Transcripts For CNBC Squawk On The Street 20171124

Im carl kiquintanilla and melis lee. We turn to black friday and all things retail. We might get records for the s p and the nasdaq at least at the open euro at the sixweek high against the dollar having the best run since july. Europe is up and oil is the other story, thats a two and a half year high and that opec meeting next week. Our roadmap begins with the season for shopping. Retailers have focused on the holiday shortened day. Macys hoping the post thanksgiving spending free will end a threeyear sale slump. A massive data breach made public on tuesday and now reports the new ceo has known about the hack for months. It is black friday, the official start of the Holiday Shopping season many shoppers already got a head start. By last night consumers had spend 1. 5 billion online. Consumer spending up nearly 17 year on year until 5 00 p. M. Last night according to adobe analystics which tracks Online Transactions at the top 100 retailers. I think the headline in the journal today on front page is shoppers flock to phones were going to talk all morning long about the implications for store traffic and real estate and sales in general. Yeah, youre waiting for a turkey to cook in the kitchen and youve got your phone there. Sometimes its just wait and see. Should be called cyber thursday, thanksgiving is now cyber thurg for shopping, right. In terms of marvegts, remarke remarkets, retailers have taken into consideration this is a better than expected sales season, up 8 in the past two weeks alone. We have a bit of a run into this black friday season. Its an interesting moment because you had the peak panic for retail apocalypse after amazon whole foods into july then youre up big depending on subsector up 20 and now theres a season the season might be good enough and consumers in a good mood, theres enough to go around in a sense for everybody. Although, is this true after thanksgiving stocks dont do well in december typically. Its into the date best time to own. Then after, then july into the First Quarter january, sorry. Thanksgiving shoppers getting an early start macys opened at 5 00. Heres more from jeff gannette, i watched you cut the ribbon with al roker, what a great perk in your line of work i wonder your take on what adobe is telling us about the jump of people shopping on their phone ahead of black friday. Is that going to be evident to you and the way in which you track foot traffic you know, we had a good start to the Fourth Quarter and black friday was very strong online as well as the traffic that came into our stores last night and that are here today in our stores so good start to the whole black friday shopping season does it feel though like less of a crush in the store itself you know, actually, depending on where it is in the country, so were blessed right now with cold weather so in the northern part of the country and in certainly here in the northeast, the traffic in our stores is slightly better than last year jeff, im wondering how committed you are at macys to maintaining price discipline when it comes to promotion we always see this big surge over black friday and shoppers tend to wait and now bargains are going to come. So they wait until the 40 signs come up on a permanent basis are you committed to remaining disciplined or willing to bank roll discounts in order to bring shoppers in . You know, i think this fournl quarter was very planned we didnt have any carry over from all of our Third Quarter inventory. It was in really good place. When you look at all of the promotions they were planned we start the planning process for black friday and all of our holiday values a year out. And so were in good place and the promotions have beeratid and great values planneded great to see them show up last night and online in response to the great values we have were in a good place with that. You and others in the industry talk about trying to change the instore experience, would there be a noticeable difference in how space is used and how things look in your Stores Across the country this season versus last or is that just sort of a broader ongoing project . No, its a broader ongoing project but certainly differences this year versus last year. We have a lot more lease options that we have in our stores so if youre here in herald store and done with beta and Samsung Experience Lens Crafters is taking up space in our stores, big Service Customers expect and well continue to build on this. We have opportunities to be more productive in our stores and were constantly looking for next thing to bring in either new categories were going to own or a new Lease Partnership that well bring in with partners. Expect well get more interesting in years to come but definitely made inroads and were a best destination with a better experience this year than last year. Speaking of making stores more productive, times did a piece a few days ago about the value of your real estate, exceeding your market cap and the suggestion that theres room to develop at least upper floors of some of your Flagship Properties how far along are you in that and is the street do they understand your intentions where you want to take that . Yes, id say weve been pretty clear about how we look at our real estate portfolio and the individual assets weve been monday tiesing, the brookfield deal for the 50 properties and the Flagship Properties that youre mentioning. If you look what we did with seattle, some of the upper floors we monetized those and currently looking at and been clear about state street and working on that. In herald square, this is a complicated property were looking at every inch of this floor to make sure that were monetizing it froeptly for shareholders nothing is off the table but its a complicated project and were going to make sure were doing it right. A way to bring traffic in might be a partnership of some sort when you look at what amazon has done with kohls for instance, we just talked to the kohls ceo last week, in the experimental stage still but the traffic has come up because people are coming into the store to return amazon goods could Something Like that be attractive to you . Do you look at that and say thats something we could do too . What id say is that were looking at all of those opportunities. One of the reasons weve been so bullish about buy online pick up in store, with the robust online demand is for that exact reason. Customers love the experience when they come into a building and being able to see things when they are picking up something they ordered online but were looking at other partners and opportunities to bring new traffic into the building is on the table have you talked to amazon im not going to comment on that when are you going to know typically in this season if youve gotten it right, if the mix is right, if the quarter is pacing the way you expected with the planned promotions what id say is we have a very strong start to the Fourth Quarter. Were four weeks in and we have five big weeks ahead of us thats a marathon for us so what were really focused on making happy customers and earning a dollar every single day. What we look at is obviously how the registers are ringing and how the customers are experiencing the brand and what they are saying about it and what our associates and management is telling us about are we getting it right. If the final day weve got a big quarter ahead of us. You saw we affirmed guidance at the end of the Third Quarter four weeks in, strong start, five weeks to go we want to make that customer happy and earn a dollar every single day i want to get your take on categories as well, the journal has a statistic this morning that last year discounts at this stage were 6 deeper than they are now across 17 categories, you said theyll be less promotion. Does that number sound about right and are there certain categories where Pricing Power is especially strong you know what id say, let me talk about how were doing when you look at the cold weather categories, weve had a strong start on that those generally carry higher unit retails, if you look at coach and sweaters and boots, those are strong categories that carry higher averaging of retail the entire fragrance category, were the largest purveyor of frig rans, very strong start in the Fourth Quarter big, big brands that are winning there. If you look at the tech categories which carry higher averaging at retail. The apple watch and then look at our values and all of our great fashion product we work with our manufacturing partners a year in advance, all of that is trending well when weve got a built in product that they are responding with their pocketbook, im saying aurs higher than last year right now jeff, your dividend yield is more than 7 right now, 7. 3 to be exact some people might look at that as a sign of distress, are you committed to maintaining this dividend as is yes, we are our board of directors looks at this regularly. We just confirmed that Going Forward with the current guidance and on the dividend, Going Forward so were going to continue to review it but were committed right now. So then this quarter, the way this quarter goes for you in terms of cash flow and things is not necessarily kind of make or break either for the dividend or for your outlook for this year so we look at our capital structure, first thing to make sure we have enough capital to fund the business. Then we look at our dividend were committed to our dividend and making sure were within our when you look at our leverage ratios, getting back to our historic levels youre going to see apply down debt there versus necessarily buying back stock. Expect that to continue into the new year in three weeks what product are we going to be talking about in terms of shortages and cult fascination and something that parents or adults want and simply cant find . You know what id say, a lot of the tech products, youre seeing that. Some of the Home Products that have technology built into them, theres some interesting items that were selling out of in our stores a lot of that we can get back into some of it will be a reduced supply of it it comes down to what fashion and other gift she wants and ma macys, we spend a lot of time with merchants and creating the best possible values and fashions so we feel were in good shape going into the balance of the Holiday Season the month of november has been strong so far but five weeks to go weve got to earn our dollar every day. And people want to buy apparel, jeff, that has traditionally or recently been the category that has seen softness across the Retail Industry, people dont want to buy sweaters anymore yes, she does want to buy apparel. There is theres obviously a lot of competition for apparel both online and in stores. But when we get our values right and get the right fashion for our customer, she responds well, again, as i said also, when you look at apparel, particularly during the Fourth Quarter when it is cold outside, that really helps our overall apparel business she comes in because she needs a coat but will buy other things, buys that sweater but also buy gifts for herself or people on her list so apparel is still a big driver of traffic and shes still out there transacting. Jeff, crazy day for you and shoppers, we appreciate you setting some time aside for us well see you soon thanks much Jeff Gennette of macys. When we come back, a look at the best deals for Company Performance and look at the premarket, a week to go for the month of november, dow and s p are on track for the eighth consecutive up month more squawk on the street in a minute [ keyboard clacking ] [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Talk to one today and see why were bullish on the future. Im here to talk to you about how at t gives you more. And so am i. Like how when you buy the amazing new iphone 8 you get another one on us. See we give you more phones and more spokespeople. Are you guys doing a spokesperson thing right now . Yes. Awesome, can i be in it . Well, its kind of like a twophone deal. So two spokespeople. Got it. K. Thanks. At t its time for more. Its time for more. Buy the amazing iphone 8 at at t and get a second one to gift, on us. Welcome back to squawk on the street. Up to 60 of the consumers are expected to shop this black friday Courtney Reagan joins us live from woodbridge, new jersey. Reporter im out here with 115 million americans may be shopping this black friday yes, thanksgiving has changed the timing of what we see over this weekend with shoppers going out at night for those big box deals. Shopping online but today still expected to be retails biggest day ever the year. Traffic at this mall is beginning to pick up but there certainly were early deal seekers and we spoke to them we got up at like 5 30 in the morning and headed here as soon as it opened and the sales are amazing. Reporter a few stores but for the most part we found really good prices and sales and they had pretty good stock. We got really great deals youve got to get here early, a lot end at noon. Its nice to see exactly what youre buying, he especially wh on sale. Reporter the mall of america was closed again on thanksgiving day. It didnt open the doors until this morning i spoke to eddie of keybank, he says the traffic is starting to pick up. And kohls and jc penny were open all night long and walmart and best buy kicked off door buster deals later in the evening last night shoppers are lining up, its an annual tradition and based on mobile searches for local retailers, the top three near me retailers this year, best buy followed by target and then walmart. Which looks very different from the near me searches last year that was macys first then walmart then home depot. Now so far on thanksgiving and black friday the top viewed items online across retailers according to price blink include amazon echo dot, instant pot cooker, apple ipod and Google Home Mini and amazon fire tv based on transactions, whats interesting there across all of the big box retailers too, walmart and targets of the world, shoppers are up 5 on thanksgiving day and transactions increased by 26 . That sort of goes to show you they are very targeted and shoppers know exactly what they want and in and off those sites pretty quickly back over to you guys. Thank you, Courtney Reagan in woodbridge, new jersey Williams Sonoma has been rebounding after that earnings release. The ceo lauraalber discussed the numbers and push into august meanted reality with the launch of a new app weve been working with them for three years building a lot of models for our websites so you can see around a product and spin and sofa and see beyond it and imagine it in different settings but having them as part of our company, allows them both to see the needs of a retailer from the insideout and for us to see all of the capabilities of this technology and really improving the shopping experience. We think that this proprietary technology will help us revolutionize the shopping experience. Joining us now, retail analyst at j. P. Morgan and covers Williams Sonoma and host of other retailers. Good morning. Just a quick question on the augmented reality, a lot of the universe, wayfair, home depot people want to use the technology. Its really interesting, they take a picture of your room and take all of the furniture and coverings out and then they have millions of items scanned in that you can place that and see that in a 3d setting. The Home Furnishing space is becoming much more competitive we double downgraded to a sell post earnings. And we think they have very rerelevant brands but its becoming very kpelt tif. Home depot cfo talked about amazon making a big effort and spending more on advertising, its becoming more competitive to be in that space. I want to go to the list courtney had mentioned in terms of the items that people are looking up they are all technology, all sort of Electronics Items and then you pair with that, the launch of the iphone 10 and iphone 8 is that going to take away from sales of soft goods . Its always an electronics christmas, past few years its been 4k large set tvs and this year best buy is being aggressive on the samsum galaxy 8 and switch, some stores already sold out its been a nice cold november and youre getting good sell through on apparel and you lap the election which caused a disinterruption. The better sentiment and traffic patterns and weather, does that put a big dent inthe structural questions weve been asking all year . Yes, i think it does. It does the consumer is better than they were six or 12 months ago youve seen nice acceleration and lifting retail retailers have invested if you look at the annual Holiday Shopping survey, target used to be 6 more expensive than amazon now they are only two. In line on price and baby and beauty, walmart, you get cheaper in toys. Then the other thing is, think about walmarts vision 35 and over, free ship, on more than 2 million items walmart is saying you dont have to pay 99 a year for your amazon prime membership, spend more than 35 on a transaction and well give it to you for free. Chris, thank you. When we return on this black friday, the batle for your buck, amazon versus best buy take another look at the premarket macys up 3 plus on the back of the interview with Jeff Gennette a moment ago more ahead attention homeowners age sixtytwo and older. One reverse mortgage has a great way for you to live a better retirement. Its called a reverse mortgage. Call rfree information kityour with no obligation. It answers questions like. How a reverse mortgage works, how much you qualify for, the ways to receive your money and more. 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Let out your inner child at the lexus december to remember sales event. Experience amazing at your lexus dealer. Allow you to take advantage of growth opportunities. With a level of protection in down markets. So you can head into retirement with confidence. Brighthouse financial established by metlife. Youre watching cnbc squawk on the street. Live from the Financial Capital of the world a lot of kids on the floor today as some families bring in their children on this short trading session. Black friday adds a nice feel to the Trading Floor ive got to say. Its a lot more fun. Festive. Yes. In terms of the markets, were talking retail all morning, mike but Big Questions about the things working versus not and the setup for next week, which includes powells confirmation and opec meeting, a yellen testimony. I mean, the market has obviously sort of recovered from that little would bel last week, high yield it was kind of a false alarm and i think you kind of plowed into the stuff already working like the big tech stocks, even though nobody sayswhy they are working thats where the growth is were going to go there. But i do think right now were at an interesting moment of somewhere between take it off the table its been a good year and they always work through december. The fear of missing out rally that has taken a grip on technology when you see the top eight technologies add 1. 5 trillion in market cap year to date, you wonder how much better is this going to get lets get to the opening bell and the s p. Theres the bell at the big board down here its American Express highlighting its eighth annual Small Business saturday tomorrow at the nasdaq its youth inc. , helping youth serving nonprofits in new york city one dynamic that is turning is oil. Awfully close to 59 today. Thats going back to 2015 levels, we have this outage at key stone, which is lasted longer than some thought and then these reports that opec may have a framework for a deal regarding production. The dollar has remained kind of restrained. Everyone thought still range bound, maybe 55 was Something Like going to be tough to get beyond in a lasting way but they are working. The stocks themselves not necessarily moving dollar for dollar with crude. But its definitely part of the everything rallying type backdrop weve had oil and bonds remain firm and stocks of course. Energy stocks are pretty much at the Cross Section of this notion of do you rotate out of best performing technology and into an under performer like Energy Stocks. Weve seen the energy etf rally since about august levels but the key question here, Oil Approaches these levels, are american frackers going to come back online and drill, drill, drill and effectively defeat any sort of extension that opec could put in place whats interesting at the opec meeting, the Energy Trader is going to give a briefing about the american shale industry. That will be an interesting dynamic next week at the opec meeting. Basically shale producers are the swing producers these days. Right. You know, even along with that, Energy Stocks have never actually looked very cheap i mean the earnings were so depressed for such a long period of time. Its tough for mathematical value guy to say, okay, now they are cheap. Once again ge will lead the dow, its happened for a couple of days now as its back in 18. 25 and so Teva Pharmaceuticals is getting attention over the holiday for these reports from a Financial News website that ive never heard of but still saying they are going to cut nearly a quarter of the workforce in israel. Yes. It was an israeli report and thats where the historic home is and the stock is responding, new ceo, seems its a pretty major stream lining effort. Its not entirely a surprise. All sorts of commentary not just from generic news makers but said on the past in earnings calls that the pricing environment is and will remain difficult for generic drug makers in particular were watching that one. Were also watching deere. A top performer on wednesday after a very strong forecast Deutsche Bank is out today upgrading deere to a buy rate ig remember though, its north america. Its a forecast for Construction Machinery up 69 expected next year and so thats really confirming this run that weve seen in the shares year to date. The ag stocks have kind of played along with it. Definitely. A bunch of targets have been out the last week or so for year end 18 i had to laugh because they are as closes to 3,000 as you can get without putting a three in the number 2950, 2900 at ubs, 2850 at goldman. Somebody wants to quite put the magic number on there. It could be because they converge around 10 to 12 , maybe get up to 15 . Its sort of the round number bashfulness combined with do we really want to build another 15 on top of 16 this year i think the strategies have been very restrained aend kind of measured in the whole thing, which is not to say they are going to turn bearish reat the right time but they are not saying its up and away from here in a big way is somewhat telling. And some of those who tried to get an offramp midyear its been very hard everyone seems to be playing the game of market is expensive, rolling for a long time. Were due for something you uglier than weve seen this year but bull markets have an overshoot to well play that. Retail will play today. Macys is leading the s p, up better than 3 kohls along with oil names are going to help out. Interesting comments from gennette about categories that are seeing decent Pricing Power. Apparel we asked specifically about apparel and womens apparel. That has been a sore spot across the board all year long. The shopper comes in and wants to buy that sweater and picks up other things i thought some of the other things about macys, i felt he was very committed to monetization and making maximum use of the real estate and commitment to the dividend is key. When you have a dividend over 7 , you think thats a dividend in danger. How much longer is a retailer going to be able to keep a dividend of 7 he seemed very committed to that dividend, which is going to be a lot of very important for a lot of macys investors willing to be in the stock and wait for the turn in retail but want to get paid to wait committed to the dividend but also with a rationale for basically Capital Spending is in our criminaontrol then well get to covering the dividend and maybe hold off on buy back its a little bit more specific than ge saying its a top priority to maintain the dividend weeks before you cut the dividend. Exactly. Speaking of buy backs, slowest pace in five years for corporate buybacks running at a half trillion dollar run rate, takes you back to 20 2012 or so. Are prices so high that we bought as much as that phase was active for a while. Corporate Balance Sheets are pretty leveraged, also the market has stopped rewarding the heavy buyback stocks in a consistent way if you look at the etfs, it stopped working. If investors arent demanding it and look at the Merrill Lynch survey, what should we do more of and investors they are not asking for more buybacks investment in the business and maybe debt paid out. You have to wonder if this is wait and see also to see if theres tax policy that will reward them for investing and allow them to expense that Capital Expenditures or if they think they are going to have a tide of repatriated money coming back you can use to pay down or something. Its interesting that the market has done just fine the market has plowed through, its only qe, only zero Interest Rates and buybacks and fang. It hasnt been only all of those things, a bull market feeds on whatever story is in play at any moment. Right. Dow is up 40, really quick. Even though some retailers are working, others are not, cignet is down and footlocker and airlines on the back of the higher oil number. Lets get to dominic chu on the floor. What else is moving right now is all of the kids around here its family day. Well get to that in a second. They are kind of gathering around me right now. As for the markets, you mentioned a lot of themes that traders will be looking at so far we have the dow up 40 points or so in terms of the overall movements, were Still Holding near record highs, not too bad if you look at the sector movers out there, well keep an eye on technology because it has been such an outperformer, Consumer Staples and discretionary some of the big winners in relative trading. Retail and telecom maybe the laggards there, it has been one of the big ones this year. A lot of people are still watching, a little of that with the high yield side. Well start with whats happening with small capitalization stocks. We have small cap stocks doing some underperforming so far but trying to play catchup over the last few days or so. We caught up in terms of relative performance you can see the s p and russell in line in terms of at least the month to date gains and Dow Jones Industrial average overall. We have seen performance pickup in the dow transportation just in the last maybe couple of weeks or so. Maybe that gap gets closed a little bit another possible leading indicator. On the junk bond side of things, we did see that selloff in junk bonds. It didnt really materialize into much but a certain part of the marketplace, traders are watching of the Consumer Staples one more sector to watch it has been a real lagguard so far this year but it has been one of the better persecute foremaners this month in terms of overall at least performance from that sector names like kellogg, who mel, campbell doing decently. For u. S. Here on the floor, all of the attention is on the kids because this is a huge day for families out here. Everyone likes to bring their kids in. You want to wave we love cnbc and everything. Hello world i. Just got a couple of seconds but i want to ask them how they feel about things. Holiday shopping, what do you want for christmas i dont know yet. How about you i dont really know yet. It doesnt seem what about you, christmas what do you want i dont know. Sky landers, there you go weve got one there. What do you want no idea. How about you clothes all right, so we have a lot of people undecided so far with regard to what they want for christmas. I dont know what i want for christmas either but my list is fw going to be pretly long. All of these guys having fun back over to you for the rest of the opening bell side of things in the 9 00 hour until then hell maybe take a lot more polls and questions with regard to what the hot toys will be. Dom, the lack of a must have i hope is not read as a bearish signal. No, but remember, adobe says billion and a half worth of online goods sold through 5 00 thanksgiving night a lot of people are spending these guys are going to do their part for sure. Dom, thanks lets get to Bertha Coombs as well over at the nasdaq. Hey, carl, as we continue our record run, the nasdaq 100 and composite both inking records yet again today. Dom was talking about sectors, the chip sector today kind of flat as we start however, chips have now been up 11 weeks in a row. As i looked through, i didnt see a span winning span that long ever actually going back to even the red hot late 90s and one of the interesting things, we also saw this week, the philadelphia sunemiconductor inx take out the all time closing eye. Up 47 year to date. Some of the big winners this week overall that has been the big theme here, along with amazon, also today putting in a new record as amazonstretches into all sorts of different sectors, now beyond retail as well i will tell you, i dont know about the kids but i already bought one of the things on my list and had to buy it through alexa, through voice, thats how they gave you the first discount on those amazon fire sticks, which was very interesting to buy that as i was cooking on wednesday night. But amazon is not the best performer even as you see big gains for the year as far as retailers here on the nasdaq bucking the trend. A really small cap retailer conns they have more than doubled and pets med express and bringing up the rear in the top five retailers, five below up 47 . Really bucking the trend in the industry overall back to you. Thank you very much Bertha Coombs. She mentioned chips, were watching qualcomm, theres a report on wednesday that broadcom could raise the bid for qualcomm remember hock tan allowed the bid, the board effectively said it was under valued the company significantly. Were waiting to see if this komsz to fruition. Were seeing a bit of a bid for qualcomm shareshigher by. 7 Rick Santelli is at the cme in chicago. Good morning, melissa lee its always fascinating. Whenever you see a perfect parallel shift on the curve, most likely that means markets hit some sort of equilibrium would match that requirement yes. We have parallel shift twos through 30s if you look at 24 hour of tens you can see the slight move higher, one week of 10s with the place marker considering the markets were closed gives a pretty good idea were somewhat treading water and 2. 33 never far from view weve gone over what that is sometimes things are pretty easy the low yield and high yield, 2 to the 2. 04 and 2 pts 63 the average 2. 33, right on the nose look at one year of 10year bunds, they did trade yesterday and drifted a bit. They popped back that basis point and a half they gave away at the xens of no arbitrage with u. S. Markets but all of the action continues to be in the dollar wow, you talk about breath taking move over the last several sessions, look at one week of the dollar index if you really want to get a good glimpse, open it up to the third week in september. It has been nine weeks since the 25th of september, the dollar index has settled at this level below 93 and finally, whats the beneficiary of that weakness the euro versus the dollar if you look at the september start you can clearly see one high was at 2036 it certainly looks as though the euro dollar is aiming for that despite all of the odds regarding the Coalition Political issues of the Merkel Administration carl, melissa lee and mike, back to you thank you, rick. It is a battle of bricks versus clicks and come up it later, kathwari will join us. We see retailers leading the charts the dow up 35 points and s p up by five and nasdaq up by 11. Squawk on the street will be right back [vo] when it comes to investing, looking from a fresh perspective can make all the difference. It can provide what we call an unlock a realization that often reveals a better path forward. At wells fargo, its our expertise in finding this kind of insight that has lead us to become one of the largest investment and Wealth Management firms in the country. Discover how we can help find your unlock. Welcome back, this black friday more consumers are expected to shop online than in a physical store deirdre is breaking down Electronics Deals for amazon versus best buy. Reporter good morning, were in front of a best buy, it opens back up in an hours time and the line is just starting to fill up. Theres maybe 10 to 12 people in line it is filling up quickly while its been closed weve been digging through deals online and best buys website and comparing them to whats on offer from amazon. Heres what we found so far. Let me run through a few of them a 55inch samsung 4kl. E. D. Tv, it is exact same price on best buys website as well as amazon. Com to the penny. 897. 99, the 65 and 75inch models same price. But heres the rub, best buy is offering actually a quicker delivery, it deliver it three days sooner than amazon can, even if you are a prime member amazons own devices too, kindles echo, fire tvs, exact same price as they are on best buys. A 13inch macbook air is nearly 200 cheaper at best buy than it is on amazon a Third Party Merchant on amazon does have it on offer at that higher price and will deliver it as early as november if youre wondering why all of these people as we are are lined up outside when all of the deals are Available Online, we spoke to the earliest people to get here we spoke to someone, one of the first guys in line who simply wasnt comfortable with Online Shopping we found the same deal for him online he considered going back and ordering from his couch. We spoke to another guy who said he simply wanted a computer right now, not later. I need something now. Thats probably the only reason to be at outside the stores anymore. Guys, more and more folks are preferring to from the comfort of their own homes or theyre becoming more comfortable buying things online so were seeing the numbers shift. This year for the first time ever, consumers are expected to spend more money joan online than they are physical stores. Back over to you deerd ra, thanks fwor that. You know what im struck by . We never showed the video, the live picture of the door opening. Everyone storming in, yes unless becky and andrew got the to it earlier today. Maybe it just doesnt happen any more thats what im saying. Fewer engineered shortages at the stores, maybe. Or why not at 5 00 in the morning when you can go online. Exactly theres a lot more competition. Jcpenney, even though it stopped selling electronics, for the past ten years, theyve got a this is a samsung 55 inch class uhd ultra high def l. E. D. Smart tv for 497. 99. So they are the entering the fray, too, even from players who are not in electronics any more. The deflation in tvs is unbelievable, right . You see those categories. Tvs are always at the bottom it does raise the question, are the consumers the net winner what is the value youre giving jcpenney to order that thing, right . When we come back, new details on ubers breach, when he found out about it and who he told first g ta uppotss uple of in a weeto cole new records in the s p at 2 6 01 what powers the digital world. Communication. Thats why a cutting Edge University counts on centurylink to keep their global campus connected. And why a Pro Football Team chose us to deliver fiberenabled broadband to more than 65,000 fans. And why a leading car brand counts on us to keep their Dealer Network streamlined and nimble. Businesses count on communication, and communication counts on centurylink. Its a like, a dagger . A worm a tiny sword . Bread. Breadstick . A matchstick a lamppost coin slot no . Uhhh. 10 seconds. A stick a Walking Stick eiffel tower, Mount Kilimanjaro ding time sorry, its a tandem bicycle. What . What . as long as sloths are slow, you can count on geico saving folks money. Fifteen minutes could save you fifteen percent or more on car insurance. Some new details on ubers massive data breach. The company says it discussed the breach with potential investor sofbank before it went public on tuesday. Uber says it had the duty to disclose the breach to a potential investor even though the information was preliminary and incomplete kosrowshihi learn of the breach more than two months before he discovered it. Some reports suggest he wanted to have it investigated fully before he disclosed it, but certainly raising more questions about transparency i think its easy to throw your hands up in the air and say, another thing at uber but at the same time, to be fair, these sorts of breaches, you want to know what the details are before you go ahead and tell the public there. You dont want to create panic you want to get a good grip on what the information is. Wouldnt it have been worse if he came out and said i dont know what the details is i know weve been hacked presumably when you know the information is no longer out there in play and the idea was that it was erased, it was deleted, then its about the protocol of saying who was impacted lets quantify thises as opposed to, as you say, rushing out there. Companies still trying to figure out where that line is as far as knowledge and exposier. I would think private america would want to figure out where that line is before the government steps in. Monday at 9 00 a. M. Eastern time, were going to sit down with the ceo of u. P. S. David abney as the Holiday Season gets under way. A lot of questions for him ahead of, obviously, a big crush in terms of shipping. Meanwhile, s p 500 up 2,601 and the dow up 36 points squawk on the street bk a mentacin every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, tomorrow get up, get out, and shop small. whoo woman class, lets turn to page 136, recessive traits skip generations. molly i reprogrammed the robots to do the inspection. Its running much faster now. See . Its amazing, molly. Thank you. [ click ] [ keyboard clacking ] [ clacking continues ] good questions lead to good answers. Our advisors can help you find both. Talk to one today and see why were bullish on the future. Yours. Good black friday morning. Welcome back to squawk on the street. Im carl quintanilla, melissa lee and dave markets are doing okay at the open, up about 40 on the dow, 5 on the s p oil, of course, getting some twoyear highs under its belt, close to 59. Beginning with the super bowl of shopping under way, a shopping check. Plus a casualty of the rally, the markets hitting record highs once again today, which might explain what were seeing in corporate buybacks and betting on nostalgia the founder of a company profiting on throwback toys but say with us in just a bit. Courtney reagan is at the woodbridge mall in new jersey this morning hey, court good morning, carl. This is my favorite day of the whole year, so its really fun to be in a mall today. Though i will say the trends weve seen over the years are changing a little. Thanksgiving night, thats when youre seeing the families and the dedicated mom thes out there buying for the whole family. Now youre seeing more of the younger crowds come, some pleasure shopping i will admit from some of the bags weve seen we got some new numbers from macys theyre saying they sold 200,000 coats and expect to sell a million by the end of year fragrance selling out pretty early. Just got off the phone with Susan Anderson shes been checking some of the apparel players. She thinks traffic is a little lower in some of those stores because this year theyre offering identical promotions online but she did note shes seen some pretty strong crowds and shopping bags in america eagle and pink and Victoria Secret as well as lulu lemon ill say, between, i think pink is probably the most abundant shopping bag ive seen here, which goes hand in hand with some of the younger shoppers weve seen we know amazon is taking a big bite out of shopping across every day of the year. They said for u. S. Mobile, thanksgiving day orders, those were up 50 this year over last year but a lot of the shoppers we spoke to here at this mall, theyre sticking to the physical stores im going to look at websites, but i think im going to get most of my shopping done in stores. I like them better sales are better. And its nice to see exactly what youre buying, especially if its on sale. Its more fun, i dont know, to be there in person and to try everything and try it on i like to see what im getting and see if it fits me properly instead of getting it online some folks are shoppingon line catch point is watching a lot of retail websites for us h ms website was down for an hour yesterday and down again at 4 30 a. M. This morning that does appear to be fixed, but clearly some issues there. Its not always a clear black friday for everybody, but well keep you up to date at the new york stock exchange. Courtney reagan on an important day on the retail beat we addressed some of the most worrisome retail trends and that, of course, is excessive promotions the promotions have bee rationalized we have less promotion than last year it was great to see the crowds show up last night and is online all day yesterday responding to all the great values that we have were in a good place with that. Joining us this morning, dan identifie ives and ed yuruma ed, are you seeing at the mall that promotions are not quite as deep this season we are seeing that. Were seeing promotions much more control were seeing them target around specific products and were seeing the consumer really respond to what the consumers are focused on this year how about you, dan . Make sense to you . It makes sense. Fundamentally, were seeing the shift as youre seeing to ecommerce is just a trend thats really continuing. Weve seen traffic last night, this morning, up specifically at best buy, up double digits overall, its amazon stealinging the show on the ecommerce side. There was a note that the price differential between amazon sites and walmart and target is only 2 , but that differential had once been 6 so amazon would really have the benefit. In this environment where we have these retailers coming out and saying, we want that share, were willing to spend to get that share, does amazon have that edge still . Its a great point. And what were seeing is in terms of prime members, theyre going to spend between 20 and 25 more this year versus last year we estimate about 49 of all ecommerce spending is going to be amazon versus 38 a year ago. So they continue to have that ring fence around the consumer on ecommerce. We are seeing walmart start to go make traction, no doubt theyve had massive success. But we believe its a big enough sandbox where walmart and especially amazon continue the benefit. And when it comes to the traditional retailers that you cover, are there online efforts, whether its pick up, in store or whatever theyre attempting to do to grab a piece of that business, is it mostly considered selfsufficient on it own . In other words, is it table stakes do they have to do this . And is it a net reduction in the economics of the business . Look, absolutely, ron the consumer is deciding where they want to shop. If its on ecomm, the retailer has to meet them there if its buy and pick up in store, they have to offer those capabilities we think apparel is particularly strong this year and thats one area where amazon doesnt have the lead that they have in places like electronics. So this could be the one holiday where on a relative basis, we could see other win withers other than amazon. Such as you know, it looked like pink, which is l brands was very strong. Gap has had i think pretty strong results we saw lots of bags at Urban Outfitters this morning. So i think this strong apparel trend could be playing into a lot of their hands gap is strong because, i mean, ed, i started getting the emails for 40 off of everything a couple days ago so youve got to wonder, strong at what price, which is i guess the eternal question for the retail sector. Is the consumer so trandz . Im trained. Ill see whats out there and ill think, the retailers are going to bring the prices down because thats what they always do certainly the consumer is trained to wait for some of these promos, but were seeing more 50 off this year versus 50 off plus 10 off. On the margin, it does seem like some of those promotions are lower than they were last year dan, is there a chance that that 50 share from amazon and ecommerce, could that become a ceiling at some point . Yeah i think you start to hit a ceiling when you get to 50 , especially with what walmart has done, target, as well, retailers, if they start to get their act together i think this year is a year from the share perspective. Prime is the key tease why you go into any whole foods, the big focus is that cross opportunity and who knows if next year if amazon gets into health care, you start going to a cvs, next thing you know, you get to be a prime member, thats the key. The prime member spends two times more than a nonprime member so the discussion weve had this morning already is if walmart continues to get this right, thats the camel peeking under the tent, is does the value of a prime membership need to be cut, right what would drive amazon to say, were going to cut the cost by a quarter . Yeah partnership mean, look, price elasticity is an important thing here you can get more services, but ultimately, we could see over the next year some more promotions around price cuts they know they have to get them in the cocoon of a prime member. Once theyre outside, bentonville is lined and walmart has done a significant job and we saw it last night and this morning. Walmart hit a hundred on friday, just for a moment it settled back a little bit. How much has the streak taken into account, the obvious hard work theyve done . Look, i think the street is starting to recognize the improvement. In the stores last night at walmart, you can see the benefits of their ecommerce strategy paying off, but most importantly, the stores are cleaner, the process is morer orderly, inventory levels were good this is a compounding benefit that theyre going to get. So we think that walmart is one of the winners this holiday. You know, ed, on black friday, we always talk about the retailers who are winning. Theyre ones that are going to be losers this Holiday Season where it might be make or break and youve got the list of the usual candidates sears down 9. 7 claires needs to pay off or refinance . 3 billion in debt by 2019. Lets say these the guys go away in some way. Are there winners in your universe certainly less capacity will help the players longer term you know, someone like a nordstrom could be a winner, someone like an acimo which owns a broad base of apparel could be a winner but this dislocation process will be dramatic for the Retail Industry over the next couple of months as we digest the Holiday Season and the ramifications of it dan, do you see amazons appetite for a more physical change ramping next year or is that just the one off . I think its one off. I think theyre going to toe the line there i think specifically depending on where they go with health care but its one where they know that slippery slope if they go down that and that differentiates them. You look at Companies Like stitch fix and some of these niche boutique models, smaes something were expecting more in retail as you see the survey work weve done. Finally, ed, on store closures, you saw some numbers this morning, 6,000 store closures this year alone there are 65,000 fewer retail jobs than they were in january of this year do you think were going to surpass those numbers in 18 yeah. Its likely. Store closures is something thats going to continue were seeing those more marginal retailers, which of which you called out continue to underperform but over time, that plays into the stronger retailers, those that made the investments in retail and its going to be a disruptive time, but overall, we think well end up with a healthier environment longer term. Its good to have you with us, ed, from the mall of america and dan, thanks for your time. Great to be here this week gotta love that shopping music really puts you in the mood, huh . When he come back, forget the malls. Theres another place were heading and well tell you why expectations are high for auto sales today. As we head to break, check out shares of Teva Pharmaceuticals rallying on news it will lay off thousands of employees you always pay your insurance on time. Tap one little bumper, and up go your rates. What good is having insurance if you get punished for using it . News flash nobodys perfect. For drivers with accident forgiveness, Liberty Mutual wont raise your rates due to your first accident. Switch and you could save 782 on home and auto insurance. Call for a free quote today. Liberty stands with you™ Liberty Mutual insurance. Tarlth slashing prices to beat out the competition this black friday Morgan Brennen is live in target in jersey city to break down the details. Thats right. So in addition to electronics, toys have been among the most popular purchases by shoppers at target so far. So here at this jersey city location, which opened its doors at 6 00 p. M. On thanksgiving last night, folks were scooping up plush, oversized teddy bears last night which apparently priced at 10 a bear were selling for 600 a minute across the companys locations last night. Other top sellers, hatchamoles, hasbros ner the f brand many of those are Available Online and that is key because a recent Consumer Survey by jeffries found that amazon is poised to by the top seller of toys this year that really turns up the heat for retailers like walmart and target target in particular is in focus right now. Its been carrying out a major threeyear, with 7 billion Capital Investment strategy. Part of that strategy is to pump up its online presence, but also to revamp stores and lure more shoppers and boost financial returns with the launching of a dozen new private label brands, as well. And keeping with the kids theme, one of those brands is cat and jack that is a Childrens Clothing line that has pulled in more than 2 billion in just over a year so its stock down is about 20 for 2017 some of the big box rivals, like walmart and best buy all of this is in focus right now. The toys, the private label clothing, like cat and jack, but also electronics, which, guys, we are going to get into and talk more in detail about in the next hour. Back over to you doesnt look busy, morgan. It is i will tell you, its theres pockets. Theres been a steady stream of people since this store opened up it closed overnight, reopened at 6 00 a. M. This morning its been a steady stream of people, some traffic particularly in the electronics section. Thats where some of the biggest deals are happening in store right now and that had a area has been full of lines all morning. Morgan, thanks. As we go to break this morning, take a look at shares of rovio, the finland basemaker of angry birds missing expectations for Quarterly Sales and profits. Stocks down more than 1 take a look at black friday at the mall of america in minnesota as we watch retail all morning long dow is up 41 points. Be right back. [ male announcer ] eligible for medicare . Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Companies in the s p 500 are on pace to spend the least on buybacks in five years, at least. Firnls are estimated to allocate about 500 billion this year in repurchase programs. Thats about 125 billion per quarter and that pace is down from a quarterly average of 142 billion since 2014 so i would say in the last couple of years, this activity has become less fevered and i was going to point out, too, that the buyback heavy stocks, the ones in the etf meant to play the buyback trend are meant to perform in market today thats versus 15 or 16 in the s p. I feel like in the last year or so, theres a real aware ps of buyback scenarios people are really theyre getting wise to this and, of course, a lot of companies that, you know, borrowed a lot of starbucks just last week. Interesting case with starbucks, it seems to me its a mature company. Maybe makes sense to do a little bit of it. Good morning to you both good to have you here. Nandini, i wonder how you set up going into the final month of this year. Weve had this rally in risk assets, obviously. Its been global its been a core across equity and corporate bonds. Its been one of the calmest years in memory. Does that mean maybe you rebalance away and look for an opportunity to do that or do you feel as if this environment can Carry Forward for a while . Yes, its a great question as investors grapple with the last year, what to look for in 2018 were very much still pro secretaries, thinking the cyclical upswing in Global Economic data, consumer confidence, all of that ticking up where it should be a support for equity egg Going Forward now, there are some sectors highly valued as markets have hit record highs over the past few months and those are the ones that are more cautious on an index basis broadly, pro risk and liking the equity market fundamentals weve been seeing. And what would be some of those sectors you might want to back off on a little bit sure. Some of the specific companies that have very high valuations in certain sectors, for example, in the tech sector in the u. S. That have more potential to fall as things get a bit more harry, we also prefer, actually, rather than not preferring, we prefer fms in the europe sector staying away from some of the more or less cyclical sectors, the ones that are also not exposed to the consumer upswing b in europe and in the u. S. And in emerging markets. We like the new stock sort of the ecommerce, the things that dial into financials, technology, very much supported by the middle class consumption rise in emerging markets and actually even across the world globally so anything cyclical that plays with the broader technology and financial themes are in our favor. Kevin, what do you think . Just kind of ride it through the end of this year and beyond or how are you positioned here . Well, were overweight equities in the portfolios that we manage. And what were looking at is a market that has moved very strongly through whats the sweet spot for the economy weve got this low inflation, but positive growth environment. And this is exactly what equity valuations love. So weve seen multiples rise theyve been rising throughout the year along with earnings and thats a very positive thing. I would say, though, however, Going Forward, there is less meat on the bone for the investor in equities and i think its important to note that the short end of the yield curve has been rising as the fed has been raising Interest Rates and the increase in multi the manies over the last year or two really puts downward pressure on the expected return from equities from here. So we see less benefit for taking on risk, but well stay with the trade as long as the data looks good. Is he moment, the data looks good so theres no rope to get off this train but we need to be cognizant that risk still exists. So the flattening of the yield curve, kevin, concerns you. Do you see it inverted well, not yet, no the curve is not inverted. Eventually the do you see it inverting well, it could. If we continue to move through this period of weakness of a year and a half ago globally to now noninflationary growth, really the sweet spot im talking about. But if we continue to push higher and the fed is forced to raise Interest Rates aggressively which we dont see at this point, but it could happen, then yes, you could see another inverted yield curve and maybe the end of a this phase of the bull market, anyway yeah. And andini, we have had some cell side calls in the past week or two goldman comes to mind who say that theyre going to have to tap the accelerator a little bit more the coming year on rates. I wonder, your take on that . And i also wonder, german political uncertainty, why is the market giving that such a broad pass sure. So ill tackle the fed question first. We are our call is for one rate hike in december, as is pretty much hiked in across the board. We expect 2 to 3 more Interest Rate hikes that can go up to 3 to 40 if inflation does pick were very much aware that the fed is on this policy utilization path germany has been a big news here over the course of the week. But were seeing markets havent taken that as a hint to stop prices, the general european stock market does seem to be rebounding, and i think the message here is yes, coalition hasnt been reached by Angela Merkel and the other Political Parties, but the other Political Parties are still pro europe broadly. And that big risk for european politics is the antieurope sentiment, which actually in the german case isnt necessarily at play we look actually towards bigger risks than italy, for example, where euro skepticism is on the rise and this week is a lesson that the stock market, particularly in germany, is relying on fundamentals and were seeing good Earnings Growth over the course of this week joust to scan the horizon elsewhere across the world, chinas market had a bit of a hiccup maybe theres concern there with Interest Rates rising, government yields hitting 4 would that be a direction where you think theres a jolt coming at some point . Yeah. Across the world, we are pro risk we like equity markets the biggest longer term risk in the horizon would be a u. S. Recession, bringing things the down in the developed world certainly. But china is another one we keep a very close eye on. How is the debt performing are the nonperforming loans reducing is growth supported by consumption . This week, you know, there is some news out of there its not a reason to reduce exposure to china or reduce or favor of emerging markets. But we are watching that and how china manages the debt situation and. Perhaps as policy might change Going Forward, if they step up and do something different, that could have impacts on global bond markets, certainly. Kevin, you know, we are talking about the yield curve and you said if the fed had to hike aggressively, we could see an inversion of the yield term janet yellen made some interesting comments last week saying she expects inflation to tick up over the next couple of years, but shes not certain about that we have jerome coming in next week who could have the same view or perhaps a different view what do you perceive for fed rate hikes next year were not as aggressive as the other guests we would see maybe two or three rate increases coming over the next in 2018. But thats conditioned upon continuation of the good data flow that were seeing that said, the changes at the fed, the introduction of new the leadership there looks more continuous with the with what weve seen before. So theres no real break there and there has been a significant record of the fed missing in terms or i should say inflation missing the feds target so consequently, its a little bit too soon to say, well, you know, all of a sudden, now were going to see this big breakout of inflation. Its something that needs to be watched, but were not convinced that youre going to have a big breakout of inflation here subsequently, were not expecting the fed to move very aggressively on Interest Rates in 2018. Yeah all right. Well see if we get any clues at those hearings next week on j powells nomination. Kevin, nandini, thanks for your time this morning. When we come back, why closet 80s toys may be the best selling of the Holiday Season. Well talk to the c he o behind that company in a moment every day, on every street, in every town, across america. Small businesses show their love to you. With some friendly advice, a genuine smile and a warm welcome they make your town. Well, your town. Thats why American Express is proud to be the Founding Partner of Small Business saturday. A day where you get to return that love, because shopping small makes a big difference. So, tomorrow get up, get out, and shop small. Allow you to take advantage of growth opportunities. With a level of protection in down markets. So you can head into retirement with confidence. Brighthouse financial established by metlife. Here is your krn news jum update at this hour. Out of egypt, at least 235 people have been killed in a mosque attack. Security officials are reporting militants in four offroad vehicles bombed the mosque and opened fire on worshippers it happened in a volatile region a suicide bomber on a motorcycle in pakistan killed a highranking Police Officer and guard. Officials report there that the attack wounded six others. No group has claimed immediate responsibility argentina has announced its accelerating the search for a submarine lost in the south atlantic that subdisappeared nine days ago with 44 crew members on board. The countrys navy said an explosion happened near the time and place where the subwent missing. And a dramatic rescue, a Good Samaritan and three Police Officers rescued a woman trying to climb on to the platform just seconds before the train came through. We dont know why she was on the platform or on those tracks to begin with thats a cnbc news update for you this hour. Back to you guys lucky person. Contessa brewer, reporting this years ecommerce sales up 1. 5 billion. Thats up 17 from last year but within those numbers, retailers are winning. Twice, good to have you with us. Thank you lets two with that question. Who is winning so far . He know its early well, the black friday shoppers ghost at the malls and wentz across the street shopping at best buy, walmart and target. They had the biggest line among the retailers. Whats interesting is we found out that one thing retailers did really good this year is that 43 of emails were increased this year. So the retailers did a good job in letting consumers know about the discountses going into black friday yet, the discounts werent too great. The discounts were on average 40 and the National Average discount has been 37. 3 over the last two months. So as you can see, there was much more of a discount for black friday michael, this year we have major launches of new phones from apple at staggering price points, 1,000 for the iphone x. When we think about retail sales, is that going to be impacted by consumption elsewhere, spending elsewhere . I think the one thing that were going to see is not only in Consumer Electronics and things like the apple, were seeing a transition of people wanting to have experiences. Its not so much about what i own, but its what i do. Its about the instagramble moment or the snapble moment and i think were going to see a shifting to those experience and tickets and those types of things that people experience as opposed to just buying whats the most effective use youve seen of that . The most effective use of marketing for that of building that kind of moment what were seeing nearly in the stores is the ability to bring the services to the stores right now, we dont see retailers building those moments as well as they should, but i think thats going to make the difference for consumers coming to store build an experience, give me a reason to come but where we see it coming is outside of the stores where people can consume such as services, such as dry bar and hand massage and give me that gift that i can enjoy as opposed to just another piece of clothing aside from the iphone, is there any kind of competitive gift that people are going of to really go for this year . It doesnt seem like it. You know whats interesting is that retailers are using a new strat by and i saw it very vivid today in the malls. When you walk into the Victoria Secret, the bras were heavily discounted, but other intimates were sold at full price. So the lines were big, with women carrying on average two bras but they were carrying sleepwear where they were paying full price and there were a lot of in lineals in the mall. When i asked them why they were there, they said they were there with the experience. They were there with their friends and they were there to actually enjoy the experience of shopping courtney spoke to those teenage girls in the mall there. They all had the phone exactly you close enough stores and i guess retail becomes quaint and you go there and you want to see what its all about because you havent grown up going to the mall we have the vintage toy guy on next do you think the cold weather is masking weakness that we might otherwise have seen yes the cold weather wam in just in time for the Holiday Season. Were expecting to see an increase in the amount of coats being sold in the Holiday Season even this morning, macys was talking coats, sweaters and fleeces, right everybody had a sweater in their hand, even at gap, which had 50 discount, yes. Those are the ticket items that need to be sold if youre in the apparel business youre going to get more margin, birth bang for the buck if you can push the coats and the cashmeres. Even if its 50 off . Even if its 50 off. Thats built into the price. The retailers discounting last are going to be the Discount Stores like walmart theyre going into the Holiday Season more confident with their inventory. About 43 of their inventory was discounted last year that has dropped to 25 this year on average, their discount last year was 18 and thats dropped to 10 were seeing theyre going more confident into the Holiday Season, that they have selected the items that consumers want. Does that mean the week before christmas, there will be shortages . Honestly, it seems like were front loading a lot of the season retailers would rather short it rather than having massive inventory levels that they have to discount and hurt margins however, the retailers that might go through that are the Department Stores. About 60 of their inventory is still sold on sale and that amount is just big, over 50 discount it just makes you question how long can they survive, you know, hurting these margins. 60 sold yes on sale that is slightly down from last year. Last year it was 66 but it still is a huge amount for macys and lord and taylor it doesnt sound like things are getting much better or the Department Stores. I think the Department Stores are just going through the evolution that theyve been going through for years. Theyre trying to find that place for themselves in the market now its been built around private labels Going Forward, theyre going to have to get back to when they used to incubate brands, give brands an opportunity, a field to play in that they can then draw the consumers back in right now, it is about their private label and differentiating on those and theyll continue to discount on those to make it happen. So example there would be jcpenney sephora, Something Like that thats a great partnership. Its a big draw. Its a great experience. It gives them a branned name that attracts people to their the brands what we see is more what nordstrom did with lenovo as being a wholesale partner. Now its a walmart acquisition, going to give them the traction with the more upper demographic that they need so when you say private brands, its not necessarily macys inhouse apparel. Its another brand from the outside theyre helping to incubate theyre going to have to incubate to be successful. That was the role of the stores back in the 70s create that passion, bring in new designers, discover the new ralph lawuren and give them a place to discovery who they. And what about toys is it purely on price at this point . There hasnt been a must have toy yet, but star wars toys always seem to be a favorite going into the Holiday Season. And toys have the last jedi is, what, three weeks away . Exactly toys have shifted to the gaming platform. I think well see some Virtual Reality systems coming out to give a boost there overall, nrf says 4 . Does that sound like theyre undershooting . Thompson reuters is looking at a 1 growth for the Holiday Season that is twice as strong at last yooef years 0. 8 . Holiday spending is expected to be modest. Were bullish on the 4 i think were going to see the volume retailers are going to do to make the volume i think we have to watch margins because were starting to see the shift to more goods being shipped jan online and those shipping costs come right out of the margins. Especially as u. P. S. Says its going to charge more around the peak shipping time its going to cost more if youre buying on a black friday to get that package delivered to your house and instead of coming to the store and pick it up on your own, its coming from three or four different locations each one of them has a 3 to 5 surcharge on it to get it delivered to your house. Thats where the amazon kohls relationship makes sense. And while youre there, why not shop a little bit more at kohls its made to entice, to increase that traffic at both ends. Thanks so much. Good to see you. Thank you speaking of shipping, wednesday well, monday were going to talk to the head of u. P. S. Wednesday at 11 00 a. M. , well speak exclusively with the ceo of amazon web services, andy jassy. Doesnt talk a lot, but when he does, you want to take paengz. When we come back, forget the malls, phil lebeau is live at a chevy dealership. What do you have coming up for you, i have a big, red bow a lot of people are putting these on the hood of a car and driving off the lot. How big is black friday in the auto dealership business well tell you when squawk on the street returns. It can detect a threat using ai, and respond 60 times faster. It lets you know where your data lives, down to the very server. It keeps your insights from prying eyes, so theyre used by no one else but you. It. Is. The cloud. The ibm cloud. The cloud thats designed for your data. Ai ready. Secure to the core. The ibm cloud is the cloud for business. Yours. Lets get to the cme group, check in with Rick Santelli and get the santelli exchange. Good morning, rick good morning, carl i like to welcome my last guest of the week after the thanksgiving holiday sean, thanks forting the time. Thank you, rig. Good to see you. I like talking currencies with you its been a very bad week for the dollar as a matter of fact, just thinking we said last week was slightly above 103 and here we are struggle, a 92 handle, the crb at 92 and that close to a ninemonth high, what do you see with respect to the dollar weakness well, i think actually maybe its more euro strength at the moment is the fact that europe looks like its not going to fall off the face of the earth as people were talking about a couple of years ago. You have to remember, in the last 2 or 223456 years, youve seen the euro at 1. 40. Youve seen it down at 105 and now were back in the kind of 120 area. So youve seen a great deal of volatility when it was at 105, it was bad for the u. S when it was at 140, it was bad for europe we think were in the 20 range, you know, why not look at that as a place for it to become more stable why not have a blah sdwa accord or Something Like that where europe and the u. S. Say, look, were going to put guardrails on this and well intervene at that point to buy the others currency we think that would be great and especially for trade the euro and the dollar are the two big currencies in the world. They dominate World Economic flows. Sean, youve never impressed me as the type of person to uger for move government involvement to slow down the volatility in government exchange. That seem like its packed with the the devil, doesnt it . Until 45 years or so, it was understood that you needed so far fixed Exchange Rates they knew that it would create tremendous speculation and Capital Market speculation which would eventually dwarf any positive mechanism and instead it would become a speculation game and that is what happened. When the dollar swings by large margins against the other big currencies in the world like the euro or the japanese yen, it destabilizes everyone and creates crisis after crisis. Were just about out of time and i wish i could continue with this because i understand that Foreign Exchange volatility can negate many things, even some of the positives to tax issues as they bark on reform there. But in the end, im a market guy. Were going to have you back and debate other possibilities to slow that volatility thank you for being my guest today. Mike santolli, back to you rick, thank you very much as we go to break, you dont want to miss this one. Coming up monday at 11 30 a. M. Eastern, ken griffin is going to join us. And when we come back after a break, classic toys making a comeback this Holiday Season well speak to the cofounder of the company brgi tse tinngheoys back to life squawk on the street will be right back double digits. Tfolio dy it really scared him out of the markets. His advisor ran the numbers and showed that he wouldnt be able to retire until he was 68. The client realized, i need to get back into the markets i need to get back on track with my plan. The Financial Advisor was able to work with this client. Hes now on track to retire when hes 65. Having someone coach you through it is really the value of a Financial Advisor. Im all about my bed. This mattress is dangerously comfortable. When i get in, i literally say ahh. America loves the leesa mattress. We have more five star customer reviews than any other mattress of its kind. This bed hugs my body. Im now a morning person. Hello bed of my dreams. Discover how leesas innovative design provides an extraordinary sleep experience. Then place your order. Well ship your leesa mattress right to your door. So you can enjoy a riskfree trial at home. I love my leesa. Today is gonna be great. Sleep on it for up to 100 nights and love it, or youll get a full refund. Returns are free and easy. Order now and get 125 off. Plus, a free pillow worth 75. And Free Shipping too. Go to buyleesa. Com today. You need this bed. Black friday now one of the busiest days of the year for auto dealers, and this years expected to be a strong one that could set up the Auto Industry for potentially robust year end sales. Phillebeau joins us live at a chevy dealership hey, phil. They opened the doors here at 8 00 and there were a couple of people who walked in were not talking about the long lines at malls or big box retailers, but its been busy all morning and will likely continue throughout the day. How important is today not only for this dealership, but dealerships around the country consider this, black friday and really this weekend, one of the top five busiest days of the year for auto dealers. They also are offering greater incentives, especially as we approach the end of the month. And this is the beginning of the yearend sales push, especially when you look at the Luxury Brands they typically are targeting that last six weeks of the year starting from now through new years, going to the end of the year, mercedes leads over bmw and lexus and for the industry overall, guys, were looking at a Third Straight year with auto sales topping 17 million most believe its going to be around 17. 2, maybe 17. 3 for all of 2017. As we take a look at shares of bmw, i mentioned the luxury auto brands really target the last six weeks of the year. Thats when you see a lot of the incentives, but make no mistake, not just the luxury names, its the mass market brands, as well. Chevy pushing big promotions for black friday, as well as the end of the year, and thats what were seeing today people coming in they may not buy today, but theyll be in here this churns the traffic this weekend and dealers love it, because it gets people coming into the showroom. All right, phil, thank you. Phil lebeau in illinois for us some classic 80s toys are making a comeback this Holiday Season with a few key updates. Wicked cool toys is a company taking the toys back on the market, equipping them with bluetooth and designing free mobile apps. For more were joined by the copresident and partner thank you for being with us. Thank you pleasure to be here. What do you think is behind the interest in these vintage toys because the kids growing up with these toys now have kids of their own . Thats exactly right. Life is a handoff. So you have multigenerational appeal and it makes a terrific time to bring back some of the most appealing and momentous brands of all time so one of those brands, perhaps, is the teddy, which weve been should go i want to address the elephant in the room first with this toy. It looks kind of scary with those eyes that sort of pixelate there. Whats new about this teddy . Completely understand as an adult after youve been influenced by the chucky movies for 30 years its easy to see yourself scared by digital eyes, but teddy ruxpin sold over 7 Million Units and that handoff is occurring today kids today are excited and interested in the digital eyes, bluetooth activity to an ipad or smart device where you can read stories and its an educational, fun, exciting toy. Are the licensing costs on some of these old classics expensive, or are the people who hold those rights just grateful that someone is interested in selling them again theres a range, if you could imagine. If you go to the toy store right now and look at the top ten brands you find a lot of consistency year to year teddy ruxpin was off the market for quite some time, so for that brand it was a reasonable deal for all sides, how about that . Cabbage patch kids has been on the shelf for 35 straight years, since 1982, and pokemon is one of the largest, if not the largest kids brand in the world, so were in a situation where theres a great deal of variability in terms of the deals to be had out there in the marketplace. Jeremy, ive actually seen an informal version of this at work basically, my dad from the basement kept stuff from my brothers and me, give it to our kids sort of a fascination with it. I wonder if there are certain 80s or earlier toys that seem not to travel well into today. Oh, absolutely. Id prefer not to mention them, because id like to be sued only once in my life, but, yes, that is true. What kinds of things might not work any kind of rule to that no, you know, ultimately if you as a parent were interested, basic play patterns and themes tend not to change much over time they tend to deliver to new kids in every single generation, so from trolls, to star wars, to pokemon, to teddy ruxpin, Cabbage Patch kids you see consistency in the play pattern and themes kids embrace. Thats evident to any dad who shows kids their star wars toys and say careful with that. Yeah. Absolutely. Get your own teddy ruxpin jeremy, thanks so much jeremy with Wicked Cool Toys very cool. All right. Lets take a check on the bond markets here and see where we stand on this black friday weekend. We are a shortened holiday week today, so if we could take a check here dow being led originally by ge at the open, but now visa and goldman. Who knows about volume today and patterns a little bit strange on shortened trading sessions black friday trade without having to actually choose a winner also it just works so well just as one of those big platform growth stocks. Be careful the smaller cap sales where volume is thin there could be a lot of volatility in a lot of the smaller cap stocks on the spectrum also midday softening in crude, which is settling back from the 59 level. When we come back this morning, it is not just Clothing Sales were keeping an eye on, well talk to the ceo of ethan allen obviously, filling the home with whether its Building Supplies or furniture is a huge tmehe squawk alley is coming up next dont go away. Directv has been rated number one in Customer Satisfaction over cable for 17 years running. But some people still like cable. Just like some people like wet grocery bags. Getting a bad haircut. Overcrowded trains. Turnstiles that dont turn. And spilling coffee on themselves. But for everyone else, theres directv. For 1 rated Customer Satisfaction over cable, switch to directv. And this weekend only get a 200 reward card call 1800directv welcome back to squawk on the street. Im Jackie Deangelis stocks are higher with the s p and nasdaq both notching intraday records Energy Stocks are the standouts of the day the sector up more than a half percent. The sector boosted by crude oil prices hitting twoyear highs following that spill last week shares of he is, Kinder Morgan among the leaders. That does it for this hour of squawk on the street. Now back downtown for the start of squawk alley. Jackie, thanks. Good morning, it is 8 00 a. M. Where the doors are just opening at the best buy in san francisco. Its 11 00 a. M. On wall street, and squawk alley is live adob