Transcripts For CNBC Squawk On The Street 20121026

Short those names in the Holiday Season . Broad market is lower despite the gdp number. Well get the view. Bombshell ticktock in the New York Times. Futures off the lows after the release of the final preliminary hearing gdp report from before the president ial election. Data showing the economy grew 2 in the Third Quarter. Thats above expectations and up from 1. 3 we saw in q2. Numbers were boosted by Consumer Spending and defense and a big part of this, well see today whether were still in an environment where people question data clearly gdp is more hard to manipulate than the jobs number. I thought the same. As soon as numbers came out, i said the people who do not like obama will say this was padded by five more planes sold. This one was padded by an error that will be reversed or california counted twice. Were in a weird mode. Whatever it said, if its positive, its a lie. Im not buying that. These are good numbers. Reverse the market. Its for real. Good or just not bad . Not bad. Any kind of good news would be welcome right here and this comes under the category of good news. Better than what we anticipated. Better than we saw in the last quarter. Maybe we can keep it going although one wonders where we are this quarter already given how much talk there is about the fiscal cliff and everyone pulling back and not like the numbers weve seen although those were Third Quarter numbers we saw from Corporate America but particularly technology where it seems as though spending really did slow. September was bad. The u. K. Yesterday posted a number of 1 . I was watching when the number came out. There were people high fiving. 2 . Thats twice as good as what they did. Two times the amount of high five. Romney supporters may not question the validity of the data but theyll say that 2 is not Strong Enough to support job growth in this economy. While the numbers are not bad, theyre not bad, theyre not good and theyre not good enough for job creation. Last night on mad money you said almost no company gets through the ridiculous gauntlet of the Third Quarter unscathed and you have said the next 11 days before election day are going to be tough no matter what. Theyre torture. I keep coming back to a couple this is the best example. We had broadcom on the other day. Scott mcgregor, the ceo. They blew in numbers when it comes to wireless. They did good cable numbers. We had comcast with good numbers. They exceeded every single metric. They have tremendous apple business. I was joking about going 33 bid because stock was at 34 at a time. The stock has not had a minutes rest. It keeps going down. What more does the market want . The gauntlet is to high. It had technology. It had a sense that the peak was reached with apple. In other words, sell broadcom. That stock would have been at least 5 if it wasnt for the gauntlet that were in right now. Meantime, lets talk about apple. Fourth quarter profits falling short of street estimates as does Current Quarter forecast. Apple sold 14 million ipads and thats fewer than analysts had been expecting. The company also sold nearly 27 million iphones exceeding forecasts. There is something for everyone here, jim, and what is remarkable is that in the postmarket session yesterday, apple was down as much as 3 on the news on the miss. And then the stocks are recovering on the belief that once again apple is sandbagging when it comes to fiscal First Quarter. Two Companies Reported last night. Neither plays by the rules. There was apple. More granular than i thought. And all i could hear about was someone saying listen, Fourth Quarter not that great. Could you tell me where the shortfall, Gross Margins meanwhile, hes stuck with r e doesnt see it the same way. You mentioned samsung but theyre doing better than you guys. When i finished, i said the analysts think they are knuckleheads and they must be out there. Im not sure what kind of equipment theyre buying. Maybe research in motion. Sticking by this fabulous company hewlett packard. Cook is saying theyre doing well. Amazon is going to say that were great. The neck with you. I dont think there are any other companies. It works for amazon. For whatever reason. Because of the confidence in the ceo and the plan and long history, by the way i think in some ways you can view it as a positive sign for investing because you have to be an investor when it comes to amazon. It is an open ended growth story. You can make an argument that amazon will be the Biggest Company in the world one day and you wont look at me like i have four heads. Maybe three. Its remarkable story. Theres no valuation support for stock at this level. Theres none. There was a moment on the call where i kept saying when will someone ask a question and theyll answer it. Finally someone said, listen, now you are starting to have to pay taxes in different states. How are you doing . Were doing the same as without taxes. Can you go into that . No. Were not going to go into that. International trading weak relative to Everything Else. Tax trend at large is working against them state by state. Big boxes do match. Does that make a difference going into a quarter where the tre pressure is on. Netflix quarter, they are not growing international. Theyre talking about credit card problem. Amazon is not growing fast enough because they seem to be able to control the growth. They could grow faster. Trying to put up as many different warehouses as possible. Its clear that these guys have such david is right. If they said that international was slowing, people would blame it on anyone other than amazon. Amazon, tell me what they told y that made it so that stock is flying. They said were doing a great job. Go shot up and just recommend us. One thing they cannot gloss over is charge for Living Social. 169 million total. Net is 240 something. They have its been a bad horse. It has. 37 cent loss compared to what was for Living Social specifically versus what was expected which was an eight cent loss. Much bigger in terms of order of magnitude. That was more than half of the net loss that they posted for the quarter. Thats a tough business. I didnt say they screwed up. I revere them so much. One of the things that i think remember i said that the apple analysts seemed to be weighted to fantastic Information Technology that we get. On this call, i was waiting for the guy to say, im an amazon prime and i just want to say how fabulous it is next. I tell you what was interesting, back to apple, we all know steve jobs never pulled any punches when referring to competitors, david. But to hear tim cook call the surface compromised and confusing felt like they were out on a limb. As much as a different personality today. But then some of the reviews have been even rougher from microsoft which had two presentations yesterday as we all know. One for windows 8 in terms of running it on Everything Else and then for the surface and some of the reviews have been brutal in terms of the windows 8 as well because of this mixed message so to speak that its sending. Im interviewing this as part of this homecoming. I want to ask is how much contempt did jobs really have for microsoft . It does seem there was this really weird relationship. Between him and gates. There was no relationship between hthem. You do this and i think its an exciting product. But then i start reading reviews and i say i guess i was wrong. Its not exciting. I was wrong its not that interesting. Im wrong to like it. I dont like it anymore. You never had to make the consumer decision of whether or not to buy it. Remember, i did see at my college reunion, i saw someone with a microsoft phone. We know who that is. Hes not abandonning that phone. Hes sticking by the microsoft phone, which is a statement. Back to apple for a minute. The operating margin guy w guide was not good. There is a thinking that as the iphone 5 and ipad mini ramp up in production, costs will go down and so this could be the trump when it comes to margins and improve by next june. We come back to multiple which is nine times, ten times. Cash on hand. 20 billion in cash. Did you get the funny moment its still a Huge Consumer growth story. How many are out there . Calling itv was supposed to be tim cooks hobby. And another one where they said arent you pricing ipad mini too high. Its the greatest thing we ever created. 39 to high. When you go into an apple store do you say this is 39 too high. I got to go to see what dollar tree has. Maybe they have a hewlett packard. Meg whitman, able to underprice that with her tablet . I dont know. I dont know. I havent talked to meg about that. I doubt it. The isi note i thought was interesting. Brian marshall, whether or not international is reaching some theoretical threshold of potential. We all know the infrastructure outside of this country is not what it is in the United States and international showing signs of maybe not keeping pace with the u. S. I remember rick hill who used to be the ceo came on mad money and said go outside of the u. S. Samsung do what apple is. Samsung reports this remarkable quarter. China, tim cook did give that double digit threshold when intel got to onethird china intel took off. You did get the feeling of this, wait a second, if i were in korea right now i would say hong kong and singapore on the trains, on buses, on streets, you see samsungs and more rarely do you see an apple iphone. Samsung results prove it. 18. 8 margins. Highest level in two years since adopting International Accounting standards. They are on a trajectory thats higher but the Holiday Season may be tepid. Who is funding the samsung expansion . Apple. They use apples chips. Intel said you want to stop giving them business and give it to us. I think about what jobs said about intel which is they are plotting upward even though andy grove was a sometime friend of jobs. You mention seasonality at apple. Theres a question about the dearth of products once new year hits and its not expected until spring so what happens between january and the spring when there is no product coming out because its been a very prolific quarter when it comes to product rollouts. I say, okay, would i rather own new corps or apple . Timkin or apple . General mills. Mentioning stocks that have mire multiples. Png. Now, johnson johnson. Ill take my chances with the company. Lets move on and talk citi. Back in the spotlight this morning. Sources telling the New York Times banks chairman Michael Oneill was working behind the scenes for months and that pandit was summoned to a meeting telling him the board lost confidence in you. Pandit then resigned immediately. It made it difficult from what i understand in terms of the relationship with the board, which was quite testy. We knew that day when it was announced something was awry. We reported quickly he had been forced out. I used the word fired. Thats clearly the case. Been waiting for a story like this to give us more. Ive been doing reporting on this and having conversations but this is a nice story by the times in giving us that time line. We wondered when oneill came in and i heard this antidotedly that he wanted this job. It has been said to me that this guy is running citi right now. That would seem to be the case from the reporting thats been done from the times in terms of the process he took to get Board Members over to his side to force out pandit. With pandit i wonder why he went down a route of saying it was my decision. Maybe better having said nothing. He obviously did plan this between 10 03 and 10 07. It was his decision. So certainly he had he said, maybe i dont want this job. Opposed to saying get out at the end of the day, he chose the latter option. The times asks whether the board was unnecessarily ruthless. Are you grateful oneill is there or do you think he acted harshly . Verdict . I dont think we can have a verdict at this point. I think time will tell. There was a feeling within the bank to a certain extent that while pandit got them through difficult periods, he was not a banker and that they needed somebody who was. Well see whether that ends up being the case. I think there was we talked about this day one this feeling they need to get smaller and not smaller as in taking everything in but just more focused and he may have resisted that so well see if it was the right call or not. It was a good quarter sbut they put out numbers saying they were the least productive bank. Its a heck of a read in the times today. When we come back, dairy giant dean foods taking a part of the Company Public today. Rising organic and silk and well talk to the chairman of dean foods. Well take you to a microsoft popup store for the latest. One more look at futures. Da damage undone this morning as a result of a slightly better than expected gdp number. Squawk on the street is back in a moment. A popup store is in times square. There have been crowds at the store and people online waiting to pick up tablets since midnight. Whats the scene like right now, simon . Reporter good morning to you. Welcome to one of the 34 popup Stores Across america that microsoft has launched today taking the message very much the commercial message to the streets. You can see its busy. They opened this at 10 00 last night. Theres 34 Stores Across america that will remain open until 1 00 monday morning. Obviously its the launch of the surface, the new tablet. You know that. Also the launch of windows 8. They want to create the buzz that apple is able to create. They want to take it right on the street. Guess who just turned up . The chief operating officer for microsoft, kevin turner, is with us. Quite an endeavor to put up 34 outlets like this. I presume you had to train this staff. Absolutely, simon. Today were opening up 34 of our stores in addition to 30 of our regular stores. We have 64 stores open. We have lines getting people trained and excited. Theres excitement around windows 8 and certainly surface. I dont see a huge number of surface being sold. All of these bought surface and are waiting to be trained. I see a lot of boxes that have been sold. We had lines down the street in times square. Its been an incredible turnout. We want to take this product to a billion people around the world that use microsoft products every day. What about this idea perhaps that the software isnt quite where the hardware would like it to be . The hardware is coming. Its happening rapidly. Great partners, hp, dell, Great Hardware coming. Were excited about that. Thank you very much. Kevin turner joining us. Back to you, guys. Ill race back down to the Stock Exchange. All right. See you then, simon. Interesting. We understand that initial sales of the ipad mini have sold out within minutes of when they first went on sale midnight pacific time. They did it in minutes. Thats disappointing. I was looking for them to be sold within the first 43 seconds. You know that fellow, that j jamaican, i thought they should have done it in that time. His 200 or 100 time . 100. Hello. Its very disappointing number. I have to take my price target down again. All right. Last night on mad money cramer revealed obstacles standing in bulls way. How should you go today . Mad dash up next. Bob. Oh, hey alex. Just picking up some, brochures, posters copies of my acceptance speech. Great its always good to have a backup plan, in case i get hit by a meteor. Wow, your hair looks great. Didnt realize they did photoshop here. Hey, good call on those mugs. Cant let em see what youre drinking. You know, im glad were both running a nice, clean race. No need to get nasty. Heres your honk if you had an affair with taylor yard sign. Looks good. [ male announcer ] fedex office. Now save 50 on banners. Mad dash on this friday. Things getting crowded in here as we await the ipo of white wave. Well start with expedia. Nice acceleration in hotels. Why do people not understand this country is replacing the travel part of major enterprises. People are now told you go using expedia. This company saves Companies Money and thats why it beats the number. Is there a priceline halo today. People are saying they are still traveling chlg th ingtrav. They want to travel cheaper. Value has been a theme. People keep wanting to sell stocks thinking no one will travel. People have to travel. They travel priceline and expedia. Hotels and airlines too. Not a bad quarter. Really good. When we come back this morning, the home of land olakes is about to go public today. Well get the opening bell in just a moment. Mike rowe here at a ford tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. The dow has not had a losing october since 2008. So far this month the dow is down 2. 5 . S p down two. Nasdaq down four. Well see if we get more inspiration today. The maker of silk soy products and horizon organic milk. Microsoft celebrating windows 8 and windows 8 pcs. Amid the apple news that we talk about, we did not mention potential effect on a pandora. I am shocked pandora is not down. Trading 1. 50 in the market and they could roll out something similar. I dont want to compete against apple. Apple is flat. Exactly flat in todays session. Were also seeing microsoft basically flat and ibm flat as well. For technology, yesterday after the bell when amazon numbers initially crossed apple numbers you thought one would think it would be a bad day for technology. Here we are. Both of those major stocks are flat and nasdaq here is edging toward the green. Amazon up over 4 . Shut up, analysts, and buy us. When you treat analysts like dogs, they are obedient. Sit. Buy. Okay. Rollover. All right. Thats how i feel analysts behave. They dont listen to analysts. Lets try to remember that. It is the decision of investors at the end of the day. There are numerous that believe in the company and the strategy. Apple is a value stock. Obviously they could take the dividend and triple the dividend tomorrow if they would like. It wasnt clear what they were going to do with the cash. For apple, im not trying to be an apple defender or anything like that. When it comes to estimates on apple analysts put forth, bullish. When we say that apple missed, maybe we say that analysts got it wrong. Theyre too bullish. Apple gave guidance lower than consensus guidance was and theyve been doing that quarter after quarter after quarter which is why apple sandbags when they give guidance. Analysts take that and come up with an estimate thats higher that apple may or may not miss. Apple is running the business the way you would run it. You have a hot product. You want to get that product out. You know that people have demand for that product. Analysts say if you had done this december 11th, you would have made a better Fourth Quarter. What are you thinking . Were not thinking about anything youre thinking about. Were thinking about running a company thats a Great American company and understand that were not general mills. General mills will do what theyre supposed to do. 26. Theyll do 27. Cisco is supposed to be 19, theyll do 18. Apple, were not constrained by what you want us to do. Well run the business in a good way. Back in the real world, Goldman Sachs with a nuance trade on caterpillar. Keeps the buy but removes the conviction buy because they say dynamics that prompted them to put it on conviction buy in the first place have not panned out. Where does that leave us . Lets go over that. Okay. They put it on the list and since then its down 13 versus the s p being up 11 . Thats a strike against. We bought some in honor of analysts this morning because it seemed like, wait a second, its down maybe up in the s p because if youre that wrong, then its conceivable that you could be equally as wrong when you pull it. Right. That guy is clearly someone that you want to find out. I used to talk to tommy all the time. He said what youre looking for is an analyst that does the wrong thing so next time he does the wrong thing, you know which way to bet. I always thought tommy and his father were great investors. To go against him seems too logical. On the right side of the scree screen, 19. 5. 18 to 21. 19 to 19. 5 is the best indication right now as far as whitewave. Wwav is the ticker signal on this. Well talk to the chairman in a few moments time. This is in that health food category demanding premium valuations with whole foods. Terrific guy. Ive been aggressive on the show. Ill mention this. I have two at the time they were vegans. The only thing you can have is almond milk. Give me almond milk. This company is sin has the stu vegans love. People who like bad tasting people who like almond milk. Land olakes has never treated me wrong. Right on the money. Bob . Okay. So whitewave priced 23 million shares at 17. That was well above the initial price talk. 14 to 16. Right now we look 14 to 16. Priced at 17. Opening around 19. Should open in a couple of minutes. This is capitalizing on the craze for Health Related products. Silk one of their products. Land olakes. This is a popular food category. Lets just move on. I think melissa had a good point this morning. Did you notice overnight a lot of worry on apple. Apple trades up most of the night. Amazon turns around very quickly trades up. Futures were down but came well off of their lows. Was never really that bad overnight. Came well off their lows once we got the gdp numbers out better than expected. Shorts are very nervous right here. The biggest risk to stocks all week and market has reflected that companies missing on revenues. We have seen some Money Managers all throughout the week suggesting lowering exposure to stocks. Very respected guy on the street talking about that just recently. He had a very good point. They seem more worried about the earnings cliff rather than the fiscal cliff. Thats a very valid point. Ive been mentioning it all week. I had eight Big Companies that i followed overnight of them half of them, five of them missed on the revenue front. Thats been the big story. Thats the main story thats going on. Look at one company guys. Goodyear tire. Love the company. Simple product to understand. Global reach. Did you see the numbers . Key metric is volume. How much are they selling in tire and dollar volume. Well below expectations. Not just in europe. We knew that. China below expectations. Asia. Latin america and the United States volumes were below expectations. They dont provide Earnings Guidance but volumes below expectations in the Fourth Quarter as well. Another good example, erickson, one of the biggest in the world, samsung is a rival. U. S. Sales erupt. Good in the u. S. Europe and china sales were notably to the downside. 2. 2 million getting ready to open on that one. Come back to you shortly. Back to you. All right. We should shift to bonds in the dollar. Lets go to Rick Santelli at the cme group in chicago. We had data this morning. Unlike some of the Previous Data points that just seemed to defy logic, this is stronger than expected. Traders are the cynical bunch and didnt look at it the same way they did the big drop in claims or big drop in the unemployment rate. What they are paying most attention to are the components and things like defense spending which carl brought up but all in all it kind of was in the quasi range. Did it move markets a lot . Not really. However, look at a twoday chart of fiveyear, ten year and 30 year. The five year was selling off more aggressively than the rest of the curve. As you see today, we see the effects of that as the longer maturity rates dropped harder on those twoday charts. If you look at a twoday chart of euro versus dollar, you can see weakness creeping in there. Foreign Exchange Traders say its because on november 1st there will be new derivative rules. If you dont own spanish debt, youre not going to buy them. Derivative changes coming. Last chart, dollar yen over two days. You can see that the dollar is losing steam and had had a nice run. We need to go to bob pisani. Maybe theres breaking news. All right. Were open. 19 here for whitewave. 14 to 16 was the range. Priced at 17. Opened at 19. Well have the ceo in just a couple moments. Back to you. Heres the families. Just get a shot. Babies are here. Families are bringing their children in. This is our man. His daughters standing right here. This is america. This is capital formation. This is the biggest day of a lot of peoples lives here. Shareholders comie ining in. This is what america is. One reason i like being down on the floor. This leads the question of what to do with the company, dean foods. Dean foods owns much of whitewave and intends to spin that off. Dean foods is looking to sell morning Star Business and then it will have its fresh dairy business and what sort of valuation do you put on a fresh dairy business at a time when dairy costs seem to be rising. For dean food shareholders, thats a question with whitewave ipo. On mad money we used a 20 price target using a breakup basically confirmed value. This is a high growth business, white wave. And really dean foods is just the old commodity business. You get a really nice boost for the rest of what they own. I like this stock very much. Does the Broader Consumer environment support growth trajectories in premium . Anything premium in this case premium dairy . If people are trading down from chipotle, for instance. Thats great question. If you can genuinely feel people this is healthier. Milk is like soda and this is a step up. Dean isnt going to say our milk business is bad. The whole food halo is one of the most important left in the market. People dont trade from healthy to unhealthy. No. They want to be healthy. Chocolate milk. They have good chocolate milk. They have chocolate soy. Chocolate pudding is delicious. Well talk to dean food chairman and whitewave ceo after this break. As we head to break, look at the early movers on wall street. 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Fifteen minutes could save you fifteen percent or more. Celebrating ipo today, whitewave. Splitting off from dean foods. Shares of whitewave are trading nicely. Dean foods is down. We did get a downgrade. Lets welcome whitewave. A large shareholder of dean foods. Good to see you. Good morning, jim. Great to be here. You spoke to me clearly. You have a commodity business but inside that commodity business is a great secular grower. Do you think youll finally get credit for one of the Fastest Growing natural food businesses in the world . I think so. Were already getting credit from the time we announce d untl today we added over a billion dollars of equity market for dean foods. We got a great reception out on the road. Really well attended road show. People excited about the Growth Prospects of this business. Were just thrilled. Im a big user. Even though its more expensive than milk, it lasts longer. Constantly throwing out milk. Do you think there are people that are allnatural food or people that say its a bargain longer term because i can keep it in the fridge for a while . Clearly if you are throwing milk away, the servings are more expensive if you dont fact yfan what you dont consume. If you want 30 calorie serving of almond milk on your cereal, thats a great alternative for a lot of people and it taste great. At my house youre not allowed to have that. None of that regular milk. My kids think its an insult. This is a demographic trend, isnt it . If you look at how the product breaks down, it skews young people and young families. Is there a difference between organic milk and regular milk . Price points are different. Is there an actual dirchfferenc . I asked a number of pediatric n pediatricians and you get different answers. If you take chemicals apart from chemical basis and you look at protein and fat, theres no difference in that regard. Organic is how the product is abused. No antibiotics. No hormones. No pesticides used in feed that goes into organic animals. Theres a genuine concern about whether or not those things get incorporated in the food and thats what i think drives the organic milk business. I think the question at this point as we see dean Foods Trading lower off the downgrade to a hold, what happens to that business . You mentioned market cap added to dean foods because the expectation of whitewave. Morning star, where are you with that sale and what happens to the fresh dairy business . As we started into this process, one of the key outcomes of the separation that were engaging in is to leave the milk business with just a rock solid Balance Sheet. Thats what youre going to see is that the milk business is going to be positioned to compete incredibly well. Its a great business. Its a 10 billion business. 38 market share in the u. S. A category thats not going away. Its a big staple food product. Dean foods historic has and will in the future make a lot of money in the milk business. Its a really solid business. Eet to support it in its balance Strategic Endeavors Going Forward. Either here or in europe, how likely is a consumer thats pressured to trade down from organic . Is it a lifestyle choice once you make it youll give up Something Else before you give up that . You saw this morning i have four little girls in my household. We have a picture of them. Theyre hanging out on the Trading Floor. Theres no chance that my wife, molly is going to bring something nonorganic into our household. Theres a few things she believes in where our kids should be in terms of nutrition. Thats where theyll be in our house. As you see conventional milk prices be more volatile because the organic bilk business is on a domestic market, you see people who aspire to be in organic market moving in. Dont you gain a soy milk user and lose a fresh dairy user . I think the reality is that dairy alternative products, soy, almo almond, they are sourcing volume from larger traditional Dairy Products category. From whitewaves perspective, the great thing from whitewave perspective is thats a billion dollar of a 50 billion category. Theres a lot of volume to source Going Forward. I personally believe that the plant based alternatives will source from conventional dairy for the rest of our natural lives. I think thats a trend thats here to stay. You talked about nutrition and importance of it. Obesity is something the country is focussed on. I dont know if you know the numbers but you may. In terms of sales at dean foods, what the are the sales of chocolate milk . I heard its extraordinarily high. Its not Single Digits somewhere. I thought it was higher. In terms of total chocolate milk. I do Love Chocolate milk. You should try true moo ch e chocolate milk product. Less sugar than regular chocolate milk. People said we had this drought. Costs were up. Some of these prices moderating. The scare of drought passed now for you . Its not quite as dire as it was in the beginning. It never really is. The important part about this is corn is a crop. We are going to have another crop next year. Chances are we wont have as devastating a weather situation as we did this year. I think if you look at the longterm here, you know, we should have seen, i think, late 2012 and early 2013 the peak in these grain markets and if we get decent crops, youll see it come back to a more normal level. What happens to morning star . The estimates in terms of the value. Is that what youre looking for . We have said were out there in the market marketing this property. Were not going to comment about valuation until its done. We have a great process and were moving expeditiously through that process. By years end . Whats the time frame on the sale . Were well in our process. They dont have a fixed time line but we hope in the near future well have completion of that process. I know we went a long time without seeing you on our air and then we got you back starting this summer. Welcome back. Congratulations. Thanks so much. Were excited about it. Hope to see you again. The ticker wwav. Whitewave food company. Watching apple this morning. Up a quarter of a percent after still shaking their heads over the price action last night. It was amazing. Some people would have knocked apple. It is about 13 lower not including todays actions from its highs reached earlier this month above 700 a share. It was reached on light volume. Here we are in the rally back from the session on a technical basis positive for the stock able to hold some ground here. Kind of embarrassing to watch the trading last night. People knew nothing and theyre trading furiously. The after hours people who trade in after hours performance, why dont they just take money and burn it in a chimney . Unless you know what the company is saying, you cant trade on the headlines. Just doesnt work. You have to be on the Conference Call which starts much later. We want to check on shares of expedia. You mentioned it in your mad dash. People always travel. Some analysts are saying that a switch to new Technology Pl platform is showing large payoffs. Expect aations were lower. Nice surprise here in trading off that. A gain of 15 . Only because i have that summit do i know that expedia fills up our rooms overnight. They do it. Its turnkey for you. They look inside and you have to give them access to your rooms and they book your rooms. You come in. They cut you a check each day. They take their cut. They automated everything. When you go to a Major Company and say you want to come and stay at our inn. We dont handle that. Thats expedia. Talk to them. Its not every base we get to actually have you comment directly as a participant in the business. I didnt know how powerful they were. I didnt want to let them in. They control our reservations . People skip. People skip. No one can skip with expedia because you pay ahead of time. Shares of priceline up 5. 5 . Yelp. And finally with a few seconds left here, jim, facebook faces the expiration. A big one coming on monday. After everything with earnings this week, how cautious are you in front of it . This is one i wouldnt be surprised to see the stock does not trade down because of that quarter. I think the shorts didnt all cover. This is going to be it for people. Lets get to Rick Santelli in chicago. Consumer sentiment. October final university of michigan is 82. 6. Remember, 83. 1 was mid month. That disappears. That one when it was released was a fiveyear high. This number is darn close to a fiveyear high as well taking us back to september of 2007. 82. 6 our final read and now officially follows the final read in september. Back to you. All right. Thank you so much. The dow almost exactly flat on that news. Squawk on the street will be right back. Between listening toe numbers. And listening to your instinct duff phelps finds the sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. Yeah, you you know, everything can cost upwards of. [ whistles ] i did not want to think about that. Relax, relax, relax. Look at me, look at me. Three words, dad etrade financial consultants. So i can just go talk to em . Just walk right in and talk to em. Dude, those guys are pros. Theyll hook you up with a solid plan. Theyll wa wa wait a minute. Bobby . Bobby what are you doing, man . Im speed dating [ male announcer ] get investing advice for your family at etrade. Hey, its sandra from accounting. Peter. I can see that youre busy. But you were gonna help us crunch the numbers for accounts receivable today. I mean i know that this is important. Well, both are important. Lets be clear. They are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows its better for xerox to help manage their finance processing. So they can focus on keeping the world moving. With xerox, youre ready for real. Between black and white on keanswers. World moving. And 1,000 shades of grey duff phelps finds the sweet spot that powers sound decisions. Duff phelps Financial Advisory and Investment Banking services. Welcome to the world leader in derivatives. Welcome to superderivatives. It is with profound sadness that we report a cnbc tragedy. Our head of operations here two children die. There are no words to convey the magnitude of this tragedy. We can come together to express our unwavering support for a friend in need. All of us at cnbc and Nbc Universal will be there kevin, marina and their family. We ask that you keep kevins family in your hearts. Welcome back to squawk on the street. Lets get the road map for the next hour. A lot going on on this friday. Well kick it off with apples Fourth Quarter miss. Will the iphone mini give the next quarter a boost and how many iphones 5 do you need to sell . Disappointing the street so far but with Third Quarter gdp coming in better than expected, are we gearing for another move higher . Amazon posting the first loss in a decade as operating costs are up 28 . Are concerns over the miss overblown and how will the kindle stack up this Holiday Season . Can a Las Vegas Hotel room actually make you feel better. Mgm grand thinks so. Well take you live to sin city for the launch of a new wellness initiative. Back to Fourth Quarter results which disappointed as ipad sales missed targets. Revenue above estimates. Shares of apple are trading slightly lower at this point. Guys, good to have you both. Good to be here. I want to ask you first, do you think that the price actually seen in apple traded lower in postmarket session yesterday and then it recovered and its holding in there. Is it a reluctance to not want to be out of apple shares as you go into what has been a Strong Quarter for apple . I think there are two things. Bulls are happy about revenue guidance and management comments that they are making more iphones today than they were earlier in the month. Theres clearly good indication that theres going to be strong supply which has been a factor in the phone sales. On the bearish side are people who can pick on things like margin guidance coming down quite a bit. Its highly understandable. A lot of new products. They expect 80 of the revenues to come from new products. Lower margin because of where they are in the life cycle and theyll ramp up from here. Its a great opportunity to buy. We think theyre going to have a great Holiday Season with iphones and ipads and theyre going to do well this quarter. Margin will have upside based on what they guided. Are these things understandable or are we making up excuses for apple . 36 in margins for the fiscal First Quarter. That is the lowest level in about four years. They have a lot of new products. They cant keep up with demand so you risk the customers who cant get hands on an ipad mini. Might go to a kindle fire or a nook. Thats a great point. Theres been so much new products and this is an opportunity for some of the competitors and what i think is really interesting, my take away is that even if you are going to look beyond this next quarter, think about this. For calendar 2013, well be on the verge of something we have never seen with apple before and that is that we may have a complete year of to see what the true demand is. We really havent had a quarter of where we havent had supply issues until about a year ago when the print was 1378. Im thinking consensus is 5053. If they solve the supply issues, i think 6065 over the next year in terms of earnings and thats the next big thing for apple is getting the supply chain to match up with demand and lets see what this company can really do over a course of 12 months just not a quarter or two but what they can earn over the next 12 months. The numbers are higher than what people are thinking about right now. Somebody emails us talking about worries about apple not being as hot a product overseas. She says she has a german friend who said you should go out and switch from a microsoft product to an apple product. No. Its too expensive. She said why dont you want to do it . I need office products. She said you can get office on a mac. She said it was like pulling teeth trying to get the european to graduate into apple. Is that reflective of the broader environment overseas and is that going to be a problem . Clearly its the high end of the market. Clearly a lot of followers who will follow it and keep buying the new product. And in overseas market youll find a lot of people who are more cost conscious and will buy products that will be cheaper but a different type of value. Those are two different types of markets. We think within the market there is a lot of opportunity. As david just pointed out, next year is going to be great year for them because they can achieve demand and supply balance in most products. Its going to have to be. If you have a 750 price target from here, you are suggesting that the stock can rise 25 . Given where we traded yesterday and the fact that momentum has been lost from it, that may seem most people watching this would hope that to be true. The skeptics would say momentum is out of this stock. Who else will buy it . Its basically as we go into the Holiday Season, we get more data points about iphone production. Theyll launch in china this quarter. It will be in over 100 countries. As we start getting data points they are getting into the Holiday Season where we see a lot of people that cant get back into the stock. Thats what we think going to next year well have more distribution of the products. It should help us get there. When you were speaking about calendar year 2013 being a big one for apple because youre on the verge of seeing what true demand is, i read that as youre entering a period in which theres uncertainty because theres no major product upgrade or a product cycle except for maybe apple tv and maybe apple tv and that will happen likely in the spring of next year which leaves many, many months in which theres no huge new product cycle to drive apples earnings. In your view, is that going to be a period where the stock doesnt have a catalyst . I dont think so. What weve seen over the past few years is every now and then well get a clean earnings report, supply and demand is in balance an we have a new significant product upgrade. People sit on their hands and defer purchases. If you think about the product lineup right now, the oldest product right now is a mere four months. So again, this is going to be a different time. Not a different time frame but reality with apple where we see the true earning power of this company. I submit between now and christmas, its going to be like running of the bulls or running of the bears if you will. Within just one month, all were going to be talking about on apple isnt new products. Its how crowded the stores are. Its a different paradigm if you will. A different mindset. I welcome it. I think it will be surprisingly good for apple bulls. Great to speak to you both. Thank you. Speaking of apple, the tech titan is reportedly in talks to license music for a custom Radio Service likely to be a direct competitor with pandora. Julia boorstin joins us now with more on that story. Thats right, carl. Apple and the music labels are in ongoing talks to launch an ad supported streaming service which could present a threat to pandora. Apple teedeals are on track to final before the holidays. Look at that drop. Its rebounding this morning. Jpmorgan out saying pandora is a buy as it will continue to make money on mobile advertising regardless of apple competition. Pandora stock dove in september when news of apples move into the space was first reported. Pandora dominates Internet Radio and is available on more than 600 devices but about half of its listening is on apple devices unlike Internet Radio which set federal rates, apple negotiate its own deals to offer ondemand streaming which would be similar to another free service. Apple would pay the label licensing fee and ad revenue which is a point of concern for the labels as apple has neither a dedicated sales team or nor the best track record with ads. Apple isnt the only tech giant threatening pandora. Last monday microsoft offered the free service. Apples move into this space makes sense. It wants to profit from the ways people listen to music on its devices and like facebook and google, it sees opportunity in this new surge in mobile advertising. Carl . Julia boorstin, thank you so much. Incredibly important development. It keeps cropping up on the program. Theres something generic happening here. Let me give you another example. Apple i believe is also working on something called i travel which will be an Online Travel agency for want of a better expression. Google and apple and microsoft also going into this particular area of internet with music. All encroaching on the areas where we see so many small specialized intercompanies at the moment and a lot of them i see you are still there could be in difficulty further down the line. We dont know where apple will go next and what business it will challenge. Absolutely. I think the thing with apple is that it wants people to stay within its ecosystem. It wants to give people a free Music Service to sell them songs rather than people listening to pandora on its iphones, it wants them to stay within that itunes ecosystem and thats how it is trying to do that. I think what we see with microsoft as well is all of these companies are trying to keep people on their devices in their ecosystem using their search tools so they can capture you will of that revenue opposed to going to expedia app in the example of travel. Huge moving forward. Good for all of us to have all of these guys fighting over our a volatile start to earnings season and race for the white house just days away. What does it mean for the markets . Well check in with pimco and get their take. And east coast is bracing for Hurricane Sandys landfall. We have a live report in just minutes. A crash Management System and the worlds only tridion safety cell which can withstand over three and a half tons. Small in size. Big on safety. [ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. Tight turning, fun to drive 2013 smart. We call this our mission. Mpany, green toys teaches children that if i have a milk jug and i stick it in the recycling bin it can turn into something new. Chase allows us to buy Capital Equipment to be able to manufacture in the states to the scale we need to be a global company. With a little luck green toys could be the next Great American brand. Find whats next for your business at chase. Com mainstreet neil joins us this morning from beautiful newport beach. Good to have you back. Great to be here preside. Bill taking his parallel between our own fiscal environment even farther comparing us to one of the characters in breaking bad. We know how that turned out. With that in mind, how do you hedge the possibility that the cliff is not at least fixed for the shortterm in the shortterm . Our base Case Scenario is that roughly twothirds of the fiscal cliff will be deferred. We think about 450 billion will get kicked the can down the road for six months or a year and 250 billion will end up still hitting the economy. Our outlook is one of muted growth. It should not tip us into recession. Theres a lot that can go wrong. The part thats really hard for us to quantify is how much damage democrats and republicans will do to the economy with their fighting. Just like a year ago. We didnt default on the debt. They raised the debt ceiling. That was the right thing to do. It kept businesses and individuals on the sidelines. Thats the part were afraid of right now. Theres already cover of the Washington Post this morning from nam saying uncertainty we have seen cost us a million jobs. Sounds like youre talking about close to 0 growth opposed to 2 . Maybe around 1 , 1. 5 growth next year. For the next several months, there arent many upside scenarios. The election obviously has a lot of uncertainty. Theres still a lot of uncertainty coming out from europe. Will they keep the eurozone together and reform economies. The next few months i would expect to see increasing volatility toward the end of the year and not big catalyst for upside in equities. There is Downside Potential and thats what keeps us very cautious right now. Theres a consensus view that i hear more often these days. You may have heard it. I think i know your answer. Basically it goes along this line. We can take the fiscal cliff. If youre worried about the deficit, we have 5 trillion reductions over the next few years that will take care of that. Do you think thats an argument thats got anything . Not a rationale argument. If the full fiscal cliff hit us, we would be back in a recession. Its very hard to tackle these major Structural Reforms when you are on your back, when you are fighting from a position of recession. Its much better to tackle these even if you are growing moderately youre in a much stronger position and so we need to keep the economy growing in the shortterm. I think bernanke is doing whatever he can with Monetary Policy to try to buy time for the fiscal authorities to make longterm Structural Reforms but then we need to tackle entitlements and tax reform in a comprehensive manner. Thats the upside. If the congress and executive branch can come together and make tough choices, not easy choices, tough choices, then the markets will rally and well see upside from here. I want to go to your stock picks and specifically samsung on a day when we had Apple Earnings yesterday. Samsung earnings overnight. Is samsung in your view an antiapple pick . Do we have to see apple falter for samsung to succeed . We dont think so. The Smartphone Market is a huge global market. Theres absolutely room for both samsung and for apple to do well and to thrive and so samsung is still one of our top positions. We trimmed our apple position over the last few months and only have a very small apple stake today. We still are longterm optimistic on samsung and at the right price, we may become buyers of apple again. What happens to samsung if apple chooses to cords with samsung in terms of using it as a supplier of components. Thats important. What if china stops doing business with america. Its a complicated business that are interwoven. Its in apples interest to have a strong, healthy samsung as a p partner and supplier and vice versa. Good to see you. Well see you next time. Lets stick with the subject of earnings. Keeping a record of which companies are coming up, it says here with the worst excuses for their big misses. Do you still blame the ceos . You know what . It depends. Well blame all sorts of things here. Deck the company put out bad guidance after the close yesterday. They didnt just blame the weather. They blamed the hot weather, mild weather, cold weather and the warm weather. In fact, deckers mentioned weather 40 times on its earnings call. While they were at it, they blame the economy in europe, Economic Uncertainty and growing trend of buy now wear now which pushed back selling season. In other words, everything wait a minute. They also blamed the olympics. While these are legitimate excuses, the critics think these excuses deflect from a more critical issue at deckers and maybe the shoes are not the fashion trend they used to be. A bigger issue with deckers is who knew what when . The stock as we reported yesterday after 4 00 took a steep dive in the last 30 minutes of trading just before the bad news hit. Meanwhile, over at Diamond Foods which is a name we havent mentioned for a while, it has nothing to do with excuses but it has everything to do with explanations which were still waiting for. In the midst of earnings news yesterday, the Company Announced it is still working on its long awaited restatement of two years worth of income statements in the wake of improper accounting of payments. Now includes two additional quarters. The company has been working on trying to keep itself listed on the nasdaq. Still in an interim period there. Simon, back to you. Buy now, wear now. I remember that through the weekend. You do that, simon. You buy now and you wear now. Do i . I would imagine. You are a fashionable fellow. United Airlines Pilots are fuming after a removal of a safety device. We have details next on the program. Still to come, a vegas first. A shower infused with vitamin c arriving in sin city today. How does that help you . Would you pay 20 to 30 more to stay in a Hotel Designed for the Health Conscious traveler . Well take you live inside the debut of the wellness rooms at the mgm grand next. Wo. And his new boss told him two things cook what you love, and save your money. Joe doesnt know it yet, but hell work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. Hell start investing early, hell find some good people to help guide him, and hell set money aside from his first day of work to his last, which isnt rocket science. Its just common sense. From td ameritrade. Its just common sense. Mike rowe here at a ford tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. They optimized our data center and got us on the cloud. They even sent tour champion, paula creamer, to help with charles swing. Maybe dont do that. Thats not good. No his job isnt to look good. Its to make the clients look good. Oh my goodness i cant help you. Thats what i thought. If your tv were a glass of milk, zeebox would be a Double Chocolate chip cookie. When they unite. Magic. Cookie [ male announcer ] and anyone who thinks otherwise doesnt deserve the extra chocolate chips. Download zeebox free, and make magic when you watch tv. Melissa, since 9 11 cockpit safety has been a priority to the pilots wonder why united removed this which came preinstalled as Standard Equipment. United took possession of the boeing dreamliner, first of many it would get last month and pilots confirm the Second Barrier is gone. It drapes across the galley to prevent someone from rushing in. Why take it out . Federal rules do not require the Second Barrier. In this merger, the planes coming in from united almost all of them have it and none of the continental planes do im told. The airline tells cnbc flight security has various components with secondary barriers being one that we use in different combination. Security matrix can vary from one type of aircraft to another. Were thorough in carrying out our security responsibilities for every flight but safety and security of our employees and customers are our top priorities. Pilots are not happy. They sent management a letter saying if safety is a top priority, stop stripping them of the safety measure that guarantees cockpit is protected. John russell is a united pilot and union representative. To remove the barrier, what are you telling your passengers . What are you telling your employees . You tell them safety is a priority. You are telling them Something Different. And this letter was written over a week ago to united ceo. He came over from continental in the merge. Hes the widow of united captain whose plane was flown into the south tower on 9 11. I was indignant. I was furious. To install these as Standard Equipment in an airplane and for United Airlines to pay extra to remove these barriers when these barriers are needed. She has not heard back from the airline. Back to you. Important story to watch. Thanks so much. Amazon posting its First Quarterly loss in a decade. Shares are higher this morning. Whats behind the move and how will kindles stack up against the latest mini addition. One hour through the trading day. These are the stories were talking about. University of michigans Consumer Sentiment index posting below the forecast and down from mid month levels. Devry shares are soaring. And roller coaster debut for whitewave foods opening sharply and then wiping out its gains. Trading 1 below the ipo price of 17 a share. Dean foods from which it was spun off trading down by 11 as well. Now back to another earnings miss from last night. Shares of amazon are up today after falling slightly in afterhours trading. The First Quarterly loss in nearly ten years was posted. Companies saying the law stem from the ownership stake and Living Social. Anthony is internet media analyst with barclays. Welcome back. How are you doing . Happy friday. Same to you. Your report titled great Consumer Brand troubled stock. Walk us through that and then tell us why its up today. I think its up today because you have some relief that earnings revisions werent negative. They also werent positive. You have a company that trades at 100 times next years earnings. 50 times 2014 with Revenue Growth starting to decelerate just a bit one would think that we should need positive earnings revisions for this stock to really work and fulfill that high multiple. Your current target, you were at 230. Are you still at 220 . Yes. Our target is based on 25 times Free Cash Flow. The thing here is that the thing here is that people think theyre going to get a positive earnings revision in january because we got that earnings revision this year, right . So the stock actually was great in the First Quarter of 2012. Hedge Fund Investors i talk to want to own it into the end of the year. If you look at performance, the stock went down each month of the year last year and it usually declines in december. It was down in december each of the last three years. You may not get gratification or positive earnings revision until we get to january and of Course Company spending aggressively fundamentally on media content and data centers. It cant even guarantee that well get a lift in operating margins when we get the next report in january. Some uncertainty here. I many, you know, it may have gone down a few months but its gone up a lot over the last year as we see right there, anthony. Investors seem to have more patience with this name perhaps than any other name out there. Why dont you believe that will continue to be the case . Its a fantastic Consumer Brand and people that use it love it. The thing is youve got a company that is taking corporate profits and excess Free Cash Flow that may go to equity holders and reinvest into lower prices and convenience to the consumer. They are sucking out margins from the rest of retail. The question is when do shareholders get gratification or returns on amazon strategy . Does satisfying the consumer always mean that in the long run youre ultimately going to satisfy the shareholder . Im sorry, shareholders are greedy and want earnings and Free Cash Flow. We dont have that fl a. Rom ama. We have to look out two to three years to see the possibility of that. I think people have been patient with it because Revenue Growth has been awesome. Now we saw in the Third Quarter that Revenue Growth is slowing just a tad. Fourth quarter guide is for another decel. If the Company Grows at mid 20s or low 20s instead of high 20s, you have a top line decel. I love the brand. I love the service. Im having hard time getting into that shareholder value. A 2 million fine. The citi fine, the journal says, is for disclosure of confidential information regarding facebook. Mahaney terminated. Well bring you more if we get it. You own more than 34,000 shares of amazon. Channing, if youre going to go short into the Holiday Season on amazon, you better be sure of yourself, right . We take a little bit longer view than anthony. You know, what were focused on is Gross Margins. Thats what is really going to determine the value of the stock Going Forward to us. Amazon has been in a transition for the last two years. Really since 2010 its been investment. Investment and Fulfillment Centers and investment in technology. We see that Management Team is making a big investment in Digital Media. We think that will pay off. Theres a Huge Investment there. Margins are pumping along the bottom. If you look back to 2010, margins were in that 4. 5 range. We think the stock will get back to that level once we get through the investment phase. The key is how successful is digital going to be . Digital media is 13 of revenues. If they continue to grow, they are higher margin product categories and stock could see higher margins in the future. You have to be patient. Can i speak to that . Is there a point at which even shareholders say you cannot its your money. Were not going to let you spend it the way you want all of the time. 100 . Is there any discipline imposed by shareholders . Its why its a 1. 5 position in our portfolio. They have a great track record. People question when they brought thirdparty retailers in. They questioned them with amazon prime and he proved them wrong. He does have some wiggle room. Going forward is going to be tough. As we move into digital, wyour not competing with apple and youre competing with google that have established networks on Digital Media space. The road will be tougher. Its a challenge. Its not a foregone conclusion that amazon is going to succeed over the next ten years. Theyre in position now. We see margins going up. Kindle fire is getting traction. Necessary evil to get into this media space. Its a big question mark. Can they be successful in media . If they can, we think stock will move higher. If they have to rely on lower margin general merchandise in electronics, the stock is overvalued at this point. Anthony, i want to go back to the news that we just broke that mark mahaney of citi has been terminated. The termination follows the 2 million fine from regulators over the disclosure of information surrounding the ipo. As an analyst, what sort of information could you imagine that could be surrounding an ipo and should every analyst who covers facebook be a little bit nervous at this point . I think you know that i cant comment on that. I just cant comment. Can we go back to the amazon . I want to just talk about what was said about the bull case on Gross Margins. Its interesting. So one of the bull cases is that amazon Gross Margins are expanding and they have in the last two quarters. Operating margins are not. So you have cyclicality in the margin that will come back. The reason they are expanding is because of third party. Fulfillment stand alone. That requires investment in big Fulfillment Centers. You cant look at gross margin in isolation. Same with amazon web services. All of the data centers that amazon invests in require operating expense. On the media content, you look at the content deals theyre doing for amazon prime. Thats a free service. Theyre giving that content to the customer. Its a Subscription Service in some ways because you pay for it with 79 in prime. We have seen with netflix that business is not necessarily an Economic Business in terms of returns. So i dont think i have sort of changed my mind on this. I dont think we can look at gross margin in isolation for amazon Going Forward. We have to look at the fully loaded operating margin. I would agree with that, anthony. You look at costs to get sold and thats not include. Third party sales are a big part of that Margin Expansion story. I think the key is that digital. If they can be successful there. I would also say when you look at the Fulfillment Centers, you know, theyll build that out and at that point there will be less investment there. So thats also going to boost. Is it going to be a game changer . Probably not. The investment mode theyre in right now is impacting margins and we can argue about what extent of that will be. I would look out if youre investing in a stock not at the next quarter but next year or two if you want to play the stock. What fun is that . Anthony, thanks so much. Well see you later. Thanks. Have a great weekend. We do have breaking news on facebook. Kayla tausche is back at hq. Federal agents arrested a new york state man who has in the past sued Mark Zuckerberg claiming he has a contract granting him 50 of the company. Now, we expect the details will be unveiled a little bit later today. It is believed that the charges do relate to that disputed contract. He sued facebook back in 2010 claiming the contract went back to 2003 and alleged contract between him and Mark Zuckerberg. Facebook denied this claim saying that he doctored documents. The legal team quit in june. We havent heard much since then. We understand hes been arrested by federal agents today. Thank you very much. Meanwhile, extraordinary new details of how he was ousted from citi. Should the bank have been more fort coming from the beginning . The former s. E. C. Chairman will join us next on cnbc. For your legal matters. Maybe you want to incorporate a business youd like to start. Or protect your family with a will or living trust. Legalzoom makes it easy with stepbystep help when completing your personalized document or you can even access an attorney to guide you along. With an a rating from the Better Business bureau legalzoom helps you get personalized and affordable Legal Protection. In most states, a legal plan attorney is available with every personalized document to answer any questions. Get started at legalzoom. Com today. And now youre protected. Get started at legalzoom. Com today. Wooohooo. Hahaahahaha oh. There you go. Wooohooo. Hahaahahaha im gonna stand up to her no youre not. I know. You know ronny folks who save hundreds of dollars switching to geico sure are happy. How happy are they jimmy . Happier than a witch in a broom factory. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. This morning in the New York Times, pandit was presented with three options by the Company Chairman according to the report. Resign now, resign later or get fired. Harvey pitt is with us. Good to get your insights. We had you on during the day in question. A lot of questions about the events as they went. Times reporting here is most likely quite accurate. Was there an obligation on the part of citi to tell us what was going on opposed to presenting it as his decision which appears to not be the case. This makes a mockery of corporate disclosure requirements. I believe it will be seen as a violation of the federal securities laws. Why . The process described here is one thats gone on at Many Companies in the past. Its not that rare that when they want a ceo out, they tell him but they plan for it in a better way perhaps and it is presented as a voluntary resignation. Why is this any different even if it unfolded over a very short amount of time. What makes this different is that there were specific concerns about pandits leadership and that this was a board decision. Investors and the investing public have the right to understand what the boards processes were. The fact that pandit chose an option and therefore chose voluntarily to leave is one thing. The rationale for his departure and the fact that it was at the boards impetus is something that should have been disclosed. I dont think you can play fast and loose with information like this which is material to the public. Although the stock didnt actually do they have a case to be made here . They didnt really suffer losses. The stock did not react negatively to the news itself. Does it come into play at all . That would only come into play if private parties sued. The s. E. C. s concern would be is this the way we want corporations to handle their disclosure obligations and in particular the person who seems to have made the most affirmative statement was mr. Oneill who said this was absolutely voluntary as i recall. If thats true, he has a lot of explaining to do in the fact that the stock didnt move is not relevant in terms of what the disclosure obligation should have been. Harvey oneill is the chairman of the board and so e, you know, if it is found that there were federal security laws broken, what could happen . What could be the penalty . What could be the punishment . Do you think the s. E. C. Wants to make this an example because it involves a chairman of a board . The s. E. C. Has a lot of authority including the power to seek from a court an order that bars any person that violates the security laws and commits what is deemed to be fraud from serving as an officer or director of a public company. I dont know that this will be that kind of a case and all of the facts will have to be assessed but it does strike me that his conduct clearly contradicts what the spirit and letter of disclosure law is supposed to be. I think we sort of covered this on the day of but the difference between a regulator taking aim and shareholder filing a suit as a result of these facts, does it make a difference . Are they open to shareholder litigation . They may be. The fact that nobody suffered any damages makes this an unappealing shareholder case. Some might argue that that would be relevant even if a regulators case but the regulators will look at the nature of the conduct and the shareholders would look to recoup losses. If there werent any losses, theres really no lawsuit. Are you saying they would have been better off saying nothing . Is there an obligation to say anything or only because they said something that seems to have not been true . This is an affirmative it seems like its an affirmatively false statement. The law doesnt necessarily distinguish like between those. I would think they would not have been better off saying nothing, but given the choice between saying nothing and lying, i think saying nothing was a better choice. Usually is. Harvey, appreciate it. Thank you. Still ahead in the show, can a Las Vegas Hotel room actually make you feel better . The mgn grande in sin city hoping to do just that. Well take you live for the latest on mgms stay well rooms. Vegas gets a first today. Hotel rooms designed to make you more healthy. The 44 wellness rooms debut at the mgn grande. Each room has features designed to reverse jet lag and better regulate your body, while they say removing toxins and allergens. The hope is that healthconscious travelers will pay 20 to 30 more to stay in them. We have the features, cofounder, and president and coo of mgm grande drove the project through. Both of them joining us live. Thank you for joining us. We actually sent a camera crew to the rooms. Great. The first thing we shot here is the shower. Yeah. That injects look at the shower injects vitamin c into the stream. What is it for . Vitamin c is great for your skin and hair and scripps cletr chlorine from water. Guest enjoy smoother skin, better hair. The lights that mimic dawn and blue flashing lights that remove jet lag. The dawn simulator is the scientifically proven best way to wake up. It gently lets you awaken. And the flashing lights make you more alert and energetic. All of the Major Hotel Chains are now massively investing to innovate in this sort of way. Well see that over the next year, 18 months starting to come out. Why did you choose this idea . Uf got a big choice at mgm. You could take any brand, any innovation. Why this . Were constantly looking at ways to improve the guest experience. At the same time improve our growth opportunity. And we were so impressed with the research theyve done on the products, and the studies weve done, we found that there is a customer that is inspired by this. They want this when they travel. This is their lifestyle at home, why not bring it to las vegas . Will they pay 2 or 30 20 or 30 open . As you open today, are you able to price at that premium . So far weve booked over 300 room nights. Todays the first checkinment and we thi checkin. We think the premium were charging well be able to get. How much is the upgrade to make these well not rooms . Im wondering how long it takes to recoup the costs. Its hard to dedicate the cost of the wellness rooms because its part of a 1160 million room renovation that we just completed. Was combined in the efforts with the 44 rooms that we turned into staywell rooms. Youve done specific work on. This you believe the cost, Additional Capital investment, be it in hotel rooms or real estate, is quite small. Therefore, it is a huge return for entrepreneurs and therefore Major Business or for a lot of people we do believe that. Weve learned a lot from the greensboro indust green industry and enhancement costs to green rooms. Its comparable to green or mood certification. Green saves energy. So it saves on costs. Wellness rooms, you cant it doesnt trickle down to the business p l, does it . How we think the Market Opportunities for wellness is tremendous. Its the Fastest Growing industry in the world. There are traveloriented wellness consumers. Let me ask a final question. Groups and corporates were the first part in 2008 and theyve been back i hear the competition for conventions, putting it away for municipalities away from vegas is huge for next year. How are your bookings . Theyre absolutely bookings look strong for 2013 and going into 2014. Theyre almost to the point where they were before the downturn in the economy. So things are really looking good with the convention business. Nice to meet you both. Thank you. Thanks. Thanks you to. See you tonight. Simon, see you in 30. Well talk a little bit of europe, as well. If youre just joining us well do the tape in a second. When you take a closer look. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Welcome to hour three of squawk on the street. Heres whats happening so far. We need to put in place a framework so that markets look and see that after the economy recovers, whenever that comes, it will take time. After the economy is fully recovered, that the nations finances are sustainable. We need to have both sides kind of go one hand, 250,000 in income, on the other hand, effectively infinity, they need come together in some way or were not going to have a deal. Our first look at Third Quarter gdp, 2. 0. 2 . Youre in some weird mode. Whatever is said, if its positive, its a lie. Im not buying that. These are good numbers, reverse the market. Its for real. Some of the reviews have been even rougher from microsoft which this two presentations yesterday as we know. One for windows 8 in terms of running it on Everything Else, then for the surface. Some reviews have been brutal. Is 39 too high . When you go into an apple store, do you go, this is 39 too high . I got to go i need to see what the dollar tree has. [ bell ] [ applause ] now our outlook for the u. S. Economy is one of muted growth. But Strong Enough growth that that 200 billion or 250 billion fiscal drag should not tip us into recession. Good friday morning. Welcome back to post nine of the new york Stock Exchange. Check the markets on a day where the dow is in the red. We started the day out relatively flat, up a little bit. We loftst some ground. S p 500 down 6. 5. White wave foods, the dean foods spinoff, making its trading debut at the nyse. Shares opening at 19. Pulling back a bit, trading around 17. Dean foods also down sharply. The ceo was on the show earlier, addressing the companys Balance Sheet. A category thats not going away. Its a big staple food product. And dean foods historically has and will make money in the milk business. Its a solid business. Now its going to have a really solid Balance Sheet to support the Strategic Endeavors Going Forward. Meantime expedia, priceline, some of the biggest gainers after expedia reported better than expected results. And benchmark citing to buy at a solid execution. A tale two of apples. The company missing earnings but selling enough white ipad minis to sell out in about 20 minutes. Well find out which story should matter most to investors. Plus, just as facebook seems to have found its footing, another lockup expolice statlo. Should you sell going into the weekend . Then Hurricane Sandy bearing down on the east coast. Were tracking the storm and with several refineries in the path, what could that mean for oil prices . And apple on track to launch its own internet Music Service. The news spooking investors in pandora. Well find out if pandora really has anything to fear from apple. Thats coming up. Well starts wi with breaki news. Internet analyst mark ma haney being dismissed from citigroup. We have more what turned out to be a barnburner of a story. Carl, the termination comes in the face of a 2 million fine that citigroup faced from a massachusetts regulatedor, largely concerning failure to supervise analysts. Mahaney as well as an unnamed junior analyst in a Consent Order we just reviewed from the state of massachusetts, noting that mahaney gave reports to a reporter at the french capitol over revenue estimates for youtube, a subsidiary of google. Revenue estimates that had yet to be published by by mahaney. The junior analyst shared a preview of the forthcoming reports on facebook even as citigroup signed a nondisclosure agreement with the social network in conjunction with that poip. T osteoporosis ipo. When asked whether that could be published, he said, my boss would eat me alive. An interesting story for citigroup and the analyst community. A lot of them are quick to make comments. Mahaney, according to the Consent Order, made the comments to the french reporter. Then when the approval was signed said he did not respond. Going back on his words. A very interesting read if you pull it up. Thats the latest now. Also raises questions about the degree to which Senior Analysts like mark who was perhaps the biggest gun at ci citi in a lot of ways responsible for the junior team. I think thats exactly right. Obviously the junior if you go and read this email correspondence, the junior reporter was merely sharing it with a reporter at tech crunch to give a sense of how the street was viewing the facebook ipo. When you share the information with a reporter, youre opening up a whole other can of worms. It largely raises questions about maybe the culturn that group, carl. All right. Thank you very much for that. Now to the ipad mini. The newest gadget sold out on line. John ford tracking numbers, here with the latest. John . Hey. We have at least one sign of a strong strong for the ipad mini less than an hour after opening at 3 00 a. M. Eastern. The white mini sold out. Apple wont be shipping many for weeks. Many who preordered the black version are being told it will arrive a week from today. Its hard to read too much in the first hours, apple tends to make fewer white versions and sometimes has a harder time puttingle this togeth le thilel putting them together. Selling out of white minis might not be a huge deal. Two signals ill be looking for. One, will apple put out a release letting us know how preorders are going . Two, well have to look at apple stores a week from today. Will there be lines . Will apple staff up like its an iphone launch . Even if the ipad mini preorder demand looks strong, there are a couple of things to keep in mind. Apple made it clear yesterday that the profit margin on the minutesy y mini is blow the market average. Its clear it uses the same materials as the iphone 5. This is not cheap. If youre an apple noinvestor, i look at this as apple spending a ton of money to push devices out and capture holiday demand . Is this an invest that will pay off in the medium term . Or thcould this be the new realy for apple margins . From what i heard yesterday, it sounds like this is an investment apple hope will pay off later. That is a key, key question, john. Thank you very much. Something that hasnt happened in more than a decade. Apple missing earnings expectations for the Second Quarter in a row, and the Company Warns of a drop in holiday earning because its gadgets are so expensive to make. Should you be bobbing for apple at these levels . Eric jackson is an apple shareholder, founder of iron fire capital. Still has an aggressive longer term priets targprice target an scott kessler, cut his price target from apple to 800 to 700. Good morning to both of you. Eric, everybodys worried, three quarters in a row. Margins down. John asks the question, are we in a newi iity for margins . Do you care . I think margins are obviously a concern. And nestedably theyre going to go down because im expecting that the volumes that apples going to sell of all their products is going to increase over time. So how they manage that will be a key thing on earnings which is obviously a driver of the stock. Now take a step back in relation to analysts earnings for the quarter. Last quarter they sold nearly 27 million fountains. Million iphones. In the quarter, there were 440 million sold worldwide, smart phones or dump phones. Apple hedge e only honly has a. I think its reasonable to assume that more people will buy smartphones and apple will get a chunk of the business. You know, if they only got a 35 share of that larger number, were talking about 155 iphones in a quarter. And i think thats where we are headed a few years from now. Yeah. Scott, going from 800 to 700, thats not an insignificant move even though you keep the buy. Whats your thinking . The thinking is pretty clear. Over the last number of quarters, theyve shown that the business is more product and hit driven than its ever been. That increases the rate of challenge in terms of execution. Also increases the volatility in the stock. Nonetheless, we expect a very big and successful Holiday Season for apple. Really no other Company Comes close at this point. And now we think with the ipad mini, folks who were looking for a form factor smaller than the ipad have somewhere to go other than amazon and google, for example. Yeah. The big chats e chatter was pattern recognition. Theyre looking for the sandbag. Theyve done this before, cautious guidance, come in three months later and beat it by a mile. Is that trend getting tired . Are they really going do that again, scott . It remains to be seen. It seemed like the guidance particularly in terms of gross margin which john was talking about earlier, that seemed particularly conservative. We understand that the ipad mini has higher costs, a new product. Sos the iphone 5. And sos the new ipad. But the reality is that a 400 boun basis points sequential reduction seems important to us. You said 1,600 in three years or five years . Three years. Three years. Youve also pointed out that we have seen corrections in the stock beyond the 14 that we hard to remember its been so long. You say weve seen corrections as severe as 42 . Are you calling for that in the near term . I mean, how much damage can be done between now and 1,600 if thats what happens . Its hard to say. I think now were about 14 below the alltime high of 705, just a month ago. You know, my my gut feeling is that were probably close to the trough here on this particular pullback, about 14 which, again, not that all significant when you go back. I think since in the last eight years there have been between pullbacks of between 17 and you know, in 08, 52 in terms of pullbacks. They were always followed up by huge runups, sometimes a doubling of the stock or more. I think probably were in a Holding Pattern at the beginning of this quarter until we see how the minis sell. I funding people get a sense that the minis are a hit, you could see the stock start to ramp back up again toward the end of the year. That mentality changes quickly as we know. Guys, have a great weekend, thanks for your insight on a tough quarter to analyze. Scott kessler, eric jackson. At least one company is trading at some alltime highs. We have that back at h. Q. Brian . Eastman chemical dating back to 1994 when it split from kodak. They reported late yesterday eps was a beat, revenues light. Weve heard that story obviously in the entire earnings season. The key here is they increased their eps guidance not only above what they said before but also well above consensus. Its trading with heavy volume. Back to you. All right. Talk to you in a bit. Now to the cme group. Rick santelli talking some global stimulus and a lot of people, rick, think there is more to come in the near future. Absolutely rights. Absolutely right. Almost as if the batman sign goes up, a big sign in the sky that says we want more stimulus. You know what, it isnt the u. S. At this point. Maybe its europe, but im referring specifically to japan. Okay . And you know, heres something fascinating. Many people in this country think were really unique. We have gridlock in the government. We have debt we cant afford. And we keep wanting to add more and more, and the governments very ineffective at dealing with the problems. Hence, the fiscal cliff. But it transcends borders. Its japan, its europe, to some extents its china. And the funny part about it is it isnt unique. Theyre all experiencing it. So japan, theyre calling potentially for new elections, why . Because the opposition government doesnt want to give more stimulus money. What has it done . So they might run out of money in november. Its like a bad rerun. We have a lot of people, a Cross Section of america on this Trading Floor today. Theyre from l. A. , kansas city. Miami miami. And when they walked on the floor, the first thing they said to me was, do you want more stimulus or not no stimulus ill tell you, its just so funny how it just seems to transcend. We have some democrats, we have some republicans. But one thing seems assured now. Whatever medicine is being administered, it knows no boundaries. Really doesnt seem to be making a difference. And as we come to elections in this country, were so not unique. Leaders around the globe had to deal with a crisis. And have they done it well . Do you think theyve done it well . No. No are you proud of your leaders . No way. When you vote, are you going votes in the same people or vote out the incumbents, what i hear from everybody . Whether its japan, whether its greece, whether its spain which, by the way, 25 unemployment today, deterioration in the euro. We will continue to march on to try to fix what ails the globe. One thing we know for sure that the rerun we get over and over and over isnt funny, isnt interesting, and it isnt working anymore. Carl, back to you. Rick, the voice of the people. Hard to argue with that. Thank you very much. Well come back to you in a bit. When we return, facebook has had a pretty solid week so far. That could all change on monday. For the second time since the ipo, a lockup on millions of shares will be lifted. Well show you how you should be playing the stock ahead of the expiration. Later, Hurricane Sandy barreling toward the east coast bringing both rain and snow. We have a live report. Plus how it might impact the Energy Market. Mike rowe here at a ford dealer with a little q a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee. Affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Buy four select tires, get a 60 rebate. Use the Ford Service Credit credit card, get 60 more. Thats up to 120. Where did you get that sweater vest . Your ford dealer. Youre taking a look at how facebook shares performed the week of its first lockup expiration in august. That was painful. A second expiration looms on monday. Current and former employees of the social network will be able to sell shares for the first time. Question is, how do you play it ahead of that expiration . Victor anthony is a Senior Analyst at topeka capital markets. Kept his buy through the summer since the ipo reined in its price targets at 34. Good to have you back. I guess the thinking, most people say, if youre liking it, if you are tempted at some of these prices and given the quarter you might want to wait. Is that is that safe to say . I not thats safe to say. You know, i think theyre entering the lockup periods with the wind to their back. It was a great quarter. They clearly refuted the bad news on the stock which is more which i thought was would have become a part of the revenue mix. It happened several quarters ahead of my expectations. But it was great. It was only on one theyve since launched several other ad units, the gifts, free commerce, mobile ad network, facebook ad network, as well. And mobile ad installs. All of these setting up facebook to reaccelerate against in the fourths quarter. Theyre entering lockups with the wind to their back. However, based on past history, i have no reason to believe that the owners of the stock wont sell. I dont know their liquidity issues, i dont know their time horizon. So you know, i wouldnt advise people to wait it out and then jump into the stock in a big way. I think the stock goes into the 30s. Hard it put your mind in the head of an employee. Right. There are Tax Implications coming here exactly. Chances are this will be movement on it. What are expectations for the quarter were now in . I think its ticking it up significantly. Say it was 14 of revenues in the Third Quarter. I think it will be 20 plus in the Fourth Quarter. Youre looking at mobile probably becoming roughly close to 50 of revenues over the next year and a half. So its changed expectations. Like i said, i think its refutesed the bear thesis in a big way. I think the company fundamentally is on good pharmaceuticaling n ifooting now. Do you see big marketers come on line, basically refuting what g. M. Said months ago . That is, we are in. Theyve proven the return to us, and were going to be making investments on this platform . Well, you know, ive spoken to several ad agencies, several marketers, as well, over the past few months. Its still experimental. Theyre running facebook, learning how to use it, learning the metrics. Trying to understand the roi and how to benefit from the platform. But youre seeing the walmarts, seeing the amazons, the big brand advertisers, procter and gambles. Theyre advertising on facebook. Theyre on a desktop, on the mobile feed, as well. So theyre coming around. I think when they learn how to use the platform better, i think you will see all of them rush in in a big way. Finally, i dont know if youve seen the news on one of your rivals, mark mahaney at citi, on your beat. Hes been terminated according to the wall street journal. It looks at this early stage that it appears to have had something to do with a junior analyst, disclosing information, as well. Does that weigh on the community in terms of how you manage your staff . Well, you know, ive only seen the headlines. From what i know about mark ma haney, hes a great analyst, great guy, ive met him. Thats unfortunate. I think it definitely will force people to reassess how they function and work together. Well see what happens with that on monday. Thanks for coming in. Thank you. When we come back, the u. S. Economy grew by 2 in the Third Quarter. That was better than expected. Still might not be enough to offset the effects of that fiscal cliff. Well see what the ceo of blackrock had to say next. [ male announcer ] do you have the Legal Protection you need . At legalzoom, weve created a better place to turn for your legal matters. Maybe you want to incorporate a business youd like to start. Or protect your family with a will or living trust. 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The best thing you can say go dp is a number with a two on it sounds better than a gdp with a one on it. Beyond that, the government avenues first look at Third Quarter Gross Domestic Product showing an economy that improved marginally from the prior quarter but growing too slowly to take up the significant slack in the economy. Thats the important fact there. And a 2 growth level not enough to offset what will happen to the economy if we go over the fiscal cliff. Blackrocks larry think on squawk on the street was straightforward and downbeats about the fallout. If its another kick the can down the road, another small attempt to reducing our deficits, then i think were going to have a recession in the First Quarter and were going to have were going to have markets are going to be unsettled. What we saw in the data this morning is an economy weve been talking about for a while. Consumer growth, the white line, its hanging in this. Up a bit which we saw in the confidence numbers, too. Business investment, thats the yellow line, is flat to down. Heres a breakdown of the contribution to the percent change. We get to the 2 , Consumer Spending adds 1. 42. Business investment and inventories takes off a quarter point. Housing up from a low number, chugging along there, up. 3 point. Trade detracting and government up 0. 71 . A big part of that gain, federal defense spending up 17 for the biggi isgest gain since 2009. It follows straight quarters of decline. Looks like the drought took away half a point of growth and inflation was higher than expected. Still sluggish growth that faces a big challenge in coming months. I would say this is the economy the fed forecast when it decided to do qe infinite. I wonder, too, steve, given the makeup of the components. Is the number more or less subject to revision than past quarters . You know, its hard to say. I dont think theres any particular trend there. The inventory numbers will be rejiggered, probably the investor numbers. Everything can come in. Trade is a big factor, inventorys a big factor. Hard to know, carl. Right now it just it doesnt change your mind, right . Had the number been 2. 5 or 3 , i would have said, hey, time to rethink the economy. 2 , 1. 8 , six of one, half a dozen of another. Well get a lot of numbers t. Well get to the european close in 2 38. Simon hobbs here in a moment. If we want to improve our schools. What should we invest in . Maybe New Buildings . What about updated equipment . They can help, but recent research shows. Nothing transforms schools like investing in advanced teacher education. Lets build a strong foundation. Lets invest in our teachers so they can inspire our students. Lets solve this. You wont just find us online, youll also find us in person, with dedicated support teams at over 500 branches nationwide. So when you call or visit, you can ask for a name you know. Because personal Service Starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. Our support teams are nearby, ready to help. Its no wonder so many investors are saying. All ] im with scottrade. The european markets are closing now. A lot of attention stateside with the gdp number and earning. Spanish unemployment always lingers, simon. Yes. Absolutely. Absolutely. And 25 one and four. Today you had the finance minister coming through to explain that and saying they needed more labor reform. To be honest, while they have their News Conference in madrid, the bigger issue for many as far as spain was concerned is that you had the ue. U. , imf, done a lot on banking. Furthered the banking situation. That seems to have buoyed the markets. If youre in market, youre more focused now on u. S. Affairs like the fiscal cliff for direction and arguably whats happening there. Youve got a move higher. The result was we pushed down yields on spanish bonds. But the biggest story is this growing belief that spain is pushing out the idea that it will apply for the bailout and therefore the ecb will generally buy their bonds and during the week youve had a gentle rising in rates, not serious, not dramatic. They are beginning to drift higher as people sell out of the margin there. Spain is as we learned, is basically funded all that it needs to on the markets. This year the government more or less is talking about funding next year. Will they bother to ask for a bailout before the end of the year . Thats one of the next catalysts that many people in europe are looking for. Lets look at where we are on the weekly performance. Whats interesting is according to reuters and its obvious really that more European Companies would miss their earnings estimates than the u. S. Because they will be more weighted to economies in europe which obviously are performing far worse than the rest of the world. Reuters now says 40 of e. U. Companies have missed earnings estimates so far this earnings season. Whereas in the United States, its closer to 30 . Interestingly, during the course of the week, weve kind of traded the same on both sides of the atlantic. This is the top 30 blue chips or the dow. This is the top 50 blue chips within the eurozone. Similar for the week overall. For the record, more profit warnings for today coming through ranstad, a large dutch temporary employer. Warning that conditions are deteriorating in france and germany. That stock down 5 . Ericsson, what a business, selling those mass the equipment from mobile phones, down again today. Marine harvest is the largest salmon producer in the world. I think thats got more to do with the environment and how many salmon theyll catch moving forward. They down. There are always bright spots. As jim cramer would say, always a bull market somewhere. Bank of america is suggesting that you should buy strauman, a medical devices operator over in switzerland. That stock has done well. There you go, up 8. 5 . And belgercom belgacom, Deutsche Telekom in belgium, raising estimates for next year. Have a great weekend,citement weekend, simon. Thanks. Pleasure. Lets get to Rick Santelli at the cme talking bailouts in europe. Of course, its a big topic. And our head guest is dimitri. My first question is a simple one. Lets start with greece and go to europe proper. Do you think the current bailouts and revised bailouts and new bailouts ultimately going to work and save greece . I would say the simple answer is now. But you know, the european leaders havent understood this. They applied the first bailout, and the results were abysmal. Unemployment is unprecedented. People have 25 unemployment, their poverty is at the alltime high, and also i have the social conditions that actually deteriorating. There are more suicides, soup kitchens and so on. To answer your question, no, it will not work. I think that the bailout will be passed by the parliament. But when supplied, its going to give us again abysmal results. Something different is needed. Before we get to what may be needed, lets open to europe proper. We obviously would see whats going on with spain, and you know, yesterday reuters reported that the finance minister in spain said, listen, 95 of my funding needs for the year on done. But then you have the 17 autonomous regions that are crying that they need funding. Can you weigh in on this, and also whether the medicine thats being potentially applied in spains case is going to turn out any better than what you said about greece . Well, one can understand very well why the Prime Minister of spain is reluctant to seek a bailout because as we know the bailouts come with very tight strings attached. And even though some of the austerity measures have been applied in spain by the government, they expect those measures will become even harsher and avoid that. Whether they will be able to ultimately avoid the bailout, i think its a big question. As you say, the regions are expecting a bailout from the Central Government. The Central Government is running out of money. So unless Something Different happens in the in brussels and in berlin, i think we will see a repetition of what happened in portugal and especially in greece. Well, dimitri, we have one minute left. If you right now were put in charge. European bailout in charge of the european bailout, what change would you make . Making them simple or overreaching, do you have suggestions . Yes. I would use a marshalltype plan for development in the countries of southern europe. Those countries cannot be competitive and cannot be competitive through an internal depreciation by having low wages. That kind of a competitive cannot happen because it will be erased to the bottom. The second thing is i would put a Banking Union so that i can have insurance for all the deposits, will avoid the bank runs. And the fourth thing is im going to try to create a fiscal union because a Monetary Union does not work. It allows the experiment to separate governments from their sovereign currency. This is something that has not worked and will not work. Dimitri, thank you, a succinct wrapup. Back to you. Thanks. Bob, the market in your words, have disappointed everyone. This is why people go nuts dealing with the stock market. Everyone was sets up for volatility today. Going up or down, something happening. Nobody was set up for nothing because thats what happened. Its about apple. Apple tends to be volatile the morning after earning historically. Look what happens. Apple opens, its down about 1 but opened flat. That made people crazy. The markets are basically flat. The volatility level is basically flats. Up and down a little, its flat. And the volume is light. Nobody was thinking that this was going to happen. Everybody was thinking something was going to happen. Now apple, traditionally volatile the morning. Put up apple, ill show whats going on here. Q3, stock was down 4 . Q2 next day, stock up almost 10 . Then 8 theyre set up, either options are up 5 , down 5 . And what happens it closes at 6 09 last night, opens at 6 09. Nobody set up for that to happen. Its frustrated. The greatest number of potential investors that are out there. Let me move on. You get the point. This is why people go crazy dealing with the stock market. Let me show you other things of whats going on. Theres a little worry about the banks. Theyve been drifting lower all morning. Theyve had a fairly rough week. And this is the thing theyre watching for, longterm movements around the net interest margins being weak. These banks are down 2 to 3 for the weekend or week again. Let me show you the q3 earnings picture. So far, better today. Remember, earnings basically have been flat for the quarter. But the big story have been the revenues. The revenues were expected to be up about 5 even just a couple of months ago. Now its down to 1. 3 . Thats been the story for the whole week. And thats how people are trying to adjust their numbers. Theres been a lot of discussion about whether we should be taking down their stock exposure on this. Barry ridholz discussed this the other day, bringing down exposure based on the weaker revenue numbers. He talked about the earnings cliff, not the fiscal cliff, as being more concerned to stock traders. I agree with the overall analysis. Thats the news, the earnings cliff were seeing now. Bob, see you later. Bob pisani. Meantime, Hurricane Sandy is making its way toward the east coast, expected to make landfall in a few days. Could ruin halloween for a lot of kids. Find out how the area is preparing in the northeast and the effects on energy prices. Jack, youre a little boring. Boring. Boring. [ jack ] after lauren broke up with me, i went to the citi private pass page and decided to be. Not boring. Thats how i met marilyn. Giada. Really good. Yes [ jack ]. And alicia. This girl is on fire [ male announcer ] use any citi® card to get the benefits of private pass. More concerts. More events. More experiences. [ jack ] hey, whos boring now . [ male announcer ] get more access with a citi card. [ crowd cheering, mouse clicks ] [ male announcer ] get more access with a citi card. Wooohooo. Hahaahahaha oh. There you go. Wooohooo. Hahaahahaha im gonna stand up to her no youre not. I know. You know ronny folks who save hundreds of dollars switching to geico sure are happy. How happy are they jimmy . Happier than a witch in a broom factory. Get happy. Get geico. Fifteen minutes could save you fifteen percent or more. Hurricane sandy leaving a paths of destruction in the caribbean and threatening the east coast of the United States. The storm expected to make landfall early tuesday. Our maria la rosas live at the Weather Channel tracking the storm. Maria . Already beginning to leave the bahamas. So thats good news for them. Were feeling the effects already on to the eastern coast of florida with gusty winds and squali weather. Here are the stats now. Still a hurricane, maximum winds at 80 miles per hour. Slow to move a little to the north now at about six miles per hour. And that puts it about 25 miles northeast of the island. Notice through tomorrow, were still going to see the gusty winds on the east coast of florida from miami to daytona. High rip current risk, obviously when youre talking about waves 10 to 15 feet, thats not going to make for a very good beach day. But at that point, it will be on the move. Of course, everyone want to know whats going to be happening next. Im going to show whats not going to be happening. This is a look at all the computer models. Were not seeing any of the mcdonald el models take this away from the northeast. Were confident that between Long Island Sound and the chesapeake bay, this will make landfall into tuesday. Heres the official track. Notice how widespread it goes inland. Were expecting not just those areas along the coast to feel the impacts, but were feeling it inland and likely for days, well into next week. Yeah. A lot of chatter here at the Stock Exchange involves all the hotels close to us booked for next week. Its going to be crazy. Thanks, maria. Maria la rosa from the Weather Channel. Sandy threatens five refineries with a total of 1. 15 Million Barrels a day of crude capacity, in delaware, philadelphia, new jersey. How bad will the impact be on the Energy Market . Andy lipow, president of lipow associates. Joining us from houston. Welcome. Thank you. How dense relatively speaking is the northeast when it comes to capacity . The capacity of the refineries is very small, only the 6. 5 relative to the rest of the country. And the northeast depends on supplies from europe, as well as canada and the gulf coast which are really going to be unaffected by the storm. Yeah. You make the point that at least here in the northeast you might have some supply disruptions, but youre also going to have demand disruptions. Can you explain . Exactly. I mean, although we know that most of these refineries are going to shut down and we lose supply, the fact of the matter is that business is going to close for several days up in the northeast, as well as airports will shut down. Thats the mitigating effect to the supply disruption. Obviously in hurricanes, you know, the old saying as you know goes if the wind doesnt get you, the water will. Wind, rain, flooding, what is where are refineries most vulnerable when it comes to the elements . Well, in the northeast in particular, i would say its the wind affecting damage to some of the equipment thats around the refinery. I dont anticipate much flooding depending on where the eye of the storm falls, weve got the philadelphia area refineries, water k can go into the river. Unlike the coast where you is a storm surge preventing water from draining. We have made this broader move in crude which im curious to get your thoughts on. Weve got a little relief today. Still, you know, awfully close to 85. Where is that trend headed given the fact that we were trading north of here in a band north of here not too long ago . Well, i see that crude supplies are quite amp ample. You look at north america with increasing production, im expecting to go to 85, then back to 82 to 83 just in light of higher and higher inventories and good production out of both saudi arabia and iraq. And then theres gas prices. You know, ive heard seen more stories in the media lately about how gas prices are going to fall 50 cents in the next 30 days. Is that overstating it, or are we going to see immediate relief to the consumer in the next few weeks . I think its quite overstating it. Today were at 3. 57. By halloween, i expect 3. 50. As a average in, a pharmaceuticals later to get around 3. 35 to 3. 40. Missouris close to 3. Some other states will catch up, too. In fact, if you look at texas, missouri, and south carolina, youll already see stations well below 3 a gallon. If you were going to have a hurricane, andy, that did not hit the galveston coast, is the northeast the next worst place you could put it . Well, it is because of the concentration of the refineries in the philadelphia area. Of course on the gulf coast weve got 40 of the nations refining capacity. So a hurricane here takes out a lot of the supply that the rest of the country depends on. Right. Were so used to watching storms hit where you are. This time its your turn to watch us go through it again. Andy, thank you very much. Thank you. Andy lipow in houston. Pandora taking a hit for the second day on news that apple is making a foray into Internet Radio. Is it time for investors to just face the music . This is america. We dont let frequent heartburn come between us and what we love. So if youre one of them people who gets heartburn and then treats day after day. Block the acid with prilosec otc and dont get heartburn in the first place [ male announcer ] one pill each morning. 24 hours. Zero heartburn. Welcome back to squawk on the street. Brian shakman taking a look at moodys, touching a 52week high. Great earnings, great eps growth. They raised their guidance, as well, by 7 . And of course its up 5. 5 . The most interesting thing, say what you want about ratings, their ratings revenue up 71 . Yep. A lot more instruments to rate. Thats for sure. Thanks, brian. Pandora meantime down about 2. 5 now. The news that apple is launching a Radio Streaming Service driving the stock down yesterday. The question is, will pandora be able to compete, or will listeners simply tune out for good . Rich greenfields cohead of research and media analysts at btig. Good to have you back. Thanks for having me. At first blush, youre dealing with a company in apple that has more money than god. Does not look like a fair fight. Youve got a company in n pandora that doesnt make money today. They are begging the government for corporate welfare in terms of relieving them or giving them relief on their royalty structure which simply isnt going to happen, certainly not with this congress and i doubt in the next one. Now youve got behemoths, not just apple, but microsoft launched a Music Service. Youve got the Big Technology heavyweights can tons s with t in the music business, and people spend a lot of time, over two hours a day, listening to music. Theres a huge opportunity to control out of home and in your car media that Companies Want to own. Right. Is this for all pandora has a decent subbase already. I listen to it every day in some capacity cd it get taken out . How does it survive in this new environment . Well, imagine you get off work today at cnbc and want to drive to the garden stated mall. Apples getting in your car, they want to be eyes free siri. You say you wanting to to see the mall, it will note through apple maps, know where you want to go, plot your course. You will say, hey, id like to listen to music, pick your type of station. Siri will auto tune to that music and will know youre going to the mall, it will know whats in the mall because it knows exactly where you are because they own the device. Theyll say, hey, would you like a coupon for starbucks . That will be the ad in the middle of the show. Automatically it will go in your pass book. When walk up to the starbucks, the coupon will pop up on your phone. Thats what apples after. The control of the local experience. Pandora doesnt control the phone. They dont know that information. This is going to be a serious competit competitor. And i think what might be most compelling for you to switch services is, one, theyll auto download it i assume to your phone, and its going to have basically significantly more skips, its going to be global. And its probably going to have the ability to cache. Youll be able to go to a subway or airplane and still keep listening which pandora cant do. The ipad. So if apple is literally spinning aweb around the pan a web around the pandoras, groupons, you make the point theyre not just devices, they are really into ecommerce and local advertising. They want to know where you, that explains maps. Is this all done organically, rich, or not just pandora, but anybody who has the tiny piece of that pie, can they be acquired, be a part of that party after being purchased . Y well, anything is possible in terms of being acquired. I would be surprised if someone tries to buy pandora. Doesnt make any money. Anyone who wants to launch a Music Service, you know, the compulsory rights that pandora has are easy to do. What apples doing is different rights. Theyre not going after the compulsory rights where you dont actually need label approval. My guess is the people that actually would want to compete with the socalled Apple Service that were talking about, theyre going to want rights that are far beyond what pandora has. Buying pandora actually doesnt do very much. I mean, look, if it falls to a low enough price, weve got a 3. 75 target, this is our first short idea, anything is possible. When i think about why google did android, why apple does ios, that control of the ecosystem is one of the key reasons why were skeptical and have a short sell rating on facebook. That control of the operating system is very important. And i think leads to a lot of different opportunities in a mobile world. Businesswise. Yeah. Rich, youre known for concise, provocative points of view. I appreciate you sharing them. See you later. Rich greenfield at btig. The yacht business used to be a party, but the party may be over thanks to the financial crisis. Well find out what the state of the ad industry says about the state of the worlds wealthiest individuals. When you take a closer look. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. Yachts may look glamorous, but the multibillion dollar yachting business may be rounding aground. Our reporter robert frank is live in ft. Lauderdale where they dont have a hurricane on the way. Following the yacht economy and all the details, good morning, robert. Good morning, thank you very much. Well, the yachting industry is an 85 billionayear business. A little like the weather in florida this morning, the industry is going through some very stormy seas. Let me give you some numbers as an example. In 2008, there were orders for more than 100 new boat of 130 feet or more, mega yachts. That number fell from 100 to 10 the following year, a drop of more than 90 . Now things are coming back a little bit, but basically prices for used boats are open more than 10 , 2 0 . Sales way down. Chinas good, other parts of the world are fine. But industry, sales are still off by more than half of what they used to be. Lets take a listen. This is bad. Its been bat since 2008 when the crisis hit. We saw the two big boats, more than 170 feet, they are understanding the meaning of buying yachts. China needs. They are growing but have not passed in this business. Now at this boat show, there are more than 1,000 boats for sale just to give you a sense. One for sale is this Pretty Amazing boat called diamonds are forever. Built by john stalupa. He loves to name his boats after james bond movies. This is incredible. It is filled with gold, with silver, with all kinds of diamonds. Its got pictures of bond girls all over the walls. Its got two jet skis down below, in case you need to make a bondlike escape. Of course, there is the martini bar upstairs. An amazing boat, yours for only 63 million. I am told by everyone that that is a bargain. Hard to believe, but bargains are relative in the yachting business. Back to you. That is an amazing number. Quickly, youve you know and have talked to so many wealthy people in this country, where to yachts fall on the spectrum on their wish lists . Above or below a Corporate Jet . Its usually the last thing that people buy. I mean, corps jets, people can use those for corporate business to get somewhere faster. Theres no excuse for owning a yacht other than you really enjoy. Well talk later about how much they cost to own later