Due months chairman and ceo is stepping down after six years in the post and five months after winning that proxy battle against an activist investor. Freeport trimming its board and reviewing Strategic Alternatives for its oil and gas businesses. Pepsico lasting its full year outlook. First up, futures indicated near the flat line a day after the s p saw a fivesession winning streak. All the s p sectors finished monday in the green led by industrials, up almost 3 . Jim, from fridays low, the dow is up 762 points. This is a market where a lot of people were caught leaning the wrong way before this rally, carl icahn, very noted investor, sounded an alarm. I think people were short betting that the number would be strong on friday, and we would have this calamity that didnt develop. At the same time peoplecloses ye negative news out of china, and glencore was able go up large. Took a breather, now the earnings start. It used to be alcoa. Today its pepsico. And if you start with pepsico and look at it, you say, wow, this is a good quarter. P pmcsierra, positive stuff about dupont. Can we continue the round . I dont know. I think were overdone. Is this the chance to sell stuff you wish you could have sold at 1870 . I think theres industrials that have gone up a great deal that went up in part because people said nelson peltz bought ge, were fine. We have not heard negative news about china lately. China comes back october 8th, nelson peltz did not buy an etf for industrials. He didnt. What do you mean . Ge is not a proxy for him taking a position in all the industrials that rallied. Not at all. Kind of the opposite. They made it clear, its a mispriced security. We will see if that proves to be a correct statement over the next couple of years. I would expect them to own the stock for at least that long. I do wonder. September was just terrible. Right. I got hedge funds, i havent pursued some of them. Closing down, huge redemptions. You have guys down double digits. I dont know how much flows matter or not. No, youre so right. The flows. The new fiscal year for some new mutual funds. Mutual funds had to sell. I dont know to what extent that played into this ralliment. At the old trading desk you would say big dog, but the mutual funds did, indeed, had so to do some taking of profits. The hedge funds were very much hurt. The last dip down was about redemption. What i feel im concerned about, if you look at dupont, well talk about it, you may want dupont as a break up. The line items of dupont were terrible. Yeah. By the way, brazil . You have business in brazil, youre down 40 because of the currency. Yeah. A lot of guys do business in brazil. Even though well do dupont in a second, we have made up for septembers losses, and then some. You were worried in september, this rebound has done nothing to assuage those concerns. I was worried about glencore, i still am. China has done nothing. The Mortgage Rate cut was big for me. It says our housing bubble is over. This wynn and Las Vegas Sands is a major reversal of the communist party that tried to crack down on this excessive party. Theyre making credit easier and going for excessive spending. Thats prescription for not hating china as much. You saw german factory orders today, big miss. Really bad. Part of my theory why they can come back is that europe has got to be better. This is not what you want to see if you want the dollar to go down. If you look at pepsico, theyre saying maybe weve seen the peak in currencies away from the dollar. When i look at the globe, you need to see china better. Did i get that . No. But thanks for calling back now. Is it the wife . No. Thank you. The wife knows not to call. The kids have soccer. Last hour and a half im trying to get this person. Dupont announcing that ceo Ellen Coleman is stepping down october 16th after holding the top jobs since 09. Edward breen who oversaw the break up of tyco taking over as interim ceo. Kullmans retirement comes five months after they won the proxy battle over nelson peltzs tria trian. Man, i tell you, i remember nelson peltz saying there will be another big cut, right . He did. This was not a big cut this was a meekly through the proxy fight, he pointed out how many times they had not met previous guidance. Here we are again, theyre saying brazil, its bad but is it just brazil . Then huge cost cutting theyre talking about moving into here. The Conference Call was unreal, frankly. Why . Hey, we had another good quarter. Ellens doing good job. Things are good. Okay. We missed big. Thats all right, its brazil. Guys, it was a bad call. Dont put lipstick on that one. Questions now, of course, we can debate certainly ms. Kullman, sevenyear ten youre, was cut short. Theyll say fired, shell say retired. You have an interim ceo. Will ed breen be interim or permanent . They are undertaking a search in all seriousness, but ed breen ran tyco, motorola. He created so much value with tyco. This fits with his lifestyle. I thought that he was interested maybe in one more gig as a ceo. Only 59. I will be interested to see whether he chooses to stay on and is given the ceo job permanently or whether he really is interim. I dont know the answer. But you could make the case he would be permanent ceo. The question is, he know house to sell things, move assets around. He did that at tyco, created value there as well. Let me ask you, something joe asked me earlier. She won the battle, lost the war. Right. No doubt. How did that happen . Because of a missed quarter . Yeah. Listen to ed garden yesterday from trian. He turned the question around, but the first part of the answer is interesting because it lends to the idea that they werent done at dupont and the board must have known that. The dupont story is far from over. But let me make an observation, you know, its all about Revenue Growth and margins. In the case of dupont, we were talking about a separation at dupont. Not for the sum of the parts, but because it made no sense to us that as part of an am amalgamation the places that make up dupont have worse operating metrics than small standalones. You have to wonder if that narrative will have more currency in the boardroom now. How about if they put nelson on the board. What would happen . Nothing says they wont. If she had just said, listen, we need these guys. Do you think it would have been a different outcome . I think she would have kept her job. You do . I think so. Really . She could have said im not happy with my performance. I need help. Here comes help. I segue to that because i think the freeport ceo will keep his job because theyre open minded. You have been doing some work on activists, but the journal today looks at 71 instances where an activist gets involved. Of those 71, outperform their peers, not by a lot, but by five points. Very interesting piece. Its almost like the term doesnt work. The term activist doesnt work. Its very broad in its nature, there are a lot of different strategies that we pointed out. I was talking about this the other day, given the size of positions and how bad september was for some activists, who own valeant, we talked about jeff ubb, enormous positions, longterm holder. Many of these guys are longterm holders. Carl icahn owns these stock force years. The trian guys own stocks for years. Thats one set. There are another set of acti activi activists. Its not always ended up rosie. We have to come up with a better term. Breaking news from twitter, unveiling whats been known as project lightning. Calling the much anticipated feature moments. This is dorseys vision of a slimmed down version of the project as a way to attract firsttime users to the platform. Its twitters first attempt to curate the 500,000 tweets sent a day. The floods in South Carolina will be a package of photos, tweets taken by residents. Behind the scenes i have been pushing, pushing, give us this. Could we make it so we can follow topic and make it known no not catsthatpurratdogs. But give us something meaningful. They kept promising. They kept promising. They said it would be out early october. This is something they promised and delivered and a lot of us wanted. This will make it so this should be your newspaper. This could work. The manager overseeing this particular product says what were trying to do is get the content directly in front of you without you making decisions. Thats smart. They got to make it easier. I was with my daughter this weekend. She hijacked my twitter feed. Dad, well do something new. Well thank people and put smiley faces for saying things nice. Why would we do that . Its nice. When we come back, ginni m Ginni Rometty. And pepsi beating guidance. Mores s isquawk on the streetm post nine in a moment. Pepsi had a nice earning beat. Shares on the rise. Sara eisen joins us early this morning with more on that. Good morning. Good morning. Pepsi out with Third Quarter results beating on the top and bottom line and raising its full year outlook, raising margins. Joining us now is hugh johnson, pepsico cfo and vice chairman. Good to see you again, hugh. Great to see you, sara. Good morning. So the strength came from north america, both on the beverage side and on frito lay. Should we take it as a good sign for the u. S. Consumer . Yeah. I think we feel good about that now. I love the way you guys closed the last segment. Beverages, snacks, profits. I couldnt say it better myself. I think theres two big thing going on. Number one, the pepsico portfolio is working. You know, previously europe and asia, middle east, africa were growing more quickly as north america was slower. Now that north america picked up, you see all of the businesses. North america beverages, frito lay and quaker are all performing well. Maybe a good sign for the u. S. Consumer. We saw revenue up in the Convenience Store channel up about 7 . Thats terrific sign that at least the u. S. Consumer who likes our product is doing well. I think thats story number one. Big story number two sara, is the combination of enhanced productivity which i think weve been seeing over the past couple of years. Weve invested in automation, in market restructuring and shared services. Weve been putting that money partly into the bottom line. Operating margins up about 60 basis points. And partly into research and development and market and advertising. Were growing sales faster than pierce. Thats enabling us to drive more productivity. I wanted to ask you about that, hugh. Your boss spoke about the productivity savings on the call right now. Why is productivity so important to pepsico right now . No. I think weve actually been at it now for several years. I wouldnt describe it as a 3 g effect. Though we have respect for what they do. We invested in capable to drive continuous productivity improvements. Part of it is smart spending, managing zero based budgeting, but also running the operating system more efficiently. We invested in systems to give us more visibility and now investing in capability to drive costs out. Part of that is going into the bottom line, part of that is going back to growth. Thats a wonderful value creating formula for the investor who wants to stay in for the shortterm and longterm. Hugh, jim cramer. Good to see you. Hi, jim. Weve got a series of stories that come out about carbonated soda drinks, diet or regular. How has your company been able do well in the liquids category despite that bad publicity . Its a great question. I think even there we have a formula thats working very well. First of all, we were somewhat ahead of the curve in terms of investing in noncarbonated beverages. We have the leading sports drink with gatorade. We have the leading tea with lipton. We have the leading coffee with starbucks. We have the leading orange juice with tropicana. As consumers shift from carbonated soft drinks into noncarbs, we are the beneficiary. For the quarter, noncarbs were up 10 . Thats why we saw such terrific north american beverage performance. I know you took over quaker. Thank you. We are doing well in the cereal category. We posted a quarter of 2 Revenue Growth, 2 profit, if you take out the gain from a profit year, profits were up 17 . Combination of share gains, pricing and productivity are working in the quaker business. Hugh, thank you very much for joining us. Hugh johnston of pepsico. Diet volumes were down 6 to 7 this quarter. They released their new diet pepsi without aspertame and consumers did not go towards it yet. Coming up, we will count down to the opening bell. We did not talk about tesla, federal express, freeport, mcdonalds all day business. That and more when squawk on the street comes back. They come into this iworld ugly and messy. Ideas are frightening because they threaten what is known. They are the natural born enemy of the way things are. Yes, ideas are scary, and messy and fragile. But under the proper care, they become something beautiful. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can seek to outperform. Thats the power of active management. Where are we . Is that house music . Thats horrible. Were clubbing. We will be clubbing the people shorting pm krspmcsierra. They are being bought by skyworks. Skyworks has the innards of every cell phone. David spent a couple billion dollars in cash to buy this. David, during the great heyday of 2000, p pmcsierra going up. It makes the company more diversified. That stock has been not so hot of late but up here. It looks like theyre getting way more than the 52week high. Theyre doing good thing to diversify. Preannounced a better than expected quarter. Lets look at skyworks, particularly in this market where we have seen stock prices not respond as positively as they had previously. Thats a barometer for the health of the mma market. Give than they preannounced, you would expect them to be up more. People are technicians and looking at this as k2, where its very dangerous. Thats where all the accidents happene happened. Not a lot of oxygen up there. Exactly. Illumina, this is gene sequencing. People thought there can nothing that can go wrong with illumina. Its a red hot stock. If you look at ilmn, look at that. How do you like that . This was a name wasnt roche after them for a while . Yeah. Everybody loved it. Theres a lot of pressure on biotech. Just illumina is the losing share and losing business. They have the box right, they can sequence you quickly. People in the business say this is a very this is the break through company you need to use. Eventually well carry around other genom on the phone. Absolutely. Everything you need for your vitals is on your phone, but you want to find out whether your genes will yield some sort of genetic proclivity for a terrible disease, and you need illumina. Do you buy it on this weakness . This took everybody by surprise. Wait until is settles. When its down that much, that means theres a second day. Made me think of the apple watch, you could have your gene on the watch. Hes back to his breitling. We have not talked about freeport yet. More squawk on the street after this. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in about a minute. A lot of various news cycles. Some news from big industrials, Large Cap Companies like pepsi, dupont and fedex. A lot of mma. A lot of food news, whether its cheerios, general mill, yum tonight. Wendys, mcdonalds all day breakfast. Mcdonalds i think has been going up because of breakfast all day. They created a lot of drama about it. Easterbrook is turning that company around. Mcdonalds remains a buy. People have been saying sell it. No, the reason why pepsico did well is not soda. Mcdonalds, breakfast is better than people think. It matters. Its good. If mcdonalds can get another 80 cents or so, you have go all the way back to last summer, july of 14 to see levels above 102. Hes real. I think it will be a huge engineering challenge. Already people upset that hash browns are not available everwhere. Well find out more as it rolls out today. Theres the opening bell. At the big board today, olin corporation. King of chlorine after the dow deal. King. At the nasdaq, baldwin and lyons, a Property Casualty insurer specializing in the transportation industry. Speaking of transportation, fedex upgraded. They say theres been a enough guide downs in a slow economy, they can make the things work. And surcharges again boosted for u. P. S. Im looking at the price of heating oil, natural gas for the winter is the lowest in a long time. Putting a lot of money in consumers products, but it goes to fedex because of raising oil no. No. Come on. Im pro these companies. I didnt get that. You think thats its a way to make money. Im just being hard on them. United parcel got together. They didnt hire a lot of people as i thought they would for the holiday season, but i think they got an algorithm for getting rid of the boxes that take up room in the truck. I want to get to freeport in the faber report. I wanted to get to baker hughes. They did amend their 13d reporting. They intend to have conversations with members of management and the board to discuss way to enhance value. Topics include board composition, which may include whether it makes sense for a value act employee to be on the board, operations, asset allocation, dividend policy, financial condition, mma strategy, a lot of other things. Trying to buy halliburton. Yeah. I dont know. I like slumm halliburton, i dont know if thats what you want when Oil Companies are strapped for cash. If they do that deal, the cost saves will be enormous. They will represent a true competitor to schlumberger. Soup to nuts. Schlumberger is an amazing. Its a buy. Oil prices have bottomed here. I know the goldman 30 call, i dont think it will happen. Production cuts are too great, particularly in north dakota. Product t production cuts are massive in north dakota. I cannot believe how the ratchet backed it up. The journal referencing smaller sites still proliferating out there. Still, you know, people drilling the sweet spot. These companies, the credit will be shut down. Contra raised money, thats smart because so much property will be for sale. Freeport, i dont know if theres buyer fors freeport, i dont know if theres buyer for for that. Valeant has contributed to the success of the firm over time, and purchasing square, a hug