Russell 1,000. The russell 2,000 and the s p 400 midcaps have all hit alltime highs. Ten dow components have set multi year highs in october with seven reaching alltime highs. As for its year in the markets, volatility has fallen almost 18 this month. Of course, the lineup has led some to question if things have gone too far too fast. Pim pimcos bill gross on cnbc yesterday after the fed decision. The markets are bubbling and all asset prices are bubbling down. Steve liesman has pointed out Profit Margins are bubbling. To the extent that any of them can be suspended i guess is the ultimate test in terms of tapering or, you know, the purchases by the fed in terms of adding to the down shape. But, yes, slightly bubbly. All right, a little spooky. Well talk more about his opinions through wrought the morning. The futures at this point are indicated lower. Right now, you see some red arrows there. Dow futures down by about 30 points below fair. The s p futures off by about 2 points. On todays agenda, we have weekly jobless claims coming up at 8 30 eastern. And we have the chicago pmi at 9 45. First time filings for Unemployment Benefits are seen falling to 335,000. As for earnings, we continue to get the drum beat. Well hear from exxon, mastercard, cigna, discovery and time warper cable before the bell this morning. Andrew, ill send it over to you. Thank you, becky. Happy halloween. We have a little bit of spooky after the bell session tore shares of facebook. The stock initially jumped more than 16 on better than expected Quarterly Results. But then this happens. The cfo admitted that there was the truth to some of those concerns facebook is losing its cool factor with teens and the daily activity among younger teens has declined. Those comments sent shares significantly lower. Also the news about the fact that they may not be showing as much advertising in the future as people were anticipating. Well talk about that and a lot more with the facebook analyst at this hour. But thats your exclusive spook on halloween day. In other earnings news after the bell, not so scary results from starbucks. They posted better than expected Quarterly Results. Revenue was in line. The coffee house chain offered a conservative full year earnings forecast that fell below wall streets view. You can see that stock falling. Well call that marginal for now. Revenues fell just shy in the world aes languagest credit and debit cart candidate. Was slightly pessimistic about its outlook in the face of soft consumers. The quotes are playing tricks on us. Again . Thats okay. So much to talk about. Facebook, you saw the quotes. Anyway, facebook, in the journal, may not be able to cram more ads into users news feeds. When it went on to twitter today you had an ad. I havent seen any no. On my twitter thing, there are only and number one, i dont follow these people. Right . They just are interloping on my feed. And the screen is two things. It used to be i can see ten things. Now theyre sticking a big ad im not following thats going to jump the shark for me. You didnt like twitter, anyway. Now there are other reasons to not like it. Now theres only two things i still havent seen it. You know on your outlook or if it gets messed up, i want to see a subject so i can see a lot at once. On twitter you cant delete anything off your feed, can you . No, you can. Hes the man to ask. Do it quickly because otherwise it will get out into the feed. Number two its an issue of anyway. We have to run that opening. Every hour. And the other thing is, there are many times when, you know, we go to washington and we play that pretentious, you know, like Network News Music and, you know, im supposed to be like jeff what we did today, i had someone else say that. You think this is more us, more our speed, more our style . Its pretty cool. Always saying the market could dive and this is really good, though. Black and white. Yeah, thats good. Were going to run that again. Im on google now. What is this . Happy halloween. Thats a scary looking witch. I wonder if it does anything. Yes. Is it not the greatest holiday . A lot of people think its, like, some pagan holiday and they dont really like it. United states kind of the buzz. Its penelopes birthday. Which is hard for shes always dealing with the kids. We can never really celebrate. I always remember her birthday. Its hard to celebrate her birthday. But you know what . Beelg born on halloween comes with well, great powers has great responsibilities. But she has powers. Over you. Over me. Im be witched, and bewildered. I like your orange tie. She said it doesnt count because it has blue in it. I liked the orange tie he wore the other day. This is a halloween tie. Youve got nothing. Ive got nothing. I looked. I looked. Tonight, youre a hat, gas mask. Walter weiss, we have the hat, the sun glasses, the go tee, yellow hazmat suits, my wife is going to be jessie and we even have zip lock bags of meth . What looks like blue ice or blue sugar or whatever it is. Im not going to say anything about, you know, halloween in new york, but theres no trees, no grass. Do you go in say lets go in that building . And you go hall to hall . Yes, you do. Door to door in a hallway and knock on the what if someone grabs you and pulls you in and you end up on the nightly news, which could happen anytime in new york, anyway. Dallas door man. In your neighborhood. What if hes dressed up like a doorman . That would be yeah. Im going to look out for that. The whole new york but then i hear like in paramus, people go mall halloweening. Really . Yeah. On our block, things get shut down. You go into all the buildings. Everyone tells you who has candy, would doesnt. Its great. In our neighborhood, to get to the house next door can take a while, so thats not true. Lets check on the markets. Long driveway. Yes. Are we going way up there . Mommy and daddy will just buy us candy. Futures are down. We already saw those. They are down at the trick today. Check out oil. Oil worries me. Its been going down and down and down. I worry about Global Growth again. I cant wait to have paulson on today. You know why . Hes going to be taking a victory lap because of the markets. Yes, he is. But his whole thing about the mismarkets is its based on economy everyone thought. Not as here he is, all his call ves come through, but for all the wrong reasons and for something he may hate. Hell be kind of honest. Hell be kind of off. And he always like like he has a hes got the scruffy he can go did on walter weiss, too. Yeah, without a costume. Tenyear fed our guest host today was wrong and he looks like walter weis. We always stroke him. We do. We love him. Theyre 2. 51 . I thought the fed said were never tapering. Other people said, you know, some earth shattering news that they might be data dependent. How many times have we said that . Theres the dollar, 1. 36. Come on. Get down below 1. 30. Soon. And then gold has had some kind of once we found out about the central banks, its done nothing by go up ever since the article about the central bankers starting to hit a shelf in gold. A number of stories out in washington including a new nbc news wall street journal poll. Hi, aman. Youre going to join us with the highlights and then im going to ask you some questions, too. That wasnt good for anyone, was it . Yeah, look, some really bad numbers here. Scary numbers, you might say, on halloween for the white house. Take a look at this new wall street journal poll released last night. Youll see the president s approval has reached a new low. The president s positive approval is just 42 . Disapproval, 51 . Not sure, 7 cant make up their minds. That is a bad new for the government. Confidence in the new health care law, this is really bad for the president. Less confident, 40 of americans now say they are less confidence in the health care law. That is attributable to this botched rollout. It hasnt even captured some of the most recent bad news data that weve had here in the headlines now that were up to october 31st. Also republicans not fairing very well in this at all, either. And this is sort of a hangover here from the government shutdown. View of the Republican Party very positive, just 6 . Negative and very negative, 23 and 30 . Thats a 53 negative rating for the Republican Party. So its really a pox on all your houses here in washington, d. C. Bad poll numbers for just about everybody. But for the president , this is a bad one, 42 approval. Now its also true that his personal favorbility, thats up and down. Thats something that the president has been able to rely on. Now were starting to see that number slipping, as well. And 70 ooh americans say the country is simply on the wrong track. That is a bad number, as well, for any incumbent administration. What this portends going into 2014 is anybodys guess. But its bad time in the Obama White House right now, guys. Added up somewhat positive, positive and neutral and i got to 46 for the republicans. Its like the election. Here is my question. Ill ask you. Youve got your ear i kind of wanted to ask harwood, but hes not around. Fine. No, i like you, but with harwood, i kind of nudge him. Youve seen the dynamic. Ill stay out of that. Here is the thing. Im going to paint a scenario and im relying on hearsay from ed cline, the author, who said that the white house, Valerie Jared thought you know what . These republicans are so dumb, but we can trap them and get them to shut down the government. We can use phrases she supposed by came up with phrases like hostage taker, gun to your head. We can do all these things, well shut it down, it will back fire on them. Theyll look stupid and well end up winning. Now, that strategy worked pretty well, but weve got 42 now on the president s Approval Rating. Joe, as far as conspiracy theories go, im always more likely to blame things on incompetent than on actual conspiracies. It takes a whole lost competence to but the incompeten komcompet from saying it wouldnt shut down on them. All you had to do was give them a little bit of bait to get them to take it. And what we see here in this poll, and i dont have these numbers handy, but you do see some negative effect on the president from the government shutdown. Its not as clean cut as the whiteout would like you to say. And the republicans got all the blame. Republicans did get the blame, but the president has taken a hit here and its a pretty significant hit. Eamon, i dont think thats going to happen, either. I dont think its going to happen, either. I want to know whether you think the second temporary of president obamas presidency he cares. You have to care about poll numbers in washington. These guys live and breathe polls. Its like oxygen here. It affects your ability to get stuff done. If people on capitol hill see a weak president , they will pounce. Theyve been pouncing on him when hes been relatively strong. He started the year with a 52 Approval Rating. Hes gone down ten points just this year. That sa big slide for the president and its going to be blood in the water for politicians who its like lame duckland. And its going to cause some of those democrats to start to peel away. If the president gets that smell of soot on him, democrats will what are we going to see him do differently, then . Thats a totally unknown question. Thats the big question going in here. Yesterday, you saw the president go up to boston to defend the Health Care Rollout and say, yes, there have been glitches in the website, but no, this is not a bad idea. In fact, its a good idea. Those people are being told they cant have their own Health Insurance plan. The president had to go out and defend sebelius and alexander this week. Theyre circling the wagones and trying to defend themselves. And holding off hoping by november 30th they fix this by then, right . They have set themselves up. And thats a really good point, becky, because they have set themselves up for another deadline, another countdown clock dynamic where they promise this will be fixed by the end of november. If it isnt, it will be another failure and a lot of people wonder why they would set a hard and fast deadline date like that with an unknown because if you dont have it fixed by november 30th, then you have a much bigger problem. If people dont have a month to shop for these things. That doesnt change for people whose insurance was canceled. A interview an Insurance Company yesterday that said his firm had to kick 43,000 people off their plan because they werent comply kwansant with obama care. He says he has no idea how many of those 40,000 will be able to navigate the website and get new insurance before the end of the year. About a month ago, we heard the president s second term was going to be about locking in, that he had to settle for locking in gains from the first quarter, maybe immigration, but nothing huge. This gets harder to defend and just lock in, its getting hard to do, as health care. Theres more jobs than they thought. They thought this thing was a done deal. Its becoming a real liability. And all that tap dancing yesterday, really, you can sum up what the president has been saying all along. You can keep your plan as long as its something that is that it adheres to the rules that were putting forth for obama care. As long as we think its an okay plan, youre allowed to keep it. Youre not smart enough to decide yourself the crushing sound bite the is that the sound bite ta you think he said its about 5 of the American People in the individual market and the subset of that group will be affected by this. They got new plans ever since the law you need more but the loophole. They dont feel this is a big rob. But the crushing sound bite for the president is that he said you can keep your plan, period. He didnt say you can keep your plan, comma, but. And thats going to hurt the president s credibility with selling this thing to the American People. The person that was complaining that she had to pay for Substance Abuse post menopausal, you have to pay for prenatal care . Thats the point. But in the old days, you could get the plan you wanted for 200 bucks. But if you want the mass to work, you have to have everybody paying for everything. Thats the whole theory of insurance to begin with, right . You have to have a whole lot of luc lucky people in the system to pay for those who are unlucky. And you need more lucky people than unlucky. The damage goes to those unlucky folks. Thats the basic mathematics of insurance. Thanks, eamon. Coming up, we have a scary story for you fit for halloween. Why your spice rack could be contaminated with insects, rodent hairs and other things and that is not just a halloween story. Plus, if you cant tell, we are excited about the holiday here on squawk box. In the spirit of the season, weve brought in a person to do special pumpkin carving. Check in on his work so far. Look at that. Plus, of course, a big congratulations to the boston red sox. They beat the st. Louis 61 last night for their third world series crown in ten seasons. This is the cover of the boston globe this morning. The headline, tested and triumphant. I just got one of those twitter ads. Its the first time ive seen one. Were back in just a moment with a lot more on squawk. Welcome back. Its time for the executive em. Sth a daily segment focused on giving Business Leaders a leg up. If you are eating breakfast this morning, turn this down for a minute. This story makes me want to puke. The fda says about 12 of spice imports are contaminated with insect parts, whole insects, hairs. Other things. It is twice those found in other types of imported foods. The industrys problems are the result of primarily poor storage and processing and not from poor harvesting practices and thats the twist on this story. We had heard some of the statistics earlier, imported by the New York Times. But this is the fda saying, yeah, this happens and a lot of this stuff is probably coming from the storage facilities, not just from the harvest. Number one, chopped up insect parts are a fine source of pro teen. Theres people that eat insects. If you think youre eating insects, its one thing. Salmonella is bad. But you can live on insects. Its protein. And yeah, and if you want to eat bugs, go out and buy bugs. But if i think im buying its all chopped up. Basil and it turns out but thats not what theyre saying. Theyre saying everything is chopped up until the gets in it. The rodent hair is bad, but thats protein. You can digest it easy enough. Salmonella is 7 . That can get you sick. Something like 2,000 people report getting sick from spices every year, but people forget it. United states used in small quantities. Its probably vastly underreported. Dan aykroyd on saturday night live, your kids will love this. Its a great source of protein and its spicy. No. You cant you cant do this. And its really hard because after that first report, i went out and started looking for spices only made in the United States and its really hard because a lot of times it says packaged in the United States. Youve got germs, insects, youve got a problem, right . There was a saturday night live skit from a long time ago. A guy dice and goes to heaven and he says, whats the 1 shlths 027 grossest thing i ever ate . And it was Something Like rodent hair examine bugs. A lot of stuff ahead of that . Yeah. A lot of stuff that you dont want to know about. This is not only nasty, but its making you sick. You dont put that much spice on your food, anyway. Okay. Anyway its like bed bugs. Get her going on bed bugs. Theyre everywhere, supposedly. Did you hear that theyre going to become more common than roaches . Really . Yeah. Oh. I have to sleep at home. If you want to worry about the new sars virus, its in bats and they can jump to humans. Tell us about it on halloween. Thank you. Yeah. I just read it. Im going throw up if we dont change topics. Earlier this week, we were joined on set by race car driver danica patrick. To many, she was best known for her go data ads. Now it says it isnt bringing sexy back to the super bowl this year. It plans to focus on humor instead. Danica patrick will return in the ads for the eighth Consecutive Year but, guys, what do you think . Smart move or not . They should be fired immediately. Whatever moronic advertising whoever decided to do this has just made the worst decision of their whole career. I dont want to sound like a pig, but this is jcpenney, going im going to let you keep saying this and defend your im done. Im done. You can defend that you want a totally objectification of women and 100 . On the go daddy ads. It has this is a company that went from 100 million to 1. 3 billion doing in you but im not for the objectification itself. Here we go with the caveats. Okay. You just want the sexy ads. Im thinking of myself as a marketer. Oh, okay. Very skillful. And clearly it has worked. Why would you now im going to say what a big you are. Enough for the objectification. Hes a pig. He is. Becky, where do you stand . I think that is barofelli, too, wasnt it . I think it was barofelli. I dont know her, but shes a lovely person. Do you guys know what go daddy does after all these years of ads . Thats the problem. Nobody knows. They host websites. What kind of websites . Oh, me might host those collections, too. I dont know about that. In that case, i should say just before the closure, because i have a website, that i think is hosted by or at least you buy the domain through go daddy. I have to say, i think maybe a switch is a good thing because i honestly couldnt remember. I was sitting there thinking, wa do they do again . I cooperate remember. I remember the ads, but not what they do. Thats the way it is with a lot of these. New york city lawmakers have voted to raise the tobacco purchasing age from 18 to 21. The City Council Approved a bill that set the minimum 10. 50 a pack price for tobacco sdpretes and stepped up law enforcement. Mayor bloomberg is a tough sparter of smoking restrictions and has 30 days to sign the legislation into law. I mean only i would just say somebody needs to defend the smoker at this point. I would just like to say just outlaw them completely. I dont care if its 1050. I dont care. It should be at least 21. They have no redeeming social value. People that i see people that smoke now and i laugh. I laugh at them. Its like, you know, you just are sick or something in the skull . How can you not you dont have kids, you dont care about yourself, you dont care about your future. Its just stupid, right . And youre an addict on top of Everything Else. Here is a question for you. I agree with you 100 . But i said all that with the viewpoint of defending them because they want to do it, but are you defending them or yes. Youre defending them . Yes. I just look at them and say, whats wrong with you . But if you want to do it, youre free to do it. And you feel fine about paying for their health care later . You see, thats where we differ. I dont think everyone elses health care is my responsibility, andrew. Ill take care of myself and my immediate family. Thats when you become the nanny state. Thats why bloomberg had to decide what kind of drink if i have to pay for everyone suddenly, i dont like its already this you like collectivism. The whole world is a they are a single payer. You dont even know it. Village idiot. Knob were not single payer. Were not. Oh, oh, my god. My camera died and this is a smoker and hes wearing a grim reaper outfit. Im not going to say who you are. But, you know, think about it. A ski mask. Great. Youre married to a matt. Thats a different man. If hes like a billionaire under there, that would be something else. Thats pretty spooky. Is this the grim reaper . Maybe its kyron. Who . The guy who takes your the biotech no, the guy who takes your who is the die that takes your coin . Oh, across the bridge, yeah. Who takes your what do you mean . With the threeheaded dog. No, the guy who takes your i thought it was kyron. Aim making that up . Maybe. I dont know anything about technology. I dont care. Weve got to go. Coming up, why investors are spooked by comments made by facebook executives. We have a top analyst joining us next to talk about that. But first, as we head on a break on this special edition of sidewalking dead, joe gets into costume. Check this out. Whew. Thats pretty good. Its alive its alive vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Welcome back. Facebook is beating the street with its results, but its scary because the stock losing ground after the companys cfo mentioned concerns about the declining teen usage of the social network. Good morning to you. Good morning, andrew. What do you make of this . The numbers seemed good. It just seems like Everything Else after that went off the rails. Yeah. There were two kind of surprises in the earn egg call. First, they did warn that there was decreasing engagement amongst some u. S. Younger teams and secondly, they said that ad load would be capped. They wanted to keep the number of ads they showed anything new speed cap around current levels. Thats what spooked the market. So what was the expectation . It seemed like the advertising people was what really spooked people. Maybe im wrong. But what was the expectation in terms of what ad load could ultimately look like . Well, its uncertain. Right now, what the ad load is in that news fooem feed on your mobile device and on your desktop is around 5 . They actually made very similar comments the quarter before, so we didnt interpret this as a new item, new surprise. We want want to step back. This is a company that had a pretty significant pivot over to mobile devices. We feel it hard to believe that theyve matured out all the different dials of revenue growth, whether its reached or frequency or the type of ads. I think that call that theyve matured out those drivers is much too early. We continue to like the stock here and as the numbers go up, valuation became a lot more attractive. What about the cool factor, though . Its true. And i think i was telling people on this program, maybe a month or two ago, i dont remember what happened. I had asked everybody in the classroom, i said, how many of you use facebook more today than you used it a year ago and not one hand went up. Yeah. No, its an issue. Its hard to stay cool. Its extremely hard to stay cool amongst teenagers. The challenge for facebook is theyve got to continually innovate the site and increase the features and functionality of the site to be increasingly relevant to people. Weve done our own survey work on this exact issue over the last six months. What we found is that teens, the the majority of them plan to spend the same amount of time on facebook over the time that they spent on the last 12 months because theres a slightly greater cohort that plans to spend less time. Theyre going to sites like twitter, tumbler and instagram which facebook hedge dollars itself somewhat by acquiring. And has the inta gram purchase worked out . When will we know . Not that we know, no. But what we know about instagram is that its about 150 million active users now. Its about a tenth the size, eighth the size that of facebook. Its completely unmonetized. When we think about the stock Going Forward, theres still two or three very interesting new drivers here. Youve got an asset thats completely unmonetized. Thats instagram. Dont forget the s p inclusion likely in the next quarter or two. Thats one of the reasons we like the stock on this small dip. Real quick, without cheryl, what happens . Theres a lot of talk about she may ultimately go somewhere else. Well, i think shes been a crucial part of the growth of this company. Obviously, not from the engineering side, but she helped bring in that adult supervision. So i think its a negative if she were to move on. Whats your price target on the stock . 60. Its a sustainable 30 earnings grower. We think the valuation is highly attractive here. On a relative val owation, where were you 12 months ago . We just came in with a 50 price target and we upgraded this stock at 20 bucks at that time it was a 35 price target. Estimates have gone up. Nice going, mark. Thanks. Appreciate it. Happy halloween. You, as well. Sxhoo coming up, a health care ceo speaks out on his business, obama care and much more. The story of net assets, next. The squawking dead will be right back. And now, squawk Horror Stories from the year 2025. The entire burden forces the government to again raise the retirement age. As a result, joe kernen pps his retirement another five years. The average cost of a fouryear instate tuition at Rutgers University rises to 425,000. And kyle is only a sophomore in high school. Bill clinton prepares for thanksgiving at the white house, hosted by president al gore. The dinner will be broadcast live in a place of traditional thanksgiving shows. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. No Insurance Coverage will be able to deny you coverage or drop you as a customer altogether. Those days are over, and thats the truth. That was president obama speaking on health care yesterday. Joining us right now is john bartis, chairman and ceo of net assets. His Company Released results after the bell, beat the street by a penny a share. Thanks for coming in today. Thank you. You have Close Relationships with hospitals. I think you work with every three out of four hops in the country. Yeah. We reduce total cost, enhance operational efficiency, we allow clinical deliveries and then we match revenue and improve revenue against the expected outcome. So what does the Affordable Care act mean to the hospitals that you serve . Its a very interesting time. Hospital census has been down over the course of the last year. Some part due to the uncertainty associated with the Affordable Care act, but also many people who have high deductible plans are being more prudent as a result of the dollars that they have to cut out of pocket with. So were seeing utilization change a little bit. I think of the hospitals kind of as a place of last resort. I would expect maybe i wouldnt go to my doctor as often if im paying a deductible. But if im in a hospital, its usually there because i think i have to be. Is that the truth . Economies are 1 trillion and its vertical in 5,000 locations. So its a very big part of the equation. Is it a good thing that people are being more concerned before they go in or is it a bad thing because theyre not getting the care that they need . Were going to find out at the time whether they have pent up demand or whether people are managing their health more efficiently. I think obviously both topic res on the table right now. What do you think about whats happened so far . I realize its still early days and there are a lot of problems out there. I think theres a dirchbt difference between the administrative issues that the admin strakz is having and what the intend is. And the intend is to provide coverage for the people that cant get it. We have 40 Million People who dont get covered, dont get care. Many of them are poor. The only way they can get coverage and care is if they get sick and walk into an emergency room. There arent doctors that come into the community to care for them. I believe the spirit of the Affordable Care act is a good thing. However, we have problems. Its 17 to 18 of gt pb. The next closest western nation is nine. And we have a cost problem. Meaning we only attacked one side of the problem, which is getting coverage to all the people who are there. Skeptics all along said theres no way you can do that without making other people pay for it or bringing down the cost of quality for everything. Or make it more efficient. I think at the end of the day, the standard of care is going to be more obvious across the country. The truth is, you have 5,000 hospitals, none of whoj know each others pricing structure. The result is we have 5,000 different hospitals with 2,000 different price books. Meaning its impossible for consumers to ever shop around. Thats exactly right. When we get Consumer Market baseded approaches and the consume ser driving it and procurement of health care, youre going to get a very smart consumer who today is 79 of the u. S. Economy isnt doesnt matter about your education. You have a mobile application, you can find out the prices. Do these things happen naturally or do you think that the government has to change the way some things are running or is this a situation where if the consumer is paying more for it, Market Forces take over . Its a great question. The question in my view is the Affordable Care act because it will be consumers buying. Buying policies and Pricing Health care. Thats never happened before. Most of us have gotten our health care through private insurance through our workplace. As a result, its an industrial price. We dont have the ability to go to any provider ahead of time and know that price or know the outcome. Ultimately, we have 25,000 health care. Theyre going to be purchasing their health care. While putting it people into exchanges. And thats been the question all along, the idea that will consumers pay for this . Its an unknown amount every year. Its been growing at a rate far faster than most corporate revenues and earnings. At some point if time, they cross and corporations might have to make tough decisions. Thanks for coming in today. Thank you, becky. At the top of the hour, were going to be joined by cleveland clinics ceo dr. Toby cosgrove. Plus well check in on our squawk pumpkin carver. Look at what hes doing. Its quite remarkable. Well talk to him about his work and maybe a few special requests. Now weve seen joe, now lets check out becky as a zombie. Here is the before picture and there it is after. The squawking dead, coming up right after this. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. I got this. [thinking] is it that time . The son picks up the check . [thinking] im still working. Hes retired. I hope hes saving. I hope he saved enough. Who matters most to you says the most about you. At massmutual were owned by our policyowners, and they matter most to us. Whether youre just starting your 401 k or you are ready for retirement, well help you get there. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. Spending your halloween festivities reaching nearly 7 billion. Hudson valley commemorates the mega holiday with the annual blaze. Thats a walk through experience with 5,000 handcarved jack o lanterns illuminating the way. Joining us now, creative director at historic Hudson Valley, hes also hand carved some pumpkins of becky, andrew and me. Do you ever say and i . I would never say and i unless i was and i am going to the store then you would say but im not. The carved pumpkin of me. That is amazing. Amazing. Way to go. How did you make me look 60 accurately . And everybody else looks although, becky you look a little walking deadish. Andrew looks perfect. Thank you. Now, if i bring these home, whats with the squirrels, man . The seeds. Its the seeds . Those little scoop the seeds out and you can spray it with some kind of deterrent. I catch them, and i come home and theyre in there. Have you ever been there . Its phenomenal. The blaze is completely 5,000 jackolanterns. Weve been and i didnt its an amazing, amazing place. Kids get blown away. I want to know, a, how you got into this, and, b, if theres any way our kids can actually try to carve things even row motely liremotely like . Yes, they can. And i was working at historic Hudson Valley as a tour guide. And about ten years ago, they decided to start a fundraiser based around the idea of 5,000 jackolanterns and enlisted me knowing i had an art background. You dont carve all of them, do you . No, we have a team of at least 20 strong carvers, we have thousands of volunteers who help scoop out. You had a sculpting instrument. Hes not using a big Michael Myers knife. Is that the issue . Is everybody doing it wrong . Yeah. No most people go all the way in. Right, so we just did it over the weekend and we went right in, all the way, too much, but not like the beautiful stuff you did, you have to thank you. It depends upon what effect you want. If you want the classic glowy triangle eyes. Where did you get a pumpkin . Remember, i told you oh, you had to leave the city. Well, yes. Oh, my god. We got the pumpkin two weekends ago. Outside of the actual island of manhattan itself . We went on another island called long island. Pumpkin carving, its a real, i think it must be over the last decade. Its a real career now, right . It is. Ive seen cooking shows. I didnt realize youd been on the cooking show. This is what happened . How did it become an industry . Its just a phenomenon. I dont know. Its the second largest holiday. Its its right next to christmas. It just keeps growing exponentially. I cant complain. And its a good flavor. Pumpkin pie is great. It is. And you know what else is good . Starbucks. Its pumpkin drink. I was going to mention dunkin donuts. But this is a microcosm of our life. Pumpkin flavored munch kins. My daughters favorite. What do you have at starbucks . Pumpkin lattes. Whatever it is, its fantastic. I dont know what it is. All right. Its a sculpting thing. You dont go all the way in. Id love to see you didnt it get messy . We take out the 5 million apartment. Oh, man. Who cleaned it up . Did you have a crew come in . A butler. Michaels going to with us for the rest of the program. Hell have another pumpkin debut later. October is traditionally a spooky month for investors, not this year, the dow and s p on track. Well talk markets and much more when squawk box returns. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Darkness falls across the land. Squawks second hour is close at hand. Creatures crawl in in search of stocks to make money and avoid the sharks. And who soever shall be found without the soul getting down must stand and face the anchors of hell and rot inside a corpses shell. The foul stench is in the air, so watch squawk box if you dare. Grisly cools from every tomb are suggesting stocks to protect your doom. For no mere mortal can resist the second hour of this squawk box thriller. Good morning, and welcome back to the squawking dead on cnbc this morning. I am andrew ross sorkin. And check out the futures this morning. Happy halloween, everybody. We dont have green arrows, though at the moment. Lets flip that board around so you can see whats going on with the futures. We do have red arrows. Not so scary, at least not scary not too scary yet. S p 500 off about two points and the nasdaq off about little over a point. Headlines for you this morning. Some scary some not so scary. Spooky news on facebook. Watching shares of facebook today. Those shares are under some pressure. The social networking giant Beat Estimates with the latest earnings last night, but the company talked about signs that younger teens arent using facebook as much. And well have much more on facebooks results later this hour. Also, on our watch list today, starbucks, its Fourth Quarter profit was 63 Cents Per Share beat consensus by 3 cents. But the coffee chain also cut its 2014 profit forecast below estimates. Speaking of coffee, mcdonalds is expanding its presence in the coffee market. Company plans to test a market package ground and whole bean coffee at supermarkets in other outlets starting in 2014. Also test single cup servings. Joe has a little sports news on halloween. I do. How times have changed for the boston red sox. Although they look like turn of the century team whose last championship in the 20th century occurred in 1918. Were those costumes they wear . With the beard . The beards. No, those are real. But that is an amazing fact, andrew. I remember the curse of the bambino. I think they won four, but then the next one wasnt until after 2000. But now they win a lot. The sox having a much better century this time around beating the st. Louis cardinals 61 in the world series. It was the third championship in ten years and david ortiz, i dont know if he ever made that, he was the series most valuable player. Hes not just a guy that is so specialized all he can do is hit. He made good plays. John lackey picked up the win for the red sox. A second time in his career hes won the clinching game of the world series, he did the same as a rookie for the anaheim angels back in 2002. And what strikes me every single time, i watched the cardinals score runs against my Cincinnati Reds as if they were they were inflationary. I thought they were going to be worth less than a run was worth. They would score eight, nine, ten, seven, six, eight. You get in the world series, its either the pitching that makes a difference. Pitching . Or the pressure or something. But the pressure didnt hit david ortiz. I watched the beginning of the game last night. Didnt matter where it was. He was so zoned in to where the pitchers were. But my only hope is that and im, you know, god bless the red sox, i was worried if they won that everybody would start thinking if we grow a beard, we can win the world series i think it would be too patently imitating. I dont know, maybe it wont cause everyone to grow those stupid beards, will it . Maybe itll be over now. If they lost its not going to be over for them. Theyre going to still wear those . It worked. Are you sure it worked . Thats like the budweiser commercial. He eats a veggie burger at a Football Game dont question it. Its only crazy if it doesnt work. I know. I know. Were stuck with the beards. I think theyre here to stay. We shouldve gotten. We condition do it. A cat can a cat can lick off my beard half the time. At my age, too. I dont know if it means i have a lot of testosterone or not a lot. Id rather have the hair here. And i do see guys at the gym and i look at them and its frightening to me. I do, i have to avert my gaze. Have you seen the hairy guys im talking about . Lets go. It looks like a halloween costume. They look simian. If i was heard to them, i would have a separate bedroom, i would. Speaking of health care. Lets talk about health and Human Services secretary kathleen sebelius. Check out this exchange with congresswoman marcia blackburn. Im not pointing fingers at verizon, im trying to explain the way the site operates. We own the site. The site has had serious problems. Who is in charge, madame secretary . The person now in charge as an integrator is qssi. Who was in charge as it was being built . Was in charge, up till at that team, who is the individual . Michelle snyder. Michelle snyder is the one responsible for this debacle. Well excuse me, congresswoman, Michelle Snyder is not responsible for the debacle. Hold me accountable for the debacle, im responsible. Okay. Joining us with more on the from obama care is toby cosgrove. Its great to see you, thank you for being here. We know this is a massive undertaking. And i wonder what youre thinking at this point. Are you surprised by the problems that have come up . Or did you expect it . Well, first of all, happy halloween. You too. Its disappointing were having so many problems getting this organized. But it really has not had major effect. And if they can get the problems cleared up by the end of the year, hopefully well go forward with the program. Your point all along has been this is an industry that has been under massive change and more change is required. Wipe dont you tell us a little bit about what you think needs to happen over the next couple of years. Well, we know we have to take the costs out of the system and thats whats happening right now and its happening across the entire industry. If you look at it, this is a huge change for the United States. This probably is as big a social change as happened since the new deal came along because it affects 100 of the people in the United States and their health care and the cost of that. And if, in fact, we dont take costs out of the health care system, its going to begin to affect other things like education and other social programs. So there really is tremendous pressure to have change and its coming in all directions and its going to affect every aspect of the Health Care Delivery system. Hospitals, doctors, manufacturers, et cetera. We had a guest who works with hospitals in the last hour who talked a little bit about how they have actually seen usage drop, and he thinks that may be in part because people have higher costs they have to pay when they come. Theyre taking on more personal responsibility. Im trying to figure out if thats a good thing or a bad thing. Part of it may be people being more conscientious as shoppers. But then you have the question of are people not coming in because they cant afford it and theyre not going to get care they need. What do you think . Well, we have seen decreases across the United States and hospital utilization. No question about that. Most people think its because of the copays and because of the large deductibles that people have in their insurance. That is the general consensus of what is causing these changes. Whether this is going to affect peoples care ultimately is hard to say. But you sound like you think maybe not. We all got a little hypo in us, dont we, toby . Hypochondriac. If you have a deductible, you cant cure a cold, i dont think, unless the cleveland clinics got new data. And dont you think that we err on the side of going too quickly if theres no deductible . Well, i think it depends on what aspect of society youre at. If, you are, in fact, in a restricted income, you might defer going to see a physician when you actually should. On the other hand, some people overuse it. And so i think that on the la e large large outlook, it is probably a good thing to have a deductible. Can you do is part of the answer a really good website that can answer some simple questions for you about whether you need to see someone . And increasingly, were doing just that. We have a website called itriage. Wuonce you know, thats 90 . Its when youre scared about something. I called the doctor this past weekend to find out if i should bring my son in. If you can get someone on the phone. It helps. And we have a nurse on call and take about 200,000 calls a year. So if your child gets sick in the middle of the night, you can call up and get the advice from a nurse and she has a protocol to direct you. Toby, if you had to say how youre feeling right now, are you optimistic . Are you concerned . Where do you think were headed just with health care in this country over the next two years lets say . Well, i think this is an experiment weve never done before. So, unfortunately, i dont think we can say how this is going to turn out. Im sure that in the 2,700 pages of legislation, there are impfgss that are going to be changed over time. There are also 27,000 pages of interpretation of this. We have to see how this is going to were obviously going to get unintended consequences and well have to see how these turn out and im sure the law is going to continue to be refined for the next four to five years just as head carry was. Its great having you here. Youre on the front lines and we really appreciate your time to keep us up to date on whats happening. I hope youll come back again soon. Thank you, becky. Thank you. Coming up next, well talk about avoiding the armageddon ghost. Well be hearing from two market experts on what may be spooking this market and how you can protect your portfolio from zombies. Were back in a moment with that and a lot more. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. 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, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. On this, right . Was that great . It was reality. Reality, right . But theres a little thing ive got some lines too. But he got the split in my teeth, man. You sound like the dude. Man. Its amazing. And they got your forehead. And my neck. Thanks a lot. All right. Markets im very happy with my pumpkin. You look young, but you look a little bit weathered . Drawn a little bit. I think its hard not to look weathered on a pumpkin. And youre up early. Youre up early. I think the eyebrows he gave you a break on. Those could have been even more pronounced. He didnt do a caricature version. Look at my wrinkly forehead too. Maybe im going to get some botox and then he can do it again. Maybe he can redo it, although i dont like needles. No. How does a needle in your forehead sound to start the day . Loaded with botulism . Yeah. Losing ground on wednesday the s p 500 snapping its fourday winning streak. Here with us now, jim paulson, chief investment strategist at Wells Capital management who we we already alluded to you earlier and we didnt see it. Youre not prepared for the onslaught. And his Global Market strategist at jpmorgan funds. Heres what i said, jim. Over the years as the market used to fluctuate and go down once in a while, youd come in sometimes, itd be down and id say, you know, youre not feeling like your predictions are working other times id say, wow, take a victory lap, no one can say you were not right about being long the market. And i hope your bosses appreciate you. Hope your investors appreciate you kept them long and made them a lot of money. But all along for a year or two, its been about that we have underestimated the underlying strength of the economy. And that the hangover and the fear from the financial crisis has caused people to be to underestimate what was really happening. And now, the reason that the fed is all in and will be all in this year and we dont know next year. The reason is that never really came true. The markets been up, you were right on that, but did you get lucky . The economy has not been strong like you thought. Welm, i think the thing thats been driving the markets throughout this recovery, joe is not the fed . I dont think so. I really dont think so. You dont like the fed, you wish theyd get the hell out of the way. Theyve made your threeyear period and you still dont like them. I dont think its i dont like them, i dont think theyre as relevant as we give them credit for. Theyre not as important. Is this just so you can no, i think the thing people are missing, its not so much earnings driven, this market, particularly last year. This thing has been driven from the get go by confidence. We destroyed confidence, took it down to postwar lows for three years. All we did in that period was worry about the armageddon ghost around every corner. And as a result, that perception priced securities across the spectrum of the financial markets. This market this year is really about a move up in confidence. Weve got from post war lows to fiveyear highs in confidence. And when that happened, i think it was because we gave up the armageddon ghost. We no longer freeze up. Good halloween talk. Youre nodding. No, i think i agree for the most part. We had a government shutdown. We almost went bankrupt on our treasuries for the second time 2011, we had this. Overstating the whole situation. It sounds crazy, but if you put it in that we were never going to but we got close to. Almost is that destroyed a little bit of confidence as you were saying. Had the economy growing at 2 , right. So i think it is fairly resilient and we didnt get in our way, we wouldve actually been growing a little bit faster. Do you think we will eventually . Seems to think that pimco. We need to talk about bill gross. Pimco they said five years ago it was going to be 2 . Came out with 2 for 20 years. Aging demo, you think were getting the 3 to 3 1 2 again . I think structurally the economy is not going to grow as fast as it used to. But theres also a cyclical recovery that has been delayed. And for that reason, it shouldnt be that crazy to think that we could grow 2. 5 to 3 next year. The third recovery in a row thats been delayed. Early 90s, early 2000s, this one were delayed for years and finally geared. And this one is following the same pattern. I think were going to 3 growth next year and well hover around three for the rest of the recovery. The tapers not going to be a speed bump if and when it comes . No, we challenged that, andrew, couple of months ago. The market was going higher. I dont think the markets scared about taper. I do think the market shortterm wont like it. You look at may and then eventually say its okay. But im more concerned of the effects on currencies and the emerging markets more so than europe and here in the United States. A real slowdown. And if theres a real slowdown there, theres a real slowdown here. More global syncniization. Who cares about the fed or fiscal cliff. You saw what happened in the emerging markets the second there was talk of tapering. Forget what happened here. Outperforming the United States market for the last three to four months. Since the idea of tapering has been delayed. Right. So the second you put that back on the table. I dont know. How much gas. Lets say i think maybe the stock markets discounting a 3 economy. How much gas is left as does it stop going up when we get there . I think thats another as i talked about the stages of conference, joe, we are about middle of the line in terms of confidence range historically. All right. 1,763. One more notch up. Before we go down 20 in a bear market, whats the ultimate number we could hit . I used your ultimate. At the end of the day . Next year we go up to 3 and thats going to take us another stage up. 1,900 on the s p . Stall speed. Thatll make the valuations even go up more. And we go into a cyclical bear market . Well, i think this market is eventually going to get up to 20 times earnings or better. Where not necessarily next year. Next year i dont have an official target. Thatll be 2,000 on the s p. I think were going to run off that level. 10 is different than 20 . Yes. A bear market. Thats just yeah, i think were going to have i think this is probably inflation stage under control. Were in the midst of a buy and hold. Buy and hold stock market. You could see 2,000 on the s p . Yeah, i try not to think about the levels because they scare you. But 5 , 6 , you tack on a dividend of 2 , you could see 8 for the next couple of years if you dont have a recession, which is our camp, we see a recession. That would take you above 2,000. Would you thank our guests, this gentleman right here with his full name . No, i will just come on. The whole thing. Andre garcia its a variant of my name. It is. Would you thank him. Thank you so much for being here. I really appreciate it. Who is he . I have no idea, but youre wonderful. We went to high school together. I know, i just honestly . Scarsdale, right . Is everyone on a diet . Oh because of the diet . You never heard of the scarsdale diet . The guys dead. Yeah, yeah. Be grateful you have to eat grapefruits. Anyway, thank you for being here. His girlfriend was it the girlfriend or the wife . I know exactly where the house is and the road. Across from the soccer field. Anyway, weve got to go pay some bills on this spooky day. Coming up, could the intrigue over facebook be dying off among teens. Earnings from the social media giant were good and the stock soared until the cfo mentioned decreased use by younger teens. Were going to talk to an analyst about those comments and what it means for the investor. And then earnings from marriott out after the bell. Last night, companys ceo what . Sorenson, what about him . No, i was waiting. Hes going to join us first on cnbc squawk box. I thought you were going to skip it. Its a growing trend in business do more with less with less energy. Hp is helping ups do just that. Soon, the worlds most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. Multiply that across over a thousand locations, and theyll provide the same benefit to the environment as over 60,000 trees. Thats a trend we can all get behind. [ laughter ] [ female announcer ] each one of us is our own boss. And no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. Can help you take charge of your future. So i can reach ally bank 24 7, but there ar24 7. Branches . Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Take a look. Here is the squawk pumpkin carver today. Michael is here, these been carving along the way. This is was that liesman . Yeah, you see liesman right there. Oh, you didnt look. Because its so unbelievable. Get a closer look. Look at that. Thats exactly isnt that awesome. That is amazing. Hes doing an excellent job. By the way, hes surrounded by our hair and makeup artists who are in costume today, as well. In tennis outfits. Could be ed asner. Up next, well take a closer look at facebook, their earnings plus the ceo of marriott. Theyll be joining us, as well. Take a look at the futures this morning. Down by only about 21 points below fair value for the dow. Over the next 40 years the United States population is going to grow by over 90 Million People, and almost all that growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved into safe, clean Affordable Housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. The oxygen of Community Redevelopment is financing. And all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. So we are now working in chicago and in washington, dc and newark. Its amazing how important safe, Affordable Housing is to the future of our society. Just the music. Its perfect. The music makes me excited about i know. Me too. Its not coming on. Unfortunately, squawk box is coming on. Thats good too. Yeah. Welcome back to squawk box. We are going to talk about the earnings across the tape. Cigthat earning 1. 35 a share. Cigna said it had Strong Performance in all of the business segments. Time warner cable earned 1. 69 a share for the Third Quarter, 4 cents above estimates. Its been hurt by increased programming fees. And shares of Avon Products taking a hit in the premarket trading. Avon earning 14 cents a share for the Third Quarter. That was 5 cents short of estimates. With the ceo saying that the quarter was tough. They were hurt by continued weakness in some of the companys north american businesses as well as Macro Economic head winds. Facebook suffering from teenage angst. More teens are dropping the social network. Joining us now with reaction is tom forte. Managing director at the advisory group. Good morning to you. Good morning. The numbers were good, but seems like the teens are tuning out. What do you think . The numbers were fantastic. And if you looked at the after hours trade, there were two things that happened that brought the stock back to even. First the disclosure, they had a decrease of teens on a sequential basis and the second being theyre not going to increase the mix of ads placed in news feed. We talked to analysts in the last hour that ads in the news feed issue was something that shouldnt be as big of a deal as its being made out to be. For you, was that the turning point . Or was it the comment about teen usage . I think the comment on the ad inventory was more significant of the two. Im highly confident they can either make an acquisition and continue to get teens coming to their Portfolio Services or they could tweak their core product. And so your expectation, though, had been that they were going to be placing right now, placing about 5 of the posts within your newsfeed are ads. Your expectation that wouldve gone up to what . Well, i think that the way i look at it now is that quote, unquote lowhanging fruits been plucked but they have two levers to pull as far as increasing pricing on that advertisement or those advertisements. And the second, driving more engagement. So they have 5 of a bigger number. So more inventory in that way. And you just said that you have youre not worried about the teenage usage because they can always make an acquisition. Doesnt that suggest to you thats an organic problem . No, i think you have to look at the history of social networks. Kind of from tripod forward. And why does facebook have staying power . You just talked about tripod. If i think about tripod and geocities and friendster. And you know how they all ended, right . Why are they gone and facebook still here . The point im trying to make. They continue to innovate. They add time line, they add newsfeed, messenger, home, graph search. I think that innovation is what keeps people coming back to the service and growing the service and that will ultimately help them bring the young teens back. Were going to have the twitter ipo next week. When you look at facebook versus twitter these days. Twitter, who is the winner in that competition . Twitter has the advantage of coming public at a time when they have significant opportunity to expand their audience and improve their monetization. When facebook became public, it was about improving monetization. The way im thinking about the twitter ipo, 38 of their users from overseas but only 25 of their revenue from overseas. So if they can get that working much like mobile monetization like facebook, thatll be a winner of a stock. Real quick, tom, whats your price target on facebook . 60. Thank you for joining us this morning. Happy halloween. You too. And coming up, those who choose not to book the overlook hotel are looking to marriott for a good nights rest. The company reporting Quarterly Results that Beat Estimates thanks to higher occupancy rates. Ceo Arne Sorenson joins us right after the break. Heres arne. The squawking dead is back after a break. I got this. [thinking] is it that time . The son picks up the check . [thinking] im still working. Hes retired. I hope hes saving. I hope he saved enough. Who matters most to you says the most about you. At massmutual were owned by our policyowners, and they matter most to us. Whether youre just starting your 401 k or you are ready for retirement, well help you get there. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Bny mellon combines Investment Management investment servicing, giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. Were checking futures right now, take a look right now, we have some red arrows, not too spooky just yet on this halloween day. Dow jones looks like it would off about 16 points, nasdaq up a little over a point and a half and the s p 500 well say its off marginally. Joe . Marriott released Third Quarter results after the bell yesterday reporting an 18 increase in earnings per share over a year ago. Joining us now is Arne Sorenson. Good to see you. We have been checking in with you off and on for checking in. I came up with that all by myself. Off and on for the past six years and you hit a sixyear high in terms of worldwide occupancy. And were seeing rev par continue to go up. And i cant remember the thing wasnt going up was pricing in the average daily rate. Is that back yet to where it was before the crisis . Well, well end the year with rev par sort of back nominally to the 2007 level. So essentially alltime highs. I want to say happy halloween to all of you. I saw the teaser on the way in. Just to be clear, weve got almost 4,000 hotels and ive not heard a single one of them, theres a rumor, that any of them are haunted. You know what, you brought this up. I was going to avoid that, but i actually thought about asking you, do you know whether youve had horrific ghoulish murders committed on any of your properties . Not that i know of. All right. And you know what, i dont think you know whether none of them are haunted to be honest with you. You havent had everyone tested, have you . We think many of our competitors hotels are. Good answer. And dangerous. Strange smells, you find in some of those other hotels. Remember for a while, arne, that rev par was okay but pricing was still down. Is pricing back to where it was . Pricing has moved nicely this year. What weve seen is occupancy has built back to essentially peak levels. And so were full midweek. And weve seen that weve been able to both raise like for like pricing, but also shift towards higher rated business. So i think one of the things thats helped us on the weak government pieces is an example in a lot of higher end hotels, the government has been yielded out. Youre at 144,000 pipeline rooms. 144,000 rooms around the world. Im sure theyre everywhere. Is there a concentration that would illuminate what your strategy is . Were at 50 , a little over 50 of all the rooms in the pipeline are overseas. China continues to perk along well. Weve talked about this before. Weve been dominant in markets like shanghai and beijing in china. I opened our 22nd hotel in china, for example, earlier this year. But weve been relatively late to the party in the secondary cities. Some of those marketsme. And were now opening in those markets. Great growth in that market. Indias going well for us too although its complicated at the moment. Complicated why . Yeah. Well, the economys topsy turvy. And so while they need more hotel rooms, its a tough financing market for our hotel owners. And average of these are middle market . Is there a lot of Ritz Carltons . High end, low end . What is it . Its across the board. So in bangalore this year, well open a ritz carlton, a marriott and a fairfield, first ever in india. We decided wed do a mid Market Product because that was a big gap in that market for particularly the indian travelers. What have you done with health care and obama care . Where are you . Do you have you made any hiring decisions based on avoiding covering people . Are you thinking about how marriotts longterm you know, what kind of benefit youre going to offer five years from now. How does it all play out with a guy like you . Well, ill frustrate you the way i seem to be frustrated every month we got together to talk about this. The employer mandate doesnt kick in until the first of 15 now. Weve made no decisions about hiring which are impacted by obama care. We obviously are keen to be a great employer and want to do right by our associates and make sure that we are being fair and taking care of them. Were also watching this to see what happens as obama care rolls out, what happens to pricing for our employer provided program. Wed like very much to continue to provide a strong Employer Program because we think its better for our associates longterm. And therefore, well reduce turnover and be good for us. Arne, this is jim paulson. I was curious about, you know, so much of the crisis took out Business Travel dramatically. And im wondering like conferences and all that. From a company standpoint, if they come back, can you see that in the hotel . Some of the best news in this quarter has been that weve seen group bookings, for example, for next year up 14 from where they were a quarter ago for 13. So thats a good sign. But youre right to ask the question because group tends to lag usually in economic recoveries. Its probably lagged a little bit here. We see that the Smaller Group higher end Incentive Group is probably better. The huge group, the 1,000 plus rooms, associations think the american medical association, the american dental association, some of those things, theyre coming back, but probably not as robust as they were in 2005, 06 and 07. Maybe the meetings werent quite as long, were seeing that build, which is a positive line. Where are you getting margin these days . You think the margin would be at the most upscale hotels. But, in fact, often times its the case that its the opposite. Yeah, weve weve seen for our managed hotels that the Profit Margins are up about a point to a point and a half this quarter. Were focused on every single line item of expense in the hotel. We still drive incremental improvement from procurement. We are being aided this year in energy which is helpful in many markets, energy is cheaper than it was a year ago. And were doing everything we can to just manage expenses. Were back to were still really not back to the same margins we had in 2007. So weve got another year or maybe two to get back to the same level. And thats going to depend mostly on revenue. Is it the case that the highest margins would be at a place like the ritz . Or is it the case that the courtyard does better . Well, when you compare it to prior peak in 2007, we see that ritz still probably lags a little bit. Its been growing faster the last couple of years. Its not the same level it was at before. All that Service Costs something. Arne and had this conversation about wifi before. I dont need to ask him dont ask him. He hasnt done it yet. Free wifi. Give away the wifi, i dont know why youre charging hemoall this extra money. I hope youre carrying a golden platinum card, its free to you. Wed love to have you come stay with us. Golden platinum card, which golden platinum card. Rewards. Im going to have to. Give him your address. Ill send you one. No, i dont want to take anything as a journalist. Yeah, he would never. Ill call the number if im a good customer, ill get the free wifi. Arne, i like some of the stuff about washington, because youre making a pitch like one of our pitches, which is rise above and win us back and start acting like adults down there. But you say our political leaders need to take a cue from america how america does business where you can use disagreements that can be sharpened and used as a tool for making better decisions as long as people like and respect each other. Thats the problem. That is the problem. And, you know, this has been frustrating. Weve got a recovery which is broad. Its across the United States, i think increasingly were seeing signs of optimism in places like europe. And the biggest threat to that recovery is this uncertainty that continues to pop up from the u. S. Government. And for goodness sakes, weve got to make sure we dont find ourselves in the same situation in january or february or theyll pull back the economy again. Yeah. But that is a problem. And i am blaming both sides about not liking and not respecting each other. Neither side i think at this point, its just its clear. And im not single anyone out, but its certainly not one side or the other that disdains and seems to, you know, really its deplorable. Anyway, Arne Sorenson, thank you. How many hotels do you have . Almost 3,900. See theres no way you know none of those are haunted. Theres no way. Theres no way. You havent tested them all, have you . I have not. All im doing is listening carefully. All right. I would venture to say, what do you think, becky, 5 , 10 could have that spirit there . Unsettled . No. No, youre thinking 15 . No a fancy hotel. He could be casper. No. Thank you. We appreciate it. Well check back in. Were going to get above the average. All that we still go back to 2007 on certain things, which is to your point. Were still not totally healed. Certainly Consumer Confidence isnt. All right. When we come back, 1 million home on elm street, but it is not freddy krugers. Real estate broker to the stars joins us with Million Dollar homes in some pretty scary places. Indian burial grounds anyone . And now squawk Horror Stories. From the year 2025. The Supreme Court hands down a Ground Breaking ruling on verbal political workplace arguments in the case of sorkin v. Kernan. Bill clinton prepares for thanksgiving at the white house hosted by president al gore. The dinner will be broadcast live in place of traditional thanksgiving day football. Cnbc ends its car service for anchors and now im frequently late for the 6 00 a. M. Hour. This has been squawk Horror Stories from the year 2025. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Welcome back to squawk box on this halloween day. In the spirit of halloween, cnbcs popular Million Dollar homes franchise scaring up houses worth 1 million in americas spookiest neighborhoods. All towns have a haunted past or ties to famous horror flicks. We sent out seven reporters to these mysterious real estate markets to give you tour of Million Dollar homes. All throughout the day, these homes are going to fight to the death to advance. But to make it more suspenseful, weve asked our ghouls and goblins not to say where their homes are located. You may be able to guess using our clever clues or may be shocked when we reveal where they are. Now touring the homes in round one are josh lipton and mary tombstone thompson. Take a look. This house is no nightmare though it does sit on elm street built in 2001. This familyfriendly home on 1 4 of an acre, oversized mud room with lockers and laundry. Outside, gorgeous gardens and mature oaks complete the landscape. If you arent spooked by the states ties to the spinechilling Horror Stories, youll probably fall in love with this brick colonial, 110 years old, sits on a corner lot a little over a tenth of an acre and beautifully landscaped. This 3,800squarefoot home boasts a wide open floor plan. The kitchen features custom cherry cabinets and a Granite Island and floor to ceiling windows in the breakfast nook let in a ton of natural light. Behind the mansions stain glass windows, theres over 4,200 square feet of living space, original woodwork, and full fireplaces. The stainless steel appliances and sixburner stove. This house has five bedrooms and 3 1 2 bathrooms, a spacious master suite with a sitting radio m and master bath with its own whirlpool tub. Theres a huge walkin closet with a built in ironing station. This has five bedrooms and 2 1 2 baths. Up a flight, theres expansion potential in a sunfilled attic with exposed brick. Work from home in this Custom Office featuring a builtin wrap around desk and when work is over, the finished basement boasts a wet bar and guest bedroom and bathroom. The asking price 998,900. Nothing spooky in this basement with the original billiard room. Next door, theres a childrens sand box. Its a great spot for entertaining and all of this and the houses historic charm can be yours for 1,050,000. Okay, help us figure out the locations of the homes, we have a couple more clues for you. For the spooky splendor, the home located on hem street. Paying homage to the movie nightmare on elm street, known more for the mobsters than ghosts. You could think about chicago, you could think about the sparanospra sopranos. Joining us now to talk about all of this is the broker to the super rich. Shes going to be telling us if we were right and which home is the better bang for your buck. And you . I dont even know. You had to go to amnityville. Whats the town that friday the 13th. No, its haddenfield. Yeah, theres a new jersey. These are all great guesses. I wouldnt even have come up with those. Those are all really good. Tell us where we are. Well, the midwest, bing bing, is glenn ellen, illinois, outside of chicago, and its a beautiful as you could see 10yearold house. And it is better known for its mobste mobsters, right, outside of chicago, than ghosts, but its on elm street and therefore, thats where we come up with the ghoulish story behind it. Where is monsters marvel . Portland, maine. I wondered. Exactly, all about steven king, all about the it book. Which one wins . Okay. We have 1 10 of an acre in portland, maine. Its oversized. Its undersized lot for the house. I think in portland. So im looking at that house as a tough sell, its 110 years old, only 2 1 2 baths, people really like baths today. So, unfortunately, monstrous marvel loses, which means spooky splendor wins. Thank you for this. Were going to be doing this all day. Yeah. Million dollar spooky splendor survives round one. Let us know if you agree. Tweet us usin using milliondollarhome. See how the next round unfolds and later shell be crowning the top house during closing bell. Coming up, well talk to activist investors on the defense. Peter weinberg. Theyre going to join us for the remainder of this halloween special squawk box. Coming right back. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. 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The third hour of the squawking dead starts right now. I dont think squawking dead is taken. We should just change it. Try to get some of those numbers. 18 million whatever . A lot. Welcome back to the squawking dead. Im going to go with it here on cnbc. Hail halloween, im joe kernan along with becky quick and andrew ross sorkin. More from jim still ahead. First, though, andrew has your Morning Headlines. Weve got some Morning Headlines including corporate news. Little by scary. Crazy after the bell session shares for facebook. The stock initially jumped more than 16 on better than expected Quarterly Results. But then cfo david ebersman, some truth to the concerns facebook is losing its cool factor with the teenagers. And that daily activity among younger teens has now declined. Those comments sent shares significantly lower. Also the fact they will cap the number of ads theyre putting in their news feed. Something some analysts were not expecting. Sent the shares lower from where they were initially. Correct. Shares are still higher. Theyve been higher all morning. Can i tell you quickly . Exxon mobile, looks like the company came in with earnings of 1. 79. The estimate for 1. 77. Third quarter annual earnings, 7. 9. Third quarter earnings, 7. 9 billion. Down 18 from the Third Quarter of 2012. They say production of oil increased from a year earlier. Significant weaker refining margins as a result of increased capacity negatively impacted the downstream markets. People have been short. Well, hes been back a lot of because of the refining. A lot of the big majors. Expenditures, capex and exploration expenditures, 10. 5 billion in the Third Quarter, 32. 6 billion for the first nine months of 2013. That was in line with the spending plans, part of the reason he was short, too. Theyd been cutting back on some of the capex and that was why he was looking at a lot of these. Anyway, that stock barely budging right now. We also have a little bit of earnings news from after the bell. Starbucks posting better than expected quarterly profits. The coffee house chain offered a conservative fullyear earnings forecast that fell below wall streets view and well be watching shares of visa this morning. Revenue, though, they did fall just shy. And the Worlds Largest credit and Debit Card Company was slightly pessimistic about its outlook in the face of soft consumer spending. Lets get a quick check on the markets, take a look at u. S. Equity futures at this hour. We do have a red arrow on the dow, looks like it would open off about 14 points. Nasdaq up about two points in the s p 500 well call it off slightly marginally right now. You dont think friendly if you think activist investors. Our guest host for the next hour has built his name, though being friendlier than most. Youve never friendly guy. Hes never taken a stake in me and asked me to do things differently. You seem friendly as a person. Joining us now founder and ceo, and cofounder of partner and head of corporate advisory. Cliff, i just we can talk about how you are friendly and maybe that worked better for you. You go in and maybe just do it a different way and maybe you work more closely with management. Do they let you in because youre friendly . They do. For us its about the quality of the conversation. Were looking for Management Teams that want to unlock value and our approach is absolutely friendly. Would you ever call icahn friendly . Cranky i might call him. Hes not really, right . Its different. Yeah. I think that carl icahn would like to be friendly, sometimes he is, but i think often hes not. I think blue harbors approach is different. So if youre rebuffed, then you find another situation. Exactly. Were very clear with the board and the Management Team. If they want us as their partner and unlock the value, were investing behind them. And if they dont, were not. What percentage of boards say thanks so much for your call, good luck to you . And then you say, okay, good luck to you, im leaving now. We dont get that initially. Most people are quite intrigued. What are the ideas we have to unlock value . Why are we interested in their company . We have a disaarming approach. We tell them up front. If they dont want us as ha lead stockholder, were not investing. We call them and meet with them many times before we buy stock. But then many times during our course of interactions, we conclude this isnt there isnt anything here. Its not as undervalued as we thought or the management value isnt our type of team. And rather than pushing our agenda and forcing them to do something, we go back another company that really wants to win. I think thats your point. You said that would be a good line of questioning for you. There are companies that know they have a problem, right . And thats the first in any dealing with any problem, alcohol, whatever it is, you first have to realize theres a problem. Some of these Companies Might actually benefit from the expertise of someone who knows how to do something. 15 years ago. It wasnt in the equity culture that existed then. Today as cliff was saying there are a number of different kind of activist shareholders. Theres tons of capital committed to that area with great returns generally, by the way. So now its a very different thing. Every company that we work with is either ready for a vocal activist shareholder or has one in their stock. Its a different world now. And it can be, actually, welcome. Most companies are interested in hearing ideas. What do you Tell Companies when they call you and say an activist stockholder has taken a position, whether its a friendly act vivist or hostile activist. What do you Tell Companies . Well, the first thing we do, tell them just to be ready. And we do this thing called the activist within. Where, you know, we come in and sort of pretend were the activist and get people ready to start thinking about by the way, some of the ideas may not be useful, some are. It just depends. Getting ready is first. And second is to meet with shareholders. We almost always encourage that. Peter, i would think, though, that you guys are the exception to the rule. You think activist investors and you probably still think the barbarians at the gate for a lot of guys. Yes, you guys are a different breed but doesnt mean the hostile guys have gone away. Thats true. And i think the friendly side of activism is which is the business that cliffs in is different. Its very different. So can we talk briefly about the hostile side of activism . Meaning, do we think or do you think that carl icahn bill ackman, i dont know if you want to put bill lobe in that category. We could name the list. Good or bad for society . Good or bad for the idea of longterm value . For example, what carl icahn wants to do at apple. Is that a good or bad thing . I dont think carl knows a thing about the actual product or the technology. He its a financial play, you know, one of the things i worry about. I think i looked at a company like ibm, actually. Thats a company that hasnt had so many great quarters. I wouldnt be surprised if an activist shows up on their doorstep. They spend a lot of money on r d. And all of a sudden if Something Like that were to happen, they slash the r d budget. What does that Company Look Like ten years from now . Thats the antiactivist argument. Right, but its a little bit of both. Its great, i think, that tim cook met with carl icahn. Thats a good thing. I mean, it cant be a bad thing to have a ceo of a company like that meet with a shareholder. On the other hand, what does carl icahn know about whats going on within the four walls of apple. Theyre thinking 25, 30, 40, 50 years ahead. Theyre spending 4 billion or 5 billion on research every year. And its not appropriate for them to say heres what were doing, and heres why we cant give you the cash or heres how much cash were going to give you necessarily. I think its both sides of it. With p g it worked, didnt it . This is this is all of a sudden maybe democracy is messy. Maybe thats what the answer is. I put cliff in a different category. How do you feel about those guys . I think theres nothing wrong with hostile activism. I think its a highreturn strategy, as well. And if theres a board thats not doing the right thing and Management Team thats not working for stockholders and not optimizing their opportunity set. Its not something we would get involved in. But if a hostile activist has a new idea and better idea, not all ideas are good or better, but if a hostile activist has an idea and not being responsive. I think its perfectly fair game. And not all companies are doing the right thing. Blue harbors approach is different. Weve decided were going to back those Management Teams that we think want to win and were on the same page. It comes from my background. Theres nothing wrong with activism, its a highreturn strategy, as well. And there are companies out there that do need some pushing from external factors. Cliff, when does friendly versus hostile activism work better . Does one favor one approach to another. When you have a company thats trading at a big discount. And there are ideas to close that gap and the management not coming up with ideas themselves, external party can bring that to the table, theres an opportunity to create, and it can be done friendly, less friendly, which is the approach of others. The fundamental. It only works, activist only works if theres a unique idea to close that gap. Many companies are trading at fair value. Many companies are not right for active investors. Many Management Teams are doing everything themselves. So its really a function of if finding those situations that are undervalued. Can i change topic for one second . We have you for a little bit longer. Deals, m a, used to be my favorite topic. We dont have it as much anymore. This year on a global basis, were looking at 2005 levels. What is happening . Is this is it possible that this is secular . I hope not because this is the business were in. And i actually think not. I think our view, andrew, on mergers Going Forward is that there are a bunch of different sectors where theres a lot of change going on. And when that change is coupled with confidence or some level of certainty, that means a lot of activity. For example, the energy space, when you look at the u. S. Energy revolution independence and the shale revolution, that we think portends for a lot of m a activity. Banks would be the other extreme where theres a huge amount of change but its not coupled with certainty and effort at all. Health care, we think will be quite active. So, you know, there have been all these old chestnuts, tons of cash, low rates, et cetera, et cetera. Thats still the case. And we continue to believe that merger activity will pick up. Is this going to be some kind of Tipping Point . What about confidence . Andrew, you wrote in the times piece about confidence being the missing factor. Is that what you think . Is that what youre hearing . Theyre not confident in their own business thats why theyre not making acquisitions . I think thats a lot of it. I think the confidence is weak and sometimes in the board room amongst shareholders within Management Teams, if you want to question confidence, theres a long list of things that would push you in that direction. So absolutely. Okay. Great. Cliff, youll be with us. Peter, thanks. Thank you, peter. When we come back, the mismanagement of the obama care rollout is taking a toll on the president s Approval Rating. Management expert bill george will join us right after this. And later, we have some breaking data on employment. Weve got the weekly jobless claims due at 8 30 a. M. Eastern. Squawk box will be right back. And now squawk Horror Stories from the year 2025. Congress votes to raise the hotel tax on wifi to 40 per night. Blackberry discontinues keyboard phone models while touch screen phones have switched to complex 3d Imagery Technology leaving me no way to communicate with anybody. Nbcs today show again wins the mornings rating award carried by charismatic new cohost steve liesman. This has been squawk Horror Stories from the year 2025. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Some of the countrys top cfos have weighed in on Health Care Costs, and we have the exclusive results from our cnbc global cfo council survey. 55 said that more than 10 of their expected Health Care Cost increases this year are because of the new law. In fact, close to 60 said that paying penalties would be more Cost Effective than providing care. But they also realize that could make them less competitive when it comes to attracting talent. Finally we asked for the personal view on the law. 60 say they oppose it. For more on the council, check out cfocouncil. Cnbc. Com. President obamas Approval Rating fell another five points to 42 according to the latest nbc wall street journal poll. And the troubled rollout of the Affordable Care act is partly to blame. Joining us right now is bill george, currently a professor of management practice at Harvard Business school and the chairman and ceo of medtronic. Looking at this as a management expert. A, how would you grade it . And b, how would you fix it . I give it a d minus. The president and his whole staff treated this like a political issue. Theres been no one in charge until very recently. And no ones tried management. And no ones thinking about the consumer, what was it like to go healthcare. Gov and sign up . If you did, youd realize what a fiasco it was. And even yesterdays appearance was emblematic of what the problem was. And working with them trying to figure out how to get it fixed and clearing away bureaucratic hurdles. Theres so many hurdles that make it much more difficult to do this in government, this government than it would in private industry. What kind are you talking about . Yeah. Pardon . Im sorry, what kind you mean versus private industry . Well, you cant hire the people you need. You cant get the subcontractors. You cant get the people to help you. Fortunately, finally put somebody in charge this qssi, the health Group Subsidiary and theyre the biggest insurer and manager of these kind of programs. They should have done this 3 1 2 years ago if they wanted to get on top of it. Now theyre in the middle of a fiasco because not only this problem but theyre canceling all these insurance plans for people and people are going to be very upset they find they cant keep their doctors, theyre going to be more upset. Youre going to have to youre in realtime now, i think they have to bring in the professionals. Thats why im recommending they bring in so many like george haverson. Implemented a 2 billion system out there. One of the biggest in the country. Bring in somebody who knows what theyre doing. Shes a politician, shes not experienced in these areas. You mean as a Health Care Czar . Id bring him as secretary of health and Human Services myself. Yes, i think thats what bush did, bush replaced the politicians with professionals like bob gates, the defense, and paulson at treasury. Thats what you need in the second administration. Otherwise, theyre not going to go anywhere and this is going to be a black mark on the president s record, i think. Kathleen sebelius testified yesterday she believes theyll be able to get the problems fixed by the end of november, november 30th, yo u think that realistic . I think its mission impossible. I heard them say this, this is a big technical problem, big management problem. Youve got a lot of software to fix. Theyll make progress. I think theyre overpromising. Theyve been doing all along, overpromising and underdelivering and anyone working on it is put in a difficult mode. Theres a tendency. She blames the contractors, now the Insurance Companies. This is a blame game. Thats the political game. Thats not going to solve the problem. Bill this is going to require a team of people to solve it. If you effectively try to halt things, at least temporarily, do you think you can ever rebuild the confidence in the American Public to try this thing . Yeah, thats tough, andrew. Youre in realtime. What i would do is slow things down. They set the standard so high, i dont know if the law gives them flexibility to ease that out. I would push the data out from january 1. I dont think theyre ready to force everyone. And i think this whole system is built around getting younger people to pay for the older. Well, the younger for less than 100 can opt out of the system and im afraid all lot of them will opt out and youll be left with the older, sicker people and no focus on staying healthy. Thats my concern. You are the former medtronic head and theres been a lot said about the tax on medical devices that 2. 3 tax, what do you feel about that . Well, its a tax on innovation. It makes no sense. It was a penalty, really, for the medical Technology Industry not coming to the party as the Insurance Companies and big pharma did. You mean not having better lobbyists. Well, that could be it too. And so id like to see it go away. I dont know, but i think the number one issue, now, becky, is getting this system fixed and i think weve got to have a whole change at how we approach. Weve got to get pragmatic. The republicans have been saying eliminate. Youre not going to eliminate, thats the law of the land, lets get it done. Like any group of executives, get it done, get it fixed and put them in charge. And the president s got to stop playing politics or else itll drag down the administration for years to come. Jim parsons is one of our guest hostst today. In your view, is there some sort of drop dead date where we go beyond where there just is not enough signed up that the Insurance Companies start to back out and this thing goes into is there a date around which that is that december 30 . Wheres the date where this thing will not work regardless . All right. If they dont slow this thing down, i think it could happen in the first quarter. Thats why im advocating slowing it down. To give a little more time, to buy some time to coach people, educate people. Not just have mandates. I was glad they postponed the employer mandate. I think Employer Health care is a very good thing. The kind of plans worked at medtronic are eliminated. They had to cancel 150,000 people because they didnt meet the standards. Wont the Insurance Companies get cold feet if they slow things down and start to exit . Yes, i think i dont know if they can exit not having been on it. But the state plans are working much better. We have a state exchange in minnesota, its working reasonably well. I think thats working much better. The key is, weve got to stop doing fee for service and get to pay for value. Thats the key to the whole thing and get people healthy again. As long as we can do that, then the Insurance Companies are going to be concerned if the costs keep rising. Bill, thank you very much for joining us today. Pleasure talking to you. Thanks, becky. Coming up, a read on the employment recent jobless claims hit the tape at 8 30 a. M. Eastern. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. Welcome back to squawk box, everyone. In our headlines this morning, a chilling tale from your very own kitchen. Listen to this. About 12 of spices that are brought into the United States are contaminated with insects, excrement and other filth. And this is according to an fda report released yesterday. Nearly 7 of spice imports were contaminated with salmonella, that is twice the contamination rate typically found in other types of imported food. Other contaminants include human and animal hair decomposed parts, live and dead whole insects, staples, wood slivers and rubber bands. Spice imports from mexico and india had the highest rates of contamination. Yeah, hope youre enjoying your breakfast this morning. When we come back, the closely watched weekly jobless claims. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Female narrator the mattress price wars are ending soon the mattress price wars are ending soon at sleep train. Weve challenged the manufacturers to offer even lower prices. Now its posturepedic versus beautyrest with big savings of up to 400 off. Serta icomfort and tempurpedic go headtohead with three years interestfree financing, plus free sameday delivery, setup, and removal of your old set. When brands compete, you save. Mattress price wars ends soon at sleep train. Your ticket to a better nights sleep welcome back to squawk box, happy halloween, and initial jobless claims for the week dropping a nice even 10,000 from 350 to 340. Continuing claims, well, just a smidge higher from 2. 85 to 2. 88. It doesnt look to me as though thats going to get a big amount of Market Movement going. Were still probably in the digestive process of yesterdays statement. Not that the changes were huge. But the response of the marketplace, at least the knee jerk was somewhat fascinating with price of treasuries going down along with stocks. The residual winner of the movement yesterday seems to be the dollar index. Seems to be attributed to less dovishness. I think it could also be attributed to the fact that theres a lot of crying foul with regard to the recent strength in the euro. Maybe that has something to do with it. Some articles on that topic in the journal today. Gang at the desk, back to you. For more on the claims data, lets get to steve liesman, theres four pumpkins now. Im so honored. Well, you know, you have taken it to a new level. A lot of people who appear on the show dont get a pumpkin. Isnt that nice . Thank you. Its amazing how much it looks like looks like gorbachev. Or ed asner. Did you see the picture of me . You sent me, separated at birth. And he was he played along. He played along. Im not going to say what he said to say to joe kernan. He may be more left than you. Hes a huge lib, of course. If you consider me, left, of course. But hes a huge left of you, i agree. Anyway, congrats on your pumpkin. Im honored. Im honored. Honestly, my 30 years in miss reporting career did not did not prepare me for this moment on television of how to react. It wasnt in journalism 101 or any of the economics training, how to react when you get a pumpkin. The golden globe. I do want to talk about the fed for a second and i want to go through the no, joe . No. Just started doing something else. And you can at home too. Now, did jim paulson in the last hour just said the fed doesnt matter. But if you think the fed does matter, heres the taper test. Remember we talked about a threepart taper test and lets see which ones are met. The first one is confidence in the economic outlook. Funny things happened over the last quarter. Weve ramped up growth, this is the Macro Economics tracking forecast, gdp is tracking 2. 7 . Unfortunately, the Fourth Quarter tracking 1. 7 . Built in some shutdown amount that we dont know about. Theres uncertainty over that for the fed. Job growth has been slowing at the adp, were up at 190, now down to 130. Id say the conditions not met. Lets move on to number two here. And the second one is fiscal restraint. Government funding debate in january, debt ceiling debate in february. Id say conditions not met. 2 out of 3, were not there yet. And then the final one, financial restraint, we have higher stock prices, we have lower yields. They removed yesterday a couple notes that said, you know what, were concerned about it. Looks like 25 basis points brought to you one of the three conditions of the fed tapering being met. Now, the question you have to ask as an investor if you care about the fed, which jim paulson does not. What is the timetable by which the other two conditions can be met . I dont think its december. But there is a play on that people are talking about in the papers this morning. The ft, the wall street journal, the december remains in play. They didnt take it out for sure, but theyre not going to. Its data dependent, so well see. I think that was a given. But i think it was a physical thing, right. Can the fed have confidence in the outlook given the data theyre going to have in december . No way. You say no way. I dont think so. Rick, i dont know if you want to weigh in on this. Im not saying its the right thing. Im saying, i dont think they will. Right. So what is the fed Fund Futures Market telling us, rick . I know there was a ramp down in the outlook for Interest Rates in 2015. Well, i really think that looking at fed fund futures at this point isnt going to garner you a huge amount of information. I think the real issue fed fund futures is the convergence. You know, youre not supposed to really look more than one meeting out because once you get much more distant, it really is more of a function of how markets align arbitrage speculation, nothing wrong with any of those, but the reality is whether its your dollar futures or fed fund futures, theres no more meeting until december. It shouldnt be shocking that the nearby contracts had massive adjustments. I dont really read a whole lot into it. I hear the word i hear that were done. I just want to say there should be caution in the what we have for the outlook of the fed survey, which is qe throughout 2013 and taper in april. I think things are less certain than the market appears to be. We want to get back. A little bit of a last word. One, you have some stock picks for us. But also, do you care about all of this . Do you care about tapering and what the fed is doing . I do care. But im not a trader, im a longterm investor. So im looking at making investments today that im going to hold for two or three years where im buying them at a significant discount to Intrinsic Value and where the board is going to everything is inflated by the fed right now . I think the underlying economy is healing. Im not going to make any predictions about the shortterm gyrations in the market, but i think the longterm is pretty good and ive been investing for 30 years and never seen a large spread between the cash return on the market and the riskfree rate. Of course im watching the near term fed and watching the gyrations in washington. But i think the prospect for stocks over the next two or three years is quite constructive. And importantly for blue harbor, were only investing in those companies that are trading in a big discount and the board and Management Team are going to do something to unlock the value. Give us picks real quick. I like a Strong Company accelerating in the web experience, video on the web. All of us using tablets and iphones to watch games, play games, watch videos and akamai is touching that. This is a very strategic company. What price did you get into that stock . Got in at 35, but happy to buy it at 45. This company is a really, really a rocket and the companys very well managed, has about 1 billion cash on its Balance Sheet. No debt. Are you working with that management . Met with them yesterday. Strong relationship there, theyre doing the right thing. Management owns 250 million of stock which is rare to find. Is that a company you decide you want to get on the board, for example . No, no. I think this is a very well managing governing company. Okay. I think its a company that is building value. Okay. I also continue to like chicos, an exciting company, growing at Square Footage and debtfree company. You love. This is an interesting company. And i also like a company we have a large position called progressive waste, which is a Waste Company in canada, owns landfills as well as collection and generates Free Cash Flow. Fas, you know what that is. Chicos. Whats the fas . Its fine arts no, folk art specialty. There you go. How do you know the company . I been around for 20 years. He likes the clothes. I like meaningless trivial useless information that never leaves my head. Cliff, look to your left for a second. Thats been there the entire time. Thats why i was laughing. Thats good. Thats good. I should have worn a costume today. Its just funny. Its scary because you see like a guy like that Walking Around and you wonder, does that mean is it really there . And if its not does anybody else see that . Youre going to be fine, yeah. Im waiting for Warren Buffett to come out from under there, right . From under the right. To undo his right. Why dont you go over there by joe, there . Move over to joe. Yeah. Warren buffett. Why is that . I dont know. Happy halloween, warren. Cliff robbins will be with us for the rest of the show. Coming up on the squawk ceo call. Liesman has learned. He doesnt even try anymore. A company that specializes in Information Solutions for the federal government including intelligence, Cyber Security and health care, the ceo of caci international. And now squawk Horror Stories from the year 2025. The New York Times ships all employees to the last remaining section, sports. The gourdman administration outlaws the use of all fossil fuels despite the complete lack of evidence of manmade global warming. Direct flights and competitive pricing and while Airline Seat Sizes decrease by 10 , the average passenger girth has increased by a factor of five maximizing spillover. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box. Its time for our halloween edition of our squawk ceo call. Its a 3. 7 billion Information Solutions company that caters primarily to the u. S. Federal government ranging from the department of defense to the Intelligence Community to civilian agencies. And joining us now in his first cnbc interview. This is your first time. First time. On halloween no less. Kenneth asbury. Of course, our guest host this morning, Cliff Robbins from blue harbor, owns 10 of caci. I have one question, weve been talking about health care all morning. Certainly. Could you fix this . Could we Fix Health Care . No, could you fix the website and all the Technology Behind this mess were in . Oh, to be honest, andrew. We dont reading the press clippings and that sort of thing, i dont think i know enough to give you an informed decision about it. But you do a lot of work for the government . We do, indeed. And a lot of back end work for the government the Technology Mind things . That is correct. When you look at a situation like that, what do you think . Well, i think that health care in general is a great opportunity for caci and theres some really wonderful places that were playing, particularly Department Veterans affairs administration, were doing some things with digitizing the ba back the old records. Im an old veteran, got out of the military in 76, my records are in paper. Were turning those into Digital Documents now. So theyre much more easy to do claims adjudication and that sort of thing. You own 10 of this company . We do. How did that happen . Proud to do that. We got invested a few years ago. Really because the company is growing so fast and really making the world a safer place. Most of what caci is involved in is defense, Cyber Security, antiterrorism. I like their mission and the company is just a cash machine. It has huge cash flow. Since weve been involved, the Management Team and the board bought back almost a third of the company. Its been a great investment for us. And the company is really poised for future growth. The things theyre going in health care, Cyber Security, antiterrorism, sadly this is the dangerous world and theyre making a world a safer place. Does all does the debate around the nsa and all of the things that theyre doing slow down your business . No, i wouldnt say it slows it down, it takes a business thats normally not been discussed in the public and it puts it in a public context. And so it makes it a little bit more difficult for the policy makers, i think, that are talking about it. Our business is focused on the development of the capabilities associated with it. The difference is the wonderful thing about being in the United States, were very creative, very inventive, weve invented a lot of these technologies that have dual purpose. We can use them to look at adversaries and use them to look at our own tell us about the technologies. Well, lets just take cyber, for example. A lot of what we do is Computer Network defense. There are other parts of our business that might look at somebody elses Computer Network and look at it from an offensive capability. Let me ask you this. I know, cliff, when you get involved its because management wants you to come in. You know what youre talking about with all of things you guys do. What did you see as an opportunity . We got invested in this company, started looking at the company, frankly, it had been using its Free Cash Flow, which is so significant. Theyve been they were established and running their business and growing their business and weve got unique ideas about the capital structure and the stock made a new high yesterday. They built tremendous value by using their Free Cash Flow to make acquisitions. Also to return cash to stockholders. And as i mentioned before, they bought back a third of the Company Since weve been involved. And thats supercharged the value of the equity thats behind. We were able to work with them and making the capital structure much more efficient. At the same time, theyd been growing their business, making acquisitions and, you know, companies doing excellent job operating even in this more difficult environment. I have a management question. This relates to Edward Snowden and being a contractor for the government. 17 of your employees have some kind of security clearance. Thats correct. Thats correct . Okay. So what is the lesson of Edward Snowden in terms of being able to track your employees to make sure theres not more like that if thats i mean, theres some people who think hes a hero. I dont want to suggest anything. But given your role as a Government Contractor of trying to avoid that. And how do you think the governments going to change its relationship with contractors as a result . Well, a lot of questions there. Let me start with this premise. I got my First Security clearance when i was 18 years old. I had joined the military, i was in military intelligence. And as a result of that, i signed a document that said i would not disclose the items that i came about. Somebody chose mr. Snowden chose to disclose that and as a consequence, were in the dialogue that we are in today. Our the government has been buying services from the private industry since the first world war. Theres millions of people with security clearances as part of what it takes to run our government from a national Security Intelligence or any other side. I think that will continue. Is it a proper dialogue to have about what criteria that you use in order to judge it . Yes, i think there is. But i think that we get past that ultimately and we right. The world is not a safe place. The United States is needs to posture itself in the position where its going to protect itself. I think it could is the debate around whether we should outsource some of the functions to a firm like yours or insource them by trying to make these people does that matter to the National Security of the country . I think it does in some cases, andrew. I think if you have a shortterm need that you dont want to invest in a federal employee or Government Employee where youre going to have them for a 30year career, then i think it makes sense to go. I think it makes economic sense to go to industry to do it. Another way to think about it, you might go there because there are very specialized skills. Such as the kind of skills we bought in the most recent acquisition that we just and so just real quick, youre going to be pursuing more deals we should expect. In the near term, were going to be delivering our Balance Sheet to pay for the one we have now and make sure we integrate it and get the absolute value added. But over the longterm, well be looking at other deals in the highgrowth markets. Thanks for coming in this morning. Thank you. Cliff, thank you. Thank you. Coming up, more from our guest host Cliff Robbins. Plus stocks on the move in the premarket with jim cramer. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Bny mellon combines Investment Management investment giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. I want out lets get down to the new york stock exchange. Jim cramer joins us right now. Jim, mad money last night, you warned viewers they shouldnt get sucked in which the head fakes of the market. Whats going to happen after people start to digest the news from the fed . Theres this weird kind of everythings going to be a little bit soft so we know the fed wont do anything. When the fed tells us things are a little soft, people panic and they sell. Usually lasts a couple of days. Facebook and starbucks, people are taking a more jaundiced eye toward everything. What do you think about facebook, the idea that some of the younger teens arent spending as much time on it, under the idea that they maybe cant expand under the ads on the feed . When ever up hear the analyst say i hate to be the dead horse, you know theyve reached the point where they couldnt put any more ads in or people would get turned off, something zuckerberg said would never happen. Theres a lot of people feel that just like the last quarter when they said its about to take off, this quarter its already peaked and somethings in between. Exxon mobil looks like it will close a little higher than where it closed yesterday. They did warn how there were significantly weaker refining margins because of all the increased capacity thats out there. Go ahead. Refining margins have been a problem. Thats why a lot of people decide to spin off the refining operations. I come back to its noble, its anandarco and pioneer. Those are the equivalent of celgene, regeneron and its the equivalent of buying pfizer and merck. When we come back, well give our guest hosts the last word when squawk box on this halloween day returns. Tomorrow on squawk box, one hour with charles plosser. Starts tomorrow at 6 00 a. M. Eastern. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. But it sure feels that way. Because with power ports. And wifi. And inseat entertainment, for everyone on board, now when you fly, time flies too. Flight Attendant sir, were about to land. vo were adding a brand new plane, with all this, every week. Its just one way were building the new american. Its a dead mans party, who could ask for more lets get back to our guest host today, Cliff Robbins and jim paulsen for the last word. In terms of what the fed sees, the economy isnt moving along as quickly. I think money velocity is going to turn up next year, right at a time when a dovish perceived fed is coming in, when the dollar is weak, when Commodity Prices are bottoming out, unemployment dropping to 6. The whole conversation in this country is going to change, particularly for the fed. I think initially positive, maybe negative later in the year. Yesterday our guest host was ted langone. He said companies have gotten better and better and more efficient and if we see an increase in gdp, these companies are primed to take off. Would you agree . I agree. I think the economy is healing and companies are more efficient. The next three mngs are interesting to watch. If fear grips the market, which i hope it doesnt it, would be a huge buying opportunity. We would be stepping in if the market gives us the opportunity. I hope they dont. I also really applaud these buyers and Management Teams willing to listen to their stockholders. We have undone the feds good work in terms of getting ready for the taper. Would you think, either of you, there would be a dislocation when the fed steps in and says its time . I dont think so. It will be gradual. The fed has done a good job telegraphing what it ultimately will do. I think the gyrations im talking about have less to do with the tapering, more with the dysfunction in washington thats pretty polarized down there and i think were going to have sort of a replay in january and february of what weve had more recently. Jim, ten seconds. I think when the fed does taper, the economy will be good enough to deal with it. Thanks, guys. Happy halloween, everybody. Be sure to join us tomorrow. Squawk on the street begins right now. Happy halloween is right. Good morning. Welcome to street treat. Im Carl Quintanilla with jim cramer and david faber at the new york stock exchange. We have a revenue miss at visa, a rough conference call, a fed statement that some are calling surprisingly hawkish. We have a big show today packed with that and more. The 10year yield is right ou