Transcripts For CNBC Squawk Box 20131107

Been watching with the euro. A decision is expected around 7 45 eastern time. But the Key Developments for the market could come at 8 30 eastern. Thats when the ecb president mario draghi is holding a News Conference. Well get previews from geoff ket mo c cutmore in europe in about 20 minutes. Jobless claims are seen at falling slightly to 335,000. As for the markets, joe mentioned the dow closing at a historic high. The s p 500 rose for the 16th time in the last 21 sessions, finishing within two points of a record. The nasdaq was not along ford ride yesterday. It closed a little lower to snap a threeday winning streak. You did see some of the high flyers that took it on the chin yesterday. You watch the futures this morning and youll see dow futures indicated open down by 20 points. S p off over 3 points. Andrew, back over on to you. We have a lot of Corporate News to get to. Toll brothers is buying a Home Building business of privately owned chipelle industries for backside 25 billion in cash. This gives toll more access to affluent real estate markets in california. Chipmaker rda microelectronics has received a second buyout offer coming from chinas stateowned shinwei uni group. In september, a different stateowned Company Offered the to buy shares. Rda says its board is evaluating both proposals. In retail news, costco is reporting better than expected october samestore sales. Customers spent more at its stores and on its website. So a little bit of a double pop there, joe. So what time is twitter opening, andrew . I am told from a couple sources because we were talking about it last night, that you probably should not see the open on twitter close to sometimes between 10 00 and 11 00. Why . The expectation that somehow 9 30 is no, they have to balance out all the orders. Oftentimes ipos dont open at the order. What time did Facebook Open . Facebook was way into the afternoon. The expectation is there were problems, but theres going to be a lot of people. Right. 10 00 to 11 00 is not when. 10 00 to 111 00. It will open today. It will open today. No, he said when i i said who knows when it will open. He goes, i know when its going to open. 10 00 to 11 00 is not knowing when its going to open. The point is is that instead of everybody freaking out this morning when it doesnt open at 9 30 or 9 345 or 10 15 or 10 30 or 10 45 as i can imagine happening well, with an ipo, they have to put all the stuff my monitor, look at my monitor. Ocd boy who cant handle things going out of walk its like a picture on the wall. Now thats too much. There. Its fine. For anybody who didnt know, joe has issues. If you want to get to him, leave the closet door open. If theyve seen the show, they know. Anyway, andrew, this is really i can argue a lot of Different Things. Were going to beat this to death. But since it was 17 two weeks ago, so you already have 50 higher. Yep. But the thing is, when you like on any given day when youre trading a stock with a market cap of 100 billion, only a few billion trade on any given day. And then all those shares are automatically thought to be marked up and down. Yep. So were only talking about 1. 8 billion out of the 14 billion. Right. So the supply demand, suddenly the value of the whole company can fluctuate wildly based on the number or on a few numbers. So i worked see 40 on the open, i could even see a double. But then again, its up 50 from where it was initially priced. Right. And its like really questionable, whether isnt it, whether it ever really makes a lot of money based on the Business Model . And then yesterday, you know why the nasdaq was down . Why . It was a lot of the high flying stuff. It should take them out of those so they can put knit twitter. And nobody can buy this, anyway. And im telling you, andrew, in the old days and i wasnt at goldman, but i was at lets saying a Merrill Lynch or a hutton. In the entire office, maybe you would get 500 shares. And one of the biggest producers would get 100 shares to give to their best clients. That was it. But you know whats going to happen, if there was a big pop, theres a lot of people who would be willing to sell. So this is going to be but you have to recognize, this is a stock thats been in the secondary markets. The secondary market in particular for a long time. And where is it . Its 14 billion is what its worth . The whole company is worth 1 4 . 2 billion. I think youre going to have a linkedin situation where you do see a big pop. Well, it should be. I figure 40, anyway. But what was the other thing i was saying . How much money did they lose in nine months . Their losses are growing as quickly as no, its not a company that looks but call jeff bezos and tell him what you think then. I can certainly see how that works. Whereas this, if i wasnt in the media or if it wasnt someone like that, why would normal people i mean, are they that everyone can be a star in hollywood . I care what every Single Person is thinking every moment of the day . I dont. Joe, its called youtube. How much money do they make . Mow they make a small fortune. Now that deal looks like it was genius. It was 1. 6 billion at the time. Its going to be fun to talk about today. These are historic. We cant overdo it. If you think about google or if you think about facebook, the day when it came public, amgen, they dont happen that often where an icon, apple, where it actually becomes public. So its something that hopefully youre interested in twitter because were going to be talking about it. We are. We will. Squawk on the street will. Morning call will. Is morning call still around . Oh, no, thats squawk on the street. Squawk on the street and fast money on. Market wrap is going to talk about it, though. That would be closing bell. On. Never mind. A few stocks moved. Other stocks in after hours trading, qualcomm, earnings and revenue fell short of estimates. The Company Forecast revenue below expectations, said it would curb its fast growing operating expenses. The comments are raising concerns that the mobile chipmaker is facing tough competition from asia. Andrew, hes got his sleeves rolled up because of the whole twitter thing. We have to get down and dirty. We have to get in the trenches. Weve got to get some stuff on our hands today covering this, andrew, we do. Cbs posting earnings. I usually roll my sleeves up. You do . Okay. Cbs, earnings in line with consensus. The company says it collected more revenue from advertising and the licensing television shows. And we kind of have to thank les for getting the programming is worth, all of us appreciate that. Thank you. If you want to wash dch. Fighting the good fight. If you like to watch, you need to pay. And we thank him for that. Hopefully lowering forecasts, the super market chain, cutting prices to keep up with its competitors. Its ugly, down about 5. 5 points on the session. And then transocean reported a larger than expected profit due to increased demand for its rigs. Also, it was able to charge more, so higher rates. Restaurant operator noodleses Company Reported lower than expected revenue and its okay. Thats why. Its only the Second Quarter of a public company. That is the nickname for my daughter, blake. Her nickname is noodle. Remember mr. Needloodle . Yeah. I see him frequently. There are two of them. Theyre both alive on youtube. Right, right. I like ramen noodles. That was a College Thing for you, wasnt it . Now they have super fancy ramen noodle shops in new york city. Yeah. Its like cure carbs, i think, isnt it . Probably true. And if you want enough protein from rodent hairs and insect parts, you dont even need those. Theres people eating breakfast this morning, joe. I know. Where is your yogurt . Its not milk and cultured nastiness. Its not here yet. It will be arriving. Cultured nastiness. No, thinking about germaphobes and what your life is like theres a difference between germ ma phophobes and people lig the subway floor. I never, ever thought about shaking someones hand and whether 50i78 going to catch something. Never in my life. Probably licking the subway folds, right . Not if its below 30 degrees. Becky mentioned the futures. Lets check on the broader markets this morning. I finally said something to a website yesterday when they said it was one of our competitors, the dow jones thing where they called it a fresh alltime high. And i said, what i go, explain to and they ever me answered. The writer there who is probably 23 years old, but i said what is the difference between a fresh alltime high and an alltime high . And then i said why dont you just go with a new fresh alltime . No, go with a new fresh alltime high. And thats like single best idea, its like why go with that . But i digress. Lets look at a tenyear high. We do it here. Id like to say stop with the fresh stuff. You fooled me on this. But even saying another alltime high, if its an alltime high, its an alltime high. This irregardless goes all the way back to regardless. In other words are we confirming earnings . Regardless. And irregardless is wrong. And it gets you to i think the so you want to really do it, this is my thats a reward. Thats irregardless . No. But people will write in and say im an idiot for using it. The people weve talked about on twitter, the haters. Anyway, lets take a quick look at the dollar. 1. 35 or so. Oh, no, the tenyear note, dollar, 1. 35. Down, down. Well, thats the big question. Does the ecb cut or not . If theres a surprise cut, you could see a drop pretty rapidly. 1. 34. We would be okay with that. Should we talk more about twitter . I dont think we can talk enough about it today. Today is the day. How many people do we have on here . Like 40. Every person should appear and Say Something about twitter. And they might. I was looking through the i think they will. I heard the ipo was not trending on twitter, which was weird. You know who we can ask about that . Julia boorstin who is up early on the west coast this morning. Were getting back to twitter. Our own Julia Boorstin sat down with twitters Ceo Dick Costolo for his thoughts on investor reaction and Lessons Learned from the ipo process. He joins us now from the process in san francisco. Good morning. When i caught up with twitters ceo dick costlo, the first thing i asked him is what he thought of investors reaction. I think as weve been on the road and seen enthusiasm for the story and the way were thinking about the future of the company and our longterm plans, thats enabled us to make the changes that weve made to the price. In our conversations with potential investors, do you think they understand how twitter really works and how you guys make money . So the answer to both questions is absolutely yes. In fact, one of the things thats been most exciting for me on the road show is the propensity for some of these investors to come in and show me examples of how twitter has been so powerful. So that enthusiasm from investors and their own use of the product both from a user basis and then from the potential of it as a monetization platform has been fantastic to see. Well, knowing what you know now about the ipo process, what would you do differently . So youre going to you know, there is i hate to give the trite answer, but here it comes. So get ready for it. I really wouldnt change anything about the way weve approached the process this time. I think that the team has just done a tremendous job preparing both me and the rest of the executive team for everything we were going to go through and being thoughtful and methodical about everything weve gone through along the way. So im extremely happy with the process weve gone through to get here and how things have gone so far. How is your ipo process different because of the job . I think one of the things it enabled us to do was what obviously weve filed confidentially. It allowed us to be thoughtful and patient with the time that we spent during that filing process. We were working on it for months, of course, before we made it public. And i think thats just very helpful in terms of not going from zero to 100 both internally and externally and allowing the people working on it internally to start to develop, the way theyre filing these things and the way of working together on it on. So that was enormously helpful to us. Now, i asked costlo how much his ipo strategy was influenced by facebooks ipo debacle. He totally dodged the question, but he did say they drew on best practices from a range of silicone valley companies. As to weather facebook poses competition to twitter, he said hes not concerned, but he did say they want to have a good accepts of the competitive landscape. Well have much more from my interview with dick costlo coming up, including his outlook on twitters potential growth and his strategy for tackling twitters biggest challenges. Guys. Thank you, julia. Before you go, do you have a sense of this question we were talking about before around the table . Why is twirt ipo not trending on twitter . What does that mean . Well, theres been a lot of question about whether twitters users who were primarily in the u. S. , male and under the age of 35 are going to be twitters investors. That is the big question there. Obviously, we had the cnbc atp poll out earlier this week which said in fact those core users may not be interested in investing, but there are plenty of people who can see potential. People talk about a huge range of things on twitter. They might be talking about the Country Music ar wards more than the ipo. But i think they might change when we get closer to the stock trading later today. Julia, thank you for that report. Well have more from julia throughout the morning. Then on squawk on the street, dick costlo is back. Hes going to be joining carl live from the floor of the stock exchange. What is his name . Because that is a different way now. Is it i followed julia into the pronunciation. Lets put it aside right now. But ive heard him cast costolo and then im heard him called costello. I think you would get his name right because its your thing. The teleprompter is not my friend, as you know. And so i so just seeing it in that format causes you to my brain is it freezes up. I get that. I get that. The teleprompter is oh, you get it because 15 years ago you had that problem, as well. I was stumbled with the teleprompter. Teleprompter reading is not my strength. Coming up, two senators no, coming up, two senators are calling for an end to a stock opgdz related tax break and why companies are apparently worried about it. But first, julia martin will join us from the Weather Channel with todays national forecast. Hey, guys. Good morning to you. Weve got a couple of storm systems to talk about. One in the east and one in the west. And were going to start things off in the west. Thats when were going to see rain in places like seattle today. Windy conditions for you. Some snow in the Higher Elevations and also in the east some rain making its way into the big cities by later on this morning. New york, boston, d. C. All getting wet. Late week, here is the pattern then. Windy here in the central u. S. By tomorrow, we could see snow in places like minneapolis. Mostly quiet conditions over the weekend. Just some lingering lake effect snow showers. Were going to track this cold front. Today, the east coast staying mild in the big cities. But by tomorrow, were in for a big temperature drop. Places like boston, going to drop a good 10 degrees. The rain moves out tonight and well see lingering lakeeffect snow showers. Colder air coming into the east and into the south and next week we could even see. Know is in the midatlantic, places like washington, d. C. Well keep tracking that for you. More squawk box when we come back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back, everybody. Its time for the executive edge. Two senators are calling for an end to a stock option related plan break for taxes. Companies that issue Stock Options as part of an employees pay package can take a Tax Deduction for the difference between what if the employee pays for the options or what the stocks are worth when the options are exercised years later. Democrat carl levin and republican john mccain called the tax break an unfair loophole and say killing it would raise 23 billion over ten years. Gentlemen. Im in agreement. Yeah. It sounds fair. Look, if its compensation, its compensation. If youre really talking about equalizing Playing Fields you think they should do this . I mean, for me, its a complete nobrainer. If carl levin had any idea what causes a tech company to be successful and to be competitive globally look, if were talking about leveling the Playing Field its not fair less money to do what it does well. Look, maybe its not fair to do a one off, but these are the type of things that if youre talking about getting in and reforming Corporate Tax reforms, this should be on the table. I dont think its a one off, but it makes sense to me that if its money it was a nobrain nobrainer. I wasnt going to respond to it because its so obvious. To take money away from i think corporations shouldnt even be taxed basically. To take more money from a corporation and to give it to the government and allow them decide how to spend it is a stupid move by definition. Its part of Corporate Tax overhaul. If you want to bring back money from overseases you can get rid of corporations or the person spending the money the way if you come back, nobody should pay any taxes and youre never going to agree on anything. Thats not what im saying. If you want to compete globally and you want jobs, look at this as to whether it helps or hurts job creation. If youre the president , you have to get something to give something and i dont think you should do it one off, but why would you i want a lower tax to bring money back from overseas. I understand that, but why if you have a restricted stock, why should that be taxed and your Stock Options not . Its not that theyre not. The company is getting a deduction. No, i understand. I understand. But why would that be if you want to figure out a way to attract talent, i dont know whether it matches up, a equals a, b equals b. If it helps you attract talent, it makes sense to me. And i want to lower Corporate Tax. I dont want to raise Corporate Taxes. I would love to find a way to restructure Corporate Taxes which ultimately may lower Corporate Taxes broadly. It immediately doesnt pass muster restricted stocks should be which the same way regular compensation should be. Let me ask a question. Yep. Okay. A tech company is getting the deducti deduction, right . One of our few bright spots in the economy. A Manufacturing Company which has they issued Stock Options like this . They rarely it doesnt mean they cant. They dont get the deductions. Why does that make sense . If they want to, do it. The if thats the way they can retail talent. This is a talentrich industry. And its working well. Stock options have historically been used mostly for white collar workers and in the tech industry. We dont like them. Im not saying we dont. Im just saying that we want a fair Playing Field. And we can but reform the whole system. Mccain, i like him. I dont think he understands economics at all. Carl levin by definition has said u. S. Corporations pay 12 . Look at the two proposals to know that im against it. Anything that is going to make our corporations let excessively and globally joe, would you give it as part of a tax overhaul . I dont would you give it as part avenue a tax overhaul if you were able to lower rates to bring back money from overseas, if you close if youre lowering Corporate Taxes, yes. What if its netnet neutral but youre evening the Playing Field . Thats like kissing your sister. I want to lower Corporate Taxes, create jobs, make companies more i would thats your Campaign Platform . Thats my campaign xlat form. Ill go to zero on it and tax the people that because if the company doesnt save the money here, its going to give somewhere else. Look, we all Want Companies to grow. We agree that theyre theyre not right now. They need help, but its not clear to me that she you should have one company benefitting while others dont. It was a nobrainer. Let me get to the second part. This is another tax issue thats out there. The white house is planning to exempt some labor unions and businesses from paying part of a reinsurance fee under obama care. But unions and businesses say the move doesnt go far enough because most of their insurance plans wont qualify. The Health Care Law includes a 63 fee on each person covered in a plan. This is news to me. I didnt realize this before. That money is going to go to Insurance Companies that end up paying big medical bills for new customers who buy exchanges. Businesses and unions argue the fee makes it more costly to continue Offering Health Care Coverage and this is a really tricky one, too. Do you start offering exemptions to these things . Is it fair to have 63 a plan. If youre a family of on five, thats over 300 in these fees that turn up. I repeatedly say we shouldnt judge obama care. Over and over again, theres new things that we keep learning that are different than what i think a lot of people perceived about how this program was going to work. Watching the union which, you know, in large part signed on for this and helped make it happen and watching as they see how its affecting them and they want all these special exemptions is my common right. The exemptions are a bit bizarre. And they get them, too. Right. And the white house, even though everybody else, you know, was good for one is good for but the unions, you know, have all this influence and theyre not subject to it. So thats i dont know. Yeah. I think were in agreement on that. Let me tell you about one more story in todays wall street journal about former jails being turned into luxury loelthss. The concept is popular in europe and is now catching on in the united states. Todays Liberty Hotel in boston opened in 1851 as the charles street jail. It housed the boston strangler, the man behind the infamous bring uses job and a nazi commander. They keep the bars . I dont know. The rooms looked pretty nice. I want in alcatraz and i wanted to leave before i didnt want to spend the night there. And they play the sound its very quiet. Oh, look. And they play the sound of all the bars closing and its a very loud echoey sound and youre glad you have a boat to leave the island. It looks like they have bars still in the restaurant, maybe down in the restaurant in the bar there are still bars on the wounds, but the rooms themselves look like you have to ask yourself if feeling like youre in a jalt appeals to you, youre a strange person. If you want to admit, yeah, id like to be in jail for a little while, as long as i could come and go, then you have to ask yourself, what is it that you really the last time i made comments about things going on in jail i know you did. So i stay away from this conversation. If you ever go to jail, youd like to be sentenced to a woman jail is what you said. And just so order of hang out, i think, right . Youre going to people know. This is a continuation of our last conversation. I know. But not all the viewers from last time do you want to go into what happened the last time . I think we probably shouldnt. Thank you. But if you were going to pick, mens jail, womens jail, where would you rather spend your time . I think a womans jail. I think we all would. When we come back, we have a live report from the ecb where policymakers are meeting today. Many are looking for the central bank to cut rates. Well see what happens. As we head to the break, here is twitters ceo on the decision to go public. Knowing what you know now about the ipo process, what would you do differently . I hate to give the trite answer, but here it comes. Get ready for it. I really wouldnt change anything about the way weve approached the process this time. I think that the team has just done a tremendous job preparing both me and the rest of the executive team for everything we were going to go through and being thoughtful and methodical about everything weve gone through along the way. So im extremely happy with the process weve gone through to get here and how things have gone so far. [ male announcer ] how could a luminous protein in jellyfish, impact Life Expectancy in the u. 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Managing them, moving them, making them work. We oversee 20 of the worlds 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 peoples lives. Invested in the world. Bny mellon. Bnk ooh fwlnd. Ecb both holding policy meetings today. Geoff cutmore joins us from frankfurt. I got a picture from elerian the other day of that hideous skup temperature behi sculpture behind you. Who did you commission to build that monstrosity behind you, do you know . And the design the euro never had a chance when you designed that ugly what is that . Its an e . Is it a dollar sign . Anyway, tell us about the ecb and the boa. Yeah. The problem is, joe, most of those european artists are dead. I think fortunately the person that created this one is still around. But since i last spoke to you, they have at least patched up some of the broken stars, some of those uncomfortable with being in the single currency who have broken some of the stars on this euro symbol. Its very much about the euro today, as well opinion i guess anybody who is interested in the euro dollar rate has been watching what the ecb is going to do today very closely. The expectation was that there will not be any change in official Interest Rates. Thats not to say that there isnt pressure. The reference banks or the barges target rate for inflation is 2 . We are half of that at the moment on the latest inflation prints. So there are plenty of reasons for them to do something at some point. But because weve seen spain come out of recession, joe, and because weve seen some better Growth Numbers out of some of the other european economies here, i think mr. Draghi today will hold pat on any Interest Rate cut and i suspect there wont be any other news on further liquidity support or other measure at this point. But, hey, hes learned lessons from mr. Bernanke. He now knows what Forward Guidance is. I guess if anything, hell try and be dovish. We might get some new language in the Forward Guidance. Back to you. Its what were going to do, too, i think. Were going to say were going to trade tapering. Were going to trade the qe for the adding a couple of really, really, really longs or go down to six on the i dont know. Monetary policy is i dont know wa we did in the old days. I dont know how we survived without Central Banks. Its really crazy. I think we managed our finances appropriately, didnt we . We ran our budgets like we ran our household budget. I mean, you dont rush out and is overspend and think that, hey, somebody is going to step in and bail you out at some point. But somewhere we drank the koolaid and we decided that it was okay to spend today and try and pay it back tomorrow even though we didnt quite know how we were ever going to pay it back. And that remains the problem here, as well, joe, because the banks are stuff chockfull of nonperforming loans. Theyve been encouraged to buy sovereign debt in countries around the region. Look at italy, portugal or spain. They have plenty of debt because its risk rated zero on their Balance Sheets. The trouble is when theyre not able to pay the interest charges on all that money thats been borrowed, of course, then everybody gets nervous. And weve still got that issue to run through through the rest of this year because mr. Draghi the last time we spoke, i think, joe, said he was going to start an asset quality review of European Bank Balance Sheets that was going to lead ultimately to another stress test. Only the third weve had in europe and, of course, we know every time we have one of these, we have some banking problems afterwards because nobody seems to quite put out an honest report. So theres a lot coming up in 2014 for us to think about. But today, it seems mr. Draghi, i think, will hold pat. Thank you. I need to pick im not going to say that. Well pick your brain. Its a gross expression. But i do need to talk about germany with you sometime. If i come there this summer, i dont know, frankfurt is not that ugly thing is not going to be no, i think berlin. Joe. Yeah, geoff . Joe. You remember last time i told you that were a stones throw away from the red light district here. Theres a very odd thing about the geography of frankfurt that we have all the bankers in one location and right next door in the neighboring block we have several streets of red light district. But my understanding is and im told this by my german colleague annette, that as the bankers have disappeared for natural reasons sips the financial crisis, the red light district is start to go gentrify and some of the most establishments are going away. Now, i dont know if that has any bearing on your travel plans to frankfurt or not, but i thought id throw it out there. I appreciate you thinking that for me. Bankers and profits are similar in a lot of ways, arent they . But its the current kill the bankers, Andrew Jackson sort of mentality these days. Anyway, geoff cutmore, thank you. I think well be skipping frankfurt. Hamburg is nice, isnt it . I like dusseldorf. Thats what you said. I enjoyed that years ago. Anyway, coming up, from europe to the u. S. Stocks rise to go record highs, were going to ask if the run can continue. Thats next. Plus, twitter goes public. Were looking at how everyone from celebrities to Corporate America to superstars, sports stars and others are using social networking to their advantage. The executive wind the nfls strategy, hes going to join us at 8 40 eastern tim. But first, as we head to a break, we have more of Julia Boorstins exclusive interview with twitters ceo. I think that our strategy approach in the ipo has been based on me and our investors frankly having a number of conversations with other ceos and investors around silicone valley. One of the great things about silicone valley is irrespective of how competitive you might be with another company or how closely you might be working with that company, theres a great sort of giveandtake and camaraderie from between some of the executives in the valley and some of the other investors in the valley. 982. 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Tell your doctor about all medical conditions and medications. Serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. Common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting and increase in psa. Ask your doctor about axiron. The dow hit another record yesterday. Now investors look to digest more data on the economy, including gdp today and the big jobs report tomorrow, which is tomorrow, november 8th. So we should have had it last friday, but it got delayed. Joining us now, lou brien and naraman aravish. We would normally have adp, but we had that last week. Do you remember what last week, lou, when was that . I dont even remember it. Was it november . It was. Do you remember, what was the adp . It was weak. Up 130. So was your number for tomorrow . You know what, joe . Im going to be higher than the average guest, which is 120. And that doesnt happen very often. But as ive been trying to figure out if theres going to be an effect of the Government Shutdown on it, and i think thats most of the reason why people are lower than they had been, i cant find a way where you cant get a twoweek period for payrolls where someone from the government wasnt working at least some of those days and getting paid, either right at the beginning of the pay period or even at the end. And i talked to some people at the government and their pay stub says the 6th through the 19th. So that includes the reference week, which is the key, the 6th through the 12th. And they were paid. So i dont think that the government is going to have that big an effect. I dont think that there were a lot of hiring that was going to go on lets not even think about that. Have we moved from nariman, have we moved from 175 we could count on . Has it slowed in the last six months . It has. The clear trend here, and thats one of the things that worries us even before going into the Government Shutdown, were a little more optimistic on tomorrows numbers. We think it could be around 150 even. The effect of the shutdown wasnt that great. The bigger worry, as youre saying, is that there already has been a slowdown in employment, in housing. So things are kind of soft out there discounting the whole mess in washington. So for the gdp number, nariman, what are you looking for . Were saying 1. 8 for the Third Quarter. And we think it might get softer for the Fourth Quarter. So the second half of the year were barely over 1. 5 . So, again, not good in terms of but we have a bunch of excuses for that. Sure, of course. But still, its not good. And whats the real back factoring all that stuff out or can we not factor it out on . Maybe it did affect us. Its what i called inside the beltway versus outside the beltway. Outside the beltway, the economy is growing 2. 5 . But when you factor in the inside the beltway mess, 1. 5 , basically. Nariman, what do you think for the First Quarter of next year . Is this a continued slump or do you think theres a quick rebound . I think we will see a rebound for two reasons. One, theres a bit of a bounceback and well start to see that underlying strength. We could easily see between 2. 5 and 3 in the First Quarter. All right. Lou, in term of just the dow and these averages hitting more highs, does sentiment or lets see people get too complacent. Does that even matter if the fed is still, you know, actually engaged . Yeah. It doesnt seem to. I mean, when the fed has been involved, and we just have a couple of instances, the qe1, qe2, and qe3, the market head keeps rallying until the fed is done, even when we know the end date, tend of march and 2010, the first qe was over. And the market was at a peak. Of course, after that, it fell about 16 and was down about 10 when the fed started hitting that qe2 was on the way. And then qe2, we rallied and got up to around 1350 on the s p. And then fell. But we could also blame the debt ceiling discussion or debate or food fight at the end of july and august of 2011. By we were at 1350 as late as november of 2012. So 14 months after qe 2 ended when they started saying, well, maybe qe3 should be around. So we go up when qe is going on. At least during these circumstances here, and we dont have very much success afterwards. And i think timing, the fed, or figuring out the fed is going to be one of the key factors going through the end of this year and early next. Pretty phenomenal, though. So its november. What are we up, 25 or something for the year on the s p . Yeah. So if we went another 10, it would be one of those years that ive been, you know, just waiting for it, like in the mid 90s where you do 35 . And this is there is in an environment where the new normal was supposedly 8 max. Thats all, 7 is all we can expect from the stock market longterm. And here we are. We might do that huge and if they keep theyre fought going to stop before the end of the year, we could do another 10 . I dont know if we will. I guess we could, but how much of that is on the fed and norm i cant rememberal gdp which i like to watch, is at a level that really stinks. And when we get up to 35 , sell it and we dont care. Its what people do. Thanks, guys. See you later. Nariman, see you. Coming up, Michelle Caruso cabrera on the chess match everybody on wall street is talking about this week. Squawk box will be right back. Farmers presents fifteen seconds of smart. So you want to drive more safely . Stop eating. Take deep breaths. Avoid bad weather. [ whispers ] get eight hours. [ shouts over music ] turn it down and, of course, talk to farmers. Hi. Hi. 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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. Ask your doctor if humira can work for you. This is humira at work. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. Welcome back to squawk box this morning. Wall streets focused on india this week, not because of the current account deficit, but because of the world which he has championship. Chief International Correspondent Michelle Carusocabrera joins us with more on that. The most exciting chess championship in decades because there is a new player on the scene who is considered as exciting or as good as bobby fisher. Wow. 22yearold magnus carlson. We bring this up, theres a lot of people who love games, they love bridge, poker, tons who love chess. Looks like rogoff. It is. Because hes a grand master in chess. Did you know that . Yeah. One example of people in finance, chris flowers he admits when hes on the set here guest hosting, i asked him, in the last two hours that youve been on, has there been any period youve been thinking about chess moves . And he goes, oh, yeah. Like, seriously . Were going to play a sound bite from ken in a few seconds. Its magnus carlson. It gets underway. Cool name too. He faces off against a 43yearold indian guy. Why dont you let andrew say that one. What . Anan . Yes. Just if you see that in the teleprompter, you might explode. Hes the fivetime defending champion. But the heavy favorites when you look, people are quite excited. Why is there heavy betting on him . Hes been blowing things out . Hes an exciting player. Let me play the sound bite where he was describing their styles of play via a tennis analogy. Anand has the bigger serve and carlsens more of the baseline persistent player. Carlsen in particular has an indomitable will to win. He aims for quiet positions where nothing seems to be going on and says, well, nothings going on but youre going to lose. Where anand sparkles at everything and particularly complicated possessions and hell try to steer carlsen into these messier things. Did you know that chess can be so exciting . The other day, there was a blind chess player really. That beat nine people or 15 people at once. And so he has to remember where all the pieces are. Amazing. And then think about where his moves are. Its mind boggling. Well, the whole the grand masters are the way it is mind boggling, they go 20 moves i dont know how to do. They go 20 moves in advance. Rogoff does have a favorite opening. Yeah, he told you. And its always i also said he said i always like to be able to start on offense. You get to pick the way you begin the game. Theres all kinds of, you know, depending on how you start. Its the open he said he liked. I forget, yeah. I asked him, though, because i googled it. I like to play. Both of my parents played. I have a set at home, its dogs and cats. You dont know how to play checkers . No, i really dont. Ive never gone itll take you three seconds. Where people do those moves where you line up where you get ten of them. I dont play how about connect four . Battleship . No. Michelle, thank you. My pleasure. Thank you. Twitters ipo, well talk expectations, plus more of our exclusive conversation with the companys ceo. The first day of trading for twitter. This guys hilarious, im going to retweet this. Well get you ready for twitters wall street debut and talk the future of social media and what it means to be mobile. Social media is bringing us all closer together. Plus, bob davis on how twitter can make money and grow its customer base. The ecbs decision on Interest Rates could move Global Markets, the news and Market Reaction is just ahead as the second hour of squawk box begins right now. Good morning, everybody, welcome to squawk box here on cnbc. Im becky quick along with joe kernan and andrew ross sorkin. Weve been watching the futures this morning and after the market closed yesterday, the dow was at another high. You can see this morning the futures are indicated slightly weaker. Dow futures down by about 16 points, s p down by three. In our headlines this morning, twitters initial Public Offering grabbing the wall street spotlight, the stock will begin trading at 26 a share, that was above the expected range which had been 23 to 25. Julia boorstin spoke about the companys strategy ahead of the ipo. I think that our strategy approach in the ipo has been based on me and our investors, frankly, having a number of conversations with other ceos and investors around Silicon Valley. One of the great things about Silicon Valley is irrespective of how competitive you might be with another company or how closely you might be working with that company, theres a great sort of give and take in comradery between some of the executives in the valley and some of the other investors in the valley. Twitter will be trading on the New York Stock Exchange under the Ticker Symbol twtr. Another company, which is well, used to be oh, i didnt think of that. You dont have a microphone on, my friend. I know, he told me. Thanks. It used to be tweeter. Tweeter et cetera, which was the bankrupt now defunct i totally forgot about that. But its perfect for twitter. I guess it is. It is. But i wouldnt want someone elses symbol. Hmm, i didnt think of that. Theres another Company Started by twitter cofounder jack dorsey also exploring an ipo. Square has held talks with bankers. Square, which makes a small credit card reader that plugs into smartphones is expected to have sales approaching 1 billion next year. And luxury Home Builders is increasing the presence in the california market. Its buying the Home Building business of privately owned shapell industries. Lets get a preview of the twitter ipo. Weve got a couple of people to talk to. Our guest host this morning, buzz feed president and c. O. O. And rocco pendilo. What is that pendola. Just like its not costello. Its costalo. We wear the same underwear and he gets my name wrong. What kind of undershirt are you wearing . Tommy john, baby, all the way. Hes the social media director at the street. Com. Lets start here. Are you buying this thing . Well, you want to start with the numbers. 26 equates to about 18 billion. If you take the e. V. , the enterprise value, thats 16 billion when you take out of some of the cash. Revenues of 1 billion in 2014. You get an e. V. To sales of 14. Thats a little bit higher than yelp. Its a little bit higher than some of the peers. But im comfortable up to 20 billion. I agree with cramer. Rbc did an analysis of market cap to sales, as well, that gets you to a 15 multiple on that. Im comfortable for 20 billion. Rocco, you say youre not comfortable at all. No, im not. I really think at least retail every day, regular investors need to be aware of is that a lot of what were hearing about twitter is being filtered through a media vacuum. In that we all love twitter. People in the media. Celebrities and people like t t that. We sort of operate in this little vacuum that twitters the greatest thing in the world. Im not so sure the rest of the country at least feels that way. Im not so sure i know the rest of the country isnt using twitter the way theyre using facebook. When youre in the Grocery Store waiting in line, people are checking their facebook, talking about facebook, theyre not doing it with twitter. That might not matter. They can still be very profitable, drive great revenue and be a better investment than facebook one day. But its something were not hearing being talked about and i think we should consider more. Does it have that mass appeal . Does it need that mass appeal . I would stay away. I think its a lot of media hype. I think the question of mass appeal means how big a company does this get to . 230 million users doing a billion this year, you have a company thats a fifth the size of facebook. It certainly if you think of the four or five big things out there, linkedin, twitter, snapchat, its fundamentally changed media. Theyve got a lot of work to do to maintain this interface. Its justified at the levels were talking about. Mike, tell us about the Technology Element of this. Is your sense that this is a company that people are going to be sitting in the checkout lines using twitter . I or are they going to be using facebook . I think roccos right in that i dont think people realize there are only 50 Million People in the u. S. Actually on twitter right now. Most of the users are outside the u. S. So the rest of that 230 million are in the international where the arpu is not as high. So theres theres that sort of like, can you grow domestically . And then, they have a lot of product problems there, honestly. They dont really know how to make the on boarding experience super easy for people. And when your grandma or my mom comes on, she can get confused right off the bat. I think growth is the big problem. Can i ask you a quick management question. Hatching twitter, i believe its called. And jack dorseys going to be coming to new york and now, apparently an ipo for square, apparently in 2014, as well. Hes, you know, we all hes been sort of lionized as this great visionary, but he sounds like a horrible manager. Sounds like dick got in there and hes got his own issues, sounds like Evan Williams has his own issues. It doesnt sound like a particularly brilliantly managed operation. I think its certainly had its creation challenges, these things are like a journey, marriages, sort of ebb and flow. I think the Management Team is strong. Hes widely regarded by the community as one of the best sales leaders out there. Dick is viewed as a person who is managing the company excellent, has a good handle on product. I think its definitely a stabilized company right now. When you and i were on much better than facebook. I said 10 to 20 and you said, well, its trading at 16 in the private markets. They try to do 13, the market pushed them to 16. They have a very small float. It strikes me theyre doing a pretty good job with this. Rocco, is it a good job if they take 26 and the stock doesnt move . How do we measure success today or either both today and lets say over the next 12 months . Well, if youre jack dorsey or one of the people able to get the stock at the offering price and cash out or whatever, yeah, its a success. My concern honestly comes with retail. Talk about the media. Last week we had Container Store go off, they ipo, and all the headlines said Container Store ipo doubles. All these guys see that and theyre like, okay, what other ipo comes that i know . Twitter, i need to get in on this thing. But that double on Container Store, the retail guy, he doesnt get that when he buys at the open. So i think really what we need to revisit. And take this opportunity to revisit is how do we do ipos . How are the shares allocated . How do we level the Playing Field so we dont have people buying Container Store at the open at 35 and then the next day, you know, were talking about a double that these folks never realized. Thats what i think the issue is. Of course, the people involved in this thing on the inside are going to its going to be a success no matter how you slice it. But do we get to play the game . Not at all. Right. Mike, you made the point about sort of what you the small size of twitter. Why do you think it doesnt grow internationally . You know, people talk about it revolutionizing democracy in places. Why is this something we dont see well, it is 77 international. But the question is, why dont you think it grows exponentially in terms of users and more importantly in terms of advertising . I think there are a few things. One, twitters been centered around events, you know. Like the oscar type of thing. They get a lot of traffic through the door there. People hear about this twitter thing and think, maybe i should check it out. But as far as retention goes, i think thats their main problem. And just sort of keeping people giving people an incentive to actually come back and sort of experience those conversational moments that twitter loves to talk about but, you know, if youre a new user to the service, youre not going to get those right off the bat. You dont get that i got it moment probably until like six months into using the service pretty regularly. Heres where i give the company the benefit of the doubt. First of all, they dont make that much revenue right now, 600 to a billion. And now theres only after the merger, theres basically three agencies in the whole world and the agencies are obsessed with them. If they go hand to hand and explain the product, getting an additional million, thats hard work, but thats not Something Like totally out there. And then in terms of user growth and new products, theyre innovating there, they have to make it simpler. This much technology, i just i give them the benefit of it. I think the stocks going to make it there. One last question. Thats a good point to realize. One thing i wrote on the street this morning is who cares they dont get the scale of facebook, right . Right. Lets say they have this great niche audience, affluent, highly educated. Cnbc does a great job selling advertising with a niche audience at the end of the day. You dont have to have huge mass appeal to be really, really successful. And their Monthly Average for the year, going to do 2. 32 all per user, facebook does 5. 87. They have so many new products, they can do app install. Theyre going to close that monetization gap. Thats a good point. What is the chance weve got to run. What is the chance this company ultimately gets bought out once its a publicly traded company. If the share structure allows it, which i havent probed into enough. I said it yesterday, apple has to buy this company. Its the biggest no brainer ever. Social is fundamental to the devices, they integrated with them six months to a year before facebook. Its a perfect solution. Johns going to be with us iffi for the rest of the program. Rocco, keep wearing your tommy johns, i apologize for botching your wonderful last name. No worries. And well see where the twitter ipo lands today. And were not done. Were not even were getting started. Not even scratching the surface. A lot more to come at twitters big day at the New York Stock Exchange. Including duncan niederaure. Tomorrow, were going to find out if the market can keep up the momentum purely based on q3. Be right back. Its twitters ipo day. Let your fingers do the talking and tweet the squawk box crew. The show squawkcnbc. Follow the show on twitter and never miss a beat of the longest running morning business show on television. Squawk box on cnbc. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. The dow closing at a record high as markets wait for tomorrows jobs report. Joining us now is hans olson for the wealth and Management Division of barclays in america. And the economist at ubs. Some people want to look at what happened with the shutdown and try to, you know, microanalyze that. Im more interested in knowing whether the basal level of job growth has that slowed in the last six months from zandi always says, well, weve been 175 for two years. Has it slowed . Yeah, from the numbers ive seen, looks like why has it slowed . Im not sure at this juncture. If you look at Capital Expenditure in the u. S. Economy, it hasnt taken off. It hasnt tapered either. We havent tapered. And its slowed. And its slowed. It doesnt help when you have all the uncertainty around, whether they would close or not, what happened in the del ceiling and you were giving folks a good reason not to do anything. And the folks i have talked to running businesses basically said were going to step back, want to see where this is going before we release a dollars worth of capital. Seems reasonable. I agree with that. Id say the other shoes about to drop. How the Health Care Act is going to start subtracting from jobs. I think youll see it when people start paying attention to it. Just because were talking about it, everyones paying attention to it. People Pay Attention to it when it hits the mainstream kind of nonbusiness News Networks and that was in october at the shutdown. And what you saw in the adp report was job growth in the 20 to 49 category, went from 25,000 trend over the last six months to two. To 2,000. Two or 2,000 . 2,000. Because two would be even worse. Two would be even worse. Two jobs. Two is smaller than 2,000. You dont have to be a math major. For whatever reason, it concerns me because all of the feds targets are based on this. And it needs to go our way or theyre in a box. Doesnt it . Yeah, you know, the interesting thing about that, if you look at the private sector gdp, strip out the effects of the government and trade and look at sort of the organic activity in the economy. What you see is a economy moving along to the end of the recession of 2. 7 growth. Not bad without any of the head winds. Without any of the head winds. You get a government policy in there, another percentage of gdp. Youre up under 4 , right . Thats not so bad. But it, you know well, should be below 14 on the u6. Youre getting a fundamental change in the workforce too, right . You have more people leaving the workforce, you see that in the Labor Force Participation numbers and all that. We dont know how much of that is demographic and how much that is actually, we have a very good idea of how much it is. And unfortunately, the fed doesnt seem willing to recognize how much is and how do you know . Because its algebra. I can do algebra. The fed doesnt accept anything that doesnt involve six regression models and some sort of test youve never heard of. You hear things people who would like to keep working but cant so they have to go on Social Security because they cant keep their job. But what we can see, you can in the numbers, break them down into every age cohort imaginable. You can look at people ages 60 to 64. And if you combine that with labor market flows, which they report, you can see whether people are going from a job to not in the labor force. Not being unemployed, just job to retirement. Yeah, but there are people who are forced to retire because they dont have a job and cant find a new one too. I know its anecdotal evidence. People want to retire. How much do you think is a skilling issue . We cant hire no one i know can hire enough software developers, enough math people. How much of that do you think plays into whats going on now . I think its a big issue. You could take the number of jobs that are out there according to the jolt survey, right . They go out and survey companies, the openings they have. If you could fill every one of those jobs, youd cut the Unemployment Rate by about a third . Yeah. If you look at the sensitivity of job openings to the Unemployment Rate, for every increase in job openings, we have a bigger decline in the Unemployment Rate. There is certainly a skills mismatch. And its across a number of things. Its getting a person who knows how to talk on the phone instead of text. And people graduated from college these days. You have to sift through a lot of no, i know, they come theres no skills, they come with ivy league skills. Theres nothing they can do. So they can report, but they cant think. Thats not a critique of reporters. Its an education issue. Thats a huge issue in this country right now. Youre talking about ivy league. Im saying people have gone through and that is these are huge structural changes with no quick fixes. Going back to these guys, people that go through professional schools to learn Software Skills and skills to your point about using texting a opposed to phones and sales for support. They need an absurd amount of oversight and they also think they should be running the show when they walk in the door. Is the rate going to go up one of these months . I think its going to be this month just because of the workforce, the federal government the headline, of course probably going up by. 4 or. 5 . What . Probably in the midseven range. God almighty, thats going the wrong way. Youll see worse. Its all just a blip. Right. You will see it reverse. Right. Weve got to fix it even where we are now is kind of i dont really believe it that much in terms of the way it feels, though. I think the big problem we have right now is that janet yellen likes to say, a ha, the natural rate of unemployment hasnt changed but then she doesnt talk about the longterm youre talking about her like shes in charge. Thats funny. If anyone thinks shes not going to if youd like to take a bet against her being confirmed. No, thats amazing, thats the first time ive heard someone say that as the person in charge now. All right. Where are you tomorrow . 20 seconds, where are you tomorrow . Were at 107 probably around, you know, 140. All right. Gentlemen, thanks. Still to come this morning, were going to talk tech with buzz feed. Plus, want more on twitter expectations, we have the founder and former ceo of lycos, bob davis. What advice does he have for twitter execs . But first, as we head to the break, dont miss the New York Times dealbook conference. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. 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Our commitment has never been stronger. Up next, the founder and former ceo of Lycos Bob Davis shares his experience of going public and gives us his thoughts on how twitter will make money. Also at the top of the hour, nyse ceo Duncan Niederauer is our guest. Right now as we head to the break, here is dick costalo. Im going to continue to invest in the near term on those kind of infrastructure capabilities in the partnerships weve developed and our platform partnerships and twitter and tv that we know and have full confidence in will allow us to grow the core business. So ally bank has a raise your rate cd that wont trap me in a rate. Thats correct. Cause im really nervous about getting trapped. Whys that . Uh, mark . Go get help i have my reasons. Look, you dont have to feel trapped with our raise your rate cd. If our rate on this cd goes up, yours can too. Oh that sounds nice. Dont feel trapped with the ally raise your rate cd. Ally bank. Your money needs an ally. Welcome back to squawk box this morning. In the headlines, the bank of england left its key Interest Rate unchanged and a policy decision announced earlier this hour. The European Central bank is going to be out with its latest rate pronouncement at 7 45 eastern time. Followed by a conference from the ecb president draghi at 8 30 eastern time. Also, warehouse retailer costco says same store october sales rose 3 from a year ago. That was above street forecast of 2. 6 . That was the expectation. Also, were going to get the latest read on u. S. Economic growth at 8 30 a. M. Eastern time. One of the reports delayed by the Government Shutdown. Economists are looking for an annual growth rate of just 2 . I hope its better than that. At the same time, the labor departments going to be out with the weekly report on initial jobless claims. Were talking about the twitter ipo this morning after it priced last night at 26 a share. What lessons can twitter take from past successful ipos . Joining us with his thought is bob davis, a general partner at highland capital partners. Bob founded lycos, which is still to this day the Fastest Growing ipo in nasdaq history. From a concept all the way to the ipo. Bob, thanks for joining us here today. Good morning, great to be with you again. Well, its great to see you. And we want to get your thoughts on twitter. There have been some naysayers, some saying this company isnt making any money. You say its hard to overvalue it. Twitters pretty exciting story when you think about all it has going. When you see a Company Going from 100 million to 600 million to a billion next year on revenue, thats meteoric growth. What lessons, what advice would you offer any of the people at the company at this point. Youve been through this. What are the risks . And what should they be doing right now. Well, i dont know if they need advice from me, they have it figured out pretty well. And its an impressive team. I think its great what theyve done. But really what twitter is doing and will continue to do. Its going to diversify the revenue stream. Done a tremendous job. The areas to think about are the partnerships. Theyve been paying attention to social commerce. You look at twitters revenue today, its 2. 44 for monthly active user compared to facebooks 6. 50. Many of the social commerce sites like an open sky are looking at 10 a month. Twitter will work its way down that path and see incremental revenue. Twitter will expand the content partnerships, the deal it struck with the nfl was brilliant. And if theres anybody thats a keeper of that content, its the nfl. Theyre willing to share that with twitter. It was a tremendous move. And i think theyll continue to diversify what they provide in terms of types of content and types of revenue. You know, bob, im a heavy twitter user, but we had a guest earlier who pointed out that maybe were looking at this through the lens of a media darling that all of us are people who happen to be heavy users and that doesnt necessarily translate into the broader world this could be a fad. What do you say to those people . You know, i say its easy to rain on a great parade, but sometimes a parade is fun to watch. And if you look at whats going on today with twitter, theres 231 million users, those are all media darlings. And thats not a fad, thats a real thing happening. Every person in the globe need to be a twitter user . Of course not. But that doesnt that doesnt suggest therell be anything but a great and Strong Company we have. And twitter has changed the Consumer Behavior in so many different ways. Twitter, for instance, has taken television and turned it into a leanin experience. Were engaged and we comment and socialize and were using television. And twitter allows us to do that. Twitter has become the news source of choice. For so many of us and itll continue to be that way. So i think the naysayers have a big awakening if they think twitter isnt here for a long time to come. I completely agree with bob on this. First of all, the numbers are what the numbers are. Any kind of anecdotal stuff, its just a media type thing, and the fact that you have 40 of them that are daily active, basically, not quite the 60 daily active of facebook, but a real user base here. The other id throw out there is the acquisition, was a brilliant acquisition for them. Mobile ads, mobile banners work terribly. This is an opportunity for twitter to take their tweets and stick them, basically, in any app or any mobile website or any mobile news application that wants to monetize. Imagine youre reading, you know, us weekly and get a tweet at the bottom for a zone bar. Let me ask you this, though, is there any limit where this goes today . You can say this is great for the future and eventually a wonderful thing and its certainly a good thing for the founders who held off and decided not to sell early. But if youre a Retail Investor sitting at home and if this stock goes to 40, 50, or 60 today, isnt there a big risk somebodys going to be left holding the bag at some point . I dont know. Im not a stock picker, but i dont think so. We said that about google at 85 a share and look at it today over 1,000. We look at facebook and it did not fan out for the first few months, but look at it today and its surged past the ipo price. Fundamentally when you see Something Like twitter, its a company of substance. Its changed completely, human behavior, the way we interact. Why is this not a disruptable technology . Why cant facebook, for example, create a twitterlike feed. Every tweet i tweet out ends up on facebook. Why cant they recast what theyre doing . Why cant somebody else do it . Why cant the google plus do it . That never happens. Youre right. It never happens. Never has, never will happen because you have the Mass Movement and the power of the brand. Its becoming ingrained in our behavior. Tivo was ingrained in our behavior until every Cable Company came up with the dvr. Very, very different and better technology. Point solutions always win by a focus by a focus player. Look at what facebook tried to do with snapchap, facebook poke. Snapchap is doing 350 million snaps a day, whole entire companies can be disrupted out of the space but its typically not like google plus is hardly, you know, causing facebook any problems. Its not. The question is one of the early investors in twitter really smart guy, one of the Smart Capital investors talked about his thesis a couple of years after he made the investment and talked about the fact i invested in a verb, he invested in a great company. Its probably in the dictionary today and if it isnt, its going to be there some day. Its a very, very tough thing to disrupt when you try to change behavior like that. Can it be done . Theoretically, of course it can be done. Will it be done . I wouldnt bet against it. I think twerk is a verb now too. It might be. It might be. I havent quite figured out how to twerk yet, but i think im going to pass on that. Dont bother with that. Dont tell us about it if you do. You know i wont. You need a chiropractor. Yeah, i can see you twerking, joe, i dont know about me. Id do it right now if you ask me to. No, i wont. No, we wont ask. Hey, bob, thank you for joining us today. Great to see you always. What reminded me of that is the cma or Country Music award. Brad paisley and Carrie Underwood and so he said he was twerking threw his back out, said i need to sign up for obama care. And he does the whole bit where he says i signed up yesterday, still waiting to get in anyway. Coming up, other tech stories outside of twitter, Jeff Steinberg will share his thoughts on netflix and the futures after a big session yesterday. Consolidating those gains and mostly flat its all about twitter. [ male announcer ] once, there was a man who found a magic seashell. It told him what was happening on the Trading Floor in real time. The shell brought him great fame. But then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their Trading Platform. [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being a. Shell. Get live squawks right in your Trading Platform with think or swim from td ameritrade. Live squawks right in your Trading Platform so you can get out of your element. So you can explore a new frontier and a different discipline. Get two times the points on travel and dining at restaurants from chase sapphire preferred. So you can be inspired by great food once again. Chase sapphire preferred. So you can. Because what you dont know, can hurt you. Urance. What if you didnt know that posting your travel plans online may attract burglars . [woman] off to hawaii what if you didnt know that as the price of gold rises, so should the coverage on your jewelry . [prospector] ahh what if you didnt know that kitty litter can help you out of a slippery situation . The more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum welcome back to squawk box this morning. Lets get back to our guest host john steinberg. Buzz feeds president and c. O. O. At lot of other issues we can talk about. Well, right now joe and i are comparing our twitter feeds. What are you discovering . You follow about 1,000 people. You follow how many . I try to keep it under 100, but im temporarily over 100. Im going to start weeding out. I have a real buzz feed question for you. Im excited for this, go ahead. Which is, we understand that the twitter ipo is not exactly trending on twitter. Right. A, why is that . And how is trending on your site . So a lot of stories you generate, you decide to run stories because you think theyll generate a lot of traffic. Yes, a lot of social traffic. Are stories about this ipo being shared . Well, i think the first point, the reason why its not trending on twitter is a good counterpoint to rocco, right . Its not an insidery media thing. If it was so insidery, everyone would talk about the ipo. I think what will happen is we will run numerous stories. Well get greater promotion and stories not being shared will roll off the home page. Thats how the site basically functions for everything. You hi how is the business coverage . The one around cbs, the over the top news network, that was a huge hit, he was a few of those every week and the coverage did, the story way before. You move more towards doing what i describe as traditional journalism in the context of the buzz feed platform. How does that match up in terms of traffic compared to some of the stuff that made you famous in terms of the list and list. Hard news and entertainment. If you look at an old newspaper, they do entertainment for old rich people, right . They have their politics and their news and their section of 8 million houses out in greenwich. Were for young people, were young media. We do stories on politics, we do stories on business, we do web culture. Thats what young people want instead of fine dining section. Its about 30 of our traffic goes to verticalized content. About 70 goes to that essential web entertainment. Before we get to the other issues, what does it ultimate portend for the wall street journal, the New York Times, the final times, the traditional print outlets and tv outlets that spend a lot of time and money now doing digital. Nbc. Com, cbs, abc everybodys its all converging. Digital is going to become the fundamental way people get their media. They change the way they do it. Changes everything. Is it all going to change and shift towards . Yes, it will. And all these Media Companies need to change their content for younger people. The content is not geared toward a young person. If these old Media Companies want any shot at rebooting themselves, theyve got to change the competition and focus more heavily on social. You have some insight into the next cool stuff out of the valley. Help us understand the valley between apple and android right now in terms of mobile. Whats interesting about it, we look right now, about 50 of our traffic is mobile, 42 is phones, 8 is tablets and android penetration, the number of android phones is much, much larger in terms of magnitude. The app usage is higher than android because its so much easier to use in an ios device. I think if android makes a simple tweak, what could that simple tweak be that spikes usage overnight almost like throwing a switch . Which is . What could that be . Hold on, guys, we have to say this right now, the ecb is cutting rates. This is a surprise decision. Cutting the refi rate by. 25 . The best guest had been that they were going to leave the rate unchanged but settled for a cut down the road. Very important to see what this is doing to the currency markets. The euro was expected to drop pretty rapidly if you saw something the futures have picked up, the dow is at 52 points. If you can look at a currency board, something that would show us the euro, it was at 1. 35 earlier this morning, the expectation was high as 1. 36 and higher, one 1. 337, its dropped below 1. 34. This is a surprise announcement, although people had been expecting you could see Something Like this happen at the next meeting. A huge concern for europe has been that the economy there has been slowing down because the euro has been so strong against the dollar. As youve continued to see Central Banks from around the globe. Misery loves company. Their inflation rate is zero, their inflation rate and over here, were like, yes, that allows us more cover to do what were going. Currency strengthens and in fact, one of the Central Bank President s weve had recently bullard pointed out we were in a situation he thought where you did not necessarily need to be in a rush to start being concerned well, were at zero. The point was we dont have anything to cut. Well get other people to cut. Youve got some left over there to cut, were at zero, you start cutting. Its like the punch bowl just moved over. Well michelles here. Michelle carusocabrera. This was a close call. The consensus was they werent going to cut, but it was possibly they could and would before the end of the year. Because they started to see signs of disinflation. In germany. In spain, et cetera. Et cetera, right . Some of the things that the ecb used to do are about liquidity, making sure the banks could keep running. If you start dealing with inflation or disinflation which means inflation is really low and you fear deflation, which is what we had in the depression in the 30s. And what japan exactly. Then you start to go back to traditional Monetary Policy techniques like cutting Interest Rates. Again, the refi rate to. 25 to. 5 . Dropping it from a quarter. Come on in, waters fine. I love this. To your point, europe has a lot of issues that cant be fixed by Monetary Policy, right . Theyve got this very strict labor law, lots of things they should be doing. What difference does it make . The point was im not in such a rush to get to the taper because if you look at our Balance Sheet, its big, but its only the fourth biggest Balance Sheet in terms of the gdp when you start measuring it up. Everybodys doing it, its fine. Everybodys doing it. You said this was an endless cycle. This is an endless cycle where people are trying to get their currency to drop a little lower to help boost exports. If there is one thing that Central Banks are supposed to do, it is to fight inflation on one side and deflation on the other side. Thats what bullard said, he calls himself the north pole of inflation hawks. He was on monday. Said you have to defend at the bottom end of your inflation targets. And if youre not meeting your targets, its a big problem. Remember, he actually raised rates twice in the middle of a crisis. Where were futures ten minutes ago . At one point, they were up one. Now up about 62 points on the dow. That is definitely translating i think the u. S. Stock market would love easy money all over the world, right . Not just here. If you look at misery loves company. Up 1 in france, up 1 in germany, up remember, we were talking about 1. 38 a couple of weeks ago. It was 1. 35 this morning. Thats a huge move. There were a number and id been talking to Hedge Fund Managers in the past week who have been saying what barry told us earlier this week at some point you need to lighten your load. They might lighten their load toward the end of the year. And when you see this activity and Everything Else going on in the fed, whether you keep riding. Even guys have said, i believe this is bad in the longterm, but in the meantime, ride it. That is not what we heard from sternling. No, but hes a real estate guy. I wasnt paying that much attention, did you Say Something about android penetration . Is that possible now . Do they have robots now . Oh no, science fiction, i heard that. You will be able to rent a is that i cant tell this squawkward moment has been brought to you by its not me. No, im talking about android phones. I wasnt sure if you knew or not. But if you talk about android penetration, it begs the question, is that possible some day . Theres no buying dinner, theres no guilt afterwards, no you have to leave. Working for the androids. Right. What are you looking at. The ecb did cut rates today. It cut the main Interest Rate to 0. 25 . Quarter percentage point. We still have another quarter point left, dont we . This is happening, it was unexpected. We knew there was a shot for this, but that was not the way the consensus was heading on this. We expected they would set up language and potentially at the next meeting go ahead and do this. You can see right now that the euro is at 1. 3366, it was above 1. 35 earlier this morning. Massive gains in equity markets are relatively speaking, we should say, we were looking at a decline. It was flat before the announcement and now the dow up by about 60 points. In france, the cac is up by 50 points. Dow futures by 83 points. This is all happening because of what weve seen. The latest report from the ecb, the concern about the euro zone inflation. Fell to 0. 7 in october. And as weve been talking around the table as you start getting to the low end, thats well below the target of 2 . Do you go to the travel website for europe . Thats where i go immediately. Below 1. 35. And 1. 33 headed for 1. 30. When are you making the trip . We have gotten a lot of cover, the fed has. I mean for years now, these policies. Weve gotten cover for europe. Europe has been so slow. Otherwise wed look anemic, almost. Were still the best house in a terrible neighborhood. What we do and theyre dragged kicking and screaming. Do you remember the guy before draghi . Never going to raise rates. No, he was in denial. He raised twice in the middle of the crisis and it was the wrong move. Theyre coming to the conclusion, wow, we havent had a Single Person hired in the european zone in the last three years and theyre finally deciding maybe this is something they should do. Yep. We will continue with our coverage of how markets reacted to the surprise cut from the ecb. Also, still to come this morning, twitter expectations on the street. Well talk about what analysts are saying about how the stock may perform when it begins trading today. Well speak to btig. What twitters listing means for the New York Stock Exchange. Duncan niederauer. I think the key is making sure youve got a connection back to the inventors of the product. Again, ill look at john as an example at ebay, linkedin, and then my relationship with evan jack, and i spend a significant amount of time with those guys. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. I got this. [thinking] is it that time . The son picks up the check . [thinking] im still working. Hes retired. I hope hes saving. I hope he saved enough. Who matters most to you says the most about you. At massmutual were owned by our policyowners, and they matter most to us. Whether youre just starting your 401 k or you are ready for retirement, well help you get there. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. More on the surprise decision from the ecb to cut rates. You can see the euro right now. Take a look. Joes getting ready for his big trip over there. Squawk box coming right back after a quick break. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds 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 peoples lives. Invested in the world. Bny mellon. [ male announcer ] at optionsxpress, our clients really appreciate our powerful, easytouse platform. No, thank you. We know youre always looking for the best fill price. And walk limit automatically tries to find it for you. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. A big day for twitter ahead of todays ipo, well talk to twitter bulls and twitter bears. Plus, the ceo of the New York Stock Exchange will join us on the preparations for the ipo and lessons from facebooks botched offering. The nfl developing a hardhitting twitter strategy. Reaches a second break even point here after which enterprise falls into loss. Any questions . You know you need a cover sheet on your tps reports, richard that aint new, baby. Hey, janice. The leagues head of social media will join us onset. And breaking economic data. Well get a first read on gdp. The third hour of squawk box begins right now. Twitter. You dont need to put this this is better. Yeah. Welcome back to squawk box here on cnbc first in business worldwide. Im joe kernan along with becky quick and andrew ross sorkin. Our guest host is john steinberg, president and chief operating officer of buzz feed. More from john, more ideas about all of these things from john still ahead. Hes got some interesting ideas. Plus, were going to talk to the whole android thing. Were going to talk to nyse ceo Duncan Niederauer about the twitter ipo. But first, andrew has some news that came from the ecb. Every month we say, you know, could be an ecb decision today and its always we break in and say the big story of the morning was twitter until about 10 minutes ago. The European Central bank cutting the key Interest Rate from. 5 to. 25 . Left the key Interest Rate unchanged at. 5 . Ecb president draghi will begin his conference at 8 30 a. M. Eastern. Of course, were going to be tracking that throughout the morning. Joining us now on this ecb meeting and decision, jeff cutmore, jeff . Reporter yeah, andrew, ive taken my crystal ball back to the crystal ball shop and asked for a replacement because it clearly wasnt working this morning. And most of the market seems to have been wrong footed by this move. And youve only got a look of the Rapid Reaction we saw in the euro dollar rate in the big decline immediately after the announcement to know this was not priced into the market. And as you pointed out, this press conference is going to be critical because there are a couple of issues on the table. By going now, he has reduced one of the options that was left in the box to deal with. Further weakness in the euro zone, economies Going Forward and perhaps a response to tapering and removing any perceived tightening in the market that might come from that. The other thing we need to see here is how dovish can the language be in the press conference. Hes got this euro weakener rolling here with this announceme announcement, the surprise announcement. He needs to continue with the language through the press conference or there may be those who start to pile back into the euro in the afternoon trade which removes some of the benefit of the shock and awe of this announcement this hour, andrew, back to you. Youve still got a court appoint left. Thats the last bullet. No, look what we did once we got to zero. We have so many Different Things they have come up with that bernanke came up with over here, jeff. First you go, you know, you talk about how long youre going to stay at zero and you can do that for a couple of years. Really, really, really, really then you start doing qe and who knows, were doing first we start with qe on treasuries and then you go to mortgages. Why not do s ps . I think eventually we could get this market up to about 40,000. You got plenty of stuff left. Yeah, the trouble is, joe, and this is the thing that makes mr. Draghis job so difficult, we dont have that mandate that the fed has to support the economy. You know, because we have these euro zone members and some of them are in worse condition than others. And youve got the German Center of this saying the ecb is not here to stimulate Economic Activity or to bail out governments that quite frankly have been too spendthrift in the past. So mr. Draghi cannot directly monetize the governments of the euro zone that have got these high debt loads that theyre trying to service at the moment. The best he can do at this stage is just continue to promise easy policy through low Interest Rates and maybe some mechanism for extending lending into the Banking System. But he cant turn around as mr. Bernanke has done and say, whoa, heres your big qe program, guys. At least not yet. Help yourselves. Well find a way. And bail out the economies. They can always change the rules. Oh, absolutely. Well, i guess they can. Which is its good reason for us to be here then to make sure that were on the watching brief just in case they start to waver a little bit on this discipline that mr. Draghi insists they must pursue. In front of the ugliest sign we love it. Thank you. Mario, right . Super mario. Back on. The other big news of the morning, twitter pricing the ipo at 26 a share. The shares will begin trading at if nyse later this morning. Bob pisani now with a special guest from the floor of the nyse. Bob, good morning. Good morning, becky, bill. Man of the hour, ceo of the New York Stock Exchange. Are you confident you and your team have done Everything Possible to ensure a smooth open . Todays about twitter, the investors and the Market Participants. Not about us, thanks for calling me the man of the hour. Im not the man of the hour, all about getting it right today and i think weve done everything we can to get ready. Reporter lets talk about the open. Ive gotten a lot of questions about when the stock might open. A lot of people may be watching who dont watch ipos every day. Can you give us a sense of whats going to happen . A lot of people who normally dont Pay Attention to what goes on here are paying attention today. And we realize there may be confusion about that. The market opens at 9 30. As you know, covering the space every day, an ipo like twitter is not going to anticipate at 9 30. I would say its about 10 or 10 15, but youll be reporting from here, youll be able to tell the viewers whats going on minute by minute. Were going to be doing things never have been done before. Were going to show you opinion and commentary youve never seen before from the inside here. Scott cutler, works through you ipo head here at the New York Stock Exchange, explaining the blow by blow. Thats my best guess, hard to predict. But what were going to do is make sure were overcommunicating, trying to bring everybody into the crowd. Were trying to take the crowd into everybodys living room so theres no confusion from everybody. We all know Technology Fails sometimes. When it failed, it was the lack of communication afterwards. Were not going to let that happen today. So everyones going to know exactly whats happening blow by blow. Ive never seen such an abundance of communication. Youve got a Conference Call at 8 30 with the Market Participants in the street. Thats unusual, but again, keeping the lines open to make sure owe open every possible question. If people say at the end of the day, wow, youre overprepared, im good with that. What else do you want to get across . Youre confident everythings been done to make sure this is a smooth open. Theres obviously going to be a lot of trading going on. Can we ensure itll be smooth . Therell be things like Circuit Breakers in place. Can you tell us about those . Yes, so, we understand that the first trades going to take place. After that, we all know on a daily basis the markets fragmented. Well keep an eye on the volatility bans. And again, well be reporting, were not going to stop reporting live once the stock opens. Well stay engaged as long as you and your viewers need us to. The market, ive gotten a lot of questions, why have there been a record ipo this week. 1. 8 billion from twitter, why is it all stuffed into this week given how important twitter is . I dont know its all stuffed into this week. But i think whats happening is what you and i were talking about off camera a minute ago. The markets that are level where it makes sense to try to take companies out, the investors are receiving them pretty well. I dont feel its frothy. I think people are being pretty thoughtful about what they want to own, what they dont want to own, and then the market is concerned. If it keeps working, i think the supply of ipos will keep coming. And right now, the market levels are pretty good. At an alltime high. I think its working right now. How long it continues, who knows. All right. Well be here. Well be here at 9 00 with commentary and scott cutler will be with us all day, as well. And well see you on marias show in the afternoon, as well. Yes. Give me the mean, median and mode for where its going to open. I want the over and under. Give me an idea. Ask duncan. Whats the price going to be . Duncan, want to take a shot . You can always count on the intellectual questions from kernan over there. 40 . I dont you know im not in that game. Youve tried to get me do that before. I think it was properly priced. I think its a goodsized deal. It feels to me listening to the guys on the floor that it trades up a little bit on the opening, that would be my guess. Would you say it was the interest of the street that Everyone Wants to see a smooth open, open up and then move up slowly throughout the day. That would be the ideal situation. Yeah. No one can control what their clients want to do or how theyre thinking about it. None of us were in the room when they talked about how to set the price and all that. Were not in charge of the supply and demand dynamics. Our job is to make it operational. And the underwriter somewhat control the place a bit. All right. Guys, thank you very much. Back to you. Bob, thank you. Duncan, thank you. And by the way, a programming note for you as bob mentioned, Duncan Niederauer will check in again today after twitters first day of trading. Joining us now with perspective on twitters stock is kevin landis, cio and Portfolio Manager of the value fund which has over 1 million shares of twitter. Also paul meek. Ask rich greene field, media and Technology Analyst at btig. Rich, tell us, everybodys trying to compare this to facebook. How does it matchup in terms of that comparison. Look, twitter is going public at a much earlier stage of its life. When you look at twitter, this is a company in 2014 we think will break 1 billion of reve e revenue. Facebook in 2014 is going to do north of 10 billion of revenue. And a look at profits. At some point profits matter, facebooks going to do a 50 ish margin in terms of ebitda. I think if youre lucky next year, twitter will do a 10 margin. Youre looking at companies in totally Different Levels of their maturity. The growth rate of twitter is faster, obviously, substantially faster. But i think the challenge for investors, especially if there is excitement around the opening of this stock as you were talking about on the show is at what point does it get a little too rich and people are pricing in a little too much of the future because there is a lot of execution risk involved over the next few years. What is that point . Look, weve said this is a stock we think this stock could be worth 30 pretty easily in our preipo research we published earlier in the week. I think as you start to get substantially north of that, it really comes down to their ability to attract the less tech savvy user. Theyve got 54 Million People in the u. S. This is not facebook, this is not baby pictures and instant messaging with your friends. They need to attract a broader universe of people. And theyre going to have to make people understand why you use twitter. If they can expand the universe of people from the Current Group of passionate users. Im addicted. John steinberg on your show this morning, hes addicted. If you can get past the people who are addicted and show the common consumer why they have to be using this, why the world series is better at home if youre using twitter, thats what could make this Company Worth substantially more than where it trades today. Kevin, you own 1 million shares in the secondary market. That translates into 1 million shares once it starts trading today. If this is a situation where it goes to 30 like rich thinks, you have a lockup period of six months. Would you sell after six months . What would make you determine whether or not to sell . Well, i guess what would make me determine, make that call is the facts and circumstances six months from now. So, you know, if it never has a down day and its just up and to the right, surely would be tempting to try to taper the position. But, you know, were a long ways from that. What do you need to hear from the company in terms of internally . What happens in terms of what they can do with revenue . What you look for is growth translating into cash flow and earnings. And unlike a lot of other investors, i think for us, we expect a Company Growing rapidly is going to plow that back in. And all we care about is theyre cash flow positive. We know its going to turn the dial down the road. So i think its going to be a highpriced, highgrowth stock in six months. And so it would be just like youre holding, i guess, crm or one of these other high Growth Stocks that everyone seems to love. And evaluate it then. You tend to be a little skeptical about some of these ipos. Whats your concern . And how big are the risks here . I think the risks are substantial not in the company not meeting the analyst estimate for revenue and adjusted ebitda, and the valuation theyre placing on those numbers particularly since most of the reports ive read and the other homework ive done, price targets being established by both the indicate analyst and nonsyndicate analyst are valuing the company at a hefty multiple. Not in 13, not in 14, sometimes in 15 and 16, way too far out in my opinion. John is our guest host here i think its a portrait. And rich did great work on this. When you look at the multiple. On 30 a share, that equates to 21 billion. Twitter, thats 11 times revenue, facebook, thats 7. 8. Thats a little bit i can get comfortable with the Company Growing this fast. I dont know with rich, if he likes 30. If we look at rbc, rbc at 34 a share on twitter, thats 15 times price to sales numbers, that puts it roughly in line with what yelp trades at. Yelp is really the comp on multiple. Its the most aggressive one in terms of revenue of market cap to revenue right now. I think twitters a much bigger company, much more important company. A lot more growth. If you can buy it yorks uh can get twitter. Except theres a view as you were saying that apple could ultimately buy a company like twitter. Yelp is a Company People constantly think is that takeover target. You really have to look at how twitter is integrating themselves with the traditional eco system. I think when you look at how theyre extending the ability to spend advertising dollars. So look at television. Lots of brands are advertising on television. People are zooming through the commercials on dvrs not paying attention, staring at their mobile devices. Twitter is trying to leverage that and trying to be that place where an advertiser can actually engage because they know youre looking for content. The nfl, i think the social media director on later. The nfl is pushing out video content. Pushing out short clips. The run the other night goes up on twitter, gets retweeted thousands and thousands of times. And that play, which is, you know, call it a oneminute video clip. Traditional video syndication done all over the web. Twitters able to help the nfl insert an eight to tensecond ad. And there you have advertising. Its organic to the platform, its not in your face disruptive the way a big fullpage screen takeover ad would be in the middle of your news feed. Its giving you value and content and yet creating an advertising stream. Thank you. Thank you. Coming up, its interesting, a venture capitalist rayiising w highs on twitter. So it will be a reflection on the overall market of how much excitement there is. You wonder with the ecb cutting rates and this is setting in. Right now the market is not popular and not that hot even at new highs, this would help and maybe we dont get it and maybe thats a good sign. Tomorrow on squawk box, we have a huge lineup from the baron Investment Conference in new york. As we talk strategy with fivestar Portfolio Managers. Its a special edition of squawk box. And it all starts tomorrow at 6 00 a. M. Eastern. [ male announcer ] what if a Small Company became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Welcome back to squawk box, everyone. The futures have taken off this morning after a surprise rate cut from the ecb that at this point is accounting for about 74 points for the dow. Its trading 74 points above fair value. S p futures up another 6 1 2 points and, of course, this comes after the dow finished at a record high yesterday. This morning, we were looking at the futures being flat until just about 7 45. Thats when we heard the news from the ecb and immediately the futures took off. You saw the euro under massive pressure. It fell down to the 1. 33 level and well continue to watch that. Also, shares of jc penney jumping after the retailer said that october comps rose by. 9 . The company says it is on track to return to profitable growth. And Goldman Sachs says it is being investigated for the currency trading activity. That news comes in an sec filing. The bank says that its cooperating with the probe thats being conducted by a group of global regulators. It doesnt give any further details. Okay. Weve been talking all this morning about twitter and were going to continue that conversation. Twitter set, of course, to start trading today in one of the most highly anticipated ipos of the year. Jeff lewis, principal at the founders fund, the firm has backed some of Silicon Valleys most successful startups from facebook to spodify. Good morning to you. Hi there. Thanks for having me. I dont know if you physically have a red flag youd like to wave, but i gather youd like to. The questions we like to ask at founders fun, firstly, is this a monopoly business . We believe, yes it is the dominant singular short form broadcasting system. And because of the tremendous Network Effect and really fast growth early on. But the second question we like to ask is how valuable is it. I believe twitter is probably 20 plus enterprise company. How much Widespread Adoption is there beyond various niche communities. Secondarily, a Business Strategy question, twitters r d costs are 50 , compared to 25 for facebook. 15 for google in q3. That ratio indicates that perhaps twitter doesnt have a super clear Business Strategy. Theyre trying to build a lot of monetization and advertising products, hiring a lot of engineers and product managers at high salaries in order to do that. Full disclosure, are you guys still facebook shareholders . We are facebook shareholders. I ask just because theres probably good reason for you to be skeptical of twitter in the battle between facebook and twitter, no . You know, i actually dont think the companies are competitive. I feel like twitter is you know, i feel like theyre going after very different use cases. The use case of facebook, frankly, arguably is a lot clearer than twitter. Basically everyone in the world wants to share about their lives and know whats going on with their friends. Not everyone is super curious about people they dont know. So i think fundamentally twitter is a more niche product. And the question is, how much more niche is it . And only time will tell. Jeff, you know i love you, but ive got to tell you, the facebook thing, all this stuff youre saying about twitter is basically stuff people said about facebook, certainly said about air b b. I feel like its a little, its a bit unfair coming from founders fund, i think. I think that one thing to be careful of with twitter is its a highly selfreferential company amongst both technologists, yourself and i, you may well be right, but we do have to adjust for everywhere in the media uses twitter religiously. People that love following celebrities, et cetera, that are also really engaged with that. But we do have to be careful because it is so selfreferential. It cant the math makes it impossible for it to be a selfreferential as all these people keep on saying. Even if you look at 50 Million People in the u. S. Which has, what, 380 million americans right now, there are not 50 million insidery tech user around the world. Absolutely. This is a criticism people keep making that has no math to substantiate it. Well, im not arguing it is not a very valuable company. And i do believe the company is probably worth certainly today where theyre pricing the ipo. I think the broader question is how big will the company be longterm . The value for all of these companies, the bulk of the value exists 10, 15 years off into the future. And the question is, how much of that value is twitter actually going to capture longer term . How much further is it going to continue to grow . The fact that the ipo is a lot earlier for twitter than Companies Like facebook and linked in chose to ipo could potentially indicate theres a ton of value that people buying into the ipo could capture. Could also indicate that twitters a little bit concerned about how much value its going to create Going Forward. Okay. Jeff, were going to leave the conversation there. We appreciate both of your perspectives this morning. Nice little debate. Hope to see you very soon. Thanks. Coming up, were going to talk about breaking economic data. Were going to get our first read on Third Quarter gdp. Plus the closely watched jobless claims coming up at 8 30 eastern. More of the exclusive interview with twitter ceo. Heres what he said about the companys near term strategy. Im going to continue to invest in the near term in those kinds of infrastructure capabilities, in the partnerships that weve developed, in our platform partnerships and twitter and tv that we know and have full confidence in will allow us to grow the core business. So you can have a getaway from what you know. So you can be surprised by what you dont. Get two times the points on travel and dining at restaurants from chase sapphire preferred. So you can taste something that wakes up your soul. Chase sapphire preferred so you can. 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But ill tell you, i figure youre thinking, these euros, misery loves company, were going to race to the bottom with currency debasement. Liesman comes over and says see how stupid they are, took them a long time to realize what the right thing to do was. Id love to get you two guys going on that. Bring it on. Anyway, give us the numbers. All right. The survey says our first look at Third Quarter gdp, better than expected, 2. 8 . And ill tell you what, that is definitely more than i was looking for. Lets go through the internals. Consumption number, definitely on the weak side. We knew this, 1. 5 versus our last look at 1. 8. The price index triple our last look, actually. Comes in at 1. 9. Also hotter, if you look at the personal Consumption Expenditure quarter over quarter, 1. 4. So to summarize, the headline numbers definitely hot. The consumption is not and the prices are a little hotter than we expected. 336 on initial jobless claims, thats a drop of 9,000 from 345,000. That is, indeed, close to expectations. What do we have to look at. Of course we still see the rallies in the equities and the drop in the Euro Currency versus what you just were debating. I dont think a quarter point makes that much difference. But i know that the manufacturers especially in germany and the whisper in the euro zone that the euro 1. 38 was too high. I wish i would have went with that notion. Economists conventional wisdom because that didnt work out well. Back to you. Yeah. I guess the futures are holding up, the stocks here too. Yeah, there they are. Not quite what they were. Id hate to say that a good gdp number means we get less, means they dont wait as long to taper. We wouldnt trade on that, would we, rick . Is it really all about the qe still . Its fueled by qe, no doubt. Oh, yeah, no. It is, joe. Im not going to change anybodys mind out there that is reaping the checks. The checks are real, you can cash them. Holding off the taper, the emerging markets are actually starting to potentially get talked about again as better investments. Maybe theyll splash some liquidity in those areas. It goes on and on, the music keeps playing and some of the bigger institutions, at least, truly, true profit in great extent. For more on the day, lets get to steve liesman. And you were already alluded to what you said in terms of took them a long time to do this. But they dont have an Unemployment Rate they need to try to right. But then are they doing this because of inflation . Is that what . Yeah, they dont seem to have a forward looking way of doing policy. I mean, i think the writing has been on the wall for whats been happening with inflation for a long tile. Over there. Over there. And look, its politically better for the central bank to wait to have the number rather than move ahead of it. But i have been talking to central bankers for two years now that have been telling me that draghi what draghi needs to do out there is weaken the euro because of the need for the periphery to get its act together and either using, you know, verbal intervention or some actual act. Theyve been calling for that and he hasnt done it. Hes done some things. But if you use a forwardlooking policy, you would have been where the ecb is now maybe as long as a year ago. And then you look at the 1. 34, euro, what exporters were saying. It harms the economy there. And what do we want here in the states . It would be wonderful if japan, which is not doing too badly was firing and europe were firing. Quick word on gdp. The consumer spender coming in at 1 1 2, thats not a terrific number. Business investment, not a terrific number. But in part given by inventories. Weve been saying this for over a week that the market was underestimated for reasons unclear to me why either the consensus guys did not pick up the change in the forecast. Its not a surprise, but what i have been reading it doesnt change the outlook for the Fourth Quarter. We talked to the boston fed president on monday. He said, yeah, it is going to be better than people expect. But its going to come out of the Fourth Quarter inventory. So we want to be careful. Theres a before, during and an after when it comes to the shutdown. This number is a better number to go into the shutdown with. Lets hope theres not a big impact here. Lets hope that all the economists are wrong there was not a big impact. We could not have missed and only shaves a couple tenths off and we can reaccelerate in the Fourth Quarter. Go you have a number . Have you done any work . Im going to do it, joe, it worked pretty well last time and it wasnt too bad. Were off by 10 k. Heres the problem, right, what actually happens to government employment. What happens to other sort of related government employment. But we decided that the basal level of job growth slowed in the last six months. Thats true. Even lower. Even lower. Look, you did the adp 130 before the shutdown numbers come through. They could be lower than that and i know some people are thinking that the markets not ready for a downside surprise here. I honestly dont know how you would go down the stuff i do last time and several other times before that and plug in the Government Shutdown. Are you addicted to twitter . I like twitter. Im into twitter. Youre in the media and were all addicted im told. I wonder if were all talking to ourselves, though. You ever get that feel sing . Thats not what the numbers show. Im writing to the guys at the journal, the journal are writing back to me and were having this big ho down, you know. Active daily. 50 million active monthly. That means opening the app. Opening the app, yes, at the very least. If theres anything that can save the company and valuation, its the nfl. And thats whats coming up. What a segue. Whoa. Unofficial transitions for 100. That is i understand how this would work. How does it work . Or for college hoops. College hoops, college football. Something big happens and you see it on twitter, oh, i missed this place, you go to it, theres an ad for verizon and you watch the clip. Think of how many games are going on. Think about that. The march madness. I like it. I like it. That might be the saving the one thing that makes it work. Love the transition. When we come back, more on the ecb surprise rate cut. Michelle carusocabrera will join us next for comments from Mario Draghis News Conference. Also, take a look at the u. S. Equity futures up 76 points right now all because of what the ecb is doing. If you take a look at the euro, wow, below 1. 33 now. It was above 1. 35 at the start of the morning. Squawk box will be right back. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. Welcome back to squawk box. Monitoring Mario Draghis News Conference over in europe. Here are a couple of the headlines. First, he said that Monetary Policy is going to remain accommodative for as long as possible but Interest Rates will stay low. And then he said or even lower for a long time. And thats conventional Monetary Policy. He then went on to talk about more conventional nonMonetary Policy such as conducting these three month ltros, longterm repos that theyve done to increase liquidity for the Banking System over there. Theyre going to continue until 2015. Three month ltros. So, once again, mario draghi sounding very, very dovish saying that Interest Rates will stay low or even lower for a long time and that they are worried the the reason theyre doing this is because theyre concerned about the inflation of data that we have seen. Andrew, back to you. Thank you, michelle. Coming up, we have more of cnbcs exclusive interview with dick costolo. We can say it a hundred different ways. Plus, well talk about the importance of twitter for marketing and engaging marketing fans. And a quick programming note, the dealbook conference kicks off in new york city. Cnbc will bring you live coverage of the names that matter for your money. Coming right back in a moment. 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The enthusiasm for what were trying to achieve and over the longterm of how we think this company and what were building can become this indispensable companion to the moment. And i think that that vision, our goals for the product and the service will result in, you know, helping people understand whether they want to invest in the company or not. And, of course, dick costolo being interviewed by our own Julia Boorstin. Hell be on squawk on the street live in the next hour and it wasnt too long ago that twitter scored that big deal with the nfl to show game highlights and other content with its amplify service. And joining us for someone that doesnt understand things very well, i understand how this could work. I would want to see that someone just had, you know, a kickoff return or something. Yeah. You would watch it on twitter. Yeah. Thats one of the most powerful things about twitter. Its instantaneous and broad and very few platforms that offer that. And look, our fans are there. Our fans are talking about football wherever they go. Twitter just actually makes it that much more engaging. And so youll see a ton of consumption on a sunday, monday night or thursday night where fans are already talking about the game. Question of getting more content in front of them creates a lot of monetization. Can you get enough volume out of amplify . Right now, theres people following you on twitter, its already a small audience, then someone has to click to play and youve got to get the preroll and you need a lot of preroll to do anything meaningful. No, youd be surprised. And you should ask the twitter guys on this. Youll find the nfl contents probably the most engaging content there. It overindexes everything. And youll find the fans if they want to see a highlight, its not that much work to click through and engage in it. On the average highlight, how many views are you getting . I wont have an exact number for you. Its like the obama care website. Well answer you in january. But, you know, i have questions as to whether its worth more to you or twitter to have your content there and drawing people in. What would you pay for it . Well, look, i think the nfl has a pretty good track record of helping build platforms where we put or content, platforms, benefit. Thats fine, thats where we have partners. It is certainly worth a lot to twitter but worth a lot to us. And thats one of the strengths of twitter. They have a monetization model that is really focused on helping content owners grow the pie. Are you guys paying . Or is this something where the partners end up paying. Whats the economics business . The partners pay to be associated with nfl content on the twitter platform. So twitters paying you . Like mcdonalds or somebody who wants to be associated. So advertisers are paying and twitter and the nfl split the economics. 50 50 . Well, im not going to get into that percentage. Youtube, you take 55 of the ads that run against your inventory and you pay youtube 45 . My guess is the nfl is powerful enough its not anywhere near that. You take a much bigger piece of the pie. I wont get into the economics we like to do. I think you have your answer there. Clearly we understand how this could work for the nfl and see how it could work for Major League Baseball and the ncaa. You could see those types of partners. How far can you get and still make it work . As far as Television Content is concerned . Or any other media content. All your stuff is sort of mass appeal stuff. Yep. And when you think about digital, you think about niche appeal stuff. But do they work in this context . Well, i think there are plenty of models out there that, look, on advertising models, reach is important but also niche is important, as well. If i can reach somebody not easy to get, thats valuable to me. For us, were a scale business. And thats the business were in regardless of what platform were on. Its still aggregating more audience as anybody and the same is holding true in social. Were always going to be a reach model. Right. And that really appeals to us and our partners to reach as many people as possible. What do you worry about with your relationship with twitter . Im sure you sat around and did the pros and cons. What would the possible cons be for you . Look, i think there arent a lot of cons. Look, the nfl, we always say we dont have to be first, we just have to be good. Some of our partnerships. Did you suffer facebook also. We do more with twitter than we do facebook. Is there any way we can do you worry about is the nfl still concerned about people going out to the stadiums versus sitting at home . Anything you can do with social media . Look, stadium, getting people to the stadium to watch the nfl, which we think is still the best place to experience the nfl is a challenge for us. We continue to work on it. Your mobile stuff. They could be watching these twitter feeds in the stadium on their mobile phones. By the way, theyre doing it already. I think this is a great experience for the user, for the fan to be able to see the replays. I dont think theres enough volume there for it to be meaningful. Youtube with all their volume, estimated to do 6 billion in 2013, 8. 6 billion in 2014, right . Thats their half of the cut. Right. They have 1 billion people a month going there. You dont have 1 billion a month on twitter. Very tiny revenue overall, and tiny revenue to the nfl at this point. I dont know how theyll get the video volume up with this interface. Look, what i would tell you is, look, 1 billion is certainly a big number but plenty of add models that work on a smaller scale. Thats been a conversation around this table this morning about how big is big. Twitters big. Its not as big as facebook, but there are hundreds of millions of people on this platform. Im interested in reaching those people. On a big game in the nfl, we get 20 to 25 Million People. People. Weve done a pretty good job of monetizing that amount of audience. If i get that many in a digital platform, well monetize it. Coming up, we have a very busy day going on at the New York Stock Exchange. Were going to check in with jim cramer on the twitter ipo, and a lot more. As we head to a break, take a look at the euro, the ecb cutting its key Interest Rate and speaking at a new conference a few minutes, mario draghi said policy will remain accommodative as long as needed. Mine was earned orbiting the moon in 1971. Afghanistan in 2009. On the u. S. S. Saratoga in 1982. [ male announcer ] once its earned, usaa Auto Insurance is often handed down from generation to generation because it offers a superior level of protection and because usaas commitment to serve current and former military members and their families is without equal. Begin your legacy. Get an Auto Insurance quote. Usaa. We know what it means to serve. Customer erin swenson ordebut they didnt fit. Line customers not happy, im not happy. Sales go down, im not happy. Merch comes back, im not happy. Use ups. They make returns easy. Unhappy customer becomes happy customer. Then, repeat customer. Easy returns, im happy. Repeat customers, im happy. Sales go up, im happy. I ordered another pair. Im happy. both im happy. Im happy. Happy. Happy. Happy. Happy. Happy happy. I love logistics. There was a whisper at the could do that. The europeans have 1920 was yesterday over there. So everything they do is based on history. I know draghi doesnt want to have any sort of repeat where people didnt have enough money to buy anything and they have to nip it now before it goes too far. I was just going to ask that question about whether it is an orderly open, it isnt just frothy, that might be good for the overall market because if the market really was in hyper drive, i mean, this would be a symptom if it doubled or tripled that we are near the end, wouldnt it . But, as we know, joe, the greatest thing in the world is to always call tops because if one day you get a top, you look like a genius. We have people calling tops for 8,000 dow points. If you see that kind of froth you go its too easy, its a top. Retail is involved. I hate investing in irony. But thats what youre going to hear today. I know the allocations were tight, theres not a lot of stock around. Is it going to hit 40 . I heard its going to open at 30 and theres very tight allocations. Tight allocations. Anthony nodo is the guy who put a lot of stock, the goldman guy you have that nfl fella. Anthony was the cfo of the nfl and did a great job. He was involved for dotcoms, he knows who to play. What has happened is the first price is not the high price. Within 15 minutes, you get a second high price and you come back to that high price. I hope it doesnt open north of 35 because then its fodder for everything weve been talking about. Before you go, i just want to congratulate you. You did a mitzvah last night. People dont know this but the lulu and leo fund, there was an event last night, jim was the big sponsor of it and the emcee. You did an awesome thing. Their strength is inspiring. It is. And thank you for doing that. Coming up, well get the last word from our guest host jon steinberg. Plus why content is king for netflix. And a live interview with Ceo Dick Costolo. Just set your start and end price. And let it do its thing. Wow, more fan mail. My uncle wanted to say thanks for idea hub. He loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a 150 amazon. Com gift card. Call 18882800149 now. Optionsxpress by charles schwab. Call 18882800149 now. Help the gulf when we made recover and learn the gulf, bp from what happened so we could be a better, safer energy company. I can tell you safety is at the heart of everything we do. Weve added cuttingedge technology, like a new deepwater well cap and a stateoftheart monitoring center, where experts watch over all drilling activity twentyfourseven. And were sharing what weve learned, so we can all produce energy more safely. Our commitment has never been stronger. We got about a minute left. Lets talk about netflix with buzzfeed president john steinberg. Dolan said about a month ago, maybe well be in the broad band business. But that means they all win, the hbos and showtimes, can they win playing against amazon and will amazon succeed creating content . I believe they will. Its some whacky apps guy. Who wants to watch whacky apps guys. They said the same thing when netflix rolled out. I dont want to watch nerds developing apps. Theyre doing deep data to analyze every celebrity a person likes. Its a nobrainer. Jon steinberg, thank you very much. Thats it for today. Join us tomorrow. Now its time for squawk on the street. Good morning. Welcome to squawk on the street. Our special coverage of twitters initial Public Offering. Im carl quintanillah