Transcripts For CNBC Squawk Box 20141114

Retail sales and import export prices. Also worth watching today, november Consumer Sentiment and business inventories. Andrew, over to you. Corporate news this morning, Oil Field Services provider baker hughes confirming its now in talks with rival halliburton. This after the wall street journal reported on negotiations between the two. A merger would create a want korth 67 billion or possibly more. This years drop in Energy Prices has hurt and sent stock prices in the nasdaq much lower. Industry watchers note a deal would likely face antitrust concerns. Well talk to an analyst who covers the company in the next hour. Theres a real bet that oil price res going lower and that they need to consolidate to compete with schlumberger and the rest of them. Stock deal. They exchange cheaper stock for cheaper stock . Cheaper stock for cheaper stock. I imagine there would be a lot of layoffs because part of the whole idea is you would be trying to get your costs down. Speaking of energy, the iea saying the dramatic drop in prices showing no signs of ending. The boards of both of those companies, the agency suggesting weak demand, a strong dollar and brewing u. S. Oil production could signal a new chapter in the history of the oil markets. Markets trading near a fouryear low this morning. Focus is in vienna later. I looked at who we have on today to talk about oil. Weve almost run out of people. We dont know if theyve been right on oil. Right. Well, definitely not wrong. Steven shore pienlly through in the towel. Hes been bullish on a daily basis on natural gas. He said after yesterday, forget it. Its human nature when you follow anything. It stayed at 90 for so long that every well, whatever. We found someone that maybe quite quite as wrong. A couple times, youve actually made the point that they may not shut down wells theyre already producing, but they certainly put in their efforts to find more. Who do you think they buy all the stuff from to go in and do the its just we knew this was going to happen. Cheaper stocks for cheaper stocks. It makes sense to borrow money at zero percent interest rate. But either way, its probably a good time for these. They will definitely rationalize. 24e8 they will rationalize. But schlumberger is so much larger. Im always concerned about antitrust issues. There are certain pieces of the baker hughes compensation where they might have to sell pieces off to go regulatory approval. But for the most part, they are still far behind schlumberger, even at a combined group. And at times like this, obviously, theyre not getting together. They could get a monopoly on the business. Theyre trying to survive. But it also means that those boards must be making a legitimate call on oil. Right. Mean its not look, if anyone could have kept oil prices higher, they would. And who knows how long they did keep them higher . When it was at 90 and we were like, wow, its stubbornly between 90 and 100. They must think its on a steady slide. Whats what i mean. But if you get to the point where these guys actually either cap wells or stop exploring, at some point, the lower supply i mean, this is like the constant supply demand. Were not going to have any peak oil segments this week, probably. Have we booked anyone on peak oil . We were almost out of oil about five years ago. I dont think weve talked peak oil since 2008. About five years ago, we were at a couple of wells just at the very bottom where we were trying to the very last part we were getting up. Something something changed. Did we run out of stones . I dont mean that. Did we run out of stones at the end of the stone age . There were still stones, right . Theres still stones. There still are stones. So you dont necessarily run ott of things until Something Better comes along. You looked at me like i was cheeppy when i asked if there were no stones. Why dont we check out the futures this morning. The dow was at a new high yesterday. The nasdaq was 14 1 2 year high. Take a look at futures this morning, dow futures up by just over 9 points. Nasdaq futures and s p 500 futures higher, as well. The tenyear is yielding 2. 343 . The doorl, euro trading at 1. 2458. There are a lot of arguments about whether gold has bottomed here or not. Right now, 1,152760 an ounce. We have key data out of europe this morning. Surprisingly, the eurozone economy dpru more than expected in the third quarter. Seema mody now with the highlights. Good day, seema. Good day. Good morning to you guys. Joe, lets take a look at the data. The health of the european economy, of course, continues to be a focal point for investors. Todays numbers, though, slightly a sigh of relief. Taking a look at germany, the most robust economy in europe, it was able to avoid entering recession, which was the big fear. Seeing growth of 0. 1 . France beat expect ages with growth of 0. 3 . France, up 0. 3 . But the bad news is italy. Italy saw a contraction in its economy. So italy is still in recession. That is a big concern for investors. Taking a look at how markets are responding to that european data, right now theyre looking at the italian markets up about 78 points on the day. France, because they were able to beat expectations is the outperformer, up a couple points in todays trade. But germany continues to trade lower, the ftse 100 down just about 12. Guys, deflation is still a big concern for investors. Actually october cpi coming in at negative 0. 1 . So that is probably one of the reasons youre seeing germany react negatively today. Back to you. All right. Seema, yeah, we were but we dont even want to go. Daylight savings, we went off and what time is it there . Its six hours. Davos, six hours and its 10 00 a. M. Here. So five hours. We dont even want to know. Five hours ahead of you guys. But daylight savings theres a period where did she. Theres a period where we used to do morning because we had Worldwide Exchange and there would be times when we would put cramers show in there on repeats because of a oneweek period where you guys change at a different tooit time, right . There was that oneweek period a couple weeks ago where we were six hours ahead instead of five. But now were back to five. So it is good morning. Good day solves everything, except you sound silly saying it. Sounds like youre saying goodbye. Good day. Lets talk about whats going on. Eu regulators say starbucks dutch tax deal may be illegal state aid. The setup allows the coffee chain to pay on a lower Corporate Income tax base. Other companies have the same thing going, apple, so we will see whether its allowed. We do have another record setter for the dow. Its his 25th record close this year. The nasdaq hitting a 14 1 2 year high yesterday. And it is interesting to note on this day back to 1972, that the dow closed above 1,000 for the First Time Ever on this day in 1972. Joining us right now to tell us if this raging bull market will continue is darrel correct me if i am wrong, wells fargos chief investment officer. Jonathan gallo, chief u. S. Market strategist. Guys, welcome to both of you. Jonathan, this is something that feels like every day were looking at new records. People used to laugh at Jeremy Siegel when he said 18,000. But with the dow at the enof the year, he might be right. October didnt quite make the almost. But all the people say were due to have this correct. They need back to the early 90s where we sent 720 days without a construction. Then we went 1600. I think were going to see this in a 10 ers to 15 pro year, moving higher for the next three or four years. Why . Why are you looking at double digit gains for the next three or flower four years . If you look at where the bond yields are versus the cost in stocks, the cost of capital for a company, which is what the company is going to tell for, the gas is too wide. While people think that peak Margin Companies cant squeeze more out. Ceos are doing a brilliant job of managing expenses and we think margin res going to continue to edge higher. And we think well get everybody back. Weve heard a lot of var ages on that. Thinking there is no alternative, stocks are the only place to be. But you are looking at the fed probably raising rates next year. There are some questions about how that will go. Yeah. I think thats right, becky. I mean, thats always the concern is that when you hit that inflexion part of monetary policy, that it becomes the end of the bull market for equities. If you look at bull markets, bull markets dont end with improving confidence, accelerating gdp, accelerating earnings and improving fundamentals. They just dont historically. So were a little bit in jonathans camp, not quite so optimistic. But we think next year you could see the s p earn from around 128 on eps, which would put us somewhere at a median. So 8 from here with a 2 dividend so youre eking out double digit gains next year by yearend 15. So the changes that weve seen, the weird things that have happened with the tenyear treasury that was confounding it, now were looking at oil prices. Obviously that has a lot to do with the stronger dollar. There are going to be unexpected consequences that come along the way. How do you guys think ahead of that . How do you get in and try and figure out what that all means . So actually, you know, theres a lot to be said about what effect the decline in oil prices and specifically the violent decline is on s p eps numbers, earnings per share numbers. Actually, its interesting, if you look historically, the effect of oil on quick moves has a very asemestymmetrical effect. It hurts the markets more acutely at first. When oil prices go down and this discussion about this big tailwind and this tax relief for the consumer,s theres some of that, but its not equal on those price limits. The key for oil will be to the extent that it stays here and that this becomes kind of a structural move down and we stay somewhere around 7 75, 80 verss go back to 90, 95, 100. What does that mean, what happens if it goes back to 90, or 100 . I dont think anything. But if it stays at these levels, youll have to exchange your earnings outlooks for next year and as a result bring down your s p estimates . I think some, but not as much as most people believe. Energy is a big sector of the market. But again, you get tailwind of Energy Consumers and their expense and to jonathans point, the s p do you were about that actual, jonathan . When you have oil falling from 105 to 75, as much as im really optimistic, it is a sign that something is broken with Global Growth. And this is not a u. S. Growth story, but this is a Global Growth story. And the same thing, if you have the year start with 3 treasury yields and end the year at 2. 3 , its a sign that you have a growth problem. And part of why this is money is flowing to where they think they can find growth in this world and thats the u. S. Seema before was talking about how the strong european growth, we got ten days out of germany, im not sure what that means. Ten basis points is still, from an earnings point, thats a recession. Youre familiar with the term cartel, no . Yeah. An agreement between competing firms to control prices or exclude entry of a new competitor. How do you know this was definitely a sign of Global Growth . How do you know the cartel is unable to keep prices where they want them . How can you possibly tell the difference, that it absolutely means theres a problem with Global Growth . Youre implying that im implying they have a caught called prices. Yeah. Listen, dooit be . I guess. Where is the slowdown that you see thats going to be so evident . And when will it be evident to the rest of us . Its very evident. Your business had been running at, what, 0. 35 growth for the past two years. You throw in what weve done in this country in terms of supply, and you throw in the inability, really, of carpetel folks who sooner or later, the supply demand fundamentals come home to roost. Theres a ton more its a lonely view of the world economy. Here you are with a big bucket of water. I tell you that 10 you hate 18,000 . You hate come on board, will you . Im sorry. I agree with joe. I think it is more of a supply story than a demand story. I will tell jonathan. On a friday. Yes, thats right. No, i do i do think its a supply side. When you get big, violent moves in oil historically theres just something so satisfying. Something to satisfying about watching it happen that i cant take it as a negative. I want to take it a winwin for everybody. We just put out a report this week and looked at specifically on days oil goes up than when they do down. Give it some time. But we did this for the last 12 months, the last ten years. The market likes oil higher mostly because the market views it as whether its right or not. But near term, when the retailers all post better results, consumers have more money in their pocket i was just going to say, when you have big violent moves, its either the backside of a slowdown in demand, which we havent seen yet. Its a precautionary demand concern, which you could maybe argue it is. I would argue its more of a supply shock than it is demand. Well see. I really dont have that strong of an opinion about it. Just think about how optimistic he is on stocks, though. 10 or 15 for him no, too negative. Hes lost on the whole Global Growth thing. Gentlemen, thank you for coming in today. We have to talk about a serious story, but you just said backside. On the back side. And im looking at the daily news. We have to do the white house intruder story. But Kim Kardashian again. You wonder why she does these things. Its been four days. Were still talking about it. So now do you know how theyve advanced the story . The daily news has identified the man that oiled up her theyve oiled the man we dont know pktly the brand of the oil that was used because he cant remember, but theres an extended interview in the daily news talking about how it was who did the spray tan . Theres another spray tan where its just baby oil is all. And apparently kanye didnt really usually its very controlling. He wasnt there. But they got an extended interview with the guy that actually did hsh wow, its a tough name. Dediv mario dedivanovich. Shes sampling some butt boosters, it says here. Theres some immigration stuff happening and, you know, i guess russ russia has bombers on our coast, but the daily news has its priorities straight on this one. If thats not a head shaking story, another one out of washington, new details on a series of failures that let an armed introoug truder make his way into the white house. Did you see that . Running through the halls. We need dogs there. We do. Dogs dont get on and talk to their girlfriends. The secret service had a prostitute problem a year or two ago, too. This is the same agency. Not the one that Clint Eastwood used to run, right . They were a little more serious. Anyway, Homeland Security issuing reports about what went wrong. Peter has the details. Everybody out wab right now. This is the home video of Omar Gonzalez running across the white house north lawn in september. Reviewed by the department of Homeland Security blames the secret service through a series of performance, organizational, tactical and other failures. The report found the skroot Service Alarm systems failed to work properly and many of the officers on duty didnt see gonzalez armed with a knife as he scaled the fence. Among the failures are a secret Service Officer with an attack dog who was not listening to a twooway radio because his ear piece was out. Instead, that officer was talking on a cell phone and only gonzalez after witnessing another officer running toward him. We can accept a couple human errors, but not as many as seemed to happen in this understand all at the same time. Gonzalez was unaware he had broken the security because an alarm box had been muted at the request of the ushers office. He barrelled past the guard, ran the entire length of the white house to the other end of the east room before he was talkeled by an assault agent near the doorway to the green room. Cleaned up to get back to the organization that we all admired and respected so much. That was a report we saw on nightly last night. And our news out of washington, tthe wall street journal reports the Just Department is using data, all part of the Marshalls Service program. It started in 20307 and the goal is to target criminals, but the journal said the government is thought to be grabbing info from a number number of citizens. We kind of know this, a lot of these programs collect a lot of data. Is it bad if youre not used it for some if youre keeping the story, they said they only fly these plane because of the expense of flying these planes when they know theyre looking for specific targets and oftentimes more than one target. Meerchk they only put the plane in the air if they have several targets that they can do this mickicing. In the old days, you have to go to the Cell Tower Company and say please give us your data. The whole program took time. I dont know the legality of it. When theyre up there, theyre correcting because every phone will give the information automatically because theres no way to do it otherwise. But i dont think theyre taking the information necessarily. In this case when they put the plane in the air, b theyre looking for specific targets. Theyre not flying around randomly every dayic thing up information. I have nothing to hide. I dont know where you draw the line and i dont know what youre willing to give up to make sure youre safe. Obviously, things have changed a time since 2001. At this point, americans have to assume that they have very little privacy. Dont you need a search warrant to get this type of data or some kind of court oregon something if you effect youly pretend youre a cell tower, that in itself preend tending youre a spying technique. When we come back this morning, the nba commissioner calling for legalized sports gammeling. We will have his argument right after this. Plus, an argument quietly settled. How amazon reached a deal and what it means for the publishing of book prices. Stick around. Op Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Welcome back to squawk box. Amazon hads over whether or not amazon has been undercutting authors by cutting the book too cheap. Joining us now, author of the ebook, the battle of 999. How am, amazon and the big six publishers changed the ebook business overnight. Good morning to you. Good morning to you. Help us understand exactly how this deal works. None of the reporting indicates what the numbers really are. That is true. Unfortunately i wish i had more information for you. But as public as the dispute has been, we always knew in the end that the deal itself would be private and confidential. Who is the whipper of this . After all of this time. The simple answer would be amazon, to be perfectly honest. Certainly hachette didnt gain anything by having their books filled promptly by amazon over the debate. How about on terms . Good question. Both sides seem to be happy with the deal right now, which explains very little about why we have the dispute in the first place. Hac had heette is going to be able to set its own prices. How amazon discounts prints is probably not going to change much. How it lets its prices for ee books is where the rubber hit the road here. Im getting there is going to be some mechanism in the deal that mandates the digital price away certain percentage lower. There are incentives in this where if they were selling it at a certain price, maybe hachette gets a certain amount of revenue. There is an incentive in the deal, but i dont know if its a positive or a negative incentive here. I dont know if they get a bigger cut or if they get a penalty. If they wanted to take down the prices of books, he thinks the book are too expensive, longterm if his if his goal is to make books more affordable, did he get closer to that goal . That is a good question. Well have to see how the deal plays out in practice. In theory, i would say yes. Who is getting hurt more by this ongoing battle . It remain toes be seen how authors are going to be paid. Since 2007 is when the commercial ebook market began. What do you think about the image hit for either company, but i would say specifically amazon. There were questions about whether they have a monopoly now on books, whether people in washington look at that, whether the author and establisher Community Rebel against amazon in some way. How do you see the dynamics sorting themselves out. . I dont see amazon taking a longterm hit over there. Thou it certainly has raised an issue. Not a lot of cop assumers know the brand of hachette. They deal with the trades, they sell at the bookstores so you dont run in saying i want that new hatchet book. That was my question. Both sides seem happy coming out of that. Does that mean the consumer lost or the writers themselves lost and got handed over in this whole thing . I dont think anybody necessarily has to lose here. As amazon makes the case, the lower prices are, the lower volume, you make more money. More than have a certain price flow charge book and get a certain cut. It sounds like if amazon and jeff besos were trying to disrupt the business, youre close rather than some sort of discorruption. What i would look at for amazon is innovation. Theyve brought a lot of innovation products to the market. Theyve launched the kindle. If theres a disruption that has taken place, a lot of it had to do with innovation. I wonder where the ebook market would be today if it was left to the publishers. I can amazons goal of moving the ebook market more quickly in the future has happened. Thank you, andrew. Good name. Coming up, congress one step closer to approving the Keystone Pipeline. But as crude falls, the economic no longer make it viable. Well take a look when we return. You, my friend are a master of diversification. Who would have thought three cheese lasagna would go with chocolate cake and ceviche . The same guy who thought that small caps and bond funds would go with a merging markets. Its a masterpiece. Thanks. Clearly you are type e. You made it phil. Welcome home. Now whats our strategy with the fondue . Diversifying your portfolio . E trade gives you the tools and resources to get it right. Are you type e . Ameriprise asked people a simple question in retirement, will you have enough money to live life on your terms . I sure hope so. With healthcare costs, who knows. Umm. Everyone has retirement questions. So ameriprise created the exclusive confident retirement approach. Now you and your ameripise advisor. Can get the real answers you need. Start building your confident retirement today. You can bring back from a trip around the world. But you cant always bring back customer data. Because many customers dont like it when their data moves around. Can i go now . If youre going to do business globally, you need a cloud that can keep your data where it needs to be. Today, theres a new way to work and its made with ibm. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Is senate is set to take up the Keystone Pipeline bill next week. If you believe the president s press secretary, it will be vetoed by president obama. The great immigration debate, a form he w43 cnbc contributor and my friend and my party did you just do air quotes when you said friend . No, i didnt. Were we not hanging out together at cnbcs 25th anniversary . And sara, too, by the way. I dont remember opinion i wasnt really i was nice to sara, actually. You were nice to me. I was. We were talking about how you were rough on andrew. Yes. Bernstein is a cnbc contributor. God all mighty. Were going to have to nd it here, guys. So, jared, you have al been, as far as i can remember, a backer of keystone. Well, i always assumed that the oil was coming out of the ground. This is a particularly dirty form of crude partnership wasnt crazy about it environmentally. I thought as long as its coming outs of the ground, it might as well go south instead of west considering you would work out some of the issues being debated in nebraska. Now being that the economics have shift shifted, it does seem like the in the money strike price for developing that is a battle of will because something north of the right side 90, maybe something between 90 and 100 a barrel, as long as oil remains below that and new forecasts suggest it will for a while, i think the economics here may have gotten ahead of the politics. You know, the thing about that, though, is if you think about where the World Population is, youve got a billion plus people in india and china raising their standard of living. And i listen to people on this Network Every day talk about the price of oil. I dont think many people think its going to stay low longterm until this is still good policy. And as we see in the senate race, which is driving this, the Louisiana Senate race which is driving this boat, good policy is good politics. And that is why this is going to be voted on. I dont know whether you know where oil is going, sara, or anybody. But the most compelling part of this story and what were not even talking about is harry reid finally bringing it to a vote now. Oh, ghee, thats so its down 16 points. Its fought going help. Its not going to help. Its a joke. Listen, i happen to agree allowing her to get political cover for the runoff and for people that are watching this and already mad at washington, nothing is being done here should talk anyone out of being cynical about whooudz. I 100 degree with almost everything that you just said. The idea that someone is going to go to the polls and change their vote because of this strikes me as extremely fanciful. You might want the Keystone Pipeline to get a thumbs up from congress for all kinds of reasons, but youre right about the politics. It kind of takes me to immigration. I think there, actually people would like to see the congress do something. Theyre not going to do anything because of the gridlock and the president is going to act. Here is the challenge with him acting and the way that he does it. The Republican Leaders are saying all the right things heading into this next conference about corporation and working together. This is nothing more than a stick in the eye at the republican congress. It is going to poison the well. Were going to see nothing in the next two years based on the way the president is conducting himself. He seems to be tacking to the left, which is a curious strategy with me. Ive talked about this with my colleagues today. And actually grudge picked up on it. The new york times, obama resurgence, theyve written that piece only ten days after the election. That didnt take long. No, but my point is peter baker. He delayed immigration for political reasons to give his people cover so the election is over and now hes doing it and hes a hero, according to the new york times. All he did was he delayed it. And he delayed the Keystone Pipeline. He delayed it to be political and now he follows through on it because hes a let me respond to that and ask sara a question. Fi first of all, i really dont think on immigration hes tacking to the left. I think theres a lot more bipartisan support for comprehensive Immigration Reform than saras comment would suggest. Secondly, and here is a question for sara. So i take the point that hes putting a stick in somebodys eye here. Thats correct. But given that these republican ves said we want to come back and work together, would it be in their interests i think it wouldnt be, but i want to hear what you say, to sht shut down the government over this . I think that would be kind of nuts. They want that. Youre giving them the idea right here. I think sara disagrees, go ahead, sara. Yo, i dont disagree. I dont think its in the interest of the government to shut down. Mitch mcconnell said its not happening. Why not let the process play out in congress . Because it wont play out in congress. Thats the problem. If congress were going to do this, i would be completely with you. Theyre not, so he has to act. Its unfortunate, but its true. Sara, there will be all kinds of bait put forth like this to the republicans from the left to say, go ahead, do something that ruins your chances in 2016. Jared loves this. We cant take the bait. It is an idea that they might be able to consider, might work, might be a good idea. The more Republican House members, john boehner has more room to maneuver. Yeah. Look, this is good policy for the country. The bottom line, thats what matters. Good policy, good politicking, too. If it causes them to anyway, thank you, both of you. And thank you for coming to the party. Although our bar bill went up a lot with both of you guys. Not true. Anyway not true . Not true. How do you know . I was with them, too. Okay. Maybe it was from me after talking to jared. I had a couple of stiff ones. Anyway, still to come on squawk box this morning, the power of taylor swift. How the top selling artist is revolutionizing the music business. Plus, Virgin America is set to take off as a Public Company today. Well ask if Richard Bransons company can deliver. Plus, tony robins will join us on set. train horn vo wherever our trains go, the economy comes to life. Norfolk southern. One line, infinite possibilities. Theres confidence. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. Its no wonder last year we sold over three million tires. And during the big tire event, get up to 140 in mailin rebates on four select tires. Coming up, the power of taylor swift. Her latest album selling more copies in its first week than any artist since 2002. Theres one thing shes refusing to shake off, namely to pay for streaming. Find out what shes doing about it when we return. Later, all the cool kids are doing it. Icahn, ackman, loeb. Why activist investors are more popular than ever. But first, take a look at cnbc. Coms most clicked on story and how they performed yesterday. Ading dock. There should be a truck leaving now. I got it. Now jump off the bridge. What . In 3. 2. 1. Are you kidding me . Go. Right on time. Right now, over 20,000 trains are running reliably. We call that predictable. Thrillingly predictable. E financial noise financial noise financial noise financial noise get to the terminal across town. Are all the green lights you . No. Its called grid iq. The 4 51 is leaving at 4 51. They cut the power. Itll fix itself. Powers back on. Quick thinking traffic lights and self correcting power grids make the world predictable. Thrillingly predictable. World and we are just living in it. Shes plastered on the covers of two major magazines. Business weeks feature says taylor swift is the music industry. And they got an exclusive interview with the star. How is the 24yearold music mogul changing the industry for the next crop . And is her music sustainable . Joining us is the assisting manager of Time Magazine and the culture columnist for the wall street journal. Thank you for being here. Help us with this. Just put her in relative terms in terms of the music world overall versus the past. Where is she compared to Michael Jackson, madonna, all of those kinds of people . I think its more instructive to talk about what shes doing presently. Right now shes the biggest thing going in music. Her first week sales were bigger than the sales of all the other albums in the top 100 combined. Thats how many units she was moving. And thats amazing. Thats why when her record kpaern and taylor swift decide to pull her music from spotify, people sent out a notice. One out of five albums that week were sold by taylor swift. All artists took their music off their spotify, would they be in the same position she is . No way. Heres the difference. Taylor swift can make a move like this because shes got a lot of Corporate Partners that are helping her to sell physical records. She did a deal with target, diet coke where she appears and they say buy her album. She has people that have her back. Other artists, if youre in your bedroom somewhere in new jersey and youre trying to move a few units, you dont have diet coke ads to sell your music. You need people like spotify to check out your music for free. Theres a lot of anger and confusion out there among artists with spotify. One called it the last fart of a dying corporation. People are not happy with it. Is she wrong or right about spotify . She says people should have values about what they created. That sha should feel like theyre paying for something. And her problem with spotify is because spotify has a service where you dont have to pay. Even for the paid service, i think to some extent she doesnt think that people really feel theyre paying for her music. I think her problem with streaming music is she doesnt want it to be given away for free. She wants a gated community where people actually have to pay for entrance with a little more exclusive. And it stands out in a sea of stuff out there. People for akwhiel thought that maybe Digital Music would save music. Now downloading has gone down in the recent months. People thought that maybe streaming services would somehow save music. But now it seems as that model doesnt generate enough revenue. So taylor swift is saying maybe theres another way of doing it. Her last three records, not just this one, the last three records have sold over 1 million copies in their debut weeks. I wonder what she is doing is replicatable by anybody else . Its not. One magazine said taylor swift is the music industry. We have had an exclusive interview. Shes not. Its the opposite. Shes not the music industry. Its hard to imagine anyone can do what shes doing. Is she just a great example of somebody who has Business Front and center who looks at this and is going to knock this out and doesnt get like you see so many of these younger stars who fall into the traps along the way. She hasnt. Shes a phenom. Think about how she launched this album. Think of the other big albums this year whether its beyonce or jay z. There are a lot of gimmicks in how they introduced them. Whether it appeared on your phone or itunes or dropped that night. She recorded her fans having small concerts they felt like it was important to them. She made it clear to her fans its important she sell albums. She wont be here any too many soon, i can tell you. And theres a reason. She is loyal to her 15, 14, and 16yearold fans. And i dont think she wants everyone to think shes in this as a business. Well, she talked to Time Magazine how she thinks of it as a business. But shes writing opeds in the wall street journal. I think its important to send a signal shes not a sellout to younger fans either. She is in control of her message and image. They identify with her as a young person. This generation, there is no selling out for this generation. They dont really care whether her song appears in a target commercial or a video. I think you will see her on cnbc soon enough. Ive tried. Im trying. I dont know. Andrews main problem is, youre worried she could some day eclipse the gloved one. She may. I saw you asking those questions. She may eclipse the gloved one. I used to wear the glove. Im a fan. Youre talking about Michael Jackson. The audience werent here during the break. The gloved one . There was a point while taylor swift may be a business mogul, that there is a team behind her including a manager of hers whos trying to sell his Company Currently and one of the reasons they didnt want to put the music online on spotify was to effectively raise the value of his company. Is there anything weve talked to both parties. We spoke to her manager, record label, her. Theyre competing who will take credit for this move. Swift says this was my decision. The record label says this was my decision. These are people trying to make a lot of money. I think one worth talking about, you were mentioning before maybe shes a representative of music industry. But i think the way taylor swift is being treated here perhaps can send a signal to other smaller artists that theres a problem with the industry. Spotify is putting out for how much shes being compensated for her work. Did you see the Freddie Mercury Michael Jackson duet . Of course. You did. Youre serious, right . Yeah. So Freddie Mercury got fed up because bubbles was sitting in between them and every take he said was that good. Should we do it again to him. Then freddie said im out of here. Bubbles was involved. Thank you, guys. Taylor swift is at least a good role model out there for girls. She is. Michael jackson was a good role model for andrew. When we come back, Virgin Mobile is going public. Well talk about that. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Im just looking over the company bills. Up . Is that what we pay for internet . Yup. Dsl is about 90 bucks a month. Thats funny, for that price with comcast business, i think you get like 50 megabits. Wow thats fast. Personally, i prefer a slow internet. There is something about the sweet meditative glow of a loading website. Dont listen to the naysayer. Switch to comcast Business Today and get 50 megabits per second for 89. 95. Comcast business. Built for business. More pressure on crude. Are oil prices triggering a wave of consolidation . Two giants are at the merger table. I drink your milk shake i drink it up ready for takeoff. Richard bransons virgin ipo about to make the move. Or is the billionaire too late to the party . And the man who motivated 50 Million People is turning his attention to the world of money. An interview with life coach tony robbins. The second hour of squawk box begins right now. Welcome back to squawk box here on cnbc first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. Dont adjust your tv sets just yet. Lloyd and harry are back. Dumb dumber to hits theaters this weekend for universal. This is cnbc, of course part of comcast just like universal. Its been 20 years since the original hit the big screen. The year was 1994 if you can believe it was that long ago. Stick around. In just a little bit well show you why it was such a great year at the movies and a kbig year for jim carrey himself. The plot he pretended to be in a catatonic state just to play a joke for 20 years or something. I dont know whether thats i dont know. But i think theres something thats the first joke of the movie. One of them has a daughter. Just wakes up 20 years later . He did it on purpose to play a trick on everyone. But he did it for 20 years. Jim carrey . Yeah. And jeff daniels says thats a good one. Got me. Anyway, another flashback for you. This time on the markets. The date was 1972 and the dow actually closed above the 1,000 point level for the First Time Ever. Today the dow is at 17,652. Thats a new alltime high. It is the 25th record close for the year. Also the nasdaq is at a 14. 5 year high. That index closing at 4,680. Once again youre going to see some green arrows in the early trade this morning. Oh, i take it back. Theyve turned around. At this point theyre down by about 10 points for the dow. S p futures off by two. The nasdaq by three. It went didnt get back above a thousand until 1982. So there was a 10year period where it went down and was below. A precursor. To 1974 the end of the nifty 50 and the gut wrenching it was a bad period for Financial Assets in the 70s. The iea says the dramatic drop in oil prices shows no sign of ending. The agency suggests that weak demand, a strong dollar which i would put that in capital letters and booming production could signal a new chapter in the oil markets. Prices are trading near a fouryear low this morning. Focus is now on an opec meeting in vienna later this month. But 74 right now. Can anyone with a straight face say 69 . Saying 69 is the bottom . No. Will we see it at 69. I think you easily could. They move in 5 increments. Weve had guys come on and say if it falls below 80, look out. If it falls below 75, look out. Now youre on the next one. Premium was 2. 95 today. What was regular, did you see . I dont know. Probably 2. 60, 2. 70. Something like that. Unbelievable. Lets talk a little bit about some Corporate News this morning. Baker hughes confirming its in talks with halliburton. A merger would create a Company Worth 67 billion. This all comes as the drop in Energy Prices has hurt demand for drilling. It sends stock prices in that sector much lower. To deal with antitrust concerns. Going to talk about all the issues around this transaction who covers those companies. Virgin America Airline is going public today. Phil lebeau has more on this new arrival for investors. And i dont know. Do you buy Airline Stocks . We have a new one, phil. Weve had a heck of a twoyear run, joe. Thats going to be a question of investors over the longterm. When you take a look at Virgin America, keep this in mind. When it lists later this morning, itll be 13 million shares priced at 23 a share. 360 million with this. Valuation will be about a billion dollars. Under the symbol v. A. The question a lot of investors have, should you be buying into an airline that just turned profitable in 2013 . Theres no doubt there are challenges for Virgin America that people will be focused on. The argument could be great theres plenty of room for growth here. But remember its transcontinental that they made their mark. Its a lot of competition heating up there especially when it comes to luring the business travelers. Virgin says 40 of its revenue last year came from business travelers. As we talked about a number of times, this is an ultra competitive segment. And take a look what weve seen from the Airline Stocks in the last year. When you see these kind of returns, it brings to question whether or not this is a sector and stocks that have really just run so far so quickly that the best days are behind them. Spirit which was the last ipo. Then you see delta and united. And the Airline Index over the last two years, up 131 . So theres no doubt that investors have realized the gains here and certainly with falling jet fuel prices, this is a good time for Airline Stocks. Coming up later on squawk on the street well talk to Virgin America ceo david cush. Well talk to him about the outlook. There are a lot of questions regarding the Airline Industry at the run theyve had. These are things that investors need to keep in mind. Have they marked it up . The current valuation. And do you buy it . Stick around. Lets continue the conversation with aviation expert and chairman of the boyd group to talk more about the Virgin America ipo. What price would it demand two years ago and with that in mind, is the is it already reflected, all the good news about this whole industry is it going to be reflected in the price that the ipo comes at . I would think for Virgin America, it would. Theyve got solid management. Theyre not expanding capacity. I think theyve got they dont have hallucinations like a lot of airlines have had in the past. I think its going to be a stable airline, a small airline. Its not going to take over the world. But i think they understand their niche. So i think it would be a very solid 24, 25. So is a hallucination even grander . Does that take it one step further . It probably does. The one thing with Virgin America, theyve done a solid job. Theyre in dallas ft. Worth. Theyre going to move to love field. When theyre at dfw, they had 20 as a new entrant. Thats pretty good. In terms of brand drilldown, theyre doing well. Going forward i think theyre going to be a solid small carrier. Sorkin, youve flown Virgin America. Love it. Why . It seems easy. The planes are all new. Is there a front of the plane and a back . There is. And either is fine. Theyre all great. Youve flown it too . Yeah they fly out of jfk a lot. Their staff is very Service Oriented too. You will pay top dollar for a first class seat and then theres also coach . Theres a big difference in the seats. Yes. They have great first class seats or Business Class seats. And the coach seats are great. They have electricity at every seat. Because its all new planes and because the people are actually interested in you and the service and it doesnt feel like from the legacy carries, they feel like theyve been losing benefits over time. Its true, but keep in mind, becky, that because they have been so effective with these transcontinental routes, it has forced delta, american, and united to all raise their game on these koss country routes. And they have been effective in their response to Virgin America. Doesnt mean theyre going to take all of the business away. Its just become such a hyper competitive segment. People like andrew saying its a wonderful flight experience. That the go the attention of the legacy flight carriers and theyve responded. But they dont allow children. Thats probably why you like them. No. Theres children all over the planes. Its a wonderful thing. There are . And its also the price point is lower on Virgin America . They can do it with a low price point . Theyve got low costs. No legacy issues. Theres no real legacy issues. With virgin, the only reason theyre really doing well is they treat the customer well. That was the recipe for southwest originally. Thats the recipe for jetblue. Treat the customer well and youre going to have a niche in the market. Again, its easier to do that with employees who dont feel they have lost benefits or are on the receiving end of getting dumped on when taking away benefits. I think thats part of the problem. It is. You have motivated employees. They say weve got a good product here. We dont make people line up 40 minutes from departure time. Thats a big difference. And employees reflect that. Michael, real quick. Are you worried longterm that their cost will go up . You see jetblue started this way. And its not the same anymore. Well, the beauty of jetblue, they see the future and they know how to adapt. Theyre not going to become a Volkswagen Beetle and say whered the japanese come from. Theyre going to see costs go up certainly but theyre a wellfocused airline and understand adding capacity doesnt make money. Adding service does. Michael, you know all about all kinds of aviation . I try to. Thats the business were in, sir. Why does bono why did he have a leer jet . Why doesnt he have a nicer jet with hundreds of millions of dollars . I dont know. Maybe hes economizing. I dont understand. You got to be cheap. You cant even fit in one, can you phil . Whoa, whoa, joe. I spent a good chunk of time in wichita, kansas, where leer is based. I know you would consider a leer jet the lower end of the private jet market. Not what you usually fly when youre going to st. Andrews. But a trip from dublin to somewhere else in europe, its fine. Global express. Or g650 or something. Ill walk off the tarmac if i see a leer jet there. Not surprised. Very funny. But i had to question that. Leer jets havent been i dont know who owns those at this point. Anyway, thank you. Leer is going to be mad at me. But even assess like a citation. And later this morning on squawk on the street a cnbc first interview as we said earlier with david cush. I see that. Ceo david cush. This is the talker of the morning. We havent had a chat about this yet. A potential game changer in the sports world. Adam silver calling for the legalization of Sports Betting. He writes in part, Sports Betting should be brought out of the underground and into the sunlight. Even cited the new jersey bill as an example of the growing appetite for online gambling. Congress he says should adopt a federal framework that allows states to authorize betting on professional sports. Silvers position is a complete reversal for the nba. I wonder what david stern and some of the other commissioners of different sports think about this. Where do you stand . You know, i dont know. I havent thought it through. I dont really have an opinion on it. Theres betting on sports . Would you prefer it be legal or not . You know what . Im like you, andrew. Any vices, lets make them legal and tax them. And blow it on something. You know . Lets tax it and blow it on something. Why not . Its happening anyway. Whats your serious view . Why wouldnt that be my serious view . Because you dont like to tax things. I dont mind taxing things. I just wish that theyd take care of it when they actually use the proceeds. Anyway, i think im with adam silver on this. Coming up, a possible merger. Halliburton talking to baker hughes. Well talk about it. And time to get motivated. Tony robbins has consulted president s and world leaders. Now hes out with his first book in 20 years. This time the focus is on financial freedom. Hes going to join us in the studio during the next half hour of squawk box. Were back in a moment. . This guy could take down your entire company. Stay with me. On thursday a hamster video goes online. On friday it goes viral a network choking phenomenon. Why do you care . Hes on the same cloud as your business. The more hits he gets, the slower your business may get. Do you want to share your cloud with a hamster . Today theres a new way to work. And its made with ibm. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Live shot of the white house there. Welcome back to squawk box. Two huge oil companies. One massive merger proposal. Oil services giant halliburton in talks to buy competitor baker hughes. Joining us now is oil Services Analyst who covers both. Are both boards effectively just even by having these conversations saying that oil prices are going to continue to decline . Good morning. Good morning, everyone. Well, you know, its an interesting time to try to put two of these companies together as youve mentioned. Oil prices have been on the decline. I would have to imagine that halliburton is looking at this as an opportunity, potential to consolidate at a time when stock prices have declined 25 to 30 . Maybe theyre thinking they can get a better valuation here. You dont look at this do you look at this as a defensive transaction . I actually look at it as a very aggressive transaction from the halliburton standpoint. It seems like theyre needing extra help to get there and accelerate that process. And therefore looking at baker hughes. Help us, though, with this piece of it. Which is from an antitrust perspective there are pieces of their business where they will own a significant part of the market. And there are pieces where they wont. There are things theyre going to have to give up the approval. I think there will be a number of different businesses that the doj will have to look at given the market share concentration. Weve identified about seven different product lines where the baker hughes, halliburton combination will have an excess of 35 market share. I understand thats a threshold where the doj takes a hard look at some of these transactions. Whats even more interesting than that is when you take baker hughes and halliburton and combine that with the market position in these seven different product designs. The market share will be anywhere from 60 to 90 . And when you think about this particular deal from a price perspective, is halliburton paying the right number . Too high, too low . Based on some of the math weve run, it looks like the base case that we think itll be done at is between 25 and 27. Halliburton will probably take that as high as maybe 90 a share before it becomes earnings diluted. I think whats important for halliburton right now is that they maintain the Investment Grade Credit Rating post any transaction. So were assuming a 50 50 debt equity mix. So, you know, id say 70 to 75 is the sweet spot. Maybe as high as 90. Thank you for joining us this morning. Thank you. Appreciate it very much. We got to get cheney on to talk about this. I was thinking about that. Who bought something and had a lot of liability . I think cheney bought something was it dresser or something and there was liability they took on . Where was that . Halliburton . Joe, you have a great memory. Back in 1998, halliburton bought dresser industries. When they bought it, they bought asbestos liability to go along with it. Is the whole bp thing halliburtons liabilities are all taken care of there . Yeah. The situation is now in the rearview mirror. Theyre essentially going to be paying that out over time. The stigma on what it represents is not gone, though, is it . I think its fading in time as you take a lot of elements of out of it. Some people think we went to war in iraq for halliburton. I still hear that. Anyway. All right. From you, from certain people. How do you say your name . Its hallead. Its simpler than most people think. But i have fun with it. Thank you. When we come back this morning, 1994 was a good year for jim carrey. It was a bad year for nancy kerrigan. Even a worse year for tonya harding. A trip from the way back machine to 1994. We mark 20 years since the release of dumb dumber. You mean you have been faking for 20 years . Uhhuh. And it was all for a gag . Yep. Thats awesome right . Take a deeeeep breath. And. Exhale. Aflac and a gentle wavelike motion. Ahhhahhhhhh. Liberate your spine. Ahhhahhhhhh. Aflac and reach, toes blossoming. Not that great at yoga. Yeah, but when i slipped a disk he paid my claim in just four days. Ahh four days . Yep. See why speed matters, at aflac. Com. E financial noise financial noise financial noise financial noise sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. [annits working forny. New york state. Already 41 companies are investing almost 80 Million Dollars, and creating 1750 jobs. From long island to all across upstate new york, more businesses are coming to new york. They are paying no property taxes, no corporate taxes, and no sales taxes. And with over 300 locations, and 3. 7 million square feet available, theres a place that is is right for your business. See if startupny can work for you. Go to startup. Ny. Gov. Youre right. It is the Christmas Tree at rockefeller center. Im trying to figure out when the lights go on. Weve got that date, didnt we . Whens the debut . The star is on top. On the third of december. On nbc. Whos the big musical person . Do we know yet . I dont think they have revealed the musical act yet. When they do, we will reveal it here on squawk box. It takes them that long to decorate it . Welcome back to squawk box, everybody. I might know some people who know some people. When does al go to the bathroom . I was wondering. There is history in the making today. Al roker is closing in on a Guinness World record. Hes been trying to do a Weather Forecast for 34 hours straight. There must be a fiveminute break to go to the bathroom. I could just barely pull it off in five minutes. Im just trying to listen to his voice. Sounds scratchy. Yeah. That is hard to talk for that long. He began just after 10 00 on wednesday night. He will continue until just after 8 00 this morning. So hes only got about 34 minutes to go before he breaks that record. Thats a tough one. Might be tired. Lot of money hes raising. We should also talk about the sequel to dumb dumber. Its been 20 years since that was released. If that doesnt make you feel old, heres a look back at 1994. In addition to dumb dumber jim carrey had ace ventura and the mask. Do i have anything in my teeth . That was my favorite. He had asparagus from his mouth. Do i have anything . Youre good. Crude oil trading at its lowest level in four years. Wouldnt you know that washington is now set to green light the Keystone Pipeline . I dont know what were saying there. Perfect timing as usual. Washington is not going to green light the pipeline, obviously, because its going to get vetoed. The breakdown of the crude crumble when squawk box returns. T robot butler. Look, i love the way he controls the lights and unlocks the door when i forget my keys. Its just that. I feel like hes always watching us. Yes, that is why we should use wink. Look, it can monitor and manage our house but it wont start to develop human emotions. Hey buddy. Control your entire home with one simple app introducing wink its like a robot butler, but not as awkward. Twhat do i do . You need to catch the 4 10 huh . The Equipment Tracking system will get you to the loading dock. There should be a truck leaving now. I got it. Now jump off the bridge. What . In 3. 2. 1. Are you kidding me . Go. Right on time. Right now, over 20,000 trains are running reliably. We call that predictable. Thrillingly predictable. Welcome back to squawk box this morning. Among the stories front and center, a surgeon whos been working in sierra leone and has been diagnosed with ebola will be flied back to the United States tomorrow. Hell be treated in nebraska. Also Morgan Stanley telling their brokers. They received their bonus totals this week. And the ftc wants more information from apple. Its going to be preventing Sensitive Data collected from its new smart watch and other devices from being used without consent. And hertz restating a 2012 to 2013 annual and Quarterly Financial statements. Th it says it will need to make material adjustments. Hertz had already announced it would restate its 2011 financial statements. Of course i think they are still looking for a ceo after mark left that company. Also, oil and Americas Energy policy top in washington this week. Debating the Keystone Pipeline extension. How much further is oil tumbling and does keystone still make sense at these levels . What do you think . Does keystone still make sense . Actually, at this price pipeline is probably the best deal for keystone. As you get lower and lower on crude, you have a bigger differential from transportation costs meaning more to the upstream producers. So at 90 a barrel, taking a train to the gulf of mexico, not such a big deal. 75 a barrel plus the quality differential for oil goes downward, suddenly you want that pipeline. It is still a big deal. What do you think has happened with oil prices . I know the stronger dollar. I know part of it is supply and demand picture. But what do you think has really happened . Its been quite a collapse. Yeah. I think we need to back up from all the minutia of financial differentials and ask, you know, what does the end user do after getting kicked in the head twice with high prices within a decade . The answer is demand changes. It becomes less responsive in the old days six or seven years ago you could unlock demand. A lot of the stuff we do with oil for fun. Driving, flying, moving stuff around. You could unlock that demand in the developed world. It doesnt happen so much now. Much more efficient. You have to rely on chinese demand to respond to low prices. Yes, they can fill their reserves. But when they refine the oil, theyre sending those back out into the market displacing crude somewhere else. Was 100 a barrel. One is the Expensive Oil is all weve got left. And to some extent thats probably true. But expensive is a relative thing. Over the long haul, the price of oil tends to converge around 2. 5 and 3. 5 times of the cost of refining and development. Right now about 25 per barrel. Youre talking between 75 and 90 as real price of oil. What did a hundred mean . Probably that we had libya offline. We had a lot of questions about the world. And demand was expected to be more ferocious than it was. The opec group seems to be acting the way a lot of other disrupted technologies, a lot of other disrupted industries have reacted. They try to hold on at any price. At this point theyre willing to lose money on this practically to make sure they hold market share and not do what theyve done in past years. This may be the same thing weve seen disrupted by every other situation out there. Old industries are broken up. Is that whats happening . Opec has only been a wellfunctioning cartel at high prices. Defection happens because they need money when prices slide. Opec broke entirely. Usually they come here with a nice looking consensus about what theyre going to do. June of 2011, they deadlocked 66. Theres differences between the sunnis and shiites within. It has functioned very poorly. What the saudis hope to do is bring it back. They are trying to pull together a coalition to say yes lets cut. But lets have it be somebody else. So what do you think ends up has been with the Keystone Pipeline . Well, right now were at a point where president obama is going to improve the pipeline. He could still do it himself and take an early session victory away or extend an olive branch. Its been set up for awhile. Whats in the way is nebraska. The Nebraska Supreme Court could rule as soon as today, but if they do the state department could say yes. Otherwise if the Congress Tries to force it down the president s throat, it would look likely not to get vetoed. He wont let it go. If they send it to him today or whenever not today but next week or something, he wont hell veto it. Right, kevin . Not necessarily. It depends on whether or not he truly thinks that theres some political gain to be had in helping. Exactly. We dont think so. I know. Its going to be all right. All about political games. Been five environmental studies completed. Which one is this one that were waiting for . Do you know . Were done with the environmental work. What were waiting for is the determination which is being held up by the Nebraska Supreme Court decision. Hes got to be nice to tom styer. He has to, right . Thats who hes appeasing and thats how it works. Hes got more at stake here. The next two years hes going to be in a browal fight with congress. Is he going to show hes going to buckle now or take a strong stand . Im sure hes trying to make sure he considers all the things that help get hillary elected. Im sure thats his priority now, helping hillary. Well, well see about that. Kevin, thank you for joining us today. Thanks for having me. Coming up next, the man that has motivated more than 50 Million People in over a hundred countries. Hes now turning his attention to the world of money. Its a first on cnbc interview. Hes making his way to the table now. Legendary life coach tony robbins is here. Hes going to join us on the set right here. Oh, my god, hes tall look at this hand. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Its in this spirit that ingu u. S. Is becoming a new kind of company. One that helps you think differently about whats ahead, and whats possible when you get things organized. Ing u. S. Is now voya. Changing the way you think of retirement. Welcome back to squawk box. Hes advised people like Nelson Mandela and margaret thatcher. Bill clinton and thats just a couple of them. Tony robbins is here. Hes got a new book out, his first in two decades. Hes gracing this weeks cover of fortune magazine. He remains a force to be reckoned with. Tony robbins joins us to share tips on investing in his new book money master the game. He talks to many. Also with us is the ceo of Financial Services at hightower. Arguably partnered with tony early on to help you figure out the Financial Game a little bit. Yes, he did. Thanks for being here. Before we get to the book i have a question. Youve been working with jones. Since he was 39. Hes now 60. What is it you do for him . My job is he had a rough patch. Hes one of the greatest traders in history. Going back to the biggest drop in history, he made 200 that year. But its going to the moon. What do you do after going to the moon . He lost a bit of edge. Figured out the model of what he used to do, brought it back. My job is to help him maximize his capability. I come see him quarterly. Youre not telling him stocks to buy. Youre talking about trying to get his mojo back. Its about maximizing your capacity. Same thing to do with an athlete. Everybody has certain strategies. Its really about making sure those are consistent. I make it simple enough to make him follow through consistently. I found complexity is the hes able to maximize his results. So you measure everything . I measure everything from the way he evaluates trades, to what he does before he makes a trade. Before he makes every trade, years ago when he was better, he stopped doing is simple thing which is saying this is a five to one. I interviewed 50 of the best in the world and said what is it that sets you apart. They all are obsessed with not losing money. But the biggest thing is they look for that risk reward. So pauls approach is if im going to invest the dollar, is it really a five to one. Yet unlike talking heads on television, he knows hes going to be wrong. I may be wrong four out of five times and still do well. Hes not wrong that much. I put systems in to maximize. Im also there during the tough times to help him shift it around. As a trader, you dont want to take the hit. You have to do that if youre going to be effective. You marry your losers. Thats exactly right. You rarely let the profits run instead of getting five to one you get 30 . Then it goes up. And these guys they all make it run. Its human nature. You have to go against human nature. The average person doesnt do that. If you look at the market, did research on the last 20 years. And they found the market was 9. 2 , the s p. But the average mutual investor made 2. 5 . Thats disastrous. Thats for the reasons we all know. They sell at the wrong time, buy at the wrong time. My mission was i grew up in a rough environment. When 2008 happened, i suffered enough myself to not having that be statistics. They all got out of the system. I said what can i do . If i interview these 50 and brins principles that are real, thats a worthy mission. Thats what brought this book out. So how did you find him or how did he find you . I got the phone call, i was driving to get my kids. They said tony robbins is on the phone. He wants to talk to you. My reaction was, youve got to be kidding me. So you did not know each other . Did not. Had you read awaken the giant . I had listened to his material. I did not know him, but i was an admirer of him and what he stood for. And i got a phone call and were on a threehour phone call talking about the industry because that butcher and dietitian white board we put out a couple years ago that explained what a fiduciary is and what a fiduciary is not. Somebody sent that to tony. And he said im going to talk to somebody who put the white board together. Since youre here, what does he do for you . People think its magic what you do. Or they dont believe it or theyre skeptical. Its hard to comprehend. Can you articulate what it is . I cant. Right now in the next 30 seconds. But im going to let tony describe what he does for people. I think what i do is i focus on how to create breakthroughs. I spent 37 years of my life looking for those strategies that make the difference. Theres only a few areas that affect life. Body, relationships, money, finances, emotions. And when you obsess for 37 years and find people the best, they have strategies. Im a hunter of excellence. I know the average person does not have a physically great body. The average person does not make money in the market. Whoa whoa whoa. Other than you, joe. But a few average people do well. Im obsessed to find what they do and teach it to other people. Have you ever been depressed . Sure. You have . Oh, yeah. Without a doubt. In the last 27 years . Do you know how to get out of it . I felt depressed 17, 18, 19 years old. I had times i got angry. I think i put a line in the sand. When i was depressed i didnt take action. I did. You could do wonders for because its a real i think about people that get to that position where they might consider doing a drastic thing, but today its now attributed to physical chemical imbalances that can be treated with drugs and things. So i wonder how that works with your thinking on how you tell people that it can all be selfmotivated and you can do it through thinking rather than some type of medication or something . Medication is about changing biochemistry. Endorphins work. I dont get depressed, but i dont think ive been in a bad period if ive run that day. Because it wipes out depression. I show people who are on maximized theyve done prosack and everything elsewhere i go whos suicidal . Theres always half a dozen that are suicidal. Ive not lost one, knock on wood, in 37 years. We follow up on them. And people do things for a reason. There are needs that were trying to meet. If we think that living is more painful than dying, then well make those shifts on people. You can also make that change. And investors do the same thing at a level. To what tonys done, when tony realized after the credit crisis in 08, i think that was a Pivotal Moment that i think you should tell people about. Because thats when you realized all of the things you had been doing effectively became much more difficult if people couldnt pay their mortgage. And i think the 08 crisis was a catalyst for you. You went to work. You produced this book. You and i have partnered up. But thats an interesting catalyst moment that maybe you should share with people. I think thats powerful. Just seeing that suffering again because ive been through it myself, i wanted to be part of the solution, not just pa rt of the problem. I thought i dont have those answers. If i go to 50 of the best and i can put that in a simple form, i can make a change. I came to elliot because i was looking at im going to teach people principles but theyre going to go to somebody for advice. I want it to be somebody whos tied to make your best interest in mind. Not someone getting commission. Not all fiduciaries are equal. Some are not worth the money. Theyre not sophisticated enough. And i came to elliot. After intering with him i said i have a challenge for you. Youre doing great work. Youre in a place thats transparent. I said lets find a way to do this for the average person. And youre not going to make any money. But its the right thing to do. He was open to it. So lets talk about chapter six. Its all about ray dalia whos been on this show many times. Weve done all sorts of things together. He talks about in your book a way of thinking about investing that i actually havent seen revealed. Hes been on our show. He never wants to engage on that topic of what people out there should be investing in. Yes. Well, i did 15 hours of research in advance. I was able to engage him. He gave an endorsement for the book. What i got him to talk to me about, i said listen. If you couldnt give your children any of your money but a set of principles, thats what i want for the ries of the world. What would it be . He said my all weather fund would be ideal. He walked through how to make money in every market. And i said explain it to me. E explained it. Im good at taking complex things and making them simple. Hes saying heres how people can make an incredible chocolate cake. Get chocolate and sugar. I need amounts. He said i cant do that. Hundred Million Dollars to start with me. I said you answered your own question. Youre giving half your wealth away. Youre not taking new clients. Help the average investor out. He said it wont be perfect. Youre right. It will be better than anybody elses. We laid out the system. And in 75 years, the biggest loss was 3. 95 . Its been right 85 of the time. And it has no leveraged. We call it all seasons. I put in the book, a bunch of friends make this an investment. You can go to the library for free and get his formula. 15 minutes a year, average 10 return. You got to tell people the formula. Its a little more complex than that. But ill tell you last month when we saw the market give up all its gains, his formula went up. Right now its just at 13 . Just above the market barely right now. Even after the market had this huge return. It takes its the smoothest ride ive ever seen or anybody who ive taken through it has seen over the longterm. This is not based on knowing the market. His whole theory about all weather is if you design this, youre going to do well in any season. What do you invest in personally . I have a huge portfolio of all seasons. After i left him, i said im not idiot. I invest in a variety of real estate elements. I love Senior Housing because its a demographic wave thats coming. Are you actively trading every day . I dont trade. Im an investor, not a trader. Thank you for being here. Thanks for having me. The book money master the game. Appreciate it. Thanks. Up next, a new reason to make a run for the border. I dont need a new reason. Taco bell has a new menu item. They put fritos on everything now. Yeah. There was a shell made out of it. Which is fritos or bacon. Were going to check it out when squawk box comes right back. Then theres trusting your vehicle maintenance to ford service confidence. Our expertise, technology, and high quality parts means your peace of mind. 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If you have any sudden decrease or loss in hearing or vision, or any allergic reactions like 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 free 30tablet trial. We have food to watch. How about a taco that you can dip . Oh, man. Yes. Thats the sans for me. Taco bell introducing the rolled chicken taco thats crunchy and designed for dipping. It there looks like one of those chimichanga things. No. Yeah. Taquito. Rob, my man. Yeah. There will be a choice of five sauces like spicy ranch i dont know if i can get through this. Salsa, guacamole, nacho cheese, and reduced fat sour cream. Why bother with the reduced fat in sour cream . Youll be able too dip your own starting november 20th just in time for thanksgiving. Brought to you by taco bell. I mean, what was the story . It was for me. Theres no point to it. It will be ready at that point. Andrew, have you but you did perk up. I totally did. I love this stuff. I admit it. Taco bell is the best. It is. Ive said it best, the worst mexican food is great. Its an old expression about that. That the worst mexican food i thought you made that up . I did. Its an old expression he made up. Up next, were going to talk about when activists attack. Investors like ackman are the heads of the hedge fund world. Well find out more after this. And potpreneurs gathering for the business conference and expo. Were going to check out the growing trends at the industrys biggest trade show. Squawk box will be right back. Opportunities arent always obvious. Sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Whale watching. The latest on the biggest activist investors. Their holdings and whether or not theyre hurting or helping companies. An eye in the sky. The government using small planes to track cell phones and collect data. Is it an invasion of privacy or Homeland Security . Plus candy is dandy but regulation is a killer. A look how edible marijuana is under serious scrutiny as the final hour of squawk box begins right now. All right. Welcome back to squawk box, everybody. This is cnbc, first in business worldwide. Im becky quick along with joe kernen and andrew ross sorkin. Check this out and listen closely. An unusual weather phenomenon hitting northeastern ohio. Thunder snow. Wow. Thats cool. You hear thunder occasionally. Thats cool. This was the first snow of the season. A lakeeffect Snow Advisory is in the area until 9 00 a. M. Tomorrow. The rest of the nation dealing with serious cold temperatures as well. Very early in the season. 20s and 30s in most of the country. Take a look at that map. Chill goes all the way down to florida and texas. Okay. Heres whats happening at this hour. Good news out of europe. The economy will growing more than expected in the third quarter. Most notably germany not falling into recession. Also considering a proxy contest at that company after negotiations over board seats broke down yesterday. And nelson peltz trian upping its holdings. The beverage giant has rejected trians attempts. Activists are the rock stars of the hedge fund world. Take a look at the average returns on each activist move by some of the big names. Bill ackman, nelson peltz, dan luke have all made serious money. The returns have been positive across the board. Some times they doubled their investments. The question is does that strategy pay off for investors as well. Whether or not the activists win or lose, you still pay. Joining us with more in what has been a busy year, ken squire. Thanks for being here today. Thanks for having me. Activists used to get a lot of attention. But now they get massive attention. Why is that . The funds have gotten much bigger. They got a lot bigger and its become a respected strategy in the investment world. The success of it in the returns has caused allocators to start putting more money in. Now theres seven or eight guys with over 10 billion. And the Institutional Investors are supporting them more, theyre talking with them more. Thats leading to them having a lot more power. More money means bigger targets too. So these guys are going after names that we know at this point. Exactly. And look at your leadin. You talked about pepsi. You talked about dow chemical. You talked about dupont. That was unheard of ten years ago. Where you could go within 1 of the common stock and really affect change. You know, value got a seed at microsoft. That would have never happened ten years ago. Is this for the good or for the bad of the investing world . Or does it depend on a casebycase basis . Activism is like any other strategy. Theres a lot thats good to it and other guys that arent so good at it. Especially now when everyone is trying to become an activist. The activists are given choices. Theyre giving shareholders choices as to, you know, ask the managements plan and what their plan is. Activists dont have any power without the majority of shareholders supporting them. Its generally a good thing. Has it been a good thing to be an investor in these funds . These guys have been going great. Their activist situations which we follow have been outperforming the markets especially these big guys for years. When you think about it, these are the most public, largest positions of some of the best investors. And, you know, so theyre devoting a lot of resources to that. A decade from now, do you think that the business of activism would be so institutionalized that black rock would be considered an activist or even the activist label will disappear because everyone will finally start thinking on their own rather than necessarily just sort of voting with management which is sort of what most of the big institutions have done for a long time . I think a decade is not going to happen in ten years. I think these guys dont move that quickly. Its very difficult even today to get, you know, still a lot of big portfolio managements for the big fupds feel theyre going to lose access to management if they even support an activist. I think its going to take longer than that. I think we will get there probably one day. I couldnt help notice bill at the top there, if youre able to partner up that helps to get to 106 . Doesnt it . If youre able to sort of push the limits and raise eyebrows. I mean, you have basically the government looking at is this legal . Do we need to do something here now . Thats a pretty good strategy if you can get away with it. Its a great strategy. There was as people said well lawyered. And it looks to be legal. And to your point, will it be legal a year or two from now, well see. His 106 was the main factor and that was his general growth. He still has done very, very well. What is that measure . He has a lot of funds. Is that all the funds together . No. General growth was five years ago. This goes back to day one. Every filing hes done. Thats what that measures. Okay. So are there situations we led into this that youre going to pay whether the activist does well or not. Are there times this investor doesnt do well . There are situations that dont work out. You think of jcpenney. Not everybody is going to be target. Not everybodys going to youre not going to win 100 of the time. Nobody has all winners, but act iivism because its so high profile in public, your winners are high profile and your losers become high profile as well. Is that a situation you should look for someone who has a fund that is continual. Some of those are new funds he opens for every one. If you invest with him at all of those, youre okay. If youre investing one at a time, you could be a winner or a loser. I wouldnt recommend investings one at a time. Every one of his big positions have been fine. If there are people watching on tv who are not invested in these funds, how can you piggyback on the trade or should you even try . Its tough to piggyback on any individual trade. As you know, youre teeing this up nicely for me but i have a mutual fund that invests in all the best 13 ds. So you can get exposure to every activist and style and not piggyback on just one trade. Although those filings come out, everybody finds out at the same time. Yeah. Theres a huge pop. And after the pop is when we get in. But a pop on average is 2. 6 . 13d has been beaten the s p by 15 . Whats the return on whats the rate of return on your fund . Weve been around three years. This will be our third full year. Our first year we were up 21 versus 16 for the s p. Last year we were up 36. 5 net of our fees versus 32 for the s p. Right now were up around 11. 5 . So weve been outperforming since inception. How do you pick which ones are the best ones . Just based on track records . Its based on track record, the sector, and what the track record is there. And most importantly its based on what their chance of activist success are. Who are the other shareholders. Are they likely to support them. What are their chances of activist success . Okay. You think that works in a down market too . I do. I think it works it doesnt work that great in a selloff market. You know, for that short period. That generally bounces back. The dow markets, you know, i think it even works better because you cant rely on the markets to create value and create returns. You really need a catalyst to outperform in down markets. Thanks for coming in today. Ken squire. Thank you. Were also watching oil this morning. The iea showing no signs of end bing suggesting that week demand in the strong dollar and Booming Oil Production could signal a new era. Touching its lowest price in more than four years. This morning were now looking at this opec meeting in vienna thats going to be coming up later this month. And coming up here next, former Council Chair and harvard economics professor marty fe feldstein. On the state of the economy. Check it out. Only two weeks until the unofficial start of the Holiday Shopping season. Thats called black friday. Well get the latest retail sales data point. The numbers are out at 8 30. So stay tuned. Squawk box will be right back. O hidden fees on savings accounts . Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees, from the bank where no branches equals great rates. Ever since we launched snapshot, my life has been positively craycray. Whats snapshot, you ask . Only a revolutionary tool that can save you bigtime. Just plug it in, and the better you drive, the more cash youll stash. Switching to progressive can already save ye 500. Snapshot could save ye even more. Meat maiden bringeth to me thine spiciest wings of buffalo. So i can reach ally bank 24 7, but there are24 7branches . Its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. And often even more. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 89. 95 a month. Comcast business. Built for business. Welcome back to squawk box this morning. Lets take a look at stocks on the move. Herbalife, a fraud case. He just found out about those charges in a comment to our own scott last night, saying it first became aware of the situation just two days ago. Also nordstroms beating on both the top and bottom line. Luxury retailer did cut its full year outlook. Lets get to one of our very own squawk market masters for his take on a lot of things. The jobs, the economy. Marty feldstein is former council of economic ood visors chairman under president reagan. Great to have you. We havent talked to you since the qe exit was finalized. At this point i know youre watching things closely. So far, so good, is that how we should characterize it . And the next step is the first rate increase, i guess. Certainly so far so good. The economy is, i think, finally broken out of the slow growth the last couple years. But now the feds big challenge is to get Interest Rates back up to normal levels without upsetting the apple card. A lot of people and you to some extent and you dont have to be a student of history to understand that when you do something for as long as the fed did it and in such a grand fashion, that there may be some things happening you dont know about that could come back to harm you in the future. How long do we have to wait before we know that were definitely that its all clear . And is it possible if we did this in a vacuum, just our central bank without the rest of the world doing it as well, i could see it might be a problem. But is it possible they can escape this extraordinary action and not have anything come back to bite us . Well, i hope that we can escape it, but i worry that these exceptionally low Interest Rates are driving investors and lenders to take all kinds of risks to pick up some yield. And thats how we can get in trouble again. I do too. But i the way that were looking for it to come back and hurt us is through inflation. And im not saying i dont know whether thats going to happen. It can come quickly. We know that. It can seem very worrying about deflation. Maybe it can happen in a way we dont know about. Its not inflation im most worried about. Im more worried about this financial risk taking thats going on. If the economy slows down more than we expect, well, then a lot of these highrisk loans, these investments in low grade bonds and the like, they could get in serious trouble. And if the economy picks up speed and Interest Rates rise enough, well, then some of those borrowers are not going to be able to repay their loans. So its a kind of risky balance thats the result of having this long period of very low Interest Rates. Every time in the last four years or so that we thought the economy was moving into a higher gear, it seemed like we were disappointed to some extent. This time it seems like were onto something in terms of being positive. Whats different this time, do you think . What was the missing ingredient . Well, what happened the middle of last year was the head winds we were facing finally stopped. We were no longer raising taxes. No longer raising the payroll tax. We didnt have a worry about a Government Shutdown anymore. All of that was taken away. And at the same time the quantitative easing did what bernanke said it would do. That is push up equity. We saw a 13 increase in share prices. That raised Household Wealth by 10 trillion. So thats giving consumers the confidence to go out and spend. Business says we can afford to hire. All those things have fallen into place starting with the middle of last year. So if you were able to talk to the senate and house and president and they say you get one wish and were going to sign off on it. We want more jobs, highpaying jobs. We want wages to go up. Whats the one thing you would ask them to do to help us along . I think were on the right track for most of that to happen. If i have one wish with the president and the congress, its to look to the longer term fiscal problems with ef. The fact that we have doubled the size of the National Debt relative to gdp in the last decade. And while its stable for a little while, that is going to start rising. The debt is going to start rising and head towards 100 some time after the end of this decade. It doesnt take heroic actions, but it takes slowing down the rise and sbielment spending. Perhaps picking up some revenue by closing some tax loopholes. And that could be done by lowering marginal tax rates. Seems like thats on the back burner. Not all of a sudden on the back burner. I think its on the back burner until after the next president ial election. All right. Professor feldstein, appreciate you coming on today as a squawk market master. I was taking notes, writing things down. Thank you. Well see you. Good being you. Quick story before we go. Jenny rometty has her short game looking down. She has been accepted as a member of augusta masters. Wait a minute. This years member invites went out, apparently. Didnt get one . You got to check your mail. Again. I moved recently. I moved. Maybe do you have a forwarding address . I dont know whether they have that . You know what . Hope springs eternal. Im going check with the post office. Anyway, shes just the third female member of the prestigious club. Remember people talked about when she went in for paul mesano. The masters has the three greatest sponsors. Exxon, at t, and ibm. And the ceo of ibm is almost always a member. So there was some talk that maybe shell be the first female member. You know the way Augusta National sort of does you know, the board will make its own decisions and they invited condi rice in first. And now it has happened and ginni rometty, now shes a member. Right. Which ive said all along shes been good at trying to and she might be on the nominating committee next year at augusta. In a couple minutes the ceo of taylormade ben sharpe will be joining us. Coming up, sears pulling out a secret weapon in canada this holiday season. Mike myers teaming up with his brother for a funny ad. Well show you after the break. And later, an eye and ear in the sky. The government tracking criminals and others in the secret Program Using small planes and fake cell phone signals. And the story, weve got it straight ahead. Health can change in a minute. So cvs health is changing healthcare. Making it more accessible and affordable, with over 900 locations for walkin medical care. And more on the way. Minuteclinic. Another innovation from cvs health. Because health is everything. 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. Its time to get to work are finally over, fixing our longterm National Debt to help build a stronger economy. With a solid fiscal foundation, we can create more jobs, invest more in innovation and infrastructure,tive, giving our kids a better future. A bipartisan solution to our longterm debt means more growth today, more opportunity tomorrow. And the time to start is now. Sears canada has a new pitch man. Pulling out a new secret weapon in a celebrity connection. Pete myers has worked at sears canada for 32 years. Turns out he has a brother who many people might know. Yeah, mike myers is that who. Comically refers to the retailers problems. Here it is. Do you know anything about the Retail Business . Not a lot. Just that sears canada has to alter the trajectory of its business model. But that would be a wild guess. More or less. Are you going to do the tagline . To this commercial only been shown in canada, sure. Come see the softer side of sears we dont use that anymore. Boo. How about sears canada, my brother works there. Youre an idiot. But that wasnt the brother. Was the brother in the thing . Am i an idiot . I assumed it was. Thats the brother . They dont look alike. Yeah, they dont look alike. At all. That was my only i kept looking at that guy thinking, is that the brother . Apparently he is, i guess. Wheres mike . I mean, those are two iconic characters he created. Actually three, really. Wayne and garth obviously. And then the you know whos the other guy . Behave. Austin powers. There you have it. He had a lot of remember the coffee class. Like buttuh. Huge movies where sequels were made. Do we need another waynes world or austin powers . Austin powers, i think. See. They dont seem to look alike. They kind of do a little bit. I mean, the hair doesnt, obviously. I dont know. When we come back this morning, well be talking about october retail sales. Well get those figures. Also later, adidas missing the green due to a dropoff in business at taylormade. How the ceo plans to get golf growing again in 2015. Right now as we head into break, take a look at the u. S. Equity futures. Mixed at this point. receptionist gunderman group. Gunderman group is growing. Getting in a groove. Growth is gratifying. Goal is to grow. Gotta get greater growth. I just talked to ups. They got expert advise, special discounts, new technologies. Like smart pick ups. Theyll only show up when you print a label and its automatic. We save time and money. Time . Money . Time and money. Awesome. Awesome awesome awesome awesome all awesome i love logistics. For that moment, where right place meets right time. And when i find it i go for it. announcer at scottrade, we share your passion for trading. Thats why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so youre always connected, wherever you are. Because at scottrade, our passion is to power yours. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Welcome back, everybody. The dow closing at a new high yesterday. If you check out this futures this morning, it looks mixed at this point. Well have to see more about these numbers. Right now the futures again as i said mixed. We are just a few seconds away from retail sales and import prices from october. Rick santelli standing by with those numbers. Breaking news. October retail news up a bit better than expected. No revision on last months. Down. 3. Lets take out all the important things and see which is really the dynamic moving. If we take out autos still up 3 . Take out autos and gasoline, up. 6. So that gives you some clues. They have this group that groups everything together. That number is. 6. A full. 2 better than we were anticipating. Now, the only revision i see is autos and gas last time was down. 1, now its up. 1. So the retail sales data is better than expected. Not bad at all. Could be bigger, but everything can be bigger. Lets look at import prices also from october. And one would suspect that thered be a little pressure in that area. And if we look headline month over month, down 1. 3. Last month down. 5. Added a tenth. Down. 6. Lets look at october and put prices year over year. They were down 1. 8. And if you look at last month, they really added to it. Originally down. Let me get that again. Its down 1. 8 year over year. I dont see any surprises. On the import side. Most likely importing a lot less energy. I know everybodys saying it was the eia. In my book it was patty at cnbc who called me early at cnbc saying were now producing more than 9 Million Barrels a day, domestic crude production. Hooray, america. It is the best pace since march of 1986. In my book thats 28. 5 years. Hopefully well keep coming back to the dawn of rockefeller time back to you. Yeah. And you got friends that trade oil, im sure, dont you . Oh, absolutely. Most of them have actually survived. But down here we have a saying. If its good for america and not good for traders, too bad. Right. Thats what ive been saying for awhile too. Did you see that oped by cochran at the university of chicago, the booth school . Oh, my god. Deflation really isnt as bad as some want you to think. I did see that. You know how long ive been on that soap box . Since my hairline was down to here the first time i started talking about that. When powerful elite highly educated people have any boogiemans at all, avoid anything that comes out of their mouths for the most part. You know what . A conversation is better than a fear factor. All right. Thank you, rick. Rick santelli. The wall street journal is reporting that the Justice Department is gathering data from thousands of cell phone using devices. On airplanes and it mimics cell towers. Joining us now with more on the story. Eamon . What theyre reporting on is a heretofore unknown. What theyre doing is flying cessna aircraft with what are called mz catchers. They are cell phone detecters that can fly over metropolitan areas and capture data on thousands of different cell phones at any one time. The idea being to look for criminals and people that are on their watch list. See if they can identify the cell phones of those people. But theyre flying these aircraft over metro areas. They can capture a lot of innocent american data as well. What the wall street journal is reporting is the department of justice told them that everything that theyre doing here is completely legal and complies with federal law. But of course the concern amongst civil libertarians is that this is going to be a potential for vast abuse here. If somebody has the potential to catch that much cell phone data on average americans. The way this works is your cell phone at all times is out there trying to connect to a cell phone tower. If theres a device out there and mimics a cell phone tower, your phone will connect to it and transmit to that device without you being aware to it. Thats what thaez mz catchers are. They capture data off the phone and theyre sorting out the data of the people they dont need and tracking the ones they do need. Everything on this story coming from the journal. We emailed the justice for their comment of it and they have not gotten back to us. I need to write this stuff down. After the nsa stuff, i dont figure anything isnt being looked at at this point. Thats probably a safe bet. And whats so interesting about this is that its everything on your phone that can be extracted by these mz catchers. Its not just the metadata in the snowden revelations we were talking about, but your pictures, your gps, everything youre searching on the web. All the stuff on your phone can be sucked down. Just to clarify two points. One is in the case of the nsa, they were collecting vast amounts of data and then trying to pinpoint specific targets. My understanding in this plr case is because the cost of putting these planes in the air, theyre only putting them in the air if they know theres more than one specific target and theyre looking just for those targets. Does that change the dynamic of how were supposed to think about this . It definitely does. What youre going to hear from Law Enforcement on this is how valuable a technique this is in terms of tracking down bad guys theyre looking for inside the United States. But i think the difference in the story here between the snowden revelations and this is that this would appear to be entirely domestic nap is, this is americans cell phone data being captured. And the potential is here its not just metadata, its actually conversations. But, you know, the fbi would tell you they have to get a court order and a warrant. So thats the tradeoff here. How much privacy are people willing to give up in exchange for the effectiveness of some of these Law Enforcement programs. Okay. All right. Thank you. You bet. See you later. The golf Equipment Market in the rough a little bit. Adidas latest results feeling a weakness. Its taylormade line. Dominic chu is with the companys new ceo whos unveiling the 2015 product line. Dom . Thats right. So, joe, taylormade adidas golf is part of adidas, the apparel giant. Theyve been one of the underperformers and needs to right itself. The guy whos going to do it is my guest now. Ben sharpe, the ceo of taylormade adidas golf. Thank you so much for joining us here on squawk box. Can we talk a lit bit about equipment . Because you guys are the big gorilla, if you will, in this business. What is it about this new equipment line that makes you think you can get golfers to go out and buy and spend their hard earning money . Well, its been a combination of a lot of hard work with our designers and our engineers. But also our Marketing Department to really understand what the golfer is asking for today. And bring them technology that can help them play the game. And message it in a way to make them want to play. What exactly is new about these clubs that golfers need to get it . So the products we unveiled this week are three product irons. What that allows is a bigger sweeter spot on the face to allow you know the average golfer who does mishit it a fair amount to be able to get more distance off their mishits. And ultimately play a better game. One of the problems with the industry right now is there is an inventory glut. Its something that adidas ceo said they need to address. What exactly is wrong with the inventory levels in the market right now . And what is taylormade adidas golf doing . So what weve seen in the last 18 months is that participation in the sport has continued to decline. And decline for a number of reasons. The last two starts of the season, weather has been a challenge and its difficult to hit a white ball around a white field. And as a result the equipment business, a lot of people buy their equipment at the start of the year. The equipment business has struggled. But also we have to take responsibilities ourselves as well. We have to look at the products we brought to market over the last year. They havent resonated with the golfer as much as previous products have. Were really excited about what were bringing to the market in 2015. I think we can have a very strong year. There are many golf equipment executives out there who feel youre in a hot seat right now. Youve got a precarious spot about trying to right a ship. What do you plan to do over the next year or two to make sure you return this unit to profitability . Firstly i wouldnt want it any other way. I relish the challenge. And the company i represent is, i believe, the best company in golf. I spent the last hundred days getting into the market and listening to what people want from our company. Listening to the media, listening to our customers, but most importantly listening to the golfers. And through that period of time weve developed a Business Plan which we call the 3. 0 playbook. Where were really looking at spom pillars about how were going to build our business. And the most important is putting the golfer at the core of all the decisions we make. Then we want to make sure we bring great innovative products. With great, strong story telling that resonates with that golfer. And then find a better way in how we sell those products. How we represent ourselves so we dont have the inventory glut. So if you talk about the way youre going to approach this, it sounds as though as a Brand Company you already have a large presence in golf . What are you looking for that companys overall feel to get people to get back into the game of golf . I think the whole industry has a responsibility to get people back into the sport. And certainly we will want to support a lot of those initiatives about how we can attract new golfers or retain golfers into the sport. The first thing i think we need to do is just Start Talking positively again. I mean, were talking about challenges in the golf industry. And weve heard those challenges over the last 12 to 18 months. We have 20 Million People playing golf in the United States. We have nearly 50 Million People playing it around the world. It is a healthy sport. Yes, can it get better . Yes, of course it can. But what we want to do is make sure its through our products and through our messaging that were engaging people again. So when they see us, they want to go and pick up the game. What do you tell a company like Dicks Sporting Goods or the ceo of Dicks Sporting Goods or any other large golf retailer out there . What do you tell those vendors who sell your products about what it is you will do with them to help manage their inventory levels . So that process has really started before i actually took the seat back in june. We were over inventoried. Its fot just a taylormade issue. Its a golf issue. One of the things we havent done this year is launch another product. Weve taken the responsible stance in trying to flush this product through. Were going to continue to do that through the balance of this year. So when the new products we have showcased this week come to market, theyre doing it with the inventory in a better place than it was going into 2014. So a leadership position in inventory is how youre going to help the game of golf . They rely or us to have a great year. Thank you so much. Back over to you guys. Dom, i think i can help. I dont know whether youre listening closely, but you know where he said were going to help make it so your mishits, you hit them much further. And i think thats one of the problems with me. I find myself much further into the woods at times. Where before id be right on the edge of the woods or just barely out of bounds. No, i mean, i cant even its gone. I dont want my mishits to go 400 yards. I see what youre saying. Ben and i were talking before the segment here how many we hit. I dont know how many you hits. Im lucky if i hit one in two rounds. Maybe this technology is going to work. Like a two iron. I can hit every time. Just flush. I dont think ive missed one. Youre one of the few people who can hit a two iron, joe. Yeah. Read sarcasm there. Thank you dom and ben. Ive got an eight hybrid. Anyway. I cant hit at all. Coming up next, sex, drugs, and rock and roll. Business stories in each of those categories. These are some crazy stories. Squawk box coming back in just a moment. So ally bank really has no hidden fees on savings accounts . Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees, from the bank where no branches equals great rates. So i can reach ally bank 24 7, but there are24 7branches . Its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. With the marijuana business booming in colorado, there continues to be a segment of the business thats struggling from frequent regulatory changes. Edibles. Companies producing these are having a tough time. Kate rogers joins us from the National Marijuana business conference. That is the only conference for potpreneurs. What did you find so far . Thats right. This year theres about 3,000 attendees. Last year they only had about 1,000 at the conference. As you mentioned, these Edibles Companies struggling with regulatory changes. We chatted with this company. They make cannabis infused products. He says thanks to colorados passing of leaguization in january, in six hours they sold more product than they sold in the entire month of november the year prior. Take a listen. The adult use consumers showed up in the state of colorado and clearly has a v voracious appetite for these products. But thanks to the changes, theyre having to update their dosage information and packaging which is costly for a small business. These emergency rules are going to cost my company between 200,000 and 300,000 having to retool all the packages, redoing all the labeling and in some cases scrapping products that just are not going to survive. Now, becky, that is a huge hit for a small company. And tripp says its something they cant budget for. With that being said, the biggest struggle within the industry is access to normal banking relationships. Its oftentimes all cash business and they have a lot of product on hand. Tripp walks around with a security guard. Hes got him here at the conference with him. Well tell you more about the security concerns and how a Cottage Industry is helping these marijuana entrepreneurs. Its odd this would be in las vegas. Are they even allowed to eat any of the edibles they show up with there . No. The conference has a really, really strict policy on any live product being here. Theyre not allowed to have it. That being said, we have heard of some 420 parties cropping up around the area. We havent been to any, but theres talk of them. Youd think theyd have that in denver or something this time around. It would make more sense. Maybe next year. Everybody obeys all the laws in las vegas. You cant even put the product out where youre talking to people. The whole idea of edible pot, how do you monitor dosage . What if you leave some around and some kid sees it and thinks its candy. Or your dog. At least when youre smoking you got to roll it and light it up. You know what youre doing. This sounds no wonder its a regulatory nightmare. I cant imagine. Right . It really is. I mean, so these for example, they have about 40 milligrams of thc in some of them. Normal dosage is only 10 milligrams of thc. Its up to you to abide by those regulations so you dont have a situation on your hands. Crazy. Its a new world. It really is. I thought i knew about things, but i dont. Kate, thank you. In rock and roll news, kid rock scheduling a big summer 2015 tour. Hes a friend of the show. Totally slammed madonna when he was on. His album first kiss set for release december 24th. Produced by mr. Rock himself. A single as well as accompanying video are scheduled the beginning of the year. The big summer tour with rocks twisted brown trucker brand is also in the works. New to me. Rock said about writing and recording first kiss soon after returning home from his 20 best night ever tour was followed by a release of a 2012 lp. Up next, jim cramer from the floor of the new york stock exchange. So ally bank really has no hidden fees on savings accounts . Thats right. Its just that im worried about you know hidden things. Ok, whys that . No hidden fees, from the bank where no branches equals great rates. I research. I dig. And dig some trader more. Search. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. So i can reach ally bank 24 7, but there are24 7branches . Its just im a little reluctant to try new things. Whats wrong with trying new things . Feel that in your muscles . Yeah. I do. Try a new way to bank, where no branches equals great rates. Im just looking over the company bills. Up . Is that what we pay for internet . Yup. Dsl is about 90 bucks a month. Thats funny, for that price with comcast business, i think you get like 50 megabits. Wow thats fast. Personally, i prefer a slow internet. There is something about the sweet meditative glow of a loading website. Dont listen to the naysayer. Switch to comcast Business Today and get 50 megabits per second for 89. 95. Comcast business. Built for business. What would help is simply being able to recognize a fair price. Thats never really been possible. But along comes a radically new way to buy a car, called truecar. Now it is. Truecar has pricing data on every make and model, so all you have to do is search for the car you want, there it is. Now youre an expert in less than a minute. This is how car buying was always meant to be. This is truecar. Lets get down to the new york stock exchange. Jim cramer joins us now. Germany wasnt so bad and europe wasnt bad, yet oil is well below 80. Id like to know for sure that its just supply so we can really embrace it. We get data points that seem to indicate that. Other than china, we have supply. There is a lot of pipe being put in now that is sending Oil Everywhere into the United States from canada. I know keystone looks like thats the keystone of the whole issue, but its not. There is plenty of work around. We are a big pressure point. We have excess supply everywhere. A lot of the Big Oil Companies set up a big pack to send oil overseas. Its stuck here and we are bringing down the world price. Will you put Virgin America into your Charitable Trust . No. His records too mixed. I heard what phil said. I happen to like the airlines. I hike spirit. I like what american has done. Doug parker has done a great job. They are uniquely benefitting from this oil situation. They are putting up good numbers. All right, jim. Thanks. Coming up, do you use lift for a ride home from the bar . Maybe. Now a new service is focusing on business travel. When change is in the air you see things in a whole new way. Its in this spirit that ing u. S. Is becoming a new kind of company. Ing u. S. Is now voya. Changing the way you think of retirement. What if we finally had that would be amazing. Hey, what if we took down this wall . What if this was my art studio . What if we were preapproved . Shut up from finding to financing, howd you do that . Zillow. For tapping into a wealth of experience. For access to one of the top Wealth Management firms in the country. For a team of Financial Professionals who provide customized solutions. For all of your Wealth Management and retirement goals, discover how pnc Wealth Management can help you achieve. Visit pnc. Com wealthsolutions to find out more. Welcome back to squawk box. In july, uber launched a business oriented version of its ridecarrying service. Now lyft announcing a lyft for work program, designed to let Companies Purchase and give credits for commuting purposes. Lyft brought on 29 partners including adobe and yelp. They can issue their companies a monthly credit balance and be applied exclusively to rides to and from the office. Businesses can list specific Company Events for credit use. Lyft will be announcing more partners in the very near future. There you get the pink mustache for november. Theres a lot of excitement in a parisian suburb. A tiger was spotted near disneyland paris. Word is this is actually just a big cat. The animal was seen by a woman who snapped a couple of photos of the animal on the hill. After police warned people to stay indoors. Parents pushed to pick their children up from school and it was just a cat. Have a great weekend. See you monday. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer. David faber is off. M a the star of the show on news of this halliburton tieup. Retail sales did not disappoint. Ten year up to 2. 36. Oil is falling again, 74 and change on west texas. Even brent below 77. Our road map begins with mov