Hi, I'm CNBC producer Katie Kramer. Today on Squawk Pod: noise in the jobs report and the debate over whether plans for higher tariffs offset sky-high government spending. Yeah, it is one loud election, but there are just a few days left. We check in with one corporate leader who is moving forward whatever happens: ExxonMobil CEO Darren Woods.
We're not setting our capital plans based on an assumption about whether there's tariffs or not tariffs or how that's going to manifest itself and then the role that we would have to lower prices.
But emotions are running high in these final days before the votes are counted. How we get through it with author and podcaster Arthur Brooks.
The key thing is not letting it ruin your life, is remembering what really matters is not the competition.
Plus, Apple and Intel speak to the street, Boeing hopes the third time is the charm with striking workers, and yes, people definitely still watch Jeopardy. This is such a boomer update, it really is. Boomer update, people at home are what show? It's Friday, November 1st. Squawk Pod begins right now. Stand by, Becky. In 3, 2, 1.
Good morning, everybody, and welcome to Squawk Box right here on CNBC. We are live from the Nasdaq MarketSite in Times Square. I'm Becky Quick, along with Joe Kernen and Andrew Ross Sorkin. It's a Friday, it's All Saints' Day, the day after Halloween, and the markets are feeling a little bit up this morning. First up today on the podcast: the October jobs report, the final bit of employment data before Election Day and before the Federal Reserve's interest rate-setting committee meets next week on Wednesday and Thursday. And the report shows that job creation last month slowed to its weakest pace since late 2020. The impact of considerable storms in the Southeast, a couple of hurricanes, and the significant labor impasse at Boeing dented hiring plans across the board. The U.S. economy added just 12,000 jobs in October, far less than expected. The unemployment rate holds at 4.1%. This is what economists call a noisy report, very event-focused and not at all clear if it's reflecting some fragility or weakness in the economy or if it's temporary.
The labor market is irrefutably slowing, and it is basically in the ballpark of what is a sustainable pace of employment growth, a stable, sustainable unemployment rate. The labor market looks healthy, perhaps a little weak, but basically healthy, and we've got inflation close to target.
But on the other side of the coin, the health of the U.S. economy and how we feel about it are among the top issues driving voters' choices in this year's presidential election.
Economist Joe Laia: the reason the unemployment rate was stable is because the civilian labor force shrunk over a couple hundred thousand. So this may not look like the great number or ex-hurricane that is being portrayed.
Meantime, take a look at shares of Amazon. They have moved higher, a lot higher, about 6.6%. By the way, earnings of $1.43 per share beat estimates of $1.14. Revenue also beating expectations. Ad revenue in line with estimates. And Amazon's cloud revenue growth, 19%, that was the biggie, a lot better than a year ago but still lagging the growth of more than 30% from Microsoft and Google's cloud business. CEO Andy Jassy saying the company plans to spend about $75 billion on capex in 2024, expects to spend more in 2025. He said generative AI is driving that spending. We saw similar things coming out of companies like Meta and others. Meantime, Intel shares rising. The company reported adjusted earnings of 17 cents per share versus an expected loss of 2 cents. Revenue also beat expectations.
When you look at the underlying business, great progress on products, on foundry. You know, a beat and raise, so obviously the markets are responding positively. But our view is, you know, we have a lot of work to do and we had a lot that we got done this quarter. So a really solid quarter of execution.
And Intel's current quarter guidance coming in above analyst estimates. Used to be if it bleeds it leads, so this is how I would have done this story. But you know, this is GAAP, we don't always do GAAP, we do do adjusted. But to be able to report a loss of $16.6 billion, which includes a lot of write-downs of, you know, for technology that's no longer any good, equipment depreciation, all those things, as Gelsinger tries to turn the company around, that is the GAAP number, 16.6 billion. It's the largest loss in Intel's history. Revenue was also down, a 6% decline. But then the expectations for the current quarter were not as bad as people thought. So the stock, which was actually almost under 20, is bouncing a little bit this morning. But I don't know, I guess the write-down was probably anticipated, not to that extent. The expected loss was $1.1 billion and it was 16.6, so not that expected.
But why did analysts, why was the, the analyst expected FactSet loss was 1.1 billion, so it was 16. The write-down I guess was the write-down.
Well, that's a big number. It is. Jesus Christ. 16.6 billion. Boeing and its machinist union have negotiated a new contract offer and the union is urging its members to vote for it. Phil LeBeau joins us now with the details. Hey, Phil.
Hey, Joe. Let's see if third time is the charm in terms of Boeing and the machinists getting a contract deal done. Here is the latest tentative agreement and the one that the machinists will be voting on. The raise is now 38% over four years. Remember, the previous offer was for 35%, the very first offer was for 25%. They've also enhanced the 401(k) match that the company will make to the machinist union. And then you have a $112,000 signing bonus if you're a rank-and-file member once the contract is approved. They will be voting on Monday. Remember, during the last vote, which was a couple of weeks ago, 64% rejected the contract offer that was on the table. That was an improvement from the very first vote where 96% rejected the offer that was on the table. So about 33,000 members will be voting. They'll vote on Monday. Yes, the union leadership is recommending that it be approved. They did that last time, they also put it in front of the members the first time and they said, look, we think this is a good deal. Let's see if that matters at all. At the end of the day, it really comes down to economics and we'll see if the enhanced offer is accepted by the rank and file. If you take a look at shares of Boeing since the strike started on September 12th, remember that this has cost the company an estimated $1 billion per month and we're coming up on that second month when we get to the middle of November where they have not had production for the 737 Max and the other aircraft that are made out in the Puget Sound area. Yes, they have raised about $24 billion in capital, so they have shored up the balance sheet to a certain extent, but they lost $6.12 billion in the third quarter. They need to get this wrapped up. Kelly Ortberg has been very clear, this is priority number one. They worked with the acting labor secretary and the union in order to get this done. Let's see if they cross the finish line on Monday.
All right, very good, Phil. It's taking forever, but I guess it could be worse. Is this the, is this the best and final offer you think?
Thank you, Becky. We've heard that before. We have heard that before. I think it's pretty darn close. I think it's pretty darn close. Look, that $112,000 signing bonus, Becky, I think that may be the sweetener that finally gets the rank-and-file members to say, we've been out of work since mid-September, here's a big check, I think I'm ready to go back.
Yeah, right. Looks like the market's thinking that anyway, I guess. All right, thanks, Phil.
Sony Pictures Television is suing CBS Studios, accusing it of leaving millions of dollars on the table in the network's distribution of game shows Jeopardy and Wheel of Fortune. The suit claims that CBS has made more than a billion dollars in profit from a distribution agreement which goes back 35 years. I'll remember Merv Griffin, this, a Merv Griffin entity isn't working aggressively enough to maximize revenue from licensing the show to local TV stations and selling ads. It said CBS projected flat to 2% growth in licensing revenue year after year, but when Sony became concerned and got involved in some negotiations, licensing fees immediately grew 177%.
Sorry, this is all we can get. I can speak to this just because I do see it a lot, but you know, two new, totally new hosts. One is one of the smartest people in the world and it's kind of fun watching Ken Jennings because there's times when he gets really annoyed with the three contestants because he knows every answer that he's, or every, that he, that he says he already knew. He doesn't even need someone to tell him. He's like, weird. Alex did too because he had the answers on the, he had the answers. Ken, Ken really does know. I think from what I can tell, he's a strange guy. And then Ryan is, Ryan is not good, is he? Is there anything he's not, not good at, Ryan? I still think Faber, Faber for the job, just saying. He was good. He really was. Shout out to David Faber. You, I, I thought he knows, he knows. I, I love Faber. Ken Jennings deserves that. They tried Mayim, whatever her name was, and the, the, you know, people were like, please. And then Ken got the job full time. But two major changes in the shows are, you know what, Vanna, Vanna's hanging in there. Looks great. She's, she's actually, she's a, I can't see, I told you, boomer, this is such a boomer update. It really is. Boomer update, people at home are what show?
Talk about this. Some Starbucks news for you. Starbucks chairman emeritus Howard Schultz weighing in on the performance of new CEO Brian Niccol in a LinkedIn post. Schultz said he was very impressed with Niccol's grasp of the many facets of Starbucks and the issues facing the company. He said he's heard from many partners who are inspired by the 'Back to Starbucks' call to action and strategy, and he's looking forward to, quote, following the journey. Shares of Starbucks roughly flat for the week on the back of earnings, of course. They basically threw the kitchen sink in and said, give us a year, we'll call you. But I think that a lot of folks that I heard from, Brian Niccol, a lot of folks that I heard about Brian yesterday after the interview that we had done were very impressed just with the concept of trying to get back to those things. Obviously, it's going to be complicated because we talked about the mobile ordering piece and if you do simplify the menu, certain sort of high-margin products, but if you can actually fix the throughput piece, and that's really the whole game for them, it can actually change it. He's an operator, you could hear that with his planning. You're going to give him time and I think people obviously have some faith in him based on what he's done already.
Coming up next on Squawk Pod: ExxonMobil CEO Darren Woods.
We're seeing record levels of demand for oil, record levels for demand for products coming out of refinery, petroleum products. But we also see a lot of supply in the world right now and a lot of that supply is coming out of the U.S.
What that means for pricing and how the leader of one of America's biggest companies is thinking about the vote next week, right after this.
Welcome back to Squawk Pod. I'm producer Katie Kramer. We're in the thick of election season, but we're also in the thick of earnings season. This next conversation is a bit of both. Energy giant ExxonMobil reported its quarterly results this morning. One recent headline about the company: a lawsuit from the state of California over plastic products the company says it makes from recycling and how effective that is in addressing a broader environmental crisis. Exxon is the world's largest producer of single-use plastics. The Golden State's Attorney General Rob Bonta spoke to us about the suit back in September.
Let me be clear about this: this case is to hold ExxonMobil accountable for their actions. They have hurt California and Californians, billions of dollars worth of damage to our environment, to our people, and their answer in their statement is to point the finger at California, the people that they hurt.
Energy prices, policy, a big touchpoint this election, especially across the opinions of corporate leaders supporting either Vice President Kamala Harris or former President Donald Trump. Even for New York Jets owner, chairman, and CEO Woody Johnson, he was an ambassador in the Trump administration. Johnson spoke to us on Squawk Box today.
Why do you support Trump if all those things are true? Well, I think inflation's going to go down dramatically. Why? With the tariffs? Well, this country runs on energy, number one. I mean, it's always been, it's always been an energy-based economy. Lowering energy prices, which I think he will do, he says he's going to do, and he can do.
So that's a little context. Now let's get back to our Becky Quick. ExxonMobil reporting in the last hour. Earnings came in at $1.92 a share, that was 4 cents better than the Street was expecting. The oil giant saying that it achieved its highest liquids production in over 40 years with 3.2 million barrels a day. Cash flow from operating activities during the quarter: $17.6 billion. And joining us right now to talk about it is Darren Woods. He's ExxonMobil's chairman and CEO. Darren, the stock right now up by about 2%. I think what may be key in this is a lot of the earnings growth, the earnings power, came from what you've been doing internally at the company to try and streamline operations and improve operations.
Yeah, thank you, Becky. Good to see you again. You're right. You know, the transformation the organization has been on over the last eight years is really beginning to manifest itself. It has been for the last several quarters, and as the commodity cycle goes up and down, I think we're going to continue to see the benefits from the work that we've been doing. If you look across each of our businesses in the quarter, by the way, this quarter, third quarter, is one of the best third quarters we've had in the past decade. In the upstream, we see record volumes coming from our advantaged assets like Guyana and the Permian. As you mentioned, we had the record oil production, or at least oil production, the highest we've seen in the last 40 years. If you look at the earnings per barrel that we're getting out of the upstream business, it's doubled since 2019 on a flat price basis. So take the market out of it, we've doubled the earnings power of every barrel we produce in the upstream. Similarly, energy products, if you look at the profitability of that business, we've doubled that versus 2019 on a constant price basis. Our specialty business, the year-to-date results are a record. Chemical business, we're up a billion dollars versus last year. We've cut out over $11 billion of structural cost out of the business. And in the new businesses that we're forming, the low-carbon solutions business, we're seeing real success there. We're the only, we've got the only world-scale carbon capture and storage system on the planet, and we've got five contracts to store CO2, close to 7 million tons per annum. We are continuing to progress the world's largest low-carbon hydrogen facility, and we've got a real first-mover advantage in the lithium business where we're trying to implement a new technology and establish a new value chain for lithium. And so a lot of hard work over the last many years beginning to manifest itself in some real wins with respect to the business performance.
Meantime, if you're looking at the broader economy and the broader energy picture, we have seen a little bit of an oil glut. I think oil prices down 10% over the last three months. What are you seeing in the world both in terms of oil supply and oil demand?
So I think if you look across all the products that we're producing, but in oil in particular, we're seeing record levels of demand for oil, record levels for demand for products coming out of refinery, petroleum products. But we also see a lot of supply in the world right now and a lot of that supply is coming out of the U.S. and the unconventional developments that we have here in the U.S. And so it's basically a supply-driven price environment right now. Demand looks pretty healthy as you look across the businesses. Similar with our chemical business, we're seeing very strong demand in chemicals, but at the same time, a lot of supply, a lot of capacity has come on to meet that demand. And so frankly, like these capital-intensive commodity businesses, it's the supply-demand balance that ultimately is going to determine price. Demand looks good right now, supply is in excess, and so prices are low. But as the world continues to grow, we'll grow out of that supply and we'll see prices rise when that happens. And we got to remember, in the upstream, in the oil business, it's a depleting resource. So every barrel you produce, there's one less barrel in the world tomorrow. And so that depletion curve eventually catches up to the demand side of the equation as well.
