Transcripts For CNBC Squawk On The Street 20131105

This week. Several big consumers names reporting betterthanexpected results. Find out what it means for spending ahead of the Holiday Season. Hey, were just two days away from that twitter ipo. Bet you havent heard that before. Find out why the head of nyse said not every ipo goes to the moon. And apple has tripled the number since last years launch. Tmobile posting a rise in q3 revenues as the company added more than a million customers in the period. Got to start with kors. 71 cents, beats by 3 cents, samestore sales plus 23. Not the 45s, 41s we were seeing a few quarters ago. Still, this is an amazing story. The last bit of research we had was a downgrade betting this would not be that great. Plus we added the addition to the s p. There was a lot of previous earnings, chatter about it. They have the best growth in any retail. What accounts for the success of this company from the moment its gone public, while so many others, is it execution . What is going on at this company that isnt happening at others . It is execution and a very high price point, yet it can somehow be maintained. So remember coach is not hot. Kors is not. Coach has to seem to be table to discount, kors doesnt have to discount. Its a worldwide product and it is expensive. Gross margins, 60. 8. 60. 8. Have you seen the stuff . Its just another like skin of a cow. The street was looking for 59. 7. But the last five quarters on come manies, 45, 31, 45, 35, 21. Does the comp deceleration bother you at any point . No. Heres my answer to that. My answer is its the law of large numbers. Its doing much, much better than everybody else. It would bother me if i saw someone else in retail within like you know, within like 1,500 basis points of course. Retail is doing very poorly. When you search for a growth story, youre going to keep coming back to kors. David, tmobile, this million figure on customer ads, pretty impressive as they continue to take customers hand offer fist in the words of craig moffett. It does seem to be and that was the concern about at ts numbers frankly, we didnt see it as much as we thought we might when we saw the at t numbers. Weve also seen everybody else report at this point, verizon, sprint. So its a strong quarter. The question for tmo continues to be will it participate in one more round oflidation if it comes to the u. S. Wireless industry, if it is allow to occur by the department of justice and will that be with the likes of print or will it be with dish if that were to occur . Where are these subscribers coming from . Everybody had a good increase in subscribers. Where are these people . At t did not have an increase and verizon, its slight. We are most people who want a phone have a phone. But if there is share taking. There is movement going on and their plans are working at tmo. Clearly the deal with pcs has been a good one. Yes. But there is still a belief that they are not big enough to compete over the long term. Sprint is in still a difficult transition. That stock still wont quit. As if they wont have a difficult transition. And that stocks been moving again lately. Im not sure why. The transition there is still going to take place. They got it to it being a 2014 story. Remember, you have hardly any float there at this point. 70 of it is owned by soft bank. Youll see deactivations. Youll see sprint is the troubled one. Its dan hesse to told us there are no issues. Dan hesse said there are issues. The stock has been on fire and its not necessarily coming from management projections. An honest guy. Notre dame guy. They have a plan. Just happens to be a longterm plan. I think its the 400year plan. Are they including like mars to venus . Do they have that . There are other earths out there. How much spectrum . The federation keeps spectrum very tight. Aol, thats going to pop up by about 4 cents today. Armstrong keeps delivering, the most understated, least promotional guy. He came on our air one time and said its the greatest quarter in the history of man and were eating up the not promotional. Are you kidding me . Hes a selfeffacing promoter. They did it right. A little humble. Got it. You know, green bay came and they were all promosal. Mean while we have guys calling all over themselves to say listen, priceline, stanley. I think priceline will be blowout. Its an amazing company. People dont realize its the european way to travel and the analysts are such snobs, they probably never used it. Okay . Okay. You want to look at hertz, too . Whats been interesting here you get this a lot in these names lately. Ooh, activist. Im not hearing it, though. Ive been hearing it but youll get an actual the equipment rental, will they figure out a way to jet ison that. United reynolds would be a logical buyer. The you felt the government was week against usair. They are talking settlement at this point. The government obviously reagan was a key, amr and u. S. Air is a key question. Thats correct. Can you feel it . Can you feel it. Last night on mad money, we talked to cramer. If you buy into the market, you can say im a buyer at different price levels. I ipo can go to the moon and there is the function of valuation that is the gravity at any price and investors need to understand where is that level theyre interested in buying. Thank you. I was so glad mr. Cutler because are prices that people shouldnt pay. I talked to a couple of hedge funds this morning who are all in. People are calling up Lloyd Blankfein and saying lets call in the favors. Put me in for 10 . 28 , 28 . 20 billion, youre already talking 16, 17 times revenue. Carl was talking to me some of the forecasts coming out of the presentations, on usa today, citing some investors, 620 million in revenue this year, 40 million ebidta, next year 980 million revenue, 80 million ebidta. I still think theres a level you should pay. I think people are excited, too excited. Everything goes right. If everything goes right, it will be worth 25 billion, 30 billion a year from now. I dont think you pay 30 billion for 30 billion. You have engagement seems to have stalled, u. S. Growth of users is not that impressive. Theres why im concerned. 75 of the business is international. Also they figured out mobile. They dont have to worry about that. Think about facebook when we were talking about that. They increased the size, increased the price, lowered expectations, got rid of lockups. Unfortunately they were going to close the books early. Its do fear that the stock is going to open between 40 and 50. But do you think theyve done it really doesnt i think the answer is that the Container Store is priced for perfection and i hope everything goes well. You have to hope that the samestore sells theres a price to pay. Maybe everything, you know . Facebook reports an unbelievably good quarter. Whats the stock done . Its gone down. Thats people selling facebook to twitter. Is that all the money there is it in the world . Really, to have to sell facebook for twitter . Cant you sell Something Else for twitter . Ones selling solar city. Thats not a good idea. I once claimed someones house on margin call. I said send the keys in, you owe too much money. When you worked at goldman . Person lost everything. Person had unsecured assets. You have unsecured assets. Theyre not going to say better luck next time, its fine. Its no different from when you repossess a car. Thats true. Thats cold, though. Really cold. What are we supposed to do say thats just terrific, you know, sorry . You banged us for a billion for you banged us for 1. 5 million but were a rich company. Thats not the way it works. Maybe you think robinhood. I dont think that way. I understand its a real its business, sonny. Thank you. You send a couple of guys to get the keys . What do you think, youre johnny o merging with afrafredo. It doesnt work. We have a developing story out of nooj. New jersey. Scott joins us from outside that mall this morning. Good morning, scott. Reporter once again, the whole issue of the vulnerability of what they call soft targets comes into focus as a man armed with a loaded rifle walks into a Shopping Mall and starts shooting. Police identify him as 14yearold Richard Shoop from nearby teaneck, new jersey. He reportedly had a history of drug abuse. He wreaked havoc in this mall, coming in just before closing time rn around time, around 9 00 eastern time, fired at least six rounds and terror ensued as employees and shoppers ran for cover. When i notice people running and screaming, thats when im whats going on. Thats when everybody panicked, when everybody came and saw the store and we as soon as everybody came in, we rushed to the back, we went into the back and locked ourselves in, in total 13 people counting me and we waited in there for around an hour and a half, two house. It took some six hours before Police Finally Found shoops body. Apparently shoop had left some sort of a note at home. Of course as weve said, no one was injured but it could be because Authorities Say that shoop had just one thing in mind. We do believe that the main motive for what he did tonight was suicide. Based upon what we know, it did not appear that he entered the mall to actually shoot anyone and i say that only because it appears he did have ample opportunity to do that and chose not to. And that raises all sorts of questions and new security concerns. Westfield, which owns the mall, said clearly yesterdays event heightens everyones state of awareness and concern. Our security precautions reflect that heightened state. Youll remember that westfield owned the Shopping Mall in nairobi, kenya, which was the site of a deadly terrorist attack about a month and a half ago. And a source familiar with the procedures here says that there will be an automatic review of the security procedures but that is an ongoing process but it gets more urgency with this incident here at home on the cusp of the Holiday Season. Fortunately nobody hurt but it may bring all of this right back into folk pus. Scott, thank you so much for that. When we come back this morning, lessons that twitter can learn from the rise and fall of a high flying ipo. Well talk with steven paternot, cow founder and former ceo of theglobe. Com. A lot more squawk on the street live from post nine at the nyse when we return. Mike roe at a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Apple getting a boost from ipad air. Pandora said its managed to increase its share despite the release of the ipad apple. And what does the ipad news tell you . The stock is stuck here. I have gone on record saying i think its going to go higher. Its stuck at the carl icahn tender play. 525. Thats it. That was the number. It doesnt seem to budge. I remain thinking a very inexpensive stock, the us . Good. Its going to be an ipad, and iphone christmas and i really like it. I think just people betting against it are selling its not solar city which sells an infinite. This has a real multiple and that almost hurts it. Its almost like someone thinks these earnings are coming down. I dont think so. Theyre coming pup. Weve seen them come down. Its not that long ago. Its lowered expectations and i think they can beat lowered expectations. Meanwhile pandora has managed to hold in there. How long do you think some of these independent surfaces can survive the Apple Ecosystem . You use im a sirius satellite, i use songsa. You should try it, just put it on mozart unlimited. Go into the introduction mozart or beethoven and just try. And keep it going all day . Yeah. Thats what i do. Soothes you. Not with mozart, he was a smart fella. Mozart was a smart fella. Very young. Very young to die. When we come back, does your portfolio need a wakeup call . Up next, get ready for cramers mad dash as futures are a little bit weak here. [ 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. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. I like the way you move, i like the way you move i like the way, i like the way lets do a little mad dash before the opening bell. Pioneer reported an amazing number. The stock spiked 20. People realized the numbers werent exactly what they wanted but when i go through this brayberg, people are talking about a price target of 90 lets just stop and explain its the second largest potential find ever. Ever. Okay. Now theyre talking about this wo wolfcamp b, bigger than the fields in saudi arabia. This is stuff that was left the first time. You know what its like . Its like proceed down one mile and make a right one mile and make a left two miles and find all the oil in the world. Permian is for real, pioneer is for real but skeptics are coming in and saying its not for real. I think pioneer has the best labs in the world and they say this is the second biggest find ever. Next hour, were going to being talking about this very subject. Obviously doesnt have to worry about s. E. C. Rules. He can talk about very honestly maybe its not so great, maybe its great. Cant wait to hear that. We have the opening bell coming up next. Stacys mom has got it goin on stacys mom has got it goin on stacys mom has got it goin on [ male announcer ] the beautifully practical and practically beautiful cadillac srx. Get the best offers of the season now. Lease this 2014 srx for around 369 a month with premium Care Maintenance included. 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 set to ring in just about 30 seconds or so. A lot of fed speak today, guys. Rosengren has already been on this morning. As we get closer to a jobs number, jim, and closer theres a post that maybe they do move the date when it comes to taper. [ opening bell ringing ] going to see a little more red than green at the open. Le wall street journal startup of the year winner and over at the nasdaq, ultratech, designer for the technology industry. Havent done cvs quite yet. Cvs, walgreens and rite aid have been delivering, delivering, delivering. Ive always been partial to cvs but walgreens numbers were great. I was talking earlier to joe kernen. These could be precursors to what happens when gasoline goes lower. That is actually a really good point. Regeneron leads at the open. He will be on mad money tonight, the drug for macular degeneration. When can rains, poors, as len says. People are talking about bubble biotech. But this company has real earnings. You got him tonight. Yes, i do. Im proud of our coverage of biotech. Other than oil, this is where the action is. F. T. Talks about a biotech bubble. I think about it, youve done pretty well this year, whether its been some of your calls on social, some of your calls on biotech. Wouldnt you agree . Ive been in some hot spots with social mobile. Oil, thank you to mark pappa, biotech, thank you to bob but beyond the stock picks, if you watch your show, youre going to learn about these industries. Thank you, thats what its about because im going to make mistake. People maybe goes to 50 and ive kept people out there. The idea is to learn why twitter got there and why Container Store got there and maybe people get smarter. Its not about stock picks. Its about making people smarter. Im keeping an eye on directv, charter communications, both of which reported earnings this morning. Directv looked pretty good. Latin americas subgrowth may have come in lighter than some, though u. S. Is strong. Story at directv is about repurchasing stock, to shrink the cap, the amount of stock, repurchase is 1. 3 billion. I dont believe the call has begun yet. Were going to have mike on with us tomorrow. Mike is smart. Big international business, right . Well, latin america is incredibly become and also questions about can you continue to compete when you dont have a full broadband offering so to speak, robust broadband offering, do you try to consolidate the industry. As for charter, those numbers look okay. Lets call it inline. The stock is down a little less than 2 right now. One wonders what they will say about continued consolidation in their part of the industry. We all know the focus being on Time Warner Cable, as i said, last week. Now that Time Warner Cable has reported earnings and charter has reported earnings, we will see that a new foray is made. There was a story out saying there were other talks between Time Warner Cable and charter. That is not to my knowledge at all. There are no talks taking places as far as im aware at this point. The question is will Charter Liberty make another attempt to engage and present a proposal that will force time warner to engage and what will our parent do. Now, what are the technological implications of a directv, just in terms of being able to do a lot with that satellite signal. Is that a limiting principle . It is in terms of being able to provide a robust broadband solution and what they are able to do. What if dtv and dish were to get together . Dish has an enormous amount of spectrum. You could conceivably fund the build out of that spectrum in a real way with the cash flow from the overall company, however antitrust, not to pension personalities and a lot of other things, it might never happen. I hadnt thought of that. Then you could roll everything together, sprint, he would have wireless, he would have a dish hes got many years to being concerned about that. Hundreds. Ted williams could come back. He could. C cryogenic. Hes been frozen. Keep your eye on the transports today. Crude is down to 94 and change almost. Although the transports are off a touch, we are seeing some airlines pop up, southwest air and so forth as we look at what the impact of cheaper gas is going to mean on the economy over the next few month. The oils are going to be difficult. If oil goes below 90, youre going to see a lot of the red hot oils cool. I continue to believe that delta, which bought that refinery hasnt come into play yet. But delta is the best in show unless usair ways gets a really good deal at the hands of justice. Did you take your numbers up tesla during the break . I took my numbers up on top of your number raised. I think carl raised earlier. I just want to be top of the street. Im all in tesla but i cant go that high. Lets go to bob pisani. I want to talk about the ipos. I know youre all obsessed with twitter and rightly so. Its going to be the main topic of discussion this week. Take a look, there are 16 ipos pricing this week. Good heavens, i had to call around to find out last time we had a week like this. You had to go back to 2006 to find 16 ipos in that week. Theres going to be 16 secondaries. Theres nine more on the calendar, ipos this week. Im about 4 billion including twitter. This is a huge, huge week for ipos. Let me show you a couple that are being talked about. I think the most interesting one is barracuda. Theres internet security, your magic word, and storage company, 4. 1 approximately shares the 18 to 21. Thats going to price tonight for trading tomorrow. And wix. Com, is an israeli based Web Developer platform and mavenir systems, enhanced services for mobile. And arc logistics, the yield on that, 7. 75 , thats not unusual for a lot of these limited Partnership Pipeline and terminal deals that are out there. All of the yield junkies will be very interested in that. The big question is whether this is a top for the ipo market. I had Kathleen Smith on from renaissance. They now have an exchangetraded funds for ipos. Yes, indeed. Thats basically flat, around 20 and change. In but they have a mutual fund that they run called the ipo aftermarket fund thats done terrific this year, up about 50 . When i put that on last week to kathleen, people immediately said heres the market top, whenever you have people doing an etf for something, its usually a market top. It did top out, this fund, in the month of september. Im agnostic about this whole question. When you get an etf for an ipo, it does raise questions about whether this is the top nyse out with earnings, ice intercould t Intercontinental Exchange did well. Ice ceo is expecting the merger to close in a matter of days, theyre waiting for the last of the regulators in europe, theres a few of them, they dont expect any problems but its coming in a matter of days. Jeff said that he felt that less infield investors were being taken advantage of. He made a few comments about what he thought the markets were looking like right now and said theres a perception out there, u. S. Markets are not fair. Well see the advances of when he becomes the actual ceo of the combined Duncan Niedermayer is going to be staying on. Michael kors did well, beat on top and bottom line. They raised fullyear guidance and revenue. Cvs caremark, they also beat on tonight and bottom lines. The dispointments are in the fertilizing companies today, Cf Industries and the mosaic missed on top and bottom lines. The beauty, the charm of ireland. If youve ever been there, you know theres no green like you see in ireland. You have been there . I have. Corporations that reincorporate in ireland, well, talking about green, their shareholders tend to see a lot of it. The latest coast in Endo Pharmaceuticals and health solutions, endp, take a look today because it enters into a deal to acquire a Canadian Company called paladin and incorporates itself in ireland. My net worth will go up about 32 , i feel, even though ill continue to work through it. Its about 1. 6 billion in cash and stock deal. Theyll get new shares of new endo stock. Theyll spin a part of it off and keep it in canada. Each will be acquiredly bithis n acquired by this new endo company. The new Company Acquires a company in ireland. In this case, thats not happening. And yet it can still reincorporate in ireland. Why . What im hearing from tax attorneys is in this case the new company in ireland should still work because the key to these transactions is getting the ownership correct, as long as the former owners own less than 80 of the newly combined company, the u. S. Will respect the new company as a foreign company. Theyre below 80 by 2. 5 , hence endo has managed to reincorporate in ireland. This is the wish and desire of so many of these companies in pharmaceutical land. So exact adviseactivists manage have the eatons of the world with cooper and now endo doing it. In a nontraditional way, reincorporating new endo because its going to represent 75. 5 what point does the government say we have to lower the Corporate Tax rate or theyre going to ireland. If congress were watching our show, i think someone would say wait a second. Wait a second, everyones going to move to ireland. Why not . Youve got to think about it if youre a ceo, how do i get to ireland, how do i acquire something in ireland, do a deal that allows me to reincorporate in ireland. Its a very nice country, it beautiful. You cut your tax bill so big. Irelands a beautiful country. Youre right. Ring of curry, man. So nice. Lets go from ireland to chicago, find rick santelli. If youre aiming for the south side, theres very little difference. If we consider there is a bias, so said traders earlier in the week, that youre going to see Interest Rates a little spongy. Why you ask . They dont have a very good feel for a strong first look at First Quarter gdp thursday at 8 30 eastern. Theyre not looking for a terrific jobs report on friday at 8 30 eastern and of course whats going on with the fed . But markets obviously didnt get the memo. Look at 24hour charts of r10s up about four basis points, bunds up about 4 basis points but the winner is the gilts, up close to 10 basis points. Why . They had a pmi number that was the best in 16 years. And remember, we have our Service Sector pmi coming out this morning as well. Even though our last look wasnt bad, if you go back a couple of months, we had the best number in eight years going back to 05. We want to Pay Attention to this dynamic. Lets look at all those countries from the currency perspective, look at whats going on in the dollar index. The chart is popping up pretty strong, looks like were making a play for 81. Maybe this is the last push on the technical side. Lets look at the euro versus the dollar. Thursday ecb meeting, will they low lower, not lower . Look at the pound. We just talked about a big rise in Interest Rates. The pound is having a really nice day, popping out pretty strong. To consider how all the u. K. Markets are moving, their stock market was still down half of 1 . Carl, back to you. Rick, well talk to you in just a few minutes when we get ism. Kelly evans joins us at post 9, taking a look at pimco. News last night that as of the end of october, pimcos total returned bond fund, which has been the biggest mutual fund since late 2008 has been surp s surpass surpassed. The biggest fund now goes to van guard, which owns 3,600 stocks and its up 27 this year in terms of appreciation and dividend, pimco down 1. 2 . As of monday, according to morningstar, van guard has 288 billion while pimco has fall i dont know below 250 billion. It goes back to may when the fed first started to talk about tapering. What it does suggest is that investors are changing where they put their money. A couple of things to take away from this. One is to look at what these indicate generally about the cycle. Prior to pimco taking the helm in 2008, it was the Americas Fund growth fund in america and then the Magellan Fund at fidelity. For those who look at this as a contrary indicator, were not there yet. A lot of institutions are still selling out of the market and putting money to work in credit. So theres still a sense that this tide is not quite turning, the great rotation may just be starting. Nevertheless, a big headline and big headwinds for the likes of pimco here. It does make you wonder if the typical retail chapter we get will happen this time. I think thats right. I think thats money should go to that. Great growth. Thats youre talking about the vanguard fund, up 27 this year. Opening that big panoply may be a correct call. Weve seen it in you look even down here at the big board. All market stock has generally been outperforming the s p. Its a nice market. Nice piece of paper. Nice money. Exactly. Come back in a few minutes and talk about the call getting a lot of attention today. Absolutely. When we come back, jeff bezos wife has a bone to pick with the author of a book about him. And Barney Harford, ce orbits worldwide. Here we are, me and you on the road and we know that it goes on and on [ female announcer ] youre the boss of your life. In charge of making memories and keeping promises. Ask your financial professional how lincoln financial can help you take charge of your future. Oh, oh, all the way oh, oh in a world thats changing faster than ever, 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. Just a handful of dow components in the green. Dow is down 90 points. Its a biggest drop since october 15th, jim. S p, no real net change over the past seven days. Makes you wonder where this trajectory is headed. This is one of those mornings im scrambling, trying to figure out who has a negative. It seems like europe was weaker and its carried over. The play has been to use the intra day declines to put money to work. Its something you think about given the fact of the data weve seen given what happens in the months of november and december, you get intra data decline and thats when you pick. Thats true. Well see what the morning brings us. For the time being, dow is buon 91. Six in 60 up after the break. Vo two years of grad school. 20 years with the company. Thousands of presentations. And one hard earned partnership. It took a lot of work to get this far. So now im supposed to take a back seat when it comes to my investments . Theres zero chance of that happening. Avo when you work with a schwab Financial Consultant, youll get the guidance you need with the control you want. Talk to us today. Because what you dont know, can hurt you. Urance. What if you didnt know that posting your travel plans online may attract burglars . [woman] off to hawaii what if you didnt know that as the price of gold rises, so should the coverage on your jewelry . [prospector] ahh what if you didnt know that kitty litter can help you out of a slippery situation . The more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum the dow is now down officially triple digits. Lets get six in 60 with jim. Piper taking their it doesnt matter. People looking for a day to raise price targets and price goes higher. They pulled for the drug for lung cancer. It may not come bag out. The con sellation has been hitting a high. Thas not the right sign. I do think that bud is a good stob. We wanted imbev not ambev. Right. Mgic . You should love rdn, which is better and genworth. And kellogg. Theyre just firing people. Firing your way into prosperity does not work. And coming up tonight. Regeneron is a blow away quarter. And sba is up i think even more. It reported an amazing quarter. Thats the tower business. Carl, if we come back, were coming as towers. Can you just keep putting on transponders. Its a great rental business. Well see you tonight. With tesla earnings as well. Tesla. When we come back, ism. Doesnt go away. Day crowd. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. 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Your link to whats next. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. 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. Welcome back to squawk on the street. October manufacturing 59. 4, better than expected. Augusts number was the best since december of 05. It isnt as strong as the 16year high out of the u. K. But better than expected nonetheless as Interest Rates move to the highest levels since the last fed meeting. Back to you, simon. Im now down 100 points on the dow. Rick, thank you for that. Lets link in to washington, a Senate Committee holding a hearing on the implementation on obama care. Our own Bertha Coombs is live in washington with more on what to expect. Over ov over to you. Reporter good morning. Its Marilyn Tavenners third appearance on the hill in as many weeks. The Senate Channel that is going to be showing that hearing was streaming Hotel California and it may feel like that during the hours shell be testifying today. Cms said despite the fact they are taking the site down overnight to make repairs and they have made some progress especially when insurance transmittals none as 834s, they did have an unplanned outage for 90 minutes during the day. Yesterday they did not have any answers as to what the cause of that outage was. In 25 days they have vowed that this site will work properly for most people. One of the things miss tavernef tavenner may be asked about is the other ways in which to apply. An internal memo says all of the routes still need the fed hub, still need healthcare. Gov, that everyone will be stuck in the same queue. This became a contentious issue yesterday during the White House Briefing for jay carney. Its likely to come up again this morning as miss tavenner gets set to testify. Back to you. Bertha, thank you so much. Well keep an eye on that. Meanwhile, cvs raising guidance. Lets bring in our guests. Good morning to you both. Good morning. Lisa, pretty nice here, raising their guidance, pharmacy up 57. Where are they now . The number of scripts they kept in the quarter was better than expected. I dont really think that thats what the story is right now, carl. Its really all about the Affordable Care act and how well positioned companies are going into that and i think that cvs will clearly be one of the winners. They did a great job on the Conference Call today articulating what the new world will look like and how well theyll fit in. The simple answer to that is because people with better coverage ostensibyou ostensibly access to prescription drugs . Its access to prescription drugs and you think about cvs, the shortage of physicians, going to the minute clinic, about Overall Health care trends and how do you drive the costs down. Its some of the things that the pharma pharmacies do now and think about prescription trends Going Forward. How much of an eye should investors be keeping on the front end . Sure. Obviously cvs is well positioned as lisa said with their integrated model. Theres a lot of increased services they can bring to the consumer. I think Going Forward their ability to grow at above market is going to be a key advantage for them and a key driver of their profits. If you turn to the front end, its indicative of a tough macro environment where the consumer is feeling a confluence of factors going on in the u. S. We did see walgreens, who has been a key competitor. Overall these guys are still winning across the board. We were just talking with cramer about the tailwind that is gas prices. How much does it goose the stock or sales at least . If you think about Companies Like cvs, its much more of a convenient buy. If you have few more dollars in your pocket, you can potentially spend them at cvs. I think the story at cvs is much more of a Health Care Story than consumerdriven story. As more individuals come into the store, whether its to pick up your prescription, to visit the minute clinic, youre going to pick up something on the front end. Thats really more of the trend here as we move into 2014. To put a period on it if you had a choice to buy only wag or cvs, it would be . Cvs. We think great profits are coming for this company. The story will change as we get closer and closer to the pull roll out of the program. Thanks a lot. In new jersey last night, a gunman opened fire in a mall last night. Scott is in paramus, new jersey. Reporter the gunman, 20yearold Richard Shoop, who lived just a few miles from here in teaneck, new jersey, he managed to get into a Shopping Mall with a loaded rifle, firing off several rounds before disappearing. It took another six hours before they were able to recover his body. Just imagine what it must have been like last night being in that Shopping Mall. He just walked past and waved at me with his a. K. 47. Im just like, wow, god was with me because he could have shot me right there. We went in and we got into the bathroom and we locked the door and we sat there for over three hours waiting because they said dont come out, dont make any noises. This morning they are still processing the scene. Some people have come here not realizing that the mall is closed for the day. And other workers coming by because they need to get back and finish up their business from last night and contemplating the idea of going back to work, one employee told us that wont be easy. Im not going to lie. Im kind of scared just because you never know what can happen in the mall now. You really have to be aware of everything. You want to make sure your employees know what to do if something happens, you want to make sure that youre going to be secure. The owner of this small, gardner state plaza, westfield properties, tells us that security is heightened, to say the least. Were told by a source that there is a review thats triggered by this. Clearly as we head into the Holiday Season, soft targets like this back in focus. Carl . Thank you very much, scottie. Lets have a look at where we are on the markets at the moment. Were down triple digits a few minutes ago. Weve cut some of those losses down. I think its not insignificant that overnight that jan believes they will move down the threshold, a dovish sign from 6. 5 unemployment to 6 . This is as a result from within the fomc that will be presented on friday. The problem for the market is that while that is dovish, he may put that with the decision to taper and that is not dovish. He thought now december was a possibility as well. We know from experience that is potentially bearish for the markets but were off the lows. Its a reason to watch the 10year here, 2. 67 percent, the highest level since the last fed meeting. Ahead of that services figure, now equities struggling to take a positive turn as a result. Were just days away from twitters wall street debut. Coming up next, how the company has changed the way we learned. Well talk to two professors who teach social networking for a living. Squawk on the street continues. The American Dream is of a better future, 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. Thats how ameriprise puts more within reach. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk on the street. Shares of orbitz are falling down to earth. The Online Travel company is down about 20 some percent in early trading, after sales met wall street estimates but quarterly profits missed expectations as Marketing Sales rose. Were going to get more on that story in the next hour right here on squawk on the street when ceo Barney Harford joins as you for an exclusive interview. You wont want to miss that. Kelly, over to you. Thanks very much. Dick costolo is calling the shots at twitter but that was not always the case. Three of the companys founders were ousted when they began to grow. What are they up to now . Julia boorstin joins us with more. Good morning. Reporter good morning. Jack dorsey is in the spotlight with a profile about him in the new yorker and a 4 stake in the twitter ipo. But his three cofounders were pushed out of the company. Evan williams was ceo until he was ousted in 2010, replaced by dick costolo. Biiz stone was pushed out around the same time as williams. A publishing platform called medium is designed for easily sharing longer form content. Now, stone and williams Obvious Corporation also backs a different kind of startup, beyond meat, which produces vegan meat alternatives. They announc now, the cofounder who is furthest from twitters nest is noah glass. He left soon after the Company Launched after a falling out with his cofounders. His Linkedin Profile said he cofounded odo where they hatched twitter. We reached out to noah glass but havent heard back. Glass has been nearly written out of twitters history. Simon . Just two days to go, julia. Julia boorstin with what we know about twitter. We want to talk more about how twitter is changing the educational landscape. Our guests, gentlemen, good morning. Welcome to the network. Good morning. Thank you for having us. Whats interesting here, its not just what youre teaching, its the way in which youre teaching using twitter. Let me come to you, first of all. You actually have a running twitter conversation as i understand it in the class. You can see what the students are making of what youre saying, you can respond to them and if youre talking about companies, they, too, can become part of that session. Is that correct . Thats right. Twitter is an e sense part of my classes, up on screen at all times, doesnt matter what were doing. I am seeing what the students are saying and republic acting to. It motivates the students when they get to ask questions and get an Immediate Response from professionals. Isnt it distracting, anthony . Doesnt it mean you can veer off in many directions and not go into the depth that arguably your students require given that everybody has its time constraint . It actually mirrors the real world for us. As we walk through our daily lives, we are distracted by needs coming from all around us. The class mirrors that and we learn to discuss substantively while we react to what happenslinhappens online. I think thats a valuable lesson. Andrew, in your case you post 12 week have i videos of the lecture and then you ask the students to respond to a blog and they have to do a weekly opinion piece where they respond to the blogs. We talk about how students can become engaged with social media as a whole, particularly with twitter. It involves students participating on their own, sort of at their own convenience, not necessarily during a live classroom, because our classes for our graduate program are taught asynchronously. Isnt there a danger they tend to rotate round in this joint scream of consciousness, that may not be particularly well informed or well educated, which is a criticism of twitter some have. You go round and round on a not in depth level . You can participate at any time in the week. Unlike having a traditional class where you might meet for two, three hours a week, people are participating and active throughout the week whenever its good for them. Theyre participating at all times learning from one another with the facilitation of the instructor themselves. I assume the social Media Masters Program predates the existence of twitter. In what way has twitter changed the way you offer the program . The students are actively engaged with their instructors on twitter. One of the things that would happen is students maybe not send an email to their professor or a traditional message to their professor, the students actually try to get in contact with the instructor through twitter, through direct messages, through tweets. I think what it does is create sort of this connection between the instructor and the students that you might not otherwise have because you feel as though you have connection, a contact with your instructor 24 hours a day. Anthony, in your case, im imagining its a little bit similar to media studies, people will understand the power of the social network, they they probably wont be able to program for it or become the next mark zuckerberg. Thats correct. In some cases we have students pursuing that. Were looking at the strategies that corporations and entities can use to leverage twitter and other social networks to achieve their goals. So were taking a look at how you build an audience, how you share information in the social media era, which can be quite different from the way things were done just a few years ago. Let me ask you finally a quick question each. Would you buy, if you were able to get hold of twitters stock, would you buy it at the debut on thursday . Andrew. Will you be giving me the money to pay for it . No, i wont. I dont know. I think what theyre doing is you notice the price keeps going up and that makes me a little reminiscent of what happened with facebook. So i would be a little bit concerned. Anthony . Im a little skeptical myself. Im looking at the potential for growth with twit esh and seeing theyre going to have to make some very significant changes to their features in order to be profitable. We dont know yet how the Community Around twitter is going to respond to that so good to meet you both. Im glad im at an age where i can call professors by their first name. Coming up, falling gas prices. Well look at how far those prices could fall when we come right back. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. 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. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Welcome back, im sharon epperson, gasoline prices keep falling. Crude prices keep falling, below 95 a fairly for u. S. Oil futures. Were seeing rising gasoline supplies as well and lackluster demand. A big part of the reason, the National Average 3. 24 a gallon, down a penny from yesterday, down about 10 cents in the past month. Prices could go as low as 3. 10 for the National Average by the end of the year, but were already seeing prices below 3 a gallon for the statewide average in five states, including missouri and kansas and also seeing about 35 states around the country where somewhere in that state can you find gas at some station below 3 a gallon. A lot more information on how low gas prices will go and whether you can find gasoline below 3 a gallon on cnbc. Com. Back to you, guys. Just in time for the holidays. Well see if it helps the consumer out. Boeing on the verge of an unprecedented deal that will get the company through the bulk of its orders. Phil lebeau has the details out of chicago. Good morning, phil. Reporter good morning. This is important for boeing and machinists. Theyre saying are were sure were going to have labor peace through the rest of the decade . Thats what it looks like as theyre close to signing a deal. For boeing as they close in on this deal, the labor contract, if they agree to a new one, would ensure the 777x, that it would largely be assembled in the puget sound area. What does boeing get out of this deal . A new contract that would run through at least 2020 and perhaps several years after that, ensuring labor peace for boeing for several years, which is going to be critical as they go through the rest of this decade. Youve got to go back to 2008, the last time that boeing had to deal with a strike by the machinist union. When you look at boeings back log, the important thing is boeing wants the certainty about the fixed labor costs for more than 4,700 planes. This is a alltime record. The value, 345 billion. You go back to 2008, the last time there was a labor strike for boeing. Since then, this stock is up 165 . Weve talked with people with the machinist unions, as well as with boeing, theyre close to a deal. If that happens, look for share to get a little further pop as people say, okay, we know the labor is locked in. Still ahead, investing in the energy sector. One of the industrys biggest players will tell us whats working now. Back after a quick break. [ female announcer ] its time for the annual shareholders meeting. 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. Shhhh i have a cold with this annoying runny nose. [ sniffles ] i better take something. [ male announcer ] dayquil cold and flu doesnt treat that. It doesnt . [ male announcer ] alkaseltzer plus fights your worst cold symptoms plus has a fastacting antihistamine. Oh what a relief it is one hour into trade here, the ism Services Index rising a full point in october to 55. 4. It was above expectations despite the partial government shut down. Shares of michael kors up 5 this morning, beating the street with quarterly results. Kors raised fullyear guidance. The hospital operator issuing a lower than expected outlook on the Current Quarter. We send it over to david faber. The total capital expected to come in at 15 trillion. My next guest is the money behind Aubrey Mcclendons new company. Joining me is john raymond, the founder and ceo of energy and minerals group. Nice to have you here. Great to be here. We tried talking about what is a revolution. I dont think we do it justice as to whats going on here. But 16 trillion is going to be needed to get this stuff out of the ground and transported over the next 20 years . Globally its over 20 years. There going to be a need for that kind of money . Youre talking about a number at 5 trillion that equates to the Small Cap Companies in america. Big number but compared to 5 trillion, where else is the money going to come from . We dont need it at once, its over a long period of time. Its a combination of a lot of different capital sources, recycled from the industry, new investment from people such as ourselves and the private domain and Foreign Investors as well. Its going to be a lot of different sources required to come up with that amount of capital. Earlier jim cramer and i were talking about the permian, which weve been doing with pioneer. Youre a texas guy. Are you a believer in that and whether they will be able to recover everything that investors seem to be banking on at this point . Its a great question. You get into an interesting conversation around the permian and unconventional resources. Theres the advancement of parallel technologies in hydraulic fracture. The point to understand here is technology. It is those advancements in the technology that allow the industry to go in there, into these big fields and recover more and more of the oil and gas. So the challenge for the industry is how do you get more and more out of the proverbial box youre drilling the horizontal well through. As you Better Connect with the rock, your recoveries increase. What youre seeing across most of the big basins is eur creep and thats basically a standing for estimated ultimate recovery. Where are we in the timeline in terms of the technology rampup, if you will to increase eur and how long will this go on . To use a baseball analogy, were somewhere between the first and second inning of the conversation. This is a generational conversation that will last for the course of the next several decades. And would have revolutionary impact not Technology Revolution but impact on this country analytically. You could make a lot of arguments. The Energy Business today is one of the largest and most capital intensive businesses to begin with. It represents a little bit less than 8 of the u. S. Economy, we employ a little bit over 9 million people. But ultimately whats happening is going to have far reaching implications not just for the Energy Business but for this country as a whole that will impact the life of each and every american. People now starting to talk about on horizon ten years out, maybe a little less than ten years out, an independent north america. If we were no longer relineitem veto reliant on Foreign Companies for energy, how would that reshape the conversation around Foreign Policy in the middle east, for example. I mean, these are all conversations that are going to come into play here in the course of the next five to ten years. From an investment standpoint of course, return on Investment Capital ends up being important. I reported a few weeks ago on your significant investment and Aubrey Mcclendons latest company in the utica shale. Why do you have faith in mcclendon . Youre the majority of the money behind that. We are, we are. Aubrey and we have a lot of investments in a lot of companies. Weve been very fortunate over time to have the benefit of working with some fantastic management teams that were in partnership with. When you think about that in the context of aubrey, what aubrey has done over the past 20 years is nothing short of exceptional. When you think about where chesapeake started and where it is today there were a lot of ups and downs. There were a lot of ups and downs but the industry as a whole had a lot of ups and downs. Theres something out there called the forbes 2020 club, 20 ceos deliver a 20 rate of return over 20 years in america. There are eight ceos that can say that and aubrey happens to be one of those ceos. So aubrey is a very talented and capable individual and with him comes a whole group of people who know how to execute Large Scale Development and understand the subsurface development. You have to have high quality rock, marry that with very significant Balance Sheets. The 1. 7 billion of opening capital is the largest Balance Sheet for a startup ever. We have to fully capitalize a Development Program and you have to marry it with very Good Management teams who know how to execute with perfection. They are fighting the daytoday ground war, drilling the wells, connecting them with the mid Stream Systems to ultimately generate the cash flow that you need to get the return on the investment dollar. John, its a fascinating story. I look forward to checking in with you as time goes by. Absolutely, my pleasure. Simon, over to you. The annual j. D. Power survey of satisfaction among customers of Car Rental Companies is out. National stops the list, partially because they let People Choose the car they want rather than assigning one. Enterprise, and alamo are owned by the others. At every single point, the more people said that someone smiled at me, whether it was the pickup driver, whether it was the shuttle person, the gate attendant, the counter person, the more they smiled, the more satisfied and more likely to return the customer said that he or she would be. Its simple, smiles equal satisfaction, equals higher margins. If theyre repeat customers, you dont have to spend the money on marketing. Amazing how easy it can be. Its often quite difficult to get your staff to smile all the time. Coming up, a historymaking ipo where the stock collapsed the next year. The cofounder of the globe will join us and tell us what advice he has for the companys execs. Well be right back. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. So i c an reach ally bank 24 7, but there are no branches . 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Jbut when it comes to investing, things i prefer to do on my own. I just think its better to work with someone. Someone you feel you can really partner with. Unfortunately, ive found that some Brokerage Firms dont always encourage that kind of relationship. Thats why i stopped working at the old brokerage, and started working for charles schwab. Avo what kind of Financial Consultant are you looking for . Talk to us today. Twitters highly anticipated ipo right around the corner. As many now know, twitter has yet to turn a profit. Some are comparing twitters ipo to some of the Tech Companies that went public during the dotcom bubble era of the 1990s. Stefan paternot is now the chairman and ceo of slated and he joins us this morning to talk about the market. Good morning. Good morning. When you hear the globe be used for some sort of touchdown for the era were now in, do you think were in the same ballpark . No, not really. I think that the markets have evolved quite a bit in the last 14 years. I think when the globe went block in the late 90s, the internet was a phenomenon. Everybody was going crazy. In fact, going public became a rite of passage. The globe unfortunately was part of reason there was an ipo mania, because we went up 1,000 in one day. So when people are trying to buy into any old ipo, it creates a ridiculous bubble. Whats going on today is a little different. The focus is more on individual companies that have really stood the test of time, are generating major revenues, have massive multihundred million user bases and i think that changes things and makes them a little bit stronger fundamentally. Take us back to that day where you did go public and you mentioned the thousand percent pop, the valuation to over 1 billion. Did you know at the time that this was not going to end well . No, not really. Because at the time i was 24 years old and a 24yearold kid doesnt really know too much about life and bubbles. But, you know, when the globe went public in the late 90s, it was an amazing experience. It legitimatized companies. Everybody wanted their company to go public because it meant it was real. Advertisers were more comfortable with companies that were better known. It was a strength for the globe and everybody that went public after was asking the banks can you do for us what did you for the globe . We want a high ipo. The ipo is a little out of the control of the ceo quite often when the demand is so high. The flip side is then you become emblematic of the downturn and thats still the legacy that casts a shadow over the ipos this time around. Is there a difference where the tech company was then versus today . When you have Companies Like facebook and twitter that seem to at least have a fundamental Business Model . Theres a huge difference. Back in the 90s you could go public simply because you had an audience. You didnt have to be generating revenues. People were so excited, they were willing to take a pass on the bottom line. Thats thats really different. When facebook went public, it had hundreds of millions of users. Its the same case with twitter. Twitter may be smaller but theyre still orders of magnitude bigger than netscape was, the globe was. Theres a much stronger fundamental and theres much bigger Institutions Holding on to these stocks for the long haul. I think thats one of the bigger dangers of course is if a stock becomes overhyped like facebook did get last year, you end up with too many small Retail Investors and Retail Investors are really still in it for the short term. Even some of the major institutions nowadays are in it for the short term. The potential danger is it will get a little oversold again. In the meantime, stefan, im fascinated as to what happened to you personally. At 24, how much were you worth when it was ascending, how much money do you feel that you lost, how do you get on with living your life . I know many people who were millionaires many, many times and they found it very difficult to actually deal with the fact when the whole thing burst that they again had no money. Yeah, i mean, it was challenging because at 24 years old youre suddenly put up on a pedestal and then youre knocked off the pedestal and youre not really sure what you did right or what you did wrong pip wou. I would say there was a lot of personal growth i needed to go through. That said theres nothing like going off into the wilderness for ten years to split and reevaluate and grow from it. Now that i come back, i would say i have a lot more experience, i have a lot more knowledge, im averse to Companies Going public for obvious reasons and i feel there are specialized fundamentals to look at. Im coming at it with a little more wisdom, a little more calmness and a little more experience. I think its an education a lot of people would die to have, even though it doesnt always end the way you look. Thanks so much for your time and please come back. Will do. Thank you. Coming up on the program, we are bringing a little championship flavor to post nine, world series mvp david ortiz of the Boston Red Sox will join us live in the next hour of squawk on the street. Squawk on the street is living live on nyc. You like it, dont you . Now can you have an entire version of it signed by the squawk on the street gang. All you have to do is tweet fridays nonfarm number. You have to be at least 18 years of age to enter. Sorry, kid. You have until 8 29 a. M. Eastern friday morning. Good luck. 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. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. We want to get some breaking news. Kate kelly has some on s. A. C. She joins us on the phone. Good morning, kate. Reporter good morning, carl. In an internal email sent out in the wake of a large 1. 8 billion settlement between s. A. C. And federal prosecutors yesterday, the firm is acknowledging for the very first time somewhat publicly it plans to become a family office. This note send out by s. A. C. President tom cahini, and it said we will become a family office. We will operate much as we do now. Even though well probably have to give back our registration as an Investment Advisor to the s. E. C. , he said he believes that will not affect their ability to run as a family office. Heres a quo from him. Over the next several months, we will wind down thirdparty investments and return capital to outside investors. He goes on to say, we can still run our business, and we believe we have in place a strong team for 2014. Of course, s. A. C. Will also have to fight civil charges against founder steve cohen with the s. A. C. About failure to supervise employees, carl. Theyre saying in this note, those are without merit, they believe, and we could see a fight ahead as they continue on as a manager of private capital. Color at all about their access to leverage, their relationship with other players on the street . Reporter you know, theres no comment in the note about that. Really just a review of why they settled, what their plans are, and kind of a thank you to employees. Having said that, my early indication from other wall street firms that do business with them is theyre going to continue on for now. They believe they are protected from liability by the secure agreement between the government and s. A. C. Shortly after the indictment. And theyre going to continue on. All right. And well see just how many continue on with them. Kate kelly with that news this morning for us. Thank you, kate. Reporter thank you. Now, over to the cme group. Rick santelli with the Santelli Exchange on a tuesday. Hi, rick. Hi, kelly. Many on the Trading Floor look forward to Steve Liesmans interviews with the fed officials. Its not about the fed officials, but garnering where theyre going, where theyve been, and where they are, and how that will affect traders. Today, i learned important bits of information from boston fed mr. Eric rosengren. Id like to play a clip. You would agree, youve said that before, you would agree your colleagues have said that before, i would agree i heard that before. It tonight seem like its sinking in. Is there some other way that markets can be told to understand this thing, or is it just something you cant do . Is it too complicated a policy . So i think it has been a complicated policy. So one of the challenges is weve not been in a situation where we tried to exit from a large Balance Sheet before. And communications is a very important part of that. So were working to get the Communications Better and be as transparent as possible. But theres still been challenges as you pointed out. Well, a couple of things that jumped out at me. First of all, its not sinking in. I think when it comes to the markets and the Political Class saying too things are complicated, as well it usually isnt really a communication problem. But most important in this, weve been we have not been in this situation before. Theyve never had to deal with an exit. So to me, the word communicati communication has a very important value, or association, with it, and that is information. In order to communicate well, you need to have good knowledge of what youre trying to communicate. Never been here before. Never had a Balance Sheet like this. Never had to exit before. So is it really a communication problem . No. I think that its a misproblem. I think were misconstruing knowledge. So weve heard a lot, whether its bush 41 with regard to read my lips on taxes, president bill clinton and the word is, current president with regard to, if you like your doctor and your health care, you can keep it, period, the Federal Reserve is evidenced by this oh, no, its not that were doing anything really weird. Its just that you dont get it, or its about debt. Its these miss, because in the end, when you hear its too complicated, usually what follows isnt reality. Back to you. All right, rick, see you in a little bit. Tweet time. Mckenz mckenzie besos, writing a book from the retailer. She says the Everything Store has too many inaccuracy. We wanted to know, if the bezos family wrote their own book, what would it be called . Back after a break. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. The most Free Research reports, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Im bethand im michelle. And we own the paper cottage. Its a stationery and gifts store. Anything we purchase for the paper cottage goes on our ink card. So you can manage your business expenses and access them online instantly with the Game Changing app from ink. We didnt get into business to spend time managing receipts, thats why we have ink. We like being in business because we like being creative, we like interacting with people. So you have time to focus on the things you love. Ink from chase. So you can. Welcome back to squawk on the street. Check out red robin gourmet burger. The casual dining restaurants Third Quarter profits rose 30 , easily topping street estimates as more customers came through the door and spent more money. Sales also rose 8 . The companys also benefitting from a revamped menu, guys. Back to the nyse. All right. Thank you very much, dom. We keep an eye on the markets here. Again, down about triple digits during the 9 00 a. M. , and clawed our way back to minus 40. Keeping a close eye on tesla, which broke above its 50day moving average, since august 5th. Earnings are tonight. It will be interesting to see which one of the anointed ones, the high fliers, give back some of the multiples. Facebook one of the hightraded companies, and its holding up there in a broadly weaker market. Goldman is down 1 , as cell, cisco doing all right, and a lot of mixed performance. And the banks . Europes banks, some of them are under pressure as we await the ecb. Xlf down about. 33 . And its kind of in line. Todays a big day. Not only the ecb on inflation. But twitter. Thats right. Yeah, both sides of the pond. And consensus is that he will not cut right. But he will be he will be very dovish, which will move the euro down. Well see what happens. Thats a couple of days away. In youre just joining us, heres what you missed earlier on. Announcer welcome to squawk on the street. Heres whats happened so far you need him to stop today . Yeah, he should stop. They should knock this out. This is bad. This is heroin addiction. Its going to get the more you get on it, the worst it will get, the more asset values you can see it already, cant you . So just because we decide at some point that we should reduce the amount of purchases that we make in longterm securities doesnt necessarily mean we change when we raise the shortterm rates. Priceline will be a blowout november 7th. I think it will be blowout. Its an amazing company. People dont realize its the european way to travel. And analysts have probably never used them, okay . Wheres the thing going to price . 27, 28 . 28 28 is where 28 is where its worth 20 billion, it will do that, opens unfortunately at 30 billion, which i think is way too high. [ bell sounding ] theres the opening bell. Its really all about the Affordable Care act and how well positioned companies are going into that. And i think that cvs will be one of the winners and they did a great job today articulating what the world will look like and how well theyll fit in. Im looking at the potential for growth with twitter, and seeing that theyre going to have to make some significant changes to their features in order to be profitable. And we dont really know yet how the Community Around twitter will respond to that. Good morning, were live here at post 9 at the new york stock exchange. Lets check on the markets here. We are seeing some red arrows really for the first time in the early going, the month of november. We had two days of gains to start the month, giving some back, although off of the lows. We were down 100 points not too long ago. A Strong Demand for luxury is boosting shares of michael kors. The company reporting a 40 jump in quarterly revenue helped by handbags and accessories. And shares of Gt Advanced Technologies surging after signing an agreement with apple to open a manufacturing facility in arizona. The Company Makes sapphire materials for a lot of apples gadgets. Now to the roadmap. Its drama on capitol hill, as medicare chief Marilyn Tavener is defending and apologizing again for obama care. Well go straight to talk to Johnny Isakson. A shooting last night at a new jersey mall has many wondering how safe americas malls are and whether there will be another hit to brickandmortar stores as Holiday Shopping ramps up. Shares of orbitz. Look at this one diving after the Company Reports lower profit and cut its outlook ahead of the big Holiday Season. Well go straight to the source with the ceo of the company this hour. Plus, the world series mvp, Boston Red Sox star david ortiz is at post 9. Hell sit down to discuss the big win and talk about the muchneeded shave last night. A senate panel is grilling the head of medicare and medicaid over the major problems with the rollout of obama care. Bertha comes is following it all in washington, and she joins us this morning with more. Hey, bertha. Hi, carl. The tone here in the senate a little more cordial than it was last week in the house, but certainly on both sides of the aisle, senators are not pulling any punches. Tom harkin, the chairman, started ostart ed off giving Marilyn Tavenner the timelime for fixing the site. They said in 25 days from now, the administration has said it will be working smoothly for the vast majority of americans who try to sign on to healthcare. Gov. He asked Marilyn Tavenner what the timeline looks like for that to happen. We actually are doing a series of software upgrades, pretty much several times a week. We will continue that. You will see improvement weekbyweek, but this is weeks, not months. And we are not rewriting the architecture. That is one of the things that a lot of people have said, that the entire architecture needs to be rewritten. Some of the pundits on the outside, technical experts. But she says that is not necessary. They are rewriting software. They had been doing it overnight, taking down the site at least for the foreseeable future. They will be taking it down between 1 00 a. M. And 5 00 a. M. They now have a notice about that on the front page. Notwithstanding that, they did have an unplanned outage yesterday of 90 minutes that they did not or were not able to identify. Meantime, senators on both sides of the aisle, guys, continue to ask about the issue about whether people can keep their plan. One senator saying, maybe cms should back a plan by senator johnson of wisconsin to legislate that, to allow people to continue to keep some of the plans that have been cancelled. Back to you. Okay, Bertha Coombs in washington this morning. Bertha, thanks. Meantime, a new survey out from adobe revealing the Holiday Season will be about the eeconomy, thanks to the growing mobile user base. Jon fortt is back at headquarters with details on this one. Good morning. Reporter good morning. Yeah, adobe based on the surveys, forecasting that ecommerce will have the first 1 billion thanksgiving this year fuelled by steep discounts and the rise of mobile shopping. So these numbers are worth watching for a couple of reasons. Last year, adobe predicted black monday online sales within 1 , at 2 billion, and the company got 72 revenue visibility within the top 500 retailers online, from its analytics platform. I talked this morning to brad rencher about how mobile and even showroom driving the online sales this Holiday Season. Take a listen. The mobile apps are, you know, are almost twice as engaging in terms of the time people spend in an app versus a mobile web experience. From a retailers standpoint, thats important. And so, we see a lot of forwardleading retailers creating an app experience to enhance and embrace the showrooming experience. Reporter and sales, whats most interesting, adobe says retailers with great mobile websites and apps will get 21 of the total sales from mobile. Nonmobile savvy retailers will get about 14 , 15 . Its not that mobile is cannibalizing desktop. Just retailers who arent mobile savvy will miss out on the extra sales. Looking at the data, adobe has also been looking at social medias impact on sales. Social will send just 2 of referral traffic to retailers. But adobe says 30 of people say they use social when deciding to buy. So thats a big potential opportunity for facebook and twitter if they can figure out how to monetize those habits that people are developing, guys. Back to you. Interesting data. Thank you so much, our jon fortt covering some of that for us. Meantime, at t announcing that activations for the launch weekend of the ipad air up more than 200 over last years ipad launch. Apple itself has yet to release some official sales figures for the new tablet, but ceo tim cook said during a recent Earnings Call he was confident it would be an ipad christmas. Joining us to weigh in, brian heater, Senior Associate Editor at gadget, and on set, collin gillis. Guys, good morning to both of you. 2 , collin . Applestoapples . Listen, right . You have to put it in context, right . Air pair launched in 42 countries over the weekend. Many countries have more than one carrier, and also launched in all of the apple retail stores, so one data point from one carrier. How far do you take it . Its a mild positive, right . Generally ipads are unsubsidized devices. Its not its a small pace base that at t is likely comping off of. You know, its better than not being up the alternative . Right. Brian, your thoughts on that, and why is apple being mum about the first weekend this time . Its really hard to say. Apple is usually the first with the numbers, monday morning, they come out, have a big, celebratory press release. I cant say why. Some say they may be waiting for the new ipad mini to come out. But most accounts is the ipad is selling very well. I can see why, right . Because its you know, its likely not a number that will wow people. Because last year you launched the ipad air and mini. The mini is not out, later in november. So why put out a number like that, you know . Even if its a 3 millionunits sold comparable to last year, right, and just the ipad air, optically it may not look good. I was going to ask, what do you think expectations are . Whats the consensus for the sales they did, and what would be a disappointment . I dont think were ever going to see that number given to us anyway, right . No, but what would the Analyst Community say the expectation we did 3 million last weekend with the ipad 4 and mini, and you should see a similar number, slightly less with the air launch this weekend. Brian, is that your understanding, as well . Yeah, i think combined theyre going to do very well. Its a fair point. Apple tends not numbers. They offer everything up in a lur lump sum. All of the reviews have been very good, it will be a successful launch. Why has 530 been a stubborn resistance . Yeah, a lot of news on the taper, right . We can talk about how many do they sell over opening weekend. Apple gave december quarter guidance be right . 55 to 58 billion, and likely at the high end or moderately above it. Theyre not trying to blow out numbers anymore. They want to guide realistically and reduce the earnings volatility. We have the good news for the december quarter guidance, the product refreshes. Investors are looking into the march quarter where we had a big vacuum last year, and wondering whats next. Well, and to that point, brian, wasnt 2014 supposed to be the year that apple came out with a lot of products in Significant Developments from its pipeline . Is that still the base case . Or is it too quiet on that front . Yeah, refresh is really the key word here. So weve seen i mean, weve seen nice refreshes all around the ipad air. Its much lighter, much faster, same on the iphone front. Cool new features there. But if theyre working on some topsecret stuff, we havent seen anything since tim cook took over. And thats going to get more and more focus, i suspect. Collin, just briefly, the price target . 550. Yeah, 550, i was going to ask i want to see the china mobile news, if that hits, how big that could be. Guys, an interesting discussion. Well see if we get metrics out of them soon. Good to see you both. Thank you. Thanks. Last night eas shooting at new jersey mall has red flags being raised in public venues and how safe americas malls really are. Coming up next, well talk with the security analyst about this issue. Also, fridays jobs number is just around the corner, and its the data that everyone has been waiting for since the shutdown. Rick santelli will talk to ed lazear when squawk on the street continues. Weekdays are for rising to the challenge. Theyre the days to take care of business. When possibilities become reality. With centurylink as your trusted partner, our visionary Cloud Infrastructure and Global Broadband network free you to focus on what matters. With Custom Communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. Every day of the week. Centurylink® your link to whats next. 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. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. Welcome back. Looking at the energy sector, one of the biggest losers on the s p 500 this morning. D dominic chu taking a look. Some of the sectors leading the sector overall, and anadarko, reporting profits that fell short of estimates. On the Oilfield Services side, you have big names like halliburton, schlumberger declining 1. 5 apiece, and marathon oil, a real standout in the sector, up around 2 after an earnings beat by the company yesterday afternoon. Carl, back over to you. Dom, thank you so much. The shooting at new jerseys largest mall has many wondering how safe are americas malls. Our Courtney Reagan is back at hq with more on that. Good morning. Good morning, carl. It seems like no place is safe from violence schools, airports, marathons, malls and while its hard to track foot traffic at malls, many believe it does contribute to uneasy sentiment. Cnbc contributors say shoppers have short memories and will still hit the malls. But they believe fear will be heightened, even though its fleeting. Retailers will need to send signals to shoppers to let them know that they are, in fact, safe. Mark cohen, former ceo of sears canada says fear may sideline shoppers temporarily, sending them online to shop instead of in store. In sad reality, foot traffic actually increases to the locations of the violence, as some want to visit the scene and see it for themselves. Cohen says stores and malls immediately revisit the Security Staffing and coverage plans to determine whether they were acting in accord with their own policies and whether or not they need to adjust them Going Forward. While many mall operators will likely increase security measures from surveillance to technology to personnel, the extra expense isnt typically enough to truly impact the bottom line. And former may Department Executive jan nippen says no one wants to make it harder for consumers to shop in store, because shoppers still hit the malls after these violent incidents. There is reluctance to add things like metal detectors and bag checks, especially at a time when the customers already increasingly willing to sit home and shop online. If you make it harder, it might just happen a little more. Kelly . Sure, courtney. Its never been easier to shop from home. Thank you very much. Now, in light of the new jersey mall shooting, does security need to be buffed up at public venues . Paul is ceo of risk control strategies, and he joins us now. Paul, good morning. Thank you. Good morning, kelly. First of all, is it just our per sepths, or are the incidents becoming more common . They certainly are. Sand the alarming thing about this is the profile of the person, a male in his 20s, picking public venues to broadcast the disdane, thats the most alarming part about this. Sure. What about with Shopping Malls specifically . I think they need to be measured and responsible, you know, how we look at thchl the last thing we want is a kneejerk reaction and start throwing money at a situation that could actually deter shoppers and hurt retail. Part of the main issue here is understanding where the true vulnerability is for the mall itself, and then taking a measured response. You have to also look at the Business Case, too, kelly. You know, we have to be responsible, in lieu of just coming out and throwing money at a situation, what is the Business Case of protecting the mall . Where to they get the best wurn on their investment, and when do you provide peace of mind without compromising revenue . To take the example of last nights shooting, in that situation, was there was it a security lapse . What is the next step, then, in terms of cracking down or beefing up security that a mall like that should take . Well, its a really good question. Again, are we going to the question, really, are we going to extend and push out the exterior perimeter . Are we going to install metal detectors . Are we really going to expect and if we do that, then we could certainly have mitigated that incident. But if we do that, how many people are not going to go shopping . How many women are not going to bring their daughters and go to a mall, and what is that going to do to the revenue . So the answer is, yes, you can clearly increase presence without going into a fixed capital issue. And i think we need again to be more measured and balance and respond to this, so we provide peace of mind without expecting the owners of malls to go deep into their pocket on fixed capital expenses. Paul, just from an optics standpoint, this happened on a week where we also had a shooting at an airport in los angeles. Do you think malls are suffering from an image that they are extraordinarily unsafe, or is this just part and parcel of whats going on in the country . No, carl, actually, i think its part and parcel of whats going on in the country. Weve gone from movie theaters to airports to churches to synagogues to, you know, to malls. I mean, it wasnt about a month ago where we had the incident, the Workplace Violence shooting out on long island. Its part and parcel to whats going on today. And a bigger issue, the bigger issue is why. Whats fuelling the 20yearoldsomething male to pick a public venue to broadcast their disdain. And its something we should examine. Were likely to see beefedup security this holiday. Thanks, paul. Thank you. Orbitz, how will it navigate the Holiday Season . Well speak to Barney Harford coming up, and rick is getting ready to talk to ed la sdpleer. Absolutely. Talking about debt and the debt ceiling. We know in january were going to all potentially have some hangovers. Well, are we going to have a debt ceiling hangover . Thats what were going to discuss right after the commercial break. Be there. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. [ passenger ] airport, please. What airline . United. [ indian accent ] which airline, sir . [ passenger ] united. Whoa taxi [ british accent ] what airline, then . [ passenger ] united. All right. [ spanish ] what airline . [ passenger ] united. [ mandarin ] which airline . [ passenger ] united. [ arabic ] which airline . [ passenger ] united. [ italian ] where are we going . [ passenger ] united. [ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly . [ passenger ] united. [ male announcer ] thats great, big world friendly. I needed a new laptop for my premed classes, something that runs office and has a keyboard. But i wanted a tablet for me, for stuff like twitter and xbox, so my downtime can be more like uptime. Thats why i got a windows 2 in 1 which does both works as a laptop and a tablet. So i can manage my crazy life, and also have a life. [ beep ] gotta go. Welcome back to squawk on the street. Rick santelli here with my special guest, former chairman of the counsel of economic advisors, ed lazear. Ed, you wrote a great oped last week about debts and debt ceilings. And before we get into discussing that, real quickly, lets just summarize. For fiscal 2013, the president can take credit or some of the combined programs like the sequester for lowering the debt to more than half less than half of what it was, from 1. 6 trillion to under 700 billion. Right. But outside of the current obama years in the office, its still the highest singleyear deficit on record. Well, it is. And the other point is with deficits at this level, it means that our debt is still growing at a pretty rapid pace. So in order to get the debt but it is some progress. Its just that the National Debt keeps going up . Yeah, its some progress, because the past was so bad. All right. Remember, weve got tax revenues going up as the economy starts to get better, and we have spending coming down, you know, significant part of which is the sequester itself. So both of those are working in the right direction. But were still a long way from where we were prerecession. Remember, prerecession, we were talking about a deficit ratio of 1. 2 togdp, which is a long way from where we are right now. So we still need to get back into that direction, i think. Now, offcamera we were talking about how to control the debt. Yeah. Obviously, if we look at Discretionary Spending, that isnt going to cut it. What was the average Life Expectancy when they initiated Social Security . Right. Well, you know, down around 65. At this point, given the longer Life Expectancy we have, we have to think alternative ways to structure longterm entitlements. Thats the general point. Youre getting to it. The big difficulty with focusing on the debt and t deficit is it doesnt treat the underlying problem. It doesnt treat the cause. The deficit and the debt get high because primarily we are not exercising spending control. And when you say, how do we exercise spending control, as you point out, we know that Discretionary Spending is a relatively small part of the budget. Getting smaller every year. Right. The only way to do that is focusing on the entitlement side. The president has said, well, we dont really have a spending problem. Well, even right now, even with the deficit, its Something Like 4 of gdp. That means that were still borrowing 20 of what we need to finance the government. So if we raise taxes, that would mean raising taxes on the average american by about 20 . Over the long term, when these entitlements really kick in, were talking about raising taxes on the average american by something, like, 50 . So unless we get spending under control, were going to have a very different world in the nottoodistant future. Do you think and were almost out of time that we are going to have another repeat in january of what we just went through in october . Well, i hope not. And what i would like to see is, again, not so much a debate over the debt ceiling, but rather a debate over spending. Thats the cause. Thats the problem. We should be doing that right now, and we should be getting control of our budget before we get to the situation that we faced a few weeks ago. That was a terrible situation, obviously. It ended sort of well for a short period of time. But thats not the way to handle things. We need to get the spending under control. Thats the only way to do it. Ed lazear, thank you for taking the time. Sounds like a sensible strategy to me. Kelly, back to you. All right. Thank you, rick. Today, its the senates turn to grill the head of medicare and medicaid about the disastrous rollout of obama care. Republican senator Johnny Isakson was in that hearing and hell join us in a moment. The bells are about to sound across europe. Well get you the details on the close and the impact back here when squawk on the street continues. Farmers presents fifteen seconds of smart. So you want to drive more safely . Stop eating. Take deep breaths. Avoid bad weather. [ whispers ] get eight hours. [ shouts over music ] turn it down and, of course, talk to farmers. Hi. Hi. We are farmers bum pa dum, bum bum bum bum announcer the european markets are closing now. Welcome back as we finish out the session across the pond in the u. K. And across continental europe. Stocks pulling back from fiveyear highs after 2014 Economic Growth projections were pulled back to 1. 1 , down from 1. 2 the last time around. And it also says it sees unemployment remaining at 12. 2 . This says the ecb and the bank of england getting ready to hold policy meetings on thursday and tons of attention focused on what the ecb will do here. The major forces in london. Were seeing red arrows, the ftse down. 33 . This is despite the fact the pmi at the highest level since 1997. Declines echoed across the other major boards. Closer eyes on banks. Theyre among the biggest decliners in europe. This includes societe generale. And important to see if it flows through to here. And shares of bmw moving lower. Automakers revenue slipped in the Third Quarter, hurt in part by discounts in core european markets. Bmw says spending on technology and new models is likely to pressure Current Quarter earnings, carl. All right. Lets bring in bob pisani with a look at whats moving on the floor. Good morning, bob. Good morning. One of the reasons were down here, partly, because the Economic News is better than expected. Look at the s p 500. Ism services came in pretty good, and the markets dropped on the good news, obviously concerns that there may be, you know, tapering, maybe earlier than expected. Weve dropped, come back a little bit, and now moving down a little bit. 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. When you do what i do, iyou think about risk. 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Peace of mind is important when so we provide it services you bucan rely on. With centurylink as your trusted it partner, youll experience reliable uptime for the network and services you depend on. Multilayered Security Solutions keep your information safe, and secure. And responsive dedicated support meets your needs, and eases your mind. Centurylink. Your link to whats next. Welcome back. Medicare administrator Marilyn Tavenner is getting grilled today before the Senate Committee on health, labor and pensions. One of the members is joining us now, senator Johnny Isakson is a republican from georgia, and hes with us from capitol hill. Senator, good morning. Good morning, kelly. Good to be with you. Thanks for joining us. What jumped out to you from her testimony . What did you learn . Well, unfortunately, the Security Problems are as bad as i thought they were. There was an announcement yesterday about a breach in south carolina. As i pointed out to the administrator tavenner today, they have hired cssi to be the coordinator of the website. In june of this year, the Inspector General had cited them for violation of federal policy in exposing 6 Million Medicare beneficiaries information to the internet. So security is a major issue, and theyve got a long way to go. And security being one piece of this. Of course, another piece of it is keeping the site up and running. Whats the latest on that front . Well, theyre trying. Theyre making an effort. Theyre not there yet. They seem committed. But theyre not there yet, and continue to have to bring the site down daily for repairs and maintenance. And thats partly why, senator, a lot of people are going back to the original awarding of this contract to a firm that, you know, at a time when we have american titans of technology, one of the strongest industries globally, why arent some of those minds working on this from the getgo in. The explanation for the problem is simply this. The government decided the government was better prepared to roll it out than the private sector. Only ten days ago did they contract with somebody to do it. It was a terrible oversight, and its the contributor to most of the problems. Senator, do you believe well have the exchanges up and running by the end of november now . And able, of course, importantly, to get young people involved and people who dont necessarily just need the insurance, but find that it might be in their interests to shop around, the kinds of people important to the whole programs success . Ill believe it when i see it. Weve got a long way to go. Theyve got a long way to go. Theyve got to get the information out there to the public to get the participation they need to make the program work. It remains to be seen whether theyll do it. Senator, the postponement of the individual mandate, is there a point at which that becomes just a windmill, where you no longer think its anywhere close to a political reality . Well, youve got two youve got a discriminatory situation going on. You put off the employer mandate but not the individual mandate. Two different treatments under the same law. But putting off or kicking the can down the road is not the solution. We either need to get this right or do it, or cancel it altogether, and start over. So are you are you still pushing for a postponement of the individual mandate, or not . I want individuals treated like everybody else is treated, if thats part of it, thats fine with me. But the bigger question is to fix the site, get the program working and if its not working, collapse the program. I wonder whether or not tavenner we heard sebelius, obviously, last week, reiterate that the 30th remains the target date. Do you believe thats still the case . I that i its going to be very difficult. Senator, just to go back to this point, as well, so what youre saying is that instead of delaying the individual mandate by a year, for example, to keep the program in line, perhaps with its needs or whats happening on the employer side, that youre saying it will have to be a binary outcome. Either we get it right right now, or we dont get it right at all. It doesnt sound like getting rid of it entirely is possible, so does that mean you fully back the implementation of having it up and running for march . I want it in place for my constituents. I happen to be one of those that rolled out companies in the private sector. I think they have Serious Problems with the implementation, and im not sure it will survive. I see. I dont want it to hurt my constituents or take away the coverage theyve got. All right. Thank you for clarifying that. Senator isakson, fresh off the hearing with Marilyn Tavenner. Thanks. Thank you. And now, just off a world series victory, hes making his way to post 9 as we speak. Boston red sox star david ortiz is here live at the new york stock exchange. Hell join us when squawk on the street returns. Stay with us. Clients are always learning more to make their money do more. 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. Bny mellon combines Investment Management investment giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. These are the hands a pediatrician. These are pioneering advances in heart surgery. And these are developing groundbreaking treatments for cancer. Theyre the hands of the nations top doctors. Kaiser permanente doctors. And though they are all different, they Work Together on a Single Mission saving lives. Discover how we are advancing medicine at kp. Org join us, and thrive. Coming up on the half live from here on the new york stock exchange, the man who won twitter, duncan neediderhauer i here. Is this rally sustainable . History suggests you shouldnt bet against the market, going even higher. Plus, is groupon still a daily deal for investors . Or should you clip this one out of your portfolio . All of that and much more coming up at the top of the hour. Carl . Nice to have you in the house, scott. Thanks a lot. Lets get to dominic chu, getting the market flash. Youre watching marvel. Its spiking up to session high, on media firm kkr has been building up a stake in the company, and is now just 5 of the shares outstanding. The chart there reflecting that bit at least. The speculation, were still waiting to see if the reports get confirmed. Over to you. Thank you, dom. Straight ahead, the ceo of orbitz reacting exclusively to the quarterly results. Well be back after a short break. I have low testosterone. There, i said it. See, i knew testosterone could affect sex drive, but not energy or even my mood. Thats when i talked with my doctor. He gave me some blood tests. Showed it was low t. Thats it. It was a number. [ male announcer ] today, men with low t have androgel 1. 62 testosterone gel. The 1 prescribed topical testosterone replacement therapy increases testosterone when used daily. Women and children should avoid contact with application sites. 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[ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your Trading Floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Shares of orbitz trading lower, down almost 20 after the Company Posted its results today and cut its outlook. Youve destroyed basically somewhere in the region of 200 million of value there on the move that you see. Joining us now in a cnbc exclusive is Orbitz Worldwides ceo Barney Harford straight off the call. Welcome to the network. Obviously, a tough morning for you. Whats going on . Well, you know, we announced actually a strong q3 with acceleration up to 22 . And Strong Revenue and adjusted ebitda. Youre right, youre seeing the share price down a little bit. But we are still up over in the order of 200 since the beginning of the year. Yeah. And that perhaps is the bigger point that, you know, you managed to reaccelerate the business. The stock price has done miraculous things during the course of the year. But here were back down to what is the outlook of the business . Youre sandwiched, of course, between the bigger players like priceline, like expedia, spending a huge amount of money on advertising. I mean, how do you how do you work through not just competing against them, but moving increasingly away from the flights, a lowmargin business, the bulk of the business, and into hotels . Absolutely. So we crossed a critical milestone this quarter. As you said, hotel is the really strategically important part of our business. Its an incredible opportunity, very fragmented, adds a lot of value, technology to add for customers. Critical milestones, we passed over 50 of the revenue is now coming from the strategically Important Hotel and dining packaging segments. Thats up 5 Percentage Points from a year ago when it was 45 . Critical progress were making there. The other thing were doing to compete with the big guys, you know, weve got some really interesting things going on. We launch eed orbitz rewards in the quarter yeah, let me come onto that in a emmo. The new reward scheme, its clearly not enough for the market. You know, undeniably, this is a very, very bad performance today, down 20 . You know, we focus very much on what were doing to run a great business, you know, and share price goes up, share price goes down. Were focused on building a great business. Okay. One of the things i do want to clear up, is weve increased the fullyear ebitda guidance. It was 8 , 10 in august, and increased it to 9 to 10 . Share price goes up and down, but were focused on building a great business. And in fairness, lets mention the rewards scheme you laumplg e launched two weeks ago where people can get all bucks, like an online currency, orbucks, they can get anything. Is it anything, or is it solely the hotels that are able to spend the cash on . Its a groundbreaking program. Weve created the currency, orbux, and it you can earn it through the site. It can be redeemed instantly against bookings of against Hotel Bookings on the website. You can earn up to 5 in orbucks when you book a hotel on the site and earn 1 when youre booking an airline ticket. And thats on top of the points you earn on the credit card, and its on top of the points you earn with an Airline Frequent Flyer program. And the thing that consumers really love, is with all of the promotions were running, no blackout dates or redemption totals. Can you redeem the points immediately. Expedia, travelocity they all have the programs. Why is it transformation for you, in essence . I think what it really does for us is helps us take the stream of customers who have purchased Airline Tickets and gives them a compelling reason to think of orbitz when booking a hotel. Clearly, the margins on hotel are higher, and to the extent were able to drive air customers to consider us for hotel, its extremely strategically important. Were also using this to drive awareness and adoption of our mobile apps, and as a result, the earn opportunity on a hotel site is even greater when youre booking through a mobile app, and the mobile apps just make the whole experience of earning and burning really, really easy and transformation. Barney, credit to you for coming on the network when obviously you knew you had something that might disappoint the market. Its a pleasure to see you. Barney harford joining us, the ceo of Orbitz Worldwide from chicago. Lets get a market flash. Back to headquarters with dom. Lets check out whats happening here, overall, with course, because michael kors, the upscale retailer report and sales, Beat Estimates by 3 cents with fiscal Second Quarter profits coming in at 71 cents a share. Sales also coming in better than estimates and the company also raised its outlook for the year as it continues to build sales momentum, a bright spot here, carl. North american samestore sales up a staggering 21 . Back over to you. All right, dom, thank you so much. They went from being one of the worst teams in baseball in 2012 to winning the world series. Were talking, of course, about the Boston Red Sox 2013 world series champions, and joining us today on the floor of the exchange, along with 500 of our closest friends [ laughter ] big papi, the most valuable player of the world series. David ortiz. Welcome. Thank you. Youre deep in yankee territory i know, im not safe here. We could barely get the long shot, because you were signing so many balls. [ shouts ] congratulations on an amazing season, an amazing series. People talk so much about resilien resilience. When youre asked how the club turned the season around, whats your answer . Hey, it was a lot of guys out there. The great attitude. Have an unbelievable manager, and guys with big hearts. Thats all it takes. And playing for a city like new england, the nation, its something its special. Its special. Its always an honor for myself and for my teammates to be a part of the ball club. Like i said, we went through a lot this year, and i think its slightly good movie with a great ending. When you hit 2,000 hits earlier, you said joining boston was one of the best career moves youve made. Whats made the difference for you personally being a part of the franchise . Well, i think that when you play in boston, its like its how i grew up playing baseball, in my country, from the dominican republic, and baseball is very intense over there. And every time you play in fenway, every time youre dealing with the red sox fans, its the people that have the true love for baseball, and to me, it gets no better. Its been said in the series itself, there was a moment i think its right before the sixth inning of game four, right . You actually held a little impromptu session in the dugout, and you said something, and shortly after that, gomes comes out and hits the grand slam. What was said . What did you say . Well, just basically, the run, one of the guys been on the team longer, i pretty much im pretty much on the bench watching things, and i watched most of my teammates just calm down, more of a depression than usual themselves. And i wanted to let them know, you know, coming to the world series is not something that you see every day. Its one time in life. Sometimes theres this guy that the whole career, they never get to see a world series. And thats the time that you got to put pressure on the side and try to do your best, play the game the way you know how, and not try to overdo things. You said you only win once, but youve won three times. [ laughter ] yeah. What makes this win coming in a year when boston began with the marathon, the tragic events then, and capping it off now . Did it add something to did it make it more challenging, rewarding . How did that factor in . Its a very special one. I know in 2004, we won one that the team was waiting 86 years to win it. And i know that one was very special. But were talking about two different situations right now, here. Were talking about the one that you wait 86 years and the one that you have something going on through the marathon that everybody is trying to raise money for different reasons. You know, just having family members and family affected by a bombing, something that nobodys expecting, it put everybody kind of on the same page. And also winning the world series and having the season that we have, its kind of help people to recover, to have the mentality that they have before way before this thing happened. You turn 38 years old next month. People want to know, how much longer this month. This month. This month. Yeah, were in november already, right . [ shouts ] how much more how much longer can you do this . I dont know, man. Im the kind of guy that i try to work hard every day, you know, when it comes down to playing the game. But, like, everybody knows, your body start, you know, feeling different than when you were in your 20s. I dont know. I have to try to keep up with what i do, and whenever the time comes, you know, and the numberone thing about me playing the game, i need to have fun. If i dont have fun, if i dont be who i am, i dont think i can be able to perform, you know, the way people always expect me. So i thank god for everything that he has done for me and my family, and hopefully, you know, i stay healthy and continue to be successful, successful at the game, and see how long i can keep on going. All i know is when people here found out you were coming down, they asked us to ask you if you would ever play for the yankees . [ shouts ] no no no way, baby hey, thats a question you need to ask to cashin. I have a feeling hed respond. You know, im towards the end of my career. And i think i dont have too many years left in my career. So whatever i have left, im pretty sure the red sox will try to keep me around and keep on playing here. So if i would have been in my 20s, it might have been a different story, but its not anymore. But, you know, happy with where i am, and things are going well here. And, i mean, ive been in this organization so long, i dont think i will ever feel comfortable being somewhere else. And i got nothing against the yankee fans, you know . Thats how it is. We understand. Im trying to be on behalf of baseball fans, everywhere, david, thank you for the series, for the season. What a joy to watch. Of course, you got tons of fans down here. Youd be lucky if you get out of here anytime soon. I know. Thank you for coming by. Thank you. [ cheers and applause ] i think were going to go to seema mody, check in with seema a few minutes before noon on the east coast. Hey there, carl. The nasdaq down fractionally. It seems like the subdued excuse me, subdued Economic Forecast from the European Commission is impacting traders sentiment, especially since one of the bright spots this earnings season has been the comeback in europe. Now, in parallel, were also watching the ism services data. That came in better than expected. Thats suggesting to some traders that maybe the fed will pull back on monetary support sooner than expected. But to put that into perspective, were seeing the nasdaq trade very near the 13year high. In terms of stocks specific action, look at apple. At t announcing activations for the launch weekend of the ipad air were up more than 200 over last years ipads launch, but were still seeing shares of apple trade down, again, fractionally. In terms of other new, cognizant tech, one of the outperformers today, an indian i. T. Services company, earning 1. 05 per share, beating estimates by 4 cents with revenue also above forecasts. European sales continue to be strong for that i. T. Services company. And then, biotech, a strong one of the strong one of the bright spots for the nasdaq this year. One mover that were watching there is generon pharmaceuticals, earning 1. 25 per share, beating streets expectations. The ceo will be on mad money with jim cramer tonight. Sharon epperson, over to you . Were looking at oil prices at the lowest levels since june. The decline weve seen in crude oil prices is good news for consumers, because its translating to lower prices at the gas pump. Weve seen growing supplies of u. S. Crude inventories and gasoline inventories, and thats helping to pressure gasoline prices at the pump. 3. 24 a gal today, down a penny from yesterday. Down 10 cents from a month ago, and we could see prices as low as 3. 10 by the end of the year. Already, five states in this country are seeing the statewide average below 3 a gallon. Most of them in the centralsouthern part of the country. And we are looking at 35 states, according to aaa, where somewhere in that state you can find gasoline below the 3 mark. How low will it go . We found some folks in oklahoma paying below 2. 70 today. You need to check around. Back to you. All right, sharon epperson, thank you so much. Tweets on this morning. Mckenzie bezos, wife of amazon ceo jeff bezos, has written a tough review on the internets largest retailer. She said the book, the Everything Store, has too many inaccuracies and it brings us to the mornings squawk on the tweet. If they wrote their own book, what would it be called . Mike, audio book of bezos laughing. Greg writes, kindling closer family relations. We do love jeffs laugh. Its one of the great laughs in american business. And i love a pun with the kindle there. Appreciate it. Thanks to david ortiz. Wasnt that fun . It really set the floor on fire today. The dow is down about 16, continues to shave some of the losses. Lets get over to post 9 and wapner and halftime. Heres what were following today bigwin. It scores the big ipo and what it means for business and investors, from the man at the top, ceo duncan niederhauser. The great debate after a new ceo and big runner, shares of groupon a daily deal for investors. Or buyer beware . We start with the question all of us are wondering, is the rally sustainable . History suggests yet. In the past 50 years, only four other times that the s p 500 has risen more than 20 in the first 10 months, and in each of those times, nem