Transcripts For CNBC Squawk On The Street 20131023

A pretty rough session in asia. The nikkei lower today. The ecb outlining their plan for stress tests. By the way, stay tuned for our interview with ecb president mario draghi a little later on. Dell out telling two different stories, caterpillar, cutting the forecast, citing a difficult year. Then theres boeing raising its guidance and upping its production schedule. And our live interview with starbucks chairman and ceo Howard Schultz. The company is looking to expand its empire beyond coffee. Carl icahn selling shares. Well discuss the best time to get out of a stock. Boeing raising its fullyear guidance. On the flip side, caterpillar is falling after posting huge numbers, missed the street by a very wide margin, cutting hits fullyear outlook. Ceo Doug Oberhelman was on squawk box this morning. Ive seen cycles over my 39 years. This one is pretty acute in mining. The rest of the business is hanging in there. Jim, he said its been a tough year, hell be glad to see it go, hes still bullish, long term on mining but he doesnt know if its this year, next year, five years, ten years. Not a great, reassuring message by observ by oberhelman this morning. A third of the job cuts have happened in the United States, their projection for revenue for 2014 is up 5 , maybe down 5 . Doesnt look like next year is the term. No, it doesnt. And this seems to be a growing perhaps disillusionment with management at this point. You havent mentioned the foray into china that jim has spoken with. Jim, youre back with us. Tale of two companies here. Interesting we get boeing and caterpillar because you have made a point talking about both of this many going into Different Directions for some times. Jim mcnerney, ceo of boeing, completely in the zone. This is a multiyear super cycle. Hes already increasing the margins on planes, a remarkable quarter. Caterpillar, i know they make the best machines in the world. I am never going to criticize their machines. The execution of the company is quite weak. The fact that they even at the very top said, listen, we dont know what the world looks like. The caterpillar of old always knew what the world looked like, always knew what the inventory position should be. This caterpillar is making the best machines in the world and is having trouble selling them. Which caterpillar . The oberhelman caterpillar . It all stops at the ceo. How can we think otherwise . I have to tell you, i like doug as a person, hes obviously a terrific guy, but can you not be more wrong. In the top of all with the bucyrus acquisition, which was a mistake and then follow it with the chinese acquisition, which was supposed to solidify china and did the exact opposite. There are not a lot of companies in the world that make the best product that are not blowing the doors off now in china and europe, caterpillar is one of them. Contrast that with boeing and mcinerneys level of confidence during the dreamliner incident, where he said this is going to be behind us. This is story of two tales of management, one has it, one doesnt, boeing has it, caterpillar doesnt. Margin growth on the commercial side, the record back log, jim, 410 billion as 40 billion in orders come in during the quarter. Just an amazing number out of boeing today. Well talk more about it going on. In the meantime, jim is there for starbucks, expanding its footing into the tea business. Jim is now joined by Howard Schultz, the chairman and ceo. Jim . This is really a pretty exciting development. I was blown away when i walked into teabana. This is a totally redesigned, extravaganza place. This is quite different from what people expected. No question about it. When we acquired teavana, we acquired a jewel of a company that had 350 companies in malls of america. Oufr, their business did not include any kind of a bar in terms of being able to make a beverage and no scores across the country. You talk the starbucks model, the espresso bar, the romance and theater of the beverage, stores in every community in america. What we plan to do is leverage the capability of starbucks in a completely complementary business we have been in for 40 years but now were going to bring it to the country of america, all over every city, in canada and at some point i think we can braeng ting teavana to a well. This the beginning of a thousand stores over the next two years. Alltime high this morning, starbucks. This is a needle mover within the next, what, one, two, three years . Give us a sense of how big the tea market is versus the coffee and how many you think ultimately there could be of teavanas . 19,000 starbucks. Could it be contained bit same four walls of starbucks . I dont want to get ahead of us. This is one store we have a lot to prove. Tea is twice the size of coffee globally. Most dont realize that. It a 90 billion category hot and cold that is ripe for innovation. If we take the foundation, which is sourcing and blending the worlds finest teas and bring the capability, the discipline and romance and theater of what we can do at starbucks, there certainly can be a global opportunity for teavana over the next number of years. Using the word romance and theater im not a touchy, feely guy but this is a warmer experience from a traditional starbucks and a more architected enterprise. I think theres a zenlike experience in here. I think tea is a completely different category, different experience and different beverage than coffee. However, were going to bring things to this category that people have not expected. The quality of the teas, the education were going to provide, being able to make tea at home, and this will become a daily ritual for many people, the same way coffee has, but its a different consumer, different customers and what i love about it, it is completely complementary to the starbucks experience. Same capability and core competency of our company. Food important. Which of the what are the synergies in terms watch you have here versus starbucks and what will we find that you would never put in starbucks . I think the acquisition of la valange gives us the ability to have the compatibility. Youre not going to bring coffee here. We want teavana to stand on its own merit. Will you see it next to a starbucks store . Probably not. However, the capability the company has in terms of Real Estate Division designs and with our global partners, especially in asia where tea is so popular and robust, this is a good occasion. Youre making a splash from day one, not necessarily the way i would expect starbucks to roll out. Well, teavana has a great history. Were ready for broadway. We want the opinion leaders and sophisticated people in new york to see this store. Youll see many other stores in high profile neighborhoods across america. The Chinese Government seems to be at least, we dont know, tv, not happy with your cost structure there, believing youre overcharging. Youve done a breakdown of costs. It seems comparable. Lets clarify the situation. First off, weve been in business for china for 15 years. We just crossed 1,000 stores there. We have a very Healthy Business and i think the health of that business has been based on transparency and trust with the consumer and the Chinese Government. Ive spent endless amounts of visits in china meeting with government officials and building relationships. When this happened, i think we were taken back because this is not the way starbucks does its business. What weve done in the last 48 hours have been completely transparent. Our cost structure in doing business in china and the investments weve made to build that businesses to have a thousand stores, almost 20,000 employees and investing ahead of the curve gave us a position where we had to charge a little bit more than some of our other markets. Weve explained that and i think the people who did the story understand it and i think the story is now hyped us. Its reported this morning 60 decline in china profit. Very clear the Chinese Government has not embraced it, we know that young, kfc, a fine executive, thought maybe wed be through that already. Government resistance. What are you hearing back . We are in an acquire period. Well announce earnings next week. I want to be a little careful there. I would say our business in china continues to be strong and were cautiously optimistic about the future. We havent seen anything that would significantly change our outlook in china. Teavana opening, the continued rollout unbelievable, samestore sale numbers, you made it clear there was no cannibalization, but youre also trying to drill down on watch. Youve had some luck trying to get people to come together with your petitions. Where are we on that . I think all of us in america have a strong feeling that something is not right, that were looking at a government that is not functioning the way we would hope. I think the Government Shutdown in the last two weeks demonstrated a complete fracturing of leadership and i think in many ways, and i hate to say this, but it was shameful. I think all those people in america who are affected by this did not have a voice. In two and a half days we put a passive petition in our stores, almost 2 Million People signed it, we physically delivered it to Congress Last week on the heels of the opening of the government. What we need as a country and what the American People need is a longterm, comprehensive, bipartisan, longterm budget deal. We need a new fiscal policy, we need a new tax policy, we need a new immigration plan and people in washington have got to understand that the constant bickering, the constant disrespect is not serving the American People. We need citizenship over partisanship. Where does that fit in to an International Company that truly is, as you call it, the fly wheel where youre trying to build the energy and then expend it with a lot of different places. How does the political fit in . Some would say this is really a great worldwide enterprise. How does howard have time for it . Does it take the eye off the ball, should shareholders be concerned . Well, i think that were living in an age right now where responsibilities for business and Business Leaders are need to be different in the future than perhaps they have been in the past. And we need to not be a bystander in this dialogue, in this process, in which were watching the government and our elected officials let us down. I also think our brand, not that it gives us license to do things, but as long as were being civil and respectful and were not taking a political side but were trying to offer an opportunity and a platform for people to use their voices and recognize that this is a democracy and we do have a choice and a stake in all this and perhaps starbucks can be the platform, but in addition, we have Core Principles and core beliefs. I stood before our shareholders that we were in favor of samesex marriage and in favor of giving health care to partners in a gay relationship. Thats who we are. In the last month ago we asked people who had a legal right to carry to say, listen, we dont think starbucks should be part of the gun experience. Were not trying to be political but were trying to recognize as a company that has stores in every community and serving 70 million a week globally, we kind of have a pulse on what people are thinking and doing and we want to offer them an opportunity to leverage our platform and their voice. I want to circle back to teavana. Its such a great extravaganza. Never mind being a houseman for a stock thats had unbelievable performance, teavana, two stores, five stores, we see a hundred, what is the pace of this particular opening . This is an expensive store. Id like to know how much it does cost and this a different store that i would think would be hard to recreate all over the country. Well, first off, the Unit Economics of teavana when we acquired it was very, very attractive unto itself. Then you add the beverage component, which will drive incrementality. And then add location, we think this can have as good or better Unit Economics than what we acquired in the mall, which has been 21 salestoinvestment ratio. Were opening another in seattle in 30 days and then well see. Clearly weve acquired this company to leverage its asset, the equity of its brand, the global 90 billion category and were going to build a global teavana business unto itself and youll see well leverage the fly wall and mobile platform to drive traffic. Thank you very much, Howard Schultz, founder, ceo, chairman. Well be speaking to you again tonight on mad money. David and carl . Thanks so much. When we come back this morning, another big interview, this one with fed chairman bernankes european counterpart, ecb president mario draghi. Well hear what he has to say about bank stress tests. We are seeing weakness largely coming out of caterpillar. Well see if boeing can upset that when we get the opening bell in about 14 minutes. A lot more squawk on the street is back in a moment. These like into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Carl icahn has sold roughly half his stake in netflix, a 4. 5 position from what was a 9 position. He said it was, quote, time to take some chips off the table. Cant blame them, of course, for having done that. 58. 40 was his average price. By the way, he still own as good deal of the stark. Nonetheless, its hard not to think he was a potential seller there. The stock climbed towards almost 400, he said was his target, though his sales took place between the 10th of october and yesterday. I mean, he made hes made well over i think its about 1. 7 billion was the total value of the position as of yesterday. Then you take his cost out at 5. 5 million shares at 58, can you do the math at home. You get it. Its one of the best investments hes ever made. And not his own idea, by the way, which hes willing to admit. We were talking yesterday morning as the stock was coming off the open, some 40. We joked wouldnt it be funny if icahn came back and said i still havent sold. In fact, he came back and said just the opposite. They did say reassuring things about growth targets in this country, could be 70 million, 90 million and the international possibility is even greater than that. He seems to carl was a great investor and trader and know when is to potentially take a profit. Seems to be at odds a bit with the thesis of the portfolio manager. Yesterday was a strange day. We did start up we didnt get an early tweet from icahn. Maybe that should have been a sign where he said i still love it, thank you. He said as the volume ramped up yesterday, we did all start to wonder is he potentially selling here. But that was quite a reversal. One key question, who are the incremental buyers at netflix at this price, other than those covering shorts. Were getting conditioned to wait for his tweets. After four straight dates of record highs for the s p, first first and foremost on art cashins radar . We take another look at as we kick off wednesday. Squawk on the street live from the nyse straight ahead. Ag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Thats what they can do with you. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. A few minutes before the bell. Lets bring in art cashin. Good morning to you. Good morning. A lot to choose from today, the asian selloff, caterpillar, icahn selling, dollar. Whats on your mind . A couple of things. You know, that early halloween that we had in the tech sector yesterday around 10 30 in the morning has traders attention. Massive reversal in netflix. It raises the question are we about to see a pause or a change in leadership . Even some from the chinese sector. I think traders will be watching over the next couple of days, the breadth of the market, where does the volume come in, is it a pause, is it a change in leadership . How do you know . We can both go back to 98, 99. Its not like netflix yesterday. And you wonder, they finally have a down day and you say is this the beginning of it until it finally was. Thats why it bears watching if this were easy, theyd have eye school kids doing it. It takes a while. And the other thing you alluded to, a little spillover in asia with the yields plummeting here and the dollar weakened, that made the yen stronger. Tokyo got clocked with the equivalent of 200 points in the dow. But china, different story. Theres talk there about possibly raising rates, real estate soaring again and maybe writing off some bad bank loans. That got shanghai down about 300 points in the dow. That has spilled over into europe. Were back to worrying about what we were worrying about four weeks ago when we started worrying about washington. Things we were worried about before we were worried. Yes. In just a few minutes, cramer will rejoin us as well when squawk on the street returns. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the American People. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. Became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Youre watching cnbc squawk on the street, live from the Financial Capital of the world. The opening bell in about a minute. A lot of big names to watch today as we soar through caterpillar, boeing, panera last night, said some discouraging things about 2014. That will be one to look at. Theyre targeting fiscal 2014 numbers at the low end growth target of 15 to 20 , comp sales were up weaker, 1. 7, saying thats leading to a thorough examination of operations. It had been a growth story in the early part of the year. That will keep us talking, along with the industrials weve been talking about all morning long. At the big board, the new york widows and benefits fund. Were getting some more defense contractors, northup, 1. 97, beats by 15. Theyve done a lot of restructuring before the sequester came along continue to see benefit, even though their backlogs are declining, not the story of boeing today. Many of these companies have been navigating quite well what is somewhat or perhaps even more than expected uncertain environment in terms of defending, particularly if we get the next round of sequester cuts, which could be upon us in a matter of months. And would take a good deal from the Defense Department budget. Lets pop over to bob pisani a little bit early today. Hey, bob. Were down globally, for good reason. You have talk about inflation, europe is down a little bit and weve had sort of lousy guidance overall this morning. Lets face it, stocks are a bill overbought. Were up 4. 4 on the s p 500 for the month. Its not a surprise were down a little bit here. I know you concentrated on caterpillar, but i wanted to put up some of the tech stocks because revenue guidance was particularly poor for a number of big names, cree, altera, it was all disappointing for the current issue. You talked about caterpillar, their big miss, a dollar lowering it, that was a surprise. We know about the slump in mining. Thats a rather large number, 17 decline in overall sales for the year. Ceo was talking about that earlier. I think these numbers were a lot bigger than even people anticipated and the companys been missing for a while. Aerospace, though, had a terrific morning. I know, carl, you just mentioned boeing a strong beat on top and bottom line, they raised fullyear guidance. Nor Northrup Grumman raised their guidance. And be aerospace affirmed their guidance. And Lumber Liquidators knocked the covers off of the ball here. Comp store sales 17 . You know how hard it is to get any kind of Comp Store Sales . They had a 17 gain. They raised guidance nicely by more than 20 cents to 2. 74. Finally, we had some other decent reports overall. Norfolk southern had a decent report, lilly had good numbers, they had good zyprexa sales. And even wellpoint benefited from membership. I know caterpillar is a lot of the talk today. Im a little more concerned with the tech guidance, the lack of revenue on the tech side is going to be an issue today. Back to you. Thank you, bob pisani. Jim krcramer is back with us afr that great interview with Howard Schultz. Lumber liquidators, yet again higher. I guess the fish and wildlife investigation into i think it was lumber from perhaps places it shouldnt be coming from and particularly scarce trees doesnt seem to hold them back at all, does it . No. Lumber liquidators, i like to make a little joke about it, but its a metaphor for the moment. If you have high growth, people suspend a lot of judgment. Lumber liquidators like whirlpool very much skewed towards housing and toward the part of housing where the Discretionary Spending is still ramping up. When you have high growth, bob pisani talked about low growth in tech, whether it be retail, whether it be in tech or machinery or aerospace, people willing to pay up for it. Its a bifurcated market. If you want growth, they dont have, they just dont want it. You look at boeing, particularly the margins, the stock up 6. 4 . Theres the growth story. Conversely, caterpillar, bob just told us lowering guidance dramatically, although the stock getting hit. Im not sure its lower than when are jim chanos told us they were shorting it back in july. From what i see infrastructure being built around the country i think will be fine. Circle back to mcnerney, the ceo of boeing. Go back to where the stock was at 68. 69, we had very big dreamliner pull back, he said were sticking to our position, were going to deliver weeks have a 25year plan. Mcnerney is the rock of gibraltar. He did say there would be Margin Expansion but hes surprising. With this level market expansion. There is a sequester going on. They have a heavy mulilitary business. Mcnerney may be the best there is. That netflix turn around yesterday was interesting to watch. Lets talk about it right now. Stock is up about 1. 5 . We know eicahn position down by more than half. Unclear whether hes still ladding the fundamentals of the country but im curious as to what you make of the turn around itself of the stock price, whether there is significance beyond a big seller out there and interesting day in trading . I think carl made a very good point. Carls very old school. Hes old school in the sense that bulls make money and bears make money and come on, ive got an unbelievable gain, what am i supposed to do, give it away . That is an attitude that growth managers dont ever have. They figure this stock is cheap, they can justify any price. Carl is enough of an Old School Guy to recognize, you know what, there is a price where i wont pay. I think netflix in the end, nothings changed about being a hit driven story, nothings changed in terms of being ageo able to say when it opens in this country, that country, there will still be no growth. The reversal will make it that others say will i take a little off, too. I think you will agree with me, that this is icahns moment, whether you like him, hate him, apple, netflix, he is the arbiter of prices here. He certainly can be and your points a good one. Its a high class problem to have the gains he had, over 400 in 14 months. So you got to think what can i take off and how much. Frankly im surprised they didnt try to get rid of all of it in some way given those incredible gains. Well, you dont know. Remember the way he took profits in hayne. I wouldnt be surprised if he does the same thing with netflix. As i said, youre not going to be able to have any its not going to be clear when he gets out of the rest because of his filing situation. But, you are know, sometimes we hear enough managers come on cnbc and say i just had a big gain. You know what, im taking some off because i believe in giving that losing a gain in other words, giving back any sort of profit is a sin. Boy, icahn is so old school, its refreshing. Yeah. Its amazing, too, how much he made in that name versus how much he spent on dell and didnt make that much money. That deal, by the way, closing any moment now as we head toward the end of this month. Jim, stand by. I know were going to come back to you in a bit. We want to get to this big reit deal today, something youre interested as well. American reality capital to acquire cole real estate, about a 6 billion deal when you dont include debt, 11. 2 billion overall. Thats the name i wanted to focus on because that of course is the acquiring company. Can you see this being well received by the marketplace at this time. Having spoken to a couple of investors in arcp, theyre applauding the deal. Theyre in the triple net lease business. Dont know what that is . Youre not alone. Think about the likes of a walgreens, which is one of their key tenants. Theyll buy a walgreens and lease it back to them or at t or those strip mall based stores and the like. With the acquisition of cole, this will become the largest player in that business. Previously arcp would be a significant player. Now it will be the largest reit. Now it may get a multiple as being the highest. It had a high difficult lend yield and had a lot of debt. It is bringing the debtt debttoebidta ratio down. It is increase being its dividend to 1 a share and well see where the yield settles out. It is a 7plus percent yield. Cole had a 4. 85 yield. Well see where the yield is for this thing. But these are the things people are focused on. Its the net debttoebidta ratio coming down, the guidance from 1. 13 to 1. 19, what the multiple on that should be and the increase in the dividend creating this category killer, if you will. Thats at least what many of the proponents of the deal would say it is. For cole shareholders are you can take cash but most will probably want to take the stock since its up nicely. Also borrowing costs will come down for the entity and one would expect it will continue to acquire as it rolls up in this triple net lease area. But one of the biggest weve seen in a bit of time, especially with the performance of that equity right there. Very large. By the way, jim, before we say goodbye to you, what is coming up tonight on mad . Were going to have more on Howard Schultz and were going to palo alto network, which is a high flyer. Fra frankly, this is a rerating off some of the reits. Theyve been skewed to the Shopping Mall reits. Nick is trying to say we got to get more liquidity, this should be the benchmark reit. I think the call does solidify that. Youre absolutely right. People will be saying that is the Real Estate Trust i want my portfolio, not necessarily stub toe after jc penny, not simon. Its a different model. They are looking for investmentgrade tenants that theyre doing these sale leaseback tenants. Thats a pretty sizable amount for the reit area, isnt it . I think the reit area has land respect in the investment community. I think nick is very conscious of that and wants very much to be able to see his company included in a lot of indices. Interest rates back to 2. 5 on the 10year. This should be bought, plain and simple. Its so interesting you mention that. I think inclusion in the s p is certainly theyre hoping for as well. So, again, something ive heard, too. Jim jim, were you able to order anything from teavana . I had the miragea chai latte. I got to tell you, the calorie versus the capuccino that i like, its half of that. Some of these drinks do not have any calories at all. In the demographic way that people think about health, this is a winner from the youngers persons point of view. Im anxious to try the lemon grass chicken kale rice balls. The menu looks good. 6 00 and 11 00 eastern time. When we come back, an interview with ecb president mario draghi. Stress tests for bank on the agenda today but first Brian Sullivan is in north dakota today, home of the bakken. Good morning, brian. Reporter good morning. Your menu there is slightly different than ours is here. Weve all told the bakken story, the oil, the pipeline companies, theyve all done well. We want to introduce you to some stories about how people are getting very wealthy up here. It has nothing to do with the stock market. Some young guys making millions of dollars. That story ahead. Theyre still bullish on the bakken. Revolutionizing an industry can be a tough act to follow, but at xerox weve embraced a new role. Working behind the scenes to provide companies with services. Like helping hr departments manage benefits and pensions for over 11 million employees. Reducing document costs by up to 30 . And processing 421 billion dollars in accounts payables each year. Helping thousands of companies simplify how work gets done. Hows that for an encore . With xerox, youre ready for real business. Welcome back. Im Sharon Epperson at the nynex. Oil prices under pressure. Lowest prices since july 1st. In fact, here in the u. S. , inventories are already at the highest level weve seen in 15 weeks. Meanwhile, demand overall for petroleum at the lowest level since june. This is having an impact definitely on the wti price and its causing the spread between brent and wti to widen to the widest level weve seen since april, about 13 right now. Traders will be watching very carefully at 10 30 a. M. For the latest report from the government on u. S. Oil supplies and well have that data for you live, carl. Back to you. Unbelievable, the series of metrics regarding oil. Thanks a lot, sharon. A town synonymous with the bakken has struggled to keep up with its own massive growth. I want to get more from Brian Sullivan, who is in williston, north dakota. What a week to launch this series of coverage. Reporter it really is. Im going to give you some more unbelievable statistics here, carl, following up on the back of what sharon did, which is this. Theyre producing so much natural gas here that theyre actually burning it off. Its called flairing. In fact, by some estimates, about 100 billion a year or Something Like that, is actually just being burned into vapor because they dont have a way to get the natural gas out. They lack the infrastructure for the pipeline, for trucking, for rail. So, again, burning so much natural gas and producing so much that they actually have to burn it off. But we know the oil and gas story he, it is alive and well, 5,000 gallons produced in 2005, 960 produced now. And there are people getting wealthy that have nothing to do with the stock market or oil and gas stocks. In fact, we met a young guy, 32 years old named andy ness who run as crane company. Listen to his story. That one right there, value is about 400,000. Sounds like given the strength of your business, you could pay that off pretty quickly . They are an hour live rate machine. But can you definitely pay them off pretty quickly here. You can virtually work 24 hours a day around here. You know, carl, that guy and his partner, who is also his cousin, they drove down to dallas. They drove the rig back from 45 miles an hour. They now have nine cranes. These guys are mobile, theyre in their early 30s and theres stories like that everywhere. It feels like the wild west. Feels like a boomtown and people just trying to figure it out. You can work like he said, 24 7 and still not get all the work you can get done. Would you say, brian, youre more wowed by what youve seen there in the bakken or the permian earlier in the week . Good question. I would say definitely here because the permian had a boom back in the 80s that they kind of already built out here. The hotel i stayed in last night, perfectly nice place about ten miles outside of town, brand new place, down a dirt road, it was half a file down a pretty bumpy road because they built the hotel before the roadroad roads. Theyre trying to grow. All day were going to be bringing you stories on the bakken. We have a brooklyn developer who is getting 3,000 a month to rent out Parking Spaces for peoples trailers. We have a lot of Amazing Stories for you here. Carl, lets not forget, williston, north dakota is the hometown of which legendary basketball coach . I knew you were going to ask me phil jackson. I wouldnt have gotten that. Phil jackson from williston. When we come back, the new ipad lineup. Should you buy what and certainly selling when it comes to the tablets and the phones. Up almost 2,000 . Well hear how chairman and ceo Stephen Holmes plans to grow the travel lodge and days inn a little later on. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Always go the extra mile. To treat my low testosterone, i did my research. My doctor and i went with axiron, the only underarm low t treatment. Axiron can restore t levels to normal in about 2 weeks in most men. Axiron is not for use in women or anyone younger than 18 or men with prostate or breast cancer. Women, especially those who are or who may become pregnant and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. Report these symptoms to your doctor. Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. Ask your doctor about the only underarm low t treatment, axiron. Take a look at the dow. We have a few dow components in the green, led by boeing. Just a blowout quarter as they raise guidance, beat the street, raise production problems. Look outside where Prince George will be baptised there a private ceremony. Just happened to take that shot just as the queen arrived. Guest list here very, very exclusive. With that we talk to simon hobbs with more. Exclusive is the word. They dont usually have it in this small chapel where lets not forget 16 years ago the body of princess lay. Usually its in westminster cathedral, but the parents, will and kate, have said they want just a low key ceremony, with only 50 people invited. There you see the king of england. Also the supreme governor of the church, hes wearing a replica of the same christening ground that 60 other members of royalty have worn. That picture now will now travel around the world and will sell an awful lot of magazines on what is a very special day in britain. That is one good looking kid, i will tell you that. The prince, by the way, Prince George will be baptised at st. James palace, being conducted by the archbishop of canterbury. Some of the most senior members of the royal family were not even invited. Only five members of the royal family are going to be there. This is very important for my home country. This is a new generation of royals that is distinctly trying to break with the past and get a new informality as you have with so many families to connect with the people and they of course have done that wonderfully well in the eyes of many britains. We are going to speak with mario draghi as we hear more about the ecb and stress tests. The s p down about 10 points and the dow now down 80 at session lows. Were back in a minute. And this will be your premium right here. Sorry to interrupt, i just want to say, i combined home and auto with state farm, saved 760 bucks. Love this guy. Okay, does it bother anybody else that the mime is talking . Frrreeeeaky [ male announcer ] bundle home and auto and you could save 760 bucks. Alright, mama, lets get going. [ yawns ] naptime is calling my name. [ male announcer ] get to a better state. State farm. [ male announcer ] get to a better state. The United States population is going to grow by over 90 oveMillion People,ears and almost all that growth is going to be in cities. Whats the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity . What we have found is that if that family is moved into safe, clean Affordable Housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. The oxygen of Community Redevelopment is financing. And all this rebuilding that happened could not have happened without organizations like citi. Citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. So we are now working in chicago and in washington, dc and newark. Its amazing how important safe, Affordable Housing is to the future of our society. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be take you to washington, d. C. This morning, a live shot where the speaker of the house, john boehner, and other gop leaders will speak about the Affordable Care act in a few moments. Well bring you the highlights from that when it happens. Meantime, some of the insurers are expected to meet with senior white house officials and secretary sebelius later on today, including humana and wellpoint. Wellpoint did have earnings today, trounced the street, 2. 10 versus 82. Unlike unh, which had a rough week last week. It will be a key day to keep an eye on some of the insurers today. Sebelius under pressure given the botched role of the online element of the exchanges. It certainly didnt go well at first. Ecb president mario draghi is speaking out about european banks. Jeff cutmore spoke to draghi earlier this morning. He joins us live from frankfurt and has the highlights. Jeff . Yeah, a fascinating conversation with mario draghi. The Banking System in europe has been running sore on Economic Growth and finally we have what looks like a comprehensive plan to try and resolve some of the banking problems. Weve got a whole agenda here on how they are going to scrutinize the Balance Sheets of 128 of europes largest banks and ultimately next year there will be a stress test. Lets listen to some of the conversation i had with mario draghi where i asked him about the risks involved in this process and whether ultimately there was a chance that the risking might push europe back into recession. The recovery is still in its infancy. Its gradually progressing, but its still weak, uneven and fragile. The Banking Industry in europe, especially in the euro area, is the main channel of financial intermediation. Thats different from what happens in the United States. Almost 75 , 80 of total credit goes via the Banking System in europe, while in the United States only about 30. So banks are crucial in this part of the world, and they are the main source of credit for small and mediumsize firms. Thats why its so important that we make everything thats needed to make them function well. And so we have to see now whether the latest credit figures that will come out tomorrow will show modest pick up because so far we had every weak, very slow credit data. To reach this target is to make sure that banks have clean Balance Sheets, that have enough capital. Ultimately the private sector find it is convenient to put money into this industry. Thats the key issue. And if thats if this objective is reached, we will not have to worry about them deleveraging. Reporter let me then follow up because its been half a decade almost since the financial crisis began, and were still talking about misbehavior in the banking history. It seems that the bankers have not confessed to their crimes of hiding their mistakes, and they have also, it seems to me, been willing to carry on taking the compensation and the remuneration that they generously get in their industry. So is this the final point where we get it across to the Banking Industry that it must reform and that what it has done in the past must never be repeated again . I certainly agree with your last statement. Whats been done in the past must not be repeated again. Many things have been done in the last three or four years. Money to the extent of 5 of gdp of european gdp, has been put into the Banking System. Its less than in the United States but its a lot for the taxpayers. Things have improved in the Banking Industry, but no, this is not the final point. Its just the beginning of a new way of doing final things. I insist on the primary objective of this exercise is transparency. When i said the private sector money must find convenience, must have trust in the soundness of the european banks and the quality of their Balance Sheets, i mean this the process must be absolutely transparent. To this extent, weve designed a process where there will be several actors playing at once. Youll have the ecb, youll have the national supervisors, you have other national supervisors, which will be part of the joint inspection teams that will actually supervise various countries. So youll have a blend of different nationals. You will have private sector parties advising the ecb but also private sector parties advising all the National Competent authorities. So the process is being designed as to be maximum transparency. So when you leave here, obviously youre going to go to brussels and be at the heads of state meeting, this Important Council meeting, and youre going to have a job to do to sell to these heads of state what youve proposed particularly when it comes to the backstop. And we know the germans seem reluctant to underpin the backstop, we know the brits seem to want to sit outside of the regulation and we know the spanish, the italians, the greeks cant afford to pay for this. So when you go there, firstly how do you persuade the germans and the others that they should get aboard and that they should provide the backstop and, secondly, when you look David Cameron in the face, how do you persuade him the banks in europes largest Financial Hub should be on this journey . Let me reassure you about the backstops. The last European Council in 2012 already had in its conclusions the explicit leaders commitment to have adequate national backstops in place. But the key challenge is not really to use the backstops there. It is to make sure, as i said before, that private money is willing and confident about being used in the Banking Industry. The transparency, the strength of the design of this exercise, the coverage of this exercise should by itself make the leaders reassured that taxpayers money, if needed and we all hope its not going to be needed, is going to be properly used. To Prime Minister cameron, you are asking me a difficult question, but im absolutely convinced that the u. K. Should stay in the union not only for its size and might of the Financial Sector but for its history for u. K. Europe. As i had chance to say in london, we need a more british europe and a more european britain. Reporter so a fascinating series of comments from mario draghi. I think this key issue, what the United States was able to do with its Banking System is hold out this pot of cash and say this is what we will use to recapitalize the banks, if necessary. And this is the problem with the backstop story. Right now we do not have the germans and others signed up to contin continue using public funds to fill up any black holes that remain in the banks Balance Sheets. Back to you guys. Simon hobbs, back at hq, its all taking place at a time when this euro run just a shade below 138. Thats incredible. Jeff, i think its a great interview. I think it raises some really interesting questions on a number of levels. I come back to that central message that these given. There will be three sets of eyes. This will be a water shed, here on in the private sector will trump the bank. It comes back to the question youre raising again and again, where does the money come from, hundreds of billions of dollars . Do the germans get their way so that even the senior bond holders take losses here . Reporter yeah, i think, simon, that is the key question in all of this. I think ultimately the way that they are positioning the Credit Structure for a bailin process would be, yes, the bond holders do have to take responsibility. Ultimately they want to see the private sector carry the burden here because its very difficult to sell the idea of more taxpayer funds than someone after youve done the shells, done the bond holders, you get to the point where you Start Talking potentially about those who have departed in the bank. We saw that with cypress. Nobody wants to go down that road. But ultimately that does remain an issue here. Mr. Draghi seems to think if the process is rigorous enough, he will get the germans to sign up to allow taxpayers cash to be the final backstop, if you like, to recapitalize those banks that cant do it themselves. All right, thanks you very much, jeff. Great work getting to draghi and simon, thanks for adding to that. The s. E. C. Is releasing its crowdfunding rule. Eamon . Reporter the whole debate has been how do you divert capital to smart Startup Companies in an effective way without attracting fraudsters . Now they are putting in place some of the proposed regulations to keep investors safe. It looks like what the s. E. C. Is doing is taking a very shallow approach to crowd funding. A company would be able to raise only a maximum aggregate amount of 1 million through crowdfunding over a 12money period and there would be a cap on investors themselves, include investors over a 12month period would be permitted to invest only up to 2,000 or 5 of their annual net worth or income, which ever is greater or 10 if their annual income is equal to or more than 100,000. Here the s. E. C. Looking to allow for crowdfunding but maybe putting caps on it and limiting the sides and amount to protect investors. Well take a waitandsee approach as to whether there is fraud in this new system. A lot of folks, ive got to say, feel this effort coupled with some of the Health Care Provisions in obama care might make the United States a much more friendly place for entrepreneurs to start companies. That removes some of the biggest hurdles for new companies to start up. Talk about a brave new world. Thank you very much, eamon javers. When we come back, well find out if the new air will keep stocks ahead. And should you be cashing out of tripledigit gainers . Well talk more about that when squawk on the street continues. We help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Therell be the usual presentations on research. And development. Some new members of the team will be introduced. The chairman emeritus will distribute his usual wisdom. And you . Well, youre the chief life officer. You just need the right professional to help you take charge. Carl icahn selling more than half his stake in netflix, pocketing about 1 million in profits so far, thanking Reed Hastings and kevin spacey in a tweet yesterday. Netflix isnt the only stock with huge gains this year. Which other stocks should you think about cashing in on . Dominic chu. Reporter here to look at some of the other star performers and what theyve done this year. Do these stocks have the room to run further or is it time to take some winnings. The ones that have had serious momentum, first is priceline. Com. This stock has been on fire, up 75 year to date and trades at 35 times earnings, trading near record highs. Weve seen a similar price move for high end burrito maker chipotle mexican grill, also trading near record highs. One of the huge moves so far this year comes by electric car make are tesla. It may be moving so many momentum very short term but shares are up over 400 this year and just about 13 below its record high. Best buy, boston scientific, those two stocks have doubled to tripled in value so far this year and they havent made a profit over the last 12 months. We asked Money Managers when they decide to make a sell decision for a winning stock and take some of those profits off the table. Hennessey funds comanager brian peery use as quantitative approach. They only sell stocks when they meet a variety of criteria and when the criteria are no longer melt, they get out of them. Doing also a lane has predetermined targets. Great traders like carl icahn, they play the odds. They make buyandsell decisions doing lots of homework. Back to you. Apples ipads may have had good reviews but did it impress investors. Guys, good morning to you. Good morning, carl. What did you make of yesterday . Did it offset any of the worries weve heard all throughout the quarter that theyre cutting orders on phones, that theres going to be tight supply going into the Holiday Season . Well, carl, i think first of all it was a much longer event than what weve seen over the last couple of years because they had a slew of announcements to make. I think most notably is what they closed with, which is what you referenced, the new ipads. I think by and large we were pleased with what they announced in terms of the air and ipad mini retina display. I think most importantly, however, customers are going to respond favorably and we think thats going to support the stock for the next 12 month. How about you, channing . What did you think as a shareholder coming out of yesterday . We thought it was good enough. Weve been waiting on a catalyst really for the last nine months. We have pointed to the two launches, the ipad launch and iphone launch. The technology is not faster chips, better design, better operating system. We think its good enough to spur demand going into the holiday quarter. I think the key that were looking at, if you look at gross margins, have been the achilles heel of the stock in the last nine month. We feel pretty good about margins rising into the next quarter. We expect margins of 36, 37, expect that to rise to 38, 39. Pricing has been a big surprise. We think pricing was higher than analysts expected. While that hurts emerging markets, it going to help margins. If you look at the cost structure, we think thats much more stable this year. Material costs have gone down. Ive seen more cost efficiencies, leaner inventories and demand is very strong. I went to get a 5s, they were out. The product mix should be more toward the margin 5s. We think with inventory, cost structure, the margins are going to go up. We think that will surprise investors and move it up to the 600 target. Scott, i wonder, what would you rather see, a true wiz bang technological advance, the kind that channing references or a big Balance Sheet move, the kind that icahn would like . I think over the longer term people want to see new categories and new exciting products. But by the same token, its pretty fair to say apple is notably overcapitalized. Honestly, we think they can do both of those this eveninngs effectively, especially offer next year. Your prior segment was talking about this notion of a seller like carl icahn and netflix, but he just started the position in apple and i think thats an opportunity here, the catchup trade where apple is down year to date but the market is up over 20 . We see notable valuation advantages to apple right now and our 12month target price is not all that far from channings at 590. Channing, a similar question to you, to the extent youre in the stock and as scott made the point and many others do, including mr. Icahn, they are well overcapitalized, even with a good return to capital with buybacks and dividends, do you expect there will be more . Do you agree with mr. Icahn . I think there needs to be. I think well see that. I think the key for a longterm investor is whats next for apple . If we look at the smartphone category, if we look at the tablet category, theyre going to become more mature, theyre already doing that, its harder to innovate. When you get to mass adoption and technology cycles, youre going to come down and see margins under pressure. Were looking morality quarter to quarter. If we get to 600, were going to have to take a real hard look at that weighting in our portfolio. You used to have a couple quarters where you release a phone, great thing. Now you have a quarter or two to see what samsung comes out. Competition is increasing. Were somewhat skeptical of technology on your wrist. Sounds great, commercials for samsung are great but i think thats pretty much where it stops. I dont think thats the next category killer. The tv, well look at that. We dont expect the operating margins that the phones have and the tablets. Its going to become tougher. The old days of seeing the big advances are probably going to be more challenged for apple Going Forward. A lot of that also might be the law of large numbers. It going to be tougher seeing large gains Going Forward. Well see what they come up with in 2014. Thanks a lot, guys. Thanks a lot. Shares of boeing flying high today as it boosts its earnings forecast and jetliners drive the companys profits higher. Well tell you how you should play the dows single best component to date. Back in a minute. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. [ dings ] [ male announcer ] every thought. Every movement. Carefully planned, coordinated and synchronized. Performing together with a single, united purpose. Thats what makes the worlds leading airline. Flyer friendly. Shares of boeing soaring after the Company Beats Third Quarter estimates, raising its 2013 earnings forecast. Phil lebeau is live in chicago and as always has the details. Phil . Reporter strong numbers across the board. When you look at what shares of boeing have done since the grounding of the dreamliner, youll be stunned. Earnings last quarter better than what the street was expecting by 25 cents, easily beating the street. On the revenue side, up 10. 6 . Strong numbers for boeing. What drove that Strong Performance . The commercial sector of that company. That division did better than expected. The company also boosting its guidance for all of 2013, going up to 650 to 665 per share, an increase of between 25 and 30 cents, depending on which analyst youre listening to in the past. Theyre also raising their production plan, on schedule to deliver ten by this year, and 14 per month by 2020. Look at shares of boeing, the best performing dow component today and the best performing dow component since january 17th. The stock up 69 since the 17th of january and thats when the faa grounded the dreamliner after a couple of battery fires. And at the time, remember a lot of people were saying to jim mcnerney, hey, are you worried about whats going on with the dreamliner, do you have to dial things back . He said no, well be okay. Conference call in ten minutes. Some people were calling for his head when those problems were just starting. Today the stock back to our history, still 1952, you cant find a stock trading higher. Unbelievable. Another dow component not doing so well. Caterpillar down sharply, about 6 after Third Quarter numbers tumble 34 year after year. Is it a sign of bigger trouble for the industry . Well talk to some of the dans of the Analyst Coverage community in just a moment. [ male announcer ] the new twin turbo xts from cadillac. 410 available horses. Room for four. Twice the fun. A confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. The Energy Department on oil supplies for the past week ending october 18th. Oil supplies rose by 5. 2 Million Barrels, according to the department of energy. That is greater than what was expected. Many analysts were looking for an increase around 3 Million Barrels. Were also looking at a decline in gasoline supplies that is much greater than analysts had anticipated, about three or four times greater than what some were previous districting, 1. 8 Million Barrels in terms of gasoline supplies. Fuel supplies rose by 1. 5 Million Barrels. We are looking at oil prices. Not at the lows of the session right now but close to it, down almost 2, under 96. 50 a barrel. Of course this is good news for the consumer as were looking at lower prices at the gas pump but this surprise decline in gasoline supplies could change a little bit in terms of what were seeing in the gasoline futures market, at least in this session. Caterpillar down about 6 after a qe miss, a bad one. The chairman and ceo, Doug Oberhelman was on squawk box earlier this morning. We saw the mines really explode as india grew, china grew and Economic Growth through the big recession outside the u. S. And europe was pretty good. I think they got a little bit ahead of themselves, the market got a little bit ahead of themselves in terms of what Mining Supply and demand really was. Joining us this morning, managing director of machinery and multiindustry analyst at jpmorgan and a Senior Analyst with longbow analyst, who clearly has plans for this evening at 7 00 as the cards take on the sox. I wonder who youre rooting for. Go cards. Even though nothing was terrible, nothing was good about the mining. Is there any Silver Lining here today . This was an ugly quarter but mining was what we expected. The surprise was the weakness in Power Systems volume and poor profitability of construction. The only Silver Lining is that Construction Equipment at the deal level has turned up and thats just a stage at the end of inventory liquidation. Thats the key to earnings performance next year for caterpillar. Anne, they were very sketchy in terms of recovery. Do you believe the iis isnvento issue gets settled in 2014. I believe the inventory issue gets settled in 2014. The Biggest Issue was they talked about pricing being under pressure. If pricing is under pressure, they didnt really explain why. If its the japanese on on the back of the weak yen, if its the chinese because theyre looking for export markets. There we have a new structural risk, in my opinion be, and we need to understand that better when we get through the Conference Call. Its easy to look backwards but management has taken a beating over the timing over bucyrus, and over it would have been hard to make it worse. Does management have any credibility because of that very large deal done a long time ago . I dont think they helped themselves today. I think we were all willing to give them some credit if they had been able to manage the pullthrough, as they call it. Were all looking for about 25 pullthrough profits and clearly they did a lot worse than that today. So i think the issue Going Forward is this such a high fixed cost business that youll never be able to deliver on the margin side in an environment where volume is weaker than you expected . I think the credibility did not get helped today at all. Eli, finally you say the rewardtorisk ratio still 21, price targets 104, unless thats changed recently. No, thats still our view. Earnings, its not hard to get to 6, 650 in 2014, based on the inventory liquidation. In this mark, 15 times is just not an aggressive valuation. You know, all industrials are under pressure in the short term. Everything in the market is paying for looking out. Mining had a super cycle. The super cycle is over. It Global Growth that will drive it. It always comes back. Its just going to take time. We knew 14 was going to be down year week had that factored in. I know youre rooting for the cards. Are you willing to say in how many games . We have the cards in six. Theyre calling it an ideal match, one of the best series ever. Great to talk to both of you guys. Thanks again. House Speaker John Boehner speaking out on the problems with the obama rollout a few moments ago. Hampton pears is in washington. Reporter the speaker and House Republicans are saying theres mounting anecdotal evidence that people will and are losing their Health Care Coverage related to the delays in signing up. Theres more and more mounting anecdotal evidence there. Republican leaders also saying theyre going to press for a delay in that mandatory penalty tax that kicks in after the first of the year for people who dont have Health Care Coverage. Clearly theres problems with the web site, but i would argue that the problems go much further than that. How about the report over the last couple of days of the hundreds of thousands of americans who are finding out that theyre going to lose their coverage because the plans they had today dont qualify under obama care. Speaker boehner went on to say if the current debacle with the web site continue, you could have more people losing coverage than are successfully signing up up for obama care. Tim price, republican from pennsylvania, said there could be the possibility that hhs secretary Kathleen Sebelius testifies on capitol hill next week. If that happens, that would turn into some mustsee congressional tv. Back to you. Lets send it over to dominic chu with a quick market flash. The second biggest Supermarket Chain is getting a boost after saying a private equity firm might have interest in safeway. And the activist investor had Jana Partners take a 6 stake in the company and is pushing for ways to unlock shareholder value. So swy up to the tune of 7 today. Keep in mind that could be part. Well see. When we come back, two startups going head to head and only Marcus Lemonis can determine the winner. Card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. [ female announcer ] Research Suggests cell health plays a key role throughout our lives. One a day womens 50 is a complete multivitamin designed for Womens Health concerns as we age. With 7 antioxidants to support cell health. One a day womens 50 . All right, its time for the power pitch tournament of champions. Six startup founders will get 30 seconds to power pitch their big idea to the world. Each of the six already delivered a power pitch that got high results from the judges. This time the competition has one ultimate judge. Its a tough one, entrepreneur investors, multimillionaire Marcus Lemonis, host of cnbcs primetime series the profit. Hell take it from here. Entrepreneurs need to show me three things, people, process and product. Today these contestants need to show me the same. First up in round one, elias roman of songsa, a music play list service. Hes facing off against an app that turns a smartphone in your own personal grocery adviser. Each of you will have exactly 30 seconds to deliver your power pitch. Take your place at the podium. Youre up first. When the clark starts, give me your best effort. Im not looking for an infomercial. It empowers people to be healthy three better food. Consumer ignorance have led to obesity and december like never before. It develops simple tools that helps individuals develop health plans and employers almost immediately reverse the years of bad eating habits, it will be used by millions to make healthy food choices and to track their progress overtime. Eating healthy is not impossible, tweak your diet, tweak your life. Thank you. Im a big believer in eating healthy. Ive invested over 5 million in healthy eating. The key word i used was invested and i expect a return. How are investors going to get a return on their investment in your company . Its very simple. The diet market or wellness market is huge. Its valued at tens of billions of dollars a year. Our approach is very different than anything thats been done so far because we focus on getting people to eat real food, not to count this or that or focus on nutrient cards. How many active users . Every month we touch about a Million People. How are you monetizing those people. Our users convert to free to paid apps at about 10 conversion on iphones and almost 4 on android today. Are you profitable today . Were going to be by the end of the year. Going to be or are odd . Were very close. Im worried about the revenue model. Ill get back to in a minute. Elias, you have 30 seconds to show me what you got. Are you ready . Im all set. Relax. Youll be fine. We use six data points to predict what youre up to, entertaining, exercising, camping and an expertly curated play list. With no marketing at all weve grown to 5 million month live users. Weve developed a way for advertisers to serve ads that users actually enjoy and built an experience where people tell us exactly what theyre doing so we can make it better. Thats a powerful foundation for curating content and products. Im going to let you have more time if you want it. You dont want it. Thats the story. Are you profitable today . We are not profitable today. One of the things i noticed in your biois you have one key investor, amazon. Com. Tell me about that. We brought in a lot of strategic investors, the manager of lady gaga and Justin Bieber as well. Is this amazons play of getting in the music space . I cant speak for amazon. Were totally rethinking how music fits into peoples lives, taking all the work out of figuring out what sound you need for each moment and building the next generation of intentbased marketing. I noticed you dont have advertising on the free app like pandora so how the heck are you paying the bills . We do have advertising but its native. Instead of a nike ad interrupting your run, it a situation called working out with nike. Theyre conveying a product messaging without interrupting the experience. Visual messaging on an audio app . Yes. Thank you, guys. Unfortunately one of you is going to go home. Look, what i love about what the two of you do is you put the entrepreneurial forefront. You both put money in your business but youre both still losing money. Which one will bring advertisers and consumers to the market first . Eating healthy is important but theres a lot of ways to research eating healthy. And getting music is important but you have a lot of competitors called pandora, spotify and itunes. Hemme, you have a great product but im not going to go forward. Elias, youll go the next round. Coming up, the power pitch tournament of champions continues during the fast money Halftime Report. When we come back, walmart is getting in on the tablet wars, kind of. You can now trade in your tablet at walmart. Well tell what you that may mean for the dow component in just a few moments. After your companys gone public . And the capitals been invested . Or when your companys bought another . Is it over after youve given back . You never stop achieving. Thats why, at barclays, our ambition is to always realize yours. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Retail giant walmart announcing its adding tablets to its electronics tradein program. Its confirming it will said the new ipad air for less than the apple price. Court is at hq with that. Its about gaining the foot traffic and the valuable tablet customer for the Worlds Largest retailer. Less than 24 hours after the launch of the newest ipad, they launch the tradein program, hoping to grab the consumers eager to trade up. Customer disreceive up to 300 for the current tablet, which is then immediately applied to the purchase of a new tablet. The tradein needs to be done in stores at one of the 3,600 walmart or sams Club Locations doing this program. Walmart says customers were looking for a tablet tradein program after the retailer launched the smartphone tradein program. The new ipad air wont be available until november 1st, but at walmart, 20 less, priced at 479, and the mini will be 399. If the new tablet costs less than the tradein value, consumers will receive the balance on a gift card, which gets you shopping in other categories. While its been weak in the recent quarters, they say tablet sails as a subcategory are growing and its doubled its assortment of tablet, important timing for the Holiday Season. Many forecasts suggesting its likely to be very tablet chris marx and on a recent Conference Call, haully said a million customers have participated in the layaway program, and the top layaway is the nexus tablet. Well see if we see the new apple ipads in there, as well. The tablets becoming the bellwether for how retail will shape up this Holiday Season. It really is. Thanks, courtney. Its the Company Behind ramada, travel lodge and days inn. Its up almost 2000 since 09. Well talk to the ceo about how they plan to keep the stock traveling in that direction. And look at a few of these, a beautiful starbucks in japan, and now expanding beyond coffee and into tea. Well hear what Howard Schultz had to say about that move. Woman everyone in the nicu all the nurses wanted to watch him when he was there 118 days. Everything that you thought was important to you changes in light of having a child that needs you every moment. I wouldnt trade him for the world. Who matters most to you says the most about you. At massmutual were owned by our policyowners, and they matter most to us. If youre caring for a child with special needs, our innovative special care Program Offers strategies that can help. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Transit fares as in the 37 billion transit fares we help collect each year. No . Oh, right. Youre thinking of the 1. 6 million daily Customer Care interactions xerox handles. Or the 900 Million Health insurance claims we process. So, its no surprise to you that companies depend on todays xerox for services that simplify how work gets done. Which is. Pretty much what weve always stood for. With xerox, youre ready for real business. Welcome back to squawk on the street. Check out medical device and supply company c. R. Barr, moving on up after the Company Reported earnings that beat estimates, the sales helping to power results, and separately Goldman Sachs and Piper Jaffray upgraded the stock. All right. A lot of individual stories going on. Thank you, dom. One deal is corning. In the deal to acquire samsung stake, just amazing the association of the company in the tablet space, or the phone space, is resulting in what is no a twoyear high, an 11 move almost, or was for corning at 1,691. Gilford securities out today saying investors should assume that corning will be more involved in the development of future products released by samsung, david. We know how competitive and highly watched those things are. Without a doubt. Also worth mentioning, a couple of other thing, broadcom, we havent mentioned this, weve gotten a lot of earnings, broadcom, it was not a happy Earnings Report to say the least, and its down over 7 . You can see it there, continued concerns about margins and just erosion overall. And the sort of bleeding over to the altera, and a real bifurcation. Operating margin at northrup and General Dynamics out today, up 120 basis points and 90 basis points respectively, offsetting the worries of declining backlogs. Look at the charts. If somebody had said to you, we have a sequester coming, thats not how you envision that chart at the beginning of the year. No, that was unexpected, i guess you would assume, given the pentagon budget is under pressure. Did want to mention the banks. Jpmorgan drumbeat is still there. This is for private securitization, and you may recall bank of america reached a settlement with a number of investors with its securities or those with countrywide, as well. They may have done a good job. Theres continued overall pressure on the financials. That may be part of it when you look at least some of the banks heavily involved in securitization, which amazingly enough, here we are, five, six years later, still dealing with the consequences. All right. European banks getting a lot of attention, too. Italy is beginning to have a tougher time closer to the european close in about 30 minutes. Well see what that brings. David, be on your way. I will be on my way, carl. Ill see you tomorrow morning. If youre joining us this morning, heres what you missed earlier on. Announcer welcome to squawk on the street. Heres whats happened so far its more important than euphoria and greed. And you can see this with the function. Bubbles go up very slowly, and then they go bang. Our Balance Sheet is bulletproof right now. Were ready to go. We need recovery in mine, which at some point will come. Ive seen cycles off and on over my 39 years. This one is pretty acute in mining. The rest of the business is hanging in there. The level of confidence during the dreamliner incident, where he said, listen, this will be behind us, dont think about it, its a tale of two stories of management. Ones got it, boeing. One doesnt, caterpillar. Now were going to bring them to the country of america, all over in every city, in canada. And at some point, i think we can bring it to asia, as well. This is the beginning of at least a thousand stores over the next few years where we can do for tea what weve done for coffee. [ bell sounds ] the recovery is still in its infancy. Its gradually progressing, but its still weak, uneven, and fragile. Could blame him good wednesday morning, live here at post 9 at the New York Stock Exchange with the check on the markets. The dow continues to lose some steam, as were off 72 point, the s p is off 11, back to 1,743, after hitting the record highs earlier in the week. Two stocks to watch this morning. That is caterpillar and boeing. The shares rallying after Third Quarter numbers beat estimating. The airline raising the earnings for the rest of the year. Caterpillar slipping, they did miss on earnings and revenue, cut the fullyear forecast and revenue outlook, as well. A lot more about those names later in the hour. Fitting that the road map begins with boeing and cat. If we go behind the numbers, what are the companies telling us about the state of the economy . Weve got some answers. Plus, one judge about to decide the way forward after the largest municipal bankruptcy in u. S. History, detroits future is on the line as a federal judge decides whether the city can reorganize under chapter 9. Well find out what that could mean in a few moments. And starbucks brewing up trouble in china, accusing the company of price discrimination against chinese customers. The ceo responds to the accusations later this hour. First up, though, a tale of two dow components. As we said, boeing Third Quarter numbers up 12 , pretty strong commercial aircraft business. Caterpillar posting low number, mostly on mining weakness. Earlier this morning, the ceo did join squawk box. Heres what he had to say. Im hopeful that im not going to make any forecasts here, bullish forecasts on mining, but my bet is it will be sooner than late, and i hope late 14, 15 is when we see that. Tom is with ogle meyer asset management, and keith joins us. Good morning. Good morning. Thanks for having us. Cat, mining has its own separate issue, but he is cat is appearing to throw cold water on what people are hoping is some new legs in the industrial cycle. Arent they . Well, its not the industrial cycle, its the mining cycle, carl. I think when you look at the industrial sector, we have it as an outperform sector. It historically does the best in expansion market. Everybody looks at it a mining sector. Global growth, even on an up tick, is going to be light. So the industrial favorites arent necessarily in mining. John, people obviously mining was a big problem for cat, but Power Systems were no good, construction was no good. Can we say this is limited to a mining story . Thats really hard to say, carl. You know, the way we look at it right now is Cyclical Companies are cheap out there. Chemicals in particular. Mining, yes, i agree with tony, its facing cyclical headwinds. You know, in the longer term, the stock prices are pretty attractive at the current levels, and there are some kind of secular tailwinds to support the stocks over the longer run. We have seen some things, john, in the past couple of day, the number of new 52week highs on the s p. Right. Getting up to 100, maybe a little more than 100. All year long, when it has gotten to triple digits, that has tended to signal a bit of a shortterm decline. Is that the cycle this time . You know, again, thats really hard to say. In the short term, i would be were kind of constructive here. Theres some supportive factors right now. Theres the 10year bond, traded up. So the cost of capital is down, trading at 2. 50 now. The dollar has sold off a little bit, so that provides a little bit of a tailwind. And then, you know, also, you have Oil Prices Trading off, which provides a stimulus to the market in general. I agree with you, the market has traded up significantly, so it may be due for a pause. Tony, give me levels here. 1,750 was a yearend target with the big banks, and we got there with a little cushion, as well. But when you look at what oil has done recently, you look at what some of the leadership has done, where are we, what will the last few months of the year going to look like . Ultimately, youll have a little bit of a correction. Thats not predictable. The big mistake we make at strategist, as investors, is we try to provide the next 2 , which is ridiculously impossible to do. I see no reason to change the target. Thats not the focus, carl. The focus is that the market gods give you the ability to buy a pullback when you have historically low inflation, negative real fed funds rate, historically steep yield curve, improving money availability, positive trajectory of earnings. Thats something we keep fighting. Until that change, and the only thing that typically changes a multiple expansion is when the fed ties Interest Rates to the point where the stock market predicts a recession is down the road, were probably a year, two years away from that. If we do get a correction, i think you follow the sectors that have been performing better, you know, since the valuation low in 2011. Yeah, do you believe speaking of not just rates increasing, but when we have the taper discussion again, tony, do you think thats a june phenomenon . Its probably going to be a First Quarter phenomenon. At the end of the day, carl, it doesnt matter, because as long as the shortterm Interest Rates are pinned, youll have a steep yield curve. The only thing thats led to a recession postworld war ii is an inversion of the yield curve. If you have thin shortterm interest rate, i dont care whether its the fedmanipulated yield curve, at the end of the day, it will make banks more willing to lend. And that wont change for a year or two. What areas do you like most, john . Oh, boy. Well, right now in u. S. Stock, we like certain cyclicals, think they present compelling value. Lionel basal is one particular name. And generally stocks in china. We think theyre trading at attractive multiples and have a secular sort of tailwind behind those, as well. And then, its hard to give universal universally applicable advice to people, but for people that dont have any gold in their portfolio, i think it makes some sense. We think zero is not the right allocation, that people should have at least 5 for a lot of Different Reasons that i wont get into, because i know were time constrained. Getting back to 1,350 was an interesting move for a lot of people who have been watching gold. John, tony, thank you for your time. Good to see you. Thank you, carl. Looking at netflix this morning, trading higher. Obviously, a huge swing yesterday. The stock did plunge. Carl icahn revealing on twitter he cut his stake in the company, making more than 800 million in profit from the stock he sold. He said it was time to take chips off the table. Cramer did talk earlier on squawk on the street about the move. Look, i think carl made a very good point. Carl is old school. Hes old school in the sense that bears make money and pigs get slaughtered. His rationale was related to the idea, come on, i have an unbelievable game. What am i supposed to do, give it away . Meantime, as of today, you can trade in your old tablet at walmart. Customers can receive up to 300 to be applied to the purchase of a new tablet. Starting on november 1st, options include new ipad air for 479, cheaper than the price apple announced yesterday. Joining us this morning, steven levy for wired. Ian scherrer is tech writer for wall street journal. Good to see you. Same here. Taking a poll of what people thought of the technology, the advances, the general consensus this morning has been good enough, not bad, but certainly not whiz bang. You agree . Yeah, three narratives going on here. The ipad narrative, where apple really did some impressive things in slimming down its ipad, calling it the ipada, or getting it to one pound is amazing. They did a good job on that. The and the ecosystem narrative, where apple is saying, come to the bigger system here. Thats why theyre giving away the applications now. And a third apple narrative, where, when will they come up with a big gamechanger there . And were still in ysuspense about that, about the next product area next year, where theyll try to take a new area, make it easier to use, and dazzle us in Something Like Television Set or watches. Ian, your best guess about what that is, what steven was just talking about . I mean, at the end of the day, weve already reported that theyre working on a television and a watch. But as was mentioned earlier on cnbc, even that its not clear how far those will push apple. At the end of the day, what theyre focused on is getting as many iphones and ipads into peoples hands as possible, and expanding the product line, selling older versions of the ipad and iphone at lower prices to kind of get people in the doors, and keep them buying into the ecosystem, which, as steven said, is one of the most important things for apple. Yeah, and the mavericks move, steven, is a big step in that direction. You go on twitter this morning and you hear people ask, why would i ever pay to upgrade to windows 8 . Why do i need excel if im going to get these things for free, if i enter their ecosystem, right . And it continues the trend thats going on there. Mobile drives everything. It used to be what we wanted from our phones and later tablets was saying, well, i want as much as possible as what i have on my desktop. Its the opposite. The operating systems of desktops are emulating the way we work with mobile devices. So it becomes sort of seamless. You do something from your phone, your tablet, and just move it to the desktop, and it doesnt really matter what device youre using, its all one system. One thing, ian, that strikes me is that every other week or so, you do tend to get a headline that raises fresh worries, right . This month, its been oh, the 5c is underselling the 5s 2to1. Reuters many coulds out and saying theyre how much weight do you put into those . As apple said, its hard to tell from one data point whats going on in the supply chain. Its important to look at, you know, were trying to figure out day to day whats going on. At the end of the day right now, the indications are that maybe the 5c is not doing as well as the 5s. And, you know, part of this again, were getting back to theyre trying to expand the product line and get people in the door. If its not working, the question become, where are the next legs of growth come in . Thats why you see so many people concerned about the headlines. How much to discount them, at the end of the day, you know, you have to look at it as a daytoday trackertype thing, right . Well see at the end of the quarter how theyre doing. Right. But early indications are early indications for a reason. Steven, as we head into the Holiday Season, and we obsess over this even more, is the real tale going to be the mini . Is it going to be the tablet . Or does it continue to be an iphone story where margins are fattest, for instance . Well, i think the tablet will be important. This is as much an upgrade story, you mentioned the walmart thing, i dont know how many people will take the couple hundred dollars there. But certainly, apple really wanted the people who were early ipad users to say this is the time, now that im going to upgrade, jump in and get my second ipad there. And i think with the air, im dazzled they got it down to one pound. Thats a good incentive for the early ipad users to say, okay, time to give this to my cousin and get the new one. Yeah. The engineering is note its just an amazing feat what they continue to do, whether or not you like the stock. G guys, appreciate the guidance. You might not know the company. You definitely know the brands. Ramada, days inn, super 8, howard johnson, all part of wyndham worldwide. Well ask the ceo if the market is strong. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Dows now down 84. Taking a look at the utes, utility sector, the best performer on the s p this morning. Dom has more on that. Pretty much only one of two sectors flat to up on the s p 500 so far today. Some of the real standout individual movers that are helping to power the gains are American Electric power, up 2 in trading, giving you the dividend yield around 4. 5 , and also dte energy, up over a percent, a dividend yield there of 4 . Duke energy share, 1. 5 to the upside here, a higher dividend yield there, as well, 4. 5 . And consolidated edison, a yield of over 4 , as well. Remember, investors often buy the utility stocks to get the fatterthanusual dividend payments, but as a whole, the sector is up 12 this year, underperforming the broader s p 500s 22 , overall gain, carl. Back to you. All right. Thank you for that. Lets send it back to headquarter, simon hobbs is standing by with an interview. Yeah, one of the standout stock market starts of recent years, wyndham is out with its earnings, saying its one of the Largest Hotel businesses, and helping people rent out vacation properties. Here in a cnbc interview, Stephen Holmes. Good morning. Good morning. They think its a strong quarter, the analysts, but you described it as excellent. Spectacular. Each one of the Business Units performed at a double digit growth in ebitda, and overall 25 increase in eps. Thats a good quarter in my book. Are you really the Largest Hotel chain . Yeah, what you count them by the number of hotels, yes, absolutely. You have 18 brand, maybe, depending on how you count them. Whats happening in the United States . Youre at the economy, midscale level, trying to persuade the hotel owners to carry the brands. What do you see . Is the consumer hanging in there . The consumer is doing very well. The consumer in the u. S. Is more and more inclined to travel for leisure than they have in the past. We continue to see good demand out in the marketplace. What we see with our brands is all of our brands have Growth Opportunity in the u. S. The two largest brands we have, super 8 and days inn, are fairly saturated in the u. S. , and were growing them more rapidly internationally now. But in the u. S. , we sigh wyndham growing very rapidly, microtel. If people love you, they love you because of the cash flow, free cash flow, 705 million so far this year, for the share buybacks. Where are we on, say, return of equity and the amount of your stock that youve now bought back . Weve purchased back about 3 billion worth of stocks since we whats the free float at . Boy, its probably about 15 , 20 . Wow. I should know that off the top of my head, but i dont. Its a significant number. Weve been doing it continually since we spun off listed on the New York Stock Exchange seven years ago, so its a continuous effort for us. Well talk about the reaction today. You had the stellar the stellar performance over the year, which people remarkable. Mkm analyst describes you ashavn executing on earnings. And recently, you have this softer patch. One of the reasons for that is because the Loan Loss Provisions became an issue in timeshares, as i understand it. You had some fairly unscrupulous behavior in florida, and youre putting that behind you. Coming out of that, the timeshare business is one that youre increasingly trying to make assetlight. Youre trying to revolutionize that business. How are you doing that in laymans terms . Well, if i could, ill comment on the loan loss provision. Okay. Thats something that hit us last year, and weve been talking about it very openly. Some people doing some bad thing, and theyve been convicted and just waiting to be sentenced. So theres really some bad things going on that impacted our business somewhat last year. Interestingly enough, though, that Business Unit covered that pressure that we felt last year, and we still delivered on our numbers. Okay. This year, its improved because its removing that additional loan loss from last year. With respect to the assetlighter model were going to, its a way of growing our business without having to deploy capital. The traditional model for timeshare is you build timeshare units, timeshare product, the build cycle might be 18 to 20 months, and it sits on the ball has sheet, and you deliver it and sell it. And now we have other people delivering it for us, and in time. We are in a feesforservice business. Thats what we do. Lets talk about the reaction to the results today. I mean, youre down. Today, youve but you have had a strong runup, up 10 , 12 , and jpmorgan raised the target for you to 78 a share, i think. One analyst said to me, maybe buying back your stock and being disciplined on cash flow is no longer enough. Maybe i dont know whether youre just a victim of your own success. How do you feel about the reaction youre getting to what you describe as an excellent set of results . Well, ive been doing this for quite a while, and theres a lot of times where we go out with just inline kind of expectations, and the stock goes up. Other times we have terrific results, like we did this quarter, and for today, or for this morning, the stock is down a little bit. Who knows where it will end at the end of the day. And as ive said to people in our organization, ill say it to other people, our job is to deliver the results. The street is going to determine what the price is. We can give them all of the information to make the right decisions, and i think in the long term, well be well be in great shape. Good to see you again, mr. Holmes. Thank you for toing. Good to see you. The chairman and ceo of wyndham worldwide. All right, thank you very much, simon hobbs. Lets go to Julia Boorstin who has news on linkedin. Hey, julia. Carl, if you try to log onto linkedin or access the mobile app, you may not have been able to. Many people reporting across the country theyve not been able to access linkedins either web product or the mobile app. Linkedin telling us, quote, our site is experiencing issue, our team is working on it, and you can follow the updates on linkedin. Its inopportune, because im at a linkedin mobile event, starting at noon eastern, making mobile announcements. Its a big deal for the company as it tries to expand its mobile footprint. So to have the app and website not functioning properly, not good timing. Back over to you. Absolutely. Looking at the shares down 3 , not too far off the 240, 250 level where it was not too long ago. Thank you. A landmark case about to go in front of a judge that will decide the future of the city of detroit. So what happens next after the biggest municipal bankruptcy in u. S. History . Well go live to the motor city to find out in just a moment. I love having a free checked bag with my united mileageplus explorer card. Ive saved 75 in checked bag fees. [ delavane ] priority boarding is really important to us. You can just get on the plane and relax. [ julian ] having a card that doesnt charge you foreign transaction fees saves me a ton of money. [ delavane ] we can go to any country and spend money the way we would in the u. S. When i spend money on this card, i can see brazil in my future. [ anthony ] i use the explorer card to earn miles in order to go visit my family, which means a lot to me. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Call 18882800149 now. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. The next step for detroit is coming soon. Starting today, a federal judge can decide whether the city of detroit can reorganize under chapter 9 of the bankruptcy code. What could this case mean . Were live in detroit with some answers. Good morning, scott. Good morning, carl. In many way, the very future of detroit is at stake in this trial. The judge will decide if the city is eligible for the bankruptcy protection it filed for. The city argued a short time ago, and had statements that detroit is insolvent by every standard. Thce of evidence, he said and the protesters out in front of the courthouse as the trial began, including a handful of protesters from the occupy wall Street Movement who came from new york to show their support. And many of the protesters here say the real culprit in detroits demise is wall street. We got sold out the city of detroit, along with other communities throughout the United States, were targeted there predatory lending, and when the tax base is diminished, the city has to borrow money. Were not responsible. We should not pay. I live in the city of detroit. I pay taxes in the city. I own a home free and clear and is worth nothing because of what the banks did with the foreclosure crisis here. If they dont have money, its because gm move the plants, took jobs out of the city. Reporter wealth, that wont be decided here, but what will be is whether the bankruptcy filing is constitutional under the state and u. S. Constitutions. Did the city negotiate with the unions in good faith, and should those pensions be offlimits as the michigan constitution says . This phase of it, this trial to decide the eligibility, will go on about a week to ten days. If the judge approves it, says the city can go forward, then theres a whole new fight about how creditors are treated, but thats still not until around about march. Back to you. A big story and lot of lessons for other cities. Well talk to you more about that. Scott cohn in detroit. And many rejected the opinions of analysts during the shutdown showdown. Honeywell and at t, among the biggest donors, and they would have seen a major hit to the bottom line. Well talk about that with representative Scott Garrett, about if the influence is fading on the hill. Bny mellon combines Investment Management investment servicing, giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. The european markets are closing now. [ bell sounds ] and its been a rough day for a lot of investors over there. Lets bring in simon hbos to talk more about what happened in europe. Yeah, for sure, carl, we have the winning streak there, people saying we were technically overbought, but weve gone dividend with some stocks. Theres a concern about earnings. Some of the Big Companies disappointing. You saw with heineken warning about the beer sales in central and eastern europe, and sml, which is im sorry, the Largest Semiconductor play in europe is worried about smartphone sales in asia. And theyre publishing the details of the stress tests. So some of the Spanish Banks will find it difficult to make that. Youve also seen some of the italian banks. A lot of banks in europe are down today. And we had the head of them on earlier. And apart of where the cash comes from and who has sacrificed senior bond holder, the question is whether they will keep the 1 trillion euros that theyre sitting on beyond three years. I think what he says here is a hint that they might. The recovery is still in its infancy. Its gradually progressing, but its still weak, uneven, and fragile. So banks are crucial in this part of the world. And they are the main source of credit for small and mediumsized firms. Thats why its so important that we make everything thats needed to make them function well. Finally, just a quick mention, Prince George was baptized today in london, in a relatively private ceremony. There you see her image industry the queen. What i find fascinating about this kid here, 3 months old, carl, is hes being baptized into the church that he will one day be the head of, because, of course, since king henry viii split from the church, he is lead the entire anglican group. All right. A great picture. Thank you very much, simon hobbs. Bob pisani is looking at the markets and the outlook from some of the companies. Tough visibilities. Three trends i want to talk about today, partly from earnings, partly from the current economic situation. We told you about the rather poor put up the stock, the rather poor guidance from some key tech players, cree, altera, and right now, the full screen, getting inline earnings, but the guidance, the weak revenue guidance is a real problem. Two things are happening. The expectations are too high, and normally we have good visibility in the Fourth Quarter, but its not happening. Poor visibility a major problem overall. Oil keeps dropping. Did you notice, it was 110, and now, put up oil, collapsing, down to 96. Great news for consumer, great for Companies Using oils and natural gas, bad news if youre an energy stock investor. So look at all of the energy name, big energy names moving to the downside. The third trend im seeing is Interest Rates. The tenyear yield is collapsing. We were at 2. 75, and now down to 2. 48 . Thats a big drop. Its been a big help for people investing in Interest Ratesensitive groups. So just the last few days, the utilities are rallies, reits are up nearly 4 . All of these are very, very nice moves in the group overall. As for the earnings situation, let me say this, caterpillars guidance and move to the downside is being offset by boeing. I know youre focused on caterpillar, but not too much. Finally, carl, the Stock Exchange mergers are happening. Department of justice just approved the bats and direct edge merger, two about to merge, and close in the first half of 2014. I think that will be fairly pro forma, so they rival the nyse and the s p 500. And Mitch Mcconnell helped the country avert a debt default. His reward, attacks by a Tea Party Republican accusing him of surrenders to democrats. Good morning, john. Reporter good morning, carl. You know, its rare for any senator to get a free ride anymore, because the atmosphere is so toxic in washington. Mitch mcconnells got a democratic opponent in allison grime, a Tea Party Republican in matt beven, but he may have made friends with the deal he made. I met him, hes very nice. I think mcconnell did exactly what we had elected him to do, and he negotiated for the state and for the whole country. I think that he actually looked at it and did what he has really done often, thand is sort of hang back till there was a possibility of an agreement, and then act to actually get, you know, something done. He really stepped up. I actually thought. You know, it would have it may actually hurt him here some. Reporter hurt him, because matt bevins calling it a surrender, and after many years in washington, just won a new face. I think both sides are a little disgusted with Mitch Mcconnell right now. I have quite a few friends that are republican, and they havent been very happy with him either. So i hope this guy has a good chance. I remember meeting Mitch Mcconnell when i was in 4th grade. Thats how long hes been in the office, so, yeah, i think its time. Reporter of course, matt bevin has vulnerabilities, running as a fiscal responsibility candidate. And he means it. The eligibility age for medicare and Social Security may need to be raised as much as seven years. Look at the demographics associated with it. It was when these programs were created, the recipients on average live add few years beyond the point at which theyre eligible. Now theyre living as long as half their lives after the point that they become eligible. Decades and decades. This is whats making it unsustainable. So what would you again, we have to walk before we run. Whether its two, five, seven year, the fact is we need to move it in a different direction, and we have to start now. Reporter ill be shocked if Mitch Mcconnell doesnt go after him for that statement. One postscript, matt bevins Family Company for years made the bell for the New York Stock Exchange in and out of session. Like many in the tea party, he says the Republican Party has gotten too closely aligned with large corporate interests at the expense of everyone else. I cant get over the sound bite of meeting mcconnell in the fourth grade. Thank you for that. Analysis from the Washington Post shows that big business provided significant Financial Support to the lawmakers who voted against raising the debt ceiling. Business groups, particularly the banking segment, warned of dire consequences of default. Republican congressman Scott Garrett voted no. He joins us from capitol hill, a member of both budget and financial services. Congressman, good to see you again. Good morning. Hey, its good to be with you, thanks. What do you make of the post story, citing honeywell, at t, u. P. S. , all of the the kinds of companies that are coming out and saying this would have been terrible, apparently lobbyi ining dollars all for na. Had we not gotten the deal at the end of the day, you mean . No, they would come on our air, ostensibly, saying default would be bad for business. And yet the congresspeople to whom they gave money in the reelection cycle voted for something that might have led to defaumt. Yeah, well, i guess it goes to the issue of those people who say politicians are bought by their contributor, i guess in that case, its not the case. You know, i was listening to the leadin to me coming on air right now, in the interviews, and what have you. The people that you dont ever get the chance to interview, right, are the people who are actually going to actually pay the price of all of this, the people who will pay the debt. The fact that we didnt reach any real agreement, we just kicked the can down the road again, the 17 trillion we, had the 1 trillion were adding to it, the 2 trillion adding to it for obama care. Really, the people you need to interview. I know its hard. Is to talk to your kid, my kids, grandkids, they are ultimately the ones bearing the ultimate price for the fact that congress cannot do anything about its entitlements and reform in that area and the extra costs were throwing on future generations. Its difficult to get the future generations on the air when theyre not born yet. Some of them are born. Some of them although my 4yearold, trust me, you dont want to see on live tv. The point of that, its almost as like the senators and other people who voted in favor of this deal went to their 4yearolds and took their piggy bank from them and said, im going to take your money to pay for the expenses that were incurring today in this congress. So thats really not fair. But anyway, you were saying. Well, if the strategy then was right for republicans the way youre describing yeah. Why is mcconnell having the problems hes having in kentucky . Why does mike lee get trounced by both the Washington Post and the journal as the poster boy for the republican who led the party down this road and is now going to pay some kind of political price . Yeah, so i guess i mean, he stood on where he believed, on principle, he was trying to address the issues, i guess, i just raised a moment ago, is that Congress Really needs to step up to the plate and try to address entitlement reform, really needs to make sure they dont keep adding additional costs to the system. And the administration, as you know, was nowhere in that negotiation. Heck, what was president obama saying . We will not negotiate when it comes to entitlement reform. So, yeah, theyll be attacked consistently now Going Forward. I guess the question now Going Forward, though, is to all those who voted, yes, what is their solution, so maybe ill be back on this program in a couple months from now when they strike the next major grand bargain that puts us on the road to fiscal sanity and gets to a balanced budget. Im not quite holding my breath for that one, though. You are on the committee, and obviously we look to you for insight on that both today and down the road. Congressman, good to see you again. Good to be with you. Congressman Scott Garrett. When we come back, Howard Schultz speaking out on the controversy of prices in china. Hear what he told cramer earlier on squawk on the street. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Plays a key role throughout our lives. One a day womens 50 is a complete multivitamin designed for Womens Health concerns as we age. With 7 antioxidants to support cell health. One a day womens 50 . Coming up on the half, the greatest trade ever, carl icahns sellout. And John Najarian said someone big was getting out of netflix long before it was icahn. Find out what unusual activity hes seeing today, and well talk to john sculley about where the stock goes next. Carl, see you in a few. Option monster sees all, knows all. Yes, he does. All right. Starbucks drawing the ire of the Chinese Media over prices there this week. Chinese state television accused starbucks of unfairly setting Prices Higher in that country, discriminating against chinese consumers. Jim cramer spoke with Howard Schultz and he asked him about the accusations. So when this happened, i think we were taken back, because this is not the way starbucks has done its business. What weve done in the last 48 hours is completely transparent. Our cost structure in doing business in china and the investments we made to build that business, to have 1,000 stores, almost 20,000 employees, and investing ahead of the curve, gave us the position where we had to charge a little bit more than some of our other markets. Weve explained that, and i think the people who did the story understand it. And i think the story is now behind us. Plus the report this morning, 60 decline in chinese profit, very clear the Chinese Government has not embraced them. We know yum, kfc, david novak, very fine executive, thought wed be through that. It hasnt happened. Government resistance. What are you hearing back from your 48hour period . We are in a quiet period. Well announce earnings next week, on the 31st. I want to be careful there. I want to say our business in china continues to be strong, and were cautiously optimistic about the future. But we havent seen anything that significantly would change our outlook about china and the opportunity that we think we have in china over the long term in the last 48 hours. A lot on your plate. Tea bon opening. Youve made it clear there was no cannibalization, and thats been put aside. But youre trying to drill down on washington. Youve had some luck with your petition to try to get people to come together. Where are we . Well, i think i think all of us in america have a strong feeling that something is not right, that were looking at a government that is not functioning the way we would hope. I think the Government Shutdown in the last two weeks demonstrated a complete fracturing of leadership, and i think in many ways and i hate to say this but it was shameful. And i think all of the people in america who are affected by this did not have a voice. In two and a half day, we put a passive petition, almost 2 Million People have signed it. We physically delivered it to the white house and congress, on the heels of them reopening the government. Now that were facing this again in january or february, what we need as a country, and what the American People need, is a longterm, comprehensive, bipartisan, longterm budget deal. We need a new fiscal policy. We need a new tax policy. We need a new immigration plan. And people in washington have got to understand that the that the constant bickering, the constant disrespect is not serving the American People. We need citizenship over partisanship. And jim will have a lot more with Howard Schultz tonight at 6 00 p. M. Eastern time on mad money. Earning news moving the news. Panera taking a hit on earnings today, down almost 5 . Stay tuned. The earnings squad is here to break it down for you in a moment. Welcome to the earnings squawk, helping you trade the stories you may have missed. Im melissa lee, and joining me is dominic chu and herb greenberg. Herb is fired up about this one. This is true. The stock is up big time, but truly of less worse is good. Well, you know taeshs interesting, yesterday talking about it, we said some investors would look at this as an inflection point. The company came out. The guidance was not good. Its enrollments, it missed. But one thing, it said it would cut costs. They see this as a turnaround play, as a value play. The cash is there. The question is, will it be, how long will it take . Its not just it sets the tone for all of the forprofits. This is the first one, and cocoa, and it could be a good story. Enrollment down 22 , and thats better from the Third Quarter of 2013. The student base next year will be smaller. This is an interesting move here, 25 gain in todays session. Lets talk about cree share, because also a wild move, trading sharply lower after a Second Quarter loss in earnings, and the l. E. D. Bulb market, theyre commodity, and theres pricing pressure around the retail complex. Walmart is marketing its own l. E. D. Bulb for nine bucks. L. E. D. Bulbs are coming into their own. On crees call, theyre focussing on the quality. And ive been in the market for new bulbs for a house in san diego, and as you go out, the lightni lightning, the brightness, theres a lot of discussion about that. Remember, l. E. D. Bulbs are still, in the past year, theyve come into their own for landscaping or for use in your homes. So cree is sort of in this inbetween spot. Yeah. When you have the privatelabel guy out there, and whats the quality of his bulb versus their bulb, and thats what theyre trying to draw attention on. Its not working one. I just buy the cheapest one. Youll look wonderful in either one. The Conference Call is interesting, because they addressed the exclusivity in terms with home depot. That expires in april. They skated around the issue. They said theyre not going for the margin. Exactly. You have to wonder, as an investor, you want to see them looking at other channels, especially as walmart is going hard into their territory. Similar Stock Movement in cree, and then it recouped. So a wild mover. And panera, Fourth Quarter earnings, and, dom, youre following this one. They come out, the sales come in maybe a little lower than some analysts estimates. But they cut the forecast. This is the latest of the restauranttype chains to say maybe the consumer is not spending as much as they used to. The samestore sales company, i just have to get this out, they said that their manager, they took a look at theyve done a selfexamination and found the managers, and this just stopped me in my track, have focused on efficiency and cost benefit at the cost of business, and when you see a Restaurant Company saying that, wow. Yeah. Not a good sign. Tweet us at earningssquad, and back here tomorrow on squawk on the street. Coming up next, new development on fines for jpmorgan. Weve got the details. Thats next. [ male announcer ] more room in economy plus. More comfort, more of what you need. Thats. Built around you friendly. Welcome back to squawk on the street. Im kate kelly, with new developments for jpmorgan, for whom the bill keeps getting bigger. Not only is it facing tentative fines from the Justice Department for 13 billion to settle a bunch of civil cases. Now comes word a longstanding private investor suit could result in a payout of almost 6 billion, a significant addition to the running tally. Some backoftheenvelope math showing that jpmorgan is eyeing in the ballpark of 30 billion of various settlements, and thats not including criminal cases that are not likely to be a part of the Justice Department accord in the works. Still, theyre not as bad off as bank of america, which the wall street journal estimates to be facing two times that amount in various mortgage claim, including a 9 billion pact with the same private investors that are still awaiting a judges approval. I cornered ceo jamie diamond, and he said hes eager to put the matters behind us. Were going to move on. And as he works his way to a final deal with justice, expected sometime in the coming days, there may be one thing working to his benefit. That is tax law. Experts say some portion of the 13 billion payment may actually be tax deductible, although not clear how much. People will have a field day with that one. Thank you very much. You know it. Kate kelly covering the jpmorgan story. The dow is currently down 59 points. Lets get back to Halftime Report and scott wapner. Thank you very much, carl. Heres what were following today. Nailing netflix. Our own John Najarian. Somebody was getting out, and somebody very big was getting out. Yeah, our own John Najarian is on the case. What opportunity is the doc diagnosing today . Power play. Why two of the traders are fighting over first solar and what you should do with the stock up 126 in a year. We do begin with more on billionaire investor carl icahn selling almost half of his stake in netflix for a profit of 1 billion. And considering he bought it for 58 bucks a share and sold for close to 400, some are calling it the greatest trade ever. We want to tak