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tv   Squawk Box  CNBC  October 26, 2021 6:00am-9:00am EDT

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into the stratosphere, the stock is now a member of the trillion dollar market cap. higher than two thirds of the companies in the dow it's tuesday, october 26th, 2021, "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick. along with joe kernen and andrew ross sorkin. and you're looking at some green arrows this morning after gains for the market yesterday the nasdaq was the biggest yesterday up by is%. but the s&p up by .5% too. this morning, dow futures indicated up about 108 points s&p up about 19 and nasdaq up another 98 points so on a
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percentage basis it is the biggest gainer at least in the premarket right now. right now it looks like the yield is on the ten year is slightly lower 1.623% but well above 1.6% andrew >> let's talk about some of the big things on today's planner. several big reports due before the opening bell, ups, eli lili, 3m ge and hasbro and then after the closing bell, the parade rolls on in a big way we get numbers from alphabet and twitter. should mention that alphabet expected to show an increase in revenue powered by demand for online ads although just like facebook and snap investors are going to be watching for any impact from apple's new privacy rules on google's new ad business twitter, same thing, revenue expected to rise driven by a boost in ad sales due to the
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covid-19 pandemic and we will watch, of course, for any of the implications from the apple privacy change as well joe? >> thanks, andrew. we've actually heard -- we talked about cathy wood and her views on inflation but the founder is jumping into the latest inflation debate. it started on twitter, ceo jack dorsey tweeted in his words hyperinflation is going to change everything. it's happening cathie wood responded. in 2008-09 when the fed started easing, i thought that inflation would take off, i was wrong. velocity still is falling. wood went on to predict once the holiday season passes companies would face excess supplies and prices would at that point unwind >> you know, joe, when i spoke
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to her at that salt conference a couple weeks ago -- >> >> it's a gnat. >> yeah. >> i think it's a tsitsi fly i saw it friday when i was there >> this was a gnat sorry, andrew. >> what i was going to mention when i was at salt with her, she actually made the case over the next five years there's going to be enormous deflation. but her argument was it was a function of technology she thinks there's going to be massive deflation, then the question begs if you believe that we're in a deflationary environment which seems at odds with where we are right now, then can you still be a bitcoin bull, which, of course, she is arguing that it could be worth something on the order of $500,000 a coin over the next five years. >> i think there's two stories there. >> there's the weighing scale.
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>> inflationary versus deflationary an interesting thread on twitter, for things we need, everything from housing to food prices to gas prices, higher education, health care costs, all of those things have far outpaced inflation in some cases. it's the things that maybe we want and that we like, things like technology that are certainly helpful that have been deflationary if you combine those two things that's where you run into problems it's, you know, for those of us who can spend more you have a better situation than the people in a position of spending all of their income on things they need >> i think there's like long-term sort of really neat things to think about. like what the internet did for price discovery and amazon and b2b and you could see everything everywhere and what technology did for things like airbnb and uber or
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wherever you're using everything, you're putting everyone on a plane that needs to go to a certain point you can save all this money. and then you think of health care, and the promise of sequencing the human genomes and we'll prevent things instead of people spending three weeks in the hospital for $20,000 a day, whatever it is, maybe we understand how to prevent and handle prescription drugs if they work are the cheapest thing around if you don't need chronic care. there's all these long term things that are great but near term it is the way it is we're printing money gang busters. we aren't handling the energy situation very well. i don't think. and this transition we're rushing it too quickly and t look at all the other stuff. the supply chain -- it should be interesting to talk to raytheon today. if we can't get toilet paper on the shelves, how do you make an engine and aerospace components
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with chips my car's here. my car's here. >> what's it been, six months? >> longer. >> longer? >> and i think it was in one of those boats or something or stuck in a port over there it couldn't leave. >> that's why ups earnings are interesting today too. just logistics in getting things places. >> they will so my own little supply chain story, it's easing >> supply chain problems are over i got my car >> i thought you were leading in to -- >> to ups but actually to ubs. >> ubs. >> ups is later this morning. >> ubs about ups you're doing ubs. >> no. ups i'm looking forward to 3m you hear inflationary things too. but in the meantime ubs reported a $2.3 billion profit in the third quarter up from $2 billion in the prior quarter and well above expectations
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profit at the wealth management division rose 42% as investments hit $2.3 trillion. the ceo of ubs told cnbc you can see the stock is up about .5%. facebook shares rising even amid concerns over the recent document dump. we'll dig through those earnings next plus tesla's market cap hitting $1 trillion but who's counting we'll show you the impact on elon musk's net worth. that's next. you're watching "squawk box" live from the market site in times square if you wake up thinking about the market and want to make the right moves fast... get decision tech from fidelity. [ cellphone vibrates ] you'll get proactive alerts for market events before they happen...
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all right. we told you we were awaiting ups, the company actually out with its quarterly numbers a few moments ago, the profit come in at an adjusted 271 a share, that beat the estimate of $2.55 and revenue came in above, you had revenue of $2.71 billion as it continues to benefit from strong ecommerce demand. that stock up by about 3%. so even though lots of places
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are having trouble getting packages or getting things to the people who ordered them, ups may be having a better run than others andrew >> looks like it we will -- we'll keep our eyes on all the folks trucking our stuff. meantime, talking about somebody who's trucking along, elon musk. now the world's richest person by more than $100 billion. this thanks to the recent surge in tesla stock at a net worth of $289 billion he ranks higher than the market cap of 20 of the 30 dow industrial companies that's as a human being, falling just behind disney at $312 billion and ahead of salesforce, nike and coca-cola. tesla hitting a $1 trillion market cap yet on the news that hertz is ordering 100,000 ev vehicles tesla closing up more than 12% on that day. tesla now worth more than the
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next nine largest global automakers combined. and this brings me to two thoughts, guys one was sitting on the set with both of you in davos, switzerland, now four years ago when we heard about his compensation scheme which if you remember at the time he was going to take no pay, not a dollar we had a debate, it was freezing outside, and we had a debate, he was going to take nothing, except if he hit these marks at $50 billion increments and it all seemed, frankly, insane i think -- at least i thought -- >> i thought it was a stretch to get to those marks. >> the company was worth i think $50 billion or -- the fact it was going to get to double that or triple that, i think you wouldn't have had your head screwed on right and then to think a year or two later that there was an offer or -- i don't know there wasn't a real offer but if you remember funding secured at $420 a share
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h he wanted to take the company private and people, including myself, thought that was an act of insanity. >> i spoke with ron barren yesterday, a long time investor in tesla and spacex. we talked about it because he was like, yeah, tesla crossed $1,000 today i said what was your cost basis for getting into that, $40 roughly 40 bucks, he's been a long-term holder there was a point he paired some of his holders, maybe not the last time we talked to him but in the last year at some point he did pair some of his holdings it was because at that point it was too much for what it was supposed to be in his fund we'll talk about it coming up. >> it's still worth saying that even elon musk thinks who has thought up until now, the last year or two, that he believes tesla is overvalued and and had said that publically i only said that -- i don't know if that's a caution or not but here we are.
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>> not that money is everything to elon. but to come up with that compensation package, and to have the confidence in not only the company but to have it in himself, you would -- and this -- this is like an expression, it's really stupid to short either tesla or elon musk never short elon musk and it's obviously just made poppers out of so many people and hedge funds and everything else to short tesla. >> it has. >> that was amazing, because it was -- the target seemed way far-off and then we watched it just sort of happen. we watched the demand and the success of the company match it. not on a valuation basis it's always going to be on normal metrics it's going to look expensive elon said today he didn't understand why hertz ordering 100,000 cars would move the needle on the stock. he said it's not about demand.
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we can't possibly satisfy the demand we have right now, it's a supply issue so ordering another 100,000 but think about what that means when the number one rental company all of a sudden is totally en masse switching to electric cars so it's just sort of a seminal more than an actual event. it's neat. over 1,000 over a trillion it's all -- >> a year and a half ago you wouldn't have thought that hertz would be able to make a purchase like this. remember we were talking about hertz's ability to be around so the difference a year and a half will make in all of these stories. >> the demise of the rental car industry the demise of going to davos, guys better get your booties on. >> i have them on today. i wore them in the rainstorm >> you heard, i have a strong feeling. >> i don't think you can see them. >> that the number one morning show -- >> might be there. >> as said on this show that
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we're the number one morning show it's been said on this show we're number one -- >> picking up tips again how to promote us. >> exactly i have a feeling we're going to be freezing outside again. but having the best guests that -- how do you not go? you can't not go, right? you have to be there -- >> we didn't last year but there was no meeting. >> -- with those blow hards and claus and those guys >> insult your guests before you get there. insult your host. >> it's a good strategy. since the invitation hasn't come yet it's a good strategy, joe. >> if we're not invited we're in the clear. we can't do anything about it. maybe we won't -- i won't be down in the -- where were we last year? what was that place? >> that was all right. >> you can't order anything. i had pizza like every night swiss pizza. it's like chocolate flavored. facebook investors -- there it is again. my god
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we have a gnat here. >> 100 million flies can't be wrong. >> that's right. facebook investors may be shrugging off the company's current pr crisis. facebook released better than expected q3 earnings shares of facebook as you can see focussing on not the revenue miss but the -- perhaps the earnings, joining us to weigh in on the company and the stock are usef squali and sarah fisher. so much -- we talk about facebook all the time but when it comes down to it, what really dictating, i guess, the results were this move by apple in terms of privacy and so, when investors really do look at facebook, i'm not sure they -- they really look at whistle-blowers and, you know, what about young people and what does itdo to their psyche, et cetera, et cetera. they're looking at whether
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people are still advertising on facebook that's what mattered. >> joe, good morning to you. so you're right. at the end what matters really are the numbers. but in the meantime, remember the stock was much higher than where it closed at last night. so the whistle-blower, the data dump as you call it, did have an impact but look facebook has been public for almost ten years now. it's not the first time where it has come under a tremendous amount of pressure for things that leaked, et cetera but you look at the numbers, and, you know, you're impressed, all things considered, right particularly on the back of what snap reported and considering the size and scale of facebook, we thought they actually ended up doing really well they ended up managing through it well and even when you look at their guidance for q 4 and some of the things they said
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about 2022, it looks to me like it's very transitory, which means that as an advertiser you need to stay on the platform they're going to take their time to fix it. they're throwing a ton of money at it. something like $10 billion to fix it and so, you know, even with these issues, facebook remains one of the best places to advertise and to generate pretty high and attractive return on invested or return on investments. >> it was higher, sarah and maybe some of the controversy has something to do with it. but stocks move around, overvalued, expecting today it could be 800 billion again so when it was at those higher levels, can you really say, this company is in trouble because of, you know, political headwinds from the left and the right? and all these regulatory issues in front i don't know 800 billion seems like a company that's firing well on all
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cylinders. >> i agree, joe. investors don't care about pr, they care about profit what facebook has proven time and time again, it's the most valuable platform out there other than google. the one thing that facebook didn't write here, and youssef eluded to this, it warned investors about a month ago that apple's iefa would cause headwinds in the third quarter because it did that it was able to avoid a stock free fall that snapchat experienced last week the biggest risk from the facebook papers is the reporteds that facebook knew it was losing ground with younger users and wasn't being upfront about it. that's why mark zuckerberg on the things he addressed on the call, the thing he was caring about was we're going to pivot to young users they're the future of the company. and he said, they're losing ground to competitors like
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tiktok and snapchat. >> is it news that some of the more vanity projects that are going to impact earnings they're putting that in a compartmentalizing that a little, sarah, probably not a surprise we've seen other companies do that things that aren't near-term profit generators. >> my first reaction when i saw it, this is further proof that reports that facebook is considering a rebrand might be doing so in a move that mimics what google did a few years ago in creating an alphabet holding group for different segments of the company. right now facebook reality lags is the department you mentioned they will be separating out is nascent. but if they put pressure on it individually, forcing it to report revenues and earnings alone, that might force that group to innovate faster and facebook said they're going to make significant investment in it to make sure it grows to a
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point they can break it out and not be embarrassed they're investing so much that the facebook rally labs will take a $10 billion hit on its profits this year alone. >> wow youssef we had mr. wonderful on yesterday, and debating about whether any of these issues with facebook are going to be a problem. he just talked about what facebook means to every small business or to many small businesses across the country. i mean, it is a key part of the way business is done nowadays. so it almost is going to muscle through these things regardless of what happens. it's just -- almost too big to fail, i would call it. >> just remember what happened when they had their six hour blackout the number of small businesses that were, you know, out of commission for that much -- for that amount of time was in the hundreds of thousands. so clearly, millions and millions -- in fact, ten million
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plus small businesses worldwide rely on facebook to really exist, to acquire customers in a cost sufficient manner and i think again to the extent that advertising is a relative industry or very fluid environment where advertisers effectively move back and forth to channels where they get the better ry and to the extent that facebook remains even, you know, aslightly better than the next guy, they'll get -- they'll continue to get the -- you know, the add dollars but more importantly their scale really separates them from everybody else with the exception of google and google dominates search i think advertisers don't want to rely on google considering that 40 to 50% of their ad dollars are already spent on their platform so we think they're doing the right thing by being introspective. i would put facebook among the best companies, ironically, in
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terms of publishing internal research, which often now gets leaked, but whatever i think other companies like twitter, google, et cetera, should follow suit but i think it's a little bit of a misnomer to say that, you know, they need to necessarily provide more clarity because i think it's there. >> we got to end it there, a youssef, thanks. we have ge just out. wow ge is able to post adjusted earns of 57 cents a share. the consensus was -- also full year profit of $1.80 to $2.10 a share compared to the $1.94 estimate and the stock is $106 wait a minute, there's a reverse ten for one. so all those numbers, if you were to put the actual numbers based on -- you see why it works. it looks like a normal company
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now that's doing well at $105, it's got earnings thatactually are more than single digit pennies. can i do that with my weight, becky? do you think that would work if i can make things not actually -- >> you figure out a way to do that, let me know. >> where it's not -- although there is a lot of progress being made at ge, obviously, but that one for ten, that really suddenly everything looks a lot better i was reading, hey, that's not bad, you're going to earn $2 and could earn $2.10 a share. a tenth as many shares it's easier to do you can ramp up the earnings per share if you divide by ten. >> spanx. >> i don't want to weigh 17 pounds >> good one. >> we'll give you the commercial break to do the weigh in
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when we come back we'll do a different type of weigh in, democrats in congress negotiating weighing a billionaire's tax but billionaires are already looking at loopholes to minimize their tax bill robert frank has a special report next. and a programming note, raytheon ceo greg hayes joins us at 7:00 a.m. to talk about the company's most recent quarter. back in just a moment.
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♪ and caring for them all means ♪ ♪ we're doing healthier right. ♪ ♪ so, let's do it all together people, ♪ ♪ 'cause this is what healthier looks like. ♪ 3m just out with its earnings another one of the big companies reporting earns right now came in with earnings of $2.45 a share, that compares to the estimate of $2.20 with
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revenue coming in above what the street was forecasting too running through the numbers, they being micro man saying in market demand was strong though uncertainty remains. did say they are also updating their guidance to reflect year-to-date results, supply chain, logistics and raw material pressures this is what the street is going to focus on. they're raidsing the organic growth range to 3 to 8%. they're lowering the top end to $9.70 -- from $9.70 to $9.90 the previous range had been $9.90 to $10.10 a share the lower guidance range, $9.83 from the street. talking about inmarket demand being strong but supply chain,
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raw materials, all things taken into consideration the stock up right now about 1.2%. >> let's talk taxes right now as democrats move closer to implementing the billionaires' tax or are they? there are moves being made already to game the system and robert frank joins us with the a breakdown. you've been working the phones, robert. >> reporter: yeah, andrew. lots to work through here. we hope to get the details of the tax maybe today or tomorrow but as you nementioned, accountants already looking at loopholes. the first set of work arounds is focused on trusts so billionaires could set up trusts to reduce our eliminate their tax. they would likely give up some voting power in that structure but the beneficiaries could be family members so the ownership would still be protected then there's charity the tax applies to those worth $1 billion or more, since half of billionaires in the u.s. are
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around 1 to $2 million, they could gift assets to their foundation or a charity to get them right under the threshold, they get the tax deduction and avoid this annual tax. and then there's staying private. the annual tax as we've heard about right now would only apply to marketable securities like stocks or bonds, closely held assets like private companies, art, gold, property would not be subject to an annual tax, subject to the tax once it's sold so you can see people shifting to private assets or even a wave of go private deals where billionaires would sort of see their companies go private and avoid that annual tax. and andrew, you know it, wall street already working on products that would allow corporate founders to borrow more against their stock or buy derivatives that drive the upside but help limit pay on
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this annual tax. >> the question i would ask you on that last piece is, do you believe the lawmakers are sitting there, this week, hearing about these types of efforts thinking, okay, before we do this, if we're going to do this, we need to close those loopholes or figure out how to do this? >> reporter: i doubt it. this is coming together so quickly, and if you look at the ron wyden plan, the blueprint of this, it is a very different tax. it imagined looking at households or pass throughs with 10 million or more so they weren't focused just on the top. and we just don't know what this thing will look like again they're put thing it together in a matter of a couple days because they suddenly needed revenue so i guarantee you, basedon past experience, they're not looking at trusts, they're not looking at charity or foundation work through this. they're not looking at how wall street could structure a product to get around this hopefully by the time it becomes
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a bill, maybe those things will be in there, but i know talking to accountants who help advise congress on these taxes, that right now they just don't -- all this is coming together too quickly. >> robert, two questions one way to get around all of that and make sure none of these loopholes would stick would be to make it retroactive so nothing you do this year would matter i don't know if there's talk of that and second is it constitutional, will it be challenged because the 16th amendment says that congress can go ahead and impose any sort of income tax they want, but this is a wealth tax, it's not income. >> right so on the constitutional question, i spent a lot of yesterday talking to constitutional experts and tax lawyers, and on both sides really there's an argument to be made that income of any source can be taxed the question will come down to whether a court will decide that unrealized capital gains are income or if they're not, then it's
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going to be tough to get this through the supreme court as a constitutional tax you know, as far as your other -- what was your other question >> if they want to get around any potential loopholes why not make it retroactive? just like we thoughtmaybe thes other things would be retroactive this year, meaning if you were going to set up a trust or move any assets this year it wouldn't matter. >> if they made it retroactive they would lose out this years but you could next year and years going forward set up a foundation or trust or those things but given that biden implied retroactivity and so did the house for the capital gains increase and the step up, you could see them considering that for this as well >> robert, thank you i think we're going to hear a lot more about this. when we come back, a ton of big interviews coming your way this morning we have the ceos of hp, eli lilli, raytheon and cisco. but the chair of the national
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welcome back, everybody. a panel of outside advisers to the fda is set to meet today to consider whether to approve pfizer's veen for use in children ages 5 to 11 years old. if approved the shots would be first to be made available in the united states for children under the age of 12 and make another 28 million people here in the united states eligible for vaccination. a new book provides insight into the race for the vaccine for covid-19 a new book out today called "a shot to save the world, the inside story of a life or death race of covid-19," greg welcome. good to see you today. >> thanks, becky. >> let's talk about this this is a miracle of science that we all awaited and were so
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profoundly changed by watching this race happen now we moved on to say this is common place but what happened, what took place to get that vaccine in such a short period of time was anything but. >> yeah. people are a little too close right now to appreciate the miracle of the vaccine it's the greatest achievement, you can say the same thing about finance and wall street too because they played a role as well to me the story of what went right is interesting as what went wrong you read and heard about what went wrong in the past year or two. but what went right is just as impressive and surprising twists and turns that i learned along the way writing the book including how close moderna came to not pulling off the vaccine they had support as recently as may 2020, they were running out of money they went to the gates foundation, merck, no one was interested in working with them and they had to turn to wall
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street, particularly morgan stanley. >> what surprised you the most, when you look at how long it used to take to get a vaccine done, why do you think the companies were able to move quickly and regulators were able to move the barriers there in the past with the obvious note being the pandemic that was raging. >> operation warp speed helped the fact they were doing production while testing it's important to remember that these approaches, the vaccine approaches, the mrna and the others i write about as well people have been working on that research for decades i try to emphasize that in my book there were all kinds of challenges overcome by scientists, small break throughs along the way that you and i maybe weren't aware of but in the labs they were making progress and it wasn't really apparent until 2020, on the eve of the
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pandemic, these approaches were pretty close to being done the executives, the researchers, scientists within the companies, the government labs were confident about mrna, the protein approach so it's important to remember it's also reassuring that these weren't produced overnight, if anything it took decades of frustration on the part of interesting, quirky, scientists i write about. >> the other thing this portends what else can be done at this point. if we know mrna works for this, what else could we potentially combat and take on with the same sort of ferocity >> it's fascinating. one could look back on this period, as awful as it's been as producing some good for the world. people like scientists at beon tech are confident about the future scientists within those comments are more circumspect but
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optimistic about things like cancer, and turning on the immune system for the vaccines maybe we can turn it off and take away some of the ills that harm some people, auto immune and others i'm excited about the future in some ways maybe we entered a new era. and find it fascinating who's behind this. it's not the vaccine giants, merck, gfk those guys didn't produce the vaccines it's companies that we wouldn't -- many of us didn't know about much a year ago, beon tech, moderna, novavax >> we find it fascinating too. the book is called "the shot to save the world the inside story of the life or death race for the covid-19 vaccine" thanks for your time. coming up on the other side of this break, the ceo of hp inc. on the global ship shortage
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and the log jam hittg minsoany companies. we'll break it all down with him right after this
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this morning later this morning, hpce enrique is participating in the quarterly just conference call allowing investors and the public to ask ceos about non-financial investments and ranked 16 in the just 100 rankings of noorn 900 companies it attracts. first hcbo here with us to talk about spli upply chain challengs and more great to see you this morning. we're all trying to understand what the supply chain actually looks like in practice on a day-to-day basis
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why don't you just tell us how you're seeing it across the board, and maybe we can get into the chip shortage itself >> thank you, and good morning and thank you for having me here first of all, i think first thing we need to understand is with the current shortages the first thing is demand. within the last year and a half, because of changes covid created, demand for supplies specifically increased this is drives some of the shortages we see today shortages are coming from components that in many cases are not available for us and many other industries, but also because of the situation in many countries where covid has been very tough and factories have been closed. this is really what is driving the current situation. >> so you think it's as much a demand issue meaning demand is so strong we would have had these issues, irrespective of what seems like a, clearly a problem when it comes to semiconductors, for
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example? >> i think clearly demand is the first driver of this problem if we think about pcs today, the market this year is going to be 40% bigger than what we were projecting two years ago this is really driven by people working from home, kids that have been learning from home, and it is hard for certain industries like semiconductors to respond fast to these types of change. this is really driving the current situation, and from one side it is a good problem to have, but at the same time really having to manage that and having to respond to customers that need those products is a stressful situation for all of us. >> so two semiconductor questions. one is, to the extent you have any forecasts here for us when do you think it eases? does it ever normalize, and, two, we have a big policy question i think in this country and perhaps in the west more broadly. which is to say --
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can we manufacture the semiconductors ourselves either in the u.s. or in europe on elsewhere not in taiwan? >> sure. so first of all, we think that this situation is going to last at least through the first half of 2022, and what happens in the second half is going to about matter especially of demand. not only in our industry but in many other industries that are using the same components. but we don't see an easy way out for this, because it takes time for companies to invest to create capacity of semiconductors, and in many of these areas there has not been investment for several years to your second question. we think that it's important that we create semiconductor capabilities in the western side of the world we have learned during the last-year and a half going through the pandemic is that we have to manage dependency on our specific area of the world when
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we talk about semiconductors and other manufacturing areas and rebuild some of these capabilities in north america and also in europe >> but is that doable? and how quickly is it doable i know there's a hugest obviously. there's annest here in the united states to do this, but some people say you can't even really physically do it. it might take three to five years to actually build these fabs >> it will take three to five years, but is certainly doable and i think it's an objective that is important to get as a country. i think it is critical that we have control over some of these technologies, critical to rebuild these facilities here for many reasons including national security. >> you are going to host this call today and one of the issues is esg something i know you've taken very seriously and are now building a number of products
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around esg and trying to be sustainable talking about laptops, including recycling aluminum dragon top made out of i think it's ocean-bound plastic how much moreexpensive is it t make those products, and do you see users, customers, saying, i want to buy those products because they're made out of those materials? >> yes our goal is to become the most sustainable and, yes, technology company. we have made esg one of the top priorities of the company. both because we think it is the right thing to do but also because there is a clear business need and a growing business need. we see demand from customers, demand from investors, demand from partners, and when we create products like the dragonfly that you explained, we clearly see consumers and business company really value the impact that these products will have, and become an
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initiator for us. >> are you able to charge a higher margin for those products >> we are, and let me give you an example we, for the last 20 years, we have been publishing our stability report, and in last two years we have shared that more than $1 billion per year has been created and has been driven by our programs because of being able to participate in qs and because of stability advancement we've been making. >> very cool enrique, great to see you, and we should tell the audience they can listen to the quarterly just call with enrique at 10:00 eastern time this morning. "squawk" returns with two big hours ahead.
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we all have the strength to see what's possible. it's up to us to unlock it. tonal. be your strongest. the earnings parade continues. big names reported results this morning ages they await big tec. and democrats spending plan looking to strike a deal this week, and warming up to a billi billionaire's tax. we'll debate how it should be paid for or if it should even exist. head of the national transportation safety board
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criticizing tesla for not cr addressing safety concerns the chair will join us live. second hour of "squawk box" begins right now. good morning, and welcome back to "squawk box" right here on cbs. >> announcer:. i'm andrew ross sorkin along with becky quick and joe kernen. look at equity futures at this hour two and a half hours before we're set to open. a lot of earnings to come. dow looks like it will open higher, 25 points higher right now. s&p up about 19 points and nasdaq looking to open higher, about 8a p85 points. joe? >> a huge day, earnings, we've alluded to get to dom chu with this morning's mover. >> good morning, joe, becky, andrew first, a huge move higher for
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3m, a dow component adding positivity the market's already at record highs for both s&p 500 and dow. a near 2% gain translates into roughly about 25 points to 30 points for the dow at opening bell. 3m coming out with better than expected results driven in part by strong results in consumer industrial businesses. 3m, dow component driving things elsewhere, in terms of earnings. a slew can't go through all the ones with sentiment on the market so far, general electric, u.p.s., hasbro as well ge up about 2% pre-market. u.p.s. up about 4.5% and hasbro 1 quan rter of 1% as well hasbro warns of supply chain issues hitting holiday sales of course, watch what's happening with tesla newest member of the trillion dollar market cap club those shares off just fractionally in the premarket
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trade after positivity around that deal signed with hertz to get to 100,000 electric vehicles for fleet late other than. off fractionally, year to date basis, becky and andrew, 45% gains. big day for catalysts. back to you, joe. >> yes, dom. thank you. we're going to move. in the move. thank you. >> nice to see. when we come back, eli lilly ceo joins us on the coronavirus treatment and their latest quarterly results. before we head to the break, though, a check on the markets dow futures up 125 points. earnings rolling in and most numbers better than expected s&p up by about 18 nasdaq, about 84 and this after an update from the mkearts yesterday. "squawk box" will be right back.
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eli lilly third quarter results crossing a few minutes ago earnings came in at adjusted 194 a share. 4 cents below street expectations, although revenue was higher than forecast the company's raising its full year outlook joining us now to break down the numbers is david ricks, ceo and chairman of eli lilly. let's talk through the number. a miss in terms of expectations
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for earnings per share on adjusted basis for this quarters, but the full year, really see additional strength is that because of the covid-19 drugs 0 ut there and demand for them >> in part overall a strong core business performance in q3. i think the miss versus the street, becky, was really driven by tax paid more tax than we thought we would, but the underlying business both for the special therapies made for covid, antibodies along with the rollout of our largest products in diabetes, oncology and other areas continues to be strong that's the top lime beat gives us confidence in our future and we're reinvesting that do projects s we're excite about for the future of the company. >> and diabetes, talk about youg >> absolutely. the most valuable projects in the industry now probably are a
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drug, a next generation diabetes therapy. and standing out here is both the depth of ability to control glucose and for a very long period of time pap pob for so many people who suffer from diabetes but also control weight in a profound way 15% weight loss versus placebo in long-term studies, a long-term driver of that disease. submitted that in q3 with vouchers a ticket that speeds upreceipt view and hope to have that approved first half of next year really exciting project. the other one you mention is aulzhe alzheimer's. amyloid clearing -- antibodies as well. working on alzheimer's a very long time and very confident that this mechanism will work, and we want to take advantage of the accelerated approval pathway the fda's opened up and start
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add rolling submission here, and also today announce add head-to-head comparison to a drug, the product approved earlier in the year demonstrating our antibody, faster and deeper what we expect to show. >> so many questions about the alzheimer's pathway cleared by the fda. whether it should have happened or not obviously, it provides a huge amount of hope for patients and their families has been meeting influence of the study and things you've been saying, clearing the plaques still a question whether that's sufficient whether that's enough to stop or slow or even reverse alzheimer's in some questions. when do you think you'll have answers on that? >> that's right. we agree there's still open questions. the standard to prove that definitively is in large placebo-controlled studies that are blinded that go the distance, that have a clean hit on the primary end point we had earlier this year a phase two study, a smaller study with
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a clean hit on the primary end point, and in a pretty convincing way, at least to us every measure you'd expect of improvement went the right way we didn't power to show a difference on everything but a small study. 150 patients we're doing a study basically five times that size now, and we expect those results in 2023 we announced on this earnings release as well. finished enrollment. now it takes 18 months for patients to observe them, and see what benefits they gain. meantime, though, as you point out. there are patients who will have progressed beyond the window these drugs are useful if we wait that long part of the logic the fda applied, and, of course, we believe the totality of the evidence amyloid reduction will improve the lives of patients aalzheimer's disease, a horrible condition and nothing dwlaet slows it down, unless we use these amyloid drugs. we plan to take advantage of that accelerated pathway at the same time, very soon
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after, really, probably six, nine months afterward, prove definitive hi the drug for alzheimer can arrest the progression of this disease. >> your antibody therapies, incredible demand for that as dealt talta wave rolled throughn certain places now hearing about drugs, like a pill that would be available to potentially alleviate some impact of covid-19 of people if taken within an appropriate time frame. will that decrease demand for antibodies ar something antibodies are here, an even better treatment for this? >> it could. when we got into this we wanted to be useful we're good any other making andy bodies to drug targets and one of the fastest and most probable ways to come up with a drug for any new viral pathogen, create an antibody to it. it's the natural way your body and mine respond top disease
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anyway that's what we did and launched the first in the world last fall sales in q3 and fortunfortunate because the delta wave swept across the country and these were used in many patients it's promising peers came up with oral techniques to be used in a similar way the largest opportunity for that would be less sick people or less at-risk people as well as the global demand where we have an advanced health care system as does europe and can use antibody therapies but in india and subsaharan africa it's been very difficult to help people because it's an iv infusion. when our industry puts or mind to something we can solve really important problems one is coming up with medicines for covid-19 and we delivered
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and will continue to for americans and for everyone in the world. that just shows the worth of ow industry. >> a lot of companies in their press releases talk about all the things affecting so many companies. whether labor issues, finding enough people to work on things or higher costs or supply chain issues glanced through quickly and didn't see mention of that in yours. is that because it's not a problem? >> it is a constraint. i think in most -- most importantly the lowest cost inputs to what we do, make medicines, are the ones most constrained. of course, at the beginning of the pandemic may be different from other parts of the economy. a lot of the medical components ramped up pretty aggressively, because we forecasted and started forward purchasing, expecting for covid therapies, for vaccines, you know, a surge in medical glass, these types of things that supply chain had a little head start what we're hearing in other parts of the economy, but there are low-cost components that are constrained i think also labor is growing, a
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growing challenge. recently we've increased hourly wages. we're a big employer here in indiana, but we have a lot of factory sites here, but people have options i think employers need to respond to that. i think that has been an impact, although it hasn't affected off underlying performance. >> talk again. you are raising guidance for the full year above what you earlier had given and above what the street's anticipating. the numbers are 795 to 805 you see it on an adjusted earnings per share basis for the full year. i think the street closer to 791. what is it you think will put you above expectations or above what you were looking for? >> a revenue beat story here in q3 and we think continues in q4. the underlying business, especially newer products, make up 16% of the company and grew 35%. these brands like trulicity and the breast cancer drug are
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driving the company forward, and that new innovation, we see continuing q4. in addition to that you mentioned we did see some demand for covid medicines and expect a little more of that in q4 and that drives our confidence in this and we're investing aggressively 25% of that going back into r & d. a bright future ahead here for eli lilly. >> stock um 1.1% looks like. good to see you this morning thank you for joining us. >> thank you, becky. coming up, the tax scramble in washington. lawmakers looking to are ways to pay for the president's social spending plan. plus, tesla worth more than the next nine largest global automakers combined. the company's self-driving feature still in question by the ntsb phil lebeau joins us with a very special guest all about it right after the break. later, don't miss this raytheon's ceo greg hayes
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♪ oh, it's all right ♪ welcome back to "squawk
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box. market value yesterday, ceo elon musk receives a scathing letter questioning safety of its self-driving mode from the national transportation safety board. straight to phil lebeau, who's got a xw"squawk" exclusive for . phil >> chair of the national transportation safety board, chair, thank you for joining us this morning i want to talk about this letter that you sent yesterday to tesla ceo elon musk where you essentially say, look, you've got to do more to put in safeguards for your full self-driving technology. what specifically worries you about their sfd technology >> good morning, phil. thanks for having me on the show my biggest concern is that tesla is rolling out full self-driving technology in beta to, on city streets with untrained drivers and they have not addressed our recommendations that we've issued agency a s a result of ns
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tesla crashes. >> have you discussed think personally with elon musk? had a phone call or meeting face-to-face, here's a, b, c, what needs to be done? woe haven't you done this? >> mr. musk and i have never met and this is not mr. musk and it's certainly not about me. the ntsb and i specifically meet people on the worst day of their lives. after a crash. after they've lost a loved one that is part of our job at the ntsb, and our job is to determine what happened, why it happen and prevent a crash from happening again. we conduct a thorough investigation and at the end of that investigation we issue findings of probable cause and safety recommendations and then we work extensively with the recipients of those recommendations to ensure they're implemented, because it's not until their implemented safety is truly improved in this case, we haven't
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received in response from tesla in four years, yet we've reiterated those recommendations numerous times. >> let's be clear. tess le does tell owners of its vehicle whether using autopilot or full self-driving beta, look, you have to be vigilant and pay attention when you are behind the kwwheel. a tweet from elon musk a few weeks ago saying fsb beta system at times can seem so good that vigilance isn't necessary, but it is. also any beta user who isn't super vigilant will be booted. are they not doing enough? i mean, he's telling people, you are need to be engaged when behind the wheel that's not enough? >> oh no that's not enough. it's clear that if you're marketing something as full self-driving and it is not full self-driving and people are
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misusing the vehicles and the technology that you have a design flaw and you have to prevent that misuse, and part of that is how you talk about your technology it is not full self-driving. unless you're saying the car is actually, the driver's actually driving the car, which in this case, it isn't full self-driving technology it's misleading. >> with all due respect, chair, you guys investigate accidents and as you mentioned you work with the recipients of the information that you gather from the accident about what can be improved, what safety enhancements can take place, whatever the vehicle might be, but it's nhtsa, the national highway traffic safety administration in charge of regulating automakers and we've heard very little from nhtsa schu talked with your counterpart and said, look, i'm out here pounding the table more needs to be done with full
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self-driving technology and we're getting crickets from you guys >> we work with nhtsa extensively to get them to implement our recommendations as well i have spoken several times with steve and with others at nhtsa, and our staff also regularly meets with nhtsa about our safety recommendations i'm just happy that they finally are going to have an administrator of the agency after -- after not having an administrator for so many years, and they're going to have true safety leadership. so i'm excited to work with nhtsa on what we can do to address this issue and other safety issues we've identified from our crash investigations. >> but not to belabor the point, chair, some look at this interview and will say, look the ntsb is not the regulator. end of the day sounds like empty threats in terms of tesla do more improving safety
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implementation of your technology i don't want to say these are hollow words you're sending here, but if you are elon musk and you're tesla, do you listen to the ntsb or sit there and say, look, it's when the nhtsa coming at us to be concerned >> majority implemented by recipients heard of seat belts, air bags and every other technology on a car it's because the ntsb advocated for it for numerous years. that's the case in all modes of transportation we couldn't see the safety gains in aviation, which brought about nearly a decade of no fatalities in major airlines. and pipelines and transit and rail, all of those safety improvements, i spent 20 years advocating for technology to save lives on our nation's railroads. that was implement add year ago. finally the ntsb called for that for 50 years that is no different
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we owe it to those that were impacted by terrible tragedies to continue to work on their behalf and the behalf, on behalf of others in the public to ensure that technology is safe, and safely implemented. >> chair, a couple last questions and then we have to wrap things up first of all, have you ever been in a tesla in full self-driving beta mode or full self-driving technology where the vehicle has been doing bulk of the driving >> yes actually -- and i want to thank tesla for this they've worked with our investigators on all the investigation and have been very forth-coming with data and information and i visited tesla at their fremont facility and met with them about safety and had a tour of their facility and we went out in a vehicle under
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autopilot. >> and just to be clear. are you investigating, your agency, i should say, is it investigating any full self-driving crashes or beta crashes or no crashes that you're investigating when it comes to fsd >> currently we have ten tesla investigations some of which are a result of fires, and we have three or four that are currently open right now, and still being investigated. >> and are those fsd or something else >> we will have to see where that investigation takes us from the information that we identify >> chair jennifer homenedy, thank you for joining us this morning. chair of the national transportation safety bore guys, back to you. the letter yesterday was interesting. did not stop shares of tesla from moving higher past $1,000 a share, a $1 trillion market cap for that company guys, back to you. >> all right, phil, thanks.
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more big interviews still to come we'll hear from raytheon's ceo hayes and talk supply issues and really cool stuff raytheon has hypersonic air-breathes defense systems that just blow my mind, plus airbus america's ceo jeff knittel. stay tedun you're watching "squawk box" on cnbc. ♪ ♪
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welcome back to "squawk box" this morning democrats scrambling to find a way to fund the president's tax bill lawmakers looking for other revenue razors warming up now to an idea of a billionaire's tax. debating legalities of a billionaires tax professor of economics and public coles and tax policy co-lead at miller and schibler, former tax counselor for the house ways and means committee
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good morning to both of you. stephanie straight up, is it constitutional >> you brought an economist on not a lawyer, andrew so i'm not really going to be able to speak to the legality of it i will say that a number of proponents of this are themselves lawyers of course, senator elizabeth warren is an attorney and so she seems to think it is legal, and i'll try to stay in my lane and trust that those with the legal expertise aren't pushing something that is, you know, plainly not constitutional >> okay. talk about the economics in a second, but lauren, do you want to speak to the policy implications legality here? >> sure. i mean, i think what's really at issue is whether this tax, taxes flk and the question of what is income, that brings into question the legality, the constitutionality of the proposal what is problematic is that we don't have legislative text at this point so it is a bit speculative to
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see it is or is not constitutional, but what the concerns are really center on the desks of income and what is actually being taxed. >> what's the chance, though -- i mean, i would argue to you, if there's almost 100% chance this goes to court, the question is, does it go to the supreme court and how quickly does something like this wind its way there >> ultimately it would end up in the supreme court certainly, but it will take a long time for any of these claims to make its way there, and i think that the real question is, what does the actual text of the law look like and on what basis would the constitutional challenge be brought? really, we have to look at, is this a wealth tax in the loosest sense of the term? or is this something else? another way to tax capital gains, and whether it's the latter, it still calls into question constitutionality.
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>> stephanie, how much money do you think can genuinely be raised by doing something like this and what are the knock-on effects planned or unplanned >> i think the estimates are that this tax would bring in something like $200 billion, $250 billion so it's not nothing, but it doesn't come very close to closing the gap in terms of offsetting all of the spending democrats are looking to do. andrew i don't know. i'm sure there would be some unintended consequences. you're already hearing people like senator romney talk how billionaires will simply respond by, you know, moving income into things like fine art and so forth. i guess to that i would just say, well, you know, watch out, because democrats have a wealth tax plan for that maneuver as well. >> lauren, back to how it's kind of complicated, how it's certainly to get challenged at the supreme court and that could
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take some time this is something joe manchin was talking about. he doesn't think they're all that near to having legislation written. sounds like it would have to be legislation that would have to be carefully crafted making sure it withstands a test like that is this really something you think a deal gets done by end of this week? >> i think it's very hard to imagine seeing legislative text by end of this week. we have to remember that senator wyden's proposal was unveiled more than two years ago, and we still have yet to see legislative tax with regard to what's commonly referred to at his market-to-market plan. so i am sure that they are working on it, but, you know, once it's unveiled, there's still time, there still needs to be time, for it to be vetted both within the caucus, by other lawmakers and also by the public so we know that we are on a compressed timeline. the deadline is essentially the end of the year, and there's a lot of work to do between now and then to make sure this is
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something that can not only pass the constitutional muster, but also garner support of other members of the caucus. >> stephanie, if we could make you king or queen for the day and you thought there was way to raise money from the highest income earners but not this way, is there a different way you would do it? >> yeah, sure. i think, you know -- you've talked about this for months on this program i think the lowest hanging pay for fruit is the enforcement that is something that i think the american people clearly understand we shouldn't have tax cheats, shouldn't have very wealthy people hiding and failing to disclose income. they ought to be paying tax on the irs commissioner estimated that there's as much as $1 trillion annually out there that isn't captured that people ought to be paying in federal income tax. i think, you know, providing more resources to the irs, stepping up enforcement, that is a lot of money the estimates are it's in the hundreds of billions over the first ten years, and then you get into the trillions in the
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out years. so that's the low-hanging pay for fruit here, if this is the game that lawmakers are committed to playing. >> the other thing we keep hearing about and just heard it from robert frank, maneuvers wall street might create to get around that. i mention that because i wonder whether the $250 billion we're talking about potentially, this raising, it even gets to that, if folks start taking loans against their stock, moving things into other places i'm not sure how it's going to happen. steph? what do you think? >> i think that if we're worried about that and it's reasonable to worry on that, tightening up the tax code in other ways closing the carried interest loophole, ending step-up of basis. those are ways to sort of counteract maybe some of what might happen if a tax like this were to pass >> lauren ponds, explain this. why have democrats who -- i know
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there's a debate whether they really do control all three parts of washington right now, but why have they not tried to do things like carried interest, do you think >> i think it's difficult. i mean, we know that margins are tight within the party, and they have to get something across the finish line that everyone can agree on, and it doesn't seem like carried interest going to be the provision that is able to gather, or garner support of the entire caucus. seems like -- right now -- >> does that mean that democrats are owned by private equity and venture capitalists? what we're saying? >> i wouldn't go that far. it's important to realize that there are various interests of the members of both parties, and it's really -- it really cull cs to a reconciliation posture, not regular orderser and they've got to get something across the
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finish line everybody can agree to doesn't look like carried interest is it. >> we have to leave it there for the conversation and debate. see what. coming up, a couple stocks to watch and then greg hayes of raytheon joins us. reminder, you can always watch us live on the go on the cnbc app. we'll be right back. what the world needs now... is people. people who see flight a little bit differently. so it takes less fuel to bring people together... ...and make faraway places feel a little closer... ...with engines that power planes more efficiently. because seeing a better-connected world
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welcome back to "squawk box," everybody. futures this morning indicated up right now dow futures up by 110 points s&p futures up by 18 nasdaq indicated up by about 85. a lot of this because of the strong earnings reports we've been hearing today in fact, dow component 3m reporting earnings of $2.45 comparing to the $2.20 consensus estimate with revenue coming in above forecast as well ge reported adjusted earnings, share of 57 cents a share. consensus for 43 cents ge's forecasting full-year profit of $1.80 to $2.10 a share comparing with $1.94 consensus estimate, that stock up by 1%. u.p.s. reported $2.71 a share
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beating $2.55 consensus and revenue beating the street's forecast as well on that stock right now. check it out up by about $ 4. ubs reporting a profit for the third quarter up from $2 billion in the prior quarter, well above what the street expected that stock up by about 10 cents. when we return, raytheon ceo greg hayes is our special guest. then, top of the hour, facebook investorses shrugging off the company's current fallout after days of negative headlines, facebook released better than expected third quarter earnings while revenue missed expectations. reaction to the quarter and talk about the recent document dump "squawk box" will be right back. make fitness routine with pure protein. high protein. low sugar.
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welcome back to "squawk box. live from the nasdaq market site in times square. raytheon much better than expected results. $1.26 versus an estimate of $1.09. also boosting full-year guidance now. for earnings per share looks pretty good. 410 to 420 up from a prior 385 to $4. i want to talk so much about this i want to talk about the revenue guidance, too, greg, but, greg
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hayes joins us chairman and ceo of raytheon. and i blame you for putting in the second paragraph about the scram jet powered hypersonic air-breathing weapon concept you had an unbelievable completion of testing, and it works, and i think you even sent us video so my inclination -- so excited about that but we got to talk about these results, which are, are solid, and i think, does it indicate commercial air travel is back and demand is back for pratt and whitney? >> first of all, good morning, joe. good morning, all. i think absolutely we look at commercial air traffic and you know, folks are traveling again. especially domestic here in the u.s. domestically in china and europe with reopenings around the world, starting to see international travel come back, and all of that bodes well for both collins arerospace and prat whitney and saw it in aftermarket numbers. up strongly in the quarter really, the basis for taking up
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guidance for the year is the strength you're seeing in commercial aftermarket. >> before we get to the revenue number, which i think if we're going to find supply constraints, supply chain issues, that might be where we saw it, because the third quarter revenue is a little shy. 16.219 versus 16.399 and then for the year, you had been at 64.5 -- i'm sorry. 64.4 to 65.4 and now at, narrowed that down to 64.5 exactly. so it's on the low end of where you had been is that supply constraints that we are seeing now? >> so there's two things, joe, i would point out. one is supply chain and people availability as we think about that, that's probably for the full year going to impact us by about $400 million on the top line. good thing, mostly on the defense side we will eventually get those sales back when we get the products in the door or the people hired, but it's certainly
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a constraint right now also we're suffering a little on the commercial side with the slowdown in production of the 787 down in charleston. >> right. >> i think you have the issues boeing's had are well known, but that's a big impact to collins. >> the -- while we're on this subject of just demand, there's -- some controversy about airbus airbus -- wants all these engines and just assumes they'll be able to get -- even the less oless or lessors, you're going to met this up. is pratt and whitney going to be able to live up to what airbus wants or are you pushing back? >> look, it's -- it's a great situation to be in, where there's a lot of demand for a great airplane which is the a320 family and the head of airbus is trying
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to press advantage over the 737, trying to ramp up production i think they'll be somewhere in the high 40s next year up from i think 43 a month this year on their way, they hope to reach 75 it's not clear to us there's actually demand for 75 a month we've actually facilitized for what we call grade 63. what the pique was back in 2019, but if, indeed, we're going to go to rate 75, we will support the customer, and, again, it's a high-quality problem to have. >> i was -- earlier i said, if we have trouble stocking toilet paper on the shelves with supply chain problems, how many chips go into your aerospace components and aftermarket components in pratt whitney and how are you possibly navigating through the supply chain issues right now, and how difficult is it and how did you do it? >> so interestingly, we've got about 13,000 products suppliers.
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we have an organization that goes out and does supplier quality assessments. we're on top of it with suppliers. the fact is, you know, there are a lot of chips and a lot of our different products, from the electronic engine controllers to the radios and the com systems, to the missiles that we make in our missiles and in our missile and defense business so we're not unimpanct bud we've been able to manage it the good news, the chips going into the auto industry and consumer electronics are 7 nanometer chips or micro processors the aerospace industry is predominantly 40 nanometer this is last generation chips which are easier to come by. so where we have seen some shortages of some components, bringing material in ahead of time the other thing is we do have long-term supply agreements that cover us in the short term and we've also been able to go out
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and secure additional supplies so we're going to work it. again, it's all part of that supply chain number. $400 million in revenue this year the chips are a small piece of that >> so in your press release, you got the first paragraph, it's like, i don't know, four lines talking about how great demand has been and how good your performance is then you get right to it it must be important to you. and i had to look it up and then i -- after i looked it up, i was like, whoa anyway, scram jet is a supersonic ram jet hypersonic air breathing goes five times the speed of sound. so we could get to where we need to be from a further place away, even quicker than if we were closer with this thing the reason you call it air breathing is i guess rocket fuel, you need the oxidating agent with the rock et fuel.
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in this you don't. you can get the oxidating agent. and it must be unbelievable technology and five times the speed of sound. >> right so this is the first successful demonstration of a hypersonic weapon system. we were fortunate to partner with northrop on this wirth the scram jet engine the beauty of a scram jet, going so fast through the atmosphere you no longer have to run a compressor to compress the air and then ignite it the air is being compressed by the mere speed of the vehicle itself and it becomes self-sustaining. so it's an incredible technology it's not new but it's the first time it's been successfully demonstrated here in the u.s i tell you, though, joe, we are behind the chinese we're behind the russians. and i think this is a great first step but there's a lot more work to do on hypersonics on the offensive side but more importantly on the defensive
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side >> the announcement from china a couple of -- when was that it wasn't even months. i think it was weeks that wasn't -- that was actually went into orbit. how does this get us closer to narrowing the gap between what they're talking about? >> so the report in the "financial times" of the launch of the chinese what is called the hypersonic glide vehicle this is something you launch into lower orbit and it bounces along the atmosphere the reported speed was something like 22,000 miles an hour, which is incredible. again, i can't really comment specifically on it i believe that's still all classified but clearly it's a technology where the chinese have an advantage today. >> okay. in this -- what's five times the speed of sound that's nowhere near 22,000 is it, but we're narrowing -- >> so think about that as 3500
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miles an hour. >> that's what i was saying. so we have a ways to go. when could you -- would raytheon commercialize this >> well, it's not a commercial product. it's going to be a military product. >> i mean will you build it eventually with northrop and sell it into darpa or whatever >> eventually this will go into the air force inventory. we're working with darpa and the air force research lab eventually it will go into the stockpile of the air force but it also may be on ships. we're still a couple of years away, but we are ready to begin production as quickly as we can get funding to do it >> going back to just since we, you know, i was excited about that what else do you need to crow about in terms of business performance or employees that you're able to hit -- you were supposed to do $1.09
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you did $1.26 with all these other issues what else could you highlight about the quarter? >> there's two things i would say. one is, first of all, hats off to our people. we've been able to navigate through this covid pandemic quite well we've got over 100,000 people coming into the factories and offices every day making sure we meet the customer demand what i think was most impressive is as the revenues have come back on, the commercial aeroside, the cost has not so you see incremental margins, collins aerospace business, 120% good incremental margins at pratt as they start shipping engines again. so the key here is focusing on operations the top line will come back. we have to keep our focus on controlling costs and making sure that we can meet the demand as it does come back so far, so good. >> i'm a little disappointed it's not commercialized. can't you put a scram jet on an airbus and get me to london in
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12 seconds or something? that's not going to -- you're not going to do that, i guess? >> you probably ought to talk to elon or jeff about that. they're more into that we're focused on the military applications >> are you mandating for people to come in do they have to be vaccinated? that got somebody's attention. andrew is ready to go. the hypersonic doesn't do it, but this one go ahead >> so the executive order that president biden signed back in september required all federal contractors to have their workforce fully vaccinated by december 8th we had actually gotten out a week ahead of that and mandated that rtx be mandated by january 1. so today we've got about 83% vaccinated about 6 or 7 more in the process of being vaccinated. and about 3% who said they won't be vaccinated. and another 3% who have asked
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for either a religious or medical exemption. so we're going to be faced on december 8th with a choice we're going to potentially lose several thousand people who refuse to be vaccinated. now this is a tough thing, but we are preparing for it. we're out hiring today we understand who is going to get vaccinated and who is not. but frankly it's the right thing to do. we need to have people vaccinated to get this pandemic under control. >> greg, great having you on promise you'll come back and update us on my hypersonic scram jet. >> we'll do that, joe. >> thank you, greg hayes, ceo of raytheon >> thanks, joe thanks, everybody. when we come back, facebook shares seeing a pop in the premarket trading despite the recent document dump because of the earnings they put out yesterday. that stock up about 1% we'll talk through the saerngs and our exclusive interview with chuck robbins joining us to
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talk about supply chain issues what's happening in the workforce, the global chip orgenducmoshta a mh re
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♪ say it's all right ♪ ♪ say it's all right, it's all right ♪ ♪ have a good time 'cause it's all right ♪ ♪ now listen to the beat ♪ ♪ kinda pat your feet ♪ ♪ it's all right ♪ ♪ have a good time 'cause it's all right ♪ ♪ oh, it's all right ♪ good morning
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earnings really ramping up today. new numbers from 3m, u.p.s., general electric and more. a trillion-dollar market cap for tesla. electric carmaker's value stretching to 13 digits. elon musk's net worth soaring by tens of billions of dollars. and facebook shares on the rise this morning despite volumes and negative press in recent days and a sales hit from apple's new privacy app. everything you need to know about a big quarter for the social media giant the final hour of "squawk box" begins right now ♪ good morning welcome to "squawk box." live from the nasdaq market site, i'm joe kernen with becky quick and andrew ross sorkin you're up in like a half hour.
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would that not make life a lot easier even for davos, right? when we head over there. right into -- right? >> what happens to your cheeks when you're flying that fast >> i was going to ask what the g-forces feel like but we could ask shatner. he's 90. he was fine. u.s. equity futures. we'll take a quick look. technology is amazing, though, isn't it unbelievable there you see. nice up 116 if you're long, bullish new highs now in the s&p and the dow jones. nasdaq indicating up 84 points or so. treasury yields which started mov moving, remaining the upward momentum now we're at 1.62. and bidtcoin holding in this morning. all the corporate earnings out there, there has been a bit
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of a parade. u.p.s. jumping on better than expected results stronger e-commerce demand that stock up 4.5% in the meantime, general electric posting a mixed quarter with a revenue miss but a profit beat ge also reported better than expected free cash flow and that stock up by 1.2% then 3m is down by about 40 cents. it's a decline of almost a quarter percent. that comes despite the top and bottom line beats for the latest quarter and some increased demand in both its consumer and industrial segments. the company did lower the top end of its earnings per share guidance for the full year from 9 opinion -- 9.70 to $9.90. then there's tesla in the $1 trillion market cap club shares surged more than 10% on news hertz is going to be buying 100,000 of its cars. the stock this morning down just slightly down by just under 1%.
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we'll talk much more about tesla tomorrow when longtime shareholder ron baron will join us on "squawk box. we'll talk about the full driving component and a lot of other issues plus other stocks in this portfolio. and eli lilly reporting mixed third quarter results with profits missing analysts estimates but revenue beating the consensus. we talked with david ricks the reason the street probably didn't know about their earnings number, the reason looking for a earnings per share number was because of taxes also compared antibody treatments for covid such as lilly's to pills like merck's that will have an upcoming treatment. >> i think that the largest opportunity for that would be less sick people or less at-risk people as well as the global demand where, you know, we have an advanced health care system as does europe we can use antibody therapies. but in india and sub-saharan africa it's been difficult to help people because it's an i.v.
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infusion so oral pill, although maybe less effective could more easily be distributed there's a place for both of these. >> eli lilly raised its outlook for the full year. the stock up by about $1.95. let's talk a little facebook with julia boorstin. shares rising after the company reported third quarter earnings after the bell last night. julia is going to join us with all of the highlights. and there were plenty. quite the conference call. mark zuckerberg seemed to be fighting back. >> there was a lot in these results, andrew. the earnings beat estimates but revenue along with revenue guidance, as well as the company's monthly daily active users numbers, all those different metrics falling short of expectations. the stock did get a boost from an increase in the share repurchase authorization on the call last night, mark zuckerberg defending facebook.
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the face of critical articles based on those whistleblower documents. >> i want to discuss the recent debate around our company. i believe large organizations should be scrutinized. i'd much rather live in a society where they are than one where they can't be. good-faith criticism helps us get better but my view is what we are seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company >> zuckerberg sounding a little emotional there. he also shifted to talk about his confidence in the opportunity in three new areas of business. creators, e-commerce and the metaverse. the company starting to break out facebook reality labs, they'll call it frl next quarter and analysts pressed him and sheryl sandberg for details on the impact of the ios changes. sandberg said they're developing
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new tools to address measurement and targeting shortfalls saying on measurement they'll be able to address more than half of the underreporting by the end of the year while targeting is much longer term challenge. guys, back over to you >> julia, that raised a question for me which is, what would -- when they say they have to build new tools, i imagine that means they have to build new tracking tools. this comes at a time when privacy is, obviously, right in the middle of the discussion what kind of tools would those be what does that look like >> well, sandberg talked about this these are aggregating tools. she said they're doing this with respect to privacy and they're figuring out how to gather data about people and anonymize that data and target it that way. what was interesting to pull in the frances haugen whistleblower story is yesterday during haugen's testimony she talked about how groups are such a powerful tool and haugen interestingly talked about how
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groups are a powerful tool to spread misinformation and hate but also a powerful tool for targeting advertising. so i think that facebook does have a couple of levers to pull, but one thing that's interesting is that snap, of course, said that this ios issue would not be that big of a deal facebook warned for quarters this was going to be a problem, andrew, and then they've been preparing and dealing with it and developing these tools to target ads without using that tracking data from people's phones >> okay. julia boorstin, thank you for that we'll continue this conversation now. becky? >> joining us to talk more about facebook's earnings as well as the ads, the negative press and so-called metaverse is henry plo blodgett, insider inc.'s founder. let's run through all of this stuff but let's talk about what zuckerberg said yesterday. he came out passionately and said he thinks people are using these documents to paint a false picture of the company
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you agree with that? >> i think that we are in this collective moment blaming facebook for all of our ills as a society and there's no question that facebook has work to do. they're already putting a lot into it. they built the most powerful media and communications platform in the history of the world. now they need to control it and make it better and they're doing that but the idea that facebook's responsible for everything terrible is ludicrous. it makes sense for everybody to look at what's going on. but what i'm seeing is a company that realizes that it has work to do and that its products are causing harm in certain areas and it needs to do better on that but beyond that, i just think that this moment should pass facebook is a good product lots of people still use it. it does something that nothing else does. it's the same for instagram. and i think that's why you're seeing the stock hang in there, despite the fact the company is getting creamed every day by, as mark zuckerberg said, article
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after article from many different organizations. >> there's a yoga berahism there. nobody goes there anymore. it's too crowded the articles that are out there may not paint a complete picture of the company but it does show one facet. you say the company is changing and doing things to address this the question becomes, what are those things what can we see and why don't they talk more about that? >> i think they are talking about the fact they are throttling a lot of the really bad stuff. they are certainly not getting all ofit, and one of the thing that frances haugen has pointed out, they've optimized their algorithm on engagement. and anyone who is in the publishing business or the commentary business understands that if you want to have people react, which is what facebook is emphasizing, just say things that are really controversial or say things that are pro one political team or the other and people go crazy. and i think facebook is realizing that that's not the
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only judgment of what is right to put in somebody's feed. so stlail to make choices around that >> are they going to change the algorithm? that's a pretty big deal people would have more questions about that and the impact on their ability to raise revenue thn they did even about apple changing its privacy standards >> i think they'll absolutely continue to refine it. i don't think they'll suddenly radically unplug it. and the other thing that i don't hear a lot of is, okay, great. so let's change facebook and fix it section 230 is not going to do it frances haugen had some ideas about let's de-emphasize engagement but we need to do that in a way that facebook is still serving up stuff that i want to see and you want to see and others want to see so it's a really tricky problem. so my big point would be, there's no question that facebook is creating some issues and has caused tragedies and so forth. but so has so many other products that we're not talking about how horrible they are and
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the issues they cause in society. and this is -- >> i hate that argument. i that i that argument the reason we're talking about facebook is they are the biggest and most powerful and have almost 3 billion users of people going and checking this out. >> absolutely. >> they're not the only ones doing it and they're not even the worst in some cases but they are the biggest and most powerful that's why they are getting the attention and focus. >> that's right. and that is fair and they need to continue to improve. and all i'm saying is i think mark zuckerberg's point that, yes, we have things we need to do and thank you for helping us get better, which is what this is all -- >> thank you, sir. >> i know. my point is it's just not a simple problem and they are working on it you don't know what you would block. the whole idea is, this is a chance for all of us to share what we want to share and then it's a question of what you amplify. it's just really tricky. and facebook also creates a lot of good in the world
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again, as i said before, nothing else does what it does >> it's useful it puts people in contact. you stay in touch with relatives, old friends that you might not have otherwise all kinds of great things if you're a charity or somebody else building up things, but it comes back to this question of, are we just going to -- when somebody says, well, everybody else is doing it all i can think of is my mother's voice when i used to say that to her when i was in high school she'd take my head off for an answer like that is this wading it out, knowing that legislation is not very likely going to come because we have legislators that can't agree on anything so we just wait this out or does somebody take the first step and make changes internally within this ecosystem? not just facebook but within this industry. if facebook doesn't lead, who will >> i think that all of the platform companies are making changes continuously look at youtube. five years ago and ten years ago was completely different than it is now >> yes >> there's still a lot of stuff on there that youtube wants to get control of
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it's the same with google. and the same with facebook i just think again, these companies build these extraordinary platforms that are driven by users and people and now they need to figure out how to continue to control them and make them better and, all i can say, remember when we were younger, television is so horrible it's ruining everything. video games. and that's true. they also did some bad things, too. so there's a lot of work to do and a lot of products. >> andrew? >> henry, i wanted to pivot a little bit to this idea of the metaverse, something that came up on the call last night and the company clearly spending enormous amount. we're going to be talking to chuck robbins from cisco who is introducing all sorts of new webex programs, including holograms and such do you think that the metaverse, when built, if you will, it will be a new game-changing feature or program that's going to change our lives
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is this an investment that's worthy >> i think it's extremely speculative. and i think it would actually be unlikely for facebook to be the leader in it it's rare that a company that led the last wave, no matter how much money they spend, is the dominant company in the next wave and i think it is likely to take longer than some of the folks who are really excited about it think it will take vr and ar we've heard about for a long time now and still used only in very niche environments. so i think it's going to be a huge, expensive bet and just like some of the bets that google has made in a lot of its moonshot projects, it may not deliver what investors are hoping for there it will take time. >> so henry if we put you in charge -- if we put you in charge, what would you do then >> this is the question -- no, this is the question you have to ask people okay, great. there are problems what is the legislation? write it for me. that is going to fix facebook or
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within the company what are you going to do that's going to fix it? and my point is, it is such a complicated problem and it is reflecting, as mark zuckerberg said, society. this is we who are powering it so they want to make it better obviously, people in the company, i'm sure, are abhorrent at the idea the problem -- the product is causing harm and so forth. so i think they just need to continue to get better and set the bar higher and i think they will do that and that's what i would do because again, i think they have tougher decisions to make than a lot of the folks on the outside seem to think. >> they should tell us about those decisions if they are making it so it actually looks like they're trying do something. henry, let's talk about the earnings that's the part the street focused on yesterday stock up by over 1%. and it's because they beat earnings expectations and maybe we already knew, they already told us to expect the apple changes would have a little bit of impact on the revenue line. >> yeah, i think overall, the company still just remarkably is healthy, especially given the
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pounding it's taking and you mentioned this as an advertising vehicle. it's still extraordinarily powerful there's nothing else like it so i think they are in good shape there. the biggest concern for facebook is the problem that a lot of these documents are highlighting that the next generation is not using facebook and in some cases not using instagram. you have the rise of tiktok. mark also talked about how they'll reorient the product toward younger people. that's going to be tough and so i think that that is the big long-term issue. but i also think that in the near term there's still so much more they can do with e-commerce and building out instagram and so forth so i think the results will look great for a while. >> great to see you. thanks for your time >> great to be with you. thank you becky. coming up -- how long until america sees light at the end of the tunnel in its computer chip shortage is there anyone -- if there's anyone that might know, it's cisco's ceo chuck robins
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we'll talk with him exclusively in just a bit. as we head to break, check out the shares of raytheon after it reported quarterly profit above expectations revenue slightly below, but the company did raise its full-year guidance greg hayes joined us a short time ago to talk about the quarter. >> the key here, of course, is focusing on operations the top line will come back. we have to keep our focus on controlling costs and making sure that we can meet the demand as it does come back and so far, so good.
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draftkings oh, yeah that company draftkings shares are higher the company says it's terminating offer talks with uh kf based sports betting giant entain draftkings said after further analysis and discussions with entain's board of directors, it will not make a firm offer for entain you guys probably haven't noticed. do you know the nba is full swing, it's back the nba is back. i mean, the bucks just won,
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right? that was like -- that just happened but remember that was pushed forward or pushed back because of covid -- >> pushed back, right. >> and now it's like, i kind of like it like that. you know, and then you know what else is going on tonight which is a little weird because you can't move the world series from georgia the world series is going to be -- you know, you can't say, whoa, wait a second here and the braves and it's two pretty good teams that seem to be piquing toward the end of the season. the braves first game is tonight but i think it's in houston, andrew >> are you betting >> i did i took the braves -- i got a -- houston is favored because they got -- it's weird with baseball. they have an extra half inning the bottom of the ninth which a lot of times if you take the other team, if you are winning you don't even play that bottom of the ninth you know how it works.
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i got atlanta tonight and the under because i think the pitching, if they put their best pitchers in the first game they want to try to win the first game the $5 free bet. >> when we come back, we'll make some other bets. this is the supply chain and labor issues on a big scale. the ceo of airbus americas will join us. we'll also hear from him on international travelers returning to the u.s. next month. as we head to a break, here's another look at some of the biggest companies to report this morning. so many. 3m, general electric, u.p.s., eli lilly, jetblue you're watching "squawk box" on cnbc (vo) this is a place for ambition. a forge of progress. a unicorn in training. a corner to build a legacy. a vision for tomorrow. a fresh start. a blank canvas. a second act.
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the biden administration will lift severe travel restrictions on much of europe starting next month. that is welcome news for airlines and also for aircraftmakers like airbus we had greg hayes talking about that -- not controversy but airbus, you know, thinks commercial travel is comingbac to the point where they are like pushing enginemakers to really -- to -- some people think it will hurt that it's pushing so hard. you'll probably get into that with your next guest >> we will speaking of our guest, let's
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bring in jeff knittel, the ceo of airbus americas from the facility in mobile, alabama, where today you guys will be delivering the first a220 to breeze airways later on this morning. joe got into it right off the bat. i might as well ask you. you are not the ceo of airbus overall. that's over in france, but you are an important executive within airbus, and when you hear greg hayes say, yeah, i'm not really sure there's enough demand to ramp up production as much as airbus wants what is your reaction? >> well, i would say first of all, we spent a lot of time with greg and others talking about that very issue. the important thing for us is understanding what the demand is so we spend time with our customers. we try to look at where the industry is heading. and quite honestly, we have contracts that we're obligated to make sure that we deliver airplanes on so the combination of all those
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things helps us to put together a -- what we view as a solid plan now that being said, phil, we're constantly looking at it, trying to understand, are the dynamics changing and we do that not just by looking at -- with customers themselves but also trying to predict where things are going it's not a perfect science things can change but so far, and i think when we talked not long ago, things were not great. and we said we're going to go to rate 40 and that worked out pretty well. so there are next steps here it may not be a straight line. we understand that but we're directally air travel is increasing and we want to align with that and align with our customers. >> and so when greg hayes says, look, they may be pushing a little too hard, we'll be there with the engines, if they need the engines, but they may be a little too optimistic about where the industry is and future growth what's your reaction to that
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>> well, greg and i have had some very direct discussions about that and i would just say, i respectfully disagree at this point. and again, we are constantly re-evaluating where we are today, as we look forward and the demand we see from customers, and again, customers are asking us to bring airplanes forward, not push them out so to accommodate customers, to ensure that we have airplanes available, in our view, the ramping up is an important next step the speed of that is the question not whether we need to ramp up so greg certainly has input. we talked to him we talked to other suppliers, but importantly, we talk to our customers around the world and we think the aggregation of that information is what drives us in terms of where we need to be and ramp up >> as you ramp up production, jeff, how worried are you about
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the supply chain so many industrial companies are talking about being unable to do what they want to do because the supply chain just cannot meet their needs, either now or for future production so they'll have to scale things back. how worried are you about the supply chain >> it's something we're laser focused on at the moment, the supply chain is working for us. i would say in terms of the evolution of our system of evaluating the supply chain, it's better than it's ever been. we are constant -- in constant dialogue, not just with the tier 1s like greg and others, but all the way down to two, three and four and we're looking at their operational performance and financial resources. all those things are really, really important now right now, it's working well we have to continue to monitor that we would expect there will be some disruptions
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obviously, we try to get away from single supplier situations where we can shift when possible but as you know, phil, this is a very complex supply chain, and because of that, we have to be really rigorous in how we manage that >> jeff, right behind you is the new a220 for breeze airways. breeze and other startups around the world are targeting secondary cities for future air travel growth. when you look at that market, do you see as much growth potential as some of these airlines see because increasingly, i hear people say, look to the secondary markets. the hubs are always going to be important but the secondary markets is where the growth is going to take place over the next 10, 15 years. >> we do see the opportunity, but the opportunity in some ways is tied with their ability to service it so if you look at the 220, that airplane in our -- my humble opinion, is a very unique
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airplane it's an airplane that is in the 130 to 160-seat category it has a feel just like a main line airplane and essentially is a small main line airplane but also gives you the economics and this is really important as you know, phil, it gives you the economics to succeed in those smaller markets. so when you look at smaller markets, you look at smaller densities in terms of passengers, and the combination of the economics of the airplane, the flexibility of the airplane, and this is an airplane, smaller airplanes historically did not have the ability to fly long legs the flexibility to fly close to 3500 nautical miles gives you the opportunity to go to different markets. as opposed to historically where the economics weren't great and the flexibility wasn't great and again, i would add, when you go inside this airplane and the passengers realize that there is really no difference to a -- between that and a traditional
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main line airplane, and in some ways, quite honestly, this airplane is ahead in terms of the size of the windows, the height of the cabin, on and on it's the latest technology that's out there >> jeff, thank you very much it looks like a gorgeous day down in mobile we'll be talking with the ceo, founder and ceo of breeze airways later on today jeff, thank you for joining us you heard jeff right there say they think that there's growth and it's coming quickly in terms of air travel. andrew, they are planning on continuing to ramp up production >> phil lebeau, thank you for that interview appreciate it. when we come back, cisco's ceo chuck robbins will join us exclusively on america's chip shortage, the return to work and so much more tomorrow we've got a huge first on cnbc interview with general motors ceo mary barra off her company's third quarter results. we'll talk all about them with her tomoow mnirrorng
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stay tuned we're back after this. [coins clinking in jar] ♪ you can get it if you really want it, by jimmy cliff ♪ [suitcase closing] [gusts of wind] [ding]
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welcome back to "squawk box. want to get straight over to dom chu who has a look at premarket movers >> on the earnings side of things we've talked about 3m, u.p.s., ge and others. here's one to watch as well tied to the supply chain. it's corning maker of specialty glass the shares right now down about 3.5% because it comes out with
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worse than expected results driven in part by some of the automotive supply chain issues not making enough cars they use a lot of those components also watching what's happening with regard to coinbase what you are seeing there is a move higher driven in part by analysts over at citi who have come out with a buy rating and $415 price target. they think wider adoption of crypto could help coinbase shares up 1.5%. and some of the popular ticker searches on from yesterday's full session believe it or not the 10-year treasury note yield is not in the top three anymore but among the individual stock names that are make something moves here, tesla, the top search. facebook coming in second. up 1%. digital world acquisition. this is the specialty purpose acquisition company tied to former president trump 4.5% bakkt holdings on the big deal with fiserv and mastercard and
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paypal on its decision to abandon its pinterest ambitions. the rest of the top ten are on my twitter feed,@thedomino >> thank you, dom. some key takeaways from this morning's earnings and tesla's $1 trillion market cap cnbc contributor got a long way to go, sarat, but you probably are watching closely to see what all these companies are saying about supply chain disruptions, as well as the prospects for material costs and inflation and everything else. what is the -- is there anything, a common thread that runs through on those issues that you're seeing >> i think what you're seeing now, joe, one thing that's giving me some solace here is that demand has not -- we haven't seen emand destruction when you look at the suppliers and you guys talked to raytheon and 3m, corning, all of them are
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just having trouble getting inventory. when you have that, it's just going to cause problems now in the supply chain for everybody so to me that gives me some comfort that we haven't destroyed demand pricing is going to be really important, and i think those companies that do well with pricing and can grow revenue are going to do really well. we had a good earnings result for the whole sector and i think we'll see those companies that can survive and do well in this environment. look at u.p.s. they had really good earnings and fedex wasn't able to do what they're doing. even through all of this we'll have to pick really good companies that have good management, not just pick the sector and say, hey, this one is going to do well and this one is going to do worse. >> what about technology, sarat? are the stocks going to trade on the results that they put up or are we still watching that ten-year if it hits 170 then tech probably goes down doesn't matter what kind of
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earnings the notion that multiples are richer than other places and that could be affected by higher rates. >> right, i think you're going to see that and you have to parse out the tech sector into those, like a facebook that is selling at ten times -- ten times cash flow. versus a snap that's selling at 30 times price to sales. so that ten-year is going to affect companies that are trading on price to sales. and if we do get over the 1.7, 1.8 piece, the companies that are not free cash flow that are trading on what are earnings going to be 5 to 10 years, even if they blow out earnings, i think they'll get hit. you have to be very careful to say we do have the macro economic factors of interest rates, but we have to say fundamentally, i want good growth companies i want tech companies but growth at a reasonable price and that can be a google, a microsoft, but we do have to be careful with multiples because we are an elevated multiple environment. >> we mentioned that you might
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opine a little on tesla. we were talking about it earlier. great company. stock is not cheap and we saw that it jumps on the hertz news of 100,000 cars. but elon musk immediately pointed out it's not a demand issue. we've got as much demand as we can satisfy. so, i mean, would you just keep buying and assume everything catches up with the multiple eventually >> you know, i think it's a great company. they've done a fabulous job. it's just very hard for me to get my arms around the valuation. especially when you have so many competitors coming tesla's valuation is because of the whole auto industry. great company. they've done a fabulous job but you've got gm, volkswagen, solid companies with solid balance sheets i think at some point that lead tesla has will start compressing and the valuation when you are trading north of 180 times earnings for something that, you know, over time could have
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margin compression so for those who invest, great i just have a hard time getting my arms around it. >> sarat, thanks for the quick analysis of that got a lot in there not just technology. we'll see you soon, i'm sure >> thank you up next -- our exclusive interview with cisco's ceo chuck robbins. don't go anywhere. "squawk box" will be back after a ve qckreryui bak want it, by jimmy cliff ♪ [suitcase closing] [gusts of wind] [ding] this is the new world of work. each day looks different than the last. but, whatever work becomes, the world works with servicenow.
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and wait for back and forth e-mail, or a call to be rescheduled for the third time. orrr... you could use slack. and work faster with everyone you work with, together in one place. slack. where the future works. welcome back supply chain issues, particularally the shortage of computer chips forming a background narrative to this week's big slate of tech earnings everyone is wondering when the
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u.s. will emerge from this dearth of silicone joining us, that is cisco's chairman and ceo chuck robbins welcome chuck to the show. he's got some other big announcements today, but we want to talk about what we've been seeing with the earnings reports all week but more importantly, the chip shortages which seem to be weighing on just about everybody. you want to make a new forecast for us, chuck? where are we >> well, good morning, andrew. great to be with you and i think that nothing has materially changed in the last 90 days relative to the chip situation. as you've heard from many of my peers and a lot of the folks in this space, the capacity build out takes a little bit of time and so i've talked to a lot of folks in the semiconductor side and they've indicated that they believe the second half of '22 is when we'll start to see improvement with supply and demand sort of balancing out some time in '23
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we've got a ways to go here, but i think that we, like everyone else, are doing all the things we can to manage our supply chain effectively right now and to get as much capacity as we can for the customer demand we're seeing >> how much of this is just a function of demand that was clearly not expected prepandemic? >> i think that's right. if you go back to the early days of the pandemic, most of us began to signal to our supply chain that we assumed that the pandemic was going to cause economic compression, demand weakening and we saw the exact opposite so i think every industry signaled a perceived decline in demand and almost every industry saw an increase in demand. so we created this gap i think we're getting -- we have to get through that. i think we're on our way to do that, but then the overall demand with vehicles and, you know, semiconductors being in virtually everything is just creating incremental demand we just haven't seen.
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so it's going to take a little while to build out that capacity >> cisco designs its own silicone but doesn't manufacture it when you think about the larger policy implications of this, there's a big move, obviously, to start the manufacture silicone, build more fabs in the united states, perhaps build some in europe, given the questions about taiwan and china ultimately are we doing enough? are we moving fast enough? >> probably not. i think that -- i'm not sure we can move fast enough in the space. as you and i have discussed, i think that the fastest time frame you'll be able to build a fab is probably in the two, three-year time frame and they are obviously expensive. i think that notwithstanding the geopolitical situation we just need capacity. we should have capacity in the united states. europe needs capacity. we need it for issues of climate and emergency situations so that we can manage our way through
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those. so i think we need to move faster, and i think that if you look at the example of the government with the private well -- public/private partnership around the vaccine development, that's a great example of how to go after this with the government's engagement as well as the private sector's innovation >> chuck, at the moment, it appears that we're relying almost entirely on one company and that's intel are there other companies, possibly even cisco, that you think the government should be partnering with that has enough expertise? i don't know if they have the same expertise to be able to pull something like this off >> well, i think like anything, you want multiple bets that's not a comment on intel. i just think that we need more capacity so intel is going to do what they're going to do. and pat is committed to delivering on that but i think having other companies that have that expertise. we have expertise in designing silicone
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we don't build fabs but i think that there should be other creative opportunities and creative ideas as to how we can get, you know, more players in the space and building out more capacity faster. >> are there others in the country that you think actually do have the expertise that we're not focusing on? do the folks at google know how to do this are there folks at an amazon or an apple >> i think most of us have focused over the last decade or so on designing silicone so all the companies that you mentioned have some aspect of designing their own silicone for different use cases. ours is obviously for high-end networking and some of those -- some of the cloud players have built their own compute silicone and some of their own acceleration silicone, but i think it's a very unique set of skills to build out the fabs and given that most of vus have been outsourcing we'll have to build some of that muscle over the next few years >> want to pivot to your
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business now and really the transformation of the company from being a hardware player to a software player. webex, obviously, being a huge component of that and a huge growth factor, especially in this post-pandemic, hopefully we're post-pandemic, by the way, now hybrid work world. what's it look like and i know you're going to be announcing some new products today. >> we're hosting webex one this week i think we have over 50,000 people registered to attend. it's a big event for us. the teams have delivered over 1,000 new features over the last 12 to 18 months. today we're announcing hologram support, first platform that will support holograms we're announcing a lot of new dedicated video devices, we're announcing webex go which is the ability to put a business phone line onto your personal mobile so you don't have to have two devices any longer
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there's a great deal of innovation i'm proud of what the teams have done and we're preparing for this hybrid work future which is about more than just sort of video meetings it is about, you know, understanding return to office safety, understanding where your employees are. giving them the flexibility. treating the home office like a small branch office. being able to troubleshoot and have the same capabilities into that home office that for a small branch it's a broad based set of capabilities that are going to be needed to support companies going forward and theteams are doing a great job and a lot of it we're going to announce and talk about this week. >> you've seen the growth that microsoft has had over the past couple years i mention it because i wonder when investors think about your company how they should think about your ability to compete with the microsofts of the world because, for example, they're almost giving away microsoft teams which competes with webex as part of their 365 bundle.
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>> well, first of all, microsoft is a great customer of ours at the same time and we're a great customer of theirs we have a strong partnership but i think as customers look to the future, they're looking beyond a meetings experience and they're looking forward this total solution so we have the combination of our calling platforms with our contacts in our platforms integrated with web exand then bringing technology like this hologram technology, focusing on a lot of technology capabilities around inclusion we have so many people -- we've taken a leadership position around inclusiveness, mental health and the stress that our employees have felt. there's a lot that this technology can do and needs to do in order to ensure that employees are having the best experience going forward we'll continue to deliver on all of that innovation and i think our customers will continue to look for that total hybrid work experience as we go forward. >> before i let you go, what is
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the hybrid experience at cisco these days how many days on, how many days off, where is it >>. >> we're not mandating it. the teams need to decide how they want to work. the power of being in the office most often is the integration with your team members so it does no good if half the team comes in on tuesday, thursday and the other half on wednesday, friday. we're going to allow the teams to figure out that flexibility we don't think it's one answer for the entire company. >> i'll have to beam myself in as a hologram. good to see you. let's get down to the new york stock exchange. jim cramer joins us now. there's so much news to run through this morning where do you want to start with this >> elon musk called me a hologram once and i was trying to figure out when that would be valuable
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and chuck robbins just talked about it we had a lot of industrials today and all of them complain about raw costs. some of them have been able to outrun the raw costs others haven't look at the 3m it looks really good i think that your interview with david ricks should've moved the stock lily up. they've got the two best drugs in the pipeline on earth particularly the alzheimer's drug i think the stock should be up >> i was surprised by what he said about that, thinking, look, with this broader study that they're rolling in, there's been so much controversy with what the fda has given with the fast track for it, people pushing back and saying it hasn't met those end points he's right when he says there's no other hope for people out there, if you don't fast track it for those people, they'll move beyond the course where this could have any impact for
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them, this drug. i think there's still a lot of hope and excitement. if we can see by next year by removing the plaques helps with quality of life for these people, that's a huge issue. >> absolutely. i do -- because american migration foundation and the things i do with brain -- extensively with brain, i can tell you that this one works it works -- doesn't work great we'd all take it biogen, no and i think that david is onto something very, very big here. but he's no longer saying, listen, this is the best thing but it is -- the people -- i work with a huge number of people on the brain and they're excited about this and they really hated the biogen drug i think there's really something here and i thought that david did great. and i was surprised that people focused on the tax and the operating. that was a winner. that was a winner interview. i thought greg hayes was a winner interview
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i'm glad that joe asked the questions about the russians and chinese. if you look at every single company, it's steel, aluminum, glass and everything so jay powell can listen to this and say, do i have to do something? the raw costs are overwhelming any price increase that's put through. >> organic growth for 3m was -- they're raising their organic growth estimates for the year. but it doesn't make up for the higher cost. >> lockheed martin was a countier they said too that they have to lower. so it's a mixed day. obviously, u.p.s. had a fabulous quarter. and people who said this was going to be a bad quarter. she came on "mad money" and said it's going to a great quarter. nobody listened. >> i want to remind you about the new investment club that jim is running you can sign up to learn more at
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check on the markets on this tuesday as we wind things down after all is said and done, after u.p.s. and eli lilly and raytheon and general electric and all the other numbers that we've seen from them last night and this morning, final result, put it all in and you get up 111 points on the dow.
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probably stayed there, it would be another record. same with the s&p. oil, which i don't think we can talk about it too much because it will filter through to a lot of things and we know it hurts them. but parts of the economy more than others. and then the ten year is always something that we should check 1.63 make sure you join us tomorrow, everybody. >> will do >> "squawk on the street" coming up next. ♪ good tuesday morning welcome to "squawk on the street." busy day at q-3 earnings got a bunch of giants raising guidance we're looking for record highs at the hope for dow, s&p, facebook is in focus our road map begins with facebook shares rallying ahead of the


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