Transcripts For CNBC Squawk Box 20141112

Morning. Five banks have been hit with major fines. Kayla tousche joins us on set with some of the details. This is the settlement weve been speccing for weeks, for months. An 18month investigation by authorities in the uk as well as the uk as well as switzerland have announced a joint settlement with five banks, urging them to pay more than 3 billion to settle charges of key Foreign Exchange rates in the 4 00 hour is when most of the activity, according to the press releases, happened. Its going to be a costly one for many of these banks. Ubs will pay the most at about 800 for a threeway settlement. The cftc in the u. S. And the federal authority, as well. Citibank will pay 668 million to the fca and the cftc as that Bank Adjusted earnings by 600 million just a few weeks ago as it was setting aside more money for this settlement. Jp morgan chase will pay the two u. S. And uk regulators. Hsbc, 618 million. Even though these are pretty big sticker numbers, guys, it does seem like pretty small change compared to at least what we saw in terms of the mortgage settlement. Bank of america, some are paying 17 billion to u. S. Regulators. But, of course, with most of these issues, the banks arent out of the woods yet. The investigation is ongoing. We had expected the occ, possibly, to join the settlement. They are still working on their findings as well as the Federal Reserve as well as the department of justice, which currently has a criminal inquiry ongoing into at least a few of these institutions and, of course, fact finding and discovery for those situations is still going on. But, guys, when you look at the press releases and some of the chat room activity between these bankers as they were saying, hey, ill pat your back if you pat mine. As it is, it is pretty bad. In terms of trying to figure out how much more incline there may be, on the criminal stuff and the criminal litigation that may come as a result of this. Well, of course, the civil litigation part will be estimated by what we saw with lib libor. Remember, when we saw some of these settlements with authorities over what the banks are doing to rig benchmark Interest Rates, you had fannie and freddie coming out, a lot of these bonds coming outs saying, wait a second, ive been cheated out of a lot of business income. If you were artificially Holding Interest rates lower, here is what i should have made. In the Corner Exchange market, its harder to sclakt exactly what the price luktates in some of these currency swaps and bench rates should have been. How do you calculate that . No doubt people will try, though. Kayla touche, thank you. Yahoo is buying video ad service brightroll for about 640 million. The deal will make yahoo s video advertising platform the largest in the country. Brightroll is a member of cnbcs disrupter. Just because i dont remember having the guy on doesnt mean we would have it. Do you know . We havent had the ceo price at all. Im not sure weve had the ceo. Hes got a young mind. I dont know about that. Its actually very full company. Were going to talk about that. You are going, right . We can talk Programmatic Advertising, what its worth, whether they will be paid. I have lots of questions. So if i go out tonight yes, sir. Having cocktails, Programmatic Advertising. Programmatic, naturally. Yahoo entering the programmatic theyre getting more into the more into the Programmatic Advertising space . Programmatic . You dont know. Programmatic is a way in which media buyer res paying for advertising. Like on a Program Effectively in the say wait a minute way that google allows you to take a word and people bid up words, its sort of like its not like programs on television and it allows you to no, it allows you to buy up inventory, but as a result it makes video advertising much cheaper. On the web . On the web. Advertising on the web, but pressure video probably will pressure Everything Else because tease what it does. It also potentially puts them in the place, they bought tumblr. Could tumblr turn into a youtoo issue. If i were to go to yahoo you havent been in a while. I havent been in a while. But if i were to go there, i would say what i can do some serching and mail . And it would accrue to somehow my searching would be monetized with this new product or something . No, no, you might see video there. Okay. I see some video that might be bright roll video . You might see video and you might see advertising on that video. And that advertisement would be bought for platform, if you will, called brightroll. Okay. You would never see brightroll as a consumer. Got it. How is the price . Some people say its you recall at some point it relates back to katie couric. Why . Because thats where youre going to see video talent starring her with this new advertising in that video. Also and id be remiss if i did not mention this. We know, of course, where katie couric made her name. But reruns of the other greatest late night show ever to grace the air waves, saturday night live. On they have reruns of that, too. In other news on yahoo good, i needed some more, reuters is reporting some can i call them unhappy yahoo campers, andrew . Investor campers. Investor campers. Calling on aols Tim Armstrong for a rescue asking him to explore a merger and run the combined company. There are currently no talks between the two companies. The most recent push by some yahoo shareholders followed the campaign from Starboard Value and in full disclosure i forgot about this. Cnbc and yahoo have a Business Alliance to share and coproduce editorial that is yahoo shareholders pushing for this. Aol has not been involved. Does aol have any active i heard theyre not proposing a deal, theyre not involved. Theyre just reacting to the yahoo shareholders. In that instance, theyre talking about Tim Armstrong running the combined company. And other shareholders are trying to get marissa to run. These are yahoo shareholders pushing for Tim Armstrong. There have been aol who pushed to they go to marissas world. Interesting. You always want something you dont have. Bill ackman is pushing square, announcing an 8. 5 stake in Animal Health companies. The companys shares of that company have risen more than 30 this year already. I dont know and then he want that company a lot about the weather. I dont, either. But im is that it . It is. Okay. The lettuce. But Animal Health company. It is an Animal Health company. And he wants this company sold, doesnt he . Yes. I think he wants a higher stock price. Wants a higher stock price for now. Lets check on the broader markets had this morning. If youve been watching the futures, at this point, futures are indicated to open a little bit lower. Dow futures down by just under 29 points. S p off by 4 points and nasdaq off by 7 points. At this point, oil prices down 56 cents. But below 78 again. Its 77. 38. Take a look at whats been happening with the tenyear. At this point, the syria note is yielding 2. 33 . If youve been watching the dollar, it is down against the yen at 115. 25. Take a look at whats been happening with gold prices. At this price down slightly, 1,116. 30 an ounce. Let me take that back. 1 162. 30 an ounce. Sorry. The s p on a fiveday winning streak, barely, though. Joining us now, clause tanzien. Ed, weve been people on talking about maybe, you know, two or three percent gains before the end of the year and only 8 to 10 next year. Is that did happen is this sort of petering out, this sixyear bull market . We think the long bull market that we have expected is ip tact. Id say were about halfway through. So its intact. Go on. So we survived the pullback in october which wasnt even a correction in technical terms. It was about 747 at least in the u. S. The foreign markets shaw a much sharper decline. But weve had a pretty stunning vshaped recovery here. We think we have some momentum heading into yearend. Were up about 10 , though, and if you tack a 2 dividend on that, thats a 12 return. So that is more than we were speccing going into the year. But theres nothing to suggest we cant go higher, still. Clause, it all hinges on us being able to with the training wheels of qe off, the underlying economy now, its almost consensus that we have upticked the 3 . Is that true . Yeah, i think so. At least as you look at where the data is going at the moment, you know, the u. S. Economy is still amired in debt. Too much debt in the economy. But if you look at the data coming in, you take data at face value, the economy is doing quite well now. And alongside the discord, which keeps on hearing about this, you know, we have too much debt. We have not really solved anything with qe. Weve actually seen some data come forward and maybe that is also one of the reasons why the market is holding up. Yeah. You say if we take it at face value. I dont think youre trying to step into the reporting of the numbers, but people arent able to move to a higher paying job right now. Some people have left the baby boomers and others have left because thief given up. Do we grade that on the curve a little bit . I think you should grade it as you say. It goes back to your point about taking the training wheels off the economy. Qe has been a in some terms a distorting factor here and low Interest Rates, Monetary Policy across the world has been a distorting factor. And it has helped and we have seen improvements. You compare that to the eurozone economy, you definitely see signs of improvement and were seeing signs that the improvement which has happened is not just about to peter out. Do you think the economy is definitely Strong Enough to take the training wheels off . We think weve been stuck in this 2 to 2. 5 growth mode since the crisis. But we think the u. S. Growth is shifting into higher gear here. We expect 3 to 4 growth over the next couple of years. And if there was one thing that happened this time around, as to differentiate it from is swoons we had when we felt we were on track before, what is it, unemployment got down into the low 6s . I think thats part of it. The labor market is starting to heat up in terms of payrolls, where significantly ahead of last year on percentage terms. And we havent been getting wage growth because we think theres ample slack and thats what allows the fed to go slow. Auto is good, but housing just housing is you know, its still recovering from the lows. We expect it to run further, as you mentioned. Autos have come back, but theyve really just gotten back to the channel that they were before the crisis. So we think a lot of these sector res pent up demand and we expect a cap ex recovery. Na is good for companies. Than by the conzoomer. Okay. But the consumers get more confidence, that could be one of the factors. Free cash flow is surging given surging . Yeah, given the decline that were seeing in energy costs. So, you know, if you look at personal income minus financial obligations minus energy costs, we see that on a pretty nice trajectory. There are two stories here with the oil price and the commodities. One is the story that when if you get a decline in the expectations as a result of low Global Demand in china beyond a certain level, you get a very bad situation for the market. But the other story, you have low oil prices, low Energy Prices which provides a boost to your income and if that happens in the context of economies which are growing still, i do think that we will see the possible effect from that. If you were not the economist, but the market the santa claus. Will there be A Santa Claus rally clause . I think so. Youre not really the stock guy, but your name is clause. He can make market calls. But you did ask me and i did, yes. Id say given the kind of recovery weve seen from the lows, this was a classic correction. We see in this market was a very, very strong bull market. You get a correction. People say now its different, now the market is going this is different and the market just youve done tv. You came in here. Thank you. Thank you. Im going to go with you on this. Youve got a november, a novembeard. November and december are typically good months for the market. Yes. Were sitting at about a 16 forward pe racho. So youre on the santa claus rally. I do think we end up higher. Yes, thank you. Then weve got a lot more from you guys which we appreciate, for nothing, nor cost. Okay. Coming up, a dangerous deadly winter storm is hitting the nation and now the east coast is bracing for chilly temperatures. Were going to get a forecast from the wh channel next. Plus, a crazy story out of manhattans diamond district. A jewelry heist in the middle of the day during veterans day parade. Police are still looking for the armed men. A live report from the scene when squawk box returns. You, my friend are a master of diversification. Who would have thought three cheese lasagna would go with chocolate cake and ceviche . The same guy who thought that small caps and bond funds would go with a merging markets. Its a masterpiece. Thanks. Clearly you are type e. You made it phil. Welcome home. Now whats our strategy with the fondue . Diversifying your portfolio . E trade gives you the tools and resources to get it right. Are you type e . The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Let it snow, let it snow. Alex wallace from the Weather Channel joins us. In colorado, i think its going to be zero or minus one . Yeah. It is pretty brutal. It is only november. That cold air mass you were just talking about is situated in the middle of the country. Hasnt quite made its way to the east coast, ewe its its going to happen. This will modify so we wont be talking about below zero readings here on the east coast. We will get notice on the cooler in fact in the late week highs will drop anywhere from 10 degrees to 20 degrees below average. The day is going to be above average. Youll start to notice tomorrow, those blue shades start to take over and that means chillier conditions. In continues cincinnati, 36 degrees on friday. That is your high youll manage for the day. In rally, you go from a high today of 71 to friday, only 46 degrees. Youll notice a drop in pensacola, as well. And in and across the northeast, boston from 60 to 45. New york 60 to 45. D. C. Also going from the 60s to the 40s. So its not untolerable air and cold. Its just a drastic drop in such a short order of time. Guys, the thing about these air masses, its going to be acting for a while, at least through the weekend. The eastern half of the country, below average. And back to you. We could have cold weather last all the way to the spring in some cases, alex. Normally it works that way. Yeah. You never know when its going to end. We know its coming, still dread it. We know its coming. We do like the snow. Lots of snow. No . I like lots and lots and lots out west. Lots out west. Lots of white snow. When it gets mucky and dirty and its going to happen, too. Yeah. Rockies, nice space, nice stadium. I know, i know. Right now, lets goat to a story that sounds like a movie script. A jewelry heist in the middle of new yorks diamond district. Catherine joins us with that story. Good morning from the diamond district. Around here, you cant walk two feet without getting photographed or an image reported on west 47th street without one of these new York City Police cameras recording you and inside this building. That is where the storm is rotated. The Business Club is on the eighth floor. Police call him suspect number one, the trench coat wearing six foot tall man who posed as a deliveryman to get into the store. Suspect number two acted as a lookout. Around 2 30 p. M. In the afternoon yesterday, with so many police officers, clouds of people on 47th street. These two suspects casually walk into the building. Police say they held guns to employees and told them to put watches, jewelry and cash in a bag when the owner walked in. A subject hit him over the head with a gun. Despite numerous officers arriving on the scene, members of the squad team, that suspect took off and got away. We talked with the jewelers at a store nearby. He believes he saw one of them running away, but he also told officers told him and other people, they didnt know how many people they were trying to find. But, again, two suspects still on the loose at this point. We send it back to you. Were hearing that its possible as much as 2 million in jewelry, watches and cash were stolen by these two. Back to you. Catherine, thank you very much. I want to bring your attention this morning to a worthy cause. Weve been talking about it for the past couple of weeks. We are auctioning off a chance to come to our set, take a tour of cnbc and have brefktd with all of us. Its to help children foster chaefbivety and resilience. Its charitybuzz. Com lulu leo. Today is the last day to bid. We should tell you, miles nidel is the current winner at the moment. He is the high bid, so you can go join line and try this. Miles, hes listed online. What else can we offer . What else do you want to offer . Like you can see read my headline. And interview you . And read my name. I might not answer. Are you ratcheting up the price right now. You can sit here for a while if you want. In fact, ill ill stay out that day. Im willing to do that. Ill stay home if you actually, that could really rachet up the price for some people. Up next, the countdown to the black friday is on. Major retailers are starting to reveal their big planners for the big deal. And the details on that, plus a look ahead at the flood of earnings in the sector. Want to return, as i said, were going to head to break and well take a look at yesterdays s p 500 winners and losers. There you can see zoetta up almost 9 . That was yesterday. We needed 30 new hires for our call center. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. At a special site for tv viewers; for tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Good morning and welcome back to squawk box here on cnbc. Im joe kernen along with becky quick and andrew ross sorkin. A normal easy way to get started this morning. We have a winner for the ft business i already saw that. And the author is no stranger to our audience. Taking the title for capital in the 21st century, when they were describing the award, it was the most enjoyable read. And no one even read this 700page monstrosity. It became a best seller. If you are interested, check out Billy Grahams oped piece in the wall street journal. I guess the award was given because its enjoyable and what a pleasurable read it is. 20 pages and you love it, right . On the beach. You said you read about 20 pages, right . I read the beginning and the end and it posted a massive amount of reviewes and this one came within the first three pages of the book. Right. Okay. Id like to tell but the headlines this morning. President obama and chinas president reaching a climate deal. The president promising to cut Greenhouse Gas emissions by 28 by 2025. Schien na is agreeing to reduce Carbon Dioxide emissions. Get with the program, dude. Carbon dioxide is a clear always carbon. Into the atmosphere, yes, yes. Chunks of heat trapping cold. Get with it. And did you notice today, the temperatures . Go from like 60 to 20. Did you notice that . Well, thats change. That is the climate changing fast. Apparently, though, actually in china, peak Carbon Emissions, Carbon Dioxide. Actually, the peak in 2003. So once again, were like could you really do that . You would do that . Okay. Imagine all this, then. And actually it was going to happen, anyway . You know, carbon is i mean, china has absolutely hideous particulate pollution that has nothing to do with 400 parts per million of co2. No one wants clean air or clean water. No one. The countdown is on. Now were counting down the actual date. Only 42 days until christmas, this morning, walmart is announcing its thanksgiving shopping weekend plan. Earnings on the agenda for the retail sector. Macys set to release results in about 90 minutes from now. Joining us now is nippon. Also with us this morning, reta retail reporter courtney reagan. Its really just 42 days . It is really just 42 days. Its coming sooner and sooner every year. Maybe it should be or has been in the past. What do you think, dan . I dont think the buzz is as big. I think people have recognized that it starts three or four days before black friday, it runs through christmas. People already saying its black week. So its really black season because the deals are going to be running for the whole time. And, you know, people have said the same thing, you dont get as much shopping in the middle of the night, so were going to run longer and run the sales longer. So yes, i think black friday as far as the excitement is fading out a lot. Would it still be the biggest selling day of the year . Absolutely. And its going the start on thursday for some time and its going to run for when does the day start, when does the day end . Its been eclipsed by singles day in china. The idea that that maybe as much as three times as you rack up in the entire weekend of thanksgiving shopping here. Thats surprising. But what can the retailers do if were saying blah, blah, blah, its easier, black thursday is coming, black friday is coming. What can retailers do to get shoppers out . Singles day got over 9 million. I cant believe we missed out chance. How can we not adopt that one . Anyway, next year were doing singles day. This year what were doing is were going to run the equally promotional event that we ran last year. Were going to be just as promotional as last year. Even though the customer is going to be more receptive and even though were going to have stronger sales than last year by 4. 5 , were still going do be equally promotional compared to last year. What does that mean for the bottom line . If youre really good at what they do, theyll do that again this year because they have learned how to deal with that environment. But if youre not really efficient, if youre not a big, strong player, if you dont have a lot of clout with the vendor structure, any of that stuff is going to be really hard on your gross margin and your bottom line. But it will be good with the strong players with the loud voices and it will be good for the omni channel like macys and nordstrom this year will be a strong player. Theyll be pushing that really hard and theyll crowd out the voice of the rest of retail. That happened last year. So yeah, there will be we knowers and losers. This year after last years briefs i think targets employees. Consooums assumers have forgiven them for the Cyber Security issues especially after weve seen it at michaels and home dep depot. It was a big shock last year, but i think unfortunately we have become used to that. Traffic sales have normalized according to the company. But what target has to deal with is the Competitive Landscape and the prices arent quite as low as walmart. Perhaps the products arent quite as exciting as they were at some point. I dont know that this is going to be their christmas, but theyre working on it. Do you have an opinion about that yet . I think courtney has that pegged. Theyre going to have a decent Third Quarter. I think were going to see an okay Third Quarter, but i think were going to see a very competitive Fourth Quarter for them. Theyre not very good online. And walmart really has them in their sights this year. Very quickly, we have maid macy aes coming out later this morning. Theyve missed on sales the last three quarters. What do we look for, what do we expect . Were looking for increase 1. 3 . Not spectacular, but i think theyll probably beat that, but what we think is that the quarter slowed down a bit. So hopefully they had a stronger back to school, because october probably wasnt that strong. I think earnings per share is 50 cents. And i think theyll be better than 50 cents. I think as long as theyre somewhere north at flat and turn in 50 cents, people are going to look for the Fourth Quarter and macys is going to win the Fourth Quarter. People expect to spend 5 more on gifts. They always lie to us, but that means they feel pretty good about giving gifts. Macys is going to turn in 2. 50 for the Fourth Quarter. Thats the quarter you care about. Coming up, a scandal in golfing. The president in mexico involves a soap opera star. And a brand new mansion and the Chinese Government, that story, next. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. Right now youre gonna ask for my credit card so you can charge me on the down low two weeks later look, credit karma are you talking to websites again . This website says free credit scores. Oh. Credit karma yeah, its really free. Look, you dont even have to put in your credit card information. What . credit karma. Really free credit scores. Really. Free. Credit karma, i love you . Why a Big Government contract was canceled. The answer, hes engulfed in a scandal back home in mexico. Chief International Correspondent michelle yeah, it almost looks like t. Michelle caruso cabrera. I wrote that, so any typos in there are my fault. Correspondan ended and then the t. You want to be called tmichelle caruso cabrera. The one thing i thought of, soap operas down there, people can get theyre born, they get up, they get divorced and they go through through all in one episode. They only last like 59 weeks. Are we going to know by the end of the day . Its possible. What happened . So here is the story. Some journalists in mexico have uncovered the following. The president of mexico is in a bran new beautiful mansion. Handsome guy. Vary handsome guy. A beautiful manage. Is this it . Yes. Owned by a Mexican Construction Company that has won many government contracts. Okay so far. Its mexico, for god sakes. The Construction Company owns it or they built it for him . They have title to the house he lives in. This Mexican Construction Company is part of a consortium of five companies remember, these government contract res so big. Its a consortium. A chineseled consortium of which they are a member won a 3. 7 Million Contract to win to build the first high speed rail contract in mexico. How do we know this . Some journalists down there got together, figured out, went through all these pilings and they posted on the website on sunday. And on that website, you can see we just showed you the experience. Thats all you can see from the ground. But they have managed to put together a bunch of photos, if we can show it, of the house. That was posted by the architect that built the house. Because they were so proud of it. It is all would it, as you can. The ground floor is marble. And the reason theyve done it all white is because theres an l. E. D. System in there that they can make the house be any color they want. Oh, so last week, all of a sudden, the Chinese Government announces and the Mexican Government announces we are canceling these contracts. And everybody says, why . The Chinese Government is mad, the Chinese Company threatened to sue and the Mexican Companies threatened to sue. This is when the Chinese Consortium won the bid. This was engulf from the beginning. Do they take it the same way . Theres no way so i asked many mexican people yesterday, people ive known for a long ooid time, i said can they bring down the president . And the answer wasnt just no, it was no. Theres no the president was the reason we know this is because, bring up the magazine cover. Last year, his wife, a very famous soap opera actress, told a magazine of spain in a 22page spain they live in the president ial palace, they live in this house in particular which they call home. And usually you live in the palace . Usually you live in the palace. So there must be some explanation, right . The president s explanation is its not his house, its his wifes house. Crazier. So the wife is a famous actress. They say she has her own money and she struck a deal with this Construction Company. She put down 30 . Shes paid very punctually every month. And when she finishes paying off the house, it is in a transfer title to her. Okay. So she is paying for this and theyre not living there for free. Supposedly. We dont know the terms of the deal. We down know if she got a sweetheart deal or what Interest Rate shes paying. Or what the price was, etcetera approximately. Exactly. So several questions are going to come to light in the next few days. The president was required to tell the controller about this house. Biggie. Even though its not his house, the law is very, very clear. Your wife, your livein lover, you have to know what the assets are. You dont have to tell the but you have to tell the controls. Really. Yeah. It would be did she pay taxes on the sweet deal that she got and what size of a present did she get . Yeah. Love a good financial scandal. Thank you. All right. Doesnt seem like it was that big. Like you said, no. Can it you . Thats what they told me in mexico. When in rome. When in mexico. Coming up when we return its one of the hottest things out there right now. Dating site tinder. Its a juicy story of its founder and how he was dumped. Were going to talk about that, next. But first, the squawk box planner. On the agenda today, macys and sea world among the names reporting Quarterly Results before the bell. Then well hear from cisco this afternoon on the economic front. One note, wholesale trade comes n at 10 00 a. M. Eastern time. And in washington, Congress Returns from a sevenweek district work period. Back in a moment. Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. How in argentina,rass confident retirement today. Change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Two bad dates. Oh, martha. Im sorry. Try again. Im sorry. I tried. I tried again. Im a little bit odd for match. Com. That was Martha Stewart talking last week at cnbcs 25 galla. This month, Forbes Magazine tells readers just how tinders ceo was pushed out. He started this Online Dating juggernaut which today now has over 30 million users and by some measure has reinvented how millennials date and mate. The 28yearold is now on the outside looking in as he hunts for a huge business lead er to the company to the next level. His associate el tore, did i say bertoni . I apologize. No problem. Here is the question. Two things. This guy sounds a bit some might have speculated that this company has been stolen from him. Is that a fair characterization or unfair . Unfair. Ive heard two sides, that shawn was just an employee and they told him to create tinder and they did. And then others created tinder and he came in and someone swiped the phone. Shawn was an employee of hatch lab that was owned by iac. In that lab, he created tinder. Because of that and because iac owned hatch, iac owns controlling stake of tinder. That was the deal at the time. What did sean do to get kicked out, exactly . That is a very difficult question. I think tinder became a phenomenon. The most exciting thing about match is tinder. The executive looked and said listen, we need real manage. We have to make money, meet the scale. We cant have these kids running around. And i would say from reading the tabloids, this guys sounds like a loose cannon. His cofounder was dating someone and she sued. All happened with people who said it turned into drawings of the male anatomy. Alex, something going on . That was in the loves the idea. Denies that happened . Didnt bring it up. Came from a disgruntled angry employee in the lawsuit, but no evidence other than that. Steve, how does is that enough to get you fired . Thats the question. Or stepped down . Was he paid to leave . Hes still there. Staying there . I think so. He told me that he is behind the decision, and what he wanted was to stay on as ceo, and he admits he dont know how to scale or make revenue, and wanted a Sheryl Sandberg coo to come in, but you step down. Hes on board, like, okay . Whatever is good for tinder hes for. Thats mature. In charge of product, builds team, just 40 people in l. A. , bring in a new ceo to scale it, bring revenue, and make it a real company. Do you think the next generation pays for this service . Right now, its free. Its free. You play this virtual gail, like a hot or not thing, pick what you like, and if they do the same thing on their side and say, i want to find someone in a mile radius of me, you know, available for the next hour it is a game. People treat it as a game as much as a dating app. Its free. The average person uses it 11 times a day. Average person uses it a 11 times a day . Steve, you dont write the cover stuff, right . I have a little bit, yeah. Revolutionizing sex, thats not hyperbole . It is. What can i do to try to you know how it works . Huh . Do you know how it works . Revolutionizing the act of sex, isnt that a bit over . Its a cover line. Can it revolutionize it for me . Revolutionizing meeting people that could lead to sex. Is there silver tinder for the next generation . Im not buying it. Yahoo is buying something. 6 00 million on an ad company, squawk will be right back. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Im just looking over the company bills. Up . Is that what we pay for internet . Yup. Dsl is about 90 bucks a month. Thats funny, for that price with comcast business, i think you get like 50 megabits. Wow thats fast. Personally, i prefer a slow internet. There is something about the sweet meditative glow of a loading website. Dont listen to the naysayer. Switch to comcast Business Today and get 50 megabits per second for 89. 95. Comcast business. Built for business. Cooperation between super powers, reaches agreements on climate change, and middle ground on Cyber Security. What did not get accomplished at the summit . Russia striking a nuclear deal with iran, and how that turning point in the relationship could impact u. S. Security. Yahoo wheeling and dealing, another big buy, but some yahoo shareholders look for another deem. The second hour of squawk box begins right now. Oh, lord, back to the music after that scary music. Because we are talking about revolutionizing an app an app that revolutionizes sex basically. Better be pretty significant. I fear for the tinder. Welcome back. Are you going to mention that . You mentioned it. Theres a site called thinder. Thats for three people . What . Three. How does that work, andrew . How does that work . See. You bring it up. Im youre going to have to talk about it. Family show. Welcome back. Thats why the music was on. Its scary. First in business worldwide. Another mild day shaping up for the new york city area, but the midwest is dealing with snow, ice, and plunging temperatures as the climate changes right before our eyes in the midwest. Up to nine states could experience sub 0 temperatures today. The weather causing a big mess on the roads. Well have a live report coming up in a few minutes, but we cover weather, but we like to cover the markets now, 53 points for you in the radio. The dow is now 53 today, and the s p is indicated down 7. All these numbers would be from all time highs, though. Remember that. And the nasdaqs down 13. Look at the ten year. Which is now 2. 339. Was it 2 that was the question. I did 2. 2. 2. 5. Theres crew, does it go to 78 first or 30 first . 78 ill say. Easier bet this way. Maybe. Okay. Maybe . Look at the right side of that, though, thats a falling knife, really. I mean, who predicted 77 . I mean, no one predicted 67, but 87. Which is more likely . Go ahead . The top story this morning, 3. 4 billion in fines dulled out to major banks in a probe manipulation, ubs, hhsbc, and several regular laters including the cftc here in the United States. The u. S. Usb port ubs hit with the biggest fine at 661 million. In other news, yahoo buys brightroll, making it the largest in the country. Its a member of cnbcs disrupter list. Full disclosure, they have a Business Alliance to share and coproduce editorial content. Well talk about the move and whether they are a takeover target. Theres shareholdersa agitating for something to happen. That in minutes. Sounds like a disclosure on a member of the disrupter list. We named it, smart enough that factored in to her decision. Yeah. It was on cnbcs disrupters le, andrew. I dont know whether the evaluation increased why do we say that every time . No, we dont say that the disrupter part, but the full disclosure that we have a business relationship before that, we have twice mention the disrupters list. Thats to make us look smart. Okay. Disclose the business relationship because we have to the conflict. Okay. Lets talk about another story. The climate deal today, u. S. Promises to cut Greenhouse Gas emissions by 26 to 28 by the year 2025. And china agrees to reach peak Carbon Emissions by the year 2030. The president s trip rolls on, offer to myanmar and then to australia for the g 20 summit. Obviously, no shortage of key issues on the agenda. Lets get to it. Joining us this morning is bob, vice chairman at kissinger associates, and former state Department Undersecretary for Economic Growth, energy, and, bo, great to see you today. Great to be here. The u. S. And china finding rare accord, the story in the journal and times today. This is a significant find. What does it mean . Significant in large measure because the United States has been encouraging china, endine urging china, to take tougher actions to curb co 2 missions and other problems in china. They move ahead at a gradual pace. Now the major pressures in china because of the pollution in chinese cities for the government to make tougher measures internally, and as a result of this pressure internally, the chinese have also agreed that they want to work with the United States to establish some international targets or goals, and this is helpful internally in china to deal with environmental problems and helps to improve ties with the United States on an issue that president obama talk about a lot. Theres a lot of things that happened, the tariffs. The socalled Information Technology greet. Theres 50 countries negotiating, and china was a hold out. Nobody understood why because the chinese export more of the products, like semiconducts, mris, navigational equipment, hightech things. Now the chinese will go with this to cut tariffs in the areas, and other the other countries do the same thing. Its helpful for chinese exporters, and they wanted this because they are going to be able to export more hightech products here and elsewhere, and American Companies wanted this because they want to export more hightech products in china. Whats it mean for American Companies . Which industries are helped the most . Semiconductor industries, if you make medical diagnostic devices its helpful, satellite guidance stuff, roughly 400 different areas of the Technology Sector benefits. Some more than others, but all together, good. It wont help just china, but they will be in many other emerging markets as well. We talk about better ties, at the same time, theres so many problems and so many flair ups around the globe this year. Putin, also there at that point, but also with china, this is a two steps forward, one step back through much of the negotiations seen. Are we okay with them when it comes to Cyber Security right now . Its a major issue. Im sure the president brought it up in private conversations with the president. This had to have been a topic, topic on the minds, but the government officials there and on the part of the American Business, and they certainly got a lot of pressure from the American Business to raise the issue, trade secret issues, coming up repeatedly in conversations with the chinese. I think some progress has been made in some aspects of the intellectual property, and some of the provinces in china who want high End Investment from the United States and elsewhere are taking tougher action to protect property of owners and their own people who develop new property at a rapid rate. This scenario where progress has been made, but theres still a lot of work to be done. You know, at the same time, going to promote a blogger who is known for antiamerican rhetoric thats out there. Is this a one thing in front of the camera and Something Else to your people . Theres nationalism in china, feeling china is now a stronger country. It mewants to assert itself on e global stage, and he picked it up and taken strong positions, but they also know they have to river Economic Growth to their people, and they cant do this unless they work with the biggest economy in the world, which is the United States. This is very important. When you see gnarlinationali thats what putin plays to ukraine. The nationalism works at the polls back home or the economic message that carries the day over the next years . They combine in china. The more nationalistic you are at home, that gives you the lee way to make the deals and accomplish the Economic Cooperation they develop with the United States and other countries in the region. One of the goals here was to strengthen what they called the new silk road, which is to increase interconnectivity between china, southeast asia, other countries in asia, and at the same time, they took tough positions against the United States and some of the neighbors. They also reached out to the big Infrastructure Initiative to connect economically with the United States and other trades in the region. Its both. Nationalistic statements at home give you latitude to do what you need to do internationally to help strengthen the chinese economy in trade and investment. Whats it do for president obama at home . Big win . A win for environmentalists, whether he gets the measures required to meet the goal through the new congress is a challenge. Things we promise to do now, and china might look at it in 16 years. I that can do a lot, whether they do remains to be seen, but they have a strong interest internally in china in doing much more on the environmental pollution front. I think the chinese will make progress meaning they have to reduce the use of coal and increase the use of alternative source of energy, and, particularly, natural gas. They sign another very big natural gas deal with russia to use the western fields of russia, pipe that stuff in to North Western china and distribute throughout china. The chinese move on all fronts to reduce dependence on coal and to increase dependence on less polluting fuels like natural gas and other alternative sources of energy. The kmie these will move and can do it if they want to. Their Technology Problems that some companies dont want to move out of coal quickly because its a cheap source of energy, thaw baal make progress. Whether they agree whether they do exactly what they agreed is a challenge, but they will be movings in the right direction. I think the u. S. Will be too, but theres laws to be changed and regulations to change in the direction that president obama indicated he wanted. Bobs sticking around, talking more about u. S. Russia relations later this hour. I cant remember. Tried to fix you up . Are you single . Youre married . Married. Were going to ask about tinder. Were focused on tinder here, bob, and still . I am. I was thinking about it because martha i was thinking if martha she was on match, not tinder. There should be a better site for marsha to go on. I would go to a higher she just went on a normal, like any schmo could date her . Only two dates. Two bad dates. Youre out. Nevermind. All right. You would be. Im married to a wonderful lady. The site would go down. A deal in the financial world this morning, dbt buys hannah for 13, roughly 36 premium to yesterdays close, both companies approved the deal. They have a good record. They figured out how to do it. Coming up, when we return, what do you do when a company is disrupting your business . Well, you buy it. Spending cash for a video ad firm, brightroll, but could the internet giant be a takeover candidate itself . Well talk about it when we return. So i can reach ally bank 24 7, but there are no branches . 24 7 its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. E financial noise financial noise financial noise financial noise thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. And often even more. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 89. 95 a month. Comcast business. Built for business. A beautiful of shot of denver, hello to my sister who lives in denver. Brightroll, a deal and with more, the managing editor is here. Good morning to you. Morning. Help us to understand this deal. A, are they spending the right amount of money, too much money, too little money, how does it change the strategy . Happy they spent any money at all. Theres a lot of cash on the books. Good they use it for something to hopefully add vag. Its not so much the amount of money they spent as much as what they brought, right . Its an ad agency. Thats the direction aols going in as well buying a similar type of company last year. Its the same kind of thing. Basically, an ad agency that matches video publishers with advertisers, a nice business to be in because its growing, but it signals that ha hoo is less a media player in a way in the way that facebook is. They do not own the ad inventory, but buying an agency that helps others sell their inventory. Its a nice move. But at the same time, its not big Game Changing or signals that yahoo is not really more than just a broker, you know, in the game. I try the valiantly in the last hour to explain dynamics and technicalities of the advertising. Help us with that. Okay, good question, its a tough one. Basically, you know, we all how the stock market works, buyers and sellers matched up is the idea. This advertising is the same as well, instead stock buyers buyibuy ing stocks, its ad inventory, a bunch need ads, need places for the ads, and this is a way to match the two ends up, and the added element is that the advertisers can bid for the same space. So the prices dont go up, they can go down, incredibly cakoimp kated, but thats the idea. Ed, pressure is mounding on yahoo and aol to merge, pushing it on the company, theres have. No talks and doesnt look like either company is interested in pursuing something. Way do you think should happen . This is, like, the tieup to happen three or four or five years ago even, and they are similar companies, yes, theres savings. You merge the two, theres overhead savings, synergies, of course, and the fact that they are both in similar types of businesses, the fact that yahoo bought something similar to what a organization l a year ago shows they go in the same direction, so, yes, on paper, makes sense to merge the two. At the same time, cultural fit, you know, its still unclear what kind of a company yahoo is, Tim Armstrong leading aol made it clear what they are to be, the content company, and now its an ad type agency, and he gets that. Shes not a salesperson at heart. Who leads the company . Theres a lot of open questions in that. If you were king for the day, what should happen . Yeah, no, put them together. You would put them together . Put them together, put them in charge. Thats what i would do. Put them together and put tim in charge . Yes. I dont know that marissa would be happy with that. You asked what i thought. Just so we understand the dynamics at play, though, in the specific board room bra ma, if you will, what plays out to happen in the next several months for us to see a deal or no deal . Well, so what sources tell me is tim, a competitor, and a sister type company, they have similar types of assets, sources said they are not into the idea of a hospital takeover, but friendly take over, and they looked at it the last few years as a possible tieup, so there has to be friendliness in that sense, and theres board members. Do you think shareholders have a point or not, and i dont know what the strategy is, and at the same time, now, spend in that on the ad company, not clear. What the company should be, or what to buy next or what to do at this point . Stick to the original content. That means you get to own your ad inventory. I know we say ad inventory, but think of television networks, cnbc, it owns the advertising it sells. The time it sells to advertisers. Yahoo aol, the direction they go in is they buy into companies that are helping other publishers, other sites sell their ad inventory. Thats not a god game to be in. Its a growth industry, but in the long term, it does not add value to what your brand is about. Thank you so much. Sure. Still to come this morning, a big winner in vegas, a new champ in the world series of poker, not bluffing on this. Well be right back. [announcer ]startupny. Its working for new york state. Already 41 companies are investing almost 80 Million Dollars, and creating 1750 jobs. From long island to all across upstate new york, more businesses are coming to new york. They are paying no property taxes, no Corporate Taxes, and no sales taxes. And with over 300 locations, and 3. 7 million square feet available, theres a place that is is right for your business. See if startupny can work for you. Go to startup. Ny. Gov. Twhat do i do . You need to catch the 4 10 huh . The Equipment Tracking system will get you to the loading dock. There should be a truck leaving now. I got it. Now jump off the bridge. What . In 3. 2. 1. Are you kidding me . Go. Right on time. Right now, over 20,000 trains are running reliably. We call that predictable. Thrillingly predictable. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Now the answer to todays aflac trivia question. What percent of americans favor legalizing the use of marijuana . The answer . 51 . Welcome back to squawk box, everybody, a new champ crowned in the world series of poker, Martin Jacobson won in the final high end event. The winning hand, three of a kind, all 10 s over 9 stz. He out lasted nine players in an 16 hour two day marathon. Coming up nextings though, russia steps up the Nuclear Plans in iran as the deadline to reach a deal with the west is just two weeks away. This is as israel says the regime in iran cant be trusted. How worried investors and others should be. Dow looks to open up 48 points lower, and s p 500 down 6 points. Back in just a moment. E more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. Welcome back, everybody. Among our top stories today, the number of International Students attending u. S. Graduate schools jumping 8 in the last year. A new report says that foreigners now make up 17 of all graduate students. Growing debt from Student Loans said to be holding back american applicants. An abstract painting sells for 45 million at auction. Sounds like a lot of money, but believe it or not, its below the presale high estimate of 50 million. Talk to a top art dealer in the next hour. Joe, i think youre directly responsible for that potential. Talked the price down. Yeah, what was it called yesterday . It was sunshine. I dont know what its really call. The person that described it, when he looked at it i dont know i cant remember the name for it. Theres more going on than just the black over gray we saw yesterday, just the black thing over a gray thing. Some people, it inspires. Right. I guess. Yeah. I mean, in the eye of the beholder, right . 45 million. That inspires me. After talking it does . Yeah, 45 Million Dollars . Yeah. We know money inspires you. Youve been on the show. Art and money combined. We had this yesterday and sesame street which was fitting. Preschoolers could have put it together . It would be tough to get a lot of people that love it, put it side by side, but thats neither here nor there. One question we forgot to ask elmo yesterday, why does he keep getting arrested in times square . [ laughter ] those are the elmo posers, not the real one. Ducked the question as if no other elmos exist. I said, we have multiple versions of you in our house. I know. He did not acknowledge that. Its hard. Whats he doing in times square . Parents let him out late at night. Theres a lot of things happening. What is he arrested for . Being drunk . No, panhandling, and harassing them trying to make him for the picture. Elmo . But not the real one. Fra fraudsters. Headed for a comet right now, and the seven hour trip due to be kplooeted at 11 00 eastern time this morning. We are continuing to watch the progress and bring you updates as they happen. Act of chivalry turns into an incident. You probably saw this yesterday in a fireworks ceremony monday evening, russian president putin put a shawl over the shoulders of chinas first lady, smiled politely, and then less than five seconds, slipped it off, and then got her own i guess, clothing, and the event up folded on live television, otherwise would have never. Seen because china was quick to remove the video and any mention of the event from the air waves. Many of the International Papers and tabloids clean up the putin charm. One read, putin hit on chinas first lady, calling him the don juan pulled the same move with ange angela merkel. Supposedly, hes a sex symbol in china because he rides on horses and stuff. Seriously . Yep. I guess are you serious . Dead serious. Thats what they said last night. What do you know about that . I dont know. Closer to the chinese, maybe the image there looks smooth. Pretty popular. He is in china. Likes to not wear a shirt. Him and matthew mckon hconcc i dont understand. Were just going to let this roll. We have a little barry white. Lets continue to talk about geopolitics, if you will. That was mr. Putin without a shirt on. Russia building two Nuclear Reactors in iran. The site of the plant is builtly russia in the southern part of iran in the persian gulf, and they signed another deal that could include six reactor units in the future. Joining us to go over the applications of this is michael, used to work at the National Security counsel for condoleezza rice, now a senior fellow at the Washington Institute and with us, help us understand, michael, what this all means. Should we be nervous . Should we be theres probably some element we should be happy about this . Whats your view . Well, thats right. This is sort of a mixed bag for the Obama Administration, and on the one hand, you know, the positive side, this remipresent the cooperation they want iran to do. The fuel is shipped into iran, not made in iran, according to the deal, and then the spent fuel is shipped out of iran. It under cuts irans professed need to make its own nuclear feel fuel at the heard of the dispute. Shouldnt i be worried that its going to make it so much more challenging for us to actually be able to monitor whats going on there . Yes. So this is the other side of the mixed bag. I mean, the first concern is just the timing. Its a sensitive time when the west, the p 5 plus 1, the countries negotiating with iran are trying to get a deal done with iran by the november 20 deadline for the talks. You want to held off, offered more as a prize if iran comes to the acceptable agreement rather than offered two weeks ahead of the deadline. Theres also the proliferation concern. From a timing perspective, isnt that why they did it now, though . Why the russians and iranians, yes, perhaps, absolutely. Russia is looking for the commercial strategic first mover advantage here showing they are going to maintain influence in iran one way or another. Iranians looking to show the west, even if theres no nuclear deal, were expanding the nuclear program. Thats a concern. As the program expands, andrew, it becomes harder to sort of monitor and verify what the iranians are doing, and, of course, you have to be concerned about what technology is going to be transferred to iran in the deal, and thats not clear at the moment. Theres also, frankly, the other side of the deal, which is are the russians paying the iranians . Remember iran is under Tremendous Oil and financial sanctions, and there were previous stories that are not really mentioned right now in connection with this that russia might accept iranian oil as barter frustrate Nuclear Reactors, and, of course, Oil Sanctions are seen by president obama, cited by president obama as really the key to keeping pressure on iran to make the nuclear compromise. Bob, you were in washington, talking with the press, and what would you tell him . I would be concern. Michael put the finger on it. The issue of timing is peculiar, but probably welldesigned, at least by the russians and iranians. The russians have done this while putin is in china to demonstrate they have the ability to conduct an independent relationship with an important country in the middle east region. For the iranians, that gives the option. If the talks fail, they can still move ahead with their nuclear program, although this supposed to be a Peaceful Nuclear program. There are always risks, risks you cant monitor, and theres very opaque clauses about helping the iranians to gain Domestic Technology for fuel rods. We dont really know what it means. From a positive point of view, perhaps that enables the iranians, if theres an agreement to go to the people and say, look, we made an agreement, some compromises with the p5 plus 1, but this deal demonstrates theres new reactors to share and other reactors in other parts of iran. You can play it as usual with iran in two ways. Is there a u. S. Play . Anything that the u. S. , the president supposed to be doing in the context of all of this . He doesnt have to do anything. I think he would want to get more information from the russians as to exactly what this deal entails, how its going to be monitored, what this clause about fuel rod cooperation with the iranians means, but the russians dont want proliferation in the region either, and as a result of that, its unlikely they are going to do anything to enhance iranian capability, enrich uranium, but thats onef fuof the risks. Mike . Absolutely right. I think that the question now for the Obama Administration really is getting that deal done. This is probably not helpful in that context because it helps the iranians put forward this sort of plan b that we dont really need a deal necessarily because we have these other options. And so theres going to be unhappiness i think with the russians, but still a desire to keep the russians on board in the negotiations, and thats been the dynamic all throughout the talks, frankly, the past many years, the russians played a double role as irans ally within the negotiations, and its not unexpected. Just one small point to be made about the reactors, though, andrew, is they are built, including the one thats already there and the two that would be built next to it, this is a major seismic zone. Theres an environmental factor for the region. Is this the place to build this reactor . The iranians, apparently, have not shown concern about that. Good point. The other point is they take a long time to build. This reactor took a very, very long time. Long time, like three rears or a decade . Its just the beginning. To site them, do the seismic work, this is going to take a lock time. We will not see the reactors come on any time soon. Its more symbolic and political at this point that iran feels it has another option in russia strengthening ties with the iranians. Mike, bob, thank you this morning. Thank you. Thank you. Thank you. I want you to just get excited here and get ready for something that is kind of a surprise for you. A surprise for me . A little bit. A segment ive been working on called off the wall. Not just about wall street. About social doing good in publicprivate ways. Wait until you see whats next. How philadelphias antigrafetti network transformed the city in a hub for creativity. Starts with aarp, all the way to Community Redevelopment and helping kids get engaged, excons, and we have the founder of the citys Mural Arts Program. Rendell loves this, won so many awards, talking about the publicprivate effort to change the world. Am i right or am i right . In a wonderful city. Youre ready. Loving this. Okay. Good. Well do more than this. Well try to find some other feelgood stories. You know where its based . In the great city of philadelphia. One of the great companies, comcast, did a lot with this too. Well be back with this when we return. Goal is to grow. Gotta get greater growth. I just talked to ups. They got expert advise, special discounts, new technologies. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome all awesome i love logistics. I have 40,ney do you have in your pocket right now . 21. Could something that small make an impact on something as big as your retirement . I dont think so. Well if you start putting that towards your retirement every week and let it grow over time, for twenty to thirty years, that retirement challenge might not seem so big after all. There is no car because there was no accident. Volvos most advanced accident avoidance systems ever. The future of safety, from the company that has always brought you the future of safety. Give the gift of volvo this season and well give you your first months payment on us. How couin jellyfish, protein impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. If you have been to philadelphia, youve seen them, transformed with a splash of color and collaboration, the Mural Arts Program was first established as part of the citys antigrafetti network. Its far beyond that. 10,000 individuals, youth and individual artists, roll up their sleeves to work on art projects annually, 3600 already in phillie. Joining us is the founder of the Mural Arts Program. Welcome, great to see you. Thank you. We talked off camera, and i asked if it was a love of art that started this, or was it, like, trying to do good socially, and you said you were a polisci arts major at stanford. Whatever the heck that is, but you didnt know at the time it was going to work so well together . No, i thought i would go to law school. Thats what i thought. I moved down to los angeles, a love of art, grew up with wonderful parents who always had me work creatively, and so i thought a lot about murals and the social impact art could have. When i moved to l. A. And saw glorious murals, i thought maybe i could do that. Why phillie . After l. A. , i came back to new jersey where i grew up, i got very, very sick, and as i was getting better, i read about a new program called the antigrafetti network, started by the first africanamerican mayor. There was a crisis, new mayor, sense of on the mission, and he said, im starting the program, i have a hunch kids like art. Hired you on the spot. Got a call. Immediately. Went in, hired me in five minutes. Doing this and cleaning things up and urban blight is one thing. When you first started, did you have any idea . It works, make beautiful murals, clean the blight, but its empowering children, excons, could be so much bigger. Thats what i saw. They stole art magazines, art in america, they had knowledge of abstract expressionism, talents and strengths unrecognized it. We have to offer kids every opportunity and option possible in order to make change. Then we started to deliver art as a city is service in the 19 80s. We did a beautiful mural, and they said, wait a minute, this has to change. We want other city services. Okay, we can do that. We layered in services and understood when you have success, its not a time you are come play sent, but a time you get hyperstrategic, and we build the program, and people clam moried for art because in the art there was hope and possibility. That laid the foundation. Suddenly, you have kids helping. They all finish high school and go to college, and you got excons coming out that are into art changing their lives with a reason . Thats right. When we were the Mural Arts Program, we opened doors it all kids, and made part of the division of social services and worked with the department a city agency yeah. Only 10 funded by the city and 90 private. Thats right rkts individuals, corporation, and earned income. Stretch every dollar from government, as far as you can, and work hard to make sure the program is relevant and impactful it all the citizens in the city of philadelphia. I wanted you to come on before comcast, a big phillie company, but thats not why i had you come in, but they have been helpful. Extremely helpful. We talk to i talked to comcast university, and we have wonderful corporate partners, but, also, i think what the genius is weve made it through four administrations, and the mayors are incredible Opening Doors for us to be highly innovative. Our Reentry Program has 10 recidivism rate, reclaiming public spaces in the city, our art ed program, 100 High School Graduation rate for kids in the advanced programs, 85 moving to higher education. We want a work force of the kids resilient and tenacious, kids persistent and embrace creativity and innovation. Jane, you talk about what this means for the people, and thats amazing, but its the space you reclaim stays reclaim because of the sense of ownership . You dont redo this, right . Thats right. Out of 4,000 works of art created, a handful have been grafetti, and back in the day, people said its a waste of money and time. The walls will be defaced, but people come from all over the world, Largest Program of its kind. We work with hundreds of cities across the country and dozens of countries around the world. Amazing. What was in the mural we saw . Thats what we found went so you learned a little at stanford, and then rutgers. Youve been telling me that. How many cities, big cities, that have not done anything with blight. How many are interested . Why is it not started there. Do they have to clone you . We are starting mural Arts University working with cities across the country and around the world. Theres a renaissance going on in philadelphia. Its so extraordinary seeing the power of art, but its about changing individuals and its changing systems, changing communities, spaces, and theres a huge impact on the civic life of the city of philadelphia. People from all over come here to see the work. Its 20,000 to 30,000 people an knewly to come on mural tours. Mural tours in phillie. They see the liberty bell, but Everything Else with it. Its a nobrainer. If they paint if they try to paint, you look and say, what the hell is that . Right . Thats going to look like it before you paint it. That looks like a billing that was defaesed or something, right . Do you understand roscoe . I love that work. There was red and white and modern. We work with tons of local artists, 200 annually employed. Were contributed 3. 5 million to the creative economy, which is great, and employeeing a lot of people coming out of prison, kids were employing. Tremendous work force here, and working with nationally and international known artists. Had no idea when you started . No idea . No idea. This started unbelievable, and just feeding on itself, and thats like watching local government really perform well. And we show that people care, things can change, government can be effective. Jane, we love having you, and its my new segment. Am i right . A home run . It is. Hes socially conscious. I mean, i want this is called off the wall or out of the box . Out of the box. Off the wall. I like that. Off wall street. I like occupant of the box because i like you all. I want to take a tour. We are hosting an International Exhibition next fall, we have extraordinary artists coming, and ill tell you something, the skys the limit. We should go. Its just the beginning for us. Well change the world through art. Maybe we can host the show i bet we have studios there. Oh, i love that idea you can tell im not enthusiastic at all. Maybe in front of a mural. Realism. Thank you. Thank you so much. I loved the show. Coming up, when we return, a rough morning for shamu. Find out why shares of sea world are sinking right now. Later, our political news maker of the morning. Wisconsin governor, scott walker, joining us, what the republicans tough Reelection Campaign temperatures us about the 20 14race or 2016 race for president. We return in just a moment. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions welcome back, bringing your attention to a worthy cause, auctioning off the chance to come on set with us, on air, and talk about it. Its all to benefit the lulu and leo fund. Enter your bid at charitybuzz. Com check it out. We appreciate it if you do. Quarterly results from macys into the Holiday Shopping season, and, plus, the need for speed at the car lot. Could you imagine a world where it takes just 30 minutes to buy a car . Sounds like nirvana. Could be real soon. Tell you who is leading that drive. Well be right back. In a world thats changing faster than ever, we believe outshining the competition tomorrow quires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Sometimes they just drop in. Always obvious. 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. Macys set to report, missing sales expectations for the past three quarters, and we find out if it turns around ahead of the holiday sales season. Things you can do in 30 minute, cook a meal, watch a tv show, buy a car. Auto nation looking to change the dealership experience. That storys just ahead. A possible president ial candidate, governor scot walker of wisconsin explains efforts to jump start the states economy and why governors make better president s. The final hour of squawk box begins right now. Welcome back, everybody, cnbc, first in business word wide. Im becky quick with andrew and check out the futures at this hour, red arrows this morning. In fact, at this point, dow looks like its down 60 points, and you could have known this by the music we were playing. Sing it. No, you sing it. Markets going down markets going down s p down 7 points and nasdaq down 12. Five banks paying Global Regulators 3. 4 billion in finds following a probe into currency manipulation. Ubs paying the largest at therefore 661 million. Jp morgan and royal bank of scott land fined. We should tell you while we do that, a number of stocks are on the move this morning, sea world fell 12 cents, short of estimates, revenue beating by a bit, but operators say 2014 was a challenging year, but expressing confidence in the steps taken to address its issues. Well talk about that, and fossil earnings, but Current Quarter guidance is now partly below analysts forecasts, and then, bbt buying cash and stock this morning, about 2. 5 billion dollars, roughly 36 premium in yesterdays close. A dow chemical raising the dividend by 14 and adding to the buy back program increasing to 9. 5 billion. Thank you. Looking at macys trading down, right . 57. 40 is what im looking at. The company reporting 61 cents a share. That is 217 million and cult the view. And cut the view to 435. It had seen 2014 at 440 to 450. Estimate is 440 no, wait, that was last year. I got yeah, ive got 498 is what if theres an adjusted number or what, but this would be the low. That may not be the apples to appl apples, but acknowledged they are cutting it thats 15 citizen. Thats a 15 cent cut on the top end of the range, 6. 2 billion in sales. What was the estimate . Looking at comp store sales. 6. 3 is below too. Comparable sales, this is different, never saw macys with numbers like this, and comparable sales in departments licensed to third parties, and Third Quarter comp sales, exclusive of license businesses down 1. 4 , and total sales in the quarter down 1. 3 in fact quarter. Never saw sales broke out to companies licensed to third parties and those exclusive of license businesses. What we heard from the analyst today is that as long as they get a positive comp number, thats a good thing. This is not not matter how you add it. Pleased with the Third Quarter earnings, even though the Sales Performance fell short of expectations. On a two year basis, it was unchanged from the first half, and up against strong Third Quarter sales growth last year. We anticipated that our year over year comp would be lower than the Third Quarter than the further quarter, and even so, sales did not live up to our expectations in the quarter. However, we were able to maintain a margin flat to last year and reduced, and so theres all in all, a solid quarter for earnings, but theres a lot of conceding points there that the sales were disappointing and below what the company was looking for. Also says hes very optimistic. He is. I dont know. Maybe they are concerned they cant keep the sga it will be a promotional holiday season. Look for sales in places like ma macys and other Big Department stores to get people in the stores, maybe that raises the question on whether theyll be able to what profits they make on the sales. Just looking at you see same store sales drop, 61 cents, right . I dont see the numbers to pull out, but there is something about the sale of certain including the sale of assets. They dont break it out, and i dont know if thats something they factor into it or not. Yeah, i dont see it in the first couple paragraphs. But he mentions excludeing the timing benefit. However, we maintain gross margin flat to last year, reduce expenses, and timing benefit of items like the sales and assets. I wonder if theres something there. Guess who is there . Courtney is here. The stock is now is that clean, 61 to 50, a beat of 11 cents . Im not sure. Im reading what you are. Stocks all the way back. Im not it was 57. 25, now back to 58. 20. After the initial reaction, recovered pretty much. It has. I like the flat gross margin, something we talk about a lot, the promotional activity, not just macys, but in the whole sector. I think the margin, boring as it sounds, we have to Pay Attention to t and thats fairly impressive they did that. Its been very, very promotio l promotional. Why . Why would Sales Performance be disappointing at macys . They control their own destiny to some extent, right . Or is there something bigger here . They are one. Best players in the game i think it was not one of the strongest scene. There was not a lot new for back to school, the beginning of the quarter. There was not a lot of excitement there. Folk if anyone wins that, its macys like we think about the holidays. October was really soft. I dont think thats necessarily indicative of what happens in the holiday season. In the press release, we certainly dont have the full investor call yet, but no mention of economic conditions, point the out recently almost every time. Maybe he thinks this is his own problem . Possibly. That is what it interesting. He mentions weather, not this time, basically says, you know, last year, the severe snowstorms were a problem for us, but this year we have to get it figured out. Exactly. Got it figured out, hope it normalizes. Exactly. They missed last quarter, he mentioned economic conditions. Makes me think theres more. Okay. So if the estimate is 440 for the year, and they have it an 440 to 450, and add 11 cents on the 50 cent number, they miss 440, whats the Fourth Quarter . Right. Sounds like its below what the street is looking for. Yeah, and whats interesting about that is we had folks who say its a strong christmas, and a lot of the retailers, i dont necessarily think are in the same camp where we see actually how they do feel about it starting here today. Maybe they are not as optimistic. You know this, but just i didnt realize this side of this, the estimate for the 50 citizen this quarter. You know what is next quarter . 254. Fourth quarter is important. Gaining by 11 on 254 does not mean anything about, you know, your Fourth Quarter, you can miss by 20 or beat by 20. I want to see the analysts estimates to see what is included. Still suspect whether they included potential yeah, but they make their whole year. The first three quarters, 254, and more than they earn the entire year. Break out whether they had success, they say they had success, i dont know. They said the whole strategy, they have to spend a lot of money, and now they have the pilot programs, same day delivery, pick up in the store, but to do all that requires systems. They had to spend a lot of money to put that in place, and the question is, is it worth it . Yeah. They used to break out the sales number for online. They dont as much anymore. We talk about the capital expend childrens they had to undertake to get where they are today, and it is harder to back up and break down. The comps, never seen them break down like this before. With the license . Yeah, with the license. Theyll break out the license. I dont see the clean comp number. Right, exactly. They will often tell you the difference, but between the license comps including license and not including license. This is more detailed than in the past. As you said, any way you cut it, the numbers still missed. I think the stoj stocks up at this point. Down nine citizen, i have the b. I. D. , and so it got down to 357 and change. I think there are going to be a lot of questions on the analyst call what was the numbers and how should we be going forwards . Go through this in the Fourth Quarter when things are bigger and harder to sort through . Thank you. Yeah, sure. We have six weeks left of 2014, important for what you are doing with the Holiday Shopping. Its important with what you think the markets are going to be doing for the rest of the year. We had record highs. Major vehicle timty and price swings in the energy sector. Joining us now to talk about it is head of Global Equity research, and also steven reese, global head of equity strategy at jpmorgan private bank. Thank you, both, for being here. Thank you for having us. We have seen a lot of progress made, made up for the declines seen right before that. What happens next . Yeah, i mean, back to the highs, bullish on u. S. Equities all year, strongly advising clients to add to the dip, and our view was it drugs the markets e and thats been the case. We saw growth at 9 . A buy after record levels . It is. We are approaching the market, and rather than where we end the year, clients should look out over 12 months where theres double digit gains by Profit Growth next year. Do you agree . We do. Its going to be a risk on market for the rest of the year, but we think size matters. Large caps led the way for the majority of the year, but now small caps time to shine. Led large caps by 10 points year to date. This happened nine times in the past 35 years. 70 of the time, small caps out perform from here, and we like small caps because they are protected in a strong dollar environment, and from weaker International Growth. Good points too. Steven, you said the next 12 months looking for the double digit gains getting us to the point why fed raises Interest Rates. Right. The markets stumble from that . We have to remember why they raise rates. Because the growth dynamic in the u. S. Is getting better. Volatility in the markets when they talk about the hike, but look at over every period in history, rates are up, for growth reasons, they have done well. Im not saying theres volatility, but in 12 months, the market is higher. What changes your mind potentially . Some dips, okay, buy because we think the trend is up. What was the dip or cause for a dip you say, wait a second, we have to raise that. Approaching fair valuations, trading 16 times forward pe. You need the dynamic to continue to make markets higher from here. We are watching very closely what corporations are saying. We see the top line, key to the growth this year, for reduction Capital Spending in u. S. Companies, that causes us to rethink the view, but right now, thats not playing out. Part of what we watch closely is whats happening with the consumers. The macys numbers we dug through, they are expecting a strong Holiday Shopping season. How much does that play into your view on stocks . Just the feelings of the consumer . Well, we think the consumer should be stronger, Lower Oil Prices and better jobs number should strengthen the consumer. We like it in ways such as in housing, though. The Company Housing is about to go into the strong seasonal spring trade. Stock perform best over the next few months, comps are easy. The First Time Buyer could come in the market as theres more money in the wallets now. Its not just waiting, but housing is changing at this point . We think housing should reaccelerate from here. Whats another stock figure like . Well, we like costco thinking it should trade at a premium because its a subscription business more than a traditional retailers. Theres 40 million members paying a membership fee every year, 90 renewal rates, they are foes kused on International Growth for higher profitability. That stock has done well in three or four months. It is. Lower oil prices and stronger consumer, they should be doing well from here. How about you . Sectors you like more than others . We have a cyclical bias in the portfolios and focusing on health care in the defensive category. Second best performer year to date up 24 . I think theres hesitation to add. Theres upside in health care the next 12 months driven by demographics, drugs, deals, and dividends. I think thats a great place to be to find all of those. We look back at what happened earlier in october, that spooked a lot of people and investors. Things like that can crop up when the world headlines that markets have been ignoring come into focus. What do you worry about, what do you think about, was that a time you were convinced prices could come back . We agree with steve that volatility is in vogue next year and started already in october. In periods with increasing Interest Rates, markets are volatile, but while technicals win battles, we think fundamentals win the war. The economy remains strong. As long as rates do not go up faster than people expect, well avoid the recession and things like jobs and stronger consumer carries the economy from here. Thank you, both. Great, thank you. Up next, they buy things online, and Car Dealerships take notice. Auto nation looking to streamline the purchase process, and phil lebeau has the story next. Scott walker on why he thinks governors make better president s and his possible run for the white house in 2016. First, though, check out shares of jmschucker, cutting full year earnings, and they were hurt by the brand dropping 20 . Stick around. Well be right back. U. S. Is becoming a new kind of company. Ing u. S. Is now voya. Changing the way you think of retirement. With the easytouse suite of tradintrading tools. Tures. At optionsxpress by charles schwab. And well give you a one hundred fifty dollar amazon. Com gift card when you open an account. If youre looking for a trade idea, start at the idea hub. Where options and futures opportunities are organized by volatility, earnings, market activity and income strategies. Then run your new idea through the trade and probability calculator to get a quick look at the possible upside and downside. Streaming charts give you the realtime quotes and customized views of the market that can help you make your final decision. 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Rolling out a new program aimed at reducing one of the top clans consumers have with a new vehicle that it takes too long. Phil lebeau has more. . Its not that it tykes too long, but the who process, start to finish, its a pain in the network. Auto mags has smart choice express, and that takes a melting of going through the dealership along with going online. Heres how it works. You pick out the model online, look at the entire inventory auto nation has, and thags wide, this is the vehicle, whats the pricing available, do haggling, and you can set up financing online, you do all the paper work at home including signing all of the documents necessary, and then once you have that all done, the dealership will tell you come on in, your vehicle will be waiting, similar to a hertz express, go in there, vehicles waiting, in in out in theory within 30 minutes. Heres the ceo of auto nations talking on why he believes this is what customers want in the future. They dont want to drag themselves store to store for selection discovery, price discovery, and they want a real car and a real price online, and when they come to the store for confirmation, after fir ration and validation that they made the right choice in the right step. Question is, does it move the needle for auto nation and if successful, will other dealerships follow the model . Interesting discuss here because, guys, i talked to a number of people in the Auto Industry, and i brought it up, and they said, look, if they get the Customer Service down, and they make this a seamless process from start to finish online to in the store, it could move the needle, but heres the key. You got to make sure you have the Customer Service down. Thats the real point of emphasis for auto nation. This is beginning of more dealerships, knowing people do not like going to the dealerships, and people want to shop online. Thats the next step. Im down for this all the way. I know. Anything i buy everything online, i know what i want. If tinder revolutionized sex, this revolutionizing buying cars. That would move the noodle needle. With had grover on yesterday and mr. Noodle. What is it about the word noodle . Its a funny word. Use it. Call it moving the noodle rather than the need m. Why move the needle . I like it. Thank you, phil. You got to do it right. I do give do do give mike jackson credit for giving it a shot, phil, doing Something Different in the Auto Industry that could pay off. It might work. Can work, but only if its seamless start to finish. If you fill out the paperwork and they say, give me a call, no way. Its got to be seamless. Like in fargo, what about the undercoat, get the 400 undercolt. I can talk to the manager for 395. I dont want the undercoat. I have not bought a new car, when do i have the saturday to go looking . Youll never do it again because of your experience with the chauvinists. Little lady. Remember. Not true, im trading in for all wheel drive. I was there last saturday. Do they know who you are now . They were nice to me. Gee, i wonder why, becky. This guy was nice last time. The guy who saved me and got me to do the deal not knowing who i was or anything. From the other guy that was, like, huh, bring your husband in to talk to the decision maker. Little did they know the first guy didnt shook my hand, but matts hand. Little does he know, he has not made a decision in he doesnt want a mini van. Your life is over. When you have a van . Thats why he wants no ownership of it. Its exciting. Excitement is growing as the European Space agency tries to do something never before accomplished. That story when we come back, and look at futures at this hour. Not so hot. Dow jones opening off 66 points down. S p 500 off 7 points, and nasdaq off 13 points. Back in a moment. No question about that. But your erectile dysfunction that could be a question of blood flow. 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Ask your doctor about cialis for daily use and a free 30tablet trial. Im spending too much time hiring and not enough time in my kitchen. [ female announcer ] need to hire fast . Go to ziprecruiter. Com and post your job to over 30 of the webs leading job boards with a single click; then simply select the best candidates from one easy to review list. You put up one post and the next day you have all these candidates. Makes my job a lot easier. [ female announcer ] over 100,000 businesses have already used zip recruiter and now you can use zip recruiter for free at a special site for tv viewers; go to ziprecruiter. Com offer2. Despite a minor glitch, the European Space agency is on track to attempt the first ever soft landsing of o probe on a comet this morning. The comet some 300 million miles away from earth, and if the landing is successful, it would be the first time humans have landed a probe on a comet. Wow. Thats cool. Were still watching, 11 00 a. M. Keep it here. When we come back, scott walker holing off a democratic challenger and winning reelecti reelection. The name tossed around as president ial candidate, hell join us next. Look at the u. S. Equity futures, red arrows across the board. Dow at the weakest levels of the morning, down 66 points of fair value, and s p off by 7, and nasdaq down 14. Well be right back. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Its in this spirit that ingu u. S. Is becoming a new kind of company. Ing u. S. Is now voya. Changing the way you think of retirement. Edit score. Again. You should check out credit karma. Theyre like free. How . Ads. Credit karma . Yeah. Credit karma. Really free credit scores. Welcome back to squawk box, everybody, heres what is making headlines this morning. The Federal Reserve says its looking into possible misconduct in Foreign Exchange markets by the large banks. That announcement came shortly after 3. 4 billion in fines announced against five banks and Global Regulators. Confusion at this point, trying to get the story on this, u. S. Regulators and other regulators that the Federal Reserve statement suggests more fines could be on the way. Also, a mixed quarter for retailer macys, beating estimates bottom line, but missing on the top. Cutting the full year earnings forecast. Samsung suing for alleged patent inpringment on its chips and guilty of false advertising for claiming the shield tablet has the worlds fastest mobile process processor. Check out this last walkway in london. A birds eye of the bridge, structure stands 138 feet above the river, and the walkway more than 25 feet long. The west walkway is open and east walkway opens next month. Would you be cool with that . Be okay with that . If its water. Little anxiety producing . I dont like heights. Oh, i wish he was here, scot waker winning reelection in office. Probably feels like his third election. Batted around for a possible run in the white house in 2016. Hes gone on the record saying he thinks governors make much better president s than members of the senate or house r and Governor Walker joining us right now. Good morning, good to be back with you. Like, twice, the recall thing too, right, governor . Thats right. Third election in four years, getting good at it. . You are. And you are, like, the poster child for everything organized labor, especially public unions, youre, like, how much money how many different its not like you skrus had to take on people in the state of wisconsin. I mean, the entire the entire public union sector galvanized twice to beat you. Third time now, and its not the most its not the reddest of the states either. A blue state. Four years ago, everything was democratic. Both houses and the state legislature and the governor. We switch everything. Youre right. They target us. The head of the nea, teachers union, and all said i was their number one target in the country, not just for governors, but the senate, 00 and governors. Why . We took the power away from the Big Government, special interests in washington. We tut it in the hands of the tax payers in the state, and in the end, the taxpayers wanted the power with them. Whats done for the fiscal condition of wisconsin and the entitlements state promised people . How much have you saved . How much better shape are you in right now . Our act 10 reforms, the collective bargaining, what the unions were upset about, saved taxpayers over 3 billion. In fact, property taxes this december will be lower than they were four year ago. Who would have thought that that anywhere in the in the country . Put the power back in the hanz of the people, the state and local levels rather than the big union bosses. They dont like that much. Its about the money saved, for example, our schools have no seniority or tenure requirements anymore. They are hire and fire based on merit, pay based on performance, and put the best and brightest in the classrooms, paid off. Graduations rates up, reading scores up, act scores up, second best in the country. The schools are better. Governor, just compare the average benefit picture for a private sector employee and wisconsin and the current or revised benefits package or pay ins, contributions, you would think that you were going to 0 with the public. Is it below now the public Union Employee benefits below the average private sector employee at this point . No. Our Public Servants get a great deal. We pay half their pension, and we only require them to make just over 12 of the premium contribution of health care. Typical family in the state pays 20 do 25 . I remember my brother, a banquet manager and part time bartender and wife sells appliances for sears, a typical american working family. My brother said i would love to have what you offer public employees. What we did was reasonable, but put people in line with where everyday citizens are, the taxpayers in the study. Switching gears completely here. You were making comments about the most recent election. I understand the president s not running again, but i would say that some of the policies were probably that was a vote on some of his policies, but you said Hillary Clinton was a bigger loser than president obama. Why . I think so for a couple reasons. Overall, third term in the president , cabinet embraces the policies, and larger context in the campaign trail is Hillary Clinton is the big loser, the one most connected to washington. I think this was the reaction to washington. People are tired of the topdown, old artificial government knows best approach, but want a new, fresh, from the ground up approach we see particularly in the states. The other big news besides just Hillary Clinton being a big loser in washington and washington a loser was the fact that the states were republicans took leadership roles four years ago in wisconsin, michigan, ohio, and florida, not only governors win, but majority sustained, and in our case in wisconsin, grown. Thats the message to washington who are taking over the senate majority. We have to lead. As i said in the political magazine this week, its put up or shut up time. We have to step up and lead. When you lead, voters, even in key battleground states appreciate that leadership and affirmed it last tuesday. Those are the two questions. What does lead mine mean for republicans who control both houses . Put up bills that are vetoed, repeal obamacare, keep, you know, keep doing things that will no go anywhere, which could cause voters that this is more of the same and flip back in two years . Thats one question. What should republicans do for two years, and second question that you can answer is what kind of candidate should the republicans run in 2016 . Someone like jeb bush or someone like rand paul or ted cruz . Well, again, i lay out in the column i wrote for put up or shut up in the political magazine, they need to lead. They need progressive. The house has the chance to lead and the senate. Put for a drop in the tax rates, put money in the hands of the american consumers, hold back on Corporate Tax rate, bring money back from around the world, bring jobs back home. I particularly, theres a chance with the keystone pipeline, provide an all of the above Energy Policy to have an Energy Policy in the country thats focused on north america now that places around the world repeal obamacare is a part of that, taking two years, but make the case on that, and i think reigning in many of the federal agencies that are standsing in the way of prosperity and moving our entitlement programs, particularly when it comes to traditional welfare programs, a system where it embraces the work. I think those are all things that republicans in the house and the senate can push, i think, the president s going to have to look twice whether or not he vetoes. You need a leader from outside washington who finishes the deal and shows the American People that we can take on washington, d. C. , dismantle it, and send the power back to the states enultimately the people. Thats what the founders wanted. Welfare programs, the Washington Post piece talking about how youre seeking to test welfare recipients for drug use as part of the welfare payments that they get food staummps and the like. How would a program like that work . Do you think its a politically palatable program . Yes. And were working on it right now. Theres a budget coming out early next year. What i heard out on the trail, not just campaigning, but as governor, employers inmy state says we have hiring signs all over the place, optimistic news, people with see their neighbors are getting hired, businesses are putting up, were hiring, come on in, sign up to work for us. The two big things i hear from employers increasingly is they cant find enough people with bas basic employability skills, i mean, skills, showing up for work every day all the time. What i hear from construction, transportation, and health care, they cant find enough people to pass a drug test. Ridiculous to give them public assistance, particularly if they are abled body adults without children, why set them up for failure . If you want our help, youll get it temporarily, but well help you find a job, and to do that, you are free from drugs so you can pass that test and be employed. Theres jobs to be had in the state. Governor, you got ill try again, jeb bush here, christie, rand paul here, and ted cruz, where is walker . Moderate than jeb bush more electable, you closer to these guys, and to rand paul i dont want to pigeon hole people, but what makes sense to the republicans in 2016 if its Hillary Clinton to beat her . What ive shown in wisconsin is im a common sense conservative who gets things done. Are you running . Oh, no, thats what people say in wisconsin, thats what they see. I know you. I have seen that angle before. No, in my case, im a common sense conservative here in wisconsin that gets it done. Thats why in the swing state at best, a state that has not gone republican for president since i was in high school 30 years ago, thats why i got elected three times. Someone like that, more than just one out there, but i think there are great governors, and in the end, theres a lot of people i love in congress. The one exception that might be paul ryan. I really love. He acts more like a governor in terms of reform and instincts, butover all, i said repeatedly, a chief executive at the state level to take on the mess of washington is the best pick for republicans two years from now. Okay. All right. Youre thinking about it. Running . I love the state, which is why i ran, put up with the grief and hassle because i love the state for my children, and i love the country. Whomever it is, ill work hard two years from now to get a reformer to take on washington. Youd be a target to liberals if you would drug tester welfarer. Youve seen this. I dont know if thats a good idea. I dont know who youre trying to get the attention of over there, but thats a target. Just for some reason, i see that as a politically difficult im not sure why. Anyway, governor, appreciate it. Thank you. Good to be with you. Coming up, when we return, how much would you pay for this painting . 20 million . What about 45 million. Maybe 80 million . We have the answer right after the break. Talk about fall art auction season. That when we return. Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees, from the bank where no branches equals great rates. Sometimes they just drop in. Always obvious. 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. And youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. So i can reach ally bank 24 7, but there are24 7branches . Its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. The fall art auctions wrap up in new york tonight. Robert frank joining us now with a special guest, and ive seen robert, ive seen a little of the stockholm syndrome with you. Youre buying into this. Well, i think coming from a family of artists. Youre moved. . Yeah. Youve seen my stuff, and i have stuff. Great stuff. It looks like something. You can make out what it is. Last night p. O. The art expected to sell the two weeks in new york city, and thats finished with 340 million sale last night that was just above the low estimate, but 11 of the 77 works did not sell including, unusual, a 12 million painting, among the top sellers, one of the flag paintings. You can tell what that is. 36 million, way above 20 million estimate. And this untitled, your favorite, joe, check it out. Tell me when we get to it. I see the wall. Where is it . Thats it. 15 million. Thats it . Called wall . Its called untitle. Appropriately so. Not wall. Joining us now is that part of the larger structure they cut out . Thats the painting. Thats what you get. Joining me now is andrew, director rt gallery, a dealer to the rich and famous, and, and w andrew, this market, rally of art, call it five or four years old, record prices, feels a little tired to me right now. Weve had prices that got sort of over their skis last night, and you have works dlevel work trading or pricedd as masterpieces, and they are not. Whats the element feel . It has to do with the pricing structure which is so humge now and the capacity for auction houses to market this material every month. The trend accelerated where the market is more and more pricey, more people involved, risks, and now it feels like theres a little bit of a a break down. We saw a break down. Be honest. There was a break down last night in prices, and what i hear from the art world, well, we have newly unwritten creators written overseas, and art is the now swiss bank account. The market has shifted to a bull market. Thats what we hear. That is wrong. That inception of the fact the take away last night there were 11 bought in and 2 high profile lines. Explain, that means smashs guaranteed half the works last night, and 11 of them did not sell. Well and some of them, they had to buy back. Sotheby is the proud owner of the proud pieces, right . Yeah. There were 12 other lots guaranteed by third parties that sold after a lot of chand leer bidding to a single auction house rep on one bid implying, not assured, but they are going back to the third party. Its very complicated. You can come in and say i want to guarantee the piece, demand your own terms, demand any kind of upside, downside you want, and its a very simple process. Creating smoke and mirrors. Reading through the smoke. Creating false positives all the time. Theres wobbliness. Absolutely. Its hard to say in public. Hard to write about it without all sorts of problems because these pieces are actually sold in house. The real back story is to whom . They are sold, but who is the end user finally . Talking quick about tonight. Chr chrisys could be a great sale, two warhols, and not just an elvis, but a triple elvis, three times is good. I think joes favorite, a picture. Do we have a picture of this . The side black board painting . Okay. What is it going to fetch . Well get that in a second. Bring in 50 million range, there it is. Oh, yeah. Is that a chalk board . Elmo would be proud. Chalk board. Can you erase it . No. The great thing is you can sell this and lets say someone found out it was not original, but a fake. You dont want it, but its the same thing you just bought. Explain that. He loved the idea of, again, a new language, completely new, misunderstood if you like it when you bought it it was a catalog to affirm the authenticity. What if its a fake . Fake . The proprietary nature of an artist is such that how he died, how he lived, all that. So he was misunderstood . This is his interpretation of blah, blah, blah. This is like the Charlie Brown teacher. He was misunderstood forever. He presented a series of paintings in 1961 that were rejected. Thank you to andrew. Thank you very much. Up next, we have jim cramer from the new york stock exchange. What you need to watch at the open this morning. Squawk box will be right back. The conference call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Welcome back, everybody. Lets get down to the new york stock exchange. Jim cramer joins us right now. Weve been puzzling about macys all morning. Right now that stock looks like its up by about a buck. What do you think . Some people want to see the sg a not be that ballooning. This was a terrific number for that. In other words, the costs are remarkable. Runs a very, very tight ship. People will say, this stock hasnt done much of late. Its going to be its up 9 for the year. Maybe we should buy some. Its not as bad as we thought. The guidance is good. In the end, a cuts forecast headline with macys. Its been in a lot of different releases by macys the stocks ended up up or flat at the end of the day. Impressive action at least in the morning. Well see how it trades through the day. Well see you in a few minutes. Thank you. Thank you. Coming up next, people get stuck all the time, like in traffic or on a plane or even on a bad date. But one man only wished any of those things happened to him this week. Well tell you about that in a moment. Me new cars. Hauled a bunch of steel. Kept the supermarket shelves stocked. Made sure everyone got their latest gadgets. Whats up for the next shift . Ah, nothing much. Just keeping the lights on. laugh nice. Doing the big things that move an economy. See you tomorrow, mac. See you tomorrow, sam. Just another day at norfolk southern. E financial noise financial noise financial noise financial noise this guy could take down your entire company. H . Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Welcome back to squawk box. Check this out. First responders freed a man from inside the walls of a marshalls in colorado. The man fell 20 feet into the space between two walls. They believe he may have been trapped as long as three days. Officials say the man entered the building through a vent on the roof. Workers heard yelling over the weekend but couldnt figure out where it was coming from. The stuck man even slipped notes under the wall with clues to his location, but heres the real mystery of it all. His reason for using this unique entrance, were being polite about it, unknown at this time. That is a really weird story. Sounds like theres more to be revealed. We should also talk about sea world shares this morning. That stock is under water after the Company Reported worse than expected results citing a challenging year. Joining us now is the leisure analyst at wells fargo. Good morning. I know that people were spending less money at the park, but i think the big story is the attendance. It was down by more than 5 . What happened . Thats an accelerated from what we saw a year ago. I think continuing problems in their San Diego Park from a media overhang that weve had, the attention regarding the extreme Animal Rights activists from earlier in the year. And then in orlando, clearly theyre being pressured without any major new attraction versus the harry potter expansion at universal. Also the frozen success at disney. Okay. This is a story, though, that as you just pointed out, the overhang from the media, from whats been happening, what people are concerned about, the killer whale treatment. Its gotten worse. Is this a story that goes away over time, or is this a changing way in the way americans actually view some of these theme parks . Well, the company has hired a new head of Corporate Communications who has some past crisis experience with the bridgestone firestone. And that coupled with, we believe, some potential relationships with World Wildlife fund and also the sierra club. Youre going to see a pr offensive coming here. More of an education versus what has been out there regarding the Animal Rights extremist views. So youre going to see sea world being more open about who they are, educating people about who they are. Do you buy the stock here, tim . Im sorry . Do you buy the stock here . We still have it rated neutral. Our target is in the 20 to 22 area based on our 15 estimates, which include flat revenues. Okay. Tim, thank you so much for joining us today. We appreciate your time. Thank you. He said the Animal Rights, the extremist views. That was kind of like i dont know. He wasnt being sensitive to everyones needs in that case. Either way, our time is up. I have to hand it over. Thanks for joining us today, everybody. Time for squawk on the street. Good wednesday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer at the new york stock exchange. Bulls have their work cut out for them. Fuc futures are lower on reports from macys. Bond market reopens today. Ten year is around 2. 33. Crude oil is weighing on sentiment yet again, almost back down to 77. Our road map begins with macys earnings. The