Doctor p dollar per barrel level. Brent up to 52. Is it still linked to the dow the way it had been in. Seems every other day. Every other day. Not like every day. Among todays top stories, china reported gdp of 6. 7 matching forecasts, retail sales rose. Urban investment rising 8. 2 . Industrial output only growing 6. 1 . Markets in asia overnight, lets see. Up on the nikkei, down slightly on the hang seng. And just call it unchanged on the shanghai. Back in the u. S. , another busy day for earnings and economic data. September Housing Starts are out at 8 30 a. M. They are expected to have rebounded after falling 6 in august. At 2 00 p. M. , the monthly beige book report tracking conditions in the feds 1 districts. A trio of fed speak today. San francisco fed john williams, dallas fed president rob kaplan and new york fed president bill dudley. Look for results from Morgan Stanley before the bell. American express and ebay after the close. Apple is launching a new imac at an event on october 27th, according to re code. The new models will be on sale in time for the Holiday Shopping season. Updates would be powered by the new sierra operating system, which added some support for the siri voice assistant. We talked about that yesterday. Shes needing some work. It needs some work. Not really shes getting there. Wouldnt you say . No. No. No. Shes shes what has she not done for you lately . When i dictate, i say very, very clear the third, fourth, fifth time at this point, im i mean my ps and my cts, the things im saying are so clear, anyone could understand it. And she says things. I look and i just end up typing it. Shes not even close. Do you like anyone better . Do you like alexis or cortana . Alexa. I am afraid of alexa even when shes turned off. When i say i made a tee time for 9 30. She puts tea. Like im having tea and krumpets. Shares of intel are sliding. The stock declined on intels guidance for sales, which came in short of where the consensus was. The chipmakers executive Vice President stacy smith pressing the positives. We had a clean beat this quarter. We were higher on revenue. Our best ever revenue quarter, up 17 versus last quarter. A 65 gross margin and 18 profit growth. A fantastic quarter. Smith highlighted the companys success with noncomputer devices and that it aims to reduce dependence on selling chips for pcs. The other big tech name to watch today, yahoo. Earnings last night beating estimates while revenues met forecast. Issuing a stronger than expected outlook for the current quarter. The core advertising business continued to see declines. We found out from the report that the usage of yahoos email service has increased slightly since the company disclosed that massive data breach last month. Yahoo didnt have the from traditional Earnings Conference Call this time, but in a statement Marissa Mayer says she is confidence in yahoos core business as the firm preparing to integrate with verizon. The email portion of the business is one key portion that would be integrated with verizon. Thats why we care about that statistic. This must be this must be sort of your tech your squawk alley expertise. I try to be i think that the tech savvy liesman, you know, he knows about the fed. Other than that, i wouldnt and the grateful dead. If you have a question about the grateful dead. I can answer that. If you know a lot about the grateful dead, i dont know what that means if youve been following them for a long time, you dont know whether youve been following about them. If you know a lot about the grateful dead, means you killed some brain cells along the way. Not necessarily. Their music sounds better if you some people say that. Some people enjoy it sober. A federal judge in california says he is strongly inclined to approve volkswagens 10 billion settlement over its diesel emissions scandal. His final ruling will be next week. Vw is offering to buy back vehicles and pay up to 10,000 to each of the 475,000 affected owners. The white house and the department of transportation rolling out new rules to spur competition in the Airline Industry. Phil lebeau joins us with the details of a story bandied about on squawk box for months and months. You dont like the way the airline prices are announced right now . Do you feel like youre not getting the full story . Pretty much. We talked a lot about competition and how competitive the business is. Let me show you what the announcements are that were made by the white house last night and officially being announced this morning. Essentially it has to do with airfares, how the information is distributed to the public, and how we see those airfares as well as how the Airlines Report information about certain things, such as how they handle bags and refunds for delayed bags. You will now get a refund for a del delayed bag. If the past you could get a refound if it was lost. If it was delayed a day or two, the airline didnt have to give you the bag fee back. Now theyll be required to. They will also have to stop selecting posting of airfares this has more to do with third party firms, whether its kayak or trip adviser, they dont always post every single airfare. They are telling the airlines you have to give every single airfare. They have to protect travelers with disabilities and has to be a clear picture of how many bags are delivered, not just a percentage but how many are delivered. The d. O. T. May require also this is a possibility all inpricing of tickets. Instead of telling you the fare, they with have to tell you the fees, everything added on so it would be priced at a much higher price. They are also studying more transparency in fare details. Heres the secretary of transition. The actions were announcing today will help consumers know how airlines are performing. Will make sure consumers dont have to pay for services they dont receive and help consumers find the best Flight Options for them. As you can imagine, as you look the Airline Index over the last year which has been under pressure as the airlines themselves the stocks have been under pressure. The Airline Industry is not crazy about these proposals. In part because when you look at the possibility, guys, of saying well advertise a fare from chicago to l. A. Right now theyre advertising the fare, not the fees, not the taxes added in. It might say 120. When in reality youll pay 145, 155 depending on the tax, the airport, what they might be. If they go to allin pricing the Airline Industry is saying that makes it look much more expensive to people and may deter people from booking a flight. The counter argument is if im paying 155, i should know thats what it is going to be. Dont tell me its going to be 125. I want punitive damages for delayed luggage. You want somebodys head. You want somebody to pay for that. Because it happens all the time. My other question, is it always the airlines fault or i dont know. Im telling you, the baggage handling at newark, just in general, they have major issues. The baggage handlers work for the airlines. They do. Unless they hire a Third Party Contract the whole belt system at newark has been messed up at times. Now youre talking about a different issue. Now youre talking about the infrastructure of some airports in the country. Given the number of flights, theyre handling so many more flights than they used to, that means things get backed up. Luggage gets delayed or lost. If im going to chicago and bringing a bag on board, my price might be 120 bucks. If im checking a bag, its 145. Why is that correct. Why does that help anybody . Im assuming the taxes tend to be included in the ticket price. No, no, not what you see advertised. What you see advertised typically is here is what the fare is. But if i go to buy a ticket the taxes get added on. At the end. Theyre talking about but if youre sorting the search results and you wanted to sort by price, the taxes wont be included in that search result. But are the taxes different . Yes. Depending on the airport and what landing fees might be and where youre going. So thats one thing. How many connections you have within there. The d. O. T. Is looking at whether or not if kayla is plying from new york to orlando, when she goes on to a Third Party Website or the airlines website, will it say all n heres what you are going to pay, or as it is right now, heres the fare for where are flying. Then she has to pick ofigure ou will be another 20. Is it better to leave the market to itself or better for the government to impose a rule here . Thats a tough call. You can make the argument that the the airlines will make the argument that airlines continued to fall because of competition. The more regulation you add in here, the more you will ultimately drive up the cost to the airlines. And it could be faharmful to th demand out there in the market. I know people who have booked tickets, when they ultimately get this this is more on International Flights where you see fuel surcharges added n people are like, whoa, i thought i was getting something for 380, now im paying 445, whatever it might be. I understand both sides of the argument. I dont think its as elastic as you make it sound. Its like, would i buy it at 140 and not by it at 160 . If youre going to chicago to. L. A. , are you going to drive . Well, the argument from consumer advocates, joe, is if im ultimately going to pay 160, tell me im going to pay 160. But the argument is if its too high, you might decide not to fly. Then youre deciding not to go to l. A. But you might decide to fly into John Wayne Airport or somewhere else if its cheaper. Like any industry, any time you advertise higher prices, you will get people doing stuff. I would think i tried to drive places recently. Drove to ohio. With the kids in the car . Its not the kids problem . You . No, just passing people, trucks. You got to be you got to be really alert the entire time. Its tiring. But you have so much patience. Is now the time they roll the video of you driving . No. No. Just its a big car. You know, i just you drive, try it, phil, if you havent done it, in a while, like an eig eighthour drive. I tried cruise control. You cant make that drive to boulder across the countrylike you used to . I used to with a 58 ford missing a front of fenderment. Throw the coors in the trunk because you cant get it out east. Made it to denver and blew a transmission in denver, once. Thanks. You bet. Solid Quarterly Results helped the markets close higher. Our next guest says what is unfolding here is part of the seasonal reporting patterns. Here is explain is eurin timmer. I wasnt under the impression that this earnings season was going so well. Its early, but your view is it will be the same old thing . People have underpromised and overdeliver and we might actually get to a positive. Right now were at minus 1. 4 . We might get to positive for the first time in five, six quarters. Exactly. We have a consistent seasonal pattern where the analysts start way too high. Numbers come down about 800 basis points into the end of the quarter. Thats the low point, then it balances by 300 basis points because the companies underpromise and overdeliver. That bounce of 300 basis points right now at the low point, about a week ago, the number was minus 1. 6, i think. So we bounce 300 basis points from there, we end up at plus two. Last quarter we were at minus 2 1 2, q1 minus 7. I look at it from a rate of change, you see a sequential improvement after five quarters of negative growth that we may see our First Quarter of positive growth. Thats a good thing for the market and for a market that is bracing for a fed hike. Thats where i wanted to go next. You answered that. Let me set it up. I dont know if earnings matter. I dont know if the election matters. They do. Maybe they do. I think youre right about what matters. Were in the middle of a paper tantrum is what youre calling it. Not tapering qe, but talking about the slightest tightening move, but the market up one day, down the next. Up the next. Down the next. Oil up. Theres no correlation anymore. You were asking that earlier. Yeah. Its like been around 50. The market goes up or down based on not being able to get out of its own way because of a quarter point possible hike in december. Its frustrating because its so meaningless. You think at zero when you go from zero, it is meaningful if its going up. When you look at equity valuation, the impact of changes in the discount rate, the Interest Rate against which earnings are discounted, usually doesnt have much intlufluence earnings are growing at 6 . In the absence of growth, if the rate goes up, it has a huge impact. At zero earnings growth, if the tenyear were to rise 100 basis points, the market would be 20 overvalued. Its the enumerator and denominator of the valuation model is sensitive to Interest Rates when theres not enough in the numerator to offset it. Its basic math in a way. The market keeps telling the fed wait until we have growth and then you can raise all you want. The market can handle it. People are waiting for the hike, and therefore not doing what they would normally do thats why you argue to get it out of the way. You say they may not do it again indecember. The odds are 65 that they will the fed had three dissenters in september. I think if the fed ends up not going in december, they may look back at september as a missed opportunity to take the control back. Like having a dance partner, both your partner and you want to lead. Nine fed banks wanted to raise the discount rate in september. That tells you where the Bank President s are. Yeah. Remember, the transmission mechanism for the least problems when the fed raised rates last december or when it was going to raise rates a year ago in september was that the chinese yuan was overvalued, that went down. You had the capital flight thing, tightening of financial conditions. This time the yuan devalued. Thats out of the way. I think the market can handle it. I have to ask about your notes. You talked about the quality of the earnings has gone down. As a journal reporter in 1999, i did some reporting on the quality of the earnings going down. It was not very long until the market went down as a result in part that they were lousy quality earnings. Whats going on with that now . 68 of operating earnings are generated through buy backs. When you look at earnings per share, which is how most investors look at earnings, they have gone sideways for two years. If you look at dollar earnings, they have gone down 16 . The only reason earnings per share have not gone down is because the share count has gone down. The hurdle of generating earnings to keep your eps up is lower. We dont have a good organic growth story. In that environment, its hard for the market to do well. It also means investors should be careful when they see earnings per share growth. Quality of earnings is not strained. The drop from dental heaven you dont know that . No, i dont. Last but not least, before we you do love that french i love him, right . Its almost like a seinfeld episode. Theres a seinfeld episode for every situation. Theres a quote from shakespeare. Oh. My question was going to be to you, since youre here. 65 . In the last couple of years, whats the highest fed funds probability that weve had and then disappointed on . I look at the front month, it hasnt gotten above not front. Out . Yeah. Youve been 70 , 80 . And when it finally came around we didnt do it. December 2015 they were up in the 70, 80, 90 percentile. Outside of that it reminds me of a call option. If it doesnt go up, the time premium comes out of every single george busin sing single the numbers have gone up and then gone down. On the evening of the fed hike, 70 . But many times not in the front month but in outer months weve been at 70 and 80 and disappointed. Thats what i was talking about the other day, if you look at the twoyear, we had to experience the fear and the economic affects of everrising rates that never rise. Yes. So the fed should have hiked or gotten off the pot is what ive been trying to say for the last year. We got to go. Thanks. Coming up, intels earnings beat the street but the stock trading down because of disappointing guidance for the quarter. Well go over that with an analyst next. Intel reports a 9 increase in the quarters results but shares fall almost 3 after disappointing revenue guidance. Joining us with more on what this means is chris casso. Good morning. Good morning. It looked like a good report. Up 9 , the revenue was close in line. Right. The guidance went that bad, right . Well, it was below where consensus was a little below. Right. Then the market sells off 3 . Does that make sense to you . Does. Expect takes had been high coming into the report. They had positively preannounced consensus had gotten positive. But i think the more important thing that people looking at, perhaps the bigger concern just for the radio people. Its off 4 . Off 4. 2. The data center group. Specifically enterprise server. The reason why people own intel now is because of data center, not because of pc. Explain what data center is. Theres two parts. One is the standard enterprise server that you have. And that part of the business has been the area of head wind. The other part of the business, more than 60 , is hyper scale data center, facebook, amazon. Right. So the key for intel is thats the part that theyre concentrating growth. And the issue is, you know, how much of the traditional Enterprise Business is cannibalizing that and providing he headwind. Also some commentary about failures when it comes to keeping pace with the pc chip market . That that continues to decline faster then people thought . Actually pc, over the last couple of months, pc stabilized somewhat. You know, i think everyone understands that pc is generally a flat declining market at this point. Its actually shown some stabilization over the past couple of months. In this particular report you saw a stronger q3 in pc, but part of the mild disappointment that you saw in the report was the fact they pulled some inventory forward from q4 to q3, which now leaves the question of will that inventory sell through. How well is the restructuring going . Thats such a huge part of this story and what investors are looking for middle of next year. Is everything on track . It is. I would characterize intel management as doing the right thing in the context of half the business is pc, thats not a growing market. So theyve been moving their efforts to other things. Data center is one of them.