Steady, moderate losses in europe this morning. And Consumer Spending rises to the fastest in three months. Road map begins with ge confirming the deal to combine oil and gas business with baker hughes to create a new entity. Well speak with the ceos in an exclusive interview. Weve got a deal in the telecommunications industry. Centurylink to buy level3, totals a new record month for u. S. M a announcements. And the latest controversy over Hillary Clintons emails as the polls tighten just eight days ahead of the election. Well get you all the market impact. First up in that deal to create what both Companies Call a new baker hughes, ge will contribute 7. 4 billion to fund a 17. 50 per share special dividend for baker hughes shareholders. Ge will own about 62. 5 of the combined company. As we said, next hour an exclusive with jeff immelt, chairman and ceo of ge, and the ceo of germanwin oil and gas, i craighead. You said it would be the ultimate buy high, sell low. Thats not the case here. No, its funny when you have a view you get a story and the story is that ges going to sell oil and gas to baker hughes and youre so upset about it. You have to take the opposite view when you hear that ge is getting control of a company that you really do like. I have felt that ge kind of an asset light approach, solutions approach basically saying, listen, when you drill, we can save costs. And then you take a company, a premiere Drilling Service company like baker hughes and merge the two, and suddenly you get a very good rival to schlumberger. Im not a crazy big believer in deep sea. And ge had done a lot of deep sea. The reason im not crazy deep sea is because deep sea needs 70, 80. We might go back to 70, 80. 40, 50 is the new 70, 80. Baker hughes makes if you look at that call they had jst on the quarter, they are doing quite well at 40, 50. So the combination of the two is very good. Yes, baker hughes guys get a nice chunk of change, as they should. But, david, i look at this deal and think ge has a good upside going forward. I feared a comcast like deal where they split the assets and only baker hughes got to buy the rest. No, its the other way around. Its the other way around. On friday we were speculating and as i said at the time without any reporting behind it relying on others the idea that perhaps it might be a spin into a merge co where ge shareholders would own it but not ge itself. This is different. 62. 5 of the ownership will be like ge. Think of the kraftheinz deal. Same people involved interestingly. Youre so smart. Thats kind of where you have to come down on this. And it gives optionalty to ge, jim, to sell down or potentially buy in well the ownership stake of baker hughes shareholders at 32. 5 or use the currency to go out and do another deal. Its number two now, it will be, in oil and gas. What a great time. After schlumberger. Theyre talking about synergies, big number, 1. 6 billion. So theyre capitalizing those synergies at 14 billion present value on those run rate synergies of 1. 6 billion theyll have by 2020. Theyre real because theres a lot of these were two very separate companies, you put them together. Theres a lot of technology overload. Baker hughes had moved a lot in the technology. Ge has great technology. The offshore stuff i dont know. I mean, maybe they can fill out. But these are a good fit. Ges got a Huge Installed base already. Yeah. And last week you made the point that the break even for shale is half of what it used to be. Yes, it is. Ill tell you something else, natural gas, people really overlook natural gas is good. You know whos really good at natural gas and intelligent pipelines is ge. This deal they have is fantastic. The enterprise optimization for pipelines, pipelines have to be built because shifting from pennsylvania, ohio, all around the rest of the country. Because natural gas is a very important fuel. Natural gas prices have gone up. So this is a really good deal. I am so i was so worried. All weekend i was thinking, oh, my god, going to have to come in and slam the heck out of ge for doing this. No, its the other way. Theyre doing a deal that actually they control a much far larger asset. Yeah. At this point, jim, with as we said the possibility they could get even larger if they want to. So seller in this environment. Very smart. And parting with 7. 4 billion in cash, as carl told you, to pay that kind of a premium and then also buy in some of the stock to reduce the overall count. Theres not going to be a lot of shares out of this thing trading publicly. Right. Right. But youve got this entity that is such a good call. Lets say iran actually does agree with some sort of cutback and oil goes to 60, 65. Interesting piece of paper. But most importantly i had felt that ges assets lacked a kind of core that made it so it couldnt compete against schlumberger. My travel trust owns schlumberger and ge, but i never felt ge had the complete package. They offer Great Solutions to cut costs chrks is the thing that the oil and gas i see you looking here at a presentation from them. Yeah. But the ge stores as they put it theyre emphasizing now theyll sell more into this. Yes, they will. Combined entity. And you were mentioning intelligent pipelines or whatever it may be and predicts, things like that they will sell more equipment into. Pipelines are much safer than trains. Yeah. But that doesnt there are a lot of people who hate pipelines because they think theyre unsafe. Been a busy week for pipeline news. It is. And i think the pipelines, like them or not, we got to get the natch rag gural gas where it ha. Ge has pipelines, on shore, fantastic. Look at all these articles about shale. You could say everyone is going nuts in the permian. The fepermian has 30, 40 finding. This is a very good deal for both. Craighead, hes good at raising money for big businesses. Ge and have to get immelt not afraid to do bold things over these past couple years, in particular but throughout hes been willing to sell and buy, the criticism has been that hes sold low and bought high. Well, he didnt do it on this one. Although i think the Financial Services divestiture many shareholders are happy. With the stock price, though, jim over time. Immelt himself tweeted this. This is video of the signing last night. I think he tweeted this at 4 00 in the morning. Wow. Over time the stock price anywhere near coming up from the s p. They waited for the eagles to lose i thought you said you werent going to mention it . Sorry. Had it on my mind, i guess. Lets quickly get to the other deal were talking about this morning and that is centurylink buying level3 communication, that transaction valued about 25 billion excluding debt. Centurylink shareholders will own about 51 when that combination is complete. And as david said, now a record month for u. S. Announced m a. I was concerned about centurylink and its dividend. This helps the dividend. Doesnt this help . This helps conserve the dividend without a doubt. Some would argue the at ttime warner deal may have been as much about that as anything, in this case it clearly is. But you can also make an argument these are two drunks holding each other up. Oh, wow. Hadnt heard that. Well take a look at performance from both companies, they reported earnings neither of which were very good. In fact, i believe level3, which is considered in some ways at least the was the higher grower had 20 basis points decline in Business Services, the key market for both these companies, theyre also providers particularly centurylink of Rural Telephone services. Right. But as you might imagine thats not a Growth Business. The dividend is enormous. It will be over 7 . Its going to beat off business. Yeah. Its about like frontier. Its all these the old days, you know, they got left. But you know whats interesting about this . Level3 did make an amazing comeback in the end. They did. It helps sustain dividend. Level3 has a 10 billion net operating loss that can be used very effectively in this combination by centurylink to help them shield profits, or not pay taxes. And it will be fairly highly levered going in at about four times, but the cash flow characteristics of the combination are such that it should be delevered pretty quickly. You can see both well, level 3 responding positively, centurylink is going to be down this morning. But thats just the arbitrage. That is to a certain extent. Not people worrying about the dividend. Right. Its in better shape. Yes. You might look at 7 dividend how can they sustain it, now theyre going to be a better job giving people confidence they can sustain it. Thereve been a series of articles, david, that said atts dividend is in jeopardy from time warner. I have not read that. I have read it the other way. I know but those articles would not be a correct analysis of the Balance Sheet of the two is from what i can tell. You too, right . Ive seen the same. Which is in fact it will be enhanced. Yes. Its a misjudgment of the they are not damaged at all. Okay, i wanted to make sure. I took two years of accounting, i could be wrong. I saw those also and questioned why those were being written. Maybe those classes were worthless. Yeah. Still searching for sort of understanding the rationale behind it beyond the financial rationale for at t. Right. Were saying were not in a Growth Business of any kind and therefore were going to diversify more. Those articles all read the same. Im tired of reading it. Like maybe the commonalities that stephenson likes hbo, what did he likes game of thrones. How many times do i have to read that . Now the question is whether goldman likes game of thrones, all sorts of elements of that story. Yeah, lets move on. Thats not worth discussing right now anyway. The market is going to have to weigh m a with politics eight days to go to the election. Tightening polls in the clinton email controversy in the spotlight. Our john harwood has more on that from washington. Good morning, john. Good morning, carl. The question is whether this race, which has been so stable for so long is now going to change in these final eight days. Donald trump has been seizing on the disclosure of the fbi reviewing additional emails. And using it to reinforce his core argument that Hillary Clinton cant be trusted. We all know about hillarys mounting legal troubles, that shes brought onto herself with her willful and deliberate criminal misconduct. Hillary clinton is not the victim, by the way. She is not the victim. You, the american people, are the victims of this corrupt system. In every way. Now, Hillary Clintons had a twofold response to this email news. One, her campaign have been going after very hard james comey, the fbi director, for the letter that he sent last week saying that it was misguided and it was unfair. Theyre demanding more information. The other is that shes reverting to her core argument which is that donald trump is unfit to be president as in this reprees of the famous 1964 daisy ad Lyndon Johnson used against Barry Goldwater. This was me in 1964. The fear of nuclear war that we had as children, i never thought our children would ever have to deal with that again. And to see that coming forward in this election is really scary. Trump asked three times flthree times why cant we u nuclear weapons. I want to be unpredictable. Now, lets take a look at the polls. Its always useful to check the polling averages. And if you look at these three National Polling averages, you see a somewhat narrower race in the real clear politics average. Two points for Hillary Clinton, it had been five or six before. In the the Huffington Post pollster average its still six points and New York Times average its down to five points. We also had new nbc the wall street journal marist polls over the weekend that showed Hillary Clinton in a deadlock with donald trump in florida, thats a state he has to win. But shes ahead significantly six points in the state of North Carolina, that is another mustwin state for donald trump, carl, so hes still got some work ahead of him. John, well talk to you later in the morning. Obviously thats going to be a big story throughout the week. Our john harwood. And a question for you, jim, how does the market digest all of this . What did fridays action mean visa vis that news . I thought the comeback indicated it was glancing. The comeback was pretty powerful. Whats so interesting was that the stocks that got hurt the most were the ones that would indicate that this doesnt mean anything. They were the Health Care Stocks were the ones that indicate sweep. So the markets seemed to take it in stride if you believe that its going to be a hillary sweep. The action in the stocks that are most connected to if the house and senate went democrat were destroyed on friday. They were destroyed. You mean separate mckesson . Separate from mckesson. You had a health care oneday bear market that is really kind of extraordinary, whether it be merck or abdvi, it didnt matter. Theyre going to stabilize a little bit because cardinal reported a good number. It took my breath away. The movement out of health care into tech and industrials and banks was veracious. And that was a sign that the democrats are going to sweep. So it was hard for me to conclude other than from some polls that the market really bought into the idea that there had been a wholesale switch in whos going to win. Storys far from over. When we come back this morning, a look at the busy week the markets have ahead including that fed meeting. Were going to get boj, b. O. E. , jobs number on friday and later the gebaker hughes deal, well have the ceos and ge oil and gas ceo lorenzosimonelli. Back after a break. some data out this morning shows Consumer Spending up 0. 5 in september, thats the fastest pace in three months. The numbers kicking off a week that does include a fed meeting, a key jobs number, the last one before election day. And as we head into the final trading session of october, all three major indices are down for the month. Looking pretty much at the worst month since january, which was a mess. Also looking at a table of months, jim, in which u. S. M a sets records or comes close to it. S ps down usually 30 days later most of the time. Ill tell you whats so hard, Consumer Spending has been weak. The numbers the aggregate numbers are strong, my problem is whether it be dollar general, dollar tree, the macys, whether it be home depot, lowes downgraded today, the weakest part of the companies i follow has been consumer spend, autos, look at ford, look at gm. So you have this aggregate data that makes it look like the economys heating up, but on the ground floor things are bad. So you go and normally buy health care when things are bad, but health cares been decimated. The Conference Call to listen to where they said huge price cutting in insulin, human growth hormone. So theres been no place to hide because it is just a rather remarkable feat to try to figure out what happened to the consumer, other than the fact we hear from the government the consumers healthy. So what, you buy amazon and banks . Amazon was unbelievable because the quarter itself was great, right . But the future they indicated going to spend more, so yes, banks. Particularly the regional banks. I keep thinking about that keybanc, the key call and beth moony, she came on the show, shes the ceo, and talked about how cleveland is just a juggernaut right now. And i was thinking, oh, my, what an incredible thing. I was up espn and talking about cleveland, theres a rebirth in cleveland. If they take the world series, its going to be the capital of finance. So there is this kind of hey, the browns did give it away. They did, didnt they . That would have been something. Oh, my, a lot of suicide pools picked them for that day. I do think youre at a moment whether it be bbnt or First Horizon or key, the regional banks are the strongest sector of the market right now. That is saying something. Yeah. Well get cramers mad dash and countdown to the opening bell in a few moments. Take another look at the premarket on this monday. More squawk on the street from post nine in a moment. 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. What do we got . About six and a half minutes before we get started here on a monday. How did that happen already . I dont know. Oh, geez. I dont know why im a little cranky. Me too. Mad dash always get me in a better mood. David, i dont mean to bum you out but this is a really seminole downgrade. Merrill lynch goes to sell on nike, nike. Great American Growth company. Why . Remember last week when kevin plank said he had to spend more to get under armour growth . Theyre saying adidas resurgence in the united states, under armour spending more money, theres inventory elevated, nike doesnt have a fresh iteration. Holy cow, this is an extraordinary thing. Look, its been terrible, but nike is one of the Great American innovators, and theyre saying that theyre starved for innovation. Could be a full year before nike has something new. This is one that people have always gone to. And i am stunned because mark parkers a competitor, but see kevin planks a competitor. I know, but do you question the thesis . Youve certainly been a supporter of nike. I struggle. Yes, obviously you would have liked to have been done here. You know what, i cant write today. But kevin plank, when i heard him last week say, listen, i want this business and he ups his spend, i shuttered because kevin plank is someone i respect so much. He is such a competitor. This group literally has some of the best executives because mark parkers a genius. Remember thats phil knight. I never thought that adidas could make a comeback. That stop sign smith shoe, foot lockers the winner because theyre the arms dealer. But i got to tell you, david, nikes not right here. Its expensive. You know, on 2019 its at 18 times earnings but still premium multiple