Transcripts For CNBC Squawk On The Street 20131120

Europe is down for the second consecutive day. Our road map begins with jcpenney, a pleasant october surprise as comp sales rise for the month. Trends look upbeat for the month and is giving the stock a big boost in the premarket. Deere jumps on quarterlies but lowes falls. And youre going to want to hear what yahoo Ceo Marissa Mayer had to say last night in San Francisco. Well have that for you. Shares of jcpenney up sharply despite a wider than expected quarterly lost. Mike ullman says penneys is encouraged by the open in november. Theyre talking 2 billion plus in liquidity, sequential increases in margins and comps. There was a whisper around they would lose 2. This is the agabeginning what i have would call the normalization of jcpenney. Theyre going to go back to being nothing, just another retailer. Theyll be like kohls. Well talk about jcpenney like kohls. Main thing is you want to buy pvh because they were the supplier that stuck with the previous guy. Notice i didnt call him clown because i came back from the west coast, im a little more mellow. I noticed that. Youre still wearing a tie, though. There wont be that inventory overhang. Looks like we made it i dont know. They lost 9, they lost 1. 94. 740 million in cash flow use. Theyre going to make it through christmas. Im not saying go by the stock. They end with 1. 22 billion in cash equivalents, raised 785 million in the sale of shares. The preferred has been very strong. Thats kind of what im saying. Jcpenney, it was really important to talk about when it was on life support. Now its in rehab. Its doing some p. T. Its szott some o. T. Some dont survive rehab. If youre good enough, why does that not mean material upside for the stock . It want that good. Can it go up to 12, 13 over time . Yeah, i guess so. But macys went from 43 to 50. It was operational improvements, significant ones. This company was dealt a mortal blow potentially by ron johnson. Its not mortal anymore. Its just that i dont think with these kinds of numbers in the most important season that you want to you know, goes to 11 . Fabulous. Would you rather buy penneys or kohls . Is there a Door Number Three . Id rather shop with other players. I think jcpenney why did we discuss jcpenney all the time . Theres 110,000 employees and it would be a disaster for the u. S. Economy if they folded. I think what this quarter says is we got the liquidity to go through but if you go back to when jcpenney before ron johnsons spart, it was not doing anything. It was on a slight decline. I think that thats not been arrested. Its just that the steep decline has been arrested. You got a lot of guys who still may know nothing about retail, hedge fund guys, once again its a free option. Thats good, i like that. Many of those guys bought it and left because they didnt turn around as they expected it would. I just think tjx, my Charitable Trust owns that, these are longterm secular winners. Costco is a longterm secular winner, they offer terrific quality stuff at a lower price. Jcpenney is going to be on that coupon goround. The only one ive seen do well on the coupon is bed, bath and beyond. Dont forget this was a horrible Third Quarter. With jepine. This is the quarter that says you could shop there and it going to exist january 5. Many retailers ive seen, january 5 theyre calling people saying, hey, nice to meet you. Youre saying this story this morning is still about hope as opposed to results . Yes. I think if you want to own the stock, what youre betting is that retail is going to be very strong and a rises tide lifts all boats. I do think it was great when they talked about womens and mens apparel being strong because those have been whats been weak. Thats why i mentioned pva. If those strongs are strong, its going to be a pretty good Holiday Season, as opposed to best buy. A price war can be good for the Holiday Season. It just not good for those involved in the price war. I want to end it here. In my comments on i have more to say. You always have more to say. That i have no doubt about. Ill end by saying on august 20th were going to end the year in 1. 5 billion in overall liquidity. They now have 1. 7 million in overall liquidity. Nd p but they did raise 785 million. How did they raise that money . Turns out this evenings are a little better and then you issue stock. If i were them, id issue more stock. He gets the last word. Lets move on to two stock heading in opposite directions. Home improvement lowes is down. I look at lowes and i look at home depot from yesterday and i say is one Company Simply doing better job . Weve been selling lowes for the Charitable Trust. I didnt sell it fast enough. When you have plus six comp, you should be making more money. Operating expensions were down. I make no excuses for it. I thought the other day i thought are they on pace for the year . The stock was up 48, 49, home depot up 25. Frank blake go back over that quarter. Some divisions were incredibly above plans, double dj ilt for appliance. Lowes was not like that. I thought that the restructuring had more room to go. Seems like low east is peaked. Im disappointed they couldnt make more money on those sales. Home depot is making fortunes on its sales, which is why theyre returning so much cash. Better execution . Yes, period. I have nothing more to say. Lets go to break. Theres another housing play to some degree. Lazy boy is up. Is there any halo to hd . Hd was staggering. Theyre saying the pro shopper is back. The renovation in rehab going on in this country they have a great line in the home depot flyer, it says if you put money into your moment, youre going to feel great. By the way, cree light bulbs called out. Home depot says you no longer that no longer like the squiggly craziness. They look like other light bulbs. This twotone home, they look terrible. We should do the show from there sometime. I should show you my closet. We could do shows. Lets go to deere. Im trying to see how they can screw it up on the Conference Call. Continuing operating perform, you he know his way around, after 25 years. Whos counting. Fiscal year cash flows from operations, 2014 forecast is 3. 9. They had 4. 7 billion this year. If they focus on this chart look, these guys, i dont know. I mean, maybe like the American Farmer is gloomy but deere finds a way to take fantastic numbers and make them into something you dont want to own, and i hope they dont do that. What they ought to do is just say refer to our quarter. Dont give us color that drives the stock down like you if i were producing the play of deere, i would say make it a comedy, dont give me henry iii. Dont make it taming of the shrew. Yeah meantime the fed is going to be in focus today. We have the minutes from last months fomc meeting coming out at 2 00 p. M. Eastern time. And ben bernanke said the fed will maintain the easing Monetary Policy for as long as needed. In particular the fund rates is likely to remain near zero perhaps well after the unemployment threshold is crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation. Interesting set of q a, said the confusion over the taper in the summer was neither welcome nor warranted. He made it pretty clear. Can he get good numbers autos, get good numbers housing . I dont know. In the end, when i was out at west coast for dream force, what i was conscious of was these companies are tremendous disruptors. Meaning you can fire a lot of the. Theres just these counter boyi boying. Well, theres like four plints being built. Theres nothing structurally positive about employment right now. He talked about the. Drans of data supports it. In the drig driver of it takes an interstate highway system. I know people dont want Big Government in this country. Its talked about over and over again. Theres no private industry that can get this economy going the way bernanke wants. We dont need an incredible infrastructure upgrade in this country. 4. 4 trillion. Is that all it is . Its sore live needed in so many different ways and so important to the future. Front page, the airports will be as busy today as they are right before thanksgiving. Can you imagine that being true . Youre right, theres a lot going on. Opt co says boeing will peak in 2014. I dont believe that. China has cities that dont have air right now that will be very busy in a couple years from now. A coal plant every other week that opens up, and they refuse. When we come back, yahoo Ceo Marissa Mayer talking about what her companys betting on. Well talk about that 5 billion additional buyback and why shares are going to open up 3 . And the ceo of tumi will be here. Future is looking decent here, implied open 20 someodd points. A lot more squawk on the street. Live from post 9 in a moment. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, they could save you in outofpocket medical costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. Shares of yahoo up in the premarket. The Internet Company increasing its buyback by 5 billion and announcing a 1 billion convertible note offering. Last nights dream force convince in San Francisco, Marissa Mayer talked about the key role that mobile is playing in his companys growth strategy. We dont think as design first, we think of ourselves as mobile first. When you look at whats happening with the mobile trend overall in our industry, its clear that it a wave large enough that you can ride it to reinvention. Yahoo has to constantly reinvent itself and the scary part about reinvention is it happens best with platform shift and we real want to ride the platform shift to mobile. Above 35. You have to go back to 06 for those levels. David faber was talking about how the alibaba stake could be the biggest thing. It is. And yahoo japan. It may be shes successful in reinventing this company but i would argue we still dont know. Youre seeing a move up in the value of ali baba. Theyll sell about 9 in that company next year when it happens. If you assume a 38 tax rate, they only have 3 billion in cash, raising another billion and dont forget the 35 of yahoo japan which has been performing extraordinarily well. So thats where its come from. Buybacks and increased value in ali baba in japan. I talked to the guy from yelp. His the only guy whose laptop is worth more on mobile. Facebooks done a great job in trying to monetize mobile. Yahoo still not great. But theres always hope. In the mine time alibaba rules. How much up side if we got engagement and metrics that actually were better, some share that began to come back . Geez, could you see mid 40s. The positive for them is they have enormous stashes of value in yahoo japan and in alibaba that they can continue to use to try to transform the business. Or return to shareholders. When you hear where advertisers want to be, they want to ride twitter and not pay twitter. They have to accept the fact that theyre going to pay facebook. They like aol because they want to be against aol video and yahoo no ones sure yet. They want to make a bet but theyre really making a big bet on facebook and on aol video. Tim armstrong when he was on, david, you mentioned to me that Tim Armstrong said he was the internet of all things. Thats salesforce. I find him to be the best in history. The cpms on video are in a different universe. Thats where the prices havent come down. If you are can curate videos so youre not against porn, can you do quite well. You know what time it is. Cramers on deck with his mad dash. Well get stocks worthy of his attention and yours. More squawk on the street from the nyse is straight ahead. 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. It feels good, yeah, it feels good its mad dash for a wednesday. Where we going . Jpmorgan . Im going to call jpmorgan the evil empire, that way im safe from twitter. My trust owns shares in the evil empire. Mary lake says the importance of the Justice Department deal is quite simple. It says we have a much narrower set of mortgagerelated risk than we did before the settlements. When people have less risk, they say what if they earn 5, 6, then you get maybe an increased dividend and then up have a 60 stock. This is like jcpenney. The normalization of jpmorgan would show tremendous, tremendous growth. People are looking at this hit as onetime only. Does that mean normalization of regulatory bodies all over, volcker rule, where are they actually . Yeah but the big litigation his being risk i think is over. You should see what they did to mortgages. I think caterpillar is fabulous at forecasting, bad at executing. Heres some october statistics. The worlds down 12 . Asian pacific done 26 , latin america down 8 , rest of the world down 17 , north america the standout, minus 2 . They are not executing well but the board seems to like it because theres been no changes. Were going to see a lot of changes potentially in a lot of different stocks. The opening bell right after this. Now access live cnbctv with your bare hands. Your bare hands. Its an app, it [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Youre watching cnbc squawk on the street. Big day for the fed. Well get minutes from one of the critical meetings where they probably discussed a lot of communication that was during the government shutdown, speaking of which retail sales this morning, best since october of 09. Actually best since july. Cpi was lowest since october 09. Retail sales apparently unaffected. Gasoline, Steve Liesman said not spending as much on gasoline, were biography sweaters. Its true. If you looked at it empirically, its apparel, a little more money in the pocket, not going to walmart, stepping up a little bui bit higher. Down here at the big board, Nuskin Enterprises and over at the nasdaq, advanced energy. And nuskin, you do personal care and you push it, this is the opposite of avon in terms of performance. People betting against nu skin have not been rewarded. Jcpenney a winner out of the gate, up more than 9 . Your story, youd rather by pvh. Im not about surviving. Im about making money. About thriving. Dont survive, thrive if theyre doing well, what is Terry Lundgren doing at macys . Just putting points on the board. Pvh is going to go much higher. I think the calvin klein deal is going to pay off dividends. Lowes, second biggest loser. Disappoint ing. And smuckers, after kelloggs and campbells soup, somethings going on in food. Campbells soup, they talked about how disappointed they were and then they talked about how great they were. I dont know, its not great. We have to talk about the winners and losers. Clearly lowes is not making as much money per sale. I bet you the stock isnt down this much later on. I dont think this is best buy where people at this point upgrades best buy. Smuckers, theyre a really good operator and theyve done a lot right. So youre absolutely right. The core of the retail store is not doing well right now. People just are not i know that safeway brought in salesforce. Com. These guys are trying to figure out new ways to bring with their customers. Whole foods did have a tough quarter. I think the supermarkets, with the exception of kroeger, would seem to be a great operator. Holy cow. Everybody else is a little challenged receipt now. I dont shop at kroeger so its harder to know but, geez, theyve done a great job. When you were on the west coast, did anybody talk about the pc . Next week well talk about Hewlett Packard and we heard from dell this morning on squawk box. Whats going on there is the tablet. They talk about chrome as being a highlight. They like google pcs and a lot of people are feeling meg whitman has been able to develop new products around pcs that are going to surprise. I heard a lot of great buzz around meg whitman and Hewlett Packard. Theyre talking about put the printers and ups and cvs and have seamless printers everywhere. Meg whitman has been successful so far. I believe meg will join us a week from today. Are you flying out there . No, shell be with us in the morning. Hewlett packard will be reporting after the close next tuesday. I didnt hear much from dell one way or the other. Hewlett packard is going to be a winner because of dell. People are saying a lot of hedge funds lock in. What are they locking in . Inferior performance . What are they telling investors . Hey, we did a really bad job but we locked in in october so dont worry . Priceline, conviction buy. I think priceline is one of the Great Stories out there. Remember people in europe travel like it goes out of style. They believe that traveling and vacation are the fundament of life. We believe work is the fundament of life in this country. Is t is selling back out to cash at 18 times earnings. Thats crazy. Boeing on the flip side. That downgrade fatuous down grade when you get the yield going as they make the plane. If they move their next plane build to a righttowork state, margins go huge. Huge. Its union, huge. I get it. South carolina. These are we have different look, you build in mexico, you make 120 profit. You just keep buying up homes in mexico so youre going to benefit from getting us out there but not the american worker. Stop. Theres plants where 120,000 cars right on union pacific, ksu train line about 20 minutes from my house. I have to tell you, this area was dirt road three years ago until the japanese decided this is where were going to make our cars. Dont hear as much about the drug wars in mexico that you used to. Are you buying settes . What are you doing . Im buying lattes. Microsoft is up almost a percent here, jim. Some revisiting of what ballmer said yesterday. Didnt really talk about his retirement. A good look at the xbox 1. Theyre trying to change it so can you get netflix and hula and amazon. Paul raines is on later this week. Youll fly to San Francisco in the middle of the night. And fly back in the middle of the night. All right, you forced me. Maybe i will go. I think the xbox is a game changer. You get king leer, Steve Ballmer out of there, sticking with shakespeare. Lets go to bet pisani on the floor. Modestly on the up side, Dow Jones Industrial average, s p up fractionally. I see tech. Home builders are also nicely up this morning. October retail sales up 0. 4 . Thats suggestive of the idea of potentially an earlier fed taper. He gives odds theres a 60 chance he said the economy is going to accelerate in the coming weeks and that could increase the odds of tapering earlier rather than later. Did you see bernankes speech last night . The fed is in full court press mode to convince the whole world tapering is not tight i dont knowing tightening. Bernanke said if the news continues to improve the fed would likely begin to moderate purchases but then he went on to say the fed could continue to keep rates low even after the unemployment levels are met. We hear about yellen trying to make the same distinction. This is going to be obviously a main point of the fed in 2014. Well see what that happens with. Lets talk about retail sales numbers. Lowes, the Conference Call is ongoing but we want to get some information about what was going on with the expensionexpenses. Samestore sales up 6. 2 . That was a good number. They raised their fullyear guidance. Heres the problem. 2. 15. Even after raising the numbers, theyre still a limb below the consensus. I know theyre talking about sales. Sale still a little below home depot, 7. 4 for home depot. Its been consistently below. Its been at least a couple years where home depot sales have consistently been higher. I think the main reason thats happening is home depot has a much better, much bigger professional business where professional Home Contractors tend to go to home depot over lowes. Thats the 1 difference youre seeing in some of the sales overall. For jcpenney, i called three or four guys who trade this stock and they said theres only one story here, the main takeaway, the company is going to survive and Everything Else is sort of a side show. The loss a little greater than expected, samestore sales and gross outlook margins improving. This is all just good enough. I think were at a sixmonth high. Theyre going to stay in business. Mens apparel, womens apparel, which was areas they were just getting destroyed in have shown notable improvement and i think thats the key takeaway right now. So were basically flat on the dow s p. Also flat, though, Home Builders on the up side. I want to talk about herbalife a little bit. Weve been talking about these shares. A name unfamiliar to some, bill stiritz, as having been one of the guys who always manages to make money, normally in the food business. The great price from conagra, the split first and then the sale. He owns 430 million worth of herbalife and increased his holdings to 6. 4 of the companys outstanding shares and changed a passive 13g filing to a 13d, meaning hes now active in the stock and is going to be talking to management. He said im going to talk with management about potential financing communities and recapitalization strategies. The two go together. You great fansing et finances t recapping. He talked about confronting the speculative short position in the form of mr. Ackman. This is a company waiting for its audit because of that strange Insider Trading thing that happened to them. Theyre waiting for the audit. And then there is speculation once they get that audit, they will move ahead with some sort of significant financing to fund a large recapitalization. We shall see. Thats the story thats been out there but mr. Stiritzs presence cant be overlooked. You look what he did in the gogo years, purina mills goes to bp. The guy is a wheeler dealer and hes a money maker. This guy if hes in there, you change your mind about worth. This guy is not icahn. This is not dan loeb buying it and staying for the long term and flipping it. Stiritz is one of the great operators. I dont know what hes got cooking here burr its not idle. Its always worth mentioning. That was an important change from a g to a d, going up in his stake. There is speculation again that mr. Ackman will in another investment presentation at the end of this week come after herbalife again. Is it the end of the quarter . No, its not the end of the quarter. But it is worth keeping an eye open for herbalife. Look up stiritz. Google him. Hes a very great investor. He hasnt lost his edge. That was in the 90s. It was when you were first looking at dex in the Conference Calls. That was the 80s. They didnt have dex. They didnt even have this internet thing when i started. They didnt, did they . No, i was on a typewriter. We called you hilly johnson. Howard hawks, his girl friday, carey grant. Hill green, often compared with you. I like that comparison, thank you. First time it will ever be made. John garfield wait, its me. Have i to send it to Rick Santelli. Youre over at the cme in chicago, mr. Santelli. Just watched a Garfield Movie and a george raff movie the other night. If you really want to see trading that isnt moving out average, fixed income is your market. It doesnt mean its not hitting all the major technical levels. Notice the double top intra days on these yields. Big retracement. Weve gone over that. If youre looking for so often treasuries, the curve steepening, you can see the curve wiggles there. Now, if you really wanted to see something fascinating, open it up for couple of months. Now look at the relationship between 5s and go all the way to long maturities at 30s. Can you see the curve differentials between left and rights of both of those charts. Lets put them together on a spread, we talked about it, 5 versus 10. Higher yield versus lower yield. We made a fresh high going back to august 2011, flirting with 137, getting ever closer to 140. Lets look at foreign exchange. Lets pick a date. Lets pick september 1st. If you look at the pond versus the dollar, the pound is getting a resurgence and you can see that. If you look at the euro, not as much. If you look at the dollar yen, we keep flirting with 100. This chart has redefined side ways but we need to look at all of them. Between that and the euro centric nature. Back to you. Coming up, squawk on the street continues. Mustang sally, guess you better slow your mustang down its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Clap along if you feel like a home without a roof natural gas is a big mover today. Perhaps people in the east coast are feeling the cold and the heating demand that comes from it is something that is likely to help Natural Gas Prices rise, natural gas up about 2 or so. Meanwhile oil prices, oil traders are waiting to see what happens with the Inventory Data reported from the Energy Department at 10 30. Theyre also watching developments in geneva about iran and the agreement over its nuclear program, what comes of that if there is any type of agreement. And we are also watching gold prices sliding sharply, down almost 16 below the 1260 level which some traders say is a key level at least psychologically. Gold is at a fiveweek low. Thank you, sharon epperson. Amazon already sells a ton of its own products like batteries and keyboards. Soon it could add supermarket products to that list. Ads mentioned a launch in ads in consumables. While this hints at the direction amazon is going, its not clear if the company will target one product type like snacks or a bunch of different areas. Whatever it is, if they like it, they will find a way to finance it. Yeah, dont go against them. Its interesting, a lot of times when i was out west, people say the Sleeping Giant that is microsoft, the Sleeping Giant that is oracle. No, amazon is not sleeping. Maybe waking. They are the company that never sleeps, like a bank that used to be. Citi . Yes, i do. They doze occasionally. Theres things can you take for that, you know. Amazon innovates at scale. Thats what i keep hearing. I like that. An enormous organization with enormous product portfolio, theyre able to change things quickly. Everyone out west in Technology Says they are fabulous. People revere that company. You can understand why its stock is going up so much without profit. Almost everybody else says the same thing, you want them to go show a profit, theyll do it. But thats not what theyre about, as long as they get funding. Heres the stock. Holy cow. Coming up, get your jim joe when squawk on the street returns. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Time for six in 60. A sale on bernstein to cap ot. Cabot. Stock goes higher. Workday. I think the downgrade is wrong, theyre strong. Secondary, a demand wearer. Monitor secondary. If it goes back to 57, it shows you the ecommerce company, including yelp can go higher. And tesla. This was an incredible call by barclays, sales down 10 to 20 because of the fire issue. They say numbers are coming down they think. Whats tonight . I always like to be on the pulse of the outlet world and thats steve tanger. Ben is one of my favorite ceos of the world. This is spirit. If you havent listened to him, hes fabulous. He said listen, people want inexpensive planes and thats what he gives you. This is a remarkable product, theyre up against jaw bone, but fitbit is the way of the future in terms of health care. On the fees united talking about how they want to take their target on fees to 3 billion by 2017. Thats where the industry is going. Ben has a chart about fees. United continental is not competitive. His roots are structured to areas where there are a lot of people who dont want to pay up. Its not like the services its like people express. They get you from a to b in the most efficient way. If you want to carry two bags on and hold everybody up, dont go there. Speaking of things on sale, this picture has been tweeted by brian sozioia, a retail analyst i love brian. A rack of pants at jcpenney for 1. 97. Those look like fat pants. Are those fat pants . Those a return to discounting, isnt it . Im going to have to check that out. Any 33 with a 30 length, hey, listen, ill take em. I dont care. 1. 97, ill wear them around the house. Well see you tonight, jim. 6 00 and 11 00 eastern time. Where do you think these buns came from . Existing home sales on the show, well be live from the l. A. Motor show with the president of ford americas. Also ahead in the program, the activist investor who believes if he can change the rules at mens wearhouse, he can change value for you, too. You see o. 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. So you can have a getaway from what you know. So you can be surprised by what you dont. Get two times the points on travel and dining at restaurants from chase sapphire preferred. So you can taste something that wakes up your soul. Chase sapphire preferred so you can. Welcome back to squawk on the street. September business inventory is up a whopping 0. 6 . Thats twice the number we expected. And last month it was revised upward by 0. 1 and 0. 4 . Were in the Third Quarter. This is a four quarter number. It helps explain why gdp is up. Were making a lot of widgets. Are there going to be people and sales . Diana. Home building down, a miss. Sales up 6 year over year. The big thing in the report, though, sales out west down a whopping 7 money to month. Theyre down everywhere else but 7 out west. That is due to rising prices and very, very short supply of inventory. Speaking of inventory, unchanged in october, which is not good news. We need those inventories higher. 2. 13 Million Units per sale. That is down 1. 8 month to month and barely up 1 year over year. Were at a fivemonth supply. Median home price, up 12. 8 year over year. This is a median price so mix of homes are still in there, lower end selling very little, higher end selling more. Carl . Diana olick, thank you very much for that. Jcpenney a big mover. Lets bring in court any rney r. Theres other reasons why were seeing that stock move higher. It wasnt all good. Jcpenney missing wall street expectations on the bottom line, reporting a loss of 1. 81 per share. Revenue slightly missed consensus as well and the quarter is posting a negative sales result. Gross margins are a key metric. Many analysts asking questions about that on the call. The margins did contract to 29. 5 , jcpenney but mike ullman responding to claims that jcpenney is giving away merchandise on the call and he says theres no difference between now and 2011, the last time they were promotional. But the retailer is Getting Better and gross sale margins are improving and they expect the trends to continue. October was the best month for samestore sales since 2011. The retailer also voluntarily repaying down 200 million on its revolving line of credit. That was kind of a surprise but a good one perhaps. Wall street encouraged by the trends. Its good enough, as you can see, to prop the stock up almost 8 today but christmas is critical. Jcpenney is going to have to deliver on the high stakes holiday. Ullman says november traffic is positive and its Customer Service scores are the highest in company histories. He expects black friday and cyber money to be big opportunities. I think its going to have to be. Now investors on wall street are really going to want to see these results positive, incremental maybe but positive yearly. Our guest named the number one retail analyst for retail and Department Stores. He has a neutral rating on them now. I was surprised jcpenneys are as high as they were. If they got positive tracking and results, would that be enough for them . I dont think so. Thi i think they need to show the full algorithm, that if sales are there, they can be profitable. From a liquidity standpoint, either one or the other is not going to do it. You really have to get both at this point. So what metrics would you need to see in order to turn bullish, for example, on the shares here . We had issued about a month back a rally trade. I thought they had components in place from an inventory perspective to pull off positive results. I think the big test will be into the first half of 2014. As you cycle returns to promotion from last year, can jcpenney put up sales plus profitable sales . We wont know until we get into april, maybe until they begin posting since the departure of ron johnson. Even though they say theyre not promotional, if theyre selling things at 1. 97, what does that mean for your space generally here . I think the big change versus 2010, 2011 is off price. T. J. Max and ross stores are much stronger competitors to Department Stores. I agree when you look at the gross margin that jcpenney had in 2011, 39 roughly, they were running 592 promotions. That is roughly maybe what theyre going to go back to. The gross margin algorithm to get back does make sense. The key is can they get out of the exclusive relationships, which are lower gross margin, liquidate the remaining Home Inventory and theyre going to need the sales to go with it over that time frame. As youre fully aware, jcpenney is one of the shorted stocks on the street as 26 . Is that a confirmation there could be substantial down side or would you see it as Spring Loaded potentially for up side due to short coffering if they do surprise on the up side . I think sentiments pretty mixed here but clearly given the Short Interest and the calls that i take on a daily basis, the sentiment is clearly more shifted to the down side. I think the big issue again always comes back to liquidity and comes back to the model. And from an ebidta, as well as a sales perspective, jcpenney lost 5 billion in sales over the last two years. With a competitive front and a promotional front, its not going to be easy to get that back. The question is the time frame, how much they can get back and are they going to need more liquidity into 2015 . I think by our math the liquidity and the Capital Raise they took on, i think theyre good through next holiday but into 2015, you know, well have to monitor that. A move in the right direction but plenty of more work to do it sounds like. Matt boss, thanks for being here this morning. Thanks for having me. Retail Inflation Numbers at 9 30. Steve liesman is back at hq having summed up this morning what bernanke said last night. Hey, steve. Reporter carl, lets talk about the inventory number. We just got, rick alluded to this, probably end up boosting estimates for q3 growth, at 3. 3 , expected to be revised up from 2. 8. It can cause a down revision in the fourth quarter. Retail and auto inventories surged, although the sales to inventory ratio has remain pretty much unchanged. On moments yearonyear on existing home sales. Retail numbers were much better than expected up. Yearonyear, 2. 4. There are those Inflation Numbers, headline down 0. 1, the core up 0. 1 year over year, 1. 7 . Here are the retail details. Auto strong, reverse in september, furniture decline, gas stations down because prices were down, electronic appliances up, clothing up, core sales also doing well. That feeds into gdp. We saved money at the gas station, bought cars, electronics and a few sweaters. The big question is whether retail strength carries through to the Holiday Shopping season. If job growth and improved housing and stock prices translate noos into better spen. Te take a look at this chart here. Almost no reaction despite the surge by the fed. It could be a massive excess reserve. If what sounded like a Farewell Speech last night, ben bernanke sung the praises of the transparency upgrade and was extremely dovish on the outlook for interest rates. The target for the federal funds rate is likely to remain near zero perhaps well after the unemployment threshold is crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation. 6. 5 threshold for unemployment, which bernanke recognizes is not a trigger, meaning once it hits it, the fed can hang around and wait, be patient before deciding to raise rates. There will be a lot of attention paid to the 2 00 p. M. Release of the minutes. Its likely the fed spent a lot of time how to convince markets to remain low for long, even if it tapers. That can man discussion about inflation and unemployment threshold. Simon . I guess what youre basically saying is theyre going to ram home that point, steve, this afternoon that tapering does not equal a rise in shortterm rates. They are very different things. I just wonder the way that he went about it last night explaining why they didnt taper in september is effectively opening up the possibility of tapering in december if theres a strong employment number. Because what he basically said was, look, we didnt do it in september because people couldnt distinguish between tapering and a rise in shortterm rates. Now eahe says he thinks the mart does understand the distinction. The yield on the 10year, were down from 3 to 2. 7. Do you think the window is now there in their view that people understand the difference and december could be the time . I still think december is too early, simon, but i think you make a good point. Theres a lot of thinking on the street that the more the fed chairman and the fed talks about keeping rates low, the more he opens up the door or creates the preconditions for possibly tapering. I dont think thats going to happen in december unless, as you say, we get a very strong employment report in that first week of december. Okay. Steve, thank you very much for that. So how should you play the feds continuing easing Monetary Policy . Lets get some reaction from our firstclass market econ panel. Diane diane and john, welcome to you both. Good morning. Good morning. What is the event risk once we get past thanksgiving now . Are we getting to that jobs data in two weeks time . I mean, theres a couple of them. I think one we havent talked about yet is that december 13th date by which paul ryan and patty murray have to get together and put something on the table for congress to take a look at and avoid sequestration. Theres a number of binary outcomes. Theres a number of things they could do and you dont want to cause that uncertainty before the Holiday Season. If you look at it seasonally, this period between now, november and the end of april is a great time for stocks. So thats going to weigh on investor minds as well. This is why i think the event risk is rising. Explicitly paul ryan, House Budget Committee chairman said yesterday he was comfortable in saying there will not be a shutdown like we had in october. He now joins Mitch Mcconnell that there wont be the same theatrics over the debt ceiling. Diane, if the fed was worried that a shutdown might prevent it from tapering, that seems to be increasingly less likely. It is less likely and theres not really i think the issue is whats going on in the core economy. Core retail sales revised back to august were down. And in fact with the overhang of inventory that steve mentioned earlier, that what to be worked off in the current quarter. This is going to be one of the most discounted retail seasons weve seen since the onset of the financial crisis. I understand that retail sales dont look that strong, but they didnt fall out of bed as a result of the government shutdown. That could equally be the takeaway for those anxious to taper for the fmoc. I dont think thats the issue for the fomc. I think the december press conference is the Perfect Point for bernanke to sort of bring home all the issues about the pivot from Forward Guidance that were going to say low rates longer than you ever thought possible and that will allow them the cushion to do tapering. Im in agreement with steve that i think thats still a 2014 event, not a 2013 event. I think it would be difficult for them to do it at the end of the year but its going to be hotly debated and those notes today will be important to watch. John, in a word, if they do taper, account market continue to rally . Weve been here before. Between may and september, the market saw what it means when its talking about tapering. The Second Time Around it might react a little better. The bond market might react a bit better. For the stock market, what theyre going to focus on hopefully at the end of this year and through next year is not the fed but focus on corporate fundamentals. We went back and took a look at this and since the end of 2009 all the gains in the stock market have come during the earnings reporting season. That tells you that when the markets focused on fundamentals, that goes up. Well see what the fed minutes say at 2 00 eastern. John canally, diane swonk, thank you. The mustang, there it is, is get makeover. Ford announcing the first overhaul of the pony car will be unveiled in december, just in time for the Holiday Season. Well talk to the fords president of the americas about that and when can you get your hands on when squawk on the street comes right back. Hmm. Mmhmm. [ engine revs ] [ male announcer ] oh what fun it is to ride. Get the mercedesbenz on your wish list at the winter event going on now but hurry, the offer ends soon. [ santa ] ho, ho, ho [ male announcer ] lease the 2014 ml350 for 599 a month at your local mercedesbenz dealer. For 599 a month there are signs both political bparties in washington get it washington is lagging behind the country on this. This issue has been around far too long. And yet, we wait. Reforming our immigration system would dramatically reduce our nations debt. Grow the economy by 5. 4 . And take bold steps to secure our borders. On this, both parties say they agree democrats. We are very very strongly in favor of moving immigration reform. And republicans. I wouldnt underestimate the houses ability to pass the immigration bill. And yet, we wait. Americans are tired of empty rhetoric. It is time for every leader to come through on their promise. And fix our broken immigration system Tell Congress the time is now. Fix americas broken immigration system. Get ready for a new ford mustang. The auto maker revealing it will reveal a new model of the car in december. I want to bring in joe hinrichs here. We do want to ask you about the mustang because its such an iconic car. The next generation is coming in december. Why now with the new mustang . We get to celebrate 50 years only once. Next year is the 50th anniversary of the mustang. Were so excited. You have 15 days to eight to see it. On december 5th were going to for the first time announce it globally. December 5th, an exciting day for us. On the other end of the spectrum, the truck market has been red hot and youve had a great year with the f series. Does the truck market continue with the strength next year . The Housing Market has been such a driver of it. Youre right, the Housing Market continues to drive it, construction and oil Industry Growth in the u. S. Is helping to replace those olders trucks that are in the marketplace and theres not a lot of new trucks out, which also drives demand. I have to ask you this. This is the one question i get from investors more than anything else and i know you cant comment on stock price. Do you sometimes feel your company is not getting enough attention and respect from wall street and investment communities in that youre having one of the most profitable years ever yet the stock doesnt get the appreciation people believe it should and a lot of people look at it and say thats nice but first of all, we run the business for our customers and were focused on the fundamentals of our business. We have very strong profitability here in north america and weve had the most mark share gain than anybody. But youre also see in china 50 year over year and a strengthening of our european business, which has been going through restructuring. Our focus is delivering great Global Products and results will come and people will recognize that over time. End the of year is heavy incentive time of the year. Are were going to see that this year . I think well see a lot around thanksgiving and strong through the end of christmas and that new years time period. Is that because the consumer is slowing down a bit . No, we have a healthy market. Tell us about the edge concept. A great new look to the edge, which is a great vehicle for us. And a lot of new technologies when you talk about autonomous vehicles, selfdriving techniques, like obstacle avoidance and parking. Joe hinrichs joins me here at the auto show. I guess ill be talking to you on december 5th when the new mustang comes out. If you were going to order a mustang, what color would it be . It would be candy apple red. Really . And coming up, Marissa Mayer and what she had to say last night. Back after the break. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Bny mellon combines Investment Management investment 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. We dont think of ourselves as design first, we think of ourselves as mobile first. When you look at whats happening with the mobile trend overall in our history, its clear it is a wave large enough that you can ride it to reinvention. Yahoo is a company like Many Companies that has to constantly reinvent itself. The scary thing with reinvention is it happens with platform short. We really want to ride the platform shift to mobile. Thats Marissa Mayer talking about the impact mobile is having in her company. Yahoo shares up more than 2 . Have to go back to 2006 to see some of these levels at about 35. 40. The debate continues about how much is her and how much is the huge gift that was left to her with alibaba and japan. The stocks, the weather, the support scores. Being an avid user myself of yahoo finance, the little tweaks theyve made around the edges to help you find your favorites, those help and it adds traction. It was summed up well and he praised her for the simplicity. Theres also a microcosm, with financial alchemy at its best, what carl icahn is agitating for them to do is a key reason they keep going up. Theyre a source of the title wave, the this movement to credit and equity that is continuing to send the index to new highs. Well, new engineering engineering, alchemy. Real gold . Exactly. Well watch the shares. Coming up, joseph a. Banks pulled its over. Well be back. Ya know, with new fedex one rate you can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk on the street. The latest report from the Energy Department on Weekly Oil Supplies just came out. Were looking at an increase of crude supplies of 400,000 barrels in the past week. Crude supplies rose by 400,000 barrels. Analysts were looking for a decline of about half a million barrels. We looking at decline in gasoline supplies of about 300,000 barrels, a decline there of about 300,000 barrels. The big surprise here, the decline in distill at fuel supplies, down over 4 million barrels. That was a surprise there. Analysts were expecting a decline of about 1. 3 million barrels. Were looking at oil off of their low of the special. Wed seen the december Contract Trading right around 93 a barrel, january which is the most active right now is down only about 13 cents at 93. 76. Well be keeps close eye on the diesel contract there because of that big surprise that we got in the distillate fuel number. Market moving data, sharon. Thank you for that. Lets get news from robert on Rupert Murdochs divorce settlement this morning. Im told that the terms are going to be kept private. Among the issues that needed to be resolved and that could have been under contention were some of the real estate, including their Main Property here in new york city, as well as the trust. Remember they have two young daughters that have a big stake in at least the income of the corporate trust. There were some issues around their protection in that trust. Those have been resolved, as well as the value of some other assets that they hold. Those issues, again, which could have been contentious resolved quite peacefully and im sure murdoch is happy to say quietly now that this divorce is final. Back to david. The largest shareholder in mens wearhouse has been pushing for a merger with jos. A. Bank. Given that its unwilling to do that, its now in a fight to replace its board of directors. Thank you for being here. 9. 8 of mens wearhouse and 4 of jos. A. Bank. Thats correct. Why are you pushing for this . This is not something we typically do. Were not activists typically. At the end of the day, there are three things that really compelled pups we like the core business. We think its an underappreciated business, a niche in mens apparel that doesnt have the same fashion cycles that has more needbased purchases. Its a more consistent, higher return on business. Number two, the opportunities to put these two companies together. You saw the presentation, 2 billion of value. Where does that come from . Youre talking about half the market cap that exists. It comes from cost savings, revenue synergy. We see enormous opportunity here. This is a board that i think has acted in a way that i find astonishing given the situation. In my 19 years of being in business, i cant remember a board that has acted this irresponsibly in front of an opportunity like this. Ive heard that a lot in my 20plus years from people like you. This is a board that owns less than 1 of the company and they are telling the other 99 , no, you know what, we dont want to pursue add 2 billion opportunity, were happy with the status quo. Well, the status quo has delivered flat earnings over the last two years and a stock price that has gone nowhere in the last seven years. Status quo is not acceptable in front of this opportunity and have made it stronger for shareholders to effect change. Youre trying to amend the bylaws and move ahead to potentially replace the entire board . Yes. Are you in it for the long term here . What do you say faber is with the Hedge Fund Manager, an activist, hell be gone once any value is created and a lot of people will end up getting fired. We invested in mens wearhouse long term because we like the business. If it takes us until next october to get full control of the board and effect a merger here, were prepared to do that. We have a big investment here but its not so large we cant afford to wait. We think theres an unbelievable opportunity to put these companies together. We want to capitalize on that. This ends up being a pretty big fight, takes a lot of time. Youre not an activist by trade. I assume its a a lot of time and effort to be spending on this. Its so compelling, i think its obvious. When you look at the opportunities, its amazing to me the board would have erected the fences that they are. What if they say well do a recap, get off our back . A recap is not acceptable. Why is that . Jos. A. Bank buying mens wearhouse or mens wearhouse buying jos. A. Bank, if its done for cash, thats taking on cash and buying back business. You get the multiple expansion, the multiple synergies and a standalone plan cannot compete with a merger here. So would you not accept that if they were to put that ahead. I would not accept that. You end up getting a lot of fast money guys, event driven is what we sometimes call them. Is that where youre going after or do you make a case more to the long onlys in this fame . I think we make the case for both. I think there are good opportunities for an investor pu i think we make a compelling opportunity to the long onlys. The stock has gone nowhere for seven years and you presented in an opportunity to participate in 2 million of Value Creation and the board says no, wed rather stick to hasnt worked over the last seven, eight years. Jos. A. Bank is the bigger company. I think we can have a shareforshare merger and use our excess cash to buy back stock. One can buy the other for cash. Theres just a lot of ways this can go. Lets talk about the broader market, around 4. 6 billion equity fund. You seem to be getting a little more cautious. A lot of other big investors weve heard from lately. Is that the case . If so, why . I this i were getting a little more cautious on the broader markettheres cle. Theres clearly been an expension in the broader market. S p is only growing at 5 yet weve seen the market up 27 up this year on top of 15 last year. Despite that, though, there are great opportunities. So all this money is flowed into the market, has flowed into the s p and shore coverering, guys in my position trying to get better position for a market rally. Then you have the High Frequency guys chases whats working. Its not necessarily put into the right place. Despite the fact i dont think the market is particularly attractive here, i think there a lot of incredible opportunities. You run a hedge fund meaning you short stocks as well. Its been really hard to make money on the short side. Is that going to change . Its been brutal. This is one of those years that happens every so often. I would suspect as the clock turns to next year and the emotions change from i have to get this out of my portfolio, i have to take a loss on my short to, all right, i have a whole other year, that has a chance to change. I want to come to one other name in your portfolio. Fedex. Dan loeb recently divulged he owns some stock. Its fundamentally a good business. You have a duopoly business, secular growth drivers, ecommerce, the lengthening of supply chains. It is a company that has underperforming metrics. That intrigues people who can see change. Whats interesting here is even without an activist actually showing up, fred smith seems to be doing the right things. He launched a cost savings plan at the end of last year to save 1. 6 billion on a company that does about 3 billion in ebid, very significant cost savings plan and started buying back strock aggressively. Hes starting to do the right things. We have an undervalued stock and management doing the same thing. Still using a le ing ing a ls domestically than ups does. Theres still a lot to improve. Ricky sandler, thanks for being here. Thanks for having me. Coming up, the tale of two cities. Miami has it all, not to mention an s. E. C. Investigation. Can the city bounce back from here . Find out after the 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. Discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. Men with Breast Cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breastfeeding, should not use androgel. Serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. Tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. In a clinical study, over 80 of treated men had their t levels restored to normal. Talk to your doctor about all your symptoms. Get the blood tests. Change your number. Turn it up. Androgel 1. 62 . 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 to squawk on the street. Nothing runs like a deere and this morning the run is to the upside after the construction giant reported profits and sales that beat analyst estimates and offered a more bullish forecast for 2014 than had been expected. They said strength in construction and forestry equipment would offset any softness in agricultural. Back to you. Thanks so much. There are few places where inequality in wealth is on starker display than miami city and the city is in the center of a threeyear investigation into finances. Scott looks at that. Reporter its important, especially in you invest in Municipal Bonds. Miami on the surface seems to be making a comeback but there play be issues where its not all the way seems. The whole metro area is at the heart of a nationwide crackdown on the Municipal Bond market. The s. E. C. Sued the city of miami and its former budget director for fraudulent disclosures, which they deny, settled with the operator of miami dade countys largest hospital after misleading investors in a 83 million bond offering and for telling investors 12 million in bonds for a shopping market is tax exempt when it not be. And then theres marlins park that could cost 1 billion by the time the bonds are paid off. The city, the county and the team have been served with subpoenas over the bond issue. Philadelphia eagles owner does not take pride in saying i told you so. He called all Public Financing of sports stadium a fraud. There is no, zero, economic benefit to the community. They talk about they all give these ridiculous numbers of jobs that are created. What jobs have they created . Reporter while the s. E. C. s probe here is at the issue of disclosure, whether bond holders or Bond Investors were told everything thats going on, we dont know if theyre going to find anything. The subpoenas are a couple of years old now. The s. E. C. In a report to Congress Earlier this year called for more regulation in this nearly 4 trillion market. Coming up later today on power lunch, well look more closely into the bond deal here and marlins park. Kelly . We look forward to it. Thanks very much for now. Still ahead on the program, its another big reveal. Bmw this time revealing its all new 4 series convertible. Its apparently the talk of the l. A. All the owe show, the car everyones been waiting to see. Well show it to you first on squawk on the street when we come back. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Ttdd 18003452550 can take you in many directions. Searching for trade ideas that spark your curiosity tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. 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The most highly recommended bed in america. Now the fun begins getting word from senator bob corker, influential member of the Senate Banking committee that he will support the nomination of janet yellen as fed chairman. He says i would prefer to see someone who held a more modest view regarding limits of Monetary Policy. After speaking to her both in the hearings and in his office, he said i do believe she will bring a more transparent approach to fed decisions and dh a more rulesbased methodology. Guys he said he wouldnt be convinced going into the hearings, but thats key support. He went on to say during the discussion, she made a commitment to moderate purchases as soon as she believed the data supports that action, and shows that the current status cannot continue. I assume she says the same thing behind closed doors than she does in public. That was his remark, im glad youve been giving us the same information publicly that you gave us privately. As if this was something novel. Right. That should be applauded, right. Hey, financial services. Wednesday morning, lets get to the cme group, and Rick Santelli has this mornings santelli exchange. Thanks, simon and kelly. I always like keeping things realtime. Because lets talk about something that was just brought up. So we have corker talking about he feels more comfortable with janet yellen about transpaernssy. Transparency. And i will contend, i cant follow that logic. Ill give you a simple example. Anybody out there know what the winning lotto numbers are going to be tomorrow . Anybody at all . Satellite radio . Anybody . Anybody . No. So in my opinion, talking about anything with regard to transparency and the feds big, monstrous qe, still in crisismode program, its very similar. I cant be transparent to you about what tomorrows winning lotto numbers are, because i just dont know. And i think you see where im going. So im sorry, just doesnt make sense to me. And as far as todays markets and interest rates, i continue to think that interest rates, well, i think the world is underrated, and i mean underrated in the form of interest rates. Lets show a sevenyear note chart right now. Lets only show a portion of it. Lets show roughly from may to july when we had that big taper move, okay . That sevenyear note, and the reason i picked it, is it most closely parallels kind of the duration that matches mortgages. How long people live in their houses. Okay . Well, it went from basically a 1. 05 yield to about close to 2. 25. And its now hovering still over 2 . But the point of this is is that this steepening yield curve i constantly look at, and a lot of people look at the twos to tens, what does it really mean in english . It means short rates are nailed against the wall because of the fed, and the long rates, even when very important to housing, which may have impacted existing home sales today, they keep on moving up. And theyre even higher than they were on the initial move when the really was going to be a taper. So now we see talk remember, were underrated. Rates should be higher. We see talk that bullard, just traders running around the floor, say, hey, maybe next meeting there could actually be a taper. I tell you what that means to me and what it means to a lot of the traders is whether it was, you know, mr. Hunzar on questions of quantitative easer, or whats going on with the yield curve, i think the fed figured it out. The fed figured out that the market is winning, and if they dont move quickly to remove the program, theyll have less efficacy in all other endeavors. Back to you. All right, rick, thank you very much for that. Rick santelli. When we come back, wine lovers rejoice. The rumors of a shortage, youve heard about that, right . No but im worried. What is this . Unnerving. Apparently greatly exaggerating. Well take you to napa and show you some proof that the Wine Industry is not running out of juice. When squawk comes right back. 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. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. 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. Losing thrusters. I need more power. Give me more power [ mainframe ] located. Ge deepsea fuel technology. A 50,000pound, ingeniously wired machine that optimizes raw data to help safely discover and maximize resources in extreme conditions. Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. Welcome back to squawk on the street. Jm smuckers in a jam this morning. The maker of folgers and jif, and sales falling 4 from the last quarter, even though Commodity Prices for peanuts and green coffee did fall. A sticky situation for sure, kelly, for the owners of the j. M. Smuckers shares. Back over to you. All right, dom, thank you very much. Now, attention, wine lovers. Theres no need to panic. The Wine Industry says that shortage you might have heard about is exaggerated, and thats certainly a relief. To make sure, our own jane wells is out in napa valley a tough assignment, jane where wineries are expanding operations. Reporter i had to find out myself, kelly here it is autumn in napa, which does not suck. You know . Morgan stanley scared everybody with this report that Wine Production had come down so much and demand was up so much that we might run out of fermented grape juice. Uh, no. At least not here in the u. S. Where its estimated production is up 20 , and theyre looking at another largerthanexpected crop in napa, including here at this winery, the nations fourthlargest, with names like sutter home and looking at an expansion, including 300 million to build a processing facility and looking to buy more napa vineyard land, despite, listen to these prices, 250,000 an acre. 2013 was a great crop both in quantity and in quality. It was probably up over 4 million tons, which is above average. On the heels of another big crop last year, in 2012. So two big crops backtoback. Reporter are we going to run out of wine . No way. Reporter thats the legendary fred, bronco wine, the man who owns two buck chuck, and while its two and a half buck chuck, its nearing the 8 millionth bottle. Revenues will rise 4 , 5 , as consumers buy the cheap stuff under 10 bucks. 10 is a high price. There shouldnt be any wine sold over 10. Reporter any wine . One shouldnt be especially open swan. Reporter in that vein, selling well, 10 wine from the duck dynasty folks here at trancaro. Later, well talk to them as they expand the winedrinking audience, all red, white, rose, guys. Back to you. I cant wait to see how your hits progress throughout the course of the day, jane, the closer you are, the longer you are in that wine field. Jane wells in napa. Thank you so much. We actually have some very happy news to share. Our squawk on the street is expanding. Our seen overproducer ben and his wife jamie, a cnbc producer with the specials unit, welcomed their first child yesterday. Beautiful William George berna, born 2 34 a. M. Tuesday, weighing in sat 7. 9 pounds, measuring 21 inches. Mom, dad, baby william are all doing well. Big congratulations to the berna family. Dont be surprised if our hasbro and mattel coverage gets a lot more a lot stronger in the weeks to come. Could reassuring theyre naming them after english princes. You know, good to know. Its great name. Bravo. Congratulations to emthis. Hurry back to work, we miss you. If youre just joining us, heres what you missed early on. Announcer welcome to squawk on the street. Heres whats happened so far im a fan of bernanke. For the record, he saved us in 08, so ill always be a fan. Look, we have no fiscal policy in this country, and hes trying his best to offset it with Monetary Policy. Hes gone as far as he can go. The person in question did own a share of the stock until after the deal was announced, and i think that no longterm intentions or good intentions for the company or its shareholders or the people inside the company. This is the beginning of what i regard as the normalization of jcpenney. We wont be talking about jcpenney a year from now, not because they are outthriving or going out of business, or because theyre nothing. Theyre going to go back to being nothing. I know people dont want Big Government in this country. Its talked about over and over again. The only thing to get it going, no private industry to get the economy going the way bernanke wants. Its too big. [ bell sounds ] our focus is on delivering great product, serving the customers around the world, and the results will come and people will recognize that over time. Were in this for the long term. We invested in mens wearhouse, and were prepared to go all the way, because we see the opportunities. If it takes us to next october to get full control of the board and effect the merger here, were prepared to do that. Good morning, were live at post 9. Lets begin with a check on markets here. Not a huge move in terms of the major indexes. What weve seen now for the last couple of weeks, trading in a pretty narrow band. And this notwithstanding some comments from chairman bernanke last night about the future, of course, of the feds qe policy. Nevertheless, the dow just barely higher this morning, adding about 5 points. The s p 500 adding 3. The nasdaq is positive by about a third of 1 . Shares of lowes are slipping after Third Quarter earnings missed expectations. And its not the only thing weighing on shares. Fullyear guidance at the Home Improvement retailer came in a bit below estimates, off more than 4 . Meantime, shares of priceline are rallying this morning, still going. Goldman sachs added travel website operator to its conviction buy list, saying the company will benefit from a european recovery, and increase mobile traffic moving another 3. 5 to the upside to 1158, simon. Okay. Here we go. The roadmap for the next 06 minutes. 60 minutes. A good day for jcpenney, rallying on a good report of samestore sales. Well tell you how long the fine times will last in a moment. Outgoing fed chairman ben bernanke last night tried to explain his actions and his thinking over the past few months. Well take a closer look at what the fed chairman had to say and what it means for the possibility of that taper. And in space, no one siri. Apple getting final approval of the cupertino facility. Well show it to you in a few minutes time. Also, the times, they are achanging, all you have to do is look at the groundbreaking news video from bob dylan. This is something you have to see to believe, and well show it to you in this hour of squawk on the street. Now, we dont say this often, but today is a good day for jcpenney. The struggling retailer surging this morning after reporting positive samestore sales last month. Bob pisani here now with a closer look at how to trade this one. Hey, bob. Slightly larger loss than expected. But that wasnt the key point here. The bottom line is the company is grvive. Thats all anybody cared about when i talked to some of the traders. Heres whats important. Samestore sales still a bit weak, but its improving sequentially year over year. Womens and mens apparel, a real problem for them, thats been improving. As long as you get a bottoming in that, and things start improving, thats what people are looking for. Look at jcpenney. A lot of guys on the street were better they would survive. The bottom was actually 6. 50 and change, that was the third week of october. So weve been improving since then. But its been an ugly, ugly year for jcpenney. Even sears, arguably, a competitor, has had a better year overall. Put up the full year for most of the Big Department stores. All of them had been generally on the positive side. Jcpenney, even with the improvement over 6, down 52 . Dillards, nordstroms, not necessarily the same space, but macys could roughly be in the same space. Sears up 49 , it bottomed quite sometime ago. Just want to comment on the markets here today. Quickly. We were on the upside on the dow, and it kind of came down. You see the spike down. Jim bullard, a moderate, st. Louis fed, came out with comments saying if we had a strong november jobs report, that would mean tapering is on in december. So the idea that tapering is on the table for the next meeting is why we come off the highs earlier in the morning. Guys, back to you. All right. Thank you, bob. Weve mentioned that wall street is particularly interested in todays fed meeting. Its minutes, we should say, for any sign when the fed will begin to taper. Outgoing fed chairman ben bernanke last night talking in washington and emphasizing the need for the fed to manage expectations through enhanced communication, indicating that the two targets of Monetary Policy are thresholds, not triggers. Take a listen. Crossing one of the thresholds will not automatically give rise to an increase in the federal funds rate target. Instead, it will signal only that it is appropriate for the committee to begin considering whether an increase in the target is warranted. On that note, lets bring in geno, head of regulatory affa affairs, former Vice President at the new york fed, and greg with risk advisors. Guys, good morning. Good morning. Good morning. Mark, first to you, is the fed going to succeed where some said it failed in the summer, and keep the market from expecting rate hikes even if the fed tapers . Well, you said exactly the right word. Its expectations. And thats what Rick Santelli said a few minutes ago and ben bernanke said it last night using somewhat different words. And what he said, if youre linking a couple of things, is that the market misinterpreted a portion of the market misinterpreted the comment on tapering. What hes doing, i think, is setting expectations for the difference between tapering and raising interest rates. Which was his primary point. And, dino, even if there is a difference, they can start to taper now. It doesnt mean theyll raise rates anytime soon. Some think it could be 2016 before they do. If thats the case, isnt it true that if the Quantitative Easing Program was meant as a stimulus program, that if they end it, well, no wonder conditions are tightening . Look, if they taper, it will have an effect on markets. So the markets will feel the effect. The question is, whats going to be the impact on the economy if they do . Now, you know, lets look at the facts. The fact is that the economy has grown 2. 25 on average since the recovery began, way below what the standard recovery has been. So even with all of that stimulus, the economy has performed pretty weak. That seems to suggest they wont be in a rush to either raise rates, you know, or, you know, unwind the assetpurchase program anytime soon, because the economy cannot tolerate do you think qes worked . Not it has not generated the effect on the economy that they wanted. Why would they continue with it . The question is well, the counterargument will be if they stop it, if they unwind it, then youll get the downdraft down, okay . So its a slightly different argument. If they were trying to be more effective, what about this concept, and weve seen a couple of fed speakers, reported addressing it on the european side as well, what about the concept of cutting rates below zero . You mean negative rates . Sure. The negative rates. Its a tax on deposits. That would weve seen that in limited circumstances. The swiss have tried it. You know, a couple of times, over the last actually, over time. It has not been tried in a broad scale, at least that im aware of, anywhere, in any of the major Central Banks. So that will be a new frontier. That will be a new frontier. You will need to have something dramatic happen to go there. So i dont know if mark would agree with that. I was going to ask mark no, dino, i agree with you fully. That would be a step were not taking. Instead of going into negative interest rates, what we have done is going out the yield curve. The qe has worked. And the qe has totally kicked n in. We can imagine where an economy would be if the fed had not done that. And so, i think the difference the distinction now is that we have to at some point stop. We can expand the Balance Sheet and stay there for an inevitable period of time. But trees dont grow to the sky. Mark, just real quick, though, theres a certain irony in the fact that were talking about all of this when the cpi headline print cams in lower in four year, below 1 . And imagine what it would have been without the qe. It also means that the feds not going to be in a hurry to unwind this, because of worries that the inflation rate will go even lower. Right. So the talk about yearend tapering is way premature. All right. Dino, mark, thank you both. Thank you. Amazon already, of course, sells a ton of its own products like batteries and keyboards, and soon it could add supermarket goods to that list. According to all things d, they mentioned what they call the launch of a privatelabel business in consumables. Another posting called for help to launch highquality amazonbranded products to global consumers. Whilst the listings hint at the direction in which amazon is going, its not clear if the company will target just one product type like snacks, or if it will look at things in a bunch of different areas. Jon fortt is joining us on the set for more on what amazon is up to. Jon . Yeah, i got some insights into that. I went on amazons site, searched through the job listings did you apply to any . No, i dont think im qualified by any stretch. Im not sure they do. Ive never seen bezos in a tie. I dug up a few job listings that maybe all things dmiss, a food safety manager. So there are a few details to pull out of here to get a sense of what theyre up to. One of the listings has a senior consumables privatelabel sourcing manager. They want to go around the world, finding manufacturers who can make some of the stuff that they want. Here are some of the things that they have in mind. Grocery, personal care, beauty, health and wellness, and baby. They call out specifically. And they talk about working with the rest of the privatelabel team, which includes brand management, product management, marketing, and instock management. So they apparently have a broad view of what theyre trying to do here. It looks like they might even be getting into selling things like milk if theyre looking for a foodsafety manager. Incredible. If you look at what theyve done to every industry theyve entered, it suggests deflationary pressures and the consumer will love it. Yeah, and i wouldnt be surprised if they do things on packaging here, too. You think about how milk is packaged, not necessarily to be delivered to you, but picked up at the store. Theyre looking to innovate across the entire line. All right, thank you, jon fortt. Coming up next, its the big reveal. Bmw unveiling the new 4 series convertible, which is apparently one of the most talked about cars ahead of this years l. A. Auto show. Well show it to you first here on cnbc in just a moment. First, rick, what are you watching today . A lot of you like to watch game shows, the one with the big wheel, you can buy a vow. The Central Banks in the world, they bought time. What have they done with this time . Did they reform . Theres talk about maybe negative rates in europe. Been there for a while. Look at some of the twoyear german rates, but well talk about all of the topics with mark grant. I think you want to see this one at the bottom of the hour. 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 . [announcer]. If you think the best bed for one of you might be a compromise for the other one. [woman]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two people. Two remotes. [announcer] firmness settings for the head,legs,and back. And with tempur on top,that famous tempurpedic comfort comes any way you like it [woman]ask me about the lumbar button. [man]shes got her side. And ive got my side. [announcer] tempurpedic. The most highly recommended bed in america. [woman]dont touch my side welcome back, and were keeping an eye on the energy sector, one of the best performing on whats a relatively flat day for the markets. Dominic chu at headquarters with more. Hey, kelly. Energy, like you said, one of the better performing sector, seeing strong gains among oil and Gas Exploration and production companies, e p. Look at devin, announcing a deal to buy assets in the eagle four region of southern texas from ge geosouthern, and it seems to be generating confidence in the industry overall. The top five performing stocks are all independent oil and Gas Exploration, like range resources, newfield, a lot of big names in e p, simon. All right. Heading to the west coast. Bmw taking the wraps off the new 4series convertible at the l. A. Auto show this morning. Our own phil lebeau joins us with another first on cnbc interview. I cant wait to see this one, phil. You know, simon, its a beautiful car. I want to bring in ian roberson, a board member for bmw, standing in front of the 4series convertible. It wouldnt be a car show without the convertible. Absolutely. All of the convertibles the hardtop retractable, and stacey will show us, this one you can put up and down as youre moving in traffic. Is the convertible market, is it still relevant today . I know youre bringing out a new model. You know, convertibles are primarily United States and european cars. Very little convertibles in asia for heat and smog and such things. But the u. S. Is biggest market, about 50 of the convertibles are in this market. California is the biggest part of that. So we still think its a very relevant segment. Its a brandshaper at the end of the day. And the roof quickly up. It says how much things have changed in the world of convertibles. I want to shift and ask you about the i3. Youve seen greaterthanexpected demand for this vehicle. Is it surprising to you because the Global Demand has been as strong as it has been . When we started out with i3, a product vision, 3 1 2 years ago, we detected the world was definitely changing. And the world was going to become more and more sustainable in its outlook. I think were at the crest of the wave. We have 7,000 electric cars, this year, 150,000. So a multiple of 22 in a couple of years. And i think were now sort of poised for another big step here. The demand for i3 is really strong. Here in the United States, we got 45,000 people whove registered for a test drive. Test drives, of course, are a challenge, because we have to charge the car in between drive and all the rest of it. In europe, about 10,000 orders already. Two last questions for you here. One of them, i want to show the statistic in terms of luxury auto sales here in the United States. Mmhmm. Youve led this market the last two years. Yeah. Going into the last two months, youre behind mercedesbenz. Can you catch them to be number one, and is number one still that important in this country . You know, its very close between ourselves and our major competitor there. Now, who turns out in the end, well see. At the end of the day, of course, its nice to be known as number one, but not at all costs, and one thing for certain, we will go into next year with good momentum. And speaking of next year, this is i call this the dessert of the live shot, because look at this, guys. This is the i8. It shouldnt be sold, because its pretty obvious, but tell me about the i8s. The i8, we showed the concept car four years ago here in l. A. A lot of people said theyll never make it. Here it is. And were driving a lot of them in europe at the moment, in the final stages of development. Its getting rave reviews. And i can tell you, it drives like a sports car, like youve never imagined before. Second quarter, we see this here . Second quarter, sales in the United States. Ian robertson joining us from the l. A. Auto show. Guys, this is a gorgeous, gorgeous car. I cannot wait to drive it when it finally comes out early next year. And 94 miles per gallon. 94 miles per gallon. 94 miles a gallon . Holy cow. It has the carbonfiber composite design. You cannot beat it. Wow, beautiful. Thank you very much, phil. Appreciate it. Simon, if you had to pick, you can have the i8 at 94 mpg, a tesla, the new mustang, which we havent seen, or the red audi, what do you pick . I dont know. That car reminds me of the delorean. Do you remember that . No. Mood earn version [ laughter ] of course not. You wouldnt, would you . Ill google it during the break. If youre a frequent flyer, meanwhile, you probably heard of our next guest, luxury luggage maker famous for the heavyduty luggage, and almost impossible to break. So our Consumer Spending on luxury goods like luggage this Holiday Season . Well ask the ceo of tumi in just a moment. Ya know, with new fedex one rate you can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ m announcer ] fedex one rate. So you can get out of your element. So you can explore a new frontier and a different discipline. Get two times the points on travel and dining at restaurants from chase sapphire preferred. So you can be inspired by great food once again. Chase sapphire preferred. So you can. Try to run, try to hide break on through to the other side welcome back, and with the Holiday Travel season just around the corner, we want to get the pulse of the consumer with the head of a luxury luggage and accessory company here for a cnbc exclusive. Jerome griffith, president and ceo of tumi. Joining us from the newest Flagship Store on madison avenue in new york city. Jerome, good morning. Thank you for joining us. Good morning, and thanks for having me. Your shares have been on quite a tear. Gone from under 19 back in october to over 23. So certainly some optimism here. What is the most popular items that you sell this Holiday Season, and what price points generally are we talking about . Our price points tend to range from in the below 100 for easy gift, pickup item, to well over 1,000 for luxury luggage pieces. When we see over the Holiday Season, what really sells for us still tends to be the best briefcases, best pieces of luggage, but weve added accessories last year and going into this Holiday Season. Were to the point that accessories rank up over 15 of the total business. Its an interesting move. And are you doing it because accessories are more affordable for people, or are you doing it just because the tumi brand is something that resonates, and that perhaps you are, you know, meeting ining demand from a mo mobile clientele . Over the last several year, theyve moved to a lifestyles accessory company, and we feel we play in the world of travel and business. All of the customers actually work in a job. Theyre very successful. They travel, whether its nationally or internationally. And we try to have all of the accessories that work for their lifestyle. Jerome, the trick for many people in luxury goods at the moment is to move upmarket. Its felt that the higher the higherend of luxury goods is more defensive. Is that what youre eyeing . Where do you position in the longer run . Well, tumi today is not exceedingly well known. Our Brand Awareness numbers are good, but theyre not great. And what were finding is that as we get bigger and bigger distribution patches in different parts of the world, our consumer tends to tends to range between the Luxury Consumer and the average working consumer. So we try and have price points for both. If you look at the average price points over the last several years, to be honest with you, they havent changed much. There hasnt been a huge up tick or a huge dropoff. Theyve stayed relatively constant. Its interesting youre coming to us from a new Flagship Store, kind of the old retail model, is it not, to have the bricksandmortar operation used to drive traffic and Brand Awareness . These days, isnt there a better way of reaching out to people . Is all of the online that weve been discussing the amazons of the world, the startups, the daily deal sites are those a better way to cater towards and build that Brand Awareness . Our is it still what youre pursuing, kind of the Flagship Stores and the spreading of that operation . We really have a multichannel approach. We have our own stores. We have some Partner Stores in different parts of the world. We sell online. We have shopandshops in Department Stores and sell through thirdparty online customers. What we find is our consumer tends to shop around and wants to be able to buy the product where they want to be able to buy the product. Weve been growing our store base extremely well over the last few years at around 20 stores to 25 stores per year. This year, were putting a big emphasis on ecommerce. We saw last Holiday Season, ecommerce was a big push for us. Again, this year, we expect ecommerce to be a big vehicle for us going through the Holiday Season, just because of the ease of shopping for the consumer. Sure. And just in a word, as well, and you kind of touched on this already. Can you tell us what the state of mind the state of wallets seems to be for your shopper . I mean, is the competition, the discounting that weve been talking about on the show earlier, is that really kind of a u. S. Specific, and to some extent, lowerincomespecific problem . What are you seeing . What we see worldwide, and our business, just so you understand, we do about a little over a third of our business outside of the United States, and not quite twothirds of the Business Inside the u. S. The consumer tends to be relatively constant. Theres been some choppiness over the last couple of quarters of the business. However, weve seen a slight up tick from quarter 2 into quarter 3, and going into the Holiday Season. So we feel pretty confident about whats going to happen for us this season, but well see. All right. Investors appear to feel that way, as well. Jerome griffith, the ceo of tumi for us this morning. Thank you so much. Thank you. Ladies and gentlemen, clear the runway. Apples spaceship headquarters has been cleared for takeoff. Youve seen the models, but cnbcs got an inside look at what the new apple hq is going to look like. Well show you that later in the show. Plus, the bells are about to sound across europe. Were just a few minutes away from europe shutting up shop for this wednesday session. Well have the details on the close and the impacts for the markets here right after the break. If youre living with moderate to severe crohns disease, and it feels like your life revolves around your symptoms, ask your gastroenterologist about humira adalimumab. 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And as they close, lets bring in simon hobbs. Were in negative territory for europe overall, for a second straight day. Yesterday, it was taking down the growth, and in the midst of this, we are off the lows. Thats partly because youve had a report thats come out suggesting that a midmonthly meeting, some at ecb are talking about negative rates, but good luck getting that past the whole committee with the germans in the present state. You will notice people are booking profits on those stock markets that have done really well since the july lows. And in the main, of course, thats the like of spain and italy, which you can see are up 24 , 22 , almost double what youve had here on the gains in the s p. Since that 24th of july marker. Its really interesting, everybody seems to be talking about Central Banks, whether its the fed this afternoon or the ecb. We had minutes from the bank of england today. And whats really interesting there is they, too, are trying to play with the thresholds that theyve set for when they will raise interest rates, it would appear, reading between the lines. No longer would a 7 Unemployment Rate in the United Kingdom automatically trigger a rate hike. So again, trying to play with expectations. Let me give you one last thought before i hand it back to kelly, and that would be tfr, who would have guessed that yesterday the French Soccer Team would qualify to go to brazil for the world cup, but they did get through against the ukraine, and these guys own the tv rights in france, and you can see the way theyve bounced there. That may be the end of the celebrations in france, kelly, because tomorrow, the farmers will be blockading paris in protest of what the government is doing. Well talk about that tomorrow. Do i sense some regional football rivalry there, as well . Moderately. Moderately. Nobody thought theyd get through. They thought they were, you know, prima donnas. Sorry. To borrow the italian term. Thank you, simon. Pleasure. For more on europe, lets get to Rick Santelli in chicago. Good morning, rick. Good morning, kelly. I love you and simon having me interactions, because ill run with it again. Central banks, negative rates in europe, whats going on with the ecb, whats going on with the Monetary Policy Committee Bank of england, and our own fed, id like to welcome our special guest, who knows about all of the topics, of course, mark grant. Welcome, mark. Thanks, rick. A pleasure to be with you, as always. Five years after the crisis, and some would say its longer, going back to maybe the fasb in 07, and everybody is talking about Central Banks. Id rather everybody be talking about a nice global recovery, but not in the cards. All of the Central Banks, draghi, bernanke, they bought time. Have they made good use of the time in your opinion, mark grant . I think the you can argue back and forth about quantitative easing, but it certainly helped to pull the economy up to some extent, though, you have to look and say the economy really is so weak that quantitative easing is all but supported the economy. In europe, its totally different. Theyve played any number of games with the stress tests of the banks. The first two, in my opinion, were worthless. And now, theyre starting to look at the banks in reality as the ecb is going to take it over, rick, and now theyre starting to get very nervous. See, now you get to the crux of what i want to talk about. Why now is there all this chatter about the ecb . I mean, theres been stories that they may want to do quantitative easing, but its very difficult for them. Theyre all fragmented. What do they buy . Do they buy the bonds of spain . Make italy mad . Buy it all, make germany mad . Do they only buy its starting to get dicey. And i guess my issue is, lets cut through it all. They talk about negative rates. Maybe theyre not going to lower rates. The key is, theres no credit being created and theres a lot of liquidity and still a lot of toxic bank assets. How will they get out of this . Well, the ecb has some very specific problems, rick, as you point out. One of the issues is the southern countries, the peripheral countries, are in a lot of trouble, regardless of the stuff you hear in the press. If you look at the actual numbers, rick, theyre in trouble. And now, you have the ecb really starting to look at the banks. Theyre talking about 150 billion, 202 billion american dollar fund to support the banks, and youre getting a very real sense that some of the european banks we dont know which ones are in real trouble. And i think theyre beginning to panic in europe about this, which is why were seeing all this fluff and all this scurrying around. All right. One final question, were out of time. Do you think do you think were going to actually see a taper strategy of any significance in the next four fed meetings . No, rick, i dont. I think ms. Yellen has made it very clear that shes going to stay away from tapering for the time being, until the economy is much stronger. So the answer is, no. Thanks, mark grant. My phones ringing. I think its jim bullard right now. [ laughter ] thank you for being our guest today, buddy. My pleasure. Kelly, simon, back to you. Oh, boy. Thank you very much, rick. Market flash, the retail space. Lets send it to dominic chu. You would be right, aeropostale is surging higher. The firm believes that shares are undervalued. They plan to hold talks with the management. The stock is hovering near just off their session highs, kelly. Back over to you. Sure. After being one of the underperformers, up 6 . Thank you, dom. The next guests company can be described as the cloud meeting the notebook. And now, you can share your notes with anyone easier than ever. Well tell you how that works. Squawk on the street will be right back. 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. 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. When you do what i do, iyou think about risk. I dont like the ups and downs of the market, but i cant just sit on my cash. I want to be prepared for the long haul. Ishares minimum volatility etfs. Investments designed for a smoother ride. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus, which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Coming up on halftime report, only eight stocks in the s p are up triple digits this year, so are they poised for a sell off, or is there more room to run . And well talk to a Hedge Fund Manager who hasnt done tv in more than a decade and says now is the opportunity of a lifetime to short stocks. Hes going to explain exactly what hes shorting and why at the top of the hour. Kelly, well see you then. All right. A tough move so far, scott. Breaking news. John harwood has the details in washington for us. John . Reporter kelly, the Obama White House has been struggling obviously with the tremendous p. R. Flood of negative p. R. About obama care. Today, jason furman, chairman of the economic advisors, published a report which tried to take credit for some of the positive news in health care, which is about the cost and price of health care. If you look, according to the report, the jason furman briefed us on moments ago, over the last three years, total National Spending per capita on health care has risen at only a rate of 1. 3 beyond inflation. That is much more moderate than at any threeyear period since we began measuring in 1965. Theres big debate over the source of the slowdown in health costs. Some people attribute it to cyclical effects of the economic slowdown in general. Other people attribute it in part to the changes from the Affordable Care act, and thats what jason furman was pressing, yeartoyear Price Inflation in health care, the cost of specific health care services, is now running just 1 . And that translates into lower costs. If it is sustained for a private individual, for individuals buying health care and for the government, projected medicare and medicaid spending is now down 10 , according to cbo, by 2020, kelly. Yeah. It makes you wonder why we even need the obama care act, john. I kid. I kid. We can understand the white house is trying to find some good news, though, amid that difficult rollout. Thank you very much, sir. John harwood at the white house. Now, it was an emotional farewell during Steve Ballmers last Shareholder Meeting on wednesday. As the Company Searches for a new ceo, rick sherrland had one suggestion for microsoft about potential acquisition targets when he was on the show back in november. If i were new management coming into microsoft, id probably buy evernote and box, and sigh, why dont we go after the Market Opportunity independent of windows . Interesting. We are now joined here at post 9 by the ceo of evernote, phil libben, and jon fortt is with us, as well. Phil, good morning. Welcome. Good morning. Have you had talks with microsoft . You know, we talk to microsoft all the time. We havent had any discussions about being acquired. Youd fit right in there, phil. Im sure i would. Describe whatevernote is and where you see the technology is going. Evernote is the external brain. Its a set of products that helps you deal with a flood of details and information thats coming at you every day in your work life, in your personal life. And help you remember things and be more productive. Its funny. Its almost like the digital version of a post it, but youve stolen the game, because youre going physical now, as well . Yeah, were partnering with post it, with 3m. Were the mainline Digital Strategy for post it notes. You can now take a picture of any post it note in evernote, and it makes it look beautiful and ties the color of the post it note to tags and notebooks digital actions. We were hanging out in Silicon Valley a month ago, and im always giving you my quirks and ideas of evernote. Ive got a note with ideas from jon, for the next version. Yeah, facts. Faxing. I know its so old school, but doctors offices, real estate transactions, people need faxes, good to have an evernote. This first goods business. Where do you expect it to contribute revenuewise . How is it doing so far . Where do you expect it to land when it shakes out . Its doing great so far, but less than two months. I dont want to get too excited for early results. We expect, we have three Revenue Streams the consumer premium business, the enterprise business, which is growing really quickly, especially with the announcement of salesforce yesterday, and the physical products business. And i expect when things shake out, theyre roughly equal. I expect it to be a third, a third, and a third in the next year or two. You said that you look at an ipo potentially as stop in the journey, not necessarily as some big event for you, but just a refuelling. Are you still looking at probably 2015 as the earliest point where that might happen . Yeah, i think two to three years out. I think its really a good thing. I think its a morally correct thing to be a public company. Why do you say morally correct . Well, you know, we ask the world to trust us with their most important information. We want to make 100year company. And i think to build that trust, you need to reciprocate. So having the transparency, allowing anyone who wants to be an owner to be an owner. Those are morally right things. Do you think being a private company is immoral behavior . No, i think for, at least, evernote, were asking the world to trust us with information, being a private company is an important first stage on the journey to being a public company. But it will take a couple of years to get there. We want to make the actual day of ipo itself as nondramatic as possible. Were not really interested in that one day. Were interested in the story afterwards. Nyse or nasdaq . You know, a little too early to say. Although its pretty inspiring being here today. Im wondering, too, youre talking about trust. Is the what people put in these notes, intensely private activity, are you able to access and use that information . No, no, we never do. We published our three laws of data protection, which says your data is yours, so you own the data with evernote. We dont own it. The data is protected, so completely private. We never look at t we dont use it for any business reason. Were not a big data company. We dont analyze. We dont serve ads or affiliate traffic. Everything with evernote is completely yours, and your data is portable, which means we guarantee you can take it and go whenever you want. We want people to be comfortable that they can leave evernote at any time, and if theyre comfortable enough to leave, theyre comfortable enough to stay forever. Its a big thing i use evernote and not google drive as much. If you think about it, you can understand why thats such a valuable proposition from an investing point of view. Fascinating, a little post it and now a big business. Phil libon, thank you very much, sir. Thank you. Now thats no moon. Its no spaceship, either. That, as you may know, is a sketch of apples brandnew headquarters in cupertino, california. Weve gotten an inside look at the brandnew headquarters, and well show it to you when squawk on the street comes back. Stay with us. Tdd 18003452550 searching for trade ideas that spark your curiosity tdd 18003452550 can take you in many directions. Tdd 18003452550 you read this. Watch that. Tdd 18003452550 you look for whats next. Tdd 18003452550 at schwab, we can help turn inspiration into action tdd 18003452550 boost your trading iq with the help of tdd 18003452550 our live online workshops tdd 18003452550 like identifying market trends. Tdd 18003452550 now, earn 300 commissionfree online trades. Call 18886282419 or go to schwab. Com trading to learn how. Tdd 18003452550 sharpen your instincts with Market Insight from schwab tdd 18003452550 experts like Liz Ann Sonders and randy frederick. Tdd 18003452550 get support and talk through your ideas with our tdd 18003452550 trading specialists. Tdd 18003452550 all with no trade minimum. And only 8. 95 a trade. Tdd 18003452550 open an account and earn 300 commissionfree online trades. Call 18886282419 to learn more. So you can take charge of your trading. All right. If that music doesnt give you a clue, apple is getting final approval to build its brandnew spaceship headquarters out in cupertino, california. Okay. This storys been all over from the beginning. A few weeks ago we talked to the mayor. We asked him how important the project was for his city. Its a very important project. Not just for the city of cupertino, but really for the whole Silicon Valley. Apple has a major presence in cupertino right now with 9,000 employees, and its just going to get bigger. As i say, its a lot of direct benefits to the city and to the valley, but a lot of indirect benefits, as well. And now, cnbc is getting an exclusive look inside of the new headquarters, at least what it will look like. Josh lipton joins us now with more. Hi, josh. Reporter hey, kelly. Yeah, this was a dream of steve jobs. Now, one step closer to reality after the city of cupertino gave the final stamp of approval for apples new campus last night. Here is an exclusive look at the model of what that new campus is going to look like. We are the only tv network that got this look at what is going to be a massive space. The new campus will sit on 176 acres. The centerpiece will be what is being called the spaceship, a circular Office Building that will accommodate 12,000 employees. The building will be four stories in height and total 2. 8 million square feet. Thats a mile in circumference. To put the size of this campus in some perspective, you could fit the new San Francisco 49ers stadium, which seats 68,000, just in the center of that ring. If thats not big enough, then heres another way to think about t you could also fit the uss nimitz, one of the largest warships in the world, also inside the center of that ring. There will also be a restaurant, a fitness secenter and auditori. Estimates range from 3 billion to 5 billion. Residents of cupertino have voiced concern over construction noise and what this could mean for traffic in the community. Apple in response saying it expects onethird of the employees to take public transportation, and also widening streets in the area. By 2016, its estimated that at least 7,400 employees will be working at the campus with fullcapacity reach in a few years. Kelly, back to you. All right, josh, thank you. John, you know a little about this area. What do you think . Yeah, i live about five miles from that. I mean, look, apple owns cupertino. They put out a report back in june. Right now, cupertinos property taxes, around 25 million with the new apple campus, another 32 million wow. Coming on i mean, what apple contributes to the cupertino economy is just ridiculously huge. So theyll make adjustments and make sure that apple is happy. Cupertino stimulus plan, it sounds like. Maybe a stimulus plan for the renters, as well, jon. Could be. All right. Over 40 years after it came out, the song like a Rolling Stone is finally getting its own music video, but its nothing like what youd expect. This is something youve got to see to believe, and well show it to you when squawk on the street continues. Once upon a time vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Anbe a name and not a number . Tor scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome back. Bob dylans like a Rolling Stone is making waves in the music world, because its just release add music video via an interactive video. Now, as the song plays, listeners can scroll through several different channels, ranging from qvc to sportschannel. User diskind of choose the own adventure or experience as they listen to the music. Lets take a listen. Once upon a time a dress so fine through your prime yeah, pretty incredible effort there. Joining us now, yoni bluth, behind the music video. Welcome. Thank you. What a neat project. Whose idea was this . Dylans team came to us. They saw we have Technology Company called interlude that does technologyenabling for videos, a Company Started by me and my band. We have a band in israel, which is actually pretty famous there, but israel is such a small country, nobody cares. But the Company Started to enable creative story telling clinics like the one with the bob dylan video. And it lets creators build things that usually, you know, everything with the video, now we can build something that has just to be clear. How involved was bob dylan in this project . So the steateam, the bob dyl team, its a bold move to do Something Like that, to take a song thats so iconic. Such a classic and give it modern treatment. Was it something his team was specifically looking to express in a new video way, or did you go to them with the concept and then work they loved the technology, and they said, what can we do . We said, why not do a video for Rolling Stone, and they said, yeah. Is the point to emphasize our lack of attention these days . That what it says to me. Im flipping around, not paying attention, but everything is still the same yeah, its like with the phone, the medium, suddenly you watch the tv, but the tv is actually watching you, you know what i mean . One of the things thats amazing, a fourminute video. People watch it more than five minut minutes, and they keep on turning the channels to get the realistic experience. How did you get so many different groups of people involved . It was actually really easy. When you tell people youre doing the music like a Rolling Stone, they want in. I imagine you didnt get many people saying no. How long and costly of an effort was this . It wasnt that costly, because we had a lot of people, you know, coming to do this, because they were excited about the project. The filming took about two months and the whole project. But the activity, because the company does interactivity, took no time. It was made flawless through the tools and we were able to launch it right away. How do you do Something Else like this, though . Whats the second act . You cant do exactly the same thing again. Completely. The idea is, you know, when people create regular video, and the way theyre thinking about it today, its, like, one linear cuerated ride, well let people create the playground and play in it, and it comes with completely different ideas, and so many different things. Turning the channels is one use you can do with it, but none linear storytelling is such a new, deep medium that we hope to, you know, unveil. By the way, you have worked on Advertising Campaigns for clients, so this is a business for you guys, first, and a creative project second. It started as a creative project for we started with the band, and we got the 20 Million Investment from the likes of sequoia and intel capital, and we have a joint venture with wpp that does advertising things. And today, yes, were focusing most of all on music, because its such a artistic form to create the best kinds of stories. I want to see billy joels we didnt start the fire. Its made for that, right . Come on. Yes. Im sure people are coming to you, come on, we have a ton of ideas, make something magical happen. Yeah, we have a lot of things. And your own band is called . Its my name. Okay. All right. Another thing im looking up this morning. Yoni bluth, thank you for joining us. Its a great effort. Thank you. Jon, were keeping an eye on markets at this point. Not a huge range overall for the indexes. Some smaller movers, though, if you look at the likes of the retail space. Were watching the jcpenney. Speaking of the segments weve been discussing this morning. Jcp shares up 8 after the company is using deep discounts as a way of fighting back with amazon and winning back share from other retailers. Well see if they can keep the stores fresh after the Holiday Season, generate enough sales to keep them alive. Right. People hopeful they can. Thank you, jon fortt. Thats it for us. Now time for the half. Thanks so much. Heres what were following today. Black friday blitz. With only eight days to go until the biggest and most important shopping day of the year, whos ready to cash in or out . Show cars. The latest and greatest from the l. A. Auto show, and whos ready to speed ahead of the pack . We begin with a look at the stocks that have outperformed the market the most. The eight names in the s p 500 up at least 100 year to date, and in some cases, much more than that. Here they are right behind me. Take a look. Netflix leading the back, up 272 . Our question is this are they ripe for a selloff, or can the momentum in these names possibly continue