Transcripts For CNBC Squawk On The Street 20141117

Its official, halliburton buying baker hughes for about 35 billion, and weve got more on activists and the fight for allergan. Forget wasting time at work. Menlo park reportedly developing facebook for your office . Moving in on google, microsoft and linked ins turf, down 3 in the free market. Numbers inside japans recession, gdp down 1. 6 following contraction of 7. 3 in the prior quarter. This week japanese Prime Minister abe expected to announce delaying plans to race the countrys sales tax and call for parliamentary elections in december. Estimate was 2. 2, to the upside. No one expected this to happen. Now a bunch of policy decisions to make. Do you suspend sales tax . This felt like 1937 in our country where they thought, you know, weve done enough to make it so were coming out of the great depression, lets start raising taxes, be more conservative. There are a lot of people saying that, you know what, this was just being prudent because the country itself is so in hock. I saw these numbers and i said, here we go, another country that i had thought kind of felt like things were Getting Better along with india. That was wrong. And i can understand why the futures are down. Yeah. Brazils in recession now. Russia, of course. Italy. France and germany not doing much to stay out of it. I mean we are with the exemptcen of india ahead of the game. Were not a big trade partner, as well as other countries. We have a big market here. I think that its been so long that we have felt any selfrespect that i think people dont believe, you know, the United States, i mean, if it if we dont have china, japan and europe going were nothing. 85 of business is done with Business People in america, it does mat. In japan, what do we expect will be the outcome of this . Theres talk of a new government. Yeah. Hell still be in control new york doubt about that. But to resolve any issue about the second part of the tax increase, which seemed to have a dill tear yus effect on americans to spend money. Kuroda buying anything and everything they can in japan. Or outside japan, too. Look, i think that what when we saw some numbers, retail Sales Numbers out of japan after this happened most of the companies i deal with in japan are saying double digits. Everybody who moved into japan thinking this is the nirvana moment has gotten fooled. By the way, a lot of the auto company interests japan have been moving up, up, as well as ours going down. Curious to see whether that can continue. Meantime, japan had a nice run off october runs, 10 in 4 days. Jpmorgan cutting u. S. To under weight. They think that europe is due for a period of relative outperformance. A weaker euro to work with now. Some stocks have come down a great deal. But did this include the g20 stomp out by putin and the idea if anything, things did escalate this over the weekend . The g20 move was a bust. It wasnt like did we get the final photo opportunity . I dont know. Australias Prime Minister talking a big game about confronting putin. Not sure that ever happened. Britain joking with him about the need to have a naval force off of the coast of australia. He was the butt of man n. Jokes things got worse, not better. But got some things accomplished in beijing. Another failing country. Kidding. China decelerating and say i wish we had that kind of quote still. Trajectorys not great. Two of the Worlds Largest Oil Services Firms hooking up, halliburton acquiring baker hughes, 34. 6 billion in cash and stock. Halliburton says its confident the deal will be cleared by regulators and expecting to close that in the second half of next year. Big divestitures, big breakup. On friday, i had said so much has to happen i cant imagine they can pass it. They did everything zbrp i think key things are the willingness to divest 7. 5 billion of revenues, 7. 5 billion of revenues. 31 billion in sales. Gives you a sense. 7. 5 billion off of 31 billion. The breakup fee far larger in a deal typical of this size, representing 10 of total conversation. That very large, goes to their confidence, jim, that theyll get it done. Speaking of people close to the situation, they point out, antitrust lawyer, extraordinary experience in dealing with these matters on the antitrust side in government. They feel comfortable about it. And with it. And, therefore, the expectation is they will be able to pass muster with the antitrust authorities but its going to be interesting to see. It will take a year as many people handicapping it will take. But the big picture that im hearing from those who advice on the deal, putting numbers two and three together, to certain extent in certain areas, theyre good at certain things were not. Theyre good at artificial lift and were not. Getting the energy out of the well with a fluid column is not a bad thing. Schlumberger, wow, evil giant, does have a fabulous glosser. Go there. Thank you for explaining that to me and to our viewers. You mentioned schlumberger. The goal to become the equal, if not exceed, schlumberger Technical Expertise and in their multiple. They want premium multiple. Thats the goal. Thats the goal. Schlumbergers fabulous company. Halliburtons done great things. I want to caution everybody this is a declining group. Weve got there needs to be consolidation. 75, there is the Conference Call last week said at 75, projects get killed. So, if you want this to happen if youre ahalliburton shareholder, halliburtons doing the right thing. Energy 9 at the s p. Nearly double that a couple of decades ago. Halliburtons biggest acquisition ever. Second biggest u. S. Energy deal this year. 274 billion. Energy the secondmost active sector in m a 2014. Youll see it more active now. What this is saying weve got a new reality, take advantage of. I was going over the bottom ind thursday, friday, they reflect the notion that were going substantially lower than 75, that we can be going to mid60s. You believe thats true . The stocks reflecting. I think it will hold at 70. And theres so much conspiracy go on the United States does very much want saudi to keep pumping because russia gets blown up and with that financially. I keep coming back and saying monthly numbers that come out, they are showing its like they discovered a prudhoe every three months down there. Incredible how much oil we didnt know we had, in part artificial lift. A very important thing. A very important thing. By the way, on the m a tactical side of this they made the first approach five weeks ago. They moved fairly quickly here. However they tell me theyve been able to identify 1. 8 billion or more, 2 billion synergies. Theres no doubt about it, you want halliburton to get those. Now, in five weeks, im not sure, but theres the number, 2 billion, thats a big number. Put a multiple on that, decide by the number of outstanding shares of halliburton, you get a pig per share number. 3. 5 billion, explain, what if Dollar General were to do Something Like that . Its not just a break fee for Dollar General and that family dollar. Its certainty of close which these dies guy guys are priding by a willingness to divest that much. Family dollar, dealing with antitrust concern, once again, they want more certainty and therefore say youve got to be willing to divest more stores. To me what baker hughes and halliburton are saying, justice department, tell us what to get rid of it, well get rid of it, we want the deal done. Last week you thought regulators would be fools to approve. You still feel the same . New york i saw a huge overlap. I look at one quarter of the revenues theyre willing to give away, what they did was say, yeah, there was a huge overlap and dont worry about it, were going to get rid of the overlap. This is astonishing. I dont think people realize how much business halliburton is willing to give away. It changed my mind about the deal. You can say, cramer, youre an idiot. No, they changed my mind. Another deal, people close to the situation indicate to me that in fact, allergan is getting bought for 219 a share. Wow 219 a share by activist, the deal is worth 66 billion, it includes 129 a share in cash and. 3683 of actavis shares. Talking about 1. 8 billion in annual synergies starting in 2016. Double digit eps accretion in 12 months. The ceo, look, they did forest, they have so many deals. Theyre good. Two allergan directors will join the actavis board. The number is 219 a share. Staggering. Which is, wow, so far beyond what some expected. Also this 129 in cash, synergy number larger than people anticipated. The cash number here, which of course theyll be taking on a good amount of debt at actavis but paid down a lot of debt, a significant amount of cash in excess of what people had anticipated. All of this, of course, conceivably closing the chapter on this long running battle under which valeant when it teamed up with hedge fund purchasing square, made an unsolicited proposal for cash and stock way back in the spring. That teaming up, if you will, of course, may have spelled valeants doom, when you look back. If they had chosen to go, jim, for the annual meeting, they would have made it, gone for a slate and challenged immediately, they conceivably would have been in a better position, valeant having lost se cephalon and this deal going by the way side. My sources and people close to valeant indicated to me a price of this nature, 219 a share, by the way it could om down if the stock price weakens which it may, youll have a lot of shorting, nonetheless, they dont feel they can compete but cited synergies higher than those cited by actavis. First, congratulations david pyott. The companys valuablen when i had saunders on, they were saying if david wants a deal, david pyott, well get a deal, guest the most on mad money of all time. You think the good guys win. Ackman does make a fortune on this. Ackman 9. 7 holder of allergan. Valeant has the opportunity to participate to the tune of 15 of his profits them walk away with some money as well. But they walk away conceivably here, we dont know what theyre doing but they walk away without what they had wanted. Maybe go after zoetis. Pyott, i think he can do 17 bucks in 2016. Posted number was 16. There are more uses for botox. I talked with david, we cant believe whats coming for botox. Things that he doesnt know that are going to come for botox. This is a remarkable drug. 44 shopping days this year. For botox . U. S. M a deal value 1. 5 trillion. Closing into the kind of year we had in 2000 with aol and time warner. Why do people think the s p is up . Look at health care stock, all breaking out, every one has another one if they bought them would be great. Can you believe actavis will pay this price . Im saying its great for actavis ultimately. Many would be surprised if you told them, even not that long ago, theyd be able to come up to 219 a share. Obviously cash and stock, but 129 of it in cash, we will keep an eye on the shares. They had been aggressive. Its funny, because of course one of the criticisms of valeant that you heard constantly from allergans camp from the earliest days was, serial acquirer that needs to keep the engines of acquisition going, benefit of a low tax rate. Valeant hasnt done a big deal in a year. Actavis their third big deal. All of the deals have worked. Theyre an amazing acquirer. I have to say if you look at allergan, they have this great franchise, not just botox, and degrowth is they had the highest percentage of r d of any major company. And i know actavis is anxious to improve on r d. Its a big day. Santelli at cme. Good morning. October read for Industrial Production comes out one. 1. We were looking for up a couple of tenths. Last months very aggressive up 1 was now degraded to up. 8. Utilizati utilization, 79. 3 expected. We arrived 78. 9. That 79. 3 which was the bef since 2008, lost steam. We lost a little bit of steam from there the market is reflecting this, as the tenyear note is about ready to slip under the 2. 30 level. Remember, weve had 14 sessions, not days, sessions, where weve been in a very tight range of 2. 30, to 2. 38. Today may be the day we break that range. Carl, its all yours. Thank you, Rick Santelli. The press release out from actavis and allergan. Dollar amount is enormous. 1. 8 in synergies. So, thats a number that i think is higher than people anticipated as well. Saunders, longstanding relationship with david. We are going to be able to speak to both gentlemen. Here. They are joining us. Here . Coming here. I dont need an ifb . No. Technical term. In 14 minutes from now. Nice. Mr. Saunders, mr. Pyott will join us as guests here on cnbc. Theyre both great guys. Look, pyott came on, when that stock dropped to 80s, he said, can i come on and tell viewers not to lose hope . 88, let me come on and tell them why they shouldnt sell . No ones ever done that. Give me a shot with your viewers, wow. Other news, facebook and Mark Zuckerberg taking aim at linked. Linked in is down. One look at futures. Lot of m a activity. Futures are lower on that weak in japan gdp number. The country back in recession. Were back in a second. Facebook working on a new professional website to compete with linkedin, dole and microsoft. The ft reports its called facebook at work, allow user to keep personal profile separate from work profile and enable them to chat with colleagues, connect with professional contacts. Interesting wrinkle here for a name up 53 this year. Thats been a stealth rally and then a stealth stall. I saw the ft played this thing up really big. My Charitable Trust own temperatures i believe in the company, believe in a lot of things theyre doing. Everything alibaba overshadowed by alibaba yahoo . People have stopped talking about facebook and still talking about twitter, but only in a way that says you know what . Twitters starting to monetize things. A great tweet this within about how twitters monetizing a lot of the nfl stuff. Nodo is public face. Do you think facebooks at a point they can pick off competitors at will . Yes. Like linkedin . Yes. I dont know if they want to. Yahoo needs it more than they do. Facebook has so much internal momentum and yahoo has a war chest and they need to buy some. Ive been working on who they might buy and acquire. Yahoo is the one that is most challenged, facebook is not challenged for growth. Yahoo when it looks at the opportunities in front of it in terms of what it could buy, it would seem for the highest quality assets, its going to be competing with facebook or google or google in particular. Google in particular which may make it difficult to do something monumental, if you will. Right. But theyve got to get out of this display advertising. Dont get out of it but recognizing it, its a terrible business out 0 of nowhere. Three years ago it was a pretty Good Business. Incredible deterioration. Cramers mad dash. The deal of the day. Live interview of the ceos with actavision and allergan on their merger. Premarket as we get this monday started. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. 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I think wasnt that what pfizer wanted from astrazeneca. Great point, jim. That was oncology was the key franchise there. We can rule out at this point, you never want to say 100 , but rule out pfizer going after astrazeneca. With the purchase, theyre moving in a different direction. Change in inversion rules as well probably prevented pfizer from another deal, from what i understand, which was actavision. What . And that also is something that is not going to happen. But pfizer was thinking about doing one, its attempt to take over astrazeneca failed. Pfizer might have been interested in actavision to get growth . Absolutely. The change in inversion rules from treasury changed the land escape in terms of what theyre looking at. You know, one of the best performing stocks in the groups since they dropped shire. They figured out their hepc franchise. Other things coming up including ceo of actavision and allergan at nyse when we ring the opening bell. 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The big deal today, we are going to get a lot of applause around the bell here, not applauding your deal. As jim just said, when you do a deal, you announce it here. Great to have you guy. By the way, a look at s p at top of your screen quickly. Whos doing the honors here at the big board, nyse, etf provider wisdom tree doing the honors and at the nasdaq, tkai pharmaceuticals. [ bell ringing ] one of the biggest deals of the year, one of the biggest in pharma coming after a long battle between allergan and valeant. We are joined by david pyott and Brent Saunders. I spoke to people close to the company, disappointed in their failure to acquire allergan but said 219 is a big number we had a bigger synergy number they are paying a price we could not pay. How could you justify it . Fairly negotiated. But most importantly what does it create . One of the Fastest Growing pharmaceutical companies in the world with top line growth accretion and bottom line accretion. Again, back to my question, why do you believe why are you comfortable playing a high price, one certainly that many of us might not have anticipated a couple of months ago. This is the best run company in pharma. I think juf mentiyouve mention many times. For us combine our company with this Great Company that david and his team built over the years, is a fabulous longterm opportunity to create value for our shareholders. We overlap in three of the four therapeutic areas in which they operate. International operations move into scale, were able to achieve 1. 8 billion of synergies, industrial logic is incredibly sound and yet, we have accretion to growth. How han many deals of this accrn and growth for the long term . Are you taking on too much . I mentioned it because forest labs deal didnt close that long ago. Youre piling them one after another after another. By the way, a criticism you lodged at valeant. Is it apt to say the same about your merger partner . Well, i think the big difference is here we have great cultural fit, very large number of common goals. Of course, brent and his team have a great track record, not only in their successful commitment to r d, they have seven mdas pending fda for 2015, quite an achievement. Great track record of building great franchises and brands. We have that in common. Brent has shared he thinks the combined company will be made off an amalgam of activists and allergan management teams. We feel really good about that. You feel comfortable intergrating all of those businesses . We do. To be fair, weve completed most of the forest acquisition, and warner chilcote has been well done. By the time the deal closes, forest will be done. One of the things youve emphasized to me is that the r d budget is the biggest per sales and thats how youve done so well. Assurances here versus valeant that that budget is going to continue in its size. I was happy when we got into detailed discussions that brent and the press release has pointed out that the combined company will invest 1. 7 billion in r d, reductions across two companies are modest. And i know he has a very dispassionate approach, just like we do. And its going to be a great future. If i could add, 1. 7 billion in r d is a huge commitment. Were i think valeant put out a press release that said 900 million cut in r d. Were talking about half of that, or less than half of that in cutting because r d is the lifeblood of our industry. We have one of the greatest combined latestage Development Portfolios in the industry. Which was sustain growth for the foreseeable industry. Revenue synergies, im really excited about those prospects, given the Good Business overlaps we have. Therapeutically and also internationally. 1650, ive been using 17 for next year, how much of this is botox, how much is oped mow logical, how much is what we dont know . 17 is for brent. When you look at your numbers, what did you have you had a lot up your sleeve that youve been very conservative. Yeah. But theres a quantum leap in the amount of earnings power for allergan that both of you are taking into account. What is behind the quantum leap . Well i think we have such a great number of growth between now and 2019, but seven products led by botox therapeutic. You know all of the conditions very well. Migraine, bladder, spacticity and restasis and cosmetic, and the fillers going through the roof. As we got into discussions, we were impressed with Growth Prospects for their major brands. With strong doubledigit accretion in the deal, we have an aspiration of 25 of eps in 2017. For the combined company . For the combined company. David, for ceos and managers who find themselves in the spotlight of actavis investors, advice . Perform, perform, and perform. Our team, all of the employees worldwide, have done a great job. Youve seen the acceleration and growth. Last quarter, 17 growth. A testament to their commitment, to focus delivering r d pipe lean, customer satisfaction. And if theres one happy thing for me to talk about, since the day before the bid came and now, weve created 20 billion worth of value for our stockholders. Valeant had something to do with that. They helped you along in terms of creating that value. Some of it was inherently there. You saw a tremendous acceleration in value. But when put into this, ill call it, uncomfortable position were put into our discomfort zone, and that really came to our fruition in term of savings but the delights with our customers. Weve received, as you know, hundreds of letters, comments, Position Community supporting us. As brent and i walked into the set, were talking about our common experiences in ophthalmologist in the past. Im convinced our physicians will be really happy brent back into ophthalmology but for me to introduce him to other specials that i know well mr. Valeant put a statement out moments ago saying they cant they could not justify a 219 price. Sort of along the lines of my first question to you. You chose not to engage with them at all. Youve delivered quite a price for your shareholders, nobody can argue, above what they would have paid. But why in this end game here when you decided okay, were going to move towards poe sente sale, why not have engaged with valeant . Our view was that the offers never came close to the Intrinsic Value of as of friday 103. 11 billion give or take from what actavis is willing to pay. I feel its a fair price. I know theyve had expert advice from their Investment Bankers on their signed i think its a fair deal for both parties. Looking at some things that botox can do that we havent thought of yet . I know that even five years ago i didnt think migraine, i didnt think certain incontinence product. Is it probably the great wonder drug when it comes to spaz itches, when it comes to muscle problems. Are you seeing much larger possibilities for the drug than we think now . Thats one of the reasons we feel this price is fair. Weve got into due diligence, in the pipeline, all of the things that will drive value in the future. Botox is a very large part of that. There are many other applications for botox. Its a drug and suite of products all in one. David, you said over and over, listen, you dont play for dinner. You didnt need to do this. You felt it was great for shareholders. Whats next . My first focus to make sure we complete this transaction. Tremendous focus on passing the olympic torch to the new team, and of course as we said earlier, it will be a combination of people from actavis as well as some members of the legacy allergan team. I feel really good about this. Not only for stockholders but our employees as well as our physician communities. Youve gone from being a company that few people were that aware of to being will become with this deal when it closes one of the Largest Pharma Companies out there, certainly in terms of market cap, not to mention revenues. Are you ready to take on an args organization of this size . Do you feel management has abilities to run an enormous organization with a very Broad Product line . Absolutely. Combined management from allergan and actavis is ready to do this. The reality is, our goal was never to be big. Our goal isnt to get bigger. Our goal is to be the Fastest Growing. Thats what this transaction is all about, to create growth pharma. Part of your strategy to be fast growing relies on acquisitions, certainly it has. Weve done a few act si significanc acquisitions. Last quarter was a great demonstration, 83 growth. You look at our Branded Products we had 14 of 17 brands growing in double digits quarter over quarter. We have a durable platform. Great diversity. Great long lived assets. We havent heard from bill ackman, 9. 7 owner of the stock. I dont know if hes going to hold the meeting december 18th. What are your expectations . Well see how that unfolds. But of course, the goal of any a actavis investors, that goal has been achieved and of course this is a sideline, our litigation on Insider Trading suit that continues. That will continue . It continues. Why . Well, at the end of the day, i personally am quite disturbed about the shareholders that sold their stock in the period not knowing that there was a bid coming from the other side. I think we have a fiduciary obligation to protect those interests. Talk about alzheimers franchise, how underinvested, how was forest labs not thinking about the big picture versus what you had done. We have 100 share, we have a great we have at the fda a combination of nimenda. Were in the alzheimers gape for the long term. One of the things you see us do is learn from new colleagues from allergan, about dtc. Weve done it on our Irritable Bowel Syndrome drug and well launch Consumer Advertising in the coming weeks. Will we all take it . No one anyone seems to be vulnerable to alzheimers . Can you prove if we took it, not a lot of downside and perhaps maybe forestall it . Its no in the label. It really is more fmoderate to severe alzheimers. 1. 78 billion of synergies, focused on investors and able to deliver that will be important. Have you delivered on your previous synergies . Yes, absolutely. We have a track record not only delivering of it, but delivering them faster. Our belief when you do synergies you do it as quickly as possible, helps employee, helps create a better morale inside the company but creates more val up the faster you get a synergy, the better. When you look at forest, we announced a billion dollars of synergies, we have this year a billion dollars of synergy. Were going to try to overdeliver that. We have a great team. Well work with allergan to do this. And weve got do it and grow the business. Thats the key. Anybody can cut costs. But can you cut the cost and grow the business like we have demonstrated time and time again . Right. Of course, allocation of capital also important about your business. Youre taking your leverage ratio up here. Where . A little over four times but maintaining Investment Grade rating. Committed to delevering, down to 3 1 2 times within a year. David, regeneron has a powerful franchise, too. Where are you in terms of competing with them on 20152016 . As you know we recently got the approval for diabetic macular edema, brought the label in the United States beginning of september, and sales have take aint remarkable uptick since then. We believe somewhere between 30 to 40 of patients with diabetic macular edeem ma are insufficiently served alone. Given our product dosed every four to five months you can imagine the convenience. Further out, we have a great program, thats one i think is a sleeper. Youve said thats the stock was at 80, David Telling me, darpen valued less than zero. That was another point i had to make to brent to say, you know, youre getting this free of charge, to make him feel about 219. Well, its were excited about darpen. This is a difficult battle i argue for you. Youve been fighting here against valeant, ackman for some time, a great deal of vitriol to a certain extent from both sides. Was there a point of which you realized im not going to be able to stay independent . Not really because, you know, i was committed to creating stockholder value. My biggest goal was to prevent the company from being sold far below its true value i think that would have been a failure of myself and the board. And the bore hard has been grea hard working, cohesive, make sure were driving up the values. I think weve done that in the right way. And thats finally the goal of all company were a public company, to do just the right thing and i think our stockholders, brent and i will be seeing allot this week, should in general be pleased. Gentlemen, thank you both for being here on this momentous day. David pyott, Brent Saunders. We expect to be hearing quite a bit from. Thank you. Thank you. S p moved within a tenth of a point last four days. Todays no different. Lets get to bob pisani on the floor. Bob . All right. Well go to Rick Santelli at the bond pits instead. Rick . Always ready here. You know, lower bands of tens and 30s have gone close to 15 and 20 sections, respectively. Todays no different. Look at intraday, you can see around 9 15 eastern, the market was disappointed wiIndustrial Production. Twoday chart shows you rates did go down and tests 228 level. Remember 230 the lower band on a closing basis. It held for now 232. Upper part is just a shy of 240, you can see it on a number of tests from the up and down side. Next chart starting in august. You want to know whats going on, theres a couple of other places that we should start. Why dont we look at how bunds excuse me, look the 10s versus 2s. Hovering at the plflattest leve in a while. If you monitor this trade it goes back to summer of 2013, before weve seen levels of around 180 flat. If we look at the bunds versus tens, a bit of enlightening picture here. Its going to retest high levels going all the way back to summer of 99. Why do you care . The defense between our yields and their yields one of the reason is its going to be difficult for our yield to move higher as they hoover low 80 basis points. Foreign exchange, a lot of the action is at. Think, Prime Minister cameron g20 meeting said red lights are flashing on the Global Economic dashboard. You have money man in the form of carney talking about we cant get traction on prices because they couldnt get traction on growth. Pound versus dollar, lowest level sense summer 20130. If you look at euro versus dollar trying to official up. Dollar versus yen, and everybody is because of the poor gdp performance and the quantitative kingdom of all time we could see that that extreme goes back to october of 2007. Carl, back to you. Sorry, bob pisani, i think were all ready to go. Hit the button and see. Thanks, rick. Absolutely right. Baker hughes halliburton, big stock story. Everybody here talking about japan and that big gdp miss. Japan lost 2 , nikkei dropped about 2 overnight on that. Hang seng also down. Japan gdp, down 1. 6. Everyone expecting up 2. 1 . This is a miss of epic proportions. Nobody had a loss amongst people who make skiestimates. You can say it wasnt as bad, things are improving but thats not the way most people saw it. The sales tax, second sales tax hike unlikely. Japan produces a lot of machinery for china. Whats behind this . Concern that chinas slowdown is more noticeable and showing up first here and slowing orders in gdp. Remember abes three arrows, fiscal stimulus, monetary easing, structural reform. People are saying this isnt working. Hes liable to ignore that and double down. Hear more about structural reform soon. Nobody i talked to thinks that mr. Abe will abandon abenomics now. We talked about the Shanghai Hong Kong stock linked. David freeland says it appears to have gone off without a hitch. You you can own 560 china shares. You never could before. This will open up the chinese marks and bring mainland chinan. This is a big little start for opening up the china a shares all over the world. Shanghai, not a bad move, that was a terrible performer for years, underperforming. Its done pretty well today. Baker hughes, 78. 62 per share. 1. 2 shares of halliburton, 19 for each bhi share. People talking about the speculation of other targets that might be out there in the oil services field. So national oil comes up a lot, weatherford, rpc, c j energy come up, yet, other than a slight move up thursday, stock Like National oil well, really didnt move much. Mostly to the downside, as you can see today. There has not been a lot of upside speculation in a lot of the names that may be targets in the future. Tyson, earnings this morning, stocks up, beat on earnings. Decent guidance for 2015, 3. 30, to 3. 40. Up 3 . Talked about higher beef, pork, prepared foods. Finally, happy birthday gld. The gold, cdle, Spyder Gold Trust went public, november 18th, tomorrow, but came here on the new york stock exchange. I had two burly guards here, speculation this would never succeed. Gold etfs have done well. Height in gold september 2011. Not as much assets under management before but the gold etfs sturdy vehicles for people who want to invest. I remember that day. Thanks a lot. Great fun. So with that, s p flat at 2038. Stop trading with jim in just a minute. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Which means its time for the volkswagen gnthendrive event. For practically just your signature, you could drive home for the holidays in a germanengineered volkswagen. Like the sporty, advanced new jetta. And the 2015 motor trend car of the year allnew golf. If youre wishing for a new volkswagen this season. Just about all you need is a finely tuned. Pen. Hurry in and get zero due at signing, zero down, zero deposit, and zero first months payment on select new volkswagen models. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. And youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Its monday. A brand new start. Your chance to rise and shine. With centurylink as your trusted technology partner, you can do just that. With our visionary cloud infrastructure, Global Broadband network and Custom Communications solutions, your business is more reliable secure agile. And with responsive, dedicated support, we help you shine every day of the week. Centurylink your link to whats next. One of the hottest groups is the hotel business, such resurgence in travel. But this morning ubs says be careful with starwood, you know, symbol hot, and marriott. Marriotts been an amazing stock. I dont nope about this call. I think on weakness you want to go back into this group. A lot of valuations calls that worry me, theyre going keep people out of very good stocks. Thinking allstate, kbw cuts to market perform. Insurance stocks up huge. Again, proctor, that call says that everythings thats going to be done has been done. Mistake to sell the stock. Merck, Charitable Trust name, came out with study for vitorin, able to cut back on second heart attack, anticholesterol drug, big, new market, regenerons got other things in the pipe. Merck is not an expensive stock. I kept listening to david pyott and what Brent Saunders created. It gives merck and pfizer, everybody a run for the money. Interesting to note, actavision share up this morning, people going into this would not have expected if you pay 219. 219 is not an expensive price. You believe that . Im telling you, what theyve got in the pipe line is revolutionary, what they can do with botox. I cant say they can double sales in three years but discoveries and uses off label that people only dream of and havent capitalized on them yet. Six years ago, botox the only thing terms of consumer cosmetics, all we talked about. Wrinkles are a minor business in 2016. You wont believe it. The most controversial stock ive ever had on, globalstar, the ceo is coming on. I was call calling it a battleground. He begs to differ. Its a very big long. I think people are going to want to watch this interview. This is 2 stock where if you dont want mad money you have no idea what to do with this. If you like what he has to say, double or nothing. Im there. Double or nothing. See you tonight, 6 00 p. M. Eastern. Simon, whats coming up next . Look at recession in japan. Why did that happen . What are lessons here for the fed . Also ahead, halliburton buying baker hughes, who is next within oil services . Also take another look at whos winning now as the price of gasoline comes down. Restaurant stocks look to be top of the list. There was a nice house that lived with a family. One day, it started to rain. The house tried to keep out all the water, but water got inside and ruined everybodys everythings. The house thought she let the family down. They just didnt think it could happen. They told the house they would take better care of her. Always. Announcer protect what matters. Get flood insurance. So if you get a trade idea about, say, organic food stocks, schwab can help. With a trading specialist just a tap away. Whats on your mind, lisa . Id like to talk about a trade idea. Lets hear it. [ male announcer ] see how schwab can help light a way forward. So you can make your move, wherever you are. And start working on your next big idea. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. And often even more. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 89. 95 a month. Comcast business. Built for business. Welcome back to squawk on the street. Road map begins with deals. Actavision buying allergan, 66 billion, hear what the ceos of both of those companies had to say about the deal in an exclusive interview. Halliburton buying baker hughes in nearly 35 billion deal. Find out what the deal means for stocks and the future of others in that industry. And as the markets hoover near alltime highs, jpmorgan says dump u. S. Equities and buy europe instead. Well talk to the strategist who made the call. Japan, the Third Largest economy, unexpectedly falling into recession after gdp shrank in the Third Quarter. Cnbcs chief International Correspondent Michelle Carusocabrera has more on that back at hq. Shrank more than expected, simon, and way below what economists were forecasting. Decline of 1. 6 when economists looking for a gain of more than 2 . I show you japans growth rate back to 2012. You can see theyve spent a number of quarters in recession, one of the reasons why abe, the Prime Minister, trying with various measures to improve the economy. If you look at the japanese economy in terms of yen, its still at levels we saw back in the late 1990s. Thats how long theyve suffered with a weak economy. Thats the impact. Show you what the nikkei did. Fell nearly 3 , because it was so much worse than expected. When you look at the yen, if theres bad economic data, currency weakens. Not so in japan. The yen strengthened there 116 yen to the dollar. Oil fell as a result, because remember now, were talking about numerous economies in the world being weaker than expected. And japan supposed to be one 0 the economies Getting Better because of three arrows, right . Fiscal policy, monetary policy, and reform in japan that was going to make things better. Why did things go so badly . Economists think because they raised sales taxes april 1st from 5 to 8 . Supposed to be another increase so the sales tax would go to 10 april 1st next year. This datas going to delay that as a result. Back to you. I think there are two big takeaways, if i may, for our economy here. The first is, you could create Inflation Expectations because the bank of japan did that. But people may not spend money because they may feel that theyre going to be permanently squeezed, as happened here. The second thing is the power of a tax increase vastly outweighs power of massive qe. And you can argue that round at other way in this country. Power of a tax cut in this country or fuel, gasoline prices falling, would outweigh power of qe, the two pointize would make. Thats interesting. A note put out and the title we did all of that qe and all we got was a lousy recession to the point raising the core question youre asking, or the point youre making, quantitative easing does it necessarily work . Also, if you have a mixed policy, one hand you say youre going to do fiscal spending, deficit spending, use fiscal policy to revive the economy, at the same time you raise taxes all you have done, inject money with one hand and take it away from the other, you just moved it from the private sector to the public sector. Its a bit of a mess. They are similar to europe. Parts of europe. Michelle, im wondering how this is going to play out politically in japan. Because all historically, if you have a disappointing disappointment like this, abenomics proving to be not working. Right. What that means for him and his reforms and the fact he hasnt gotten through much structural reform. It would mean another government potentially for japan, can you imagine . Italianlike almost in constant changing in leadership there with one point you make, sara, also one of the reasons to suggest why the yen may be stronger today. Looks like abenomics may be going away you dont get the same policy that was pushing the yen far lower. Thats the only policy choice they have, i would think. The yen is turning around now, starting to weaken. Thank you. Turning to a major merger deal of the day, halliburton buying rival baker hughes for 35 billion. The deal valuing baker 78. 62 a share. Joining us on the phone, michael lamot. Before we talk about the deal, do you expect it to go through . Do you expect the antitrust regulators to allow those happen . I do, i dont think theres going to be issues of pricing power. Most Major Products and service lines. Halliburton and baker hughes mentioned today on the analysts call this morning that they had identified up to 7. 5 billion of consolidated revenue that might be an issue from a regulatory standpoint. I actually think the number will end up being lower than that. So i think this will get through without any issues. Do you think its a win win for both companies . I do. I think this is the right point of the Business Cycle to be doing a deal of this size, were heading into a soft spot as a consequence of lower oil prices. So the entire industrys going to be looking at structure and doing what it can to manage margins through a weaker time. I think this deal allows both companies to get ahead of the markets, so to speak, on the cost curve and emerge from the softer spot, i think a stronger entity. Shed light on what happened friday where it would appear the talks completely broke down, then halliburton was going to go hostile, and then two days later, over the weekend, they struck some sort of deal. Does it mat that baker hughes management may feel extremely angry and defensive about what has happened here . Particularly with a view to getting it past the antitrust authorities . I think the issue, as i understand it, initially around price and value to baker hughes shareholders. Clearly over the weekend they were able to negotiate a higher price. I think fundamentally management, both management teams, were aligned in terms of the logic of the deal. And as i mentioned from a Business Cycle standpoint, it makes great sense, it was more about price and clearly that was what got resolved over the weekend. In speaking to people who were advising on this deal, i can tell you, their hope is that they create a combined entity that is compelling to own as schlumberger. Do you think thats a realistic goal . I think it certainly its an ambitious goal, but given the scale of the combined entity, i think that they will accomplish something together that Neither Company could do on their own. Given the backdrop that you laid out of sharply lower oil prices, do you expect more consolidation in the space and if so, can you name any names who might need to find a seller and who might need to find a buyer in. One of the things one of the consequences of the shale revolution here in the u. S. Was really an explosion of the number of Companies Participating in various segments of the oil services industry. For example, hydraulic fracturing mark was consolidated heading into the shale boom with the three major players, bj services, acquired by baker hughes in 2010, halliburton and schlumberger controlling about 90 of the market. Today, those three Companies Control about 60 of the market with upwards of 45 to 50 players participating in the other section. So i think we will see a lot more consolidation of these smaller players as the market begins to rationalize and recalibrate around the lower level of activity next year and possibly even in 2016. Finally, michael, does it tell you anything about the companys outlook for oil prices, about whether they expect them to stay at super low levels . I think its really a function of being nimble to response to any pricing environment. As we listen to the emp companies talk about their plans for 2015 on Third Quarter earnings calls, it is a bit prematu premature, most heading into the budget season right now. So well get better clarity on what 2015 will ultimately look like, probably beginning in the january time frame. But meanwhile, the Services Companies are kind of sitting tight, waiting to hear what their customers are going to tell them. And i think remaining nimble is the private. Thank you, michael lamotte, joining us on the phone for the 36 billion deal. Even ebola making head leans, a surgeon has died. Meg tirrell live with details. Good morning. Reporter good morning, carl. Thats right, dr. Martin sala was further along in the course of the disease than many other patients flown here. He was extremely Critical Condition when he arrived at nebraska over the weekend. And because of that his outlook wasnt as good. He reportedly received negative tests for ebola before symptoms persisted and then received a positive test. Some of the tests arent as sensitive in early stages of disease. Its harder to detect virus in patients blood and it highlights the need for better and faster diagnostics. Nebraska Medical Center gave him every available treatment, including blood plasma from a survivor and zmapp, the name of a drug we havent heard in a while than was administered to dr. Kent brantly and nancy writebol, some of the early american survivors, but we thought it was out of supply. We should be receiving more income, whether a few doses left over or a new supply. The u. S. Is working to ramp up the supply. Theres a press conference for noon. We should be learning more about that. The outbreak in west africa continues to rage. While the u. S. Did contain the cases in dallas, more than 14,000 cases have been reported in the 3 countries in west africa and more than 5,000 deaths. We know Clinical Trials are expected to start in the next month in the west african countries being run by doctors without borders. Those are another drug and blood plasma. Here at the conference in new york city, talking later with mike mill kin and francis colins. Thank you. Send it over to kate rogers for a quick market flash. The dow down 17. Simon, check out dreamworks, the stock taking a hit as negotiations between and it hasbro has been hamped by issues regarding the structure of the qup company. Two the companies had a hard time agreeing on the price. Dreamworks trading down 15 . Hasbro trading up over 4 . Thank you. When we come back, lower gas prices mean consumers have more cash in their pockets. Which areas of the economy stand to benefit the most . How can you make a profit . More on that when squawk on the street returns. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. Thats the thing, you dont know how long it has to last. Everyone has retirement questions. So ameriprise created the exclusive. Confident retirement approach. Now you and your ameripise advisor can get the real answers you need. Well, knowing gives you confidence. Start building your confident retirement today. Which means its time for the volkswagen gnthendrive event. For practically just your signature, you could drive home for the holidays in a germanengineered volkswagen. Like the sporty, advanced new jetta. And the 2015 motor trend car of the year allnew golf. If youre wishing for a new volkswagen this season. Just about all you need is a finely tuned. Pen. Hurry in and get zero due at signing, zero down, zero deposit, and zero first months payment on select new volkswagen models. Where will the extra cash go . Lower prices at the pump are giving consumers more spending cash. Which retail sectors stand to benefit the most . Chris christopher an economist at ihs global insights. Good morning. Pleasure being here. To a certain extent you can see this beginning to show up in the figures of course on friday. We saw the food services, in particular, are now up over 7 on where they were last year. Its already beginning to feed through, isnt it . Yes. And not only food services, and thats fast food restaurants, but big box stores, Discount Stores going to do very well. Why would you say that . Why do you argue that . Theres a lot of People Living paycheck to paycheck. Times are rough for majority of the americans. When the pump prices fall a bit, they have a little extra spending power. Now those in the upper income brackets, this doesnt mean too much to them. I guess a big question is whether you believe that gas prices have fallen permanently or whether its something thats going to put a bit of extra cash in your pocket now but may not be sustained. Well, for the most part, how people react to falling gas prices is they think its sort of perment. Theyre careful. The longer it lasts the longer they think its going to, you know, be in the future. So kris out in people are cautious but the Holiday Retail sales season is looking bright because of falling pump prices. The caveat, obviously, chris, talking about the baker hughes deal here, people believe thats a defense everybody deal. We can debate that another time. Some believe parts of the shale industry, in this country, can have a hard landing. That takes the edge off of the optimism because some may lose their jobs here. Yes. There are parts of the country that depend on Energy Prices being relatively elevated. However, overall, the average American Consumer will benefit. You laid out sort of the consumer. Can we break that down further . Low income, you say, does that mean a restaurant would benefit more than a Department Store . They have input costs. This helps them further, having a low price of oil. Which sectors within consumer get the most . Those sectors that depend on lower income households should benefit. However, one little hitch to this story is that food prices are relatively elevated and the pump price relief is not giving enough, you know, juice to low income households to spend more. Now one thing is everyone has to eat but not everyone has a car. Especially in lower income brackets. Chris, i want to take a lesson that leaf leaweve learn japan. Theyve created Inflation Expectations. If you do that the textbooks say people go out and spend. In this case, it didnt happen in japan i wonder if the point that you make about food inflation in this country is similar. People believe that they will be squeezed permanently now and it done have the effect that you expect it to. Food inflation in the United States, at least is different than pump Price Inflation or pump price relief. For some reason, pump prices have undue influence on the American Consumer though they spend a less than the percentage of the disposable income on pump prices. So, psychologically, pump prices play a big role. Well leave it there, crisp Chris Christopher from ihs globalen sights. Breaking news out of huber. A partnership with spotify. Joshly. Ton has details. New partnership announced between huber and spotify. The point trying to bring spotifys streaming service to hub huber customers. If youre an Huber Company and and request a ride, inside the car youre able to listen to music from your own spotify play lisp the point for huber to try to distinguish itself from rivals like lyft. For spotify a big partnership, a chance to get its service in front in front of many people. Huber is active in 50 cities worldwide. Spotify does have 50 million active users but of course increasingly competitive field here, pandora, apples, beats, and youtubes new service. On the call, which is ongoing, hubers ceo not willing to get into the details of the financial parts of this deal simply saying that this is a win win for the two companies. Carl, back to you. Interesting stuff. Competitive space. Thanks so much. One of the biggest deals of the year being announced more than an hour ago. Actavision agreeing to acquire allergan in 66 plus billion deal in cash and stock, 129 a share in cash. Remainder of actavis shares are up. People saying, wow, that is a big number when you look at multiple to ebitda, when you look at multiple to earnings its paying for allergan, its talking 1. 8 billion of synergies but some may say that seems to be quite a stretch. None of that seeming to dissuade investors from buying shares of actavis up over 4 , sending the val ue above 219, coming after battle between allergan and valeant, which pursued it but failed in fact in actually getting to the finish line. This morning valeant telling us that 219 a share price cant be justified, at least in its opinion. Valeant did have more synergies than currently claimed by actavis. The question is, okay, why are you comfortable doing a deal at this price right now . This is the best run company in pharma. I think, jim, youve mentioned that many times yourself. And for us, to be able to combine our company with this Great Company that david and his team built over the years is a fabulous longterm tune to create value for our shareholders. We overlap in three of the four therapeutic areas in which they operate, International Operations move into scale, able to achieve 1. 8 billion of synergies. Industrial logic is incredibly sound. And yet we have accretion to growth. Remember, of course, they also have nice low tax rate as a result of inversion they did not that long ago when they purchased warner chilcote. That of course being actavis which not only bought warner chilcote but forest labs. So a good deal of integration that has taken place mr. Sauners said, a lot more to come with the acquisition of allergan. For valeant it may have to move on and try to identify another target, perhaps, part of its rollup strategy. One shareholder who will be quite happy, bill ackman, having taken that very large position of 9. 7 teaming up with valeant, if you will. He walks away with a huge profit, 15 of that will go to valeant. But when you look at their strategy, clearly a failure on their part. I would argue, failure comes from their actual partnership with mr. Ackman. If they had not done that and gotten to it when they wanted to, they would have made the meeting, been able to nominate a slate, actavis was nowhere in sight. Theres a lawsuit. A lawsuit that mr. Pyott said will continue. All right. Some confusion, i think, as to whether this was a win for bill ackman because he didnt get valeant deal through. But clearly he makes money either way. 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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. Welcome back to cnbc. Im Michelle Carusocabrera. The breaking news desk, mario draghi has said the following, buying government bonds is an option if the ecb decides to tax additional easing steps. Well roll through the european markets and show you the Immediate Reaction weve seen in major averages there theres the board. You will see they moved higher in the last few moments, as this headline crossed. And i think you might see a positive response in the u. S. Markets as well this is significant, hes at the european parliament. He testified, it looks like he may be answering questions afterward. He has said in the past, well do everything it takes, et cetera, but when he was asked specifically about buying government bonds at last meeting at the ecb, he would not specify. I think this may be the first time that he actually does that hence why youre seeing the market respond the way that it does. And of course, remember, guys, just because he says it done mean the germans will go along with. Back to you. It doesnt mean that it cant happen though, without the germans. Thats true, thats true. Still get a majority to push it through. Some people believe he can only increase the size of the Balance Sheet by a trillion euros by buying government bonds. Thats the scene of mario draghi in the european parliament. The ceos of allergan and actavis speak out on this show. Hear what they had to say about the deal and what in the future holds for them when we come back. Who do you work for . Your boss . Yourself . Your parents . Your family . At baird, what matters most to you. Matters most to us. As an Employee Owned firm, our Financial Advisors have the freedom and resources to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Which hedge fund performed the best this quarter . Cnbc hasek clusive data whos at the top. Kate kelly. An interesting, new Analysis Shows that when it comes to stock positions, its not necessarily the household names that are performing the best among hedge funds this quarter. Some of the less recognized Fund Managers that are. Take a look at top five stock pickers. Whale rock capital management, 850 million, based in boston, number one. Thanks to picks like alibaba and assuming they own those names all of which they disclosed in Regulatory Filings dated september. Other big hitters Matrix Capital management, par capital, Senator Investment Group and starboard, star board is terribly high profile. Senator actually is invested in partially by blackstone. Theyre more on the radar as well. Managers benefitted from names like yahoo allergan, Delta Airlines and results are intriguing at a time when, according to the study im citing as well as underwhelming Hedge Fund Performance numbers weve seen, stock picking prowess is in short supply. According to symmetric, only 30 of manage have been able to select wellperforming stock names, particularly sectors beaten down. The average manager over the year has demonstrated negative stock picking skill, carl, according to the survey. Back to you. Interesting stuff. Kate, thank you. As the dow hoovers near alltime highs, jpmorgan says dump u. S. Equities, start buying europe. The firm cut its ratings on u. S. Stocks to underweight from buy. The Global Equity strategist for jpmorgan joins us this morning from london. Good morning to you. You mentioned the credit cycle beginning to bottom out. You talked about the euro being a tailwind. What are the real dynamics at work here. Hi. Thanks for having me. I say, first issue, that europe down 22 from the s p 500 this year. And if you look at the differential between the two regions, its at the top of the range. From here you have to see some kind of reversion. If you think of sentiment, excited about europe, about now, if universally shunned. I think therefore you need to be contrarian and buying europe now. Any worries that the divergence cant get worse, that europes troubles can get even worse, as either as ours get better or same the same . Of course. Europe shown time and again it can always disappoint on the downside. But that would say if you think about the flows, u u. S. Is crowded, money has gone into the u. S. , money has left europe. Thinking over here is risk reward from here, what do you want to do. I think draghi just on the tape, mario draghi, talking about possibility of buying sovereign bonds. Would that help your call or hurt it . Is this rally predicated on qe or fundamentals of the eurozone recovering . Our view that is ecb will not act, we think probability is less than 50 of sovereign qe. So the story here that is there is a fundamental bottoming out in the credit cycle, supplies bottoming out. Obviously, if you give us qe as well the call would be more powerful here. Mislav, the problem that is youre talking primarily to an audience in the United States and is therefore dollar denominated what it does. You could have a rally on europeani equities in outperformance but erased by the fact the dollar would rise and that europe would fall. What specifically is the tradeoff there . So, i would say if you take a step back, we still think that u. S. Equities will go up in absolute terms. This is a call that we were underweight europe, overweight u. S. This year, for example, we think it should be changing. Yes, one of the arguments behind our call that is euro will fall further which will help european exporters, european earnings and activity. But, mislav, if i see the European Equity market through the eye of the dollar, if the dollars rising thats going to reduce returns on the equities. Its different for you. Youre in london. Thats my point that euro will weaken but im not looking for european equities to be overshadowed by that. I think european equities outperform u. S. Equities in dollar terms as well. Are you suggesting 10 move lower in a trade weighted euro, boost growth by 1 over two to three years. Doesnt sound like much of a bargain. Its a starting point. If europe given a bit of growth that would mean a lot because we are the point is that if you think about the big picture, big picture u. S. Has been printing money for a few years. Fed has been acting. That storys largely done. Now its ecb which is not going to do sovereign qe, we think but expand Balance Sheet by 35 over the next one or two years thats going to be meaningful. On the news of the day, japan entering a recession, a shocking negative print on gdp. Does that mean abenomics is failing . I would say that the key function for us is that bank of japan will do over the next few years five times more than what fed has done. And if you think about the third arrow, that is very, very low moving. The key is about asset deflation and again competitiveness through the currency. One Silver Lining of what happened today is that the hike which is scheduled will be pushed out. So japan will have still some support as well. Provocative call. A lot of attention this morning on this side of the pond, mislav, thanks for your time. 66 plus billion the largest pharma deal of the year and one of the biggest transactions weve seen in a very robust year for merger and acquisition activity. Actavis ending long saga allergan playing off as it fought off valeant. 219 a share purchase of allergan. That deal worth more than 219 a share because, as you see, actavis shares responding sp positively to 1. 8 billion in synergies by 2016, a number above what many analyst whose investigated the possibility of this deal had anticipated it would come in at. Earlier on cnbc we had an opportunity to talk to both men who run these two companies, david pyott from allergan and Brent Saunders, who will run the combined actavis allergan. This the best run Company Since pharma. For us to run the company that david and his team built over the years a fabulous longterm opportunity to create value for shareholders. We overlap in three of the four therapeutic areas, our International Operations move into scale, were able to achieve 1. 8 billion of synergies. Industrial logic incredibly sound. Yet we have accretion to growth. How many deals of this size and scale to do you see accretion to growth for the long term. Your companys so busy. Are you taking on too much . The forest labs deal didnt close that long ago, not to mention warner chilcote. Youre piling them one after another. By the way a criticism you lodged at valeant. Is it apt to say the same here about your merger partner. I think the big difference is here we have a great cultural fit, very large number of common goals. Of course, brent and his team have a great track record, not only in their successful commitment to r d, they have seven mdas, pending fda for 2015, and also great track record of building great franchises and brands. We have that in common. And brent has shared with me he thinks the combined couple will be made up of an an al gum of actavis and management teams. You feel comfortable integrating all of those businesses . We do. We have completed most of the fore forest acquisition. By the time this deal closes, forest will be done. One of the things youve emphasized to me the r d budget, its the biggest, per sales and thats how youve done so well. Any assurances here versus valeant that r d budget will continue in its size. I was happy when we got into detailed discussions that brent in the press release has pointed out that the combined company will invest 1. 7 billion in r d, the reductions across the two companies are pretty modest, and i know he has a very dispassionate approach, just like we do, and its going to be a great future. If i could add, jim, 1. 7 billion in r d is a huge commitment. I think valeant put out a press release or slide deck that said 900 million cut in r d. Were talking about half of that, or either less than half in cutting because r d is the lifeblood of our industry. We have one of the greatest combined late stage Development Portfolios in the industry which will sustain growth for the foreseeable future. One thing that wasnt picked up on revenue synergies, arent the actavis numbers but im excited about those prospects given the Good Business overlaps we have. Therapeutically and also internationally. Those comments certainly helping to sent shares of actavis higher, perhaps something of a surprise given the very high multiple its paying although, to be fair, you hard some of the conversation behind those synergies. The big winners here, well, certainly allergan shareholders, david pyott having delivered along the way realizing he was not able to keep the Company Independent but not selling to valeant as he seemed to vow throughout a very difficult and hardfought battle to avoid the clutches of that company. Bill ackman walks away, simon, happy as well. You heard kate kelly on Hedge Fund Performance, his is one of the top performers. Every twist and and turn reported by david faber. Next big story. Up next, the fed is meeting with wall streets biggest banks. We have details from jerome powell. Squawk on the street will be right back. Hi, i just signed up for your Credit Report site and i have a problem. I need to speak with your fraud resolution department. Ugh, we dont have that. What should i tell him . Just make that super annoying modem noise. shuuuuuuuh. Zzzzzzzz. De ee. Dong. Shuuuhh. hello . Not all Credit Report sites are equal. Classic. Experian. Com members get personalized help plus fraud resolution support. Join now at experian. Com. With enrollment in experian credit tracker. Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Welcome back to squawk on the street. Check out merck, moving higher after it said cholesterollowing medicine met its main goal after adding to another drug could reduce heart risks. That stock trading up 1 . Jerome powell meeting with big banks in new york to devise an alternative to the scandalous and controversial libor interest rate. Powell sat down with cnbcs Steve Liesman for a rare interview. We dont get a chance to talk to fed governors much. Hes in the meeting, including citi, barclays, to come up with an alternative to libor. The Bank Industry paid 6 billion, thats just so far in fines, to settle charges of manipulation, and one trader in england is going to jail. Fixes made to libor the fed wants banks to find a new reference rate for pegging mortgages, loans and derivatives, one where the rates arent made up. The point of libor reform is to assure that libors grounded in real transactions rather than someones judgment, which will make libor more difficult to manipulate. The specific piece today is, we have convened the global dealers, 15 largest swap dealers and National Regulators from around world and were going to start the process of choosing a riskfree rate and the idea that is over time we can move new derivatives to the riskfree rate. Powell mentioned the treasury rate, possibilities for the change. Now this rare, exclusive interview with the governor. He said recent news that japan had two quarters of negative growth is of concern to the fed. The issue for us, it really is Global Growth is weakening in a number of jurisdiction. Europe is weak, china has weaken, theres weakness in latin america. We havent felt na in the United States yet. The risk is we will begin to feel it through the trade channel or other channels but not yet. Powells cautiously optimistic about the u. S. Economy and said the fed is on track to raise rates next year, perhaps around the middle of the year. But hes sticking to the feds script of the timing of any rate hikes is data dependent. Thanks a lot. Steve liesman. When we come back, googles head of Global Agency sales, joins us live. Thats coming up later. Squawk on the street returns in a ploemt. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Which means its time for the volkswagen gnthendrive event. For practically just your signature, you could drive home for the holidays in a germanengineered volkswagen. Like the sporty, advanced new jetta. And the 2015 motor trend car of the year allnew golf. If youre wishing for a new volkswagen this season. Thats coming up later. Will that be all, sir . Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. And often even more. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 89. 95 a month. Comcast business. Built for business. Nice shot of michigan avenue. Lets get to Rick Santelli not far away. How are you doing, carl . Good morning. Like to welcome my monday guest, the amazing ira harris. This morning, i must have gotten 25, 30 emails about charles beaderman, beaderman, having a fascinating discussion on squawk box with tom lee and ill summarize, you said you saw it, for viewers who may not have seen it, charles was saying that big dynamic of printing money and recycling it into the hands of investors that buy their stock back in essence creates less tradeable stock and the price goes up. That movement isnt a bad thing, but to onetoone core late that with upward mobility in the economy is where everybody is going wrong. Do you agree . I agree on that. Youre buying the stock. Now the bigger part of that, weve talked about this before, is theyre borrowing money to do this because the tax laws benefit that. Theyre borrowing money. When rates normalize, whatever normalize means, the fed likes to throw that around but we dont have any definition, i have my definition, im sure if john taylor was here from stanford he would have that, that would come back to haunt. Thats what charles point. You will pay the price, when, we dont know. Well, charles beaderman was pretty clear. I read the transcript twice. Basically saying once you raise rates, okay, that thats going to be an issue. Now i contend by looking at the market that the Market Driven rates are not raising, theyre not rising, theyre not moving higher for this very reason. The only question that matters, to really put people on notice, and im going to do that to you, yra, is janet yellen going to raise rates in 2015 . If everything stays roughly where it is. As they say, no. Theyll look to the world and thats when the fed will start looking as weve seen and as i told you, well have to look at the fomc minutes to see what the discussion was about the global phenomena. If the Global Economy stays as it is, i dont think the fed is going to raise rates. Another angle, very few talk about this, what is the real issue with the central bank in the old days not talking ate things like Foreign Exchange . They had a mission and they stuck to it. They did. Now janet yellen and company theyre much more activist going out to the population at large and digging down into the dynamics, for example, of where the wealth is distributed. Is this a good thing for the fed to do . Well, this is my opinion, because theres no clear answer here, so its only my opinion, i think that they overstepped their bounds and its a slippery slope as you would say, for them to do that. Because when you start to get into the wage discussion, listen, i happen to agree with janet yellen. I think that i do too. But its question of, is this an area they should be going . Isnt this where the policy of the politicians, this is the fiscal side. Should there be this much bleed through . I think this discussion is a fiscal policy side is and the fed gets itself in trouble when it bleeds into the fiscal side. Stick to the monetary. Stick to the mandates. This could turn into a full gruber. It really could. Because in the notion of the end justifies the means in everything, including central banking, is going to get us in trouble in my opinion. Listen, thats exactly right. And thats why when people say well, because that bleeds into the gold argument. It why does gold hold here to go higher. Its not inflation. Anybody who says gold is an inflation argument is missing the bigger thing. Its an issue about what Central Banks are doing globally. Hence the swiss referendum. Out of time but quickly, werent the japanese better with less debt and a little deflation than trying to promote inflation with no growth, where the end doesnt go as far and the middle class is behind the 8 ball. Final comment . Ill be afraid the middle class will get squeezed. A wonderful piece in the ft about this in the election because the populace is feeling squeezed because they got higher prices because of the imports with the weaker currency, but wages havent gone up. Theyre getting squeezed. This may be what the snapple action becomes about, how they will distribute that corporate money out. One thing is for sure, many exchanges like this one are trying to get the bank of japan to trade more. Back to you, sara . All right. Thanks very much, Rick Santelli. With the dow fluctuating above the flat line, lets send it over to jon fortt with whats coming up on squawk alley. Lots of stuff, facebook, at least a team inside, has its eye on the works place, should linkedin worry . Two of the biggest names in mobile commerce, teaming up. Uber and spotify. Whats it about and what impact will it have on consumers. Youtube has built out impressive space here in new york city. Well tell you what its for coming up on squawk alley. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. When diet and exercise arent enough, adding crestor lowers bad cholesterol up to 55 . Yeah crestor is not for people with Liver Disease or women who are nursing, pregnant, or may become pregnant. Tell your doctor all medicines you take. Call your doctor if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine, or yellowing of skin or eyes. These could be signs of serious side effects. Are you down with crestor . Ask your doctor about crestor. Its time to get to work are finally over, fixing our longterm National Debt to help build a stronger economy. With a solid fiscal foundation, we can create more jobs, invest more in innovation and infrastructure, and make america more competitive, giving our kids a better future. A bipartisan solution to our longterm debt means more growth today, more opportunity tomorrow. And the time to start is now. Welcome back to squawk. This stock soaring after data showed the drugmakerss brain tumor drug shrunk tumors and improved survival in patients without the disease worsening. Celldex trading up. Thanks very much. Taking a look at the major indices here and Little Movement on the dow. Its up about five points. S p 500 also limb change, but there are mover beneath that. Despite the fact that mario draghi has boosted european markets you have not seen the follow through. I want to mention robin at ubs, downgraded starwood and marriott from buy to neutral. Not calling an end to the lodging cycle but people should avoid paying higher than historic multiples. On the upside, tyson foods on the basis of beef and pork prices, one of our top gainers in addition to those involved in the m a today. Procter gamble under pressure after they downgraded p g on concerns. Over to you for squawk alley. 8 00 a. M. At facebook headquarters in california, 11 00 a. M. On wall street, squawk alley is live. Taking care of business every day taking care of business taking care of business taking care of business snoths working overtime happy monday. Welcome to squawk alley. Joining us this morning, john steinberg, ceo of the daily mail north america with us post nine, jon fortt, back after a couple days off, Kayla Tausche is here. What a day its turning into for facebook. Going corporate. Facebook secretly working apparently on a new Office Version of the social network called facebook at work. The new site will supposedly let users chat with colleagues, connect with professional contacts, and collaborate over documents competing with the likes of google drive, Microsoft Office and linkedin. Facebook