Transcripts For CNBC Squawk On The Street 20151119

David faber. A landmark potential deal with pfizer. Europe this morning that the architect of the paris attacks has in fact been killed and we will get to the news moving bonds and oil as well. Road map will start with major developments for the architects of the attacks. Well go live to paris with the latest. We have the latest going on with the deals in the works between allergen. And well get you the action and plus the interview with jack dorsey. First up, the Paris Prosecutors Office announcing that the alleged mastermind of the attacks last week in paris is dead. Michelle carusocabrera is in paris once again. Reporter abdelhamid abaaoud, Police Believe he was the architect of what happened here on friday night that killed 129 people. More and more details are coming out as the days go by. The Associated Press is reporting that the woman the suicide bomber who blew herself up in yesterdays tremendous raid conducted by the french s. W. A. T. Team, that she was the cousin of abaaoud. So there is a Family Connection now, according to the Associated Press. There are six raids going on in belgium around the area of brussels where they are raiding the homes of the friends and family of one of the suicide bombers at the stade de france. They brought one person in to custody at this point and woel see if that reveals more information. And finally, the lower house of parliament here in france has voted to extend the state of emergency by three months c. The state will take it up on friday. Its widely expected to pass. Its not just extending the duration but also about increasing pretty sharply the powers that the police and government have during a state of emergency to do certain things like put people under house arrest for fear of dangerous attitudes. So were watching that and the political response progress as well as the criminal investigation as well. David faber, back to you. Thank you very much, michelle carusocabrera. On now to corporate news. Late yesterday, news started to come out about the talks between pfizer and allergan and how far they had advanced. The two companies, as we know, had been in significant talks about a deal under which pfizer had acquired allergan. They are centered around a deal which would exchange a bit more than 11 shares of pfizer for each share of allergan. The exact ratio to be determined. A number that i shared with jim a couple of weeks back. You gave us that. That is the number, roughly, that they are dealing with right now. Of course, the overall value will depend on pfizers stock price. It will be an allstock transaction designed to make sure that shareholders will own more than 40 of the combined company. Why . Many of you know why. Because of corporate inversions, the regulations at least that were proposed by treasury back in september 2014 and making sure to get the benefits of said deal because it would fall under, broadly speaking, the measure of equal provision. Thats where they are right now. In terms of an announcement, dont expect to see anything this monday though there had been reports that the companies were aiming for that. The fact is, late monday we got this letter from jack lew, the treasury secretary, in which he stated that they will be issuing guidance later this week to return the economic benefits of corporation inversions. What that guidance is going to be, you might imagine pfizer and allergan want to know and feasibly well find out later this week and that was in a letter that came out late wednesday. And so you want to give yourself time to see what it is, to digest it, to understand it, to see whether in fact it is important to deter your plans and im going to get in to this more later and perhaps also make sure its included as a carveout of the Exchange Clause in your merger agreement. All of that said, heading into the thanksgiving holidays, you might imagine its going to take a bit longer. Sources close to the situation also tell me that at this point they are in the final innings of discussions while they are still waiting to see what treasury actually brings in terms of guidelines. Thats where things stand. Where is the 3. 80 . 33. 31. Do you know what that gets you . Thats where the stock is now. Right. So its the premarket down. All right, david. Its very clear jack lew said we cant do anything to stop this without congressional approval. And thats been the case all along. Dont forget the regulations issued back in september of last year. They dont exist. You need congress to make it true. That had a deterrent. And did not do shire. Correct. Because of what part of lose instruction defeated that and this has got to be amped up. Yeah. That is its own situation. Of course, medtronic decided to do it and there have been other deals but there were provisions that have the potential regulations that they felt would be onerous and benefits of the deal and there was pressure out of chicago whether it was on their director and as a result of durbin being the senator or rahm emanuel. You can imagine. Youve got jersey and new york. David, the last thing i need to know about this, allergan is so big. You can just say, listen, kind of a merger. Its been discussed and you and i have sort of talked about it, the idea that if it came at them, could they conceivably turn around and make allergan the buyer. At this point, its not contemplated. That makes the deal more certain. Stock was at 310 before lew and then dropped to 297 for lew and now at 305. On an earnings basis, i would say that the stock belongs here. Its not clear what treasury can do. Right. However, it still comes down to the risk that the two parties are willing to take on and that becomes a key consideration for them. I want to talk more about it in a report as well. A little over 11 final innings of discussions but dont expect a deal on monday. A lose point that Congress Remains key. Right. Meanwhile, square making wall street debut trading under sq. Payment pricing at 9 which is below the range of 11 to 13. Half of the valuation that it earned from private investors, were going to talk to jack dorsey this morning and then match group debuting on the ticker. The home of tinder. Match group spoke on squawk box. Take a listen. Were obviously price sensitive but not so price sensitive that we thought going out and getting the independence from ic was strategic going forward. It was not really an option. So weve got im going to ask you, jim, relative bargains compared to what the private sector has been valuing these companies at . I think thats what you have to put it at. Relative bargains. I nealt if the public comes to square, its cheaper than other companies. Its cheaper than the stock of pay pal. Should it be cheaper . Pay pal has a lot of other features to it. Jack dorsey will tell that you they are very embraced by other companies. Why didnt starbucks stick with you . Howard schultz says to use it, it will be like a retailer that does a trunk show in your house. Right. Its very they have 2 million customers and its growing. What about the larger takeaway here that the ipo was a down round, so to speak, in the parlance of venture capitalist. Many would say this is game over for the 20 unicorns and i think that it was pronounced the death knell of unicorns. They said, lets get realistic. This idea that fidelity is trying to figure out what the price is and what some of these other investors no. Lets come the conclusion. We know listening to him is pretty amazing. Yeah, lets take a listen to that. Most Unicorn Companies, jim, are staying private way too long and i have friends of mine who are cos of those Unicorn Companies and ill tell you the same thing i tell them, get out into the Public Markets. This is an opportunity to rationalize your valuation. Let the market decide what your valuation is. Instead of trying to maximize your valuation, let the market decide. Well, when the market decides, its 50 of what it was. Square not a profitable company. Intermittently they said that they have strived for profitability. Its a growth story. It definitely has growth. What this says is dorsey was willing to bite the bullet. Other than air b and b, they are all too high. Really . Uber . Yes. Air b and b has a supply problem. They dont have enough hotel rooms. Ive got to tell you, were going to see massive look, i brought street public and were over valuation. Yes, it was. And it was a race to the door and this time the door is closing so quickly. I mean, this square is a company jack dorsey Everybody Loves jack dorsey. His mom marsha when she rings the bell today, being a project of twitter. It was like the duck came down. The duck is here. And youre paying too much for the duck because its a turkey. Were going to have the live interview with jack dorsey later on. In the meantime, stick around for a rare and exclusive interview with ken griffin with citadel. All three averages positive, once again, for the month. And the dow going for four in a row to the upside if futures turn around. More squawk on the street from post 9 in a minute. U h moving lower and the dow component cites lower than expected activity because of the Affordable Care act. Looking for 6 now, jim, and they say its a proactive step and they will determine the first half of next year whether or not they can even continue to serve these markets. Its shocking. Im going to quote this. Steven hemsley, a very good ceo, by the way, guided up in july. Keep that in mind. In recent weeks growth expense expectations for individual Exchange Participation have tampered industrywide. Higher risk and more difficulties while our own claims experience has deteriorated taking proactive step. Every single one of the Companies Involved in this is going to have to do what u h did. The large insurers are watching these exchanges, watching the relative amount of people in the exchanges fall. The cooperatives, which you know, have priced incorrectly failed. Typically in a situation like that where you had legislation, you would need to make some changes. Yes. And this has happened before. There have been changes made in these kinds of legislation. Right. The expectation here, of course, is there is not a chance that youre going to get any changes in the aca. The republicans want to kill it and so it may be being killed by the publicly traded companies that have been participating. Remember, u h serves in accordance with the aca. Everyone is going to pull out. They are not all going to pull out. They are not. The big boys are going to pull back. I talked to some of the other big boys. And they are going to participate and they are raising their rates. And just lose money . For now, yes. Why . Because of the goodness of their heart . Because of the government . No, because they have to. Thats amazing. This thing is really turning out to be they would also hope that there would be legislative fixes. How is that possible . Its not possible. If we had an operating government it might be possible. This is very damning for aca. Its very damning because these are you know, in recent weeks, think about those terms. In recent weeks what happens . What happened in the last did you get your premiums and people said i dont want to pay anymore . Yes. People are dropping off. Thats particularly the concern because people are healthy. With a relatively good risk pool. Yes. Relative to the rest of the nation. Its just staggering. It is a real its a potential crisis point. If no one is making money in exchanges, how can they not exit . They have to be there . Where in the legislation do they have to be . I dont know the answer to that. Because u h is saying i think that eventually this will turn in to a profitable business and im sure that opinion is not necessarily widely shared. Ive spoken to a couple of other ceos of other insurers who intend to maintain, at least as of a month ago. That covers everybody. I have to cut numbers everybody. But the overall story is larger than u h. Yes. Its staggering. Its staggered by this. The aca has got some issues. Yeah. You know, this is a political bombshell, not just a corporate bombshell. Obviously implications for the dow this morning. Well get cramers mad dash and countdown to the opening bell. Jack dorsey joins us at the nyc later on this morning. Dont go away. 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. Maybe you heard us chatting on camera, off camera. We have a message for thursday. I think what is important, going towards 8 billion, Fastest Growing enper pricterprise. Who is it coming from . Who loses this business when they get it . Thank you. The cloud deniers. Hes literally throwing a grenade into a crowded room. Companies who have been clouded deniers, like s p are paying a horrible price in single digit and negative growth. They will tell you that thats a mischaracterization. It seems like it. Were trying to like you say, jack, i think this is really important. Thats who is taking orders. Right. Thats who he is taking the stuff from. Every cloud deniers. Cloud deniers. You know, when ellison hears this and i know larry you watch, when Bill Mcdermott hears this, they are not cloud deniers. Are they throwing things at the tv . They would be very upset. To cool them deniers, thats going to ignite a war. Almost 33 this year. Look, he talks very lovingly about microsoft. He talks very lovingly about amazon. He talks about google. These are his partners. In particular, he threw great love towards nadell and looked thin. Looked great. Yes. But microsoft, the partners, they are friendemies but theres no love for s. A. P. Oracle. The cloud deniers. All right. There you heard it. Jim cramer. That is his name. This is squawk on the street. Jack dorsey will be bringing the bell. More squawk coming up. Announcer if youd give thanks for a better nights sleep. [barks] sleep train has just the ticket. [train horn blares] during sleep trains thanksgifting sale save up to 300 on beautyrest, posturepedic, serta, even tempurpedic get up to three years interestfree financing plus, choose a free gift with selected mattress sets but hurry, sleep trains thanksgifting sale wont last sleep train [train horn] your ticket to a better nights sleep youre watching cnbc squawk on the street live from the Financial Capital of the world. Thats a shot of square where jack dorsey will be opening in a few minutes. After square opens for trading, hell do it in a special way. Hell periscope it. Meantime, at the nasdaq, email provider security celebrating its own ipo and well watch match open at the nasdaq later on today. And the m a, we already covered. Jobless claims come in, sub300, the longest sub300 streak since 73. See, you had a kind of what many people are saying was a goldilocks moment and they say, were going. Were absolutely not going to go after that. And that combination, whats really been worrying people is once they go, its rapid fire and when you get off the desk with a lot of people, dont even fool yourself. Its rapid fire. They basically said, put us down and its not rapid fire. So we can raise and then we can wait and i think that made a lot of people feel emboldened to buy common stocks. A very interesting moment where people seem to want to hear more that they are done after the fact that they are going to do. Oil Saudi Oil Minister arguing for more sustained output. People are, woeonce again, digg out for a goldman washout for 20. I dont think thats going to happen but i know the saudis have dramatically increased their reserves and the reserve numbers and i think there are a lot of companies that there was no way that they could pump this much. They are talking about fracking techniques and the production im going to use the numbers, sounds absurd. It could add ten times more frac. The saudi reserves . Yes. Ten times. So much for peak oil. No. Fossil fuels are going to be look, the world is against coal. The world is not against natural gas. Were going to be exporting natural gas in january. I know. Middle of january. Well begin exporting natural gas. Estimates internal estimates saying if we fracked, it turns out we have far more oil than we thought. Very realistic. Their costs are low to begin with. All of which adds up to what . Were going to be looking at 40 oil for a long time . Lower, longer. Lower prices for longer. Go buy southwest air, go buy delta. This is going to be interesting. There is jack dorsey periscoping as we speak. Ringing the opening bell with his mother, marsha dorsey, not a bad twitter follower in her own right and making a purchase from squares very first seller, the sound of that completed transaction is going to be coupled with the nyse. In fact, a lot of Small Businesses, jim, basically the core of their clientele add to that. This is a Small Business plan like what it is not is an international scale. Remember, starbucks leading them. This is very important. They lost a lot of money on starbucks. The rap again wrap is they hat been able to scale at all. The board of directors. This is blue chip. Fun fact, wherever square prices its ipo tomorrow and meaning today, will determine the new fate of the tech company from the last decade. Obviously a little bit of i do believe the 120 unicorns had to listen who was really focused on square and the fact that the people paid too much in that last round. Who were the last round payers . Maybe they were. Its funny you mention sunedison. Thats what carl was just telling you about from mr. Andreason. Oh, my, jim. Sun edison done another 3 . That coupled with ptrp, sort of in that new alternative Power Generation family, if you will, down almost 5 , these are both very Big Hedge Fund names as many people may know. We talked so often by valiant and the losses there. Sune and take a look at the charts. If we could show you the charts. The debt has ballooned. You use the term family, this is very much like all unhappy families are unhappy in their own way. This is the unhappiest family ive ever seen. The ttrp is a disaster. The stock is down 83 for the year. How does that my friend carl put this together for me, a cheat sheet on sun edison. Its making a very difficult year, although apparently a lot of the deadlines came from the hedge funds or at least a capital backed day and it wasnt too bad. It wasnt too bad. I know. They paired him back but theres a the word is Capital Raise but how are they going to raise capital . What are they going to do . Well, thats the question. You tell me. You can always, you know loan shark . Lending club. Lending club. Shark tank. Shark tank. They could be on shark tank. What do you think cuban wants to do with sun edison . Maybe land shark . Land shark. Isnt that in europe . Thats an snl skit. We have so many earnings we have not gotten to. Best buy revenues in line. This is the other one. Best buy is giving you the, the last few weeks have been good the that emboldens people. When you get this kind of stuff, the most granularity, its not as bad. I thought the stock was going to be down 4, down 2 bucks. Cfos trying to argue that consumers are waiting longer this time to catch black friday deals. Does that ring true to you . I think they are waiting longer at best buy but not at amazon. The callout on wearables has been positive. The callout on Digital Printing is bad for hp. Okay. And right. Youve got to remember now, hp versus hp. Right. And not the enterprise. Look, i didnt like what i heard from best buy but i will also tell you, was there anyone who thought that they would like what they heard from best buy . No. No. So i dont know, at the end of the day, look, the ones that have been losers, nordstrom, macys, i have to tell you, target, really unhappy with the Digital Online growth. Lb for a long time was the golden child for retail. They beat by 3 cents but the current outlook is below. I think they would be very conservative. There is one that i would buy. There is one that is working. Im looking at allergan and david you were supposed to say 12 shares. Was i . Yes. Im afraid its not as of now. Final innings but still some other issues. Twominute warning . More like 51 seconds . I dont know. Could be. How many timeouts . I think all three. Youve got a little time. I can buy a couple la land sharks. Youre one of those land sharks, arent you . Gmcr, less than expected, hike . One of the things that Green Mountain did is gaffe the shorts like you wouldnt believe. People are so angry about the good news here. There are more people that are angry that they didnt do as badly as they thought and they talked about their new coal system and told a story, you know what, we were really stupid last year. Were not as stupid now. Yes. I was so much more stupid then, im not as stupid now. By the way, dorsey making his way to the floor with tom farly. S p, you asked about the investors, it was may 12th. Existing investor, park capital advisers, among others. Sometimes you just get had. It happens. Yeah. By the way, speaking of yahoo shares, up about 1 this morning. Starboard, my mother, my sister, my they cant figure out what they want. They really cant. Forget it, david. Spin it off. Dont spin it off. I dont even know starboard puts the activists long shareholder and puts out a new letter linked to the journal, gets nice prominent coverage saying dont spin off all and the tax attorneys at yahoo are virtually certain they will be fine. Virtually certain . Virtually certain. About an organization that no one know as single thing about called the irs but they are certain. Are they virtually certain or virtually . Virtually. Look for that to take place in january. Thats the spin of alibaba but mr. Smith saying, instead we want you to sell the core business. He previously recommended that they merge it with aol and that would mean merging it with verizon. I dont know. I mean, i come back to macys. Modern day activism. Hes very diligent, does a lot of good work. I dont want to take that away from jeff smith. Man, that stock was 73. Right. Its one of 4 and i would point out that macys and nordstrom still trying to figure out what truck hit him. Target doesnt think it was hit by a truck. They think that they were just online glanced but this is a period where retail where if you home depot and the lowes corner, oh, my, lowes was good. Home depot, everything they sell, every aisle. Theres lowes on 65th and broadway now. Ive been in there a bunch of times. Lets go in there. Theyve got plants, too. You can buy all sorts of stuff. Where do you buy your flats . When you garden, where do you i power garden and go to home depot for my power garden flats. I get relaxed out there. Its like jefferson. No reason to get angry about it. I know. Wow. Gardening is solace. Have you ever heard of solace . Crowd building around post date which, if youll recall, is when twitter went public almost two years ago to the day, november 7th, 2013, is when twitter went public. This time, dorsey is back for square. For that, we go to bob pisani. Early indication already, looking at 10. 50 to 11. 50 on square. Square has got to close over 9. If it doesnt, we have a bit of a problem. That means valuations have to come down for everybody else out there. Just to summarize right now, 27 million shares, 9. The stock price was 11 to 13. The midpoint is 12. 25 cut here. Valuation now, 2. 9 billion. Thats half of what it was a short while ago here. This is the most important ipo in a while because its sort of a leading indicator for those unicorns out there. Remember, what else is out there in the near future, a number of the big unicorns waiting in the wings in 2016. Snapchat, for example, drop box, pintrest and air b and b. They are waiting for something to happen and theres a bit of comeuppance. The private markets are more disciplined than the Public Markets, they say. Prices can get a little stupid in the price markets as well and were getting a reset of the prices right now. This is part of a trend for ipo valuations weve seen in the last few months. Remember what happened in the first part of the year . People lost money. Through august 31st, the average ipo was down 8 from its initial price. People stopped after that and came back and said, enough of this. We dont want to do this anymore and started demanding price cuts so there was a huge amount of price cuts all throughout the month of september and october. The average ipo was cut 18 for it is price and what happened immediately, its prices started doing better in the after market and all of the ipos started improving. Instead of being down 8 , they were up 8 . Thats a huge improvement overall. Dont kid yourself. You can talk about valuations coming down but this is good news for all of the people buying that stuff, now and in the immediate future here. Let me also point out, a little less important is what happened with match. Match is a spinoff. In a sense, its a little less important but they priced at the lower end of the range as well. 33 million to 12. The price talk was 12 to 14. On a different day, it might have been important, over at the nasdaq, price talk, 10 to 12, that also priced at 10 and that also was the low end of the range. So i think its important that we get this closing above 9 today. By the way, everybody who is boohooing from the small investors that might have been part of this company right here, square, the average insider price for square, 2. 48. Now, i know weve made a lot about valuations and there were some at 11, some at 15 and obviously thats a bit of an issue. But the average insider, according to their filing, 2. 48. Well keep an eye on this right now. 10. 50 to 11. 50. Tom farly and i will be around the corner. Well talk about this more on the ipo market. More on where he thinks its going in the next couple of minutes. Guys, back to you. Thank you very much, bob. As we await the opening of the ipo. Mr. Dorsey, its always important to point out, ceo of two Public Companies, twitter and very soon to be public square. Did want to come back to one of our lead stories. Of course, thats the talks between pfizer and allergan and the role that the treasury may play in perhaps stopping any potential deal. Late yesterday, jack lew releasing a letter to senator ron wyden in which the treasury will come out with new guidelines. We intend to issue additional review our existing authorities to identify additional ways to address this serious problem. And its important to emphasize, however, that treasury cannot stop inversions a couple of experts have pointed me to two Different Things. Mainly, the need for congress to act and then instead of saying new regulations, he says new guidelines. What exactly that means . Well, well have to wait and see tomorrow. Of course, that doesnt stop many who follow washington and this subject area closely from coming out with their analysis. I go to one analysis from isi on treasury. They usually do a good job in washington. They say, we continue to think that treshly will propose or guide much more than it actually has the authority to accomplish legally in any final rule and suggest as it did in 2014 that any find rule would be effective as the date the rule was first proposed for pretreshly treasuro achieve its goals. Remember, in september of last year, none of the rules have become final. None. They had the impact of at least deterring, to jims references earlier, the deal to acquire shire and a few others contemplated, though not all. They are talking about a deal, as i reported earlier, that would involve 11 shares of pfizer for each share of allergan. They want to make sure its a bit more than 40 for buybacks that could take place. It will be above 40 that. Fits in to the definition, broadly speaking, of an m. O. E. And treasury, again, is not going to is not the final arbitrar. Congress is. At the same time, theres some deals where Big Companies i mean, is this the fact that its a mail drop in irelan ireland . Its the biggest pharmaceutical company. They have to be glaxo to get away with it. No. And to your point, they tried others and many argue that its not a level Playing Field between the companies that have inverted and there are inversions that take place for a couple of reasons. Sometimes its to get the effective tax rate lower but oftentimes and really this is the case in why pfizer wants to invert, to get access to foreign cash. They have tens and billions of dollars in foreign cash and i would like somebody to due the true study. How much do they lower revenue in this country as a result of the tax that is paid in the u. S. Coming down by the companies because, remember, they are still u. S. Taxpayers. They can do Different Things that lower their tax bill and pfizer is going to bring money back, jim. Yes, but they are going to invest in r d. Therefore, what is the result on tax revenues as a result of that . I dont think the debate has both sides in terms of the impact. Does secretary lew know that its the final innings because of pfizer allergan . Yes. Hey, david. Jack lew should take a queue from donald trump. If they obviously need regulations, they can change policy, they cant rewrite the tax code. Shame on all of them. Intraday ten year, you can see rates moving down. Lets be frank here. Out of the last four sessions, will today be the fifth or not . As you open the calendar for october, the one bit of data most Pay Attention to, that is the first fridays employment report. Something fascinating going on there. Its slipping below 50. Open that chart up to early may and it hasnt spent a whole lot of time below 50 of late. Something to Pay Attention to. And when you look at the spread, hitting ever closer to 180, you realize something is going to change here. Lets get a macroview. Open that spread chart up to 20 years. These are pretty wide areas. Its a pretty safe assumption that eerd the yields are going to go up or tens are going to go down in some sort of combination. But what if tens keep moving up . Its going to be fascinating to watch. The next 20year chart weve often heard multinationals dont like the strong dollar. When we recalibrate zero rates, the dollar is going to get stronger. No force on the calendar is going to change that. Carl, back to you. Rick santelli, thank you very much. Watching indications on square this morning, lets get to bob pisani on post 8. We are not just outside post 8. We are inside post 8 just as we were with twitter and alibaba. Tom farley is joining me. Give me your impression of todays ipo of square. First of all, let me say that were having a good time with the square team. They fit with what we do best, large tech deals and just generally large deals. In terms of the ipo, they are a Public Company now, which i think was the primary goal. They have a public currency to acquisitions and raise capital in a way that they werent able to do previously and hold themselves out as a wellgoverned company. Weve been talking about the ipo prices for the last month or so. Theres been persistent demand to cut the prices. This is what happened with square today. Price talk meeting, 12, went to 9, 25 discount. As a guy who runs an exchange where this is trading, how do you view these recent developments . Theres two factors that play. The first is, the market has been volatile market you get fewer ipos and thats the fact of the matter. Weve had more canceled and pushed ipos than completed ipos on the New York Stock Exchange. But also valuations have come in. When i look at it, i look at the first half of the year, ipos by and large traded down. Latter half of the year, theyre trading up in the after market. Thats a very good dynamic. When we think of the companies weve taken public, pure storage, healthy ipos and theyve seen positive after market performance. Instructor was a good example. They cut the price and performance was generally better after the first day. 24they have all traded up. I look at in the sense of did they get public, do they have a smoothly trading stock and also from the perspective of an investor. An investor takes risks. How is the stock Price Performance for the investor. Any hint on whats coming up for ipos in the future. The window is closing for 2015. This will be a quiet end of the year 2015. I dont expect a lot of ipos, and i think theres a question about what next year will law school, frankly, in the early part of the year. Investors like certainty. They will be looking to the fed to see what the fed decides to do and remains to be seen exactly when the window will open up. Before we let you go, i want to point out, here is the team thats assemble this, pat ty, building a book. We have a while to go. We have about 3 million shares between the 11 and 11. 5 range. We probably want to get a healthy print of 15 of the whole allotment size. Another half hour 45 minutes to go. We are seeing a lot of equilibrium when 11 and 11. 5. Well be talking to patty. This is the guy building the book. 10. 5 to 11. 5 are the indications. Well bring you updates and continue to talk with tom farley. Thanks very much. Thanks. Brilliant. I was looking at the pricing. I wanted i said between 11 and 13 represent a great value. Trading 3. 5 times 2015 sales. Remember, the sales are growing huge here. People say you love square . No, i love square at a price. And they guy you that great price when they decided to price it as low as they did. 49 sales growth, so what they did was give you a bargain to attract you and then later on maybe theyll release some stock as the lock up ends, but this was brilliant. This is what has to be done to move this merchandise. People who are selling albertsons. This is what people should do. Dorsey pulled it off. Match also im hearing has a pretty good book because they went to the bottom of the range, 12, so shes shaping up pretty well. Well keep an eye on match. They listened to what the market said. Find some price discovery. Stop jerking it around saying its worth this, worth that. No, the market is right, and square did the right thing. And by the way, may i add that valeant is up four points and we have not mentioned valeant which means we have been negligent. You definitely squeezed it into the 9 00 a. M. Theres a look at match. We continue to watch it over at the nasdaq. Dow is almost exactly flat. Unh taking 45 points out of the dow by itself. Were back in just a moment. You totaled your brand new car. Nobodys hurt, but there will still be pain. It comes when your Insurance Company says theyll only pay threequarters of what it takes to replace it. What are you supposed to do, drive threequarters of a car . Now if you had Liberty Mutual new car replacement, youd get your whole car back. I guess they dont want you driving around on three wheels. Smart. New car replacement is just one of the features that come standard with a base Liberty Mutual policy. Learn more by calling switch to Liberty Mutual and you can save up to 509. Call for a free quote today. See Car Insurance in a whole new light. Liberty mutual insurance. Time for cramer. Theres a stock thats up very big that we havent talked about, j. M. Smucker. Remarkable quarter. People love coffee. This is a company that people have to recognize shows you if you have growth and youre a consumer packaged good company, this one has it, hormel has it. Congratulations smuckers. Great acquisition of a pet food company thats working well, too. Whats on mad tonight. Decks com is a modern miracle. They can monitor remote diabetes. Its changed peoples lives. And mike mcnamara, flex, good quarterbac quarter. Buying back stock and wearables. I have to find out more about wearables because fitbit is rallying. You will have gap and ross stores and auto desk and a few others to toss around as well. Ross dressed for less, my friend. Ill be shopping this weekend like a banshee. Like that will be anything new. Jim will see you tonight. Mad money 6 00 p. M. Theres jack dorsey at post 8 awaiting the opening trade for square. Well talk to him in the next hour. Every insurance policy has a number. But not every Insurance Company understands the life behind it. For those whove served and the families whove supported them, we offer our best service in return. Usaa. We know what it means to serve. Get an insurance quote and see why 92 of our members plan to stay for life. Good thursday morning. Welcome back to squawk on the street. Im Carl Quintanilla at post 9. But post 8 is where all the action is. Were waiting for square to open. Theres a look at the open, at the post on the left side of your screen. Over at the nasdaq were watching for match. Jack dorsey of square will join us late they are morning as that stock begins trading. Currently indicated 10 50 to 11 50. Unh a big source of negative sentiment. And oil still with a four handle but not by much. We have full coverage of a squares ipo. Bob pisani is on the floor. Kayla tausche is also standing by. Bob, lets start with you. Any early indications here on the pricing . We want to point out, were inside, not outside. Were inside, and we are standing next to the designated marketmakers. Right now indications 10. 5 to 11. 5. Let me bring in patty murphy, who is building the book. Do we have any update . We just kind of honed it in about pricing b 11. 5 on 4 million shares. Do we have any indication of when we might start trading . Wif a little bit of time to go but were comfortable in the 11. 25, half range right now. Youre talking about a half hour. Any idea . I have no idea right now. Were working with the syndicate to build the book, working with the other brokers to get as much volume on the print as possible. Weve used this phrase a lot, working with the syndicate to build the book. Patty, tell us exactly what youre doing right now. Communicating with goldman, all the other people on the syndicate, the brokers in the crowd, putting all the order flow into the order book, getting the price equilibrium around where were comfortable on a 10 to 15 volume of the print. Just put it all together. Then well be ready to go. Its really a classic auction. Thats what you want to emphasize here. Very transparent. Its a very transparent we indicate to the crowd and to the whole public of where were looking, where the price equilibrium comes together with the volume. There are traders on the floor also yelling out orders as well. What role are they playing . They are listening to our price indications and talking to their xhers to get orders what they have and to transfer that orders into our display book. That is all interacting as well with the people who are building the book and with goldman and you as well. Its a group effort among the street to get the right price, the right volume with square. Still indication 10. 5 to 11. 5. Well give you any update and come back as soon as theres any change. Were inside the post for square. Guys, back to you. Bob pisani, in the thick of it inside post 8 waiting for the square ipo to open. For more on what it could mean for sill can valley starts up, with us we have a familiar face, henry blo Henry Blodgett from business insider. People are looking at this as a test of what investors are willing to pay for unicorns. Is that how you see it . I think so. Theres a lot of nuance. Enthusiasm is dampening down and thats fine. This is a real company and its worth something, the same with a lot of other unicorns. What folks are not talking about is the last round was done with a very particular security. Its a preferred stock with a ratchet, which means that the last round of investors have adjusted to the new price. Theyve gotten more of the company. So this idea that they had this valuation and its disappeared which was double. Thats right but they got that with a security that guaranteed those investors a return that theyre now getting and that is coming out of the hide of the prior investors and the common stock investors. Let me ex the valuation wasnt that let me explain what youre saying. I didnt think wed get to the ratchet so soon. Its important though. Effectively we will have to give them 90, 1 100 million worh of shares after it floated for not getting the price that was initially guaranteed. Its not like they went out and sold common stock a year ago for 6 billion and now its 3 billion and so its a disaster. Let me come back to the basics. If this stock had a change of 11 to 13 but was priced due to a lack of interest at 9 last night, why then does it open in the range of 11 to 13 . If thats where we end up, the underwriters did a very good job. They figured out exactly where the demand is. They priced it underneath as jim cramer was saying a few minutes ago. You want to give investors in an ipo an incentive to do the work and take a position and hold it with a little bit of a bump. You dont want a huge pop. Thats actually terrible for the company because they lose out on a lot of money. Underwriters are making it too easy on themselves. But in this case its basically saying, look, the reality is here is where the market is, do you want to sell stock at this market and square is making a smart decision. Just to hammer home the point, you want to leave value on the table so you get a pop on the open. A little bit. Even if you have to compensate people physically with shares on the ratchet further down the line. A little bit. Its a nice gesture, and it rewards the investors for actually doing the work and taking a position and holding on. So theyre being very realistic and getting the deal done. Thats better than companies living in denial and saying were worth twice as much and doing bankrupt. You compared it to selling your house and then watching the person who bought your house flip it for 50 more the next day. Right. Thats the ipo pop. Folks have been wrong about ipo pops forever. Theres this idea that the bigger the pop, oh, what a success all it means is that you sold stock way too cheap, and you would never do that with a house, for example. Underwriters make this argument, youre just selling an apartment and youve got a wet demand amer and all that stuff. Give me a break. Market anybody will come in at any reasonable price in the future regardless of what happened in the past, so this is smart. If they price at 9 and it trades at 11, thats good. Lending club surged 50 on its ipo day. Its down then. Etsy had a strong open. Its 45 below its ipo price. So the oneday pop not so meaningful. Pricing is hard, but go back to the 1990s. Lots of companies were celebrating these huge pops and then they went out of business a year later because they didnt raise enough cash. If theyd actually priced at or close to the market, what folks were willing to play, they would have had that much more cash. None of those companies should have gone public. Some of them should have. Some should have. Very few. But that said, you know, sometimes you get the argument that we only sold 10 of the company, it soared but its had the effect of valuing the 90 that we didnt sell at a higher price. Public market investor is not going to look at it that way. A little bit of a pop is necessary. You want to incent fidelity and others to come in, do the work, take a position for the long term. Theres good negotiation back and forth on pricing. The idea you have to give them an overnight gift of a double is crazy, and it also encourages investors to be lazy and just say, okay, ill buy it. Its an ipo, guaranteed money. Everybody is out on day one. What about the underlying state of the business . You know, the headline is it will come through at half the valuation it had last year. Thats what people will talk about tomorrow. Clearly its an extremely innovative company, its done great things for payment systems, its bought Small Businesses into an arena where they couldnt do what they do now, many of them. Why do they have to rush it to market in an environment thats so difficult . Well, they need cash. Theyre burning cash but the business itself is growing nicely. They seem to have come up with a product that adds a lot of value. If it continues to grow, it will be a good number. Will it be profitable in the long run . Apparently thats a major concern. It is a concern with a lot of companies that go out. There are some specific things like they have a very unprofitable deal with starbucks thats going to disappear. That will change the profitability quickly. They have a good gross margin. Not super high but its good on their main business. So she should ultimately be able to be profitable. So the business is real. Its just a question of what its worth, and this is not a terrible price. This is the thing. Were coming down from an atmosphere in Silicon Valley of just pure euphoria and these special securities that allow latestage investors to guarantee a return, so of course theyre paying those prices. This is actually a decent Public Market price. The question is valuations is it a payments company, a Financial Company or a Technology Company . Very different valuations. 85 of the sales come from Payment Processing or point of sale transactions. Its a payments company, period. Financial company. Which is one of the fastest innovating areas of the market. But its also an area where apple is getting involved, google is getting involved, p paypal is already there. Its moving tremendously fast. Its incredibly complicated. Theres an opportunity for Credit Card Companies and processors to be disrupted. Square is not doing that yet, maybe they do it eventually. But its a massive, massive opportunity for the folks who do figure it out. Henry, thanks hes going to stick around for a little bit. We go back to bob pisani who is not just at post 8, hes inside post 8. Bob . 3. 7 million shares of square open at 11. 20. Pat murphy, do we have that right, 11. 20 . You have that correct, yes. 3. 7 million at 11. 20 and thats a very good price. Remember, median, the price talk was 12. They priced it at 9. Now opening at 11. 20. I think a little bit of a sigh of relief amongst all those people out in Silicon Valley looking at their 2016 ipo potentials. Im talking about the snapchats, the drop boxes, the pinterests, a airbnbs of the world. The important thing is to keep it above the initial price. You see tom farley and some of the other officials congratulating each other and moving around and i can assure you a lot of relief about that price. 9 pricing opening at 11. 20. Yes, it took a huge valuation haircut. 2. 9 billion, valuation was 6 billion just a short while ago, but right now that stock is trading at the highs for the day, 11. 50. Guys, back to you. Well come back to you. Thank you very much. Reaction, henry . I guess looks good. Looks like it priced right. If it continues to go up you could have argued they could have done it 3. 7 billion, 3. 6, 3. 7. S p tells us among tech ipos pricing in the second half of this year, the average first day pop, 13. 6. So youre above trend at least for the second half in trend. Bob rattled off a number of names of private companies who are waiting to see if they want to go public. Who is watching this closely . There are a lot of companies on file in Silicon Valley and a lot of them will have to make the decision if they, like square, did around where they have a special security that is going to effectively dilute earlier investors, do they want to go out now, do they have to go out now . Do they want to wait for a better market or is this, in fact, a reasonable market . Not one thats deeply unhealthy. I think, again, the fact that square went ahead and did this and it looked like they priced it well, thats a huge tribute to them and they took a risk on the prior round to get a vie haultion wi high valuation with the ratchet. It may still be worth it. It shows how deep our Capital Markets are. It worked for everybody. They never would have done that if they hadnt been able to guarantee the investors this return. Henry, thank you. An important day for square and tech at large. Jack will join us after the break, of course, now that the first trade has happened. A gain of about 32 for sq. Were back after a break. My name is jamir dixon and im a locate and Mark Fieldman for pg e. Most people in the community recognize the blue trucks as pg e. My truck is something new. Its an 811 truck. When you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you dont hit them when youre digging. 811 is a free service. Im passionate about it because every time i go on the street i think about my own kids. Theyre the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then ill drive it every day of the week. Together, were building a better california. Welcome back. Square clearly the story of the morning, pricing at 9 but trading at 12 and change. Thats a 35 gain today for sq, well above the second half trend for Tech Companies on their first day. Joining us is jack dorsey, the cofounder and ceo of square. Good to have you back. Thanks for having me. Congratulations. Thank you. So much talk about where you priced before we talk about where its trading right now. What does it mean for you . What does it mean for tech . This is a moment. Were entering a new market, and were you know, were really excited just to get back to work. We have a longterm view on our business and where we need to go and what we need to do, and we just want to build good tools that people love. Fred wilson blogs today, sometimes you just need to get the deal done. The terms might suck, but the cash doesnt, so you do the deal, and you live to fight another day. Does that sum up how you feel . Hes absolutely right. Its all about getting the business and accelerating the business and thats what we came here to do today and we did it. You have though 174 million in cash. You raised about 240 million in this deal. Why did you need that cash, and what are you going to do with it . We really want to accelerate our tools out to sellers all over the world, and a big part of our future is really around this device that we announced, our new reader that accepts apple pay and emb. We want to see that on the other side of every transaction. Were selling it at 49. We have 350,000 proorders alrea r preorders and were shipping this order. Subsecond transaction time and it just feels great. Whats the uptick of that device and how much are customers and merchants using things like apple pay, android pay . What do you see happening on your platform that tells you where to move. Its really interesting because we have the device. Our square reader, accepting apple pay and android pay at a few merchants in San Francisco and were seeing the same number, percentage number of transactions with people tapping their phone as we are with people swiping their card. So we think this is going to shift very quickly, and one of the things that i think we bring to the table is we represent the everyday. We represent the coffee store, the lunch place, and if we can get that square logo to say we accept apple pay, we accept paying with your phone and you see it everywhere, you see it four times in your week, it changes behavior. You talk a lot about 30 million businesses, 9 million accept a credit card. Its a big piece of the pie that basically is cash only, right . Yeah. Whats a reasonable piece of that pie that you can take, that 20 million . Well, you know, its not just about accepting credit cards as well. Its really about helping a business start running and grow their business. So weve always had a philosophy of any payment device that comes across the counter, were going to enable our sellers to accept it because its all about making the sale and credit cards are where people have been moving quite some time. Cash are diminished, people arent carrying their checkbooks at all. We think theres a huge opportunity in the 20 million Small Businesses alone in the United States but theres 85 million Small Businesses around the world that dont credit cards today, and we think we can serve them in a great way and also help them grow their business. One of the best things about square is if we focus on growing a business, our business grows as well. So our interests are completely aligned with our customers. I remember you came on this set a while back with Howard Schultz and rolled out the starbucks deal. What happened . How do you explain what happened . Howard emailed me when we were two years old as a company and we were so excited that he chose us to process their payments and to build square wallet into their stores, and we loved it, and in three months, after that announcement, in three months we built a stack that could process for 7,000 starbucks store in the United States without missing a beat and what that says is that any one of our sellers can reach that height, any one of our sellers can grow to that level around the world, and thats really powerful. And, you know, we wanted a big focus on square wallet and a big focus on our readers, and, you know, we didnt see as much as we wanted to there, so we ended the relationship and thats reflected in our estimate. But what was it exactly because anyone in your position would look at starbucks and the ubiquity of that brand and say thats a dream partner, thats a dream customer. What happened and does it give you pause about working with other big vendors in the future . No, not at all. Every one of our sellers is growing. Blue bottle started with us at ten locations and now 30 locations around the world and using us in tokyo. All these sellers have big ambitions and we just want to be there. We have other customers like uniglow that are using us in their u. S. Stores and also their Japanese Stores and theyre reporting 20 increases in sales because theyre using square. You guys are going to be helping some of those Small Businesses grow. Youre getting into the lending business and a lot of investors say thats maybe where the growth for the company lices. A lot of investors want to put money into Square Capital. When does that become a line item . We think theres a lot of growth in the payments business first and foremost and that enables us to do Something Like Square Capital. Square capital is fantastic. Weve advanced over 300 million to 40,000 sellers. We have a really unique approach in that we can email our sellers and invite them in. Tap of a button and they get their money the next business morning, so say you get 5,000, you can hire a new employee, do some marketing, and then your sales double, and then because youre processing with square as well and taking our payments, our business doubles as well. So, again, that perfect alignment is really important to us, andcited about the Square Capital business. Do you see yourself scaling Square Capital to a level or will it be smaller. We think its a massive business and we have unique information because we have a deep relationship with our sellers. You started the interview by saying were entering a new market. What does it look like to you . Were entering a new market. In terms of i asked you about valuation and the pricing tonight and everyone out west looking at how you opened today. You know, i havent really been paying that much attention in the immediate. Im really excited to get back to work and build these tools. Ramifications for unicorns . I dont know. Youll admit youre a test, yes . I dont know. Im not an economist. We have an economist on our board, larry summers. You should ask him. Bring him on. Do you feel like you took one for the team because that was the sense in the headlines thats not how i think about it at all. We raised some money so we can accelerate our business and serb our customers better and thats what matters. Theres a sense that among some that a year from now youre going to look smart that you got in before things truly became more difficult for private companies to go public. Do you think thats going to be the case . Were going to look smart if were serving more sellers and were serving them better. Thats really what it comes down to. Weve seen a lot of Companies Choose to go the acquisition route because the ipo market has been so bumpy, and i know that one of the benefits to your platform is being agnostic. You accept visa and mastercard, all of the different payments but im wondering if there comes a time there are benefits to being owned by a Bigger Company . I cant speak to other companies but we have a lot of power in our independence. Like i said, we can really be a platform that is agnostic to devices and to networks, and i think thats really important because our sellers shouldnt have to care what comes across the counter. They shouldnt have to care how their buyers are paying and the buyers should be able to pay whoever they want. They dont have to think about it. They can accept every form of payment and they can make every sale and thats what matters. You have got eight consecutive quarters of net losses. How important is it to you to make a profit . As any entrepreneur would tell you and any one of our sellers, you have to invest in your business and you have to grow your business, and, you know, we dont see this as a loss. We see this as an investment in our business and it costs money. So we have an understanding of our business. We have a very clear sense of the controls of the business. We showed a break even in q2 of this year and that really proves that like we have a business that can see that, but we want to invest in growth. Couple questions on twitter. How long can you do both of these jobs . As honestly as you can tell us. As long as i have great teams around me. Its all made possible by the teams, and our Leadership Teams is it not a strain at all . You know, its definitely hard, its definitely something i approached with a lot of self awareness and i have been very thoughtful about, but i benefit massively from our Leadership Teams. You cant do anything alone, and, you know, that continues to prove out every single every single industry and every single role and i just have the best teams on the planet. We joke we want whatever time management app youre using because it could help a lot of us. The companies are next door to each other theyre next door. But do you walk over to the other company at lunchtime . How do you split the day . You know, both are going to have different meaningful events but im at both companies every single day, and theres a Blue Bottle Coffee right in the middle and theyre accepting apple pay so i can pay with my phone. Its very fast, and i can go about my work and go about my business. The street has gone around and around trying to understand the twitter story, becoming addicted to the mau metric. What do you want wall street to understand about twitters growth that it doesnt get yet . I think one of the things to watch is just how instrumental twitter has been in the world, and we see that week after week after week. That was a story when and thats what i look at every single time is how are people using the service . And you have been changing the world for years. Theyve been changing the world. We create the tool. Theyve been changing the world with it and thats whats important. We were here with you on this floor a little more than two years ago when twitter went public. Jumped 73 the first day. Of course, the stock has come back down to earth. As you watch square pricing and as you watch it trading up 50 now, do you have any lessons that you learned from the twitter ipo about where the stock went, what the street needed to hear that youre bringing with you now . You know, im always learning. I learn from twitter, i learn from square, i learn from my team. Both teams are smarter than me. I have hired people that are better than me, and i learn every day, and you know, theres not one moment where learning stops and theres not one moment that all learning is hooked to. Its a daily thing. This is our work, and, you know, we have customers that we serve. We have people around the world that we serve, and we want to do right by them. Last question, were hearts the right move . Happy birthday. Thank you so much. Thank you so much. Big three nine today and congratulations on the ipo. Jack dorsey joining us, cofounder and ceo of square. Thank you. I think when we come back, our own kate kelly, as if jack went enough, going to sit down for a rare exclusive interview with citadels founder and ceo ken griffin live from citadels hq in chicago. Still waiting for match to open at the nasdaq. Dow is down 11 points. A big piece of that is unh with their lower guidance for the year. Were back in a moment. vo me . I dont just wait for a moment. I watch for the perfect moment. The one nobody else sees. Ken griffin live from citadels announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus, powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. Good morning, everyone. Im sue herera and here is your cnbc news update this hour. French Authorities Say one of the terrorists kill in an apartment raid yesterday was the mastermind of the paris attacks. Abdelhamid abaaoud and he was identified through skin samples. The woman who blew herself up was his cousin. Two syrians presented themselves at the border and asked for political asylum and there is no suggestion of any links to terrorism. The two men, two women, and four children are being processed by immigration authorities. President obama and World Leaders meeting on the second day of the asiapacific economic summit in manila. Apec, which accounts for 60 of global output and nearly half of world trade, is aiming for a larger free trade area for members by 2025. And jared fogle in court this morning for his sentencing where he pled guilty to child pornography and sex crimes. Prosecutors are asking for a 12 1 2 year prison sentence. Youre up to date. Thats the news update this hour, and now lets go back downtown. Im bertha at the nymex. Weve got the numbers out from the Government Weekly stockpiles in natural gas rose by 15 billion cubic feet. That was slightly lower than what analysts were looking for but its a rare event this late in november to actually see an injection. Over the last five years the average has been for a withdrawal of about 12 billion cubic feet. Were seeing natural gas futures come off of their lows, actually move into positive territory. The forecast is for Colder Weather ahead, but certainly really an anomaly. Only once before have we actually seen an injection, guys, this late in the season from natural gas. It just tells you just how warm it has been this fall. Back to you. Unusual weather. Thank you, bertha. Meantime, watching shares of best buy falling hard, down more than 4 after earnings this morning. Courtney reagan just got off the phone with the ceo. Courtney, what did he have to say about the sales mess . It was a mixed quarter for best buy, a nice beat on earnings but disappointing comparable sales. The ceo was in quite high spirits. He said we at the company feel we are crushing it. He said while results across retailers have been uneven, he has a very positive view on the growing demand for Technology Products and services over time. In talking about his view of the u. S. Consumer going into the holiday season, he says its less about the psyche of the consumer, more about having the right products and the right experience. Now, getting into product specifics, he expects demand for 4k tvs to be strong. I asked him about broken tvs brve they even reach consumers home. He said theyre very fragile, very large, very thin. He said the risk of damaging them from the store to the shipping center or to the customer is very high. So you should have the geek squad install them for you and i wish a lot of luck to our competitors to, quote, take a crack at this. When asked about the demand for new apple products,j oly said i can provide you tim cooks email and phone number. Kind of a clever answer there. Courtney reagan, thank you very much. We want to keep you updated on the situation, the fluid situation in europe. Authorities in belgium conducting new raids for terror suspects overnight. Our Julia Chatterly joins us live now from brussels with more. Julia . Reporter thank you so much. The latest weve just heard in the last few minutes is that theres now been nine raids in brussels and the surrounding areas. Nine suspects have been taken into custody but thats all the information we have on them. We know twothirds of the raids that have been carried out today have been looking at known associates of one of the suicide bombers that carried out the attacks in paris on friday. Whats his connection to brussels . This is the key question. I can tell you that his family has lived here for many years. Hes also lived here but thats not the only connection between those attacks and brussels. If we really hone in and look at the architect, the man that was believed for masterminded those attacks on friday, he also lived if brussels in a particular region known as mollen beak and that thats where i find myself. One political analysts described this as the Political Capital of jihadism, high unemployment, 80 of the population are muslims, and there are real concerns about the radicalization of behavior activity going on here. I can tell you that people have been getting on with their lives as normal today. People i have spoken to said theyre very sad that just a few extremists have given this area such a bad name, but the authorities here in belgium very much criticized for not clamping down on this extremist activity, and i can tell you we seem to have had a real step up today. Nine raids, nine suspects now in custody. We wait for more details. Guys, back to you. Yeah, i think the deputy mayor said they lost control of the situation. Julia, thank you. Julia chatterly joining us from brussels where so many jihadists are apparently holed up. Lets get back to whats happening at the New York Stock Exchange. Square continues to gain in value as you can see. Currently valued at about 4. 5 billion. It priced at 9 a chair. Initial range was 11 to 13. There was disappointment they only got 9 on the book but theyve opened substantially higher. Were still waiting for match to open at the nasdaq, not without some tinder controversy at the last minute. Joining us from his usual spot on squawk alley is john, a cnbc contributor. Good morning, john. This stock continues to gain. Yes. Its a gamechanger. I think its been public since they did the mutual fund investment, since they did the 6 billion round with the ratchet. Whether it was 6 billion given the debt qualities to it, but its traded down 50 from then and now its trading up 35 from where it was at the point it traded down to. Lets call it 4 billion. Its slightly more than that. Still down from the 6 billion they got last year. The bigger question for everybody else, for example, people that are giving up their jobs around the world to go work for uber in amsterdam to grow that business, for example, is theyre being offered uber stock at a theoretical price. Thats how theyre rewarded just as an example. What happens to Companies Like that if the employees are like, hell, im not sure these stocks are going to be worth what theyre telling us . Theres a massive gap between the private prices and the public prices and were seeing it now converge a little bit with the rounds that are coming out that are pricing at the low end like match, like square, like box which has traded down. Like i said, theyve been public and you have to think about them as sort of overvalued public stocks when theyre doing the mega rounds. Question im asking you is about the Practical Implications on those that are trying to grow very large businesses, uber, airbnb on the valuation i wouldnt take stop options at that price. I would assume im going to end up being underwater on them. I would ask for a ratchet if i was an employee. Do employees really understand the Stock Options theyre getting . Employees join a firm and say i want 7,000 shares instead of 5,000 shares instead of looking at what the fully diluted cap structure is. Employees dont know. You raise 500 million youre worth 1 billion, you should be public because actually theres a lot more stability in being public than being private. You do a down round in the private world, youre dead. You do a down round in the private world, look how much amazon has traded down and google, traded down and traded back up. If youre willing to wait 15 years. Not all of them are 15 years. Look at netflix over a period of a few years. I wanted to ask you about management. We just heard from jack dorsey. You saw the interview. Do you think he has effectively communicated to us, to investors through filings how hes going to plan to split his time between ceo of twitter and ceo of square . I dont think he has but i thought he gave a very compelling answer to carls questions on square. I find it very compelling. Square is a company thats grown its gross merchandise value 50 over the ninemonth period that just ended. Grown revenue 50 . With the starbucks revenue taken out, the cost taken out, the loss is narrowed from 50 million during a ninemonth period to 35 million. He seals comfortable with a compelling story. The twitter question comes up, carl asked him about maus an theres not an answer. He wasnt here to talk about that. But, simon, that goes to the point. Hes a ceo of two Public Companies on a set of cnbc. Youre going to get asked about everything. Let me pick up the discussion about square in particular and this idea they have the square which will accept all payments around the world. Where do they exist in the future . Theres huge pressure to innovate within payments across the board now like we have never seen before. Clearly theyve not been taken out by one of the big Credit Card Companies because they want to remain somebody who accepts everybodys credit card. Yeah. What is their future ultimately down the loo in . I dont know what their future is. I know theyre a 3 billion nice company. Its fairly priced right now. Maybe theyre a take out target do you think if they were a takeout target, they will be taken by now. Maybe somebody feels now its more stabilized. What is coming up with this lock up . Maybe it will trade down and be a 2 billion company and am ex or visa will take it up. Its a nice multibillion Dollar Company with a lot of revenue. Net net in Silicon Valley today when they see this chart right here, are they wiping their brow with relief or worried weve entered a new darker chapter . I think theyre saying theres a gap between private and public. Square made the right move. Square did the best they do to bridge inflated prices in the private market and the need to go public. Thats my read on it. I think we have to mention sort of in this environment the fact that fidelity cut its stake in terms of its estimated stake in some of the companies that are private. What is the whole picture telling you right now . A strong ipo for square, match prices at the bottom end of the range and there are other little anecdotes and examples about this whole environment. When i talk to investors and i try to get an understanding of what happened with this fidelity mark down of the private stakes, what they tell me is theres a separate auditing function that goes on at fidelity that the Portfolio Manager that bought those private stocks has no control over the pricing and they said market down, that the market overall for the stocks is down, therefore you have to mark down your stocks as well. It was snapchat, drop box and it goes to my point. Theyre public. Fidelity owns your stock. Any of these giant funds own your stock, you probably would have been better off being Public Public sfed of fake public. This is what jack dorsey said to us earlier. Every both are going to have different meaningful events but im at both companies every single day and theres a Blue Bottle Coffee right in the middle, and theyre accepting apple pay so i can pay with my phone. Its very fast, and i can go about my work and go about my business. Presumably with great Leadership Teams it is possible to do both jobs. Yeah. Its not by the way, twitter is up almost 2 . You have to look at the tradeoffs. Jack is a genius. Two times in two years the man is standing on the floor of the New York Stock Exchange to take public multibillion Dollar Companies hes the creator of. If you get half of his time maybe its better than full time of anybody else. He said when the board said you can have both jobs, this is the twitter board, did he actually articulate in detail what happens in 2016 with the Product Innovation do you think . Is there more here specifically on the table, not least perhaps the giveaway to the staff that were not aware of. Its possible. What i do know so far is the product stuff hes rolled out so far, i think the expectations are so low that anything he rolls out right now is were claimed at as genius. Twitter was polls. Were excited about that . Excited about hearts . It seems the expectations are a bit down from where the Product Innovation needs to be. John, thank you. Thanks, guys. Good norenergy today at the york stock exchange. When we come back a rare and exclusive interview with citadels ken griffin. A Hedge Fund Titan coming up on squawk on the street. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. We heard you got a job as a developer its official, i work for ge what . Wow. Yeah okay. Guys, ill be writing a new language for machines so planes, trains, even hospitals can work better. Oh sorry, i was trying to put it away. Got it on the cake. So youre going to work on a train . Not on a train. On trains youre not gonna develop stuff anymore . No i am. Do you know what ge is . Are you looking for yield . Well, one fund manager says the best place to find it may not be in bonds. It may be in stocks. Find out why, tradingnation. Cnbc. Com. More squawk on the street coming up. Yeah, a little. Youre making money now, are you investing . Well, ive been doing some research. Let me introduce you to our broker. How much does he charge . I dont know. Okay. Uh, do you get your fees back if youre not happy . dad laughs wow, youre laughing. Thats not the way the world works. Well, the worlds changing. Are you asking enough questions about the way your wealth is managed . Wealth management, at charles schwab. The 25 billion Hedge Fund Company citadel is one of the biggest players in the industry. Its founder and ceo ken griffin usually only seen publicly on the conference circuit, but today he is giving us his First Ever Television interview. Our kate kelly is live with him in the companys super secret risk center in chicago. Kate, take it away. Hey, thanks so much, sara. Were on the 37th floor of citadels chicago building and i am sitting with ken griffin who runs the 25 billion Citadel Hedge Fund family as well as a Market Making trading business. Ken, its a pleasure to be here with you. Thank you so much for doing this with cnbc, and let me get right into it. Its a lousy year for hedge funds. The average is at dead zero, the market is up one and change percent yet our Flagship Fund is up over 12 . How do you pull it off . Weve had a really good year this year across the majority of our businesses. Its been a solid year in commodities, had substantial volatility in the commodity complex thats done well for our team. Our equities businesses a another really resounding year of performance coming behind them. Really pleased with how weve done across a number of the different sectors we invest in. The key to our business, its a lot of research. Well do about 15,000 management meetings this year. So weve got a lot of people on the ground trying to understand whats changed in corporate america, whats changed in corporate europe, where are opportunities appearing. Its that sort of research that feeds the strategy because the multistrat funds have fixed income and other strategies embedded. Talk to me a little bit about your 25th anniversary. It happened earlier this month and this is a company you founded in your dorm room in 1990 with convertible bond trading. Now you employ almost 1,600 people. Looking back, whats your philosophy on hiring and retention . How do you keep talent and find talent . So one of the great advantages that i had in my career is i started trading 24 hours a day in my early 20s, and i had to learn to delegate to people. I had to learn to trust people, and i realized that success was going to be born in hiring really bright people, very selfmotivated, very able to make good judgment calls day in and day out, and if you look at citadel today, thats really the founding principle of the firm is a real pursuit of talent, a pursuit of people who have a passion for finance, a and pursuit of individuals who make good decision day in and day out. Well interview 10,000 candidates this year to fill 300 jobs. So a really strong emphasis here on finding the best and brightest in our markets. That sounds almost harder than getting into harvard. How does the upside compare . I think harvard is a bit easier to get into. I think the upside at citadel is a bit better. Interesting. You founded one and you went to the other. Reportedly youre considering an initial Public Offering. We have some interesting ipos in the market today, different space obviously. Are you going to do it . This has been rumored for almost a decade. There will come a time and place for us to consider going public. That time is not now. What about in the next couple years . Anything could happen in the next couple years so i wouldnt take it off the table but its not front of mind by any stretch of the imagine yation. The world has really been roiled in the last week by the terror attacks in paris. As an investor, how do you put this into a broader context . What does it mean for the eu . What does it mean for the world beyond the eu . I think thats the right way to frame it. Its how do you think about this not from where should the tenyear bond go or what should it mean for equities tomorrow . This is a much more fundamentally challenging problem for europe in that we now have on the ground of europe a significant terrorist incident driven by what appears to be middle eastern terrorists. With europe opening its borders to 4 million or 5 Million Immigrants seeking political asylum, theres a material risk that europe will see more events such as this and i think its going to drive a real debate around how porous should europes borders be and what is the commitment of the european citizens and the european governments to the College Educated workers full robust employment in theed economy. The fed has to balance that with the reality that for those that dont have a college degree, the labor market is still difficult. We are not seeing wage growth in the less skilled part of our work force. Low inflation gives them i think theyre going to move, but they certainly dont have to. Are you worried about what happens if they have to rethink that decision later . You know, if we have to head back towards zero, that means that some shock has taken place, and the economy is shockingly turned south, and i think that if that were to happen, i think that would be a cause for concern because it will be perceived the fed has fewer degrees of freedom to reignite growth. One of the reasons the fed has waited so long to raise rates so far is to combat that very concern. Lets talk about some other markets. Youre active personally in both art and real estate. You recently set property records in miami, chicago, new york. What is your philosophy on Real Estate Investing and art investing . Why is it important . Why is it invaluable . Highend real estate has a different meaning that the heats different than just investing. Its not just an investment. The art market is now viewed as a market. When i started electing art 20 years ago it was really a market dominated by collectors. Today were seeing far more people pursuing art as an investment. I would have cause for concern around that. Weve seen the art market, and the tier one artists with the best works setting alltime record highs. Were seeing second tier works by the best artists starting to slide down in price. I think people should be very hesitant in thinking about art as an investment. Would you rather own a prestige property on the oceanfront in miami or precious metal gold . Personally would i much rather be in miami. We only live once. Gold will sit in a safe, and whats that going to do for you . Paul teeter jones Hedge Fund Manager once famously said that new mothers cant focus on trading, so i guess by that logic its a good thing i dont make my living that way. He also said he redeems money from male money manager whz theyre going through a divorce. You recently settled a fairly high profile divorce. How did it affect you as ceo of this business . Obviously theres an emotional dynamic at play when you are going through the end of a very important relationship and for me my children were really the focus of my attention. Our three children, i love them dearly. Wanted to make sure that this went as smoothly as possible to protect their interests. Now that its resolved and behind us, im happy my children are doing as well as they are. Lets talk politics for a second. Youve been active over the years on both sides much the i am, although you favored some republican president ial candidates. In the most recent cycle you donated to the pacs for scott walker, now out of the race, and marco rubio and jeb bush. Who are you looking at exclusively backing for president . Youve had the three candidates that have had the most interest. Scott walker has been an absolute champion of free markets and a hamp yon of smaller government. Those are things that are really important to me. I think that freedom of speech, freedom of religion, the freedom to pursue your career as you so choose, those are fundamental core values in america, and all three of these candidates share those values. Walker is important to me because we live in illinois, which is economically depressed due to an overreaching government that cant control its spending. Looking at the national stage, jeb bush, marco rubio, both outstanding candidates for president. Both would be, i think, great leaders for our nation. Really excited to pick one of these to the end. In jeb bush brings his a game to the table, he can win. In florida as governor he had an outstanding track record. Focused on education, focused on balancing the budget, focused on making the state a real draw for capital and people. So as you think were into the next 25 years, whats next for citadel . What are its priorities . Were the largest marketmaker in equities around the world. Thats an incredible platform for us to build, but it would be i believe one of the great securities dealers of the next 25 years, and within our hedge fund, we have enjoyed 25 years of strong growth, and if i look at the talent we have today, i look at the ambition of my team members, because this really is a team effort. I am really impressed with where we think well take this firm over the next 25 years, which is to be a leader in investing across each of the strategies where we edge gauge today and add newing strategies to the mix over time. Real focus here, though, on depth, not breadth. We think that excellence in investing comes from focus. Ken griffin, thank you so much for doing this Television Interview with us. It was an honor. Sarah and the gang, back to you, guys. Thank you, very much. Kate kelly live in chicago from the risk room at the mega hedge fund citadel, which is a rare interview with ken griffin. I was straining to see what the risk room was telling us. It wasnt moving. They seemed to have deactivated it. His investments in art and real estate. The fed. I thought, actually, his comments on immigration really showed how big investors are thinking about whats happening, the recent terror attacks in paris and how he phrased it, should germany define the immigration policy of all of europe . Then he wanted to know, okay, he said theyll be uncomfortable with the european union. Are you suggesting the euro will break apart . Does it become peripheral spread. He should come back again. I think he was guessing theres a lot of soul searching ahead. In terms of an investment, what was the position there . Thats the interesting thing. Clearly, raising some big fundamental questions actually in a british style. Also talked about the fed and u. S. Stocks and the challenge that the fed has with a rebust employment economy i think is what he said with the reality that that, you know, its been a mixed recovery in the back of that. Remember, it priced with all of its range, the initial Public Offering price was 12 there, but, again, getting a bit of a pop. Not far offer, actually, the valuation of square. Squawk alley will be up next. 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. Bob dylan. To improve my language skills, 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 morning. It is 8 00 a. M. At square headquarters. Its 11 00 a. M. On wall street. Welcome to squawk alley. Joining us as always john and kayla as we watch two big deals in technology. New issue, swear going public at the nyse. Shares up with 52 . Ceo jack dorsey joined us live in the last hour, talked about his dual roles at both square and twitter. Take a listen. I approached it with a lot of selfawareness and have been