Transcripts For CNBC Squawk On The Street 20131212

The markets posting their biggest selloff since november 7th. The major indices all down more than a percent this week. Its a big day for ipos led by hilton and aeromark. We have the ceos after trading begins. Facebook, shares up on news the ipo will join the s p 500. Lululemon lower on weaker guidance. The day after the dow closed down, the worst day since september. Retail sales showed an uptick in november. Next week all eyes will be on the fed meeting as investors watch for the potential taper from the federal reserve. Maybe decks are cleared for a taper or at least a serious discussion for one, why not take your gains for the year. Is thats whats happening . We had the largest order in balance weve had ever. If you take a look to sell, if you look at when the market broke down, its look, i can shoe horn anything. I can say thats because of taper, i can say thats because of the budget deal. How about this because of the possibility that there are lots of funds that are locking in. I dont want people to be discouraged. Locking in is technical. It means part of the business, dont give up the gain. I see a lot of dont give up the gain in the last few days and i think when that runs its course, the buyers will come in and say i have to put money to work, position for 2014. This is a transitional moment in the market. Youve been saying financials have benefited from higher rates but i noticed the financials were taking it particularly hard. Very true. I also talked to people yesterday who say the computer is taking over here. Whatever the program is that said sell the financials. I know people dont want to hear that, people feel thats a cop out, you havent done your homework. But can you only make so many calls and get that it was an algorithm before you throws your hands up and say i did it yesterday. You talk to five, six people and they all kind of come down to the same thing. Maybe youre right. Maybe it a cop out. Order and balance. Financials were very weak yesterday. Not quite sure why, if your thesis krek, which is this should benefit from a Net Interest Margin that will widen. I have been doing a lot of work on bank of america. I believe theyre having a really excellent quarter. We had the Jpmorgan Madoff news. I think the stock doesnt get hit anymore on that. Were going to talk about the lululemon warning after the commercial. Profit warnings at a peak. You called Athena Health this morning a total disaster. Athena is a cult stock. My i think its going to be up at the end of the day. The book to bill was north of one, the reason why the Gross Margins had a problem is just the number of salespeople added because of the hugium of orts would have gone to cisco. The release is more negative than the Conference Call and it all about how many orders they have. I was worried about the guidance. The guidance is great. Athena is just one of these stocks. This is a medical record coming. But they didnt execute. Theyre not changing the longterm 30 goal, as i understand it, i didnt is why at the Analyst Meeting youre going to see that stock perk up. That is off the lows, by the way, from earlier in the free market. We have a lot of ipos today. Two of them are public companies. S the company priced its shares at 20e last night. That was near the top of the 18 to 21 range but some might call it the middle. Food Services Company aramark also will open today. Weve had some negative numbers out of europe. Baltic rate is up to 2337. By the way, the suez numbers are in the 30,000s. I remain convinced china is on the grid. Chinas strong. This is just what it costs to ship and it tends to be things like coal, minerals, even though people are tempering on minerals, bernstein rolls out with a buy. Copper, jjc, watch it. Copper could go either way. On the ipo front, you want a taste of these . Its got to open higher just to get on par with hot. Now hot is starwood. Fritz is just a great manager. And its a bit of a lower multiple than marriott. The thought is youll get people who will get ahold of it and hold it, its not going to be home for flippers. I agree. Both are vintage buyouts. I think aramark was started in 06 and hilton was a bit after that. Right before the end, right at the top of the bubble of the lbo craziness, if you will oned hilton, too. Hilton stayed alive when there was a lot of low hanging fruit to grab ahold of, now its going to be a big win for blackstone. Aramark, well see. Hilton is going to raise 2. 3 billion. Twitter, which got an enormous amount of attention a few weeks ago raised just over 2. Well see if it gets the requisite amount of attention. Hiltons an institutional name. Twitter is an individual name. The institutions dont own twitter. They took the profits. But individuals kiem in at that 40, 42 level while institutions were shorting it betting they were going to break it. They couldnt break it. I think twitter has joined amazon and netflix. Think about it as if its modern art and you see those prices and you see i dont get that versus rembrandt, versus renoir. This is frank stella. You like stellas stuff . Im not a big fan of stella i have to say. I have a barnett newman. Its a poster i have when i was in college. You have ever seen the prices on that stuff . This media giant will join the index as well the s p 100 to replace tear a diradyne. Instagram will hold conference later today. We knew this would happen. It took google 20 months about its ipo, almost the same for facebook. Facebook very controversial versus twitter. Weve gotten a lot of notes saying that people like twitter better. Interesting deal today with pepsico. Replacing coke. Look, were at a moment where facebook is getting that those three companies are building a book of business off facebook. Domin dominos, 40 of their business is online. I think facebook is so much cheaper than twitter. But so many things are cheaper than amazon. But you got to earn that. Twitter is not able to has not earned that right. No, it hasnt. And wont for a long time. Amazon has been around for quite some time. Thinking that twitter might be aol in its original incarnation . Its shown its ability to innovate and grow at scale, by the way and do all kinds of different things. And youve mentioned with their charitable trust. Youve switched out of facebook into google. Do you wait for facebook to get cheaper . Yes. Obviously a spike on the s p. I think facebook if you look at when facebook started come being back from 4r5, 46 is when twitter started coming back from 41. The stock is trading as pairs. As you said,twitters unseasoned. Google is firing on all cylinders. You talk about g. A. R. P. , growth at a reasonable price, google is cheaper than most of the stocks we talk about. It doesnt get talked about enough. It is. Its a Free Cash Flow story and i hear it a lot from the media. They do when theyre off the desk. You cant not like it, people say, given youre not paying a lot for it. It is a really good company, good stock. Lulu is getting het this morning. Should the transition be a worry for investors . And also ahead, is the third time the charm for aramark. Ceo eric fos is on tap. And a lot more squawk on the street live from post 9 in just a moment. Were aig. And were here. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. The company gave an outlook for its Fourth Quarter lower than what analysts were expecting. Meantime home depot in the green today, investing 300 million in its supply chain to support sameday delivery. Jim cramer spoke to frank blake last night on mad money. We went through a time when homeowners lost half their home equity in the space of three to four years. Half a trillion dollars in home equity. Now its coming back. We see people are willing to spend in their house. They want to make sure, though, its an investment, not an expense. As their house increases in value, theyre more willing to spend because thats an investment. Theyre going to get that spend back. Its certainly been helping them. I loved your conversation about led lighting. 22 years the new bulb. Said you got to put them in your will. And the light is much better now. It no longer has the eerie glow of the twilight zone. This is an important interview for what frank said. He says this is not the ninth inning, this is not the eighth inning. Hes saying there are powerful demographic switches. The amount of money spent as percentage of gdp on your house is so incredibly low, the replace number of homes each year is so below what we need, more People Living with your inlaws. Those people need homes. Ive never heard frank blake this upbeat, ever. Really . Never. On lululemon, inventory has outpaced growth for nine quarters. A difficult macro but it would be naive to not consider our issues it would be naive to think they didnt have some impact. It reminds me when intel had a recall in the 90s of 486. You put out a defective product, people are not too excited about shopping there. This is no longer the only one that makes this apparel. I pulled up with the ceo of macys this morning and one of the hottest sections is this kind of apparel. Lulu is missing this moment. My yoga class. Youre doing that would not being a positive there. The vic room if you want to private equity. Active wear is where it is. Why doesnt that give lulu a chance to leverage a come back faster than you think. I think theres probably really things wrong in their supply chain. Ni nikes gave the concession of finish line. Anything footwear is incredibly strong. What about footwear . I asked lundgren, what explains that . He said it has to do with where women are willing to wear these clothes. They used to only wire them at the soccer field, sidelines and gym nationiums. They now feel comfortable shopping in it and food market with it. Thats a very big secular change in the way rim dress. Thats lundgrens view. I am not necessarily an aficionado on the way women dress. I like them to dress nicely. Yes. Terry knows his shoppers, we know that. Had you a busy morning. You were there by like 7 30. Yaur of 7. Takes the interview. That picture, why was he at macys and then again, why wouldnt he be. Thank you for looking at jim cramer on twitter. They were lined up to get into macys. There was a bit of an event. Still, that macys store is so gorgeous. I felt so inspired to do buying there. But then i remember david faber said dont go to Department Stores and just spend like crazy. I think thats part of your ethos. It is part of my ethos. Keep it simple. And sh reng to grow grow. Youre an omni channel person. It not youll about get ready for cramers mad dash. It going to be very busy over at post 8, hilton and aramark going public today. Squawk on the street is back in a minute. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. 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This company is so back, alcatel is a throwback but theyve reorganized, cleaned up the Balance Sheet. I would have expected a cisco to win this kind of order. I think this company is back. Remember when lucent would trade in the 80s. Look out that, brazilian contract they didnt get. This is a crossborder deal from some time ago, on the brink of bankruptcy really and its survived. And now its thriving. Im sure will say they got in this order because they dont have an nsa that snoops and china doesnt like china has its own waah way. So dont know why they wouldnt go that way. Nokia also . Remember when nokia wasnt just a river in finland, it was a great company. Nokia. Rbc says buy it. Monetizing to intellectual property. I wanted to mention this because of the contact between nokia and blackberry. Nokia sold to microsoft, sold to you, steve and then began to spend that money, fix their Balance Sheet first, thats a common theme and then came up with some products that are winning and their intellectual property is being monetized. Blackberry, maybe they should have sold the handset business to somebody and monetized the intellectual property. They failed to do that. Thats why blackberry going like this and nokia doing like this. Two ships passing in the night. One feels very titaniclike and the other maybe like an intrepid. Didnt the eagles win the super bowl in no. Weve not won a super bowl ever. Ever. I know, thats kind of its something i have to live with. Apologize for that. I must have been mistaken. Of course the jets havent won one since 69. The opening bell just a few minutes away on this thursday. Were back after this. 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Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Youre watching cnbcs squawk on the street, live from the Financial Capital of the world. The opening bell about to happen in just about two minutes. Very busy scene, post 8 here on the big board floor. Two big ipos, hilton, raising over 2 billion and aramark, a philly company you probably know pretty well. I worked for aramark at one time. They had the stadium contracts. Hey, ice cream here, vanilla and chocolate. Thats when i learned how to call people chief and buddy. Hear me out. I wonder if we didnt have lower rates whether hilton and aramark would have failed. They would have been dead. Now, your ability as a high Leverage Company to refinance, we expected a slew of bankruptcies of the go privates from 06 and 07, and the opening up of the high yield markets to credit we never thought, yes. People need to know this, its what didnt happen that bernanke should be praised for. He gets a lot of heat. But these companies didnt go under. Thank you, ben bernanke. Sorry, i apologize for saying something good about bernanke. Please, dont let that happen given. [ opening bell ringing ] theres the opening bell. And the two big ipos down here. Ringing the bell is Food Service Provider aramark, celebrating its ipo today. Oo lot of guys on the floor in chef hats. And over at the nasdaq, dexcom. Well keep our eye on both of those as we get indications from pisani in a moment. The other thing people say low rates may have done is provide a platform for Oil Exploration and exxon is out today talking about an abundance of their supply. They think the u. S. Should drop restripgss on exporting domestic oil. Marathon said that again last night. This is going to be a continually theme. However, i think that these are struck that ilt a political issue. We were trying to send oil to canada. I remember when they were shipping the alaskan oil to japan. People hated that in this country. They directly relate that to higher gasoline prices. Dont. Its a little difficult to explain why gasoline prices dont come down. Theyre pryce off of the world price, not the domestic price. Exxon is still a refinery. Different from natural gas, which we are going to be exporting. Yes, lng, the big winner. I want to take a moment to mention stocks we might not otherwise. You can go online for no charge today sponsored by oracle. Oracle is challenged by the cloud. The downgrade is supposed to be a valuation downgrade. When you go out and speak with people who are in the cloud, every vert tall so to speak, whether it be meta data, attacking them on how they keep trook of their sales or whether it be workday, first on human resources, oracles a challenge company. I do not like the stock interesting. It the biggest loser on the s p now. Call jillian, it going lower. Apparently according to reuters telling investors hes beginning to see the u. S. Market recover. That comes after he had brutal things against emerging moorkts a few weeks ago and the guidance has been so poor. Look, cisco, i dont think people should on it. If they do own it, take the bucks and go. Others arent down beat like cisco. I wanted to hit on satellite di distribution and content on table. A look at dish, owner of a lot of spectrum may not be bought by dish, which has been thought to be the leading contender for that bankrupt company. Centerbridge has come in with what the journal is reporting a 3. 3 billion bid. Would that be bad for dish, which has been amassing a great deal of spectrum and will be participating in the age block auction that isnt that far away early next year . Well see. I also wanted to mention directv. Theyre having their investor meeting today. Those shares are up almost 1. 6 at directv. Well see what they have to say about south america and overall growth. South america, thats right. Theyve got that gigantic business in south america. Hes navigated some tough waters. Very important. Can i just quickly mentioned that athena is now unchanged . I didnt mind to tied track. They are so loved. The analyst tells a story, it was a miss, though. I left with the idea that it a miss but some stocks are so loved, they will not stay away. S ps on track for its worst week since the end of august. And as we talk more about the budget deal, the expiration of some of these jobless went fits, some of the discounters having a little when i talk to terry lundgren, thats its very hard for me to jive the negative with the positive. I wonder if walmart and target are just challenged. Theyre not the barometer they used to be. Multichannel on fire for macys. Did want to take a look at shares of scripps, after yesterday, a lot of that chatter out there. They did get a down. Hey, it aint cheap, or in his words, it expensive. Earnings second only to discovery, which does have that more expense of currency but perhaps because it is growing at a faster rate. How serious are things between these two in as i reported yesterday, it kind of a gray area. They talk a lot. There might certainly be a desire on the part of discovery to get something done. The question is whether they really have a willing partner in description. We tack a look at shares of discoveries hes sold 2 million depository shares earlier in the week when it was 140. It was done 15 yesterday, icahn enterprises. A caller last night said isnt this icahn calling the top . I said hes an individual stock picker but hes been negative for years. This is rattling people because people thought there was moe liquidity. Youre betting on one man buying and selling his own stock . As we see a bit of a rebound. Those shares were crushed yesterday. Let find out whats going on at post 8. Bob pisani is on the floor. There are six ipos. Hilton is getting all the attention but there are six ipos. Were pricing 4 billion just this week alone. It will be quiet for the next three weeks or so. I just want to point out whats going on with aramark, 11th in market, there do all the Food Services at the major stadiums. This is the third time theyve gone public. Aramark first went public in 19 9. Then they went private. They were public again in 2001. Then they were taken private given in a 6 billion lbo with thomas lee and a few others as for hilton, we are not even close to opening on hilton yet. It not exactly theyre going to continue own 750 million shares, about 76 of the company. I think the big question everybodys had this morning down here is whether or not it going to have a significant pop. At 20, everybody agrees it a big brand name. Everybodys going to want to own it. But it not clear whether it going to pop because of the valuation. A couple of comments out this morning particularly friendly towards it. We had morning star come out and sigh they felt the valuation was not compelling. The lodging industry is up. The question is whether the others will get some kind of pop here. We still doesnt have a clear indication on hilton. Ill let you know as soon as i see one. Thanks a lot, bob. Did want to do a little cable talk oos we had come to call it, lately hes why not broadcast it . Every your they bring a number of investors out there. The word ive gotten back from some of those investors who intended is malone and mcveigh still tuking about their interest in Time Warner Cable and many come out of the meeting believing it still just a matter of time, perhaps not days, maybe still weeks speaks it all about your perception of whats being said in from the likes of a malone. But would they get to a 140 price . The idea of getting between 150 and 160 seem to have been shot down. Time warner advisers are saying no deal made before eight inform is. Heres a look at all the stocks in question. The key dates are the window on the nomination of board of directors, opens in january, closes in middle of february. Dont think they arent very focused on that at charter and liberty. Maybe you get some sort of an offer in the low 130s, thats submitted, rejected, they come public and then you have the potential of a proxy fight. We shall see. There were some expectations we night see something sooner rather than late but im not sure thats going to be the case. They certainly have until next year should they choose to wait to come with that offer. But many leaving that meeting saying it still straight ahead for them. How can you have a group you can throw darts at and make money . I dont know. People love the ideas of these Companies Getting together given the synergy and tax savings because you have a large n. O. L. At charter. Youre going to have a blended multiple on this combination comcast the greatest patriotor out there trades at seven times. What should this thing trade at . Well see. As for comcast, by the way, while it continues to sort of hang around, all i can tell up is i would need to final note from me on this. John malone, ziggo and global, discovery, may they want to make a play on sni. And finally this one, what do they have in common . Borrowing money. Seems john malone heard a bell ring when it kams to the 10year, cheap money, still out there, get it almost free. Get it done now. He already has been borrowing a great deal. Its the story of the earth. Cheap money. Oh, it me. I keep forgetting. Let head over to the bond pits to Rick Santelli at the cme group. Take it away. Thanks, david. A twoday chart tells you everything you needed to go. Pay attention to the pattern. The pattern is rising states. Pretty steady. If you look at the 10year bunds, 10year guild, whether you look at the 290. These are japanese government bonds, a tenyear maturity. It doesnt have handletheres no 1 in front of it or 2 or 3. There as a not in front of it. Its not decimal point 66. 66 basis points. Though the pattern is what we call a rounding bottom on rates. You really want to Pay Attention to this. If i was to show you france, same and if i were to show you canada, similar. Theres own one day we need to look at. And yesterday on the spike was where we settled on 12 40 looks about right. We are keeping a close eye on the big ipos today. Youll see that shot for a while, with hilton and aramark are going to go public. Thats coming up when squawk on the street continues. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. Xx dow is down again. One thing the airlines, oil may be going higher. Got to buy us airways, which is now usair. And baird. That may be offer. I want to wait. Bair does like costco. We were all fretting about it yesterday. It barely went down. Mohawk . Its a great stock, i want to buy mohawk. And mira and micron. Youre going to hear that the strongest stock is vf corp. Thats north face because its so cold. Michael kors continues to sell right. And tommy h. Were going to get more snow, winter storm electra is what theyre calling it moving into the northeast this weekend. Whats with all the naming . The eagles play in a dome. We like snow. You do like snow. Lets check in with pisani again and see whats going on on the floor. Were getting close on aramark, going to hope somewhere close to 20. Not putting up a clear indication. Probably in the next three, four minutes. This is a big philadelphia institution, Food Services, uniforms. 11th in market, right down the street where i live. As for hilton, i think its going to take a little bit longer. Its a big stock, a lot of stock involved. The guys there building the book are still talking a lot amongst themselves and theres not a lot of shout outs into the crowd. I would say this is definitely not going to open until after 10 00, maybe between 10 and 10 15. Hold on a second. I think we just opened. 20. 25 on aramark. Pricing at 20, opening at 20. 25. Carl, back to you. Thank you for that. We got one, well wait for the other. Stand by for an interview with the ceo of Hilton Worldwide when squawk on the street returns in a couple of 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. 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. Food Services Company aramark opened for trading. Right now the stock 20. 37 after pricing at 20. Joining us at post 9 is eric foss, the president and ceo of aramark. Welcome. Congratulations. Thanks, carl. Its a special day. Happy to be here. Youve heard third times a charm a couple times by now. What do you make of it today . This is a defining moment in aramarks history. This is a great story with a great story to tell. Weve got tremendous business momentum and its an exciting time as we look to the future. The new aramark wants to go international. Is that where the growth is, emerging markets . It is. Weve seen our emerging markets double in the last five years. We see it as a continued opportunity for us. Having said that, north america is our home turf and has tremendous momentum. When a company is big enough to be able to have a cafeteria, its a sign things are getting better. Are you getting more gdp growth and business formation . We had a record new Business Year last year. Were seeing it across health care, education, sports business or our business industry. Record year. Very happy with what were seeing. Were seeing a number of Companies Come public that were private. When they went private, many times the private equity firms behind them said we can do things as a private company we cant do as a public company, can make the tougher decision. What was done at aramark while it was private that will benefit now that its public again . I think weve been able to reposition ourselves in a couple of areas. Weve tried to make sure weve got the right business strategy, starting with the marketplace, satisfying consumes are and their need. But you were always doing that, werent you . Were talking about unveiling a new brand. We dream, we do. Dreaming is about bringing innovation to consumers and clients and doing is about moment of truth excellence. I like to say were in the Customer Service business. That moment of truth, lens is what aramark is all about. This is happening a few days after cisco. Cisco is a long standing partner of ours. I think you will see more m a in the space. Half of the industry out there is still selfoperated. And when you make your pitch, the guy who does it himself, they obviously have none of synergies, none of the supply bargains. Do you just win . Whats the entrenched story . Why would anyone not use you . We win primarily based on three things. Number one, were in the people business and youve got to have the right team on the ground. The second is making sure we take great insights and lead it into innovation and finally its about making sure we provide a great and Consistent Customer experience. Thats why we get hired. What are you doing with the proceeds aramark is raising . Is it largely to pay down debt . Originally well pay down get. Our use of cash will be to invest in the business, continue to return cash to shareholders by paying a dividend and overtime looking to buy back stock and pay down debt. What about your prief equity owners . Theyre very happy with what weve laid out in terms of the strategy. As you said, we were p were only selling 150 of the company today. As we look forward, theyre very encouraged. We have tremendous business momentum. Give me of sense of what youre talking about. If you look at the last couple of years, weve taken a business experiencing flat revenue growth, we had record ref in 2013, high singledigit operating profit and we think that model as we go into the Public Markets is going to be of very much interest to investors. Have we reached a limit, before we let you go, as to what people will have to pay for a hot dog and a beer at a game . We like to define the total value proposition. Again, one of the things we do beyond beer and hot dog is you have some great culinary partnerships. You go to citifield and you see shake shack and we just went into dmk, the hottest Burger Concept in chicago. People define value more broadly than priced. And when the bears come to philadelphia, what are you going to bring . Two weeks, sunday night, nbc. Thanks for having us. We are waiting for hilton to trade. Jim, well see you tonight. Okay, thank you, buddy. [ gra] with new fedex one rate, i could fill a box and ship it for one flat rate. 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If youre wondering why it takes this long, well, theyre trying to build the biggest book they possibly can and open it at the right price so it doesnt gyrate around. People might still want to buy maybe at 20. Theyre seeing if theres anybody down there and there might be people who want to sell perhaps at a higher price, maybe at 22. Some take a little longer to build that book. If i had it guess, just judging by the body language over there, another ten minutes or so. Ill be here. Home total ipos today, bob . Six. Weve had about 4 billion in ipos just at the nyse this week. I didnt total what was going on at the nasdaq but theyve got a bunch of them as well. Today and tomorrow will be the first one until the second week in january. Ending a terrific year for ipos. Ill do a year end in review next week on the ipo story. The strong market is really what has helped these companies. Today a company like, you know, hilton, you know, you want the wind at your back for the stock market for these companies. And just to give People Perspective on the timing here, bob, i remember when twitter launched i think it was well into the 10 00 a. M. Hour. 10 47. You mentioned visa was previously the longest visa was 10 15. When theres a lot of stake and theyre big, wellnoknown names they want to open at a price where nothing gyrates around too quickly. Steadiness is the most important thing theyre looking for here. All right, bob, thanks for that. Well come back to you in a few moments. Our bob pisani near post 8. Hilton is raising 2. 8 billion in the biggest ipo. Were joined by the ceo of morning star. Good morning. Good morning. Bigger than hyatt, than starwood. Deserved . While blook stone is going to still have a huge ownership position, i think its certainly deserved. Whad, you say this ipo is unattractive for longterm investors. Where do you get that thesis from . Why do you say that . Were buying it at a discounted cash flow basis. Theyre pricing this at a premium multiple. Its being priced as a next year enterprise value to ebidta multiple at about 14 times. Thats about a 20 premium to the average global Hotel Operator that we just dont think that premium valuation multiple is justified. Chad, i guess well see what the ceo of hilton says when he joins us after it trades. But theyll say were a growth company, were expanding, have a very Big International pipeline of room, perhaps the biggest in many regions, at some point in time theres a deleveraging story, they lease or own 150 hotels, which when they started to reduce their debt, they could sell off and return cash to shareholders. They sold it to the institutions at 20. They did a great job marketing this ipo, the underwriepters, i have to give them a lot of credit. But the key thing to realize is that they get about 40 of their cash flow from owned hotels and the owned Hotel Business is not growing and the Capital Expenditures are much higher. Can you apply a very high multiple to the entire company. Weep think the offering price is basically when they have a pretty High Percentage of their cash flow coming from their own hotels. Rob, this is a moment in time. You were on cnbc when six and a half years ago it was taken private by blackstone. Blackstone still has over 70 of the stop. What happens now with in a overhang do you think . Theyre locked in for 180 days. What sort of profile do you think theyre imagining for presumably, ilting . I think theyre going to be a longer term holder of this stock. I dont think theyre going to be getting out any time soon. I think as you move forward in this cycle, theyre going to have to deal with their real estate portfolio, whether they sell that portfolio to a reit or Institutional Investor or if they actually plit the real estate out and roll it out into a separate reit. I think they have a number of options. Thats interesting because the big question is how long is this up cycle going to last . If you look back at the mccory research of the last couple of cycles, they would say theres three, possibly six years to go on this up cycle. Isnt that a window that blackstone cant afford to avoid, if you like . I think right now were dealing with consensus estimates of rev par or revenue per available room growth in 4 to 7 a year in each of the next three years. This is an industry that has been able to choke off cycles with too much supply. Right now were running with supply rates well below longterm trend. They have expanded their room count since the buyout by a third, chad. Do you believe the discipline that that the industry will find discipline the way it hasnt in previous cycles . Yeah. I mean, if you look at industry supply, its been growing at only half a percent the last three years. Were expecting it to only grow at 1 to 1. 5 the next three years. So youre seeing much more responsible growth within the industry, which really bodes well for increased occupancy rates and also room rates. We think growth can be in the 5 to 6 range. What do you like in the sector in where do people make money on the profile that youre both describe persian gulf. I didnt say that hilton was oversubscribed at 20. Forgive me, rod. Let me direct that to chad. Forgive me. Chad, where can i make money at the moment in this industry . We like a company by the name of acore, trading at ten time ebidta. We think they benefit from a stabilization in the european economy. We would look to buy that stock versus the u. S. Operators, which we think are moderately overvalued right now. Thanks, guys. Were going to talk to Chris Nassetta of Hilton Worldwide a little built latit later this m. Still looking like 21 to 21. 50 is the last from bob. Were watching shaures of lululemon lower. Reporter what a stretch its been for lululemon. Two days ago it announced its search for a ceo was over but surprising everyone by naming Laurent Potdevin and today announcing while the Third Quarter is relatively strong, guidance for q4 uncharacteristically negative she tried to say. The revenue of nearly 380 million also stronger than expected. Wall street focusing on lower consensus guidance. Outgoing ceo Christine Day nowhere to be found on the Conference Call today, which would have been her last. Cfo john curry led the conversation. Curry noted a very soft start to the Fourth Quarter, including a slowdown in traffic in the stores. He echoed concerns about the macro execution issues and pr issues have been numerous recently. We had the sheer pants problem in march that continued for a couple months. Todays resignation that surprised the street and chip wilsons comments and he has stepped down from his position but will reman in on the board. Forecast for the Fourth Quarter not looking optimistic. Bob pisani, they say theyre getting closer on hlt . My estimate at 10 10 and its now 10 11. 20 to 21 are the indications. I would estimate its going to open between 21 and 21. 50. Hold on, dont go away. Theyve frozen the book. Okay, its going to open. 21. 30 . Hilton has opened at 21. 30, right in the middle there. Hilton, which first went public way back in 1946, now going public again here at 21. 30. I think a lot of questions, this was a decent open, pricing at 20, opening at 21. 30. A lot of people wondering whether they dragged their piees along with them. I cant see the screen from here but a lot of people felt they could open nicely with a nice up move on hilton, it would drag along its peers. Hotels have been very well, the index up 32, 33 on the year, outperforming the s p 500. Hilton 21. 30, now trading at 21. 49. And were going to be talking to the man in charge shortly. Biggest lodging ipo. What a victory for blackstone, taking this private about six years ago. When you think about 07 when they took it private where the economy was headed, the price they paid extraordinarily high. 30 premium to where the stock was at the time. The indebtedness they took on and the fact they were able to conne come out with a winning investment. It points to why Jonathan Gray is widely considered to be the heir apparent to steve swartzman. Hilton is open for trade. Next were going to speak to its ceo Chris Nassetta, a man described to me as a godlike creature. Squawk on the street will be back. Of a complex, global econo. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully re investing. 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. Hilton worldwide, raising 2. 3 billion, it is the Biggest Hotel ipo ever and the second biggest ipo in this country this year. With us, christopher nassetta, the president and ceo of Hilton Worldwide. Good morning. Thanks for having me. For you, this is the culmination of six or seven years of leadership. How do you feel . I feel very good. We arrived on the scene six years ago and had what was a very good company that we thought the potential was to make it one of the Great Companies in the world. We set about a global transformation of the business. We very proud of what we accomplished. Were the biggest in the world but more importantly the Fastest Growing of the major hotels. Its a test ament to what the people of the company have done, continuing to do a great job, surveying more customers and doing that more places around the world. You managed to price at 20 a share. As was pointed out by an analyst before you came on, thats 13, 14 times earnings, almost a 20 premium to your peers, notwithstanding marriott. What worked for you . What message did you deliver on the ipo process, the Book Building process, that seemed to resonate with the big investors . I think its what i said, that, number one, the fundamentals in the business are quite good but that what differentiates us is there is a significant value opportunity associated with the growth in our management and franchise business, where we have nearly 190,000 rooms in our pipeline, nearly 100,000 rooms under construction and of those rooms under construction, almost 80 of them are outside the u. S. In all the parts of the world that are growing so fast. And i think also that while were not growing units in the real estate part of the business, which is about 37 of the business, were in a very nice part of the cycle for real estate ownership and i think everybody was very much of the belief that theres the huge amount of value in growth associated with the real estate that we do own. But it is a cyclical business. No matter how you slice it, the industry as a whole, youll have 150 billion in debt, youll pay some of that down but how does that capital structure work when were in another downturn. Weve deleveraged this company in a huge way. We were over ten times. You look at pro forma for this deal, were in the mid 5s. Our goal is to become Investment Grade in the next five years. The strategy we have is dominated by new unit growth in the franchise segment and having the best brands in the industry with an intelligent, global, Strategic Plan on how we deploy those brand, we think we can grow at a rapid pace, increasing pace in good times and in bad times. Historically weve been able do that. The company is in the best shape its been in its history. Yes, it is cyclical. But the point is the growth we think is very resilient. Why do you think that . Because in the end its a big world. Diversification is a very powerful thing. The world doesnt go in lock stepon and we have managed evenn the toughest of times been able to grow the business. If you look at the lee man collapse, 2008, 2009 and our net new business growth, we were growing against a very significant base. We started out as a pretty big company. I think the point is its a big world and different parts of the world speed up, slow down. We think were very quick on our feet to sort of deploy the right strategies and right brands in the right markets in the right times which allow us to grow. There are people who say when you came in this was a totally mismanaged company. Clearly thats no longer the case. There are a lot of relatively easy thing as it you did that created value. Its got to be more difficult now that many consider it to be a very well managed company. I think it is a well managed company, thank you. I would describe it as a Sleepy Company when we arrived and we had the ability to inject a million volts of electricity into it and get it moving forward. The last six years we have performed well. Its in our filings. Its been really a transformation thats been based on the future and really totally transforming the model of our business to being focused on growing in the capital light segment of our business, which is franchise business. I mean, this is the the received wisdom, and were finding out things from you that we didnt know before because youve been private. Selling off hotels i had some experience in that. I ran host. You have 106 that you either loan or lease. I know some of those are collateral. They are. Are you reinventing the Hotel Industry and keeping them . I think the answer is right now we like having the hard assets to the with the management franchise business. We like that because we think at this point in the cycle, there is huge embedded Growth Opportunities in the real estate, and we want to be able to basically take advantage of those. Longer term, its not clear. Certainly theres an opportunity longer term to think about being more capital light, but at the moment i think my job is to make sure that were sort of mining the value that is an incredibly important thing to say because accord, the giant french chain, said they, too, will challenge the marriott model. I know when you talk about how you might make money, it is converting some of the hotels to residences, to retail and to time share. We have a great portfolio, 156 in assets in the ownership segment. That segment is dominated by the top eight hotels, two of which are here in new york. The waldorf astoria and the new york hilton. And about a handful of those we think there are big opportunities to sort of think about the uses of those properties in a different way than historically we have. And that will involve to some degree certain elements of time shares, certain elements of residential and most definitely an incremental retail. When i talk about mining the opportunities in that real estate portfolio before we decide to do something else, those are a meaningful component of the mining of value. You mentioned the brands people are familiar with. Which has the most momentum and what does that say about the overall market, where its strongest right now. The good news for us is we have ten great brand, theyre all market leading with market share premiums. As i say when people ask me that, we love all our children, love all our brands. Our strategy is win everywhere. We have the number one pipeline in terms of rooms under construction in every region of the world, were a very close second in the u. S. And the reason is because we have ten market leading brands were deploying very intelligently. In the u. S. Its a limited service play. Its hampton, it hilton guard i dont know inn, its homewood, its home 2, if you go to asian pacific, its a lot of double tree. Blackstone will own 76 of this company after todays deal. I think theyre excited about the company. What do you think their commitment is in terms of selling those shares . I think theyre very committed in the business. Theyve been an amazing partner, its been a total collaboration with them. Theyre not a selling shareholder and i think they have a lot of optimism about the company but also sort of where we are in the cycle. But theyre in the business of recycling capital. Theyve got to exit eventually. They will exit in terms of selling these shares over time. My sense is theyre not in a rush to do it because they believe theres a lot of up side in the story. If truth be told, your prime rich customers are the hotel owners. They are certainly an important customer. Theyre concerned when you go public, your relationship may change, that you might get more aggressive on required Capital Expenditures which youve been hanging back on because you didnt want to lose the numbers, didnt want to lose hotels. They shouldnt worry. We have terrific relationships with our more than 10,000 owners around the world. Us being public is not going to change our relationship with them in any way. You really have six daughters . I have six lovely daughters. I hope one of them at least is watching today. If you can manage six daughters, you can manage ten brands. Exactly. You also brought the floor some presents because we cant accept gifts but theyre gorgeous robes. You can still wear them. You can rent one of those for the morning. Absolutely. You would look dashing. On twitter, theyre saying my favorite pastime at a hotel, take the robe. Youre going to pay for it if you take it. Chris, nice to see you, the ceo of hilton. 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[ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Welcome back. Im Sharon Epperson at the nymex. A report at the Energy Department showed natural gas fell by less than and taste pitted by greater than last year and greater than the fiveyear average. Traders are already looking ahead to what next weeks storage number may look like. Theyre saying could be a decline of more than 200 cubic billion feet based on the cole temperatures and increased in heating demand. Its been a very cold winter to start off the season. Back to you. Sharon, thanks a lot. Instagram announcing a new way to send messages today. Jon fortt joins us outside new york. Good morning, jon. Reporter good morning. Snapcat turned down a 3 billion acquisition offer. It allows communication between people on instagram who follow each other, if somebody sends you a photo who you dont follow, it goes into a holding area, you have an option whether to accept that or not. You can send a photo or photos, up to 15 people. You can revisit these moments. The cofounder of instagram hinted that more snapcat features could be coming to instagram. Im not sure whether there might be more news to drop. Snapcat has about 4 million a day. Snapcat got quite a bit of action. Clearly more private messaging is becoming popular. This is a very key area for facebook to focus on because instagram is more popular among the younger users who facebook has admitted are using facebook a little bit less. As instagram looks to monetize its user, getting them engaged in this could be important. I was in a Department Store a couple weeksing a and two people ran into each other and old friends and one of them said get at me at instagram. Its not really integrated to facebook at all. Its sort of a separate photo sharing device. Do you get the sense of with the announcement and new developments the two will start to be merged a little bit more . Not a lot of mention of facebook that ive caught at this event, and that might be smart. You know how you can sometimes segment brands so one is a little more youth oriented or photo oriented. Members of my extended family who are younger do tend to use instagram more, you can send quick textbased messages, along with the photos you send. It could be facebook establishing a tiered approach, messaging and private messages being built out to keep the younger, more visual user base more engaged. Thanks, jon. Well get more from you in the control room. I want to continue to thank the control room to show my phone so i continue to get more is it a private account . It should be. Phil lebeau joins us now from chicago. Reporter simon, theyve danced around this question here for some time as to whether or not ford Ceo Alan Mulally will truly stay until the end of next year. Now today the ford board will be meeting and were told one of the topics that is likely to come up at this meeting is some assurances from mulally regarding what are his future years . He said he plans to stay through the end of 2014 but has also not publicly said he is not in the running for the ceo job at microsoft. When you take a look at ford under the leadership of chairman bill ford, hes in sort of a tough spot here. He is the person who brought in alan mulally, hes very close with him. He said this is your time frame, however long you want to stay at ford, its not a contract, its a handshake agreement, you can stay that long. Since 2006, the stock has more than doubled. Yes at the same time for mark fields, who is the coo and essentially will take the ceo job will mulally steps down, is in a waiting game, as is the ford board trying to figure out what alan mulally plans to do. You see ford is beginning to trend a little bit longer. You cant blame that on how long mulally will stay at ford. When i speak to people on wall street, the question is what is happening with mulally. At the same time, its fair to say microsoft is not deaf to what is going on and when they see the reports today that the board is going to basically read the riot act at him, whether that is accurate or not, then presumably microsoft, if they do want him, is going to have to hurry up. The question is what is the microsoft board thinking . Were told theyre down to two or three finalists and alan mulally is one of them. Whats their time frame . Have they conveyed that to mulally and has he conveyed that to the ford board . You have to look at the ford board and the fiduciary responsibility they have to their shareholders and investors of who is going to run the company and for how long. Its interesting, mary barra on the cover of business week this week. If gm and ford both had new ceos, what a horse race that would set up, right . Think about this. As much as these two Companies Like to say they operate independently and they dont worry about what the other guys are doing, they have almost always moved in tandem. I know talking with ford executives this week, they noticed what gm did in terms of a decisive plan with the Succession Plan and you know thats going to likely come up in conversations at ford. Phil, top of mind for most shareholders in the industry. Thank you for that today. Reporter you bet. Are consumers getting into the holiday spirit this year . Our next guest hopes so. Well ask ceo of Constellation Brands coming up next. 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Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. [announcer]. If you think the warpbest bed for one of you might be a compromise for the other one. [woman]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two people. Two remotes. [announcer] firmness settings for the head,legs,and back. And with tempur on top,that famous tempurpedic comfort comes any way you like it [woman]ask me about the lumbar button. [man]shes got her side. And ive got my side. [announcer] tempurpedic. The most highly recommended bed in america. [woman]dont touch my side tis the season to get into the holiday spirit, according to Constellation Brands, millennium consumers are important to driving sales during the Holiday Season. Go figure. Joining us is rob sands, president and ceo of Constellation Brands. Thank you for joining us on the show. Good morning. What is Constellation Brands doing and planning to do during the Holiday Season to maximize sales . The Holiday Season is a very important time of year for us, one of our major selling seasons. We have a number of programs going for our key brands. Co corona, one of our most key plans. We have a lot of holidays promotions going on that will drive sales. When you say promotion, this is not a discounting promotion presumably, its a big advertising budget . These are programs such as joint promotion programs with company like butterball where we copromote our brands, like Robert Mondavi with butterball turkey. Corona, we have great advertising going. We probrought back one of our b tv commercials for corona. And we have things like rex the halls for our brand rex goliath. What about the kids . How do you appeal to the young are generation . I was looking at the products and wondered where to start until i realized that one of them was a cinnamonflavored whiskeys. Right. You mentioned millennials, one of our most consumer segments. Theres about 60 million millennials right now, people aged 21 to 36 years old. This is one of the key demographic groups were appealing to. Theyre into flavors. So we have new flavors like cinnamon rush on our black velvet canadian whiskey, we have new flavors on our svetka vod s vodkas, like orange cream puff and its all about flavors mixed drinks and spirits side and on the premium side, we have a bloody mary mix and beer combination, which is very popular right now, modela. Peopp more. When the weathers bad, people shop more. We talk about how when the economys good people drink more. When its bad, people drink more. Where are we on this cycle based on what you can see from consumers habits and drinking your alcohol . Yeah, i think the good thing about the beverage alcohol business, its very noncyclical. We dont really see people drinking more in a bad economy. We see some venue shifts, we see people drinking more at home than out. On premise, at restaurants. When the economys great, or better, which it certainly has been improving, we see the onpremise pick up, people going back out, the expense account business. It picks up in major metropolitan areas like new york. So very stable and recessionresistant business. Rob woods, this is perfectly good booze and youre taking stuff and doing stuff to it. You actually like this . Have you tried the different concoctions you are coming up with . Yeah, theyre great. The consumer today is, as i said, very interested in flav s flavors, even on the wine side theyre looking for wines that are easy to drink. Weve created new brands like our milestone brand, which should appeal to millennial consumers who are looking for just greattasting, easytodrink, fun products that fit with their lifestyle. Rob, real quick, weve had you on in the past, of course, on business, as in grouper modello, the deals done, and whats the progress there in terms of integration . Yeah, the deals done. We fully integrated that business into constellation overall. Its a great business. I think its the best beer business in the world right now. You know, its got a portfolio of the most iconic hispanic brands, mexican brands, corona, modela especial, and we represent a group thats going to go to 110 Million People over the next few years. Rob, well see how the figures stack up when you report on the 8th of january. Thank you for joining us. Rob sands, Constellation Brands. Im glad you couldnt see the expression on everybodys face around the table when he described the bloody mary mix and beer combination. Thats a really popular drink right now. A restaurant here in new york that has them, called them the bloody maria, a variation of somebody said save this for the nail the number contest. The dow is down 67. Lets get to Rick Santelli and the cme. Hey, rick. How you doing, carl . Listen, theres something going on that is under review, and i guess the best way to describe that in one phrase is we have to get past the notion of gas is good, and braking bad. As in braking, car braking, economy braking, slowing things down, and that will be a rough transition. You could say its gas. You could say its a subsidy. You could pretty much call it anything you want. But what we know is the needle seems to aim north with respect to how it plays out in the Global Equity markets, north meaning, of course, a rally. And it isnt just the u. S. , but, of course, the next fed meeting is going to be big for many, because no matter how many traders believe the markets, especially the long end, are going to force the fed into its next position and i dont disagree with that the fed obviously, just look at the Balance Sheet, still figures prominently into the equation. Now, as i look up at the board today, were getting ever closer to 2. 90. We reecached 2. 90, 2. 93 on the kneejerk betterthanexpected jobs report last friday, but the next best thing is 33basis point, twoyear note. Thats significant. Because the short end should be nailed, and it shouldnt necessarily correlate with taper, but it does. My final point is, yesterday we had the wonder kid of the reagan add administration, stockman, and he said the budget is a betrayal, and im not agreeing or disagreeing, actually i agree, but the timeline fascinates me, after 2016, ultimately, it wont be until 2018 that we can really do things like entitlement reform, tax reform. I think thats the sad part that really needs to be addressed. Back to carl, simon, david, kayla, the whole gang all right, rick, thanks so much for that. 400,000 salary, a free apartment, a driver, and firstclass plane tickets . Sounds like a sweet gig. All you have to do is become a tutor. Well explain why in a moment. Were aig. And were here. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Is caused by people looking fore traffic parking. Y thats remarkable that so much energy is, is wasted. Streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then theres a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. The collaboration with citi was important for providing us the necessary financing; allow this small startup to go provide a service to municipalities. Citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. So the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. Believe it or not, some people are willing to pay big bucks to give their kids a leg up on the competition. Were talking hundreds of thousands of dollars a year. Our robert frank explains back at hq. Good morning, robert. Good morning, carl. Well, tutors for wealthy kids are in huge demand. How huge . Some are making up to 400,000 a year, and they get a free apartment, a car, travel, and sometimes a private ship. Now, tutors international, one of the biggest firms, says its business has more than doubled over the past year. More and more of the wealthy live in multiple homes around the world, so theyre hiring a tutor to travel with them. Others are looking to give their kids an edge on homework, or help getting into a top college. Nathaniel hennen used to work in washington, d. C. , and now makes six figures as a private tutor. And while he enjoys the perks, the money and the travel, he said the wealthy can have very High Expectations for tutors. We have to get results with these kids. We have to help these kids to realize their full potential, and we have to do it every time. And thats a great deal of pressure on us. Now, the pay is growing, especially in crisis situations. One tutor was paid 80,000 for just 16 weeks work to help a swiss student pass his exams at cambridge. Now, another tutor, that one making 400,000 a year, he was responsible for helping a student coping with school and Substance Abuse issues on the west coast. Now, a competition for top tutor jobs is also rising, along with pay. Tutors international saying its searching for a tutor in sri lanka now. Of the 400 people applying, only two will be offered to the client, and the job comes with personal assistant, a car, and a driver. Back to you. Nice work, if you can get it, thats for sure. Exactly. 1,200 an hour. You need tv lessons . Because of the big they have to travel, they dont pay tax. Actually, this is a real economy for the people employing these guys. It s and youre getting some of the top teachers in schools attracted to this now, because of the pay, and again, you know, this guy we talked to, in barcelona, you travel all around the world, stay in mansions, get a driver, a nice life. Robert, great stuff. Thanks a lot. Thank you. Our robert frank. It is now the worst three days for the dow and s p since the beginning of october. Well see in a few minutes, talk about europe. Lets see what you missed earlier on. Announcer welcome to squawk on the street. Heres whats happened so far so we think its a good template, good precedence, its not the bargain of the century, but in this divided government, dysfunctional government, its a modest, but productive step in the right direction. As a private company, were investing like never before in a bold way, really with a focus on the longterm, and 100 focused on our customers. I see a lot of dont give up the gain of the last few days, and when that runs its course, people will come right back, and the buyers will come in and say, i have to put money to work, position for 2014. This is transitional moment in the market. [ bell sounds ] we came off a record year in 2013. The fiscal ended in september. We had record revenue, our revenue grew midsingle digit, highsingle digit operating profit, and we think that model as we now go into the Public Markets will be very much of an interest to investors. Hilton has opened at 21. 30. We set about a, you know, a global transformation of the business. Were very proud of what we accomplished. Were the biggest in the world now, but most importantly, were the fastestgrowing of the Major Hotel Companies on earth. Announcer the squawk on the street countdown to christmas is in full swing. Ho ho ho sleigh bells ring are you listenin in the lane is glistenin good morning, live at post 9 at the New York Stock Exchange with a check on the markets. A busy morning. A lot of ipos, a couple of profit warnings, and a weak day for the markets overall. The worst three days for the dow and the s p since october 7 through the 9th. Two big ipos on the big board. We want to get a check on Hilton Worldwide and aramark, and shares of lululemon taking a hit after the company gave forecasts that fell below analysts estimates. The roadmap, hilton, its big debut at the big boards. The second largest ipo this year. We talked to the ceo, and what did he tell us about the valuable real estate . Well give you the details. And instagram direct. It lets you send photos to friends and family privately. And a snapchatlike function could be on the way. Retail sales showed a pickup in november. Theres a budget deal in place. Does that sum up to a taper in december . Well bring you some word on what the economy did earlier on. And ski season is in full swing. Vail resorts is expanding. Should you get into the mountain trade . Well have the ceo of vail resorts here exclusively during the hour. First up, though, as we mentioned, hilton making the debut at the nyse. Simon is here to give us a rundown of not what just happened today but for the past few years. Absolutely. Phenomenal turnaround. Blackstone took them private 6 1 2 years ago, and today returned it. Dont forget they priced last night at 20 a share, so they raised in excess of 2. 3 billion from that road show, and today, the public got the chance to buy the stock for the first time. You saw that its now trading at just shy of 22. So a big premium to the rest of the Hotel Industry. Some would say overvalued, christmas, though, the man of the moment, earlier on the program, was quite clear, as you heard in that clip there. This is a very fastgrowing lodging business, and it deserves a higher valuation as a result, and indeed, the days, of course, when it was so saddled with debt and when the industry was falling away, beneath its feet, are long in the past. This is how he put it. We feel great about the capital structure. We feel even three years ago, over ten times. You look at pro forma for this deal, were in the midfives. The objective is to become Investment Grade over the next two or three years, which were very focused on. The other thing that was really interesting from the interview is hes quite clear for the time being hilton is going to challenge the received wisdom in the industry that was pioneered by marriott that you go assetlight. You sell off the hotels to other people, and then say, actually, id like to run them for you. So you dont have any of the risk, and marriott would argue, youre able to extract most of the value. What hilton is saying, we have 156 hotels owned or leased, and we intend to hang onto those for the time being, in part, of course, theyre collateral for the loans they have. This could really be a big change for the industry, the received wisdom. As i mentioned to you, akor, french hotel chain, its also doing the same thing. But a lot of the hotels they observe are the marquee properties. Eight juggernauts. These are namebrand hotels that are flagship properties. For a hilton, you almost couldnt imagine selling a marquee property like that. You could, because marriott has done it. The marriott in times square is not owned by hilton. Thats the whole nature of the industry, carl. Some critics might say the marriott and the waldorf astoria are a bit different. Both marquee. Both marquee hotels. Exactly. Thank you, simon, for that. Were also covering this Instagram Live event. The photosharing social network announced instagram direct today. The extension will allow users to share photos and videos privately with one or up to 15 friends. Jon fortt joins us from outside todays event with more. Jon, over to you. Yeah, kayla. Investors seem to like it. Facebook seems to be up in the 4 territory today with twitter down around two. Yelp is also up around 2. 5 , but facebook a nice move this morning as the news was coming out. As you said, up to 15 users. This is private messaging where you get to choose who actually gets to message you photos, if someone tries to message you a photo, who youre not following. You have the choice on whether to start following that person or not. Caught up with him after the event was over, and he was talking about the granular possibilities and being able to communicate more seamlessly with friends, with a group of people who you define. Its an interesting shift from what instagram and facebook were emphasizing just a year or so ago. These are the Biggest Social Networks of their types. They were really focused on scale, getting lots of people. Now they seem to be once again pivoting to something more granular, and particularly important, because systrom hinted monetization could be coming up, but he said the young demographic is what they want to reach, the same demographic facebook has said slowed down the frequency of the facebook, and that spooked investors briefly before the stock started rallying. It seems to be facebooks younger demographic play with instagram, and its giving that demographic more choice in who gets to see their photos. Guys. All right. Jon fortt, it does sound very familiar to snapchat after facebook poked, didnt go as planned, so an important plan for that company. Thank you for bringing it us to. We want to focus on the econ data. Retail data just the last major piece of data ahead of next weeks fed meeting, so discuss this, well bring in diane swong, chief economist, and our own steve liesman, and, diane, i want to start with you. One of the most notable pieces is the bigticket items furniture, automobiles, Building Materials really contributed to some of the increases here. What does that tell you about the consumer at this point . Well, what were seeing is those that have money are really spending. A lot of that is residual from the pickup in home sales that we saw over the sunler summer, which have declined. But it does mean jobs. Its one of the reasons we saw manufacturing and construction jobs in the month of november, as well. Thats positive news for the fed. The more traditional holiday retailers, though, the spending was horrific, clothing sales, online retailers, not doing well. The split here, you know, you have auto dealers doing great and on the other side, furniture, trying to see some comeback. But the traditional Department Stores, the promotions, the retailers are really nervous this Holiday Season, and they have good reason, because when you look at traditional holiday sales they were not there in this report. We keep hearing that, diane, over and over again from the retailers reporting earnings, today lululemon saying holiday sales will be flat. Do you expect that some of the bigticket items and some of that Consumer Spending for the stronger consumers will stay afloat during the Holiday Season, even if we see some of the other retailers not doing as well . Yes. Were going to continue to see that break. And thats good news, like i said, for employment, because it has spillover effects and it leaves the fed in a closecall on december. I still think theyll delay tapering, because of the low inflation numbers, those heavy discounting, we have deflation in the apparel sector. That said, its very tough for the fed, because you get this sort of tale of two economies that weve had exacerbated and theyre trying to lift the lower end. But the good news, it does mean a little employment, but is it sustainable . Theres the question into next year, but not december. A rise of. 7 , an increase to the previous numbers for october. This is just the latest in the not bad Economic Data were seeing. Is this adding up to a december taper . You know, i think it does. And i would point out to dianes comment that one of the members of the fed who was most concerned about inflation to the point that he dissented earlier this year, jim bullard, is now kind of giving a green light to tapering. Youre right. In december. Thats something that informs me and they want to do that pivot. Youre really right. They do want to pivot to being more of a Forward Guidance rate. Right. Led fed, rather than qeled fed. Thats still a long ways off. What you ask is interesting, kayla, in the sense of where i think about where the economy is, Macro Advisors had a forecast for the Fourth Quarter, and now 1. 7. Ive seen 2 before. Take the 2, the threesix in the third quart other, put it with a 1 1 2, 2, and you have an economy thats better. Maybe not 2 , 2. 5 economy. I think thats well within reason. And i think its a slight bump up. One of the things thats so interesting about the economy right now is were still waiting for the wealth effect from all of the wealth. Weve had Household Wealth up. Yeah. Weve had stock wealth up. We havent seen a wealth effect. The kind of spending that diane is talking about is almost like handtomouth. I have a job, i spend money. But not because my portfolio is up, not because my housing is up. I think thats perhaps a key story for 2014, is we get the confidence for consumers to spend, you could have a wealth effect story next year on the consumer. Diane, theyre also there continues to be a conversation that people are spending money from food stamps or unemployment benefits, and as those expire, were seeing discount retailers take it on the chin. Absolutely. How much are they at risk . Theyre at incredible risk, and thats one of the reasons we saw food sales down in the month of november, because Food Stamp Program was rolled back november 1st. And you did hear grocers actually talking about it, as well, and some of the discount grocers, biggest. They rely heavily on these kinds of things. Again, you get that tale of two economies. I do think steve is right, the interesting issue is the top 7 of americans, the top 7 of income earners are doing better than they were prior to the crisis and after the crisis. Theyve will he gained the wealth. The bottom 93 has not. Thats a real interesting issue, too. Its not the top 1 , its the top 7 carrying the economy. And they can do a lot of spending. Thats an important issue, because that dips into what we consider sort of upper middle income households, or lower higher income households. Hey, guys, i know we have to go, but i want to tell you tomorrow we have some interesting news on consumer and Holiday Spending on our all america report. Youre going to watch it. Its going to be interesting. Well, thats very good. We didnt have time for stan fisher today, either, guys. Oh, god, wonderful, wonderful. Thats all im going to say. Stan fishers thought is great. Thanks a lot. Vail resorts is expanding, opening a new resort out west. Is this a good time to go long the mountain trade . Well talk to the ceo of vail resorts next. And dont forget, Rick Santelli had David Stockman on yesterday. Lets listen. Lets be clear, its a joke and betrayal. Its the final surrender of the House Republican leadership to beltway politics and to kicking the can and ignoring this budget monster thats hurtling down the road. That interview made big waves. Rick, what have you got today . Today, its recalculate, recalculate, recalculate. Anybody have gps out there . The constitutions supposed to be the gps for the country. Kind of the map. But is it really . A week ago tuesday, House Judiciary Committee had a hearing. Wow it was wild were going to talk about that with South Carolina Representative Trey Gowdy in about ten minutes. 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Stick with innovation. Stick with power. Stick with technology. Get the new flexcare platinum from Philips Sonicare and save now. Philips sonicare. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. The department of transportation is out with the airline report, and for that, lets send it to phil lebeau. Phil . Were looking at the numbers for october, and it turned out to be a good month in terms of Airlines Getting the passengers to the destination on time. 84 of the flights arrived on time according to the d. O. T. The Top Three Airlines hawaiian, which is always almost always at the top, followed by delta and alaska. They led the pack in terms of ontime performance. The bottom three, frontier, frontjet and southwest was dead last, coming in 78. 7 of the time with flights on time. And two other statistics, guys. First of all, 2. 52 bags mishandled per 1,000, thats been below the average this year. And fewer complaints in october than in october of last year. So overall, not a bad month for the airlines. All right, phil, thank you very much. Our phil lebeau. Vail resort stock has been flying this year, and now the ski season is just getting started. Will this Company Ascend to new peaks, or is it destined for a downhill ride . Joining us this morning rob katz availables chairman and ceo. Rob, good to have you back. Good morning. Great to be here. I think were doing will we opening back bowls . We are, opening the back bowls this weekend. We have terrific coverage all across colorado, and a huge storm that came through last week across the entire western part of the United States, so the conditions couldnt be better right now. You know, im from there, and i get reports from my parents almost every day. I mean, this is shaping up to be a good year, and weve had some that were not quite so good recently, right . No, absolutely. The temperatures have been low, so snowmaking is outstanding. The quality of the snow has held. This is exactly what you want to see in the early season. Weve had a terrific thanksgiving. And a terrific beginning to december. 80 inches snowfall seasontodate, 11 above the average. Are you see any sort of followon demand, and what will that mean for pricing as we get into the season . Well, what were seeing is a strong booking, so obviously, our past sales were up 13 in units, 16 in revenue dollars. Thats before the season even begins, actually the largest percentage increase weve had in the last five years. Lodging bookings are also very strong. So its really the year, if you want to take that ski vacation, to go out and book, because we think were going to be really busy across all of our resorts. Rob, later in a few months, were going to have a big event, the winter 2014 olympics. Thats going to come right toward the end of the ski season. Do you expect to see any sort of followon demand from that as people are watching and getting really pumped up about going and hitting the slopes . Well, what we usually see from the olympics is thats one of the things that really brings kids into our sport. We get a threeweek commercial. We have kids all across the country, all around the world, jumping up and down on the kids debads, pretending to be shaun white, lindsey vonn, and they really get kids into skiing. Every year is a big year for the olympic sports. You picked up sports out of colorado even. Is your appetite satiated, or is there more to come . Were still interested in growing. The past provides incredible value, so to the extent we can add a new resort to that path, in a different location, we think it brings huge value to all of our guests and consumers around the world, and obviously, we think we can do a good job buying the resorts and running them better, given our scope and scale and sophistication. Anywhere in particular, rob, that you have your eye on right now . You know what . We look at all of top destination resorts around the world. Thats really what our focus is. So where we see skiers, where see sigh the highend consumer traveling, thats what were focused on. Winter olympics on nbc are coming up early february. Youre going to hear a lot about downhill skiing, Cross Country skiing. Do you generally see any ancillary effect on a winter olympic year . Yeah, we do. Theres no question that i think people get more excited about the sport. It reengages everybody in it, particularly kids. And so, were very fortunate, i think, to have a Winter Olympics every four years thats all about our sport. All right. Rob katz, chairman and ceo of vail resorts, well leave it there. Thank you for joining us. Thank you. And yahoo mail is a consumer disaster, at least from cara swisher, and well get the results straight from the source, and cara will join us in a few. Thats after the short break. [ male announcer ] heres a question for you if every u. S. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. Impact wool exports from new zealand, textile production in spain, and the use of medical technology in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back to squawk on the street. I have a special guest, trey gawdy, from South Carolina, a congressman, republican. A week ago tuesday he figured in prominently into a House Judiciary Committee hearing that really, in my opinion, was more about the constitution than anything else, and some surprising facts. Welcome, congressman. Hey, thank you for having me. Listen, i guess listen, im a strict constitutionalist. To think that the origination clause may be an issue with regard to how the obama care, Affordable Care act, came about, or the notion that we see issues like immigration, election laws being dealt with from an executive order scenario, or all of the agencies that have become the Fourth Branch of government without any checks and balances, the hearing hit on all of these. Can you explain what went on and why, to somebody like me, it gave me such ajutat . Whether its mandatory minimums or the hearing were have with respect to asylum request, what good is it to have a legislative body to pass a law if the executive branch is free to ignore the law . And part of the discussion is the difference between prosecutorial discretion, which is a prosecutor on an individual case basis saying i dont have enough evidence to prosecute this case, and just the wholesale ignoring of laws that are, number one, constitutional, and, number two, have been fully funded. The Affordable Care act is a perfect example. The president went to the Supreme Court for the court to tell us that that law was constitutional, and the funding is 80somethingpercent mandatory, but yet he is deciding which portions of that law to turn on and turn off. And to me, as a fellow constitutionalist, it really doesnt have anything to do with politics. I would love to be able to ask a republican chief executive, or a Republican Attorney general why he or she is not enforcing the law. To me, its more about our system of government than it is the viscitudes of elections. I think there are issues here. Im not a lawyer, but i pay close attention. After listening to the legal experts from georgetown, George Washington university, whether it was professor turley, rosen krantz, lazaras, its difficult to find standing on the issues. Your thoughts . There are a couple of ways the congress can remedy this, and thats go to court and sue. And members of the Supreme Court said congress doesnt have standing. The ultimate remedy is impeachment, which some of the witnesses brought up. But the really important remedy is elections. And if your viewers think that the balance is tilted more toward the executive branch and away from the legislative, they need to correct that come next november. Well listen, thank you for taking the time, and theres never enough time. I think in the end, to be fair, as well, a lot of these infractions have happened under the current administration, but the executive branch getting stronger has been an ongoing phenomenon for quite a while. Thank you for taking the time today. You bet. Carl, back to you. Thanks a lot, rick. Yahoo mail is a disaster, but the companys response is even worse. So says cara swisher from all things d. Shell join us in a moment and talk about why. 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Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your gastroenterologist about humira today. Remission is possible. Announcer the European Markets are closing now. Welcome back to squawk on the street. Major u. S. Indices are in the red, and a similar story across the pond. For that, we want to bring in simon hobbs to tell us about what happened in the continental European Market today. Simon . The difference between europe and the United States is that europe had really bad Industrial Production data out today. It indicates that Industrial Production yearonyear is actually down 3. 6 . Yes, theyre worried about tapering, theyre worried about the fed, theyre worrying about all of the normal things we worry about. But this market is transfixed on a very poor Industrial Production figure, and the cyclicals, the industrials, have also sold off. I mean, its a broadbased decline. 80 of blue chips are lower. Some of the luxury goods manufacturers are lower. Some of the banks are lower. Its these industrials, the carbon manufacturer, one of the biggest in the world. This makes industrial wire and ropes. Thats down. And you see, also, the oil services are suffering in europe today. A lot of them u. K. Based, a lot of them focused on the north sea. You have marathon oil, of course, saying that its going to sell some of its assets in the north sea, and focus on drilling here in this country. John wood has issued a profits warning today. So the oil services are lower. Persho is also lower, saying it wont get the sort of savings it expected from its General Motors alliance. Do you have a Capital Increase on the card zahn, being pushed closer with the cheap cars in china. A phenomenal recovery for the year, theyve almost doubled. And finally, let me tell you the pope in his first new year address, the peeps address, has decided to attack the mega salary and the wealth gap. He said the great financial and economic crisis of the present time have pushed man to seek satisfaction, happiness, and security in consumption and earnings that are out of all proportion to the principles of a sound economy. Back to you guys. Something to think about, as we talk about the wealth effect in this country, simon. Thanks a lot. Our simon hobbs. Lets bring in bob pisani, had a busy morning watching the ipos on the floor. I havent had a chance to talk about the markets much. Want to note here, the problem, of course, Interest Rates. You know, we had a great retail sales report. Thats putting some pressure on bond yields. Theres the intraday on the 10year. When Stock Traders talk about bond yields all the time, Pay Attention, because they dont normally. Were inching towards 3 , this is putting pressure on Interest Rate sensitive. The reit business has been a mess, since may, when they started talking about beginning the tapering. The vnq, you can buy that, an etf. And elsewhere, the transports, airlines are doing well. I add or raised the global estimates for the year. Thats helping out the airline stocks. Chinese internet stocks are flying around. Autohome yesterday, what, 17, so down a little bit. But all of the other ones, theyre darlings of the day traders. They love that, because they have huge betas, move around tremendously from day to day. Theyre on the upside. I ipos, aramark, priced at 20, but a great move on the upside. A nice move to the upside right at the open, went straight up, has been holding. Hilton priced at 20, and the same situation. That slow general move to the upside, up about 8 right now. The hotel groups all up. A lot of people speculating if hilton could open up 5 , it would bring up some of the hotels, and thats generally whats going on, starwood, hyatt, although marriott not on the upside. Index, up about 32 , and the Dow Jones Industrials hotel index. By the way, guys, the whole thing, the ipo parade, its not over yet. Theres a hot ipo pricing tonight for tomorrow. Ill be back on the floor again talking about nimble storage. This is all about flash storage. So remember, theyre replacing all of the old diskspaced Storage Systems with the new flash storage system, and nimble is the leader in this place, pricing 8 million shares here at the New York Stock Exchange at 16 to 18, and now theyve raised the range to 18 to 20. So well be talking about tech tomorrow morning. Guys, back to you. Bob, with volatility that low end of the year rush to get the public, continues to keep you busy, but we thank you for bringing us everything on that. We want to go back to hq and dominic chu for a quick look at gold. Gold is taking a hit, this on expectations the fed would reduce the huge Stimulus Program after a budget deal in washington. The agreement is seen as increasing the chance of an earlier taper or a reduction in fed stimulus. You can see gold is down about 2 , also silver down 4 in this trade, so the metals really taking it on the chin, as the dollar rises in value. Carl, back over to you. Dom, thank you so much. A lot to watch regarding gold and the markets. The dow down 83. Planning the vacation has never been so easy. Weve got the ceo of peak. Com, what some are calling the open table of travel when we come back. My customers can shop around. But it doesnt usually work that way with health care. With unitedhealthcare, i get information on quality rated doctors, Treatment Options and cost estimates, so we can make Better Health decisions. Thats health in numbers. Unitedhealthcare. Ya know, with new fedex one rate you can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] this december, experience the gift of unsurpassed craftsmanship at the lexus december to remember sales event. Some of the best offers of the year. This is the pursuit of perfection. [ male announcer ] heres a question for you if every u. S. Home replaced one light bulb with a compact fluorescent bulb, the energy saved could light how many homes . 1 million . 2 million . 3 million . The answer is. 3 million homes. By 2030, investments in Energy Efficiency could help americans save 300 billion each year. Take the energy quiz. Energy lives here. Coming up on halftime report, facebook is up again today on the news its being added to the s p 500. Will this lead to a flood of new investors and an even higher price . And beyond facebook, whats the next big thing in new tech . Were going to ask someone whos been ahead of the trend. Sales force executive and founder of buddy media, mike lazaro. And small caps are showing real weakness. Is it time to buy in, or is more pain ahead for the little guys . Well see you at the top of the hour. Scott, thanks so much. Volcano tours in hawaii, and peek. Com, some have called the opentable of travel, make it is find interesting things to do and to book them. Launched last year and backed by jack dorsey of twitter, eric schmidt of google, announcing the debut of the first mobile app. The cofounder of peek. Com joins us, and its great to have you. Good morning. Thank you. I love the story. You got this started, you wanted to spend a birthday in istanbul with some friends and found there was no efficient way to plan it. What did you do . Well, i ended up spending about 20 hours planning the trip, which seemed a little excessive, and so, i wanted to find a place i could go that could help me discover what i wanted to do, but actually make it really easy for me to book it all online. What i discovered when i started looking at the space was a lot of the activities operators werent online, and so peek. Com and the tour operators allow us to bring them online. How does the back end of this work . How many people do you have on the ground sourcing, cure rating some of the ideas and putting them together . We have a team of about 20 based in san francisco. Really what they are doing is customizing everything that we might actually possibly want on our site. We also work with taste makers, so people like torrey burch, wolfgang puck, and its a big selection of what you might want to do in a distant place or in your hometown. You could get tickets for the tribeca film festival, or skipping the lines the the Empire State Building or an art tour of the subway. Well talk about the app in a minute. How do you attract a burch, a dorsey, a schmidt, to contribute to the content of the app . We were fortunate in the sense that myself and cofounder had worked at other startups before, so we had exposure to a lot of the existing investors, so they had invested in Companies Wed been working with previously, or weve gotten in touch with them in that way. And so, they really liked what we were doing, attacking a 27 billion market globally, and four times that globally, and its an opentable for the activities market, and thats what were doing, building Something Like that. What sort of advice have they given you, as you go along this road and building a company from the ground up, to have the advice of such storied entrepreneurs like that, i imagine its priceless . Yeah. Its been fantastic. A lot of it has been around the core strategy, and now, in 17 regions in america, in london and paris, being able to scale smart requires great insights from our investors. And also, just building the product, when you think about the mobile app thats just launched, being able to get great perspectives from entrepreneurs who have done this before, who are really obsessed with product, is very, very important. And so, making sure that so beautiful user experience, and how every screen looks, its been very, very help tell to get their thoughts. How important is mobile . Im trying to think if i were planning a vacation, id probably do it from home. How much do i need to be on my phone per se . Well, actually, 80 of people book activities whether they get there. Really . A huge of amount of people wait. So we normally look out the window, hey, its the weekend. Not type a people like carl, though. Were probably slightly different. Is it mostly scaled on advertising revenue . Is there a subscription element no, we take a commission on everything booked on the peek site. There are jetsetter, black tomato, the niche products. We focus just on activities. Thats very important. You wont find a flight or hotel on the peek site. For us, it was were taking this one piece of the market that hadnt had any of the Online Booking that was necessary, and we brought that. We do layer that with great content and photography, so you see what you might want to do. But ultimately, its about activities, which is why those guys dont end up competing. Whats the craziest thing thats offered on the site . It depends on your tastes. So you can do anything from going bungee jumping, canary wolf, an experience in las vegas involves you going into a construction park and demolishing things with jcvs and tractors, which i think sounds awesome. Thats probably the one i want to do the next time im in las vegas. Only in vegas, right . Very interesting. Well keep our eye on you. Thank you so much. Thank you for your time. Joining us from peek. Com. All right. Another entrepreneur, elon musk, one of the keynote speakers at dell world this week. Phil lebeau is listening in. Ya know, with new fedex one rate you can fill that box and pay one flat rate. How naughty was he . Oh boy. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ 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. 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. The dow is down 82. We have a news alert on aetna, and for that, we introduce for the first time, i think, on squawk on the street, our morgan brennan. Morgan, good morning. Good morning. Thanks, carl. So ceo mark saying the Health Insurance giant will double its revenues by 100 million by 2020. Actually, double to 100 million. And bertolini thinks thats a conservative estimate. Aetna is pegging the growth to a combination of things including medicare advantage, medicare expansion, and perhaps most interestingly, private exchanges, which bertolini believes will host 75 million enroles by 2020. He also says he doesnt expect obama care to go away. That the midterm elections will likely result only in changes and improvements to the act. Back to you, kayla. All right. Thanks so much for that. I know a lot of people are watching the insurers with regard to the aca. A Big Development there. Thank you, morgan. Elon musk is speaking out at a dell conference in texas this morning. Phil lebeau is live to tell us what he had to say. We always want to know what he has to say, and in particular, because of the nhtsa investigation into the safety of the models batteries. Heres a taste of whats going on. Hes actually speaking as we are talking and delivering this report. And as hes talking, most of the comments have revolved around production of the models and his vision for the future of the company. Hes made no comments regarding the nhtsa investigation. Remember, the models, at current production, at last report, of 550 vehicles per week, and said a few minutes ago that the production rate coming in at about 600. Heres what he had to say. So were at around 600 a week, and our projections were about 400 a week. So the main supplier for the battery cells was able to ramp up by 50 , but its going to take them a little longer to improve production beyond that. You have him alluding to the fact they need better battery production. Remember, they struck a deal for lithiumion battery cells from panasonic. They need this, because theyll be forecasting a major rampup in production over the next couple of years. As you look at shares of tesla, you guys, its hard to pin where this stock is going to go next, because it really had the wind taken out of the sails when the nhtsa investigation was announced. But it has come back a little bit over the last couple of weeks, currently trading just a little bit north of 140 a share. Guys, back to you. Thanks so much, phil lebeau. Lets get to Courtney Reagan with a news alert. An interesting tidbit on jcpenney, court. Thats right, carl. News out of jcpenney. They are editing their assortment, as retailers do over the course of business, so we know that mike ullman has taken back over from ron johnson, happening in april. And the company has been taking their time evaluating whats working and whats not. As of today, we can tell you that jcpenney will be launching a line of home goods in towels and beddings under the Liz Claiborne brand, replacing the towels and bedding that may have beared the Martha Stewart design. Remember, ongoing litigation there. It appears theyll create the products with the Liz Claiborne branding. Jcpenney is also eliminating the jcp menswear, the private label brand. Editing down the assortment, reducing the amount of inventory for both joe fresh and michael graves. They will still have that product in stores, it just wont be the assortment that we see today. Theyre going to move that joe fresh merchandise to give a more prominent spot to its own private label brands, which include the womens a a and the jcp womenswear, and the consumers really like that. Jcpenney took flack for editing that too much, taking away the private label brands. Consumers beginning to appreciate that theyre back. Thats at least what weve been hearing from jcpenney on the more recent earnings calls. Interesting. The commentary out of ullman, court. We dont have six or seven years to get our business back. I mean, even with some concerns about liquidity being answered in the short term, the clock is still ticking to some degree. Exactly. That is a comment that mr. Ullman gave to reuters in their exclusive interview. We understand he looks at this in a realistic way. He knows the business theyve lost. Theyve got to do everything they can to bring that consumer back. Also making some comments about how the consumer didnt give up on jcpenney. Jcpenney gave up on the consumer, probably alluding to what ron johnson had done with his strategy, trying to backtrack a little bit, bring them back to what they come to jcpenney for, and a lot of that is that privatelabel branding. So this move, this editing of the assortment could really, you know, turn some good for jcpenney. Well see, though. It wont happen until the beginning of next year. So im not sure well see it in time, truly for the holiday sales. Well Start Talking about top business stories of the year and this one will be in contention. It has to be, yeah. Thanks, courtney. Courtney reagan. A lot of college kids wont make it out of bed for an early class, but up next, well talk to a student from yale willing to go the extra mile for what hes passionate about. Well go live to the south pole in just a moment. 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. Where does the United States get most of its energy . Is it africa . The middle east . Canada . Or the u. S. . The answer is. The u. S. Most of Americas Energy comes from right here at home. Take the energy quiz. Energy lives here. Welcome back to squawk on the street. Shares of hovnamani is moving higher. Gross Profit Margins better than last year. The ceo said the Company Continues to believe the industry is still in the early stages of a housing recovery, kayla. Back over to you. All right. Thanks so much for that, dom. Everybody loves an oldfashioned brawl between lawmakers. We dont get enough of those these days, but today, a big one in the country of georgia. We have michelle ka ruse a cabrera, and it demonstrates how its spilling over to other regions. Rolling the parliament tape from the country of georgia. You can see, what are they arguing about . One group in parliament wants to support the Opposition Movement and the protesters in ukraine. The others do not. Russias support is a politically sensitive topic in georgia, as well, because it, too, is a former soviet republic, and as you can see, the sprawl unfolded. This comes on the same morning that the e. U. Foreign policy chief claims that the president of ukraine has told her they actually are going to sign a deal with the e. U. Remember, the protesters in ukraine and this brawl are all happening because of this concern about whether or not they should be aligning with russia toward the east or toward the European Union to the west. But once again, the tensions in ukraine having a spillover effect in georgia. Were going to have to see how this all plays out. Carl, kayla, back to you. Unbelievable. Thank you so much, michelle. How far would you go literally to raise awareness for your campaign . One 19yearold sophomore from yale is willing to go 400 miles on frozen ground to the south pole, to raise awareness for Climate Change. Hes doing the journey without support, entirely by foot, all while conducting some scientific studies along the way. Joining us this morning from somewhere in the middle of antarctica is parker leotold. Parker, great to have you. Walk us through where you are, and why youre doing what youre doing in antarctica. Thanks for having me. We are around 100 or 200 miles from the unintelligible , about minus 40 degrees, and really out here you do two things, first of all, to conduct research to try to better understanding the climate sys m system. And second of all, just sort of change the way we talk about Climate Change and to and to change the way we communicate Climate Change. Yound a your teammate are trying to, basically, set a coasttopole record, getting from the coast of ant a antarct days. Are you on track . Its a difficult question. We just passed the really difficult part of the expedition, which is the glacier, about 7,000 vertical feet in rise. It took about three days, and well probably be actually, we feel good. Parker, setting a record would be quite a feat. But what do you hope to get out of this expedition academically . Were doing a couple of different programs. The first is test a new lightweight weather station. The second is the second and third are really using various proxies in different layers of antarctica snow to understand how unintelligible . Youve done three trips to the north pole since you turned 15. You study geology, geophysics at yale. All very impressive. But my question to you is more basic what does minus 40 feel like right now . It feels like it feels like you just want to move around what it really feels like is its just raw. [ laughter ] you know . Its not something you can ever get used to. We think we have it bad in the northeast, parker. Our best wishes to you, well monitor your progress and try to keep viewers informed as you do this, because again, to raise awareness for Climate Change. Good luck. Thank you. And the expedition can be followed at will willisresilience. Com. Parker joining us from somewhere in antarctica. He is bundled up. Thats devotion. Before we go, a quick clarification on the story, aetna expects revenues to double to 100 billion, not million. Thats important to note. And then the markets here, kayla, pointing out the worst three days for the dow and s p since october 7th through 9th. The better the data gets, the worse the market performs. As cramer said, some institutions locking in a good year ahead of what may be a taper next week at the fed meeting. Lets get back to headquarters and check in with scott wapner and the halftime. Guys, thanks so much. Facebooks new friend. As the company is added to the s p 500, does it set a new bar for where the stock could go next . Next big thing, buddy media, and runs salesforce. What social and tech plays would he make now . Well ask mike lazaro later on. And stocks coming off the biggest twoday decline in two months. The russell 2000 closing below the 50day moving average, so is the recent weakness in small caps a big problem for the bulls . Its halftime. Lets go to you, jon najarian, in the worst threeday stretch since october 7th, 8