is going to go back to the shareholders. What i look at is over time whats the were not stock pickers here. We never will be. Thats not what we do. But we just focus on that Balance Sheet and maintaining the strength there so were healthy no matter what comes at us. Just a quick question. The dollar much stronger. How do you position yourself against competitors like the japanese with betting on incremental business. I know its quality and service, but how do you do it . Great question. And weve worked in fact, beckys written articles about this and weve talked about this. But its taken us decades to create a manufacturing foot print where we sell. So in japan, were a big producer inside japan. And we export from japan. So we get the benefit of that. Is that product line or by market position where youre exporting to . Its a little of both. The bulk of our machines, the ones that are our midsize machines where theres a big demand in asia or china, we try to make them there so we dont have to ship them. The big Mining Equipment is mostly made in the u. S. And we export that around the world. But we produce in dozens and dozens of countries. We make an excavator in six or seven places around the world depending on the demand. That means cost and currency. We bring all this back and were well balanced. In the quarter, the stronger dollar was a slight stronger impact to us. It takes a long time and its really about manufacturing and supply chain. Thank you. Doug pointed out you come on with us whether the news is good or bad. We appreciate that. Because we know you well enough from all your appearances, do you have a cold today . I do have a cold, becky. Sorry. We hope you feel better. Im kind of on the tail end of it, but yeah, i do. If it sounds a little froggy, its not lack of enthusiasm. Ive been traveling a lot lately. Well, im glad youre feeling better. Congratulations on the earnings and thanks for joining us today. Good to be with you all as usual. When we come back, were going trucking with super mario. Before we go, these are the companies who have reported within the last hour or so. More on these names and more stocks to watch in just a bit. receptionist gunderman group. Gunderman group is growing. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. I just talked to ups. They got expert advise, special discounts, new technologies. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome all awesome i love logistics. Twhat do i do . You need to catch the 4 10 huh . The Equipment Tracking system will get you to the loading dock. There should be a truck leaving now. I got it. Now jump off the bridge. What . In 3. 2. 1. Are you kidding me . Go. Right on time. Right now, over 20,000 trains are running reliably. We call that predictable. Thrillingly predictable. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. And often even more. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 89. 95 a month. Comcast business. Built for business. Welcome back, everybody. Many are calling this is stock pickers market. Our guest host is Mario Gabelli. Wed like to play rapid fire with you. Lets talk about janus. This is an interesting story with bill gross leaving pimco going to janus. You like the stock. Well, i liked it at 8. I didnt like the deal with daiichi because that would provide them a shield against another merger potential. However, you got to give the ceo credit of attracting and creating this infrastructure. So the japanese are changing the culture with regards to their investment philosophy. Daiichi is a funnel entity to the United States for janus. That could be a very significant input in their equity especially with bill gross joining them. Janus has 188 million shares. The stock closed yesterday at 14. Cash exceeds debt. Im going to be in denver. Hope to see them in a couple weeks. Wed like to own more. Itd be like gabelli, pimco, gabelli leaves gamco. You cant leave and its still gamco. Why not . Weve created a model of investing based on gram so youre sue per but i get paid more than i should for running money. Im going to remain overworked and overpaid. Thats why that is cheap. You took a term 30 years ago and left wall street and went into Something Else. Dont make me mention how much you make. How much i pay in taxes is even better. Thats right. I want to talk boulder brands. Thats one of the stocks you own. I dont know that much about it. We own about 8 of the company. Weve owned it for a long time because we like gluten free. The stock was down 3 yesterday to 9. The only issue you buy more when it falls like that . I bought a little bit. The reason were concerned is the insiders we want to go back and figure out when that happened. I think this is a company that should be sold. I think you sold to who . Like a big Consumer Brand . Somebody who wants to be gluten free in a bigger way. Its not the atkins diet. There are people with celiac. 9 wherever it closes, they got 250 million in debt. The gluten Free Products are going from 40 million to 60 million. That isnt cheap and the margin business is coming down. They knew it. Thats why they made so many acquisitio acquisitions. You got to buy it. Cash flow is going to be terrific. I think the stock doubles. Maybe even many for. The earnings are going to be in the 5 a share area in five years. The movie business content, globalization, mobile phones. Buy it. Did you want them to buy time warner . The question is always price. Do you overpay to get the assets where theyre clear synergies . Or do a retail deal . The answer is its not were you one of those investors who that stock went down. Twentyfirst century fox went down because people thought they were going to massively overpay and didnt understand that time warner was not going to do the deal. This paid retail for dow jones. They paid retail for other assets. This one here they said timeout. Lets step back, buy our stock back. They have great cash flow going. You were happy when they said no, because i owned enough of time warner and so i kind of see a need for consolidation in the content business. My bet is that sony and viacom come together because of the merger of paramount. Alibaba would buy the boat. Next . Navistar. They are simple. This is the big trucks on the highway. Theres 230,000 in the United States. 2. 4 million on the road. The farmer has a huge crop, they cant transport it because the barges inland waterway transport is clogged up, the railroads are carrying oil. The economy is improving. The cash flow of the truckers is good. And if they ever come back with depreciation, youll see a huge earn bings gain. This is a double. We got to go, but you just said sewny and viacom. Are you making that up or is that something you think is a real idea . From my point of view, consolidation of content companies would work. With viacom do you think sony would ever do that . Would do cbs first and put that together again . Thats what makes speculations. If i knew it, i would share it with you. But i dont think anybody has ever talked to me. Independent of what, why not . If youre sony, you just got a billion shares, the stock is 17 billion market cap. Thats a minnow. And they can sell them insurance assets for mark to market for 4 billion and in addition to that youve got music, movies. And then they have to deal with all electronics. With abi running japan, layoffs are happening. Well continue and have much more with mario throughout the program. And well talk about the canada chaos yesterday. Questions today after a lone gunman kills a soldier outside of Canadas Parliament. Then at 8 30 this morning, weekly jobless claims. That means leismans probably in the house. Squawk box will be right back. An Unprecedented Program that partners businesses with universities across the state. For better access to talent, cutting edge research, and state of the art facilities. And you pay no taxes for ten years. From biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo. Startupny has new businesses popping up across the state. See how startupny can help your business grow at startup. Ny. Gov e financial noise financial noise financial noise financial noise Stephen Harper addressing his nation. Harper himself was in the building when the gunman shot a soldier. He was then killed in a shootout with military personnel. The soldier Corporal Nathan sirillo was murdered in cold blood and reassured people about safety in his country. Let there be no misunderstanding. We will not be intimidated. Canada will never be intimidated. In fact, this will lead us to strengthen our resolve and double our efforts. And those of our National Security agencies to take all necessary steps to identify and counter threats and keep canada safe here at home. In the United States and new york city in particular, police are sending more coverage to areas with the canadian government. Says there have not been any threats made against any locations. Coming up when we return, jobless claims data and what you can expect during the trading session. Jim paulson is going to be joining us. And before you cast off your credit cards in favor of apple pay, you may want to wait for a glitch to be fixed. Well tell you about that when we return. All right. Here we go, everybody. We are a few seconds away from jobless claims data. Lets check out the futures and how things stand ahead of those numbers. Dow futures now up by about 164 points above fair value. Weve been in positive territory all morning long. But things took off after caterpillar reported. But caterpillar beating by a wide margin in terms of the earnings per share number. If youve been watching, its up by 3. 6 . Also if youve been seeg whats been happening with the 10year note, thats key too. The yield now at 2. 24 . Lets get down to rick santelli. Jobless claims rise rather substantially but from a really low level. 264 up to 244. Ramp that up to 283,000. Were basically looking at an area of 17,000 where under 300, the market is nonplus. Of course even though it is good news, we continue to monitor all the historics regarding jobless claims and the improvement in the jobs sector. We havent closed above 2. 25 closing in on two weeks. But what really drives us home is just think. A week and a day ago we were 186. By any standards especially in percentage terms, that was just one home run of a trade for anybody that dabbled. On the sell side, the one time you could get away with it a week ago wednesday, of course were going to continue to monitor the european data. A couple of tenths improvement pmi and everybody was giddy in europe. The bar is so low, nobodys going to limbo under that bar. Back to you. Last week when we talked to you you pointed out something interesting. It seemed the oil markets, stock markets were leading the other markets. Do you think thats reversed at this point . You know, i think the Energy Market is one of these markets a lot like treasuries where objectivity is in the eye of the beholder. I know we have supply issues. I know despite all the politicians or many politicians were becoming very energy selfreliant. So theres a supply issue there. But processing that supply turns into demand. And i really think it could be that easy a barometer of domestic is impacting oil as well. But nobody wants to talk about that side. We just like treasuries. Theres many components to treasury yields being as well behaved for 2014. But one of this is less growth from an optimum standpoint. I think everything is always up for grabs, but i would still say the only adult in the room continues to be the treasury market. Okay. Rick, thank you. Well talk to you again soon. Steve leisman joins us as well. What do you think of these numbers . I think theyre up from a very low number. But the fourweek moving average at 281 falling 3,000, thats the last four weeks, lowest since may 2000. We know theres not a lot of firing going on based on the jobless claims numbers. Also continuing claims also declined 38,000 to 2. 35 million. Those are reported with a weak lag. And they suggest pretty robust numbers for the employment report. I want to talk a second about growth here. We havent had a second to talk a lot about the overall growth outlook. Stocks have been volatile. Growth has really not been. I want to show you the latest cnbc rapid update. And what it shows is theres growth expectations. 3. 1 . You can see a line at 3 . Four of the last five quarters. Except for the aberrant q1. And they think 2. 5 is the potential. They think that should be about soaking up slack in the economy. With a range of 2. 6 to 3. 5. Weve been up and down three tenths here, two tenths there. But the growth has been remarkable stable. Moodys at 3. 1 . Morgan stanley at 3. 1 . And theres 2. 6 on the bottom. You can talk about all the reasons for the volatility. Its not the economic outlook. The Economic Data. Doesnt seem other than that one retail sales report youve had a lot of i dont know, what do you think . I think the numbers you are talking about are real. The nominal growth rate are higher. So add 3. 1 and 4. 7 . The revenue numbers which should be matching the overall nominal Growth Numbers are running 3. 8. Except the revenue numbers are youre looking at the s p. And 30 or 40 of that is nonu. S. And so as a result of that, youve got the currency dynamics. And you have the weak overseas growth. That would explain. Also you have small caps that are u. S. Centric. You know whats been interesting, though, forget the economic numbers weve been getting along the way. We look to earnings season as a time to get some insight into what ceos see. While a lot of companies have been beating expectations, they say theyre doing these things despite what the economy may throw at them. Ive been surprised. Doug oberhelman of caterpillar. Whats the advantage to a ceo to get up and sing and dance about the outlook when you do have elements that, you know just uncertainty factors. Meg whitman did it well. Stocks have done extremely well. Thats the model to follow. Why would you want to get up and say europe a going to boom, chinas going to have and were going to do extremely well. Overall if the pie is growing, if you maintain as a company, your rev nigh should go down. If you own the whole world, you should. I remember stuff that happened in high school but cant remember yesterday. Used this phrase about how we did it ourself. Selfhelp idea. The selfhelp idea was much more about that he thought he was doing it on his own opposed to being forced to do it by dan lowe. Meaning they were making i heard were doing it despite the economy. He did make some comments in the actually press release that were tied to that. That we foresee this momentum continuing despite what the economy may throw at us. Andrews been using the selfhelp line. Hes been using that phrase for about a year now. Actually since dan went into the stock about all the things they were going to do sort of on their own without the need for pa activists. Do you remember the girl in casablanca. Where were you last night . I dont remember. I dont remember yesterday that well. I remember freshmen this guy freshman year in high school. Yeah. He had some thoughts on how these economic numbers could play out in the markets today. Were joined now by jim paulson, chief investment strategist at Wells Capital management. And still with us youre here today . I was saying go see girls gone. Then you would really have an updated version of what you did. Andrew has seen it every Ben Affleck Movie when it comes out. Gone girl. So many things have changed lately. Im going to tell you something that steve just said because i thought about it. He said the volatility has been really unbelievable, but the growth has not been. I think we need to recalibrate our volatility. I think the volatility given what the fed has done for the past three years, i think the volatility has been uncharacteristically low. And that now were just back to sort of normal. Has the volatility, is it really just absolutely insane when we think 1 moves are the end of the world up or down . No, i dont think that is, joe, but certainly what weve done in the last week is outside the box of normal volatility steve was talking about the fact that real gdp growth now is 3 plus if we take the last four out of five quarters in the United States, that hasnt changed. But certainly the expectations around it changed a lot in the last two weeks where everyone went real scared we had this big global slowdown coming and now it looks like its okay again. I think thats kind of what happened. There wasnt volatility on the ground. But among the expectations. You know, overall. Im impressed. You were talking about 5 nominal gdp growth. I guess my central problem that i still worry about here is if were at 5 nominal gdp growth, three real, two inflation, i think thats clearly unsustainable with an Unemployment Rate thats now in the 5s. And factor utilization going to break through with a 0 short rate and a 2. 25 10year yield. I think those are incompatible. The stock market needs to yet adjust or figure out what theyre going to do as Interest Rates are reconnected with the Economic Cycle here which still hasnt happened in my view. Most people, you know, what people are arguing about is that inflation number that you just gave. And maybe u. S. Is too. But whats the global rate with sort of what we compare our bonds . In germany, theirs is. 8 of a percent. I dont know. Is it really 5 right now . 3 plus 2 or is it 3 plus 0 . But u. S. Only. Im talking u. S. But ill tell you what. I dont think u. S. Bond investors are going to sit still with the 2. 25 yield on the 10year if the inflation rate starts to accelerate in this country. I just think youre already close to a zero yield on your 10year bond. If this starts accelerating at all, i think Bond Investors wont sit for that even if theyve got deflation in japan. Weve been hearing this for a long time. One of these days its going to happen. But anybody thats gotten too early on that has been wrong. I ask you a question. Is there volatility now or was there just no volatility before . What is volatility in this market . Well, i think, joe, we had massive recordsetting postworld war ii volatility during the 08, 09 aftermath. We had 80 vix readings for awhile. Unprecedented except for the great depression. So i think you follow that incredible volatile period with a period of lower volatility. Thats not necessarily uncommon. You know, we had that after world war ii where you had a lot of volatility and then a very stable period for a period of time. I would suggest that were still in a period where we might sustain lower volatility readings than average more times than not the next several years. Maybe for the balance of this recovery. But certainly the volatility that weve had in the last couple years has been far below average. So this is more normal, if you will. A vix of 15 to 18 i think is a more normal reading. All right, jim. Thank you. Thanks. Well see you soon. Were going to get more from mario in just a bit. Coming up, stock os then move this morning. Caterpillar, 3m and others in focus today. Squawk box returns with that and a lot more in just a moment. Where you headed at such an appropriate speed . 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Results were driven by Strong Demand in north america and china. And caterpillar well above estimates of 1. 36. Also raised the outlook profit for the year. And shares of under armour are under pressure. Even though they Beat Estimates on both revenue and earnings. And it raised its forecast for the year. Apparel sales did fall short of analysts forecasts. Although sales of footwear and accessories are what the hell is an under armour footwear . Theyre shoes. I have a pair of under armour sneakers. I did the tough mudder. They are the sponsor. They make a special shoe joous for that. I thought under armour was for under theyve been expanding to all kind of things. Now its everything. Its like nike. You want the compression to make your feet look smaller or something . You have feet they are disgusting. Thank you. Youre welcome. Performance wear. Its sportswear. Now they have gisele as a spokeswoman. Theyre like nike. So they have okay. All right. I think its a stretch to think you can do things like feet. Like under armour things with shoes. Up next, apple pay hits a snag but good news is on the way. Well get the details after the break. Plus cramers take on what you need to watch when the ball rings on wall street. Squawk box will be right back. When diet and exercise arent enough, adding crestor lowers bad cholesterol up to 55 . Yeah crestor is not for people with Liver Disease or women who are nursing, pregnant, or may become pregnant. Tell your doctor all medicines you take. Call your doctor if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine, or yellowing of skin or eyes. These could be signs of serious side effects. Are you down with crestor . Ask your doctor about crestor. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Early glitch for apple pay causing some users to be charged twice for some purchases. Only affecting a couple of customers, but the bank of america customers. Theyre working on a fix and will be reversing duplicate transactions. The spokesperson for bank of america said it affected about a thousand transactions. Not a thousand users, but transactions. Apple shares trading close to an alltime high. Lets get down get down to Stock Exchange where jim cramer joins us now. Take your pick. A lot of dow components. A lot of other things. What caught your attention . I listened to your interviews. I thought the southwest, especially the ebola inquiry you made showed a lot of confidence. It was a good quarter. Caterpillar revenues werent up big. They are making so much money per piece of equipment. I think they are starting to get rid of the drag that was mining. I understand why the stock is up. This was a key name for the shorts. They needed to name to come down. Your interviews showed me if youre still short it, if it gets back down a couple of bucks, you can cover it. There is not enough there to bring the stock down. There are times when buybacks make sense. After the ibm news, this thing said a buy back is some sleight of hand at this point. If youre using cash. Look at icahn. His rationale for apple. Could they build more plants even though they dont need them, share the profits more or return capital . Returning capital has been a terrific theme this quarter. Caterpillar is a gdp play. They cant help it. If they think 2015 is going to be better. They think ultimately the second half of 2015 will be good, why not buy back stock. Who bought back stock the most aggressively . Yahoo. Some make sense because there is so much cans. Some of them dont because theres not enough cash. Ibms operating cash flow was not good. Cats was great. We agree. If you are buying a stock to support it, that doesnt make sense. If youre buying to maintain earnings per share growth, that is important. Genuine parts, 2 buyback which accelerates the growth, if youre buying the because its below what you think is Intrinsic Value, thats terrific. Mario, what am i going to say . Thats the best stated thing i heard about buybacks. You laid it out. You had it right. What are they going to do . Catch it by navistar with three months of earnings own the whole company. Right. Youre thinking my stock is down because its a member of the s p. Im not seeing the weakness. Ill take advantage of the fact s p knocked my stock down. In some cases that makes sense. Booing was more difficult. We expected the dreamliner to start making money. Most companies are saying you think our stock and our company is doing nothing. Our stock does not reflect the fact our company is doing better than you think. Lets buy back stock. Genuine parts. Inexpensive stock. Why shouldnt they buyback stock . Not only that, some companies, i happen to like interpublic and he is doing a great job. He talks about a stock buyback but number of shares outstanding doesnt change. You look at the number of shares at the end of the quarter and they are knocked down and brought back stock. That says we brought back what we issued. I want actual shrinkage. After this, you know what . They are doing better than we think. I like that. I like confidence, by the way. Not a bad thing to have. Who is playing tonight . This is the first thursday night game worth watching. Chargers broncos. Does cbs know how to promote a game at all . Why dont i know who is playing tonight . Do they have no idea how to make an event of something thursday night . It is a very disjointed notion between doing way thought they do, make it to be the hallmark like we do sunday night, and throwing it at you. I dont know who is playing tonight. That is a sad commentary. Moonves has to get off the whole want to be an ambassador idea. Whats going on . Nothing. Bulls and knicks. Thats the seen. The world series has been very exciting. I like the world series. These are two really class teams going at it. And you like the royals. I love the royals. This is their year. See you in a couple of minutes. When we come back, inside the mind of Mario Gabelli. Maybe what he likes to watch on television or squawk box. The lightest or nothing. The smartest or nothing. The quietest or nothing. The sleekest. Sexiest,. Baddest,. Safest,. Tightest,. Quickest,. Harshest. Or nothing. At mercedesbenz, we do things one way or we dont do them at all. Introducing the allnew cclass. The best or nothing. But parallel parking isnt one you do a lof them. Ings great. Youre either too far from the curb. Or too close to other cars. Its just a matter of time until you rip some guys bumper off. So, here are your choices take the bus. Or get Liberty Mutual insurance. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. See Car Insurance in a whole new light. Call Liberty Mutual insurance. But what if you could see more of what you wanted to know . With fidelitys new active trader pro investing platform, the information thats important to you is all in one place, so finding more insight is easier. Its your idea powered by active trader pro. Another way fidelity gives you a more powerful investing experience. Call our specialists today to get up and running. Time for rapid fire responses from our guest host Mario Gabelli. We want to know the following. Walking dead versus homeland. Thats a little amc versus showtime cbs question. I like them both. I happen to like walking dead but i like homeland more. Which stock do you like more . I would say that cbs at the moment has been beat up so much that they can have a bounce here. Iphone galaxy . Neither one. Favorite guilty pleasure. Easy big question. Apple pay or paypal. American express . Hold on. Apple stock versus ebay stock before the spinoff . Youve got a lot of qualifiers there. I happen to own more of ebay than apple. Apple is a very Interesting Company with 6 billion shares at 100, thats 600. I get nose bleed. Coke or pepsi . I like them both. Im betting on dr. Pepper because its 15 billion. They had good numbers, good cash flow. Buying back stock, 200 million shares of a 65 stock. Is bundling dead . No. But it will change. Why should i pay for espn at 5 and somebody else at 2 when i dont watch sports. As a result of that, something will be priced out. Google or yahoo . At the moment, selling off my yahoo in light of what the taxes they have to pay. Im going to be out of them. Marissa did not convince you . No. They have to do a better job deferring taxes. She said she is going to figure out how to do it. I hope so. Within that context, i hope durbin is around and watches the inversions. Bayer or meyer . Meyer in the street should be sold. Mario gabelli, thank you. Thank you. Thank you for joining us. Were done. Time for squawk on the street. Goodbye. Good thursday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer at the new york Stock Exchange. Faber is on assignment. Probably the busiest day for earnings. Caterpillar, 3 m airlines, all leading the charge. Cat is nudging the market higher. Tenyear yields up 224. German manufacturing, a pleasant