that yield. yield does go -- that's yield. yield goes higher. crude oil is the key to this market. >> geez. >> i say that before my friend to the right of me says it. wow. we're above 50, jim. that's a move. >> it's for real. >> and that seems to be having a broad impact as you might expect on so many markets which we will get to as we start the road map this morning. glencore higher in the premarket. it plans to cut production, but alcoa lower on weaker than expected results. tesla gets a downgrade while elon musk lobs a put down at apple. oh, yeah. a bit of a smackdown. and gap shares are down almost 8% in the early trading. that on declining same-store sales. well, oil prices as we said, extending gains. crude on track to post the largest weekly increase percentage wise in six years. shares of glencore also up. that after the company announced plans to cut annual zinc production by a third. and alcoa's falling after it posted weaker than expected quarterly results, in part due to lower aluminum prices. last night on "mad money," jim was told alcoa's outlook has optimism. >> our experts press injected a deficit for next year in aluminum. then we have seen the stock price, what's in warehouses coming down to levels that are below the levels that we have seen before. i think there could be a lot of optimism in there. >> how much does alcoa predict what is going on? >> if alcoa is splitting into two different part, and then this upstream business, basical basically aluminum and balcite. claus was saying this aluminum company that everyone seems to hate today, if it were separate, it would be like freeport, up 30%, 40%, if glencore is cutting back zinc. we're hearing rationalization to valet. bhp and rio have had big weeks. he said this would be the pure commodity play would like. he said it is a well-timed split. pure play aluminum we would love it because the quarter wasn't good. people think this is the trough, david. we hear trough in so many different minerals because the rationalization is coming in with glencore finally blinking in a zinc market that's so horrendous. if they blink -- >> you mentioned glencore. they announced a half -- 500,000 ton reduction of contained zi e metals mine production, main rain to preserve the reserves in the ground at a time of low zinc and lead prices, which does not correctly value the scarce nature of the resources. glencore, you can see what's happened with that stock. that's the adr. when you look at what has happened to it, it is up sharply over the last couple of weeks as they start to fight back after that 29% down day a week ago friday. this is important. >> last monday. >> two weekses a ago, you go of water cooler talk. i can't buy stocks because of this glencore. i can't buy stocks. oil is going up. the real, which is one of the worst performing currencies, you and i should go to brazil and buy a couple mansions, the reale is strong. >> relative strength in over a week or so? >> i'm talking about two weeks ago you could only buy one-sixth pack of pbr if you had a share of pbr, now you can buy two six packs. that's facetious. the pbr is the same as my favorite beer pabst blue ribbon. people say the dollar is peaking worldwide against everything. you are hearing that. when cfos talk, one thing people will be saying is the dollar that peaked, our currency fx is not as big. look at pepsico. we did not talk about the fact that they are saying the dollar that peaked. they have russia. the ruble has been good. >> ruble strength is up since oil is up. a lot of this goes back to oil. >> everything goes back to oil. oil was the worst commodity in the third quarter. i was dealing with oil executives coming into town. the oil story they're talking is not -- we only had a 5% decline in production in our country, they're talking about a 20% to 30% production for next year. >> so is 50 here to stay? nobody will be talking about 30 bucks anymore? >> in spring when the oil had the run up to the 60s, companies got faked up. then it got brought down on the goldman call on the 30s. there's been a lot of shut in. a lot of equipment taken out. >> for some time you were saying it's not cut as much as you would have anticipated. >> in the last four weeks, the cutbacks have been amazing. you don't want to be in the oil pipeline business either. nat gas production is soaring. >> you don't want to be in any of those businesses. >> nat gas you do because of the share take. >> all right. >> coal. >> williams ships a lot of nat gas. not wanted on that stock. >> now you do. now you do. >> over the last week i have wanted to. you have the deal -- >> i have done a massive amount of work with my friends at rbn about the energy transfer and williams, they will own the natural gas business. they will export 5% to 8% of our natural gas in this country. they need all the pipe they can get. but the oil pipes are running 50% full. the natural gas pipes are r running 100% full. if you're in the oil business, not so hot. if you're in the nat gas business, demand is everywhere. >> we're talking now about those that transport natural gas but also that produce is? >> this is coal. >> where are we on this? >> natural gas at a 15-year low. >> thank you. 2.49. >> david, the utilities, coal, forget it. it's not going to be 2020. it's 2018. coal is going out of production. if hillary clinton is elected, all the companies that think they'll be okay, the utilities, forget about it. they're going natural gas and renewab renewables. you still need baseline, baseline is coal and natural gas. general electric very levered to the switch to natural gas. >> general electric has had one of its best weeks in years. >> number one performing industrial in this country. >> ge closes yesterday at 28.03. >> the secret -- >> started in the mid 24s. >> can i tell that you nelson peltz and jieff immelt, it's nelson peltz influences jeff immelt to buy more stock back. that's why ge will be a good stock to own. don't forget, 19% of this company is oil in china. i'm not convinced yet that -- i like oil as a bottoming story. i like china as a bottoming story. therefore people are playing ge as a way to bottom. >> ge had another great week. that was the week think announced the decision to divest most assets of ge capital. it did not sustain. it did not sustain because of the price of oil and the lowdown in china you think it's different this time? >> i think the balance sheet is different. i think it's under-levered company and it won't be circumstances, siffy, it can buy back more stock than people think. ge, i hope it comes in so people can get in. >> what a week we've had. this is the same week that ellen kullman was fired. it happened this week. >> exactly. it's been an amazing week and it's not over because tonight -- >> tonight, 9:45. we can watch the mets beat the dodgers. jake that, jane wells. let's talk about another west coast company. tesla receiving another downgrade at barclays. they go to underweight from equal weight. the firm saying they see many challenges ahead for the electric carmaker especially in regard to the musk has taken a shot at apple when saying apple is hiring tesla's engineers. he said they have hired people we have fired. we call apple the tesla graveyard. if you don't make it at tesla, you go work at apple. i'm not kidding. >> the tesla graveyard. getting crowded. >> you always talked about it being a cult stock. barclays saying they don't know if they can ramp up the output. >> did you see that piece. >> reality check on margins, future stream and delivery. >> model x -- yeah, the x launch reinforces three risks. but the wrong flow of data points. this piece is far more negative than people realize because they're really talking about the production is going to be much lower. big production miss. i don't know, david. it's a cult stock. leave it like that. >> it is. >> do you believe apple is a graveyard for tesla employees? >> it -- i -- they may have removed the head stones, but they didn't remove the bodies. i think that if anything, this is a poeltltergeist for apple. everything growth has been horrendo horrendous. look at google. >> can't apple fall into -- >> it's trading at 11 times earnings, but the source of funds for csx and union pacific, not for tesla. go figure. coal, coal is not coming back. coal is not coming back. coal is a bad story. >> we're talking about some positives here, all of this could come to a screeching halt when we talk about congress. republican congressional leaders set to meet this morning to discuss the selection of a new speaker of the house after majority leader kevin mccarthy stunned the gop by dropping out of the race. ohio congressman john boehner who is the speaker announced plans to retire at the end of this month. he says he will stay on as speaker until a replacement is found. why is all of this important? jim, i hate to say that on november 5th we have to have the debt ceiling raised. and then, by the way, in december we're talking about the budget. and we could be facing an impasse again. it's hard to imagine. if boehner keeps the job through the end of the year, that seems a positive. >> that's how i was looking at it, until you put the negative spin on it. >> but the turmoil in the fact that we don't have a speaker yet, mccarthy is not there. the idea that something could be more conservative than he is worries those who belief a shutdown is more likely. >> shutdown does hurt earnings. i can show you -- >> shutdown would be bad. >> you have to scale back the international. there's a lot -- travel. a lot has to be scaled back. united reported a good number. would sell the airlines on a shutdown. we know that. so, no, we have to watch it again. remember, it does get built in. by the time you get to the shutdown, the second day you have to buy the stocks. >> daryl issa was a member on "squawk box" this morning. let's hear what he said. >> i'm considering whether or not to put my name in the hat. to be honest, i probably am better suited to be the republican leader or committee chairman. but that's not a question of suiting. at this point or even experience. it's a question of can we come together? >> come together, we should get that button made? >> that again? it work well. >> hey. >> was what was it? rise above? >> rise above. >> my president bloomberg 2016 pin. i felt like wearing that last night. >> do you? >> second day in a row i listened to mayor bloomberg. >> i know. i saw your tweets. i thought i was day behind. >> i'm talking him. i love to listen to him. this is not in the market. a shutdown is not in the market. we're oblivious to it in the market. so does endlessly buying the industrials. fed lockhart, rate hike still likely. where is bullard, he's sanguine. those guys are what i call outlyers, but they love microphones. they walk a mile for a camera, those guys. >> with the 20-pound pack -- >> i would be shaking. i would be shaking. they could come down and get me. i'm right down here. post nine. i was very peaceful. i was very sanguine about the whole interaction. i don't know. the wife didn't like the way i got a beat down. >> really? >> yeah, she want mess s me to her the wife already. >> we have two empty seats. >> the guy went to titan in 2007. >> bullard can come sit next to us. >> coming up, bad news on the gap, at least if you own the stock. also ahead, an exclusive interview with new york fed president bill dudley as the interest rate debate rages on. let's look at futures. we are back with "squawk on the street" after this quick break. [announcer] right now at sleep train, get up to 48 months interest-free financing on tempur-pedic. save $300 on beautyrest and posturepedic. or choose $300 in free gifts with stearns & foster. the triple choice sale ends soon at sleep train. gap shares are falling in the premarket. the retailer reporting comps down 1% in september, hurt by a 10% decline at banana republic. comps at old navy up 4%. but the head of that division is leaving to become the ceo of ralph lauren. that will take place next month. gap got crushed when that was announced. >> did you see what art peck said? >> no. >> he said that -- he blamed poor fitting women's clothing. >> poor fitting. not the women. >> disappointing women's product. banana republic, it doesn't fit well. it's not flattering. do you want to have your wife shop at a place where the ceo says don't buy our clothes, they're not flattering. that's when that fella, who ran abercrombie & fitch didn't wasn't any people overweight go to his stores. jeffries. these are things you don't say. my clothes are ill-fitting. >> the stock, which frankly was in the mid 40s in the spring or close to the spring, is obviously down sharply from there. we talk a lot about the mixed picture in retail. >> yes. >> you cannot paint it with one brush. you cannot also invest across the sector and expect the same results. >> well -- >> this is yet another indication of that. >> elle brands, those numbers were extraordinary. costco, 8% comp. a lot of good little chatter about retail. jcpenney, ralph lauren, since the management change up 20 points. then the ill-fitting guy. >> you're giving positives, but there are plenty of negatives. it's not just gap. >> no, it's a mixed picture. i don't think cokohl's is readyo move. i think nordstrom is. i don't think you can say ill-fitting clothes, and say the clothes are ill-fitting, down 40%, i'll go look bad. >> what do you do. >> fire some people. there's ways you can turn it around. i don't want to fall into the stock by any means. by the way -- >> i got that. >> ascena shows you what happens if you stick around long enough. david jaffey comes on money all the time, hasn't been doing well, then golden gate bridges the gap there. >> you got them all. >> 9% stake in ascena retail group. golden gate capital is what jim is referring to they own the dress barn, lane bryant. >> yeah. they own maurice. >> ann taylor. >> i think that ascena is very undervalued, they made a series of acquisitions that have not worked out. they also had style issues with justice, a division of theirs. not the department of justice, but it sells as many clothes as the department of justice. they need a shakeup there. david jaffey has tried but -- >> you're not a midnight toeker, are you? >> excuse me? >> you said you're maurice. >> no this is not the steve miller band. this is the david jaffey band. >> got it. >> we're going to have cramer's mad dash coming up next as we count down to the opening bell on this friday. it's been quite a week. we're not done yet. by the way, joining us is new york fed president, bill dudley, he speaks to steve liesman, that's an exclusive interview coming up shortly. we're right back on "squawk on the street." ♪ [engine revving] ♪ ♪ ♪ ♪ a 401(k) is the most sound way to go. let's talk asset allocation. sure. you seem knowledgeable, professional. would you trust me as your financial advisor? i would. i would indeed. well, let's be clear here. i'm actually a dj. 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>> people want value. that means if you're going to do value, lower the price of some of these offering. earlier this week, a company i liked very much. against emc, but it's a growth stock. people, david -- if you looked between 215 and 230 the futures went up big. once the futures were up to 230, sellers were turned to the growth stocks. other than netflix where they put through the dollar price increase. the rest of them, google could not catch a break yesterday. the biotechs barely turned. they don't like growth. they like value. unless first data price -- first data, do the buyers a favor and price this lower. they want to get this thing out. they've been waiting so many years to try to start to monetize, not that they're back to break even yet. i'm not sure they are at kkr. >> the company is doing well. >> company is doing fine. >> i know they'll say why didn't you mention we're doing well. i'm talking about the pricing. right now people would rather own freeport because betting that there's disciplined return after glencore, then they want to own first data. probably at kkr saying this is incredible how out of favor the whole -- whether it's the biotechsthe techs in the ipo market, they're horrible. >> or as you say growth. >> yesterday you and i sat and talked about ebay, which was down as much as 8% at one point. not a rebound today. we were talking about walmart and amazon, that stock getting crushed yesterday as a result of this same service. >> you asked me how accurate it is. it's good for one part, but the amazon web services people like at am s at amazon. i'm concerned about the ipo market it says that the regular market is overbought but there's no new money coming in. it's overbought with rotation out of high growth. did you see skyworks yesterday? >> no. >> skyworks up for the year. avago down again. they were the ones to love, cell phones. what do they love now? pc tech. what is that about? >> skyworks has not done well since saying they would acquire pcm sierra. the down performance has been the 5:qacquire of a stock. when that turns, you can't argue that it's turned completely at this point, but it was that dialogue deal, it was ete for williams, those folks, to be fair, have been up sharply. >> that's because of yield. >> this deal. there's been a number of them. we're not seeing that premium be afforded the acquiring stock price that could have a negative effect in terms of more deals. >> david aldridge came on "mad money." in that announcement when he bought pcm sierra, the stock has gone down, down, down. avago, the inquisitors tried to put in a down point. they are all doing badly. what do people want? they want huntsman chemical. >> at least for now. >> yeah. what happens, watch alcoa. that's the key to the market. alcoa did report a bad quarter. the stock was down badly. now stock going down. i think you have to watch the metals. the glencore news today about the zichnc, that's so good for vale. >> are you saying something positive about vale? >> you have to get real about the reale. >> i will focus on getting real about that. why? >> israeliing. >> are they out of the woods? >> no, but petrobas and glencore kept me up at night, now netflix keeps me up at night. did you see the story in the "new york times"? 1.04, drops to 1.02, can you imagine the stock up 12 points off a dollar increase? no sense at all they would do this. there is no -- david, you pay $15 a month if you got to watch "narcos." >> i might. i might. >> i was at best buy last week. none of the guys have tvs. >> what do they have? >> 65 million members. at netflix. a lot of money. >> look -- >> what are their programming coasts? how much of this is a result of them being able to pay that bill? 4 billion, 5 billion. >> david, they know -- i asked about "narcos," i'm talking about a show that i think everyone should be watching. >> i need some good recommendations. "narcos.." >> an algorhythmic show based on breaking bad and scar face. they do tv where you don't have to worry about sponsors. you can do a darker form of tv. a form of tv more like real life it doesn't end with the big bang theory what is that. >> i don't know. they are great shows, some of them. we don't know how popular they are because they don't share those numbers. >> no, but "crouching tiger hidden dragon ii" is coming out in china. >> they could spend a fortune on marco polo and tell everybody it did well. >> it did well! >> you don't know. you're just listening to them what does well mean? >> who am i supposed to listen to? >> we spent a billion dollars to buy it. >> who am i supposed to listen to from netflix other than netflix? are you going to bet against reid hastings? >> no. they could just say it did well. they're not giving you numbers. >> that's true. >> thank you. >> i'm going to take that and run with it. mary thompson is on the floor. she's got more on what's moving. >> modest gains for the markets on the heels of yesterday's late afternoon rally based on the dovish notes from the last fed meeting. right now the dow jones is up 31 points. we want to look at energy. this is expected to be a factor in the gains today. we have oil above $50 a barrel. as you can see, energy seconds tending its rally this week. it's the best performing sector this week, which is very strong week for the markets. up over 8%. again, adding modestly to those gains right now. materials expected benefit. you heard jim talking about it. glencore cutting production of zinc. materials has been the second best performing zesector within the s&p 500 this week. drug stocks remain under pressure this morning. this is the worst performing sector this week. down again right now. overall the dow is up 3% this week. the s&p 500 expected to post its best weekly performance since october of 2014. the nasdaq again, because of the concerns about the biotech area, has been the weakest performer. though still up 2%. look at the russell. up over 4% this week. extending their gains in early trading, up about -- just over a point now. but it's close to exiting the correction. it's still down over -- call it 10.2% from its all-time high. quickly want to check on the transports. they had a big move yesterday. they're extending that move today. despite higher oil prices expected to get a lift from ual, united airlines, raising the forecast in large part because of the credit card deal. up just about 0.9%. very strong week for the dow jones transports. their best week since october of 2012. right now the dow is up 44 points. david, back to you. >> thank you very much, mary thompson. want to update a couple deals i'm following closely led by beer. we are moving closer to the put up or shut up deadline which will be next wednesday at noon here in the states for sab to say, okay, abi, we're willing to talk to you. therefore we will extend this deadline or the possibility that it will not be extended and that abi will essentially go away with its current proposal to acquire sab in what would be a 1$104 billion deal involving broad divestitures around the globe. today carlos brito is in new york meeting with investors, trying to tell them about the merits of the transaction and the synergies brought to bear as a result of it. for its part, yes, this morning, sab increased its own coast savisav cost savings, not on a deal, but on their own. some analysts are saying that was already in our numbers. we anticipated significant increase in cost savings at sab is it can be viewed a couple ways. it can be viewed as a negative saying they are undertaking things they believe will be showing more value or saying, come on, we're worth more, but that's all they're doing. it's a high stakes negotiation, anybody can -- you can figure out what odds are that they will get something done. as i pointed out in my first reports on this potential deal, one of the keys of the santo domingo family, led by alejandro santo domingo. others have focused on that in the press. at every opportunity abi is out there saying investors of sab, please, pressure them. we may not have that much more money left. please, pressure them. brito will be saying the same thing today. >> altria has been going up, which is my tell on whether this things can happen. altria has been incredibly strong stock. not op cigarette growth, but that additional money that would come their way. more buyback. >> finally, i did want to also hit emc. we talked about it a great deal yesterday as we shared the details of a potential deal under which dell would buy the company. he emc stock up a bit today. the deal is above 27. the question is how much and what the composition of said deal would be. as i reported yesterday, it would rely enormously on the credit markets to complete this deal. dell would have to borrow at least $40 billion in the credit markets, have $50 billion plus in debt on its own balance sheet. the leverage ratios, you can work them out. it's not crazy. it gets up there. maybe four times or so, but not beyond the pale. that said, it's asking a lot of the credit markets. even with this idea of hybrid approach. right now they're still working on the credit market side of this. people familiar with the situation tell me they have not gotten it locked up on the credit markets yet and the debt they would need. still negotiating. one thing is i can share is vm ware. dell intends to maintain control of that company. but there is the expectation they can use some of that 80%, 81% stake and spin some of it off to share holders as part of the consideration for your emc shares, so you would get some number in cash, and certain amount in vmware stock, which would be done potentially in a tax-free manner. if dell were to simply buy it and sell vmware shares, that's not a tax efficient way to do it. this might be. so this deal might be largely cash and this stub of vmware given to emc shareholders, all of which they hope will combine to a price where they will say, okay. >> you don't want the traditional array business of emc, the storage business what about the off-shore cash? bid could go much higher. >> it's not clear they can access that cash in an effective manner. i never put it pass a lot of these tax lawyers to figure out ways go about doing it, but that does not seem to be part of what they're aiming for. you can borrow against it, that's helpful. >> this is one where i was telling people on "mad money" that i feel the upside is complete on emc, but you tell me there could be more. >> we will see. if you end up with a deal worth 30, 31, do share holders of emc say that's enough? what does elliott say? they are only a 2% holder, but they can agitate. i don't have all the answers. as we didn't yesterday. but this is still moving ahead. we may see something sooner rather than later. this is one where it did help the valuations of others, hewlett-packard, jim stewart with the evaluation of hewlett-packard. a lot of chatter that microsoft is reigniting the pc world. when i spent time out at microsoft, there is great enthusiasm for the surface. the surface. >> surface? >> the surface. the surface! >> okay. let's get to rick santelli now in chicago. >> good morning. there were a lot of investor and trading questions and issues after yesterday's minutes. the way the market behaved, the way the dollar behaved. if you look at an intraday of tens, unchanged up. two-day you can see we firmed up dramatically. up 11 basis points on the week. 12, by the way. settled at 199. another issue traders had yesterday was that if this was catalyst by the fed's minutes, why didn't the dollar act weaker? it dropped yesterday. on the intraday, it's the two-day chart what happened after yesterday, late in the day, last night has given it momentum. there's an easy answer here. it's not only the fed, it's the fed, the effects on the dollar, and the commodity cycle may be bottoming because if you go back to the last time the crb was at this level, which was the end of july, and you overlay a ten-year note yield, all of a sundadden,e issue dragging it up is the commodity situation. peter bookfare has written grit pieces on this. it's more about the recalibration of supply. free markets are still wonderful. can you imagine if governments were trying to tinker with this? they're making adjustments, commodities, suppliers, growers, they're all making adjustments here. now we'll get a better demand picture. david faber, back to you. >> thank you very much, rick santelli. it was nine years ago today that google agreed to buy youtube. at the time the company's largest acquisition. what does the future hold for youtube rival vinheo. and a one-time publicist for steve jobs is portrayed in the new movie. we will talk were andy cunningham about what it was like to work with jobs. awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks. active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management. prge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world. dentist appointment when my teeth are ready? ♪ can it tell the doctor how long you have to wear this thing? ♪ can it tell the flight attendant to please not wake me this time? ♪ the answer is yes, it can. so, the question your customers are really asking is, can your business deliver? . steve jobs, the movie, opens today. reviews mostly positive a favorable 91% rating on rotten tomatoes. some reviews, the best thing about steve jobs, the thing that makes it work is both tribute and critique is how messy it is. peter travers, fassbender gives a towering performance of savage wit and limele leimitless firep. >> all right. >> stock doing well. disney coming back as well. >> cost cutting concerns which were hitting all of media hard have abated a bit. >> they don't know cufocus on broadband. >> stop trading with jim after this. it lets you trade stocks, options, futures... even advanced orders. and it offers more charts than a lot of the other competitors do in desktop. you work so late. i guess you don't see your family very much? i see them all the time. did you finish your derivative pricing model, honey? for all the confidence you need. td ameritrade. you got this. bob dylan. to improve my language skills, i've read all of your lyrics. you've read all of my lyrics? i can read 800 million pages per second. that's fast. my analysis shows your major themes are that time passes. and love fades. that sounds about right. i have never known love. maybe we should write a song together. i can sing. you can sing? do be bop. be bop do. do be do be do. do do do be do. i'm a senior field technician for pg&e here in san jose. pg&e is using new technology to improve our system, replacing pipelines throughout the city of san jose, to provide safe and reliable services. raising a family here in the city of san jose has been a wonderful experience. my oldest son now works for pg&e. when i do get a chance, an opportunity to work with him, it's always a pleasure. i love my job and i care about the work i do. i know how hard our crews work for our customers. i want them to know that they do have a safe and reliable system. together, we're building a better california. with jim. >> there's so much to talk about, whether it's the gravitas of the eli lilly upgrade today. probably the cheapest of the big pharmas. international paper cutting back, discipline on the supply side. last night on "mad money," dominos is not yum. look. listen to me on this. pizza hut down huge in india. up big in -- india is big for dominos because they have a vegetarian pizza. the fact the costs of making pizza is down and revenues -- do not worry about supply chain. >> did he explain the franchise question? >> yes. >> why it was not -- >> it had do with the fact that -- when food costs come down, they get a vig. but it does hurt the revenue, but not the bottom line. i like domino's here. i think there's -- there's a big bond deal they're doing. 900 million they're freeing up. we did not talk about that. look at the capital structure of dominos. it's happening now. i would not seldom knl dominos. i still don't have conviction on yum. >> stay away. >> i order via emoji for dominos. banana peppers. extraordinarily good. >> got it. >> what do we have on "mad" tonight. >> i'm reviewing all of these ipos. it will be the coliseum of ipos. >> what's already been -- what's coming or? >> one that has happened and i'm giving you a preview. some of these deals, we'll be talking about these deals. next week is big earnings season but also ipo season. if the ipos don't do well, your market won't do well. that means no more cash coming in let's stay focused on commodity producers, on whether biotech can bounce and what happens to the roll-ups. >> beautiful. >> good luck tonight. >> thank you. we'll need it. we'll need it against mr. kershaw. coming up, an exclusive interview with new york fed president bill dudley. we all know that directv's better at this whole tv thing. so, to beat them, we're gonna get bigger. we're gonna merge with cableworld. (exec 1) cableworld? i can't stand those guys. (exec 2) they're the worst. (exec 3) they're totally incompetent. (exec 4) that company stinks and i mean they smell. i used to work there. i had to breathe through my mouth the whole time. (cole) shh, shh, shh, they're here. (newhart) this is gonna be fun, firing everyone. (vo) get rid of cable and switch to directv. call 1-800-directv. good morning, welcome to "squawk on the street," i'm david faber along with sara eisen and simon hobbs. carl hat day off today. let's give you a look at markets and oil, which seems to be such an important component of all the markets. certainly adding to what has been a good week for the broader equity markets. we continue that trend thus far early in the session. let's get to rick santelli with breaking news on wholesale trade. rick? >> yes. wholesale inventories and sales for august, which means spot in the middle of the third quarter, last quarter, up 0.1 on inventories. last month it was down 0.1. the first minus number since may of 2013. it is a positive read and better than expectations. could have some subtle, subtle changes to the gdp, considering the revision to july, it will be taking away based on that alone. sales were down 1%. this is a surprise. much more than double what we were expecting. last month unrevised down 0.3. so inventories, well, important. but you need to move the inventories and the sales number is not pushing it in that direction. simon, back to you. >> thank you very much. so the market is managing to hold gains. in less than two weeks, the s&p has gained 7% that cuts the loss year to date to just 2%. jason pirdy and michael hanson join us now. jason this is a strong rally we have here. >> you know, it is. but so the circumstances that we're having is the market is trying to decide between whether this correction we recently experienced is one that will be associated with a recession or one that's not. there's a dramatic divergence in where there is a perceived scare, and then the economy and markets figure out we're not in as dad of shape as what could have possibly been. in those scenarios the market tends to find its way on average back to the previous highs within seven months. it seems like we're ahead of track based on the market's path. >> jason, just help us understand exactly what's happened over the past two weeks. you will be aware, because it's got traction today, that bank of america has a note out where they're noting that $53 billion has gone into money market funds, cash. the conclusion from that, they say, is that this is pure and simply a short-covering rally. that may be preempttive to what you're talking about, but that's where we are. this is a short-covering rally, isn't it? >> it's no surprise when you have a 10% market drop that you have a fall off in sentiment and a pick up in conservativism by investors. that partially creates that 10% move and what is the aftermath of the reaction in the markets. that's a normal environment. in terms of what has been happening, people are really trying to die just two primary pieces of information. one is the impact that the energy drop and decline in that sector is having on the global economy. and the second piece, which is probably bigger in peoples minds is what exactly is the impact that china's manufacturing slowdown is having as it filters through. the imf made an interesting statement last week. christine lagard coming out saying the numbers for this year and next year are at risk. there are estimates that it could be 0.5% sit from the chinese situation. our take is we're still in a growth environment. you have that hit coming through. >> okay. >> that magnitude seems about right to us. and investors should be using this as an opportunity to buy in the middle of a longer term economic expansion. >> let me show you one place they're buying. an ipo has just opened on the nasdaq. the company is cpi card group, a provider of credit and debit cards. it's soaring. up 19%. it lowered its ipo price to $10 per share on thursday. it set a range between $16 and $18 in september. keep in mind, this is somewhat of a bumpy of an ipo market with purestorage coming out of the gate lower. this is up higher now 23% for cpi card group. i wonder if it's a sign that, you know, in slow growth environments, when these ipos are hot and investors like them, they soar. >> in the near-term, there's a bit of a concern of growth. third quarter growth in the u.s. will be relatively soft. it looks like some very significant drag on the trade side. and also that inventory correction discussed earlier. if look through to time domestic demand, it's doing well. with the lag, that should be supported for some more cap expending down the road. we're not seeing it now. that's a glass half full attitude it may be perfectly correct, but let's not forget where we are on this rally. this rally is predicated on a soft jobs number we had out in the employment report and the idea that the fed dare not raise interest rates until next year. there's a survey out today that suggests the risk of recession in this country over the next 12 months has risen to 15%. it's an indication of the fear that people have of where the economy is going. what would you say to that? >> there's obviously some risk of recession out there at any given point in time. it's not especially high. this is a recovery that's had a very slow build. i'm not sure we're on the verge of a downtown. fed officials say they think things are good enough to support as have to communicate why they think that, why they think the economy can handle a rate hike and we have a couple months before they can make that decision. >> ultimately, as barclays put it, it may be because unemployment plunges. on the basis that we're rallying, what is the best idea now? >> i would probably point out a couple different areas. number one, for those -- both of these are for those willing to take a bit more risk right now in their portfolios. one area i think is international developed markets, european and japan. those areas still are the cheapest of the global sectors. they're sometimes not as good of companies as those in the u.s. but the valuation discount there is still pretty monstrous. that's an interesting opportunity. in the u.s., i would probably argue that you're quality side of the equation, your side of the investment argument where you have stable business models, high profit margins, those companies in a lot of cases have been hit quite as hard as the broad market. and in many cases you're getting a long-term investment return that works really well in a low growth, low economic growth environment. >> thank you both for your analysis. jason pride and michael hanson. one of the stand-out force this week is the move on oil. jackie deangelis has more. >> what has been thought of as a potential break out for oil has more legs now. several assaults on that critical $50 level. we have broken through but not able to close over that level. traders tell me we will keep testing it until we close and hold. the intraday high, $50.92, now trading slightly under the $50 level. geopolitics slightly back in focus. you cannot dismiss russia's involvement in syria now. being viewed as an alliance with iran, joining power and aligning forces within the region. speculation occurring that saudi arabia may have to prepare a counter offensive here. saudi arabia has said assad must go. and this really is not about syria as an oil producing region. they don't produce oil, but it's about influence in the region. we've seen this before when it comes to wars. prices of oils have shot up. it is something to watch. you have goldman out yesterday reiterating its bearish call on oil, going back to the fundament fundamentals. traders tell me if something like this escalates, all bets are off. s&p energy sector up nearly 8% for the week. up next, the race for speaker of the house is heating up. congressman darrell issa thinking of throwing his hat in the ring. larry kudlow will be joining us live at post nine to weigh in on the congressional chaos. "squawk on the street" will be right back. care of my heart. that's why i take meta. meta is clinically proven to help lower cholesterol. try meta today. and for a tasty heart healthy snack, try a meta health bar. . house republicans are meeting on capitol hill this hour. the republican conference is in chaos after majority leader kevin mccarthy dropped out of the speaker's race who will step up to unite the party? we have the perfect guest on this, cnbc's senior contributor, larry kudlow. thank so you much. >> thank you. >> are you hoping that paul ryan will be pressured into taking this? >> paul is an old friend. oddly enough i was speaking to him on wednesday, i was interviewing him before the mccarthy thing. i was talking to him about tax reform, then this story broke. he would be good. he would be a unifier. it's up to him. >> sounds like it's up to his wife. >> may be. he's got kids. you could be on the road 150 days a year if you're speaker. for a guy with a family, that's a grueling thing. he would be a great unifier, but he's not only one that could do it. >> who else do you have your eye on? >> i have a couple. not everybody will agree with me. here's the thought. i want the leadership to be a coalition. all right? i want people from the conservative wing, from the moderate conservatives and so forth. for example, i would like to see jim jordan of ohio in the leadership. maybe not speaker. is good speaker who could unify the caucus, peter roscom from the suburbs of chicago. very good lines to all the different factions. formally a deputy whip. those are a couple. lots of names out there that could do the job. let me say this, i'm more interested in the policies. you know we have ftax reform, budget caps. >> dead lines coming up. >> the policies are important. i don't think the public is as tuned in to the speakership as we are. and i think a year from now it's not going to be an issue what will be an issue is whether we get a 15% corporate tax, which is what i want. >> more immediately the party appears to be in turmoil. if you look at what's being written in the journal, maybe paul ryan is the only man who can save the gop now. you and i touched on this when we spoke about shutting the government down. whether you crusade passionately and angrily for the unadulterate ed principled conservatives or you sit back and say how can we win the middle ground in an environment where donald trump is doing exceptionally well, it would ahere shgppeaappear, is g disturbing? >> that donald trump is ahead? >> yeah. >> don't you have to get the white house at some point? >> yes, i think you do it's early, simon, for that. you have to win the primary first. donald trump, who is a friend. you probably know him. i've interviewed him many, many times. he has great corporate tax plan. i just want to say that terrific. the overall plan itself some question on whether it's anything but, you know, would be revenue negative not revenue neutral. i know from where you come from, the club for growth -- >> i'm the wrong guy to talk about that. >> we don't need to go down that road. >> just to finish the donald point. i don't agree with him about mass deportation. i don't want trade wars with china i do have my differences with donald. on this point here, simon, in perspective we have to cover this. it's an important event. it's not, in my opinion, truly a national interns emergency. >> if the government gets shutdown, if we have a holdout over the debt ceiling, which looks unlikely -- >> so our first deadline is october 29th with the highway funding. >> let me comment. myself i don't get excited about a three-day budget shutdown. i don't care. republicans have done that. democrats have done that. however, i'm very much opposed to any expiration of the debt ceiling which would be a global economic event. you won't remember this, but four years ago on the air i had a knock 'em down drag 'em out fight with eric can't tor. >> i do remember that. >> i said no way, don't go there. that's an issue. but i want the party to be much more aggressive and use something called reconciliation in the senate, a budget and tax process. you only need 51 votes, not 606789 you can keep the caps on the budget go to a 15% corporate tax rate, which would stimulate the economy. i'm waiting for the republicans to do a lot of things they didn't do after they won a year ago. that's why this revolt is happening. >> you're talking about corporate tax reform as if it's a realistic thing that might happen. there's no chance this congress is passing a corporate tax reform. >> that's not where the anger is coming from. the anger is that they're not blocking the democrats sufficientl sufficiently. >> the anger is they have not fully fulfilled their promises and passed a bunch of bills and put it on the president's desk. mr. ryan, as we talk, or at least before yesterday, was preparing for a reconciliation bill that would essentially repeal obama care. that's in tow. corporate tax reform they're slow on. this budget issue this so-called sequester caps is a huge issue. the xm bank is a huge issue. policy is very important here. and that's what the fight is over in effect. >> why does nobody want to be speaker? everybody wants to be president. >> doesn't pay that well. that's number one. you're on the road 150 -- i think somebody told me john boehner was on the road 195 days. you know what? you're a manager. you have to keep everybody happy. it's not so easy. >> the right is seeking to stack their own people in other committees to make the job of speaker hard. >> i want the rights to have representation in the leadership position. i do. a friend of mine interviewed him a million time, jim jordan, i want him to be in the leadership. european style, british style, you need to build a coalition. they got do that in this battle, however it works out. they have to have people in there and get along and try to work things out. it's great fun. great drama, but i agree with you, david faber, do not mess with the debt ceiling. that's the one thing i think is off limits. >> november 5th, it's approaching. >> it will go -- you know, they'll keep it going for months after that. >> not necessarily months. they play things tight in treasury. in terms of what is coming in and out. >> gold is rising. i think it's all about the debt ceiling. i don't like that part. please, may i have, simon, i appeal to you directly, i want a 15% corporate tax rate. china is 25%. i want 15%. it will create millions of jobs. >> could you organize a speaker of the house before we get to that stage? >> yeah, i reckon so. >> that's kind of a stepping stone. >> i will work on it all the rest of today. >> thanks, larry. always good to talk to you about this. larry kudlow. be sure to tune in to cnbc october 28th for the republican presidential debate moderated by our own carl quintanilla, becky quick, larry kudlow will be there. there will be talk of corporate tax reform. coming up, the last six months have not been kind to am shares, falling about 13%. gene munster says there is a certain trend that will provide a big upward tailwind for the stock. more on that when we come back. proud of you, son. ge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world. welcome back to "squawk on the street." check out shares of solar winds, an enterprise technology and data management company. stocks spiking up about 10%, that's on a reuters story that the company may be looking to sell itself to possibly private equity buyers. it may be shopping itself around. this according to a reuters report. that is causing shares to move higher. solarwinds, it is an enterprise technology company. up because of those reuters headlines. we'll keep an eye on them. we should say it's traded, again, a huge amount of shares right now, well eclipsing its average daily volume over the past three months. would apple stock do the same? apple investors divided about how far the stock will react to a faster potentially iphone upgrade cycle. optimists predicting 40% more upgrade in the stock. gene munster is managing director and senior research analyst from piper jaffray. he joins us from minneapolis. the issue here is the rollout now across the country of these upgrade programs, be them from apple, or from the telecom providers. talk about what's happening and why you believe it's a game changer for apple. >> well, they're basically compressing the time it is to upgrade. right now the average consumer upgrades every 22 months. the carriers are looking in consumers to upgrade on an annual basis. so that incentive will get people to upgrade phones more which could have a profound impact on apple's numbers. just to rewind a year ago when you bought your i phone you bought it on a subsidized basis, which was every two years. today we estimate that about 95% of iphone users are going to buy with the option to upgrade annually. that's a big deal. a significant change to how people are buying iphones and can have a profound impact on apple's overall business. >> yeah. you call the stock up to $172, which would be over 50% from where we are now. the naysayers like abby lander are suggesting that our conversations with users indicate the upgrade cycle will remain at about two years. they call the stock at 125. there lies the discrepancy where what happens when people can pay this monthly fee to upgrade at the end of the year. >> they'll emphasize that debate, how often people upgrade. if people are paying for the option to upgrade annually and are getting that as part of the contact, we think that 75% of people will take them up on that option. ultimately everyone should take their carriers up on that option. we're a big believer that this will have an impact in terms of compressing and speeding up the pace at which people upgrade phones. >> there is research showing that sales of the apple mac line is slowing, arguably outperforming pcs, but still within the ecosystem of apple, a disappointment. how does that impact the stock? we know the bulk of the money is made from iphones. >> you said it right there. the mac right now is about 9% of total revenue. 8% of total profit. to get the stock right is to get the iphone right. this topic of how fast people will upgrade is more critical than the mac. >> do you think, gene, wall street has it wrong. the dow sis up 3.5%, apple has barely moved. >> the simple answer is i think they do have it wrong. it's hard to imagine a stock hyper scrutinized like apple for that many investors to be missing the point. at the end of the day, the s-cycles tend to be nervous periods for investors to wonder how the growth will be after this great sixth cycle. that concern has really clouded the ability to look at what's underlying and what's going on and what is really going on is that people are standardized on the iphone. they're gaining market share. and they're upgrading their phones faster. so we think when they report the quarter on october 27th the lights will start to go on for investors that something bigger is going on here. >> one of the bigger questions is whether they launch the apple car on to the market. did you see what elon musk has been suggesting? that apple is a tesla graveyard where failed employees go to work. he said they hire people we fire. if you don't make it at tesla, you go to apple. i'm not kidding. just rhetoric? >> there's always talk that apple will buy tesla. i think that got a bit more of a long shot today based on those comments. but that said, the car opportunity is a big opportunity for tesla and apple. if apple can replicate bmw, that would add 135 billion to apple's revenue. >> you really are a bull. gene, good to talk to you. gene munster joining us. when we come back, carly fiorina has been frequently called one of tech's worst ceo's but jim stewart takes a different look at that title. he will look into her record and will tell us all about it when we come back. wow! hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you. at ally bank no branches equalsit's a fact.. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. good morning. i'm sue herera, here is your cnbc news update. the obama administration has ended the pentagon's $500 million program to train and equip syrian rebels. the defense secretary meeting his counterpart in london said he wasn't happy with the early efforts and results. one person is dead, three injured after an early morning fight between two groups of students led to a shooting at northern arizona university. it happened outside a student dorm. the suspect is 18-year-old steven jones who is in police custody. a democracy group has won this year's nobel peace prize for its decisive contribution to building a pluralistic democracy in tunisia. tunisia's young and shaky democracy suffered two extremist attacks this year in which 60 people were killed. the california coastal commission approving a plan by seaworld san diego to expand its killer whale tanks. hundreds of animal welfare activists protested that plan. the approval comes with the provision that no new whales from the wild will be kept there. that's your cnbc news update. back to you, david. thank you very much. gop front-runner donald trump has been anything but shy about attack his opponents. former hewlett-packard ceo carly fiorina, he said her record as ceo was a disaster. but our next guest says she shouldn't be known as hp's worst chief executive but rather someone else deserves that distinction. joining us now is cnbc contributor jim stewart. it's friday, here he is. >> hi, everybody. >> who gets the title? >> well, you know, look, in fairness to fiorina, leo appletucker, only there slightly less than one year wreaked more havoc and the stock went down by just as much as over her six-year term. the revelations about this disastrous autonomy deal just keep coming out. the latest one i'm highlighting in nominating him as the worst tech ceo, they wrote off 8.8 billion of autonomy. in their due diligence, they had kgb do an accounting, and the chairman and the board members never read it. can you imagine? >> how do you know that? >> was in an independent study by a big law firm. to its credit, hp has revised its approach to due diligence. but they're paying 11 billion for this thing, a lot of money to kpg for the report, and the top people don't read it there's an executive summary. >> what did the report say? >> number one, it says they wouldn't answer our questions. they wouldn't give us the documents we wanted. so we couldn't answer most of the questions. they did say growth is coming through acquisitions, not through organic growth. organic growth is actually falling. both in the core software business and related businesses. that was key to this huge price this growth number. you had to plug the growth numbers to come near the $11 billion price. that was in black and white. >> don't forget, he also embarked on that plan to split the company, not in the way that it's being split now. that created chaos. i would tend to agree with you. he's one of the worst in his brief tenure of all time. >> the question is he's not running for president. >> no. >> i'm saying, let's be fair here to fiorina. we're throwing around these extreme characterizations. by the way, professor sondfield at yale said he is one of the worst. i said do you think she's worse than this? he stands by his opinion that she's worst. but it's hard to top this. >> it's extraordinary that you have such a titan in this country that continued to be so badly managed. >> i asked several of the experts i talked to. >> i said is this so bizarre because if we knew more about corporate things, he said hewlett-packard was an outlyer. >> didn't they used to spy on their board members? >> i reported in another column. they hired apotheker, the rest of the board didn't want to meet him. they didn't want do it. they didn't want to sit down and have dinner with the guy. >> bizarre. you wouldn't want to sit down and have dinner with him. i remember meeting him. my god. >> really? >> you have to remember donald trump as his record as ceo. both trump and fiorina are rung on their records of corporate leadership. >> at least with hp, we have the public, the stock price, a wealth of information. trump is a private company. so we don't really know. the trump record is not very sterling. you know, has any ceo ever been elected president of -- >> wasn't herbert hoover? was he a ceo? coolidge? >> i don't think heit's been se as a fast pass to the presidency. >> there's an anger and an anti-establishment movement on both sides of the spectrum that could be a game changer. that could be why donald trump is where he is and why hillary may not win the primary. >> going back to the founding fathers, it reminded me they were not professional politicians. they all had lives outside. they had businesses, they stepped in as a public service to government and went back to whatever their lives were. >> you didn't need a billion to run for president back then. >> no. >> the kochs will do that for you if they get it right. >> to be a good ceo, you have to do some unpopular things. you have to fire people, cut costs. lay people auchoff. that's not an easy record to run on. >> jim, very valuable. >> thank you. let's talk about oil prices. climbing to the highest levels since july. close to the best weekly gain for oil since back in 2009 with wti hovering near the $50 a barrel mark. we passed it earlier. john kilda watches energy and is a cnbc contributor. he joins us back from cnbc hq. do you expect this rally to last? >> i don't really. i think the fundamentals are still too great to allow this to persist. for example, this week, we saw a big plunge in the refinery operating rate, down to 87% or so that will cause a huge back up in the crude oil system now as we go in the next few weeks. it will be a major data point here for the market to seize upon and push us lower like it did this time last year. >> seriously, with russia involved, bombing syria, missing, missiles landing in iran, a key opec member and oil producer, isn't there enough tension in the middle east to keep the price of oil supported? >> that's the only thing going for the market. that's a big worry a big concern of mine. i wrote a blog for cnbc.com last week about this situation. yes. there's a lot of room for error in those errant missiles yesterday just highlight how scary this is. but the oil market does a good job after a while of digesting these sorts of situations. i think that will happen again as we get used to these misfires, other misactionses by the russians in syria that will allow the fundamentals again to simply overwhelm things. >> i mean, it's big houses like goldman's that are on your side with the call as well. my thing is the idea that keeps popping up that the russians will sit around the table eventually with the saudis and then it's game on for opec. how do you weight that? >> i don't see that happening. only because the saudis and the russians are at each other's throats over assad and keeping him in power. the russians are in syria to prop up assad and the saudis are working with us to get him out. >> ultimately when you see the saudis reserves dwindling as they are, not that it's, you know, actually base level, but when they run out of cash, at some point we have to say we need to raise the price of oil. >> simon, they have not gone in for the kill yet. they're seeing budgets cut 20%, 30% by the major oil companieses around the world. they're liking that. they're seeing their policies working. they can still hold out for quite some time before they throw in the towel here. >> just on the trading side of things, extremely short positions could be leading to the quesqueeze higher. the dollar going the other way now. that helps the price of oil. can you talk about -- you are still with us? >> i'm there, sorry. >> you can talk about some of the technicals and other factors moving oil, perhaps one reason why we saw a big move this week? >> there's no doubt that -- that there was a lot of shorts in the market and has been for a while. there's also a lot of enthusiasm to pick the bottom like we saw earlier in the year. there's a lot of money in the sidelines that came on here for the beginning of the quarter. a lot of long only commodity money that sees multi-year lows and wants to buy it. in technical terms the market was in consolidation phase between 44 and $48 after massive volatility the end of august. we were primed for a breakout. we have gotten this upside breakout for now. >> so you're sticking with the lower call on oil prices, like goldman sachs. but does that mean we could go down and retest lows going to the 30s or is that out of the question? >> yeah. i'm not always happy to be in the same camp as goldman sachs, i'll take it this time. yes, i do believe there could be a new low for the year. again, you will see huge increases in u.s. crude oil inventories over the next few weeks because of the this low refinery operating rate. that will catch some people by surprise and see what we did last year. again, too, there's increasing chance of u.s. tipping into recession next year i'm hearing from a lot of economist friends if that develops -- >> 15%, maybe an increased chance, but not the base case. >> i did not think it was in the cards to be honest with you when you have a federal reserve looking to hike rates and our impressive employment picture. i don't know where that's coming from to a degree, if that's out there, it will feed off the things in china and asia, which is the demand center which is key to oil prices going forward. >> john, thanks for joining us on the price of oil and the big move this week. we look at wti, 49.54. >> cnbc delivers an exclusive interview with the new york fed president, william dudley later on the program. does he still think that there will probably be a rate rise this year? 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daughter: looking at options. what do you guys pay in fees? dad: i don't know exactly. daughter: if you're not happy do they have to pay you back? dad: it doesn't really work that way. daughter: you sure? vo: are you asking enough questions about the way your wealth is managed? wealth management at charles schwab. . heading into the weekend, let's pick up the santelli exchange on the way. hi, rick. >> hi, simon. thank you. i would like to welcome my special guest, lacy hunt. it's always fascinating to talk to you, especially post the minutes of the las fed meeting. steve liesman said it after i said it. and it shocked me we're on the same wave length. it wasn't necessarily a close call as everybody made it appear, press conference and all, but in the end, if we do see a global glide path lower than it is, i think the possibilities of the fed pushing overnight rates into negative territory or the possibility of more qe, they continue to rise. your thoughts on both of those. >> well, qe has been tried three times unsuccessfully. quantitative easing was more of a negative than positive. one of the worst positives is that it worsened the income and wealth divides in the country, caused a misallocation to capital, and overcapacity in a lot of industries. in fact, it has served its cross purposes to the fed's goal of trying to stabilize the inflation rates. it's been a total failure. with regard to the possibility of negative interest rates, the fed has the capacity to engineer the lower rates. banks are holding about 2.5 trillion of excess reserves. the fed is paying them 25 basis points. nothing presents the fed from charging 25 basis points as a safe keeping fee or 50 basis points. if they were to do that, it would force the rates into negative territory and have severe negative consequences for many components. that's one of the difficulties of -- >> let's go to the negative consequences. i understand the institutional side of it. what about the average person on the street? if we see overnight rates moving negative. negative out half the curve in europe, how would the average person be affected if at all? >> the average person, the bulk of their assets are fixed income >> over time it would aggravate the -- it would adversely affect the banks, their earning capacity, and it would also increase the unfunded liability of the corporate pension plans. .. they would actually have to call in the currency because as long as currency were a viable option, there would be tremendous currency disintermediation and people would begin to hold currency rather than to pay toe fun in a short-term asset. ell, we have to leave it there. >> totally unknown. >> listen, not a lot of cheery things to think about in that, but we need to be early on this. i think the possibility of negative rates is higher at this point in time than ever, but it stildoesn't mean it's gng happen. thanks, lacy. have a wonderful weekend. i wish your astros well. i wish my cubbies well. sarah, back to you. >> great. thank you very much. rick santelli, have a great weekend. up next, halloween say multi-billion dollar business. more than $2 billion will be spent on just candy. that doesn't count costumes and decorations. hear from one man who is trying to capitalize on that spending when we come back. 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. hello, ken jennings. i haven't seen you since that tv quiz show. hello, watson. you can see now? i can recognize people, analyze images and watch movies. well i wrote a few books, did a speaking tour, i... i've been helping people plan for retirement. and i help doctors identify cancer treatments. is that all? i recently learned japanese... yeah, i was being sarcastic. i haven't learned sarcasm yet. i can help with that. from and the people whought you underwhelbrought youet speeds. temperamental satellite television. introducing... underwhelming internet speeds and temperamental television... in one. welcome to the moment no one's been waiting for. the fastest internet and the best tv experience is already here with x1. only from xfinity. >> hall lean wean will be a $7 billion business this year. that's actually down about half a billion collars from last we're. one man is making a lot of jack in the jack-o-lantern business. jane wells has his story. i thought we had a pumpkin shortage this we're. >> this is the great pumpkin story. it involves a man, a dream, a lot of money, a lot of failure, and, finally, this. they're called pumpkin steins, and i take credit for their success. >> this is real? >> this is real. >> that's last year when a friend told me you have to die story about this farmer near me who is growing melons and pumpkins into shapes. we met tony in 2014. >> when you saw your first one in person, what did you think? >> is it real? >> sam said his team had to convince degara to let them scale his business beyond his wildest dreams, but that price had to come down. however, instead of selling 5,000 pumpkin steins like last year. this year he has orders for 90,000. >> they're not going to be $100. they're going to be less than $30 at sam's club this year. >> i can keep selling them at a high price, low volume, less work, but i've got a lot of other ideas i want to do. a big one was the skull mold, which i was really trying to get out this year, but with the onset of the volume that we all of a sudden had to produce, a couple of those projects just couldn't get done in time. >> all right. next year, yes, a white pumpkin in the shape of a skull. he says he is finally profitable, and he doesn't have an exclusive with sam's, so he is also selling these to other chains for higher. right now, by the way, on-line, simon, this story behind this beautiful mistake. >> i love it. presumably ultimately you can make them into any shape you like, jane. the mind boggles as to where this industry could go. >>. >> yes. heart-shaped valentine pumpkins. >> let's send it over to kayla for a look at what's coming up on squawk alley this friday morning. >> hey, simon, good morning. we have an interview that is more important than ever after yesterday's fed minutes. sfluls, elan musk calling apple a tesla graveyard. seems like a lot. plus, the steve swrobz movie coming out this weekend. we will talk to a p.r. executive responsible for selling the apple story. steve jobs story way back when. hear her thoughts on the matter. squawk alley coming up next. 8:00 a.m. at tesla headquarters in palo alto, california. 11:00 a.m. here on wall street. "squawk alley" is live.

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