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tv   Squawk Box  CNBC  October 22, 2019 6:00am-9:00am EDT

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cards. calling this the biggest opening day tuesday, october 22. we begin right now >> welcome back, you are watching "squawk box" live from marketsite in times square >> good morning. welcome to "squawk box" on kansas i'm becky quick. let's look at u.s. equities higher the dow was up about .2.
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s&p up s&p up and the dow indicated up look at what happened overnight in asia. the nikkei opened up in europe where there is active trading, you'll see green ar owes across the board. the ftse was up more than half a percent. you'll see at least the 10-year is yielding 1.8% big news, wework's board now weighing two competing financial rescue offers. expected to accept an offer from softbank to take a controlling stake in the company the decision could come as err will early as today the are rescue package from sofk
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to buy up to $3 billion in shares held by other investors they would also put together $5 billion in loans sources say they'll pay the founder adam neumann up hundreds of millions to leave >> you are paying him twice. >> he's the only one who has made money on this deal. >> meanwhile, they'll begin layoffs almost immediately of almost 2,000 people. one of the reasons they delayed the layoffs is they couldn't afford the severance you'll wait here for adam
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neumann to go home i'm told that will keep him from filing for personal bankruptcy now jp morgan has a second offer on the table leading left for the ipo, they have put together a package of about $5 billion this time, including who was our guest host on friday the star wood capital is part of that group consisting of several parts of new bonds. this is the most astounding part of course, more than the entire total amount of money that would come into this >> they are put in $10 billion
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>> initial 10. another $5 billion from outside investors. >> then it will be worth $8 billion. so it is worth negative how much >> right now, worth down about $5 billion >> fortunes can go south i'm thinking i'll never buy an ipo. looking at wework and talking about bringing it public if the range was $8 billion, how could you ever get involved? >> by the way, goldman and morgan stanley were talking $60
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or $80 this is now probably 12 months ago, it was $100 billion on the highend. our buddy neumann. >> he bought at least five homes. he had a may batch and somebody driving him around >> he has loans outstanding. credit suisse and ubs against the shares so he was all leveraged. you've talked about that
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how you'd like to eventually -- kickstart a campaign >> no, no. >> if you with your friends would likely 200 pop. cash. >> i might take it too >> let's both work on it you have a better chance with the people you know. pocket change. pocket link. howard hues selling millions worth of assets here is the guy. saying it would only consider selling itself if a premium was
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offered. announcing replacing a ceo and plans to move from dallas to houston. from 2010 spin off made multiples what did he make on that td ameritrade said their estimates dropped. they expect a decline as it adjusts to losing more than $220 million of revenue stamps.com shares are soaring. landing a deal with ups giving users discounted shipping rates
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>> star wars fans are searching for includes opens december 20 the movie sold 45% more than avengers end game. that set a record for on line ticket sales this sold even more. >> i just got an email from a hedge fund manager that said, can i raise billions >> i know i could raise that money with my folks. >> you could >> my folks probably actually it is tough to say. >> am i reading this right, i'm stuck here either way. >> do the elitist liberals actually have more money than
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the right wing media types >> this will be good >> the journal says the e elitis liberals are those leading >> i'm from ohio >> i don't drive a porch >> you don't drive >> we'll hear from some big names including four dow components technologies, travelers and we'll look at the biggest winners and losers in the dow. whether your beauty routine is 3 steps...
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what are you doing back there, junior? since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. >> it's a busy day for earnings. united technology, mcdonalds ups, bioagain, novartis and more >> prok ter&gamble coo will be joining us more to talk with us about what
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to expect is brian levitt and global market strategist at jp morgan good to see you both brian, let's talk about earnings season so far. is that a reason to jump in and support stocks here? >> we get really negative. what we had was an environment where economic growth had come down significantly companies are finding a path the policy is improving. all of that is good for improved markets. >> i don't think we should put
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the cart before the horse with respect to october it sounds like more balance with the fed. i do think there is at least one rate cut the fed if at all possible wants to be on the sidelines i think there is a chance to go before the year to do that coming back to earnings, it has been better than expected. underlying drivers continue to merge. buy backs are playing significant role when we think about the remainor of this year third quarter might be tough and might bounce back. we have some questions around what 2020 looks like when the fundamentals will soften >> we looked at that pushing
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above 3,000 yesterday. >> i think it is interesting we are so close less than 1% from an all-time high with brexit still unresolved that outcome may come eventually but not as quickly as we are looking for. >> investors need to step back getting the big story. the slow growth world stepping in with the growth any time we need the slow down that's why the markets continue to press higher. policy is improving. stocks continue to be cheap to bonds. no real signs of inflation or technology this goes on longer than most suspect. >> we haven't gone anywhere in a
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year >> we've dealt with corrections. this is a third time in this cycle we've dealt with a sharp slow down. the market trying to find its footing. the fed has backed off we've seen that tone on trade and conditions have eased. >> not to mention, the trade war. >> you might anticipate you are not going to see as much angst between the two. >> i think the pot is beginning to boil i think there is still a lot to be discussed. it is important not to make a mountain out of a moel hill.
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the big question is seeing the return >> bottom line, you are cautious >> brian, you seem much more bullish. >> i'm optimistic. we've dealt with a period of negativity and where long rates went down. i think it is too late to get defensive policymakers have responded to a growth scare. >> what do you buy right now >> it is too late to be defensive. it is cheap. for investor's longer term, you'll have a short move but continue to be a growth. i would start to look outside the united states. i know that has not been the
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place to be. the policy mix that starts from merging economies. >> that is all about income. whether you get that from high yield bonds and financial stocks pairing with the income approach is the right way to go forward when brian is right and i'm wrong, you participate on the upside you have duration to help offset that downward move and risk assets >> thank you both. >> coming up, we'll tell you about an important new hiring initiative for people with autism and differents. that's next. and more on the next chapter of the wework saga from the rescue package and fall out from softbank and jp morgan a full run down.
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million jobs for people with differences. talking about the pledge president and ceo, bold friend of nbc, autism speaks. what should we talk about first? the size of the issue we are dealing with or the way we are going to try to actually do that how many people are we talking about? >> we are estimating about 6.5 million americans have autism or some kind of development disorder about 80% are unemployed or underemployed. >> in new jersey, one out of 40
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boys born. we are talking more boys than girls. >> we are talking about people with other differences as well the most important thing, these are people who are employable, great employees. >> it is not one size fits all >> within autism, it is such a wide spectrum in terms of skills you can be barely affected or nonverb al completely. >> yes there are incredibly independent and see autism as a gift and others who are impaired and wish life was different there are people who can be superheroes in the tech industry and really reliable in the pick and pack facilities. >> what is the feedback you ge from employers at this point
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>> employers are finding employees like these are reliable, you retain them. the younger work force, they are so used to inclusion, there is an expectation >> how are we doing? there has been more attention there getting out of school. >> starting to really think about what happens after high school is important beginning as early as 14. one of the biggest predictors of having a job afteris having employment while you are in college. that's why autism speak, special olympics and best buddies.
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are really focused with getting people ready for jobs is there social components you try to put together one thing we've been finding is people are doing great with that core job having lunch or going to happy hour, having that buddy is so important. >> the numbers are only going to increase and be very, very productive i don't know how you get to the point where people can form lasting relationships. not a lot successfully marry what is that percent there >> i don't know that i know with work over time
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people can figure out. they figure out how to do things together this is all parents think about, i can tell you that. autism works does great work but there is a lot to still do where does the research stand? >> a lot of autism is genetically linked there is still a lot to unlock certain jeans may cause higher incidence of seizures. you may look out for that. >> bob is still involved >> still a great supporter >> give him my best. thanks for everything. one of the most important things we can focus on. 6.5 million people, right now. could be either very productive or not as productive and
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something we'll have to take care of. >> we'd love employers to go to #delivering jobs. thank you. >> coming up, more wild fire blackouts coming in california details about that and procter&gamble and we'll look at yesterday's s&p 500 winners and losers through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business.
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>> announcer: welcome back you are watching "squawk box" live from marketsite in times square >> good morning. u.s. equity futures are a little higher this morning. dow futures are up s&p has turned negative. down by just under half a point. california is bracing for second round of power outages including parts of 16 counties in the foothills north of sfrafr last week, they told state regulators they may need to rely on power shut offs. in the latest story, the city proposed a plan to turn the
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power company. the plan would strip pg&e of investor status and turn into cooperative. they said they had not seen the proposal but that its facilities were not for sale. coming up, working out a deal for wework. looks like it will go softbank's way. we'll tell you what it means for softbank and jp morgan later, we'll hear from senator rick scott stayunor ted f more here on knbc
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>> i remember early on, you were not necessarily a believer in the wework model and then you became more of a believer. i want to understand where you are now? >> i'm a little conflicted on this first of all, i think it is a business >> what is your conflict by the way so we understand >> we are involved that was last friday our guest host on the show we know more about how barry is
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involved reports say he is one of the backers for the package. sources say wework expected to accept softbank's office joining us now axios business editor and chief investment advisor in japan with out pouring on softbank. dan, you broke the other piece of news which is in part how this soft bank offer will pay this separate $200 million payment to adam neumann. >> in legal terms, it is a bribe. he still controls the rights at wework i can't quite understand why maybe they literally just didn't get the paperwork done they control the votes he's being paid to vote for
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softbank's deal. is there any chance share holders can sue. if you are adam neumann, i assume, if you don't have $700 million of debt sitting on your books. >> that is part of the problem i imagine softbank needs to offer the money to get it done my understanding is that this will be layoffs. some of which they would payoff earlier because they couldn't pay the severance? >> i have heard that as well there is an outstanding question
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of who the ceos will be the maybe by the end of the day or end of the week. that is unclear if they want to stay at the company. >> if that's the case, who wants to stay for the layoffs? >> you like softbank you say it is not a take over but a take under >> absolutely. he's vested too much money it has gone belly up. a real business at the start is it a shared office space. they have a lot of space in manhattan as well and tokyo.
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is the real business longer term expanding way too fast that needs to be direct. in the move here, in the end, there are assets worth having. one would rescue it. good money after bad as before >> you look at this, it looks like they'll have something like $13 billion of their own money into it. is there any model that you see 12 months out, 36 months out, you get to even or you get to green? >> forwor wework, i think it ges worse. for softbank to be ahead, i think it takes months. this was 13% of the fund
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now 6 or 7%. masa made a bad bet. one of them has gone bad >> dan, what are the implications for the vision fund and the available for the second vision fund how founders and the rest will view the vision fund and soft bank as a result of all of this. >> the money softbank will put in now, that will come off their own balance sheet. what it does for vision fund it does now revalue vision fund's original stake. they have having a hell of a time raising this. yesterday, massa wouldn't even say if he was going to the saudi
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conference for founders in the valley, the math probably stays the same they don't like softbank vision fund if that appears. if they get offered it, they probably still take it >> to the point at the top of the show, do you think this sours the market as one issue and problem child or do you look at this and extrapolate out? >> i think it is problem child for the company. you look at the numbers for the years. there have been some that struggled. plenty have come out and done well plenty have changed. in general, i think they can still go public. that is what this shows here
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the other thing i do find interesting. for all of his problems, adam neumann was willing to give a lot to get the ipo done. >>. >> giving a lot from a ridiculous perspective he does that and two weeks later,he's out a ceo if they get offered another deal in that point. >> it is a wall street development issue. they value near $8 and $47 billion. they had no idea why should we believe them the very best firms. jp morgan, whoever
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never mind, it's more like $47 million. they want to get the best price they can >> and they are selling themselves to the company. >> they don't know when they are pricing these what they are worth. >> they are also selling it to the companies. $47 billion gets you the underwriting job >> speak to the issue of so softbank and the vision fund it seems like sometimes when there has been a troubled investment, the company comet o opposed to the fund. >> two points on that, almost
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all of the investments they've done come from softbank first. i wouldn't get too caught up that is probably dead in the next six months. this money going into vision fund and wework really probably stops vision fund two betting set up to your point overall, you were asking earlier i think this ipo and the failure is a notice to all founders if you want to come to market, you've got to have a business that works that is clear, that is strong. you have a path and the amount of disclosure is excellent if you are not doing it, it is not going to fly ultimately, we'll see the vision fund work in the sense that it has 80 plus investments.
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it a good thing. not all tech, we've got a massive hang over in this. longer term, the stock is at a significant discount >> david in tokyo. dan in washington, thank you for joining us >> earnings just out for toy maker. $1.84 a share. revenue also below street forecast gaming are he have knew down 17%. franchise brand revenue down 8%. hasbro set the threat and enactment of tariffs reduced costs as well. i thought they dealt with that supply >> i think they are moving away
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from it. it will take a while they have been working on it when we come back, chipotle and mcdonalds reporting this week which stock should you have and the top restaurant stocks. a quick check at the european markets. the ftse is now up about .4% mmm... good. so i've spent my life developing technology to help the visually impaired. we are so good. we built a guide that uses ibm watson... to help the blind. it is already working in cities like tokyo. my dream is to help millions more people like me.
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welcome back, everybody. the fast casual restaurant sector performing well this year we'll get another read when we hear from mcdonald's
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after the closing bell we'll get chipotle that stock has rallied 98% joining us with his picks is steven anderson. thanks for being here. >> thanks for having me here. >> you're overall concerned about the economic macro >> most of the macro economic indicators are still positive to the consumer things we're starting to see in terms of more mixed indicators like the inversion of the yield curve, maybe some reduction in consumer confidence indices. at this point weekly jobless claims, things we look at are real wages that's -- those are things that have been positive for the consumer more directly correlated with restaurant spending. so at least for now i think the consumer is in good shape but we'll see what happens in the next 6 to 12 months. >> your favorite pick is brinker international. stock symbole-a-t.
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that's largely chilis. >> strong value component. three for ten value platform is performing well for them although casual dining in general is a sector that is a bit of a concern in a slowdown scenario, we believe chilis is in a good position to benefit from even market share gains as it continues to attract a more value conscious customer from more expensive chains. >> what's three for ten, three people get food or you get three items? >> an appetizer, entree and a non-alcoholic beverage. >> three for ten has been good for them they have a couple of other deals, two dinners for 25 bucks? >> yes that's been long running for them focused on value $5 monthly margaritas. >> that draws people in, too let's talk about chipotle. avocado prices have been moderating strong sales in some other areas, too
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>> this is a name we liked earlier on we have a hold on the name. >> why, because it's come up so much >> exactly it's really a valuation story, but brian nichol, the ceo, has been at chipotle for a year and a half he's done everything right when he was selected from taco bell he brought a lot of some of the innovations into chipotle. >> i knew that would happen. >> tacos >> taco bell, the purity of chipotle they're woke now they're going to become fast market, fast food. i knew he knew how to do that. i knew it. he did. >> it's a lot of innovations in tech >> so it's not product do they have tacos now >> they've had that. >> how about nachos? >> nachos and quesedillas. >> they do have -- >> they do have that >> no, it's a matter at this
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point of trying to get the operations right and trying to get execution. as you may recall about two years they had the queso come out. i think that's been -- >> and charatulopos? >> no. >> you stay hold but that's based on valuation what would it take to upgrade it >> pull back at this point what we would like to see is a step more towards international expansion. more than 99% of chipotle restaurants are in the u.s one of the things that brian nichol did in his time at taco bell was force the issue of international expansion through franchising. for a brand like chipotle it might be more difficult because you have the supply chains to deal with. if that were to come to pass i would get more optimistic on the name. >> thanks for coming in. good to see you. >> thank you. coming up, four dow components reporting we'll bring you the first three of them in the next few minutes. the numbers and reactions
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straight ahead. and we'll have a first on cnbc interview with procter & gamble cfo john moeller don't go anywhere, "squawk box" coming back.
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good morning welcome to skauk b"squawk box" t here on cnbc our guest host this hour, managing partner and portfolio manager at douglas c lane and associates sirat. u.s. equity futures up 25 points the dow looking up a point higher and the nasdaq looking to open 12 points higher. joe? sk breaking news. under armour crossing the wire courtney ragan joining us. what's up, courtney? >> reporter: good morning, joe here's breaking news from under armour kevin plank is the company's
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founder and ceo will be transitioning to the role of executive chairman and brand chief as under armour elevates patrick frisk, the current president and chief operating officer to the role of ceo these changes are effective as of january 1st, 2020 now plank, of course, has been the ceo of the company that he founded in his grandmother's basement since 1996. a company he ultimately took public in 2005, whichmakes frisk just the second ceo in under armour's history now frisk did join under armour in july of 2017 from alda where he was the ceo working there also with a company founder. frisk has been a key architect of this transformation plan. he's reinvigorated the supply chain. he's relooked at their sourcing capabilities, even retargeted their customer so that's been a critical role for him to play here, though of course there's still some work
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to be done north american sales still haven't quite stabilized and shares of under armour are down about 25% since the last earnings call when investors were really hoping to see a new trend for north american sales and we have a first on cnbc interview here coming up on "squawk box" with both kevin plank and patrick frisk to talk about this new leadership change, the transition and much, much more. but, of course, again to reiterate those headlines, under armour ceo kevin plank will be transitioning to the role of executive chairman and brand chief as patrick frisk is elevated to the role of president and chief operating officer as of january 1st. back over to you guys. >> thank you for that news big news in the retail and apparel world. we're talking about that in a bit. dow component travelers did beat street forecast the profit was below estimates
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as the company increased reserves due to increasingly challenging legal environment. >> united technologies earned 221 for the third quarter compared to consensus estimate of $2.03 the company raised its full year outlook. and harley-davidson reporting profit of 55 cents per share for its latest quarter that's three cents above estimates. we should point out this excludes revenue beating analyst's forecasts. we're getting a lot of numbers piling up for us ups also beating estimates by a penny with quarterly profit of $2.07 revenue was a little bit below forecast that stock though up already 1 1/4 percent. we'll dig a little deeper into the numbers coming up soon david abney of ups will be on at 9:30 a.m >> the profit excluded something but revenue also beat estimates.
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anyway, procter & gamble first quarter results hitting wires just now profit came to $1.37 a share that was 13 cents above estimates. revenue also above jon moeller, chief operating officer and chief executive officer at procter & gamble. i get better at figuring this out. you're raising your fiscal year '20 sales guidance it had been 3 to 4% sales growth, now it goes to 3 to 5. you're also raising adjusted earnings per share for the year to 5 to 10% gains, it had been 4 to 9 so i understand both of those are above where you had been previously this is better than you were forecasting and the stock's reflecting it this morning >> yeah. it all comes on the back of an incredibly strong quarter. it's the fifth quarter in a row with strong volume sales,
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consumption and market share gains, organic sales up 7% the last five quarters, 4, 4, 5, 7, 7 core earnings per share. about 22%. core earnings per share up 24% free cash flow productivity, 91%. significant increases in both gross and operating margin operating margin up 26 basis points 5% return to shareholders. on the back of the quarter we're raising our estimates for both sales, profit and also cash. >> get david up here for our delivering alpha you finally found the right guy, i think. it took a while. kept bringing laffley back he was the only guy in the world that could run this company. proof is in the pudding right there. we're looking at a one-year chart, jon what has been done differently, do you think it's almost like i'm thinking of an ocean liner
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procter & gamble is like -- i don't want to say the titanic but it's a big, big, big ocean liner to turn around, isn't it, globally >> this is a credit to the 95 million people -- 95,000 people i work with -- >> good answer >> they're executing an integrated strategy that concentrated our portfolio in categories that are daily use where performance drives brand choice we've invested significantly in those categories where performance drives brand choice to increase our level of superiority. product, package, communication, go to market, value all funded by significant productivity. we're in the middle of our second five-year $10 billion cost takeout and also enabled by constructed disruption of the entire value chain from the media supply chain to our own product supply chain, our innovation methodologies
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we put a new organization structure in place as well on july 1st that's designed to increase focus, accountability, increase speed trying to move at the speed of the market. >> jon, one of the issues that you and every multi-national company is facing is foreign exchange i know that was about 2 percentage points that that added to from a negative perspective. what do you think about that is it a big issue? do you expect it to continue >> it's been a significant headwind over time last year the -- last fiscal year, which started in june, the combination of foreign exchange, commodities, tariffs was at $1.4 billion after tax headwind this year is much more modest. it's still a headwind. we'll have to see what happens in the markets over the balance of the fiscal year, but it's actually less of a headwind this year than it's been historically. >> are you rooting for the fed to lower rates at this next meeting? do you think it's warranted based on what you see in the
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economy? >> i'll let the fed decide whether it's warranted or not. i mean, certainly the compression and the spread between the u.s. yields and yields around the world puts a little bit of pressure downwind on the dollar which is good for multi-national companies which have more than 50% of its on perfe perfect rags outside of the united states? >> what's the thought on smaller niche brands to appeal to young people do you have a free range non-gmnon-gm non-gmo kale-based detergent with no preservatives? i would buy that are you doing that do you have these new brands or are you -- can you sell a millennial tide? if i were a millennial, there's no way i would buy tide. my parents used that. are you out of your mind >> actually, our large brands in
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the u.s., there are 17 of them that are either number one in the marketplace or number two in the marketplace with the millennial consumer. they do have different needs and desires and those are real and we need to meet them and we do that both with our existing brands but also small acquisitions and organically developed brands play a role >> what about beauty that's where you saw 10% organic sales increase that's incredibly impressive what were the big drivers there? >> beauty we're performing really across the board. sixth consecutive quarter of strong growth. all portions of the beauty business grew significantly. the skin and personal care business grew in the teens our hair care business grew in the mid single digits. so it's a business that's really hitting on all cylinders. >> i notice you call out china olay that's the only premium brand i noticed. is that brands that are selling internationally versus what you see in the united states
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is that why you're seeing the big volume >> no, we're seeing it across the board. i mentioned hair care. in the u.s. last quarter we grew 6% olay grew in the u.s. as well, but we are seeing higher growth in asia, particularly in the skin care business behind both sk2 and olay. >> how does the -- is technology or the digital revolution helping in terms of like chshel space, inventory, distribution are these all things that take cost out that you were talking about with the five-year plans has that been -- are you successful there as well does that make a difference for the results? >> digital technology makes a huge difference and it's being integrated into everything we do it's a contributor to the top line, it's integral to innovation as you mentioned, it aids productivity it's something that we're bringing to bear across the
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spectrum of value and it's one of the elements that i referred to indirectly when i talked about constructive disruption. there are new possibilities available certainly in the marketing area but also in the production area and the office environment that we're -- where we're bringing digital technology to bear >> so would you say that a couple of years ago did we get out in front of ourselves in terms of the big established companies thinking that they needed to -- you know, you can't be macaroni and cheese, you need to be -- what's it >> aunt annie's rganic >> is size still good. some of the best-known brands in the world are at procter & gamble would you say the pendulum is swinging back a little in terms of what's in favor, jon? >> i would say as the entire ecosystem is evolving, it is -- it benefits large brands think about ecommerce for example.
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very few ecommerce shoppers go to the third or fourth page of a search what shows up on the first page? what determines what shows up? there's revenue to retailers, depth of ratings not just the average numerical ratings but a number of four and five ratings and certainly big brands can compete in that context and so we're finding that big brands are extremely resilient in the environment that we're in and the ecosystem is moving in a direction that will continue to favor them. at the same time, as i said earlier, there is a very real and important role for small brands and we're about both. >> jon, you mentioned that the biggest growth is coming outside the united states. so what does that mean when you've got the china trade talks that are taking place, brexit, potential for other tariffs that could come to the e.u. and other places has that impacted the country at all? >> brexit and the impact on
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consumer impact has had an impact china was one of our best quarters in a long time, grew 13%. that's on the back of 10% last fiscal year, 1% last quarter, now 13% and in our industry it's really about -- particularly in these categories where performance drives brand choice, superiority of offering, delight of consumer. if we do that job well, we generally fare well and when we don't, we have issues. >> when i saw david at delivering alpha, i asked him. i really wish you would come on "squawk box. he goes, i'm not nearly as good on tv as jon moeller and he's going to be the one that keeps coming on. >> we agreed, by the way. >> we agreed i don't know what they pay you but i'm sure there's a big disparate between ceo and cfo. >> cfo is getting paid more. >> maybe you should be is what i'm f you've spoken to him about this
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he deferred to you no, i can't do what moeller you're talking contracts -- >> appreciate the scoop. that's helpful >> thank you again, and we hope to see you again. >> it's working for you. >> yeah. i help when i can. we'll see you again soon hopefully, jon thanks. we just got a huge number of earnings that came out let's talk about some of those results. sirat sefi is at douglas c. lane what do you think, sirat p&g better than expected travelers better than expected revenue and a miss on the bottom line utx much better. >> if you look at the multi-national united technologies, procter & gamble, what's impressive continuing from last week is that they've been driving revenue growth in spite of fx and organic growth is growing it's impressive to see 7% organic growth at p&g.
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they're spending money on r&d, spending money on innovation you're seeing that with other companies as well. going into this quarter there was a belief that earnings were going to be lower than other people expected. not coming in great but better than what most people think of so far. >> which makes you think what in terms of what people should be doing with their money >> part of it, there is a fear we still have the uncertainty with brexit coming in our face, uncertainty of trade talks if you look at corporate america with growth, you are really seeing companies that are performing well that are spending money i think on the right places and innovation, r&d, expense control are all taking care of themselves and you're seeing a little bit of earnings growth that most people didn't expect. >> what do you make of this under armour news? >> i'm not surprised there's been a lot of noise around under armour and at some point the board said, hey, let's get somebody in there whose not
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the person who founded the firm and let's get some professional management in there. >> you think he was pushed >> i don't know. >> going to talk to him? >> we're going to talk to him. given he was staying on, it was probably something they all agreed on to say, okay, for the sake of the brand, it's a great brand but it's had some difficulties in the past couple of quarters. probably a good thing for shareholders. >> one other piece of news we haven't talked about enough this morning. biogen, the stock is surging this morning. >> i did it's up 30%. >> up 30%. what do you do it's had a tough year though. >> it has. biogen over the last couple of years hasn't really done as great as some of the others. i think the question is let's see exactly where they are i have not read the release. up 30%. >> alzheimer's drug. alzheimer's drug that they had said was -- the early results they thought were bad. it was sort of shelved for a period now it's come back they've re-looked at the numbers, there were additional studies. >> analysis.
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>> there's some hope. >> that's the thing when you invest >> look at that, up 32% right now. pretty remarkable. you can see what that stock looked like all year >> it's hard to measure progress though 23% reduction in the clinical, what's measured as a clinical decline in your abilities versus a placebo. so that's a statistically significant movement nothing for alzheimer's. >> right it's an area where there's really not a lot of competition. if they've got something that's new, i think they'll get credit for it. >> okay. >> you know what, this is -- this has to do with amaloid. every time there was a failure, that's not it. >> maybe they're coming back. >> instead of being causal for why you get it the first time that the clearance of aggregated amaloid
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data had a decline >> decline >> dow looks like it would open up 36 points higher. s&p up marginally, 1.5%. nasdaq up 9 points you're watching "squawk" on cnbc we have a lot more coming up in the next hour and a half. still to come, senator rick scott on china trade talks and later, mcdonald's serves up quarterly results. the numbers and instant reaction is straight ahead. "squawk box" will be right back.
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welcome back, everybody. u.s. trade rep robert lighthizer says a phase 1 trade could happen next month. let's welcome senator rick scott of florida he serves on the commerce budget, homeland security and armed services committees. senator, good to see you.
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>> nice to see you, becky. >> i know you are somebody who has wanted to see negotiations take place, some sort of deal get struck what do you think of what we've heard so far what sounds like a deal is not there but maybe progress has been made. >> i've never believed there is going to be a deal this is a government that doesn't comply with anything remember how they agreed to buy stuff, it didn't come through. a couple weeks ago they said they would do something, they didn't this is don't comply with the wpo. look at hong kong. in 1997 they agreed to give basic rights to hong kong sit accepts. oh, gosh, that's gone. this is a bigger -- for me, way bigger than a trade deal this is a government, the chinese government is a communist china government that doesn't comply with anything they don't let the nba players speak if they possibly may be -- take a chance of saying something anti-president xi.
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i don't believe there's ever going to be a deal. >> we shouldn't believe anything that's happened at this point. what would you be telling the government to do, our government >> i'd be very specific what they need. one, china has to start showing up and acting responsibly. open up your markets you agreed to it when you joined the wto. do it. make sure you stop stealing our technology release the million people that are in prison for their religion we have american citizens detained now release them give the hong kong citizens their rights back. look, i'm furious with the nba i mean, they'll stand -- oh, yeah, when it's -- they'll stand up for human rights when it's convenient, maybe they can sell more jerseys don't stand up for human rights in china because that might impact their jersey sales and shoe sales this is ridiculous. >> adam silver is not welcome in china from what we heard yesterday. the head of the nba, just by saying he will not apologize or force the general manager of the houston rockets to apologize
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sounds like -- >> he didn't say that stuff when he was in china, did he? >> he's supposed to go back next week from what we hear from our correspondent there, she thinks that there are definitely tensions ramping up against him versus what she's seeing -- >> we shouldn't be doing the olympics the '22 olympics shouldn't be there. are they going to say you can't say anything anti-xi fifa is talking about doing the club world cup there china, until you become a legitimate country that is going to respect human rights and respect things you agree to, we're going to quit doing business with you. >> what do you think of the companies that are doing business there right now trying to walk the fine line, not just the nba but companies like apple. we talked to the procter & gamble cfo who said their china sales were up double digits. what would you tell the companies? >> if you believe in human rights think about what you're doing, you're helping a government that is a clear adversary to american
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interests. they're militarizing the south china sea. they said they wouldn't do that. they're trying to build a military bigger than ours. they're helping maduro commit genocide in venezuela. human rights are important to us in america you want to sell your products, tell china they're going to have to change. >> what do you tell the president who has made what he calls a very nice deal. >> have they complied with anything i mean, look, hope springs eternal. i'm glad the president believes he can get a deal done nothing's happened he's been doing this for, what, 2 1/2 years. they didn't change they're not opening up their markets. they're not complying with the wto. they're the worst polluters in the world. there's no human rights over there. they're trying to take them away from china -- or from hong kong. the american president needs to stand up for what we believe in this country we believe in freedom. we believe in democracy. >> senator, did you look at what's happening in washington right now related to the
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president giving him more or less leverage in this situation? because given the impeachment hearings and everything else, i think there's a real question whether actually the chinese will go along with any of this or whether they're just going to wait or think that they're going to wait him out? >> might as well whatever they agree to, they're not going to comply with anything they never comply with anything they've agreed to. let's remember, the democrats have been trying to impeach the president the day he was elected. if he gets past this one, there will be another issue they want to impeach him on. they're still trying to litigate 2016 with regard to china, all-americans have to say stop buying chinese products. they're our adversary. not good for america >> senator scotting, i want to thank you for your time. good to see you. >> thank you coming up, lots of earnings we'll do that in just a couple of minutes up next, jamie dimon's offer to wework that proved to be a
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potential blow to the firm and softbank's deal to bailout the embattled office sharing company. details after the break. check out the futures. lots of dow components had them altogether. up 32 points we're coming back.
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still to come. united technologies. those are some of the names reporting in the hour. earnings news. sounds off on the warren tax plan under armour, kevin plank announcing he is stepping down join us live in a first on cnbc interview. "squawk box" will be right back.
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♪ ♪ all right. welcome back, everybody. earnings in from lock heeheed martin earning $5.66. that was well above the consensus of $5.02 15.2 billion comes in well above 14.8 billion the street had been expecting. talked about a lot of the different sale systems that are here rotary emission system sales, 3.7 billion sales.
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aeronautic, 6.1. missiles and fire control, $2.6 billion. we'll dig through. lockheed digging through by much more than it had been anticipated. 1.32% gain. here to talk about earnings and the market, julian emmanuel. cnbc contributocontributor. these numbers are coming in pretty decently at least today and thus far there was this sense that somehow the numbers were either going to miss or start to get on the -- we haven't had all of the conference calls to hear what the ceos were saying the numbers were going to miss or there were problems what they were projecting for. >> corporate america is pretty good about managing expectations in general there's a consistent trend of slight beats order of 2 to 3 to 4% in aggregate. from that perspective we weren't worried about the projections for a down quarter, but what's important is it's not as much about the projections going
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forward, it's about whether the confidence and the economy is going to continue to inflect as it is appearing to do so over the last month or so and obviously again the 800 pound gorilla in the room over earnings is geo politics. >> i think all of these companies, the two parts that are going to be really important. we know the consumer is going to be important look at p&g and coca-cola. consumer is strong, look at the growth i think on the corporate side. united technologies, honeywell, lockheed things are growing well. if there's confidence there, you get the cap excycle. the investment cycle of the c plus i plus g, that's going to add. >> you think we're going to get it >> i don't think it's going to be as robust but it's going to be dropping off unless of course geo politics comes into place. we have no idea what's going on. right now things are moving. >> let me ask you. we've talked about this on the set before you're talking about geo
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politics how about domestic politics. historically you look at cap x and the year of the election cycle and typically cap x goes down not up because there's a little bit of a let me sit on my hands and wait and see what happens next. >> if we've learned one thing about the last three to four years is that the typical cycles, you can sort of just rip up that script and throw it out the window because you've had this lag, because there's a potential for not necessarily economic acceleration but a continuation of sort of 2% to north of 2% growth there's a catchup that we expect could occur. >> don't worry about where the company is guided or where the analysts are what are we seeing in terms of year over year comparisons for most of these earnings are we going to get -- is it going to be flat it's not going to be down. other people thought we'd have falling -- actual falling earnings some people say we'll be up 2% with what we're seeing so far is
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it better than up 2% >> no. no it will be flat to maybe slightly down depending -- >> have a down quarter in earnings in the s&p 500. >> yes very, very slightly. entirely possible. >> and part of that is -- >> this quarter? >> yes >> you agree with that >> if you look at the overall earnings, energy and a couple other industries i think you have to parse it out. the other thing that's happening this mark -- helping this market -- >> earnings are going to be down >> earnings flat to maybe a little bit down. >> 2019 is going to be a consolidation year from big gains we had in 2018 >> exactly. >> then do we go back up 8 to 10% next year? >> i don't think you get 8 to 10%. you get 3 to 5%. 1 to 2%. >> it is possible you could get earnings acceleration because a lot of the issues, margins have been under pressure because of the shift in geo politics. confidence has been clearly on the back foot.
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for us the most interesting statistic out there right now is german business expectations the future for the first time in five years looks brighter than the present and when that's happened, that's typically been the trough of an economic cycle. when you think about the importance of europe, there's a potential. >> you think we're in the trough right now and we're about to come out to a five-year expansion period in europe >> not necessarily five years but we are certainly -- you know, the -- >> what do they say about where we are >> that the cycle is likely to extend itself. >> for another five years? >> five years is a very long time. >> you can set your watch by seven years when there's a crisis, right? we're way overdue. >> and if that does happen in europe, we get the option value on earnings of the s&p because something like 60% of the earnings come from over seas europe has been a negative headwind. >> if you're right, by the way, jay powell should sit on his hands for, you know -- he should
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just go on vacation, right >> that case can certainly be made when we look at next week, the question is not whether they're going to cut or not, it's if they don't cut, how's the market going to take it. >> okay. >> our view is that the economy and the market are strong enough and sentiment is actually weak enough on a contrary point of view that the market's going to be fine. >> do you agree with that? >> i think in the short term the market is not going to like it i think a lot of it is baked in. financial services numbers, a lot of that was baked in all they're doing is cutting expenses trying to go to the revenue. i think the market in the short term will feel like, wait a second, we're going to get som help. >> i know what you think should happen i'm curious what you think will happen as a result how you position yourself for it. >> well, i think they're going to cut if they don't -- >> you think they are going to cut? >> i think they are going to cut. >> you don't think they should >> no, i think they should. >> you think -- but he just told you that the -- >> because i think we've been --
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>> it's killing it. >> you're saying you think europe's going to change we've been saying that for years. until we actually see that happening, i don't think our fed is going to actually do anything until that turns around. >> we may see it in a couple of hours when the first vote gets taken in westminster. >> so you're convinced -- that's interesting. >> i have a harder time believing. i think it's going to take longer for europe to turn around i believe it's going to happen but not as quick as people think. >> thank you sirat, stick around. let's get up to speed on some of the earnings that have been hitting very busy day. dom chu joins us with a quick rundown. dom, let's see them. >> all right so we've got a couple dow components one big one but not dow component. shares of ups which are down just about almost -- at this point 4% 20,000 shares of pre-market volume the profits beat estimates revenues do fall short ups was helped along by stronger ecommerce demand
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up pre-market now it has turned lower. watching shares of united technologies which are up about 1.5% roughly 10,000 shares of pre-market volume. profits and revenues both beat their expectations they boosted their full year outlook for earnings as well they got better results from the aerospace divisions and pratt and whitney aircraft parts and aftermarket divisions. shares of procter & gamble up 4.5% over. it was helped along by strength in the beauty brands like owe lay products health care products dow components up 4.5% giving a boost, utx and procter & gamble. >> coming up, what is the perfect tax rate for the rich? who are the rich no one -- a lot of debates surrounding the warren and sanders tax plans for the nation's top 1%. oh, the rich
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top 1% we're going to hear from art laffer who was a member of president ragan's economic board. u' hrdf e laffer curve. we'll hear from him in a couple of minutes coming right back. 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. ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time. ♪
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welcome back to "squawk box. wework, the corporate story of the day. we may see the outcome today wework's board weighing two financial rescue offers. wework expected to accept an offer from softbank. the decision could come as early as today that rescue package, the softbank version, accelerates a $1.5 billion investment it planned to make next year. it would buy up an additional $3 billion in shares held by other investors. on top of that softbank would put together $5 billion in loans from a consortium of financial institutions which would include itself so if you're doing the math, folks, we're talking about somewhere between -- we're close to another $9.5 billion going into this company. up to 5 in loans, $3 billion in equity plus the advancement of
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1.5 supposed to come before. softbank will pay founder adam neumann $200 million to leave the board. that would gres and support softbank's takeover. might also help adam neumann avoid personal bankruptcy given that he had collateralized -- he had taken out a lot of money from the company and collateralized the shares and loans against the company to begin with and was using some of the money to buy more shares. >> how much of the vote does softbank have now? >> that is a very good question. >> softbank and adam neumann, do you have over 50% of the vote? >> no, i don't think you do. softbank i think has less than that meantime, jpmorgan's package adds $5 billion bringing in barry sternlicht from sternwood capital. we talked to him briefly about this i don't think we understood his role in it at that time. the proposal consists of several parts including new bonds, some
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with very high interest rates. softbank's offer, we should mention, would value the entire company about $8 billion which is so far from the $47 billion valuation before its attempt to go public. the $8 billion valuation, softbank would have double the amount of money in it, more than double the amount of money in the company altogether there you have it. coming up, what should be the optimal tax rate for the nation's rich? that's the question on the table. we'll get adam neumann to weigh in we'll get robert frank to join us with his preview of that story. robert. >> not much wealth there to tax. the top tax rate for the rich used to be over 90%. now one of elizabeth warren's economists say it's time to go back to the good old days. metoaxg als too high when it cos tinweth back after the break ll 25. that's why i take osteo bi-flex, to keep me moving the way i was made to.
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welcome back, everybody. the economist advising senators warren on the tax plan has a suggestion on where the tax rate should be. joining us is robert frank. >> good morning, becky it is the big question right now. what is the ideal rate for taxing the rich. in a new book the two economists who advised elizabeth warren and bernie sanders on the wealth taxes analyzed the laffer rate the economist, gabriel zucman
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and emanuel sayez put that at 60%. that would be the top marginal rate when you add in state and local taxes the top marginal rate for the rich would be 75%. now if that sounds high, it is compared to the current top federal rate of 37%. it's lower than the rates that we used to have after world war ii in the 1950s top rate was over 90%. it drifted down to 70% in 1980 now many will say, the rich didn't actually pay that amount. many did report their full income only a select few earned enough to be subjected to that tax. the actual rate paid in those rates by the top 1% was actually around 42% although some studies show that the effective rate could have been higher, maybe over 50% either way when you have rates over 90% the rich did pay a higher share of their income than they do today
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>> thanks. thanks, frank. >> sure, kernen. >> stick around. robert, thank you. joining us now to respond is the man himself, art laffer, laffer, art, whatever of laffer associat associates art, i'm going to start it a different way. challenge you on all of the notions that we've had for, you know, 300 years. i still want to challenge you on it what's the problem with moving some of the wealth that rich people have that they don't use for anything productive, let's say, and just solving a lot of the problems that we have here is it, a, that that goes against property rights and western culture in terms of being con physician ka t fiscatory or do you believe people will work less if they are going to be taxed at a higher rate.
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>> i don't know if they'll work less i'm not worried about it. >> why don't we do it? art, we've got problems, huge deficits people need education. we've got a lot of -- these guys don't need billions of dollars let's go >> we've done it before. we did it in the 1920s we lowered the tax rate to 73% in 1920 to 25% in 1929 and tax revenues from the rich went from about 30% of total tax revenues to 66% huge increase in tax revenues from the top 1%. the same thing happened under john f. kennedy when we cut the highest tax rate from 91% to 70%. revenues from the rich went way, way up the same thing happened with ragan. the highest rate from 70% to 28%. revenues for the rich went way up as a result of that when you look at the very simple straightforward evidence, in fact, if you substitute complex error for simple truth whenever
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we lower the rates on the rich and tax rates on the rich, revenues go way up these people can get around your taxes, joe they really can. warren buffet as he reported in "the new york times", which is a rarity, reported his income taxes. he paid 7 million in taxes in 2010 and his income, according to economists, was about 12 billion. now if you cut those regulations, restrictions and rates he'll pay his fair share, but he's just using the tax code to take advantage of them as they all do. they always will they aren't going to sit there and pay these exorbitant rates to zucman, saez, slamrod find a way around it. >> of course they will they do inversions, all sorts of things why don't we have a low rate, broad based, flat tax, everyone pays the same rate and use the income distribution of the spending to help the poor, the minorities, the disenfranchised who we all want to help. that's not an issue.
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the question is, how do you do it >> how about 1 percenters, is it 500,000. >> probably -- >> so they don't take advantage of a lot of that a lot of people work six months of the year for the government and then whatever they make for the next six months sort of accrues to them. is that a good number? is 50% a good number >> no. >> i think you lost him. >> it was interesting. yes, no one's talking about 1% taxes, remember, for those -- >> but raising marginal rates. why is there a problem with marginal rates that would be where you would get some revenue >> right. >> does it hurt? >> that and changes in capital gains which is where a lot of the democrats are. >> if you're looking at -- >> let's just put capital gains where ordinary income, tax labor the same as capital and that would generate some say even
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more revenue. >> so you wouldn't go -- >> but if you look at all of this, what people don't talk about is cost of living. if you live in new york or california versus you live in florida. so why doesn't anyone actually talk about, you know, like you said, if you're 1% and you were half a million to a million. >> it does differ. it does differ warren escapes that entire argument. >> art is back. >> i have a quick -- >> i have a quick question for art. mike novogratz this week said the idea that these people making 50 million or more or the billionaires subject to this tax are afraid, he said, you're not victims, you're the richest people in the world. can't these people that are worth 50 million or more afford 2 cents of every dollar beyond $50 million given the amount of money that that would raise? can't they afford it isn't there too much fear about it >> yeah, but they -- you know, you're not going to get it from them voluntarily unless you lower rates and they think the tax codes are fair people don't like to be ripped off. the rich people have earned the
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money. you want to tax them on the highest amounts and they don't want you to. >> that assumes -- you're just assuming no enforcement. >> you don't think you enforce it they can hire better lawyers and accountants and ex-irs agents than you can they're rich. >> forget about a wealth tax, higher marginal rates. how would you feel about the basic closing of loopholes around step-up basis when it comes to end of life, 1031 exchanges for the real estate folks, carried interest for the private equity folks let's do the low hanging fruit are you game for that? >> of course i'm with it andrew, i've always been for that. >> okay. >> i've always been for getting all of your deductions and exemptions jerry brown's flat taxes, getting rid of all deductions, exemptions, individual deductions on the first dollar to the last dollar and just let
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it go. they'll all comply with the tax codes because they believe they're fair they won't try to get around it. now of course some of them will, but not all of them. that's what you want to do with your taxes warren buffet, as i said in 2010, paid 7 billion -- 7 million and earned 12 billion. >> the laffer rate what to you think is the highest level you can tax somebody before there's too much avoidance or too much productivity what is the highest rate >> the highest rate we could possibly do? >> yes >> i don't know what it would be 13% if you got rid of all of the deductions exemptions and exclusions that would be the perfect rate >> you don't want to talk about how low you can go you don't want to talk about how high you can go. >> i want to get the growth up i want to help the poor by jobs, not by trying to confiscate money from the rich. >> art, thank you. always good to see you.
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>> by the way, your interview with zucman was great. >> a lot more this morning dow component mcdonald's ready to serve up earnings we'll bring them to you after the break. take a look at futures as we go to this break. man: how can i dr superior long-term results? it begins with a distinctive approach to managing money. that for over 85 years has focused on keeping confidence up when markets are down. an approach where portfolio managers work well independently. and even better together. who don't just invest, but are personally invested. can i find a proven approach designed to deliver results? with capital group, i can. talk to your advisor or consultant for investment risks and information.
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breaking news. under armour naming a new ceo. both men will join us live first on cnbc. earnings alert a parade of companies reporting quarterly results including four dow components we have the numbers and the reaction. plus, the washington issues that matter the most to wall street we'll talk taxes with senator charles grassley as the final hour of "squawk box" begins right now. ♪ ♪ live from the most powerful city in the world, new york. this is "squawk box. good morning welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square i'm joe kernen along with becky quick and andrew ross sorkin u.s. equity futures are
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negative they've been positive for most of the morning but just barely a lot of dow components. treasury yields up 1.8 quickly pulled back on the 10-year to 1 point upon 77 andrew, we're so close 1775 i'm looking for 1776 and i'm going to play some patriotic music. >> break out in song >> taking it -- as long as we're taking it to that decimal point we might as well get a 1.776 mcdonald's hitting the wires that's it. that's why the dow turned negative earnings of $2.11. missed consensus by 10 cents revenue also came in below forecasts. we need to look closely. >> tell you about a couple of things global comps up 5.9% that was better than the up 5.6% but u.s. comps were light. came in 4.8% the street was expecting 5.2%. >> 40 basis points >> u.s. comp store sales.
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>> nothing else? >> that's what i'm looking through. trying to figure out what's happened in this. >> they didn't find out egg mcmuffin's make you fat or something, did they? no new news on something like that >> no. >> they're fine? they're healthy? sausage and egg mcmuffins? doesn't say anything mcdonald's is the reason you're fat. >> that was the soda is the reason you're fat. >> soda. >> soda. the company -- the comments from steve easterbrook said they returned $2.4 billion in share purchases and dividends. the company announced an 8% increase in the quarterly dividend to $1.25 per share beginning in the third quarter. >> battle intense competition that offer plant-based options it says. >> is that what it really says >> what it really says on the wire. >> is that burger king that was offering the plant-based. >> the world's largest has
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trailed behind burger king and yum brands in offering plant-based burgers which partnered with beyond meat. >> that's not mentioned in the release. >> that's not? >> this is just a reuter's story but that makes it something that you can -- that's what you put in your little lead, if you don't want to lead. >> let's ask an analyst about this will slaba is standing by. he covers mcdonald's as an analyst at stevens the stock is under quite a bit of pressure right now. what do you think happened >> i think there are a couple of things in the release that investors are looking at global comps are good. u.s. is strong 4.8 versus 5.2 the g&a number was high. they've made a couple of technology acquisitions as you have noted in the past couple of quarters i wonder if there's some staffing up around that that could have led the g&a to be
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high taxes are higher not maybe as clean of a miss as it looks initially either way those couple of things are what's leading. >> none of those would explain why the stock is down 3.5% it's run up, right, will >> it's a heck of a move nearly a straight line from '88 whenever easterbrook came in he's done a good job the u.s. number is going to get most of the focus here where they put up a 5.7 last quarter it's a 4.8 this quarter. underlying that, even with the 5.7 last quarter, it was all check driven negative transactions. you would imagine with a 4.8 you probably have even more negative transactions that's a big worry for investors and franchisees and the company as well. i'm sure that's something they're going to address today how do you turn that around? what we've been hearing recently is it has been getting better as we exited the quarter. a lot of that is breakfast driven getting people in on
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value. that's some of the drum beat we'll hear. >> right now the stock is down by 2.9%. obviously none of this is reflected in the press release you'll hear more on the earnings call what do you do now is this an opportunity to buy or do you wait to see what they have to say first? >> i think it's an opportunity to buy we like mcdonald's the economics are best of any of its peers. the business momentum is actually going to pick up a little bit in the fourth quarter. this is a business we think is really well set up as we go into next year and can weather any economic cycle while some of the momentum may be coming out of it today after the 5.7 going to a 4.8 in the u.s. this is better situated. >> will, is there anything to what reuters -- is that a millennial writer that likes beyond meat that decided that mcdonald's is moving too slowly to adopt meat alternatives that was actually cited in the piece for why same store -- they're losing ground to their competitors offering beyond
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meat is there anything to that? >> i think there's a small bit to that. i do think mcdonald's going to get involved we think they could do something in the alternative chicken space. no one's really gone that direction. they have an excludsive -- >> don't they already have chicken nuggets. >> they do not alternative yet. >> i was going to say, well, the meat that they already serve is kind of -- no, i love mcdonald's fresh meat, everything else. >> i think -- interesting -- >> go ahead. >> in this quarter the big quick service was around popeyes and the premium chicken service. we're seeing them go premium and alternative. you're offering me something really, really good i can't get somewhere else or you're offering me something that's plant-based. >> what's the alternative chicken? what's that, will. >> popeye -- >> bless you >> don't hold it in like that. you're going to pop out a kidney or something like that you have to let that out. >> let the sneeze go.
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>> let the sneeze go what's the alternative chicken they have a plant-based product the same way beef is -- alternative beef is plant-based as well. >> what's that >> pretty good the main point is that it tastes very, very similar to the original chicken or original beef product this so far has been testing well. >> any negative effects a couple hours later or no? >> that's a good question. i can't really answer that one. >> okay. we'll be watching. all these things need to be tested thoroughly. >> we should point out the revenue line came in just about below expectations, 5.43 billion versus 5.83. it was a decent chunk of a miss. 10 cent miss will, you think it's because of the investments they're making in the business, some of the additional technology pieces they brought on board? >> i do. g&a is really where they missed it as far as the earnings go
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like i mentioned, there's a slight higher tax rate than what we model g&a, a lot of investments, a lot of that is technology. >> thank you thanks for joining us. >> thank you. here are some other stories that investors could be talking about today. under armour ceo kevin plank is stepping down from that job next year he'll be succeeded by the company's chief operating officer patrick frisk. going to become executive chairman both men will join us live at 8:30 a.m. eastern. wework's board is weighing two offers expected to accept an offer from softbank to take a controlling interest in the company. it's already poured $10 billion into wework. softbank will pay adam neumann to leave the board meanwhile, jpmorgan's package would add up to $5 billion and bring together a group of outside investors, including barry sternlicht's starwood
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capitol. also, a flurry of stocks on the move this morning. telling you about procter & gamble shares. earnings and revenue topping estimates out buying stop estimates for the premium beauty brands travelers shares are lower you can take a look there. the property and casualty insurer missed the mark. hurt by as best toss reserve costs. dow component raising the full year forecast that stock up a little over 1% then the big winner of the day, take a look at this stock. biogen, drug maker plans to file for fda approval of an alzheimer's treatment after promising results from the drug and clinical trials. this stock is now up 40% today on this news. >> $40 billion market cap prior to that. that's like adding $15 billion. >> this is real -- this is real. >> it's a beta amaloid drug.
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>> for alzheimer's. >> we were ready to give up. >> the company had given up on it and then went back to the fda after they re-looked at the numbers and have gotten permission to move ahead promising news >> promising for the -- >> promising for all biogen shareholders are obviously happy but there's very little to deal with what -- especially in an aging population it's going to be a huge deal it's a long good-bye, one of the most heartbreaking things that can happen to a family. meantime, hasbro shares getting slammed. profits and revenue falling short of estimates the threat of tariffs on toys imported from china significantly increased the shipping and warehousing costs you can see that stock down 10% right now. real estate development companies howard hughes selling $2 billion of non-core assets along the strategic review activist investor bill ackman.
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they would only consider selling themselves if a substantial premium was offered. coming up, beyond earnings we're going to talk about -- beyond earnings. trade remains a big issue for the market we'll talk about the topic with senator charles grassley futures are down mcdonald's not helping that's one of the reasons we're down 15 now. nasdaq remains up 23 and the s&p is up. stay tuned u' wchg quk x" on cnbc for farmers here, this is our life's work. but when a recall happens, perfectly good food goes to waste. now, we've got away around that. looks good. we're on target. blockchain on the ibm cloud helps pinpoint a problem anywhere from farm to shelf. it's used by some of the biggest retailers everywhere. a nice wedge. so more food ends up on your table,
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joining us to talk about trade and so much more, senator chuck grassley of iowa, chairman of the finance committee. good morning to you. some people are calling this a skinny deal. are you in favor of a skinny deal if it doesn't get you some of the bigger issues that i know you've been talking about? >> it seems like it's starting down the road of some of the big issues like stealing our intellectual property, trade secrets, manipulating the currency and transfer of technology but only partially going down that road but that's a pretty good start so obviously i'm happy that they're getting serious about that the trouble is, we don't really know until, you know, you get -- we can sign an agreement in chile next month, but we won't know on those things maybe for a
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few years. are they really a biden in good faith? but on the agricultural stuff, when they are committed to buying $50 billion of agricultural products over the next two years, we'll be able to measure that for sure. so i think you have to have some hesitancy and some disbelief about whether china's really negotiating in good faith but at least it takes some of the anxiety out of the -- that results from the uncertainty of trade and getting some certainty is pretty important, not only to china. their economy is hurt worse than ours but when you consider that china's 15% of the world's economy, we're 22%, that's 37% added together when they get together, it's going to have an influence on the whole globe. >> senator, let me tell you, and i don't want to put words in his mouth, but we had rick scott on the program earlier today.
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he doesn't believe the chinese, frankly, to some degree are even worth negotiating with now because he has a view that they are not going to abide by anything that even they sign their name to. >> i think that that's a realistic approach and you heard some of that caution in my answer to the first question, but we're going to know on agriculture right away if they don't deliver, we can measure that in the dollars they buy or don't buy >> what is your sense though of the bigger pieces that you've been talking about, meaning how do you think we get there? can that get done over the next 12 months in an election year or do you think that whatever leverage we had or have -- whatever leverage we have or don't have, that we've actually lost some leverage in this next 12-month period as the chinese wait to see what the leadership of this country looks like >> well, obviously your question's in regard to phase 2
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and phase 3. >> right. >> i don't know whether there will be a phase 2 or phase 3 next year but if this agreement is signed in chile, then it doesn't have to go through the congress so it won't be affected like usmca if we don't get it done this year it's into a presidential election year and makes it questionable the president signs this, does china live up to it is the only question you have to ask >> do you have a view and we talked about it on this show a lot that if one of your other colleagues, elizabeth warren, were to be in the white house, that she would be even more hawkish on china >> well, i think you've got to look at -- it's pretty hard to beat this president compared to three previous presidents. two democrats and one republican they knew china was not living up to their obligations under the world trade organization they didn't do anything about it
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didn't even label them as a currency manipulator like this president has done this president has been as tough as any president has ever been on china and we ought to be thankful that he is. even the farmers of iowa that are hurting to some degree as a result of the uncertainty of these trade agreements still has given the president some leeway on dealing with china because they know china has been cheating us for 20 years not living up to the obligations of the world trade organization so i think you've got to look at it whether it's elizabeth warren or somebody else down the road, this president has started us in the right direction in regard to china. >> senator, before we let you go, got to ask because there's been lots of speculation about what some of your other colleagues including mitt romney and some other republicans in the senate are up to what's your feeling about impeachment right now? >> well, how do you really know considering the fact that
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everything is a star chamber approach in the secrecy of the house committee room and so different than nixon's impeachment and the clinton impeachment where the president's lawyers were in the room cross examining witnesses we don't have any of that, so you're asking me what do i think about it even republicans that are in the room at the house of representatives, and there's a few of them there, there's a gag rule put on by schift, the congressman, and they can't even speak about it, but yet there are leaks out. so i think that it's really wrong to draw so many inclusions except for this, that you can go back to a washington post headline, january 20th, 2017, six hours before the president was even sworn in that impeachment proceedings have started against the president.
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something like that. i'm paraphrasing so this has been an effort to oust this president, to negate the last election by impeachment and they thought mueller was going to do it but there was no collusion or crime so then they go to what they're doing now and it's never going to end. and whether he's impeached or not, we're only a year away from elections so why not let the election take place. >> you don't have a -- you don't have a twitter account under a different name like senator romney, do you >> i've got 450,000 people following me. >> on your real account. >> and they know it's chuck grassley. >> dangers taken, senator. >> senator, we want to thank you. we have breaking news literally just crossing the wire as we were just finishing our conversation i know becky's got some of that on wework. >> right dow jones news wires has this crossing they say softbank is to take control of wework according to
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sources. they also say softbank will provide adam neumann with money and newman and neumann is going to sell his shares to softbank they will extend $500 million of credit to neumann and he will step down from the wework board. this is news breaking crossing from the dow jones news wires. we'll have more on all of this when we come back. we'll talk more about this morning's big movers and then our newsmakers of the hour under armour ceo kevin plank is stepping down from his job next year he'll be succeeded by patrick frisk. both those gentlemen will join us live coming up in a few minutes. plus, don't forget to subscribe to our new podcast you'll get interviews and much more stay tuned, you're watching "squawk x"n bcbo ocn what do advisors look for in an etf?
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right after this break,
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kevin plank and the man who's going to take over his job, patrick frisk. stay tuned, you're watching "squawk box" right here on cnbc. is the monolithic view of emerging markets obsolete? at pgim, we see alpha in the trends driving specific sectors of outperformance. where a rising middle class powers a booming auto industry... a leap into the digital era draws youthful populations to mobile banking and e-commerce... trade and travel surge between emerging markets. every day, our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential.
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welcome back to squa"squawk" right here we continue to follow flashes on wework a deal has been reached suggesting that adam neumann as part of this deal, which would be worth about $8 billion for wework, would be collecting somewhere in the neighborhood of $1.7 billion that would include a $185 million consulting contract. an issuance of $500 million of debt and $1 billion of stock that would be purchased as well. meanwhile, 2,000 people will be laid off likely in the next two weeks as a result of what's happened at this company so there's going to be lots of questions if softbank gets this over jpmorgan. jpmorgan was going to be
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offering debt as opposed to the equity deal. >> looks like they're getting $500 million in credit to neumann as well. >> i imagine the shareholders -- this is a shareholder lawsuit waiting to happen. >> $185 million consulting fee for what how to bring the value down to that extent? >> the whole thing is very shocking, how about that you're not shocked >> i -- nothing shocks me anymore with wework. it's a saga. have we decided that here are some of the stories investors are going to be talking about today after a busy morning for quarterly numbers. the earnings parade continues. we'll get th numbers from chipotle, mexican grill, discover financial, texas instruments and whirlpool getting a esh n the housing market the national association of realtors is out with existing home sales from september at 10 eastern. economists think sales fell .7 of a percent
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and twitter is planning to institute a new rule on doctoredoctored content. they will first seek public comment before finalizing the rules. >> back to the other big corporate story of the morning under armour ceo kevin plank is stepping down. he'll be succeeded by patrik frisk. plank will become executive chairman the two executives sitting down with cnbc's courtney ragan right now. courtney. >> reporter: thank you very much, becky. appreciate t. we are here in baltimore. we are joined by both kevin plank and patrik frisk. >> good morning. >> kevin, you started this company in 1996. took it public in 2005 you've been running it ever since. why is now the time that you're moving to executive chairman and brand chief? >> what an awesome i think american entrepreneurial story and one i'm so proud of. what's important is that we make this an eternal brand. part of doing that first and foremost is that this is my decision to get to this moment of the ability to work and frankly have enough partnership
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where patrik and i complement each other so well the ability of the business, the company is moving from defense to offense the ability and the opportunity we have to do that is something we think is really, really next generation right now couldn't be a better time for us to do it you're about to see the brand begin to unleash i think it's going to -- it will empower us i think it's going to be freedom. it will allow patrik to make the decisions and run the day to day and me to be the vision. great partnership. >> reporter: you said this was your choice. this was not board pressure? this was all you >> no, i've got a great board. i've got feedback from my board and we have smart people around including patrik and the other team this is the right time this will be my 56th earnings call coming up we've done this. we've been down this -- we've done this a number of times. it's a great opportunity so i'm really proud. really excited. >> reporter: patrik you joined
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under armour in july of 201. was this all the the plan for you? >> we certainly discussed it early on, but the first step we had to do was start the transformation that we're currently in that's what's so great about this transition is it's been planned. we're going to continue to run the same plan that we've put in place with the entire executive team that's what's so exciting also for our teammates, the fact this is about continuity. this is about running the play this is about turning from defense to offense we believe we have a strong plan in place and we now want to be able to free up kevin to be more strategic in terms of how he thinks about what he does and then allow me to do what i do with more freedom as well. we think it's a perfect office it'll be there january 1st and 2nd so we'll continue to work and interact there's nothing changing as patrik continues to report to me we'll make sure we've got the ability to really divide and conquer is the way we're thinking about this. it elevates me, elevates patrik
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and puts us in a position to elevate us. >> reporter: you said nothing changes. you become ceo there has to be some level of change. >> of course the great thing about the announcement today is this is a transition till january 1st. it gives the organization time to settle in for us, there will be change i will be running the company day to day but it also allows kevin to become more strategic in terms of how we think about elevating product, how we think about big, strategic marketing ideas. it's a complementary thing it's about running the play that we've put in place and also complementing each other and allowing him to do what he does well and allowing me to run the compeem, somebody needs to have their hands on the wheel. you can't have two people yelling go left, go right. i'll be there. we'll drive on a strategic basis, make sure we're aligned on that. patrik on a day-to-day basis has
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to be able to turn the wheel the ability to have a 30-plus year most of which was spent in this industry veteran being able to come and join, having the ability to work together side by side the last 2 1/2 years, being in board rooms together, sweat together in gyms, we're going to finish this operational executional place for under armour we're going to continue to blow people's minds with the world's greatest product when you put that together, we think it's nitroglycerin. >> reporter: patrik, you've said before two people here but one voice. >> yes. >> reporter: does that continue or is there more of a separation clearly you're still working with the founder of a company so how much independence can you have >> first of all, i'm very honored today of kevin giving me this trust to do and to lead, you know, one of the most iconic brands that the world has ever seen in sporting goods in terms of reporting, it doesn't change i'm still reporting to kevin as
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he elevates. the plan is still the plan the way we have crafted this over the last two years is going to remain. we're going to continue on we're excited about doing this together and completing the play like kevin said. we will be turning from defense to offense that's what's going. >> reporter: north america is still a key point that needs some stabilization. >> yeah. >> reporter: you have been looking for the sales in north america to be down slightly for the year, which was a bit of a downtick from the previous guidance you also have a new president of north america. >> yes. >> reporter: she's only been with you six weeks or so if i'm doing the math right. >> yes >> reporter: do you have any sort of further developments to share about how that plan may be evolving to reinvigorate what's happening in north america >> the plan we laid out on investor day, we're still executing on that plan that plan was to over time get us back to strong growth in north america. it will take time. nothing has changed so the plan
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remains the plan. >> reporter: patrik, you had said asia will be a top performing region for the next five years. >> yes. >> reporter: you have a big plan to open many stores, i believe 70% of them will be in asia. a lot going on both politically, economically in that country are you still able to go forward with that same plan in asia? >> so here's the great news. at under armour we wake up every day thinking about what we call the focus performer. we believe that the plan that we have for the focus performer to deal with things they don't know they need and once they have it can't imagine they were without it our teammates wake up every day thinking about how do we make you better for us, that's a unique way to carry out that work every day. we haven't changed the plan in asia we still believe in the plan we laid out in december we're continuing down that path. >> reporter: do you have anything to add to that, kevin >> i think he was great.
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listen to the ceo. >> reporter: that's true he is the ceo. you talked about opening up a regional headquarters in hong kong at the end of this year is that still part of that plan? >> we actually opened in july of this year. we did that a little bit earlier than we thought we would have been able to it's working well. we're going to focus on the fact that we are grounded in the apac region in hochk congress we were going to ground ourselves in panama. >> reporter: what's job number one? >> supporting our team i've laid out three goals. numbering o number one, elevating the product bar. the greatest product that blows your mind. second thing is amplifying the brand. we use the phrase of being a loud brand in a quiet company. so we want to make sure that this chapter is something that empowers us to do that it's also working with our team. i said that, i can't wait to see
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our teammates be out there this isn't a ceremonial ambassador role that is a real job and allows us to work with product, marketing out of the weeds and the day to day, i did start this in a basement i was a college athlete. this is something that came naturally. the cool thing about the brand, i think, is when you look at it, it's real. there's a real heart and soul here that's what i want to make sure is front and center that i'm not getting corporate ties with that while the organization needs to grow up, we also have the ability to unleash what is here with that rawness but do it in the structure of a discipline which is what you see us building with patrick and i working good for the last few years. >> reporter: what do you think about the u.s. consumer right now as we're going into the holiday season we talked about this a month ago. >> yes. >> reporter: we all know a lot can happen in a month. look at the change that's happened with you all. where do you see the u.s. consumer at this point >> i think the consumer is a little bit tentative what's going on now, everybody is looking forward to the
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holiday season and there's a little bit of apprehension we have a great program going for holidays and we feel strongly about our ability to execute. ultimately there's a little bit of apprehension at the consumer level. that's how we think about it at this point in time. >> reporter: patrik frisk, kevin plank, thank you for joining us. >> congrats. >> reporter: going to send it back to you in the studio. courtney, thank you. coming up, we have this morning's biggest earnings movers the futures right now have turned slightly positive again even though mcdonald's is a drag on the dow we'll be right back.
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welcome back to "squawk box. now to this morning's big stock movers we have a couple big ones this morning, dom chu. >> reporter: more than just a couple, andrew earnings up the wazoo. let's look at travelers down 4%. those shares roughly 3,000 shares of pre-market volume. the profits came below estimates. travelers was hit by an increase in how much it has to set aside. tied to asbestos claims. shares off 4.5%. taking a look at shares of what's happening with jetblue which are down a little under 1% 98,000 shares pre-market volume. profits and revenues both beat expectations and operational efficiencies did offset in the caribbean markets because of
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hurricane dorian they did forecast a key metric of revenue growth will fall and slow down in the fourth quarter. we'll watch those shares as well then we're going to end on shares of harley-davidson which are up 6 plus percent pre-market profit and sales topped estimates and harley was helped by an increase in international sales. a smaller sales decline in the u.s. retail market the company is reiterating the full-year forecast from motorcycle shipments those shares catching a big pop pre-market i'll send it back to you. >> thanks a lot, dom joining us is christopher rome and mike santoli, cnbc's senior markets commentator. since you're technical, chris, i want to start with mike. >> yeah. >> we were talking earlier that like so many other quarters, expectations are at a point where we're getting a lot of beats. >> yeah. >> i want to know whether year over year these are good
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numbers. are they flat? 2u7% >> flattish. i think it's been three quarters of flattish and up 2%. that's a bragging rights thing it doesn't matter to the market. it doesn't trade in aggregates i think if you look at the estimates for this quarter on june 30th when the quarter started, they're much higher than what the companies are going up against as they report. that's the standard cycle. i think it's a deeper revision kind of cycle this quarter so i think the big question is is this the trough and up from here more than it is do we go down 1% or up 2%. >> chris, what is the action we're seeing at the company? what's that? >> i think what's so remarkable, mike touches on this the bar to expectations was low. think about all of the headlines. brexit, china, trade, recession. then we juxtaposed that with the price action jpmorgan, 52 week high, housing
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stocks 52 week high, semis up. the message is constructive. the mistake is wrapping around the headlines. the price action is pretty darn good. >> i would absolutely agree with that if you looked at the industrials yesterday outside of boeing, they were up pretty strongly also among the list of worry points from august was the yield curve. yesterday two-year versus 10-year is up 20 basis points. that has to be the backdrop. right now the equity market wants and needs to click higher. that's the pattern we're in. the one thing i'm focused on is are we going to grind our way to the high if you look at the last three or four, that has been a stall point or an opportunity for a pull back. right now the market isn't telling you that's what's going on >> mike, what's so remarkable around the world is what is not getting attention. dax, 52-week high. export driven market telling you things are getting better. >> things are getting better, there might be an actual agreement with the u.k. over
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brexit what does that tell us >> i think what's notable is even from a leadership performance, dax is outperforming. taiwan, biggest semiconductor market out there there are signs of global cyclicality that are starting to emerge people aren't positioned for it and that's the positioning piece. >> the positioning piece has been the context of it i think context is its own catalyst for a while people get too negative and it requires more incremental negative news to keep stocks where they are because people haven't been in enough. >> would the fed not lowering rates be incremental negative news >> i think there would have to be a little bit of make our peace with that decision and know they're still flexible. also, i think there would be a message in the fact that they're in the blackout window it would be a little bit of a jarring move but i don't think
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the real signal of that would be rate trade incrementally got going. we're okay. >> mike, the un-inversion of the yield curve has gotten considerably less attention than the inversion of the curve as the curve has steepend here, what's acted better? banks in all corners of the world is acting better jpmorgan, 52-week high regionals starting to outperform up and down the cap scale as the curve has steepened, the curve has gotten better. >> thank you, chris. thank you, mike. let's get down to the new york stock exchange. jim cramer standing by cramer, dying to ask you about mcdonald's today that stock is down by almost $8 now. look, it was a miss on the bottom line but the earnings -- i mean, the revenue number wasn't terrible. a lot of the comps numbers were pretty decent or not far off at least for the u.s. comps what do you think? is this a situation where people are overreacting or is this a -- >> i think so. i think so, becky.
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>> i didn't mean to -- >> the global numbers are very, very good. obviously, the release they're not going to say i did a bad job. i looked at the global numbers and i was surprised. global, 5.9%. >> yeah. >> that's remarkable u.s. 4.8 we all knew there were problems. last week there was a jpmorgan piece that was very negative they did 4.8 people were looking for 5.2. let's say they weren't real given the fact we were worried about domestic i think you find yourself a buyer of the stock obviously the issue is there are others that are more attractive in the space i like wendy's the idea that this is some sort of a dramatic short fall given the fact that we're all looking for a short fall, i'm not buying it i think that this is one that we want to hear what they have to say. i don't believe it's as bad as the stock looks. given only because i realize that many people said it was going to be bad and it was not
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great. >> no. >> i would kill for a 5.9% comp. >> right. >> it's down 7 people looking for stuff to buy. >> right. >> maybe down 7 you buy a company with huge -- huge global comps, there is so much good today, though. procter, united technologies procter is incredible. i don't know, how do you get double digit for some categories that have been so bad. >> beauty and health and -- >> i thought that was incredible. >> just to see numbers like that, a big company like that, able to turn things around and get good growth, not only just about every one of the categories, but in every geographic location they operate in too that is what surprised me. >> how can you -- 3% price, 3% miss 3% volume. volume is 3% suddenly people decide, you know what, i'll start looking better. i've been looking bad now, because of instagram, i got to
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look better. that's incredible. did millennials they got to look better they always wanted to look better i thought the numbers were amazing. i don't know who is being crushed. unilever's numbers were okay this is a strong quarter, much stronger, joe, than the bengals who i guess are playing with a ten-man d, red card, like in high school, red card, hold up a red card. >> we forget so fast monday night we forget so -- >> i see ghosts. i see your team, i see -- you're like ghost busters i see ghosts >> do you have -- do you still own a glass house? >> i like the trash talk. >> i'm a stone thrower from way back >> jim, don't feel bad he brings up rutgers constantly. >> look, i mean, unless you're from boston, what can i say? wow. i hate them. i hate them. >> thank god i was in new york,
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unable to bet. i was thinking, ten points, jets looked good last time, i was thinking -- i looked at the first quarter, 17-0. >> i see ghosts. >> bengals, god almighty >> jim, we'll see you in a few minutes. >> okay. >> thank you when we come back, we'll talk wework with the reporter who just broke the new details "squawk box" after a quick break. we'll be right back. the world is built for you.
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so why isn't it all about you when it comes to your money? so. what's on your mind? we are a 97-year-old firm built for right now. edward jones. it's time for investing to feel individual.
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welcome back new details out in the last few minutes on wework and softbank joining us now on the squawk newsline is maureen farrow at the wall street journal. she broke this news. and, maureen, tell us about the details. looks like softbank has won the bid from the board what does that deal entail >> sure, so the deal entails as we reported some of this yesterday, they're going to take over the company for about $8 billion. probably the most stunning part of this deal is the payout to adam newman, the co-founder and ceo. it looks like as part of this he's going to get a package worth about $1.7 billion and that's divided -- sounds
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like into about three parts. he'll be able to sell about a billion dollars of stock into this tender offer they're going to launch. they're going to pay about $3 billion, employees, investors can sell, adam, based on his stake, up to roughly a billion dollars. they're also going to pay up his loan he has a $500 million loan coming due they're going to give hmm a new loan they're also going to give him a quote/unquote consulting contract, almost $200 million. >> maureen, why are wework shareholders and employees not going to sue adam neuman and sue softbank for a deal that clearly advantages him in a way that even with his control iling stae is very questionable approach? >> i think it is far too early to say what happens.
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i think that the issue, it seemed like during the negotiations, he had the power, he had this voting control, they needed to find some way to get him to relinquish that our understanding is that consulting contract was one part of it. the loan forgiveness, but i think it is a good question and seems like -- >> it is a terrible look on a week they're going to fire 2,000 people to take $185 million consulting arrangement i can understand potentially the billion dollar component of this, given that's the -- that's his own equity stake in the company, but then when you add on top of that an advantage loan and $185 million in cash, you know, for all of those employees who were hoping to participate in this ipo, who were led down a path by a pied piper that clearly scared them in a terrible direction, it raises lots of moral questions, ethical questions and why frankly softbank would participate in something like this.
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>> it is a good point. and there are huge questions around this. a month and a half ago, we were talking about maybe two months ago, $20 billion valuation in an ipo as you said, employees, investor could have sold shares and that was even far below where they last raised new money, $47 billion, we have seen this rapidly shrinking valuation for this company and, yes, employees are going to be let go in coming months, 2,000 -- who knows where that ends and their valuation of their shares has diminished rapidly. >> now that masa son is going to look like he's rewarding a individual who frankly -- frankly has done tremendous damage to him personally, his own reputation, and the softbank vision fund and softbank itself, how are other founders going to look at this just going to look at him as free money >> well, it is going to be
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interesting what other founders look at. i think another huge question this raises is can you give founders the 10 to 1 elevated voting shares. every founder wanted them. for the most part, founders have been given this voting control and now you see what you have to do even when things go really wrong to get a founder out of this voting control. this is such an extreme example, but it is hard to imagine that this was not a tipping point where these kind of voting shares, these founder -- the really founder friendly terms, real questions there. >> so many founders that softbank had invested in, frankly, who were disgusted with adam neuman. i would be surprised if they can stomach this transaction on a morning like this. one reason hes with wi was wille out of this was because other founders were disgusted by it. for him to now be paying him, i
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don't get it >> maureen, we are out of time today. thank you for calling in >> thank you for having me >> thank you >> we got to go. it is already 8:59:52. futures up 13 now on the dow a lot of dow components. more tomorrow. join us with the aforementioned day. "squawk on the street" is next ♪ >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. free market watching and waiting here futures flat procter, utx among the standouts. big brexit showdown today, the house of common votes and the ten year around 1.77 road map begins with a slew of corporate results. four dow components reporting. mcdonald's, p&g,

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