Transcripts For CNBC Squawk On The Street 20151112

Worst week in ten. Draghis comments dont add anything new. Rolls royce has a warning. Oil back below 44. Copper to a new sixyear low. Macys sending shockwaves through retail. Its not all brands. A big beat this morning from kohls. Well have an exclusive with john malone in a moment and apple reportedly diving further into payments. Pay pal and Google Wallet may be on notice today. First up, kohls up sharply on better than expected quarterly results. Comps up 1 . Retailers citing strong backtoschool sales. Comes after macys reported the weaker sales and guidance. Comps up better than estimated. Inventories up 5 but still sequentially better. The take is, given macys, this is pretty solid. There was a time when 1 comp growth would be something that i would turn to you and say, wow is that pathetic. People were looking for 1 comp growth and they gave it to us. Was it kohls has one advantage. They dont have a giant flagship store. Kohls is also trying to differentiate some of its products. Thats not an easy thing but they have good private label. I happen to like the private label very much. Private label is often what the key is nrd to make good profit. But kohls demonstrates as does jcpenney that people are going to say macys is an outlier. I think kohls has been a serial underperformer and this was the beginning of numbers have been cut so much, they didnt disappoint. We have nordstrom point. Bezos is now the fourth richest person. Kevin plank at theu c iconic conference last night talking to our scott whopman. Terry lundgren is one of the best executives in retail. I think macys is a powerhouse. They, without question, they set the tone in a lot of rights. Youre seeing a lot of inventory and people reacting to the second warmest september and probably one of the warmest octobers in recent history. And that will have its effect. You mentioned weather yesterday. You said you have to it is warm out there. Who wants to look at an overcoat. I love kevin plank. Mark parker was honored by fortune. Hell hate that. Hell buy every copy of fortune and rip it up because thats the player kevin plank is. Hes got this fabulous clothing line that keeps you warm when its cold. Well, guess what i dont want right now . Kevin has done a remarkable thing. Hes a technology company, connected fitness. I love the guy. Scott interviews kevin plank. They have a great relationship. Plank could not control the weather, which is monumental because hes in control of Everything Else ive seen him go up against. No big voting stalk when it comes to the weather. Walmart is not only trying to simplify their deal structure going into black friday but theyre loading up on inventory. They dont want people to walk into the store and not be able to get what they want in the size they want. Theyd love some Colder Weather but theyre comfortable with their inventory. Doug mcmillan. The good news about the ceo, hes lowered xe eed expectatione point if they sell very little well hold it to, theyre selling very little. I think doug works in Mysterious Ways as we know when he said that business was okay and then business wasnt okay. I think a lot of people are pulling for doug because hes trying very hard to turn around the biggest american retailer. Is this the right strategy . I dont know. Everybody else has too much inventory. I come from a retail background. My father would also curse inventory if the weather was warm. And i think doug and my dad would not jive right now. David, were going to hear from you in a moment on malone. I assume youve got some thoughts on the retail picture, too . Lucisten, jim and i were e l emailing yesterday going, whoa, look at that move in macys. It really was stunning to see that kind of a loss of market value in one company. Weve seen it, you were just mentioning walmart. Weve seen that day happen. A number of these blowup days in retail and some of the heavily shorted stocks that you and i are just sort of watching go down every day whether its valiant or sun edison. Not to bring those into the conversation, but moves like that and macys can have a big psychological impact, too. Yesterday was the youve done more work on this than anyone. Macys, no to the real estate of what we heard at delivering alpha. Mcdonalds, its not that kind of thing. We dont want to play that. Well not try to bring it through reits. Were hedge funds just saying we were hoping theyd go this way and weve given up. Maybe the year of Financial Engineering and real estate has kind of peaked. It may have. Theres also some questions from the irs front in terms of structuring these so they get irs approval. We saw thats pressure on mgm. They went a somewhat different route. Theyre keeping most of the reits theyre creating and selling it in an ipo. Very different from selling it off and trying to get those irs approvals which have been tougher to get in terms of the taxfree status they like to have accorded to those things. I dont know how much that plays into it or its simply a view of a lot of different things, including wanting to own your real estate. Talking that off the table certainly probably didnt help on a particularly bad day as it was. One of the things thats happened, i remember when best buy was viewed as being the showroom for amazon. David, i think theres a consensus building that macys is now just a showroom for amazon. Tough. 15 billion market value at amazon. A lot of people rallying around macys saying the yield is okay. Theyve derisked the stock. Theres a funny term. Carl. The derisk firm concept which means, man, this thing is so bad. But, david, sun edison has not been derisked. Its still too early to buy sun edison. Too early to buy . Oh, no, jim. Thats just terrible. Is it too early for david, you report is weighed in on this incredible cocacola situation where acman is saying you dont like valiant . Cocacola, thats not good for you. This is a battle royale. It is isnt it . Its a battle royale, it is. Help me, david. Im out there on this cocacola thing. Im not going to cocacola. Im not going to cocacola. He waeont bite, carl. Can go to malone, though if you guys want. Lets get even more controversial. Lets go to malone. I had him sitting here for about 45 minutes. A longranging discussion at the annual Liberty Media investor day. Some news out of Liberty Media. Theyre creating even more tracking stocks. If you want to follow the fortunes of the atlanta braves, youll be able to do that. Every win or loss. Perhaps that tracking stock will go up or down. They are creating a tracking stock that will follow their ownership of sirius, which is close to about 60 of that company. But will actually be simply a tracking stock of sirius so youll have that and the actual common stock of sirius. Unsure if theyll trade in parity. The frustration had been that its trading in a significant discount. Its holdings are more than the stock of liberty would seem to suggest. Theyre trying to address those imbalances with these various spins of, as i said, the liberty braves. Liberty media and liberty tracking stock groups. I didnt talk to malone that much about it. Well talk to greg mcfay later in the morning, the ceo of liberty, about those plans. We talked about a lot of things. But one in particular, the charter deal to acquire Time Warner Cable and the bruighthoue networks. Still awaiting approval on antitrust and from the s. E. C. And questions now about, could it be this thing actually meets any real trouble on the regulatory front, and is it possible given the 26 ownership of Liberty Broadband which malone controls of charter, and his ownership in discovery and various content assets, that it could create more problems. I asked john malone whether if that were the case, what he would do. Ive always taken the position, for instance in directv, you know, when my ownership and participation in directv became an issue, an antitrust issue, right, i negotiated an exit for me so that directv could go forward without these issues. So, you know, my phone number is well known. Youre like an exit to discovery to allow charter to buy Time Warner Cable. No, but i could exit charter. I mean, why would i exit discovery when thats a double bank shot. I would never expect you to. I wanted to understand what you were saying. If charter has if the problem of charter being able to do this transaction is me, i dont have to be part of charter controller ownership. There you have it from mr. Malone, or dr. Malone. Unlikely that thats going to come up, but at least its been somewhat part of the conversation lately. And it does seem fairly certain that i shouldnt say fairly certain, but most people believe that the deal will be allowed to proceed. The broadband penetration of a combined charter, Time Warner Cable and brighthouse is still less than our Parent Company comcast, but nonetheless, we know a year ago, including malone, he thought there was an 80 chance comcasts purchase of Time Warner Cable would happen. Were watching that deal. Its an important one for john malone as well. We talked about a lot of things. Well be sharing that through our program this morning. Well have the entire interview available at some point online on cnbc. Com. Hes always interesting, to say the least, jim. Well, i mean, look. I think a tracking stock for the mets would have been that would be something that could be offered. But malone is doing something, and i think that i like the fact there are executives in that area that are its still an area of consolidation where money is being made. I mention that because theres a lot of areas where money is no longer being made. I wanted to get davids take on viacom where stocks down badly because i think viacom is the kind of nondisney programming, david. I think john malone must think that disney programming is special. You know, its funny. We talked about media getting day. Youll be interested to hear his response about what happened to the various stocks, including discovery which is close to mr. Malones heart as you well know given his sizable ownership. Viacom has had a terrible year in the stock market. Dragged down so often as a result of its own operations. The belief it does not necessarily have mustsee programming. And that it is in the weakest position of the major content providers, if you will. This quarter didnt look particularly good. I want to get an opportunity to look morclosely at it. The call as well and see what comes off that. That can make or break a lot of these situations. But theres got to be some pressure, one would think, on felipe. Its got to be on that board of directors. He has one big supporter, sumner redstone. Certainly bears close watching. Domestic ads of viacom down seven which prior down 9. A step in the right direction. This is a kohls situation. Its interesting. Whats the first line in the release . Sumner saying viacom continues to create some of the most compelling content in the world. Im confident that viacoms Leadership Team will continue to lead for a period of transition. Transition is an interesting word because where exactly are they transiting to, david . The digital world. That endless digital universe, jim, that were all trying to figure out. Thats where theyre transitioning to. Im shorting the braves. Tell john im shorting the braves and going long for the mets. Theyll be back. Well talk more about whats going to at libertys day. Apple may be upping the ante in the payment wars. Were looking here. Dow futures down triple digits. S p futures down 13. Crude oil down more than 1. Six fed speakers on the docket, including yellen in about 15 minutes. Were back after a short break. [announcer] if the most challenging part of your day is the staying awake part. gunshot sleep train has your ticket to a better nights sleep. Because when brands compete, you save during mattress price wars. And through veterans day weekend, save up to 400 on beautyrest and posturepedic. Get interestfree financing until 2019 on tempurpedic. Plus, helpful advice from the sleep experts. But mattress price wars and this special financing offer ends sunday. Sleep train your ticket to a better nights sleep apples reportedly in talks with u. S. Banks regarding a mobile to mobile payment service. The journal today says it would allow users to zap money to one another rather than relying on cash and checks. The service would compete with paypal, google and square. A lot of questions. The journal points out its not clear the progress of these talks, how apple would make money, how this would fit into bank infrastructure. Talking about a hot space. They felt it was just too cheap. Obviously, everybody wants to be in this because its peer to peer and people like it. The younger generation, im going to date myself here. Paypal is through credit card. They dont regard American Express ive been a member since 1982, and they laugh at that. They say, dad, join the fast living world. But apple is doing a lot of things that people dont seem to care about. Apple is in the throws of another round of people saying that cell phones have peaked. Certainly not demonstrable in the last quarter. Not from skywars who Just Announced a big buyback. It doesnt seem to matter all the innovation that i think apple is bringing to the party. This is something thats a good idea for apple. But apple cant get out of its own way right now, the stock. The stock you mean. Yeah. In a sense, its like 1,000 cuts theyre trying to take out of rivals because a lot of these wont move the needle, but in aggregate, maybe they lock the user in the eco and theres no reason to go anywhere else. The facebook ecosystem, google ecosystem and amazon ecosystems, the worlds collide. But i think theres room for all these worlds. I keep thinking about what tim cook said about the pc. He didnt mean the mac, which i just spent a g for with my kids. The mac you knot a macbook the air mac. Its this thing that i have. This is like what i use now for weights because i cant lift weights because of my back. This san old hp. No offense to meg whitman. I use American Express and i use this and my kids are saying, hey, trex. Theyd be calling me trex. Its like, wow. Hey, trex. Apple is not trex. You think youd get the ipad pro . I already ordered it because im tired of the wife watching her thing and doing that darn that 30second New York Times crossword puzzle. She watches her thing and i cant get a minute in to watch banchi, strike back. I have to have my own darn tv in bed. I cant see. Your experience and mine is mirrored. The things you are saying, the ipad, watching television in bed, thats she just watches movie after movie of dogs trying to get into food but not fresh pet. Well go over that. And occasionally its peppered by a cat that does something. Shell look at thus. Look at this. She doesnt watch the show. So i can say i pretend to like these things. She doesnt watch the show. I can say this. Your secret is safe with us. 2 million people, but theyre not going to tell her i dont watch those things. Well count down to the opening bell. Obviously a rough start to the session is in store. The dow, s p and nasdaq are all about break even for november. More squawk on the street after a short break. Dont go away. Just about six minutes before the bell. Lets get cramers mad dash. Rolls royce in europe is making some news. Im focusod their statements. The stock is down very badly, down 20 . Theyre talking about possible slowdown in engines. Before people read through this to ge, rolls royce is out of the mix on narrow body planes. Knocked out by ge and pratt and stuck with engines in the a350, the airbus, which is not selling that well and the a340, which is not selling well. I think thats a mistake for united technologies. They have some business demand. I dont know. Before you extrapolate this to the one area of the world doing well, which is air space, understand rolls royce has its issues. Thats a london chart today. Dont want anyone to trade rolls royce. Disaster of the day is a Company Called fresh pet. This is pet food that is natural and organic, okay. And it comes in its own refrigerators. I personally had to distance myself from this when my stepson was caught trying to make a sandwich and what he thought was bologna but it was dog food. The dogs like it but they dont do the buying. Generally we do it for them. This was a great concept, natural and organic. But you put it in your own refrigerator and a lot of people think thats a downer. In the middle of the night when you come down to make a sandwich, what is this stuff . Its dog food. You dont think its a broader comment on consumer diskregssary . People are going to read through that way and its its time has not come yet. They have a lot of product line. Very earnest guy runs the company. But natural and organic. Just remember that in the end, the dogs dont have nearly the votes you think when it comes to buying dog food. Well get the opening bell in a minute. Yellen is on tape. Mcdonalds ringing the bell. Back after a short break. Narrator when you see this truck, it means another neighbor is going to sleep better tonight because they went to sleep trains ticket to tempurpedic event. Through veterans day weekend, save up to 300 on the cooling comfort of tempurbreeze. Plus, get up to 4 years interest free financing. Sleep risk free with sleep trains money back guarantee, and of course, same day delivery. Are you next . But dont wait. This special financing offer ends sunday. Your ticket to a better nights sleep opinions. Theres no shortage in this world. Who do you trust . Whose analysis is accurate . How do you make sense of it all . A simple, unbiased stock score consolidated from the opinions of independent analysts. Is that too much to ask . Nope. Equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. And its only on fidelity. Com. Open an account and find more of the expertise you need to be a better investor. This Holiday Season, gi see you brought a friend . I wanna see, i wanna see. Longing. Serendipity. What are the. Chances. And good tidings to all. Hang onto your antlers. Its the event you dont want to miss. Its the season of audi sales event. Get up to a 2,500 bonus for highly qualified lessees on select audi models. Youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in just over a minutes time. Before the bell, were expecting some remarks from more fed speakers today. Six in total. Five voting members. Bullards already on the tape saying we should start heading the policy rate back to more normal levels. Theres yellen speaking. The conference is called Monetary Policy implementation and transmission in the postcrisis period. I think that again, i dont think its necessary to have a rate hike but its now in the cards after last fridays employment number. You see such weakness throughout the economy. It is kind of odd that employment has held in. Were just were going to be bagged by this. Im very fatalistic about a rate hike here. Its sure not good for stocks. The bottom of your screen, shes not commenting specifically on the economy or policy. And shes not taking q a. I think thats all well get from yellen for the time being. Lets get the opening bell under way and a look at the s p. At the big board today, a guest of ours on set yesterday, mcdonalds. Ceo Steve Easterbrook along with members of their marketing team. At the nasdaq, vwr corporation. Laboratory products supplier. Celebrate its first listings anniversary. Well get cisco tonight, jim. And we might hear from them more directly tomorrow. Its a very expensive stock. Chuck robb is doing a great job. Is this a blowout quarter . The guy has really invigorated the company. This is not necessarily the greatest moment in the world for tech. But my Charitable Trust owns it and its doing a lot of things. Worst week in ten for the dow is not saying a lot. We havent had a losing week in almost two months. Thats important to point out because the gloom is so palpable so quickly. A lot of that is due to the fact the dollar draghi is saying all these things that make the dollar go higher. And theres this great conundrum going on. For a long time we felt when oil goes down, good for gasoline, for the consumer. The macys situation has clouded that. Owl going down, copper going down is signalling to a lot of people, are we going into a gigantic slowdown at the same time mr. Bullard is very sanguine n that the fed is on auto pilot. Thats got a lot of people worried and is causing a lot of selling. Theres a report out today talking about the amount of oil at sea. Thats literally on ships. Two times the levels of earlier this year. Its equivalent to more than a day of global supply. We may have capacity but they are running out of it on the ocean. An interesting email was sent out yesterday from the ceo of the largest oil tanker company. His company is doing quite well. Why . Exactly what you said. Its a lot of hedge funds storing oil. Selling futures against it. And yeah, theres too much oil everywhere. Iraq is certainly pumping a lot, and iran. And its not being used more. Theres like a 1 to 2 increase in the amount of demand of oil. Its not keeping track. One of the reasons theyre doing so poorly is we dont need the pump as many. Many felt anadarko and apache could be the beginning of a wave. So too much oil is viewed as a negative now because its not helping the consumer, and, obviously, theres so many stocks that are connected with oil, correlated in a way that makes it just go down. How concern order you that we hold 41, 38 . I think were okay. I think that there is some demand at the 40, 39 level that kicks in. I dont want to conflate too much geopolitical but isis seems to be on the retreat. Isis put in a bit. I do know theres a sense the middle east has gotten a little more in control of things and the saudis dont show any sign of letting up. Absolutely not going into the december vienna meeting. Their strategy is stubborn. Stubborn. You keep hearing the saudis are going to stop. They are at 11 million barrels. We probably need 9. 5 to stabilize oil and theyre at 11. Theres no place to put that stuff. That oil chart will lead you right to the winners today. Kohls, darden, delta is on there, along with some others. I like delta and southwest. I really like them. I think that they are very, very inexpensive stocks. Obviously hurt by a stronger dollar. Less southwest because its so american. But i just think that they are dont forget. They and the cruise ships, holy cow. Talk about a group thats doing well. Royal, carnival. They oar are they use so much fuel. Those heavy users, it goes right to their bottom line. It will be quite good in terms of cost structure. Bill miller is such a good manager and is in deep in the airlines. Those two make sense. Spirit is not doing that well. A lot of people want to buy simple. Stick with delta and southwest. Do you take a gamble on jwn tonight . Theyve got nordstrom has great warmer weather clothes. The service matters. I was in nordstrom last weekend. Their array of stuff is fabulous. Then again, the weather is just not cooperating. Kohls has more nonweather stuff than nordstrom which is really in deep in terms of more expensive, but great service, but more expensive. I wouldnt put it past them. They have a great Online Business and terrific manager. I just dont like retail here. I cant change my view. Vf corp downgraded. Vf corp started signaling this. If you want to know who i think youd take a gamble with, its tjx. They have that right mix. And home goods is doing well. The Dollar Stores have been terrible here, too. Indeed. Advance parts. They missed the numbers. 2. 09. Goes 1. 80. A new ceo coming in. A lot of activist challenge there. This group has been very strong. The one to own is autozone. And i think rather than read through this group has suddenly gotten weak go back to autozone. Oreilly auto zone is the second one. This company youre right. Theyve been a winner but there have been some challenges. This company not doing as well. I saw doug cass yesterday. N. I. K. E. , we get depot readings early in the week. Dougs got a point. Those are winners. I think kohls calling out nikes business is strong offsets whats people read through that macys says nike is weak. Nike is selling a lot in china. Chinese oar that was a very big seller. Costco get something play on that. Costco makes its money on that card. When i go to costco like i did this weekend, im always amazed how they really have items they just sell for what they bought them for and its a joy to go there. Although they have way too many natural, organic samples. The joy of that place was to get that lox spread. Its would you like some gnutella and quinoa . Come on, bring back that stuff that raised your cholesterol so we can keep lipitor in business. As you mentioned, fortune names mark parker of nike their business person of the year. Number two is zuckerberg. Three is wilson at ea. Tim cook and then a. J. Mango at mastercard. These guys are all great. Start with mastercard and work back. Mastercard and visa, very competitive. Theyve delivered an amazing quarters. They are very good. Parker, incredibly competitive. Would you have put him at number one . I would put Howard Schultz up there, part of nosh. Parker is so unsung. Tim took obviously a very big backer of parker. My daughter lives in oregon. And like nike, thats nike town. And people just know that this is one of the most progressive, greatest companies. Theyre doing so many things right at nuike and people keep betting against it. Lee gallagher, i didnt know he was a 40year veteran of the company. And a relative introvert. Have you ever met him . No. Some people are these quiet competitors. Mark parker is he has europe was fabulous. Chinas fabulous. He has great rapport with athletes. In the end, hes a shoe guy. He likes a great nike. I just cant say enough good about him. Electronic arts. Havent they done a great job. Thats been a big winner. And that whole sector. Take two has been great. I like game stop. All these guys, it does translate to stocks. Those stocks are all really good. And ea and nike have been giant winners. Ea was an undermanaged company for a long time. These are companies. I like the correlation between the ceos and how the companies are doing and stocks are doing. Mark parker doesnt get enough credit. I want to do my show from nike headquarters. A seattle show would get a lot of work done. We do portland, seattle. We do it where people are positive, even though the weather is not that good. Its been rainy all week there. These guys are just the dna is to win but not to toot their own horn. A lot of stuff happening in the pacific northwest. All the dow components are in the red led by caterpillar in the red. Bob is on the floor. Good morning. All ten sectors are down here. Led down by energy with oil at the lowest level since back in august. Materials, industrials, all the global names weak. Consumer discretionary doing a little bit better but not that much. A little bump from kohls there. I want to emphasize energy big down day again today. This is the second day in a row here. In terms of whats up with them. Lowest level since august for oil. Big inventory build. Yesterday we saw. A lot of disapontement. No anadarko apache deal. Nothing happening in the m a space. Look at the energy stocks. Chesapeake, anadarko, murphy. Marathon. All of them down again. Some of these guys, chesapeake, apache, marathon. Down double digits just this week alone. Weve been on a down trend the whole week. The whole commodity complex is on another down trend here. If you look at base metals. Copper, sixyear lows. Zinc, nickel, aluminum. Im discerning a pattern here. Not even in the base metals. Goals sat a fiveyear low. Platinum, silver. The dollar is killing things and weak demand is not particularly helping. Moving on to kohls, i was quite impressed. Comp store sales up 1 . Jim is right. Were in a strange year when Comp Store Sales are celebrated at 1 . Inventories up 5. 7 . Remember, macys Comp Store Sales down 3. 6 . So at least this is a better comparison between sales and inventories. Inventories are moving up but certainly better picture than macys. And the gross margins. 37. 1 . That was only down ten basis points from the prior month. Very good margins. I anticipate thus will slip in the fourth quarter. Much better than expected. Kohls is helping but not big moves in the Department Stores. I guess you can call kohls a Department Store. Sometimes a discounter. Even if you look at some of the discounters out there, walmart and everybody else, very modest moves. Even tjx is down. Not a lot of followthrough for kohls better than expected numbers overall. Finally, i want to point out macys comments that theyll be Opening Discount stores. They are following on the success of nordstrom. Were going to get nordstrom after the close but remember what nordstrom did the other day. Samestore sales were up 4. 9 . Revenues were strong. But much of the growth has come from the Nordstrom Rack chain. Thats the discount chain. So macys is simply recognizing what everybody else is recognize, what nordstrom recognized. Nordstrom rack is a very, very dedicated following. They opened one in philadelphia recently. Its been packed. And the business there has been very good. Keep an eye on that. Nordstrom after they closed. Faber is uptown in new york. Thanks. Thats right, bob. Were in midtown manhattan at Liberty Medias annual investor day. Had an opportunity to sit down for my yearly chat with the chairman of Liberty Media and chairman of Liberty Global john malone. Some may forget malone terms himself an investor these days. No longer ceo. He leaves that to the likes of greg mcfay. But there are so Many Companies either controlled or at least he has negative control of, meaning he can prevent something from happening. Perhaps he cant make something actually happen. They own qvc. Liberty interactive. Liberty broadband has a 20 stake in charter. They own 50 of serious satellite radio. That announcement today is going to become its own specific tracking stock thats been a part of Liberty Media. Thats not to talk about the, i think its a 22 or so stake, in discovery. Sort of control there along with the newhouses that malone has. You get the point. Hes got his fingers in an awful lot of different things, does john malone. I was speaking to him earlier in part about whats going on in media and in content. We had a lot of discussion about that. Then i also specifically referenced that day last summer when bob iger at disney came out and said, well, we saw some minor declines at least in subscribers at espn and the media stocks as you well know went south fast. I asked malone, what was your reaction . I was cursing bob for generalizing because we werent seeing this kind of attrition. Im sitting at charter. Im sitting at discovery. Were not seeing any meaningful subcount attrition. In fact, were seeing a strong advertising quarter right now. And so the numbers im looking at are going this way and bob is gloom and doom going this way. Interesting reaction, of course, from malone who, as i said, owns a lot of discovery and has watch that stock struggle for any number of reasons, including on that day we sometimes refer to as media get. And a lot of other things we talked about well be sharing through the morning, whether it be Liberty Global. Hes the chairman. There are talks with vodafone and with cable and wireless. Where does all that stand . And the deal yesterday in which discovery and Liberty Global bought stakes in lionsgate films. Well be sharing that through the morning. Certainly interesting to hear him cursing bob iger on that day in question. Well, david, its important to point out viacom is up, and thats significant because again, maybe this is the kohls phenomena that weve taken these stocks down so low when they do kind of a notsogreat number, its better than what people think. And so media getting and what media is saying about disney, they all have a common theme which is maybe we got too negative. Yeah. On viacom itself during the call, i think, jim, they said they expect to see sequential improvement in ads. While people going intoey in quarter were not looking for too much, they were better on the advertising front. So while the stock did look like it might be down a bit before the open, does appear on the call they gave a little more positive commentary. That may be why youre seeing a bit of life in viacom shares. Overall, malone is still talking about scale globally for content, not to mention distribution which hes been pushing for some time but which may occur with the charter deal. But he still thinks theres a real opportunity there. Well be sharing those thoughts again from him directly as opposed to through me. Thank you, david. Lets get to the bond pits and check in on some of these yields. Rick santelli is in chicago. Good morning, carl. Obviously, six fed speakers, cnbc has been highlighting that. Five are voters. Im sure the clarity factor will just reign supreme after we get done listening to all of them. Mario draghis words. Lets start with the European Markets. A twoday of the dax. Right around the time he was speaking they were flirting with yesterdays lows. Now below it. August chart, you can clearly see, 11,000. 11,000 is the line to Pay Attention to. If we look at whats going on with the euro, yes, Mario Draghis words gave the euro a bit of a boost. Look at charts in april and maybe the tail end is turning up, but the drop is directly due to the notion of whats happening in the december meeting with our fed. If we look at the part back to the u. S. Side, the biggest part of the curve that everybody is watching, the most pain and the most gain, its the fiveyear note. Look at yields since midjune. Theyve skyrocketed. How can we tell if its over . It certainly feels weve reached the level where the rise in rates are moderating. Lets look at the component s. Its slowed down a bit. The same for 30 5. It brings in many more treasuries and lets get to the benchmark tenyear. Where do you want to watch the freight start to come down . Midseptember high yields 228, 229 is what traders are going to be looking at. Carl, back to you. Rick santelli. When we come back, dont miss an exclusive with the ceo of trip adviser. Dow town 176. Mauks makes it the worst day since monday. At ally bank no branches equals great rates. Its a fact. Kind of like playing the boss equals the boss wins. Wow why pause to take a pill when a moment spontaneously turns romantic . And why stop what youre doing to find a bathroom . With cialis for daily use, you dont have to plan around either. Its the only daily tablet approved to treat erectile dysfunction so you can be Ready Anytime the moment is right. Plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. 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Dow 38 map lead lower by boeing, chevron, jpm and American Express, led by cisco, which, by the way, reports tonight. Chuck robbins with us tomorrow. Jim, a lot to talk about. The stock has not done that much. Great balance sheet. It has a lot of momentum, more than people realize. Then again, i want to point out, were at a moment theyre not as dollar sensitive as people think. This is not a agreement moment for tech. A downgrade of oracle yesterday. Ibm goes down a lot. Other than pure cloud plays, its been very tough. Im not going to hold it against chuck if he doesnt blow the doors open. Lets get to jim and stop trading. I like the fact there are pockets of strength. The drug stocks are starting to come back. But look at ge. Ge hit a 52week high. Rolls royce reports that negative. Youd think that would go right through. New high for this year. And yet ge is being read through as a takeaway positive from rolls royce because rolls royce is using business in ge. Its just really interesting. The Fastest Growing large cap industrial in an era where people keep selling industrials and a lot of this is because of the share take, a lot of it is because of Good Management and a longer finance company. But i dont know. Good to see something working. Its now moved ahead. Its now the third best dow component for the year. Just edges ahead of mcdonalds at 22 . Two companies that are doing many of the right things. And its so interesting that they own that rolls royce is that a350 and the ge is doing so well in engines. People forget thats a core business for them. United technologies doing well, too. I want to point out the gloom is too palpable right now. Whats on mad tonight . We have popeyes, louisiana chicken, a place i love. If i want a treat, i go there. The Company Reported a great quarter. People got too negative and the stock is up gigantically. Too much gloom factored in to some situations. If apple goes up today, its going to be a day that people are going to regret that they didnt buy. Jim, well see you tonight. Mad money, 6 00 p. M. When we come back, a lot more of davids life is with john malone. Good thursday morning. Welcome back to squawk on the street. Im scarl quintanilla with simo hobbs. David faber spoke with john malone from Liberty Media. Plus tom rutledge in just a moment from Charter Communications. Stocks have had a rough morning. Dow down 164. Oil is coming off of the lows. Well see if that has any effect on equities in the next few hours. Lets get to the road map on cnbc. Macys, a big drag on the Retail Sector but thats not hurting kohls. The stock is up sharply. How you should be playing retail now. And libertys john malone. More from davids interview. And there are six fed speakers today, including chair yellen as youve seen, more importantly this evening, vice chair stanley fisher. Well get all the highlights as they come through and what you should expect. Kohls is surging today. Cost cuts enabling the Department Store to beat on earnings and report a 1 gain in luke for like sales after recent declines. Much of the Retail Industry is clearly haunt eed by that warni from macys which lost onefifth of market cap in one week. Oliver chan, good morning to you. Did kohls cheer you up this morning . It did a little bit. The retail environment is very cautious but kohls printed a solid comp at plus 1. Also kohls has an attractive product portfolio. Its focused on active, active wear, footwear performed well. This was very encouraging. The plus one comp especially given yesterdays macys negative 3. 9. Lets come on to that. Whats the advice on kohls . Whats the price target . Obviously a company in transition . We have a market perform rating. We do believe that some of this momentum in the Stock Performance is due to short covering. Short interest as a percentage of flow around 10 to 11 . Some of this is short covering. Kohls, we were just off the earnings call. There are a lot of factors which are positive going forward. Loyalty program. Buy online, pick up in store and mobile and better womens product which is a tough category. Womens is 30 of the business. Lets get on to macys which obviously is huge for the week. You lowered your price target last night from 52 to 42. What is the takeaway. How brutal is the read through on inventories for the Holiday Season for everyone else . Simon, macys had a really big inventory spread. Thats a problem. Inventories are running about 10 above sales. Theyre planning to liquidate in fourth quarter. That will be a negative for all the apparel universe. The big factor for macys is international tourism. Tour uism could be down 20 to 30 . Tourists also have been gravitating less toward the center core. Michael kors, pbhs. Should they not have seen that coming, not the warm weather, the fact that they would challenge within tourism . Well, they saw it coming, but it got materially worse. So it was a 100basis point hit previously. It moved worse at 150 and this company executes very well, but its been tough. That plus the weather. So i think they saw hints of it, but worse than the Management Team expected. You cant deny the oncoming of amazon. The other factor with macy and mcdonalds as well is that people are pushing back from the what the activists want, the Financial Engineering of spinning out in to a reit. Id like your take as to why that might be. Reits have clearly fallen in value. Is there a realization if you spin off these properties you get a rag tag bunch of properties that are all tied to one lease holder . There are a lot of complexities with the Real Estate Investment trust. Macys said thats off the table. The complexities include the valuation, single property tenant, as well as macys. Can it afford the rent expense . Macys wants to remain investment grade. Should be able to maintain financial flexibility, and thats a longterm type of interest. Dont forget were in the fashion business, consumer discretionary. These comps for sales can be wild and macys fundamentally doesnt want to take on that leverage. That being said theres billions of dollars of real estate value. Over 10 billion. Its something well watch and we think theyll be ad hoc about it. Okay. We are, what, two weeks and a bit away from black friday. The commentary is fascinating. Its black friday in a relative sense going to be a damp are people realize 7ing its about maintaining margin to an increasing extent and not chasing to the bottom to generate volume and press headlines. Well, i think its going to be a little of both. Who should win here . Probably consumers because there will be great deals in the marketplace. Whats going to be fun about this year is the integration of bricks and clicks. Buy online, pick up in store and consumers getting stores in their hands with mobile. Understanding where the best deals are and moving towards that. So we will see some great door busters. Excitement. Black friday, simon, is a social experience for the United States as well. Sure. So i think there will be action. But the news flow surely is people who are not willing to open stores to the extent they did before. Perhap oz the periphery not opening at all. The mood seems to be changing for the retailers. I think what youre seeing is really thoughtful approach to labor and store employees and kind of elivating service in general. Thats a theme and its really a variety in terms of how retailers are playing this card. Some retailers are opening earlier, strategically in some markets, and some are choosing not to. We see market share gainers and lo losers. I understand the sensitivity. I kind of cut you off before you finished there. Sorry. Oliver chen joining us. Thank you. Good to see you. David joins us again from Liberty Medias investor day with a guest who is shaking of the cable business. Hey, david. Hey, carl. We are joined by tom rutledge who is the ceo of Charter Communications. Good to see you. Good to be here. Thanks for taking a moment to talk to us. Today is in the end of the Public Comment period for your pending acquisition of Time Warner Cable and Brighthouse Networks coming along with that. Time warner cable already agreed to a deal. You confident youll get this through the regulatory process . I think so. Its a good deal. Its good for the country. Its good for the industry. Why is it good for the country . Youll have a better operator in a larger footprint that will be a source of innovation in the industry. It will be smaller, relatively speaking, than comcast. It will be smaller than at t from a video perspective. One way to think about it, its really time Warner Brighthouse which is already combined from a programming perspective, picking up a 4 Million Subscriber system in the form of charter. It doesnt change our position in the industry that significantly. But it does make us slightly larger and a place where innovation can occur. In addition to comcast. Comcast is an innovative company, and its a place where alternative sources of innovation can be developed at scale. And charter has been doing well. Its improved its customer service. Hiring lots of people. Weve hired 7,000 people in the last four years, and if we apply the same approach to the time Warner Brighthouse assets, which we will, well hire 20,000 people. Well create jobs, create Quality Service and were going to expand our competitive footprint, too. Were going to build out areas that are unserved in commercial areas. So well bring highspeed Enterprise Services to parts of the country that are not served today and well expand our residential footprint by a million homes. So well have a larger competitive infrastructure, Better Service organization and well have American Workers doing it. And youll have 22 Million Subscribers . Well have 24 million customer relationships. 17 million video customers. When i think about broadband and what brought down comcast Time Warner Cable. Comcast is larger in broadband. Tom wheeler is a wild card, i would argue. Are you confident that theyll not come out at the fcc and say still too much market power when it comes to broadband for this combination . When you look at our data business, well still be smaller than comcast when this deal is completed. And were smaller than at t. Were smaller than verizon. Were about the same size as sprint and tmobile in terms of Data Customer relationships. So i would argue that its a pretty competitive environment, and you have a lot of investment occurring in the wireless space. A lot of investment occurring in the wire line space. And moving toward a mobile competitive environment and i think that allowing us to operate at this scale will actually be good for all the parties. And good for competition. So i think the fcc will see it that way as well. When i was speaking to john malone earlier today, because theres been some murmuring or conversation about the idea, there could be an argument that theres also some vertical relationships here given his ownership stakes in various content companies. He said if it came to it, i wouldnt stop this deal. Mean, hed figure out a way to reduce or eliminate his ownership of charter. Does that surprise you . Its very gracious of him, i think. And the kind of shareholder that he is. And he is a shareholder. He doesnt control charter. Hes got a number of board seats. He does. Well, a Public Company Liberty Broadband. Has some board seats. Theyll actually be reduced in this transaction. Weve set up a governance structure to make it impossible for those kinds of things to occur inside the corporation. But even from an economic perspective, its not rational for his ownership to if he could control the company, to damage one of his Video Services like discovery by giving it exclusively to charter and not selling it to satellite and phone companies. It would really be a net economic loss. So i think even the economic arguments dont hold water. The other thing to remember is his personal ownership stake in the new company will be about 1. 7 . Not that significant. While hes famous and people follow him, and i love having him on our board and i love his input, hes not in a control situation. His voting stake is far above his liberty broad bands voting stake. I want to move on to content to a certain extent. A year ago you and i had a conversation about hbo, which there was talk that it would start its own Broadband Service away from the cable service. At the time i think you said if they do that, theyll be sowing the seeds of their own demise. They did it. Hbo now. Its up and running. Yes. Have they done what you said theyd do . Is their demise coming . I think they have risks to their business, if they are selling against the distributors that carry them today. And they have, you know, all of our customers have the ability to get hbo, and we dont need hbo anymore to satisfy our customers. So it creates now does that mean its impossible for us to sell hbo . Were selling more of it than ever. So wouldnt that seem to argue that its not perhaps that much of a concern . Yeah, i think you can argue it both ways. I think that it all depends on what their Business Practices are in the long run, whether or not they put their base at risk. And so far, it doesnt appear to be happening. From their point of view, so far, so good. You added video subscribers last quarter. Yeah. The market cheered what was a very good quarter from you. Were all sitting here, those of white hou us who follow this closely and investors saying the bundle has fallen apart and consumers are going away. Wouldnt seem to be the case here soor is it that youre takg shares from the overall pie . The overall pie is shrinking for a variety of relationships. Theres more over the Top Television. So there is substitution. Theres also very poor security on tv everywhere, which is high quality television. Its whats in the bundle outside the home. And what what do you mean when you say that . People can share passwords. I know theres an account that has 30,000 concurrent streams on it. How is that possible to be allowed . Well, the companies that are running tv everywhere are new to distribution. Theyve been content companies. And they arent managing security. So that has an effect on the value of content. Particularly in college markets. It used to be when kids went back to school, wed have people signing up at desks essentially in front of the Student Union for cable. They sign up for broadband now. They still sign up a lot for cable. We grew this year more so than last year in that marketplace, but theres a real impediment to selling video when people have passwords with them from their home and they can essentially watch it anyway on broadband. So that security issue pressures the business a little bit. The cost pressures the business enormously. There are a lot of people that cant afford it. You said that in your last call. You were blunt about it. The population is poor, essentially. More people have left the workforce, on disability and food stamps. Thats all true. The average person has gone backwards. Our business serves everyone. Everybody wants television. Everyone wants broadband at some level. Doesnt that argue for skinnier bundles . If you are a content company, you dont want your product disaggregated from in big bundle because it means youll have less customers. So theres our view is different than content companies. A lot of people think were a monoluthic industry, and were not. We have a completely different attitude. We like over the Top Television because it makes our broadband product look better. We like it because it pressures the price of video. Obviously, if consumers are unwilling to pay for video at a certain price, were unwilling to pay for that as well. So our cost structure is positively impacted by over the top. That said, we want to sell packages of product. If we had our druthers, wed sell packages and tailor them to whom the audience was and wed give consumers what they want at the price theyre willing to pay. But if youre a content company and you have 100 million homes and distribution, you dont want to be disaggregate. When a big company ms. To us that has leverage if you want to take espn you have to take disney tunes or whatever. And thats the way its been and i understand why they want it that way. Tom, always a pleasure. Wish we had a luittle more time but were out right now. Tom rutledge, thank you. David will be back to brung bring us more of his exclusive interview with Liberty Medias john malone. Keeping a close eye on some of these levels with the dow down 143. Were back after the short broadcast. Market down 145 points. The dow is down 145 as you can see. Extremely sensitive to whats coming through from some of the fed speakers. Six fed speakers today. Yellen arguably has caused some gyration on the dollar, even though she doesnt say much. For the moment, you can see were down. Its energy and materials leading the fall. Coming up, a wealth of speakers today. Six speakers, including one from chairman yellen. All the important headlines after the break. They are out in force. By the end of the day well have heard from four fed president s as well as chairman yellen and vice fair fisher. Kate rogers is monitoring it all. We are hearing from half a dozen fed officials today, including fed chair janet yellen giving opening remarks at a post crisis Monetary Policy conference hosted by the board of governors of the federal reserve. While yellen did not milwaukee mention of u. S. Economic conditions or rate hike timing, many are chiming in. Chicago fed president Charles Evans reiterated the points he made to our own Steve Liesman last friday that it could be well into next year before we begin to see sustained upward movement in core inglags. He says it would be appropriate to lift the target Interest Rate very gradually which would give time to assess how the economy is adjusting. St. Louis fed presidency James Bullard said the unemployment and inflation goals have been met. He said theres no reason to continue to experiment with extreme policy settings and added that zero Interest Rate policy has put the u. S. Economy at a considerable risk of future inflation. And richmond fed president je Jeffrey Lacker reiterated the statement that Monetary Policy has the ability to determine inflation over time. And he has dissented at the last two fed meetings arguing in favor of a rate hike. New york fed president bill dudley speaks at the new York Economics Club this afternoon and will be taking questions from the group. Well keep an eye out for that one. Busy day on the fed front. Thank you. Lets get back to david faber. More on his exclusive with david malone. We had a wide ranging discussion with john malone as we are lucky enough to do at least once a year. Malone, people may remember, as a cable pioneer having built tci into one of the largest Cable Companies before having sold it to at t in the late 1990s. Hes known as a cable guy, an engineer, but hes spending a lot of time looking at content. People may remember that announcement from discovery and Liberty Global, two companies in which mr. Malone has a Significant Interest and vote interesting. Both taking stakes in lgf, lionsgate. Buying it from the chairman of lionsgate, its largest share owner. That comes after starz also bought a stake in lionsgate. Started much of our conversation simply asking malone, what is it about content, and is there a time at which you can see lionsgate getting together with stars and perhaps the mgm studio and maybe an amc and even a discovery . I would say that the the media if you want to call it that segment, if you compare the size and scale of the players, say, on the internet side and then on the Communications Service side, im talking u. S. I mean, youve got these Huge Companies on the internet othe technology side, right, with massive Balance Sheets and massive cash availability. And theres really only four of them that dominate. And then you get over into the cell phone world, and youve got really two giants. Massive Balance Sheets. You can throw comcast into the massive category now. And then youve got even disney is small in market cap when you compare them with apple or now amazon and facebook. Or google. Or google. You have these giant guys. You have these traditional guys who are still quite big in the telco world like at t does directv and now theyve got some pretty good scale and ubiquity. Youve got comcast with nbc universal, some pretty good verticality and some scale. These are getting to be big companies. And over here you have the Traditional Media Companies who are looking very small. Even the big ones are looking pretty small by comparison. So you could argue that theres going to be some combinations because if you believe scale is important, and in the content world, whether its Computer Software or television content, scale is very important. You make it once. You distribute it enormously. And stability comes from scale and so on. So it wouldnt surprise me to see consolidation in that space. We talk about content these days. We can be talking about any number of things from a movie to a Television Show to something, of course, that has nothing to do with either one thats a short clip done by somebody thats sent over and owned by verizon. You seem to be more focused on the traditional side. At least with some of these stakes recently taken in, for example, lionsgate. My involvement in lionsgate got a lot of publicity but theres a lot going on. A lot of cross investment going on as people try to understand what social networking, internet connectivity, portable devices are going to do to content and information consumption. Right. What did you learn so far . Since you started dabbing your toe in the content waters . You know, its just a brave new world. Not so much the creative process, but trying to integrate that into some kind of a Global Distribution mentality. The day that disney reported there might have been some espn subscriber losses and media just got shellacked, what were you thinking . I was cursing bob for generalizing because we werent seeing this kind of attrition. Im sitting at charter. Were growing video subs. Im sitting at discovery. Were not seeing any sub count attriti attrition. Were seeing a strong advertising quarter right now. And so the numbers im looking at are going this way. And bob is gloom and doom going this way and i think what hes experiencing is that there are a lot of operators who think espn is quite expensive and they have the bigger guys have a little bit of latitude to offer packages that dont include espn. And so i think espn was experiencing more than the rest of the industry in terms of loss of big bundle video customers. Zazlov makes a lot of money. You pay your guys so much money. Why do you pay them so much . This is black shoals models. My philosophy is, i give them large stock option grants up front that are meant to compensate them for the next five years. They vast over four and five years out. Stock performs, they can make a lot of money. If the stock doesnt perform, they dont make anything. So i want my ceos to be just like me. Invested in the company and its longterm success. And i wont apologize to anybody, and i think the black shoals model sucks. As a mathematician. How many executives do you know that really want their options to be granted when the stocks are at an alltime high . There you have it, carl. The black shoals model sucks. If malone says it, youve got to believe it. Ive heard Straight Talk but never quite like that. David faber with john malone. Stocks taking a hit this week. Is a santa claus rally ahead . More squawk on the street when we come back. Hello. Im sue herera. Kurdish fighters backed by a u. S. Led air campaign launching an assault to retake the strategic town of sinjar in northern iraq. Isis overran the town last year causing the flights tens of thousands of yazidis. U. S. Military advisers were on the scene but stayed well back from that fighting. House Minority Leader Nancy Pelosi meeting with senior officials in beijing. Shes been quite a critic of chinas human rights record and also met with tibetan officials in beijing. Clashes breaking out in athens. It comes during the first general strike since the leftist led government took power in january. Actor George Clooney visiting a Charity Sandwich shop in edinburgh. It donates all of its profits to homeless people. Clooney chatted with the staff and posed for pictures and hell speak at the scottish business awards. Lets get back down to the nyse. Hey, carl. Sue herera, thank you. Markets in the red today. Dow down 170 amid a wave of fed speak. Lets get to David Rosenberg and jeff rosenberg. Morning guys. Good to see you both. Good morning. Here we are. We just got bullard. Probably lacker. Williams earlier in the week telling us time to normalize even as copper goes to fresh sixyear lows. How long can this go on . I think the aim is to get off zero. They passed september because of all the global turmoil and the fact financial conditions were tightening. I dont think commodities will factor into the feds decision. They probably should have gone off zero quite a long time ago. When they make the move december 16th, its going to be more important, what they say to suit the markets in terms of what the contours of the path of future Interest Rate increases are going to be. Theyre going to emphasize this is going to be a truncated Interest Rate cycle. To me thats more important. And the bottom line, its already priced in. Maybe not into the fed futures contract. Look at the dollar. Mortgages. Look. Its pretty well a done deal. I dont think the fed has ever embarked on a fresh tightening cycle starting in december but some sense its a victory lap for them. The economy will be able to withstand it. Theyll not say were like one and done but theyll suit the markets by saying this is not like a repeat of 1994 or even 2004. Jeff, are you as optimistic they can deliver what some argue it would be a complicated message . David has it exactly right when it comes to domestic analysis. The other big issue here is going to be how does the dollar respond and how to Commodity Prices respond to the dollar as well as whats going on in Global Growth. The offset to the domesting anal sus, which i agree with david, has long argue forward leftoff here is the impact of Financial Market conditions. We ged dudley speaking later today. Hes been the main proponent of looking at this third target, if you will, for the fed. If you get the impact on the dollar, commodities, Global Growth from normalization and that spills back over through Financial Market conditions, that tightens effectively policy for the fed. So the fed doesnt have to do as much and it certainly changes the markets perspective as to what the fed is going to do irrespective of the Domestic Labor market or domestic analysis. Maybe we can throw up a chart of the dollar over the last five weeks. Its staggering. The dollar index. The basket of countries. Were down off where we were. We were heading toward 5 in just four weeks earlier in the session. Clearly thats still a big move. Fisher specifically tonight at 6 00 has said hell address the impact of currency effects. Are you suggesting they might come through and talk down the prospects of further rate hikes because of this move . Its not that theyll come out and talk down the prospects. I think its much more about how do Financial Markets evolve . And then the fed will respond to those Financial Market conditions. We talked about it in september. Global and international developments. It postponed the fed hiking. The difficulty here is were back to this divergence theme. We didnt talk about europe and draghis comments earlier today. Clearly europe is moving in the opposite direction of the fed. Thats putting additional pressure upward on the dollar. And the impact of that in terms of what it does to Financial Markets and confidence effects, thats whats going to limit the fed. They wont speak about it explicitly but theyll be reactive to how Financial Markets react. Do you agree . Its next to impossible for the fed to tighten Monetary Policy and not have financial conditions tighten. Thats what the goal ultimately is. So were talking about the u. S. Dollar. And the current market is a pair trade. Dollar yen, dollar euro. Dollar canada. When you take a look simon, real final sales in the Third Quarter were up over 3 annual rate in volume terms. How Many Companies in the world can boast that . Most arent interested in current pairs but what the stock market does in response to this. And that 5 move weve seen in the dollar, presumably in a delayed sense adds to the cost or benefit of those individual Companies Moving down the line. Lets say the dollar stays where it. Is lets say the dollar further strengthens. As a stock market investor, what do i have to do . What do i have to be wary of . The stock market is overvalued right now you could argue. We came off a huge bounce, an unexpected bounce. Everybody had the White Knuckles during the summer and although november is typically a positive seasonal period for the stock market, thats usually november is flat to down after youve had a rippi inping october. Were getting part of that back. I think it is very idiosyncratic. The fed raises rates. What would we be buying into that . The financials. The fed is going to give the financials, the banks, some net interest marge on. Id avoid areas of the market affected by the strong dollar. Like industrials, technology. Consumer staples. But take a look what is a strong u. S. Dollar do . It reduces import costs. That creates winners and losers but puts more positive margins in the broad retailing sector. We like consumer discretionary. Some parts of Technology Like google and amazon. Theres places you can play this and not be hurt by the strong dollar. The effect today on commodities and oil prices, do those become increasingly dangerous areas to be materials in energy after all is said and done . Well, were going to have to go through more production cuts, more m a at some point. Anything that cant last forever by definition wont. Commodities are not going to go to zero but its way too early. What do you want to do . How do you want to play lower energy, gasoline prices, feeds into the augto sector. What wed be buying right now, the airline stocks. Delta is having a good day. You call this the paranormal market, the point at which bad news was good news for stocks. That seems to have flipped. I wonder if you think thats going to stick this time. I think geographically, its evolved. Bad news is good news is still whats going on in europe. Look at the strong European Market reaction after what draghi gave you. When youre thinking about investing in bonds, you want to be careful about investing in front of the fed where they are planning to raise Interest Rates. Thats clearly the impact on the short end of the curve. When it comes to the stocks and paranormal in the u. S. We saw that shift. As we look at the impact of how raising Interest Rates in the u. S. Impacts the dollar, the commodity space, were in a transition period certainly away from Monetary Policy being able to lift stock markets. Stock markets are going to need real good news. Its back to good news is good news. The risk there then is, of course, that means bad news is bad news. We have to be careful on the u. S. Side. Good to see you both. Thanks, guys. Still ahead we focus on yahoo . Kara swisher joins us on what she calls a convoluted strategy. Well be route back. Here at the Td Ameritrade trader group, they work all the time. Sup jj . Working hard . Working 24 7 on mobile trader, rated 1 trading app in the app store. It lets you trade stocks, options, futures. Even advanced orders. And it offers more charts than a lot of the other competitors do in desktop. You work so late. I guess you dont see your family very much . I see them all the time. Did you finish your derivative pricing model, honey . For all the confidence you need. Td ameritrade. You got this. Just beware the broad market, the s p 500 is now at a critical level. Its perched exactly on the 200day mutualing average of 2,063. We need to hold that or the expectation will be wed gap below. All 10 s p sectors in the red. Still standing out is one of the worst performers as Oil Prices Fell to a 2 1 2month low ahead of the inventory numbers. They are out in the next hour. Marathon, tesoro, Consol Energy and apache are weighing on the sector the most. Down around 2 . The dow down 141 points. Lets get to the cme and Rick Santelli for this mornings exchange. Simon, thank you. Id like to welcome my inperson special guest brad tank. Chief investment officer. Thats a big job. Head of global markets. Its got to be a tough job. Simon just pointed out something many on this floor are looking at. Were on top of the 200day moving average in the s p, 2,063. It wasnt that many weeks ago we were well above that. Now all unchanged or lower. Whats changed in the last two or three weeks . One thing to consider when looking at the s p is the s p was the market that rebounded off the bottom faster and more powerfully than anything else. From that perspective, it was pretty narrow, even within the s p 500. It was a narrow advance. You get into other markets, develop european stock markets, emerging markets, its been nowhere near as powerful. Now the s p sort of pulling back. Dont we all kind of take the pro and con when were doing certain things that are positive for our markets . They drain away emerging markets . Central banking activities at the epicenter of tick datie i d who drowns in liquidity and who doesnt. On a scale of 1 to 10, how much of the down side activity in the last several weeks in stocks do you think is directly attributable to the notion that finally, if you believe fed fund futures at this point in time, they have acknowledged the probability that is well over 50 that we are going to see snugging up of rates in december, although its a fluid market in fed funds. Theres an element here. Transitions from stimulus to growth are also tough and market questions the growth side of the equation. If you look back at how the market reacted from midseptember fomc which was a nogo decision and the weakness was markets didnt price it in, they didnt go and the stock market had a big party. The party didnt start for a couple of days because many were trying to handicap. Would the fed question financing at the end of the year and do it in december . Now thats dawned on the marketplace. If fed fund futures continue to price it in and that is that important as jim bianco thinks, thalts thats the green light the fed is looking for, doesnt the stock market activity affect how fed fund footers trade and reprice the notion . Theres a lot of toom leime lef. Weve got a few weeks left. If it happens, the big issue is, what comes next. 2016. Lets do a hypothetical. Hyp. If rates were at 1. 5 right now, not 0 to 25 . If they were at 1. 5 , all things being equal, would anybody expect any teep of change in rates at the end of december, in your opinion . Very different set of circumstances, and i think the answer is to that is no. It gets to the heart of the feds dilemma is they have the data and theyve theyve got the jobs data. The quality of jobs, how many are full and parttime, because it doesnt mesh with growth. Lets continue. The other part of the equation is they know zero support normal, and they missed the window earlier this year to raise rates. They would like to hit the next window, and they want to get off of zero. The answer is this fear at 1. 5 , they probably dont have much to do right now. Really the issue is correcting something thats wrong versus doing something that Current Conditions would auger for. At the end of the day theyre going to have to make a compromise, and the compromise is likely theyre going to go in december and then when we get into 2016 i agree with the compromise. I just think that its compromised the notion that its data dependent. Simon hobbs, back to you. That was an interesting conversation. Thank you very much. Up next, remember monday, tuesday . It has been a roller coaster ride for retail stocks. Not just all the way down. Well talk about that when squawk on the street comes 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. A lot of people are focused on gold and where we are at the moment, as you can he see. To be honest with you, the main swri rags seems to be. Within retail, macys way on the sector clearly this week in the wake of what they said where heed. Kohls today pushing higher. Courtney reagan has more on that. Hi, courtney. Hi, good morning, simon. Well, kohls results reemphasize what many have said for some time. You paint all retail with the same brush. Mace where is was the out performer and polls lagged, but for the Third Quarter results, that leadership has flipped. Kohls beat wall street for comparable sales. The retailer said back to school sales were strong with late october sales helping to offset a weaker september. On the Conference Call executives reiterated Prior Guidance for the full were. Kohls did, however, concede there was weakness in cold weather apparel given unseasonably warm weather this fall. The midtier Department Store did have good it includes nike and fit bit they named by name. Now, womens is about onethird of Kohls Business and both womens and junior logged a positive comp for a while. Kohls ended with inventory at 5 . Its a position that was improved very purposefully, in part from buying less merchandise for the holiday quarter. Kohls says its going all in on marketing, though, spending 14 more yearoveryear and, like macys, kohls is piloting an off price concept. Now, londonbased burberry turning in a mixed first half of 2015. Profit improved more than 14 , but total revenue more or less was flat over the first part of the year compared to the year prior. Quite short of expectations. Mens and womens wear sales were flat. Accessories grew slightly, while childrens grau 10 . Now, ceo Christopher Bailey calls the external environment challenge, but says he is confident burberry has its strongest ever holiday plans. We hear from nordstrom after the bell. We have quite a big week ahead for apparel. Its been an interesting hour. On the one hand Charter Communications told us that so many people are poorer in this country than they were, and that affects cable consumption and oliver chen suggesting its a problem with Foreign Tourists here not coming in the case of macys or at least not spending in the macys big stores. Yeah, exactly. I think that that is going to be something a little more retailerspecific because thats not something that kohls has called out ever this quarter or previously, and nordstrom has said its not really an issue for them in the past. Well see what they say after the bell today. Thank you very much. In the meantime, lets go to john fort with a look at whats coming up on squawk alley in three minutes time. Good morning. Good morning, simon. Apple might be planning on chasing down pay pal. Well look at the immrikdzs. Also, we have the trip advisor ceo joining us to talk about that active space, and theres no place like the home page. Kara swisher with the latest news on squawk news. All that coming up. The future belongs to the fast. And to help you accelerate, weve created a new company. One totally focused on whats next for your business. The True Partnership where people,technology and ideas push everyone forward. Accelerating innovation. Accelerating transformation. Accelerating next. Hewlett packard enterprise. Welcome back. Im jackie deangeles reporting from the floor of the nymex. The department of energy out with its inventory report. Prices are actually bouncing on this report at this time. Were creating around 42. 20 at 2 decline. It was slightly less than what the