tv Squawk Box CNBC November 26, 2013 6:00am-9:01am EST
>> good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. we're going to start things out with the markets this morning. we know that the dow and the s&p have been posting record numbers. but yesterday, it was the nasdaq stealing the show. the tech heavy index rising above 4,000 for the first time in 13 years before failing to close at that level. u.s. equity futures at this hour at least. if you want to take a look, you'll see that right now you see some modest advances. right. the dow futures are up by about 1 1.5 points above fair value. s&p futures up by 1.5 points. joe mentioned there are a few tests for the markets today, so why don't we take a look at the calendar on the economic side. we'll get the s&p case-shiller index-home prices for september at 9:00 eastern time.
later, the consumer confidence number is released for september. we were originally speccing housing starts at 8:30 eastern today. permits will hit the tape, but the government is delaying the starts and completions again. they are still blaming the shutdown for this. the commerce department now plans to share that information on december 18th. we go from the economy to earnings. this morning's horts include hormel, tiffany's, and barns & noble. also, other market related news, takeover premiums are shrink to go historic lows. "the wall street journal" reports more than 9300 deals and so far this year the average premium has only by 19% of a target the week before. that compares to a historic average of 30%. among those factor tos are booming economy, a worry interest rates will rise.
market vaum is an issue. you have to look in two different places to figure out what that word might be. beyond the market is the other top story, the severe storm threatening parts of the country. the big mess that hit omaha, arkansas and texas now sweeping across the east coast. >> good morning, andrew. this storm has an awful time as we're calling it here at the weather channel, winter form boreous. maybe is the possibility of severe weather as we head into today. meanwhile, a prestorm street, if you will, across the northeast. we have some slight snow ongoing. that's no the the big problem, though. boreas gets winding into tomorrow. today, rain down towards
atlanta. much of the southeast. thunderstorms there, as well. and then tom, kind of depends how you look at it here. good news, it's not a major snowstorm on the busiest travel day on the year. bad news, it's down into new york city, washington, d.c., as well. you have to head west to see that cold air get in there and that's where we'll see icy mixture getting into upstate new york and vermont. western pennsylvania, some great lakes enhancement, if you will. it is going to stay away from the i-95 corridor, so that will make things a little bit better. timing not great. 3 to 5 inches in that cold air is able to sink into winner form boreous. so, andrew, the thing with this
storm isn't that it's an unheard of storm. it's that it's on this busy travel day. >> thank you for that. >> it's going to miss us. >> and i still want to know what it does to retail. >> oh, no. you're worried? >> we didn't see each other yesterday. i became worried about retail. >> when you get concerned about a news story, it's due to courteous detachment. >> is that what they say? >> courtis detachment. that's her newest thing after read to go kill a mocking bird, she's always giving me the courteous detachment and i go, i'll courteous detachment you. anyway, the nasdaq for a while, you could overlay it with japan. and suddenly, though, 4,000? i tried to get back to -- >> well, look at the nikkei, though. >> but you know the name of this building. when was this building built, do
you remember? since we've been here how long? >> i would say 2003, maybe. >> no, i think it was before that. >> 2002? >> it was before that. >> we moved in in 2003. >> we did? >> yeah. >> because they started building it during -- >> well, they planned it and starting well it during -- >> the nasdaq 500 building. northbound had never built a structure from the ground up to watch. for a while, the nasdaq was going to be a tree that grew to the sky, it made sense. and the stock market wasn't nearly as popular, we used to refer to it as the nasdaq 5, but here we are at 4,000. and a lot of it is social, is it not? a lot of it is linkedin and facebook. >> there's pieces, though. if you look at what's really behind that --
>> well, microsoft is not back to 80. amazon is doing well. but the four horsemen never -- cisco is not back. >> they've never gotten back to the -- >> they have never gotten back to any of them. the nasdaq, the ultimate, you know, sort of canary in the coal mine for frovt, but maybe we deserve to be back here. in other news, new jersey gambliing regulators had given okays to offer gambling statewide. the decision came after four days of testing. and gamblers must be within new jersey. the garden state now joins nevada and delaware as the only states offering internet gaming. we'll talk more about this story with a gaming analyst in the next hour. then in retail news, canada's
globin mail approached sears to sell its canadian business. but so far, sear has come up independent. and in other industry news, shares of jcpenney got a boost in extended traying, disclosing a purchase of $8.935 apiece. obviously now he's more arrested than he was. reuters is reporting that tool industrial packaging segment could fetch about $3 billion. in late september, itp authorized a plan to begin a sale process for the industrial packaging segment. why don't we take a look at the markets again. as we mentioned, there are some modest advances this morning. right now, the dow futures up by about 12.5 points. s&p futures up by 1.5. as joe has mentioned, the nasdaq rose above the close.
oil prices also of interest. yesterday, you did see a big decline initially because of that iranian nuclear deal. some of those declines kind of passed away as we got through the day. people started bringing up skepticism about the deal. oil prices are up to 94.46. natural gas prices have been pushing higher as we've been wrachg this cold weather push across the country. right now, the ten-year note is yielding 2.762%. that's numbers the fed will be watching, as well. the dollar this morning is down across the board. euro is trading at 1.355 and the dollar/yen is at 101.45. gold prices yesterday settled at their lowest settlement since july 8. you can see right now that gold prices are up by about $10.30. this comes after three le clines after the last four sessions.
right annoy, it's time for the global markets report. ross westgate is tanding by if london. ross, good morning. >> good morning to you, becky. a little softer right now for european equities. we're not quite on the session low. mild losses. 5 to 4 decliners currently outpacing advancers at the moment. we hit the session low around about an hour or so ago in the trade so far today. the ftse 100 yesterday was up some 20 points this morning. it's down 26 points, so wiping out the gains of about a third. the xetra dax still on all-time highs. the cooke 40 is currently down 0.2% and the ftse mi byis down 0.2%, as well. now, i remember the argentinean government confiscated its stays in ypf in 2012. now it looks like there will be some kind of settlement. we don't know the numbers, but
it has given repso will a bit of a boost. remy cointreau is down 10.8% based on a profit warn because they had a slow yun in china. elsewhere, bonds yields have gotten lower as wheelchair gone through the session. spanish yields, 4.148%. we'll be looking tomorrow towards mr. berlusconi. he could be finally kicked out of parliament in a full senate vote, but i never know with the former italian prime minister. that's where we stand in europe. back to you. >> quantro, some people, ross, try to replace triple sec in
margaritas. they pry to replace quantro are triple sexx do not do that. >> really? >> yes. and i went and got some quantro. >> i don't think i've rch had a room one. >> if the, if you want the make it, autos hardly any soort. you were explaining some other stuff. >> the remy is a cognac, which is a choice for thanksgiving? the margarita or the brandie?
>> i make something more fufu for the softer -- >> okay, mr. white wine, for you, too? >> pomegranate margarita. you do basically the same thing, du -- >> and a frozen one? >> and i do put ice in there and blend it. i will do that for you, but you're talking a virgin margarita, as well, right? >> could you make me a shirley temple? >> i don't even have to do it any more. >> what's the other one, coke mixed with grenadine, that's the opposite? cherry coke? >> no. you do grenadine with sprite, a shirley temple. and then you do grenadine with coke, what is that?
>> i don't know that one. >> ross is gone. >> he's gone. he wants to be gone for this. >> roy rogers. back to blackberry, many are asking if there's a smartphone alternative. one option we've got for you took us by surprise when we return. but first, a little bits of squawk football news. the san francisco 49ers beating the washington redskins, 27-6. colin kaepernick threw for 235 yards, 3 touchdownes and no interceptions. the 49ers improved to 7-4 for the final nfc wild card berth. "squawk box" coming right back after this.
welcome back, everybody. right now, it's time for the executive edge. this is our daily segment focused on giving business leaders a leg up. businesses looking to wean themselves off the blackberry have had few options over the years. but an old tech firm is breathe something new life into corporate mobility. kayla tousche is here with this story. kayla, i'm listening, trying to figure out if there is an option i would take over the blackberry if it's not the iphone. >> you're our main audience here, becky, because i know you have had a hard time weaning yourself off the blackberry. but companies have long treated it has standard issue. but they've recently been warming to iphones and androids, even letting employees bring their own devices. it's a trend housed by one
start-up that show businesses that blackberry is no good. >> big banks are doing rogue, ditch i ditchi ditching dwass, paying top dollar for the app that puts apple and android devices in good company. >> we have the large aeft warningest tell care organizations. we want the rest. employees where data is on a secure twice as good as blackberry. just as a former citigroup executive. >> for me, it was sort of a liberation. you need to be able to conduct business no matters where you are. before her stint on wall street, she worked at motorola, palm and google. her timing couldn't be better. with the future of its biggest rival blackberry unclear, good
business is skyrocketing. >> we've actually grown our users by 50% within the last three quarters. >> they're not subtle about stealing market share. with webinars, conferences, and full page ads targeting companies to make the leap at what wyatt calls an inflation point. >> the next step, an ipo. the's's offers, foreher and her team, the outcome is not good. >> sthaels have seen a noticeable jump over the last couple of days. she's finally seeing cios of some of these big multi national companies coming to her and saying, listen, we're not interested in upgrading our blackberrys what are you offering us and how big can you scale this one our company?
>> but i don't understand. why is it that much biretter th using the apple version or the android version, whatever it is. >> especially regulated industries like the banking industry, like, you know, washington has kept the blackberrys because of security. the interesting thing to me about good is blackberry has a level two certification, good has a level four certification. so when companies don't want things to be forwarding things to this gmail or texting to their personal phone, they would rather keep it all on a device and be able to make sure that that information is secure. >> but it works on any device? >> it works on any device. it's a firly expensive license. they're trying to change their pricing model so more employees within an organization can have a license to use it because that saves the skp money.
>> does it make it et any includekier or is that something you would even notice? >> you know, it doesn't. i didn't really notice that on the app. i would have it. i would love it if cnbc got this. but i haven't experienced it on my own device with pictures, music, a ton of that storage on there. but the thing about good is it's not keeping all your information native. i asked her about cyber security and that's one thing we're going to be talking about later today. one of all these industry owes this one platform, does that make you more susceptible? she said no because we don't store the messages, we just allow the employee to connect to a company server. so i don't think it would make it necessary, but -- >> same thing. its competitors are citrix and a few other start-ups not as secure as good.
that's why they've been able to capitalize on this. another story, the "new york times" reports nsa may have penetrated internet cable links that connect cables around the world. internet cable centers are locked down under heavy security. but the fiber optic cable res said to contain information that is un encrypencrypted and an ea target for interception. >> we're back to are we okay with this? >> this creeps me out, not just sail, look, we want to work of in this information, but looking and targeting -- >> it sounds as though -- >> but there's so many data that the only thing that's interesting is when you see some money wired to yemen. there's so much data that none of it really will --
>> but instead of cooperating with companies and saying, look, help is flag suspicious looking trng transactions, but they're saying forget it, we're going to go spy without even your approval. >> the amount of data that they're talking about to be able to organize it and, like, spy on andrew, spy on me, spy on you without it being something that just raises a red flag, there's so much mass data that i don't care if they -- and i'm not -- you know, i do minor stuff. there's nothing there. >> i understand that. but the point is, you are using spying technology to capture americans' information, spying on american companies without their approval ig. now the respects are -- >> my question is, have they found another way in?
>> it creams me out. it bothers me at this point. >> the nsa operates independently. >> what does your guy do, andrew? he's a nice guy. he's not a nasty republican. >> i'm agnostic. i don't care who you're talking about being my guy. you're my guy. >> and you're my guy. >> there you go. >> okay. let's talk about the fda now warning 23 and me to halt sales of its genetic tests because they have not received regulatory clearance. the company 23 and me is backed by google and sells a $99 dna test that it says can provide information about a person's health risks. but regulators are worried that certainly false positive could and a false negative could failure to recognize a risk on
a -- >> this is so ridiculous. >> number one, a false negative is better than no information. you're not going to get any information. you wouldn't do it, otherwise. so you're in the same position if you didn't do it n first place. and no one in their right minds is going to take a mail order test and go and get a mass tmas. now here we are with more oversight from the fda which has other things to focus on. >> andrew and i have both done this. >> we've both done it. >> i think it was like $200 when i did it, about 2 1/2 years ago. i never even looked up the results because i was doing it because i was interviewing ann wojicki who is the founder and ceo of the company. i wanted to do the whole test, but things got crazy. >> how many x chromosomes did you have? >> it did not --
>> i it didn't specifically say -- >> i did it seven years ago when they were prototyping it and they were using tight test -- people were testing it in java, they were swapping you. and i looked at it to figure out whether i would get alzheimer's. >> and you didn't have any of those markers? >> i always joked that i could get it early because i have such a bad memory on the show. i could lose my hair. you learn all sorts of things about your family, different cancers you could get, but there's no way i would go and get a surgery or some kind of something -- i might be more aware of something, and maybe talk to my doctor about it, but that's about as far as it would ever get. >> and you guys know that the company is keeping a huge debate of all this stuff and adding to the knowledge we have about different -- did geno type
phenomenon and this is all really useful information. we studied a lot about the xxxy, xxyy, it's actually pretty interesting because it's hard to find actual examples where you can definitively said this pheno type aim from this again it genetic marker. >> i don't think they can continue to do the tests at this point. but it sound pd like there was paperwork back and forth. maybe they've been complying but not as fast as the agency wanted. >> i wanted to know if they're being halted what that really means. i don't know. that was not my understand, but there is growing pension.
>> overreaching here is -- >> well, if someone wants their -- >> you should be able to get the information. >> i'm worried by the nsa. i have to say, reading this stuff is getting spookier. >> well, you know, i want to hear what you're doing, where you think you might get in trouble for doing it. >> i'm worried about our civil liberties being eroded. i'm worried about technology getting better and better. >> we have a pretty good government over here in terms of civil liberties. so when they start telling you you can only have one kid, then start worrying about your civil lib terties. when we come back, we're going to become back time. does this tell us something about the broader market environment? >> blue, how the central bank plays into the skagz. ready to run your lines?
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>> yeah. >> from destiny's child. it was the third top song on billboard's year-end top 1100 chart in the year 2000. >> since before beyonce was beyonce. >> well, she was beyonce, but -- >> she wasn't beyonce mrs. jay-z. >> we're talking about beyonce because the nasdaq, when it got above 4,000 it was the first time in 13 years. it failed to close at 3,994. u.s. equity futures this morning are indicated up a little bit, but it's flat and -- i don't know. there's a lot of people that aren't around. don't you think? at some point that people do go -- people that can afford to a lot of times leave around thanksgiving and they might leave around christmas.
are you going anywhere, sorkin? no? >> i'm not going anywhere. i'll go away next week, but i'll be here for christmas. >> but you are going away next week. that's right. >> a preholiday holiday. >> and i know your plans. i like that because it involves the staff. i like that. the house is -- do you have a chef? >> i don't know what you're talking about. i don't know what you're talking about. >> that's the true sign of the -- that's the true sign of the caviar economy, when you go to a developing country where you can have like 40 people working for you. i didn't say which developing -- there's developing countries all over the place. do you not like the staff -- never mind. let's forget it. there's an upstairs downstairs going on with this thing, right? have you got your white dinner jacket ready? he's totally speechless, which is rare. >> you have to leave at some point, too. and when you do, you should be careful. >> i will be putting on my own
clothes when i go. >> i'm sure he is, too. >> i'm not going to be like this with someone -- yes, sir. >> let's talk about the federal reserve. it has still offered few real clues as to when a scaling back of its bond buying program is going to begin, but most agree one key driver will be the fed's data dependance. is that the most effective situation? joining us now, chief executive at vining starts, craig, i know you're fared up about the position the fed is in right now and the potential risks. what worries you the most? >> well, good morning. i think the thing that worries me the most about where the fed is today is that losing credibility and when you look at what they've done from the beginning of this process, they started with saying they're going to keep the overnight rates low for an extended period. then they move to 2013. then they move to 13, then to 14, then to a 6.5% unemployment
rate. how do we affect forward guidance? clearly they have lost confidence in asset purchases and they're trying to look at what can we do to replace and i think they're losing credibility by continuing bad forecast. by the time the future policy decisions to those forecasts, it's easy to say you guys can say you're not going to raise rates until x and then they're not going to believe them. >> how much of this was because they chose not to taper in september? >> i think a lot of it. absolutely a lot of it. they've cleared forecast to the market through the various methods that they used, that they would be tapering in september. and the ironic part of that when when they announced qe3, they said it would take substantial in the economy. and yet in june, i think it's hard to argue there had been substantial improvement.
and just one indicator, they had gone from 148,000 to 185,000. i think the real reason is they're concerned about the risks being created by the balance sheet growing to large. >> and potentially wonder background tefkiveness of the program at this point, too. >> absolutely. the efficacy of it is in question. yet they continue to do it in september. so i think as part of that, the market now looks and if the fed comes out and says we're not going to raise rates until 2017, i think the market knows that if the conditions change, they're willing to change course. >> i mean, this is an argument against transparency in some -- in some level. i mean, the fed has said we're going to be transparent, we're going to tell the market what we're doing. and i guess there are some major risks to that idea of transparency. >> sure. and you have to look at transparency as two things. first of all, it's a policy tool. clearly, when rates are going down, when you're trying to make the policy more accommodative,
you can use it as a tool, especially when you're lost by the zero bound on the overnight rate. it makes it very clear your errors. and by project b it will be 2013 and '14 and '15. asset purchases are supposed to be done by 7% unemployment rate. >> what is your forecast? if you're watching the jobs number, if you're watching the other numbers that trickle in, are we improving? when do you think they'll start this take placer? >> i think there's momentum building to start the taper. so i think there's a group on the fed worried about the risks being associated with asset purchases. there's a group that wants them to be data dependent. so i think there's momentum building to slow. so i think you will start to see them taper. my forecast is the economy continues to grind along at a fairly slow rate, 2% type of growth rate. but that they're going to have to move to something other than asset purchases to be
stimulative. >> craig, we want to thank you for joining us today. appreciate your time coming in. >> thank you. we have other headlines for you this morning. this one, we talked a little bit about, but not this piece of it. the eu is accusing the united states now of improperly trolling the citizens online data. the ft reporting that brussels is warning washington that u.s. tech companies risk losing their exemption from privacy rules unless the u.s. changes the way it treats eu citizens online data. and this is what we -- this is google, microsoft, everybody who does business in europe, that goes to the larger issue of how much more challenging it's going be for u.s. businesses to do business abroad because of the politics of the moment and whether other countries are going to say, you know what? we're alnxious that you're -- because you're a u.s. company that your information is going to be somehow blow over. >> cisco tried to say that and then they asked was it material to your results?
oh, no, no. >> i don't think it's material yet, but i think it could be a -- assuming this becomes a bigger and bigger story. >> no, no. >> you saw that they -- unless you have an incompetent spy agency, you're doing it, too. and then if you're not doing it, then you just feel incompetent. >> i think the france, uk, i'm not sure germany and doing it the way you might thing. germany wouldn't be doing it? >> i think there's something countries not doing things as aggressive as we are. >> germany is morally above us in this issue? >> i think in a post world war -- there they're still a little limited on certain things that they do. i think there's a cultural thing about a lot of this stuff. >> i wouldn't know. >> the chinese i'm sure are doing it like crazy. anyway, we have a lot more news for you coming up. new jersey gambling regulators have given the okay to six casinos to offer internet gambling statewide. we'll talk to wins and losers
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new jersey is permitting online sggambling. joining us now is harry curtis, from nomura securities. harry, initially, i don't know, i liken it to being able to watch movies at home, but that doesn't mean no one is going to go to a theater. it's a totally different experience going to a casino, isn't it? you don't need to get in your car. >> but you're sitting at a computer screen gambling.
at least at the casino you can have a couple of cocktailes and it's social. if you're in your basement gambling on your computer, how is your self-image working out for you at that point? >> it seems a bit desperate to me. >> my question is is this a huge threat to -- obviously, some think it's a huge threat to ka seennies, right? >> in the united states, i don't think so. i think in the u.s. a company like sheldon nadelson, mgm, they're making most of their money iventer nationally. so at this point, it's a small piece of their business. >> how can we make this story something to think about? number one, andrew, you don't like the idea of people being able to main line something that can be negative to their family by sitting at home, right? >> yes. >> is there any truth to that to be -- should we be opening this up for people who can't control them in the first place? >> i think that's the debate
that's going to rage at the state level. and the interesting thing about gambling, particularly in new jersey, because it's the first full scale gambling that you'll see in the states, and you'll see states like connecticut and california and new york watch it carefully. and they'll monitor particularly the tax revenues. and if the tax revenues are high, then they'll be -- >> by the we, if tax revenue res high, it's almost worse. >> with see the ads, it's happy and instead of losing 10 grand apiece, that's 100,000 people losing $2 apiece. but you're separating people from their money with no chance of winning anything, right? >> my sense is that's right.
as a practical matter, though, as we take this one or two steps further, my guess is that it's going to be very difficult to get a national gaming bill through congress. >> can you bet on like college football online now? >> in -- >> or basketball? >> i don't think so. >> you've got to pay up front, right? you can't build up a tab, can you? you can't get in trouble with the people that will come visit you for the money? >> ones that know how to use their knuckles. >> yeah, exactly. you'll be limping for the rest of your -- that scares me. if you can build up a let it rides on the next one, that would away problem. >> but i just don't think that's likely to happen. this is all being done realtime fast with your credit cards, which is another issue. >> if we happen to invest in
this, what should we buy? >> it's difficult to say because it's such a small piece of the total gambling picture. the biggest investments are generally have their cash flow coming from asia and specifically macau. so the two companies that do have the greatest exposure to new jersey gambling would be boyd gaming and mgm. >> all right. so if you want to try to go along for the ride, if you want to cash in on other people's misery, those are the companies that you would -- all right. thank you. there you go. >> very simple. >> you look like a buttoned up guy that would think this is just horrible. no? >> you're -- >> i don't sit in my baste and go online. >> this should bother b but andrew, if the nsa bothers you. a bunch of people with just -- they have circles under their eyes. they're up all night. >> i don't love it. >> is it blackjack? >> it's all those things, right?
>> it is in new jersey, anyway, it's just poker and in nevada and delaware. >> thanks. later this morning, we'll talk to former senator blanch lincoln. may throw an obama care question at her, too. when we come back, a dangerous winter storm is threatening thanksgiving travel for million of people. the impact on the airline industry right after that. and then, economic out who is happening out in the squawk green room. former fed governor kevin warsh. he is a key member of ben bernanke's inner circle during the financial crisis. we'll talk to him about the economy, tapering and the fed coming up at the top of the hour. ure, a confident retirement. those dreams, there's just no way we're going to let them die. ♪ like they helped millions of others. by listening. planning. working one on one.
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welcome back to "squawk box." a powerful storm could threaten one of the busiest travel days of the year. and michael boyd is president of boyd group international. good morning to you. >> morning, sir. >> so a couple things, what are the airlines doing now to avoid this? can they avoid this? and how much money gets lost in a period like this? >> well, truth be known if the airlines could choose when it would strike, this would be the time. mainly because there are no more airplanes in the sky over thanksgiving. as a matter of fact, the ten-day period, there are fewer airplanes in the sky. the difference is, you've got a lot of people who aren't used to flying. when god decides to lay a snowstorm on us over thanksgiving, it could be a real
mess. but as far as the airlines go, it's going to be less of a hit than a normal weekend would be. >> i don't understand. you're saying there's more planes in the sky but not on the ground, is that what you're suggesting? >> no, airlines don't schedule anymore flights over the holidays. this holiday will have more departures than it did a year ago and 4% fewer than a normal period of the year. >> why is that? >> simply because, everyone talks about how bad wednesday is and how bad sunday is, but when you get to friday and saturday, it's dog city as far as revenue goes. and airlines don't fly as much. >> and do they actually cut back on flights on those days? >> typically they will cut back as much as they can. you've got to run airplanes through the sky. tip kwli they'll cut back. there's going to be about 4 1/2 to 5 fewer than a normal period. the difference is, you don't have -- you've got wives and husbands and children.
>> are airlines able to bring more planes on during the peak moments or no? >> no, they don't have more planes. >> that's what i was assuming, i didn't know if there was something they could do. >> in a peak period like that, if you fill up that extra flight on wednesday, when it comes back on thursday, it's empty, there's no percentage in that. that's why airlines don't add more flights over the holiday season. >> separate issue, it's not related to this weekend, but it's actually been in the news. you saw this news over the weekend about the 747 and the 787 and this engine issue of icing. you know what i'm talking about? >> yeah, i do. it's not going to affect many airplanes. it's a 787-8, it's mainly going to be cargo airplanes and we still don't have as many as 100 787s in the sky right now. it's going to affect a lot of people. but it's one of those things the manufacturer will put notifications out to watch out for. >> is that something that will
concern you or no? >> no, it really wouldn't. it's one of those things they can deal with. it's not like an airplane wing's going to come off or anything like that. >> if they're saying the plane can't fly near thunder, what does that say? what does that mean? >> you avoid it and there isn't that much out there. and remember, the number of airplanes affected by this is very low. >> okay. thank you for joining us. >> thank you. >> happy thanksgiving. >> same to you, sir. >> hopefully the travel season won't be that difficult this time around. anyway, coming up, the nasdaq hitting levels not seen in 13 years. plus, we are going to be welcoming former fed governor as he makes his way to the table right now to talk about the economy tapering and much, much more. we've got a big two hours coming up in a moment. clients are always learning more
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inside the fed. former governor gives us the inside track on what to expect from janet yellen in 2014. and he will join us for the remainder of the show. a thanksgiving travel nightmare. a major storm across most of the country causing travel headaches. but will it slow down holiday shoppers? we take a look at retailers that could be impacted. plus, we talk spam, chili, and the consumsecond hour of "s box" begins right now. good morning and welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin along with becky quick and joe kernan
who is back in the hot seat. see what's going on right now. green arrows with the dow looking like it would open up over 12 points higher. s&p 500 up almost 2 points higher and the nasdaq 2 points higher, as well. let's get you through some of the morning headlines, more changes in the offing at blackber blackberry. interim ceo john chen will continue to weed out personnel and remove those he deems ineffective. that comes a day after the company replaced the chief financial officer, chief marketing officer and chief operating officer. also, a day after we heard the chrysler's initial public offering wouldn't take place this year, we do know more about the ipo. chrysler says it plans to list on the new york stock exchange and also plans to use the ticker symbol cgc. the automaker is hoping to go public in the first quarter of next year. mark your calendar. also, at least six private equity firms reportedly want to buy the industrial packaging unit of illinois tool works. such a deal could bring in more than $3 billion.
among the contenders, carlisle, blackstone, bain capital, seeking to sell that business. joining us as our guest host to talk about the markets tapering, janet yellen and much more is former federal reserve board governor, a distinguished visiting fellow at stanford's hoover institution. and kevin, thank you so much for being here. >> becky, thanks for having me. >> we haven't gotten to talk to you since janet yellen's nomination. and i wonder how you think she's going to do as the head of the fed. >> we got a chance to work together when she was running the san francisco fed. she's got a ton of experience. no one prepared for meetings the way that janet did. so she was the one who came with her notes fully in line. her prepared remarks, the rest of us would write down a note card like this. she's got all the experience, all the background. she's taking over at a very, very challenging moment for the fed and for the markets. and as you know, financial markets tend to test new
chairman. they did it to paul volcker, did
it to alan greenspan, '87, for better or for worse, from our perspective for worse, they challenged ben bernanke and his team a few years ago. i've got every bit of confidence she's going to realize that being chairman is, frankly, very different set of responsibilities than being a governor vice chairman where most of us get to chatter from the cheap seats, she's got to make the tough decisions. >> and yet, you've been concerned about qe and what the fed's doing. you've been concerned for some time. a lot of people think she is even more dovish than bernanke is. where does that get us? >> right. so it's easy to think on a hawkish dovish spectrum. and there's no question she believes in the efficacy of the fed's tools even more so than chairman bernanke. i don't think she's more dovish than ben. i think the biggest difference is in some sense that she really does believe very much in the models and in a model centric
view of the economy. >> what does that
mean? >> what it means is, when i look at the economy, i look at the models that come from the federal reserve, with the whole series of outputs and projections, but also a set of market conditions. i look at the ticker tape, what's happening with asset prices and volatility. >> the models from the fed haven't been working. the fed's predictions have been way off. so -- >> so it's the fed's models have basically been wrong for about four or five years. there are a lot of excuses we can offer. we can say the models didn't anticipate the crisis and the crisis response was a surprise. but the models are enough to give me pause. enough to say, well, they're an important input, but maybe something's happening on the real side of the economy that the models can't well appreciate. and what the models do is look at the kmip since the second world war and figure the next five years will follow some mean
regression because the economy has snapped back from recessions, it'll snap back this time. and what i wonder about and wonder if the models are taking into account is the policy response has been quite different this time. the policies have been remarkably different, more aggressive i'd even say a little bit more myopic. and whether they're going to be right or wrong in the next few years is more of a challenge for janet or my colleagues at the fed. >> the models, even though they didn't predict this, they might be -- it could have been much worse than maybe -- we weren't -- it could have been a continued recession after 2008 without all of this, theoretically, proponents of all of this accommodation would argue that we could have been at zero, not two. so maybe by saying we should be at three and didn't hit two -- i mean, models are -- >> so if you spent enough time working on models, you realize that the outputs, you can make
whatever you want. we should judge the fed's performance by what they promised us, in my days, what we promised. and in 2009, the fed promised that the economy will be much stronger in 2010. growth will be at three, the unemployment rate will be coming down. it disappointed, in 2010, the same thing to 2011 and that's true right now. i think what we'll hear in december is the economy will be much stronger in 2014. ultimately, it could be true, but it's not obvious that'll happen in the next couple of quarters. >> did you say this quantitative easing is nothing but the -- at the zero lower bound of interest rates? did you use the word normal? do you remember when they first started this? you called it shock and awe, the most earth shattering development in the history of monetary policy to do qe, now you're calling it the normal operation. have you changed? what changed? >> joe, i wish that you read every word of my editorial. >> i'm reading this here. >> what i tried to do a couple
weeks ago in the "wall street journal" is lay out about seven or eight of the foundations of monetary policy, the current leadership believes in and then i rebut them. >> oh, okay. >> so what concerns me and what, joe, i think you're bringing is that qe is unprecedented, it is extraordinary, and we shouldn't be fooled into thinking it's just what central bankers normally do. >> yeah. >> in the old days when i showed up at the fed in 2006, we basically had one tool interest rates, you try to get it about right. you raise rates or cut rates. the new innovation was qe, which we did not know it was going to work. and my sense is that we get to the end of this year, early next year, qe has gotten a little tired in that room. looking from their perspective, it may have done about all they can do. what's the instinct? the instinct is to create a new tool, a third tool, which goes under the very kind sounding name of forward guidance. >> yeah. >> and so as they pull back on the second tool, they're trying
to reinsert the third tool and see if they can convince all of us in financial markets those are pretty good substitutes. >> is this what bernanke is saying, forget it, we're not going to raise rates for a long, long, long time to come. don't worry about it, this tapering is not tightening. >> they started with that. >> is it nearly -- is that tool nearly as effective as actually what they've already done, which is real? one is sort of -- but talk is cheap, right? >> yes. >> and we also don't know. >> and they can change. >> and they can change. i was going to ask what you thought about the credibility of the fed given the markets thought something over the summer and had a rude awakening in the fall because the fed didn't do what people thought. >> so the u.s. experience over the course of the last several years and the experience in japan today is that markets know what qe is. they figured it out. they now know -- that risk assets melt up. what they're running right now
and the chairman speech of about ten days ago was to set in place a natural experiment. see whether they can get away with words what previously constituted trillions of dollars of asset purchases. if they looked at market prices today from the chairman's speech where he laid out this new framework with the introduction of the third tool and a possible pulling back of the second, they've got to be reasonably happy with what they're seeing. treasure yields haven't spiked as they did in the spring and summer, volatility and fixed income markets is lower, as set prices continue to move up. they're running a natural experiment. >> although, we've had plenty of economists who have come in here and said, look, if it's data dependent and you're not going to begin the taper until the data justifies it, is there a case for starting to pull back? let's say in march or even in december. is there a case for it at this point? >> so by their own standard, it does not seem to me as though we've seen a substantial and
significant improvement across the economy. in fact, if you look at the economy over the last 4 1/2 to 5 years, looks to me remarkably stable. growth has been around 2%. the underlying fundamentals in the economy have not broken out. the promise in december is they will break out next year. next year will be the year we get to escaped velocity. if you look at realtime indicators, the real data, it is hard to see the turn in the u.s. economy. >> what happens to qe? if they're kind of tied in by what they've set up themselves, is there a way to get out of this if the data isn't what they think? >> i think the challenge for them in december is to convince the markets that both their economic forecasts are right, that is the economy will be growing at 3.5% in 2016, the unemployment rate will be in the fives, and yet, to andrew's point, interest rates still at zero. my view is one of those has to give. if the economy is roaring as much as they say, markets will
not believe that the federal reserve will keep the fed funds rate at zero in that environment. the alternative is the economy is stuck at around 2% growth in which case it is possible that rates and yields stay quite low even if they're just talking rather than acting. >> the effect on savers and the effect on wealth distribution. i even saw germany there as a big piece over the weekend. a lot of criticism that the disparity of wealth in europe is being exacerbated by zero interest rates. the positive effects counteracted by the negative effects yet? >> this is a real problem. when congress talks about tax reform, any other policy comes up, the "new york times" runs a distribution table. who are the winners and who are the losers? and we see that some policies favor the so-called rich. i would say that the reality is qe policy favors those with big balance sheets. they favor those with risk appetit
appetites, access to free money. and real people that are living off their income statements that have w2 income, they are still looking around and saying what is fed policy doing for me. >> instead of ending that program, which exacerbates it, progressives, we design another program which will then address the redistribution. and we now know what it is. it's called obama care. and even your paper over the weekend finally talked about that it is pure and simple from the very beginning redistribution. and that's one of the reasons -- and even axelrod defended it by saying redistribution doesn't have a dirty connotation anymore because there's been so much redistribution of the wealthy that now it's only normal and it's a positive thing to talk about redistribution back to the people that don't have -- >> when did he say that? >> over the weekend, i think on one of the shows. but in light of how much the wealthy have gained over the past 20 years that a redistribution to the lower --
>> did you know he came on the show and talked -- >> he never has. don't we employ him now? >> let's design another program to layer over. keep qe going and we'll redistribute it back. >> so we can come up with a whole bunch of plans. >> might be better to -- >> the reality would be if we could get this economic high to grow at 3% instead of 2%. >> fix a lot of things. >> we'd be in a lot better shape on a broad set of issues. >> all right, i'm going to read this. so, are there any visiting fellows that aren't distinguished? >> it's a very secret list, joe, i can't tell you. >> you know what i mean -- are there a bunch of visiting people? >> no, you'll get invited to be a fellow, you are distinguished by definition. >> everybody's distinguished then. >> you looking for work, joe. >> no, i hear that, it's a great distinguished visiting fellow --
>> he wants his title to be distinguished anchor. >> i do. up next -- >> it's real. >> it's so real. i'm going to ignore that. will rain or snow ruin your thanksgiving week travel plans? we'll get an update from the weather channel. later, the retail blame game, which companies will be hit by this winter storm. andrew has expressed some consternation about the effect on retailers. names you need to watch as the holiday shopping season kicks off.
welcome back, everyone. shares of tiffany jumping in the premarket trading this morning. the luxury goods retailer reporting profit of 73 cents a share, that was 15 cents better than the street was expecting. take a look at that stock. it's up by 5.5% this morning to 85.50. revenue also came in well above wall street forecast. tiffany reporting a 7% increase of same store sales compared to a year earlier. but, again, this shows the tale of two different retail worlds where walmarts and targets have been struggling and a company like tiffany really outperforming. if you're living in the midwest right now, you know how bad it is what a mess it is outside. a major winter storm dumping heavy snow and ice across much of the midwest, it's now heading east just in time for thanksgiving for us folks over
here. the weather channel's keith carson with your latest forecast. >> thanks, andrew. yeah, the timing on this thing is awful. we're calling it winter storm boreas at the weather channel. and right now it's largely a liquid, rain event, across the southeast, heavy rain. we're watching northern florida for the possibility of some tornadoes. this system is multifacetted for sure. meanwhile, suburbs of boston and downtown boston at last check, seeing light snow. new york city, marching toward new york, as well. this is not part of boreas. there's snow out ahead of it. here's a set-up for this storm. it's come out of the gulf of mexico, boreas has, it's juiced up. and we're going to interact some of that cold air in here on wednesday. the combination will give us some snow. good news is, it'll be pretty far to the west of the i-95 corridor. that's the deal. today, atlanta, much of georgia, seeing rain, and wednesday, obviously the biggest travel day of the year looks to be a mess
from boston's logan airport into new york city, into washington, d.c. it's not the snow there that we're concerned about. there'll be no snow accumulating there. it'll be the rain and the wind, could see gusty winds enough to cause domino effect as far as the airports go. and you head further inland into central and western new york state. you see that icy mix down into the carolinas and further still west into the eastern great lakes where we start seeing snow totals there. enough cold air in place. we recently updated the forecast. and we've got bull's eyes, we get that cold air over the relatively warm still lake waters and end up with the bull's eye 12 to 18 inches. but, again, you'll notice that rain/snow line is staying away from a lot of major cities. the exception being pittsburgh, could see a good 5 to 8 inches of accumulation. that's the deal with this storm. it's a large storm, largely warm, but the timing is absolutely awful for travel plans for thanksgiving.
>> do we know anything about thanksgiving day parade, the macy's thanksgiving day parade. >> that's a good question. >> will the balloons fly? >> yeah, you know, looks like the wind criteria for that is 23 miles an hour sustained. so we're going to be really close to that and gusts could be 30 to 40 miles an hour. so if i was a betting man, they might ground them. >> wow. >> and keith, one more question for you, not that we're trying to look for personalized weather forecasts or anything. but if you were to leave on wednesday before noon, are you still going to get caught in all of the ice and snow? >> where would this hypothetical person be leaving from? >> let's say engelwood cliffs, new jersey. >> we're probably going to have a backup. planes from atlanta will have a hard time getting to the north. >> there's no escaping this, right? it's not leak you're going to get out of this. >> unless you want to leave right now. cut the show short. >> no, i'm back friday. i'm back friday. >> wednesday on a plane? >> no, i'm driving. >> she's driving.
>> i'm driving. hearing the rain/snow forecast. >> then the rain is fine. you'll be too far east. >> it's going to be a mess on the turnpike. >> you don't have a convertible, right? >> no. >> keith, thank you. >> convertible would be bad. >> would be bad but i think with the rain you're going to deal with extra bad traffic trying to get anywhere. >> don't mess your hair up. >> never. when we come back on squawk box, though we'll take a look at retailers who may be impacted by the storm and what it means for holiday sales. before we get to that, though, the ceo of hormel on his latest quarter. consumer trends, food prices and spam. "squawk box" will be right back. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing.
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space x now has a backlog of nearly 50 launches worth $4 billion. and you remember a few years back every time, was it russia? someone was trying to launch over there. maybe it was china. everyone they sent up was like a dud or turned sideways or fell into the ocean or whatever. which is why -- >> it's not easy stuff. >> no kidding. >> it's rocket science. >> so you're going to take a ride up with them? i'm not either. did you see branson when we asked him, did you see gravity yet? >> no, i don't want to see. >> he said intentionally. >> well, someone tell me there's no air up there. >> right. >> or gravity. well, we go from one disaster to another. the coast guard is actually responding to a sinking vessel and oil discharge into the mississippi river. about 100,000 gallons of petroleum products reported to be on this sunken vessel. yesterday afternoon, a 144-foot tow book struck a submerged
object, and began to sink. all nine crew members made it to safety, though. >> back to -- what it says -- >> distinguished anchor. so distinguished. >> distinguished anchor joe. why haven't we put that in all along? >> well, it goes without saying. >> it's redundant. you're right. more to come -- >> ron burgundy would be distinguished. >> my daughter saw him last night. that guy looks just like will ferrell. he does, does he not? with the mustache. plus, we've heard it before, companies muttering the words "due to weather" during earnings season. how will this affect sales this holiday season. this totally unexpected winter weather in november. we'll find out. still to come -- pepperoni, bacon, chili and spam, the wonderful products of hormel. we talk earnings and the consumer with the ceo, "squawk box" on cnbc.
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welcome back to "squawk box," everyone. we're going to be getting fresh data on housing this morning. but not some of the numbers we originally thought. the commerce department has pushed back september and october housing starts numbers. those numbers were supposed to come out at 8:30 eastern and something economists were hoping to give them insight into what's been happening with housing. those numbers have been delayed because of correction problems related to the government shutdown. that data will now come out on december 18th. we will be getting building permits for those two months coming at 8:30 eastern time. and half an hour later at 9:00 eastern, we get the report on home prices. economists are expecting to see a 13% year-over-year increase on september home prices for the country's largest markets. takeover deals aren't as big for investors this year. the average premium at just 19%. that's the lowest level since at least 1995. the historical average for takeover premiums is closer to
30%. >> there's just so few deals. if we were like in a big deal boon. >> a heated -- >> a heated deal boon, but now you can hardly get a deal going. anyway. >> joining us this morning as our guest host is kevin warsh. we've been talking about a lot of things this morning. and kevin, we've been noticing energy prices. they've come down significantly and that has helped the consumer. how does the fed kind of view that? and where do they see oil prices heading? >> so my sense is generally when energy prices come down in the u.s., it's thought of as a tax cut. it's a tax cut that allows some incremental consumption because the economy is so dominated still by consumption, business capex, the mergers and acquisitions pipeline that andrew was talking about. they're relying on the consumer getting back in the game. and the move in energy prices has been pretty useful in the fed model to say the consumer might be on his front foot in
the first quarter of next year. they'll take that as good news. >> we saw oil prices pull back significantly yesterday morning because of that iranian deal announced over the weekend. by the end of the day, people were looking at it much more skeptically and played that off. how do you view iran and whether this is a real deal and what it means? >> the iranian deal and the idea that the middle east might have a calmer 2014 instead of as aggressive or belligerent one as some thought, take some geopolitical risk out of some markets, takes it out of the energy markets, risk premium and asset prices. but if you believe that we have just moved the risk aside, then markets might be too complacent about that. >> yeah. that's the concern. i mean, do you -- i think you'd have a hard time finding anybody who says they trust the iranians. >> so risk is highest for the federal reserve and for the u.s. economy. if i were in chairman bernanke's shoes or chairman yellen's shoes
to come and i see risk levels volatility this low across the stock market and the bond markets, see geopolitical risks coming out of the energy markets, that would be just enough to make me very nervous about what can be unexpected over the next 12 months. >> i can make the case that t the -- what happened with the oil markets could even worry you and it gives the fed more cover to continue to say there's no inflation. because we had -- did you see bullard when he was on? he looked me straight in the face and said as long as there's no inflation, we don't see any problem. basically i'm paraphrasing, basically said we will go pedal to the metal with this $85 billion. and if inflation were to actually come down or unemployment were to stop going down, they have no worries about keeping this program going because they see no inflation whatsoever. and you make the case that it isn't necessarily hyperinflation that will let you know you have messed up. it'll be the misallocation of
capital which we find out. you can find out in some way it was totally not inflation. >> so you guys have to be careful about current central bankers. all we care about is core. and when energy prices move down, we say well, we're looking at the whole mix of commodity prices and inflation and saying it's very low. that inflation is low around the world. with some exceptions, indonesian come to mind, that should be not license to throw more chips on the table. >> they are using that as they feel invincible there's nothing bad that can happen from the crazy, which is really unprecedented as you pointed out. >> in a debating society, it is useful to say that the other side is worried about hyper inflation. that hyper inflation hasn't come, hence there are no risks. and your point, joe, is the right one. there are plenty of risks of these unprecedented policies, including misallocations of capital, malinvestment, and to your point, things we don't
know. rates have been at zero for a long time. >> i said last week, okay, it's not inflation. there's all this capital misallocation. what's -- what do you watch? what's the canary in the coal mine that tells you you've gone too far. there isn't one, is there? >> so in the model, there isn't one because zero rates from 2009 until 2016 or '17 do great things for asset prices, the economy. >> we feel really good. >> capital is not likely finding place for the highest and best use. >> it's wasted. >> what's been the biggest disappointment in the forecast the last several years? business capex. proxy is mergers and acquisition volumes. >> you made the case that all of this accommodation could explain the crappy 2% growth we're getting because the capital isn't going to where it's treated best. >> right. the model says the economy should be growing above three, the reality is two and that's because in my language, which is
too wonky, joe, you're not going to like it, the macros have changed. the individual incentives for individuals, for businesses, for banks have fundamentally changed and a model that's built on the last 70 years won't reflect. that. >> say that again. >> micro foundations of macro. >> because we have a lot of cocktail parties around this time of year, do we not? we've got ge -- >> need to sound smart. >> i'm writing that -- the micro -- i was thinking that. >> take that with your eggnog, joe. >> i will. anyway, we'll have more at 8:00. >> well, 7:50, we have more. >> and then at 8:00 too. but we'll go back to that. now i'm -- i don't like getting personally affected by stories like you do. he gets worried, depressed, right? and now i'm really worried because there is no canary -- >> you should be. >> in the coal mine. hormel foods the maker of spam, skippy, jeannio.
the company also raised the quarterly dividend to 20 cents from 17 cents. joining us with more on the quarter, jeffrey eddinger. good morning, jeffrey. >> good morning. >> i'm still dealing with smithfield, obviously. you weighed in on that before. we have to open our markets, i guess, to one other. will there be any change in your supply change for hormel? >> no, not at all. we contract with family farms within the midwest region and they're still all part of our program. >> what's -- can you gauge the consumer based on your products? or is it -- i would think it's pretty inelastic at hormel, no? >> well, we have a broad array of products in our portfolio and enjoying good success with them. our most recent quarter was excellent with 7% increase in sales and 18% increase in
profits and came in four of our five business segments. >> so in other words, you can't tell me whether the consumer's feeling better than he or she a year ago based on your products? you basically -- if times are tough, people still buy hormel chili, don't they? >> i think that's correct. our portfolio is broad. we have items that appeal to all consumers and income brackets and had success in different times in the economy. i think we're seeing a gradual recovery overall. i think unemployment's starting to go down in our home state of minnesota is now below 5%. and so we do think that's going to benefit the business in the long run. >> i look for things to talk to you about. i imagine that input prices are based on what happens in the meat complex. and i look up at the meat complex and how expensive it's gotten because of ethanol and corn and everything else. are you -- does it disturb you that commodity prices and
certain of your input materials are up? >> we certainly have challenges on input prices over the last few years, particularly in the corn and soy mean complex for our protein businesses. and as we've expanded into new areas, we look at inputs such as peanuts and avocados for those franchises, as well. overall, we're looking positi positively to 2013. would have a midpoint of about a 14% increase over the number we've turned in for 2013. >> we were just having a conversation with kevin warsh about inflation and whether you see it. you talk about how some of your import prices have been up. what do you think of that view? >> well, there have been significant food inflation over the past few years, certainly on our turkey store side. we've ended up having to push prices to keep up with those cost inputs. i do feel heading into the next year, we're in a little bit more of a benign environment that
should allow consumers to really enjoy our products, and we intend to support a number of our products with ad campaigns adding into the new year. the turkey store will have a new campaign featuring the new ground turkey item and we plan to relaunch skippy. we acquired that company early last year and we'll have a campaign early in 2014. >> i remember you bought skippy. is spam -- we used to talk. we used to love spam. we used to talk about it all the time on the show and had a lot of paraphernalia. all of that, are sales still -- do they go up year-over-year for spam? >> we did enjoy a sales increase domestically this year. rolling out a new variety of spam, teriyaki spam.
and just last night, 1:00 in the morning our local time, we closed on the skippy china deal. and we'll now in the asia countries be able to distribute spam and skippy. >> how big of a market do you think that's going to be? >> we're very excited about the potential for both spam and skippy in those markets. spam is very popular in many countries in asia already. okinawa, guam, we're working on mainland china. and skippy's a $30 million business in china. the closing on the transaction yesterday means we now own our third plant in china. and we have great expectations to be able to grow the peanut butter business throughout that region, as well. >> if you just talk about the 50 states, what percentage are in hawaii of your domestic sales? >> well, it's the largest per capita market for us. percentage wise under 5%.
it's popular overall. >> great with pineapple. when you bought skippy. >> spam or skippy. >> spam. >> yeah. >> it's good. >> i don't see any synergies with spam and skippy. am i missing that? >> they really would be more on the sales and distribution side. they're both shelf stable items. some of the foreign countries -- >> i'll try anything. >> i'm not saying to eat them together necessarily, no. >> you can dip them. >> well, you saw -- >> for the smooth kind of skippy maybe. >> i have skippy. we get the low fat. i like the chunky. and i put it on everything. pretzels, apples. >> i have a serious business question. and i know -- i think i know how you're going to answer it but maybe you're going to help me. your company to me seems like a natural target for an acquisition. just given sort of the way of the world and consolidation in the food business, i would think that one day your company would
be part of a larger company. just one man's opinion. does that make sense to you? >> well, we're positioned very well, we're 48% owned by a local foundation that our founders had the foresight to set up. and then the other 52% is traded on the public market. so we think that enables us to make long-term decisions for the shareholders. but also, the public side holds us to the quarterly challenges. and i think that's been a great combination for us. if you look at the last five years, we've grown sales at a clip of 5%, 6% a year and grown earnings of 10% to 11%. >> would the foundation ever be prepared to sell? >> they're set up for the benefit of the local community. we're a major employer here in austin, minnesota, i think we're confident in being an independent company. we've just about reached $9 billion in sales this year. >> peanuts are good for you, jeff. you ought to put that in your advertising. i think it works with peanut
butter too, right? a handful of peanuts is -- they did 100,000 people, 20% less likely to die of everything if you eat peanuts. >> really? >> yeah. i'm going to eat some after this show. >> i like peanuts. that's good. >> i saw that news on nuts. certainly another benefit for the skippy franchise going forward. >> i'm going to smear some on some spam. probably no one has tried it. he's going to bring it out, but i'm not going to do it. appreciate your time. appreciate it this morning. >> thank you. >> wow. >> we'll be trying that. still to come this morning, console wars in full swing just in time for the holidays. which company is going to win out? we'll find out in a bit. and you've got to know when to fold 'em. blanche lincoln on the booming business of online gambling and why she's trying to stop it. coming up -- the retail blame game. how will this early winter storm hit retailers and consumers
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welcome back to "squawk box" this morning. take a look at shares of dsw today. the shoe retailer's earnings matching estimates. revenue came in short and same-store sales falling .7% during the quarter. a blast of winter weather moving east just in time for thanksgiving. and black friday. so what impact will this storm have on the season's shoppers? joining us is paul walsh, the weather channel's weather and business analyst. and we know that cold weather can be a good thing, but snow and rain right when you're looking at black friday, how does that measure up? >> well, snow and rain would be horrible if it happened on black friday. but this year, looks like retailers are going to dodge a bullet. we're going to see the worst of this today and really tomorrow. so it'll be a big travel headache, but by the time we get to thanksgiving, of course it'll be windy and might impact the macy's day parade, but black friday will be clear, across the country. it's going to be dry for the most part and that is perfect
weather. we have a good tail wind going into the holiday. >> we have a lot of cold weather that's moved its way across the country. what does that generally mean for some of the retailers? >> for department store retailers? for specialty retailers and even for mass, that actually is a great sign for them. again, as long as it stays dry. and we've seen through polling we're going on weather.com that there's been a huge increase in demand in the northeast for outerwear as we moved through the first part of november. that bodes well. and as long as we can keep the snow and the rain away from the weekends, it will be a good sign for the rest of the holiday season. but, of course, we have a week left of the shopping runway this year. therefore, there's this big risk hanging over all the retailers, which is really an ill-timed snow event for one of the last crucial weekends going up to the holiday. >> right. i would guess this is also good news for the home depots and lowe's of the world. i guess the question, though, is with the shorter run time, fewer days that you can actually get
people into the stores, does that mean the discounts will start sooner in the season and last throughout? >> i think so, although there may be some benefit to the fact it's turned cold and likely will stay cold at least through the first half of this holiday season. they'll be able to move a lot of the seasonal goods anyway. what happens when you've got a cold season like this, it tends to cannibalize a bit. so whereas last year, it was relatively warm, it was warmer than normal. this year, it's going to be the opposite. it'll be a lot colder. even if it's normal, it'll be a lot colder than last year. demand for the seasonal items will be much higher. they'll have a better chance of increasing for those items. if we do have a weekend storm, that will certainly cut into the runway and have an immediate impact. that's why i think time is a real problem this year and a risk of a weekend snowstorm is elevated compared to prior years. because they don't have a margin for error. >> paul, is it true that
increasingly that there's really a few peaks to the christmas shopping season so there'll be the black friday peak and the christmas rush peak. but increasingly, this christmas business is more and more happening after the christmas with gift cards and the rest? >> that's right. so there's the two big weekends. the retailers are really worried about is, of course, this weekend and the weekend before christmas and then the days after christmas which makes having good weather on those two days extremely important. we also have cyber monday becoming increasingly important. obviously people can shop while they're at work, but the weather does influence those shopping patterns, as well, we call that the forecast factor, when the weather forecast is for cold weather, for cold temperatures, it starts to drive early demand and that will actually influence what people buy online. it all -- everything is sort of all tied back to the environment. or a good portion of it. the weather doesn't impact the overall holiday spend, but it certainly can affect the
proportion of what people buy and, of course, if we have a weekend snow event in the northeast or midwest, it could shave off a bit of overall sales. >> can i ask one quick question? all this black friday, cyber monday stuff, how much is that just pulling forward the spending? it's not actually changing the overall spend? >> so the economics of it show that there's two shifts. there's certainly a shift into the amazons of the world and online. but what we're seeing really in stimulus and christmas. the economics is not obvious you're increasing spending over a 12-month over three month. >> and they're bringing the margin down, not necessarily helping them either. it's interesting what happens to the overall spend. anyway, that was my quick question. >> all right. >> we've got to run, though. >> paul, we'll talk to you again soon. >> all right. thanks. when we come back, more from
teleprompter. i haven't. this is our crack staff. this is me. this is me. turning back to our guest host this morning, kevin warsh. not just any visiting fellow. he's a good fellow but a distinguished visiting fellow at stanford's hoover institution. former federal reserve governor, you went to undergrad at stanford. >> i did. >> j.d. from harvard. you've always been something special, i think. >> i got nothing for you. >> but think about. that's how someone becomes a fed governor at like 18 years old or whenever it was when you did that. here's, you know, liesman? >> i heard of him. >> liesman, his panties are all in a bunch from talking about -- you've got no evidence that misallocation of capital is being demonstrated here. where can you see it?
how can you tie business spending, long-term capital investment, how could that be affected by what the fed is doing right now other than in a positive way since asset values are worth more of the wealth effect is worth more? having trouble connecting the dots between that. and i actually argued in your case and said because the uncertainty of how the hell we get out of this thing would cause me to wonder about making long-term capital investments right now because it's looming how we exit, no? >> well, the theory of qe from the qe-2 to present was we are going to print this money, create this new bid in asset markets, bring unnatural buyers into the stock market and high-yield market and pick those assets up including housing. people will feel richer. they'll spend more and hire more. well, the first part of that has surely worked. asset prices are inarguably higher than if none of us had
uttered the word qe. why aren't businesses investing? why is capex this historically low and the share prices are as high as they've ever been? >> can we continue this at 8:00? don't say why. will you tell us when we start again after a commercial? >> that's the teaser into the commercial. >> how we do this? >> coming up, we're going to talk about online gambling, which is kicking off in new jersey. we're going to talk to former senator blanche lincoln in a moment. 0
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insight from a former fed head. >> qe's gotten a little tired in that room. qe looks like from their perspective, it may have done about all it can do. >> one more hour with former fed governor kevin warsh. >> online gambling is now legal in new jersey. >> five. >> i'll stay. >> not everyone is happy about that. >> give me that, clark. he's rich and i saw it. >> co-chair of the committee to
stop internet gambling. >> and the battle lines have been drawn in this week's console wars. play station 4 and xbox one competing for the allegiance of gamers. the third hour of "squawk box" starts right now. anyway, welcome back to "squawk box" here on cnbc. i feel like -- >> want to go to vegas. >> yeah, with you and the rest of the rat pack. our guest host this morning, former fed governor kevin warsh. currently a distinguished fellow at the hoover institution.
first, though, it's not named after herbert hoover? >> i believe it is, joe. >> no kidding. oh my god, we're in trouble. the nasdaq crossing 4,000 yesterday for the first time in 13 years before falling back below 4,000 before the close. yeah, you could take a look at it today and we'll be watching closely. if you look at the u.s. equity futures a the this hour, at least, you do see green arrows. these are modest advances. right now the dow futures up about 18 points above fair value. on today's economical da calend the government is delaying the release of starts and completions again blaming the shutdown. that data is now scheduled for december 18th. we'll also be getting occasion shiler home price index at 9:00 eastern. in earnings news this morning, shares of tiffany jumping in the premarket trading, the goods retailer reporting a third quarter profit of 73 cents a share.
15 cents better than the street had been expecting. revenue better than expectations and the company raised its forecast for the year. take a look at the stock this morning. at this point, better than 6.5%. it reported a 7% increase in same store sales for the quarter. and this is really something to be on the watch this morning. $86.40 is the last tick. also, watch shares of dsw today, the retailers matched estimates, but revenue came in a little short. the company said same store sales fell by .1%. and gambling regulators offering internet gambling statewide, came four days after testing the technology involved in online betting. under the rules, gamblers must be within the state of new jersey physically. the garden state joins nevada and delaware as the only states offering internet gambling. former arkansas senator blanche lincoln is the cochair of the coalition to stop internet gambling. and the other top story
we've been talking about this morning, it's the severe storm that's threatening holiday travel. giving us the rundown over the next couple of days. >> thanks, yeah, you know this and right now it has a wet storm, meaning it's largely rain across the panhandle of georgia into mississippi and alabama, it's rain. icy mix going on, that's ice, across portions of virginia and the western carolinas, there's icy mix to start snow shower activity moving through boston and portland. it is juiced up with a lot of energy from the gulf. as it movers up the eastern sea board tomorrow, it'll collide with cold air coming down from canada we have big travel delays likely on wednesday, the biggest travel day of the year. >> all right, keith. appreciate it.
these two companies should be together, i think. as a result, joseph a. banks up a buck. >> you're going to like the way you look that guy was unceremoniously thrown out. i forget that guy's name. ready to engage with joseph a. bank, we believe, immediately. is this a bear hug? what is this? it's like -- >> it's a bear hug. >> they're making it known. >> unsolicited proposal. >> yeah. >> i'm trying to figure out what's gone on behind the scenes already. it sounds like they've already -- >> it's a 45% premium? >> no. >> unaffected enterprise value, and 30% premium over -- they're closing share price on october 8th. >> and it's already gone.
it was at 42 before all this started happening. >> they're very similar, aren't they? what can you get a suit there for, andrew, $300? >> i don't even know. >> i think you can. >> $300, $200? >> let me message and see. >> i knew you were going -- >> that was awful. i'm kidding. >> they make good suits, by the way. >> that's what i'm saying. like you'd ever, ever. you won't even walk past that store. >> i bought some ties years ago from men's warehouse. >> when you were 16? you're going on a job interview at the foundation. you wouldn't know. he wouldn't either. would you? you're not going to answer. you don't play along with us. you're not a fed governor anymore, you can let your hair down a little bit.
>> i don't want to correct you, joe, but i believe that was a reverse bear hug because you see how the one guy was going to be the acquirer and the other guy -- >> almost like a reverse pacman only a bear hug in this case. >> depending on the terms, joe, it could be a reverse baby bear hug if they've pledged not to go hostile. >> a reverse baby bear hug. that is interesting, though. >> i was looking that up when you were shopping for your suits. >> you were -- yeah, exactly. i was a glimmer in my mother's eye. microfoundations of macro have changed. that's what our guest host told us in the last hour. let's get back to kevin warsh for more on the economy and the fed. you were going to actually -- i feel like i've climbed up this mountain and finally gotten to that point, you've gotten in the lotus position. how can misallocation of capital, vis-a-vis the fed's qe,
how does that cause businesses not to make long-term investment? >> so ceos wake up this morning and see their share prices are higher. they're happy about it. >> right. >> they understand that came about for two reasons. one was they took costs out, they drove productivity, they deserve some substantial credit. but they know there's another force that drove their share price and the share price of their peers up. and that's some version of quantitative easing from the federal reserve. >> even though there's people that still don't even admit that asset values go up on qe? there are still people who think this market is up not because of the fed. >> central bankers from a central bank i came from believe they had something to do with it that we can debate how much. >> okay. >> so you're that ceo, that board of directors and you see this high share price. are you going to be investing large amounts of capital expenditures as you had done for 60 years when your share price was high and you were confident? >> you're worried it's not you. you're worried it's fake. >> you want to know what happens when the whistle gets blown on
qe? you want to know what your unaffected share price is before you get on the front foot. you look around the world and see a global economy that is growing at 3% instead of 4.5%. u.s. economy that's growing at 2% instead of 3%. you don't see anyone else racing to be on their front foot, racing as a competitor to a first mover advantage. you're going to sit this one out, wait until qe comes back and see really how strong your share price is and how strong your company is. you're not going to get in front of it as the more virtuous story goes. >> although people in the bond market seem to not care why these prices are where they are. they're acting on them, taking advantage of it, i guess. and they're not saying, wow, i don't know what the real price of money is right now. they say they're going to accept this and make long-term plans based on that, aren't they? >> when world central bankers are setting prices, showing up with $85 billion a month, people in the bond markets are saying bring it on, yields are very low. when bond prices adjust, we will see what marginal investors will
do at what price they're willing to hang into these markets. >> all right. so people will be more inclined to say the fed can control bond prices so i'll go with it. but if you're making a 20-year investment into a planner facility and you don't know what the world is going to look like and you know even less because you're not -- you don't trust your stock price where it is, then you better -- i better keep this for a rainy day in case it's not as good as it appears. >> and i'll invest over the near term, one, two, and three years out because that's what i can control. but i'm no longer certain what my prospects are, the process te prospects for the global economy. see whether forward guidance is an able substitute and then i'll decide whether to go big on capital expenditures. >> it's a vicious circle. because if they are going to wait, then the fed's going to watch them waiting. it's the roach motel we can't check out of. >> a central bank has this mirror problem. he or she are trying to learn
from markets yet impacting markets with everything they do. at some point over the next several months, they'll have to make a tough judgment. they are trying to run this natural experiment now. see whether markets are okay with a modest withdrawal of qe and see if the economy is as good as they promised. >> one of these days, the wedge will get pulled out between stock prices and the central banks. we don't -- no one knows. we're hoping that the underlying economy catches up at that point and there's not as much errors as there could be two or three years ago, right? >> my judgment is the federal reserve cannot do much to take a 2% growing economy and 3% growing economy. we can't do much to take the unemployment rate in sevens and turn it into 5.5%. >> they think they can. >> janet yellen thinks she can. >> they believe they can. >> i thought -- >> and the federal reserve's model believes they can too. they are in this business because they think they can compensate for the failings for
the rest of these policies. you've heard my views, i'm somewhat more skeptical. >> so hoover calls himself the first student of stanford because one of the first students and it was named for a library he built in 1919. it was founded in 1919. it was long before he was president, that's why it's called the hoover. it's not j. edgar hoover. >> no, it isn't j. edgar hoover. it is former president hoover. >> former president hoover. and he calls himself -- he's stanford's first student. is that like first lady probably is what he means. >> no that would be j. edgar hoover in that case. inside joke. much more to come from guest host -- he's in "boardwalk empire" this season. >> president hoover? >> j. edgar as a very young man. do you watch? >> i saw a little piece of it the other day. >> you did? >> yeah, i did. >> you just jump in. >> i wasn't prepared. >> watching all along.
>> we're going to get back to our distinguished fellow from stanford hoover, it's the hoover institute at stanford? >> the hoover institution. anyway, coming up, the garden state is a gaming state. online gambling is now legal within new jersey borders, but not everybody is happy about it. an advocacy group to ban online gaming. up next, we'll talk to the co-chair of that group, former arkansas senator blanche lincoln. and later, the console wars thereon. we're also going to continue to watch shares of men's wear house and joseph a. bank. $55 a share, it was supposed to be the opposite way around. joseph a. bank trying to buy men's wearhouse. a reverse baby bear hug. she's always been able to brighten your day.
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democratic senator from arkansas and now the national cochair of the coalition to stop internet gambling. good morning to you. >> good morning. thanks for having me. >> before we get into this, how is it possible that you are on the same side as sheldon edelson? >> well, i have to say, through the work i did particularly on behalf of children and families, you know, i have introduced a bill on child internet safety and i just think that this is something that we have to really rethink and take a look at the damages. >> when they come to you and say they want to support this, did you have misgivings about working with him? >> well, i'm actually working with the coalition -- >> right. >> i don't know mr. edelson and i do agree with him on this. i'm excited to be a part of it. i think it's something we need to focus on as a nation on behalf of our kids and families and our economy, quite frankly, when you look at the amount of debt we're seeing out there.
it's a good thing. i'm excited about the opportunity to be able to try to move this in a direction that's going to be productive and healthy for the country. >> so the question is, is there a compromise? is there a way to do some form of online gambling so that states can actually make some form of revenue but that it is not as deleterious to the culture and country as i imagine you may think it is. >> i think it's going to be very difficult to work something out. you know, i know that states are interested in the revenues that it could bring in there. but is it really worth what it could -- the kind of damages that it could cause? now, i know technology's amazing and there's amazing things you can do with technology, but at this juncture, i'm certainly not confident that we can put all the safeguards in place. the fbi and other law enforcement have indicated to us that there's a real danger out there. so i think it's going to be critical that we -- we put a
time out on what we're doing here. the reason we are actually here is because a decision was made at the justice department two days before christmas in 2011 to reverse the interpretation of the wire act from 2006 where we did have a ban on internet gambling. so this was done, again, kind of in the dark of night. it was done without public input. it was done without congressional input. and i think it's important to put a time-out on this and to stop and think about what it's going to mean to us as a nation in our economy, to our children and to our society. >> do people still ask you about obama care? >> yeah, of course they do. >> what do you make -- looking back on it now and the way the rollout's gone and you were talking about technology how difficult it is, how are people in arkansas feeling about obama care? >> actually, our exchange is coming up pretty well -- >> your exchange, yeah. >> well, we're working through
it which is what everybody needs to do so. nobody -- >> do you regret that vote at this point? >> no. no. you know, realizing how important it was to do something about health care, you know, i worked hard to make some changes to the law before we passed it. and there were some parts of it i didn't agree with. but by and large, if you look at the growth of our spending on health care as a percentage of our gdp. and if you look at that in terms of outcomes of what we were getting, we have to do something. we have to do something to change both mentally how we focus on health care but also financially how we deal with it. this isn't perfect. you know, when i was in the senate, i was also one of, i think 11 democrats that voted with president bush on adding a prescription drug component to medicare. and i got out there and worked hard to try to make sure that arkansasans would know how it worked. and we ended up being one of the
top states in terms of enrollment? medicare part d. it's going to take elbow grease and hard work and we're going to have to change things and people will have to work together. unless you work together, you know, it's hard to get much of anything done really accomplished in a way that is productive. >> you know, senator, i can appreciate that working together message. i think that is something that is missing in washington today and we'd like to see more of it. to your point to obama care just in terms of addressing that huge curve in health care spending, that continuing climb, i realize that we had two problems in this country, one was the number of uninsured people, another was the health care spend increase. i don't think obama care has attacked the spending curve, i don't think this law does that. >> i don't agree with you on that necessarily. i think there are better ways we can begin to start looking at the spending volume. you know, when we talk about,
you know, the medicaid part of obama care and the aca, you know, there's some things there that we've got to be conscientious about. because it's going to increase some of those types of spending. but by and large, if you do not get a hold on the idea that there's a number of people out there that are not participating in the health care system that creates greater health and the healthier people are the lower the costs are going to be. but just making sure that we are managing that coverage. you know, people -- way underestimate the number of people that are getting their health care through emergency rooms or not getting it at all. so you're exactly right. the expansion of coverage was a critical part of this bill. >> yep. >> and making sure that people are in it and involved with it is going to be -- it's going to be essential in terms of moving down the pathway towards making our access to health care more successful in this country. so it's not perfect. but people need to work together
to make the changes. >> certainly is. we've lost more people now than have signed up, i think, which is heading in the wrong direction. we'll see, december 1st is coming. >> there'll be more. >> should be interesting. thank you, senator. appreciate it. >> thank you. >> we'll get building permits at 8:30 a.m. eastern. first, though, more homeowners are missing payments on home equity lines of credit. we'll tell you what it means for banks next. clients are always learning more to make their money do more. (ann) to help me plan my next move,
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it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.
welcome back, everyone. story that focusing on some concerns about home equity lines of credit. homeowners are increasingly missing payments on home equity lines of credit they took out during the housing bubble. banks may be hit hard as a result. reiters is reporting that those loans are a problem now because of an increasing number are hitting their ten-year anniversary. at this point, borrowers usually have to start paying down the principal on the lines in addition to the interest they've been paying all along and that is creating problems. when these loans go bad, loans can lose 90 cents on the door because a home equity line of credit is usually the second mortgage the borrower has. and most of those proceeds of the sale will pay off the main mortgage. that leaves little left for the home equity lender. and it's another problem that we are continuing to see years after the housing bubble. still to come this morning, we've got breaking data on the
real estate market. we'll get building permits from the census bureau in about three minute's time. plus, as we head to break, take a look at the u.s. equity futures this morning. right now, dow futures up by about 25 points, nasdaq indicated five points higher. that's the one we're watching today because yesterday, it hit a level we haven't seen in 13 years. "squawk box" will be right back. yep. got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. so i knit until it was full. you'd be crazy not to. is that nana? [ male announcer ] fedex one rate. simple, flat rate shipping with the reliability of fedex.
welcome back to "squawk box," everyone. the housing starts data that we expected today is postponed until december 18th, but the census bureau will report in . >> permits were expected to be around 925,000, over 1 million. 1.034 million. 1.034 million. and that now comes from a revised 974,000, 974,000, and i would consider that it's going to be a little tough to get the gps on this, obviously, but it's still -- it's, what, up about 6%, 6 plus percent, not a bad number. we're going to have to wait until december as you pointed out. interest rates, well, they were
actually moderating a little bit. one could say yesterday pending home sales was a bit of a trigger. so it's going to be fascinating to see if there's another one-two punch pushing yields back up. we still have some of the case shiller data to come out, that's a month over. that's september. and of course, we have supply coming out today. all in all, we continue to monitor the breathtaking, breathtaking rally we continue to see in equities. the fed has paint all numbers on the roulette wheel red. >> rick, stick around. let's bring in steve liesman to this conversation, as well. steve, pretty strong number, at least, in terms of what you're seeing for the permits. the question becomes the starts. what are we going to see when we get those numbers. >> details, becky, this looks like driven by multifamily construction. we're reporting two months now, we're looking through going back to august as the baseline.
you were about 299,000 in august, multifamily, now that's up to 414 in october. so that's a -- a consecutive jump in september and october. whereas single family homes, 627 is actually below that level. you've had a two-month surge in multifamily. looks like a lot happened out west and out south where permits are, at least in october, unchanged in the northeast and down in the midwest. so i'm not -- we like this number, we like it to be high. it's a number that doesn't do badly in terms of tracking gdp two quarters ahead of time. >> over a million now too. >> yeah. we haven't been there since march. but you certainly like to see that more substantially in the single family ring rather than in the multifamily. which is variable and a bunch of guys break ground on a lot of units and you've got a lot of multifamily construction. and by the way, this is a trend going on. the more you have these single parent households, the more you have these multifamily homes
being built. because that's where the housing shortage is. and i didn't see -- well, we don't get a price number. we're going to get three months in the month of december, we'll get september, october and november in december for housing starts. it's a bad time not to have a good read on the housing market. >> yes, i was going to come back to that. our guest host is kevin warsh, former governor at the federal reserve. and kevin, the housing market is a key component that the fed watches. it's -- as steve said, not a great time to be getting these numbers. flying by the seat of their pants. >> when the government was closed for that period of time, there's a tendency for some government officials to feel as though they don't have any data from which to judge the economy. but data that doesn't come from the bureau of labor and bureau of commerce is data in financial markets every day. it's data coming from the real side of the economy. i think the housing equities, the big home builders, that's are good economists historically. and if you look at the trend in those, it's been volatile. the trend in those has been to the upside. the housing stocks have done
well, the home supply stores have done well. i don't exactly this the government should be blinded because they're getting some of the data late. the fed policy is very housing centric, the better that housing does, the more they think their policies are working. >> mr. warsh. >> i've heard your distinguished criticism of the federal reserve. what i haven't heard yet is what you think the fed ought to be doing right now. what would be the warshian prescription policy for the fed? >> so the more they've been aggressive, the more they find themselves, i think, with fewer degrees of freedom. if you're stuck in this position, imagine, steve, at a humphrey hawkins testimony, imagine janet yellen at her first testimony long after she's been confirmed in a bipartisan basis getting a series of questions from them, urging her to do different things. imagine if she said, senator, with all due respect to you and your 99 colleagues, if this economy's not growing at 3% next year, it will not be the responsibility of the federal reserve, it'll be the responsibility of the congress
and the administration and put the burden on them to take back the baton, do good fiscal policy, trade policy, but it's not going to happen, steve, easily if the federal reserve continues to say they can compensate. >> what do they do with quantitative easing? what would you have them do in december and january? >> i would make it clear that qe is on a path towards extinction. i would be pretty committed as to what the sell down will be from 85 to 65 to 45. >> regardless of the market reaction -- >> absent some extraordinary -- >> very little -- >> not 3% in stocks. not 2.7 on the ten-year. >> your strategy if you need to slow it down or don't want to go on the big jumps, what do you do? >> well, we've been practicing highly discretionary fed policy and we have been stuck at economic growth of 2%. given where we are, you have fewer degrees of freedom. steve is absolutely right about this. but the more that you commit to micromanage the decision in
december based on a housing permits data or payroll data which is subject to revision, i think you're suggesting that you have great foresight as to what the economy's going to be in the next two and three years. this is not foresight that i think any economist has -- >> yeah, and you'd probably just say what he said, i guess, right, probably, rick? >> no, i have one question, mr. warsh, how important is it to divine signals on housing to try to interpret what's going on in the economy? is that, in your opinion, a priority? >> no, i don't think it is. i think housing is part of the economy. but housing and housing assets are only giving you one signal. there's a broader cross section of data from the consumer from the business, from trade and from exports. so this preoccupation with housing strikes me as as really quite dangerous. >> do you think there's any signals in the economy that are worth paying close attention to with regard to what you believe the fed is putting on top of that list?
>> yeah. i think global trade matters a lot. i think if you wanted to be more confident about the economy in 2014, you'd want to see global trade be picking up to the upside. you'd want to see shipments both in volume terms and price terms moving very significantly, telling you that the backlogs are moving. but as i look at global trade, trade with the u.s., with europe, with asia, you do not see a turn to the upside. and if you wanted to make a prediction on the economy, you should be seeing it in global trade as we speak. >> so as japan potentially weakens their currency due to the last stimulus program that may be standing, i understand their trade's going to pick up. but the reason is a little disturbing, don't you think? >> yeah. so good policy and bad policy are both contagious. bank of japan policy is in some sense made possible by the intellectual foundation from the federal reserve. it may have been one of their devices to weaken that currency
to grow exports. but the reality is, that policy is still pretty early in its formulation. exports have moved up some, but not nearly as much as they thought. what's actually happened in the japanese economy is some return of animal spirits, some return of confidence and asset prices there have done something. i'd say they're in the early innings and like the rest of us need that third arrow. they need structural reform, we need structure reform. the europeans need it. and the real question that steve liesman and i have to wrestle with is are central bankers creating an opportunity for the fiscal authorities to get involved and make those sorts of fundamental changes in the economy? or are they delaying it making it impossible? i think that's the tough question. >> yeah. you know, i liked what you said. it's time for the guys in congress to do their job. i really do think that ben bernanke and company are hurting that process in a huge way. >> what kevin knows, i think, i'm not sure why he's not saying
this, that the fed would never sit by and never say that it will not do what it thinks needs to be done for the economy in order to essentially cajole congress. >> the operative word there is thinks. >> very much the way a doctor wouldn't sit by and say you know what, you know, you were not taking care of your body, not taking care of yourself, i'm not going to help you. that's not what a doctor would do and not what the fed would do. >> right. i think the difference, steve, neither the doctor nor the central bank should overpromise. the doctor and central bank has to say this is what i can do. because what i can do is really going to work. you wouldn't continue to overpromise and underdeliver because at the end of the day, the doctor would no longer be perceived the head of his profession. >> forecast is not a promise, though, kevin. you know that, as well. when they say we're going to do this and here's my forecast, that doesn't mean they're promising those numbers. >> here's my expectation of what this policy will do. >> that's right. and they've been wrong. and they've been wrong.
>> i quoted yellen last week saying we will keep it where we are until we guarantee a strong recovery. she says we will keep doing this until -- as if it's worked up to this point. >> it's not quite -- until -- >> i read it on this show. >> until a recovery happens. (announcer) at scottrade, our clients trade and invest exactly how they want. 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." ♪ [ male announcer ] 1.21 gigawatts. today, that's easy. ge is revolutionizing power. supercharging turbines with advanced hardware and innovative software. using data predictively to help power entire cities.
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get zero due at signing, zero down, zero deposit, and zero first month's payment on any new 2014 volkswagen. hurry, this offer ends december 2nd. for details, visit vwdealer.com today welcome back to "squawk box" this morning. take a look at the futures, see how things are setting themselves up 45 minutes before the markets open.
dow looks like it would open up higher, s&p 500 up close to three points and the nasdaq almost six points we'll call it. take a look at shares of aeropostal, theorizing early this morning after the company announced it had adopted a poison pill. the retailer says it's not adopting the plan to require control of the country. also take a look at take two interactive saying it is buying back all of carl icahn's shares in the company. they resigned as they promised to do so once icahn resigned his position. he bought his position, i want to say back in 2010. >> yeah, several years ago. >> shares closer to 10.12 back then. but he is now officially out of that one too. and we were looking at men's wearhouse and joseph a. bank and you're going to like the way you look with the reverse baby bear hug. >> baby bear hug. >> but not a teddy bear hug and not a bear hug. >> karen finerman says it's like a reverse pacman.
>> i said that already. george zimmer. it's awful close. >> like the way you look. >> yeah, you are. microsoft's xbox one and play station 4 are in a battle. i made the point that, i mean, toys, you don't use that stick with like a ring where you go down the street anymore. it's hard to sell any conventional toys. it's so cool to do these things. >> absolutely. >> it's amazing. >> these video games are fantastic. you can go -- have these massive war games and fields where you can go in tanks. >> it's like 20%, probably, of christmas sales of what you buy kids, i would think. >> it definitely is. and there's been a long wait for these consoles, the xbox 360 has been on the market since 2005. people have been waiting a long time for these consoles. >> i finally saw an ad for the
xbox one where they tried to tell me -- did you see it? it's everything. everything in the living room what we've been waiting for for so long. is it? >> that's the big selling point for the xbox one, a home entertainment kbis more than a gaming system. you can watch your tv through there. you can talk to it and say change the channel to cnbc if you want to and it'll change the channel for you. you don't have to get out your remote anymore. it can make suggestions based on what you like to watch. and it can do things based on fitness. it is a kinect sensor, detect how active you are. >> oh, great, just what i need, someone ratting me out if i'm not keeping pace. >> or encouraging you. >> play station 4 is better to play games on, is it not? >> more of a gaming focused device. where microsoft tried to go with this big all powerful machine for home entertainment. >> is it ready for that? >> i think so.
the xbox has a ways to go before it can do these things. the voice recognition of the kinect isn't quite there and there's missing pieces to the table. >> how bad is the voice? is it worse than siri. >> probably on par with siri at this point. your living room tends to be a noisy place and struggles to recognize you sometimes. also does facial recognition. so when you walk in front of it, it's supposed to recognize for you and sign you in for me only works half the time. >> you don't have anything at this point, do you? >> no. >> you don't have a wii. >> no, my kids are 3. i've got to avoid -- >> 3. >> if possible -- >> i mean, 4, don't you get a wii? >> absolutely, yeah. but ultimately, quite a few kids these days they want to play games on the ipad. and because -- >> mario cart, man. >> mario cart is a good one. >> is this going to be the thing that saves video games. is this going to actually
reenergize this? >> there's a lot of speculation, including that the gaming markets has been declining. these consoles have been around for so long. i think that should help. but ultimately there's a huge trend of people moving toward gaming on their smartphones or gaming on their tablets because they're successful and the games aren't quite as immersive or good. they're right there all the time. i do think that trend is going to continue had so the whole gaming market's probably going to decline to some degree. we should see a nice bounceback. >> if you are an investor, forgetting about the issue of which console's the better console, the gaming companies, the margins on those games, when you do it online or on your ipad, they're making a lot less money. do you think the entire business is going to decline? >> i think there's tough times ahead. they're figuring things out. definitely getting better. even if you only pay a dollar
for a game. you're in the game or another dollar for an extra level. they're getting good at that kind of thing. i think they'll find ways to get the revenue back up where it needs to be. but there are troubling times until they get things nailed down. >> i mean -- >> what? >> your kids are growing up in a concrete jungle. >> yes. >> no trees. you can't get a dog, can't go out and have a barbecue. no yard. for halloween, you go into a building and go door to door in some dimly hit hall. >> well lit. well lit. >> you can't give them a video game. you deprive them of a video game player, as well. >> it's too early. they're too young. >> they could see trees. they could have a virtual yard. a virtual dog. give them something. >> we have something called central park, the biggest backyard you could have. >> how much dog poop do you have to walk through to get to central park? >> just a couple of blocks. we're very close. we're close by. >> do you live in the burbs?
>> right here in the city. but you are now the distinguished anchor after the spam reference, the poop. >> my title is getting longer and longer in the teleprompter. anyway, tim, wii, get a wii at least. >> kid-friendly console. >> kid-friendly. >> get some rock band, that i can rock out together. >> no guns -- >> what's the correct age? >> we have a wii. kyle doesn't play it yet. >> no guns, andrew. >> we do have an xbox, too. >> thanks, tim. >> sure. >> and don't miss "squawk box" on friday. our guest host is going to be bobby kotick. we'll get him going on some of these -- >> he's got video games with guns. >> he's one of the bad guys. we'll talk about stocks on the move. ahead of the opening bell, we'll talk about the proposed deal between men's wearhouse and joseph a. bank. our good friend jim cramer will join us after the break. tomorrow on "squawk box,"
we'll get you ready for the trading holiday. joining us to talk portfolio strategy for 2014. plus, a "squawk box" tradition. >> and you really want to stuff it in here. >> turkey advice from the butte butterball hotline. "squawk box" starts tomorrow at 6:00 a.m. eastern. ♪ no two people have the same financial goals. pnc works with you to understand yours and help plan for your retirement. 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.
welcome back to "squawk box" this morning. he were's a stock to watch in today's trading. palo alto network beating estimates by a penny. a 73% game in subscription revenue. the company has been in the process of switching to a subscription business model. let's go down to jim down at the new york stock exchange pip want to talk to you about how nice you're looking in that suit. i don't know who makes that suit. >> that's a brioni. i got three for one at jos. a. bank. it's $17,000 down to 9,000. >> what do you think of the reverse baby bear? >> i love revenge.
may men's wearhouse, a bigger commonwealth. -- company. they can triumph. it's a good idea. >> today did a double take because jos. a. bank was supposed to be the buyer. >> i think men's wearhouse wants to cole the shots and i think men's wearhouse is doing better than jos. a. bank. why should a bigger company have to report to jos. a. bank? let's say the guy who is biggest gets to call the shot. >> this sounds like an ego thing. >> totally! you got a problem with that, mr. bitcoin? i like the bitcoin piece. thank you for being honest. you had branson last week and you were right, you were right this morning. >> thank you. >> taking bitcoin.
tomorrow i great four for one, maybe tomorrow i'll get a two for one. you're the first guy to talk sense and not be worried if it goes up tomorrow in value. >> it will go up tomorrow in value. as joe knows, i'm the contra indicator. >> you told the truth. stop it with the deny the humility thing. >> even branson said the minute it clears, they sell it. >> they sell it into dollars. >> he said because of fiduciary responsibilities to shareholders. >> i thought that column told the truth. >> you're a kind soul. we'll see you in just a couple minutes. >> when we come back, we'll get the words on the fed and the economy. and robert shiller will be on "squawk on the street" to talk housing trends. we'll be right back.
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to be a lot better. the dynamics around the table is likely to be quite different. jan set very well received by her colleagues at the table. but i would say controlling a room, harmonizing divergent room, having a relatively straight forward message for cnbc and watchers and the real business community, that's a challenge. she's taking over very delicate moments as they're changing instruments and i are say it will be a challenge in her first six months to remake that institution in her own image. ben bernanke did it. ben bernanke is thought to be running a democratic process around that table, but i can assure you he can get whatever decision he needed through that body. i was asked before the september meeting whether they were going to taper or not and i said i don't know whether they're going to taper but i know the vote is going to be 9-1. so this is going to be a tough dynamic for her and she's going to need to call on all the
depths of relationship and some degree of deference to take the fed, the institution, in the direction she wants. none of this will be easy when you have 19 people around the table. >> you're talking about bumpier roads? >> more volatile messages, let's certainty, less clarity, but she'll be able to develop that, but it will take her some months. >> thank you. "squawk on the street" begins right now. ♪ and i said what about breakfast at tiffanys ♪ she said i think i remember the film ♪ >> good morning. welcome to "squawk on the street." i'm david faber with jim cramer live from the new york stock exchange. carl quintanilla has the day off. the latest shiller home index has been released. we'll show you the case-shiller index shortly and break down the numb
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