Transcripts For CNBC Squawk On The Street 20151015

Bonds reacting to a soft empire index, the strongest year on year cpi. What does that mean . Our roll back. Two different stories on global volatility and banking. Citi beats but goldman misses. Netflix shares are extending losses after they reported quarterly subscriber growth that came in below expectation. Walmart hit with roll backs. They beat the street on the bottom line for the Third Quarter. Revenue, a bit shy of consensus. Goldman posted a business for q three. In the earnings release, the chairman and ceo said, we experienced lower levels of activity and declining asset prices during the quarter reflecting renewed concerns about Global Economic growth. Once again, guys, trading remains a sticky issue for a lot of the banks, down well into the double digits. Investment banking up six. We will talk to David Solomon later this morning. Investment banking is interesting. You saw debt underwriting overshadow a really sharp drop in Capital Markets. That feeds into the story of ipos getting held. That has a real effect on the banks bottom line. It is the number down 33 , more than double the closest drop of a peer on that line. As you are talking, some headlines from the treasury secretary. Breaking news in the ongoing battle over the debt limit. Treasury secretary, jack lew releasing a letter. He says the governments Borrowing Authority will be exhausted on november 3rd. Two days earlier than some previous projections. He is urging congress to take action as soon as possible as that showdown gets a little nearer than we thought. That looms. It is all about whats coming in and whats going out in terms of revenues and Interest Payments and things of that nature. Some have said, including our own larry kudlow. We have had members of congress say, it is not real. I dont think thats the case. I think it is real in terms of the countrys ability to pay its bills. It comes a few days after our Republican Debate here on cnbc where that is like will i to come up in some form or fashion. We mentioned goldman, citi. Legal kofl legal costs come in. Some discussion about reserve releases and maybe also waning. That is eliminating some of the banks ability to boost earnings as they no longer release as much as of their reserves. It speaks to the fact that banks are trying to position themselves for potential defaults or distressed situations in the oil and gas sector. Instead of releasing those reserves, we are seeing an uptick in reserves to cover some loans that could potentially go bad. We call them rainy day funds. We hope you dont have to use them but they are there in case you do. The citigroup story is so interesting. It is the Third Quarter where Citi Holdings u, which is the b bank, has become profitable. Quite a reversal of citigroup and bank of america. Jpmorgan, wells fargo and goldman suffers. Perhaps the expectations for those banks are too high in this market. You are right, Citi Holdings, net assets, 110 billion. Those assets are producing decent income. Goldman, listen. It is funny. We talk about fixed income being a weak area. It is in terms of trading. Although, we have these enormous capital races going on in the bond market. Namely, the two big deals from this week. Dell is going to borrow as much as 45 billion from banks. Much of it investment rates from a good high yield. They are going to come for 55 billion to the credit markets to finance their deal to buy s. A. B. Ecm over goldman, missing expectations. You are really seeing a sharp slowdown in stock even at the same time as the Capital Markets have been Pretty Healthy for debt issuance. Jpmorgan, they were much more positive on the broader economy. Marion lake and her comments seemed to be much more positive. The goldman read and citigroup mentions it. The jpmorgan mantra is all about america being the best place to invest for the long term. They werent shy about saying maybe analyst estimates werent too high. They are not denying there are some near term obstacles in keeping those profits and those revenues growing. They are pull ibullish longter. They are saying, whether it was employment or retail sales or ppi, the path is getting easier for some of the doves on the fed. Although, the cpi number throws a little wrinkle into that narrative. We get. 2, month on month. Estimate,. 1. Rent, up 3. 7, year on year. It seems like a difficult environment in which to hike. Some of us here feel hikes more than 3. 7 . There is netflix this morning falling in the premarket. Quarterly u. S. Subgrowth below expectations. The company blaming that transition to chipbased credit and debit cards. They are missing on the top of the line. Some of those issues regarding pricing and value during last nights earning call. Take a listen. The more we have incredible value, the more we have amazing originals. Over time, we are going to be able to ask consumers for more, to be able to invest more. Thats been the rhythm we have been on as we did the tiering. If you look at how much broader and bigger our content is now than two years ago, i think we really delivered on that promise. U. S. Subs disappointed. International subs were much better than expected. There was some confusion on the call as to whether or not they are going to get into original news content. We will see where their ambitions lie beyond programming and entertainment. They are more reticent to sign up for something new or this payment for something they already have in place doesnt get processed. It is a particularly acute headache that i face this year switching over to chipbased cards. David, it makes you wonder whether this is a thing we are going to hear from other subscriptionbased Business Models. Some of the newspapers, maybe. I suppose it is a good excuse if anybody runs into a little bit of top line growth issue or subscriber issues. We may see Companies Use it. I would assume that will be resolved within a quarter. One would expect it is not something that lingers. I didnt even open the envelope for those new credit cards for quite a while. The person fishing through your trash probably did. They are still in the apartme apartment. I just havent opened them. I cant say the transition has been a big factor in our life. Some consumers will get used to it. Maybe it is the weather. The decline in the stock at this point doesnt appear to be particularly tough. We are talking six points off 110 for now. We will see how that goes during the course of the day. Some analysts weighing in. Perhaps a bit more negative. Generally, all of them very positive for what is still an extraordinarily high multiple stock with incredible growth. You do have to wonder at one point, at what point Free Cash Flow starts to be a concern. They are spending more and more on content, at least for this quarter. That doesnt seem to be the focus of people looking at this company. You mentioned the drop of this can is to, a little bit more than 5 . Yesterday, it was down as much as 12 , 15 . They did a decent job defending on the Conference Call and brought that back talking about some of the issues with he just mentioned in terms of credit cards and also just growth. International, to carls point, was very strong. Which is a big push for them. What a day on the ipo front. Square with its s1 and albert son with the delay. First data, well go public with the biggest ipo of the year. Well get to bob pisani. The most important thing is it is happening. It is going public. Look at the information here on t agai it. The price talk was 18206789 the midpoint, 19. When it is 16, thats about a 16 hair cut below the mid. As for albertsons, they didnt price today. The Third Largest drug retailer after kroger and walmart. We will find out tonight if they can do it. I know you are hearing the ipo market is in trouble. I prefer to look at it, it is repricing. Thats good news for everybody that wants to buy low and sell high. We have had a lot of price cuts since then. The average price is 18 below the midpoint. There has been a first day average pop of these ipos of 10 . The following day, another 6. 5 move. Thats great news, because the people who bought this stuff are sitting on profits, which is exactly what you want. Cutting the prices has improved the ipo market. There is pros and cons on first data. Here are some of the important pros. This is a big leader in its industry. They have a lot of longterm contracts, stable, recurring revenue and very good cash flow. 3 billion in ebitda. Some serious cons here. Very high debt levels. High debt to ebitda levels. A lot is variable rate debt. They want to refines and use the money to pay down. The forecasts depend on the ability to refinance the debt. Pricing pressure and xet tigs. Square is a direct competitor. If this can open above 16 and close today above 16, thats a victory. Nobody is looking for enormous pops. This is very modest expectation. If it can close on friday above 16, that will be a victory. Everyone will say, okay, we are getting reasonable ideas about where the ipo market should price. There is a hair cut of 15 , 18 . However, if first data closes, 15 today or tomorrow, everybody is going to say uhoh. The price cuts we have had, 15 20 , not enough. We have to do it more. This is a well bellwether day and a bellwether ipo. In the meantime, here with us now at post 9 is frank visignano, ceo of first data. Welcome. Thank you for having me. Any Company Going public has to take the long view. You have to get through the ipo first. What gives you confidence about this market . I think it is important to look at the companys longterm view. We feel very comfortable and great about our investors. Today is a fabulous day for this company. You. Jon ed the company more than two years ago. You have this reputation as a fixer. First data was viewed as a company that needed fixing. What did you do . We brought in a Great Management Team and we innovated and focused on the client. We went from zero Revenue Growth to 6 . It is all about the client. One of the things you first did was put an Employee Equity Program in place for 23,000 employees. So they are share dl hoholders s company. I realized 150 people had equity in the company. I have worked in Great Companies my whole life, very equity focused from the days i started. What seemed to me is if we are going to win, everybody had to be rowing in the same direction. Today, they are celebrating across omaha, down in florida, Corpus Christi and across the world. We are darn lucky to be here. There had been some talk, price talk, that it was around 20 a share. You are willing to go out today at 16. Why . Great investors, almost 3 billion of equity raised. Longterm view. We want to do a great job for our Share Holders. You didnt want to hold back and wait for a better market . This is not about a timing exercise. It is about taking the company forward. We demonstrated when we raised 3. 5 billion in private placement last year, those investors have tremendous confidence. I have a great partner in kkr. They have tremendous confidence. Plou plow ahead. You are going to head over to post 8 to watch the open. You are going to join us later on. For now, Frank Bisignano, the ceo of first day that. We will bring that to you when the stock opens wall street is weighing in on walmart after yesterday guidance that set the stock tumbling the ceo of Virgin Atlantic on whats next with the airline in light of oil prices and a changing landscape. A very busy day shaping up. It is only 9 15. More squawk on the street in post 9 in a minute. Ive read all of your lyrics. Youve read all of my lyrics . I can read 800 million pages per second. Thats fast. My Analysis Shows your major themes are that time passes. And love fades. That sounds about right. I have never known love. Maybe we should write a song together. I can sing. You can sing . Do be bop. Be bop do. Do be do be do. Do do do be do. Good. Very good. You see something moving off the shelves and your first thought is to investigate the company. You are type e. Yes, Investment Opportunities can be anywhere. Or not. But you know the difference. E trades bar code scanner. Shorten the distance between intuition and action. E trade opportunity is everywhere. Airlines in focus. Our simon hobbs is across the river in brooklyn with travel leaders focusing on the future of the industry. Simon . Kayla, good morning. Welcome to an Industrial Park in brooklyn. Yes, for the sciff global forum. They would argue this is the travel industrys onset to ted. It is bran foin food and new id. Virgin atlantic ceo, craig creager. You are about to address the conference or the forum here. Innovation is clearly the keynote. You guys were founded by Richard Branson on innovation. Now that everybody else has caught up, how do you stay ahead . I dont think the spirit of innovation ever leaves the Virgin Atlantic brand or company. That essence of richards original premise for the company, which is how can we do things better for customers still drives the Decision Making that we make and try to take on today. We try things. They dont always work. We tried both google glass and a sony smart watch as a vehicle to get some of our agents out from behind the counters with their computers so they could have the information they needed right when they were with customers and be able to help customers in person. It was a great experience. The google glass worked wonderful, although i dont think it is scaleable given googles decisionmaking. Kr . If google isnt continuing to invest to the extent they will be avail be on a more mass basis, it is unlikely we will use it broadly. It worked wonderfully. The smart watch, we found out that this is the universal symbol for, im bored with you. It didnt work for customers. The staffer where they would have the flight information on the watch and what time and what gate. It is useful. It is close but this gesture just wasnt quite right. The rice is ace is on for alu with wifi and better wifi clearly. You would be able to position off of netflix on all your flights as your cousins are at virgin america. We are not yet looking at netflix. Over time, we will be looking at a variety of other things as a way to engage. We are the First Airline to offer seat back video in every seat. We think of the virgin brand and our company as the purvey yor o entertainment. Delta ceo moved the stock of boeing when he suggested that they were in a bubble and could fall. You were in the process of acquiring 20 dreamliners and 2 7 777s. If i buy this plane new, it is 300 million. If i buy it secondhand, decade old, it is only 10 million. It is a great question. We ordered these 787s long before any bubble. These aircraft had been ordered by the company well before i arrived there. We are just now getting them. They are a fantastic airplane. As we look to the next order of aircraft, which we will be looking at in the next 6 to 12 months to make a decision on the future airplane to replace our leisure 747, we have to look at new and used options. Am i inferring that the words from delta ceo would help . Anything that would bring air prices down has got to be good. Craig kreeger, ceo from Virgin Atlantic. Thank you, simon. Busy day for you. Back to you. Thank you very much. It is busy. Take a look at the predrk market. Earning trains are going to roll on tonight. We have a lot of data to get to. First data here about to go public. The big test ipo of the year. Dont go away. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can seek to outperform. Thats the power of active management. Or the freedom to choose what doctor you want to see. So if you have medicare parts a and b, consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement insurance plans, these let you choose any doctor who accepts medicare patients. Youre not stuck in a network, because there arent any. Plus, these plans help cover some of the part b medical expenses medicare doesnt pay. So why wait . Call now to request your free decision guide and find the aarp Medicare Supplement plan that works for you. Like all Medicare Supplement plans, youll be able to stay with the doctor or specialist you trust, or look for someone new as long as they accept medicare patients. But unlike other plans, these are the only ones of their kind endorsed by aarp. Rates are competitive. So call today. And learn more about choosing the doctors youd like to see. Go long. You wouldnt take medicine without checking the side effects. Hey honey. Huh. The good news is my hypertension is gone. So why would you invest without checking brokercheck . Check your broker with brokercheck. Albert sons and first data, we are going to get one. We will be the biggest ipo of the year, pricing at 16. We are going to get that and the opening bell straight ahead. [announcer] through sunday at sleep train, get up to 48 months interestfree financing on tempurpedic. Save 300 on beautyrest and posturepedic. Or choose 300 in free gifts with Stearns Foster. The triple choice sale ends sunday at sleep train. Your watching cnbc squawk on the street live from the financial ka Financial Capital of the world. The biggest ipo of the year going to open today after pricing at 16 last night. Albertsons delay is probably the word that is used. Kate kelly has reported that the team thats working with albertsons will try and price it today. Its price range was 2326 this year. She reported price stock yesterday after the bell was still around 20 per share before they pulled it. Some Institutional Investors had put orders in at 17 a share, which is so far below that. Of course, it is a walmart story. Albertsons is the number three Grocery Store in the United States behind kroger and walmart. Going out on a day with walmart, gets 20 billion in market cap taken off. It is not a day when you can price. It wasnt a good day to pick to come public. That said, i have a hard time believing they are going to be able to get there tonight. Based on what i have heard this morning from a couple of pms that have been called by the underwriters. It feels to me like they may push this thing. Cramer likes it. Great same store sales. They do have a lot of debt. It a it is a Strong Company with a lot of momentum. They have a very good competitive position. The question is, how tough this market is. What sort of Risk Appetite those Portfolio Managers have. What kind of discount they will take off the original. First data was willing to say goodbye to 20 and 18. A lot of the streets coming out and trying to make sense of what walmart said yesterday. We could talk about investment levels and strategic initiatives. Shares are flat with levels seen 15 years ago. There is meaningful costs and competitive pressures, pe perio that has little to do with whether or not you are going to pay an associate 9 or 10. Biggest fear, too large to grow. Lets look at the opening bell. Look at the bottom have your screen. First data, actually, not ringing. It is the Downtown Alliance managing, downtown Lower Manhattan Business Improvement district. Over at the nasdaq, specific special acquisition celebrating its recent ipo. Banks are going to be top at least in the open. Funny, they make a point this morning, guys, for two years, we have heard about how low volatility in the markets was bad for trading operations. Now some are saying all this volatility is bad for trading operations. Which is it . There seems to be no clear direction that traders are taking on the current market. When you look at the Bank Earnings and equity trading, equity is up during the heightened volatility in august and september. People were able to have a view on which way they thought the market was going at that time. Not so for currency or rates. There was no clear catalyst on the Interest Rate front. That made it very hard for traders to figure out, which way am i going on this . Is it worth changing my position . We have to mention a stock we havent talked about yet, which is valiant. Our viewers know. We have talked about it a great deal. A company that has grown largely through acquisition, deal after deal with an extraordinarily low tax rate. Also, a very different approach in terms of how much expense on r d and whether or not it takes the prices up of acquired drugs more perhaps than i would argue the market. There are others who say they dont quite follow it or understand it. Hence, the company has been under the microscope lately as this debate about increased drug prices has come to the floor. It may have been started in part by that Small Company touring pharmaceuticals. They are getting the brunt of that. The stock has been coming down dramatically. This morning, they confirm that claire mccaskill, the democratic senator from missouri has asked the company to respond to questions about a couple of its products. They have also received a subpoena from the u. S. Attorney for the Southern District of manhattan as well as in massachusetts requesting documents with respect to patient assistance programs and request relating to Financial Support provided by the company for patients, distribution of products and information provided to the centers for medicare and medicaid services. And pricing decisions. Valiant, down sharply. Dont forget, pershing and valeant. 60 billion in market cap after the drop today after the open. It is down just shy of 10 . You mentioned touring pharmaceuticals, which is what whipped this whole issue into a frenzy. Our meg tur rrel and drew casey reached out and asked whether the price of darafrim would come down and it hasnt. The company said we will reevaluate and make it cheaper. Aggressive price rises have been more than the norm amongst any number of companies. It is not just valiant that does go about things in a different way. When you talk about mike pierson, he is a different kind of ceo. He is a consultant. He has decided that r d has wasted a lot of that money. They run much leaner in all ways, through the acquiring of many companies, baush lomb. The stock has benefited from all that and his approach until now, until the last few weeks. A lot of the biotechs are getting hammered in sympathy. We are that the president is going to make a statement at 11 00 a. M. Eastern. He is expected to say that 5,000 troops will remain in afghanistan past 2016. He had previously made it one of his Campaign Promises to bring home all troops by the end of his term. It appears that is not going to happen. Well take that live at 11 00 a. M. Eastern. You know whats winning today is wen, which reports 3 gain month to date gain, 42 assentment. Thats really turned. To some degree, some stabilization in china. That is amazing specially given how far the stock had fallin. Those mccow concerns were not viewed as temporary by pretty much anybody that had been in the stock and chose to sell. Xylink the other big winner. Revenue was amiss but guidance, strong on wireless and david, the speculation of mna with incentives that were really only in some middle inning. Intel bought voltara, or they nrt process of buying. There is some speculation with zi links or the sandisk deal. It has been an extraordinarily busy sector. We saw the biggest deal with dells expected purchase of emc for 67 billion. One of the biggest buying deals of all time, anheuserbusch merging with s. A. B. Miller. Now, we are hearing about a massive 55 billion bond offer, record for a corporate acquisition, specially at a time when we are talking about whether the Capital Markets can stomach all of these deals. We saw an 8 yield. It moved up 200 basis points in a quick amount of time. It does include a lot of Investment Grade. The ability of that company to circle that money is really a testament to the strength of the Capital Markets. You are right, 55 billion is not a small amount of money. They have been waiting a long time to do this deal. It was the prospect perhaps of higher rates that may have finally gotten them to the finish line. 14 billion is a lot of money too. Thats what first data would be at 16. The indication is now 16 to 17. You heard pisani saying, clothes above 16 in his eyes or in the eyes of someone on the floor would be considered a success. A lot of kkrs down here as well as this is their biggest equity bet. Their stake valued at 4. 5 billion. About 15 higher than the original investment of 3. 9. They have put about 300 million in about two years to this day followed up about six months after that with 3. 5 billion more in equity. They have a vested interest in this company whittling down its Balance Sheet and cutting the sheet. I am not surprised that you saw them double down on that bet to get this company to this point. You talk about the high yield market. It has to stay open for this company as well. The key part of their entire story is the idea of refinancing high cost debt with lower cost debt in the high yield market and benefiting on the earnings line. They will have 18. 5 billion in debt. Their interest expense, likely to be around 1. 2 billion. Still, roughly 7 times ebitda. We talk about the leverage ratios. Whats your debt level versus how much do you generate each year . Lets get to bob pisani and see whats happening down on the floor. We are waiting for first data to open. The biggest ipo of the year. The indications are 16 to 17. Even though it prices at 16. Midpoint was 19. The important thing is it is getting done. If it can open above 16 and hold throughout the day, that will be considered a victory. Nobody is looking for some gigantic bigday pop. Lets take a look at the markets, decent open. Financial tech, consumers staples, industrials leading the way. Bio tech again on the down side. Thats been a little bit volatile in the last few days. China was very strong overnight, europe, germany, italy and france to the up side. I want to point out something that has happened over in europe, because burberry came out and reported flat open. One of the big luxury names in the world. One of the problems they were talking about is what is going on in asia. The luxury market slowing down in asia. This has very big implications for some ipos out there. Niemann mark cut postponed its ipo. Ferrari has the road show. They are looking to price 17. 2 million shares at 48 to 52. Burberry is saying, wait a minute. Luxury buyers in china are a little bit slower. One of the things ferrari is saying, we deserve a luxury premium because our buyers in asia asia and throughout the world are quite strong. This burberry comment may have implications for ferrari. Pay attention to that. As for first data, 160 million shares of 16. Those Still Holding at 16 to 17. What they are looking for is something around 16 or 17. I informally polled a lot of people and they said would closing at 17, 18 range be a victory. A lot of people answered yes. I will come back when i get an indication. A pretty nice string of victories for the nysc. This, and some others, to the degree we are getting these tend to be coming here. Albertsons, though it didnt happen, appear to be choosing the new york stock exchange. First data was a big deal of its own in april of 2007. Thats when kkr announced they were taking the Company Private nd a massive leverage buyout soon to be heading right into the teeth of a financial crisis and a recession. The price back then. It doesnt equate at all to the current stock price now as it comes public again. It was 34 a share. It was 26 over the premium. Sometimes you wonder what you look at these in total of, taking the Company Private, massive debt, bringing on one Management Team and then another. Frank visignano helping to clean things up there. Still, 18 billion in debt after they do this deal. Sometimes i do wonder what the point of it all is. You wonder what it would be like if it had never been taken private to begin with. Would Share Holders still be looking back and say, i wish we had sold out at 34 back in 07. They perhaps were a beneficiary. The larger issue of simply taking companies private to then take them public again. Interestingly, the human phase of the company has changed dramatically after Frank Bisignano came in as ceo, some twothirds of the top 150 executives joined after that time as of right now. An interesting makeover of that company. We will see what the Public Markets view currently indication, 16 to 17 a share. In the meantime, lets head to the bond pits. Rick santelli is in chicago at the cme. Hey, rick. Good morning, kayla. When it comes to inflation data, this morning was a bit of a different view than yesterday. Whether you looked at the core, whether you take into consideration x energy, whether you look at the Service Sector but maybe more specifically, the old generic cpi, year over year, snugging back up to 2 . 1. 9. I know 2 is a mythical number. We are getting very close. How did the markets respond . Pretty much the same as yesterday. You saw a very big drop. Look at a one day of 10s. That pop wasnt because of 255,000 as much as it was, a combination. The twoday reveals what you need to know. We need to keep an eye on whether it reaches back to the high yields. If you want to see how significant 2 is post april, this chart really shows that as a technician, there is something magical about the third time. If we continue to close under 2 , that will change. They have always done pretty well the last several months selling the price when the yield gets 2 or lower. If we look at the knob, which is the term between third and tenyear yields. Look at the knob. It is the widest, biggest difference between 30s and 10s, going all the way back to may of 2014. You really want to watch this, specially in the context of the reversal of those data points today. How did all of this affect the dollar index in fairly the same fashion. That number yesterday had fed implications. The dollar had tire tracks on its back. If you open it up, year to date, you can see how important this level is that we seem to be spending all this time around 94. Carl, it is all yours. Rick santelli, thank you very much. We are on ipo watch waiting for first datas first trade. We will bring that to you when it happens followed by reaction from the ceo. Tom farley on the big board snaring the biggest ipo of the year so far. Dow up almost 80 points and s p down. Were back in just a minute. A big day for the nysc and the biggest ipo. First data going public. Nysc president , tom farley, joins us here. Good morning to you. Good to see you. Good morning, carl. You put together a few home runs here in a row. This being just one of them. How did you do that . We are on a roll, having fun today. The group hyped us, Frank Bisignano is a great business person, cut his teeth here at the new york stock exchange. We have had 14 of the 15 largest ipos since 2010. We have u. S. Listings only at 30 billion so far this kreer. Thats less than half of the same time last year. What is the pressure to get that number up . Kayla, im sorry. Will you repeat that . So far, u. S. Listings, 30 billion. Less than half of what we had last year. 40 billion 82 billion at that point last year. Is there any pressure to get that number up, to get more companies to list per quarter . You are exactly right. Ipos are off about half this year. Our Business Model here at the new york stock exchange. On the one hand, when ipos are doing well, thats great for our business. When volatility picks up, you have fewer listings and the secondary trading picks up. We are having our largest market share in terms of equity trading that we have had in four years. Do you expect that this is going to keep going. Tom, can you hear me . Sorry, th working. Do you think the summer, the lightness of the summer was material and means something Going Forward or is this the beginning of something new . What happens is, when you have increased volatility in the market, nearly always, you have fewer ipos. If you chart the number of ipos against volatility in the market, it is an inverse correlation of negative one. The day we had the enormous decline of the open. And in the days following. What gives me comfort, however, if you look at the companies that have gone public, whether it is pure storage last week, Performance Food Group two weeks ago, not only are they having smooth ipos but their stocks have performed very well. They are up 20 , 25 in the aftermarket. When you are having conversations with companies that are look for an exchange to trade on, whats the tenor of those conversations . Are companies saying we want a human to open our stock and we dont get that from nasdaq . Is that still the case. You go to the nasdaq and there is someone who is making sure things happen smoothly. This is purpose build for large ipos and ipos in a volatile environment, because we have humans who can apply judgment and sophisticated technology. That doesnt exist anywhere else in the world, let alone here in the u. S. Can i ask you about walmart . We were doing the show yesterday around 10 00. Newsbreak. Enormous market cap stock is down almost 10 . Did you consider a halt . Was there anything regarding the trading that was in conversations yesterday . Sure. Im not going to speak specifically about walmart given related to our regulatory obligations. We have the largest Regulatory Team and apparatus in the United States. We have 140 great people on our Regulatory Team. They are constantly looking at the perspective news release as they are applying human judgment as to what is the appropriate response. Whether is it a halt. I take great pride we do a great job with that. Thank you very much for being here. Thanks for having me on. Joining us from the nysc. We will have the first with the ceo of first data after the opening trade a lot more of squawk on the street will be right back. Who do you work for . Your boss . Yourself . Your family . Our Financial Advisors are free to realize a plan to fit your familys unique needs. Well listen. Well talk. Well plan. Baird. Awe believe active management can protect capital long term. Active management can tap global insights. Active management can seek to outperform. Thats the power of active management. [annouget up to 48 monthsy interestfree financing on tempurpedic. Save 300 on beautyrest and posturepedic. Or choose 300 in free gifts with Stearns Foster. The triple choice sale ends sunday at sleep train. A look at the post 8. First data, massive deal. The biggest ipo of the year with an indication of 16 to 17 as they price at 16 last night. The biggest ipo of the year was supposed to be much bigger. Expected 18 to 20 a share. Nearly a 17 billion company raising nearly 4 billion in proceeds from this deal alone. The market being what it is, the vix having been at heightened levels, although not at august levels, is something they took into account. The performance of some competitors. Watching the banks and a bunch of big names on the dow. When we come back, a live interview with the ceo of first data after the opening trade. Markets up 44 right at 2000. Dont go away. Good thursday morning. Welcome back to squawk on the street. Im carl quintanilla. Simon and sarah are both on assignment today. Very big day as we wait for first data. The biggest ipo of the year to open for trading with an indication at 16 to 17. It did price below the expected range at 16 a share. Dow is up 51. S p up about eight points as we digest a lot of macro data, empire, cpi running hotter than we are used to. Rick santelli in chicago with breaking news as well. Rick . Philly fed is always a favorite. One of the reasons it is a favorite. It is real time, october data, current quarter. Mine is 4. 5. We are expecting minus two. That really isnt the issue in my mind. It is a bigger negative. It follows an unrevised minus six. The first negligent sieve since february of last kreer, 14. We havent had back to back since january, february of 13. October data, responsiblegy side depending on how you prioritize philly fed. We want to monitor. We just did. Philly fed, new orders, minus 10. 6 versus a positive 9. 4. Employment, minus 9. 7 versus last months positive 10. 2. It isnt only the headline as you dig down deeper. It seems to get a little nastier. Carl, back to you. First data,as he mentioned, feels like it might be opening soon. It is going to go very shortly. Indications were 16 to 17. It has just opened, first data, opened at 16. 39. The price talk, 18 to 20. The important thing was to get it open above the price, 16. Nobody was expecting this to open at 20 or anywhere near it. Above that is where it is. That is about perfect. Now, we have to watch throughout the day to see if we can keep it above that 16 price tag and more importantly, clothes above that tomorrow. We get to 17 or so tomorrow, everybody will be happy. Frank busine Frank Bisignano, you are going to be talking to him. I can assure you might argue, they didnt price it where they wanted to. It wasnt a home run. Certainly, arguably, it was a triple. In these situations where you dont control the market conditions, i can assure you, getting it done nd agetting it done at 16 is good enough. Lets see how the investors in the ipos are going. Still trading at 16. 30. Lets check with first data and whats happening in the ipo market overall. Henry blodget joins us. Bob calls it a near perfect opening. They have opened at least for the near immediate term. It is great for the company that got out and didnt make the mistake that so many Tech Companies do. They price the stock way below the first open just getting a huge gift to investors overnight for no reason and screwing the folks who are already own the stock. The fact that they price just below the open is good. My guess, it will be tough to keep it there. This is a lot of stock out there. If it only opens with that much of a premium, which is tiny. It is going to be tough. The argument you are making for the smaller, higher growth names when they have a smaller float if it goes below the issue price or if it needs support, that might exist two huge myths that are very popular. You are saying, i sold my house for so much below the market price that the guy flipped it the next day for 50 more. You would be furious. Thats the Way Companies should think about it. You should take as much money off the table as you can. What happens over the next day, 23 to this, the press will make a huge deal out of t ultimately, it is irrelevant. Look at facebook. Collapsed after the ipo this huge disaster. Nobody remembers it. On one hand, the argument you are making is companies are criticized for leaving money on the table. Proceeds they could have. Investors who buy in at those levels and then the stock goes down gets hosed. You want to get a premium arks small premium to reward investors for doing the work and stepping up and buying a deal before there is a public price out there. You are aiming for a small premium. It is crazy. It gives to the investor clients. It is not true. You want to price it just below the fair market value. To be fair, when we see those big opens, there is an awful lot of stock behind that. We are talking about 5 , 6 , 8 of the company being taken public. Kkr owns 38 , 39 of the company. It does benefit them. It comes back to reflect the value. That somehow generates good will to price the secretary deondaryh higher level. Ultimately, the stock trades on the fundmental talls of the company. With facebook, once they start going up, no one complains about the ipo. There should be a premium. We should not be celebrating a bitter offering if it jumps 300 the first day. In this case, not a Growth Company we are talking about. It is still valued at about 12 times ebitda, which is no the a shabby multiple. Do you have any on first data itself. In terms of the size of the company, you can be more precise in valuing a company like this. We have a good sense of growth ra rate, good sense of cash flow. You can price it much more accurately, the fact that we saw the price come down is indication that investors were saying im sorry, we are just not quite there. Can we get a quick takeaway on square . Have you had a chance to read the filing. Jack dorsey will get square public and then go to twitter. Ultimately, he would have not taken the twitter job if it werent for that. The idea a ceo is split between two companies, it is almost crazy. We have to get out of that the rest of us are still working on tying our shoeing. Henry, good to see you. Henry blood skret as we continue to watch first data. Henry called it a near perfect open. You want a small premium. You dont want to look like you left money on the table or look at the stock go down and make investors feel like they are losing money right away. It is on twitter as a text book opening. 16. 19. It opened at 16. 39 after indications were 16 to 17. It appears to have opened just right in the middle of that range. Joining us now at post 9 is Frank Bisignano state off the opening trade from first data. Frank, great to have you back. Hi. Welcome back. Thanks for having me. We were watching the open, up 1. 25 . What do you make of it . We are just happy to be here. I love the new york stock exchange. It is a great day to open. We feel fabulous about it. The hard work begins now. 3 top line growth. You have to keep that going. You have to keep cash flow strong and pay down your debt. Whats the strategy and how do you prioritize this . It is a client centric strategy. We are going to focus on innovation and feel good about where we are today and plan on being there. We have a fabulous client base. You give us a snapshot of some of your competitors in the s1. Everyone from visa to fidelity, National Information services to square, which is going public. How do you plan as a low Growth Company to be innovative enough to compete against those major, Major Players . If you like what we have done over the past few years, we have completely transformed the company. We were a noGrowth Company. We have changed that. We change how we approach our clients. We Enterprise Solutions to them. We bought a lot of innovations, a bunch of startups that we feel great about. Our platform, digital gift. Changing how we do business with small and medium size businesses. You brought in a lot of executives. I read twothirds of the top 150 joined since you joined. A lot came in jpmorgan, which is noticeably taken from your underwriters. If you look at the people here with us today, i have people with us over 25 years going back to when i worked on the floor as a young, young man. You have a long career and work with a lot of people. I have tremendous respect for everyone at jpmorgan and a great relationship with many of them. Whats more important is the future. The ability to grow this company. We have a Great Management Team. People i know a very long time. Over 20 plus years. We had a discussion a moment ago about the process of going private and going public. For people that think it is essentially moving money around. You have hinted at it just now. What was the hardest thing you have had to do. What did you truly change . We transformed the company, we invested. We went after our client franchise and building our client franchise and bringing tools to them. We didnt go after expenses. Of course, we were smart about them and we will continue to be smart about them. We decided we had to grow the company. The only way to grow a company is to like your clients. Thats really the business we are in and we bring multiple solutions to them across a broad array. Everywhere from the largest banks in the world to a falaffel truck on the corner. Tomorrow, we will have a bunch of vendors that we run our system on. From small to large, a big, big opportunity. Frank, gdp is growing at 2 . Do you think you can consistently outperform gdp and grow well above that in terms of your revenue line . This industry outgrows gdp. With he were laggered. We were laggered for a long time. Thats in the past. So we feel great about our future opportunity and growing the top line of this company. We hear it from our clients this. This is a clientfocused business. We are not a processor. We are in a clientcentered business to Bring Solutions to them. How important is your ability to refinance that at a lower rate in terms of your ability to deliver bottom line growth. We have a tremendous refinancing opportunity. We have a tremendous, if you look at the debt stack. It is completely in our favor. It is right in front of us. The track record of refinancing. We are going to pay down debt with all of this. This company has a great trajectory for Free Cash Flow. We can organically deleverage by the middle of next year, which is a complete transformation of the income statement and the Balance Sheet. Kkr gave you a huge vote of confidence when they doubled down their bet on the company a couple of years ago after you joined. You also have a vested interest, about 90 million of this stock you hold personally. What is the plan for any share sales Going Forward . Will we see kkr in their position . Kkr with myself decided in discussion, they love the property. They have loveded it for a lon time. It has just gun our journey together. We are in business for a very long time together. It is on their Balance Sheet. I feel great about that. We are partners. This whole Management Team is completely vested in this property. We love it. It is exciting to watch round two. Congratulations on weathering what has been a tough market, frank. Come back and see us soon. Frank bisignano is the ceo of first data. Two banks reporting with different results. Goldman sachs has edged into the green. Much more on goldman. Citigroup, currently up 2 , when squawk on the street comes back. Here at td ameritrade, they work hard. Wow, that was random. Random . No its all about understanding patterns like the mail guy at 3 12 every day or jerry, getting dumped every third tuesday. This happens every third tuesday. We have Pattern Recognition Technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. Theres no way to predict that. For all the confidence you need. Td ameritrade. You got this. [annouduring sleep trains latriple choice sale. Ig for a limited time, you can choose up to 48 months interestfree financing on a huge selection of tempurpedic models. Or choose to save 300 on beautyrest and posturepedic mattress sets. You can even choose 300 in free gifts with sleep trains most popular Stearns Foster mattresses. The triple choice sale ends sunday at sleep train. Sleep train your ticket to a better nights sleep another busy day for Bank Earnings. Goldman, missing, Mary Thompson back at hq looking over all these numbers. Goldman missing estimates for earning and revenue. An estimate 27 drop. It accounts for a fifth of the total revenue, larger than the rivals. Both of these behind those disappointing results. On the call today, cfo, Harvey Schwartz saying, the quarter saw more than its fair share of macro issues including the slowdown in chinas commodity. Some impact of various events led to lower levels of client activity and a significant repricing of the equity and credit markets. Goldmans earnings at 290 a share missed by a penny, revenue of 6. 9 billion was a quarter shy of forecast. On the call, schwartz called it a tough quarter for the fixed income unit an noted we are in the deep, long part of a fixed income cycle. He noted that Legal Provisions are mostly cut by 3 points on an annualized basis. The company has about 200 million in exposure to Commodity Trading prices. During the Third Quarter, while trading declined, equity trading proved strong along with the fees that goldman were advising on mn a and debt. Goldman driving the comp ratio to 34 . We want to know that goldmans return on equity, which is a measure of profitability came in at 7 for the Third Quarter and running at 8. 8 for the first nine months of the year. Carl, back to you. Thank you very much, Mary Thompson. Later on today, we are going to talk to David Solomon of goldman sachs. Talk more about the outlook. When we come back right now, what first datas ipo means for the rest of the Financial Technology industry. The dow is up 63 right now. Be right back. Daughter do you and mom still have money with that broker . Dad yeah, 20 something years now. Thinking about what you want to do with your money . Daughter looking at options. What do you guys pay in fees . Dad i dont know exactly. Daughter if youre not happy do they have to pay you back . Dad it doesnt really work that way. Daughter you sure . Vo are you asking enough questions about the way your wealth is managed . Wealth management at charles schwab. The biggest ipo, down slightly. Currently trading at 15. 75. It is down about 1. 5 . It is on high volume too first data volume surpasses every component of the s p. What does this mean for the payment space . For more, joining us on the cnbc news line is gill luria. We have been waiting for this ipo to happen. What does this mean for the payment space . They mean that other merchant processors have been doing very well. A good Business Model that has a lot of visibility and very little. These companies have very little emerging market or current exposures. It is a huge data. We just heard from first data ceo Frank Bisignano and asked him where it will come from and he said to paraphrase that they have to make sure their clients are sticking, that they have the best products for their clients and that they are doing more business with them. How sticky do you read their client bases being. Their biggest customers are bank of america. Some of the smaller customers, the merchants, tend to switch based on price. A lot of the smaller merchants are going to more simple, Cheaper Products if there is like square. So it will be challenging for first data to hold on to that position. Going forward, more challenging as Companies Like apple pay or android pay or paypal start participating. First data has plenty of challenges Going Forward in terms of being able to sustain its growth. Competitive pressures aside, from a macro standpoint, are they leveraged to the point of new or Small Businesses graduating to medium sized businesses. What is their leverage to Overall Economic growth . Their leverage is to the growth of electronic payments. The more people use their cards for spending, the more first data grows. The baseline is the growth of the economy. Since there is a growth above and beyond that in the use of cars, credit and debit cards, thats what drives the growth. They get paid per trend action. The more we transact with our cars, online and offline, thats whats drives their growth. A lot of players trying to get a portion of that business. Gill luria from webbased securities. We are having the next iteration or evolution of the dieselgate scandal. Volkswagen has announced they will formally recall 8. 5 million total vehicles in european markets. 28 markets and a total of 8. 5 million. They go to say they will put in place plans for Technical Solutions to be implemented in january of 2016. It could involve Software Updates as well as hardware measures as well. These are currently being developed for each of the affected series and models for each year. The headline here, volkswagen plans to recall about 8. 5 million vehicles in 28 different european markets. This will take place starting j january of 2516 with fix016 wit software and hardware. Stocks are moving higher here in the u. S. Major averages are slightly in the green after taking a tumble yesterday. We have our eye on first data and the one and only art cashin will weigh in when we come back. Im sharon epperson. Your cnbc news update. He had said by the end of 2016, 1,000 troops in kabul to protect the embassy. Now, the number will be closer to 5500. Currently, there are 9800 in the country. Cnbc will take his announcement live at 11 00 a. M. Eastern. Its official. The government saying no benefit increases for millions of Social Security benefits, low inflation costs by low gas prices. It is the third time since 2010 that payments will remain flat. Dennis hasterts lawyers and prosecutors say the former House Speaker has agreed to a plea deal in his criminal case. He is scheduled to change his plea to guilty on october 28th. He has been cused of breaking Bank Reporting laws to hide hush money. No word on whether he will serve prison time. Lamar odom remains on a ventilator in a las vegas hospital. Doctors are treating his swaying as an overdose. Sources say he had multiple drugs in his system including cocaine. He was found unconscious at a nevada brothel on tuesday. Thats our cnbc news update. Back to squawk on the street. Waiting for the Natural Gas Storage report. A build on that gas last week of 100 billion cubic feet. This is higher than most traders were expecting. We were trading 256 before the report came out. 251 is where the current price is right now. Stocks are in good shape. Roughly 14 over where they were last year, roughly 5 over the fiveyear average. Looking at the weather forecast, several models saying this winter will be a little more mild than we have seen the last couple of years. The farmers almanac doesnt agree wech agree. We are expecting temperatures to fall more rapidly. This is a big build for net gas. Back over to you. Stocks modestly higher today, although, well off the highs. Art ca art cashin joins us here on post 9. I wonder how much you think walmart threw a wrench into all sorts of things. They did. It spread all the way through the whole retailing sector. That caused more than a little problem. I think the funniest part of what we are seeing is that the fed book came out and stocks sold off a little heavy. The feeling was it indicated that the economy is maybe at stalled street. Things are not going. Perversely, when that wound up being picked up overseas, they looked at it as a good sign that the fed is on hold. Thats why we opened a little stronger today. We have a kind of circular reinforcement coming in here. Thats why i think this rally may be somewhat tentative. You want to keep your eye on crude. If that breaks below 46. They will be back in the equity market. It is interesting to see the rhetoric turn to the doubts of a 2015 rate hike and yields on bonds firm. The tenyear was below 2. Now, it is above 2 slightly. I think they are trying to sort out some trading positions this there. I dont take the fact that the yields rose a little bit. That came a little bit more from watching how things go in europe. Some look at year on year cpi, hottest we have seen since last summer. It may be a message that there is Something Back on the table for october or even december. Thats a possibility. I think it is a bit of a stretch. They are data dependant and the data is not really coming out there. That is kind of a one off, an outlier, i think. Empire, no good. The internals no good. Philly sort of reinforced the tone we got from retail sales. The data is not coming in the way the fed had hoped. If they are data dependant, they are not going to raise. What should we watch for in the market today . Snp is holding 2000. Do you expect we will say green today . If you can hold above 2000, it would be a good thing. I believe the rally might be a little tenuous. I would keep my eye on crude oil. If it breaks below 46, that would bring in selling. You want to watch the s p hold at 1990 level. That allowed them to bounce a little bit. If we break that, we could get a messy situation. We are halfway through october. We talked about the legend of this month at the beginning of the month. When it is good, october is really, really good. Is the latter half of october seasonally, has a seasonal characteristic. It tends to do a little bit better. There are outliers in there. October is famous for breaking bear markets for producing bottoms and bounces that come from bottoms. This one is a little tough to figure out. Of course, traders are a little nervous, because friday, the 16th, is an expiration day. In 1987, friday the 16th was an expiration day. As we get monday, the 19th again. We will be watching carefully for that. You are working monday. I will be. Bringing an extra helmet if you do. We are kneedeep in earnings season. We have heard everything from fx to commodity swings to chip cards being negative influenceers influencers of earnings. I think thats a great deal of concern about the financials in general. I think their production is coming back. They are not hitting home runs. Solid improvement. Given all the handcuffs and handicaps that they got from all the legislation, it is amazing to see them doing this well. I think they are happy to get singles or doubles at this point. Maart, thanks a lot. David solomon joining squawk alley for a live, exclusive interview. Lots to talk about with him. Squawk on the street is back after a quick break. At ally bank no branches equals great rates. Its a fact. Kind of like mute buttons equal danger. That sound good . Not being on this phone call sounds good. Its not muted. Was that you jason . It was geoffrey it was jason. It couldve been brenda. Hi watson. Annabelle, your birthday is tomorrow. Im turning seven. What did you ask for . A princess. And a pony. You like things that begin with p. I like pink frosting too. Will you have a cake . Yeah. I was too sick to have one last year. The data your doctor shared shows you are healthy. Are you a doctor . No. I help doctors identify cancer treatments. I want to be a doctor someday. I can help with that too. Watson, i like you. Of fixodent plus adhesives. They help your denture hold strong more like natural teeth. And you can eat even tough food. Fixodent. Strong more like natural teeth. Fixodent and forget it. Weve gotpeptocopter ummy town. When cold cuts give your belly thunder, pink relief is the first responder, so you can be a business boy wonder fix stomach trouble fast with pepto. 10 38 on the east coast. Time to get to chicago. Rick santelli in the santelli exchange. Today, a lot of issues going on as we try to monitor whats going on with Interest Rates and the cross currents on pricing pressure. The differences, of course, between pricing issues and manufacturing versus the Service Sector and whats going on overseas. I try to relate the inside market gossip. Protuguese tenure, put it on the screen. It is not a huge move. It is getting close to 2. 5 . Some of the highest yields in a month. The reason it is important. It is a political issue. The current prime minister, elections from earlier in october. Coalitionforming issues. Not unique to portugal. We have seen this throughout europe. Specially some of the southern parts of europe. Here is the point. You have these complex systems like the financial markets. Mario dragi and central planners have done their darndest to work the europe economies, the weaker ones lower. It could be any catalyst. People are pa i ying attention that. I am a big michael creigton fan. He passed away. A brilliant man. A medical doctor, wrote e. R. , wrote movies. Two books that are appropriate, state of fear written long before Global Warming and Climate Change was a big issue. He is the only person that linked the ver knack lar to what happened with the fall of the wall and the end of the cold war of how government likes to pressure their citizens through a state of fear. Global warming rose as they fell. He always wrote about things that are real but wrote about them in a fictional form like jurassic park. The fed is basically chaos. They are trying to overlook it, meaning ian malcolm, that mathematician, he predicted the outcome. Why . Because no Single Person or small group can tweak a complex system. When you look at the financial markets, it is the most complex system of all and sooner or later, those managers or groups of people that try to control those complex systems, they lose control. Now, is that the fed . Is that Central Planning . I cant tell you. A good argument for free markets. They dont always get it right. I bet on their track record any day of the week. Rick santelli, up next. Dells multibillion dollar for emc means this. Could be the biggest yoor fear mna. We are joined right after this break by the ceo. [ male announcer ] eligible for medicare . Thats a good thing, but it doesnt cover everything. 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Thats why at xfinity were hard at work, building new apps like this one that lets you choose a time for us to call you. So instead of waiting on hold, well call you when things are just as wonderful. [phone ringing] but a little less crazy. Were doing everything we can to give you the best experience possible. Because we should fit into your life. Not the other way around. Welcome back, a red hot m a market, dells announced deal to acquire emc, 67 billion the price tag there. Not to mention the huge beer deal worth over 100. Today is mark schaefer, the cohead of merger and acquisitions on citi. You advised on the dell deal, citi did, along with a number of other banks. Let me step back and take a skeptyske skeptyske skepty skeptical view. Emc agreed to do the deal. Is it a vote of confidence that dell was having in its future or in some way are they rolling in to cut their risks . I think it is a vote of confidence. My view is that the industrial logic on this deal is very compelling around cloud convergence for structure and security. It will be a powerhouse. You think about distribution, cash flow generating of this company. One thing that has not been compelling thus far is the performance of vmwear. What was that truck that just hit us and why . It is very Innovative Financial structure. There is always going to be churn with a structure like this. There is some arbitrage activity where stock is short. I would say, it is early days. A very compelling story. Most think it will trade at a discount, that being the tracking stock. Those that advise on the deal say it will be closer to parody. I dont want to comment on shortterm market trading. It is early days is all i will say. Lets get to the broader market. Until recently, and i think we have a chart to buy this. When you really go back through the data. Still, with even Third Quarter performance not being up, in terms of for buyers, it is still on a historic basis performing better than it has over a multiyear period. It is too early to call it any kind of a correction. Our business does lag. We do a lot of work around, instead of doing 12month rolling averages. We tend to lag the overall market. If you think about where we are today, july was the second biggest month on record. August was the biggest august on record. Q3 was the biggest Third Quarter on record. In north america, we have already included those seven. It just doesnt get better than this. The question is, because we are tied to the equity market, if you believe the equity market is speaking, you could see our business start to turn down. Whats going to take us there . Listen, those of us that have been following this for a long time are practicing the art of m a for a long time. It is hard to fight that. Right now, it is very strong. Im not smart enough. Im not an equity guy. Im not going to sit here and predict whats going to happen in equities. It is about as good as it gets. There is always a lag effect. This business has legs for a while. What unifying theme between the two deals is the Capital Markets. They are going to be borrowing 55 million. Dell is going to do an Investment Grade high yield offering. It may raise as much as 45 billion. It is unbelievable that the Capital Markets are that generous. Are you surprised . There is tremendous capacity. It is clearly a vote of confidence on behalf of the banks that this risk is manageable. I would say, look, at this point, big deals. Financing is available. It is strong. As you know, whats fueled a lot of this is very low Interest Rates, cost of the capital, bringing down your weighted average cost of capital and allows parties to pay bigger prices. Another thing is ceos that checked a lot of boxes and the only one left is m a. You have a couple of ways you can do it. Invest in plant and equipment, in r d. Or you can do Something Like getting into the m a and buy back stuff. That has been strong. To buy back in stock is not really a growth play. It is a good play to return capital to Share Holders. This market, people are increasingly looking at an opportunity, people are increasingly looking at an opportunity whether its capacity rationaleation and looking for a new business and new ways. This is whats driving it. I think right now it looks very, very good from a practical tellingser thats been at it a long time. Whats the one thing that you would go whoa if you saw it . Is it Something Else . Market disruption. There were big deals announced in that time frame. You have to take the deal if we get really a major the corrections are one thing, but if we get any sustained market disruption, either the fixed income markets or the equity markets, thats a problem for our business. Now, of course, dell is a highly leveraged deal. I cant call it an lbo. Today we had a big lbo with the 30 billion deal. Do we ever get back to some of the big lbos . Sponsor activity is up, but theres a lot of monotization. The deal of the mega lbo, thats much tougher to create. Its a lot of dry powder. We know technology has been very busy. Health care. Is there a sector perhaps we havent paid attention to that may get busier . Its all been pretty good. I have to say. If you look at percentage up, everybody is up i think in the energy area, it could be very, very interesting Going Forward. You see consolidation there. Technology will continue. This is a very big transaction. Very transaction. We could see more you see football institutions in the second largest volume in terms of volume. You knowing, right now. You come regardless, rain or shine. We appreciate it. Mark shafer, of course, co head of m a. Up next, our own phil lebeau test drives a tesla with autopilot capability. Wait until you see this. First, send it over to john who has a look at whats coming up next on squawk alley. Hey, john. Hey. Were going to have David Solomon, cohead of Investment Banking at goldman sachs. Well talk netted flicks after earnings. Triber growth not what investors expected. Something to be concerned about . Were still following first data. Hugging right about that flat line. Trading about 16. After that ipo. That was supposed to be in the range of 16 to 17. What does that say about the ipo market . All that and more coming up on squawk alley. singing you wouldnt haul a load without checking your clearance. So why would you invest without checking brokercheck . Check your broker with brokercheck. Welcome back to skwuk auto the street. The time Share Company posted weaker than expected Third Quarter profits and sales due to, among other things, currency head winds. The company did raise its full year guidance, but said it expects full Year Contract sales to be flat to up 10 . It did think before it was going to be 5 to 8 higher. Shares are now down 15 for the year. Flat going in, and now carl down 15 yeartodate. Back to you. Thank you so much. Meanwhile, shares of walmart after being hit with a series of downgrades and price target cuts today after the Company Guidance sent the stock down 10 yesterday. How much of this weakness you talked about the comparable sales growth is economy, and how much is the fact that you may be losing share dollars . What happened is we got so focused in the last few years on productivity that we didnt invest in the stores the way we should are have. You have been in since yeah. I own some of that. The wattons who own 40 lost 11 billion in a matter of minutes. Still a lot of the discussion from the sell side about whether or not this is about the amount of money theyre putting into wages and tech or just sheer run of the mill pricing pressures against the likes of amazon and others. They said 2. 7 billion will be spent on wages. 1. 2 billion in the first year. About 1. 5 billion. Not far off from what expectations were, but mcmillan told cramer maybe im just not good at messaging. I think thats safe to say the way the stock performed yesterday. Well continue to watch that. Tesla releasing software that makes thousands of its cars semiautonomous. Phil lebeau is one of a small group of journalists able to test out the new autopilot capability. I always get scared when phil does the live shots while is he in the car. I guess its safe enough to be sent over to you. This is being pushed out to model s and model x owners. Were on the west side highway. You hit the Cruise Control button twice, and it signals the car will take control. Im want doing anything right now. Thigh rettically, the idea is want that you are supposed to be driving handsfree, but that eventually when you want to do lane changes, the vehicle will do the lane change so you dont always have to be holding the steering wheel. We should point out that part of what they do with the Autopilot Technology is that they will send a signal to you. I get one, here we go, one right now. Hold the steering wheel. That is teslas way of saying they want you to stay engaged when you are driving. This is the next step of what were going to see when it comes to selfdriving vehicles. Semiautonomous for right now. They point out this is still early on in the test process. Theyve got a long ways to go, but they sent this over the air to thousands of tesla owners, and they will be tweaking this over time. This is the early first stage of autopilot from tesla. Weve talked to the likes of mobile eye about the engineering that goes behind this and the advance that is have happened for literally 16 years. There are 12 ultrasonic sensors not into the tesla model s that im driving. I dont know how you do it, the concentration while on live television. A lot more to come during the course of the day. In the meantime, getting breaking news on crude oil. Lets get to nymex and jackie deangeles. Thats right. This is a highly anticipated eia report. We have a drawdown in gasoline of 2. 6 million barrels. What does this mean . Its less on each side than what we saw from the api last night. Less extreme, that is. It is taking prices down at this po