>> they would tell you that it is better than the gulf stream g-650 because of the range. when you're looking at this price category, it flies up to 17 people. >> take care of my plane. >> that's too many. >> see you back at hq. we've got to run. >> thanks for joining us. now it's time for "squawk on the street." >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. after the first three-day win streak in a month for the s&p, futures suggest we may make it four. nearly half a dozen dow components reported earnings this morning. ten-year yield back above 22. crude oil looking for stability. our road map begins with a slew of earnings this morning. sales light at coke and

mcdonald's. both moving lower in the premarket with another chipotle. >> another blowout quarter. apple beats on the top and bottom line. more ipads sold, fewer i pads. >> we have dow components. it's not just an earnings story. futures rising with chinese economic data and reports of stimulus measures in europe moving markets overnight. coca-cola did report third quarter operating earnings 53 cents a share, in line with estimates. soda volumes did come in flat. coke sees currency head winds affecting full-year profits, announcing a cost-cutting program and achieving $3 billion in annual savings by 2019. the dollar, a seven-point head wind in q-4. that's the high end of expectations. >> north american down a quarter. down 1%. sparkling down net single digits and still down low single digits

europe, latin america. a little bit better. it's a ghastly quarter. when people tell me there is a big mac row challenge to soft drink, i get uncomfortable. >> why? >> you are not supposed to stop drinking soda. soda is like medicine, i thought. you drink it regardless. macroenvironment. then execution. i'm tired of hearing about bad execution. the halo of this company has to be ripped off. enough. there should be no halo here. this is not a well-run company. >> soda flat, still up two. >> i want pepsico. look at pepsico. 12% year-to-date growth. pepsico guided up twice. >> you say it's not a well-run company, that is a significant charge. >> i know it is.

i don't make it lightly. i keep thinking that i just am tired of excuses, david. i think you have to tire of excuses. it's a difficult period for sugary drinks. >> then come up with something else. the two things they've done right, green mountain coffee and monster. just go buy the rest of it. give me something to hang my hat on coca-cola. i'm delivering a knockout blow ko to the symbol. >> making the big acquisitions, what are they doing? >> green mountain coffee and monster beverage are fabulous companies. >> they've given themselves an opportunity to buy them in the future. they lock them up for all intents and purposes. >> you were about to say a day after ibm, it's a buffet story? >> i'm saying the halo, i like

wells. they put up a good quarter. ibm is a huge disappointment. the rebellion on the conference call. this coca-cola quarter. yes, we are going to refranchise. yes, we are going to do this, we are going to streamline. you know what? i've got a lot of companies hitting the ball out of the park that are not, these stocks are not doing well. other than warren buffett, why do i have to think this is any different from general mills which has better growth? why is this any different from kellogg? i'll take kimberly-clark if i want a little bit of growth. >> an interesting note on buffet, he does act as shark repellant to activist investors. >> nelson is the one to go after. >> in this day and age, it doesn't matter how big you are. an activist will still get in there with a big dollar number

and still shake things up. think microsoft. so many examples we can give you. when buffet is in there it gives all the other activists pause. >> if they had given themselves those raises, they would have to be on the wall of shame. >> you did have david winters talk about compensation. >> we reached out to them this morning. >> we taken a hard look at our progress, our strategies are on the right track. what makes you think that? scope and pace of our actions must increase. >> there is an endless series of urgency press releases and there is no urgency. >> language that sounds like mcdonald's this morning. they came in well below street forecast. reporting a third quarter profit of $1.09 a share. revenues were amiss. september, total comps down 3.8 including down 4.1% in the united states in september. ceo don thompson said by all

measures our performance fell short of our expectations. there is no good number anywhere for the quarter or for september. down 9.9%? >> this is so bad, it's good. this is like the chinese economy. this is so bad. this is so horrible. my charitable trust is buying this stock. this was, without a doubt -- unlike coca-cola which is we did great but we didn't do great or ibm, we did horrible, but really didn't do horrible. this is a call, we are horrible. we are miserable. we don't know what we are doing. i like that because there is no way there will not be wholesale change after this quarter. >> what does wholesale change mean? they are talking about a new concept, a new restaurant concept, the experiment of the future. >> they ought to buy magala. listen to me.

>> i always listen to you. >> benchmark. benchmark bad quarter. benchmark bad quarter. no way this company can stay the way it is. there is going to be a big shake-up at this company. they have to change the way -- >> does that mean the board of directors say see you later? >> it's a darden-like situation. >> darden-like situation for an activist comes in and throw on it the entire board? i beg to differ. >> yes. i think an activist comes in and says, listen. >> ackman was in there years ago. >> it's a horrendous release. maybe on the call they say -- it was horrendous. >> still yields 3.7%. >> that's why i like it. it's a treasury equivalent where unli unlike the treasury -- jack lew will not be out. there will be no starboard

coming in taking jack lew out. this is a ten-year treasury where there's going to be changes. there will be changes. and sea of up side. they still have a good balance sheet. they've done nothing. great balance sheet. >> they mentioned specifically having to close restaurants in russia. obviously, the pate scare in china. higher effective tax rate. they are not able to explain this quarter? >> chipotle corner the analysts didn't like. they are selling itself. people are looking at mcdonald's saying i can't go in there because i'm a healthy individual. but mcdonald's has to -- mcdonald's cannot stay like this. coca-cola is going to stay exactly like this. coca-cola, three months from now what we are going to hear is change is going to be rapid now. change is going to come. they've got like a sam cook

approach to it. mcdonald's, i'm having a party. they are going to have wholesale change right now. >> wholesale change? boards are more willing to make changes. i do, but i also think you're asking a lot of -- >> we are going to get a lot. >> of iconic companies with significant shareholder in two cases is the same guy. if he doesn't turn, it's hard to imagine the board is going to turn. >> this is where nelson pelts who turned around wendy's. terrific. made a lot of money and do what he did with wendy's. wendy's. >> they have a $90 million market value. >> david, hedge fund kings are not intimidated by size. >> no, they are not. that is true. >> they don't play by the rules. >> that's why boards are bringing in investment banks to advise them on anything an activist might come with full

decks of what an activist might say about you. >> these guys are not playing with a full deck. nelson pelts sells pepsico. fantastic job. he says, don, let me give you a hand. >> you're an ad for nelson pelts this morning. >> i think he could make a difference. >> before we run out of time, let's get to apple, exceeding street forecast with fiscal fourth quarter results. revenue up 12. 39.3 million iphones sold in the period did beat estimates. overshadowing decline in ipad sales. issuing an upbeat outlook in the holiday season. >> today we launched in 32 countries including china and our new iphones will be shipping in 69 countries and territories by the end of this month, making this our fastest and most successful iphone launch ever.

>> best year for mack. revenues for itunes and software is more than revenue of the fortune 500. >> and the buyback is more than the size of the fortune 500. >> it was 22% of all technology earnings is apple? >> did you see average selling price for the iphone? it's up to $750. call coca-cola and ask them, is that a macroenvironment challenge? people want to spend $750 for something of value, but they won't spend for coca-cola because that is overpriced? $750 iphone, but diet coke? i can't afford it. this is the writ large issue of our economy. speaking of pay, apple pay, how important is it? you go on the chipotle call. what do they ask? are you in apple pay? the pressure to be in apple pay begins right here.

on a chipotle call. >> it will be a slow build, but it won't be an insignificant business, many people believe it will hold real traction. i don't know when we start to pay close attention to it. >> amex, sending e-mail, use apple pay. >> this is valhalla. >> i had down 13. >> this was a flea and i'm flicking it. >> 70% of everything is the iphone. >> a little cannibalization. donner party situation. there is always going to be nit-picking. analysts can't just sit there and say this was a really good call. really good quarter. own the stock. they have to justify their

existence. >> you will admit they are still having to figure out their replacement cycle on tablets? they said we are still learning this. >> yes. i think i pay is something, the pressure is on. when you -- what i saw on chipotle, people don't like the chipotle call. we are only same store sales are up. that's all you should care about. hey, they are going to get through this. what i feel strongly about, is the pressure from analysts in the food industry, in restaurants to take out ipad. mcdonald's, i saw that they are playing for chicken mcnuggets with the i pay. there is hope for mcdonald's. people are still buying the chicken mcnuggets. >> there is so much more to get through. how concerned should we be when it comes to the state of the global economy? later, we'll talk tech pioneers and the digital revolution with

walter isaacson whose new book is titled "the innovators." we haven't gotten to verizon, travelers, utx, and a lot more "squawk on the street."

china gdp with the slowest growth in six years. watch is on to see if chinese central bankers will see targeted easing measures to boost growth in the fourth quarter. along with the reuters story that says the ecb is considering buying corporate bonds on the soakedry market. >> futures ramped dramatically on that. they came out around 540. suddenly futures were flat then up 10. something is stirring in china. the baltic drive trade index i get every morning about now was up 117 last night. back to 1,090, a comfortable level. copper up 4 cents. back over $3. something is stirring in china. i'm not sure what it is. it's coming around. >> what does this put to eli the idea of this global macroslowdown theme? should we be rethinking it? >> auto sales there are not that

great. i know that the story is they are going to start dumping more steal because they don't have that. domestic consumption could be up. i like the texas instruments call. china is not as bad as we think. i think the people's republic may have a little game. >> we always have people remind us that these figures are notoriously unreliable in terms of the government figures. you've got to look at different things to get a wholesale picture of where the economy really is. >> it's not easy. we are going to hear from caterpillar tomorrow. they may give us a sense how horrible china is. baltic drive freight is coming back. that's been in a major funk. >> we'll get cramer's mad dash. take one last look at the premarket. ♪

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time for the mad dash. >> dance, dance magician. >> i almost grabbed you and started twirling around there. >> lockheed martin. when i see a release that says the corporation expects net sales will decline, i think they've got a 4% yield where this stock is going. this was disappointing. talking about the buyback was not going to be aggressive. this was not a good quarter. maybe we should put away the sequester and start spending more on defense. people are in this stock because we think how come, don't we have to rearm? this was a troubling ke ining q a very good company. >> i feel like i've heard you say that a lot this morning other than apple. >> i wasn't grumpy when i woke up. i had a good workout. >> you don't see grumpy to me. >> arm holding started out bad.

that was week. i hear a penny miss. this is one i normally would sell it. kind of liked verizon. i like the ads. >> ads are good. >> addition of subscribers. >> right. >> the margin came in a bit less than people expected, 49.50 versus 50.7, the expectation in ebitda margins. they are doing differently than at&t or sprint, for example, which have equipment installment plans that. has the effect of giving you a bigger boost in your ebitda. it could also potentially bring on bad debts in the future. you're subsidizing people's equipments at a much higher level. it can jack up your revenues ebitda. at&t in effect is repricing its base of subscribers in this way with so many people taking those plans. verizon is on a different route. i haven't been on the call to

hear if there were any explanations why they didn't quite hit that margin number. as you say, on ads, handsets because they give you handsets and tablets, all good. the margin numbers is contributing to this 1% decline so far. >> what's amazing to me, the competition is hard here. yet, there is delivery. remember, the government did want competition, you've got competition. they are putting up good numbers. made sense to buy wearless? >> without a doubt. especially given the cost of capital. >> the lowest cost of capital. they should make the verizon cfo, he would be a good treasury secretary. we have one. i'm just saying the next administrator. >> i thought you were going to go to a ceo of one of these companies. >> no. i wish the government would have the savvy to issue bonds right now the way verizon did. too many cook issued bonds. >> they hit the low.

apple hit the low. >> do you think they are lucky? >> that was luck. >> better lucky than good, my friends. better to be lucky and good. >> opening bell coming up. we've got so many more earnings we haven't gotten to. location. location.

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you are watching "squawk on the street." opening bell in a few minutes. >> suddenly great managers come back. this was a fantastic quarter. reminded me of honeywell. honeywell put up good numbers. this stock, i think, can go higher because the stock has been on a one-way ticket from $116 down to $99. no matter what they did, it seemed like they were doing it wrong. they put in fantastic numbers. they have big china exposure. something could be good in china. everyone -- it's not the gdp

number. i get the coal numbers, electric numbers from joy global. those are more reliable than any number put out. >> harley-davidson did beat by a dime at 59 cents. shipping fewer bikes. stock is down 16% this year. >> project rushmore looks like it's doing well. they've got polaris. a lot of people are saying how can this be? there is not a lot of discretionary income. i'm continually shocked by the amount of money people are willing to spend in this country. have the right product? great motorcycle will be bought. >> chipotle. >> remember last quarter, we had walter on. i think they need to do it. they have to start saying what chipotle did. the whole thing of the conference call which i loved but analysts didn't.

the reason we have these comp numbers because people trust us. whole foods have to say we have the seal of approval when you come to our store. >> let's get the opening bell. a look at the s&p. at the big board ark investments celebrating the debut of its etf and at the nasdaq communication services provider r.r. donnelley and sons celebrating its 116-year anniversary. >> go back and watch when the ceo is on "mad money." that is a different company. that's a buy. >> off to a nice start here. >> what is going on with inversions we are seeing a lot percolating right here? >> abbvie paying a break-up fee to shire.

arbeggedon. >> that's good. >> there are a lot of hedge funds who got mauled in this thing. abbvie saying they are going to buy stock. what are they going to use, repatriate cash? i don't think so. >> that was some what critical. >> we still don't know what happened there.

we don't know the whole story. >> astrazeneca. shire is a good company. though have a lot of good products. >> medtronic had been concerned given what happened with abbvie/shire. they put out their latest proxy this morning. they are sending it with red lines and showing everybody where there is complete commitment to the deal. they've been saying, we are fine. in this proxy, the disclosure surrounding the board of director's vote and when they took all should give comfort to investors this is going a very different direction.

there was worry that would be next. they are not making that. >> no. >> you said hand holding, not harm holding. >> delta, southwest, as we -- looks like what worked well this year. celgene, biogen. >> this is the doctors without border. they know how to do it. you are seeing the military getting in it. i think that is very important. >> it's only been a week since the latest new case. amazing what you can do. >> 317 million people so far have not contracted ebola. i find that number comforting. >> indeed. >> it's not the mass panic. >> carnival is on the list. >> yeah. the airlines. they seemed like layup shorts.

a lot of people are saying delta reported a good quarter. fuel costs are down a lot. people will be traveling again. that's the short of caving, recognizing they made this call that perhaps this weekend many people are going to come down with ebola. anybody near the late mr. duncan had to have contracted it, and it must be a little more difficult to contract. >> thankfully that would seem to be the case. i want to mention time warner. i've been watching this stock go up, up, up, after last week when they introduced their guidance. very significant numbers and over the top hbo, which they haven't rolled out. no a lot of details around it. that stock hasn't stopped going up. it hit 78 this morning. >> now we have this new fee

fight between dish pulling cnn, pulling cartoon network, pulling turner, classic movies, tbs. >> what a great buy when it got back to the level it was launched. the celgene, crohn's disease, a very small group of people. there's a lot of good corporate news. time warner was very good. >> not good things with ibm. another 2.2% loss. i don't know if it was your skewering them last night. >> had to.

let's add an "i" bunchy. >> i don't see a lot of value there. i think earnings have to come down. now we are on buffet watch. will buffet stick with a company where he said the buybacks are great and now they don't have the operating cash flow to do that buy back. >> they still have significant operating cash. >> it's diminishing. >> it's not going up. >> all right. >> what about the idea, a reset for the company. they are no longer attached to this road map certainly not when it comes to these financial targets with ibm. they are pursuing what she says has got to be the future of the company in terms of data, analytics, security. mobile, social. all those watch words. >> security is good.

it may be -- >> you've got to take a backlog in your services business and you're still generating billions each quarter. >> there isn't any other company i know that they are proud something is down only 6 because it used to be down 9. this is unacceptable. >> it is somewhat reminiscent of what hewlett-packard was facing when they came in. >> got a wholesale change there. yes. it is reminiscent. i think the emphasis on the call is, look, if we keep doing what we are doing, we are going to do fine. best thing about that call was the sale of that division because they did do well. they got that off the books. >> it's a no margin business. they got $4.4 billion in cloud revenue. that's going up. $16 billion in data. that was up 8%. >> let me bring you back to coke. >> the other side of the argument of ibm. i don't know where it's going to

end up. buffet is the key. we haven't heard from him. >> coke's the biggest loser on the s&p. hard to move a name like that more than 5%. we moved ibm seven yesterday. >> all i'm saying when you're on these conference calls and you have nothing good to say, you've got to come up with something bold. give us something other than you are going to go zero base budgeting, which coca-cola said in its release. zero base budget, jimmy carter. what's up with georgia? i need more. you can't stand still in corporate america. if you're making major mistakes and not doing a good job, i want to get on the call. this is unacceptable. here are the tangible things we are going to do right now. i didn't get that. didn't get it from coke or ibm. i have to listen to the coca-cola call. maybe they've got magic secret.

>> and you didn't get it from mcdonald's either? >> mcdonald's, that company is going to be changed from the outside. there is no way. >> you do feel like an activist is coming back in there. >> balance sheet is good. there is room to do things. >> there have been rumors. i haven't been able to unearth who or what it is. >> i would put a fund to come after mcdonald's. >> that would be the one you go after? come on. we've got to have a meeting if you want to put a fund together. >> arguing for what? >> burger king made a turn. wendy's made a turn. i think mcdonald's has been poorly executing. they have two new executives in. i wish david novak would come in. i have to believe someone can do bet were that product. i really do. >> my guess is you are going to see some of that. it's going to be operational change. not wholesale.

they could change the concept. >> something happened with united technologies. that's not going up enough. we have to listen to that call. there is something wrong there. >> finally, before we get to bob, are you warming up to the market overall? >> yes. absolutely. >> back to neutral? >> yeah. i find ebola has -- there will be more ebola cases, but people retreated from the notion that you can't fly, you can't travel. now you have low oil. money has been flowing in that group and can now flow back. >> even with the mega cap warnings and miss of the past three, four days? >> yeah. you said three things. china maybe gdp better. europe. i think we underestimate how important it is for europe to get back online. the most important thing that happened this morning of all the things we've been talking about

is the possibility germany is relenting. >> yes. >> herbert hoover in a pantsuit may not be as strict. >> angela merkel. >> back from her herbert hoover stance. >> hoover in a pantsuit, that went viral. dow up 52. let's get to pisani. >> the three issues why the markets are more stable. number one, fed likely to remain dovish next week. number two, ebola less of an issue in the last couple of days. number three, you're right. oil stopped dropping. west texas this morning is over $83. been there four days now. it's basically been stable. sideways to slightly up. that's dramatically helping the energy sector. we all know what's happening. you can put up the usual names, halliburtons, anadarko, eog.

the whole flcomplexion is up. old school industrials. i love them. they are doing great. the trend is clear. they are maintaining guidance for 2014, not lowering everything. we saw illinois tool works this morning. i love them. classic, nerdy, in automotive testing equipment. adhesives, lubricants. all the nerdy stuff in the automotive industry and behind the walls you never pay any attention to. they beat and bottom line is they raised the mid point of their guidance. they get 30% of their revenues from europe. 30%. despite that, they raised the mid point. industrials that would see a big slowdown are not panicking even though they have exposure to europe. united technology. 20% of its sales are in europe. they beat and they talked about 2014 guidance affirm. didn't lower the guidance here. they make automotive.

they are in the aerospace industry. heating ventilation and air conditioning with carrier. another company said things are fine. we are not lowering our numbers. this is a trend. remember last week with general electric. they came out and reported great numbers. their orders were good. heavy exposure to europe, but orders up 22% year over year. honeywell, another company, exposure to europe. raised the low end earnings and revenue guidance. textron came out and raised their guidance. there is a trend here. give pig industrial companies, all of them came out maintained their guidance or raised it for the rest of the year despite exposure of anywhere from 20% to 30% for europe. that's very important. let me talk about chipotle. you know what their problem is? sales are too strong. 20% same-store sales numbers. how could it get better? it's not going to get better than that.

that's the problem and that's why chipotle is trading down. numbers were fantastic on the surface. they beat by a sizable amount. problem was 2015 guidance. low to mid single digit comparable store sales growth. they just had 20%. now low to mid single comparable sales growth. that's the problem. chipotle were at a historic high about 1 1/2 months ago, now off that. it's getting more expensive to travel. did you see what happened with the airlines? united, american, southwest, all announced fare increases. ups raising fees at the end of the holiday season. people are trying to raise prices right now. finally, very important little story from challenger gray and christmas. keeping the ebola thing in perspective. the biggest problem for the american work place this christmas season is not ebola, it's going to be flu. they reiterated last year was

one of the worst flu seasons on record. they totalled up the number of man hours lost. they were in the millions urging people to get flu shots. let's bear that in mind. it's a simple comment from them. read about the impact of the work force of the flu virus. right now the dow up 60 points underperforming the s&p 500. let's get to the bond pits and check in with rick santelli. >> rates continue to creep up a bit. we know it's been just one day shy of a week when we really had some robust trading. equities down and interest rates down. last night in particular was really interesting. little bit after midnight we see that ten-year rate started to move up. the dax open and started to move higher. boons open and their yields moved higher, price lower. everything was in sync. right around 3:00, 4:00 in the morning, the story hits

regarding the ecb considering, air quotes, considering buying corporate securities. there's been pushback. the market doesn't care. if santa claus is rumored to be on the radar screen, kids get excited. the markets did get excited. dax moved into positive territory rallying a bit. we'll continue to monitor the stories. everybody is looking toward europe a little nervous about the outlook for growth. in the end, it seems mario draghi's promises cure everything. we'll monitor. the dollar index is right footed again. it's up about 0.25% due to the notion it is shadow boxing after that scare. maybe we test 1.5% last

wednesday. back to you. >> thank you very much, rick santelli. when we return, we'll talk with dean camen, the inventer of the segue. dow is up almost 80 points. s&p is more than 100 points above last week's intraday low. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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a lot of green on the s&p this morning. you can see s&p going for four straight winning sessions, back above the 200-day moving average. the vix back below 17 having cracked 20 a couple of days ago. >> by 25. people were freaking out. it was at last that wednesday, which was a very bad day for hedge funds. there was some bad news out. since then ebola. the panic got the government involved. i think when they appointed the czar. it was clear the president

understood the gravity. the cdc wasn't making the calls any more. that showed urgency that turned around a lot of travel and leisure. germany cannot hit them enough. germany must elect. if they do, a lot of companies that do business in europe, a lot of them today are up. a lot of companies that do business in europe are trading off germany. there is nothing else going on. >> there is a good chance we may see a new case in this country. how much are we on egg shells? >> i think the difference is that there was a feeling just last thursday that maybe there was a mutation we didn't think about. that turned out to be false. the idea it could mutate and spring from one person to another. duncan was living with people, they didn't come down with it. emergency workers didn't come down with it. >> the crisis is in west africa. that's where it needs to be stopped. if you want to talk about danger for the rest of the world, it's

if you don't stop it there. >> agreed. i think there's progress with vaccines. don't want to get your hopes up. ron klain is a competent guy. amazing how politicalized things are. >> it's two weeks to the election. >> harvard law school is a bunch of phonies. i think they got involved. they got energized because they recognize there was panic. that changed this. >> we'll see where that leaves us in the days and weeks ahead. we'll get stop trading with jim in a moment. we needed 30 new hires for our call center.

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time for cramer and stop trading. >> there are whole companies going off the call, boeing is going up off the call. cummings is going up off the call. the stock that started these stocks going up, united tech is doing badly. i think united technologies, i think this is a buy. i have to tell you that you have to blow the numbers away and raise the numbers to get people

excited. this stock is big. i like it. trinity yesterday killed off the lawsuit overdone to the down side. we are not done fracking in this country. trust me. >> what is on "mad" tonight? >> we have the guy who runs the trials quintiles. we have the doctor who runs the trials. a lot of people are saying theme park, look at disney coming back. are they going to be affected by ebola? let's talk with six flags. i think those stocks have all been bad. cedar fair has been bad. that is something people still, it's a bargain. the stay kags. all the travel stocks are red hot. >> there are fair increases. >> great to see those guys come

back. they got cheap. ebola did, ebola in germany, those two things changed in the last 72 hours. >> see you tonight, jim. >> what a show we just did. >> let's get to simon. >> we are going to look how high apple can go after the blowout earnings last night. gene munster will join us live. we'll look at the bloodbath with hedge funds. if you don't improve your behavior, you risk getting broken up. hour two of "squawk on the street." the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me? go. right on time. right now, over 20,000 trains are running reliably. we call that predictable. thrillingly predictable.

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welcome back to "squawk on the street." existing home sales up 2.4% to a seasonally adjusted 5.7 rate. sales still down 1.7% year over year, but this is the highest monthly rate of the year so far. sales up across the board in the nation except in the midwest where they fell 5.6% month-to-month. the median existing home price in september, $290,700, increase

5.6% year over year. this is a median price numbers. other reports show prices stalled between q-1 and q-2 of this year. inventories, 2.3 million homes for sale up 6% from a year ago. we are now at a 5.3 month supply. still tight. what is interesting, we are seeing distressed sales way down many, 10% of the market. all cash over 24%. investors just 14%. what is not changing is that first time home buyer shares. first time home buyers not getting back into the market. one thing realtors say is realtor confidence is at a 12-month low. despite the bump-up in sales, realtors are not confident. these are closed sales in september. they represent contracts signed in july and august. this may be what we'll see for the rest of the year. it's a beat up 2.4%

month-to-month. >> thank you diana for that breaking news on home sales. coca-cola shares getting hammered aft e hammered. coke warned it is facing currency headlines and will not meet its full year target. the ceo saying in the release, we have taken a hard look at progress to date and realize while strategies laid out at the beginning of the year are on the right track, scope and pace of our actions must increase. coca nounsed it is firmly in cost-cutting mode, $3 billion annually until 2019. saying we are cautious in our outlook. one of the biggest disappointment was total volume. 1% growth. that includes sodas and

noncarbonated beverage which is driving growth. if you take out noncarbonated growth, the number would have been negative. >> perhaps management is completely out of touch with the world we live in. it's a company in the soviet era where they are forced into the cost cuts and forced into the pay down. can't be that complicated a company to run. why are there 100 bottling factories in north america. why are they spending $100 million to revamp their headquarters in atlanta? they don't live in a dynamic environment. >> clearly, it is. that's why they are making these so-called big bets. in august they announced a 17%

stake in monster. they are partnering on this new k-cup cold machine. making it clear in today's release they are going to look for strategic partnerships, while at the same time focusing on their core business. they are number one in soft drinks. they have an extensive geographical reach. this quarter china hurt them. i think the question going forward is whether that's macroeconomic weakness. >> they are fighting what pepsi is doing and lose focus what the core and nature of the company is. why are they not coming up with monster beverages? why partnerships? where is the innovation?

>> that is a fair question. >> it's not new. >> they are moving toward more noncarbonated beverages and moving to try to partner with some of these companies. pepsi has the snacks business. that's been a big growth driver for the top line. >> mcdonald's taking a hit. what does that mean for the future of the company? joining us by phone is the editor of qsr magazine. good morning to you. >> thanks for having me. >> these comps are remarkable to the down side. are they a surprise to you? >> not so much a surprise. this is following their past

quarters of performance. it is surprising to see how much they continue to falter. i don't think anybody expected a quick fix any time soon. >> don thompson says they are taking decisive action to fundamentally change the way we approach our business. what does that mean? what do you think they are up to? >> they need to get more in line with what their competitors are doing. you see these companies like chipotle and better burger concepts like smash burger, like five guys, they are all encroaching on mcdonald's territory by offering higher scale menus and more upscale overall experience. what don thompson is talking about is being able to improve the overall mcdonald's experience and menu more in line with what millennials are looking for. >> you think it's a menu tactic, first and foremost? >> absolutely. i think the menu had a lot to do with it. what was encouraging when he

said they would focus on more simplified menus. that is one of the ways they have to go. the menu has ballooned to something like 140 menu items. i think what chipotle proved and a lot of other companies proved, a more simplified upscale menu is what people are looking for. >> is don thompson the right one to turn around such a big company as mcdonald's? he's been onboard since june 2012. since then the numbers deteriorated big time. >> i couldn't speculate who the right person would be. i don't think mcdonald's has made many decisions that were wrong decisions. a lot of what we are seeing is more the nature of the competitive landscape in the service restaurant industry today. they are coming up against a very large number of other restaurant companies that are firing on all cylinders and offering an innovative experience. this is like turning a cruise ship around. mcdonald's has been around 50,

60 years. it can't change at the drop of a dime like that. we'll see probably a bit more of a long-term plan in terms of being able to get to it that point. >> can it change enough? if you were in the stock three or four years, maybe eight or nine years, is it a bet they will prove through or do you say the structure of the business, it's very different from chipotle. are they going to make the stuff in front of people? do they have the infrastructure to deliver fresh food fast? that's not what i think of when i look at what mcdonald's is serving. a lot is frozen and heavily processed food that may or may not have a problem at this stage through the supply change. >> to your point, yes. mcdonald's is never going to be chipotle. they are never going to have an ingredient bar and won't make the food in front of you like chipotle. they offer a different experience what they need to do

is improve what that experience is. in terms of long-term performance, what is interesting, ten years ago they were going through the same thing. ten years ago we were asking ourselves, is mcdonald's going to turn it around? what is going on at mcdonald's? at the time they owned a stake in chipotle. they turned it around and were recession-proof up until a few years ago. they are smart folks and a well-oiled machine. i think it will take time to figure out and offer something unique and innovative enough to take customers back. >> hard to do when you were serving tens of millions of meals a day. sam, thanks for coming to the phone, sam oches of "qsr" magazine. apple shares getting a boost after smashing expectations after the close. they beat on the top and bottom

lines, projecting a stronger holiday quarter. i sales jumped 16%. here is tim cook on the conference call. >> we generated our strongest revenue growth rate in seven quarters, far surpassing our expectations. we communicated in july and establishing a new record for apple september quarter revenue. >> jim munster at piper jaffray has an overweight rating with a price target of $120. welcome to the program. >> hello. >> it's rare to hear people choose words like they are choosing to describe this quarter. smashing through forecasts, recharging growth, predicting record holiday sales. some say a new supercycle is upon us. how would you describe what you read and heard? >> i think they are doing what they need to do here and delivered on what were high expectations around the cycle. all those adjectives are appropriate. from my end, the calls i've

gotten from investors is what's going to happen in march. people today are pricing the december quarter. it's amazing how quickly people shift the focus down the road. outlook for march is optimistic, as well. that is our focus today. >> the context is a great gain. this stock has been a great stock for the last six months, up around 35% in broad terms. where will it go from now? where will it be in a year's time, do you think? >> i think we can get to 120, hopefully earlier than a year. we have a 12 month price target of 120. the reason is the march quarter we think will benefit from an accelerating positive impact from china. most investors we talk to about apple feel this is a product cycle trade. you own it for the december quarter. then maybe part of march, then you let go. i think there's more sustainability with the iphone. i've got one statistic. is it 70% of phones sold in

china. new phones come from the bigger phone factor. it is a huge opportunity they haven't tapped into. that could last several quarters. the momentum surprisingly can continue. >> why not be more optimistic? they think apple is on a supercycle of new products and the market needs to think more about what is to come. their target is $20 higher than yours. >> as we go out and the numbers inch up, there is a chance our price target inches up, as well. i think they are talking about the sustainability in china. there is still plenty of up side

in shares. >> you tested apple pay. how should investors look at apple pay? will it be a profit driver or another excuse to buy more iphones? >> it will probably be a powerful excuse to get a phone that. has a dramatic impact on the business. overall experience was about 2/3 of the people we talked to knew apple pay was out. this is as soon as it came out. they were educated, which is shopping. retail is so messed up behind the counter. apple did a great job educating their partners to get the message out. overall, it was seamless. it's a better experience. you have your phone in your hand as you're coming up. you're taking messages, reading something. then you can pay quickly there. i think it's a big deal. >> just before you go, one last

question. does a point come which we can put to bed the question whether tim cook is a worthy successor to steve jobs? >> tim is not steve jobs. he never said he is, but tim cook's legacy is success. he just defined that with the december quarter guide. >> gene munster, thank you for your time. >> thank you. when it comes back, is there more correction to come? keeping a billion customers a year flying, means keeping seven billion transactions flowing. and when weather hits, it's data mayhem. but airlines running hp end-to-end solutions are always calm during a storm. so if your business deals with the unexpected, hp big data and cloud solutions

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welcome back to "squawk on the street." we are watching shares on harley-davidson. this after the motorcycle maker posted better than expected third quarter profits despite sales that were slightly below analyst estimates. harley said its sales figure reflect lower motorcycle shipments to dealers in the quarter. that stock off its session highs but still up by about 6.5%. the president of harley-davidson will be on "power lunch." and we'll hear about the entire state of the motorcycle business. >> i know that's something you love, dom. stocks pushing higher this morning following weeks of volatility.

>> gentlemen, good morning to you both. >> people are talking about ebola and home sales are going to be good again. is it that simple? >> probably not. that's the news of the day. there may be more volatility to come. there is volatility in interest rates. slowing potential global economies. the news today seems mostly good. >> i've got to give you credit. when a lot of folks were talking about a better u.s. economy and higher interest rates, higher treasury yields, you maintained your 2% target on the ten year. i don't know what last wednesday was about is that where we are going to stay for a while? >> sara good to talk to you. thank you for mentioning that. i think we hit and we went to

1.86 last week. i think 2% will be tested again. the u.s. economy is not as strong as it is made out to be. the reason being it is like saying that a patient in an oxygen tent is breathing normally when you had six years of quantitative easing. you see the federal reserve is afraid of taking off qe, afraid of increasing interest rates. i believe the economy is healthy when there is an increase in interest rates. i don't think this economy can tolerate that. >> are you suggesting that's going to be in our future near term, sri? >> i am saying there will be no increase in interest rates in 2015. i won't be surprised to see qe start resuming again. particularly because the chinese growth not only did it slow in today's number, but will continue to slow. >> why are you so much less optimistic on the u.s. economy than the consensus, wall street

view even the federal reserve is talking about improvement. you sound like you are seeing something others aren't. >> the reason is i think the consensus view has a basic inconsistency. they talk about the zero, they are talking about the strong economy, but they also want to continue with zero interest rates into the seventh year. to me, that is inconsistent, it is illogical to have a strong economy continue to have zero interest rates. i think they are really concerned about hiking rates. that is the reason for my disagreement, just as i disagreed on the ten-year treasury-year-old. it just didn't make sense to look for the yield to rise 3.5%. i don't think it makes sense to have the u.s. economy recover once a quantitative easing comes to an end. >> regardless of whether it makes sense, what is the practicality here? does the market and the types of

think we heard from sri, believe that qe is on the way and maintained at this level because of the belief that qe is going to come back from the fed? and what happens if they don't deliver that comment when they meet next week or leave it hanging in the air like mario draghi did as a potential threat somewhere down the line? >> i agree pretty much with all the comments that were just, although i don't thing we are nearing another pending qe. i think the fact of the matter is the economy, the u.s. economy has not shown enough sustained growth to give a lot of us comfort that the fed can raise rates substantially. i think they are stuck. they can't raise rates without choking off the economy. they really don't have a lot of additional powers with respect to quantitative easing. they are stuck where we are. the u.s. economy appears to be improving. if it was a closed economy, that's great. the problem is when you look

around the world, you see very uneven, anemic or potentially recessionary situations, and that's going to eventually affect the u.s. economy. you see u.s. interest rates at a divergent from most of the other world central banks. that's creating a demand for u.s. assets on a yield basis and because of all the other crisis going on. you've got sort of a safety trade going on with the dollar. that's creating a very strong dollar. eventually, you heard it with coke's earnings today and probably other consumer multinationals. they are going to start talking about the strong dollar impact and currency impact on earnings going forward. that bears watching. >> i would add to that, in this financial crisis for the first time after 2008, the u.s. is no longer the largest economic unit in the world. going to sara's question, the reason why the situation is different today and consensus is

wrong, they assume u.s. dominates the global economy. the european economy is larger. the chinese economy has just been declared to be larger than the u.s. >> yes. >> the u.s. isn't going anywhere. it's still a major player. i think the big risk on interest rates is not necessarily the central banks. i think they are stuck. i think market interest rates could go all over the place. investors behave volatile. we saw that last week in the ten year. it moved overnight. >> we remember wednesday all too long. thank you very much, guys. >> thank you. >> with the s&p up a full percent right now. wall street's main regulators telling big banks to clean up their act or face down sizing. [ male announcer ] some come here

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on an up day here in the stock market, ibm hitting a fresh three-year low. coca-cola having its worse day in six years. ibm earnings out yesterday. the common thread is both big warren buffett names. >> 16% in coca-cola. >> 9% outstanding? he is quite significant. enormous companies. when it comes to ibm, the whole theme of the marketplace which we heard from ebay, hewlett-packard and we heard yesterday from ibm. >> tesco in the u.s. the market was moving too fast to respond.

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wall street's main regulator

the new york fed president dudley telling big banks to clean up or else. mary thompson has more at hq. >> executives from some of the biggest financial firms getting a dressing down about culture, ethics and compensation. at an all-day workshop at the new york fed yesterday. dudley a former economist at goldman sachs telling the attendees it's imperative to regain public trust and ensure long-term stability in the financial system. rejecting that wall street needed to minimize the number of bad apples, dudley said ethical problems in originate with the management who dudley says determine the quality of the barrel. asking if big banks were too big to manage ethically citing large problems until organizations like the near-fatal losses and the $6 billion trading loss at jpmorgan's london whale.

dudley recommending firms be more aggressive about self-reporting bad actions, be more aware of their public image and be more aggressive on compensation saying more compensation in finance needs to be deferred and for longer periods. he went on to say he thinks there needs to be a shift in the mix of deferred compensation away from equity toward debt. how long would dudley recommend deferring pay? up to ten years. he also suggested firms pay fines out of pools. another saying if banks don't clean up their acts, regulators and law enforcement will impose more requirements, strengths. >> still getting scalded after all those fines. coca-cola having its worst day in years. warning of currency head winds. those shares sliding off the news. they are trading down now. more than 6%.

let's bring in caroline levy, managing director of clfa just off the earnings call. did any of the executives say anything to reassure you after the company missed on volumes, revenues and even on the cost cutting program? >> not at all. i think they sound shaken and it's disappointing they are get nothing tail winds from the global economies or currency. the fact is that the biggest issue they have is that sugared cola and diet colas are under pressure from consumers moving to other products. >> are they balancing the risk enough in terms of the portfolio focusing on noncarbonated beverages, focusing on big bets for growth, monster energy and green mountain? >> those equity investments are valuable, but very small relative to the scale of the company. i guess they've been late to get into noncarbs with good reason. because every one they sell is

less profitable than a carbonated soft drink. i think this will be a really long haul to get to where they want to be from a profit standpoint. >> it sounds like you are saying the real culprit here is the fact they are in this business that consumers don't want, millennials don't want. it's not about the macroeconomic weakness, say in china and the rest of the world where they were seeing growth. >> yes. i think one of the bigger issues is the awareness by consumers what you put in your body is meaningful to your long-term health. even short-term health. i also think they pushed volume so hard for so many years, oversized everything, you are seeing the repercussions of that. that will take several years to get back to right sizing. >> is there a kill tur problem at the heart of what's going on here? is the dna of coke wrong? is it too old school? why spend $100 million to upgrade their headquarters in atlanta? >> good questions because if you look at who they are trying to recruit as new consumers, the

youth. i know from my own kids it's hard to get them to drink a carbonated soft drink. you wonder if there needs to be a little bit more change in how they are doing things. i have to agree with that. >> this isn't new. this move by millennials or people of my generation isn't new. this has been on the cards a very long time. remind us what the dividend is. what are people getting here? you just hold coke as a good dividend player even though it's potentially structural decline and if you get growth that's a bonus? >> that is a dangerous game. dividend yield is 3%. there are many other companies offering a similar yield be it kimberly-clark or procter and gamble where they are moving faster to change things. we've been underperforming the stock for a while. i think this transition is probably not far and fast enough. they are not making the changes quickly enough in their supply change and right sizing. >> what is your price target?

most of the community is not with you. half say it's a buy. most of them say hold and price target higher than shares are trading at now. what is the sell side missing here? >> price target has been $43 for a while, less than 10% up side. that is an underperform for the market. the sell side, i think, and other investors were hoping for a much deeper, faster restructuring. i don't think there is a quick fix. it's difficult to move a giant ship. we would be on the sidelines forenow. >> jim cramer suggested maybe the warren buffett effect. he owns 9.1% of the stock. is sort of helping block any activists, that might be a candidate for activism to get changes going in there, do you agree with that? do you think an activist investor should shake things up? >> it would be valuable, but the pressure is on management. they already, as of today,

shifted their strategy to price mix from volume and shifted the way they are paying their employees and managers. you are right. there is an obstacle to activism. nothing is impossible in this market. they could do with further shake-ups. probably some changes at the senior level. >> caroline, thanks for joining us fresh off that earnings call, with an underperform on coca-cola. if you are in the market for a private jet and want to find a great deal, you would be surprised what discounts you could get on used jets. where are you, jane? >> i am the legendary clay aviation. this is a gently used 35-50. it's about $20 million less than its original price. it's being sold because the owner is trading up. he got a new g-650.

you can get 450s, 550s at a bargain. according to analyst by an aircraft broker, current average $28.5 million or 62% of original retail price. a price that is expected to fall in five years to $18. $18 million for a g-550. this is pushing down the price of another gulf streams. you get a g-4 as little as $4 million. a year ago there were 11 g-550s on the market. now there are triple the amount and sales price picked up significantly as prices fall. >> we do have a 550. that one is priced at $38 million. it would have gone new close to $50 million. if you were in the market back in 2006 and you paid a premium for an aircraft, it would be a horrible time to sell right now because you are taking such a

huge hit. >> but a great time to buy. if you are a billionaire who can afford a 650, you don't have to trade it. there are no trade-ins. you don't have to sell your 550. you can wait till you get the right price. people are doing that now and multimillionaires and companies can say hey, we can afford one of those because the price has come down. the bulk of the market shifted back to the united states, but there is one gulf stream you can now sell used at a profit. the 650. yes, there are a handful of them already being flipped. >> wow. david faber is floating the idea we should buy the $3 million one and share it with the team. >> what would be my average cost? on actually operating this airplane? >> well, if you are operating it through a charter agency or an airplane management agency, that

is one cost you have there. my husband is a gulf stream pilot and works particularly for a company as part of their staff that. is a whole other operation if you want to pay for the pilots and maintenance guys and all that. then the jet fuel. if you are at this level, that's not really a question. >> simon can be the pilot and i will be the stewardess. >> i had to ask the question. >> it was suggested i should lease an aircraft. still ahead on the show, author and steve jobs biographer walter isaacson weighs in.

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>> all these airline stocks doing well today on news their latest price hike stuck and gotten legs here on the falling oil price market. no bad news on the ebola front and you have a recipe for success in today's trade. united, continental, delta, all the majors up anywhere from 3% to 5%. good day for the airline stocks. back to you. >> let's head to rick santelli. >> josh, thank you for taking the time this tuesday morning. >> thanks for having me. today's investor business daily headline says it all. rebirth of the toxic twins. do you agree with that headline, josh? >> i agree with the headline in the sense you've got two

companies, two of the largest financial companies in the world that have almost, really have no capital because it's being swept by the government. as we lower credit standards, the government is back on the hook for the rest. >> that's the heart of the story. let's get everybody up to speed. 20 something hours ago there's been work by fhfa director, hud secretary to work to try to lower standards of credit to get the housing market moving. one thing they did was raise the payment down 3%. is this really a good idea? haven't we seen this monster movie before? >> i think this is more headlines than reality. the 3% was a product they had last year. there wasn't a lot of uptake. psychology is very much against borrowers taking on a lot of leverage at this point in the

housing market. they learned a lesson. the bigger question is how do the gses price for the risk they are taking on when, a, they have no capital? and b, we've got a conservator who asked for comments where risk transfer fees should be? the industry is the only party responding saying lower, lower, lower. gses are being pushed to take on more risk without building capital to cushion them. that is productive and positive. i don't think it's a transfer risk on to the books of the gses in that move. i do think it definitely is an attempt to drive psychology in the market which i don't think is going to work. it's about demand as much as credit. >> you bring up the salient

point. banks aren't trustworthy. we can debate how the credit crisis and subprime started, but without the government with various programs, creating the sausage factory structure, my feeling is it would never have turned out the way it did reps and warrants. you think banks are ever going to trust -- they have algorithms for disparate impact. if they say there aren't this many short people, green people, purple people in the neighborhood, we can come after you. you see that changing? last answer. >> yes. that is exactly what they are trying to target. increased confidence in the banks. reduce risk to the banks. i think you're right. it's going to take a long time and more than this for banks to trust them. >> thank you for your expertise this morning. back to simon and carl. >> thank you, rick santelli. when we come back, morgan

stanley's vice president of wealth management. >> gary kaminsky is live.

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u.s. stocks rallying higher this morning with increased volatility. what lessons did we learn after last week. gerry kaminsky joins us. >> good morning. >> we spoke last wednesday when the marked open very hard. we talked about some of the feelings people had. i wrote some notes down because i wanted to make a couple points. the balanced approach is about eating well or sleeping well. when i manage money we talk to people about do you want to eat well oar sleep well. if you had a balanced approach, an account 60/40 fixed income equities. through the volatility last week and the rest of the year your account was up between 5 and 6%.

you did not feel the type of volatility being reported in the marketplace. it is very important to recognize if you want to eat well or sleep well you have to have that balanced approach. number two, nobody's talked about closet indexing more than me on this network in the last decade. there is a time for active management and a time for indexing. last week i believe is where the beginning you see active management significantly outperforming versus just indexing. last week was an opportunity to buy things on sale. i reflected back to 2009. somebody came on the media and talked on "60 minutes" about municipal bonds. last week is buying junk bonds. and lastly i was asked to to an event. and i know -- sarah's --.

we'll get to that after. why would i want to have active management? you talk about closet indexing all the time. and i thought of a very good analogy in terms of having somebody guide you on the -- in terms of advice. disintermediation in everything the technology has been a great stream for the last 15 years. financial services maybe that is not what you want. i said to the client, when i buy dog food now i like to go on amazon becauseky click and buy it and it delivered to my door. when it comes to my wealth and money, do i want to disintermediate it through something on a technology base just clicking or do i want the vice we give as an institution, our clients get by having somebody guide you in the balanced approach? >> about active management in hedge funds? which we know have been getting crushed. they are very active. >> right. >> and they have been generally

wrong as an asset class, at least this year. if i'm an investor, perhaps with morgan stanley off your platform i'm not happy with active management. >> you are talking about the hedge fund community which has been impacted by the large bets and companies impacted by lack of the economic growth forecasted. in addition you have had the risk off community. as you pointed out last week had significant blows because of what's happened. if you are going to invest in hedge funds you are expect that kind of volatility. but i'm not going to argue this is a year where retail investors have the outperformed. >> energy as well. i want to point out we are seeing session highs. we noted on the bottom of the screens for the s&p 500 up a percent and a quarter. the dow is up 100 points. and fixed incomes and junk bonds. also are you seeing it in the equity market? and what is the right allocation for stocks right now.

>> the right allocation depending on your risk tolerance, how much cash you need in the near term. and for the last decade people have wanted to shy away from the natural asset allocation because of what they lived through since 1999. it's impossible to give that specific answer other to say i don't have a problem with wanting or the slightly more conservative than the models would tell you because of the volatility of the last 15 years. >> so you are prepared for more weeks like last week as we go into the end of the week. >> i -- the best trader i know is one of the very few people that trade the market and make money long-term trading. i have absolutely no idea. we talked about ebola. in a very weak economy and the global concerns. does that impocket the

short-term? i don't know. but longer term, equities as an asset class, what's been proven time and time again. will be additive to our overall wealth. >> any questions? >> he sells hard. >> people say he's a salesman. >> yeah a good salesman. >> marketing is everything on wall street. >> as you all know, as i spent many years here. i only talk about what is actually happening. and right now and i'm not going to dispute david what you are saying. the balanced approach as you know and you compare it to the some of the -- you talked about. has been the right approach. many came on and talked about the higher interest rates. and i got abuse for saying i thought the ten year was going to go subtwo%. things happen for a reason. you got to let them play out. >> i'm observing and taking it

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good morning. 8:00 a.m. at apple headquarters. 11:00 a.m. here an wall street. "squawk alley" is live.