Transcripts For CNBC Squawk Box 20131129

Recession. And whether you hit the stores yesterday or not, plenty of people are out this morning. If you are planning on waking up early for your black friday sales, youre late. Step et up. Shoppers are expected to spend an average of 650 this weekend. Thats 11 1 more than last year. We have the chief merchandising officer at toys r us. Then well be joined from Tysons Corner, a huge mall in virginia. Bobby kotick will be join onning us on air. Electronic items are expected to be a big seller this year especially with the launch of the xbox and the new play station consoles. Coming up in the next hour, we have Terry Lundgren. And at 8 40 this morning, the ceo of Brooks Brothers. We have a packed line upof guests ready to giving us a look at the American Consumer. We start with dana telsey this morning. We have heard a lot of stories about some expecting disappointment, some maybe not great retail numbers. But what do you really think is going to happen this Holiday Season . I think its the season of insurgency. We have six fewers days between thanksgiving and christmas. Look at the season started earlier than it ever did before. There are items out there for people to want, whether its accessories and hand bags and watches. Certainly electronics with all the new tablets out there. So overall, it should be a 3 to 3. 5 total increase, 2 to 2. 5 like for like. But it will be promotional. And with online and stores, you have to be in it to win it so you have to be open in order to be able to get the shop. I have an open question. Everyone is opening their stores. However, if you look at all of the sales growth for all of these stores, its all online. Its up 20 , 30 online and invariably at the store level, the fiscal locations where everybody is supposedly running, its down. People are actually losing shares. Well, one of the things happening is you order online, pick up in store, reserve in store. Its complimentary. Retailers need an Online Presence and a store presence. Dont forget, though but the black friday versus the cyber monday. Black friday and cyber mon nobody is going to order stuff yesterday and pick it up today, right . You may be doing that. Whats hopefully happening is if you order online, pick it up in the store, not only are you picking up what you ordered, but youre getting more, too. Well talk to Terry Lundgren about that. Its working. I look at these numbers. Weve had a few people who come on and said, look, maybe you get an upside surprise. If you had to go with the over earn, whover over under, what would you take . Side say over. Retailsers need to move the merchandise. Does that mean lower margins . Yes. Are they going to be profitable . It will be pressured margin for some of the retailers. Dont forget, 40 off today is what 10 and 20 off used to be years ago. Theyre planning for promotiones and planning carefully. So far, the markdowns that weve seen out there yesterday and this morning so far, for the most part, theyre very similar in the last year. When you say 40 off, there was that wall street journal story last year saying 40 off, but thats because we marked the price up 35 . Exactly. And i believe that is happening and they mark the margins in order to be able to hit. I think when youre getting 60 , 70 off, its whats taking off that initial markup. Is it margins and pressure, meaning its still a profitable share . Still a profitable sale. Its margin compression. These retailers came through 08 and 09 and they know thou manage their expenses in order to make a profit. Who are the big winners . Walmart came in and said they were going to offer plenty of discounts. That put plenty of retailers into a tailspin, a bit of a panic. Who wins and who loses . I think macys wins, tjx wins, michael kors will win. Limited should win. Best buy, outside of my office the traffic, the line went straight down the block. But best buy said their margins would be compressed. Right. What would you do with this stock, best buy . If i could buy it or sell it, id buy it. The reason why . Great expense structure to make profits down the road. Dana will be with us all morning. tis the season for early spending sprees. Joining us now is richard barry, the toys retailer and merchandising officer. How are you . Im great. How are you . Im great. Give us a sense of what has been going on overnight for you and what youre seeing today. We opened at 5 00 p. M. Last night. The sales staff at midnight the night before online. What we expected for this thanksgiving and for black friday period was that people were going to shop how they wanted and thats what weve been seeing. So great sales online at 12 01 midnight. We saw great crowds at 5 00 p. M. Weve seen a nice stream of traffic heading through. Right now, weve got our 5 00 a. M. Specials running so weve seen another really great surge of traffic coming through again. And were going to have great deals all the way through until we close tonight and again for the weekend. And, you know, this period of promotion is not just about black friday any more. Its about the period before black friday. Its about cyber what used to be cyber monday which is now cyber week. So well be taking our cyber seevent on saturday and that will continue through next week. So for those procrastinators who will wake up monday morning and realize its december 1st, well have plenty of deals to get them motivated. Richard, when you said you had a 5 00 a. M. Deal, what is available at 5 00 a. M. And what is the price point . We have deals across the store, whether youre looking for toys or electronics. For example, we have tablet b with a 10 inch tablet thats 99, 50 off. We have disneys infinity figures. Buy one get 50 off. Weve got deals really across all the stores, whether youre looking for barbie or lego, youll find really great deals all the way across the store. Plus, we have about 250 door busters that are still running across the store. Wile we started early yesterday, we have plenty of vinventory to see us through today, through tomorrow and then well kick off our cyber event, as well. Richard, there are six fewer shopping days between thanksgiving and christmas. Is that an issue for you . Well, weve been planning for that all year. We knew they would be a tightened and compressed season. For us, it works in our strength. We carry the widest assortment, great exclusives. Were going to work on our instock position as we get through the next few weeks. So for those customer thats get pressured on time, we will be the only stop where you can make that quick stop and get everything you want and get a few surprises and quick deals. Richard, real quick, this next 48 hours, will you make money . Will this be a profitable 48 hours for you or is this just to get the brand out there and hope more people come in between now and christmas . Well absolutely make money over this period. We see customers buying into our door busters. But what was exciting last night boor busters is a euphemism for an unprofitable trade for you, right . It can be. But what we saw last night is customers coming in, buying whole shopping carts of goods, literally doing their complete christmas shop on this day. So that helps us with our margins outall. But the fact is, wpt to give our customers a great place. One final question and then would he have got to run. All of these door busters and they promotions and all of whats happening, is it just pulling forward the sales or do you think its actually increasing incrementally the sales . I think weve got a couple of things to look at. First youof all, we have a compressed Holiday Season. We have to make sure every single day counts between now and the 24th of december. Its not our fault this is pulling forward sales. This is absolutely necessary. Its important to give our customer tess convenience, the time to be able to do that shopping so that they can get the right gift for their kids so they have a big smile on their face for christmas. Richard, thank you so much for joining us in times square this morning. Happy thanksgiving and happy holidays. Happy thanksgiving. Were just getting an update. Walmart processing more than 10 million registered transactions thursday. Dana, is that a big number . Sounds like a very big number. 400 million page views on walmart. Com. And they said big screen tvs, ipad mini among the top sellers. Laptops, xbox 1, ps4 and call of duty ghost. Call of duty is interesting because bobby kotick is going to be here. Thats a new video game they have out. This is interesting in the release, too. There has been this talk about protests from workers today who are going to be protesting the wages paid by walmart. Listen to this line. In appreciation for their hard work, walmart will be providing 70 million in holiday pay to hourly store associates. They say store associates who worked on thanksgiving day will receive a 25 discount on an entire purchase on december 5th and december 6th, allowing them to save millions of dollars on Holiday Gifts for their families. So first of all, from walmart, just the numbers that are out there getting some of these transactions, they say there were more people who came through, some 22 million customers would came there on thanksgiving day. In four hours. Just from 6 00 to 10 00 on p. M. What do those numbers tell you . It sounds huge. Huge numbers and you have to decide are you going to keep the store open or not and do you want to be amazoned or do you want to have the competition from online . They want to gain share. This way they can hopefully work with the workers and their staff and be able to generate sales. How 41,000 transactions a minute. A minute. From 6 00 to 10 00 p. M. Thats why im here today to calculate this. 2. 8 million towels, 2 mill n televisions and 1. 9 million dolls. This sounds like alibaba and china every day. How far behind are they relative to amazon . Are we about to enter a new paradigm . I heard from somebody who suggested in the next two years, people may start going to walmart. Com for orders more than amazon, for certain types of things. What weve always heard is that people go to amazon for specific items. They go to some of the retailer sites in order to be able to browse because they know theyre going to find a complete assortment. Harder to browse on amazon when you know exactly what youre going there for. Easier to work when i browse for tvs, ill always go to best buy. Thats my thing. Do you want to do google shopping search. I would go to amazon. I would probably going to amazon. Id look for the comments to see what everyone says about them. Then i would go to google or do something so i could find the cheapest one to physically buy. Thats what i would probably do. I think what dana is saying is its the automatic places that you go, there are reflective places and walmart may be becoming one of those. Thats amazing. Right. We have dana here all day to comment on all the incoming information we get from retailers. Here is what you need to know about trading hours. The New York Stock Exchange will close at 1 00 eastern. Commodities, gold trading as the nymex closes at 1 30 eastern. And electronic trading finishes at 5 15 eastern. So these guys at dotcom, theyll be on all day. Lets check on the markets this morning. Where are the boards here . Here we go. Dow jones looking not too shabby, up 35 points if you do the fair value calculation. Nasdaq, which crossed the 4,000 barrier thursday or friday last week sorry, this week. Tuesday. It was a shortened week, right sdmp. Tuesday or wednesday. And lets see, hoyle now was in the 90 area, 92. 567. Brent around 110. Natural gas, 392. Theres the tenyear treasury. 2. 75 . It was up higher. Seems like the new middle ground for it. Where is the dollar trading today . 102 on the yen. 1. 36 on the euro. So weaker against the euro, which has defied expectations in keeping its strength up. And finally, gold. In the 1200 range, now 1246, up 9 today. Well see if that sticks. Time for the Global Markets report. Ross westgate is standing by in london. Ross, how was your thanksgiving . It was very good, steve. I had a chef on set with me and we prepared a turkey. Merry thanksgivingkuha, by the way. Thank you. Wouldnt joe rib you endlessly about the lack of celebration of thanksgiving in the uk . Yeah. Clearly, it was the guys that left that youre giving thanks for. They were, you know, a little too uptight for us, to be fair. Its an unusual holiday for us, if you know what i mean. Ill tell you what has happened, though, retailers today, fist time this has happened, british retailers are pushing black friday discounts in britain. And that has never happened before. So we have now inherited that from you. There you go. Its come all the way back. We forgot why thanksgiving happens, but the shop onning retailers come all the way back here with discounts based on the same thing. Meanwhile, steve, equities today just above the flat line. Around about 5 to 4 advancers outpacing decliners at the moment. The ftse yesterday without the absence or with the absence of u. S. Trade didnt do an awful lot. The ftse wanted up 10 points. Pretty flat for the xetra dax and the cac 40 in france. The xetra dax is at the alltime highs at the moment. The mts mtsftse mib is fairly f. They downgraded and cut the aaa rating for the netherlands to aa plus. They did say the outlook is stable. This is a country that has been on negative watchout look for around two years. They said it no longer wants that aaa so theyve trimmed it down. It was a negative outlook for a couple of years on that. But they said they dont want it to be on the same rating as germany. Tenyear spanish yields a little higher today or lower today. They also got an upgrade in terms of the outlook from s p to stable from negative. And we focused on the uk through our mortgage approvals ticked higher once again this month. We heard from the bank of england yesterday that they stopped their funding for lending scheme for mortgage finance. They are using this theme to give banks cheap finance if they extended more mortgages. Theyve cut their house price he and rebounded quite nicely. Were stoking house prices a little bit too much in this recovery. So the bank of england stepped in and said were going to do chief financing. There was a moot point about whether it was funding an awful lot of mortgages in the first place. Otherwise, were pretty flat. Well see how your shopping goes stateside. Back to you. Ross, thank you for that. Is it thanksgivingkuh or is it the opposite . Hanukkah came first, technically. Hanugiving . Hanugiving, something. Thanksgiving kkah is catc catchier. Coming up, youll be surprised by the stopping. Plus, russia, why theyre raising minimum vodka prices and how china could be controlling bitcoins fate. We have all those stories. First, alex wallace is joining us now from the Weather Channel to give us a breakdown on how things may be faring over the weekend. Alex. Good morning to you and happy post thanksgiving. Things are looking pretty quiet. A few light snow showers moving across parts of new york state and pennsylvania. What we have, though, is the chill thats in the air. Its going remain quite cold throughout our day today. 30s and 20s through the interior. 30s from new york city northward. By tomorrow, not a whole lot warmer. 42 in d. C. With syracuse now getting up to 34. So a bit of a moral victory, at least getting out of the 20s there. It will remain cold heading into the weekend. 32 in detroit. Once we get into tomorrow, only about 5 degrees warmer. We do find it into parts of the south, this is where were getting to see a chance of temperatures in the 60s. Some of these areas were freezing with crazy cold temperatures yesterday morning. By the time we get to sunday along the gulf coast, mid to upper 60s to enjoy. Thats your National Forecast heading into the weekend. More squawk box coming up next. Announcer before you hit the road, here is your travelers check. Las vegas and los angeles attract business travelers. What else . Find out next. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Announcer what makes these cities more desirable for conventi conventions . Direct rail rides from the airport to downtown. According to the u. S. Travel association and American Public transportation association. Time for the now executive edge. This is our daily sellment focused on giving Business Leaders a leg up. We start things out with retail. Retailers at this point to find out whether buyers are on work computers, mobile devices or standing in the grocery aisle. That data can be connected with other personal information like your zip code. The techniques can help customize Shopping Experiences. But consumers argue aggressive tracking and profiling opens the door to price discrimination. Some of the things they talk about in this article are creepy. The idea of them tracking which items youre walking up and down, if you pick up something or put it back on the shelf or into your cart. That is starting to sound truly invasive. Im not bothered by any of this. The only thing im bothered by is the possibility for price discrimination. A year or two ago we did a story, i think it was on staples. And there was a physical story that was close by to your house or not, they would charge you more or less money. And that actually frustrated me. I think the prices should be the same across the board. A point of information here, the economic concept of surprise discrimination is not bad. What do you mean . Well, retailers discriminate all the time between those who are willing to pay more for a product and those who will pay less. And you can think about that in terms of the two different models o ft same automobile that was put out by, for example, there was mercury and there was, i guess, ford. I guess they got rid of that. So what was it . It was a more ornate version of the same automobile. So yeah, but a more ornate version is not the same. No, but its very much the same product. The concept itself tsh you go into starbucks, starbucks is price discriminating. You can get a cup of coffee for 1 or you can get a 6 cup of coffee. And whats happening is starbucks is discriminating. Now, the discrimination youre talking about thats a different type of discrimination. The idea of discrimination based on if youre looking at their sex or gender or their race and deciding but its a different there are retailers that in some certain instances, the better customer you are the more they charge you. What you want to know is if youve been subscribing for a long time, theyll charge you through nose. Theyll discriminate between new customers and old customers. Perhaps. But this is across the board. Discriminate between those who want to pay a lot of popcorn and those who dont pay a lot of money for popcorn. Some of what theyre learning is so where do you put things . What aisle do you put something on . The customer is going the buy more if theyre seeing socks and cosmetic together or Something Like that. How are they go going to charge people the same price . They look at your zip code, for instance. To me, that borderlines on things like theyre not allowed to look at some of those things because youre looking at Racial Discrimination at some point or gender discrimination. Im in the same store and they read my zip code and will charge me a different price . Apparently. I didnt realize some of the thats freaky. Thats not thats discrimination via price. It sounds a little i belong to some of these loyalty memberships. I understand that to a certain extent. But some of the things described sounds like something the nsa would be doing, not necessarily your local best buy or something. Anyway, well continue to watch this because it sounds like things are starting to creep, creeping to the creepier levels. Lets talk about a story out of russia, which plans to raise minimum vodka prices by next year. The country is trying to reduce consumption of alcohol. But some fear this will spur others to drink cheaper illegal vodka out there. 30 of all deaths in russia are tied to alcohol. Steve, you lived there. The only comment i can make is new york and cigarettes. And it worked. I used to tell people that russia is a fascinating, complicated place. But theres only one thing you need to know, which is that the vodka bottles do not have screw on tops. What . What do you mean . The vodka bottle has an aluminum top. Once its off, its off. You open the bottle of vodka, you finish the bottle of vodka. Youre kidding me. No. The screw on top is the export version. You drink the whole thing and theres a superstition that you dont leave an empty bottle on the table. You take the bottle and put it underneath. Theres a drinking problem there. A lot of what weve seen in the tables will russians and the Life Expectancy is a result, i think, of the alcohol consumption. And by the way, gorbachev tried this in the 80s and it was terribly unpopular. They got rid of it in the 90s. And he this got rid of him, too. They got rid of it because it wasnt effective, it was exactly what becky said. Theyll go to illegal versions and make it at home. All right. China now equities for 62 of the global volumes in bitcoin. The article warrants that beijing has taken steps to reign in Virtual Currencies in the past. Just a few years ago, the Chinese Government introduced legislation banning the use of digital money to purchase tangible goods. If china is tied up in the future of this, you have to wonder how secure na is. Theres two issues here. One is if youre china, from a policy perspective, there is an jurmt to be made that you want to undermine the u. S. Dollar to the largest extent possible. They oddly have so far let it go in china. Baidu, one of the biggest retailers out there, is now accepting bitcoin. Thats a crazy thing. The whole thing seems bizarre. Ultimately, the u. S. Government and everybody as the is he serve currency. Why . Because they dont want to be tied to us. The whole argument of bitcoin sess a keanu reeves like world where the u. S. Dollar goes to zero and everybody just has to walk around with gold and bit coin. Right . Thats the whole goal. In which case maybe that would help china become the reserve currency. Its a reserve currency argument. We realize how much in dollars china has right now, right . So their actual desire to undermine the dollar would be minim minimal. Well, but do the extent although there have been chinese officials who have made comments because theyve been frustrated by the actions the u. S. Has taken. If you told me bitcoin and now a life coin and theres so many thats why i cant imagine one wins. And i think the u. S. Government, i dont understand what ben bernanke is doing with that comment he made to those senators. I dont understand it. Im not even sure why its legal. Im not, either. Im surprised the government here hasnt stepped in. Theyve just begun this story. Okay. Interesting. One mans opinion. When we come back this morning, were going to talk more about this mornings top story that is retail and the American Consumer. Well head to dyTysons Corner virginia, find out how much theyre spending and what theyre buying. Squawk box will be right back on this black friday. Stick around. [ male announcer ] if we could see energy. What would we see . The billions of gallons of fuel that get us to work. Wed see all the electricity flowing through the devices that connect us and teach us. Wed see that almost 100 of medical plastics are made from oil and natural gas. And an industry that supports almost 10 million american jobs. Life takes energy. And no one applies more technology to produce American Energy and refine it more efficiently than exxonmobil. Because using energy responsibly has never been more important. Energy lives here. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box this morning. One big story, the state of the consumer. Courtney reagan joins us from a mall in dayton, ohio. Good morning to you and happy thanksgiving. Good morning to you, andrew. Happy thanksgiving to you. If we want to sum up what weve seen so far, its sort of steady as she goes. Those early thanksgiving hours yesterday have helped to spread out the crowd. I have to tell you, i stepped into a walmart. It was packed, but everyone was fairly orderly. They were passing out wrist bands. Consumers had pretty packed carts. The National Retail federation expects well see some 90 million shoppers hit the stores today. 140 million over the course of the entire weekend. So far, so good at least from the online indications. Were getting sales up 11. 5 , according to ibm and base odd traffic through late last night on thanksgiving. We spoke with some very hearty midwestern shoppers here today to see how its going for them. Listen to what they had to say. Ive been shopping since 9 00. I started at 8 00. I went home, took a shower, lay in bed and i thought i was going to sleep, but i decided to come back. Came out at midnight. To kmart, old navy, hh gregg, here, the mall, elder beerman, pay less. So as you can see, shoppers hitting the stores early and not stopping yet. If we think about early winners, what im hearing so far is best buy. Lots of lines at best buy stores around the country. Remember the Company Warning theyll do whatever it takes to win this season, including compressing those margins to offer the best deals to consumers. Walmart, were hearing lots of good things about what we saw there on thanksgiving. Macys appears to be the Department Store winner both here at the mall and around the country. Theyve been going all night and well bring you the latest about we get it here at the mall from dayton, ohio. For now, back to you in squawk box. Its a new tradition, courtney and dayton. How many years now . Three. Shes from the heartland. Its good to know whats happening there. Courtney in dayton. Retailers by the way, you made the good point. No fighting. Yet. Maybe theyve relieved the pressure by doing it thursday, doing it online. Sdh theres a lot more time. Can you get the same deals in the stores as you can online . No. Not al watt mart last night. Right. And today youre getting different deals than you might have gotten yesterday. We saw signs being changed last night just at the time when its 8 00 is coming, 50 off now, here you go. Do you want to say what youve gotten from your spotters already or ill tell you a little bit. I have people all around the country. Firstcations are danbury mall, traffic is lighter than last year. Busiest stores, macys is winning. Also sneakers. You mentioned about your son in footlocker. And my son will be on air at 8 00 for a special sneakers release. Meanwhile, if youre at Tysons Corner in Northern Virginia today, you have a front row seat. Well check in with the nations largest regional shopping mall. Joining us, the Senior Property manager at Tysons Corner center. Good morning. Good morning. Whats the traffic like there . Its been an exciting night. It was weve been opening up at midnight for the last fooe few years. Shoppers have really made it a tradition. Last year, maysys opened up at 8 00 p. M. And a bunch of our stores decided to open out at 8 00 p. M. Traffic was strong and steady and has been all night long with good troudz crowds and a variety of stores throughout the shopping center. Can you compare it to last year . Was it the same hours last year . Well, macys opened up at midnight last year. The 8 00 p. M. Opening was new for them. Some of the other stores decided to come on with the early opening, as well. So our hours are expanding. We saw traffic all night long and is we got the big bump at midnight for our official opening again. Corey, weve been talking a lot about online sales. And it seems like theres a significant chunk of sales online now. For a retailer like a macys or a walmart, they can capture some of that with their macys. Com website. What does a mall operator try to do to combat online sales . I think its the retailers addressing that. Theyre embracing the fact that theyve got the multiple channels. Theyre doing special promotions in store only in addition to what theyve got online. Theyre doing more to make an experience in the store. We saw very strong traffic last night, especially around all the game consoles. Those were very big. Cell phones, especially the no contract cell phones were big. And, of course, the door busters and macys and the Apparel Stores are always a big hit on black friday. I think the retailers are embracing those channels. Were doing what we can to bring in the mobile world, too. Weve upgraded our apps and were trying to embrace that to make the Shopping Experience better for everyone. We can talk about traffic, but when it comes down the to sales, have sales at the mall been affected . Have they dropped at all because of Online Shopping . From what i saw tonight, i saw lots and lots of people with lots of shopping bags from a variety of stores. We dont have any data yesterday as to what it will bring for our shopping center. But, you know, it was a great start. And the retailers i spoke to are very happy from what theyve do know seen from author stores so far. Thank you so much for joining us this morning from Tysons Corner. Thank you. My pleasure. Dana, your thoughts on that. What will mall operators do. I think what events are you doing to drive people into the mall . What are you doing with fashion shows, with concerts . What is the special deal youre offering . With a shorter season, you have to have some longer hours. But i think of myself, i do a lot of shopping online now. I never did that before. I would say the bulk of my shopping through the course of the year is done online. That has to have an impact. And i think thats why the stores are opening now. They have to be able to offer something. Here is when you have to get people in the malls. Were not seeing many mall openings. Theres fewer than there was. And youre seeing more flash sales. So the speed of how are you going to do Something Different if they would build them differently, make them more of a destination, i have a reason to go to the mall now as opposed to i can just sit at my computer and do the convenience shopping online. I think theres a lot of older malls that have different designs for day when there wasnt the dotcom world to do your shopping on. Now they view them differently. We have a few other headlines of note. Spacex aborted the launch of an unmanned fallon rocket one minute before liftoff yesterday. The company cited an unexplained technical issue. Spacex has a bag log of nearly 50 launches valued at about 4 billion. Better get those things off the ground. Is this a bad sign . It is rocket science, so its not exactly it is. Literally, thats true. Also, petro china has developed a share in one of iraqs most promising deals from exxon. The final details of the deal were not disclosed. Venz secures a load from russias gazprom. The Australian Government has rejected Archer Daniel mid legions buyout proposal for grancorp. Adm has offered to buy the remaining 80 . Coming, how retailers are communicating with consumers. Well talk about stores targeting sales when squawk box returns. Ready to run your lines . Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Welcome back to squawk box. Retailers used a variety of tools to gain insight into their customers so they can better target sales. Vision critical ceo scott miller joins us now. Good morning to you, scott. Good morning, everybody. So you are a Big Data Company in some ways, creating big data or at least trying to help retailers sift through big data. What is it exactly that you do . Well, the headline is kind of the collision between Market Research in big data. The headline is that companies are start to go leverage their customers as genuine advisers. Theyre trying to get ahead of that moment of the decision. And i think its no more relevant than in black friday. Black friday is a very narrow window. Companies have to get it right. And if you look at all the information they have, the big data that flows through that they talked about once they get once customers have done something, most companies, retailers right now are trying to get ahead of that curve. Theyre Building Communities of five, ten, 15,000 xhup customcu theyre bringing them inside the strategic tent. Theyre getting them engaged in developing new ideas, in understanding how theyre going to consume information in black friday, how theyre going to make decisions. All of this theyre trying to do before all of these big data come through. Give us the big insight, which is what have you heard from the customer . What is the great surprise this Holiday Season . Great question. And an example of why its important to get ahead. So we actually reached out to one of our own communities engaged about 1500 retail shoppers and learned a couple of really interesting things. It may not surprise you that mom and you guys were talking earlier about online versus instore. Moms in the mid 30s to mid 40s still want to go in. Shop. But theyre being driven into those stores by discounts. The bigger the percentage that come through on that promotion thats on their smartphones, the better opportunity off to drive those moms into the store. Oddly, though i was going to say go ahead. Sorry. Contrast that to dont send that same cue upon to single males because theyre buying at home and theyre actually buying as much for themselves as they are for people that theyre shopping for. Scott, real quick and weve got to run, we were talking about a story that was in the papers this morning about the potential for price discrimination as it relates to the idea that you know everything but say now. You have more data on us than everything. And what happens when i walk into the store and from whatever zip code im in you decide i can charge ta buy more because hes probably more inclined to buy and was less interested in the price compared to somebody else. I actually think that basically consumers are eventually going to catch wind of that and that could end up back firing. What customers are doing, clients are doing, is theyre trying to get ahead of the curve and get those customers engaged in the process of identifying, really, what they want to do and what experience they want to have. Eventually customers are smart. Theyll figure it out and theyre supposed that stuff. Scott miller, thank you for joining us this morning. Very quickly, we just heard from target putting out a release talking about what happened on thanksgiving day. Target announces strong start to black friday sale with target. Com traffic exceeding previous records. Once again, youre talking about the online sales being a huge part of whats happening and a huge twist to this. They do say the headlines started at 8 00 p. M. Before the opening there. The traffic remained strong for several hours. Saw things like ipad air, a nintendo free dsxl and the row boat dog being some of their hoetest hours. When we come back, teens are synonymous with disposable income. Are they showing up this year . Which stores are best squawk green room this morning playing video games. This is big business, its serious business. We have activisions ceo. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Announcer where can an investor be a name and not a number . Scottrade. Ron im never alone with scottrade. I can always call or stop by my local office. Theyre nearby and ready to help. So when i have questions, i can talk to someone who knows exactly how i trade. Because i dont trade like everybody. I trade like me. Thats why im with scottrade. Announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box, everyone. Joining us this morning is the Specialty Retail and apparel director. And, pam, we always look at those teen shoppers. They have a lot of money, theyre willing to spend it. It has been a little tougher for the teen retailers lately. Is this trend going to hold out for the holidays . Well, its an interesting question. I was in the malls last night and i had associate malls throughout the country. And the teen retailers were packed. Not as packed as gamestop where everyone was waiting for the systems to come out. But abercrombie and hollister were the most crowded. But abercrombie fitch, they warned about that. Warnings from american eagle, everybody. Its all changing. How deep do you think the discounts are this year versus last year . Well, its interesting, i thought they would potentially be deeper. So abercrombie was at an additional 50 off the whole store only until 4 00 a. M. Hollister an additional 50 off, and there was a 10 gift card with purchases, as well. Aero was at 60 off. But they didnt open at the same time. So the mall that i hit had an abercrombie, hollister, and eagle all open, aero didnt open until midnight and didnt get the traffic. We know teens are fickle. We know they shift with the winds. But is there Something Different happening here . Is this not the same old teen trend weve seen in the past . Well, i think theres less out there for them to be buying in terms of apparel period. Its a lot of the same old, same old product in the marketplace. And i was noticing last night and into this morning, it was a lot of parents in the store shopping for the kids. And when you look at the private label teen retailers, its safe to go with an abercrombie, eagle or hollister because they know the kid will wear the brand. We werent seeing as many of the teenager shopping stores. What are you telling investors in terms of these stocks . Would you buy these stocks right now . Typically theres a seasonal trade out of this group right now through february. So right ahead of the next earnings season. So for those names that have been beaten up, which there are a lot of names this point in time that have been severely beaten up, id say its a good idea to get involved in a longer term horizon. But between now and year end, theres not going to be a ton of movement in those names ive reported. Thanks so much for coming in today. Thank you. Coming up, we have a parade of Corporate Executives ready to speak out on the state of the American Consumer. Terry lundgren is going to join us from Herald Square this morning. But first, game on. We are welcoming bobby kodick, hes going to join us for the next two hours when squawk box returns. V its black friday, and squawk box is going shopping. In this hour, the ceo of macys live from his Flagship Store in new york. Activision ceo on the bestselling video game of all time. Plus, we go off the wall with the ceo of fathead. Youre a big fan, arent you, joe . And Steve Liesman rocks out with the ceo of rialta entertainment. Its the most wonderful time of the year. And it all begins right here on this special edition of squawk box. Good morning, everybody. Happy black friday. Welcome to squawk box here on cnbc. Im becky quick along with Andrew Ross Sorkin and Steve Liesman in for joe. Joe has the day off after eating lots of turkey like the rest of us yesterday. Joining us to talk video games and technology, we have the ceo of activision and, bobby, welcome, great to have you here today. Thanks for having me, beck. You are the big man on campus. Well talk about it. We also have dana telsy also here for todays big black friday show. So thanks to both of them for being here. Well have more from them in a moment. Weve been watching the futures this morning. Believe it or not, you are going to see some trading today. Its a holiday shortened trading day, but the dow futures are up above fair value. Nasdaq by another 13 points after the run its been on. And the s p 500 up by just over two points this morning. A big month for stocks. Gains of better than 2 for all of the major indices. And if youre looking to do some investing today, heres what you need to know about the trading hours. The nyse will close at 1 00 eastern time. The nymex at 12 30 eastern time. Oil trading ends an hour after that at 1 30, and electronic trading today will finish at 5 15 p. M. Eastern time. We have a little news from walmart on thanksgiving sales. The retailer says it processed over 10 million registered transactions yesterday. What is that . Its 1,000 sales a minute. Between 6 00 and 10 00 p. M. Only. Just those four hours. Walmart. Com more than 400 million page views yesterday. The big screen televisions, ipad minis were some of the top sellers on thanksgiving day. In the meantime can we get them to do the obama care stuff . Youre sitting in joes seat, youre channeling him this morning. In the meantime, target is reporting a strong thanksgiving for Online Shopping, as well. It says target. Coms sales were the highest the companys ever seen in a single day. Plus, the first time in the 155year history, macys joined the parade of retailers opening their doors on thanksgiving night. Four hours earlier than previous years. Joining us now to talk more about it from the Flagship Store in Herald Square. Terry lundgren, the chairman and ceo of macys. Have you been to sleep yet . No. Not really. Actually, thats not true. I did take a couple hour power nap between 2 00 and 4 00 this morning. But i was here at opening before 8 00 and when we opened our door here at macys. We had 15,000 people outside the door, wrapped around the building ready to get in. Its obvious thats what the customer wanted was for us to be open. And im glad we made that decision. I saw you yesterday at the macys thanksgiving day parade. This is your super bowl everything wrapped into one day. In terms of why you opened earlier. We had an analyst last week who said he thought it was because youre interested in gaining market share and gaining the millennials. By opening at 8 00 p. M. , do you grab a larger portion of younger shoppers . Definitely, becky. Well, first of all, what we did because i was a little more skeptical. But what we did was i said i wanted to survey our associates. And so we surveyed our associates before we made the decision. And i said, you know, we were hiring 83,000 temporary associates, we could always say to them, they could open the store at 8 00 p. M. If we didnt want our fulltime associates to do that. 90 of the positions were filled by our fulltime associates. They wanted to work. They wanted to be here for two reasons. One is, its higher pay, we pay time and a half, but also because they were saying for the first time theyre actually going to be able to get off and shop with their friends and their families on black friday. Because theyd be done with work by 4 00 a. M. On black friday. Once you start listening to your own associates, you get the truth and get the real feedback. And we wanted to do what they wanted. But obviously based on the traffic out here, becky, thats what the customer wanted. Our competitors were going to be open. Thats what drove our decision. And yes, we definitely got a major, major traffic flow of the young Millennial Consumer last night and early this morning. You know, terry, its been a tale of two retail worlds out there. Weve been looking at some of the discounters talking about how things have been tough, how theyve had to offer big discounts. But macys really led the way in terms of Earnings Releases. People were surprised by how strong macys sales have been, the earnings have been. And one comment you made in the last Earnings Release was that things started looking better. Improved through the month of october. How have things been looking in november . You know, everything is all good. We feel really good. We knew that it was going to gradually get better. We felt it was just based on, you know, the focus that we had put into the later part of the Third Quarter of value, of focusing on the big brands, you know, recognizing that what our customers wanted was great brands. But also to make sure we offered great value throughout the season. And so the momentum carrying through october we feel really good about as we headed into the Fourth Quarter here. Hey, terry, quick question for you, its a margin question, which weve been talking about all morning. Which is over the next 72 hours, what does the average margin look like for you relative to an average day . So, you know, next thursday, what would the regular margin be that youd be getting during the Holiday Season relative to this sort of special period with all the door busters and other things going on . Yeah. Were obviously working tighter because we wanted to make sure that without question, our value was obvious. And frankly, you know, thats what happened in the second quarter. I dont think our values were as obvious. We felt we were giving good value, but we didnt really make it obvious to the consumer. And so that was our shift into the Third Quarter and the Fourth Quarter is to make sure that we are working very closely with our suppliers to ensure that no one had to guess or wonder. They could go online, they could check and do whatever they want. We were going to have great value throughout the Holiday Season. We definitely work tighter now and throughout the Holiday Season. But in the end, you know, when you start generating the incredible volume that we do from this point forward, you can leverage off that. Theres only so much expense i can put, you know, toward that volume. And so after a certain level, it just really becomes very positive for us. And bottom line as well as top line. Terry, thats interesting because thats really talking about the parts of your destiny that you control. But there are certain things that will be out of your control. Something like gas prices, which have been down, thats helped consumers. Also your competitors have stumbled. If you looked to a jc penney or kohls, how much of your destiny is in your control and how much is other peoples missteps . Look, becky, as you know, weve been performing well for four years. This isnt and some of those same retailers have been doing okay while others have been doing poorly and some have been consistently poorly, some have been up and down. So i think our consistency has been about our execution. Understanding who our core customer is and just focusing on that core customer. Constant value, constantly making sure we have the best brands, the most powerful presentation of those brands. And working very, very closely with all of those key suppliers with the collaborative relationship that makes sure that we get unique product. And a lot of what were selling here is unique to us. Take us to, i dont know, january 20th. Youre tallying up the sales from the Holiday Season. What does online growth look like that makes you happy . And what does in store sales look like that makes you happy . We still do close to 90 of our sales in our stores. While online is growing very fast. I think were now the tenth Largest Online retailer in america. Wow. Were behind like netflix or something. And this is like all retail. Crazy. And so its crazy and so but its growing on a huge base but also growing. But i tell you one of the best parts weve figured out here with technology is how to use our stores as fulfillment centers. And thats just, you know, just magic for us because ive got 500 of my 800 locations that can now ship product directly to consumers homes. And so if i dont have the product in macys Herald Square and have it in sarasota, florida, i can ship it to the customer wherever that person give us some numbers, terry, i want to hear some numbers. What kind of sales growth are you looking for . How much is online . How much is in store . Were running at about, you know, first of all, higher at bluming dae bluming dales, a much higher percent than but overall, somewhere in a 10 range. The thing is, you cant look at that anymore. How do you define a sale when a customer buys it online and returns it in stores and buys Something Else in the store. Was that an online sale . And so you start thats when you start thinking about this whole omni channel consumer. And for us, ive made it clear to my organization, you know, we dont care how the customer chooses to shop. Its up to us to solve that for that customer. And thats how we define the customer and its working for us. Terry, as you think about this Holiday Season, what are you seeing in terms of whats working in terms of gifts. And youve remodeled, theres more to grow, how is that doing in bringing in the new customer . It looks great. Well thank you. First of all, i have to admit, you know, when you say what can i control and cant control . Id like to say i can control the weather. I havent been able to do that for the last three years. Apparently were controlling it this year. Because it is absolutely ideal. I loved being in that sitting there at the macys thanksgiving day parade, wrapped up in a scarf, coat, heavy sweater, like this freezing because everybodys watching whats going on there. And theyre dying to get coats. We sold a ton of coats in the last whatever several hours here. And were selling boots. Weve got these combination of value and cold weather items are selling like crazy. 79 Tommy Hilfiger coats, 19. 99 boots, customers are charging in and buying in all of our Stores Across the country. So cold weather is definitely helping. Hey, terry, i need you to help solve a debate at our thanksgiving dinner table last night. We went to the macys day parade and the conversation turned to how much does the parade cost macys . And we had lots of guesses. I want to know and other people at my table wanted to know and our viewers might too. Yeah. Guess what, im not going to tell you because its a lot of money. Its a big investment. Its a big investment. I dont want to go there. I can tell you were against it last year, its not a term of this year, last year. Its a big investment and so are the macys fireworks we do on fourth of july. We consider ourselves as an entertainer as well as a seller of products. Thats part of our brand and who we are and so dont worry, were going to continue to keep that investment going for the macys thanksgiving day parade. But its expensive. You looked very warm yesterday in your coat and scarf, the rockettes did not look so warm. They made me shiver when they walked by. Well, the dance the rockettes definitely had coats on 30 seconds before they went on the air. I can tell you that. Good. Im glad to hear that. Thank you so much for joining us. I know this is a huge day for you and we appreciate it. Well see you back here again soon during Holiday Season. Happy thanksgiving, happy holidays. What was your number . My number . I thought it had to be 40 million plus. 40 plus million . A lot of advertisement. Its a huge market. Up next, activision ceo. We were going to put a sky lander in the plane, it was 700,000. Hold that thought, bobby. Activision ceo on video game Sales Technology and the new console wars and im going to figure out how much money ive got to give him. Ive got teenage sons who buy his products. And later, joe is here in fat head spirit. There he is. I did not call joe a fat head for you tweeters out there. Ready to run your lines . Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. [tdd 18003452550 wlife inspires your trading. Aflac pays you cash. 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. The console wars driving sales of hit video games like call of duty and sky landers, and our guest host is bobby kotick. Good morning. Good morning. Weve said good morning to you multiple times. Heres my question for you, i want to talk about activision. Weve been talking a lot about it for the past week about this whole sort of microsoft, you know, xbox versus everybody else situation. Who is going to win this thing . Everybody wins. No. It cant be. Its true. Which ones better . Theyre both great. I think for us as a software developer, theyre much more similar in the architecture than in the past which makes it much more efficient for us to develop. The great thing about them is they are a little bit less expensive than youll see in past cycles. Theres a lot more Great Software that will be available. We really do take advantage of capabilities of the hardware. And so i think everybody wins. When you look at the games, the sony consoles not any better you dont see a difference . Some say one is truly better than the other for gaming. Game specifics. You know, without getting too technical, some games will run a little bit differently on the different hardware. But at the end of the day, theyre fairly similar. How important is it to you that those consoles are successful so people upgrade to buy the new games . We invest a lot of money, they invest billions of dollars in the platforms, they will be successful. Youre already seeing, if you look at the sell through in the first few days in the launch of the devices, they are going to be successful. I probably should just write you a check now, right . Ive got two boys right in the zone there. Thats why i came, steve. I want my check. Is there something that would take me out to another five years or so. Just like a payment plan . We have a whole program thats available. Heres what i need to know, are these games substantially different and better than the older versions on the new boxes . They are. Theres no question. The games that we have for the new hardware are going to be graphically richer, theyre going to take advantage of the unique capabilities of the hardware. You have to step back and realize, if you have a microprocessor and a display, we make games for it. Regardless of whether its a play station 4, xbox 1, 360, or iphone, we make games for any game that has a microprocessor. These are fantastic. Lets talk about call of duty. Ive seen some things where people were concerned about some of the quality of it, but ive also seen really strong sales numbers. If you look at walmart today, its big screen tvs, ipad mini, xbox one, ps4, and call of duty ghost. What do you feel about the game . How have the sales measured up . And has it been disrupted at all by the release of the new consoles . Every time, and this is every seven or eight years, you have new consoles, theres a period of time which we are in right now where consumers have to decide which new game system theyre buying. So theyre not going to buy new software until they know which game system theyre going to have. Youre going to see a lot of xbox and play stations under christmas trees, and until they have that hardware, youre going to see sluggishness in sales. I think the game is a fantastic game. Theyre one of their favorite call of duties ever. Its doing well, but i think until you know what hardware youll have thats what i mean, is it a big youre not going to know until the christmas presents get opened. Is that really when you see the sales and the rest of the things . Because the kids will go once they have the console and go buy their games . We have a pretty good idea. But, you know so tell us. Its successful. Hugely successful. Bobby, whats the next big game youre working on now we dont know about yet . That you dont know about, we cant tell you. But were very excited about next year we have a fantastic slate of products, starting with blizzard has a new game, one of the most fun games ive ever played. We have a tremendous loss of productivity at blizzard because everybodys playing this game. And its fantastic. Then we have destiny. What is it . Its like a virtual guard game using blizzard characters. And it is just so engaging, compelling, fun to play. The interesting thing is the first game weve seen where the tablet version is the most popular version within the company. Youre starting to see you do all this Development Inside the company. People are playing it and you watch how your employees react to the product as part of a gauge of how good a game its going to be . We have thousands of our own employees who are great guide to whether or not the game is successful. And then we have these beta programs, we have in this case hundreds of thousands of players who are playing the game and providing us realtime online. Thats a big deal. People have been concerned about tablets kind of steeling away from these games. If youve got games thats the thing, you got a processor, ive got a game for you, right . Whats the margin . Is the margin different . Its got to be. No. Well, heres the thing, it depends on the game. You know, and it depends can you play call of duty on an ipad . There are call of duty games specific to ios. How much does it cost, for example, to create a call of duty. This is like a huge hollywood release. I dont think we give the specific figures but lets say when you look at cost of development. Hundreds of millions of dollars. Cost of marketing, cost of goods. Almost 500 million. But then you have 1 billion in sales right off the bat. In a day. When you should be saying is that the marginal cost of intellectual property is zero. Once you make the game, it doesnt matter to you. You have to transfer to different platforms. Thats all in the development costs. But selling the next version is still, you know, is there more money in a tablet sale than there is in an xbox sale . Its every device has its own specific economics. Android will have different than ios, play station could have different economics than the xbox. You dont want to tell us which has the best and the worst for you . A billion in a day. Whats the pipeline of games . More this year than last year. 2014 is the strongest pipeline than weve ever had as a company. Weve got a lot more questions for him. But were going to go to a little break. All right. Coming up, former toys r us ceo turned Retail Consultant gerald storch. The ceo of fathead joins us. And ive got joe kernan looking at me the entire time here. And then the ceo of game maker realta. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . Paying ourselves to do what we love . In a we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Welcome back, check out toys r us in time square this morning. Theres a live image i dont see lots of shoppers running around there. The longer day is basically keeping people going at different times. Is that open . I believe theyre open. Anyway, shoppers there grabbing door buster deals. Were going to speak to the former toys r us ceo jerry storch next, and Steve Liesman will try out a new game that teaches guitar enthusiasts real chords to their favorite songs. Were back in a moment. Hi honey, did you get the toaster cozy . Yep. Got all the cozies. [ grandma ] with new fedex one rate, i could fill a box and ship it for one flat rate. So i knit until it was full. Youd be crazy not to. Is that nana . [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. [ male announcer ] fedex one rate. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Ya know, with new fedex one rate you can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box. Well be back to retail stories in a couple of minutes. But first, other business headlines this morning. The Australian Government has rejected admsed bid to acquir graincorp. Offered to buy the remaining 80 . Also, the head of the iea saying that oil markets sufficiently supplied even with the prospect of dwindling crude output from libya, the militias there continue blockading oil fields. Reports canada allowed the nsa to conduct widespread surveillance during the 2010 g20 summit in toronto. A Canadian Media report citing documents from former nsa contractor Edward Snowden on that report. And im going in a month or two and im thinking that all of the communications are going to be you know, people always use wifi in there and i imagine now all of these big shots wont do that. I dont know, you think i guess its the difference is knowing what theyve been doing. But now that you know. You always go out there. Dont you think people are going to be much more careful . Im not worried about my emails. Nothing happening. Theyre okay . If the nsa is reading them, theyre probably chuckling. All right. Lets talk a little bit more about whats happening with black friday and the thanksgiving opening for some of these stores. Retailers have been getting a jump on the competition by opening their doors earlier on thanksgiving day. Will it be a Winning Strategy . Our next guest was out last night checking out the early, early deals. Jerry storch is the former ceo of storch advisers. How are these retailers doing . I think theyre doing great. You know, it started early yesterday, the earliest in history at 5 00 p. M. With toys r us, then 6 00 p. M. With walmart and best buy and huge lines in front seat of all the stores. I couldnt find ha place to park at the walmart parking lot. Black friday has become black thursday and black friday. Hi, bobby. Hi, gerry, please say hi to jackie. I will. I have an important question since you were the biggest promoter of sky landers when we created it. How are the sky landers doing . They were huge. There was a great deal on sky landers at toys r us, at target and walmart, as well. Not quite as good at toys r us. Its a huge item for the holidays and that continues today on black friday. You know, people make a lot over the fact theres some shift from friday to thursday night. Its really one big black friday event. I dont know whether you should call it gray thursday like some people do and black friday, but whatever you say, its a huge black friday event. I believe the biggest black friday in history by a wide margin. As you know, there are fewer shopping days between thanksgiving and christmas and johnnys still got to get his sky landers and dads got to get his sweater. Theres 18 , fewer days, that means ones going to have to be huge. We were talking off camera about that, the idea of opening early. Do you get more sales in . Or is it a situation where you end up spreading the sales thinner over several days . Youve got to pay to keep the store open. Maybe it makes sense on a year like this, but if it werent for the calendar shift, doesnt it make sense to stretch the sales over more days . Well, its a great question. Some of it is just spreading the jolly. Someone mentioned the stores are quiet now. And i was out before coming in here talking about not sleeping all night. And the stores that opened early yesterday were pretty empty right now. You could run a bowling ball through target and you wouldnt hit anything. But theyre going to come back later in the afternoon. So net, it spreads it out, makes it more of a family event. Its calmer, cooler. Sales tend to grow. But its not just about black friday. This year, theyre using the entire pack of crayons. So, you know, youve got sunday thats coming up soon. I call that one yellow sunday because after the long weekend, people are going to realize, it is december 1st and hope springs eternal, theyre going to go out shopping. The saturday before christmas will be a mammoth day. Some people call that super saturday. You know, i think of that as green saturday, you make a lot of money on it that day. And Christmas Eve day, the day before christmas is one of the most intense shopping days of the year. It ends early for Christmas Eve and all retailers know thats a golden day because theyll spend anything to get the present. Dont look for sales at the last minute. Jerry, thank you for joining us today. Great to see you, bobby. Coming up next, from life size poster stickers for your iphone, the business of fathead is expanding and the ceos going to join us next to talk trends and hot gifts. You can see us there. Were right there. Not really but sort of. And then later, steve rocking out with the chairman of realta entertainment. Maker of band fuse to help you achieve rock star status. Squawk box coming back right after this. Go steve. Thrusters at 30 i cant get her to warp. Losing thrusters. I need more power. Give me more power [ mainframe ] located. Ge deepsea fuel technology. A 50,000pound, ingeniously wired machine that optimizes raw data to help safely discover and maximize resources in extreme conditions. Our Current Situation seems rather extreme. Why cant we maximize our. Ready. Brilliant. Lets get out of here. Warp speed. [ male announcer ] the parking lot helps by letting us know whos coming. The carts keep everyone on the right track. The power tools introduce themselves. All the bits and bulbs keep themselves stocked. And the doors even handle the checkout so we can work on that thing thats stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. So everyone goes home happy. Welcome back, everybody, weve been checking the futures this morning. Youre going to see that the dow futures are indicated higher, up by about 38 points above fair value. Nasdaq futures up by 14, and the s p 500 up by close to three points above fair value. In our headlines this morning, sothebys will hold the first major auction on the chinese mainland on sunday. Competition between the auction house and its long time running rival christies is moving into one of the hottest markets. Sothebys are offering a slate of modern and contemporary chinese works with a total estimated value of more than 20. 19 million. Thank you, becky. And the holidays are always a time for companies to roll out new products and throughout the studio this morning, we have life size cutouts and wall murals from fathead, ramping up the season and now inside chains like walmart, target, and dicks sporting goods. And joining us from detroit, the ceo of fathead. Do you have a fathead in front of you . Do you see us . Good morning. He cant see us. So he doesnt realize. Your fatheads look great. I thought you were going to say we had fatheads anyway. Youre talking to a fathead who is trying to do an interview with the fathead in front of me. How did this happen . Well, the fathead business is up 38 this year. And a big part of our growth is the custom product and actually you saw the custom of joe in studio. Yep. And thats been a big driver of our growth. And how that works is a consumer goes to fathead. Com, upload a photo and turn it into a fathead of their desire. We can put it in different forms. What is the most popular product right now . The most important is the custom fathead. But from a license perspective, tom brady is number one and then you have peyton manning, Clay Matthews and one direction, the new hot kid band is making a big push here and could surpass all three based on the sales trends. Is there anybody that will not license their image to you that you would like to have a fathead of . You know, fathead has been blessed because its a great brand and people want to be a part of our product lineup. So typically when we reach out to achieve a license, we typically dont have any problem getting it. Can i ask what you pay for a license, for example, to a musician . Well, typically theyre royalty only. So the great news is that musicians want to be a part of the fathead brand. In essence, we pay royalties and we dont have to pay an upfront guarantee typically. Is there a seasonality to the business . Oh, definitely. In the six weeks of what i call the Holiday Season, well do about 45 of our business. So theres no question that a fathead is a great gift. Its certainly a wow product at holiday time. No question. Patrick, this stuff is pretty cool. I went on and i was checking out. I couldnt believe some of the ones you had. It gave me good ideas of christmas presents. I was surprised not to see elmo. Have you tried to go after elmo . We have tried. Unfortunately, thats one we have not been able to get. Can i customize it if i take a picture of myself and send it in . Can i make one . Well, were not supposed to do that, but for you, well take care of you no problem. We have over 700 licenses. And really, weve traditionally been known as a sports Product Company in the past. But now were about sports, entertainment, home decor, art i think its huge that customized ones are the biggest selling items at this point. That says a lot. And probably helps your margins too. Oh, absolutely. Because you dont have to pay the licensing fee on a custom. Right. And its a great gift. When you go into a room and see a customized fathead, theres definitely a wow effect. Hold on, this is interesting, i didnt realize if becky takes a picture of elmo. How often are you getting customized products of people arent themselves or their friends . Well, that doesnt happen that often. Its a very small percentage. And theres times, obviously, if its a licensed product that we cant do it. Thats a small percentage of the requests we get. Final question and we have bobby kotick here. Do you have any deals together . We do. I dont know if we have sky landers characters, we have something. We like to support businesses in detroit. Absolutely. We do have a partnership and we do offer some of your products. Awesome. Happy holidays. Thank you for joining us and thank you for sending in those fatheads. Weve been having fun with them the last week or so. Thank you, these things are going to show up on the set for a long time to come. And thats a lifesize head. All right. Thank you, patrick. When we come back on squawk box, so you want to be a rock star . Steve liesman does. Hes going to introduce us to band fuse. Think of it as guitar hero but with real instructs. Were going to demo it next and talk to the game creator after the break. Ready to run your lines . Okay, who helps you focus on your recovery . Yo, yo, yo. Aflac. Wow. [ under his breath ] that was horrible. Pays you cash when youre sick or hurt . [ japanese accent ] aflac. Love it. [ under his breath ] hate it. Helps you focus on getting back to normal . [ as a Southern Belle ] aflac. [ as a cowboy ] aflac. [ sassily ] aflac. Uh huh. [ under his breath ] i am so fired. Youre on in 5, duck. [ male announcer ] when youre sick or hurt, aflac pays you cash. Find out more at aflac. Com. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. Xbox and play station expected to be big hits this shopping season. Looking to capitalize on that popularity with their latest game bandfuse rock legends which offers a unique way to use the consoles by plugging in a real guitar. I was waiting for this. I saw my kids playing the other games that were out there, and i was like, theyre not going to learn real instruments this way. Whats the idea behind it . The idea here is to go to the next generation gaming game for instruments. We take real instruments, guitar base and actually vocals, as well and teach you how to play them. This one actually teaches you how to play the real notes with real tableture. Are you in the stores now . Were in stores. Went out in stores about a week ago. Where are you . I saw you in Guitar Center. Were in Guitar Center, were in the top Guitar Center stores, we have kiosks like this where you can demo the game. Were in Guitar Center and gamestop, also online at amazon, et cetera. I saw at amazon, you were sold out there. We were sold out briefly. Yes, we were. So the games going very quickly and so were replenishing whos going to buy this . Not the same guys who bought the fake instruments . Well, i think this appeals to a broad group of folks. First of all, it appeals to gamers, the game is really like this because it is actually a game. For the musician you can play against somebody, too . Two guys can sit here and score each other. One of the big differences with bandfuse is we have two guitars, bass and vocals. You can play together, we can play with somebody with a bass, as a family. Theres no other game on the market you can actually do that. And the beauty of the game is our technology is such that we can actually score you. I can play at level one, which is beginner, you can play at level five, which is note for note. And a bass player can play at level three and everyone is scored independently and youre scored collectively as a band. What musicians are you working with now . Well, weve got big folks in the game. Big announcement, we signed the Jimmy Hendrix folks. Were going to have 16 exclusive songs put out through our downloadable content. We also have other folks, we have slash, we have zach wild, weve got a number of great legends in the game. First of all, is it hard to break into this field . To get on the xbox, if you have a good idea, is it easy to do . This is no picnic. Weve had a lot of fun. Its been about five years of labor of love. Lets see what five years of labor of love lets get you on, i think were going to play barricuda. Youre all tuned up, ready to go. You should probably do this. I dont really read it that well. So what am i doing here now . Well, what youre doing is this is regular notation as you would see it. This is what you see when you try to learn a song. This is what you see. And as it scrolls across the screen, the numbers represent the frets youre going to play on the guitar. These are the actual strings and youre going to hit the note as it crosses this bar. And as you can see the sparks fly in the back, thats telling you youre doing a great job hitting it. All right. Sparks. Each time you hit it perfectly, youre going to get a multiplier and on the top right, itll give you a score on a realtime basis. The other thing it also does is when there are actual chords being played, the chords will show up here so youll learn how to play the chords, as well. The beauty of the game is that its for electric guitars. But we also have a setup for acoustic guitars. Anybody playing an acoustic guitar, we have an adapter that plugs on to the head of your guitar and itll score you exactly the same way. In fact, the beauty of this game is while were four instruments today, you can actually plug a lot of different instruments into this, as well. So, for example, you can have an upright bass. Cool. You there, bobby . Im here, steve. What do you think, man . Looks great. You got one coming out like this . You compete with this . Guitar hero is a different experience. Its just a game, doesnt teach you how to play guitar. That looks fantastic. All right. Peter, thanks for joining us. Appreciate it. This looks like a lot of fun. A lot of fun. Thank you. We entered it lets see my score. Dont read into that. Its not good. You didnt finish the whole game. Youre doing a great job. Your pitch accuracy was 88 , 17 notes in a row that were correct. That was pretty good. Ive got to do better. I would think youre doing a great job. Becky, back to you. Steve, thank you. As you probably know, our guest host today is bobby kotick, the ceo of Activision Blizzard. First of all, tell me what you think about the state of the American Consumer right now. How are things going . Well, look, you know what, i think our economy is challenged. And i think that, you know, its going to be reflected in things like holiday sales. You see the determination that people have to find the lowest possible prices. Or, you know, all the discounting thats taking place right now. These are unprecedented discounts that weve seen for things. And i think its a reflection of the challenges in the economy. Are the retailers bearing the brunt of this . Walmart had spectacular sales yesterday. I was looking at things, 299 for an ipad mini, 39. 99 for call of duty. Are they taking this and eating it themselves . On some items theyre probably absorbing the costs but in most cases its the manufacturers supporting those prices through promotions. Weve talked an awful lot about the sense of uncertainty that american Business Leaders have, consumer consumers have too. A lot generated by washington. Do you think things have gotten better or worse over the last year or so . My opinion is probably counterintuitive to others, but i think the economy is weak. I think when i look out at job growth and the opportunities for Wealth Creation, i think you have a lot of speculative Wealth Creation thats taking place today. But if you look at where Interest Rates are, you know, any reasonable spike in Interest Rates, any increase in tax rates, youll have a meaningful impact on eps. If you see that, i think youre going to see, you know, changes in the market values of companies that could be dramatic. I think theres a good reason to be cautious and concerned about the next few years in the economy here. How does your business trend with the cycles. Were so big as a company now that i dont think we are. And i think, you know, while you may say, well, the costs per hour of video game entertainment is the most economical form of entertainment, i dont think any business is going to be exempt from, you know, prolonged economic downturn, ourselves included. Again, bobby is our guest host, hes going to be with us for the rest of the morning. When we come back, though, well be talking more retail. Retail giants walmart and target reporting strong thanksgiving day traffic in stores and online. Shoppers turning out for some of those big ticket electronic products. They had big items they said were very hot that drew people in. Were going to talk to the man responsible for what ends up on walmarts shelves right after this. Squawk box will be right back. 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. You really love, what would you do . [ woman ] id be a writer. [ man ] id be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] id be an architect. What if i told you someone could pay you and what if that person were you . When you think about it, isnt that what retirement should be, paying ourselves to do what we love . The turkey is gone and the stuffings dried out. Your friends and family are all home passed out. But squawk box is here while the hangovers fading to cover black friday, the lines and the waiting. Weve got some great guests here to talk about retail, like dana telsy whose strength is attention to detail, Bobby Koticks here too, one heck of a gamer, his Activision Blizzard gamer recently upgraded by cramer. The gloom, boom and doom report, its a squawk box friday you cant believe. Here now your hosts, andrew, becky and steve. Welcome back to squawk box here on cnbc, first in business worldwide. And a special shout out to dave our producer who wrote that that was awesome. Our own dr. Seuss. Steve liesman is joining us, joe kernan has the day off. Our guest host, ceo and chief Research Officer at the telsy advisory group. Well have more from dana and bobby still ahead, but first, weve got Morning Headlines for you. Becky. Of course, whats been happening with the markets. We are going to see trading today. Its a shortened trading day. But right now, you can see that the dow futures up by about 43 points above fair value. Theyve picked up a little bit of ground. S p futures up by three points. Nasdaq closing after big runs, up another 14 1 2 points this morning. As we mentioned, we are going to see a shortened trading day today. The nyse is going to be closing at 1 00 p. M. Eastern time. For commodities, youve got trading at the nymex closes at 12 30 eastern today. Oil trading ends an hour later and electronic trading finishing at 5 15 p. M. Eastern. It is black friday, you knew that already. Make or break time for retailers. In just a minute, well talk to the man who decides what product walmart stocks on its shelves. But first, Courtney Reagan and another holiday tradition joining us now with a retail update from where else, the Retail Center of the world. Dayton, ohio. Go ahead, courtney. Thats right, steve. Hey, you know, its actually a really good Cross Section of the midwest consumer. Americas heartland. And ive got to tell you, this mall opened at 8 00. Im hearing traffic was pretty heavy then, hit a bit of a lull overnight. Some of the shoppers we talked to said they were out on thursday, theyre going to take a break and come back this morning. Were already seeing the traffic pick back up again. So far, it seems like the headline around the country is slow and steady. Not a lot of mania so far. I think those early thanksgiving hours really starting to help some of the retailers spread out the crowds, spread out some of the panic that we often see. Consumers dont quite feel as worried about getting those deals this time around. Ibm says that online sales already up 11. 5 . That was through last night. The nrf expecting shoppers to hit the stores today. It appears the traffic has been first at the big box discount retailers and then to the mall. If we take a look at target, theyre seeing some strength online already. Basically saying on thanksgiving day that on the website traffic and sales among the highest the retailer has seen in a single day. Orders two times as big as the year before. Jpmorgans matt boss thinks theyre some of the early winners. And of the coldest temperatures weve seen on black friday in 11 years are likely selling some apparel. According to shopular, a popular app, macys is where the consumers are spending the most time. An average of 79 minutes followed by jc penney at 72 minutes. Seeing similar trends around the country. What a difference a year could make for jc penney. Well see how it goes, many hours to go here today. Back to you guys. Thank you for that. Im sure well see you throughout the day. Also, we have a good start to black friday for retailer walmart. The retailer said it processed more than 10 million registered transactions yesterday from 6 00 to 10 00 p. M. Just a couple of hours. The retailers saying that big screen tvs, ipad minis were among the top sellers on thanksgiving. And joining us now, the man in charge of deciding which electronics and toys. The executive Vice President of general merchandise at walmart u. S. Are you in austin . Where are you . Im great, andrew, how are you today . Are you in austin, texas, is that where you are . Im in a store this morning. Oh, for some reason i thought you were in texas this morning or san antonio. But good to see you. Yeah, no, im in bentonville, the store, 100 right across from the home office. So heres the big question. Steve was doing the math before. You said how many sales in a minute . Remember, the 10 million was 6 00 to 10 00 p. M. , 2 1 2 million an hour, 41,000 transactions a minute. 41,000 transactions a minute last night. What was your expectation . Of where you were going to come in last night . Yeah, it was a great night for us last night. And as you said, a lot of transactions between 6 00 and 10 00, customer came out early, shopped really heavily. We were really pleased with our results this year. Last year we served over 22 million customers, a lot more this year. They came for the prices, the onehour guarantee and were pleased with the results we had. Heres the big question. Weve been asking it all morning, margin compression, are you making money on these sales over the next 72 hours . You know, our business is very broad. And whats great about walmart is the way it can be shopped. We sold over 1. 4 million tablets. But we also sold close to 3 million towels last night. We have a broad mix of product in our store it is and able to make money because we have a unique mix that nobody else has. Thats the power of the Walmart Super center. We feel really good about the results and the weekend to come and were excited. One other question related to this margin compression. Are you a believer do you believe that all of these sales, these door busters are just bringing sales forward . Meaning that customers ultimately would be buying the same amount of stuff but its just being brought forward and being brought earlier . Sure. Its a great question. Its something that we look at all the time and try to figure out and, you know, theres no exact answer for that right now. We do know theres a compressed season this year, obviously with one less week between thanksgiving and christmas. So we think its important to go out early and capture as much sales as we possibly can. But we were really encouraged with what we saw last night. The customers were out in droves. And they were excited and shopping. We think theres pent up demand, customers excited about the christmas season. And its been difficult from an Economic Situation for a lot of our customers, but theyre going to have a Great Holiday, provide a Great Holiday for their family. Were confident theyre going to continue to shop with us and continue to look for the great deals. Deals we have this weekend and all through next week on cyber monday. You pick the stuff on the shelves. I also imagine youre picking stuff off the shelves. How quickly if something is not moving, how quickly do you say enough . Were taking it off now . Thats a great question. And were live throughout the night last night, were in constant communication across the country. We have phone calls scheduled, the east coast is talking to the west coast. We look at pricing, items not moving, do we need to move the location in the store . Do we need to change the price on them . Live action all the time . Thats a live ongoing process. Theres no one answer to how quickly we move. It depends upon the item. But we move very quickly and make sure we have whats right for the customer when we need it. Im sorry, assuming im assuming that you probably getting close to out of stock on play station 4s and xbox ones, but you know, last night at the thanksgiving table, uh gave thanks to steve who the the largest buyer of video games in the free world. Well, we sold a lot last night and we were really pleased with what we did on xbox one and ps4, its been a great launch for us through presale, launch day and last night we were the only retailer that had both systems in our ad for black friday and sold everything we had. And, you know, theres a huge demand for it. Were actually going to be air freighting in product in december to make sure our customers can get more before christmas. And obviously were going to were going to sell a lot of video games with that also. Can you give us an insight on who is winning that so far . The customer wins. The customer wins. Theyre great systems, we love both systems. Sony and microsoft are great partners of ours and were excited to sell a lot of different products, include a lot of activision games. All of a sudden it becomes expensive for you to air freight it in. Yeah, its a cost, but for what our customer wants and its how we drive sales. And as i said, weve got a very Broad Product base, a lot of different products in our box. We can mix it out in a lot of different ways. Number one priority for walmart is always take care of the customer. If thats what the customer wants, thats what were going to do. How competitive were the prices this weekend . And how will it change going through the Holiday Season . Yeah, its very competitive. Retails competitive every single day. And theres no more competitive time than black friday. We were really pleased with our price position going into the weekend and as weve watched, prices change, deals happen, we came out feeling incredibly good. Were always going to lead on price and we think we netted out really well. People got really concerned in the retail world the last time walmart talked about what happened with earnings. They started thinking that consumers were feeling a lot of pressure. And i just wonder if you can give us an update on what you think about the state of the American Consumer based on what youve seen so far this month and particularly this Holiday Shopping season. Yeah, its a great question. They have been under a lot of pressure. And goes all the way back to the payroll tax, unemployment continues to be an issue. So the pressure hasnt been relieved. But what we saw last night was customers coming out and customers shopping and an aggressive way. They came out early, they were excited, i dont think that pressures going away anytime soon. And i dont necessarily see a Macro Economic change, but we were encouraged with what we saw last night. One thing weve been surprised about is the lower gas prices at the pump havent helped the consumer more. Have you seen that helping at all . Do you think its only offsetting some of these head winds youve been running into as far as the consumers strength. Certainly gas prices have an impact. Its hard to tell in a short period of time what happens when gas prices move. But it is a big part of the expenditure for our customers. We cant say its had a direct effect on sales or will in the shortterm, but we certainly are a fan of lower gas prices, gives customers more money to spend in our stores. The happier we are and the happier our customers are. I want an example of something you took a risk on this christmas. Something you stuck your neck out on and said, you know what, guys, this ones going to sell thats not on our radar right now . Well, i wouldnt say theres any one product. But its about a onehour guarantee products, we did this last year, three products last year we did onehour guarantees on, and we did over 20 this year. And the reason we did it is customer driven. Our customers told us the number one problem or complaint they had about black friday is they dont get the product they want. So we went out and put a program in place over 20 items guaranteed in our stores. If you come and youre in line the first hour, we guarantee you youre going to get this product. It was a huge success overnight. Over 5 million customers took advantage of it. Its a big event on our part to make that happen. But it worked really well. Youve got to believe in those 20 products, basically . Absolutely. Call of duty. Absolutely. It was one of five hottest ones they listed. Call of duty well, its a great product, our customers love it, they love the franchise, loved it for years and sells well in our stores. But those items are a big bet. Youve got to back it up with inventory. Very quickly, steve, all of this discounting, i mean, it came as a little bit of a shock to the rest of your competitors, to the Retail Industry. You saw Companies Come out and say their margins were going to be lower than they expected in the First Quarter because they have to keep up with you and the competition. Was that part of your plan to crush competitors . No, you know, we watch your competitors very closely, its something thats kind of core to the dna of walmart, always trying to understand what the market is doing, what our competitors are doing, but the reality is, we put a plan in place to serve our customers and fit with our business model. We dont necessarily react to what theyre doing or plan based on what theyre doing. Our program is to serve our customers, we know they want great product, want us to be in stock and they want us to have the great prices. That was really how we built our program this year. Clearly your competitors are reacting to you. One more thing worth mentioning because i think its something extraordinary youve done. How many veterans have taken the opportunities that youve provided this year . Because its something extraordinary. Theyve made Jobs Available to any veteran thats looking to work. Yeah, its a program were incredibly proud of and weve hired thousands and thousands of veterans already this year. Walmart has been committed to veterans for a long time, were proud of the program we put in place that any veteran honorably discharged within a year has a job at walmart. We believe anyone that fights for their country shouldnt have to fight for a job when they come home. Bill simons been championing it for us. Hes done a great job and something were very, very proud of and our customers appreciate. And they tell us all the time, thank you for doing that program, thank you for leading on that issue because its important to us. Steve, i have to ask you before you go, what are the reports . Is it everything peaceful . Are there any fighting going on in the stores this year . No. Conditions in the stores were great this year. And we feel really good about the program we put in place, customers came, shopped early, our associates did a great job of managing through. And we were in really good shape. Okay. Steve, thank you for joining us this morning and happy holidays. Thank you for having me. Appreciate it. Appreciate it. Take care. Coming up, warm holiday feelings beware. The squawk market master marc faber sees bubbles everywhere and hes got a warning for janet yellen and later the ceo of Brooks Brothers will join us to talk about the expectations for fashion this Holiday Season. As we head to the break, a live shot of shoppers at mall of america. Well be right back. Your grass waters itself. Your dishes wash themselves. So why dont your floors. Clean themselves . The Irobot Braava floor mopping robot. Irobot. Do you . You can fill that box and pay one flat rate. I didnt know the coal thing was real. Its very real. David rivera. Rivera, david. [ male announcer ] fedex one rate. Simple, flat rate shipping with the reliability of fedex. Welcome back to squawk box. The futures right now up 42. 67 points, nasdaq up 13. 97. What else are we going to read . Just looking at the stocks this morning . What time, becky . 1 00 . Yes. 1 00. Were looking at an early close with many of these markets, were going to continue to check this. We have been talking about how the markets have extended the record run ahead of the holidays. Also the digital currency, bitcoin breaking through the 1,000 barrier. Crazy. Raising all kinds of questions about whether or not bubbles are brewing. Joining us now is marc faber, he is the publisher of the gloom, boom and doom report. Hes also one of our squawk masters. And marc, thank you for joining us this morning. Thank you. We have been talking with you lately and i think the last time you were on, you talked about how you think were in worse shape potentially than we were in 2008. My guess is you havent gotten any more positive on the market since that time, correct . Well, actually, ive been quite positive for equities after 2009 when they became very cheap. But recently, you have to say that we are again in a massive financial bubble in bonds, in equities, we are in a bubble in asset prices that have gone up dramatically. Farmland is up ten times over the last ten years. And bitcoins are up now and who knows what next will go up. But we are in a gigantic speculative bubble. And as i said, i havent shouldered any stocks yet because they havent moved up. But i dont see value in stocks any longer except very few sectors. What started the concern . What was the point where you said, hold on a minute, this no longer makes sense . Well, basically the market went up from 666 on the s p in march 2009, were now at over 1,700. I felt the correction was overdue when the market was around 1,600. It hasnt happened. But it doesnt make stocks good value because of that. Its like in asia, some markets kept on rising at the beginning of this year and then was in three months from may of this year to now, they dropped 30 currency adjusted. So we have to be careful in this kind of exponentially rising markets. Marc, a bubble is different from overvalued. Is this just an overvalued market . Or is this a bubble market . And what are the metrics in your mind to distinguish between the two . Well, the p e ratio at the time is Something Like 24 times earnings. So its at the high level that would suggest relative low returns Going Forward Interest Rates on the short end are at 0 so they cant go much lower. And bond yields are relatively low, even now the ten years has risen from 1. 43 to 2. 75 . Were still at the low level. So i think the financial asset if you look at the next five to ten years expected returns that these returns will be very long. Then what you have is symptoms of excess liquidity. Some people say they are savings. Well, 40 of americans have no savings at all. The savings are concentrated in essentially the 0. 5 of the well to do people. And they have very high savings rate because if you earn 100 million a year, its difficult to eat for 100 million. So you eat for 10 million and you save 90 million. But, marc, let me play devils advocate. I know you look at it over a number of years, 24 times earnings, but if youre looking at forward earnings, youre looking closer to a p e ratio of 15 for the market. Correct. If someones been away for a while and really looking at this and has pulled their money out, theyve lost money over the last several years if they havent been participating in this. Those are the people really starting to take a look at this and say, wow, ive missed my chance, maybe i need to be an active longterm investor looking at this over the next 10, 15 years. Yes, precisely. I think if youre longterm investor, you should have bought in 2008 at the end of 2008, 2009. But you shouldnt go 100 into equities. Precisely if your longterm investment, i think the future returns will be very disappointing. Hey, marc, very quickly concerning the valuation of stocks. Marc, bitcoin yes. Bubble . Make sense to you . Well, its a symptom of excess liquidity goes into bitcoins. It can go into paintings, farmland, diamonds, all at different times. I have no idea whether a bitcoin is worth 10,000, 1 million or 50. But it shows that there is a lot of liquidity that just flushes into one speculative sector of the market to another one. Right. Okay. Marc, thank you for joining us, happy holidays. Appreciate it very much. Thank you very much. To you the same. Were going to give youen a update on obama care. Tomorrow is a key deadline. But officials reporting more delays and provider changes. We have more on that when we return. 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. 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. 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To avoid longterm injury, seek immediate medical help for an erection lasting more than four hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. Welcome back to squawk box, everyone. The troubled healthcare. Gov site is switching web host providers. Said its replacing Data Services from verizons moving it to hewlettpackard. Caused the obama care website to be slower or unavailable at times in october. Separately on wednesday, the Obama Administration announced another delay for the online exchanges. Now its Small Businesses that will not be allowed to purchase coverage for their employees on healthcare. Gov until next november. The fix for the Small Business part of the website was delayed so that workers could focus on repairing the individual enrollment section of the website. In the meantime, Small Businesses will have to Purchase Health coverage for their employees through an insurer, agent or broker. By the way, tomorrow is Obama Administrations selfimposed headline. Only about 27,000 signed up for coverage. Officials have said that by saturday, the website will load quickly and will work accurately for at least 80 of users. When we come back, we have much more from our guest host today. Were going to be talking retail and gaming with activision Ceo Bobby Kotick and the ceo of Brooks Brothers joining us at 8 40 a. M. Eastern. Hell tell us, though, musthave items this year. Avo the volkswagen sign then drive sales event is back. Which means its never been easier to get a new passat, awarded j. D. Powers most appealing midsize car, two years in a row. And right now you can drive one home for practically just your signature. Get zero due at signing, zero down, zero deposit, and zero first months payment on any new 2014 volkswagen. Hurry, this offer ends december 2nd. For details, visit vwdealer. Com today welcome back to squawk box, weve got headlines for you. A con man who skipped sentencing after pleading guilty to defrauding more than 11 million from dozens of families has been captured in las vegas. His name is david kalp and he was arrested in las vegas earlier this week after he was featured, get this, on an episode of cnbcs american greed. Right here. And the fbi received a tip on his whereabouts. Heres a tip from the cnbc original that aired on november 14th. April 2012, 29yearold david pleads guilty in los angeles to orchestrating a series of mortgage and lending frauds across the country. He may be young, but hes destroyed lives and stolen nearly 11 million says u. S. Attorney james bowman. I think theres no question hes very intelligent. Unfortunately, he decided to use that intelligence to try to lure people into giving money that he was going to lose or spend for himself. A little back story, he pleaded guilty to defrauding more than 50 families and three separate fraud cases. In one case, he set up a Mortgage Firm and told homeowners he could refinance properties at below market rates if they provided money up front. This is like americas most wanted. Its a great series. With john walsh. I cant turn it off when i watch it. Youre saying all the right things, steve. No, i didnt watch it for a while and i started watching it and enjoy it. Lets turn to our guest host. We were talking earlier i said i had two boys. And you said you let your 13yearold play call of duty, like i was making a mistake. Do you get a lot of pushback . And what advice do you get from parents . With these games, which part of their attraction is they push the envelope. I think its a great question. But as an industry, we do a very good job on ratings. And the ratings are much more descriptive than any form of media and theyre very clear. If youre under the age of 17, that game is not appropriate for you. And we do we discourage parents from allowing their kids to play games that are inappropriate. Ive got to push back a little bit on that. Ive got to push back a little bit. I guess in the industry its called skirt tuck. Mommy, i want this, right . And were getting that from our kids who its being pushed down, at least, on an advertising basis or some basis down to that level where theyre asking for it, their friends are playing it and what happens is, it starts to snowball. Its not like youre entirely innocent in that regard. Well, youre the parent, you accept the responsibility of being a parent. If your kid says, you know what, they want to watch television thats inappropriate, spend time out in the winter when its not appropriate. Your responsibility as a parent to make sure your kids are doing the things that are appropriate for kids. That means regulating their game play, regulating, you know youre not helping me. Because its all theyre pushing it down. Theyre pushing down the choice to the kids. Okay. But im not your nanny, okay. Youre responsible for yourself and your family. Do you do a Nanny Service . Is that . No. Not us. What do you think about this . Kids are demanding it, right . Kids are demanding and parents have to set boundaries. Im getting lectured. You are. This is very hard to do. You were probably a fan of the vchip, too, right . Remember that . We had that. But whatever code we put on the thing, they learn it. They learn it practically before we all as parents need to do a better job i have good kids, by the way. And this is doing your homework, not watching excessive amounts of television, not playing excessive amounts of video games. Thats our responsibility as parents. Can i ask one related question . So you have on the game the recommendation in terms of age. How often do you think that is actually adhered to . And how often what percentage of parents do you think and kids are playing these games at younger ages. I cant i dont know the percentages but i would generally say that, you know, most parents are responsible. And, you know, most parents are taking the time to see how the kids are spending their time. Not all, but most. Because i increasingly think parents are even taking 10yearold, 11yearold kids to pg13 films. Theres a slight inflation, if you will. You know your demographic, though. You know what percent of kids that are 13 are playing 17 recommended. You know that. We cant we dont really know age, but we make half of our market is over the age of 18. You know, gaming is a business that is more the 18 to 35yearold. Now, things like sky landers, those are for 6 to 11yearold. We have a new game destiny coming that were designing specifically for that teenage like from 12 to 17, which, you know, has why cant you put on a 12 to 17yearold version of call of duty. That is a game designed for adults. And thats who were building the game for. Okay. You tried. I tried. And he succeeded. Hes right to throw it back at me. And we do some of that and we need to do more of it. And im going to get home and take the game away. You dont have to. Yes, i do. I shut it off for you. You needed a little parenting help so i shut your game off for you. Lets talk a little bit more about whats been happening this retail season. Dana, youve been watching the numbers coming in. I just got a note from an analyst last week that raises the point, we could talk about what happened yesterday. We could talk about whats happening today but we really dont know whether or not this was successful or not until you get at least a few days into this because we dont know whats pulling sales forward, dont know how its going to measure up at the end because they were open earlier, we never had that before. Right. I totally agree, i think overall, its extending the season. You still have 40 of your holiday sales done. So the sense of urgency is there. Whats interesting is, were not seeing competitive deals or competitive prices that are so much greater than last year so far. So its being managed pretty carefully with the margins you talk about all the time too. So earlier hours, not necessarily better deals. Well see how it washes out. Right. I dont know if well get a bigger increase. But is it going to be as expected as we move through . Weve heard it, the traffic from 2 00 a. M. , 4 00 a. M. , or 5 00 a. M. Wasnt as big as people expected when you had the mad rush at midnight last year. If youre opening at 8 00, theres only so many people who will go out and continuously shopping. Makes sense. Well have more throughout the hour, becky . All right. When we come back, well talk about some of those holiday discounts that will make you look like a million bucks. Well talk about the ceo of Retail Brand Alliance. And not everyone at walmart is shopping today. Phil lebeau with some workers protesting low wages. The American Dream is of a better future, a confident retirement. Those dreams, theres just no way were going to let them die. Like they helped millions of others. By listening. Planning. Working one on one. Thats what Ameriprise Financial does. Thats what they can do with you. Thats how ameriprise puts more within reach. [ male announcer ] if we could see energy. What would we see . The billions of gallons of fuel that get us to work. Wed see all the electricity flowing through the devices that connect us and teach us. Wed see that almost 100 of medical plastics are made from oil and natural gas. And an industry that supports almost 10 million american jobs. Life takes energy. And no one applies more technology to produce American Energy and refine it more efficiently than exxonmobil. Because using energy responsibly has never been more important. Energy lives here. Welcome back, everybody. It is black friday. And were watching whats happening in the stores, also the markets. Right now the u. S. Equity futures are indicated to open up by about 33 points for the dow futures, s p futures up by over two points bitcoin continuing to surge, touching a new record of 1,432 before pulling back. The currency trying to get into the Holiday Shopping season with the shopping promotion involving hundreds of merchants. And even though weve seen this skyrocket, man, this is a volatile, volatile currency. The contra indicator. No, i agree with you and agree with your column. This is a very touchy thing for people to get into. I think this is like tulips. Could step in and shut it down at any point. Tulips, beannie babies, Cabbage Patch kids, at the moment im losing, last week it was about 800, now its at 1,200. Im a longterm short on this situation. Anyway, squawk goes shopping this morning, and our next stop is Brooks Brothers. Store opened just about an hour ago and has officially kicked off its Holiday Shopping season. Joining us now is the ceo of Retail Brand Alliance which owns Brooks Brothers. Good morning to you. Good morning. So many other retailers decided theyre going to open up on thanksgiving day at midnight. You guys dont do that. Why . Well, we did in our other stores, but in our regular stores, we just follow most of the other retailers in the mall. We opened the store this morning at 7 00, and most other stores between 7 00 and 8 00 in the morning. What kind of Discount Program do you pursue . You know, it doesnt seem as aggressive as others. And i wanted to try to understand that strategy. Well, traditionally always been full price, most through the season. We go on sale the day after christmas. In fact, for us, thanksgiving is not necessarily the biggest day of the year for us, the day after christmas is. So, you know, we stay consistent with the past. Traditional of Brooks Brothers. We have inventory right now. We dont feel any pressure to start the season earlier. And i always think of Brooks Brothers as a guy store, except you do at lot more womens than you used to. And thats been growing . Oh, yeah, thats about ten years ago was maybe 10 and so its one of the still a small percentage. What is the hot item this season iffer you . Of course, you know, suits and shirts, ties is our number one items through the season normally. But for the Holiday Season, we didnt normally sell a lot of cashmere sweater. You can find a better sweater at any price. What are you charging for a cashmere sweater this season . 398. You cant really find this quality anywhere else. Can you help me with this . This is a real question. I look at them during the Holiday Season. Maybe you can help me with this too. You look at these different sweaters. Yours will cost close to 400, ralph lauren will do something in that kind of range, but then you come down, you can get it at j. Crew maybe for 200, 300, banana republic, or go down to h m, they seem to find cashmere for 90, even less, ive seen stuff for 50, 60, how different is it really . Well, if you ask our customer that bought our cashmere sweater ten years ago, theyre probably still wearing them. And if you ask a lot of other people that bought cashmere sweater somewhere else, they bought maybe last year, im not sure theyll still wear it this year. There is a real big difference in quality. Its still called cashmere, but the way its put together and the wool we select from is very, very different. Okay. I am wearing a cashmere sweater today. Oh, final question, this is important for guys. This season, it seems like its everywhere. Patches, are you doing a lot of patches on the elbow . I see it all over the place these days. Yeah, this year, theres a little more than usual. We have some, especially in our younger collection. Its like the old professor look. Now everybodys putting patches on their blazer. You know what im talking about . Its crazy. Now you put on the sweaters, everything. Give reason if im going to buy one of these things, how long fashion wise, how long will this last . Two years from now, will i have to get rid of it because im going to look old . Well, you know, we sell patches in our jacket, our traditional jacket and tweeds jacket for a long time. Theyre still in fashion, still traditional. And this whole pattern a little bit more, but i dont think itll go out of fashion. Thank you very much. What are you going to say, steve . What producer gave you the brooks brother segment . Why . Youre such a clothes horse i was noticing, he had a suit up there. Everyones wearing patterned blazers, you know what im saying . Yeah. The sweater. Its the italian suit. I know. That was a Brooks Brothers. No. That was a Brooks Brothers. What . You think his suit . No, Brooks Brothers has gone very upscale, very italian. They were screaming to get out of that segment. I know. I know they were. You kept asking question after question after question. How old is that cashmere sweater . This sweater is fortunately or unfortunately ralph lauren one so its a pricey one and the good news is, it does last. How long have you had it . Probably three or four years whereas the other stuff is relatively disposable. How much did you pay for it . On sale 30 off. You can fix that easily . In the back . Thank you. Well have much more about andrews. Well put a live shot in your closet. Talk more about andrews sweater. But theres more going on at walmart locations coming up. Phil lebeau will have that story from chicago next. Reporter andrew, this is the kind of crowds i dont think walmart was looking for on black friday. Protesters, 75 calling for walmart to pay workers more. How many of these protesters actually work for walmart . Well have that story when squawk box returns. All next week, squawks Higher Learning project, innovating education by disrupting the classroom. Putting the University System to the test. How the public and private sectors can reshape the nations workforce. The brightest minds on the front lines of learning whole class only on squawk box. Tdd 18003452550 trading inspires your life. Tdd 18003452550 life inspires your trading. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. 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We found 3 people of the 75 who actually work for walmart. Brings up the question why are these people protesting at this walmart and supposedly 15 wall marts around the country. They believe they should be bringing the minimum wage up to 12. 50 an hour. In their words, thats the right way to help the workers earn more. Its about the choice that the company makes. At the end of the day, it is not fair that we as american taxpayers have to add to the bottom line of the most Profitable Company in america. Were talking about the Worlds Largest employer. They can, indeed, afford to pay higher wages. And again, the minimum wage for walmart workers is 8. 80. Its a number of groups coming together, calling themselves jobs for justice. Walmart has 1. 4 million employees in the u. S. And the ceo says they do pay higher than most other retailers. Were proud of the pay that we have also. We pay in the top half of the Retail Industry and we understand that there will be people out asking for more. We understand that frustration after five years of a difficult economy and were going to do all we can to look for opportunities for them to advance. As you a take a look at shares of walmart and how theyve done over the last year, keep this in mind. We saw these protests last year, well see them at a number of stores this year. When i talked with the people in line here, i said what do you want them to do aside from raise the minimum wage . Everyone said we just want the workers to be treated better. I said what does that mean . They said just better. Im not sure everyone exactly know what is theyre protesting for but theyre making quite a scene here on black friday in front of the store on the north side of chicago. Dana, could walmart pay its workers more . What would happen to walmart . You could always pay your workers more but then you want higher margins, too. Costco pays more than walmart. Is there a benefit . Longevity of talent. Phil is gone. I wanted to ask him, he said 3 of the 75 people protesting actually work at walmart. We had a debate about this around the table last night about could they pay higher wages, especially on service jobs that are locked in. Its not like theres a competitive overseas thing. If its a manufacturing, its a different story. Bob, you want to weigh in on that . I have to say this is a company that has offered every veteran that has been honorably discharged a job. You cannot have the opportunities like that to provide those kind of opportunities and not be a company that cares about your employees. What about the other side of that, which is a person who may have a fulltime job from one of these stores would have to receive government assistance . So is that right that essentially the story is the taxpayer is subsidizing cheap hamburgers in our society today. Its a complicated question. Generally you see in surveys that walmart employees are happy employees. And at the same time, there are a tremendous amount of unemployed americans and many would kill for a job like that. I dont know whether minimum wage should be lifted or not. It certainly seems like it could hamper job creation but at the same time, if corporations are reaching some of these incredibly fat profit levels, should that be passed on . Generally im not in favor of price and wage controls, i think that leads to a dangerous spiral. Many of the retailers that we know, many of them are already paying above minute maam wage. Thats been the argument from many of them is that were not at men mum. And you pay your workers more, you have to charge your customers more. The question is does that come from the shareholders remember than from the customers . So profits are less rather than prices be high per. You have no comment on this, andrew . I dont know. I have no answer. I wish i could tell you what the right answer is but i dont know. Coming back, well get the last word from our guest host. And the University Health services ceo alan miller will be on squawk on the street. Thats coming up in the 10 00 hour. Squawk box will be right back. Were aig. And were here. To help secure retirements and protect financial futures. To help communities recover and rebuild. For Companies Going from garage to global. On the ground, in the air, even into space. We repaid every dollar america lent us. And gave america back a profit. Were here to keep our promises. To help you realize a better tomorrow. From the families of aig, happy holidays. announcer scottrade knows our clients trade and invest their own way. With scottrades smart text, i can quickly understand my charts, and spend more time trading. Their quick trade bar lets my account follow me online so i can react in realtime. Plus, my local scottrade office is there to help. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Lets get back to bobby kotick for the last word. You know ceo is up for grabs. Besides from yourself, who would you like to see in that role . I would say they need someone who has entrepreneurial, opportunistic thinking. While we rely on them for their xbox business, im not sure you want to throw a name out . Someone like safra katz, oracle. Any other name you want to throw out . I think thats what comes to mind. Dana, quick thought on the retail season. Macys, tjx, michael kors will be some of the winners and well have a retail season that will be extended. Thank you for joining us. Right now its time for squawk on the street. Good morning and welcome to squawk on the street. Im david faber with kayla tausche. Its bring your kid to work day on what lab shortened trading day for the markets