Skip to main content

tv   Squawk on the Street  CNBC  November 15, 2013 9:00am-12:01pm EST

9:00 am
we do the worst is employee evaluations. and it's human nature, right? no one wants to sit with someone and say you are aren't succeeding. everybody thinks a performance evaluation is here are the two things you do well, here are the two things you do bad and i'll see you next year. you really need to let people know where they stand and get on with it. >> david, it has been a pleasure having you here. we hope to have you back again soon. >> you, too. have a happy holiday season. >> have a great weekend. it's time for "squawk on the street". good morning and welcome to "squawk on the street." i'm david faber with jim cramer and kelly evans live from the new york stock exchange. carl quintanilla has the day off. one day after the dow and s&p closed at record highs, we are sitting up for a bit of a higher open. 10-year always important. heard from yellen yesterday.
9:01 am
taper? no. probably not. i'll leave that to kelly evans. 2.7. we've been hanging around that range for some time. let's go overseas and take a look. it was really asia that had the strongest markets in the world with the nikkei in particular. can you see it up 2%. 7.7% last week for the nikkei of course, they're pressuring that yen again, the dollar gets stronger and you see what happens as they're trying to get thing back on track in a sense after a gdp number that was a little lower than some had hoped for. let's get to our road map this morning. where does it start? the dow and s&p, starting from another set of new highs and looking to extend the overnight cali throughout. >> moody's cutting its ratings on bank saying the government is less likely to jump to rescue in the future. >> and paulson and loeb piling
9:02 am
into fedex. >> let's start with the markets, futures are on the rise. the dow and s&p all look to set new record highs. the s&p, by the way, fewer than 10 points from 1,800. we can do some quick math. in asia, the shanghai composite rallied after china released a raft of reform plans, including more than one child. >> changes to the one-child policy, changes to the huko system -- >> do you want to explain what the huko system is? >> you can think about it as an internal passport to some extent in china. it was modelled on the ussr version of that in the late 40s, 50s. if you were a virginian moving to new york city, you would have to have a passport in order to access new york city services. if you didn't have those, you'd kind of be a second class citizen and it creates a lot of hamstrings across the chinese economy. you have 700 million urban
9:03 am
people there, kind of 200 million of which doesn't have a passport for being there. that's why a lot of them stay at dorms if they work in the big factories. these signs of progress that indicate real reform coming in china, real consumption booms, real switch. that's what is going to support the market here. >> in 1850, our country had dorms for people who couldn't afford it, emancipated those people, became the industrial country we are, that was part of the industrial revolution. china is a little behind us. one child because mao felt strongly that population control mattered, they got away from some of the maoist regime things, i think you'd see more -- >> demographics also playing an important role here. we talk about it so often.
9:04 am
china faces an issue not as bad as japan. their aging population also and this will help conceivably. >> look, what really helps is -- >> these are long-term issues by the way. >> short-term, get europe going. 25% of their exports go to europe. the pollution control problem, they cannot get control. do you think -- there is a lot of talk that they're letting the state corporations continue to thrive, which is unusual because they don't have control over them. the communists control everything. >> depends who you ask. some say they have too much control, some say they're able to centralize so many of the services to themselves, they're getting away from policy. northeast asia, the japanese story, the taiwan story, it was all about marshalling state-owned companies to achieve economic outcomes and china has to unclench its claws from some
9:05 am
of these companies and allow them to be smaller and more competitive. >> there's two classes of companies that do well. there's the procter & gamble and then there's the ge cap pillars and both have been somewhat stymied of late. i was going to say the tech companies. you know cyber technology better than anybody. te tech companies claiming it's hurting their sales. >> cisco in particular citing china and lack of sales there because of worries about spying. in other words, the same way we won't let waway in this country. >> was there spying in russia and india, too? i don't think it's spying there. >> and cisco suffered in the market yesterday. you had some hard things to say. >> somewhat critical. >> a day after our new fed person, where are we?
9:06 am
>> once again we're gripped with the money management imperative. you didn't get yellen say anything about having to play catch up with the averages. that has been in charge, this notion of getting long. i checked with a lot of desks yesterday. there's not a lot of supply coming in, despite stocks rallying. that's highly unusual, it's indicative of what happens at the end of the year when people don't want to show they're not 100% long. sorrythe doub about the double . typically if you talk a stock to where it literally has some supply -- >> is that because of buybacks? >> also because institutions are reluctant to let go of stock. they just don't want to let go of their winners. i think you saw some of that yesterday with the -- i have chipotle on. that's a classic case of what people don't want to let go. it doesn't matter that the multiple is beginning to float up to well beyond the s&p. >> at the same time you could
9:07 am
look at chegg,s argument for a case for a lot of the ipos, the supply is so low, that's why they're raising the demand, but then they go to market and the trend hasn't been all that great. what's going on there? >> not that many. there has been more outperformance than not. chegg was not a good performance. >> most average up 1/18%. >> that was poorly priced you could say in retrospect. >> i think that what twitter looks look -- twitter looked like it bottomed. david you're stuck end lipless about talking about facebook and twitter. we joke around about that. we joke around about there are so many other stocks to talk about. >> yeah, there's tesla and netflix. >> oh, you -- solar city. i remember when i first went to a meeting with john thane of all
9:08 am
people, he said we're going to offer car loans in a security. i said you got to be kidding me? you can't do that. now they're doing solar panels. >> then it went to home loans being packaged into new securities and then it went to ruining the american banking system. >> but fedex, multiple buyers and no supply. at 136 there's no supply. >> we're going to talk more about fedex in the next block because there's some interesting things there as well. >> we have to keep an eye on the financials. moody's cutting the long debt rating of goldman sachs, morgan stanley, jpmorgan. a lot of people look at this and say if anything, this is a sign of progress. is this a reason you sell the banks? no. the case for holding them is not necessary the case the
9:09 am
government is going to come to your rescue in exactly the same manner this time. >> didn't you think it's funny, wow, moody's taking aggressive action now when our banks are the most solvent in the world. one of the things that has kept europe back is they are banks getting rid of things. they are dumping. >> trillions, trillions. >> they've gotten very tight in the european banks. the economy got better and they're not loaning as much and they're disposing of bad assets. >> they put themselves in a position where they could recognize the losses and part with the stuff that was marked well above what it was actually valued. >> remember the old days we used to come in and say they're vastly overvaluing their nonperformser. draghi gave them an atmosphere where they can wait -- >> quality review, it's going to be coming. >> last friday we thought especially with the bit of a tech up in rates, thought maybe this would be the group that would start to move us ahead
9:10 am
towards the end of the year. didn't follow through this week. >> no, but the housing stocks moved. but that's also yellen. >> one more potentially that will play in and perhaps weigh on the banking sector today, i believe we can show this quote as well. we've got holder talking to the "new york times" indicating with regard to the probe into foreign exchange manipulation, again, this is one of the many circling at the moment, but he's saying the manipulation we've seen so far may just be the tip of the iegsberg. we recognize this is potentially an extremely consequential investigation and that's selling as well -- >> it says bank investigation, that's fx. that can be another important investigation here. >> jpmorgan raised its price target to $15. i said to myself, one this evening i love about key, do you think they were manipulating currency? do you think they were one of the big creators of -- >> no, they weren't involved in
9:11 am
libor either. >> that's why i like huntington and first merit bank. >> the regulators are going to continue to tighten the noose. an interesting story from bloomberg last week where they're talking about highly leveraged transaction loans and curbing them or trying to actually target, allowing only those that come in below leverage ratios, so let's call it six times, debt representing section times of ebidta. if that starts to happen, that's nuts. a bank is supposed to at least weigh risk on its own. you do wonder about their ability to ever get out from under. >> you're talking about 8 to 9 multiple permanently. >> you just break them all up and let them do their thing. you got to figure out one way or the other. >> i want to raise more hell and less corn. remember that? >> yes. >> coming up, soros, paulsen and loeb jumping on the fed
9:12 am
bandwagon. should retailers follow suit? and zulily jumping into the ipos. as we head to break, the futures still positive. the specific as much just 6 away from 1,800. we'll keep an eye on that psychological level when "squawk on the street" continues. y crow. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. jbut when it comes to investing, things i prefer to do on my own. [ female announcer ] today, cisco is connecting the internet of everything.
9:13 am
i just think it's better to work with someone. someone you feel you can really partner with. unfortunately, i've found that some brokerage firms don't always encourage that kind of relationship. that's why i stopped working at the old brokerage, and started working for charles schwab. avo: what kind of financial consultant are you looking for? talk to us today. that's a good thing, but it doesn't cover everything.
9:14 am
only about 80% of your part b medical expenses. the rest is up to you. so consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, they could save you in out-of-pocket medical costs. call today to request a free decision guide. with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients... plus, there are no networks, and virtually no referrals needed. join the millions who have already enrolled in the only medicare supplement insurance plans endorsed by aarp... and provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. with all the good years ahead, look for the experience and commitment to go the distance with you. call now to request your free decision guide.
9:15 am
♪ so crazy right now, most incredibly ♪ welcome back to "squawk on the street." we have breaking data from the floor of the cme group. we have negative 0.1 on production. we were expecting a plus 0.2. last month was plus 0.6. capacity 78.1, we were expecting 78.3. again, it's not that great of data. hopefully we reflecting some of what's gone on in the government shutdown. bond market stays where it is, yields are hovering around 2.7
9:16 am
in the 10-year. i think bad news to them still means no taper, but this is probably not bad enough to chang the way they're thinking today. back to you, kelly. >> jim, thank you very much, sir. just trying to take a little closer look here. important last month given the bump from utility production is going to be whether it's that unwind or what's happening with the manufacturing piece of it in particular. we'll take a look into it. in the meantime, shares of fedex rising premarket, as paulsen, loeb and soros disclosing stakes in fedex. >> it was great. we meet with shareholders all the time. so there want anything unusual about that. and dan loeb asked if he could come down and bring a couple of analysts. they bought some shares and it was a lot of fun. they're very smart people. >> a lot of fun, very smart
9:17 am
people. but to what extent is this really about that group of people deciding that they're going to do something active in fedex? >> i mean, it doesn't appear -- listen, what i find these days in particular given activism has run rampant, you will get guys in stocks and then they try to encourage some of the bigger name activists to get involved. i think that was a potential here in fedex. i've been hearing the name a lot in activist circles. loeb got in there but apparently is not going to be active, is going to be passive and along with these other big names. but there is, jim, interestingly an activist case to be made here. it's when you look at the differences between fedex and how it's run and ups, its main competitor. many argue even who own the stock nfedex is very cheap but it's run as a plane company. they don't lease their planes, they own them. they have 280 planes in the united states versus 150 for ups. they make most of their money on
9:18 am
ground, not on express. when you look at the 400 to 1,200 mile delivery, they are 2-1 using planes at fedex versus ups. ups has 10 billion more in revenue, 50 billion more in market cap. and so there is an argument there and it will be interesting to see if that picks up any steam and whether they just go and perhaps do a big dividend to keep everybody placated. >> i didn't know that. i am a much bigger believer in scott davis and ups. i did not know about all that opportunity for fedex. i just know that fedex did a restructuring when the stock was in the 80s and it's been a magnificent performer. sometimes i wish the activists -- sorry to beat a dead horse here -- but a cisco, a big cap company doing nothing.
9:19 am
they go after fedex -- >> they're not. there are people that see opportunities and think you could. >> missed fact there. >> but at this point thing about names are not making an activist play and very well may not, although there may be one to make an argument that you're running it like a plane company, not logistics company. >> when fred smith sat down with them, he's a reasonable man. he's an economist. >> he does own 20 million shares, too, not to be forgot i don't know -- forgotten. >> he's very good. i think of all the terrible companies out there, all the companies where if we had different management, there could be some greatness. >> where are the agitators? why not look at it and say there's value to be unlocked? >> the agitators i think are taken aback. >> it's not necessarily a turn around. if you're an activist, you may not want to get involved in a
9:20 am
turn around that's going to take years, you may change allocation to capital in some way that's going to result in a real positive. that's another side of it. >> true alchemy? >> conceivably. >> last night i put mr. jefferies from abercrombie and finch on my wall of shame. i think if an activist came in and replaced him, he's 69, his contract's not up, i think there's value there. sometimes people overstay. people do overstay their welcome and boards are very forgiving. >> got to go out on top. got to know when to walk away. coming up next, cramer's "mad dash." we'll hear what he has to say about several stocks under the l lens this morning. dow is about 25, shrugging off the industrial data. the manufacturing piece of it was more positive. more "squawk on the street" from the new york stock exchange straight ahead. welcome back. how is everything?
9:21 am
there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.
9:22 am
a lot can happen in a second. with fidelity's guaranteed one-second trade execution, we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
9:23 am
♪ i like to dream, yes between the sound machine ♪ all right, seven minutes till the opening bell. it's friday. i'm happy it's friday. >> i'm not sure why steppenwolf played a role this. let's talk ge. >> let's do it. >> ge doing another pro shareholder equity offer. >> conceivably. we're talking about their north american retail finance business, things like private label credit cards. we did get some sense of this in the news reports from a few weeks back. they're going to spin off or i
9:24 am
should say issue up to 20% of the equity in an initial public offering. that will be done next year most likely. then a full split off by 2015. >> some people want that. >> of this business. >> some people want -- remember capital one has been a total winner. you get these credit card plays, people are very excited about them. visa disappoint, mastercard, those are different kind of credit cards. this could be something who want a new finance name might go to. >> parting ways by 2015. let's move on to exxon mobil. >> this is warren buffett taking his biggest position since ibm. i had been a big derider of exxon hoping they would show production growth. this last quarter was a good quarter for exxon. a 2.7% yield, this company is a long-range thinking, it hasn't really monetized xto yet, the
9:25 am
natural gas company, they've not been in favor of using natural gas as a surface fuel. i think when they change their mind, the stock will go higher. i think this is a very well company that no one, i'm going to use the phrase, ever got hurt owning. >> people run into the shares because warren buffett owns it? >> oh, geez, stop it. that makes no sense at all. my charitable stock owns wells fargo and i'm like we're not selling it because warren buffett owns it and she's like, jim, how about some rigger. >> stay with us right here on "squawk on the street." [ male announcer ] what if a small company
9:26 am
9:27 am
9:28 am
became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you are watching cnbc "squawk on the street" live from the financial capital of the world. we got the opening bell set to ring in about 30 seconds. what's key to this market? >> lumber liquidators, 27 cents short. i think the key to this market
9:29 am
is kimberly clark. >> really? >> there are nine analysts who follow it, major firms. six had a hold, three had a sell, a very vocal sell. mr. faulk, the great ceo, comes out and says listen, the last downgrade was at 93, look at the stock, you're talking about $113, 112 stock. that's a bond market equivalent. everyone said when taper turns, it going to crush them. mr. faulk is saying we're a living, breathing organism here. you may think all we are is a bond market equivalent. all we can do is break the company up. what is going on when they break the company up, david? >> shrinking to grow! >> that's the key. >> pfizer was the key to the market. >> and you know what drug that was. >> yes, i do. >> it was viagra.
9:30 am
it was viagra! let's ring the opening bell, shall we? we're about to hear the applause and get that opening bell. and here at the big board we're going to have ace, a transaction management platform. over at the nasdaq, zulily, a children's clothing web site. initial offering today. >> it's a very exciting site and it will be a very exciting deal. a little bit more green on the board. >> the t-mobile deal is holding at 25. that's important to point out. >> we didn't really get to that. we knew it was about a $2 billion offering of stock to raise capital for the company. ostensibly to use for spectrum, though they're not participating in the -- >> why doesn't google buy them,
9:31 am
david? >> it's an interesting question. >> doesn't google want to be all things? >> there is growing discussion in the industry that to the extent google needs control, all you want is to have people use as much -- use their devices as much as possible, in as many ways as possible, would google conceivably do that? they bought spectrum. would they actually buy an operator? you can't rule it out, especially they also have a manufacturer of handsets. let's not forget motorola. >> i guess how -- you can make your case do you want to put all your chips in a phone basket? if ultimately you're about that connectivity, i can see it as a valuable asset. >> for google, a lot of these are side bets. they're not central but they're bets on future and making sure the central business is able to continue to transform. >> we don't praise them enough. we talk about a lot of
9:32 am
companies. they seem to get lost in the shuffle but they are the ultimate cloud play, social play, advertising play, they're a very forward looking company. when you talk to younger people, where do they want to work? not goldman, okay. not procter. they want to work at google. >> or they want to work at snapcat and get bought by google. >> it's a $10 billion company if they come public. in this particular environment. everyone is going to say, jim, you're encouraging a bubble. i'm not encouraging anything. >> facebook, that is your digital mailbox, there's tons of data but snapcat? >> do you think snapcat is words with friends? it's ephemeral? >> it's hard with a site like that. in anonymity is a hindrance to being able to monetize -- >> how often do you snapcat?
9:33 am
>> never. >> i do multiple times a day. it's how i communicate with my kids. that's what they want. i could skype but they're stick of me. we snapcat all the time. >> we go to tjx and hit the mall and go to in ordnordstrom's. the play there off the cold weather were very strong. i'm going to come with both deckers, because that's uggs and also b.f. because -- you got north face, power house brand,
9:34 am
erik weisman doing such a fabulous job. i like to mention vf corp. i like deckers and i like the nordstrom call and i also like tanger factory outlet. the rack is doing very well. >> they're going to have tons of inventory. to go back to the nordstrom point, is this a company that you want to buy on the weakness here and say for whatever reason they didn't, cu execute that quarter? >> no, because they can't deliver. i'm tired of their lack of delivery when i can just go by terry lundgren. they're not kohl's, they're not -- if you go on the macy's call, it's really interesting. they were like we promoted correctly, we did door busters, we advertised, we executed better.
9:35 am
nordstrom is struggling. they offer so much service that i think it might actually hurt their margins. >> i want to talk about fannie and freddie. yesterday we had bruce berkowitz on. he suggested a somewhat audacious plan under which he and a group of investors would essentially buy the insurance business from fannie and freddie leaving the legacy portfolio to run off, raising $17 billion in additional capital. i did want to tell you this morning that bill ackman's purchasing square has taken a 10% stake in the common stock of fannie and freddie. hedge funds have been in the preferred shares. that's where berkowitz owns and perry capital, which is suing to overturn the third amendment in which the government basically takes the profits from fannie and freddie, that's where their
9:36 am
ownership stake is and many other hedge funds. but here it appears mr. ackman is focused on the common, at least according to two s.e.c. regulatory filings. he does say he's encouraged by or made the decision in light of the proposal made earlier this week by mr. berkowitz's fairholme capital. ackman, we've taken a lot of shots on him but on one he got right was general growth, when nobody saw it. >> it's up to the congress, up to senator corker. i'm hearing corker's warming up to this. >> berkowitz has thrown something out there saying let's do it. here else is what he had to say yesterday. >> the government wants to change the future relationship of the enterprises with government sponsorship and i understand that and the
9:37 am
government has every right to do that. but we need to respect the past, we need to respect current owners. current owners can help give everybody what they want. this could be a win for everybody. >> it's what he's saying. interesting to know, mr. ackman now again it's the common. and apparently he just bought it if he's saying it's in response to the plan. the plan was just announced yesterday. >> let me just ask this question because fannie and freddie is such an important and central issue to the u.s. economy. is this really about the future of fannie and freddie? is this about a trade? you can make money real quick in some of these preferreds. >> the preferreds are up five fold. a lot of hedge funds in the preferred are already thinking about exiting. from mr. berkowitz's point of view, he's got to stay in if he's going to have any credibility in this potential plan. we were skeptical in questioning him yesterday but he's trying to get something going. if it were warren buffett that came with that plan, it would be
9:38 am
taken differently, don't you think? >> the senate would say we've got the blessing of the best investors, let turn it over to him and let's do it. >> if it was buffett, not berkowitz, change the name. you'd get more traction. >> there's nothing wrong with that because buffett has a track record of doing things he perceives in a long-term effort. >> he suffered through the big downturn. >> berkowitz is long term. the man's portfolio has barely changed. if you own the fairholme fund, you better be reddy for that and this and this and this. let's go over to possible business an -- bob pisani. >> we're up section weeks in a row, the s&p is up six weeks in a row. the recent record was seven week. that goes back to i think 2009
9:39 am
or so. so we're near new record here. we haven't had great volume all week, it's been eh overall. number one, the december taper trades, that's all gone. yellen confirmed that yesterday and what's back in is the high beta names. it's out with old tech like cisco and in with new tech, yahoo! zillow, yelp, groupon, priceline, amazon. another group that's back in is real estate stocks, particularly home building stocks, the itb, that's the main etf for the home builders is up almost 5%. that's a five-day chart there. that's a nice move and that's a little bit of stabilization on the interest rate side. is there a reason to sell? i called around, asked a whole bunch of people this morning. not right now. everybody's gone back to being more afraid of missing the up side than getting killed on the down side. so the bottom line is right now this is still a very powerful
9:40 am
rally and still not a lot of reasons to come out and sell. a lot of talk we're still not overpriced on evaluation, 15 times forward earnings, expecting 10% growth in earnings next year. that will come down. thomas lee raised the price target at jpmorgan, 18.25 from 17.75. he said we are remaining in a secular bull market. let me mention nordstrom. it's common place to ount opoin the higher end is doing better, but the sales growth, only 2.5% on the year. i think it's down because the overall 2014 guidance for top line was a bit of a disappointment. zulily is going to price on the nasdaq.
9:41 am
these specialty retailers have done really well. this caters to mom. real special niche of the markets, the retailers doing very well. >> thanks very much, bob pisani. okay. let tell you about men a's warehouse and joseph a. bank, they say if you let us do due diligence, we might raise our bid, please, please, please. didn't help. a hedge fund that is being an activist here, even though mr. sandler earlier this week put a letter out that said we talked to the ceo of men's
9:42 am
warehouse. you haven't engaged with us in any discussions regarding our proposal. bye-bye. the question is what is eminence going to do about it? they come out with a release that said we are now going to try to seek to have a special meeting with the shareholders. you can act by written consent but first you have to move to get an amendment to do that. so they are going to try to do that to move towards a consent solicitation to remove directors without cause before the next annual meeting. they would need 10% to even then call the meeting to try to amend the bylaws. the new york hedge fund manager
9:43 am
would have to go down to texas. that's a tough road. >> seems like you all get along. >> i jest. we get along quite a bit. these companies would do well together. >> i have to tell you, david, i have to look at it from the fundamental side. >> whether it's -- >> it would be such a good idea, these two are struggling right now, joseph a. banks in particular. this would have been a really good deal. >> men's wearhouse has thus succeeded in giving them the stiff arm. we'll see if these actions are successful in changing the dynamic. >> you have someone flailing,
9:44 am
another guy comes in, reinvents. you have a lot of dual supply chains, a lot of overlap. it just a shame they didn't follow through here. that money's wearhouse wouldn't open. >> coming up, a mea culpa from mcdonald's, a fascinating one. and as you head into the holiday season, what's the number one wine? stick around, you'll hear one publication's stop pick when "squawk on the street" continues. tdd#: 1-800-345-2550 trading inspires your life.
9:45 am
tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. store and essentially they
9:46 am
just get sold something. we provide the exact individualization that your body needs. before you invest in a mattress, discover the bed clinically proven to improve sleep quality. the sleep number bed. once you experience it, there's no going back. final days for our lowest price ever on c4 queen mattress sets-just $1299. plus special financing until 2015.
9:47 am
only at one of our 425 sleep number stores nationwide. sleep number. comfort individualized maestro of project management. baron of the build-out. you need a permit... to be this awesome. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro.
9:48 am
♪ i got the magic in me, every time i touch that track, it turns into gold ♪ >> mcdonald's admitting its service has suffered as a result of trying to add too many menu items too quickly. to help rectify the situation, the fast food giant says it's investing in new preparation tables that can accommodate more ingredients to help assembly and they are going to add a third drive-through window. they have suffered, jim, since reporting those latest comps that disappointed globally. it's not cheap or easy to just throw a third window in there or even add a table. we're talking about capex. is it worth it?
9:49 am
>> mcdonald's has structural problems. chipotle spends year before they introduce a new menu item. safrita, they just introduced it in baltimore. they know the through-put problems. if you have these difficult menu items, your staff can't do it. chipotle just added five more per hour of lunches. mcdonald's -- panera trying to change their menu. >> aren't they between a rock and the hard place? if they don't change their menu, you may not get the traffic at all, right? >> yes. but these are complicated dishes in order to offset or kick the traffic back from mcdonald's.
9:50 am
when i sat down with wendy's, just the introduction of a couple new items. yesterday i had popeye's. they only do one at a time and it's hard. mcdonald's tried to do too much. >> if everyone else can get it right, how does someone like mcdonald's get it wrong? >> because mcdonald's is a much larger chain with not the kind of same managerial infrastructure. chipotle brings people up, really promotes them, has team leaders, linebackers they call them, too. when they have a complicated new dish, they make sure they're absolutely ready. they're doing a new chop house, an asian kitchen chop house, maybe three in washington just to get it right. they've had multiple years to try to get it right. some chains are more nimble.
9:51 am
>> so you're just all about chipotle. you just can't help yourself. >> i had afce, i had -- i can talk any chain you want, i can talk dine equity, appleby's. >> i-hop? >> they have not been able to execute correctly. what's the matter? >> your range never ceases to amaze me. >> i don't have a life be beyond fantasy football. >> from retail to food to oil and gas. >> i'm paid to get this stuff right. >> he is paid a lot of money. >> that's not the point of that. i come to play every day. >> not enough to buy snapcat. snapcat ceo apparently turned down a billion dollar offer not once by twice. he's said to have turned down google's $4 billion offer
9:52 am
because he believes at this rate his company is growing, it's going to be valued much higher down the road. jim had some thoughts on that yesterday. >> so in all seriousness -- >> no, i don't think he's old enough to shave. >> he's 23. >> so what? he's 23. how old were the google guys. i hate that kind of talk, that a guy's young. the problem is that most people are too old to run these companies. that's really been the big reservation i've had. >> doing a tax deal for google, take the stock, you run snapcat within google -- i don't know. >> we got to get to our squawk on the tweet this morning. if you could snapcat your advice
9:53 am
to evan spiegel, what would it be, what would it say? >> i'm doing it right now. why do i have to tell people? >> i want to know what that picture is going to be. >> "six in 60" don't go anywhere. we'll be right back. that's mine. ♪ come on, kyle. ♪ [ horn honks ] that's mine...kyle. [ male announcer ] revenge is best served with 272 horses. now get the best offers of the season. current lessees with an expiring lease get this 2014 ats for around $299 a month. ♪ at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing.
9:54 am
bringing the power of investments to people's lives. invested in the world. bny mellon. (announcer) at scottrade, our cexactly how they want.t with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade-proud to be ranked "best overall client experience."
9:55 am
9:56 am
time for "six in 60" seconds. start withage lant. >> they had a good quarter last night. >> lynn energy. >> a lot of big shorts in the name. i think they're going to be wrong. >> go-go. this is a company that morgan stanley says has gone too far. they been a winner. >> pandora. >> a lot of people think apple is starting to kill them with their apple iradio. >> amax. >> i have big concerns with them. >> costco.
9:57 am
>> stearn says it's a $144 price target. they did have the best comps of any retailer. >> i already know one guest you have tonight on "mad money." >> the second one is rocket fuel. this is a programmatic buyer -- >> went public not that long ago. >> this man is a rocket scientist. we have to find out whether this is too expensive. you and i have been through the web, have been through internet one. we know a lot of companies that advertise in consulting and they didn't necessarily all last. >> there is a new model emerging absolutely in terms of advertising the web, rocket fuel is one of those names. we've had a few of them come public lately. >> this is that realtime buy. the multiples are huge on sales, not earnings. a boy has got to be skeptical. >> and jack -- >> jack's great. >> you'll be out on monday, correct? >> then i'm coming back tuesday. red eye, red eye.
9:58 am
>> red eye, red eye. a lot of that. we'll we're still waiting for zulily to open for trading. we'll to the company's ceo coming up. my customers can shop around.
9:59 am
10:00 am
but it doesn't usually work that way with health care. with unitedhealthcare, i get information on quality rated doctors, treatment options and cost estimates, so we can make better health decisions. that's health in numbers. unitedhealthcare. welcome back to "squawk on
10:01 am
the street." th we have broken the streak of slightly disappointing data today. whole sale as expected plus 0.4, prior week was revised hirer to 0.8 po 0.5. who wholesale was revised down a bit. this is good news. none of these numbers were huge live relevant but together they were making a bad scenario. who wholesale inventory is important. it reflects demand. the stock market has stayed where it is, 10-year yield still sticking around 2.7% so no big move either way. back to you, kelly. >> nosing toward 1,800 there on the s&p. jim, thank you, sir. helping to support u.s. indexes
10:02 am
this morning is what's happening as well in asia. we've got strong rallies shaping up in japan but also in china, thanks shaping up there. eunice, people are describing this as the boldest set of reforms we've had in decades. is that overstated? >> reporter: no, no, it's not overstated. this is major news. this comes after the china leaders held a closed door four-day meeting earlier this week. the details of that document have been published in the state press and they are big. for investors, they said the government plans to liberalize the financial sector, beijing will allow the markets to play a bigger role in setting interest rates, the government said it would allow privately owned banks, ease curves on individuals who want to invest overseas, set up a deposit
10:03 am
insurance system. they are allowing the proflizatiprof professionalization of the banking sector. they said they would pull out all the stops on financial reform. one other thing people were concerned about this week was the role of the state. the government today signaling the state's role will be reduced. they said private capital will be allowed to participate in projects with state-owned enterprises, they're going to end some of the state monopolies and allow the markets to have greater say in prices on commodities like water, oil, electricity and telecommunications. in terms of foreign investment, they specifically said they would relax the curbs on elderly care for foreign investment as well as e-commerce. this is really, really big. >> just to go a step further, does the fact that it's changing so quickly after years and years of criticism that china has been
10:04 am
moving too slowly indicate to you the leadership feels more under pressure than perhaps we had previously realized? absolutely we feel it indicates they're been under pressure. they've been under pressure to reboot the economic growth here. of course we don't have any time frames exactly on what -- you know, they're going to be reforming the house hold registration system, which has been slowing the pace of urbanization and relaxing the one child policy, which has been another key factor and people have been very concerned about it hampering economic growth in the future. >> mega reforms that could play out or pay dividends in the years to come. eunice yoon, thanks so much. >> president obama is set to meet with health insurance ceos
10:05 am
today. john harwood with more. john? >> reporter: this is a huge mess. the administration is trying to do what it can to minimize the damage of that. that's the fix that the president announced today isn't likely to have a huge effect on the insurance market because most states and insurance companies want to move on to the new standard they've set, but the administration felt the need to deflect some of the heat that was coming on to themselves and to congressional democrats who vote today on a plan by republicans that would purport to fix the law but democrats believe it would gut the law by allowing new customers to come on to the individual market. the president will meet with those insurance executives this afternoon. he'll be taking some fire from them. they were criticizing his plan, the one industry source telling me yesterday this plan is a joke that just deflects blame on to the insurance companies. i would expect the
10:06 am
administration to try to tell the insurance companies that they will give them a little bit of a break on what they call the risk provisions of the obama care law, maybe some -- the loss ratio payouts which companies are required to make to absorb whatever financial damage they take as a result of the extension of these policies, but i wouldn't expect a lot of them to be extended and really, guys, the most important thing for all of this is getting that web site working because that's where the administration believes people will discover in much larger numbers than they do right now that they're coming out ahead under the plan as opposed to only hearing from the people who are losers, which is what the country is hearing right now. >> i mean, of course, john, the key here -- it seems as though they've added another layer of potential complexity to an already difficult situation in terms of the changes the president is trying to make here, which wouldn't seem to do anything toward the ultimate
10:07 am
goal to get people signed up, particularly the young, the ones you want to be signed up as opposed to the infirmed or those who are not great risks. >> no question. and because of that very complexity, the difficulty of doing this, that's why i think that not many people are going to do it. remember states have had the ability to extend plans into 2014. what the president was offering by way of flexibility yesterday is that some of those states that want to do that can extend some of those plans as late as the end of december 2015. but so many insurance companies in states want to move on to the new world that they're facing, the extension of a few months may not provide that much relief to people on the individual market. so that's why i expect when we look back at what happened yesterday, it will be seen as more of a political gesture than a substantive change to the
10:08 am
situation. >> john harwood, thank you. >> we want to stay with this story and ask what the best strategy is for resolving the government's health care difficulties. john engate joins us now. good morning. >> good morning. >> first of all, you have heard from the administration at all on this? >> we have not worked with them at all. we've been paying attention to it and we've seen a lot of the changes behind the scenes that we've heard about but we haven't really been involved directly. >> when we asked you plim errol where health care p-- prelimina
10:09 am
>> it was a short time frame. that's hard for anyone to accomplish, with lots of moving parts within the government. i don't know if anyone in the u.s. could have done necessarily a better job with this. it a very short timeline with a very complex challenge. >> let's go over some of the complexities here and the likelihood that you would place on the administration able to get this up and running by the end of the month. >> it looks like it's getting better. i don't know if the end of the month is something they can necessarily achieve because they have so many challenges ahead of them. it does seem to be getting somewhat better. i tried it out last night myself, i got a lot further through the process than i did originally, but that doesn't mean that it necessarily works at scale. my one experience doesn't necessarily extrapolate to the entire population. they have a tough challenge still ahead and a tight timeline. >> if you were to change a couple of things, would it be about the design or is it what seems like an interface but have
10:10 am
to go through an incredibly complex series of checks through many government agencies? >> i it's all of the above. i think there were some coding problems. i think the massive challenge is the integration of hundreds of different companies and agencies across the united states. you have hundreds of moving parts here you have to look up data in hundreds of databases and that all has to happen in realtime. it especially challenging when you don't have control of those databases. they're spread across a wide number of entities. it's a difficult challenge. >> is that why the states that seem to have set up exchanges have done so much better? >> i would guess that's the case. they're working with lots fewer sets of data sources, they control a lot more of the end-to-end processing that's going on. it's a much simpler process for
10:11 am
the state. they've got all the data about their residence, they have control over their data sources. they don't have to work across different agencies and different entities across the country. >> finally, is that any model, if the government can get this centralized web site to work, is there any way it could delegate more? >> i think that's certainly an option. the idea that a state is in charge of their own destiny is probably something that we should look at as a future model for this kind of health care exchange. >> all right. john engates is the ceo over at rackspace. thank you. >> mcdonald admits it has suffered from trying to expand its menu too quickly. is this just the tip of a supersized problem? we'll be right back. bny mellon combines investment management & investment servicing, giving us unique insights
10:12 am
which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.
10:13 am
10:14 am
after receiving customer complaints about slow service, mcdonald's is adding a third drive-through window to new and renovated stores. has it forgotten its fast food business model and made strategic errors here?
10:15 am
>> jim, is this about just weakness in mcdonald's core customer base or is it and to this point we've gotten some tweets and e-mails in the past hour talking about this story, is it that their mine has become too confusing? >> i think the biggest problem with mcdonald's is they tried to do too much. they see this core business as probably not going and more of the growth in the so-called more affluent and they're trying to offer premium products and i think therefore, the menu has grown too big. i think the only way they can really grow is try to expand their accessibility, convenience and store front and they want to continue to drive traffic through the drive-through. so that's what they are looking to grow. >> it is interesting. we should know you have a hold on the shares, $108 price target over 12-month period. as much as their problem was trying to do too much, is their fix also trying to do too much?
10:16 am
in other words, could they just focus on the fact they have too many menu items or they need to distribute them more quickly or do they need to address them on all front is it. >> i think it's best right now to execute, not try to introduce new products. right now the current environment is not conducive to new innovations and new products but more trying to execute and serve well. i think about customers, i think of three factors why they pick a certain restaurant. one is price, second is product but third is convenience. given the fact the first two is very competitive environment, i think they should focus on vying to be more convenient. they need to focus tactically and longer term strategically address how they want to folks
10:17 am
on the growth era, the millennium generation, which i believe prefer restaurants other than mcdonald's. >> is there a way to measure traffic? >> you can measure how many people in the lines. you see people wait in line, it too long and they leave. >> how expensive is this fix going to be? adding a third window is a big deal for some of these locations. >> they're in the processing of reimaging also the new restaurants. it's part of their capital expenditures and i think this is probably needed. it within their budget and i think that's what they need. so the answer is it does pay for itself and i think it's positive. >> jim, will these moves help you turn more positive on the shares or does it ultimately come down to macro? >> i think it's mostly macro. i think right now mcdonald's is more tied to the economic
10:18 am
environment and is hurt more because the core consumers are not doing as well. and the ones that are doing well are more affluent and they prefer the fast cash uls. right now we have a buy recommendation on starbucks. they continue to introduce new products and gain market share also in the breakfast and also in the lunch area. >> thank you, jim, we're showing some of the other pick there is as well. have a great day. thank you for your time. >> thank you. >> up next, a phone that can do something that no other phone can do. what is it? we'll tell you and show you right after the break. ♪
10:19 am
(train horn) vo: wherever our trains go, the economy comes to life. norfolk southern. one line, infinite possibilities. how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed much is the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ to enjoy all of these years. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets
10:20 am
and drive forward with broader possibilities. cme group: how the world advances.
10:21 am
. welcome back. let's get straight over to dominic chu for a quick market flash here. >> amr announcing it will list
10:22 am
the combined company of the american airlines and usair ways as american airlines group and both stocks are down on those opening trades. >> thanks, dom. samsung may have beat apple in the cell phone but lg has the curved flex phone. >> this is pretty cool. >> i'm going to put this next to this gold iphone so you can really see how it's curved. six-inch screen. so it's a really big phone. but it doesn't feel as big in your pocket because it actually curves with your leg. but here's the kind of freaky thing about this phone.
10:23 am
>> this is insane. >> plastic screen, still high resolution, so you can actually sit on it or smash it down -- don't try this at home, folks. your phone cannot do this and survive. it's going to be a high-end phone, probably the equivalent right now, selling in korea for about $1,000, unsubsidized. when you consider this is a flagship, it's got some unique features, it really shows how a lot of phone makers are trying to entice the high end of the smartphone market. last week we heard from qualcomm, telling us there's a lowdown at the high end of the market. it's not just cosmetic. when you get a curve in the phone, stretches out the light rays, should give a better viewing experience when you don't have the light bouncing back as much.
10:24 am
>> why aren't they selling them by the dozen yet? >> there's little sticker on the back of the phone. they don't want to advertise which carrier will carry this. they said at the beginning of 2014 this will come out. it is out in korea. we are the first to get a look at this phone outside of lg. >> there's only four of them? >>. >> four of them. we have two of them. >> we have 50% of the market. >> is that enough to differentiate that i would want to buy an lg over a samsung or apple? >> it depends. the power button is on the back. samsung is spends on marketing. it going to be tough to lg to break through all that. we've seen a lot of other companies not able to make money. they need an innovation that
10:25 am
catches people's eyes. >> i wouldn't put that in my pant pocket anyway. it's too big. >> i did put it in my pant pocket and oddly enough, it doesn't -- the edges don't stick out as much because it curves. this phone is too big for me to carry around day to day, i'm constantly taking this out, sending e-mails. i would throw it up in the air, testing its durability, just say. but there a lot of folks who like these big phones, analysts looking at spreadsheets and stuff like that, people with big hands, bigger than mine. >> didn't samsung or apple file a patent for curved technology? seeing this, though, the fact they already have it out here and that it's not just curved glass that, it does have these non-breakable properties, it would suggest either you get on board with this or by the time
10:26 am
people have it, people will be over it? >> it's led, it palalastic on t front, it high pixel density, it bright. we'll see how they display it in stores. if they can convince people it's different enough they want to show it off to their friends. >> you enjoy it. >> i don't know if they'll let me take it far from the stock exchange. >> fascinating. >> snapcat ceo reportedly turning down an offer to buy not once but twice. when we spoke to him in november, this what he had to say about monetization.
10:27 am
>> if you could snap chap your advice to evan spiegel, what would it look like, what would it say? ♪ [ male announcer ] every thought... every movement... ♪ ...carefully planned, coordinated and synchronized. ♪ performing together with a single, united purpose. ♪ that's what makes the world's leading airline... flyer friendly. ♪
10:28 am
10:29 am
. one hour till trading. here are some of the stories we're squawking about. the smartphone wars are heating
10:30 am
up ahead of the holiday season. samsung sold almost three times as many smartphones as apple in the third quarter. plus mcdonald's says it's sorry for the bad service. the president of mcdonald's usa said the company added too many menu items too quickly. >> and a record medallion price for handicap accessible caps, the record bid, a whoting 2d.5 million for a fair of medallions in in 2008, a pair of medallions for a handicap cab went for half that. >> compared to 2008, it not just art or pink diamonds, it tacky cab medallions benefiting from the rebound? >> they rarely get hurt, even in
10:31 am
recession. >> even with the new asset class. >> we're talking about new highs in the dow, the s&p 500, the nasdaq back towards that 4,000 level. what does the fed do under its incoming chairman janet yellen? let's ask our guests. guys, good morning. >> good morning. >> doug, first to you. we just saw jpmorgan raise its year end price target to 1825 here. a lot of people will say we're staring down the barrel of 1,800. is that psychologically significant? what else does that tell you about sentiment here? >> i think there is a psychological level there. i think in the end a lot of investors, at least the ones we talk to, spent a little too much time on the sidelines and have doubted the rally because they maybe philosophically disagree with what's happening in washington or at the federal reserve. in the end it doesn't matter, the market is going to do what it's going to do.
10:32 am
we look at a u.s. market that's reasonably priced. it's not expensive, not excessively cheap. it's a fair deal. as you come into a period of seasonal strength, the november to may period, this is the time where trends should probably continue to do pretty well. we're fully invested and enjoying the ride right now. >> there was a prizing amount of bubble talk with janet yellen. i know you look at a broad c constellation here and i wonder do things look sloppy to you? >> the string in equities owes much to very low interest rates. the bond yields moving higher. i don't think that the equity market will come under much pressure from significantly higher interest rates any time soon. for other asset classes, high
10:33 am
yield bonds. high yield bond spread right now is close to its median of the previous two economic recoveries. from that perspective, you can't say that corporate bonds are overvalued. but if corporate bonds are overvalued, it not because defaults or problems with corporate debt repayment are going to rise. corporate bonds are overvalued from the perspective of an overvalued treasury bond market. >> isn't it demand for credit that's driving a lot of the performance we're seeing, spilling over into equity? this does seem to put us in the middle of the another credit boom. do you agree with that and how do you trade that in the months to come ? >> if you keep rates low, you're
10:34 am
pushing investors out on the yield curve. if i'm an investor and i can no longer supplement my income and retire on what i'm getting on the bond market, i have to go out a little further. those folks are finding their way to the equity market. utilities, some of the telecom where we've really seen the bond investors go and hide in those areas in the equity market. they're a lot less attractive for that reason. >> i want to go back to financials as well, john. so important for broader market sentiment. moody's down grading some of the banks yesterday saying they are in fact too big to fail. what do you see for the financials? are they going to have a rougher go of it? >> they're holding up quite well today.
10:35 am
they still have worries because of reduced revenue growth. we've had this drop in mortgage-related revenues. there's a deep 60% year-to-year drop by applications for mortgage refinances. you made a very good point and that is, again, too big to fail, what this deals with are junior debt holders of bank debt. they are the ones now that face greater risk. the banks themselves, the depositors, would still be bailed out in the event of a severe stress scenario. could i add what's been overlooked among these downgrades is that moody's upgraded the stand-alone bank strength rating of two banks yesterday. i believe it's bank of america and citibank. that's because of improved capitalization. >> sure. >> and it's also because of the fact that we have a better handle on what their liabilities
10:36 am
might be in terms of previous mortgage-related matters. >> and would you then expect, john, that these companies, which for years traded below book value now are getting back toward hysterical valuations will return and return back to the bund? >> i don't think we're going to go back to the bund. the valuations are not going to be as rich as they were in 2006 but i suppose there's room for improvement. but let me give you an impression as to how the credit market looks at banks today versus 2006. today investors demand between $70 and $110 to ensure -- insurance $10,000 in bank debt. investors settled for $15 to $20
10:37 am
to insure $10,000 in bank debt in 2006. it's unlikely real return to the multiples. >> sure. we'll return to you in 2016. >> let's send it back to dominic for a quick market flash. >> warren buffett has disclosed a 40.1 million share in oil giant exxon. it was disclosed as of the end of september. the bulk of that stake was built up in the second quarter, 31 million shares that were not disclosed in the second quarter filing due to a special exemption that berkshire gets from regulators. they also disclosed a lightening of it's conocophillips stake
10:38 am
last quarter. >> he does get a lot of time to build up those positions at berkshires. >> the insurance city's tainduse on president obama's health care. the ceo of ehealth will join us after the break. in a world that's changing faster than ever, we believe outshining the competition tomorrow
10:39 am
requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.
10:40 am
10:41 am
♪ can't find a better way president obama meeting with health care ceos today to discuss how to fix the roll-out of another online health insurance
10:42 am
exchange is ehealth. the president and ceo of ehealth is gary lauer. >> good morning. >> how long is it going to get this thing right in your opinion? >> i don't know. they're going to get it working. the question is going to be how effectively does it work? we're at the point here where enrollment is critically important for the success and failure of this legislation. i can't urge the administration and others enough to start to utilize the public sector, that there are proven, tested companies out there like my company that can help to get people enrolled. >> the private sector is what you're saying. how would you go about trying to help with the rollout of >> there are companies like mine and others that have been online for years and year of doing this. we've been compared to the of health insurance. we enrolled more individuals in the month of october than all the government entities
10:43 am
combined. all of a sudden you've doubled it. we need something important to happen, which is that for lower income, subsidized individuals, we need to connect to the federal data hub to get coverage. tease that's a big part of what's into the working and these are many of the people being left behind. and we have to get them in the enrollment ranks, especially younger people, between 18 to 24 years of age. >> earlier i was speaking with another guest. the state exchanges seem to have done a much better job. is that simply because the level of complexity is that much less or were they better prepared? >> well, i think on a relative basis they're better. but, again, if you look at total enrollment, it way, way too low. it's just not going to work at this rate. it good these state exchanges are getting people through the
10:44 am
process, but we need a heck of a lot more going through. we need young people in here. young people want to do this online at 1:00 in the morning when they feel like it. they don't want to use a call center or paper. for example, in the month of october of the individuals that we saw come to ehealth, well over 40% were between 18 and 34 years of age. we've got to get government to embrace the private sector, get a public/private partnership going to save the legislation. >> this approach to health care was supposed to make it so it was bringing the private sector more into the fold than doing any kind of single payor model, for example. i'm curious, as you say, your web site functions like an but what the government is tasked with doing is double-checking people's social security histories, their tax records. it's all of those complex pieces of information that are going to
10:45 am
come from agencies the problem as opposed to the e-commerce part of it. >> where the government has fallen down is they haven't gotten people through the doorway to go through that complex part. we have to get more people to the door, to the front end and we have to do it soon. all of this is overshadowed by the president's announcement yesterday about cancellations, but the real fundamental issue is enrollment. this legislation succeeds or fails based on enrollment alone. we've got to get more private sector help in here right now. >> there is a hope it will follow along the timetable the part d launch of medicare did in 2005. it was a mess, perhaps not quite
10:46 am
as much archmess as this is. but then they did get it together. it took a long time for seniors to stand what was going on. now people seem relatively happy with it, whether or not you consider it an entitlement we can't pay for is another issue. >> that's a good example. i will tell you with medicare part d and other medicare products, the vast majority of those, the enrollment happens outside of government. it happens for private sector entities. we've got to be doing the same thing with obama care. government can't do this alone and government is proving that right now. >> i'm not expecting much to change then, right. are you? >> well, i'm going to keep pushing because i'm a supporter of the affordable care act, i want this darn thing to succeed and enrollment is the key to success right now. with the change in the cancellation issue that we heard about, it makes enrollment even more important. a lot of these people
10:47 am
potentially being cancelled were counted on as being the new enrollees. if they're going to be able to keep the product that they have, they're not going to be new enrollees so they'll have to go out and get even more. >> gary, appreciate your time. gary lauer. >> thank you so much. >> coming up, you're looking at the number one bottle of wine in the world. its identity is still a secret. but coming up we're going toto unwrap it and tell you exactly what it is. david's going to have a taste when we come back. >> all right. ♪ [ male announcer ] more room in economy plus. more comfort, more of what you need. ♪ that's... built around you friendly. ♪
10:48 am
that's... built around you friendly. you get your coffee here. you get your hair cut here. you find that certain thing you were looking for here, but actually you get so much more. when you shop at these small local businesses, you support all the things that make your community great. the money you spend here, stays here. in this place you call your neighborhood. small business saturday is november 30th. get out and shop small.
10:49 am
ask me what it's like to get your best night's sleep every night. [announcer] why not talk to someone who's sleeping on the most highly recommended bed in america? ask me about my tempur-pedic. ask me how fast i fall asleep. ask me about staying asleep. [announcer] tempur-pedic owners are more satisfied than owners of any traditional mattress brand. tempur-pedic. the most highly recommended bed in america. now sleep cooler with extra cooling comfort on our bestselling tempur-breeze beds. visit to learn more, and find a retailer near you.
10:50 am
♪ welcome back, and just in time for the holidays, we're taking a look at one potential housewarming gift for you. could it be a vintage chardonnay, an american pinot noir or sauvignon, so which fermented grapes have swirled to the top? tom matthews joins us now, "wine spectator's" executive editor with a big reveal. welcome. >> thank you so much. great to be here.
10:51 am
>> this is a four-criteria process, correct? >> yes. >> explain what goes into picking a top wine. >> out of 20,000, it's hard to boil it down to one. we look at quality first. that's the score. we look at value. that's the price. so there's, like, the fundamentals in the stock market. we look at availability, because it's harder to make a lot of great wine than just a little bit. and then there's the emotional factor, the x factor, what got us excited. >> what have been a couple of the past winners, and how important after you deem them top wines you see a flow-through? >> they sell out immediately. last year, it was california, relentless from schafer, beautiful sirab blend, we've done bordeaux, italians, but this is a first. >> now, we've got to know what it is. we haven't seen it yet. >> nobody has. the worldwide reveal. "wine spectator's" number-one wine of the year is from spain. from riojas.
10:52 am
>> always my favorite. this is a first, right? >> very first time for spain. and really, this is a balance between the ultramodern california style and the traditional burgundy or tuscany. it has 95 point, classic rating. only $63. very available. >> not anymore. and it finds that road with tradition that i think people want to drink these days. >> have the prices just gone up on the 4,000 cases made up? >> that's your job -- >> oh, come on, i imagine it has influence in the market. >> it definitely has influence. >> and it sells out immediately. so leave that one behind, please? >> this wine was reviewed a couple of months ago, so the people that saw it and jumped on it are now sitting pretty. >> where are we in terms of wine consumption right now and affordability? 63 bucks doesn't seem -- to our audience, it may not be that much, certainly willing, but
10:53 am
many people don't want to pay that much. can you get a good bottle for $15? >> you can. i spend $15 most times in a retail store. can you find a very good '88, '89 point bottle for that price. and americans are -- wine consumption has increased every decade, and end points are strong, california is strong. >> wine production has got to have increased quickly, if not more quickly. i feel like every time i'm driving across the country, new vineyards are popping up left or right, in states you never would have thought. >> all 50 states are making wine. >> what impact is that having? are more american wines good wines? or is there just more of it? >> well, i think there's both. buff i think americans are embracing wine as part of their lifestyle. they want good food. they want something nice to drink with it. they want to travel to noise plays, high achievers, like your viewers, and they want the good life. >> mm, well, i've always wanted to go visit rioja. >> a beautiful region.
10:54 am
19th century winery, still in the family hands, five generations, and really doing it right. they grow mostly their grapes, very careful about the winemaking, and just hard-working people. >> will this have an impact on the group stocks, like riojas become more popular? >> rioja tends to be a very good value. you can get one for $15. and you can hardly pay more than $100, so a lot of value to be found there. >> great stuff. thank you very much for coming by. yeah, we might have to crack that one open -- >> i'm not sure he's going to let us. >> thanks, tom. snapchat ceo reportedly turned down a multibillion dollar offer not once, but twice. google apparently bid $4 billion, at least according to reports for snapchat, and outbid facebook's offer, which was $3 billion. spiegel supposedly turned down google's $4 billion offer because he believed at the rate his company's growing, it will be valued much higher down the
10:55 am
road. so here's the snapchat ceo, what he had to say about that and the growth that his company has had, last month. >> right now, we think the company is in the adolescent, so it's creating a product that people love to use and monetizing that further down the road. >> all right. now, all of that brings us to this morning's "squawk on the tweet." if you could snapchat your advice to evan spiegel, tweet us. at faabout insurance.ou smarr because what you don't know, can hurt you. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪
10:56 am
at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. (vo) you are a business pro.
10:57 am
maestro of project management. baron of the build-out. you need a permit... to be this awesome. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro.
10:58 am
let's get to it. it is time to "squawk on the tweet." facebook and now google reportedly shooting down snapchat on their multi -- or being shot down, i should say. in any case, let's get to the "squawk on the tweet." if you could a snapchat your advice to evan spiegel about what to do at the company, what would it say? chris tweet, don't let google steal your fire. rick tweet, sage advice from the steve miller band, take the money and run. and bobby tweets, have a snapchat from myspace to remind him how quickly teens change their minds. >> myspace is a great example. it's funny.
10:59 am
jon fortt joins us. i remember there was a point at which news corps owned it, they were trying to swap it into yahoo! that's how valuable they felt it was at the time. and then they sold it for nothing, 300 million bucks. >> yeah, the value snap-chatted away. even though it sounds crazy, when somebody offers to buy a zero revenue start-up for billions, don't forget instagram. that will probably go down as smart as youtube -- google's acquisition of youtube for $1.65 billion years ago, because if they're willing to pay $3 billion for snapchat now, they'd be paying $5 billion for insta many g instagram -- >> and not dissimilar. you're talking about two that are hits with young people. >> photos go away, so they'll have to have a challenge monetizing that for the long term. people don't want their data retained if they're using
11:00 am
snapchat. but maybe there's a way. people figure out all kinds of things. >> that is a very good point. instagram is almost like a twitter-like service, but pictures, and put a community around it, how do you create one when nothing stays, when it's all gone? >> that's going to plague them. jon, stick around. david, great to see you. >> kelly -- we're going to keep an eye on fannie and freddie, the calm and preferred. >> have a good weekend. here's what you missed if you're just tuning in. >> announcer: welcome to "squawk on the street." here's what's happened so far. >> you don't just push a button and make this happen. there's a lot of work to be done, but we think we can reinstate our policyholders. >> the economy is not strong. it's not strong, because we don't have pro-growth policies in terms of taxes and trade, and the centerpiece of that is reforming the tax code to incent
11:01 am
more business investment. there's not a lot of supply coming in despite stocks' rally. that's highly unusual. it's indicative of what happens at the end of the year when people don't want to show that they're not 100% long. sorry about the double negative. [ bell sounds ] what's the matter? >> it's just incredible. your range? >> no, the -- it never ceases -- it never ceases to amaze -- >> i don't have a life beyond this and fantasy football. >> well, i know that. i don't know if the end of the month is something they can necessarily achieve, because they've got so many challenges ahead of them. but, i mean, it does seem to be getting somewhat better. i tried it out last night myself. i got a lot further through the process than i did originally. >> what they have said is the beginning of 2014, it will come to the u.s. boy, this literally came out in korea. this week, we are the first to get a look at this phone outside of l.g.
11:02 am
good morning, we're live here at post 9 at the new york stock exchange on a friday, and let's begin with a check on market, as we're nearing key levels for several of the indexes now. the dow edging closer to 16,000, at 15,929 this morning. it's up about .3%, leading the majors, in fact. the s&p 500 adding .2%, as it nears 1,800. the nasdaq trying to reclaim the 4,000 mark, as it's up just barely positive in this trading session today, though. now, shares of men's wearhouse rallying. the company said it would consider a new bid if invited by men's wearhouse to discuss such a deal. the shares are up about 1%. and shares of linkedin are rallying. stifel, nicolaus initiated it saying it is evolving into a critical daily and weekly platform for professional workers of all times. up about 4%. now to the roadmap. it's another big day for obama
11:03 am
care. the house is set to vote on its own fix to help people who lost coverage under the health care law, while the president meets with ceos of health insurance companies to talk about the fix he proposed yesterday. what is the way forward for obama care? we'll talk to a congressman on capitol hill and speak with a former cto of the u.s. plus, a big ipo this morning. shares of children's clothing website zhu lily are set to open any minute. we'll talk to the ceo later this hour. and sony playstation 4 is officially on sale everywhere. the lines have been long. with microsoft's new console out next week, which one will bring in the best sales this holiday season? we'll look at all of that. but we begin with obama care. later today, president obama meeting with ceos of insurance companies. this, a day after announcing a plan to help people's whose policies were cancelled under the new law stay on the policies. our own john harwood saying insurance executives are saying the change is a joke, and he joins us from washington with more.
11:04 am
john, before we get into the rhetoric here, i just have to point out, shares of the insurance company, they were rallying yesterday, and they're still holding in there today. so the view from the street, at least, is that this is no disaster. >> reporter: no, i don't think it's going to be a disaster, because i don't think the effect is going to be that great. you were talking, kelly, about the road forward. first of all, we've got a vote in the house today on a bill that would allow not only old customers but new customers to buy these noncompliant with the health care law policies. that is not likely to become law. this is a case where gridlock is the president's friend. many times it's not his friend, but it is in this case, because it's not likely that the republican house and democratic senate are going to be able to agree on anything. now, the question is, what happens with the fix that the president outlined yesterday? there are some states -- significant states, the state of washington, for example, just to take one, which spoke out yesterday -- that have said, "no, we don't want to extend these old policies, we want to
11:05 am
move into the new world of insurance." but there are also some states that have said, "yes, we're willing to do that. florida is one of those states, and, therefore, the chairman of florida blue cross, who was on our air earlier today doesn't think this is a joke, and, in fact, is saying he wants to work with the white house to make it work for their customers. here's pat garagity. >> there will be some confusion in the marketplace, but we're willing to take on that effort, but we want to understand all of the parameters of the decision. and so, we'll be involved in this meeting at the white house to talk through all of the detail that comes behind a decision like this. >> reporter: now, there are a couple of different implications of what pat geraghty was talking about. one is the logistical challenge of getting to customers who received cancellation notices. the other is the pricing and the effect on the viability of the
11:06 am
companies and the insurance exchanges. there is some flexibility in the law to give a cushion to some insurance companies, that would also, in turn, cushion the exchanges. everything ultimately is still going to depend, kelly, on whether or not they can get the website working for those exchanges so that people can see their opthss options and people may not want to renew some of the old policies if they can find out what's available to them. >> briefly, too, john, we were showing the tally of a vote on the floor right now. which i understand is not the final vote. can you explain here, is this the vote about moving forward the republican potential fix to the bill? >> reporter: no, that vote is going to come in the middle of the day. there are a variety of procedural things, and also a democratic alternative, which is essentially a codification of the same thing the president proposed yesterday, but we won't get the final vote on the house bill -- the so-called upton bill -- until the middle of the day. >> all right, john, thank you.
11:07 am
let's head to bertha coombs are more new information on the aca rollout, including who knew what and when. bertha? >> that's right, the house committee putting out some e-mails from medicare and medicaid services, and essentially trying to get at who knew what, when, in terms of how badly the might perform. back in mid-july, the deadlines were slipping, memos were saying that if they continue to slip and still doing functionality late into september, that that could affect quality. at the same time, you had one of the main contractors asking for more money, and henry sha, the deputy cio, sent an e-mail to some of his colleagues saying, i don't want to give them any more money. i need to feel more confident they're not going to crash the plane at takeoff, regardless of the price. that e-mail was on july 16th. on july 17th, he and marilyn
11:08 am
tavenner, the head of cms, were both testifying in front of congress saying things were on track, and they were going to be ready by october 1st. so as a result of that, a few days later, he sent an e-mail widely to his staff saying, look, i under oath stated we are going to make october 1st. i would like you to put yourself in my shoes, standing before congress, which is in essence standing before the american public, and know you speak not of necessarily just half truths but a truth that you will make happen. in other words, he wanted to make sure this happened no matter what, even as they knew they were having some significant technical issues. very interesting e-mails, kelly. >> absolutely. and i'm sure the reaction is going to be strong, as well. bertha, thank you. the house is voting today on the gop-sponsored "keep your health plan act." joining us from capitol hill is congressman john langford, and, congressman, good morning. thank you for joining us. >> good morning to you.
11:09 am
>> can we begin with the rundown of what's happening today on capitol hill? is it true the gop is voting for a gop -- i'm sorry, that congress is voting for a gop bill that would effectively dot same thing that president obama said he wanted to do yesterday, which is keep people on existing plans? >> it's similar to it. what the president is saying, if you're on this plan now, the limited group of people, and all of the other stipulations, we're saying remove the stipulations. if the plan was available at all. that plan is available for anyone who wants to be able to get the plan, it allows them the options. this opens it up to a free market to say we won't include all of the business solutions. you had to previously be on that plan, you had to prove that, and also -- the plan has to promote the other exchange plans, all of the other restrictions, and just clear all of that and make it simple. >> to be clear, so the gop strategy now is not repeal obama care. it's make it work? >> no. no, it's not. we don't think it's going to make it work.
11:10 am
here's what we're facing. there are 5 million people across the country that received a cancellation notice. the website is not on board. they cannot say it will be ready even by the 15th of december. if that's so, we have people coming january 1st that are currently insured now that will not be insured in january. that is absolutely unacceptable. we're trying to find everything we can to protect the people from the harmful effects of this law. >> i see. so the strategy is for individuals who had coverage, they want to keep that plan despite everything that's going on with obama care. what's interesting, though, is to some extent, the gop plan would force insurance companies to have to abide by that, in order to keep people on existing coverage. that's not exactly the free market at work. >> no, it actually just opens it up. it doesn't force them to. it opens it back up to it. so the key for us is the president wants to limit the number of plans available. we want to open it up and say as many plans want to be available could be available. let's let the free market work. >> okay. i'm getting a little bit
11:11 am
confused, so i can't imagine people trying to navigate this must feel right now. >> absolutely. >> what is the state of affairs you would like to see come march 1st, 2014? >> best case scenario, march 1st, 2014, we have all options are back on the table. individuals can choose either health plan if they choose those plans, and they have the opportunity. right now, the president continues to just to close down the different options and opportunities on that. we want to see those back open again, and for any individual to do that. it's not just individuals. let me clarify one thing. individuals, they keep talking about the substandard plans for individuals. lots of small businesses are on these associational plans. all of the associational plans are out, they're made illegal by the affordable care act. so we want to open that back up for associations through the small businesses, chambers of commerce, all of the folks to provide the plans again. >> and finally, congressman, to be clear, because a lot of the state exchanges -- and we've been making this point all morning -- have been working better. what's your view on that? >> the state exchanges have been
11:12 am
working better than the federal exchange? >> yes. >> i would say the state plans do work. that comes back to my original argument. if you go back to oklahoma, we have insure oklahoma, that we've done for years. it has been a good policy and a plan for us in oklahoma. now, the affordable care act and steps in on top of it and says that has to be waived and gone. >> but you're okay with doing this at a state level? >> if you allow states to make those choices, states make those choices, they'll make sure it runs well. if it's the federal government that does it, and the bill allows for that, if it's the federal government, that's the problem. i'm not saying the affordable care act and the mandates, let the states decide on that. it will be more efficient. >> all right. congressman james lankford, appreciate your time. >> thank you. as government workers race to repair, many have been left without insurance in the meantime. what's the best question to resolve the troubled site's problems to get it up and running by the end of november, if that's possible?
11:13 am
anish choptra, good morning. >> thanks for having me, good morning. >> it says the office has been sullied, and rightfully so. where does it go from here? >> the administration has had an ambitious goal for having the site working by the end of november for the vast majority of americans, and my successor, todd park, spoke to that at a congre congressional hearing. and i feel confident they'll achieve that objective. >> you know, the chief technology officer position, what was it, as you understood it, at the time? >> well, no, the position is clear. it reports directly to the president of the united states as a policy advisor to make sure that the ideas of the president cares about are infused with technology, data, innovation, to make a difference for the american people. it's a policy role. it doesn't manage contracts. it doesn't operate. it's a staff of just a couple of people. in the white house. to focus on advice to the president. >> do you think if you had stayed in office, that you would
11:14 am
have done things differently? >> todd park is a phenomenal chief technology officer. i think of him as a brother in arms, and i would have done as much as todd has been doing. on many cases, when we see challenges of this sort, the chief of staff, or the president, would ask us to come in, as the president's done with todd park and jeff, to come in and address the issues once they've realized there were challenges that needed to be overcome. and that's a playbook we'd run for cash for clunkers and a few other initiatives. >> sure. and having the luxury of not being involved in this right now, what would you say to him is the most important thing? what advice would you offer? >> well, relentless focus on execution. naming jeff to drive this gives the market, i hope, more confidence, that we'll see real milestones and progress against those milestones. it's also making sure that we force multiply. there are lots of people in this country that can help folks sign up for health insurance. we have tens of thousands of brokers to complement all of the
11:15 am
public and nonprofit activities that are out there. and you saw earlier on your show, even some of the online for-profit insurance broker site, like e-health and others, that can bring a value. that had always been part of the law, and i'm confident will be a big part of the solution. >> all right. hopefully, they're marshaling all resources. thanks, we wanted to get your perspective, aneesh. appreciate it. >> thank you for having me. in wall street has its way, trading stocks in penny increments will be a thing of the past. so if you can't do that, what can you trade them in? more on nickels when we come back. ♪ ♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement.
11:16 am
visit a branch or call now for your personal retirement review. the most free research reports, customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account. [man]ask me...
11:17 am
[announcer] ...every wish for a bed that could feel perfect under every part of your body... [man]ask me about our tempur-pedic. [announcer] they're sleeping on the newest tempur-pedic bed... the new tempur choice... [man]two remotes. [announcer] firmness settings for the head,legs,and back... these real owners get that famous tempur-pedic comfort how they like it. [woman]ask me about the lumbar button. [man]lumbar button
11:18 am
[woman]lumbar [announcer] tempur-pedic.the most highly recommended bed in america. now the fun begins! welcome back. i'm julia boorstin with breaking news on forbes media. the company, including the website and "forbes" magazine is exploring a sale and has hired deutsche bank to do so. the ceo telling his employees, he's received indications of interest and is organizing a process to test the waters regarding a sale, saying he expects interest from numerous suitors. the ceo says this will be the company's best financial performance in the last six year, saying it's been bolstered by 25% digital revenue growth. kelly? >> wow, julia, thank you very much. also, look at the financial sector as we follow the market higher towards the 1,800 mark. but financials one of the better
11:19 am
performer, up .4%. dominic chu has more. >> look at this, kelly, because among the best-performing stocks so far are t. rowe price, the mutual fund manager, up a little bit bush we'll call it a percent or more. leukadia umbrella, holding company for mining, telecom, health care, and those in banking. they're the ones that own investment bank and securities firm jeffries, and on the other side, goldman sachs, wells fargo, citigroup, also among the best-performers in the index overall, kelly. so, financials, yes, leading the way higher. back over to you. >> all right, thank you. now, wall street may be moving closer to allowing some shares to be bought and sold in nickels after more than a decade of trading in pennies. the plans to allow smaller company shares to begin trading in increments of 5 cents are winning the support of a variety of regulators, exchanges, bankers, and investors. and our next guest says the stock market has gotten too
11:20 am
efficient for small caps to thrive. an interesting argument. scott cooper is managing director, capital formation task force, and joining us from silicon valley, our own jon fortt on the set, as well. guys, good morning. >> good morning. >> scott, first, to you, is this about efficiency, or is it about high-frequency said, and the market becoming inefficient because of the way the trades are being executed? >> yeah, what this is about is we're trying to enhance liquidity, especially the smaller end caps, and the problem is, if you look at trading activity, the institutions have pretty much all but abandoned the market. 70% plus of the shares held in this end of the market are by individual investors. the big thing we think we can do, if we enhance trading liquidity, it will bring back institutional investors and improve the prospects for the stocks. >> bring this home for the folks at home. exactly how does a shift to a nickel affect that?
11:21 am
why is that going to be better for the individual investor? how's that going to increase the institutions trying to jump in? >> yeah, so here's what's happening today, right? so today, you can trade in -- you can post, you know, shares in penny increments, but then, you can also price improve in as little as a tenth of a penny. if i put an order for 1,000 shares, someone can come in and take that away with a tenth of a penny price increase. what happens is people don't want to show volume in this market, because they get traded away quite significantly. what would happen, if you widen the increments and at the same time reduce the amount of points people can trade at, so they can trade at the bid or the offer or at at midpoint, you'll actually make it much easier for people and incentivize people to show liquidity, and that will improve trading activity for the stocks. >> scott, i'm curious. how much has liquidity suffered? can you give us a sense of 2013 to, say, 1993 on this? >> yeah, two things that have
11:22 am
happened. the number of ipos has dramatically changed. if you look pre the last bubble, we had somewhere between 300 and 500 ipos a year. and about 80% of the ipos were $50 million or smaller. if you fast forward to today, 2013 is actually going to be quite a good year for ipos on a relative basis, between 175 and 200 ipos, but less than 10% will be $50 million market cap or smaller. and so, the biggest change that we've seen is companies are going public much later, in part we believe because the trading environment as a small-cap stock is just amenable to being a public company. >> jon, this comes at an interesting time, a time when more and more of the start-up firms in silicon valley are pursuing, what, buyouts by much larger companies, and we haven't seen them go public until the late stages. isn't that a good thing, though? >> it is a good thing for them. you have to think a lot of the rich angels and super private investors are getting the benefit in some of the
11:23 am
companies, whereas if they had come public sooner, mom and dad might have been able to buy into that if they're doing their homework, watching cnbc, figuring out about the companies before they get huge. it's kind of obvious, "oh, facebook, i know that's something already big, not just going to be big." >> that's an interesting argument. is access to the companies at an early stage a key reason why you want to switch to five-cent increments, or is that seen as a possible side benefit in. >> yeah, no, a couple of things. and jon hit right on it. two issues. number one is just in general, ipos are job-creation events for the company. if you look at companies that go public, they tend to increase the post-ipo employment by 150%. and over the last ten years, we had ipo volumes the way we used to be, we'd have 1.9 million new jobs probably created. and the second issue is exactly what jon said, which is what's happening here is almost all of the appreciation of the companies is going into the pockets of a credited investors and people lucky enough to
11:24 am
invest in -- 96% of the population invests in the public markets via the 401(k) plans, and we think a lot of the appreciation ought to be able to go to a broader set of people. >> yeah, well, it makes a lot of sense to me. granted, there's risks, but there's always risks. it's nice if the folks at home can play and feel like they have a shot at making it big. >> nickel stocks. we'll see. scott, thank you very much. managing partner at dreesen horowitz, and by the way, speaking of ipos, zulily trading open and significantly higher, almost 80% higher on its debut. it's just under the $40 mark. jon, this isn't unusual. in fact, this looks almost like the opening moves on twitter not too long ago. >> not like chag, though. this will get them some attention. it's one that hadn't gotten a lot of tradition from the tech press, maybe because they cater to kids and moms, and based in seattle.
11:25 am
but it's interesting, because they get quite a bit of traffic on mobile. mobile continues to be a key component in any tech company coming public. >> and we speak to the company's ceo in a couple minutes' time. and now moving even higher from where it opened moments ago. this is the e-commerce company zulily trading over $40 a share right now. john, thank you very much. for your insight on that, as well. coming up, mark your calendar, because the holiday season is fast approaching black friday, if you can believe it. it's only two weeks from today. so which retailers do you want to buy and sell here? the answer when "squawk on the street" comes back. ♪
11:26 am
♪ [ male announcer ] more room in economy plus.
11:27 am
more comfort, more of what you need. ♪ that's... built around you friendly. ♪
11:28 am
welcome back, and you're looking at shares of ecommerce site zulily up 82% in their debut over at the nasdaq,
11:29 am
hugging the $40 mark, up $18 from the open. and we will have more with the company's ceo coming up in just a bit. but it does give you an interesting read on the consumer and on where demand patterns are shifting, as we approach the key holiday season. we are, in fact, just two weeks from black friday. and joining us now with more perspective on this is richard jaffee, retail analyst at stifle, at key banc capitalist analysts. ed, are they going to crowd out the traditional chain stores? >> look, obviously, ecommerce is a huge focus of the chain stores. a number of them are investing to compete. mobile is a key theme. so i think they're all clearly watching players like zulily very, very closely. >> and what do you recommend for investors? who, then -- can anyone win here, or is this just a case of finding winners and losers within the traditional retail space? >> one of the companies that's been very aggressive in investing the online space, particularly within mobile, is
11:30 am
nordstrom. we think they have a best-in-class delivery systems, capabilities to ship from the store, and it's the compelling mobile content they offer that would help them compete against the likes of the zulily. >> it's interesting you bring them up, because after the earnings reports, a lot of investors are rethinking this one. what's the argument for nordstrom strategically, given that they're not necessarily connecting with the consumer here? >> well, i would say they're investing for the longer term, and obviously, that weighs on any given quarter's results. one other interesting thing with nordstrom is their rack business is doing a little bit business than the full-price business. that speaks more to the consumer. consumers are looking for the deals, and that's what that rack business serves for them. >> richard, do you still like nordstrom? >> i like nordstrom, but following the ecommerce comment, i really like macy's. they're the 10th-largest internet retailer in america today, and yet they have 800 bricks and mortar stores. they satisfy the customer in two ways and have an advantage in that regard. >> was that overlooked in the
11:31 am
latest beat? now, the ecommerce sales are factored in to the same-store sales, or is separate? >> they separate it out, and you can do the math both ways. 4.6% comp with, 3.5 without. they're doing well either way. they have the great product and exciting consumers to come to the stores, to the website and to the mobile site. >> and there's been plenty of discussion about this already, but i would imagine that's why you'd want to steer clear of, for example, a target with a much smaller ecommerce operation. who else, though? if that's the thesis you want to stick with, kind of the consumer-play plus the ecommerce, who else sticks out? >> i think product is key, and urban outfitters does a great job with the mobile platform. 30% of the revenues coming from that channel. i think gap has done a great job with the omni channel for gap, banana republic, old navy, athletea, and great merchandisen
11:32 am
online, and tjx, launching a commerce site, it's about the off-price buyer looking for great value, but now the ecommerce channel working for them, as well. >> good point. thank you for your perspective, and happy early black friday -- or something. >> and to you. >> have a great weekend. >> shop early. going back to zulily, debuting on the nasdaq and a strong performance, up 75% as we speak. this after pricing at $22 a share. and that was above the upwardly revised range of $18 to $20. and now, here first on cnbc is darrell cavens, ceo of zulily, with our own jon fortt at post 9, as well. darrell, good morning. >> good morning. thanks for having me. >> thank you for being here. so do you regret not doubling the price? >> well, i think we wanted to make sure we had a price that, you know, fit for the business and where it's at. and i'm pretty excited to see where it's trading today. but, you know, we just remain very, very focused on building the business. you know, we're working to build something for the long term here.
11:33 am
>> darrell, very interesting company. you've got a lot of people who aren't moms shopping for kids might not know about it. you've been around for just under four years. >> sure. >> i might say it's similar to fad in some ways where you're trying to source unique products, get them out there, and entice moms to shop. but are there dangers in this model going forward? we're seeing fab cutting back, moving to a traditional retail model. are you going to get caught up in that, too? >> we think our model's pretty special. and i think when we started this business, what we saw was consumers absolutely loving the unique and fresh model of the flash sales. and i think if you look at our category and our business, we're pretty different out there. we've got an incredible assortment of brands coming to the site every day. we're launching over 4,500 new products a day. an that's why the moms are loving what we have to offer. we're providing an incredible value, typically 50% off retail
11:34 am
pricing and the numbers we have out there speak for themselves, that our business is pretty different than others out there in the marketplace. >> how sustainable is that? is technology going to allow you to do efficiency and keep that going? or at a certain point, are you going to need to raise prices or get margin from somewhere? >> well, i think you see as we even look to come to the market today, we wouldn't be doing this if we didn't think there was a great long-term opportunity for us here. we've been able to scale this business up considerably. really based on that great value for consumers. we use a tremendous amount of technology. you mentioned that. you know, from how we're launching brands, we've got over 300 people in our merchandising division that are out there sourcing brands every day. we've got a phenomenally efficient studio business, where we're able to bring those products through very cost effectively, using a lot of technology, and run them through a proprietary set of technologies in our fulfillment centers, and i think that has enabled us to drive kind of variable unit costs out of the business, and as i look forward,
11:35 am
a lot more opportunity keeps improving that with scale. >> interesting. darrell, by the way, why the nasdaq for this listing? >> we thought the nasdaq would be a great partner for us. you know, they have a great technology base. we've got a strong technology platform. and it felt like a great match. >> tell me a bit about mobile and how quickly that's growing versus the rest of your business. >> sure. so mobile's been phenomenal for us. when we started the business, we had mobile in mind as -- excuse me -- from building from the get-go. over 45% of sales today are happening on mobile, up from just 30% a year ago. so we're seeing consumers engage with us on mobile. and again, with the unique, fresh content every day, when mom's got a few minutes standing in the starbucks line, or waiting for the kids in the pickup line at school, she's able to pull out her app on zulily on mobile and browse -- kind of discover great new brands and products. so mobile's been a big enabler for us, and as i look forward, i think a lot more opportunity
11:36 am
could continue to drive a very strong mobile experience and mobile demand. >> darrell, you and mark vaden, i hope i'm pronouncing that right. >> yes, that's right. >> first at blue nile, then zulily. what's next? >> we're super excited to be here with zulily. it's still very early days for us. we think there's tremendous opportunity to continue to grow this business. and all of our time and focus is going here. and, you know, it's just a phenomenal platform for growth, and this is where we're focused. >> what about dads, darrell? i shop on mobile more than my wife does. >> well, we -- >> yeah, go ahead. >> we have an awful lot of dads that come to the site. what we see is the mom market, you know, if your house is anything like mine, my wife has a disproportionate amount of the decision-making there, and i think we're seeing -- >> a very good way of putting it. >> yeah. [ laughter ] >> darrell, we really appreciate your time this morning. and congratulations. the shares are up 80%.
11:37 am
darrell cavens, the ceo of zulily. >> thank you very much for having us. >> have a great weekend. sony's playstation 4 is available everywhere starting today. it does come a week ahead of mike ro microsoft's xbox. does that mean they're aheade o the game this season? and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity? what we have found is that if that family is moved into safe, clean affordable housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. the oxygen of community redevelopment is financing. and all this rebuilding that happened could not have happened without organizations like citi.
11:38 am
citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. so we are now working in chicago and in washington, dc and newark. it's amazing how important safe, affordable housing is to the future of our society. geothe last thing i want iswho doesnto feel like someone is giving me a sales pitch, especially when it comes to my investments. you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.
11:39 am
bob pisani, we are edging closer to some key levels on the market here, sir.
11:40 am
how important is it -- how important is it if we hit those before the end of the year? >> nice, round numbers, people like it at 1,800 in the dow, for example. 16,000, 1,800 in the s&p, 16,000 in the dow. there's been resistance in the past when you get to round numbers on the s&p. for the moment, record highs. record highs, all four of the sectors are record highs, six weakness a row the s&p has been up. we haven't had a win like that since, i think, 2009, seven weeks in a row on the s&p. so two things that have happened this week. basically, the taper trades, the taper coming in december, the trades are all off. two other trades have replaced them. hig high-beta, interest rate sensitive, linkedin, zillow, yahoo! high beta. that's what high beta means. and emerging markets have bounced back, brazil, thailand,
11:41 am
all are up 3%, 4%, 5%. same situation with the other interest rate sensitive group, housing stocks. so horton, pulte, k.b. home, ryland, tripoint had good earnings reports, and that helped the group in the middle of the week. and the other big group, biotech stock, very iffy, but again, gilead, biogenetic, all on the upside. the big question is, can we continue on this, and the important point the traders are making is 15 times forward earnings is where we are on the s&p. that's not overvalued. they're expecting 10% earnings growth next year. that will come down. the bottom line, we're getting 4% earnings growth this year. that's good enough to get to the record highs and still not be overvalued. that's the main thing the market's got going for it. the other big thing is, everybody's very skeptical about the rally. so lo so a lot of money remains. >> some of the read points, the
11:42 am
modern day record, new-year highs, new closing highs for, you know, almost three dozen times so far this year. >> yeah. >> the history, the performance, the nasdaq up 32%, it just seems like the statistics continue to confound. >> this is a very, very powerful rally. and one of the big problems is hedge funds have had a very tough time about it this year, particularly long/short equity funds, because they're long a book and short a book, and they're underperforming the bogeys because the shorts haven't been working. the long-only guys are doing better than the long/short guys, they just can't get shorts to stick for very long. >> passive investing wins the day again. thank you very much, sir. investors are acquainted with janet yellen. what's their take of the incoming fed chairwoman? we'll ask when we come back.
11:43 am
[ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the all-new fidelity active trader pro. it's one more innovative reason serious investors are choosing fidelity. get 200 free trades when you open an account. there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex.
11:44 am
[ male announcer ] introducing fedex one rate. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro.
11:45 am
all right. some big calls are just ahead on the "halftime report." we have the s&p analyst who slap add buy -- or sell on twitter today. we'll explain exactly what's behind that bearish call. plus, jpmorgan's tom lee boosted his target on the s&p, and he's here to break down what he thinks will lift the record-breaking markets even higher. we're also whale watching, the big investors making surprising moves, and we'll ask if it's safe to swim with the whales this time around.
11:46 am
we'll see you at the top of the hour, kel. >> all right. stay dry. market bulls have been singing this morning to the tune of janet yellen's confirmation hearing. the new high run continues with the s&p 500 now eyeing the 1,800 mark. let's get some perspective from art cashin, ubs director of floor operations, and tom po porecelli. tom, first, the take away from yellen is dot-dot-dot -- >> i think people are trying to determine how dovish she was, if she was more balanced, et cetera, and that misses the point. from our perspective, it seems like she wants to toe the bernanke line, which is probably not a big deviation in terms of the framework bernanke has put in place, and perhaps that's the most critical part of this. she'll have plenty of opportunity to show us her leanings, whether it's to a significant degree dovish or moderate degree dovish. but yesterday was extremely balanced, and she didn't want to
11:47 am
rock the boat. >> i wonder where that leaves the tripwires, usually when we're talking about the 10-year? is it the 10-year tripwires? what to you is -- >> it's a couple of things. if you're into conspiracy theories, there is a rumor around all week that somebody took a big position in the spider 180s. >> the etf for the s&p 500. >> right. and the mark conveniently is obliging by marching slowly in that direction. to add further to what tom said, i think that as much as the market was impressed with what yellen said, the demeanor of the hearings impressed everybody. they did everything but buy her a corsage. [ laughter ] so that probably hints a seamless transition, and a continuation of the bernanke policy. >> i wonder, as well, we talk about how the market's -- you know, part of it is the s&p 500, but frankly, across the board, equities are at new highs, some of the signs out of credit
11:48 am
markets, you know this as much as anyone, looking at financial markets more broadly, are conditions getting frothy? >> no, it's funny, i would say in the consumer space in particular, i'd still say there's down right depressed for lack of a better word. having said that -- >> but that's actually what i mean. >> yes. >> in other words, we have stocks at new highs, while there's consumer confidence, frankly, at not great levels and signs that confidence has even weakened lately, and, you know, divorced in front of them. >> yeah, this is how i would define the setup for 2014, if you will. i would argue that this coming year, we'll look better in terms of economic activity than this year has already. i mean, look, you're looking at 1.8% growth year for 2013. next year, probably 2.4% growth year. that will be the best growth year we forecasted since the recovery started. where do you get sort of this extra boost from? the extra boost comes from the fact that the credit markets, particularly as it relates to the consumer, are really starting to heal. and i would actually argue that sort of the backdrop is ripe for
11:49 am
credit to really start to expand in the consumer space. we're not quite there yet, and i think the regulatory hurdles are significant, but we're moving in the right direction. >> briefly, art, what do you take from the zulily ipo doing as well as it just did, up 80%? >> i think the animal spirits are up in that general area. you know, the social media thing, we have twitter here, we had a variety of other things. and i just worry a little bit that we might be edging back toward that eyeball and click thing that we had just before the year 2000. so it's not quite frothy yet, but it wouldn't take much stirring to get it there. >> all right. art cashin, tom porcelli, thank you so much. >> thank you. fan boys rejoice. playstation 4 is available everywhere starting today. now, the playstation out a week ahead of microsoft's competing new xbox. it also costs about $100 less. does that make sony ahead of the game this holiday season? the answer when we come back. ♪
11:50 am
♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. get the best offers of the season now. lease this 2014 srx for around $369 a month with premium care maintenance included. ♪ [ male announcer ] how could switchgrass in argentina, change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 70% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus
11:51 am
with investment information, risks, fees and expenses to read and consider carefully before investing.
11:52 am
the next generation has arrived. people were lining up for sony's playstation 4, which is now officially available in stores across the country. take a look there at some of the images. in fact, i saw some of this on the street last night. with microsoft's xbox one out next week, the question is, which one has the leg up this holiday season?
11:53 am
josh lipton is live in san francisco with more. is it crowded there, josh? >> yeah, well, i tell you, kelly, we're outside, so the gamestop here in san francisco. i can tell you gamers were here last night. they were back at 6:00 a.m. this morning. sony, of course, pulling out all the stops to promote the new ps4 console, hosting launch parties from coast-to-coast. last night, hundreds lined up in new york for a launch party hosted by sony. this was really the first shot in the upcoming video game wars. microsoft, remember, it's expected to release its xbox one console later this month, which will be sony's biggest competition in the battle for hard-core gamers. so how do the two consoles actually stack up? the specs are expected to be pretty similar. here's the big difference. the ps4 will retail for about $100 less, and sony is hoping that will give it the competitive edge it needs to beat out its rival. >> in terms of the overall
11:54 am
numbers, we're planning on selling 5 million units worldwide by the end of our financial year -- end of march. and that's significantly ahead of where we were with the last generational playstation 3. >> morgan stanley forecasting similar numbers, with the expectations for sony to sell around 3 million units by the end of the year. and any way you slice it, sony has held a dominant lead in terms of hardware units shipped to retailers this year, with playstation consoles accounting for some 50% of the market in 2013. microsoft comes in a distant second at 30%. if you take a longer-term look at the battle between sony and microsoft, it shows the consoles are pretty evenly matched. with the ps3 and xbox 360, they've shipped about 80 million units over the product cycle. in first place, though, actually, is the nintendo wii. it shipped about 100 million units. analysts peg the console industry at about $10 billion, so listen, this is a battle
11:55 am
neither side is willing to lose. we'll be here all day talking to gamers, talking to ps4 fans. so look for a lot more reporting throughout the day. guys, back to you. >> sure. and gamestop, itself, one of the winners here. josh, thank you very much. jon fortt here with some reaction to all of this. it really is neck-and-neck. >> it really is. i was just talking to rick doherty at envision engineering group, a longtime technology analyst, studied the market a long time, and he thinks sony is well positioned this time around in terms of the way they've been supporting developers and getting the games out. some eight-player games that are being tested right now on the console. just in terms of game play. but what i wonder is, is this the end of the console era? you've got games on smartphones now, games on tablets. is this technology leaping enough to pull the folks on the edge back into console gaming? i don't know. >> real quick, is it a mistake for microsoft's device to be $100 more? >> it's gotta be $100 better if
11:56 am
$100 more. >> well put. are you a gamer? >> no, not anymore. >> not a gamer. i didn't think so. evan spiegel reportedly turned down a multibillion dollar offer not once, but twice. google reportedly bid $4 billion for snapchat, outbidding google by about a billion dollars. he believes at the rate his company is growing, it will be valued much higher. here's what he said about his primary focus with the company on "squawk on the street" last month. >> we're great to have a messaging model in china, and they've been able to do that without relying on brand advertising, so that's exciting. in the near term, we'll look at maybe transactions and make advertising down the road. >> if you could snapchat your advice to evan spiegel, what would it say or look like? tweet us @squawkstreet. ♪ ♪
11:57 am
so you can get out of your element. so you can explore a new frontier and a different discipline. get two times the points on travel and dining at restaurants from chase sapphire preferred. so you can be inspired by great food once again. chase sapphire preferred. so you can. store and essentially they just get sold something. we provide the exact individualization
11:58 am
that your body needs. before you invest in a mattress, discover the bed clinically proven to improve sleep quality. the sleep number bed. once you experience it, there's no going back. final days for our lowest price ever on c4 queen mattress sets-just $1299. plus special financing until 2015. only at one of our 425 sleep number stores nationwide. sleep number. comfort individualized
11:59 am
welcome back. it's tweet time. snapchat's evan spiegel turning down the multibillion-dollar buyout offer not once, but twice. here's some of the advice.
12:00 pm
mike tweeted -- kate tweeting -- and greg tweeting -- this offer will self-destruct in three, two, one, as will snapchat's user base, should have accepted. i think it's hard for people to think about turning down a couple billion dollars, but if jim cramer is right, maybe it will be $10 billion. now, time for "the half" and scott. #sell. that's what one analyst said to do with twitter. we'll hear from him live. it's our call of the day. whale watching. what big names are the biggest investors buying and selling, and should you jump in the water with them? we do begin with stocks, which are on track now for a sixth straight week of gains. little now standing in the way of dow 16,000, certainly not the fed nominee who did nothing to upset the bulls yesterday. and one of wall street's top dogs is upping his target for the end of the year. you'll hear from him in a moment. but first, the question to the traders -- is a global rally over the


info Stream Only

Uploaded by TV Archive on