Transcripts For CNBC Squawk On The Street 20131126

Yesterdays negative market action. There you can see the s p, the dow and the nasdaq, all looking like we may be implied at least for a positive open. We shall see. That allimportant tenyear note deal. Interesting how rates have been moving up over in china in terms of borrowing rates. How are we doing here in the states in well take a look at the tenyear, which is still hanging right in there at that 2. 7 range well call it. Go across the atlanta to europe. Well call it a mixed picture. Is that your call . Yeah. They dont celebrate thanksgiving there. They dont have that seasonal lift like we have here. Thats true. We start with tiffany, shining just in time for the Holiday Season. Sales in asia helped to shield the outlook and the stock. Remember when jos. A. Bank withdrew its offer to buy mens wearhouse earlier this month . Now theres a twist as mens wearhouse tries to buy jos. A. Bank. Tiffanys posted better than expected results, total sales in the Asia Pacific Region were up 27 . It raised its fullyear forecast. Seems like not that long ago, i can remember thinking whats wrong with these guys, they havent gotten together. Suddenly they have. Their numbers didnt do well. We put together on mad money a gatsby index. The gatsby index is up a total of 25 year to date versus the s p up 15. Unfortunately i put coach in there and lululemon but tiffanys has been a real star, powering along with starbucks and michael kors and brunswick, because they make boats. This is the rich people spending, david, globally. Youve been talking about this as an idea for some time, the gatsby index you refer to and its been working. Right. If youre obama, i think youre watch being the show probably not. But if you are, i think youd be saying we didnt raise taxes high enough, these people are still spending man, they spend like mad. We talk about it as many times being a result of the outgoing fed chairman. They were just talking about him on squawk on the street. These are tiffany cuff links. Im feeling it. We have the First Amendment and we defend it in our country. We dont typically put squour journalists in jail. Occasionally we do, which is a bit scary. The obama administration, they havent been particularly kind of journalists. I want to speak out in favor of journalism. We can get to watch incredibly brave people in countries they would not believe. We stand up to ackman and icahn and these people stand up to tyrants and their families go to jail. Thats the way it goes in other countries. We dont do that. Anything in retail we should be looking at . Container store starts with buys. Remember vince the other day . There is just an allure to spending. If there is a way to show excess spending and if theres a way to be frugal. This is the weirdest bar bell. Peep want to go to macys and buy kors and twomey, when theyre not doing that, theyre at costco stuffing their car with toilet paper. Its good to save money but then they get out and spend a lot of money on hard goods with value. Japan we talked about for many years have had an important presence but its beyond that at this point. Seems to be a pretty positive read from that part of the world as well. I happened to be with someone last week who just came back from china. In macau where people go to show the wealth, there is a run on 500,000 watches. People dont understand this in our country, but if you cant buy houses, the way you show your wealth is in watches. Rich people in china are really an engine of both for the globe right now. Particularly the european high end, which just has brands that they love. We dont talk about it enough. We should. We had talked about some of the crackdown on the communist Party Leaders being perhaps their lack of willingness to show their wealth as they had been because of concern being an issue. Thats been an issue lately under the new regime. They are heir to capitalist roteors who say there is nothing wrong with being wealthy. I believe the chinese under that hair tutsi suit of communism ar spending like mad, louis vuitton. You didnt like fitzgerald. I thought id share that with you. That last one that was not finished i thought was nonsense. Tender is the night . Mens wearhouse offering to buy jos. A. Bank for 55 a share, comes almost two weeks after jos. A. Bank this is interesting. We thought this was a possibility. We have an activist investor here, owns 9 of mens wearhouse, owns 4. 9 , not a large dollar position of jos. A. Bank. Again, these are relatively small companies, but its been an interesting saga. And here we are today, mens wearhouse does turn around, plays the pac man defense, though it is the bigger of the two. People are asking me privately, can revenge really motivate . Is revenge part of the arsenal that ceos have . This is greatly this is vengeful. I think this is more about making sure which Management Team keeps their job. I think thats part of it. Could jos. A. Bank have started this in order to get the ball rolling . Well see. Its hard to imagine bank bajos bank will nott iengage with the. I have not spoken to their advi advisers this morning as to what their approach will be. Ricky sandler will play an Important Role in being one of the largest shareholders in mens wearhouse and in jos. A. Bank. I asked him last week when he joined us about this very scenario. You mentioned mens wearhouse buying jos. A. Bank. Would jos. A. Bank have interest in that . The ceo said theyd be amenable to it and theyre obviously the Bigger Company. I think theres multiple ways this can play out for here. We can have a shareforshare merger, one can buy the other for cash. Theres just a lot of ways this can go. This this case its cash. That number may not look that large, 55, given where the stock is trading. Theyre claiming it on a 45 premium back to october 8th when the first news reports of jos. A. Bank trying to buy mens wearhouse surfaced. Theyre talking about synergy. So between 100 and 150 million. Not revenue synergies. When you look at the press release, theyre all folk ubsed more on cost and things of that nature, whether its Customer Service and mashing practices, streamlining and efficiencies of that time. Well see what jos. A. Bank says and well see what plays out here. A victory from mr. Sandler. David, you date yourself. Please explain to people what pac man is. Its a video where you could turn around and gobble up who was coming after you. And weve seen it rarely in corporate defense. There was a famous one between Martin Marietta and bendex. That didnt succeed. I think e2. It did work there. Its been talked about a great deal but executed very infrequently. Given the fact that the mens wearhouse is larger, this may have some legs. This is a merger that makes so much sense, its incredible. Its a struggling category, the Mens Clothing category. These two do need to get together. This is a very tough time for that particular aspect of retail. They should get together. One would expect its more likely well see a deal here. You x out golden gate, which was a part of the Equity Investment for jos. A. Bank. The hope is you get multiple expansion here. Again, the toughest category of all. We sit here and we just bemoan. If you look over and over again at mens suits, its been a declining category for ages. This is the only active deal, interesting deal out there, even though its very small. Jos. A. Bank will like the way he looks when this is done. Well see. Lets get to the weather. A major winter storm has dumped heavy snow and ice across much of the midwest and is heading east just in time for thanksgiving. The weather chnlannels julie martin joins us. Reporter a big mess on the busiest travel week of the year. Here in atlanta its ban rain event all morning. Weve been fortunate to say a little bit above the freezing mark. Nonetheless, still pretty messy and chilly. Were in the 30s. Weve seen freezing rain and sleet in places like virginia, North Carolina and kentucky. So the travel tieups are likely to continue as this system continues to push into the northeast. Also air delays are going to be major come tomorrow in all of the hubs along the east, new york, d. C. , boston, all expecting heavy delays. Right now were seeing a few delays in atlanta due to weather this morning as well for arriving flights. A Traffic Management program now in play. So definitely not good timing for all of this nasty weather and its going to be a couple of days, actually this evening day, before we finally quiet down. David . All right, thank you, julie. I hope the parade happens, one of my favorite days. The balloons are okay because they get a lot of wind. And it like the fall of saigon did you ever carry a balloon . No, ive not done that. Or been on a float . Havent had a shot yet at that but im still young. Dont forget that. In my mind youre fref young. Coming up, Robert Shiller will break down the caseshiller home pricing report. Well probably ask him about the market, too. Take a look at the futures here. More squawk on the street live from post 9 when we return. 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. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. If the house is arockin, dont come on in lets get back to the key housing data thats out this morning. The latest s p caseshiller report showing u. S. Home prices rose 3. 2 in the Third Quarter. That versus the Second Quarter and the yearoveryear increase, the biggest in 7 1 2 years. Robert shiller, Nobel Prize Winner and professor. Should i make anything of the fact that 19 cities had lower projections than in august . I wouldnt make anything of it, its seasonal. Theres much more balance, similar to last month. Were still kind of up and away, arent we . We are. Its kind of remarkable. If you look at a plot, it looks like were off and running. I say looks like. I dont know if we really are but right now we are. Robert, i dont know. I deal with a lot of Real Estate Companies and we hit a wall last month and sales stopped in this country. Id like to know whether youre seeing anything ahead of these numbers which indicate the incredible decline in transactions that has occurred during the month of october . Well, i dont know. I dont have any explanation. I do a survey ive done a Questionnaire Survey about home buyer attitudes and i dont find that theyre as excited about the Housing Market as the price increases seem to suggest. It may be more of an unusual demand from investors thats driving the market now or its the pullback from the large number of foreclosures weve had before. I just dont see a lot of home buyer excitement, expectations. Affordability kind of fell off a cliff. We have a lot of housing people on the show. And they tend to be as positive as theyve been for the last five years, but to me, that affordability did get out of control. Has historically affordability been a good indicator of the dropoff in sales . Id have to check. I havent done the analysis. I would suspect not. I tend to think that the market is driven more by psychology than any careful calculations than affordability. How do you measure excitement . Is that a subjective measurement . I try to measure it. I do it can Questionnaire Surveys. There are other people doing them, too. I just dont see evidence that people think were launching out on some great new era. Thats what people thought in the early 2000s. Now theyre looking at the problems in congress and the fact that fannie and freddie are propping up the market and we have bills to wipe them out. People are not so excited or sure about the future. I might be actually happy theyre not feeling like they were in 2005. We dont want to go back to that, youre absolutely right. It would lift the economy but of course we know how the story ends. Professor, you mention the presence of institutions. We know the blackstones, the colonies and others that have been buying up a lot of individual homes. They may be at the end of that or certainly at the tail end of a lot of that buying. Is that going to affect prices . The word seems to be from them that theyre longterm investors, but i suspect theyre not. I think what theyve learned, im guessing, not from any direct information, theyve learned theres sorhortterm momentum in the market. But as soon as its weakening, theyll exit. We cant trust momentum in the Housing Market anymore. These guys will say its a brave new world and the rental market could last for years. Maybe perhaps they are rationalizing the purchases like many people who bought stocks at 4,000 and 5,000 in the nasdaq in 2000 . Yeah, i think so. Its true the rental market does seem to be coming back and a role for people who will convert owneroccupied to rental. But theres also a speculative component. How can they not notice how fast home prices have been going up and the fact that historically momentum is a much better play in housing than its been in the stock market. So im pretty sure its on their minds. Theyre not going to say this, i guess. Theyre not going to say that were ready to dump them. Finally, professor, real quickly on the markets, dow 16,000, nasdaq 4,000. Whats your reaction . Well, it looks like were a little bubbly in the stock market. My cape ratio, real price divided by tenyear average of real earnings. Thats pretty high. If it keeps going up like this, the expected return on the stock market will fall below the tips yield. That might be happening. I dont know when it will end. Excuse me. All right. That could be worrisome. I wouldnt want to get less than the tips yield. You move up in the beginning of the year, in january could be tough. Professor shiller, as always, appreciate you coming on. Thank you. Robert shiller from yale. Two days to go before thanksgiving. Your portfolio, could it benefit from a dash of cramer . Well, youre going to get it. Mad dash coming up next. [ 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. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, it could save you in outofpocket medical costs. Call now to request your free decision guide. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. [ male announcer ] youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and virtually no referrals needed. See why millions of people have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. Dont wait. Call now. Its time for mad dash here on a tuesday. I think this is your last day. We dont know. We dont know. We dont know. I shouldnt be talking about everybodys schedule. Lets get to talking about the work day. This is an amazing stock. Busry is one of the great executives. Hes delivered the antioracle. When i was interviewing him last week, he said were going for everybody. And theyre winning. Accelerated Revenue Growth last nigh night, high multiple stocks were getting killed yesterday. He was telling me 90 Customer Satisfaction rate. When theyre in, theyre in big. Theyre moving to financial management. This is the most expensive stock i follow and i think its going to go higher. Its the most expensive and youre still positive to buy it at this multiple. Busry built remember oracle . Do you short oracle . Yes. Really . Yes. I like that. Good for you go long workday and short oracle. Thats going to be a great pair trade. You do pac, i do pair youre going to get killed if theres an actual bad market. You are too funny. Coming up, three and a half minutes, lets call it. Lets see how we do on this tuesday. Were back after this. [ 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 cnbcs squawk on the street. We are live from the Financial Capital of the world. The opening bell set to ring a little less than 30 seconds or so this morning. Listen, Robert Shiller may have had a cold, but i still heard him. He seemed a little bit worried about froth, at least following his tape ratio. The guy did win the nobel. But there is a very big flag in that index, in october were giving to see a flplateau in relation to higher rates. But also the stock market. The market is really being driven about performance catchup. Guys tell you were locking it in and share schits innelinitz celgene. An employer coalition, over at the nasdaq, nexstar celebrating its tenth year. Were off and running on a tuesday. Were looking at 3996 in the nasdaq comp. Well see if we bump up against that 4,000. Your goal is a fantastic, fantastic piece in usa today. They had two pieces about the nasdaq going higher, but they have a chart of what was leading the market. And, you know, it was cisco, david. Cisco was 8 of the index back then. Microsoft had an enormous market cap, 600 billion i remember infospace telling me theyd have the first trillion dollar market cap. Theres still time. Web fvan was going to take ot infospace. Remember it was just dont sell us and then it became just dont sue us . That guy had the beret. Joseph dignified fellow. Those were good times, as long as you knew to sell right around now 13 years ago. Lets take a look at mens wearhouse shares. We talked about it this morning of course. It is up sharply. Were going to speak later with larry graphstein, helps run m a at ubs. 16 fewer deals than last in terms of volume. Deals not done, far from it. Theyre just offering 55 a share in cash. Well see whether jos. A. Bank chooses to engage with them after seeking to buy them for quite some time, not getting the engagement they wanted, going away, Eminence Capital comes in owning 9. 8 of mens wearhouse, going to go to a consent to potentially replace the board. By the way, thats still going on. Thats down the road. First they had to get an amendment. And also owns 4. 9 of jos. A. Bank and mens wearhouse comes in and does what some said they might do, which is make an action on jos. A. Bank. Where do you you come down in the activist Board Members . I want to talk about it in the faber report. Weve seen trends in companies willing to take an activist out on their board seats. We mentioned tiffany. Those shares are up rather nicely, 7. 2 . The groups that slam me on mad money all the time, the key to this market, foxx el jet, they sold a couple of printers. Its ulta. Im adding why do i mention this . The 3d printer space has been so hot that im just calling it a bubble. 3d printers are insane. I am going to be attacked at jim cramer on twitter because i said these stocks are expensive. Everyone has a right to overpay. I would never get in the way of peoples rights to overpay. I got real mail in 88, 89 when i would make my comparisons. People hated it. It went on for quite some time. 3d printers on. I had solar city theyre actually an earnings story now and they were talked about the fact they were a cult stock and they became an earnings story. When voxel jet becomes an earnings story, ill listen but now no. Workday, accelerating Revenue Growth, also known as arg and doug mcmillan, ceo tell me whats going on there . I dont have any great insight. I wonder with that company the larger question of simply managing a company of that size and scope is some would say becomes an insurmountable staff. You have to bring power down to levels well below the ceo because youre talking about 2 million employees. Remember sam used to go to the stores in his pickup truck . I dont think you could go to the stores. And when duke came in, they thought international would be the gakey. Mcmillan is running international. Its the future now. Theres not a lot more room for wall street. Mike duke gets a very big package. We have to mention that, people will be angry in we didnt, retirement package. We talk about banks being too big to manage. Walma walmart may be. Frank greg, craig jelinik, i think theyre concerned about the ability to manage very Aggressive Growth and walmart is challenge company from the point of view of, wow, how do we manage all of these stores. In man is a home grown arkansas fella. Started in the wearhouse, started moving boxes. Impressive, isnt it, that you can move up in the company like this . And a very young gentleman compared to us middleaged folk. What do you mean middle age . Oh, youre welcome. My aarp card is already seven years old. The Container Store, everybody coming out with coverage given the time that passed since the initial public offering. Most of the research i think was positive. The Container Store is one of those stocks that will be like whole foods, like starbucks, like chipotle. These are overvalued stocks that have a right to be overvalued because they have tremendous growth and Container Store needs to show the earnings but im just pointing out that that has got a halo. And, david, again, im not saying that these stocks are clean and im not saying im not being facetious. Some stocks are loved because management is so great. People love the management at the Container Store and i think thats fine. It can go up for a very long time. Its got a very big growth path. These are very wellrun companies. We talk about the Tractor Supply and the ulta and lumber li liquidator liquidators. In the 80s, the Research Director came down and said go buy walmart. I said ive never been in walmart. He said its in seven states, its got master plans. Walmart . Who is walmart . Then i went to arkansas and said you guys have a game plan. Walmart was a great growth stock for a long time. I remember when home depot moved to long island. I went to see it. It was right in this area, it was on route 22 and it was incredible. I said this is going to be one of the great growth stories of all time. Theres the move youre talking about of course during that incredible period of growth where, by the way, a lot of store managers became multimillionaires, sam delivered stock across the organization. But look at since. You can look at that kind of a chart for a company put microsoft up against it, it might not look that different. Theres home depot reaction sell rating. They fell on hard times, they came back, doing 7 comps. Theres few number of companies doing 7 comps. They deserve high multiples, they earned it. Microsofts growth was more incredible. As you pointed out back in september of 2000, that was approaching 600 billion market value, the largest we ever saw until apple elipsclipsed that n that long ago. Apple is sneaking up. We want to get to Mary Thompson. Amazon is at a more or less new alltime high. One company i used to do annoying comparisons on and, by the way, they were all well, lets just say its never been better. Amazon, netflix product, buy the stock, thats the way it works. Mary . Reporter we continue to see gains, the dow moving into record territory. Today the nasdaq retailers and Home Builders will be in focus. Expect another light volume day as we saw yesterday. Again, we have a holiday shortened week and weve seen a dropoff in volume. That made us vulnerable to lateday swings yesterday, which pulled the s p lower. The nasdaq yesterday closing above that 4,000 mark since september of 2000. This despite weakness in recent momentum stocks like facebook. What was driving it continues to be a strong reason or one of the reasons for the nasdaq recent gains or biotech stocks, which are outperforming other sectors in the market yesterday, one of the reasons we saw the nasdaq move to that 13year high. I want to go over a couple things. Tiffany opening at an historic high today. Earnings helped by strong sales in asia. Sales closer to home not so strong, samestore sales here in the u. S. Up only 1 and a lot of that had to do with its flagship new york stores, suggesting stores elsewhere may not have done as well. Sidn Signet Jewelers continues to go higher. The build by mens wearhouse, chicos came in with result as little less than expected on the bottom line. Sales were better on the top line. Let me just doublecheck that. I might have that confused. Thats a womens apparel retailers. Revenues were better there, earnings light. Barnes and noble, that was up and dsw posted disappointing sales. Home builders benefiting from the news that Building Permits are at a five and a half year high. The nasdaq just below that 4,000 mark, up just about 5. David, bark to you. Thanks very much, Mary Thompson. I want to come back to something jim had mentioned earlier, it called a trend. When i first started 27 years ago or so in the news letter division, it was a trend if you had three examples. That was a trend. You could write a trend story. And that would be on the front page of the news letter. I got three. So im going with the trend. The trend is activist investors selling their stock back to the company in question that has a large buyback in place all in one block more or less, getting out almost entirely and in return removing their directors from the board. Remember activists get involved, sometimes they win the battles and they put Board Members on and they get locked up and cant sell. Were seeing a trend. We saw it with yahoo and dan loeb, and loeb and the Board Members all stepping down. That has moved well above where mr. Loeb sold. Yesterday you had adt, the spinoff from tyco security company, selling or buying a stake back from corvex. Keithmeister, they had a board seat. They bought those shares back. Did you look at adt yesterday . It was down 10 , it got crushed and the latest is today, take 2 buy shares back from icahn. Its not particularly active, but the board stepping down, the whole bit. The trend starting to go around, is this the new green mail . I would argue, no, its not like from the old pac man defense days where an activist such as mr. Icahn would get involved in the stock and he would get taken out at a premium only for his shares and no one else would benefit. Youre getting market price but youre enabling an investor to sell a large block of stock market, which would otherwise have to hit the market with, which could hurt the stock price when theyre selling 8 , 9 , 10 of the company. Im curious to hear what you think about it. People thought with the adt situation they they would goad him into youre protected disomeone who is tough and then, boom, theyre gone. Theres keith meister, focusses on activism and runs that great conference every year. He says i do believe the activists have a duty to investors to sell at the best price they can so i dont blame them. The question is how badly do the other directors want the activists off the board. House of representatives does it affect the activists . Does it hurt them the next time they want to get a board seat . I think take two now, nuance is up. Nuance reported it wasnt that good. Thats a stock that people think about icahn with. I start thinking he sold out of haine. Those who follow these filings, so and so bought stock, you might have been adt and next thing you know, your gain is wiped out. My breath was taken away by that. Corvex getting out. Take two shares are down about 4. 5 this morning. Thats a good company. 1. 6 billion market value. Lets go over to Rick Santelli at the cme market group in chicago. Were going to bring 35 billion of them to the market in an auction at 1 00 eastern, trying to decipher the housing data, whats on the surface appearing as strength, as you dig a little deeper maybe might not be as strong as one would suspect and thats showing up. But if you look at a twoday, that strength, that pop, a little bit of pressure. Year to date it continues to demonstrate why the yield is steepening. The fiveyear yields have been suppressed, unlike longer maturity counter charts, looking at the difference between 10s and 5s, because its hovering at the widest level since the summer of 2011. Now, lets look at another Interest Rate. Its in the papers today and yesterday, were talking about tenyear rates in china. Now, heres a longerterm chart. You can see were at the highest levels that weve been at since 2005. A word of caution, theres a lot of control exerted on these rates. What i can tell you is theres only about 3 to 5 basis points between every maturity. A threemonth over there is about 4. 13, the 10year about 4. 70, theres about 60 basis points between 3 month and 10year. Lets look at foreign exchange. If you look at the dollar yen since may, these are the best levels for the dollar since that tim. If you really want to see a good chart on the dollar yen, look at a technical chart. Looks like it could be an open field. Back to you. Coming up, smartphones, smartwatches and now a smartwig. Well tell you which company is seeking a patent for that product. Squawk on the street back after this. [ male announcer ] this store knows how to handle a saturday crowd. 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You may be soonable to add this wearable sensor, the smartwig. People have been able to tap their side burns. Wearable is very, very important. That brings us to this mornings squawk on the tweet. Complete the following sentence with the arrival of the smartwig, mankind will finally be able to blank. Send us your response. Hope springs eternal, my friend. Not that much excitement, says professor shiller, but perhaps thats what we want. Thats what bernanke and yellen want. They want jobs created. They would love some nonresidential construction to start but they cant do that. Thats going to require the government to be involved. Sorry libertarians, but thats what you need. We have six in 60 with this man to my left coming up. Re. Re. You get your hair cut here. You find that certain thing you were looking for here, but actually you get so much more. When you shop at these small local businesses, you support all the things that make your community great. The money you spend here, stays here. In this place you call your neighborhood. This saturday is Small Business saturday. Get out and shop small. It is that time. Lets start off with cracker barrel. They cite the Government Shutdown for reasons they didnt do that well. Are they in d. C. A lot of them . Just pointing it out. Dont shoot the messenger. Whiting petroleum. Dsw. Theyre doing a discount warehouse. Gross margins under pressure. Jpmorgan says get right back in. Sprouts. 17 million share, people dont like this group. They turned on the natural organic, supermarkets. And finally eagle mine the gold miners are renders. In the end what do we have tonight on mad . Palo alto. Mr. Marc mclaughlin say people no longer like the souptonuts approach to cisco. They cherry pick, they want the routers here, Cyber Security there. They have a great Cyber Security subscription business, not unlike workday. What day is it, david . Its workday. Have a great holiday. We have Consumer Confidence coming up when we come back. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. 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. [ male announcer ] fedex one rate. announcer at scottrade, our clto make their money do more. Re ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. [ sniffles ] i have a big meeting when we land, but i am so stuffed up, i cant rest. [ male announcer ] truth is, nyquil cold and flu liquid gels dont unstuff your nose. They dont . [ male announcer ] nope. They dont have a decongestant. Really . [ male announcer ] really. Alka seltzer plus night fights your worst cold symptoms, plus has a fastacting decongestant to relieve your stuffy nose. [ inhales deeply ] alka seltzer plus. Oh. What a relief it is. [ male announcer ] cant find theraflu, try alka seltzer plus for fast liquid cold and flu relief. 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. We have some november numbers, confidence number, 7. 04. That is deficient in terms of expectations. Didnt ramp up from 71. 2 to 72. 4, 70. 4 is the weakest level since april when it was 69. 0. We also had November Richmond fed out at 13, second highest level of 2013 and the spread thus far for 2013, minus 11, deposit of 14. Simon, back to you. Thank you very much, Rick Santelli. Shares of tiffany are shining bright this morning, rallying more than 7 after its results beat expectations this morning. So are tiffanys results a sign of whats to come for the luxury season . Kudos to you coming into this. You were upbeat on the stock. You thought the margins would be improving. It was a buy recommendation and we hit your price target. What do you think what you see now . I think its pretty impressive. If you look across the board the last three months, just about every luxury global peer has seen a 3 slow down on their top line. Tiffany showed a dramatic improvement in asia. Gross margin is up almost 300 basis points, you have a pretty compelling story in 2014. We had a blood curdling warning from the French Liquor group remi quantro. Why is tiffany succeeding in asia . Theres only 60 or 70 stores there. Productivity is very low, Brand Awareness is very low and theyre really building upon the global brand theyve created. Just much more immature. At the same time, correct me if im wrong, tiffany is talking about strength in japan but we know whats been happening with the weaker yen. Sales in japan were down 13 on the quarter, up 9 on a Constant Currency basis. I understand shipping out the weaker yen if its juaa onequar phenomen phenomenon. Isnt the decline the more relative figure here . The Constant Currency comp is up mid single digits. This is a global business, 50 u. S. , 50 international. The u. S. Business is seeing the areas like hawaii and gaum, those areas are not seeing the robust sales they used to see. Its more about the currency come, which is very healthy at 5 . Whats happening in this country. The comparable sales figure is a gain of 1 but thats skewed by the 5th avenue store doing well. You said theyve had important highers, you believe the margins can expand here. Why . Theyre doing some things that are new, that we havent seen the past couple years. First and foremost, they hired a new head of retail north america, anthony la drew, comes from cartier, winston, luxury background. I think hes going to be key to turning around the u. S. Business, which has lagged for about two years. They havent will a creative designer for four, five years. They hired a new one, whose background is as a silversmith. That dovetails nicely with the silver business. Theyve been innovating a lot more this year than they have in the past. I think theyre doing the right things and the bench is in place to carry this business going forward. But which is the better investment . If you look at signet, its a huge outperformance. Would you stick with signet or advise people to buy tiffanys . I think tiffanys a better story. The gross driver margin is not the same as what signet has had. We definitely prefer tiffanys now fundamentally. Okay, well leave it there. Have a great day. A major winter storm is making its way east. That storm and freezing cold temperatures could pose a problem for retailers trying to attract shoppers on thanksgiving and of course on black friday. Joining us to weigh in on what this could mean for the sector is charles copperman, chairman of ceo of entertainment. Is this potentially going to derail the numbers retailers are hoping for . As you know, everyone shopslishops online. If the weather will prohibit them from getting to retail, theyll buy online. Ive been traveling over the last couple of weeks, ive been in vegas, scottsdale, miami, restaurants are packed, weather was horrible in miami, couldnt get into a restaurant, 20 deep. If they cant get in stores, theyll get online. Were getting data saying Consumer Confidence remains week, that they took a cut last month but it wasnt a tell on what people were actually spending. From what you see out there, what is providing the basis for consumers to spend right now and how much of a lift could we see going into a Holiday Season where expectations are pretty low . I look at anecdotal research and i see smiles on faces, i see people spending monday and this is a time of year when Everyone Wants to buy gifts for everyone else. The consumer will find a way to get there. If the weather isnt that great, theyll shop online. The major retailers have built their online presence, whether its macys, hope depots, kohls, theyre ready. The consumer is going to be there this season. You know kmart, you put Jennifer Lopez into kohls. Thats the nature what you do. Those are the deals that you do. At the same time a lot of people that shop in those stores are very nervous about their jobs, the low income. This is the front page of the Washington Post today, the lowincome section of society is more worried than ever about the fact they could lose their jobs during the course of the next year. For that section of the buying public, there are problems, are there not . Most definitely there are problems and there is this great divide, as they say, between the haves and havenotes. When i spoke to nicki minaj about kmart, her response was kmart is perfect, thats where my fans want to shot. Nick nicki being at kmart, theyre going to want some cheer and bright and theyre going to be there. You really diversified Martha Stewarts business. When you look at the power of celebrity now, we showed some of the people youre doing deals for, is the power of celebrity as strong in terms of boosting sales, boosting margins . Or are we in a different era now . No, i think what you have to separate are those music celebrities and those celebrities that are on television every day. When youre a music person, your fans are used to spending money. Theyre used to buying your tickets, theyre used to going to your concert, downloading your music, they go to the concert, they want to be like you, look like you, feel like you. So its not a mystery that if you have a style like mark anthony or you have a style as martha did with her daily show, if you have that connection every day, youre going to do well at retail. Assuming that you have the style, design and the ability to make your brand a reflection of who you are. And its interesting thats partly how Martha Stewart wound up in the middle of this between jcpenney and macys. If you look at jcpenney shares, do you think a jcpenney here is doing the right thing generally speaking and is it important for them if they dont have a martha to get some of those other celebrity lines back in the stores . Well, i just recently had breakfast with mr. Ullman, who is an incredibly smart, great retail individual, and my bet is that hes going to do well. And, yes, i think that if you want to bring diversity in your stores, if you want to bring a new constituency into your environment, if you partner with the right stylish celebrity that has a builtin following thats used to buying their stuff, thats a good thing. Thats certainly what investors are hoping theyll see. Charles koppelman with views across the sector, thanks for joining us. Hope carl feels better. We do, as well. Hope hes watching from home. Hi, carl. A major storm is heading east. Joining us now the weather channels julie martin from atlanta with the very latest. Julie, what can you tell us . Reporter kelly, its been a messy morning here in atlanta. But the good news is the temperatures have stayed warm enough that this is rain and not freezing rain, but we have had reports of freezing rain in places like virginia, tennessee and North Carolina this morning, causing travel issues there. And certainly when this storm really got going in texas, we saw a number accidents as a result of this winter storm, as it has now pushed off to the east. Heavy rain expected throughout the day today and tomorrow and throughout the deep south and stretching all the way up the eastern sea board. Heavy delays at the airports expected tomorrow in places like new york, d. C. And boston. Weve seen a few delays here in atlanta. Overall a few accidents here and there. As ive mentioned, since temperatures have cooperated, weve stayed just above freezes and that has just been the saving grace for the city of atlanta and the state of georgia as it could have been a whole lot worse with the slipping and sliding as millions take to the roadways for this Holiday Travel week. Simon and kelly . Oh, yes, its going to be tough. Stay warm, thank you very much, julie. Up next, a new twist in the mens wearhouse jos. A. Bank saga. David faber will break down the proposed merger and tell what you it means for you as an investor and a buyer, as squawk on the street comes right back. 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. 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Mens wearhouse has turned the tables on jos. A. Bank. Jos. A. Bank had made a series of offers to the company, trying to get to engage. This morning mens wearhouse makes an offer to acquire jos. A. Bank for 55 a share. That is in cash. Clearly there are expectations amongst investors that if they are successful, it will result in a higher price than the initial 55 a share offer. You may recall we were following this story for some time last week. We spoke to Eminence Capital, the largest shareholder in mens wearhouse, who is moving to potentially unseat the board of directors at mens wearhouse but also embrace the idea of mens wearhouse buying jos. A. Bank. You mentioned mens wearhouse buying jos. A. Bank. Would jos. A. Bank have interest in that . The ceo said so in an interview shortly after he made his bid. He said wed be amenable to it. Theres multiple ways this can play out. We can have a shareforshare merger and use our excess to buy back stock. Theres a lot of ways this could go. The 55 represents a 45 premium. When you go back to october 8th, which they claim is the unaffected price, thats where it looks, thats where it was, this is the key here, 100 million to 150 million of run rate annual synergies over three years. The hope on the part of investors would be also get multiple expansion. The question, who is the better Management Team . Im not going to answer it but it is certainly a question. If jos. A. Bank chooses not to engage, which seems unlikely given theyve been trying so hard to get mens wearhouse to engage on their proposal, but if they should not, i think theyre coming up, the board comes up in june, july, you could potentially throw out the board. Also, Neither Company boasts a great deal of Share Holdings by their Management Teams. Sometimes when you look at a potential seller, you look at how much money the ceo might make from doing so. In this case, i think the ceo of jos. A. Bank owns 53,000 shares. Just a quick question, david, from the consumers point of view here. Does this mean the end of the buy one, get five suits free . Are they the reason weve seen so much promotion . They are, although mens wearhouse says they would keep the jos. A. Bank brand as a separate brand underneath and within the company. So conceivably they would still run their own promotions. Are they going to promote against each other, destroy their own margins . Theyre going to be able to get the cost synergies by buying from the same places or marketing and things of that nature. At least they say they will. Its buy one get two free, right . You dont get five free. There was one the other day they were throwing like an ipad app as well. A lot of shirts, ties, simon. Well take threw aftyou ther the show. Thank you, thank you. Social media stocks being a little antisocial. All the big names in red over the last week, not making a lot of friends here on wall street. 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[ male announcer ] dont stop taking eliquis unless your doctor tells you to, as stopping increases your risk of having a stroke. Eliquis can cause serious and in rare cases fatal bleeding. Dont take eliquis if you have an artificial heart valve or abnormal bleeding. While taking eliquis, you may bruise more easily and it may take longer than usual for any bleeding to stop. Seek immediate medical care for sudden signs of bleeding, like unusual bruising. Eliquis may increase your bleeding risk if you take certain medicines. Tell your doctor about all planned medical or dental procedures. Ive got three Important Reasons to up my game with eliquis. [ male announcer ] ask your doctor today if eliquis is right for you. Good morning, simon. Retailer digital ad spending is projected to grow 15 to 9. 4 billion this year. This Holiday Season facebook is expected to draw 70 of social ad spending to twitters 30 , according to shift, a marketing platform. But twitter is making progress, last year facebook had 90 to twitters 10 . Pushing for a bigger piece of the pie, facebook and twitter are encouraging campaigns. Twitter said the number of retailers using its ads has nearly doubled since last fall. Last week it unveiled a survey saying retailers spend more money on their platform. What we love about using twitter is really because it enable as very quick interaction where a member or customer can tell us what theyre looking for or whats of interest in a very direct format and we can respond really quickly. Meanwhile, facebook is looking to build on its leadership and social ads, just posted a blog on its big push into mobile. Facebook is pointing out if facebook can reach additional customers and stay connected by promoting its own mobile apps. Target says their mobile app is expected to generate north of 100 million in incremental sales for the retailer. Both facebook and twitter will make gains this Holiday Season, but twitter, because its growing off a much smaller base, should grow more quickly. Kelly . Julia, thanks very much. With twitter near its lowest prices, and other big social names floundering, the question is how investors should play the space. We want to bring in Colin Sebastian and bruno. Guys, good morning. Good morning. Bruno, the social media etf is down today, yesterday was kind of an ugly day across the sector. Is this the beginning of a down move . We dont think it is. In the Third Quarter alone, social media stocks were up more than 30 . These are Companies Growing very quickly. These are stocks that see a lot of volatility. The recent correction is really not surprising and not too much of a concern for us. So what do you think happens from here . If you were to look out over three, six, 12month horizon, do you overlook the daytoday volatility on a day like this and just say to people you have to have a stomach for more of this . Or do you think were going to shake this off and move significantly higher . I think theres a couple of things that we would look at. One is social media stocks, you know, individually can have divergent performance. We like the space as a whole so we think its important given the volatility in individual stocks to diversify across the basket in places like china, russia. We this this is an attractive entry point. Over the next 12 months you can have an attractive return. There are not many places around the globe that give Significant Growth opportunities and this is one of the sectors. Colin, yesterday there were a lot of different theories as to why it was getting hammered, the shares were down 4 . Do you have a sense of what the story is there . Is it changing . No, i dont think it is changing. There is a strong gravitational pull toward these social platforms, facebook in q4, more than half of the revenues sudden come from mobile and for twitter, theres tremendous innovation happening under the hood at twitter that is not really visible yet in their numbers. So we think next year is set up quite well for twitter and for facebook. Colin, are you just characterizes the recent losses weve seen on these huge momentum plays . Are you just characterizing that as people booking profits on the winners so far this year more than anything more fundamental . You still believe there are big gains to be made next year from what youre saying . Yes. Thats what im saying. I think were towards the end of the year, the sector, the social media group as a whole has locked in some significant gains. So naturally there could be some yearend profit taking. But if we think about the Enormous Growth potential and where users are moving on the web, then you would want to be leveraged to this sector of the internet. Colin, briefly, what are your top picks in the space . So we like facebook. Weep think just given the mobile shift, given the significant ramp in ad app install ads, as well as more sophisticated advertising the platform, that sets up well. We also like google, we think its one of the unheralded leaders in social media. Even just yesterday they announced a new Consumer Review integration with some of their business sites. I think google is an interesting play in media. Bruno, is goog until your index . It is in our index. The properties of each of these is very, very interesting. All right. Some up side potential after the volatility. Thanks very much, guys. Appreciate it. Stay tuned a little bit later, well talk to the youngest person in history to get vc funding for his company, hes working with companies to bring you mobile ads you dont even know youre clicking on. Thats coming up next hour. And larry graph stein will join us on post 9. Hear what he has to say about cnbc. You find that certain thing you were looking for here, but actually you get so much more. When you shop at these small local businesses, you support all the things that make your community great. The money you spend here, stays here. In this place you call your neighborhood. This saturday is Small Business saturday. Get out and shop small. [ male announcer ] this december, experience the gift of true artistry and some of the best offers of the year at the lexus december to remember sales event. This is the pursuit of perfection. 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. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Consumer Confidence Index falling 2 points. Economists had been expecting an increase. Shares of hormel rising more than 6 . The food giant posting better than expected Quarterly Results helped by strength in its turkey business. And macys is among the stocks hitting the alltime highs today. The Department Store chain is now up 22 in the past two months. Now lets send it over to david faber, who has the cohead of m a at ubs. This week may include a holiday but m a never takes a very case. The new that mens wearhouse is playing the old pac mans defense. Who better to discuss this than my next guest, larry grafstein. Someone weve been talking to for 20 years. Lets just leave it there. Lets start off with the old pac man, a blast from the past. We talk a lot about it, it rarely seems to work but in this case its certainly being tried. A Smaller Company looking at a Bigger Company and the Bigger Company turning around in this case. When you look at mergers and transactions and acquisitions, you dont get caught up on the nomenclature. Its who is running the company, what is the board and what does the postdeal capital structure look like . It really isnt a question of who is the buyer, who is the seller . Its what do people have before and in combination. This is an example where the market seems to like it at least for now because the deal seems to make sense. Of course we spent a lot of time talking about this deal in part because its been one of the few deals out there, certainly one of a contentious nature. Deal volume looks like it will be the lowest in the last four years. A year ago we could have felt good as we saw dell and heinz and a couple of larger deals and then nothing. The larger deals is down but the dollar values are deals is flattish. There have been a couple big deals like the two that you mentioned and others. There is still the ability to do strategic deals that make sense. At the same time, theres clearly a constraint different by conservatism. Still a little overhang after the crisis. There are subsections of health care and financialence constituti Financial Institutions where theres new regulations. And you look at m a along a continuum of options. People look at that as organic investment and also against share repurchases. Youre not going to take as much of a risk buying back your stock. I would think it figure noos in board whether they lose their job on a make the company break the company bet. Intelligent strategic deals are getting done. Theres a lot of tough negotiation at the margin. The equity markets have been strong this year, which i think makes buyers a little more hesitant obviously. And the activity levels are not as robust as they feel in a frenzy or even a peak but solid deals can get done and get financing. It just doesnt feel as if theres that many. I think the average premium has been about 19 , which is as low as its been in a very long time. Its a function of the average deal being bigger. If the number of deals is down and dollar volume is flat, that means the average deal has been a bit bigger. When the market is strong, you have Companies Selling out at close to their highs. Certainly the last five or six years in some cases. At the same time you have a bit of a concern that you have to look at the mixture of cash versus stock. If companies are making stock in a combination, theyre going to continue to share some up side. One of the areas that has been active, sprint, of course, and soft bank, the vodafone with verizon, you were involved with that, telecom as we head into next year, do we continue to see a level of activity and consolidation . Were down to four now here in the states. Four in the states. If you look globally at the number of telecom suppliers, youre down to a handful of handset makers. You talk a lot during your shows about blackberry and the struggles nokia and microsoft have. Apple is a big winner, samsung is a big winner and google through android. Thats three Huge Companies and in the u. S. Alone youre talking about four carriercarriers, can four, brazil five. Ultimately consolidation ought to continue because theres an imbalance between Service Carriers and suppliers. Not to mention equipment suppliers, alcatel, lucent nokia siemens. You have the fundamentals that drive telecom. In media as well, you guys are reporting on that. Those fundamentals are out there. Over the years you think about how wireless and Wireless Technology has cannibalized a lot of industries. There used to be a local phone land line business, much more significant part of at tverizon than it was ten years ago. Video obviously, people spend more time Consumer Media on mobile devices. You talk about the pc ecosystem destroying lots of value but where is it accreting to . Its accreting to a handful of global winners. When you bring that back to consolidation, its precisely that fundamental that will in the medium turn drive consolidation pup cant ignore the technology and you cant ignore these imbalance. Now, governments have something to say about this and, you know, proceed potentially unevenly and any individual transaction you could argue might or might not happen. But in general the trend is towards do you get anything unexpected, google doing anything unexpected, ala motorola . Amazon, facebook, microsoft, they all compete in different dimensions. Its the macro trends in social network and cloud computing, as well as the trend to wireless, all of these things drive a tremendous amount of value shift. If youre sitting as a company, the change patterns and cycles are very rapid. So you have to react in different ways. In some ways you do st strategically in the marketplace. The story about the aborted play for snapchat, we may have to get away from cannibalization ourselves. Kelly, over to you. Great stuff. Thanks very much. Coming up, while healthcare. Gov has had more than its share of problems with its rollout, california has had a pretty smooth smart. 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[ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk on the street. Barnes noble is moving lower. Reporting an 8 drop in quarterly sales, falling across all of its businesses, including its stores, nook ebook readers. Net profits did increase as the company cut costs in the face of those falling sales. Well, i was buying there but i guess im the only one. Lets go to the cme group. Rick santelli. Reporter good morning, kelly. The markets gone wild theres many traders on the floor, and ill put myself on the list, even though im not a trader anymore, that didnt really believe that the stock market was an adequate representation of the economy as a whole but were definitely not challenging the notion that the Federal Reserve could take the roulette wheel of the stock market, paint all the numbers red and pretty much tell you doesnt bet black, okay . And it worked out rather well. Many traders, though, continue to also remember a time when markets went wild and there was a lesson to be learned. Primarily thee Trading Floors in chicago started out as Commodity Markets and Commodity Markets have a unique phrase associated with them when they start to move in a crazy fashion. Down here we call it going parabolic. The lesson today is the nasdaq market. The nasdaq is up a whisker shy of 30 on the year, 29 and change. But lets harken back to an earlier time, late 1999. As a matter of fact of fact, lets go till october 19th, 1999. The nasdaq at that point was at 2680. In a short time, it virtually doubled in five months to its high, which took 13 years, basically now, to get anywhere near that level again. And remember, then from march to april it went back down to 3,300. So the lesson to be learned is i can remember, like many, running out of money, buying puts to catch this trade. But heres the key if you sold it here, you sold it here, you sold it here, you sold it here, people would call you why did you jump off this train . Cant you see its aiming to sha shangrila . So the lesson to learn isnt that you shouldnt be involved in equities or challenge the fed at this point, but be cognizant that what goes up must come down. Kelly, back to you. Thank you very much, rick. Simon. It is a critical time for the hotel industry. Millions of americans travel for the holidays and a major storm baring down on them. So what can you expect from hoteliers over the next couple of days . Coming up, Jonathan Tisch will join us to weigh in on that and preparations for the super bowl. Squawk on the street will be right back. Aying 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. 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[woman]dont touch my side the Holiday Travel season officially kicking off. How will this winter storm impact bookings . Lets check in with a man who has a pretty good post with the lodging history, Jonathan Tisch, owner of the loews hotel and chairman of the super bowl host committee. We have a lot going on, simon, but its all good. Lets talk about the storm barrelling toward the northeast as 43 Million People travel for the weekend. What does a smart hotelier do . Well, people will be stranded. But the people who cant get out, there are an equal number who cant get in. In terms of occupancy and dealing with a full building, that churn on the front office to try and deal with those reservations . Very much. Coincidentally, youve launched a new social media reservations system on twitter. Just explain to us how that works and what sort of baptism of fire youre now expected to have. We are obviously very aware of how important social media is today in everything that we do. I say i was born on the wrong side of the digital divide, because i dont tweet or do instagram. I leave it to my wife. But the business has to. Yes, fortunately, talented men and women sat loews at the hotel, where can you tweet us with a cancellation. So the people will be in more secure chat areas . Yes, absolutely. And whats happening with the hotel. The consumer is so much in focus. We talk about on the retail side. Weve got Consumer Confidence down. People thought maybe its a shutdown effect, but this morning it didnt bounce back. And yet consumers still seem to be spending. The consumer is still spending. Average rates are certainly starting to rebound from the depths of 08. And if you look at new york city, 98,000 hotel rooms in new york city by the end of the year, were going to break 100,000 next year. And even with the new addition to supply, we still run 85 occupancy in new york city. Isnt new york city atypical . Or is it whats happening across the rest the big cities are doing well. Middle of the country is softer. What were still not quite recovered from is on the Group Business side. Groups still are a little hesitant about traveling. Its expensive. Travel issues play into why a Company Might send their people away. But that really hasnt recovered yet, and were hoping it will next year. Were going to hear a lot about investing in hotels next week, because hilton is likely to have the ipo at the nyse of 30 billion. Can you tell us what youre doing with your portfolio . I hear a lot of extra capital is around. People want to be in the space. Theyre rotating into it. I see you are opening new hotels. Talk us through what youre doing. We at loews are fortunate, at the parent level, were sitting on 4. 5 billion of cash. When we partner with some other equity interests, then we can go ahead and buy hotel, which weve done. We bought a hotel in hollywood, california, in boston, washington markets that we wanted to be in. And also reinvesting in the existing hotels. The loews regency, the home of the Power Breakfast, will be closed for one year, 100 million renovation, and that will open on january 16th in time for super bowl. Orlando, where we have three hotels already on the grounds of universal studios, 2,400 rooms, we have 1,800room under construction, cabana bay beach resort, the largest under construction in the world outside of china. Phase one will open april 1st, 600 rooms. The rest of the hotel by june, when harry potter 2 opens, and 400 rooms in chicago. So 1 billion worth of projects now. Wow. You mentioned the Power Breakfast that will start taking place about a month and a half or so from now. A lot of the people in the room, jonathan, i know many of them would say theyre worried about the new mayor. Worried about what hell do in terms of how he will treat businesses and whether business wants to be able to continue to invest in new york city. How do you feel . Im a born optimist. I think that mayorelect de blasio understands that business is the engine that creates job. Its the private sector that creates jobs. Why do you have that confidence . Because as i said, im a born optimist. And ive known mayorelect de blasio for a while. Ive had a conversation with him already about super bowl, about traveling tourism. Traveling tourism is essential to our citys economy. And i am hopeful that as he goes through his transition, he will start to really understand the issues that impact our business, because we still have the ability to create jobs and be a vehicle for economic development, especially when the International Traveler wants to come to new york, they are essential to the future, because they stay longer and spend more money. We are 72 days away from super bowl. 67. Not that simon is counting. But whos counting, samen . We have staff who counts these things. Beautiful, too, sunny and 72. Ill take sunny and 45. I was at the game sunday night. It was chilly. Oh. So where are we on the weather impacting super bowl with no roof . I can predict a lot of things. I cannot predict the weather. We are ready for anything. Our contingency plans have contingency plans. Whatever Mother Nature throws our way, between the nfl and the shoeft committee, the jets and giant, met life stadium, well be prepared for it. There have been two and a half years of conversations as it relates to transportation, as it relates to security, as it relates to weather. All of the issues that could possibly impact the game have been discussed, and were prepared. Just real quick, is it true, as well, that a lot of the celebration and the events around it will be taking place in manhattan and not necessarily around the stadium in new jersey as people there had hoped . This is the new yorknew jersey super bowl. Both states are supporting the effort, and obviously new york city is supporting the effort. The team also stay in new jersey, theyll practice in new jersey. The Opening Press event will be in new jersey. Just due to where the facilities sit certainly a lot of people will be staying in new york city. But new jersey will benefit economically just as much as new york state. Im looking forward to seeing the but light Floating Hotel on the hudson. We have to leave it there, jonathan. The what . Nice to see you all. Bud light, going to have next to the intrepid you tell them. Next to the intrepid, anchor a norwegian cruise liner. Charter add cruise ship to sit in the hudson, and its for their sponsors, for their executives, and they will be partying on the hudson. And we will be on it. Jonathan, thank you. Thank you so much. Its tweet time now. You may soon be able to add this wearable Computing Device to your wish list. A smartwig. Sony has filed a patent for a hairpiece that is packed with sensors and special devices that vibrate on a persons head, giving messages and directions. Seriously, take a look. Were asking you today to complete the following sentence with the arrival of the smartwig, mankind will finally be able to blank. Tweet us squawkstreet, and well read some of the answers after the break. I see a world bg with opportunity, with ideas, with ambition. Im thinking about china, brazil, india. The worlds a big place. I want to be a part of it. Ishares international etfs. Access to developed markets, emerging markets and single countries. Find out why nine out of ten 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. Is a really big deal. 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The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. [ male announcer ] 1. 21 gigawatts. Today, thats easy. Ge is revolutionizing power. Supercharging turbines with advanced hardware and innovative software. Using data predictively to help power entire cities. So the turbines of today. Will power us all. Into the future. Welcome back to squawk on the street. Motorola will start selling a cheap smartphone in the u. S. Today, more than a month ahead of the schedule. The company says it was able to develop the phones faster than expected, starting with a price tag of 179, with a contract requirement. Motorola is owned by google, which, as you can see, is up to session highs so far today. Kelly, back over to you. All right, thank you very much, dom. It certainly is. It is tweet time. Sony has filed a patent for something call add smartwig, so we asked with the arrival of the smartwig, mankind will be able to, finally cal tweet scratch their heads and learn something. Rick tweet, make the best of a hairy situation. Well done, rick. And david fabers hair tweets, mankind will be able to compete with me. So now we know how you were tweeting, david, this whole time, from your hair. Hes not david fabers hair. I dont know who david fabers hair is. I will say this. Theyre very witty. Wittier than i am. My hair somehow funnier than i am. A miracle, isnt it . Yeah. Thank you for that hair wit, wherever you are. Lets get to t heres what you might have missed if you are just joining us this morning. Announcer welcome to squawk on the street. Heres whats happened so far. Qe looks like from their perspective, it may have done about all it can do, and so whats the instinct . The instinct of my colleagues are the weak colleague create a new tool, a third tool, which goes under the very kind sounding name of Forward Guidance. Mens warehouse is proposing to buy joseph a. Bank we thought it might be the way around. Right. If youre obama, youre watching the show probably not but if you were, i think youd be saying, we didnt raise taxes high enough these people are still spending when are we going to crush the rich people . But, actually, in reality, you cant, because, man, they spend like mad. Its a struggling category. The suit, Mens Clothing category. These two do need to get together. It would be a good thing. This is a very tough time for that particular aspect of retail. They should get together. Theyve learned that theres shortrun momentum in the Housing Market. And so, they know how to play momentum, but as soon as it looks like its weakening, theyll exit. Thats why i think that its really different now that we cant trust momentum in the Housing Market anymore. [ bell sounds ] i think the consumers out there, and if theyre going not to the stores, theyll be Online Shopping and buying. And good morning, were live here at post 9 at the new york stock exchange, and lets start with a check on markets. Take a look at the major indexes. Were continuing to gradually tiptoe to new highs on the Dow Jones Industrials average. Off the highs of the session, but adding about 20 points to the day. The s p 500 up a couple. The nasdaq has been lagging, but now up by. 3 , and its back across the 4,000 level. Well keep an eye on it. Shares of tiffanys rallying this morning. It beat analysts estimates, and the Company Raised the fullyear forecast, a 7. 5 move now. Shares of hormel moving nicely. It beat analysts estimates in the Fourth Quarter and raised the dividend to 20 cents per share, stock up about 5 , simon. Here you go. If you have travel plans this week and 43 million americans do then you want to check the weather. A massive storm is moving towards the east coast, threatening to delay or cancel flights for millions of people on both coasts. This thanksgiving. Well tell you what to expect in a moment. Plus, amid all of the bad news on obama care, there are bright spots, most notably, of course, at the state level. Well talk to the head of the state exchange in california to find out whats working there. And theres a new frontier in the technology market. Im, of course, talking about the smartwig. From sony. Well tell you about all of the big plans that that Electronics Giant has for your scalp later in the hour. In the meantime, a powerful winter storm is moving up the northeast coast, threatening to mess up travel plans for some of the 43 million americans who are planning to travel this thanksgiving. So how do airlines prepare for major storm that could put a freeze on so many peoples hopes for this season . Golden bethune is the former Continental Airlines chairman and ceo, and a cnbc contributor. Gordon, welcome back to the program. Thanks, simon. I guess the key thing for ceos here and those on strategy and planning is that if theyre on the northeast coast, they can see it coming, its well telegraphed. You know, it happens every winter, you just hope it doesnt happen on thanksgiving or christmas. I think theyre well prepared. Theyll have deicing crews and enough glycol standing by to handle it. What you do is get into freezing precipitation, which causes deicing, which causes the delays to start rolling through the system. So its unfortunate that it happens on thanksgiving. Yeah, i guess these days, as well, the other thing we should notice is that most of the planes are full. And that is you know, the industry is booming at the moment. So theres not much spare capacity, it would appear. Youre absolutely right, simon. And for every individual flying today, you want to be sure you get to the airport on time and get through the security on time. If you miss your flight, you probably wont get another one, because they are full, and it really causes some disruption when you have to cancel. Gordon, do you think people are more likely to take out insurance now . Are there other kinds of services that make it easier for people to be nor flexible, or is it still that sense of, if this flight gets cancelled, youre out of luck . You can take out the insurance, but thats remuneration. You really want to go. Some people do hedge this. At the end of the day, if its cancelled, and its not your fault, your Tickets Still good, the problem is you cant get a reservation on another flight. And youre going to miss thanksgiving dinner. Thats the real problem. Oh, yeah. You know, i want to ask with one other story in the news this week, and thats boeing. Concern about some of the ge engines that were icing at high altitudes. You know, Something Like that potentially for a nervous flyer who might think to themselves, you know, we have this major storm coming through, should i be worried . Should they . No, no, no, not really. Obviously, something is going on in the engine itself on probably the fuel control. But theyll get that fixed and theyll avoid those conditions in the interim. I wouldnt hesitate on getting in on any one of the gepowered boeing airplanes. There will be many people watching on the east coast waking up, does this really affect me . If theres bad weather on the east coast, from an airlines perspective, what happens to the planes on the other side of the country . Well, see, the good point again, simon, once it starts, it starts rolling through the system, and it may, in fact, the arrival into San Francisco doesnt happen because you couldnt leave new york. So youre absolutely right. Nobodys immune. But certainly people on the east coast are better are worse impacted than the west. Gordon, i wonder, too, how unusual is this . Of course, this time of year, youre always going to have bad weather in some parts of the country. So, i mean, just given, you know, your history with the industry, is this storm worse than usual . Is the disruption really threatening this time around . I think, kelly, its unfortunate that its thanksgiving weekend. We have these storms every winter, obviously. But the millions of people who only travel for holidays will be included in some of the suffering. So airlines are prepared. They know what to do. The consequences, though, are borne mostly by the customers who are either cancelled or delayed in getting to where they want to go. Good to see you, gordon. Have a great thanksgiving. Thanks, simon, kelly. Gordon bethune there, the weather piles up on the northeast. Lets take a closer look at the path of the storm. The weather channels julie martin is live for us in downtown atlanta where theyve been affected. Hi, julie. Hi there, kelly. Yeah, a very wet morning here in atlanta, but it could have been worse. Temperatures stayed just above the freezing mark, so we didnt get any freezing rain in the city of atlanta. However, we did see freezing rain this morning in places like North Carolina, virginia, and tennessee. So travel obviously impacted. Weve got millions of people, either on the road or about to hit the road, tomorrow, the busiest day, expected. And weve got a similar weather situation here in the south. A lot of rain coming through, and temperatures overnight are once again going to be hovering right around freezing just in time for the busiest travel holiday of this season. Now, in terms of air travel, you mentioned in the earlier interview how, you know, the system can get clogged, and certainly coming through atlanta, a major hub, you have a lot of folks flying up to the east coast tomorrow, as well. So we are anticipating delays and problems coming through atlanta heading into the eastern cities, as boreas, our winter storm, continues to track into the northeast. It will produce heavy rain along the i95 corridor, and then snow on the back side, places like pittsburgh will get hit pretty hard with snow, and in between, thats where well have that wintry mix. So travel certainly impacted, very bad timing for this storm. But well continue to track it for you. For now, though, here in the south, at least in the Atlanta Metro area, it is rain on the roadways, and not freezing rain. Back to you guys. And such a relief for drivers, julie. Thank you very much. Good to see you this morning. Christmas comes but once a year. Thanksgivukkah, though, comes a lot less often. This is the first time thanksgiving and hanukkah have coinsig coincided in 95 years. And taking advantage of that, some retailers. Hey, court. Good morning, kelly. Everyone knows black friday, some are trying to get great thursday to catch on, to capture the thanksgiving day shoppers, and this year,s theres also thanksgivukkah. So it coincides with thanksgiving. That means many are done shopping before black friday. According to the National Retail federation, hanukkah shoppers represent 6. 5 , but they spend about 25 more than the typical holiday consumer. Every year, it seems retailers push out the promotions earlier, but this year, there might have been better reason to. Not only are hanukkah shoppers out before thanksgiving, but theyre also only 25 days between thanksgiving day and christmas. Shortening the unofficial Holiday Shopping season. Price grabber actually surveyed consumers in october asking them how the timing of hanukkah will affect their spending. 50 of those celebrating hanukkah said they plan to look for retailers running early sales. 31 said theyll buy a few gifts prior to the holiday, but then wait and take advantage of the deals after thanksgiving. 25 said theyll be done shopping very early. 9 of hanukkah shoppers said theyll wait and buy all of the presents until after the first day of hanukkah, to make sure they dont miss out on the deals. But most analysts dont believe calendar anomalies like the early hanukkah or shortened Holiday Shopping season truly impact overall holiday spending, and november, the walmart warehouse chief, said he doesnt believe the hanukkah timing will impact the black friday sales. Simon . Court, just a quick question, as well, in terms of marketing, is there a way retailer d eers capitalize on the shear timing . We havent seen a lot of it. Thats because the population is a bit smaller than what Marketing Budget ds can account for. We havent seen a lot of it. Perhaps it would have been smart for them tof do it. Maybe they learned their lesson this year, and 95 years later, theyre on record. I think jdate, the jewish dating site, i think theyre at least seeing an opportunity. Courtney reagan, thank you very much. No end to your web surfing, is there . No. My word. It was an advertisement, i swear. I saw it in the city. What are you seeing on black planet, thats what i want to know. There are so many ads for the dating websites. Every day i hear about another one, its slightly horrifying. Lets get more on the joseph a. Bank and the mens wearhouse. Can we get more on jdate and i want to term her bright red. Not possible. No, i know. Im just you want to know all data sets, thats all. Exactly. All data. Talking about data. We did get more from joseph a. Banks just about five minutes ago. The company put out a response to mens wearhouse public proposal to acquire it for 55 a share in cash. Very much what you would expect, board of directors will take a look, one would expect we wont hear anything prior to the holiday before they get back in more formative way to their Shareholder Base and to all of us, who are following this. Again, joseph a. Bank had made a series of offers to acquire mens wearhouse, had been rebuffed for same time, and finally folded up its tent, said were going away. Activist investor, 8 , still going after the board. But also encouraging the two companies to talk and, in fact, had raised the idea that mens wearhouse could turn around and buy joseph a. Banks, and that could be an accretive deal. Thats what mens wearhouse is proposing to do. Its interesting to note both of the companies, basically on the potential accretion, the synergies, have added 1 billion in market cap since this started on october 8th. What happens if it falls apart . They both go down. Yeah, thats a billion dollars. Yeah, these are not large companies. Right. So on 3 billion, you know, youre talking 30 pluspercent appreciable value, simply on the idea theyll get together, whether its joseph a. Bank buying mens wearshohouse, or perhaps the other way. David, thanks, i think. No secret that the rollout of obama care has been tough, but there are some smallbusiness stories of success. California is a success story. Well ask the head of californias state exchange peter lee what is working and how he got it to work. Thats in just a moment. First, Rick Santelli watching the kay schiller report. Maybe we havent talked enough about it. No, i think we need to talk a bit more about t we need to talk more about permits and multifamily, and the story youre referencing regarding health care in california, theres a word that applies to it. Im talking about and that, its called affordability. Affordability. Well talk about that with mart hanson in about ten minutes. 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. announcer scottrade knows our and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. [announcer]. Every wish for a bed that could feel perfect under every part of your body. [man]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two remotes. [announcer] firmness settings for the head,legs,and back. These real owners get that famous tempurpedic comfort how they like it. [woman]ask me about the lumbar button. [man]lumbar button [woman]lumbar [announcer] tempurpedic. The most highly recommended bed in america. Now the fun begins lets look at the Consumer Staples sector, right now trading to the downside, as you can see. Dominic chu is back at hq with more on that. Thats right. If you look at Consumer Staples, the sector is flat overall. Some individual stocks are moving within it hormel is leading the way after the Food Processor posted betterthanexpected Fourth Quarter earnings and sales. It also raised its Quarterly Dividend by 3 cents to 20 cents a share. Will, monster beverage moving higher. Among the losers, though, grocery, retailers, like kroger, tobacco giant philip morris, a lot of the tobacco names have been in the headlines recently because of the stock moves. So, kelly, overall, were seeing some decentsized individual stories coming out of the Consumer Staples sector. Back over to you. All right, we certainly are. Thank you very much. Now, at least one bright spot for the troubled obama care rollout, and its the exchange in california, now averaging 10,000 applications every day, and joining us now is the executive director of cover california, peter lee. Peter, good morning. Thank you very much for joining us. My pleasure to be with you. One question that immediately came up from viewers is, is this all people are going with the individual plans, or do the numbers represent the Medicaid Expansion . That reflects medicaid as well as the individual plans. So about onethird of the people signing up will get into medicaid, which is medical in california, and twothirds are picking the private plans, some with subsidies, many without subsidies. Okay. So of the onethird, just to kind of get into the issue, of the onethird signing up for medicaid, that will be funded by the state long term, although for now, the federal government is funding that well, no, no, absolutely let me correct that. Under the Affordable Care act, for two years, the federal government pays 100 of the Medicaid Expansion. After that, the federal government pays 90 . And so, this is in an area where states like california that said were going to expand medicaid are actually getting a huge federal support to make sure that the lowestincome californians, or the other states that are doing this, get health care. Sure. And that, of course, will raise the ire of other people in the country, who think theyre as a taxpayer expanding the expansion, and not even the issue of whether there should be more support for medicaid. Going back to the twothirds of people not involved in medicaid, signing up for individual plans. What proportion of those did you say are getting subsidies . About half. So about 50 are getting subsidies. As you probably know, people up to 400 of poverty, which is 92,000 a year for a family of four, nationwide, can get financial help to make health care more affordable. So were seeing a lot of people in california learning about that, but even in states that dont have statebased exchanges, you know, like texas, like florida, these subsidies are there for every american. Its a big deal. We think were going to see signups not only in california but across the nation. Mr. Lee, they say the Administration Says that hopefully on the federal site they will be, by the weekend, have a capacity to allow at least 800,000 consumers to visit every day. In the meantime, as youll be aware, a lot of democrats are beginning to panic and they are on the verge of breaking away and saying, actually, we should start dismantling parts of obama care. Notably the deadlines of the federal level to purchase a plan and to pay a premium through december. And perhaps more importantly, from your point of view, extending the ability of those that are on substandard plans in the administrations view to actually renew those in the new year. If they do that, to what extent would that pull the rug from under you . Well, i think, actually, if were you to continue these substandard plans and not have those people part of the broader risk pool, would you actually kneecap reform. And californias a state where were showing it can work. Now, we are ready to declare success, but we are ready to say it can work. If a state gets behind reform and trying to cover all of its citizens, like california has, were seeing the results. 10,000 people a day signing up. By the way, when it comes to the people who we really need, i guess both on the state and federal level, to sign up, in order for the whole thing to sign up, the healthy young population. What success are you seeing . We got good news. In the month of october, month one, sixmonth open enrollment period, 23 of the people who signed up were between the ages of 18 and 24. Thats almost exactly the percentage of the population. That bodes really well. That said, were doing huge outreach to college students, to young people on social media, twitter, et cetera, because these are folks that actually will benefit a lot by the subsidies. We just need to get the message out. And next week, the white house will start its outreach in the same sort of way. If lee, if youve achieved that, is it your belief that across the board, with the young people on board, premiums will fall moving forward across the board . Well, i dont know if theyll fall. But lets be clear. The rates in 2015, a year out, are going to be based on who signs up this year. And i think that the Affordable Care act gives the nation for the first time the ability to Lower Health Care costs, which has been basically a millstone around the neck of the entire nation for the last 20 years. Without getting everyone insured, we cant turn our attention to really lowering costs, which i think we can actually do. All right. Your state will be an important test case for that. Peter lee, thank you so much for joining us. My pleasure. Thank you very much. A strong reading on home prices today showing the biggest yearly gains since back in 2006. So as home prices continue to rise, where in the country could you argue there are housing bubbles now . More on that in a moment. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. 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. 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 and welcome, mark hanson, my housing guy. Happy thanksgiving, rick. Yes, happy thanksgiving not only to you but everybody in the audience, radio, tv. Listen, mark, you saw the numbers today. We saw the september case shiller numbers, month over month, year over year, and we saw the october permits, of course, well have to wait several weeks to see the starts. But why dont you tell me your impression of both datapoints . Three things on caseshiller. Houses, the prices are set when the contracts are signed. Due to the lagging nature of caseshiller. Great index. But it could be up to seven months old at the tail. The datas too old. Its during the summer. The zillow index, however, more realtime, came out this morning, as well, and it showed sales prices down two months consecutively in october. The first time thats happened since october 2011. And lastly, prices follow sales volume. Sales volume precedes price. And sales volume all over the country postrate surge have been collapsing, so i fully expect house prices to hit a leg lower here. Not only seasonally, because they always fall seasonally during the wintertime, but much more duration this period, you know, down two, three quarters, at least. All right. The big issue to me, and i continue to say that Interest Rates are very, very, very important, and the entire economy, especially housing. But trying to find the money to finance or to be able to get a loan, looking in the past at arm, looking currently at what financing is available, youve written many pieces saying that if you look at apples to apples of affordability, the current times versus previous 03 to 07, well, it might be different than most people think. Explain, please. Uh, looks like we lost our guest, mark hanson. Well, i will continue to try to bring you housing information, but i can tell you that he believes that affordability now is much worse than it was in 03 to 07. Hes written a couple of papers, and i think hes back. Mark, are you back . Yes, i have you, thanks. Okay. Affordability. Explain your impressions of affordability now versus 03 to 07 . I could never buy more house on a Monthly Payment than i could in 2006 with a pay option a. R. M. , or in 2003 with a five reinstallment, the refinancer and price busher in the bubble years didnt use 30year fixed mortgages. Thats how the relative of affordability is calculated. The economists assume everybody always took out a 30year fixed. In california, for example, 70 of the loans in 2005 and 2006 were other than 30year fixed. Mark you know, mark, well have to bring you back, because to me, this is the whole crux of the housing moving forward for the next several years, but we are out of time. Thank you. Have a very happy and safe thanksgiving. To you too. Squawk on the street gang, its all yours. Up and down, left is right, cats and dogs living together. Im talking about the market where the market is good news for investors, or so says jeffrey rosenberg, from blackrock, and his own analogy is to the horror film paranormal activity. Twins. I didnt see them coming. I have obligations. Cute obligations, but obligations. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. 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. [ bell ringing, applause ] five tech stocks with more than a 10 . Change in aftermarket trading. All the tech stocks with a market cap. Of at least 50 billion. Are up on the day. 12 lowvolume stocks. Breaking into 52week highs. Six upcoming earnings plays. That recently gapped up. [ male announcer ] now the world is your Trading Floor. Get realtime market scanning wherever you are with the mobile trader app. From td ameritrade. Announcer the european markets are closing now. And the close in europe is broadly lower. A lot of the major markets are in negative territory. Theres a concern about earnings. Weve seen hugo boss say theyre not going to make their targets. And a tough morning for the cognac business, and theyre saying things are not good in europe. More importantly, china is a real issue for them. They see destocking there. And thats brought down some of the other drinks. And we have a Capital Increase of note on the worlds oldest bank over in italy. The thirdlargest bank is working on a 4 billion Capital Increase, and you can see the way in which that mighty player has fallen, not least of course of the derivative positions that it had so on and so forth. Overall, of course, this has been a poor year for europe relative to what youve seen here in the united states. Look at the broader market. The s p 500 against europes stocks, 600, big underperformance. The question is, will that reverse next year . Goldman is suggesting that european shares will gain 11 in 2014. The question is, do you buy when its cheap and sell when its high, or stick with whats working . And remember, it was in europe where this whole thing about a meltup market into the end of the year began, and people are talking about that back over here. To some extent, what we started to see there, at least turning for the better, so to speak, is now bleeding over here, as well. About recovery, though. Do you have a recovery in europe, or not . And the jurys still clearly out. Especially the Third Quarter earnings, down 15 , if you think its a tough slog here. Lets bring in Mary Thompson with a look at the big board. Retailers, hormel and homebuilders, among the market leaders today. We do have a lightvolume day. The dow trading in a narrow range, starting to lose a little bit of steam. The nasdaq is firmly above the 4,000 level. Well see whether or not that it if it closes there. Of course, yesterday, crossing into territory it hasnt seen in 13 years. Mixedgroup leading the nasdaq higher. Semiconductors are stronger, as you can see the gains in inindividuinvinvidia. And the s p 500, a loser yesterday, amongst the sectors were watching, seeing strength in financial, consumer discretionary, thanks to the homebuilding stocks, and telecom, utilities are trading to the downside, though. Lets focus a little more on the financials, because the xlf, the financial etf, has been outperforming the s p 500 over the last four trading days. It continues to do so today. Theres some rotation into the financials. Some people believe theyre undervalued. And so, they are getting a theyve been getting a bid over the last couple of sessions. A number of people see this as a play on an improving u. S. Economy. Tiffanys the biggest gainer among the s p 500 members. The company, of course, coming out and reporting strongerthanexpected earning, beat by 15 cents, thanks to strong sales in asia, ex japan. And zales, which will be reporting after the close today, another lowerend jeweller is expected to report a loss. But it is expected to see sales gains. Its actually going through a restructuring, and i believe it closed about 50 stores in the last quarter. Hormel, of course, also a winner. You mentioned it at the top of the hour. The Company Reported betterthanexpected results. Its helped a lot being helped a lot by the acquisition of the skippy Peanut Butter brand, and the homebuilders are among the winners today, after the Building Permits increased to a 5 1 2year high. Kelly, back to you. Mary, thank you very much. Now, do you feel that paranormal activity . Yikes. The movie was pretty scary, but quite profitable. Does the same go for the bond markets . Thats right. Jeff rossen beesserossenburg, j. Good morning. Do tell. Explain this one to us. Good morning, kelly. Thats a metaphor for what we see going on, not just in bond market, but all Financial Markets. The discrepancy between whats happening in the real economy and whats happening in the financial economy. Markets, stocks, bonds are dependent on expectations of ever easy monetary policy. And so, good news in the economy is bad news for market behavior, because that implies less monetary accommodation. The flip side is bad news in the economy is good news for Financial Markets, so it highlights the dependency we see and the Market Outlook for the expectations of very easy monetary policy. Sure. But, jeff, i would quibble with this, and suggest that perhaps the peak for this kind of activity in markets was more than six months ago, and now that were starting to shift into this environment whereas the 10year drifts higher, the fed starts talking about a taper. Yes, its a bit of a rocky period, but correlation is actually historic lows on the market. Bond yields and stocks tend to rise together. All of that suggests were moving into a different environment now. Well, i think it depends on where youre looking in the yield curve at yield movements. I think the critical change, when we talk about the outlook in 2014 for the bond market is that the movement away from quantitative easing and towards Forward Guidance, the promise that Interest Rates will be zero for very long, is basically going to give a little bit more room for the back end of the yield curve to move up. But the fed is going to keep the front end, zero to fiveyear maturity with the yields, basically anchored. And so, when you look at some of the correlations, it depends on where youre looking around the curve at Interest Rates. Expect next year, more Interest Rate increases are going to come in the back end. But low for longer, and Forward Guidance means zero to fiveyear rates are going the feds going to keep its focus there to keep the rates low. You know, steven lewis at monument, good morning, steven lewis at monument, makes a fascinating point about the taper and generally where well go with risk assets once the taper is under way. And he says, you may have factored in the taper into where we are at the moment. What you may not have factored we may not have factored is the change in psychology. At the moment, were inoculated against bad news, because every time theres bad new, people go, oh, dont worry, the fed will make up and the fed will do a bit more, the fed will hang on in there for longer. But once we get past the point of which weve taper and just on this Interest Rates will stay low for a couple of years, then theres nothing to counter that bad news. So bad news will increasingly ratchet on the markets. Would you accept that . You know, i think its a fair point. We have to be careful about how bad the bad news can get. Go back to july and the overreaction in the bond mark s markets, and what you saw the fed come in and do was basically to reiterate that big increases in Interest Rates, critically Mortgage Rates and the impact that has on housing, wouldnt be tolerated. So i think you can see a little bit of movement there, and a little bit of bad news bad news for the stock market. But there will be a limit, because of the dependency on the of the economy on Financial Market conditions. And the fed needs to keep Financial Market conditions stocks, bonds, most importantly mortgages, and housing high so that it supports consumption through the wealth effect. So they cant really move too far away from that guidance. And thats going to be guidance on forward rates as well as when we get into a taper conversation right. The fact thats its a twoway conversation. Jeff, we want to ask you about floatingrate notes, because a lot of investors have thought to themselves, if were in an environment next year where Interest Rates are drifting up, i want to take advantage, and i want the income im showholding drifting up, as well. But theyre pegged to libor, are they not . It takes more than the 10year moving around for people to benefit. Well, thats a very important point. And this strategy has been very popular this year. Going into Floating Rate Notes because of the high yields that are offered, and the promise that in a rising Interest Rate environment, your yield also go up, your principle value will be protected. But its critical when thinking about the 2014 outlook. Fed policy is going to remain anchored at zero. And the rates that loans floating rate loans are tied off of, is the threemonth libor rate. Exactly. And that isnt going to move up. If youre expecting increasing yields from a rising yield environment and floating rate, you wont get it in 2014. Its still too early in the feds cycle to be expecting that kind of outcome. All right. Jeff, important point. Thank you so much for joining us with that and other thoughts. Well see if paranormal activity is a hit with clients, as well. Well be tweeting outlook segments from the top analysts, strategists, economists, and more. Find out all of their views on twitter if you search for the hashtag squawk2014. Click on it and read what they have to say. Take a look at the luxurious heartshaped island. Well, according to reports, this island was, in fact, a birthday present from Angelina Jolie to brad pitt for his 50th birthday, because, of course, the man doesnt already have everything. Well tell you how much it reportedly went for, next on the show. [ 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. So, if youre sleeping in your contact lenses, what you wear to bed is your business. Ask about the air optix® contacts so breathable theyre approved for up to 30 nights of continuous wear. Serious eye problems may occur. Ask your doctor and visit airoptix. Com for Safety Information and a free onemonth trial. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. [ female announcer ] today, cisco is connecting the internet of everything. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. Coming um on halftime report, is the biggest shopping day of the year in danger . Well find out what do derail black friday retail revenue, and which companies have found a way around that threat. Plus, could the pac man defense work for mens wearhouse . Theyre turning the tables on jos. A. Bank. Both stocks are outperforming the market, and well find out which is the best fit for you. Plus, a fivestar fund manager on where hes scoring big returns in the emerging markets. All of that straight ahead on the half. Simon, well see you in a bit. Great, looking forward to it. Thank you very much, scottie. Rumors have been swiarming around the internet over the latest purchase. Stories all around the web today that Angelina Jolie bought a private island for brad pitts 50th birthday. A nice thought and a great story, but not true. People close to the property tell me that the island in new york is, in fact, on the market for 19. 9 million. They say angelina didnt buy it. In fact, the owners have never heard from angelina or any of the couples representatives about even the possibility of buying it. As they told me, quote, the first we heard about it was from the british papers. As is often the case. Now, that means petra would make a great Christmas Gift for the billionaire with everything. I got to visit last year. 50 miles from manhattan, 11acre island with 5,000squarefoot house, giant rock in the interi interior, cottage designed by frank lloyd wright, and has its own boat dock, or for the really rich, your own helicopter pad. Guys, back to you. Robert, as a marketing strategy, this would be pretty genius, would it not . It worked. It got it on tv, and its gotten the property all around the web. The people close to the situation, the owners, the brokers, those types of folks said this is really frustrating. They have no idea hang on. Hang on. Are you casting thoughts toward the british no, in fact, not. They write stories sometimes that are true. Yes. A great summary. Robert frank. Thanks, guys. Thank you very much. That means someone else can buy the island. Next guest is the youngest person in the history to get b. C. Funding. And hes working to bring you mobile ads you dont know youre clicking on. You may remember our next guest as platform for businesses that offers reallife rewards through mobile campaigns. Keep is coming out of beater and opening up the platform to all Small Businesses, so what do they see as the best strategy leading up to black friday . Brian huang is the cofounder of keep and jon fortt is joining us back here at post 9. Brian, before we go any further, in simple terms, what does keep do . Very simply, we take simple moments people are engaged in, when youre leveling up in a game, or finishing up todo in an app, in that moment youre feeling something and youre happy. We want brands to be there to reward you, and that process being able to market to you and actually be able to sell product, as well. Hey, brian, good to see you again. I have a question as you push your expansion, you say its not just about mobile, not just about gaming, you plan to move into cars and other platforms. Are you a little bit inventoryconstrained . This is for the achievers out there doing things and feeling good. What about the people just sitting on the couch . Yeah, so we call them everyday victories. We dont want to find moments that are super significant like when someone has a child or Something Like that. We want to take things that people are doing every day, you know, just finishing a todo or leveling up in that game is satisfying enough, right . And the everyday victory, we think brands should participate. And this Holiday Season, with so many consumers more mobile, its more important to be there, and in a way that respects who they are rather than just a blast messages at them via banner ads. Brian, so viewers know what were talking about, the goal might be Something Like, i dont want to spend more than 100 on black friday. Or the goal might be, i want to run a halfmarathon, or Something Like that. Is the process of articulating that goal that official, or are you able to tell advertisers that can you kind of sense what im up to and what im trying to achieve . Yeah, so thats what our technology does. Weve imbedded into 1,500 apps and actually already look at the moments as people are engaged in them. You dont have to set anything. What happens is brands come in with their very traditional sort of targeting requirements. You know, hey, we have a sale going on in new york city for black friday. We want to target people who are male, 18 to 24, lets say. But well find moments that already happening during that day and in that location, in all of the apps that people are already using. So its tapping into behavior thats already there, rather than trying to make people do new things. And thats the beauty of what mobile allows us to do, is people are already engaging with it. Why not take moment when is people are happy and link it to a brand and allow some type of a purchase to occur. One of my favorite things that you guys are doing, brian, is the idea that in a fitness app, when somebody reaches a fitness goal, you can gift them with some gatorade, because thats so closely tied to what theyre doing, reminds me of Google Search and the idea that you have that sense of intentionality. I just wonder, eventually, do you have to reward people for opening up a bag of chips . In order to get the inventory youre going to need to truly grow big. Thats a great point. I love that you said that. You know, for google, the search query is their water, right . Its an indicator of intent, like you said. For us, moments as we call them, is our water. Its an indicator of our intent. And i think its actually our responsibility to maintain scarcity, as it were, so that we dont overdilute these moments, right . If we were to reward everything, it event yuldly things would become less and less Effect People will respond negatively. Its up to us to make sure we dont go crazy about it. Weve seen almost 70 million devices every month actively hitting moments. Almost 510 million moments a month. So theres a lot to be rewarded, and so, were excited to continue down that path. Brian, i keep reading that youre the youngest person to get v. C. Funding. How old are you . When i raise it, i was the youngest. Now the record has been broken several times. Im now 22. Okay. Are you making money . Im gladly making money, yes, for this business, yes. And good luck to you, sir. Thank you for joining us. Brian wong, the cofounder and ceo of keep. Now, you may soon be able to add this wearable device to your wish list. It is a smartwig. Weve mentioned it this morning. Theres a look at it. Sony has filed a patent for a hairpiece thats packed with sensors and special devices that vibrate on the users head to give him directions. Sony has tested the wig with employees who gave presentations and switched slides by tapping their sideburns. Oh, my. That brings us to this mornings squawk on the tweet. With the arrival of the smartwig, mankind will finally be able to blank. Flipping through a Powerpoint Presentation is already taken. Tweet us, and well have your responses when we come back. You get your coffee here. You get your hair cut here. You find that certain thing you were looking for here, but actually you get so much more. When you shop at these small local businesses, you support all the things that make your community great. The money you spend here, stays here. In this place you call your neighborhood. This saturday is Small Business saturday. Get out and shop small. I have obligations. Cute tobligations, but obligations. G. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. 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. Welcome back. Forget glasses or watches, the next wave of wearable tech may actually be wigs. Tech giant sony has filed a patent for a smartwig that buzzes every time the wearer gets a text message or call. The patent filing describes a wig that includes gps capabilities and sideburns that could be used as controllers in honor of this, check out on the wall of evolution of sideburns, in order of appearance. There he is on the far left, ambrose burnside. Luke perry, of course, with the debut there at the end. I dont actually know, simon, i guess they have evolved. A sideburn is a sideburn, really. Not a huge i see the burnside once in brookline. The sideburn is back with a vengeance. I am sadly not up on that wall. You bring me here to talk about artificial hair. Is that what weve come to now . I have to say. This sounds ridiculous, but i think sonys on to something here. In the patent, they talk about cos players, people who dress up in costumes, they could be used so it doesnt have to be lifelike hair on the wig . It would be a marvel character. It could be red yes. It doesnt have to be a full head of hair. It could be one of those small hairpieces that are popular in asia these days, where its just one little its just as we get from the evolution to implant from where we are to implanted chips, there will be awkward steps along the way like the smartwig. Its the subject of todays squawk on the tweet. Weve been asking you to complete the sentence, with the arrival of the smartwig, mankind will finally be able to. Jeff tweets, hide their google glasses. Nice. Starcase, embrace baldness. Yeah. And oracle tweets, with the arrival of the smartwig, mankind will be able to dread locks. Nice. I dont get for old people. Dull people . Old people. Its the way i speak. Should we do a couple of quick checks . The indexes, broadly speaking, are flat. A couple of big movers. Workday, jon, now up better than 11 . Palo Alto Networks also doing well, shows the cloud folks are surging ahead while the enterprise giants are really still searching for growth. Yeah. Homebuilders are also doing well. Lennar, dh horton, up 4 , 5 , as we had caseshiller today. Yeah, people are still worri worried, though, next year, about the impact of higher rates. And top gainer today, tiffanys, doing great guns in asia. Again, up 22 on the likeforlike sales. The Luxury Retail segment continues to shine, if youll pardon the pun. No thanks to me. Youre not a big fan of tiffany . Oh, well well, what guy doesnt love tiffany. I mean, my wife is a big fan. But i just havent different fan base . Yeah. You need Newt Gingrichs line of credit there, or something, to really move the needle. Thank you, jon, for joining us this morning. And in the meantime, that does it for us here on at squawk on the street. As we hit noontime on the east coast, lets get straight to the fast money halftime report. Indexes shehere, as we said, broadly higher. A hewlettpackard reporting after the close of the day. And a fund manager will join us on how his market has returned big returns. How much more can stocks run . We begin with the countdown of the biggest shopping weekend of the year, and who will win the battle for your money . And what makes the black friday blitz more of a question mark now, a major storm in the east. Its threatening to steal christmas from the nations retailers. So whos best positioned to win if Mother Nature makes all of the mall madness not so maddening . It is halftime. Lets play the action. Josh brown, lets start with you. How much is riding on retail . How much do we need retail to get off to a good start t