Transcripts For CNBC Squawk On The Street 20131113 : compare

porky pig. >> overnight in asia, shanghai and hong kong down sharply, some disappointed in that four-day meeting of leaders and bank of england cutting its forecast for inflation. macy's beating profits, affirming on the year. >> and a fight with kraft ends up costing the coffee giant $2.8 million. >> tesla confirming there are no plan foors recall. outlines his vision and fires back at george clooney. >> and doubts continue to compound about completing fixes for the end of the month on baum care. >> revenues beat consensus at revenues are up 3.5 prgs. the ceo says numbers are extremely strong. sales trends at bloomingdale's doing well. >> big name for my charitable trust. ta terry lundgren has been able to go against amazon. in is always who's got the anti-amazon game plan. he can move around merchandise. he's got my macy's, the regionalization. if you go there friday night in pittsburgh, you will find steeler-like clothes, raleigh, north carolina, it's bow ties and sear sucker. the new york store is doing well. i like this! i like this! >> one quote from the release, the improvement in sales trends in every region of the country -- >> let's be a bear. let's be a bear. how do you say that? some regions didn't do better than others? i've been struggling to spin this negative. >> they do hold guidance at 390. >> we are officially in north face weather. north face has very big margins. >> especially this morning. it's supposed to get a bit warmer later in the week. to those who would have said macy's is having great success because of the turmoil at jcpenney, that would have abated given the leadership at penney and yet macy's continues. i don't know if this is bad for penney or has nothing to do with it. >> i think the notion that it's all zero sum has to do with the belief that the consumer is dead. i think the consumer is alive and well, they bought a lot of stuff at best buy, they're buying a lot of stuff at amazon and at macy's. this is contrary to the whole political rap we hear all day. the consumer seems to be immune from the craziness and zaniness of washington. >> and gas prices are turning into something really. >> stats say it's only $120 a person if the tax goes down a dime. this is a payroll tax decrease in the form of going to the p pump. the average fleet of cars is 11, 12 years old. that money is transferred immediately to things like apparel. not just candy bars at the convenience stores. >> it's true, although apparel continues to be somewhat challenging. i don't know within the macy's earnings release what area is doing well. >> kors has been doing incredibly well. >> it has. >> there is a split here. there's the high end -- del frisco's. you eat well, you're high end. >> you had them on last night. >> huge period doing so well. but then you have this group of people who are challenged and i think the challenged people may be benefiting from the gasoline. >> and we're going to the anniversary of the payroll tax increase. >> plus we have an earlier holiday. but let's not forget, the calendar versus the hurricane, the super storm is going to get better and better. this group has underperformed. i think it's about to outperform. >> we are going to get walmart earnings tomorrow. you get in front or not? >> walmart is so unwieldy. i do not think that walmart is taking share from anyone. i saw a positive home depot note, they report in a couple weeks. cost co did very, very well. if you want to know who is not excelling right now, it's walmart. i think they're doing fine. they're doing fine. the dollar stores have challenged them from the low end. they're doing fine but they're not like the old days when it was the -- >> when it was what? when it ruled the world? >> no, the age of -- >> oh. >> i think you're going with the dinosaur rules. >> we have -- they're my two favorite, my eldest daughter's favorite two things that cnbc ever did. >> you can't come up with name of your own documentary, it terrible. >> "squawk on the street" was theans answer to a crossword puzzle, it was 8 down. there it is. "squawk on the street" error, the answer of course four letters, cnbc. >> sbux. >> oh! >> just a sec. i have to do something i've been -- >> you're going to get $1.8 billion out of your brief case to help them out? >> this is what they did. they wrote a check last night, a big check. they have the money so it doesn't bounce. who signs it? howard? >> maybe. or the treasure. starbucks was ordered to pay nearly $2.8 billion for ending its coffee partnership with kraft. starbucks revises fourth quarter to show a lot of $1.64 a share. originally of course it had reported profits of 63 cents a share. they should have taken the settlement early on, it's easy to say at this point, which was maybe $1 billion is what was reported they were talking about with kraft. they were unhappy with the way it was being marketed. >> it was being marketed poorly. they turned it around. this is a gigantic check. this is a lucky win. >> for mondalease? >> yes. >> that's a huge number. >> that's a lot of capuccino with skim, man. and they're giving away a 2-for-1 deal today. >> does it reflect on their choices or -- >> it reflects on the whacky legal system we have. you agree to arbitration. >> you conceivably, at least in this opinion, violated the terms of the contract. >> i don't know. i gasped when i saw it. that is an amount that wasn't in my number. >> that's a j & j number. that's what they play every other day for the hip implants. >> would i bring my checkbook out but i cannot handle j & j. risperdal and hip implants? obviously goreski is making a clean -- >> this is pacino at the altar making the call. make it go away. >> i was thinking goreski might say here's my offer -- nothing. >> we're talking about a sett settlement, $4 billion for hip implants. >> i thought that was a bargain. was is it, $50,000 a person? i don't think risperdal was hanging over j & j's head. i say positive things about j & j so i'm a war criminal. people tell me they're going to be put out of business. no. viox almost wiped out merck, even though the ceo's wife was taking viox. there's nothing wrong with viox as far as i can see. >> i would like the total number of fines and penalties paid by j & j by what was largely the weldon era. >> did you ever go back to that children's tylenol once you had the -- it tends to be the same formulation. >> i i'm sure he's moved on and he hates me but -- >> starbucks, should it get hit by this penalty? >> the analysts are sticking by it. we just got the quarter. you could argue that it should be down more than this. that is really bad. >> speaking of big american brands, tesla's elon musk defending the company's vehicles. musk said there would be no recall of the model s despite three vehicle fires in the past few weeks. take a listen. >> there's definitely not going to be a recall. there's no reason for a recall, i believe. the perception is, if you read the headlines, it sounds like tesla have a greater propensity to catch fire than other cars. in reality, nothing could be further from the truth. >> there and there's this interview with george clooney in "esquire", he's talking about a tesla that he once owned and how he spent more time at the side of the road because of the car. musk saed that was needlessly told and needlessly reported. >> in 2008 it was his roadster. >> musk is fascinating to listen to. when he gets into flying cars, that's where it gets really interesting. he did address the car fires. >> it's such an easy path -- i'm trying not to take a side here but an easy path for a short ostensibly to float one of these stories. >> exactly. i felt one of the things that musk did was really tell you how small this whole thing was in terms of the other cars -- not the pinto, but other cars would have had done the same thing if you subjected them to the torture that these drivers -- it seems like these drivers were short tesla. they did everything they could to start this thing on fire except to poor lighter fluid on it. i mean, honestly, this was match light. let's see if we can set match light off here. >> when he described i believe the second crash where the car hit another car at incredible tree, went flying off into a tree, a bunker, rolled, everybody walked out and then there was a fire. >> then they went over the george washington bridge, hit the brooklyn bridge, bounced over that and they set it to a bricket fire and it still didn't light up until they finally took an acetoline torch and darn it, that got it. >> we'll take one more look at futures. again, looking at an implied open down about 73. s&p's got 531 trading days without a 10% correction as of today. >> are you kidding? that is just an amazing stat. >> be back in a minute. 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. welcome back to "squawk on the street." i'm kayla tausche at cnbc headquarters with some headlines from wells fargo ceo tim sloane. he made some interesting comments about the mortgage market. he said that he expects the mortgage market will stabilize next year. this is important because with rates jumping around, a lot of industry watchers have been wondering what will happen to the banks and some of the housing companies with the mortgage market slowing down. wells fargo's originations were down 40%, its pipeline was down more than half and that was a big contributor for the bank's margins, which ground to a halt at 3.38% in the final quarter. he said he can't promise that margins hit bottom in q3 and that the worst is not over for those margins. that's why you're seeing wells fargo stock down. he believes as soon as the mortgage market stabilizes, which he believes will be next year around the second quarter that margins will soon follow. for now, we'll send it back to you. >> kayla tausche back at hq. the house oversight committee set to hold a hearing at the bottom of the hour, that after news that the web site is unlikely to be fixed by the end of the month deadly. . eamon? >> reporter: yes, a tough morning. there had been some question about the chief technology officer would testify. the white house initially said this guy is too busy dealing with the health care.com rollout to go up to capitol hill and testify and do all the preparation required for that. some people had described him as actually sleeping in his office in the roll-out of the healthcare.gov web site, obviously plagued with problems. we have a little of an excerpt for his prepared testimony this morning. he doesn't say enough but he says we have much work still to do but are making progress at a growing rate. kind of a vague description here. "the washington post" reporting this morning they're still having trouble with that web site when more than 20,000 or 30,000 people try to sign on at the same time. we'll have to see how they hold up to questioning here, which is expected to be very, very tough indeed today, carl. >> that hearing and the heat that comes with it, with the comments from president clinton yesterday -- >> oh, that was something, wasn't it? >> watching some political allies turn to you to some degree. >> maybe even the media will turn on the president with this. the president p.r. people are going to start turning on this. i think this is the most outrageous story. it's still single head. it's never big. i mean when clinton -- present, that was very, very damning. it's bad if people lose their health care. clinton spoke out. i'm saying fdr, go back to the fdr era. we try and have a safety net here, according to clinton, not me. >> some have argued it's hard to reform if you're not willing to break some glass. that's one of the debates going on today. anyway, cramer's got more stocks on his radar. we'll find out what names he's watching and what he thinks about them in just a moment. his "mad dash" is next. and coming up, we'll have an exclusive with chris albrecht and where paid tv content fits in the mix. don't go away. ng your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex. ♪ there'll be the usual presentations on research. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ to help you take charge. in a we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. ♪ you can ring my bell, ring my bell ♪ ♪ you can ring my bell, ring my bell ♪ all right. how many minutes are we till the opening bell? i'm looking at the clock. it says about seven minutes. we have "mad dash." >> i think this usair, amr deal is so great, i believe this stock could catapult if it follows the direction of what happened when america west merged, they did their big mergers, the stock could double. >> we were on air, we were breaking it as it happened, trying to understand exactly what the give-ups were. with one day having gone by, many say, hey, they didn't have to give up more than what they would have anyway. it's a little more competitive. >> now there's only for airlines in the country. >> that's true. >> and they give up these gates. >> 80% of the market. >> what they can get when you fly. doug parker, one of my favorite execs, he pointed out the employees really wanted this. i wonder whether the justice department was very responsive to labor, which actually did want this deal. also, don't forget, these companies have been very lucrative for the first time ever. it will cost you more to fly. they refute that in the conference call. but us airways goes much higher. >> hair goithey're going to clo deal in december. stake holders will own 72%. >> delta's the biggest. i like delta more. >> really? >> yeah. u.s. steel. you have got to go over the u.s. steel last conference call, waves repudiation of the last ten years of u.s. steel management. they are saying morgan stanley, this is the beginning of serious cost controls. that steel conference call was breathtaking! they basically said, all right, forget what we've done, we're going to shrink this company and make a ton of money. >> shrink to grow. >> i believe it. >> one of the worst conference calls was the timkin call, tkr, that was a horrible call. tkr play closed in a night. the u.s. deal play could be very long running. don't forget what hyman ross said. >> what did he say? >> he said we're bigger than u.s. steel. that's a reference again -- >> to the "godfather." you keep coming back to that. i'm not sure why but i'll watch my back. come back to "squawk on the street." stay with us. maestro of projec. baron of the build-out. 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 full-size or above, and still pay the mid-size price. 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[ 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 company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. you're watching cnbc "squawk on the street," live from the financial capital of the world. the opening bell set to ring in 90 seconds. futures are a little bit lower here today and if you're thinking that's not too common an occurrence, if the s&p and dow are down today, it the first back-to-back loss of the month. last one was around halloween. >> well, november when you're up a lot is a good month but it's been tough at times. the guy that runs the central bank in london for u.k., he's got a problem on his hands. it's a high-quality problem. that economy is smoking! he may have to raise rates. i like that guy so much! >> you're fan. >> i'm a huge fan. he's one of my guys. did you ever see his testimony when he got the job? his girls were still in school, he didn't want to miss the school year. my kind of guy. >> very nice. by the way, a very crowded floor today. some representatives from stay america, extended hotels. and of course ringing the bell today, as we get a look at the s&p at the top of your screen, theline textbook rental company, chegg. >> which came first, the chicken or the egg? the chegg. >> over at the nasdaq, a major and biofunctional lipid ingredients doing the honors. >> we didn't even talk about the cholesterol drug in terms of lipitor. >> mary thompson joins us with news. >> goldman is going to be naming their latest managing director at noon today. it will be slightly larger than last year's at 266. it's pretty much equivalent to a vice president level at other firms. the new managing directors will reflect goldman as revenue breakdown of the new class, with 20% from europe and 20% from emerging growth markets. after 2013, goldman is going to start naming managing directors on a biannual basis as opposed to every year. there was speculation this class would be much large r, maybe double the size the last year. keep in mind of course goldman has been trying to trim costs in what it calls a tough operating environment. back to you. >> very interesting. thank you very much, mary. comes on a week where lloyd blankfein made comments at the conference and asked how long he'd be sticking around and he said "why do anything else," as a lot of eyes on blankfein and his future. >> they're going to have to carry him out of that play or -- >> the stock's not been great during this period. it kind of flatlined because the activity has flatlined and some have outperformed but they haven't. it's kind of interesting because you would expect even in a flat environment that goldman would find more ways to make money. i suspect they will in 2014 but it's not happening yet. >> a lot of wins aners among th retailers. nordstrom -- >> nordstrom, look at that, that was at $60 last week. there's a lot of belief that this group is well behind and is catching up, some champions of kohl's, i happen to like ross stores, shouldn't do as well as others. this is a foot price rally. these are companies that have markups and don't have markdowns yet, macy's, they must be doing badly. false tell. did not yield the kind of results that the bears have been looking for. >> pot belly we mentioned, one of the newer issues here. 15 cents, beats by 6 cents. comps up 2.5. up 13% premarket. not bad. >> people love store growth. they're going to give it to you. that's what people first for when they open a restaurant chain. pot belly doesn't seem to need the whole foods or foods that's necessarily good for you, it's just good tasting. >> and netflix, they continue to be hesitant to raise pricing. >> be careful. dreamworks and disney said this is going to be an important part of their company. i remember when disney said we're going to embrace these guys, the flipped the switch. >> can really did. >> the bears -- if you were a bear, you would be hoping they'd do that so you can bring your shirt in. i don't think reid hastings need the money. i think it's overblown. >> jpmorgan does a report on lulu. >> they have more recalls than tesla. that's for certain. they have johnson & johnson type recalls. i prefer vp corp and pvr. much more stern hands at the tiller. >> we're seeing a broader weakness in the market at this point. we didn't talk market at all today. we did yesterday a bit. i do speak to a growing up in of money managers who are concerned about the level of complacency and about earnings growth or the lack thereof. looking at our expectations and where we are based on what we've seen. >> i've come back and say, listen, we just got a great measure of the consumer, which is macy's. it's a fabulous company to analyze. these international companies are doing so well overseas that i think 2014 is being set up as a first year of revenue growth. these companies have fired so many people. they could get a little revenue growth, it going to be big leverage. especially if the dollar stays calm so we don't have the dollar translation problem so many companies just reported. there's an issue in the money management business, they have to use every price point to get in because they're so far behind the averages. >> yesterday jefferies defended qualcomm. i said this is going to drive cramer nuts. >> they can't resist. qualcomm could come out and say we're going lower and analysts would come out and say ignore that, they're going higher. i love you, you love me conviction buy. >> that's all true. i do want to correct something last week when we spoke about qualcomm. i talked about their cass position. i had it a little high. it's $30 billion, not 50. but it is worth talking about when you think about qualcomm. it a lot of cash. in this day and age of activism, you know the board is thinking about it. >> you want cash? starbucks has cash on hand, they wrote the check. the companies are so rich, they have so much money. it not just apple. does apple move without icahn saying something today or is it focused on its business? >> focused on its business. >> how long can that last? >> they should buy twitter. up know? you can embed people, you can kick people out. block icahn. buy twitter, block icahn. what do you think of that idea? >> you encouraged them some time ago to buy twitter. >> when it was 10 billion i wanted them to buy it. when it was a gleam in the eye -- >> al gore tried. they didn't want to sell. >> i think when you look, microsoft had a chance to buy them. that would have been a fabulous merger. >> one last thing we've not had a chance to talk to you about, airlines. discussion about the d.o.j.'s intervention. if it hadn't been for this one, they would have been locked out of these key airports for a long time to come. >> spirit charges you for breathing on the plan. they have a pay toilet on spirit now. walking down the plank costs money. i wish i were joking. i talked about go-go doing well yesterday. there's some lines in this conference call that are so priceless about how this is really good for the consumer. i just love that. good for the consumer. to have fewer companies is always good -- will you please? just say we did really well for the shareholders. i do believe that save is also going to be a winner but delta's great. these airlines are so well managed now. i remember for years they were managed like the way "mad men," you'd pitch them, people would have big fat dinners, they'd go to del frisco. now these guys, they eat nothing. >> looks like 22.86 would be the first trade, as we watch their representatives huddle around post 8. >> speaking of starbucks, ceo. >> speaking of which, let get to bob pisani. >> the ipo business keeps chugging along. these are all listing fees for the new york stock exchange. we're waiting for chegg here. pricing 12 to 12.50 right now here. that's about the range they were talking about. this is all about disrupting that expensive book bound business, they want to transition to e textbook platform. this was founded by three iowa state students not that long ago, grown past, 7.2 million users. 40% of college-bound high school seniors, 30% of all college students use that. we'll have the ceo on in a few minutes. extended stay, they priced the 20 apiece and opened $22.86. that's a nice little pop there. this company was acquired out of bankruptcy, i think it was 2010, blackstone, paulsen company were involved in this. they're upgrading the vast majority of all their hotels. let me comment on macy's. i was amazed at these numbers. earnings up 30% year over year. that was a huge fee. the expectations were very low and they came in very aggressive here. terry lundgren said we saw improvement in sales trends in every region of the country. promotions were very high. at least everybody i talked to said macy's and other companies were doing very, very heavy promotions here. the big issue is whether or not this is going to spill over into the other retailers. tomorrow walmart reports, nordstrom reports, kohl's reports. i'd be shocked if we got these big beats out of walmart. the one wild card everybody keeps bringing up to me is gas prices. we're at two-year lows, 50 cents below where they were not long ago. that may prove to be the little extra umph that we need from walmart. chegg at 12 to 12.50. >> i want to get to a story that i followed this summer, battle for control of the hospital operator hma. you may recall earlier in the summer when its largest hedge fund did something we rarely see, namely undertook what ended up being a successful solicitation to remove the entire board of directors of hma. you may also recall in the last moments of its previous board, hma agreed to a deal in which it was to be acquired by community health systems. would they come in and approve that community health deal given they were getting a look at things for the first time? you would need a 70% approval for the deal to happen by hma shareholders. well, this morning i can tell you we've gotten nasty earnings from hma for its third quarter. first quarter and second quarter weren't good and now it a bad third quarter. it does appear they are going to say yes to community health. i shouldn't say does appear. they are saying yes to community health. glen view says yes, the newly constituted board of hma says yes that was worth about $13.42 in cash and stock as of yesterday, two days ago. the consideration is 10.50 share in cash if you want to rrl aan -- recall. you hear some of the bells behind me. guys, i'm trying to do a report here, okay? thank you. and we're going to get that 70%. this deal is going to happen. jim, what was fascinating here is you had a successful consent, a new board come in. what appears to be the case and i have spoken with glen view as well, which put a release out, is things were really bad and they weren't getting much better. glen view owns 9.9% of community. in fact, there is 60% overlap, 60% of the holders of hma also own shares of community health. they said we're glad we had the opportunity to get in there, have our board make the decisions and now we're taking the deal that we kind of forced these guys to actually do when we were fighting for the consent. >> that deal was shooting fish in a barrel, it's been so great. these guys, i guess there was no fish in their barrel. this was a poorly run company. doesn't make sense. >> again, they're going to close the deal most likely early next year, you get the vote in december. it does appear we'll have a successful deal there. but they're not going to have run the company for very long. >> i want to mention, talk about goldman, congratulations to them. i worked at goldman sachs. >> it's a big deal to be -- i want to also back off. i didn't mean to imply any violence of any kind between gary cohn and -- that was a little harsh. >> i also have said silly things in the past. >> he's a great guy. i can't tell you how much fun -- he bares the blapublic face it have. he's a nice guy, gary. >> i wouldn't want to tick off gary. >> he's supposed to be working. >> we're on ipo watch this morning, looking over at post 5. we'll look ahead to the two companies making their debuts. dan rosenweigs president and ceo of chegg and jim donald, ce o'of extended stay. ♪ ♪ it's estimated that 30% of the traffic in a city is caused by people looking for parking. that's remarkable that so much energy is, is wasted. streetline has looked at the problem of parking, which has not been looked at for the last 30, 40 years, we wanted to rethink that whole industry, so we go and put out these sensors in each parking spot and then there's a mesh network that takes this information sends it over the internet so you can go find exactly where those open parking spots are. the collaboration with citi was important for providing us the necessary financing; allow this small start-up to go provide a service to municipalities. citi has been an incredible source of advice, how to engage with municipalities, how to structure deals, and as we think about internationally, citi is there every step of the way. so the end result is you reduce congestion, you reduce pollution and you provide a service to merchants, and that certainly is huge. because what you don't know, can hurt you.urance. what if you didn't know that posting your travel plans online may attract burglars? [woman] off to hawaii! what if you didn't know that as the price of gold rises, so should the coverage on your jewelry? [prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪ time for "six in 60," six stocks in 60 seconds. start with atk. >> credit suisse upgrades it, up 80% in one year. >> government, gm. >> the government has been selling stock. >> downgrade for dean foods? >> the soy milk, dean foods no, white wave, yes. mde, a very bad quarter for a pipeline operator. i'm getting interested. >> and regeneron. they have the next level nonallergic statin. i would be a buyer and not seller. >> and las vegas sands. >> what a great story they are. >> "hunger games" continue tonight on "mad"? >> oh, yeah. we've got david novak have yum. and then open table, one of the greatest stories out there. people kept trying to short open table. it's the life blood of a lot of restaurants, gets more patrions and gets them cheaper. >> you're going to stick around. when we come back, textbook rental firm chegg hoping to make the grade here. and we'll talk to daniel rose rosensweig in a moment. i'm beth... and i'm michelle. and we own the paper cottage. it's a stationery and gifts store. anything we purchase for the paper cottage goes on our ink card. so you can manage your business expenses and access them online instantly with the game changing app from ink. we didn't get into business to spend time managing receipts, that's why we have ink. we like being in business because we like being creative, we like interacting with people. so you have time to focus on the things you love. ink from chase. so you can. chegg, a textbook rental company that also provide as range of tools and resources to students going public on the big board today. priced above the range, raised $187. dave rosensweig, celebrating 25 years of marriage today. >> 25 years of marriage today to my beautiful wife, linda. linda, happy anniversary. i hope this is a good anniversary gift. my guess is i'll have to do a little bit more. >> congratulations. >> thank you. >> how do you feel about the pricing? >> i feel the market determines the price. we're excited about having a chance to be a public company, they'll accelerate growth. we worked hard to get here, my team. >> someone who has a daughter in college, we go to the barnes & noble store i say, geez, if you're not that wealthy, what do you do? you are doing well by doing good. >> we are. the name check comes from chicken or egg. i needed a job to pay to college, i needed college to get a job. we keep saving them time, helping them get scholarships, get additional learning tools. we want better outcomes at a lower price. >> a lot of people invest in platforms it seems. twitter we can argue. we know what it is today. we only know it going to be better tomorrow. i would assume that's similar with chegg. but right now you're still in the old print business, spending a lot of money to buy textbooks, rent them out, which is cash intensive. talk about the transition you're undergoing and what it will look like. >> fast forward ten years from now, we imagine the entire world going digital. learning will be more interactive, more personalized, more relevant. we can do more for the student. not only will we know what school, what their grades are, but we'll know what they're interested in doing professionally, what page they're stuck on when the e textbook. it should just get better. the challenge is the global economy has changed faster than the institutions that serve our students and we're trying to accelerate that pace of change. >> demographics, the long-term trends of enrollment in college has got to be a tailwind. >> it should be our responsibility to make it more accessible, more affordable, more beneficial to help these kid get the jobs and then enrollment goes up. we're creating more value as kid go to school. >> are we in a moment where the amazon model is prevalent? you're not making money but is it the type of thing where if you started making money now, you limit your opportunity? >> the question is it not about making money or not making money. it about investing in where the opportunity is. so what we're doing is we are growing our customer basin credibly fast, 100 a year on our digital businesses, which are all high growth, high imagimarg. if we don't invest now, we'll miss a trillion dollar opportunity. why wouldn't we invest in the future -- >> trillion dollars? where are we getting that number? >> a trillion dollars is spent every year in education. 15% of the population is involved in higher education. $50 billion back to schools, $10 billion in textbooks, $100 billion in ancillary learning material. $16.5 billion is spent recruiting students to go to colleges they never get into. we fix all of that. >> what are you going to do with the money today? >> we want to accelerate our growth. in this economy a strong balance sheet is a winning formula for investors. now we've just put $200 million more on our balance sheet, we've got extraordinary growth. we want to use it to buy more things that help students improve their outcomes. when we see an opportunity, we're going to leverage that balance sheet and grow faster. >> thanks. >> thank you very much. your daughter should rent from chegg. >> we finally talked about the company as opposed to yahoo!. >> yeah, exactly, finally talked about chegg. >> meantime, the ipo parade rolls on. we'll talk with ceo jim donald on extended stay wall street debut in just a minute. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives. invested in the world. bny mellon. ♪ ♪ you better move, you better dance ♪ welcome back to "squawk on the street." the road map begins with the magic of macy's, beating third quarter estimates with same-store sales up 3 1/2. >> plus extended stay america spiking in its wall street debut. the company's ceo is also the former ceo of starbucks. >> and he brought you the hbo you basically know today. the man behind "sex and the city," "the sopranos." chris albrecht will be here talking all things television. i want to get a look at chegg, new ipo today, looks like it's down 10%. the range was 9.50 to 11.50. so priced above, trading basically within it. we just talked to the ceo, dan rosensweig. >> macy's beat on the top and bottom loon. -- line. guys good morning to both of you. >> good morning. >> rick, some people have problems with the quarter. they say it was taxes, they say it was buybacks. even the comp suspect given what happened to margins. what's your take? >> i would agree with that. i think this was a low-quality beat. it looked look gross margins were down, sales were up. that's usually indicative of sales that are driven by markdowns and they got 3 cents on the bottom line from the tax benefit. i think it's a low-quality beat. >> chuck, you see a problem in that view? >> i counter that view. i thought it was good, 3.5% comp, shared margins are a little bit weaker than we thought but i don't think it was due to a lot of hard marks. it was mover on the value message. value is in vogue and macy's is in a good spot. >> where does it fit, chuck, among your universe? one of your favorites or not? >> yeah. this is the cheapest stock i cover. it's 10.5 to 11 times next year depending where it's trading now. look back at macy's track record over the last three to four years, it's been excellent. they had one hiccup in the second quarter. there's up side to those members. you look at where the trends are in this country and they're favorable. this company is in a great spot. along with the dollar store and costco, it's one of our best picks. >> you could argue it's moving to a lower price point overall. >> that's what is bringing the margins down. i respectfully disagree with chuck. within of my rules of thumb is don't bet on a miss in retailers in the first and third quarters. we'll see how the fourth quarter plays out. >> no secret who has the hold and who has the buy on this stock right now. >> it must be something about covering macy's and having hair, there's a rule. >> come on, carl, that's not nice. >> what about a read for retail, if there's one to be had here. >> tomorrow night for kohl's and nordstrom will give us a good idea. we'll see how this shakes out. it's a good sign for the consumer. obviously the fourth quarter, cycling the sandy events that we have easy comparisons. there appears to be a little momentum, a limb life in the consumer. we'll know by the end of the day tomorrow if we can extrapolate this across other parts of retail. >> the stock trading well today. good seeing you. >> thanks for having us. >> macy's spiking today but another apparel maker isn't doing as well. dom has a quick market check for us. >> perry ellis is seeing its profits drop today. they cited reductions in its private label business as well as lower sales through its direct retail business. it did say there were positives in golf lifestyle and navy swim. back to you. >> u.s. stocks are down ahead of yellen's confirmation hearing. that's tomorrow. it's sure to stir up some fed issues. let's bring in our guests. guys, thanks to you both. charles, anything we could expect tomorrow that would affect how you think about bond markets? >> we think people are going to be too short sighted on whether they're going to tyaper in january or february. the long view is they're going to go higher. and history tells you when it happens, it's going to be challenging for the market. >> how challenging? >> if you look at the graph of 10-year interest rates over the last 60 years, interest rates went dead up from 63 till 1983 and stocks went absolutely nowhere. the dow stayed at 700 in '63 and it was still at 700 in '83. interest rates have dropped pretty continuously since '83 and the dow has gone from 700 to 1,700. it's not going to happen next month or two or three months, but an increase in rates, which we see is coming, is going to be a big challenge. >> we may have seen a preview in june that we would get a september taper that never materialized. give me your take. >> on the taper, we're looking for perhaps taper in january depending on how the economic data play out. in terms of tomorrow, i wouldn't expect too many fireworks from the yellen confirmation hearing. she's going to be pretty well prepared for the questions the senators are going to throw at her. i wouldn't expect she would say too much about the policy outlook. i don't think we're going to hear too much from the vice chair tomorrow at her hearing. >> charles, people are still looking at dow down today, our first potentially back-to-back losses of the month. they point to the nasdaq specifically having not taken back some of those highs on friday's big bounce, right, some of these high flying tech names, even some of the small caps are not responding as well as the dow and s&p. is that worrisome? >> if you're a short-term tech player, it clearly is. we had a lot of high flying tech stocks that went to levels we thought were unsustainable. you have to look for where there's value and there wasn't vol u in the technical sector. the twitters of the world were barely above the level. >> can you tell me what you expect for the rest of this year and into next year for the broader economy, michael? >> yeah. i think fourth quarter may be a little softer than what we saw in the third quarter. inventories were built up as a rapid base. next year we're looking at growth and 2.75%. weep should have quite a bit less fiscal drag holding back the economy. i think next year is a year where it's pretty reasonable to look for a better growth outcome than what we got this year. >> unless of course we get hung um around a debt ceiling, which seems less likely but is not off the board, is it? >> no, that's right. in january, february we have a continuing resolution and debt ceiling. we can make it past that, i think there are reasons to be a little more optimistic about the situation going forward. so you're right, the fiscal situation is still a bit unresolved but hopefully barring any blowup there, i think the outlook is a little brighter next year. >> we'll leave it there, guys. thanks to you both, charlie and michael. >> when we come back, the extended stay with about a 20% pop. jim donald will join us live at post 9. that's why you take chare of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach. one more check on chegg there. 10.86, a decline of about 13% after pricing just above the range. as we said earlier and talked earlier, the company they see going digital eventually, even though their money now is made in those paper textbooks that cost so much. >> it's a cash intensive business, too. that becomes a question. it's all about potential growth and, as you say, the digital future. >> three years after filing for bankruptcy, hotel chain extended stay under new management and the shares are moving higher this morning after pricing the shares at $20. the former ceo of starbucks is at post 9, jim. i see the disrupt of marketing in all the green jackets. how do you feel about the opening? >> we feel good about the opening. this is a milestone for us with all the work we've done with 10,000 associates and getting to this point. >> talk about that story. a lot has been written about investors who had the nerve to get in and make large scale investments in '07, in '08 where all sorts of businesses were on the ropes. to a degree this is their exit in this story, too. >> i started 20 months ago. this business is a solid business and it's a business that with the funding of $625 million with our sponsors, we were able to walk the walk and talk the talk and tell our associate as new day is coming and all 10,000 of them have executed on the plan we put in place. this is just one step in our process for the long term. it's just the beginning for us. >> your average customer stays 20 days? >> 26 days. >> what ability do you have to raise rates? >> we like to say we are the best price value relationship in the industry. we just got voted the most improved hotel brand in the mid-price extended stay segment. that price value relationship was the greatest improvement in the entire hotel history. we like to think that the way we're priced and the experience our guests have, we will make sure it's the best value relationship in the industry. >> you have a renovation program -- >> we have a platinum awareness going on. we launched brand awareness and marking. we launched platinum renovations, but we plan to continue that renovation going forward and are looking out an additional 100 properties that gives us 65%. what these renovations do is just makes that guest stay and that corporate guest that we're trying to get the place to go because everybody's looking for price value relationship. >> of course the industry in large is famous for not having discipline regarding development, overbuilding, not being protective when the economy does go into a down turn. is that going to change? how much expansion is on the horizon? >> the proceeds only gets better. the proceeds strengthens the balance sheet, with 100% of the program going to pay off debt, which will allow us to pay off debt and earn dividends going forward. we like to think as we get our own house in order. >> i know you've been focused on internal growth, but does the possibility of external acquisitions come about as a result of being public? >> i think that whether we're public or not, the opportunity for us, and we are the most efficient hotel chain in the industry right now, i think by us refining the model, that gives us an opportunity to do that on a go-forward basis. we have to make sure we get our own four walls in first. >> do you miss running starbucks? >> starbucks is doing quite well. hourtd and the team, they continue to rock 'n' roll. >> talk about leading the charge. are they doing things would you have liked to have done had you stayed? >> i will tell you, though, when i look at starbucks and extended stay, forget about the fact that we're serving coffee as well with our grab and go breakfast, it's -- capexand an engaged culture equals growth. that's what we're doing now. >> thank you so much for coming by. >> up next, big names such as tesla, facebook have been weighing down the nasdaq recently. is that index in for a broader fullback? we're going bear hunting in the nasdaq after the break. 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[ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex. welcome back to "squawk on the street." why r.c. worldwide shares are losing ground after the company expect had a a bigger than expected loss. this stock has fallen 73% in just the last four months. back over to you. >> that is not good. thanks, dom. >> the nasdaq posting a few lackluster days recently. we go live to the nasdaq for more on the story. sheila. >> reporter: hey there, david. the nasdaq is down for another day. when you talk to traders about what's been happening here, a couple of words keep popping up. the nasdaq is overstepped, overbought and trading at thin volumes. does it mean we could see more decline ahead? we decided to go bear hunting and see which stocks are already in pullback mode and what it could mean ahead. in the nasdaq 100, there are ten stocks that are officially in bear market territory, which means they're down more than 25% from their highs. tesla, green mountain coffee, f5 network, and others stocks are close to that, facebook, monster beverage and akamai making that list. about a third of the stocks here are officially in correction territory, which means they're down more than 10% from their most recent highs. big picture, could we see more of a selloff in traders tell me it's never good when you see these big momentum stocks taking off. there is one thing working in the nasdaq's favor and that is seasonality. the santa claus rally which happens at the end of the year typically for stocks is strongest here at the nasdaq since 1980, 77% of the time the nasdaq has posted gains in the last few trading days of december. carl, certainly something to keep in mind but it was pretty fun to go bear hunting ear. >> mike: sheila thank you so much. airlines reach a settlement with regulators. what indication does it have for the industry? we'll talk to gordon methuen live after the break. ♪ we're together, come on, come on, let's work together ♪ clients are always learning more to make their money do more. 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(announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates. i'm sharon epperson. the slide in prices at the pump has stalled for now. we're looking at the national average for retail gasoline at $3.19 a gallon. that's up a penny from yesterday and it's the first time in 12 days that gasoline prices have risen. the fact that we're looking at this rise, the biggest since the middle of october, has a lot to do what we're seeing here on the floor of the new mercantile exchange, since friday there have been refinery issues on the east coast and we're seeing a pretty sharp rise in brent crude prices. and we're looking at brent crude prices being impacted by supply issues in libya, as well as concerns of what will happen with iran's nuclear program and will we have an agreement on the issues. all of this is contributing to the rise of brent. >> we want to take a look at chegg, a silicon valley startup focused on higher education. they priced $1 higher than the range. there had been a sense, david, that because twitter did go so well last week, there might be a halo effect. this is the first silicon valley company to come public since twitter. it still early. >> breaking syndicate like this, it's not good, nobody's happy. if you were somebody in there at syndicate, you're not happy if you bought this at the underwriters. that's a big move down. i don't want to sugar coat it. that's not the way it's supposed to work. >> some big name investors, too. the ex-netflix cfo and cfo of the 49ers back in "silicon valley." and extended stay americas hotel has what a much better day than chegg, trading up about 16.5%. when we come back, the man responsible for so pran owes. and "entourage" star chris al brebt will join us when we come back. t growth is going to be in cities. what's the healthiest and best way for them to grow so that they really become cauldrons of prosperity and cities of opportunity? what we have found is that if that family is moved into safe, clean affordable housing, places that have access to great school systems, access to jobs and multiple transportation modes then the neighborhood begins to thrive and then really really take off. the oxygen of community redevelopment is financing. and all this rebuilding that happened could not have happened without organizations like citi. citi has formed a partnership with our company so that we can take all the lessons from the revitalization of urban america to other cities. so we are now working in chicago and in washington, dc and newark. it's amazing how important safe, affordable housing is to the future of our society. ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ ♪ stacy's mom has got it goin' on ♪ [ male announcer ] the beautifully practical and practically beautiful cadillac srx. get the best offers of the season now. lease this 2014 srx for around $369 a month with premium care maintenance included. ♪ (vo) you are a business pro. maestro of project management. baron of the build-out. 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 full-size or above, and still pay the mid-size price. 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(vo) meee-ow, business pro. meee-ow. go national. go like a pro. . chris albrecht has done a lot for television. as the chairman and ceo of hbo he launched shows such as "the sopranos," "sex and the city," and the greatest show of all time "the wire," that's my opinion. you have an investor day today in new york, later today. we're glad you could be with us here. 50 hours of programming, that cost as lot of money. when i talk to your investors they say where's the free cash flow if you're spending this money to develop this new programming and how can you grow it if you spend it next year in having 75 hours. >> we'll been able to ramp up the originals and return cash to shareholders. there are stepdowns in our film output deals. that's money we can invest in programming. we've recently made an alignment inside our company that's going to allow to us have a more effective marketing spend and putting it together with our consumer marketing spend. so there's a lot more levers inside a company of starz this size, even though we have a fairly easy business to understand, there's a lot of leverage that can allow to us make the adjustments. >> something that also helps is having hit shows. when i think about the current landscape, a "homeland" or "mad men," i don't think of names you guys have produced yet. why is that? >> we have just really decided to take the bull by the horn. in '13 we'll have close to 40 hours of original. so the ramp up to put five shows on in '14 creates a consistent platform for us on our network, and have you to have more at-bats. i think people -- this is not -- you get in the who will of fame in baseball in you hit .300 and that's three out of ten. we just need to find a way to get more at-bats in our portfolio approach to putting on shows. some we only license, some we own fully. it's going to allow to us take more at-bats. and i think the results of that, along with, you know, having the chance to seek out differ demographic groups. when you're only in 22 million homes, there's only so many viewers you're going to be able to accumulate over one airing. so between a critical mass of viewers and real third party awareness and acknowledgement and sort of weind in the sails projects, i feel really good about the stuff we have coming up this year. the second season of "da vinci demons." and the first show created by an african-american woman, courtney kemp, who i told i'd give a wink and a shoutout to. >> did you it. >> and outlander from battlestar galactica. it's a big series, appeals to women, giant book, which worked well. >> it certainly has. >> you mentioned dim graphic and women. almost 60% of the audience is women. is that the sweet spot sp. >> originally the audience is men, older men, mostly men. and while, we ended up with a 16% female viewer siep. we've seen females a real, and american hispanics are also underevidence is. to have a critical mass of person viewers who are subscribers, unlike an advertiser supported service that seeks certain key demographics, we're looking for anybody who can afford to pay for television. >> you let the rights go to disney. do you regret it? >> in 2017 originals are going to be even more important. whether it's the basic tier services or premium services or netflix, the thing people are talking about are the originals. that was an incredibly rich deal. netflix got an immediate boone in their stock price, even owe the -- we just went, you know, it's going to be limiting. we have the sony outputt deals. 5% is spent on originals but they account for 40% of the top 00 titles on starz. they're clearly overindexing. and it makes more sense to put dollars in that area so we don't freak out -- all the investors out. >> what about all this talk about netflix on the set-top box? i've heard a lot of pushback that says that's not going to happen. where do you come out on that? >> first of all, it not in our control. i think lee hastings would s say -- they already have within their domain the largest, deepest, con felt -- they're much higher products than netflix would be on their platform and the context comes much earlier. i think there's a lot of reasons why netflix could undermine they have with content makers. >> there's a bill that would allow them to get easier access to sports and prime time shows. we've existed in the ala cart, top top now this stuff is happening so much more quickly. i think that we're going to see technology bring services that have a lot of content amassed under their brands and get them delivered to consumers in more effective ways and that's great for branded services like us, that isn't already a sub kripgs business and it's a high-market blj. >> you should be part of a larger entity. it hasn't happened. is that something you don't think about or consider? >> when i go to my job every day, i think about running an independent stars. there's a lot of rumors which there weren't really any synergies. i went to them and said you have to let us forge our own path and whatever happens happens. if there are conversations there for doing show or distribution partnership or tro teej ek alliance. we're open to anything that's going to bring long-term shareholder value to the stars. >> i appreciate your time. >> chris al brekts, the ceo of stars. >> now that the u.s. governor has brokd it's airlines, he joins us from house. >> memo, do you think it had any bite sp. >> no. it was all dark, david. a new guy didn't know what he was doing and it was a very flawed and al significant that they were probably going to get their head handed to them in a federal court. >> a lot of discussion now, it's been said for a lot of these low-cost carriers, even though they might not have a lot of planes, if it hadn't been for this intervention, they would have been locked out for a long time to come. >> i guess that's true. you've got southwest, which the domestic department failed to put in the economic analysis. and as you know, they're the major domestic player. i'm not so sure that having four really big airlines doesn't give the world plenty of competition. when you get too greedy, a low-s could guy will come in and take away from you. >> it is an awful large market share. they've been controlling capacity very well, something your industry had not done particularly well for a long period of time. is it going to be more business as usually? are we going to see this quite frankly doug parker is going to bring some real it and tale ent to american. these guys underp understand the capacity to revenue and they. >> were you surprised the dga went after him in the first place? >> bill bear just wand to make a name for himself. >> let's say gordon bethune was going back into the airline business, which one would you want to run? >> i'm a continental guys and all my friends are at united. . i'm still a united fan, although you got to give the boys at dealta some credit, too. >>. >> we talk about it all the time here, paying the dividend. people said it was going to be impore, -- important. >> innovation is important. gordon has not had the easiest time. this deal between usair -- >> it's tougher to do a merger than an acquisition as delta just acquired northwest. you have to give parker a lot of credit. he's a really smart man. i think he understands what he's getting into having done the usair and america west merger. he's got his job cut out for him butch he's capable. >> and one last question on gas price, fuel prices. we talk about it all the time broadly as a net positive. were we overplaying it or is it going to be material, you think? >> no, it's always material, carl. you got to keep your eye on that ball. i don't personally believe there's some really big up side in spiking oil prices in thor in fo form -- >> do you want continue to vest in warren buffett? how about dan loeb? you can monitor their investments and see how they're doing. we'll tell you how when "squawk on the street" comes back. ♪ every day kisses, wishes when you have diabetes like i do, getting the right nutrition isn't always easy. first, i want a way to help minimize my blood sugar spikes. then, a way to support heart health. ♪ and let's not forget immune support. ♪ but now i have new glucerna advance with three benefits in one. including carbsteady ultra to help minimize blood sugar spikes. it's the best from glucerna. 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[man]lumbar button [woman]lumbar [announcer] tempur-pedic.the most highly recommended bed in america. now the fun begins! welcome back to "squawk on the street." check out shares of yum brands, parent company of taco bell and pizza hut. it fell about 5%, less than the street was expecting. and yum chairman david novak will be a guest on "man money" with jim cramer tonight at 6:00 p.m. and 11:00 p.m. now back to you. >> want to invest like a billionaire? the -- financial billionaires have committed the most funds. the co-founder of ibillionaire joins us now. is there real demand for something like this? >> hi, david, how are you? thanks for having me. there is. we launched a web site a few months ago and a lot of investors are seeking strategies to know what these billionaires are doing. we launched can track it and follow the smart money. >> you're following 13-f filings? what's the lag here? a dan loeb can make decisions during the quarter that i would assume are not necessarily reflected, or are they? >> right. that was a concern for us at the beginning. but we were taking into consideration the time lag. there's a lag. but we're looking at long-term investors. warren buffett, for example, has wells fargo for a decade. that makes a small percent of the index, compared to 1% of the s&p 500. the returns are 12% in the last eight years of the index compared to only 7% of the s&p 500. so you're looking at about almost double the returns for half -- or the same risk. so i think it really mitigates the risk, and by looking at the different billionaires, as one maybe buying and another one may be selling. >> what if you wanted to just follow a buffett model, or an icahn model? will there be eventually products for that? >> right. the index is really -- what's interesting about it is you can follow both. for example, warren buffett likes to invest not in technology, and icahn wants to invest in technology. so with the index in both, you have a bit of both of best of the worlds, and i think that's what's interesting about the continue ex. -- index. >> it's updated as the 13-fs remain public. how long does that take? minutes or seconds? >> it takes about 45 days. but, for example, david einhorn has had apple for three years and just recently we know icahn has been buying shares of apple, just because it's three years later, doesn't mean he's not capturing any value. what it means is these investors are going into the companies, very active and they're trying to increase the value. so by mixing them together, i think the long-term record indicates it's much better than investing in the s&p 500, which is really what we're trying to do. we're trying to beat the s&p 500 with these strategies. >> right. how do you pick the billionaires? >> so we pick them based on three things. one, most, 90% of the funds, have to be in equities. and they have to be long-term investors. so warren buffett, carl icahn, dan loeb. >> carl icahn is a long-term investor? some would say whoa -- he is sometimes, but not always. >> for example, in apple, right? he will take in more than a quarter, more than a day to do what he wants to do. and the same thing with dan loeb. he went into yahoo! put marissa mayer on the company. so that takes a few months, and i think regular investors can definitely benefit by having the index they can easily track. >> ticker's billion? >> the ticker is billion, yes. and people can look it up on google finance. >> what do you do when dan loeb shorts wells fargo and warren buffett long it? >> that's another thing. we're only looking at 30 large-cap companies. we didn't want to compare with the s&p 500. we knew that we're not looking at everything, but we're looking at the most important companies. >> right. and also no way to reflect a series of preferreds or convertibles that some of the guys actually get their hands on? >> exactly. we're trying to beat the s&p 500, and we're looking at the top 30 companies. i will do that. >> that's what we're all trying to do. not me and carl, per se. >> we're not allowed. >> no. >> raul, thank you. >> thank you. >> co-founder of ibillionaire, going live today. speaking of money. christy's. have you seen this? man, sold nearly $700 million worth of art last night. we're going to find out which piece has got the biggest price tag. i want to know who bought the coop coons, because it wasn't us. after the break. ♪ ♪ [ male announcer ] more room in economy plus. more comfort, more of what you need. ♪ that's... built around you friendly. ♪ there's nothing like being your own boss! and my customers are really liking your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. 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[prospector] ahh! what if you didn't know that kitty litter can help you out of a slippery situation? the more you know, the better you can plan for what's ahead. talk to farmers and get smarter about your insurance. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum♪ christy's new york hosted the highest grossing auction with a art sale netting $691.6 million. robert frank is back at hq with some details on the record-breaking sale, and some fascinating pieces that were up, too. hey, robert. >> hey, carl. lots of records broken last night, raising questions about whether this is the beginning or maybe the beginning of the end of this big art boom that we're having. now, this francis bacon tryptic became the biggest ever sold at talk, $100.42 million. bill bought it for an unnamed client. for perspective, the $142 million is more than the entire christie's spring auction in 2005, so that puts perspective on that number. the record for the most expensive word sold by a living artist, the balloon dog, carl's favorite, went for $58 million. it's being sold by peter brandt, and no word on who the buyer was. a lot of paintings sold, and worhahl, and wealth creation oversees driving it, and asia. asia is the x factor driving up art prices right now. collectibles all over. now, if you look, the chinese buyers specifically, looking to move as much money out of the country as quickly as possible, put them in portable assets like art. for some buyers, art has become the new suitcase of cash. it just happens to look a lot better on the wall. back to you guys. >> wow. >> robert, when will we know, will we ever know who bought some of the iconic pieces? >> i think we'll know who bought the francis bacon in the coming days and week, such a big number. it's a pretty small world. we found out who bought the monk a few weeks or months after that. so stay tuned. we will find out who it was. >> i just want to watch them move the koon's into whoever's house. >> yeah, the front yard? i don't know. >> and it may end up in a museum, we can all hope. it's a beautiful piece. >> you know it. fascinating story, robert. >> thanks, guys. >> thanks to you. david, it does bring home the notion of putting your money in hard assets. >> it does. >> if you believe the economy and the inflation will look a lot different in a year, five years from now. >> yeah. and i think particularly interesting point from robert is the idea of just getting money out whether you're in russia or china into a portable asset is important. also speaks to the growing income and inequality and who we're hearing about, and even people at the auction, whether it's stan druckenmiller, who was potentially participate. that's interesting, too, the boom going on, that robert has detailed so well in all of his reports. >> yeah. in the meantime, the dow fluctuating with moderate los s losses. the two stories that stand out, david, i guess, are potentially back-to-back losses for the first time this month for the dow and the s&p. and then some of the ipos not benefitting from any kind of tail effect out of twitter last week. >> no, shag has broken syndicate off the battle, and extended stay, not in technology, at all, extended stay hotels, it's not good. not good at all. overall, as you point out, the market -- listen, on the flip side, macy's very strong today. the stock, i think, having the best day in four years. >> as we await the conference call, regarding a heightened sense of urgency among consumers as we get into the holiday season. >> all right. thank you, carl. if you're just joining us, here's what you missed earlier on. ♪ >> announcer: welcome to "squawk on the street." here's what's happened so far. >> most people say the only way you can get multiple compression is by the "p" of the p/e going down. it's inconceivable to people that the "e" could go up. but my question back is, why would interest rates go up? why would they -- unless the economy is getting stronger? >> what's it feel to own an iconic institution like this? >> hopefully, my colleagues and i can change any misperceptions, we're excited to own it. it's an unbelievable franchise. it's not just iconic, but it's exciting. now, a lot of investors that say it's 120 per person, when gasoline goes down a dime. hold it just a second. remember how we were sweating the payroll tax increase? this is a payroll tax decrease in the form of going to the pump. i'm getting this -- >> $1.8 billion out of your briefcase? >> i'm looking for my -- i'm looking for my -- here it s this is what they did. they wrote a check last night. >> referring to starbucks? >> yes. this is a big check, and they actually have the money so it doesn't bounce. [ bell ringing ] >> it's the same kind of market share leader, high-quality product, good price relationship. and so, what i learned from starbucks is that cap ex and engaged culture equals growth, and that's what we're doing right now. good wednesday morning, we're live at post 9 on the new york stock exchange. the dow struggling for the morning hours, and negative in the presession, and continued into the regular session. disappointment over the four-day meter by the chinese leaders and downward guidance out of europe. macy's rallying, as decent news about the consumer. the ceo gave an all-important outlook on the all-important holiday season. stay tuned for that. we have more. lululemon rallying this morning. shares of the athletic apparel maker rated at overweight. the firm says lulu will see the top and bottom line execute. this is not the headline the obama administration wanted to see. "washington post," healthcare.gov unlikely to work by the end of november. what does that mean for the future of the health care law? we'll ask one of the authors. mike mayo, someone never afraid to speak out on the banks he covers, and today, b of a in his sights, and he's here to talk to us about it. call it extreme makeover. netflix edition. the online video company rolling out the biggest update to its tv experience in company history. we'll tell you exactly what has changed and what it means for you the next time you log on. first up, key officials, including todd park, are testifying at a hearing on healthcare.gov, and eamon brings us the highlights. >> reporter: we have a tense hearing going on up here on capitol hill. todd park is testifying up on capitol hill. the question whether he would testify or not has been resolved. is he there. he said he had hoped to have a little bit more time to work on the website before going up there. but members of this committee have been squabbling over everything from how much time each side, each party has to ask questions, to who is insulting whose staff. a lot of bruised feelings in the room here, and one of the questions for todd park so far has been, exactly how many people can use this obama care website at any one time? take a listen to this exchange. >> you gave a number. that number was erroneous. it couldn't handle 60,000 simultaneous users. documents that will be placed in the record show that on september 30th, the system crashed with 1,100, and the goal was to get to 10,000. would you like to tell us, for the record, based on your working on this, what number the american people could simultaneously be on the site working on on day one? before the system began to time out. >> so to answer as simply as i can -- thank you for the question -- the information that we had at the time was that cms had designed the system for 50,000, 60,000 concurrent users. right now, if you ask me right now, based on what i know right now, what the system is currently capable of handling, the then i'd be comfortable saying is that the system has been comfortably handling at present about 20,000 to 25,000 concurrent users. >> and, guys, obviously, 20,000 to 25,000 concurrent users is not enough for a nationwide system where there's high demand, at least in the initial stages for people to get onto this and figure out what exactly their options are. this hearing is still ongoing now, and as you mentioned, the article in the "washington post" this morning laying out the belief among some inside the administration that they will not be ready for this promised end of november deadline here. that's one of the questions that we can expect them to try to pin the officials down on throughout the day at this hearing, carl. >> eamon jabbers in washington. thank you so much. >> reporter: you bet. >> we want to continue the conversation. amy goldstein is the staff writer for the "washington post," the lead writer on the story eamon was mentioning. and bob over at the hill. good morning. >> good morning. >> good morning. >> amy, the figures you're talking about, to the degree to which the site can be enabled before crashing, are pretty worrisome. walk us through it. >> well, as the clip that you were just showing says, the idea was that the site was to have the capacity -- it was built to have the capacity to handle perhaps 50,000 to 60,000 people using it easily at any one time. and at the moment, about half that number of people can use it before it starts to have problems. and people sometimes find if there are too many people on it at the same time that they get screens that freeze, they can't continue to enter their information, then they wait a while, and then they get an error message and thrown off the website. >> your sources telling you november 30th now unlikely. are they giving you any indication as to what is likely? >> no. it's more a matter that they know how much software repair needs to be done, and these are pretty complex problems. and there's been, you know, as you know, huge race to get things working straight. and there's some improvements being made. but not everything is getting fixed. in fact, what we heard yesterday that's in our story this morning was that of the fixes that the main contractor, a company called cgi federal, has attempted so far, it's managed to get no more than 6 out of every 10 fixes it's attempted accomplished on the first or second try. so there's a lot of work still to be done. >> wow. bob, you know, we cover businesses here on cnbc, and we're always talking about underpromising and overdelivering. why has that not happened here? >> it's a big problem for the obama administration. clearly promised you can keep your health plan, and now republicans are pushing a bill that would allow people to do that. policy-wise, some questions whether that would work, because the cancellations have already gone out. but remember, the insurance companies were demonized in 2009-2010 as the bill was moving through congress. now, obama has to work with the insurance companies to make this program work. and remember, the enrollment numbers are coming out later this week. they'll be disappointing. there needs to be some good news for congressional democrats who are growing increasingly nervous about the election less than a year away. >> this morning, in your paper, amy, ezra klein has a brief side-bar referring to former president clinton's comments about the law allowing people to keep their health care if they like it. his point is, you won't have true reform if you are not willing to upend some things and the former president knows that. to what degree is that message understood in the white house? when will it be telegraphed by the white house, if at all in. >> well, it's -- the fact that the former president, who's also a democrat, put more pressure on the white house. puts more pressure on the white house. and what we know is that there's some thinking going on within the administration about what, if anything, to do about the fact that a growing number of people -- and these are mainly people who have not had job-based insurance policies, but have had to buy coverage on their own. it's those people, some of whom are having their health plans cancelled. they're having them cancelled, because their old insurance, in these cases, doesn't meet the requirements for coverage under the new law, which is supposed to get people better insurance. >> right. >> but the question is, those people are still not happy, because some of them might have to pay more. if they get different health plans. and figuring out what to do is a complicated set of tradeoffs, because, for instance, if they buy the new health plans, they might be able to get federal subsidies. they keep the old ones, they won't. >> right. >> but they might be cheaper. so this is a whole thorny set of questions that the administration is wrestling with under increasing pressure from congress, and now from the former president. >> very complex. final word, bob. is it the prevailing sense in washington that the aca, as we know it now, will continue to be implemented in that form? or is it going to be subject to change? >> i think it's going to be subject to change, and i think democrats and republicans are probably going to eventually agree on something. but it's such, as you know, such a partisan battle, it's hard to agree on anything related to obama care. so -- but democrats need a cover to say, listen, we want you to keep your health plan politically. policy-wise, the effect on obama care actually could be negative. so i think that it's very hard to predict what's going to happen from here, but there's a lot of just anxious democrats on capitol hill right now. >> bob, amy, we'll continue to watch it with your help. thank you so much. >> thank you. >> good to be with you. meantime, csla mike mayo joins us at post 9, setting his sights on bank of america, publishing a report demanding more accountability from the bank. mike, good to see you again. good morning. >> thanks for having me. >> we've seen you at a citi analyst meet. today, it's bac's turn. what's on your mind? >> first, i've been dead wrong on bank of america stocks, and put a sell rating on it. having said that, i'm dead right on the accountability issues at bank of america. a company should have strategy with metrics to judge success of that strategy, and with compensation that attaches to both. the compensation is not related to metrics that i can find. the metrics are undefined and the strategy's unclear. just yesterday, the ceo of bank of america compared his company to a battleship, and he previously said they're narrowing the focus. which is it? more narrow, or are you a battleship? the metrics used to judge success, the 2010 annual report says return on equity is extremely important metric. it's not mentioned again in the dialogue in any subsequent annual report. the last 15 earnings releases. or in prepared remarks in any presentation. so which is it? >> so as your complaint -- it's not just about comp, i'm guessing. it's not just about comp? >> by no means. so in terms of compensation, having said that, so what we did is we dug through the proxy, and the ceo has said a 1% return on assets is what they should achieve during this earnings rebuilding period. and some of the incentive compensation kicks in at only half that level. so if you're saying a 1% return on assets is where you should be, and you start getting incentive comp at .5% r.o.a., what gives? so that's certainly one issue. but there's a big list -- another example is, you know, all companies that i've covered have reclassified results at some point. >> sure. >> bank of america has restated over 400 items year-to-date due to change in classifications. this is something i've never seen. they've done it in each business line. they've done it in every quarter during this year. and again, the number of restatements of individual data is at least an outlier. >> you obviously preface it by saying you've been wrong on the stock with your sale. what has it done wrong? >> rising tide lifts all ships, so the housing environment has gotten a lot better than i had expected. the quantitative easing of $4 trillion federal reserve balance sheet certainly helps. credit quality in the industry is getting better, and, in fact, credit provisions for the banking industry as a whole in the third quarter were at the lowest level in four decades. so that -- bank of america has been a leveraged play on improving housing. >> the dynamics you knew were coming, yes? certainly qe was not going to take you by surprise. >> so i've had my recommendations. morgan stanley and citigroup. and i think citigroup should go more in that direction. so the key here is bank of america improve your accountability. citi did it by changing management. morgan stanley did it by becoming more focused with metrics that management could be held accountable to. bank of america, i feel, needs to take one of the roads. and importantly, the last few years has been relatively easy to succeed as a banker. nice tailwinds. those tailwinds are abating, and now you really need to have a more focused strategy, metrics to judge the success of the strategy, to succeed. and bank of america does not have that right now. >> the broader point to those that think you're being too aggressive, or you're being gadfly-icious, if they don't return accountability, it will be left to the regulators, right? do you think regulators will be more aggressive in the latter half of the president's term? >> we term this big-brother banking. yesterday, elizabeth warren saying the banks were out of control. you'll have big-brother banking if the investors don't step up and hold the large banks accountable. i'd prefer to have the investors hold them accountable than regulators, and my report, i hope, is a step in that right direction. investors deserve better than what bank of america has delivered in terms of how they evaluate themselves. where's the board of directors ensuring that investors'are front and center? >> all right. thank you very much. our next guest is one of the richest men in the world, and in his new book, he's highly critical of capitalism as it exists. lord david sainsbury is head of the sainsbury market in the u.k. twins. i didn't see them coming. i have obligations. cute obligations, but obligations. i need to rethink the core of my portfolio. what i really need is sleep. introducing the ishares core, building blocks for the heart of your portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. ask me what it's like to get your best night's sleep every night. 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[announcer] tempur-pedic owners are more satisfied than owners of any traditional mattress brand. tempur-pedic. the most highly recommended bed in america. now sleep cooler with extra cooling comfort on our bestselling tempur-breeze beds. visit tempurpedic.com to learn more, and find a retailer near you. take a look at the consumer sector. discretionary at least one of the few positive sectors on the s&p, which is down about 2.5 points. dominic chu is back at hq with more on that. dom? >> that's right, carl. no real surprises here, what's driving the action in the sector. macy's is by far the best performing stock in the s&p 500. consumer discretionary index, up around 9%. that's after america's second biggest department store chain posted profits and sales that beat estimates. sales were helped along as the company offered goods that were more custom tailored to each market. the second best performing stock is fellow department store jcpenney, up around 3-ish percent, and making it the trifecta, nordstrom up, as well. and we'll round out the list of gainers with an automaker, general motors up around 2%, as well, carl. back over to you. >> all right, dom, thank you so much. the debate on the future of capitalism has been heating up since the financial crisis back in 2008. a voice in that debate is lord davis sainsbury, who has put his experience of business and government into a new book called "progressive capitalism." in the book, he says the recent failures of capitalism are not an inherent part of it and could be curbed. could this mean an end to capitalism as we know it in the u.s.? joining us first on cnbc is lord david sainsbury, the former chairman of the parent company of the sainsbury food market chain in the u.k., where he served as the minister of science and innovation, and now chancellor at cambridge. lord david, great to have you. good morning. >> great to be here. >> you've been working on this for a while, since the trouble began. can you walk me through the origins of the line of thought? >> well, i think like a lot of people, indeed in the labor department -- labor party, which is what i was in, we thought the model of capitalism we had then was pretty good, but i came out of government in 2006, and i think fairly quickly it seemed to me there was some flaws emerging in the model of capitalism, and, of course, when the crash came, it was very clear there was some institutional problems. and then that's when i started writing -- writing this book. >> you're obviously talking to an audience that likes free market capitalism. they like to say the words, "free market capitalism." they like the way it sounds in their head, and they bristle when people want to change it or tinker with it. what exactly are you recommending? >> well, i think that's actually changed now. i mean, i get over here even in the states, i think four years out, there's some considerable concerns that everything was not right. and one of the things which was wrong was this division between the shareholders and companies, where the shareholders become very remote from the companies, and this has allowed companies -- whether they're banks or big corporations -- to go on their own way, sometimes taking risks and so on, which nearly brought down the financial system. >> so give me an example of a fix, as we like to call it. >> well, i think one of the biggest mistakes which was made, which we all ought to have seen, was banks and other corporations, but particularly the banks, trading on very small levels of equity, which meant if there was a sudden fall in their asset, they were pretty well bound to go bankrupt. and when i was a student over here at columbia getting my mba, we were taught that was a then you didn't do, and it shouldn't have been allowed to happen. >> we just looked at some of the rules of what you're calling progressive capitalism. the term social justice -- >> yeah. >> -- so argue is loaded. what do you mean by that? what is social justice, and how do you achieve it? >> i think people have a very strong sense in england, i expect here, also, of what is fair, what is fair and right. and i think as in england, also in america, people are very happy to see chief executives of banks making a lot of money when those companies or banks seemed very successful. when the financial crash came and the banks had to be bailed out by the government, and then those same bankers appeared, now getting huge bonuses, now called retention bonuses, that seemed like a reward for failure. and i think people said, look, that's not fair. that's not how the world should work. so i think this question of fairness is, as people's contribution to the economy really been rewarded in a fairway is a big issue. >> you're being supported by george soros. i think he'll help roll out the book here in the states. >> yeah. >> he himself is known to create controversy with some of his views regarding the role of government or institutions. >> right. >> do you expect a lot of pushback in this country? on your thesis? >> in england, there hasn't been much pushback. and so far, here, there hasn't been much, because i think people see that it's written as a book in defense of capitalism. it is really saying there are things that have gone wrong, but they're not inherent in capitalism. if you reform it, you can make it really achieve what people in capitalism want it to achieve. so that's what the book is about, and as a whole, people have said, "yeah, i think this is pretty much on the right lines." >> it will be interesting to see how it's received, and certainly how some of your ideas are carried forward. lord david, great having you in. thank you so much. >> thank you very much. >> lord david sainsbury, "progressive capitalism. ". facing lagging sales, ford's lincoln brand is going small. today, the car company unveiling a new smaller suv at an event in new york. is smaller actually better? we'll talk about that in just a moment. stick with innovation. stick with power. stick with technology. get the flexcare platinum. new from philips sonicare. explaining my moderate to severe so there i was again, chronic plaque psoriasis to another new stylist. it was a total embarrassment. and not the kind of attention i wanted. so i had a serious talk with my dermatologist about my treatment options. this time, she prescribed humira-adalimumab. humira helps to clear the surface of my skin by actually working inside my body. in clinical trials, most adults with moderate to severe plaque psoriasis saw 75% skin clearance. and the majority of people were clear or almost clear in just 4 months. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer have happened. blood, liver and nervous system problems, serious allergic reactions, and new or worsening heart failure have occurred. before starting humira, your doctor should test you for tb. ask your doctor if you live in or have been to a region where certain fungal infections are common. tell your doctor if you have had tb, hepatitis b, are prone to infections, or have symptoms such as fever, fatigue, cough, or sores. you should not start humira if you have any kind of infection. make the most of every moment. ask your dermatologist about humira, today. clearer skin is possible. ♪ ever heard the saying, "go small or go home"? well, lincoln, the luxury brand from ford, hopes the strategy will give a big boost to lagging sales. our phil lebeau explains in chicago. hey, phil. >> reporter: this is about the new vehicle that lincoln has unveiled today, called the mkc. let's look at it. it's really a small crossover utility vehicle. they're calling it a small suv. but it's built on a car platform. it will start at just under $34,000. now, lincoln is hoping the mkc captures the growing demand for small suvs and luxury crossover utility vehicles. year-to-date, lincoln sales down 3%. they've had no traction at all, while the luxury market overall is up 11%. but the head of lincoln says he believes things are starting to turn around. >> as the luxury business is about brand, it's about contribution margin, and it's about customers buying the best product. and we are really pleased to see that our price on the new mkc are up almost $6,000. our hybrid mix is over 30% now, which is something we didn't expect, frankly. >> reporter: so there are some metrics that are moving in favor of lincoln, which really has been stuck in the mud for a long time. but jim farley thinks they can bring it around. the showrooms have been dramatically improved across the country. but you really don't have a whole lot of selection of vehicles there. you have the mkz, the mkc, and two new vehicles coming out by the end of 2015. take a look at shares of ford. if lincoln ever catches on, guys, this will give ford shares a nice little boost here, because they are not a player in the luxury market at all, and many believe that if they can finally get lincoln on track, and that's a tall order, given how competitive the luxury market is, then perhaps that'll give the ford shares a boost. carl? >> yeah, more interesting is whether that's something mulally will oversee or not over time, phil. thank you so much. phil lebeau in chicago. this redesign is the biggest update to the tv experience in company history. that's what netflix had to say about the brand-new look of its home page this morning. so does the new look mean big changes for the netflix experience? we will bring you the answer in a few minutes. bells are about to sound across europe. we'll get that close in about 90 seconds. don't go away. that way with health care. work with unitedhealthcare, i get information on quality rated doctors, treatment options and cost estimates, so we can make better health decisions. that's health in numbers. unitedhealthcare. 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great day. we talked about macy's earlier. comp store sales up 3.5%. nobody had those kinds of numbers. everybody was around 1%, 1.5%, so a pleasant surprise. you don't see macy's up 8%, and it's pulling up a lot of the other names. nordstrom's tomorrow. perry ellis, a disappointment, had numbers out here, i think one and a half year low, the third quarter numbers were cut and full-year earnings were cut, as well. moving on here. the one group that's not showing any signs of bottom, and that's emerging markets stocks. these are ultra-interest rate sensitive, as the move up, of course, people tend to take money out of them. once again, china, korea, russia, taiwan, all of the emerging markets, down 2%. and the groups are approaching down 10%, 12% in the last several weeks. remember, they're very volatile. they routinely move in 20, 25-point ranges, but this has been pretty quick decline just in last few days. my sense here is if the markets stay here, we get this kind of flat performance, i think gradually we'll move back up, because people who are sitting on the sidelines are waiting for it to resolve. they don't see big drops, so they'll be forced, eventually, back in. that's been the pattern all year, at least. no big drop, eventually you get forced back in. >> i saw today, the s&p above the 200 day for more than a year, for a year. driving the shorts bananas. >> and many times, up 8%, 9%, even 10% above the two-day moving average, and that's a really stretched number. >> thanks, bob. when we come back, meet the new netflix. same as the old one? starting today, they're rolling out a major overhaul to the home screen, but while the display looks different, are any major changes in store? we have the answer when we come back. bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon. ♪ [ male announcer ] united is rolling out global, satellite-fed wi-fi to connect you even 35,000 feet over the ocean. ♪ that's...wifi friendly. ♪ you really love, what would you do?" ♪ [ woman ] i'd be a writer. 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[ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love? ♪ coming up on of "the half,"e we in more good news from retailers like macy's? plus the favorite stocks for the holiday shopping season. then, headed for another taper tantrum? some appear worried as rates continue to move higher. not to worry, though. we have your portfolio protection ideas. and don't miss our exclusive interview with pulte group's ceo. find out what's ahead for the housing market. that and much more is ahead on "the half." carl, we'll see you in a bit. >> all right. thanks. talk about an extreme makeover, netflix is completely revamping its home screen in what it calls the biggest update to the tv experience in company history. julia boorstin has the details for us live in los angeles. hi, julia. >> carl, to encourage you to spend more time streaming netflix videos on your tv set, it is transforming the app for televisions. now, looking to make the netflix experience more immersive, it features more damages, more synopsis and personalized recommendations based on your viewing history and what your friends like to make netflix more social. they say it's the biggest change to the interface in tv history, and first to roll out simultaneously. the new interface will be available on newer smart tvs, blu-ray players, roku box, and the current generation of xbox 360 and the playstation 3, as well as the new playstation 4, which launches friday. the new look will not work on microsoft's upcoming xbox 1 or the apple tv, because of the way the companies control their devices, and it will not affect how netflix looks on computers, ipads or smartphones. now, netflix says its members collectively watch more than a billion hours of netflix a month, and most of that is on their tv sets. having a single software platform across the tvs should help netflix on the back end, allowing it to quickly roll out updates and improve the software. just last week, netflix announced a deal with disney's marvel to create original exclusive programming, which will launch on netflix starting in 2015. now, carl, as an investor in original content, the company wants to make sure it's easier than ever to find and watch those new shows. back over to you. >> all right. very interesting. thank you so much, julia. julia boorstin. jon fortt here with some reaction to the change. >> yes. >> but also to some views lately that their cash flow's going to run in problems. you spend more on content, stubborn about raising prices among the consumers, it put as squeeze somewhere. >> yeah, it probably is. as for this interface issue, the folks who really ought to be worried -- tv network, right? because really -- >> shhh! >> i know, i know! but they are competing for share of eyeball time with all of the rest of us. and if they are able to get this platform out there, and they're able to tell exactly how long people are watching, make tweaks that allow them to opt imize the experience, they'll have an advantage over everybody else across the platforms. very smart. netflix very good at using data and annalytics. good for them. >> it comes on the week where "alpha house" goes live on friday. i've seen a couple of reviews. none of them really that great. >> i want to check it out. >> yeah. >> sent me a link yesterday, because they heard us talking about it, right here, post 9. they said, you want to see it? here, we'll send you a link. >> that's nice. my point is the game netflix has had to itself for a while, in terms of online originals, is not just theirs anymore? >> that's true. and amazon also being very careful about data, as you'd expect. taking a look at what people like and don't like, deciding what to put out there. netflix in a strong position, as far as how much it can afford to spend, and how it monetizes that. so, yeah, content is expensive. but as far as who can afford to pay for it -- >> true. >> -- they're right in there. >> that's true. the other big story, microsoft announcing it will do away with the employee-ranking system. in the current system, stack-ranking managers rank the employees and get rid of the bottom ones. why did the system fail and what's the best way for tech companies to retain talent? a big piece in the "journal" today. and hr practices at tech companies fascinate everybody. >> yeah. the big problem with the stank ranking -- stank. stack ranking. >> somebody would call it, yeah, somebody. >> -- is that it discouraged people in high-performing team, right? you could have a really great team where the lowest third of that team is better than most of the teams elsewhere, and kind of encouraged people to hang within the mediocre crowds within microsoft. that was the big problem. the stack-ranking issues, they may not be as bad as you think. netflix has one of the toughest cultures in silicon valley. >> is that true? >> you should see the slide deck, an extreme bias toward high-performance employees, if you're a consistent "b" player they'll give you a severance package, a lot of respect, but they only want the "a" player. you think it's fun and games, but it is not. >> "the journal" quotes jack wel welch, having a disciplined, rigid system at ge, where he said it's not cruel to cut the lowest performing worker. what's cruel is to make them think they belong there. >> yeah, you run into trouble at a position like microsoft, or employees working on challenging work, maybe not the strongest in the group. they start to get poached by others who want that talent. you can't hold onto them, because you're making them feel bad. >> and we know, microsoft is in a transition, as we await a new ceo. and they even make the point, we don't know if this will be our practice a year from now. if the new guy or new girl comes in and wants to change what ballmer has put into place, that's their right. >> and it's this time of transition where employees are uncertain to begin with. if they're high performing, make just not the super duper stars, what's the point in making them feel bad? >> isn't it fun covering tech from here as well as out from out west? >> yeah, i could get used to it. >> a busy guy, jon. in the meantime, check out macy's. the stock is soaring after numbers beat expectations, and it's an all-time high for the stock. what does it mean for the holiday season? we have the answer in just a moment. ♪ i want to fly like an eagle . tdd#: 1-800-345-2550 life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading. what a day for macy's. the stock soaring this morning after third quarter profits beat analysts' estimates by a wide margin. what macy's said about the holiday season may be the biggest reason for the stock's rally this morning. our courtney reagan is back at hq explaining that. all-time high, court. >> that's exactly right, carl. looks like last quarter was a speed bump for macy's. they posted a great third quarter, though. the third quarter is already in the past. it's all about encouraging commentary, suggesting a happy holiday season for macy's. so macy's beating the street on the top and bottom lines, as well as turning in a stronger than expected comparable sales number, up 3% over year, and a rebound from the last quarter decline. ceo terry lundgren making a key statement, saying the business improved over the quarter with particular strength in october. so we're entering the fourth quarter with confidence. what a good word to use. lundgren painting a jolly holiday forecast for investor, largely attributing the strategic moves by the company for the reason the quarter was so strong. shares trading at all-time hi highs, like you mentioned, up more than 9% in the session, marking the best daily percentage gain in over four years. shares have actually underperformed the s&p retail index over the past three months, but there's no better time than the holiday season for macy's to turn it around. cnbc contributor jan nippen says he thinks most americans associate macy's with gift giving and having the annual parade on thanksgiving day to kick off the season certainly helps americans associate macy's with the holidays. the big question remains, can the confidence the street is getting from macy's, will that be the exception or the rule for retail going into the holiday? macy's cfo even said on the conference call today, it's hard to tell, but they'll listen to what the competitors have to say about how the consumer is feeling. ca carl? >> certainly lighting a fire today. thank you, courtney reagan. we are continuing to monitor this morning's house oversight hearing on obama care, a live shot now. we'll bring you any relevant headlines as they occur. in the meantime, the woman who was previously the face of the affordable care act's website is speaking out about cyber bullying. in an interview with abc news, the woman who identified herself as adrianna, says she's endured online mocking and hateful comments. >> have you ever experienced anything like this before in your life? >> well, this is actually the reason why i wanted to be here, because as a kid, i never went through that. but now i am. you know, so some sort of bullying. >> it is bullying. >> but at the same time -- you know, i thought i had to do this for my child. i'm here to stand up for myself and defend myself. >> in exchange for free family photograph, adrianna agreed to allow for their use on the website, she was never paid. the affordable care act has been changed and no longer includes anyone's photo. checking in one of the hottest ipos, event management company, cvent shot up almost 57% when it ipo'd back in august. how is the company doing a few months after? we'll talk to the ceo when "squawk on the street" comes back. the dow down about 53. 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[ male announcer ] today, men with low t have androgel 1.62% testosterone gel. the #1 prescribed topical testosterone replacement therapy increases testosterone when used daily. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or signs in a woman, which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are or may become pregnant or are breast-feeding, should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep, and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. in a clinical study, over 80% of treated men had their t levels restored to normal. talk to your doctor about all your symptoms. get the blood tests. change your number. turn it up. androgel 1.62%. cvent is a cloud-based management platform, and it opened to the public in august of this year, closed that day with a nearly 57% gain from its ipo price. reggie aggarwal is the ceo and founder of cvent. we had him on that day back in august. he joins us again here at post 9 along with jon fortt. reggie, welcome back. >> thank you for having me. >> a huge hit. still above the ipo price, but not nearly as much. how are you feeling a few months in? >> yeah, we're feeling pretty good about the company. we did our earnings release yesterday, up 33% for our revenue growth. beat our numbers in terms of revenues and earnings and increased the guidance for next quarter. so we feel pretty good. >> what are you seeing that caused you to raise guidance? >> we have a huge opportunity here. we like to say the meetings and events industry is the biggest industry you never heard of. it's $565 billion spent, you know, every year on meetings and events, and cvent's positioned to be the number-one market leader in that space. a lot of opportunity. >> it seems like it might be awfully seasonal, though, when we see downturns in the economy, you see a lot of people cancelling the meetings. and also in the last quarter, you mentioned the margins are coming down from the mid-70s to the lower 70s, because you're adding customer service people. how will the model shake out in the long term, or what kind of seasonality should we expect as you get more mature? >> sure. events are very much critical. regardless of the year when they are, they're always happening. in 2009, think how difficult it was for the financial industry. but every bank still had their conference. that's something they do no matter what, because it's so important to meet face to face. in terms of the earnings, we have a track record of being good stewards of capital. for ten straight year, we were cash-flow positive. we see such a big opportunity, that we're investing very heavily, because we see a the lo of greenfield ahead of us, so we think it's the right move to do that. it's one of the reasons we went public. we have a great track record to find the balance of growth and profitability. >> speaking of which, we've seen a lot of new issues coming to market lately, don't want to show a profit, and want that to be the case as you go for scale, trying to get big, and set the margin maximumization down the road. is that essentially your model? >> we're different. we started in '99, had ten-straight years, and we are taking it down some. from a kosh flow perspective, we're generating cash every quarter still. so everyone needs to understand that. we think it's the best opportunity to invest because of the big opportunity ahead of us. >> you have the event planners on one side and the venues on the other that sort of make up the customer base. you're expanding into mobile -- mobile apps for on-premise services that can you provide. is there an opportunity to give the people who are attending the meetings something, too? because i know whenever i go to a conference or something, i want information, and it's sort of catch or catch can whether it's good or not. >> yeah, i think it's a very good point. mobile is really a large part of meetings, because think of the type of people that go to meetings. people like you and us, hundreds of attendee, all mobile professionals. they always have the mobile devices. they have their ipads, they're tweeting, on linkedin. so that's a perfect segue for the meetings industry. what's happening in the industry is a big transformation going. literally, the attendees are showing up with pitchforks and torches demanding mobile apps, because they're tired of carrying around the big brochures and really they want a mobile app, so they can, first of all, fine the information they need to, and they can engage more with the attendees -- other attendees and find out the information they want. you're seeing a big transformation -- they're seeing a big transformation happening between that. >> you're showing the mobile app. hold it up for a second. >> sorry, no worries. >> demonstrating to the camera. >> happy to show it. >> how much has your life changed being public versus private? is it a matter of just having more attorneys on staff? i mean, give us some color on that. >> yeah, so we think going public was the right thing to do. it's really two simple reasons, to access the capital, and that helps us, you know, because again, we see a big market, we want to continue to invest. and the second thing is, it helps to increase the brand awareness. a lot of people aren't aware of how big the meetings industry is, and what's happening, it's bringing a lot of attention and positioning us well with the brand on a global basis. cvent opened our london office, and it's getting a lot of attention. >> what's the most untapped segment of the market? is it different vendors within the food chain to exploit? >> it's all of the things you just mentioned. what cvent is positioned to do, is expanding internationally very aggressively with the london office. and the second thing, mobile and social are huge. we mentioned the mobile already. from a social view, an event is social by nature. with the social media coming on, we've been able to capture that. one of the new things on the product is something called a social wall. so during a -- you know, any type of event, you can display your twitter feeds, you can display the instagrams and any type of social media, and kind of the final thing is the core business is still growing, and so, it's still got a long ways to go, because we're replacing the manual processes of excel and access, and that's still the biggest greenfield opportunity. >> anyone who's been to a conference lately, understands the social media standpoint. reggie, good to see you again. we'll keep tabs on the progress. by the way, the dow continues to struggle here, down about 47. of course, cisco after the bell, jon, you'll have an interesting after-the-bell session, and now, back to headquarters and scott wapner and "halftime." >> thank you so much. here's what we're following today. retail shocker, after macy's big beat. is the holiday in for a big surprise? on the homefront, pulte's ceo and "halftime" exclusive on the state of housing right now. and stocks in jeopardy of posting back-to-back loss for the first time this month, and all of it coming as investors renew their concerns about the fed pulling back on its easing efforts. so as rates continue to move higher, is another taper tantrum on the way? and how can you protect your money? it is "halftime." let's play the action. josh, i'll begin with you. what happens if the fed continues to talk r?

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