And for the time being europe is mostly in the green over there our road map begins with facebook, smashing analyst comments. The cfos comments about teens using the site is spooking investors. And a double dose of dow earnings. And well speak exclusively with the ceo kroeger in just a few minutes. Investors were spooked when the cfo made comments about teens. Usage of facebook among u. S. Teens was stable from q 2 to q3 but we did see a decrease in daily users, specifically among younger teens. This is nothing new. Theyve been talking about this for a while. But to hear them say it, they have denied it in the past. The q a for this is the stock was at 55 and 56. First you hear teenage decline, 52, 53. And then you hear ads will decline and its boom, to 50. Theyre doing 2 billion in revenues now. You listen to the call, you were kind of blown away by how well theyre do bug thing but ty give you that chink. The thesis by the end is this people doesnt use it anymore because theyre younger. Next thing you know, its a fiasco. My charitable sold some of the stock because we feared everything had to be perfect and not everything was perfect. Theyve been able to make it up in pricing, theyve been able to make it up in putting more ads on the feeds. But they admit they cant cram any more in there anymore. And it was questioned when are you going to do video in instagram hasnt monetized yet. I want to stop you at instagram. Im getting familiar with the younger teen graphic. Not quite. Hello are you snap chatting, partner . No, but instagram thank you for that snap chat reference. I wonder whether theyre losing facebook people to instagram, which by the way is just keeping them in the family. That was my point. They didnt even talk about how instagram is growing and they havent monetized instagram yet. So i think the arc is not as negative as people portray. It wasnt as positive as 56, it isnt as negative as 45, 46 where the stock seems to be headed. Revenue per user is now more than 1. Yeah, they put good number. People watch the internet 5. 25 hours per day, i know you watch tv 4. 5 hours per days. If facebook has 1 in eight on the desktop and 1 in 5 minutes on mobile. And you think 1. 2 million users and this a great story. At what price, though . They want to take it to 45, 46 and then you buy it there. All right. Lets get on to starbucks. Shares of starbucks heading lower after its 2014 profit estimates came in lower, this after a 34 growth in profits, thanks to strong profit gains and an increase in spending by customers. At one point Howard Schultz has to say, wait a second, hey, guys, i sense the tension. You keep wanting us to raise samestore sales. It would be irresponsible. This was exactly word for word with what he said last time but it doesnt matter. The jackals will not stop, the knitpickers will not stop. You think in the end maybe Dunkin Donuts is better. Teavana is just kicking in. But you know what . The theme of this day is profit taking. People are looking for any excuse to profit take and starbucks is a high multiple stocks selling at twice its growth rate and the analysts turned on it as if it were Weight Watchers, as if it were avon. I was at the canal last night its like venice over there. You take a gondola, go see the new whole foods. You mentioned schultzs relationship with those on the call. Heres a listen to what schultz said on the Conference Call last night. It seems that we cant get through a Conference Call without somehow this tension between us and you regarding to comp growth guidance. The guidance were giving is the most responsible guidance we could possibly provide you, especially when you consider the maturation of our store base and the number of stores. He did say last year was a stunning year. Funny, too, we just got done talking about facebook. There were some that thought that sandberg was combative on the call, trying to compare the users of other sites and media. That was a great litany of who theyre doing better than. Both calls had the same commonality, which is are you kidding me, were crushing everybody and thats not enough for you . In the starbucks call, youre talking about 8 connemps. I had Buffalo Wild Wings on last night. We take the stock up 15 on 5 comps. Some of the guys are c students, they bring home a b and youre buying them a porsche. But its hard to maintain that, especially when you have a 34 multiple. In other words, at least the risk grows that the down side will be larger. Yes. Thats why these were both very expensive, facebook and starbucks. They had run a lot. People are looking for a reason to say, you know what, i think its done. Starbucks is an incredibly wellrun company, it did move up a lot. Youre looking for a buy point. To be fair to those who are not as bullish as you are, they said revenue would be 10 to 13. Now they say 10 plus. We were looking for comps, china came in 8. Im not denying. Im not saying these stocks should be up. Im saying when they get to a certain point, my charitable trust, lets say starbucks goes down to 74, 75, youre getting the best in show. Then you say who has better growth in the end . The teenage thing did bother me. The platform at facebook is just so enormous, seems to have so much power embedded in it. If you believe theyll figure it out, theyll figure it out. Figured out mobile and it didnt take them that long. But when they put it in your face, you feel like maybe i should be more worried, even though it was kind of an offhand comment. But whyd they put it in . You want to parse these Conference Calls. Theyre giving you a heads up that this is going to be maybe now twitter comes out and says we have that cohort beat and twitter gets valued at 25 billion. We get to kind of this arms race among these companies with teenage and growth rate. I come back and say these are really good companies, they ran a great deal. A double dose of dow earnings, exxon mobils Third Quarter profit did total 8 , still total visa will be in red, the company sets aside money for taxes, they see activity slowing in october. Others pointing out theyve got regulatory pressure, they have square on their tail. What do you have make of visa . I know this is going to sound like a broken record. Another company you want to buy on what i felt was somewhat targeted weakness. They had been giving you insight that things wont be that strong. Why would i think to buy it . The buyback is for real. The company is a juggernaut, its incredibly well run. Youre getting it at a discount. So Many Companies ran into the quarter expecting things were going to be so much better than expected. You cant maintain what the analysts want. Can you say that for the overall market then . Yes. It seems to be a story that is shared. Yes, can you say that for the overall market. 5 plus for october. Visa is up 6, 7 in october al e alone. They didnt come up with a new thing for hepc. They didnt do chicken wings. The stories that are doing well are stories where Gross Margins are going up. I didnt hear a lot of Gross Margins going up gross guidance last night. The Gross Margins for a coffee and for a copy that you have generate are so immense. Theres a level but they did run up. Exxon, the journal tripes to give them kudos for at least returning capital. And their return on invested capital is actually quite strong. They just may not put enough it have out there perhaps. It was a better quarter than expected. Im so used to Production Growth being down. Refinery, everyone has a problem with refinery and they came out and said it. This is an example of a stock that i felt there had been little excitement to come and thats the exact opposite i thought. This is not a stock thats been running up for a very long time. No. It is a bank. Theres someone here to runs the exxon buyback. And thats been a constant theme since the mid 80s. So, yeah, i thought it was better. So if the theme of the day is profit taking and people are looking for any excuse to take profits, you dont buy this market . Got to wait. When they decide collectively that weve all run too far, give it some room. Give it some room. All right. You have to. When we come back, david dillon will visit us at post nine. What is the head of the largest supermarket saying about Consumer Spending . Robert shiller, a lot to talk about. Claims, by the way, did fall 10,000 to 340. They say it a claim number out of california at last. A lot more squawk on the street from post nine in a moment. Here come johnny singing i got a woman snm designed by hp, will give ups over twice the performance, using forty percent less energy. Multiply that across over a thousand locations, and theyll provide the same benefit to the environment as over 60,000 trees. Thats a trend we can all get behind. The ocean gets warmer. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. I always feel like somebodys watching me gas prices are hitting new lows. What does it all mean for the consumer . Lets bring in david dillon, chairman and ceo of kroegger, t nations largest Grocery Store chain. Mr. Dillon, this food stamps thing kind of snuck up on everybody. What will be the impact really . The impact is significant to the customers who rely on food stamps to pay for their food. After all, thats an obvious necessity. At kroger, we dont expect the impact to be significant. So much so that we confirmed our guidance for sales and earnings yesterday for the rest of this year and thats with the full knowledge of what we think will happen with food stamps. But the economy, as youve seen, is a bit fragile, improving but still fragile and the customers lives are a bit fragile. If you take anything out of food stamps for them, it makes them stretch their budget. I do think it may affect them on what they have to spend on disposable income and restaurants and theaters and other places. You have done a remarkable job with loyalty and affinity jobs, a fantastic job with private label, better than any other supermarket. Do those also play into your hands where food stamps are cut back . For food stamps information, we have a good sense of what our customer needs and what applies in their household. We look at the broader world and our private label speaks to everybody, not just to those on food stamps. Those macro dynamics, is it lost, Pricing Power . I dont know that its lost. I look at it as were trying to find ways to have lower prices for our customers, sort of counterintuitive. Most retailers are finding ways to have higher prices. We want to find ways to have lower prices. For the last ten years weve been able to lower prices. Whats been the key to lowering costs . We all know you compete with walmart. You perhaps and differently than many of your competitors have succeeded in doing that but whats been the key to getting costs lower . You have to every once in a while go back through and say how do we want to do our processes different, things that dont affect the customers. Years ago we used to do our accounting in individual locations and now we do it in a central division. Lower prices drives higher sales and earnings. Youre in the process of closing the highest tweeter acquisition, i believe. Where are the opportunities for kroger . Are they in continuing to continuing to consolidate the industry . Harris teeter is a really Good Opportunity because theyre a great chain. Weve admired them a long time. Weve said were very collective on acquisitions and mergers. We want to look for partners who we can learn as much from as we may be able to learn from them. In harris teeters case, theyre going to teach us a lot of thing. I had the good fortune of sitting down with the ceo of costco this morning. They aspire to be the cheapest. Amazon building out warehouses around the country, maybe for delivery of sameday food, is this a pinch on kroger . Where people want to buy there food is all over the place. Its the costcos, the drugstores, the club stores. Everybody wants into the act. We think it have as the retail industry, not just the supermarket industry. Weve been competing in that for a long time and we will continue to do so successfully. Even with amazon . Sure. Amazon is a great example. It illustrates people are interested in the Digital World. Theyre interested in Home Delivery. Weve been doing Home Delivery in the denver market for about 20 years. Its been super for us except customers arent as excited about it generally across the u. S. Yet. I think they will be someday and when they are, we will be there and be ready the other side of the Digital World actually is more interesting today. Customers are really into this is using the apps and digital coupons, communicating digitally and we do a lot of that. We do millions ofline coupons and our app, if you havent tried it out, is very special. Finally, the high end, right, we talk about whole foods, fairway, sprouts. Has that brought more opportunities than challenges to the market overall . The high end is a really Good Opportunity. And we do well there as well. And thats one of the other places that the information we have about our customers works to our advantage. We can understand the household and address you in a more personal way in a treats you as an individual customer. So were very excited about that end of the market. Were actually excited about each of the segments of the market because of the information that we have available to us. Youve been the used category winner, taking share of everybody. I want to congratulate you for just a phenomenal couple of years. Thats david dillon, chairman and ceo of kroger. Thanks, jim. Happy halloween. When we come back, have no fear, cramer is in your corner when it comes to making money. Take a look at futures here. Well get the opening bell in just about nine minutes. Dont go away. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. A lot can happen in a second. 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It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. I want candy theres going to be a lot of candy at my house today. Lets talk Weight Watchers, talking about candy. They better hope a lot more people eat candy. This is going to be the big loser of the day other than avon. I can strategize about why theyre having less traffic, but i think its the fit bit world, i think its the world of the device that allows you to keep track versus yourself. It is making it so that you are your own personal Weight Watchers. Technology i think is doing in Weight Watchers right here. The digital revolution hurting Weight Watchers . Though you still need a plan and a strategy, dont you . I wouldnt know. When you have fit bit, you see at the end of the day i only walked 12,000 steps, tomorrow im going to walk 13,000 steps. This is a great company. It is . Its down 36 let me back up. That model has done a lot of good for people. That model may be being outmoded by tech. The stock is saying theres a secular trend against this company and im saying that its the world of technology and the world you wear on your wrist and youre competing. Talked to kroger about amazon. So many ways you wouldnt necessarily think as right now the world is tipping. There are so Many Companies doing sole things that are disrupted. Can you believe it, Weight Watchers being disrupted by technology. Well be watching that stock and a lot more. Coming up, the bond king and the Nobel Prize Winner together. Well have yales Robert Shiller and jeffrey gundlach. 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Were going to watch visa closely today. Thats likely to be the biggest drag on the dow, given the priceweighted index. This is a time that every time it has gotten hit, you had to buy it. When it settled down. This time is no different. I was talking with david walking over. Am i a little less bullish today . We had such a remarkable run. If i stay bullish forever, what does that make me . Whats working are companies that hadnt been working. Expedia, disappointed horribly. Visa, starbucks, facebook, those have been rockets. People are saying going into a new month, maybe take some money off the table, cant disagree. Mastercard did beat 14 increase on a local currency basis in terms of spending. Their Conference Call began at 9 00. Theyll likely be asked the same questions that visa i said take a look at a company like skyworks. Nobody liked it coming in. Suddenly they love it. [ bell ringing ] the operator of chinasli online ipo celebrating in the marketplace. And scholastic, celebrating childrens books. We didnt dress up . No. My kids are now too old to trick or treat and its driving me crazy. Oh. Were in the zone. Enjoy it while it lasts. We havent done sony. They did cut their fullyear forecast by about 40 . Theyre blaming some Box Office Figures that does bring a discussion about whether dan loebs view of the company has been vindicated. Costco kind of took my breath away. I had this narrative i wanted to do in the interview. Suddenly he said tvs not selling well, i thought, sony, i have to talk about how sony may be hurt. The market overroad me. Overrode me. Loebs a combative fellow. Whether or not hes going to mix it up with george clooney, i dont know. Somewhat unexpected, even though we know the numbers from after earth and a number of those other movies were not good, they were not able to make it up within the division with other more stellar performances. Hence why iger has spent so much time rolling the dice to get away from such fickle movies. Sherry mccoy said the quarter was tough. So often you get these Conference Calls, thats good, thats good, thats good. Sharon mccoy from Johnson Johnson does just lower the boom. We had a tough quarter. What a breath of fresh air. They cite Macro Economic head winds and continued weakness in north america. They ran into a Macro Economic buzz saw. Meantime, expedia will do okay. Beats by 8 cents, revenue above consensus, increased bookings, travel continue. There had been a little disruptive there had been a sea change in some of these online companies. The in i own, expedia is very important. You want to cut travel expenses, go use expedia. The wall has been removed. Theyve got some terrific, less market deleverage. What ive heard from Airline Executives is the Government Shutdown did have an impact but it came right back. T the minute it stopped, they saw bookings they just all fly by plane . They dont take cars . Dont fly first class . No, i dont believe they do. And anything back below first class, very cramped. How would you know . When was the last time . Give me a break. Keep your eye on starbucks. Its not the worst loser today. Just a little behind visa. A 2 , 3 move here, jim, will get your attention. But in the context, you were saying stocks have been fabulous. If were going to turn on stocks and not recognize this is just profit taking, youre going to miss a great opportunity. Let it come in a little and then i dont want to say go right back out, that will be glib. The companies are doing so well and stocks have advanced so well unless you shot the lights out i have harmon on tonight. People thought they shot the lights out. If you did incredibly well like Howard Schultz did at starbucks, at a certain price you just go in and buy it again. Exxon, marathon, conoco, thats going to be a segment to watch today. Exxon, Production Growth was good. I was pleasantly surprised by that. Id been saying that exxon that exxon and chevron were like pfizer and its nice to see a big dog get a little run here. You know how hard it is to keep up with you in the control room . I got to get to the control room while im doing this. Im not sure but well figure it out with up. Well, you take first class. Lets get to bob pisani. Happy halloween. Happy halloween to you. We do have a chinese ipo. Its been a while since weve seen one, an online retailer. Price talk was roughly 13 to 15. They priced it at 17. Then it went to 15 and 16. The bottom line is right now its looking at 20 to 22. So from roughly 15 to 16 to 20, 22, looks like its going to open on a nice pop here. Elsewhere i want to pick up the discussion on big oil you were talking about. Refining margins are tough but Lower Oil Production is still the biggest problem big oil has gotten, not the fraging companies. Mobil is reporting problems. So put up the screen here. For production in 2010, they did 883,000 barrels, this is oil production. 737 in 2011 and 702 in 2012 and theyre going to be down again in 2013. A year ago they were 2. 13 a year before that. This is the biggest problem with big oil. They keep buying back stock. Theyre going to do it again, another 3 billion in the Fourth Quarter and the dividend is 3 almost. Thats what keeping these companies up. Conoco phillips has bigger problems. Their production numbers have been declining for years. The stock is up this year, they have an almost 4 dividend yield. People are buying these Companies Just on the base of the difficult depend yield. Royal dutch shell, they have big problems in nigeria, they have declining production as well as weak industry margins here. The growth is coming and jim is right, from all the fracking plays, look at pioneer natural resourc resources, halliburton, in the fracking services areas, youre up 95 . Thanks very much, bob pisani. Time to talk Time Warner Cable. Time warner cable this morning reported earnings that were not particularly strong. However, the stock is up. As for the numbers themselves, lets remember the big dispute with cbs was off. The numbers on that metric at least came in worse than expected. The company losing 429,000 primary subscription units during the quarter. It lost broadband subscribers for the first time ever. It was done 24,000. Consensus had been for a gain. Theyre running, by the way, 6 loss overall of its video Subscriber Base over the last 12 months and about 2. 2 gains in broad band. Another reason of course why the stock as you look at all the losses in high speed video and voice, another reason the stock is hanging in there is the overhang of m a activity. Almost all the analyst who is put their notes out this morning end with this basic theme. Ubs, we expect the stock to hold up better than these results would suggest given rising expectations for a deal with charter. And we expect the stock to hold up better than these results. Its very unusual. Usually they dont like to even talk about that. I got a lot more on that. Lets go back to the beginning of this month. Remember the Liberty Media analyst day . During that there was this brief slide essentially put up by the ceo, playing the music of the rolling stone, time is on our side, that made many people believe theyre going to wait for a while. Im here to tell you i dont think theyre going to be waiting too much longer. We told you mid june a proposal had been made by charter liberty. That was given the stiff arm by Time Warner Cable. The question is will charter and its partner liberty, 27 onner liber owner liberty with a number of board seats make another play . Will it be quiet, will it be public, will they go after the board of directors in some way, which they conceivably could do next year . What would a price be . Time warner cable advisers talk about 8. 5 times ebidta. How do you do a deal that high when your charter is far smaller than cable. They say youre just buying us with our balance sheet. That doesnt make any sense. Finally, let me end on this, our parent company, comcast. The cfo of comcast has made it clear to any investors who ask that the focus is on international if they were to do acquisitions. And he said they will not do a consent decree. There are no caps any longer on terms of how much you can own, and the question, jim, becomes if Time Warner Cable is available, if it is looking for a white knight, does comcast in some way try to play a role there . Would it threat go to a charter or would it consider stepping in . The d. O. J. Might have something to say on that, especially given vertical interjection, will it continue to say no and its a key question as this battle heats up again. We often talk about execution. Anecdotally time warner not a well executed company. Comcast anecdotally and empirically a well executed company. 1,200 software engineers, xfinity lauded by many. Time warner cable bears paying attention to. So you buy a company that doesnt have the great cash flow and Gross Margins and execution, you run through your system and suddenly its very accretive. The numbers can be extremely accretive, if comcast steps up, not that it will. A lot more room to make money off of time warner if you buy them than to just on the stock. Lets get to Rick Santelli in chicago to check out the bond pits. It looked like rates moved up yesterday. Look at the context of where they started out the session. Dollar index is stuck a bit. Twoday chart is holding up. Why is it holding . Up most likely because of rate decrease. You can see dollar index at 80. Now im going to run. In a couple minutes were going to do chicago purchasing manager survey. All right, rick. Thank you very much. The dow is down about 13 points. Kelly evans here at post nine joining us. I think talking about maybe what larry said earlier. The theme is double trouble boil and trouble. Just some context on the kind of month were about to have. The s p 500 on track to post a gain of 5 , best month live glyn over two years, havent had a real stock correction in over two years. Weve talked at length about valuation, multiples, et cetera. Thats bubble part one and bubble part two, a lot of people feel a decoupling. The other day there were comments that were seeing bubblelike markets again and said thats in part thanks to the federal reserve. Hes not the only one either who has been talking about bubbles making a comeback. Bill gross making comments suggesting that prices are artificially high. Hes not just talking about the shortterm move here or the fed. In his latest investor letter, this is where the toil and trouble comes in. He says myself and other managers have been riding a 20year credit boom, this is not something we created, its something we rode and its time to return the share to labor that capital has accumulated. Rick . Im going to put an asterisk on this, everybody. Many of the services we get our information from are showing 65. 9 for the Chicago Purchasing Managers survey. Deep inside i just find that a bit hard to believe. I think maybe theres some type of miscommunication there. If that stands, thats a whopper of a number. If we look at new orders, they also this is kind of crazy. Theyre looking at 74. 3 on new orders from 58. 9 . If these numbers are accurate, this is a blowout report. If you look at the employment index, 57. 7 versus 53. 2, that makes sense but, as i said, these numbers are stratospheric. Somebody is giddy looking at what the numbers say. Back to you. I want to look at wuba, you can see it is up rather nicely at this point. It is and we always like to put some sort of tag on things to make you understand them. So the craigs list in this case of china. Im sure it not quite that but it is what they call a very large marketplace, online marketplace connecting local merchants and consumers, not nearly as larges profits compared to alibaba. Ipos continue to make you money. And china hasnt seen many given a lot of accounting concerns. Muddy water, they come still and go after these companies. This is the first weve soon in a while. Thats great you mentioned that. People got burned really seriously badly on a lot of chinese ipos. Im told this is a highquality company. When we come back, talk about sky high, shares of Spirit Airlines have been soaring, more than doubling so far this year. Well talk to the ceo about the discount carriers Growth Strategy and where low fares and fees fit. And well try to make sense of the chicago cmi number. Best in two years . Well figure that out when we come back. 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Nobel prize Winning Economist Robert Shiller, and bond guru Jeff Gundlach will join to us talk about a new fund theyre starting together. And shiller said that young people with a moral purpose should work at Goldman Sachs saying when you study finance, you are studying how to make things happen on a big scale, on a lasting scale, that has to matter more than getting into google and programming some little things. Its an interesting story if in fact he means that. I worked at goldman. I went there to make a lot of money because i was poor. Unlike everybody else. What we did was go there to make money. If that is a higher calling, sensational. I pushed paper from here to over here. It was a tremendous exercise in greatness in america, versus the google people, all they ever do is create the greatest wealth ever. Just a second, im going to do my goldman thing. Im moving the paper from here to here. I made millions of dollars. Google, all they did was change your life, make it so you could look up anything. Selfdriving car. It does bring to mind what druckenmiller said yesterday about this, best american model business. Every kid in the world wants to work at facebook and google. Can you not get a job there. Goldman sachs also recruits and you want to make a lot of money but we have engineers coming out of our country once again of our Great Schools going to great companies. If thats wrong after what weve been begging for you mean if the rocket scientists actually go into Rocket Science as opposed to dividend calls. Dows down about 7. Six in 60 is coming up next. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. So i can reach ally bank 24 7, but there ar24 7. Branches . Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. We feel very good about how were seeing some of our seas seasonal christmas items selling, our perapparel and hardware are very good. The area thats probably weak at the moment is probably television sets, computer. But our tablet business, which i think is going to be a big business this Holiday Season i think is doing pretty well for us. Costcos craig jelinek. Lets go to six in 60. When Deutsche Bank came out and said it could be negative at the bell, i dont want to hear that. Jeffreys lowers price target on gap. I put this in. Theres jelinek saying apparel is selling well. He did emphasize tablets are very strong. Tablets the concept, not apple. Steeple does cut soda. Theres a lot of die hards in soda stream. It also puts a damper on bed bath, though it shouldnt. Carbo ceramics . They have the best fracking materials. Look at that. And finally, parago. This example is not good. Look what happens when you blow it, so to speak, though i didnt think they did. I dont know why thats doing that and then you come back and Everybody Loves it. This is embassy ped xpedia here here. Tonight you got costco and harmon as well . Harmon is a company that people love today. Oh, man, im striking out everywhere. People do not understand when you deliver superior sound equipment, you make a ton of money and harmon is delivering. When we come back, a faceoff on facebook after that companys Quarterly Results. Plus a ceo hat trick. Live interviews with significant in a, expedia and spirit. Keep it right here. [ male announcer ] staying warm and dry has never been our priority. Our priority is, was and always will be serving you, the american people. So we improved Priority Mail flat rate to give you a more reliable way to ship. Now with tracking up to eleven scans, specified delivery dates, and free insurance up to 50 all for the same low rate. [ woman ] we are the United States postal service. [ man ] we are the United States postal service. [ male announcer ] and our priority is you. Go to usps. Com® and try it today. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. The ocean gets warmer. [ female announcer ] today, cisco is connecting the internet of everything. The peruvian anchovy harvest suffers. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. Welcome back to squawk on the street. You are going to look at a live shot at Reagan National airport, where the faa is expected to make an announcement regarding the use of your Electronic Devices while flying. We are going to take that live once the News Conference begins. Were told they may have some findings theyll share with the flying public. In the meantime, lets bring in phil lebeau and talk about what they might possibly say, phil. Everyone wants to know something about this story. Carl, i think at the end of the day theyre going to say they agree with the findings of a committee that was put together to make some recommendations on changing the policy. I think michael is walking toward the podium now. Essentially theyll say youll be able to keep on electron ic devices below 10,000 feet but will you not be able to text or send emails. Otherwise if youre listening to ipod or are on kindle, its okay. Its the faa rule theyre trying to enforce. On most flights ive been on and i know youve been on these flights as well, a lot of people dont listen to those warnings. It always brings on the uncomfortable conversation between one passenger and the Flight Attendant. What do we know about ayannicaya avionics and electronic signals . When tests have been done, theres never been any conclusive evidence that a blackberry or iphone sending out a text message interferes with the avionics in airplanes. Those anecdotal reports cannot be dismissed as somebody thought they saw something, theres enough there they want to be cautious, which is why i think youll see them say theyre not comfortable with people sending out signals, a text or email. The Consumer Electronic Association saying they want to help passengers stay connected to their loved ones. There was a time when we were concerned that terrorists could detonate on takeoff. Is that not a concern anymore . No. They dont want to see below 10,000 people, a concern that somebody might have something more criminal in mind. Thats why theyre going to keep this ban in place for any device that might potentially send out a signal. The question of being able to play word with friends, its a little silly that a Flight Attendant comes up and says you have your kindle on, turn your kindle off. The real current is whether or not you are sending an email or potentially doing something that could interfere with the avionics of the plane. Phil, thank you for that. Well keep our eye on the podium at reagan international. We want to bring in ben baldanza, the ceo of Spirit Airlines. I wonder if you feel strongly about the topic were about to discuss here as we watch the faa . Well, you know, a large number of our customers bring a smartphone or tablet on board the airplane. So their ability to use it, as long as its safe for the airline, well be fully in support of that. Well said. Well see what they say. The quarter, ben, again weve talked about your strategy of relying on fees, revenue per seat mile up 89. Im not sure if anyone has posted a number like that. How long can it continue . Its been a great quarter for us. We have a great team putting out the results. Its been a result of good capacity discipline in the industry, which is positive, thats supported a generally higher fare environment and the spirit model of taking a really low fair and adding choices so can you customize your total price as been working really well. We think this can continue for a while. If you are look in europe, for example, were the only airline that operates like them in north america. So i think weve got a lot of runway ahead of us. Ben, i just want to update people, the faa statement is out and they say passengers can safely use portable Electronic Devices during all phases of the flight, with very limited exceptions. We were talking about fees. A lot of airlines have started to use mobile, wifa, those kinds of services as a major source of income. Does this potentially cut off that source of income if people can now use their devices as they have . Well, its unclear. I think the usage of paid wifi on airplanes is generally pretty low. We dont offer that service on spirit right now because we cant make it a Profit Center and if we cant make it a Profit Center, were not going to do it. But i think it probably would affect usage somewhat. On the other hand, if can you use your device during more of the flight, it might encourage more usage. Ben, dont go anywhere. Let me bring back in phil lebeau and talk about what the faa is saying. They expect most carriers will approve that its safe to use devices pretty much gate to gate by the end of the year. Im sorry, ben, go ahead. Im happy to stay with you. I have a question for ben. I saw some of your comments after your Earnings Report yesterday that you were considering perhaps modifying your bag fees so that perhaps people would pay more to check a bag on certain flights, if its a popular flight, and perhaps less if its a less popular flight. Can you give me any sense of how far along you are in developing that modification and how it might impact passengers . Its just a concept right now so weve got a lot of work to do on it before it would be a reality. The idea would be to price bags and seat assignments similar to the way tickets are pryce, higher priced during high demand periods, low are priced in lowerity manned periods. We think it would be a real consumer benefit, more people might be able to check bags and pick the seat. More often the prices would be lowered rather than raised. But in the fewer times of the year when the dee manned is in the airlines favor, we can pump the price a little bit. Ben, operating expenses in the quarter actually up year over year. Weve seen crude come down to 96 and change this morning. We look at a curve just like you guys do. We could predict it better, i probably wouldnt be in the airline business. But generally we watch it pretty closely. We try to be a really good user of fuel. Were proud of the fact that at spirit we burn less fuel per seat than any other airline. That makes as you real efficient user but we pry trito get our revenue to react quickly to stay ahead of that. But weefr encouraged by the current fuel environment and we hope that can remain. Its been a huge boone for the space. Thanks for chatting about some of these other issues, too. See you next time. Ben baldanza of spirit. What a session last night on facebook after hours, experiencing what some are calling to and angst today. The companys cfo saying young people just arent using the site as much. Should investors be worried . And Companies Reporting bookings are on the rise at expedia today. The dow close to session lows, down 44. Life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Sometimes they just drop in. Always obvious. 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. Welcome back. Shares of facebook are trading lower this morning, down about 2 . The stock had initially popped on the Earnings Report until facebook cfo David Ebersman made these announcement on the Conference Call. We did see a decrease in daily users specifically among younger teens. So the question is will that disclosure will the impact of changing teenage habits hurt facebooks prospects . Lets bring in our guests. Kim doesnt own facebook. I assume you still dont see value here in these shares . No, we dont. This is a momentum stock. We are Value Investors and we think one of the worst things you can do as an investor is overpay for a stock. This looks likes its a very expensive stock at this point with an uncertain longterm future. Before we go any further, let just concentrate on what the cfo has said here. This stock was up 15 after hours. It fell into negative territory. What hes saying is overall the teens are stable in the United States. It may be that some younger within that are decreasing their daily activity. Those comments wiped out, by my calculations, 19, 20 billion of value. This is a transcript of the call last night. What he went on to say is we dont typically call up such granular data, especially when its of questionable statistical significance but we wanted to share this with you, since we get a lot of questions about teens. Is he right to have gone out and said this, wipe 20 billion of value and potentially change the direction of this stock for the next quarter . Well, i think we all know the stock has done extremely well. Lets focus on the fundamentals and ill get to the teen engagement issue in a second. This was the first consecutive quarter of accelerating ebidta. We dont think the teen issue will affect their moderation Going Forward. There will be from time to time different demographics will that slow down on the platform but i think looking at it wholistically, the user growth and engagement growth and monetization has been secure. Theyve been beating numbers every quarter sin going public on mobile. They are trying to be conservative, trying to manage expectations Going Forward. Kim, youre bearish on the stock but surely the fiduciary responsibility is to the shareholders to accurately represent what is going on. If this is not statistically significant, kim, should he mention it on the call . Well, you know, i think the s. E. C. Highlights that risks do need to be called out and highlighted to investors. The statistical significance is interesting but probably irrelevant here. To looking at this stock in a more holistic view, it depends on people coming to the site. The reason its had such meteoric growth in its revenue is because it did not build its revenue base before it went public. So were not looking at a very Mature Company here. Of course we dont see gains like facebook has soon in the last year in established companies, but to be perfectly honest, they need people like you and me and 10yearolds to get on this thing and stayin gaejed and thats the real problem here. Its not necessarily revenues because revenues will come after people are spending tons of time, right . Thats the theory here. Kim, you have to admit the story for facebook works it seems a lot easier than it might have a year ago. You can point to their revenues just go back to basics. Theyve turned a profit now and it appears theyll continue to do so. Fundamentally does this business look healthy for the longer term . Or are there reasons why this quarter we should be careful to describe as a more specific conditions are more specific to this quarter . I would say we should not even look at this company and this stock on a quartertoquarter basis. Theyre not reasoning this for the short tem. The mean reason theyre trying to limit frequency of ads and news feed is because they want to make sure the use are experience is solid. Number one, people are going to spend more time on Digital Services this year than on television, unfortunately. I think that trend is in favor of these guys. Mobile advertising is growing at 50 a year and these guys are right there to capture that momentum. So in my mind quarter to quarter is not the right way to look at it. Over the long term these guys will double their market share in a market that itself is going to double. Kim, final word to you. What would change your mind . Me . Im sorry, kim, go ahead. What would change your mind and make you want to own these shares . To see that they have a plan forward to make sure that their product is engaging for the long haul. Normal people are pretty lousy storytellers. Im a Facebook User myself. My friends arent that engaging. I have to see some more kind of story arc or something to keep me coming back rather than what they have to offer. I think thats really what needs to be done. And then, hes right, the money will follow. All right. Thank you both this morning. Kim forrest and arvind bhatia. Expedia is surging on posted better than expected Third Quarter earnings. Those results were boosted by hotel books. The companys ceo will be on live in the next half hour. Thats an interview i wont want to miss and you wont want to miss. Youre not attempting a pronunciation on that name then . I could try. Well all be trying later. Coming up on the program, well hear from the who made Retail Investing what it is and what shes telling people about playing the market on main street. Well be right back. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. A Research Tool on thinkorswim. Ido more with less with buless energy. Hp is helping ups do just that. Soon, the worlds most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. Multiply that across over a thousand locations, and theyll provide the same benefit to the environment as over 60,000 trees. Thats a trend we can all get behind. This is halloween, this is halloween this is halloween, this is halloween welcome back and happy halloween. Wells fargo advisers is getting a new president. Kayla tausche joins us with that special guest. Marry mark will take the helm of wells fargo advisers. Thanks for being with us. Thank you. Wells has flown under the radar. Im curious about how you plan to grow the business, assets, advisers, et cetera. We are focused on client and client experience. Our clients need us to make it simpler, getting your financial house in order can feel complex and scary. And so our focus in growing the business is a focus on clients up. Need people to do that. Theres been a land grab for talent between well fargo, Morgan Stanley and merrill lynch. How do you make sure you have the right group of people to recruit your clients . Were really pleased the advisers who think about coming to wells fargo are focused exactly where were focused, which is does the platform, does the experience create a great environment for their clients . Clients have comfort levels and certain confidence levels. You talk to them every day. What is the state of the Retail Investor and where are they putting their money . Retail investors are looking for guidance, looking for a plan and looking for help in terms of navigating a complex environment. Our Financial Advisers sit down with you and help you have a difficult conversation when thats what you need to wrestle with. Ive done the exact same thing myself. But when you think about where theyre putting their money, there was a story earlier that said customers would rather pay down their debt than save for retirement. Is there in input in people getting prepared . It starts with a conversation. We see a lot of clients focusing on debt. So while we believe a traditional there a number of clients who are seeking more advice and advisory. Thats probably one of our biggest growth areas. A lot of people have had trouble getting investors back in the market after the financial crisis. Who do you see as the most underrepresented class in the Investor Base right now. We cover the spectrum of clients because wells fargo is help each one to investing and the young are investor as it moves through your life cycle. Each one of those has work to do but we probably have a lot of work to do with our younger investors. You have to start somewhere. Mary mack, well keep in touch with you as you start the new job. Thank you. Expedia surging after reporting better than expected onli online. Also, Jeff Gundlach and Robert Shiller are launching a new fund today. Theyll be here in the next hour to talk about that. [ male announcer ] eenie. Meenie. Miney. Go. More adventures await in the lexus lx. Dare to be spontaneous. With fidelitys options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Copenhagen khosrowshahi welcome back to squawk on the street. Im Sharon Epperson. We have breaking news from the Energy Department about Natural Gas Storage levels. Were looking at Natural Gas Prices down about 5 cents. And 3. 50 will be a key psychological level. The department of Energy Reports supplies rose by 38 billion cubic feet. That was a little bit greater than the range that analysts were expecting. They were looking for an increase in storage between 33 and 37 billion cubic feet. Its still a lower storage injection than we normally see for this time of year or last year or the fiveyear average so that was expected, but were also waiting to see what happens with the Weather Forecast over the next several days into the sext several weeks. Were expecting above average temperatures this week. Its supposed to be 72 degrees in new york city tomorrow. That could also continue to pressure Natural Gas Prices until we see the seasonal heating demand really start to kick in. Back to you. Cnbcs Million Dollar home franchise, all these towns have a haunted past or ties to a famous horror movie. We sent seven reporters out to give you a tour of some Million Dollar homes. These homes will fight to the death to advance in our tournament. Only one will survive. Weve asked our ghouls and goblins not to say where their homes are located. You may be able to guess using our clever clues or you may be able to guess. In round one, the spooky flendor goes up against monstrous marvel of maine and in spooky splendor two, they go up the eerie estate. Built in 2001, this familyfriendly home is on an quarter of an acre, an oversized mud room with locker and laundry, outside gorgeous gardens and complete oaks complete the land scope. This is perfect for lovers of open air and space. Theres an inground pool, a Fresh Water Pond and more than half its 14plus acres are pure green pastures. This 3,800 square foot home boast as wide open floor plan. The kitchen features custom cherry cabinets and floortoceiling windows in the breakfast nook let in a ton of light. There are three fireplaces, including one just off the kitchen for cozy family dinners. This house has five bedroom, three and a half bathrooms, a spacious master suite with a sitting room. Theres also a huge walkin closet with a builtin ironing station. Gorgeous sues from any of the four bed roorjs not just master sweet. Work from home in this Custom Office featuring a builtin wrap around desk. The asking price, 998,900. Originally built to raise horses, all down the street of friday the 13th, 985,000. So we know the spooky splendors on elm street in chicago or near chicago. To help us figure out the location of the eerie estate, we have this clue. Joining us this morning, Real Estate Broker to the super rich, dolly lenz. Dolly will tell us if were right about, this which house is the better bang for your buck . You got a guess, kel . I like the eerie estate. Where is it . I thought eerie was the clue. Hannibal, friday the 13th. Where did that take place . Eerie, pennsylvania . Close. Really close. It was blairstown, new jersey. Is a really spooky and eerie place. How many people died in that movie . That was really something. Which houses do you think win . As i said, i do like the eerie estate. I think you could camp out in the back yard, simon, dont you think . How many acres that was . 14 plus acres. Amazing. Theres no question that eerie estate is a fabulous house, 14 acres, low taxes. In new jersey . In new jersey. Tristate area, everything going for it. The chicago house is nice. Theres high unemployment in chicago glen ellyn is a nice suburb, though. It is. How do you beat 14 acres . Its really tough. Does it come with a senatoho . It comes with two horses. Which is why the taxes are low. Its under 20,000 a year for everything. So you get a tax break for horses . Theres a farm story there. So eerie estate. Thats right. You tend to like the house thats not in urban areas. Yes. Why is that . Its not what im used to. More possibilities for remodelling . And more room to roam. Does history affect Property Value . Many houses where famous murders took place have been torn down or burnt down because nobody wanted to live there afterwards. Will they keep shooting crime scene csi, i keep saying it will bring down the value. Movies are good. What if you have wanted to sell a house in amityville . Sleepy hollow. Fascinate persian gulf. Dolly, its great stuff. Let us know if you agree. Tweet using Million Dollar home. Later shell crown the top house during closing bell. Lets send it over to dominic chu for a quick marketplace. Ariad pharmaceutical is down, saying it will stop sales of its blood cancer drug iclusig. Its down about 86 , the stock, for the month. Back to you. Now to shares of expedia, which are significantly stronger today after its Third Quarter results Beat Estimates on the top and bottom line on higher bookings. Here for a cnbc exclusive is dara khosrowshahi. Youre back in more senses than one. Bookings up on the year and tra vargo is making money in the United States. Travargo, weve been focused on expanding it globally. Were pretty happy so far and hoping to get it going. Boa has you as a buy and 75 price target. Dara, a quarter ago it was very, very different. Your stock lost one quarter of its market capitalization on your Earnings Results and you had a problem with trip adviser, which used to be a subsidiary, but you spun is out. Can you explain to us in laymans terms what went on there. Trip adviser changed its technology to show all the prices of all of you providers on one single page. What were you failing to do then that you may be doing better now . We had been working with trip adviser very closer over a number of years, it was part of the family. It changed the way it showed its offers on the site. It required us to adjust how we bid on trip adviser, how much. We paid for advertisements and et cetera. Initially we lost volume as a result. As weve been working with the trip adviser team, weve been regaining a fair amount of that volume and trip adviser right now is on a positive trend. We hope to keep it going that way. Dara, a question about share price, which simon just referenced, you see huge swings. I wonder if there isnt an element of it that frustrates you. Weve heard from other ceos, whether its elon musk at tesla, does it frustrate you at all that there are such large swings in the share price . Were a company that isnt really paying attention to we try not to Pay Attention to shortterm swings. We dont guide by the quarter, we guide annually. And if youre a company like ours that throws off a ton of free cash flow, you can allocate capital and take advantage of shortterm price swings which you think arent warranted. We bought back 6 million shares and took advantage of we think a mispricing of the market and think long term it can add value to the stock. But theres a bigger point than that. You announced youre going to do the back end stuff for travelocity now and earn 65 million potentially profits each year for doing the work for them. Youve got this mesh, it will seem to many people, within your industry of compete being brands, cooperating brands. I mean, investors surely have the possibility of huge instability here and customers actually, if truth be told, are totally unaware of who owns what brand and whether theyre getting competing quotes or not. Fair comment . I think that there is going to be a fair amount of consolidation in the industry. This is a trillion dollar industry. Youre going to see larger players consolidate smaller players. I think as long as we give our customers the Great Customer experience, we have over 200,000 Bookable Properties weeks joining with home away to offer their properties on our site as well, all of this is resulting in more choice for the customers, more properties offer better technology. We think the longterm trend is good for the customers. Dara, good to see you again. Dara khosrowshahi, ceo of expedia. Coming up, the head of health care giant cigna joins us to weigh in on the debate. Plus its reaction to the companys Quarterly Results. Were back after a break. Y talk. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. [ female announcer ] today cisco is connecting the internet of everything. Bny mellon combines Investment Management investment giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. To prove to you that aleve is the better choice for her, shes agreed to give it up. Thats today . [ male announcer ] well be with her all day to see how it goes. [ claira ] after the deliveries, i was okay. Now the ciabatta is done and the pain is starting again. More pills . Seriously . Seriously. [ groans ] all these stops to take more pills can be a pain. Can i get my aleve back . For my pain, i want my aleve. [ male announcer ] look for the easyopen red arthritis cap. We think the longterm trend is theres a new report out that the white house has pressured insurance executives to keep quiet about the obama ca care rollout. There are a number of americans, fewer than 5 of americans who have got cutrate plans that doesnt offer real financial protection in the event of a serious illness or an accident. Remember, before the Affordable Care act, these bad apple insurers had free rein, every single year, to limit the care that you received or use minor preexisting conditions to add to your premiums or bankrupt you. David, its good to have you back, good morning. Thanks, carl, good to be with you. I want to talk about the quarter and Conference Call. The stock getting a lot of activity today. Have you been asked to keep quiet about obama care in. We have not. Weve been actively iengaged wih multiple years with the administration on both sides the aisle. We believe the make system needs to evolve, you need to improve affordability for all and improve Health Care Quality for all. Thats what weve been working toward. When he refers to bad apple insurers, i wonder if you think hes lumping you into that group . Id like to think not. If you look at cigna, we have a large record we been an employer provider for decades. How do you convert those to an individual market to have the same level of engagement and incentives for individuals and partner with physicians and have them engage more on partner health. Its been a crazy month for the sector at large. You, yourself, had a nice beat and a nice raise. Probably in the this good. What did you say during the call today in. We had another Strong Quarter and were pleased. Our Team Continues to execute well. A few points are irrelevant here. One, a strong track record of delivering revenues and Earnings Growth through 2011, 2012 and 2013. Our customer and Client Retention level is outstanding opinion were expanding our relationship with nem and adding new relationships. And very important for us, both in the United States and outside the United States, our Global Business outside the u. S. Will grow in the 25 to 30 range this year and is poised to hhit that and david k, can you make health care sexy . If you talk to people logging on to the obama care exchanges in order to get health care, there may be 70 choices, 72 choices i think one of our staff had the other day. And the power of the brand is perhaps something that you guys have not realized at the individual level before in the way that you might, i imagine, in two or three years time. What can you do to sex up this area of provision . Simon, i very much appreciate the way you framed that. Youre correct. Historically in the u. S. , for example, weve focused on working with employers and clients and then providing solutions to their employees. Increasingly were working to engage both the employer as well as the individual. You mentioned samsung. Were quite excited about that. Outside the u. S. , our business focusses on primarily individuals. Whether you use the word sex see sexy or engaging, thats what were focused on and thats what we believe the future is all about. Just to circle back to the Affordable Care act. Four states i think on the federal, texas. Can you tell us how many people, and speaking of individuals, have signed up in those states . Yeah, kelly, i think thats the framing four states on the federal exchange, one additional state, in five states, colorado, a statesponsored exchange, its quite early, as you know. And for a variety of reasons, the information flow doesnt give us a good handle on the absolute numbers. I would tell you its small, and from a cigna standpoint, in 2014 through the lens of our investors, were not betting on a big land grab for 2014. Rather, we focus on five states. We focus on specific products and were focusing on products that could be sustainable in those states as we establish relationships with individuals Going Forward. Specifically, its a small number thus far and the numbers are starting to trickle in. Its an interesting quarter, and we didnt even get to talk about disability and life as opposed to health. We look forward to having you back sometime soon, david. Thanks again. Carl, thanks for your time today. David from cigna. And still ahead on the program, former health and Human Services secretary Tommy Thompson will weigh in on Kathleen Sebelius and the issue of the health care act. And coming up, jeff and robert are joining forces, launching the doubleline Schiller Fund and well be speaking to both of them exclusively. Squawk on the street will be right back. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Because what you dont know can hurt you. Urance, what if you didnt know that its smart to replace washingmachine hoses every five years . What if you didnt know that you might need extra coverage for more expensive items . And what if you didnt know that teen drivers are four times more likely to get into an accident . sup the more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum [man]ask me. [announcer]. Every wish for a bed that could feel perfect under every part of your body. [man]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two remotes. [announcer] firmness settings for the head,legs,and back. These real owners get that famous tempurpedic comfort how they like it. [woman]ask me about the lumbar button. [man]lumbar button [woman]lumbar [announcer] tempurpedic. The most highly recommended bed in america. Now the fun begins welcome back to squawk on the street sand happy halloween. Listen, its a happy halloween for some in the marketplace. We had a blowout a blowout chicago pmi this morning, right around 9 45 eastern. And when i was on the air, i put an asterisk on it, thinking maybe some of the numbers were inverted a bit. Youll see what i mean. Heres the number that flashed on the screen, and i was thinking to myself, maybe its 56. 9, because theres a lot of almost every number in this report is a huge outlier. Now, lets go through it very quickly on the wow factor. 65. 9, was up over 10 point, best since march 2011. Order backlogs is something i want you to put off to the side, because its important. It was up 14. 3, same time period. New orders, all up. But new orders in particular was at a nineyear high. Inventories, all of these things were good. But heres the real issue, is this telling us some wonderful things are going to happen to the economy and the stock market . And maybe they are. But heres what i want to show you. Lets put up some charts. Lets put up a 10year chart of the Dow Jones Industrials average, and most notably, i want you to notice the low on that chart. Of course, march of 2009. We all remember that. And then, look at the big rally that ensued late in 10 early in 11. Now look at the chart of the headline number from chicago pmi. Most notably, one was the thirdlowest level since theyve been doing this since 1967. It was in march of 09. And if you look at some of the better numbers going back to march of 2011, they did coordinate with a rally in stocks. So there is this linkage there. But more importantly, and this is the important part, the National Number that comes out, the i. S. M. , wasnt a big driver of this report. I talked to a lady who does field work for this organization and said, this is the one thing that surprised here, and this is the hook, the respondents she talked to minimized any impact of the Government Shutdown, at least based on the chicago activity, and that, in my opinion, may be the most important aspect to this report. Kelly, back to you. Yeah, rick, in other words, the strength, as you see it, was not, you know, when the report when the report, first people were skeptical, what does this mean . Youre saying the area of the region is still doing quite well . Right. And the low inventories and big backlogs backlogs is not something the i. S. M. Looks at, was really a driver in the report. When you look at the polling period, which was about 24 days from early in october to the 24th, and the respondents kind of came in rather evenly, there seemed to be no correlation to any negatives regarding the shutdown. Okay. Rick santelli with the details of this mornings report. Thank you, rick. Still ahead, the wall street journal Walt Mossberg calls the ipad tablet the best tablet hes ever used. Well tell you what it could mean for the bottom line. [ male announcer ] eeny, meeny, miny, go. More adventures await in the lexus lx, rx, and new sevenpassenger gx. Dare to be spontaneous. And new sevenpassenger gx. Ido more with less with buless energy. Hp is helping ups do just that. Soon, the worlds most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. Multiply that across over a thousand locations, and theyll provide the same benefit to the environment as over 60,000 trees. Thats a trend we can all get behind. 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We destroyed confidence, we took it down to postwar lows for three years. And initial jobless claims for the week dropping a nice even 10,000 from 350 to 3 who. 340. You know what . People arent using it anymore, when theyre younger, why, they dont like the interest of ads. You know its a fiasco. It is not a fiasco we sold some of the stock going in, because we feared it had to be perfect, and not everything was perfect. Were trying to find ways to have lower prices for our customers, sort of counterintuitive. Most retailers are trying to find ways to have higher prices. We want to find ways to have lower prices. Theres the opening bell. The spirit model is taking a low fare and adding a lot of choices so you can customize the total price has been working really well. We think this can continue for a while. Ive been getting numbers every quarter, you know, since going public on mobile. So i think theyre trying to be conservative, theyre trying to manage expectations Going Forward, just so the numbers dont get too far ahead. As weve been working with the tripadvisor team, weve been regaining a fair amount of ad volume and tripadvisor right now is on a positive trend, and we hope we we hope to keep it going that way. Good thursday morning. Were live at post 9 at the New York Stock Exchange with a check on the markets. Some have said that people are looking for reasons to take profits. That was cramers line in the 9 00 a. M. Hour. And for the time being, it looks like theyre doing some of that, being dragged down by visa, s p down 1,760, by 3. 25. And its on a strong day that the chicago pmi, a roadmap, though, facebook did a complete 180 after comments from the companys cfo. Well tell you exactly what he said and if you should be buying facebook today. Plus, two of the biggest names in business are coming together. Nobel prize winner Jeff Schiller and john gundlach, and they will join us live in a little bit. And walt says the ipad era is the best hes ever viewed. Hell tell us why hes so impressed. Watching shares of facebook following the Quarterly Results that did beat expectations. The shares at this hour, at least, up just a touch to 49. 29. The shares had initially jumped on the report until the cfo, David Ebersman, made these comments on the Conference Call last night. Our best analysis on Youth Engagement in the u. S. Reveals Youth Engagement among u. S. Teens was stable q2 to q3, but we did see a decrease in daily users, specifically among younger teens. Channing smith, cofort portfolio, and jordan row hand is a Senior Analyst at stifle. Good morning, guys. Good morning. The teen thing is making the headlines. Is that really the problem . Not in my opinion. I think anybody whos surprised by the comment that young teens are going to instagram and other alternatives, besides facebook, just doesnt speak or interact with a lot of young teens today. So you do not believe they are even if theyre migrating to instagram, you dont believe theres a problem in maintaining the metric on these young teens . Facebooks in the transitional period of several years, going from being cool, where it was a few years ago, to be a utility. Theres nothing wrong with being a utility. Its just going to appeal to a different audience. And as those people as the facebook audience gets a little bit older and gets more buying power, advertisers like them more. It didnt stop the ceo from using that as a way to lower expectations just a little bit. Channing, you know, it does feed the sort of overall worries of slowing user growth, up only 6. 7 in this quarter, even though the revenue per user is accelerating. How much are you worried, how much were you worried by the call last night . Somewhat. Look, it was a great quarter overall. They beat on earnings, revenue. Every user metric they beat on. I think the big concern we have at Capital Advisors is the ad inventory for the news feed. There seems to be a limit on that. There will be a ceiling. And news feed and the advertisements, a big driver for Revenue Growth for facebook. And i guess our question, you know, what we have to ask ourselves Going Forward is to justify this enormous valuation, you have to you have to think about what is the Earnings Growth, what is the Revenue Growth going to be . And if news feed going to be limited, youll have to go other places to find Revenue Growth, which might be, you know, pricing, which might be more users, one site. But its a problem. And its something that has to be looked at. It puts more dependency on video advertising that well see, and if they can monetize instagram. But the news feed and the ceiling on that advertising was somewhat concerning to us. And, jordan, to channings point, its what facebook can do with instagram and ads, because it might be a bellwether in general. Whats your read on how much more pathway they have to expand advertising in that way . Well, first of all, instagram is running somewhat independently and is being very, very selective and careful about which ads they experiment with at this point. I wouldnt expect any material results out of instagram from a revenue or margin perspective anytime soon. Secondly, on facebook, i do think that some of the talk about equilibrium ad load, if you will, that theyve reached in the u. S. , it probably ignores the fact that most of the growth is coming outside the u. S. Where they still have some room to increase the ad load. They just need to get the right people calling on the right agencies and clients there, and increase the number the number of people who really want to advertise, the number of marketers who want to advertise in their international markets. Yeah. Unfortunately, the monetization overseas is nowhere near what it is in the United States. Channing, the price targets over the course of the year have gone into the 40s, into the 50s, and now some in the 60s. Where do you like the stock . Oh, we think, you know, our approach to facebook is to take a small position. We did this back in april. We put this in emergingfranchise category, which basically means its very hard to figure out what the value of facebook and these type of stocks is, because theres so much uncertainty around the business model. We think that investors need to have a small position in the stock. Theres a number of scenarios to where this you know, the stock price could go. We would suggest having a small toe in it. However, at these levels, you know, when youre thinking about 50, 60 times, 2015, you know, p e, you know, its just too hard to mike a big bet. We suggest having a small bet. Its an important piece of the mobile, you know, internet world. We think 55, 60 is achievable, but dont make a big bet. Theres too much uncertainty. We need to find new Revenue Growth drivers if news feed has a ceiling. Thats unproven. Can they monetize video . Can they monetize instagram . Yeah, the history on this one is short, at least as a public company. Thank you for that. Channing, jordan, well see you next time. And david joins us, with an update on Time Warner Cable. Yeah, Time Warner Cable this morning reporting earnings, not particularly good. Of course, remember this is a quarter that included the dispute with cbs. There was a larger, perhaps an expected loss of video subscribers and unexpected loss of broadband subscribers to the company. Its operating income before depreciation and amortization, however, was more or less in line. Margins, also, in line. The stock is up largely because of the continued questions about whether it will be part of the consolidation in the cable industry. Interesting to note that at the very beginning of the Conference Call this morning on the earnings, ceo glenn brit addressed just that, saying, i read in the press, and im not interested in consolidation, and that after i retire, Time Warner Cable might have a more enlightened attitude, the implication ive been interested in entrerchli ientrenching myse colleagues. If you think about it, that is absurd. In m a, were open to deals that do exactly that. I care a whole lot about maximizing value. Britt went on to cite, hey, i was a part of the aol time warner deal, i can see where you can destroy value. And he did come back to address charter communications, of course, a company thats already made a proposal sometime back that we told you about to try to merge with Time Warner Cable. He said, we certainly believe there are benefits to consolidati consolidation. However, we believe the benefits are finite and easily knowable. Among the companies that youre aware of, you follow the managements and boards, theyre aware of the finite benefits, and the reality is, if they only wanted to do deals in which they receive all of the benefits, but those win lose deals wouldnt be good ones. Whats he talking about there . As i reported earlier on squawk on the street, it is my expectation based on reporting that liberty and charter will likely make another make another foray to get time warner to the negotiating table. Perhaps they would want 150, 160 bucks a share, 8 1 2 times ebitda. The question, of course, and one that britt seems to be raising in the comments, at five times leverage already at charter with the stock price that you see has run up enormously, and some would say an inflated currency, is that in the best interest of Time Warner Cable shareholders . That remains an open question, as do whether or not our parent company, comcast yes, there would be some issues perhaps at the doj, but nonetheless, no caps on cable subs, would comcast be interested in getting involved, given it could be a more accretive deal and its been delevering. Ill leave that with you. Oh, sure, let us take the ball. Thank you, david. Jetblue getting the jump on competitors. The faa, if you havent heard by now, announced it would allow the expanded use of the personal Electronic Devices on flights. Only minutes later, jetblue did file to begin the process of getting approval for the expanded use. If all goes as planned, it would be the first carrier to be approved. All right. Now, health and Human Services secretary Kathleen Sebelius facing hours of questioning during yesterdays hearing on obama care, and things got a little heated. Heres just one of the highlights. So youre saying that the president is not responsible for hhs . Sir, i didnt say that. Okay. So the president ultimately is responsible while i think its great that youre a team player and youre taking responsibility, it is the president s ultimate responsibility, correct . Uh you clearly uh whatever, yes, he is the president. He is responsible for government program. [ laughter ] well, that hearing, of course, is over, but she may be back, and what is the future for the Affordable Care act itself, is the law in real trouble . Well ask former hhs secretary Tommy Thompson in just a moment when squawk on the street returns. In todays markets, a lot can happen in a second. 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[woman]dont touch my side welcome back. Im Sharon Epperson. Keep your eye on gold. Gold continues to fall here after the fed statement, and were looking at gold prices that are at a key technical level, right around 1,325 an ounce, having dipped to the 1,320 mark earlier today. Traders say today is an important trading day technically as it is the last trading day of the month, and where gold closes is going to be very key. Back to you. All right, Sharon Epperson with an eye on gold. Amazingly, no one is talking about the federal reserve. What they are talking about is obama care. Secretary of health and Human Services taking responsibility yesterday when she was testifying on capitol hill. Take a listen. Who is in charge, madam secretary . The person now in charge, as an integrator, is qssi, one of our who was in charge as it was cms was in charge up until at that team, who is the individual Michelle Snyder is the Michelle Snyder is the one responsible for this debacle . Well, excuse me, congresswoman, Michelle Snyder is not responsible for the debacle. Hold me accountable for the debacle. Im responsible. Okay. Our next guest is a former secretary of health and Human Services himself. Joining us is Tommy Thompson, also a former governor of wisconsin, in madison, as i understand this morning. Governor, good morning. Good morning, kelly, and how are you . I am very good, sir, thank you for joining us. We know youre no fan of obama care, but certainly you can empathize with the position that sebelius finds herself in. What do you think she should do now . What she needs to do is she needs to go back and get all of the technical people together, and shes got to Start Testing and retesting the whole system. When i was secretary, i was tasked with setting up part d of medicare. And then, it was implemented by mark mckellan and secretary lubbock, and we did the same thing as setting up a whole new system. But we tested every week. Every week i had the technical people in, and finding out what was working, what was not working, and how you could improve it. Secretary sebelius has got to do the same thing. Shes got to sit down with all of the technical people and say, what are the problems . Whos fixing it . Whos responsible . How soon . When is it going to be done . That should have been done before it was rolled out, but now shes got to go back and start all over and do the same thing again, so that it really gets set up and runs correctly. It sounds like the administration has now set itself a deadline, perhaps the end of next month, which is a short period of time for a system this complex. Thats right. The question now, just becomes, on the one hand, you know, a lot of inquiry into what went wrong, but on the other hand, are we actually capable of successfully launching a system of this complexity . And from your experience, as you said, with part d, et cetera, whats it going to take to get it right . You gotta you gotta start over and find out wherever the problems are, test them, retest them, fond out what the problems are, check them, and make sure somebody is responsible for fixing them and hold that person responsible. Secretary sebelius, of course, is the overall person thats responsible, but all of the individual people have to be tasked for their own particular programs and theyve got to be held responsible. This is america. We can fix anything. This has got to be fixed, and it can be fixed. But they should have tested it and retested it before they rolled it out. Governor, do you think she should stay and have to take responsibility for getting it right, or should she resign given the errors that have led up to this point . That is thats not for me or anybody else to say. Thats for the president. But the truth of the matter is, what are you going to gain by changing right now . You have all of the problems that are there. She knows what they are. Hopefully. And she is the one thats probably tasked to fix them. I think you would be just holding them back even further if you changed secretaries at this point in time. Sounds like, governor, you think the website, notwithstanding, that the longerterm issues of young people enrolling, of states oh, sure. States getting enough players on board, you dont seem as concerned about those . Oh, i am. I think i think the technical glitches will be fixed. But the people that are losing their insurance, the hundreds of thousands that are losing their insurance, the hundreds of thousands of people that dont know how to get on and be able to take care of getting covered. The kind of coverage that theyre going to be demanded to take will not have the choices that we as americans have always had, and its going to be very problematic. Young people themselves are going to be very concerned about trying this and are going to be, i think, reluctant to do so. Thats going to help to sink the whole system, because financially, its the young people that will support it, but the most important one, and the one that im the biggest got the biggest concern about is the one on privacy. The information going in there, i dont know if its going to be protected enough and secure enough to satisfy americans. Yeah, we can only hope thats part of the equation as they get this thing up and running. Governor thompson, appreciate your views and insight this morning. Have a great one. Tommy thompson from wisconsin. Thank you very much. Today is halloween, of course. That means a lot of people all over the country are already dressed up. But for shutterfly, the day after halloween, is the busiest day of the year, obviously. Well talk about that with the ceo of shutterfly when squawk on the street comes right back. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. 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Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back. Crazy Halloween Costumes and decorations translate into millions of photos taken and uploaded to the internet the day after halloween, which is the busiest day of the year for photo uploads according to shutterfly. They expect more than 40 million picture uploads in the next couple of days, and joining us now is the ceo of shutterfly, jeffrey housenbold. Jeff, welcome. Thanks, kelly. Its interesting that in this day and age, the day of halloween isnt your busiest, the way people on their mobile device can turn photos around. It is still the day after . It is. Though many pictures are taken with smartphones, and with the shutterfly apps, they go up automatically. A lot of moms and dads are taking pictures with digital slrs, loading them on their computer and sharing them with grandparents and friends. How much of your website, of your business, is photo sharing, something that obviously a lot of people associate with instagram, versus photo printing and using the products to turn them around for gifts and that kind of thing . We pioneered online photo sharing in 1999, and its still a main part of our business. We send out hundreds and hundreds of millions of photos every year. We monetize fophotos through physical products, photobooks, 10,000 different card design, iphone cases. So we really make our money by turning your memories into precious gifts and everlasting products. Its been said you guide you tend to guide conservatively, but certainly the guidance this week was one reason the stocks now down to june levels or so. What are you seeing in the Current Quarter that gave analysts some pause . We took down our top line of guidance by 3 million. We beat qe on revenues and ebitda by 5 million on the top line, but wed terminated part of our costco relationship, negative 8 million in the quarter. 5 plus negative 8 negative 3 on the top line. We do tend to be, i think, thoughtful about our guidance. The Fourth Quarter is where we make all of our profits. Its about 53 of our revenue. Were more prepared than weve ever been in terms of new products, feature, function, designs, applications, so were excited about the Fourth Quarter. No worries about the macro Holiday Season consumer in the Fourth Quarter . Theres always uncertainty, and with the furlough in the government, that created more drag on gdp. Theres six less shopping day this is year than there was last year. And Consumer Sentiment continues to go down. So we always have concerns. But as the Market Leader and what we execute upon, were very confident about our ability. Whats the most popular product right now . For the Holiday Season, its by far and away our personalized greeting cards. So we will see old school. Hundreds and hundreds of millions of holiday cards this year. Thats reassuring. People still send stuff through snail mail, even as theyre sharing the pictures online the day after halloween. Jeff housenbold, dressed as what as a halloween . Im going to heidi klums part. Oh, enjoy. Cant wait to see that picture. Instagram. As kelly said, today is halloween, and odds are, some of you are already wearing your costumes. Which Major Companies are wearing a disguise all year round . Dominic chu has answers. Carl, if you think about it, costumes are fun this time of year. But investors also want to know what exactly theyre investing in when they go into a company. So heres a company, we found a few of them that are maybe in disguise, like you said. So this particular company, you think about jams and jellies, you may even think about peanut butter. But in reality, this Company Makes more of its money, more of its profits from the coffee side of their business than they do from the jams, jellies, and peanut butter. We talking about smuckers, j. M. Smuckers, yes, not just peanut better and jelly. They get more money from coffee. Another one were looking at is solar winds. This company, overall, gets a lot of its money from things like maybe solar or wind. But in reality, solar winds is not a solar or wind company at all. This company does i. T. Systems and administrationtype solutions. This comes to us courtesy of jim cramer. He looks at solar winds, and we think alternative energy, but theyre not. Its i. T. Management. And the final stock is one stock in disguise that you think about, and you say, hey, its all about mail. Its all about those the postage machines and everything else. Well, this particular company gets about 243 growth from Ecommerce Solutions and digital business. This company is pitneybowes, so, guys, overall, in the halloween spirit, we want to kind of just show you some of the companies that have their stocks in disguise. Back over to you, kelly. Love it, dom, thank you very much, sir. Two of the biggest names in business are now working together. Jeffrey gundlach and Robert Shiller are starting up a brandnew fund. Theyll be here when squawk on the street continues. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call now and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. 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Well, doubleline started an equity business at year end, and we launched three funds in t the in the growth category, the first one smallcap growth, performing superwell, and we wanted to broaden out what were doing with interesting ideas. And dr. Shiller has been working for a long time, won the nobel prize for a lot of his work, as you know, with this thing called cyclically adjusted p es and created this strategy thats valueoriented that matches well with the investment philosophy of doubleline, because we believe in better mousetraps in the investment business. My total return strategy goes back 25 years. We think this is a better mousetrap, the idea we divide the stock market in sectors and invest in 40 of the sectors based upon a valuebased calculation. And were going to do that with a total return swap. And underneath that, doubleline managing fairly lowrisked pools. The cape strategy from dr. Shiller has shown to outperform the s p 500 with lower drawdowns and lower volatility over time, and we can add value through outperforming cash on the underlying investment pool, so theres a doublevalue proposition. This was brought together by barclays bank, that thought there was great synergy between the investment philosophy at doubleline and the investment philosophy for which dr. Shiller has been awarded the nobel prize. Jeffrey, its an interesting move, especially in light of the news that pimco is hiring someone to head out their investment division. Dr. Shiller, whats your read, the bond funds are getting more aggressive on the fund side, whether theyre using your methodology or that of others. Well, investors have to diversify, and i think some people could use a more sophisticated deversedification strategy, and put it in a package that makes it easy. So i think it sounds like a Good Development from my standpoint. Certainly, a lot of people are also talking about valuations here, because if you look at your own, as you mentioned, cyclically adjusted p e ratio, the market looks expensive on an historical basis d that factor in at all, to get more Retail Investors involved in the equity market . Well, absolutely. The cape overall for the market overall, our price earnings radio is around will 25, which is pretty high. That doesnt mean you want to miss opportunities in the equities market. You just want to avoid the sectors that have high tape. Thats what were doing with this product. But what happens if the cape keeps growing . What happens if stock if the stock market starts to exhibit bubblelike characteristics Going Forward . At this point in time, the stock market is somewhat bubbly. It has a high cape. But we can still find lowcape sectors in the market. And even the market overall is not disastrously overpriced. If we ever get back to like we were in 2000, we might have to rethink things. What would be jeffrey, well, what would be rethinking it . My understanding is youre going to try to get a nice yield off the bond holdings, but theyre held as collateral to the swaps, so the key is performance of the cape strategy, isnt it . Well, certainly the dominating driver of the return is going to be the equity beta, and hopefully outperforming that with the cape strategy. The idea here is that investors are always diversified. No matter what you think about valuation of the stock market, i think it would be a little bit extreme to advocate a zero waiting weighting to an Investment Sector as substantial as equities. What were trying to do is build out a better mousetrap so investors have the better tonight to invest in the market, from a value framework, which i think is timely. Maybe the stock market is higher value than average, but even against that backdrop, it seems to be a very good idea, or maybe especially against that back it drop, to think about investing in areas less overvalued. Obviously, we wont be investing in massive momentum names with infinity p es, or no earnings, or not even a 10year history. That kind of becomes excluded from the cape methodology. This is kind of a a basic security analysis, graham and dodd. Its grounded in the work from the book of the security analysis by graham and dodd. This is good oldfashioned tackling and invests, and its timely. For a bond guy, jeffrey, you love talking stocks, dont you . I mean, the last time you were on a couple of weeks ago, actually, you were not particularly positive on google, which i have to point out came out with a great quarter and the stock ran. I dont know, are you going to be giving a lot of advice to professor shiller here . Well, no, this is this is something that is professor shillers strategy, regarding google, im not negative on google. I just said, when i talked, david, the last time, we talked about harvesting google. I dont like things up massively in general. I guess its sort of in my dna. And we talked about avoiding tesla, which clearly has kind of given up the ghost as one of the signals that the momentum names arent really as strong as they used to be. Youre right, i do like talking about stocks from time to time. And, you know, i spoke at a thing here in chicago called invest for kids, and sam zell spoke before me. He put up something very interesting, and it was a cartoon that said, if youre trying to be perfect in the world of investing, youll end up being paralyzed and doing nothing. Its like baseball where youre trying to have a high batting average. Fortunately, weve been able to do that, even the equity market at doubleline. Professor shiller, if you dont mind, id like to quickly come back to comments you made this week on google versus goldman. Oh, thats right. You know, you said when you studied finance, youre studying how to make things happen on a big scale and a lasting scale. It has to matter more than getting into google and programming some little gimmick. [ laughter ] what are you talking about . I was set up in a debate with wawwa, who is very progoogle, and i was being a little bit flippant there. There was a solid point, though, that i think finance is a good field for people with integrity, social purpose, want to make a market on the world, want to do something thats personally ethical and moral. People dont realize that about finance. That we need that finance is about financing activities. Here i go, im a finance professor. I talk about these things. And it creates activities that last and endure and help the world. Sure. So thats what i was trying to and google, im not antigoogle. I was debating i was joking at that point. All right. Well, jeffrey, let me just end with you on the bond market itself. Those fed minutes yesterday, some people thinking maybe there is going to be an earlier taper. Whats your take . I totally disagree. I think there was a little bit more hawkish thing in the statement, a little tiny bit. But really, im pretty confident that were looking at several months here where its steady as she drifts with fed policy. So, you know, the bond market rally down exactly to 2. 47 on the 10year, a pictureperfect kind of resistance point that a lot of people have been looking at, and it reversed on the fed minutes at exactly that yield level. So i think we have a little bit of a yield rise coming in the 10year treasury. But the backdrop with fed policys on hold until march at least. Gentlemen, always great to have you. Jeffrey, nice to have you back so soon. Jeffrey gundlach, professor shiller joining us. Thank you. The new ipad air hits stores tomorrow. The good reviews keep piling up. Walt mossberg said, quote, this ipad isnt a radical rethinking of what a tablet can be, but its a major improvement on a successful product. Its the best tablet i have ever reviewed. Walter mossberg is here to explain in a moment. Abracadabra its a growing trend in business do more with less with less energy. Hp is helping ups do just that. Soon, the worlds most intelligent servers, designed by hp, will give ups over twice the performance, using forty percent less energy. Multiply that across over a thousand locations, and theyll provide the same benefit to the environment as over 60,000 trees. Thats a trend we can all get behind. In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. We are the thinkers. The job jugglers. The up allnighters. And the ones who turn ideas into action. Weve made our passions our lifes work. We strive for the moments where we can say, i did it we are entrepreneurs who started it all. With a signature. Legalzoom has helped start over 1 million businesses, turning dreamers into business owners. And were here to help start yours. Coming up on a special edition of the halftime report, is this monster market starting to spook investors . Some big investors are talking bubbles, and our trader also weigh in. Then, midcaps having a huge year so far, but are we starting to see cracks in that space . Well get a fourstar Fund Managers playbook. And facebook losing teen users, and now the only guy who runs the social media etf breaks down where it goes from here. Carl, ill send it back to you with this advice. Dont take a sip of water as youre about to do a tease. Not good. [ laughter ] not good. Cheers. Well see you well see you at the top of the hour. Thanks a lot. Well see you at the top of the hour. All right. Apples new ipad air hits stores tomorrow. The next guest gives it high praise in the wall street journal review. Walt mossberg said, quote, this new ipad isnt a radical rethinking but a major improvement on a successful product. Its the best tablet ive ever reviewed. Walt mossberg joins us from washington, where hes celebrating the red sox victory last night. [ laughter ] walt, its good to see you. Is that an air in your hand . This is the air, and this is a good way this is the best way i found to show the screen, i think. It is beautiful. And im just going through the review again, which we all red earlier in the week. Battery life, display, speed, the only downside, i guess, is price, right . Thats right. I mean, heres the thing. Theyve sold 170 million of these in 3 1 2 years because what they did was to make something that was thinner and lighter and had much better battery life than a laptop, and the gamble they took at the beginning was, could it do enough of the stuff laptops do that people would use it for a significant amount of replacement of laptop use . And i think the answer to that is clearly in. It doesnt totally replace a laptop, but, you know, people are i know i use my laptop significantly less, because of the ipad. This ipad air is probably what they what steve jobs would have wished he could have introduced in 2010 in terms of it weighs one pound, its really thin, and it has sensational battery life, even though they cut the size of the battery in my tests, which are much tougher than the industrys tests, this thing lasted 12 hours and 13 minutes, playing highdefinition videos backtoback. Wow. With email pouring in in the background. So its really a beautiful job of engineering and design. But on price, its apple. Apple is premium. Thats what they want to do. So they didnt raise the price, but its still 499. Walt, thats exactly what i was going to ask, because to some extent, the success of the tablet that youre talking about is more categorical than applespecific, and, in fact, their share of the tablet market has fallen to a new low. I think its under 30 worldwide. Right. So if their strategy is to be the premium highend game in town, fine. But theres not for most users, the differentiation between what theyre offering and what most of the other tablets can do these days isnt great. No, the differentiation is great. I disagree with that. The android guys have done a nice job, and they certainly charge less. But apple has done one thing that none of these other guys have done they have specifically gone out and encouraged developers to write apps that are optimized for a tablet. And they now have, like, a million apps in their overall app store. Google has something similar. But apple has almost 500,000 specific ipad optimized apps, things that have more features on the screen, theyre not just stretched out phone apps. On android tablets, you primarily get stretchedout phone apps. So thats a big differentiation, particularly when it comes to things like creativity apps, productivity apps. Theres lots of on price, i would say in apple world, they believe theyve actually made it more more accessible financially to get an ipad, because while this is 499, theyre now selling the ipad mini at a price cut of 299, still a lot more than you pay for a smaller android tablet, but it certainly is the cheapest entry point for an ipad that there ever has been, and theres another fullsized ipad, older model, that theyre selling for 399. So they have a number of price points covered now. Finally, walt, last week, you said the mini really is the sweet spot for a lot of people. Right. Wheres the line as to whether or not i should upgrade to an air or not . Well, its really interest g interesting. I would i would if you dont have a tablet or if you have a really older ipad, i think upgrading to the air and you want a fullsized tablet, i think upgrading to the air is a good decision. What they really are setting up here, though, with the new mini that will be out later this month is a is a thing where youre just going to decide on price and screen size. Thats it. The new mini will have the same processor, so the same speed, the same increased wifi capability, and the same Screen Resolution as this air, and it will sell for 399. So its 100 less. You have a somewhat smaller screen. And, you know, more portability, so thats your decision basically. Yeah. And apple i understand, although apple doesnt make this public that there have been quarters and months where the mini has outsold the big one, and then it flips, and the big one outsells the mini. Huh. So its consumer choice. Yeah. Congratulations on the sox, walt. Thank you. I had nothing to do with it, but thanks. Well see you next time, Walt Mossberg talking about tablets. Oshkosh and avon are making major moves to the downside after reporting Third Quarter results. What exactly went wrong for the companies today . Earnings squad has the answer when we come back. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Welcome to the earnings squad where we dissect the earning stories everyone is talking about. Im melissa lee. Joining me is dominic chu and stephanie link. Lets start off here with avon, the Company Trading sharply lower after reporting weakerthanexpected, and talk about sinking in on the Conference Call. Unbelievable. This was a darling. 56 headed into the quarter. Across the board, earnings miss. Organic growth negative 1 . And all of the regions were disappointing, and also sg a up a lot more than expected. This is in the face of estee lauder beating and raising. Right . And having 6 organic growth. So theres really a contrast here. I think it will take a while for the dust to settle. I wont be buying it. Is it just they appeal to a different sort of consumer . We heard, we heard from visa, that spending slowed down towards the end. I think its that, and the transition is taking longer than expected. Theyve gone from being more of a Paper Company and boring products, and really trying to upgrade. And its taking a lot longer. By the way, a lot of competition in this arena. That is true. Shares of oshkosh, as well. They are also sharply lower, and this after than weakerthanexpected, and whats the problem, dom . The problem is the outlook. Theres no surprise when a company that gets 45 of its revenues from the u. S. Government, that when budget sequestration and those issues come into play, their forecast is not going to be great. This is a stock thats done very well, but down maybe 11 , 12 over the past week. With this stock, it really is about these trucks, armored vehicles, fire trucks, construction equipment, jlg lifts, they make all of the stuff. When the spending picture goes down, their forecast goes down with it. You said 45 from the from the government. U. S. Government. This is the kind of stock, stephanie, people should be careful of, pull back the curtain and see where theyre getting their dollars from. Certainly. I was surprised on the commercial business, the margins were disappointing. Thats the area where i think they would have been able to outperform. Fire trucks and dump trucks, yeah. Exactly. We mentioned visa. Reporting lowerthanexpected, and it wasnt the quarter, a beat on the eps, the revenue a little light. Its what visa said about october spending. So this is a period after the quarter was closed, but they say that spending in october really slowed down and they said it was across the board. Its not high end or low end, they saw it in travel, in supermarkets. So this really throws into question whether or not the consumer is going to be poised to spend going into the Holiday Season, and, by the way, mastercard also reported, but they didnt mention october in terms of describing what the spending environment was like. So we have this data from visa and stuff, do you think its a visaspecific issue. No. It cant be. I dont. If you listen to paypal, ebay, what they had to say, and mafltmaflt mastercard was saying things are not great. Consumer is remaining selective, wage growth is not on the rise. Its been pretty flat. Exactly. Yes. That does it for earnings squad. If you want to join the conversation, earningssquad. Up next, what do you get when you mix toothpaste, healthy candy, and a girl getting sick to her stomach . Over 3 million hits on youtube, of course. Well explain when squawk on the street comes right back. Stick with innovation. Stick with power. Stick with technology. Get the flexcare platinum. New from philips sonicare. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18883303136 now. Optionsxpress by charles schwab. Call 18883303136 now. So ally bank has a that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Devil with the blue dress on devil toothpaste company crest loves halloween, and this year, its touting a mega successful ad featuring healthy candy and a girl getting sick. Our jane wells explains live in los angeles. Good morning, jane. Reporter carl, sales of this promotes sales of this. And crest explained to us the strategy behind this hit video, tricking kids about treats. Who likes halloween candy . All me were going to replace candy with healthy halloween treats today. These are called veggie fruitjus, guys. This is the most worst i ever tasted. Its not good. Halloween is the Biggest Candy consumption day, thats a day when everybody wants to indulge in the sweet tooth. Mine tastes like broccoli yuck mine tasting like poo poo we thought, lets have some fun with it. We said, what if we had the all spinaround, taking candies away . Kind of good, kind of bad. Be honest with me, adrianna. Its bad. So we wanted the spontaneous reaction. So we deliberately kids who were confident in front of the camera, outgoing. Asparagus flavor, beet flavor. In their minds, theyre thinking theyll get some really delicious, sugar candies. As they ate those, some of them had a very natural reaction, which we captured. What about artichokebuttercups . One really good, adrianna, quickreflex reaction, but so nonchalant about it, and cutely says, i threw up, and just went on with it. I threw up. You threw up . Okay. Which we thought was it was very watchable. So we kind of kept it in the final film. Oh, you cant the banner covered it up, but you actually do see her spit up. Adriannas parents were there, and everybody was cool about it, and they kept it in. Guys, the video has 3 million hits on youtube. Well see if it sells crest. Got to watch p g, and they say it dont work with kids and animals, but it seems to work for them. It did. The kids, it was a casting call, none of the reactions was scripted. Yeah. Amazing. Unbelievable. There will be a lot of candyeating tonight, we know that. Thank you, our jane wells in los angeles. Were coming off the session lows here, down about 28 points, as people continue to digest not just the visa Conference Call and the fed statement yesterday. Turned positively, about to turn positively on the dow. One to watch. Lets get to wapner back at hq and halftime. Heres what were following. Mega midcaps may be up 27 , but are there cracks starting to show . Face mask. Whats behind facebooks Earnings Report . And the drop in teen users. The stocks about to close off the best month, an october surprise thats pushed the s p up 23 this year. Monster mash but the question, has the monster market come to scary for your money . Lets play the action. Josh brown, are we too frothy at this point . I would get nervous here. You know, thats