Transcripts For CNBC Squawk Box 20141118

Youtubes new service. She was on the cover of Time Magazine in, right . We just had the editor of that piece in last week. Loved her. It was a guy. Loved him, too. I have to say, well, the editor of Time Magazine is a woman. This was one of the deputy editors who say here. But taylor swift. That was friday. Remind me of things like that. The funny thing is, you can remember Everything Else forever, but i can remember childhood things, like back to when i was 3. Betty . No, becky. Thats just what some of our guests say. Taylor swift, i think, is a great role model for the kids. Im really glad shes out there. I am, too. Earnings are just out from dow component home depot. The company beating estimates by 2 cents. Revenue was above expectations, so was did 5. 2 increase in samestore sales. Home depot did say it has not set aside money for the costs related to that recent data breach. It says it cant yet estimate all of those expenses, but otherwise, good numbers across the board. Well see where that stock trades. Lets talk this morning, if we can, about some top market stories. Okay. Why dont we. Yeah. Take your time. Whats going on in japan . A little bit more cadence. One day after new gdp figures, japan officially falling into recession. The countrys Prime Minister gave stocks a shot in the arm. Abe announcing a delay in the second sales tax hike by 18 months. Were going to have more from our colleagues in tokyo on all this in just a couple of minutes. But first, remember, from 5 to 8 perls on the tax. Meantime in europe, better than expected sentiment data out of germany, giving stocks a boost. The bulls are welcoming the numbers after a recent sign suggesting the German Economy was slowing. Was that cadence okay . It was good. Someone asked me if japan need good or bad. Its like here. Last time they did qe, we were up 300 points. Arent we used to zero . The nikkei was down 3 , but the week before, it had been sitting at new multi year highs because of the expectation that they would be pushing back the sales tax increase, anyway. Turn it around today. 20year lows, yeah. Check out some of these stocks to watch this morning in the u. S. Gopro announcing its going to sell more than 10 million shares in a public offering. The news came in a regulatory filing. Edison and one of its units are buying first wind for 2. 4 billion. The deal is going to let sun edison enter the u. S. Wind power market. And edisons quarterly profits dropping as the company dealt with the losses spin off. Urban increased by marketing expenseses. Xilinx announces buy back and as a result, up 2. 4 thus far. The s p 500 closing at another new high. Take a look at where the futures are this morning. This tells you about how investors are dpeelg. We have not seen big swings in the stock market lately. It shows you a little bit of investor caution as were looking here. The benchmark index has moved less than 0. 1 in each of the last five sessions. The dow had one move since october. Well see where things have moved since october as we get closer to the opening bell. Oil prices, right now youll see oil prices are up slightly higher, up 342 cents. Brent crude sitting at 79. 50. Still below 80 a barrel. And check out Natural Gas Prices. As we mentioned earlier, Natural Gas Prices yesterday rising to their biggest oneday gain in nearly nine months. Check out where things stand right now at 4. 279. Take a look at what the tenyear note is doing at this point. The yield sitting at 2. 333 . Dollar this morning looks like it is down across the board. Euro is trading at 1. 252. Dollar yen, 116. 6 of 1. Yesterday the yen moving all the way up to 1 17 or the dollar moving to 117 yen. Also, gold prices at this point look like they are wow. Up 18 bucks. Thats a big move for gold. Back above 1200 to 1,201. 10 an ounce. Were going to go back to the top market story of the morning, japanese Prime Minister abe calling a snap election and scrapping that sales tax. Kaori enjoji joins us now. Good morning. Good morning. Well, the Prime Minister here in japan, shinzo abe formally announcing that he will postpone a tax consumption hike originally scheduled to happen by 18 months. But he says says by april 2018, the tax right will go higher. And using the slogan no taxation without representation, he said he was going to call an election because he wants to ask the public whether or not they are on board with some of the reform agenda that abe nomics so far has promised. The socalled third arrow that has been well, the third arrow that has been missing throughout the last two years. And you want to ask the public whether or not they say any other alternative. He says the economy is just too weak to weather another consumption tax hike at this point. Now, technically, he can delay a consumption tax and not call an election because election doesnt really need to be called until 2016. And so that is why political analysts are saying this is a move by the Prime Minister to solidify his power within his own party while his support ratings are high because, as you know, when hes tried to embark on some key reform measures, whether it be agricultural reform, tpp, hes run into a lot of resistance from within his party. So that would argue that this election, probably held on december 14th, is an attempt by the Prime Minister to do away with those. Now, its possible after this election they may lose the twothirds opposition. Theres less risk of that now than there was maybe several months ago. So i think at the end of the day, hes decided to postpone this consumption tax hike. It looks like hes done a deal with the business lobby, which is the kadondon. Im hearing that maybe even tomorrow they will announce an across the board wage hike. As you know, higher wages has been, really, a missing link in this whole reform process. Kaori, thank you. Yeah. Why was that thats an unexpected drop. Well, because they were looking for, i think, a gain of 2 . How does that happen . I dont know. That is what economists were expecting, but i think the government had to have some idea because those rumors started last week, that the sales tax hike was going to get put off and a snap government was going to last week. If you were abe and you knew that the purple income tax was like 50 or whatever and you knew it had been 20 years of just look, he said to nigfight ba. Thats why hes calling the snap election so he can say, look, my way is the right way and all you guys pushing me the other way will be voted out. You would think thoot public, of course. The consumption tax. Its a tax. Its like you hear ainge yellings singing ooh tax the s p 500 closing at a record for the 4 2nd time this year. We havent seen him since friday. Listen, do you remember carl win love carl quintanilla, but i love carl icahn, billionaire activist investor carl icahn. No, hes not fanning investor fever. Hes not. No one cares. He believes there will be a major correction in the next three to five years. Wow, okay. Thanks, carl. Was it three were four, five months ago when he said hes been saying this . Yeah. So were up from there. I can tell you, hes very smart, hes loaded, i love him. But 15 years ago he told me this was going to happen. So i was there. I know the man. The question is whether three years ago. Hes the Hedge Fund Manager and part of what he does is protect money from the downside. So youre always looking for that. While the market has moved from 5,000 to 18 thousand, hes never thought this the market i was was not overvalued. Thats all im telling you. Take take it for what its wor worth. So that doesnt mean hes not going to by right this time. Have we moved from a relatively undervalued situation to where stocks are either fairley valued or overvalued in your view . Our perspective is that were at fair values rights now. You have to fundamentally look at whats if trajectory for earnings, right . Corporate earnings have continued to be very, very good. We came into the Third Quarter looking for 4 year on year earnings growth. We got about 8. 5 . So you look at where the market is yeartodate. Were up about 11 , 12 . We really have not seen market multiples move up that much. Our view is that were fairley valued here and this is going to be all about corporate earnings will continue to look very good to us. And andrew lovefield, he says this all the time. Made a lot of money creating the corporate kiems mega mergers again popular on wall street and mine melds. Corporate managers arent always right. Sometimes they sell stocks at the wrong time or make wrong moves. But can we count on them being right that earnings are going to continue to be well, look, i dont think we have to count on them being right. Investors have been right. If we look by how acquirers have behaved this cycle, theyve gotten awarded for doing deals. And thats actually somewhat different than in prior cycles when the acquirers who were sometimes perceived as perhaps paying too much saw their stocks punished. But you look at mergers and acquisitions as a backward looking indicator, right . Youre not looking at it as a failure looking indicator. Does it matter where you are in the cycle to make that judgment . I think it completely matters where you are in the cycle to make that judgment. From our perspective, were really mid cycle. We havent seen a big, huge boost in Capital Spending yet. And theres still huge amounts of cash on the balance sheets. So many of these deals are highly strategic like the ones we saw yesterday, the two deals we saw yesterday were highly strategic deals. From our perspective, theres no reason not to trust the market and how were evaluating. But im going back and thinking back in 2007, 2008, i was thinking txu, depending on where you thought the cycle was at that time, you would have said, oh, this is another indicator of the great animal spirits and were off to the races and other people would have said were at the top. Yeah. And can i ask mark a question . Inge it is about an allocation of capital standpoint. And one of the things that is helping right now is because capital is so low. The leverage component is so large, the margin of error becomes so small that the risk increases dramatically. But at the moment, you think were so far from that . Well, i think theres youre going to see it on a deal by deal basis. Thats something well have to obviously watch very closely. Right now, what were watching, and lisa touched on this, at what point do Business Leaders become confident and say we want to spend and invest as opposed to doing it from an m a aspect. Thats the part we havent seen in terms of Business Leaders buying in and saying, we believe this is for real and that we want to invest in the future. Half the time, he works very hard to create the type of growth quickly that they need. And thats why theyre doing the m a. Absolutely. Its not a function of the fact that they dont want to invest in their own business. Its invest in their own business and get them to the other side as quickly as they think they need to. Youre exactly right. Its a time frame issue. In terms of voting on shortterm versus longterm, the m a address is the shortterm issue. Youre waiting for them to invest in their business itself . I would like to see it. I think thats what creates longterm value. All right. Must be more in dallas . Susan burns. The actual income is from mississippi but, you know, i dont think texas wants to claim it, but thats okay. Do you think Mississippi State was overrated . No, i dont. And im a Mississippi State fan, so oh, they were number one, but they were underdogs and they were number one. But, you know, its which one of the sharks . Mississippi state or thats ole miss. Tuscaloosa is a tough place to play. Well see. People go in there and walk out feeling very good. All right. Lets say hi to her. I will. She was one of our squawk one of our originals. All right. Thank you. Lisa, thank you. Thank you. Have you done jury duty . Ive done jury duty. Ive never been picked. Theres a lot of waiting. I cant really talk about it. All im going to say is its very gratifying and that i love this country. I love this country. And you look at the way this is one of the crown jewels of our system and that is a time by jury of your peers. And i looked around yesterday, and its hard work. Its hard to get these people together. No one wants to do it. Once you see democracy in action, it brought a tear to my eye. Theres not sanl person i saw there that didnt look like a well intentioned good person that would have done their very best to cancer all the evidence. And you told them that you wanted to be there, for the case . You told them that you wanted to be an unbias member of the jury . Like im saying, i cant discuss the actually details of why im not there, but so you were called into court . I was called into court. I did speak to the judge. I cant mention whether it was a i called this individual your honor. I cant give any details because its a big trial coming pup. Really . I cant really talk about it, but we do have things. Were going to d. C. , were doing some things with the business. So this has been a longterm trial. Exactly. But theres a lot of waiting around and its just that election, theres two things about that. Ride. All i can say is guilty. I dont care what the facts are or anything. But guilty and youre not getting off, fella. Hang em high. There you go. When we come back this hour, wall street reacts to home depot. Well talk to an analyst now. Coming up, comesport reports on the latest read sales heading into the critical shopping period. Coming up at 6 45 eastern, well be talking about education with former new York City Schools chancellor joel fein. Squawk box will be right back. For practically just your signature, you could drive home for the holidays in a germanengineered volkswagen. Like the sporty, advanced new jetta. And the 2015 motor trend car of the year allnew golf. If youre wishing for a new volkswagen this season. Just about all you need is a finely tuned. Pen. Hurry in and get zero due at signing, zero down, zero deposit, and zero first months payment on select new volkswagen models. 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. Welcome back. The total amount of money records from Bernie Madoffs ponzi skiem is nearly 10 billion. And the lawyer in charge has also brought in, i should mention, over 1 billion in legal fees for his handy work. Commission, 10 of the business. I dont know how you feel about that. Wow, thats a lot of money. Lets talk about home depot. We told but the results earlier this morning. It came in with estimates that were better than expected on both the top and the bottom line. It had Comp Store Sales better than expected. The retailer did note a 28 billion Third Quarter expense for that recent data breach, but said it cant estimate the total cost at this time. Joining us with his reaction is brian nagel, from oppenheimer and company. It looked like it was pretty good news. Why is the stock trading lower this morning . Good morning. I agree. I think it was a good record. There wasnt too much that was unexpected here. We saw another good Comp Store Sales out of home depot. I think the stock is reacting because theres nothing really new here. Shares had a big run lately. So, again, youre looking at the stock trading right now, 96. 70 is where we have the bid. The ask is 97. 89. That to me would suggest that people were looking for higher guidance, the company came in and affirmed guidance. Is that a disappointment . I dont think so. I think lets see how the stock trades through the day. Its still pretty early in the morning. Home depot, as theyve updated investors and customers with this data breach, weve talked about guidance a couple times through the quarter, so i dont think thats much of a surprise here. What do you think about the stock overall . What do you think about the prospects for the next 12 months . I like it here. I look around the environment. You were talking about weather. I think thats a big positive. This quick shift, if you will, to the Winter Weather i think will be a positive for home depot. But more important than that, i look at underlying home or housing data in the United States and even Consumer Spending data. I think the environment is Getting Better for home depot. As we look towards that, sort of say that peak selling season next spring, i think this will be quite good for home depot. So i think the stock sets up well here. You think the overall housing plays into it . I think so. If you look at the data direct correctly, were starting to see better sales data. This is the Second Quarter in a row that home depot has been almost best in breed, not just with Home Improvement, but with retailers. Remember last quarter . Everybody else was we were like, wow, what happened here . And sooner or later, you have to Say Something about frank blake, dont you . I think frai frank is one of the best ceos ive seen in the retail business. As i recall, home depot did much better last quarter than lowes did. It was just across the board with the Home Improvement guys, right . No, tease true. Home depot has been outperforming lowes for some time now. Lowes is doing well, but you will get an update on the results tomorrow morning. I think overall what this speaks to is the strength in this category. Frank looks like the guy in mayberry at the Hardware Store when you walk in who says, hey, neighbor, what are you doing . Come over here. What kind of job have you got . If he was waiting at every home depot with the orange apron, wouldnt you feel more comfortable going over there . I shop at home depot. Dont write me off like that. Youre not a lowes person . We have home depot cards, so youre a home depot yeah. Light bulbs . 23rd street. Actually, you know what i am . I am a pc richards man. Do you know what pc richards is . Electronics. They sell a lot of home goods. I just bought a new washing machine and dryer. Lg. You did . Yep. My maytag, which i thought was never supposed to break you couldnt get the maytag repairman . The whirl pool guy. Sorry, we digress. And so any of the key investors and founders people. All right. Thanks. Thank you. Something langone has told us before, too. Yeah. Things are different. The world has changed. It used to be every year we would play golf. We would try to play golf on thanksgiving and a lot of years we would play golf around thanksgiving and youre getting the quibble. Climate change. Until all this warming caused all this coldness, which, you know, all the snow and this year, it is not happening. Youre not playing golf on thanksgiving. No, with the warming causing all of these freezing temperatures. Coming up, why your favorite bottle of olive oil could cost you a pretty penny. Plus, get a jump start on the retail madness. With a first on cnbc tally from online sales. First, as we head to break, here is a look at yesterdays s p 500 winners and losers. 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. 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. Why the music . What happened . Futures are down . That was the music we played at the top. You didnt have your ear piece in. Natural gas and the weather. Its cold out. Its a little chilly if youre getting up early this morning. Look at the window. Welcome back. You dont get olive oil. A cool summer. All that warming. A cool summer in europe are taking a big bite out of the Olive Harvest in key regions. It threatens the plant. Output alone is looking at plunging. Yet we learned we may run out of chocolate in our lifetime. Demand is growing so fast and theres some problem with the cocoa production. They dont think they can keep up with demand in the next 102020 years. Is that a cookie or a candy . Cookie candy. Its childish, but if you say penis, maybe ill say penis howard. Anyway lets talk about the headlines this morning. Toyota planning to introduce its first mass market fuel sell car next month. The vehicle runs on hydrogen instead of gasoline. The automaker wants to copy the success of its preyum hybrid. The company cutting costs and investing in films, including the new spiderman film and former sac Portfolio Manager matthew martoma, hes going to order to begin serving his nineyear prison sentence for his Insider Trading conviction. Ecommerce sales jumped last month 15 compared to last year. Looking ahead, the company is now predicting this could be a record breaking Holiday Shopping season online. One reason is there is one extra day of shopping this year. Joining us now to take us inside the numbers is jan corfoni. I would be shocked if it wasnt a record breaking year. I think every year for the last 15 years its been a record breaking year in online sales. What are we talking about . Yeah. We think this year well see about 61 billion spend in november and december, which would be a growth rate of somewhere around 15. 5 . The thing thats different this year will be mobile. But beyond its role as a buying device, i think that were beginning to see the impact of mobile, having a negative effect on in store buying. Its very easy now for consumers to check prices while theyre in the store. And our daddy suggests the use of mobile devices is accelerating the channel from instore to overline. Are there things the retailers, the Delivery Companies are doing differently this time around, that the people that got burned wont trust it as late as they did in years past . Yeah. I think they mainly trace back to the fact that it was such a short shopping season. It was just 28 days between thanksgiving and christmas. What that did was caught a lot of variability in daytoday buying. For example, it boosted buying online on the weekends to the tune of 70 increases. And i think that that daily fluctuation caught the retailers and some of the shipping companies by surprise. I have no doubt they will be determined to not less it happen again next year. There are other things that can be taken into account. You would expect the same things for the big online retailers not promising it will get there in time for christmas if you dont order well in advance . Yeah, im sure theyre looking at that. Were seeing somewhere around 60 to 65 of all transactions now with free shipping. And its almost become the cost of doing business for the retailers. And i think that that parameters around that in terms of when you can expect to receive your gift, your purchase, i should say, is really something that the retailers are going to take really a close look at. Jan, thank you so much for joining us. Thank you. Still to come on squawk box this morning, were going to talk education with former new York City Schools chancellor joel cline. He says students need to spend a lot more time in the classroom. Hes got some Management Tips for us. Then at 7 00 eastern time, squawk box with the ceo of united airlines. And then later, bentleys chief executive is going to talk high end cars live from the los angeles auto show. Before we do all of that, lets take a look at whats happening in european markets right now. Were back in just a moment. 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. How couin jellyfish, protein impact Life Expectancy in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Welcome back, everybody. Right now its time for the squawk planner. At 8 30 eastern time, we get the october price index. At 10 00, its home builder sentiment. The cdc will hold an ebola hearing in washington. It will be in response to the public outbreak. Also in d. C. , freshmen will pose for a photo on the steps of the capital. Well see if theres any unusual poses in that. Right now, andrew, over to you. Big question, how can we cultivate better educators . Joe cli joe klein arg, author of the ne book lessons of hope, how to fix our schools is joining us. Were thrilled to have you back at the table. Thank you. Its good to be back. I key the this up before the commercial break to say theres some management lessons, not just the world about education, but theres questions about just the world of business. Absolutely. And one of the things that astonished me when i became a chancellor in 2002 is that the Public Sector seems to think that effective management is a bad idea. Its a business idea rather than the way to run an organization. So ill give you one example. I think the most important this education is the quality of individual school. You send your kid to a school, you dont send your kid to a school, thats all from the politicians and all that. And if youre going to have a great school, you need a great school leader, a great principal. And yet virtually no one focused on that issue in public education. They try to micromanage the principal, the rules from the union try to dictate everything that he did or she did. So one of the things we started with right from the beginning was the Leadership Academy that we really trained with a new generation of principal. And over the course of the eight years we gave more and more authority and greater and greater accountability. I want to talk about the Leadership Academy. This was an academy effectively of bringing new people into the program to run these schools. You could have taken the best teachers in the system and move them around . Absolutely. But the unions wouldnt allow you to do. Youre not allowed to move anybody around, no. So what you have to do and youre not even allowed to use incentives. So i was always short math and science teachers. Its the nature of the market. So if i wanted to get more math and science teachers, i would have to pay more in the private sector. In the public secretary we shall you cant do it. Its nuts. What do i do . I have a whole bunch of well intentioned people end up teaching math and science when they arent trained to teach math and science. Thats where its hardest to get good teachers. So the system doesnt realize that if you dont respond to rationale incentives, youre going to end up with all sorts of mistakes and the kids are going to pay for it. How much blame do you place on the unions or not . Is there a way to work with the unions . Its a yesno question. We did some important work for the unions for the first time we negotiated a contract. If i told you that you were the principal of a school, half the vacancies you have could be forced on you, you couldnt even interview them, talk to them, talk about basic management practices, if you cant assemble your team, how are you going to execute against your obligations . But we did some good materials. But too often i think the union is too protective for a status quo that i dont think is working for its own members. Just yesterday, i had a piece in usa today talking about lets make teaching into a real profession. The most iconic union leader ever pushed this idea. So i think there are lots of things we can do to move them forward. What do you say its not working for its members, either . Union if argument is its not working out for the kids. Its not working for the kids or the teachers. How is it not working for the teachers . Because i think the Teachers Want to be incentivized to do great things. I think they want to feel like theyre part of a respected profession. Too much teachers feel like theyre blamed for the problems in the system. Theres so much irrational rules in the system. It used to take us one incompetent teacher who was documented incompetent, it would say us 2 1 2 years and 300,000. We had to pay that person for 2 1 2 years to sit in something called a rubber room. How ridiculous is that . I dont think Teachers Wants to be a part of a system thats dysfunctional. So if you think about it, if you made teachers a prochgfession, y were responsible for setting Something Like a bar exam, the ed schools basically are not doing the work they need to do. So you have to reshift the whole thing. But i think if you look at country thats succeed, becky, you see the teachers are the most respected. In japan, theyre called sensei for respect of the learned profession. We need to get there. And the way they are going to get there is by the unions and the schools and everybody saying this system is not working. We lose half our teachers in the five five years. Any company that loses half its population in the fifty five years has to rethink things. You have a lot of people happily going into teaches in new york city. Theres an article, though, that suggested that those kids come out of school, they work in the teaching profession, but as you just said, they work in the teaching profession for four or five years and theres a remarkable time in part because they get burned out and in part because theyre going to Charter Schools and other places in a good way, theyre working 12, 14, 16 hours a day and there are some arguments being made that you actually do that seniority and some gray hair helps. How do you think about that balance . Theres no question seniority and gray hair or even bald hair or the absence of hair helps. But you have to do it sensibly. So what you need to do is not have a lock in where people are basically rewarded, but if they want to stay 10 or 15 years, they have a portable pension so they can move to another system. So we need to do this in an intelligence way. What we have right now is a false dichotomy. They stick in the system forever because at some point, the attraction of a pension becomes so compelling. And every other industry, you know how portable pensions, people can move from one job to another . Lets do it intelligencely. 401 k , right . Yeah, exactly. That way you dont get the kind of lock in effect. Theres no question you need senior teachers. Dont get me wrong. But you need the right mix and you need highly motivated senior teachers. I talk in the book about some of these teachers. You say, well, ive been here for 20 years. Theyre suggesting that theyre finished. And, you know, that kind of attitude becomes part of a culture. And to me, i always say everybody has to get better every day. Our kids need that. Is there a School System in the United States that you think is a worthy model . The model thats working, i think, right now, theres several doing good things, but the one thats most interesting is new orleans because they had a restart after katrina. So that is driven competition and the results, its a very tough school district. High poverty, lots and lots of kids who are struggling and theyre beginning to see results. But that was a reset from katrina. Thats right. But the basic principal of choice. The one thing i always think about, if you talk to everybody you know, nobody is going to say, ill go to the Neighborhood School where its good, bad or indifferent. Would gets stuck with one and done . The kids in the high needs communities, the poorest kids. In new york, we opened up almost 200 chapter schools under mayor bloomberg. Last year, for 20,000 charter spots, some 80,000 families, almost all africanamerican and latino applied. These parents know what they want. They want better schools. They dont get in, though. Thats why you need more charters. Whats going to happen in new york . The next thing, unfortunately i think Governor Cuomo is going to lead the way on this, they have a cap on chapters. Why . Because in the Public Sector, they dont want competition. Everything you talk about all day long is competition drives the economy. Like you said right at the very top, there are people with words like competition or Business Models or meritocracies or accountabilities. They dont like any were arguing still about whether the president is it good to have an effective ceo as president. That question now we question that, whether that is something that we need to do. How we cannot know at this point that accountability and someone having to answer for,. Its shocking. People think if you put a label on it and its business, that i mean, what andrew said before about seniority. Any organization that thinks that seniority is the altar you worship at rather than merit is going to get it backwards. That doesnt mean seniority doesnt matter. Theres a reason in baseball theres a rookie of the year and a most valuable player. Usually the rookie of the year is not the most valuable player. But theres lots of rookies of the year who are a lot better than senior people. Organizations that arent built on merit like joe says are organizations that pay a price. We are going to say thank you on that note. The book lessons of hope how to fix our schools. Go out and get it. Thank you. Appreciate to be with you guys. Thank you. Been at it for awhile. Baby steps, i guess. No its frustrating. We cant afford baby steps. Every day we read about inequality. You hear the American Dream is evaporating. Give kids a good education. You think its gotten better or worse . I think its Getting Better, but not moving fast enough. Were moving at baby steps. But weve got to accelerate it. We wouldnt tolerate it if our kids are in dead end schools. We shouldnt tolerate it for other peoples children. We care about their future and we want them to have a shot. Yet today kids in the bottom are locked in. Whats the greatest cure for that problem . Give kids a great education and a great opportunity. Right. And were not doing it. Thats why i call it lessons of hope. Although somebody told me i should have called it lessons of nope because of all the challenges. I know. Thats why i was asking. Thank you. Thanks a lot, guys. Still to come, United Continentals ceo. And later a shark tank success story. Group book allows users to upload books and get a bound book of those photos. If you think thats a good idea . Shutterflys founder thought so. He just bought it. As we head to break, check out yesterdays most clicked on stocks on cnbc. Not surprising, theres apple. Ameriprise asked people a simple question in retirement, will you outlive your money . Uhhh. No, that cant happen. 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Coming up, why home depot shares are under pressure this morning. Plus the news maker of the morning. Shares of united soaring more than 25 in the last month alone. Find out if low fuel prices and strong travel demand will keep business flying high. Squawk box returns in just a moment. 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. Taking off with united airlines. Lower fuel prices, larger fee revenue, a stock thats up more than 50 in a year. Ceo jeff smizik will tell us if theres turbulence on the horizon. The big chill. Plunging temperatures across america, blasts of snow. How will the weather impact the Energy Prices . A picture of shark tank success. Im all about making win win situations. Congratulations. Kevin oleary wanted a piece of groove book. Now shutterfly is swallowing the whole company. Mr. Wonderful and the ceos get into the squawk tank. 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. If you are trying to stay warm this morning, we have a story to remind you to spring is right around the corner. Maybe not right around the corner, but we are talking baseball. St. Louis signing giancarlo stanton. This is the biggest contract ever in sports, ever. The 25yearold led the National League in home runs before missing the last 17 games after getting hit in the face with a fastball. The contract works out to 154,000 a game. More shocking about the deal is the usually frugal marlins spending this much money is unheard of. Pitchers and catchers will report to spring training. You heard the figure how much that is for a game. Thats usually 168,000 a game whether he plays or not. For a long, long time. Really good work if you can get it. You have a problem with ceo pay but dont have a problem with this . Thank you, joseph. No . I mean, its okay . Hes 25. Free market. All right. Among todays other top market stories, one day after new gdp figures show that japan has officially fallen into recession, the countrys Prime Minister gives stocks a shot in the arm. Shinzo abe announcing the delay in the second sales tax hike by 18 months. Well have more from our colleagues in tokyo in a few minutes. You can see what happened to the nikkei. It gained back almost all the ground it had lost the day before. Take a look at whats been happening in europe this morning. Data out of germany. That gave stocks a boost there too. Up about by 1. 2 . The bulls are welcoming the numbers after recent signs suggested the German Economy was slowing. Very big concerns if that motor of europe actually slowed down. Check out whats happening we the dollar. Dollars down against the euro which is trading at 1. 2515. Also the 10year note at this point, looks like the yield is down around 2. 38 . The price of crude oil is slightly higher this morning. Up now only by about 11 cents to 75. 75 a barrel. Also look whats been happening with gold this morning. Cold is up by 16. Not sure whats cause the spike, but we have seen a few days of gains. Right now trading around 1,200 an ounce. Home depot beating the street. It was the 5. 2 increase that did that. Home depot did have a 28 million expense. But the recent data breach, they cant tell what it would be. Wall street journal reporting the chip maker will combine its production. To those who focus on mobile devices. Set to take effect in early 2015. Weve all seen gas prices. Low Energy Prices clearly front and center for the airlines as well. United continental looking to take advantage of jet fuel cost which fell 8 in october. The stock, check it out, its been flying high this year. Near an alltime high. Outperforming the s p 500 by almost 40 . Here with us on set, the president and chairman and ceo of united. What a long, strange trip its been for four years. It has, indeed. And now record profits in the Third Quarter. The Airline Index was up 33 . United continental is up 51 . So things at this point, your critics i dont know if theyre as loud as they used to be. You said im going to take this Great Airline continental and buy united. At this point im sure youd say it was worth it. Its been a long, strange trip. Its taken longer than i personally expected it to. We clearly have taken off now. Did you have a choice in the matter to allow continental to stay like it was . You had to bayou nieted with all of its myriad issues. You had to do it for size, did you not . We need ed to stay in that. If we had stayed as the old continental, we wouldnt be around today. All along i sort of thought its something you had to do. But there were issues with united at the time. And continental on the other hand but continental was great. There are always issues in every merger. Whenever you bring two companies together, theres technical issues, fleet issues, you name it. But thats what were paid to do when we do mergers is to bring two carriers together and produce something greater than either of us had done. You honestly think continental would be out of business by now if you hadnt . Maybe not out of business, but marginalized for sure. Its tough. Its very tough when youre a small what is remaining . Are you okay. This is the dawn of the new United Continental and its all clear sailing from here on out . What still remains . Its never all clear sailing in the airline business, but most of the tough issues are done. We have got a couple of things left without contracts. We have folks who maintain and flight attendants. Weve got smaller work groups already done. But most of the cheheavy liftins done. Were focused on who we are as united. How would you grade your integration relative to delta, northwest, american, which is still going in terms of its integration . Its still too early to tell on american. I would say that ours was tougher than deltas. Because deltas nonunionized. So it makes it more difficult bringing together unionized carriers. Id say they were similar to the old continental and old united. But weve made huge strides in culture. That brings up a great point. I fly united all the time. I fly out of newark here. I flew continental before that. I will say sometimes dealing with some of the legacy carriers, you have Customer Service represents, flight attendants, people who arent happy to see you to begin with. And already some of that is what they feel theyve gone through a rough time with the merger, things theyve lost along the way. You dont have the same when you fly jetblue. People who are new to this brand new area. As a customer, you feel sometimes that there is people have a chip on your shoulder before you even show up. I think thats changing quite a bit. And were doing a lot of things at united. Weve implemented a very Detailed Service standards. We actually have a firm that flies around thats rating us on those giving us data. Like a secret shopper type . We do. We have them on lots of airplanes domestically and nationally. We also offered buyouts. How do you change that culture . We offer buyouts for the tenured employees who would prefer to retire. We recently did one for the flight attendants. We expected to get about 2,000. Got 2,500. And i think thats healthy for them. Thatll give them a good chunk of change and they can retire. And its healthy for the company as well as for the service. You talked about it last week. Thats when we were with virgin america. Made that same point that when you dont have a lot of the legacy issues people feel like theyve been battered and bruised. By the way, jetblue is almost a legacy carrier themselves these days. Identify got to buy the biggest legacy carrier. United had more legacy issues than anyone else. Let me say, if this merger works as we get more profitable, as we have the cash to make investments in our employees and in training and technology, you begin to get a very positive sort of virtuous circle here. You see it in our Customer Satisfaction scores, on board the airplane, and were investing in break rooms for employees. Things that the Old Companies didnt do. And thats positive. Delta has a bunch of old old airlines arent necessarily bad. You look at airliners are not necessarily bad. You can retrofit all of them. Youve upgraded the fleet. Weve got a good modern fleet. But we also continue to invest in our existing aircraft. We retrofitted and are going to retrofit more. We can extend their life. We extended our 747s also. So you can. You can take an airplane that may be 15 or 16 years old and you can fly for another five or seven years. Thats good cap allocation. Nobody doesnt like the pods. Into the front of the plane i have a consumer question. Different type of consumer question about pricing. Which is one of the things that has happened. And its benefitted the companies the airline companies. Is that pricing has gone up considerably over the past several years. Despite the airlines saying that after the mergers, we wouldnt see the kind of price increases that i think we can say we have now. How much more do you think we have to go . Well, remember, in the old fractured airline industry, we used to lose money on every flight and tried to make it up on volume. That didnt work well for us. And what were doing now is pricing our products that we can so were a business. Used to be an industry. Now were a business. Now we can make money. Air travel is still a bargain. Its still a lot cheaper than it ought to be. Inflation adjusted, its very inexpensive. I will say i just looked up a flight to california on united. I could get it for 330 bucks still. Ill have to call and get that fixed. It still is a bargain. But were pricing today to make a reasonable profit. Were not the level of profitability we should be at united. We will get there. But it isnt just pricing the product. Theres lots of opportunities for us in ancillary services and ancillary products to make good margin. And those are things that customers value and theyll pay for. I want to talk southwest always whenever theyre on, oil price, jet fuel prices are up. We were hit. Wow, theyre down. Yeah, we made money dpop they really it seems like sooner or later if youre hedging against higher prices and you come down, youve blown money hedging, have you not . We are actually hedging do you wish you hadnt recently . You can always go back. Its like if you buy insurance and you didnt have a car wreck or you didnt die, are you unhappy you bought insurance . Yes, i am. Well, you should have insurance. But Different Airlines have different hedging strategies. Ours is one of insurance. We tend to be you can but you can also lose money. Sometimes you win in the trade, sometimes you lose in the trade. Were just in hedging. Youre doing well with where fuel prices are now, are you not . Sure. Of course. And now have you had an empty seat on any planes in the last week . We try not to. Fewer its great for the company. I love to see that. But i will say consumers feel like and i feel sorry for you being in this industry because everyone feels we understand the airline industry. Consumers feel like its gotten less pleasant to travel over the last five or six years. They feel there are more fees, its more crowded, it used to be you could sleep three across because there would be empty seats. It has gotten more it would be great to be the only passenger on a flight. But nobody could make money with that. And what were doing is turning this into a business. I understand that people would prefer an empty middle seat. And wed be happy to sell them that empty middle seat if theyd like to pay for it. But they dont. They value it but theyre not willing to pay for it. I would like to feel like i know what the price is up front. I quoted the 330 bucks across country. That doesnt include 25 both ways for my bag. Id just like to know the price. Our prices are really transparent, becky. I will say by charging people fees for the luggage, it means that everybody tries to get a bag on the plane. Loading and boarding has been more problematic when everybody tries to stuff their luggage on for free. It makes boarding a big pain with everybody jumping and trying to cram this stuff in. Theres no question that having bag fees has made the boarding process more difficult. Thats something we dont have a solution for yet. Weve got some ideas, but nothing yet. Everybody needs to take a 1500 mile drive with children once a year and then remember why they like to fly . Right. Then go back on and say this is pretty good. Sure, my shoes off . No problem. Heres a question for you about those of us who have miles. For those road warriors on your planes all the time, one of the things that has happened since the merger is a lot more people who have higher status and as a result the, quote, higher status now means you have lower status. Are we doing kids in first class . No, no. I dont know if he knows about our debate on that. Thats a separate one. As a result you have people who have the, quote, status but actually you sort of get bumped down. Now being in zone one, everybodys in zone one. If you know what i mean. How do you change that effect and what does it do to the loyalty of the customer . Although there are more people with more status because theres more people, theres a whole lot more seats. Its true theyre sort of disproportionately more. In some markets in big business markets, sure there are because theres a lot of Global Services people. And we try to treat them very well. In other markets where there are fewer of them, i mean, youre probably flying to these fancy places with lots of exactly. You know what you just said about zone one . Everybodys in zone one. You are such an i mean, you try to use code words and you try not to out yourself. But you just cannot help it. You dont want any kids screaming in first class. Too many people there were people in zone one that were not zone one people, jeff. I could look at them and tell they were not zone one people. And there they were. With me. You cannot help yourself. You cannot i think we better switch topics. Thank you, jeff. Thank you. How could you tell they werent zone one people . What was it . Their clothing . Their hygiene . What was it that told you they were not zone one . Everybodys in zone one. That was so funny. Everybodys in zone one. Everybodys in zone one its true. Lets ask about the weather because weve seen all these pictures of snow everywhere. Lots of snow on the ground. Is that impacting how carriers can get around . Whats that mean and are you concerned about this Winter Weather turning out to be as tough as it was last year . It was a tough winter last year. Look, were used to dealing with tough weather. We have hubs in if you think about where we are in denver, chicago, new york, dulles. I mean, weve got hubs in knowy places and were used to dealing with it. Passengers understand it and they understand there are going to be delays when theres tough weather. And they want that because we need to be safe at all times. Well, i love continental. United had its issues, but it is a great brand. Great music. And united friendly skies. All that stuff. Bring it back. Were doing it. Were doing it. Were making a lot of progress, joe. Youre right. Wed all like to fly alone on a we would. G 5 but were not going to. We will. You need a profitable vibrant industry. Thank you for your time. Thanks for having me. Make sure you get joe into zone one. I dont want to be in zone one with those people. Old zone one, maybe. Not this zone one youre talking about. Thank you, jeff. Appreciate it very much. Coming up when we return, a hot prospect from the shark tank getting snapped up by a big finish. Mr. Wonderful kevin oleary. Were back in just a minute with some zone one people. Er than ev, 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. Are you looking for a thrill ride or a crazy stunt . Well, there are plenty of gopro videos of people doing wild and crazy things. The gopro could be on the christmas list this year and its one of todays stocks to watch. Announcing it will sell more than 10 million shares in a public offering. Shars of gopro down about 50 cents. Coming up, the arctic blast has Natural Gas Prices in play. 8 jump in one day monday. Should we expect more weatherrelated moves in the Energy Sector . Thats coming up. First, though, up on the menu, a new offering from burger king. But you may need to book a 13hour flight. Well tell you what we mean when squawk box comes right back. I. And cialis for daily use helps you be Ready Anytime the moment is right. Cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently. Tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. Do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. Do not drink alcohol in excess. Side effects may include headache, upset stomach, delayed backache or muscle ache. 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When we come back this morning, will Energy Prices increase thanks to the weather plunge . Thats next. And we have ceos and mr. Wonderful himself joining us to talk about a wild success story. Right now as we head to a break, take a look at u. S. Equity futures. Things have turned positive. Dow futures up by 14. Nasdaq by just about 1. Always obvious. S arent sometimes they just drop in. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Welcome back to squawk box this morning. Among the stories that are front and center, japans Prime Minister telling Party Leaders hes going to be delaying that unpopular sales tax increase and call a snap election. This comes one day after new gdp figures shows they entered a recession. The nikkei rallying overnight on that news. Also germany giving stocks a boost. And a new study from erickson says that about 90 of american households have three or more internet connected devices. The average number of connected devices, more than five. Also, a senior vp at uber is paving the way to help fight back against the press. Buzzfeed reporting that the executive suggested that the Ride Sharing Company should spend a Million Dollars to hire a team of opposition researchers to dig up dirt on critics in the media. I cant believe we havent talked about this yet. He made these comments at some dinner he thought was off the record. I actually know people who were at that dinner. He said they were upset with some of the journalists. I think there were one female journalist in particular who had given them a hard time about things. He wants to hire like, this is straight out of the dirty tricks game playbook to hire people to chase down these journalists, dig up dirt on their life and use it against them. He said this in a public forum. I bet this actually happens already. You think it happens in actual companiecompanies. I do. I dont think they hire people for this purpose, but i think occasionally theres some opposition this guy said it at a dinner. I indefensible. Indefensible. Joe . Yeah. Probably not good. And uber is one of the sort of new Age Companies where you would think that theyre what was it hp doing this before . Was pretexting . Pretexting. Is that for journalists . Yeah, that was journalist who is got caught. Uber is more of an aggressive culture than some of the other companies. You use it all the time . All the time. You do . Yesterday. You did . Maybe once a day. Instead of a taxi. Constant. Constant. More expensive than a tax key, isnt it . Cheaper than a taxi is youre on uberx. Like zone one. No uberx is the cheaper version. You couldnt make it to zone one with uberx. Maybe some days ill use uber. Its different than youtube. Its different. Keeping up with see, this is what i its hard for me. Keeping up with millennials. Its a big job for companies that depend on the tastes of consumer. Morgan brennan has todays big job sectornomics. Can you handle this . Im going to try. When it comes to Consumer Staples from packaged foods to personal care, new Companies Catering to millennials are outperforming the big, well established oldtimers. Take whole foods. Stock is up 28 over the last month. Compare it to centuryold safeway. Thats only up about 3 , 3. 5 . Safeways had negative store growth for ten years. Its now trying to offer Premium Products for local markets. Something whole foods already does. Another example, keurig green mountain. That stocks up 12 over the past month. Its been helped by those single kcup coffee pots. But smuckers up only about 2. 5 , 3 for the past month. Lowered its guidance ahead of earnings tomorrow on its coffee division. And its now expanding its kcup partnership with keurig. Last one. Check out monster energy. Its up 19 , almost 20 over the last month. And there is a lot of room for this company to grow globally. Very different story from cocacola which suffers from flatlining soda sales and a flat stock despite the recent market rally. This trend is why coke has bought stakes in monster and keurig. New tech, changing tastes, and a push towards convenience is whats driving millennials pocketbooks. You see the stocks out performing. Thank you. Lets get a check on the futures this morning. Weve been watching on the equity markets at least at this point are poised to open slightly higher. We have seen some green arrows develop. These are modest gains at this point with the dow futures up by only 13 points. Also if you check out crude oil prices at this point, right now wti is down. But only by about ten cents. 75. 54. Still trading well below 80 a barrel. Been stuck in this zone for quite a while. Joining us now to break down the market is jim iuorio. Hes a cnbc contributor. And Chris Faulkner who is the ceo, president , and chairman of brightling energy. I want to start with you this morning because its not just oil prices weve been watching with such fascination, but also Natural Gas Prices. Yesterday their biggest oneday gain in nine months. What happened . We think that natural gas obviously is responding to winter coming on. In the northeast its what impacts. People are surprised that winters here . You know, i think it was slow coming. Texas we had a pretty cold spring. Doesnt really impact the gas prices. As the northeast gets that, it moves up. Natural gas prices will remain below five bucks. So i wouldnt see supply and demand fundamentals have been fixed, but at least we get cold winters and hot summers moving the needle. You dont think its simply supply and demand for the oil prices . No. Weve got two concerns. Number one, libya production came back on even if thats temporary. Now the kurds have got to deal with baghdad. They can export oil out of the northern routes of iraq. They might put more oil into the market. The Iran Nuclear Deal happening, if that gets sort of resolved, that could come down a bit. Or if they dont, we could see extended sanctions in iran causing oil to come out of the market causing supply hopefully to come down, prices go up. The biggest thing is saudi and opec around thanksgiving. Weve got russia and venezuela trying to convince opec to cut production. Saudis saying theyre not going to cut production. If that happens, we could see oil prices go further down. Chris, as opec lost control, is this about u. S. Production . I think opec is becoming less and less relevant. Theres a lot of infighting between these countries held together by duct tape, opec is now. I think all eyes are on saudi and what theyre going to do. But now on market share versus price controls. I think saudi wants to beat their chests saying were the producer of the world. United states is now producing 9 million barrels. But were on their heels. They can drive the price down. They can weather the storm. They can withdraw money from that foreign currency exchange. Then they can drive the price down. Create the market share demand for themselves. Saying were still in control of this thing. How long that will last, how long opec will be around, i dont know. But the United States will have to make a decision if oil prices go below 70, are we going to curb production relatively . I think smaller producers are going to be making those decisions rapidly quickly if things dont change here. Lets talk about the markets. We did see the s p set another record yesterday. But its almost a begrudging record. It seems like investors are nervous at these levels. And they should be. Weve traded kind of on the sideways range for a week. Remember when we used to debate about whether domestic data base i think that argument has changed. Now good news equals good news here. What we really like to see is bad news in japan and europe because whats going to happen then is that assures that they keep the pedal to the metal as far as liquidity goes. At the end of the day look at what do you need to buy. Youve seen french at 1. 1. Our stuff here looks great by comparison. Yeah. It looks great by comparison, but what else concerns you . I mean, obviously theres a lot of unease out there. Theres well, if we start to see the weakness in those economies starting to drag us down considerably, but then even then well see, you know, we could possibly see an acceleration of accommodation here. And that should support asset prices. The thing that bothers me the most, i guess, is just when people get on one side of the boat. Like the euro trade. It could be destabilizing and people get worried. They sell risk. Thap worries me a little bit. But not even that much. Jim, let me ask you quickly about japan. How should we read that . Is that good news . More stimulus is going to come. Is it bad news because without the constant stimulus, they cant stand on their own two feet . Its good news in the shortterm. The longterm, its awful. The only way to get out of their problem is devaluing the yen. Theres even some conspiracy theorists yesterday that were saying that number may have been massaged to the downside just so abe gets ground cover to suspend the sales tax and increase liquidity. Thats fine. Because that money is going to end up here soon. It just like you said, it all comes down to the worlds tallest midget. And thats us. Thats a bad characterization. Our economy is going well, but its good news when we get bad news out of japan. Thank you both. Thank you. Okay. Coming up next, making millions in the shark tank. Weve got details on the investment mr. Wonderful made in digital startup groove book and why shutterfly decided to buy the photo app. Squawk box returns in a moment. vo rush hour around here starts at 6 30 a. M. On the nose. But for me, it starts with the opening bell. And the rush i get, lasts way more than an hour. announcer at scottrade, we share your passion for trading. Thats why weve built powerful technology to alert you to your next opportunity. Because at scottrade, our passion is to power yours. Uh, and i know my iq. Okay. Uh, and i knowuhi know what blood type i have. Oh, wow uh huh, yeah. I dont know my credit score. You dont know your credit score . I dont know my credit score. Thats really important. I mean i dont know my credit score. Dont you want to buy a house. Like, ever . You should probably check out credit karma, its free. Credit . Karma . Free . So, thats. How much . Thats how much its free. Credit karma really free credit scores. No credit card needed. Oh, my gosh. Welcome back to squawk box. It is global entrepreneurs hit week. We are jumping back into the shank tank now with some news announcing they are buy iing groovebook. Its the firstever buyout of a business featured on the show by a publicly traded company. Making shank tank history. Joining us now is the founder of groovebook. President and ceo of shutterfully. And the investor of groupbook along with mark cuban. Good morning b to you guys. Good to see you guys. So let me just ask this question. Was shutterfly were you guys watching shank tank when this happened . I happened to see the show. Did you think you wish you could buy it then . No. I caught my attention because it was on shark tank. Then we watch it month after month after month. This went up and up. And brian the julie and the team executed well. And the platform was a phenomenal success for them. I love it, by the way. I absolutely love it. Love shutterfly, love groupbook. I love the app because it was i love photography, but i saw the compelling cataloging of a family that would be very sticky. Once your kids are born and you start cataloging their lives, you dont stop. But we didnt expect this growth in subscriptions. This is the First Time Ever anything like this has happened. Now we respect the platform for what it is. Consumer goods on shark tank are remarkable. Every week were blown away by sales. I think, you know, i want to boast that i think we have the most successful Venture Capital firm on earth in consumer goods. Theres nobody can touch what we do. I dont think thats a stretch. Walk us through the math for you. So the way this works obviously as a shark, i love royalties. Thats what i love. Because im never certain whats going to happen. I have a piece of equity and a royalty. All that goes away. Im bought out, basically. Hes going to make into this plot form. Shutterfly has to own this business. It makes sense. But i want to reinvest in this guy. Hes a winner. Any hesitation about selling . Did you ever think to yourself its a much bigger business. Why sell now . I want to be independent. We have so many people who come here with their new business and they say they have no intention of selling out. Well, i know that the shutterfly brand is going to help grow the business and we can take it so far. And ill be on to the next project. How did you and your wife come up with this . My wife lost her phone a couple years ago and i had a commercial printing company. I created a book for her after she lost her photos. She said i need this every month. We found out how to get it as inexpensive as possible. We started one by one and its been credible. I feel like i take pictures all the time. My phone is always with me. Yet they kind of just disappear. You never have any hard printout of it. Since airing weve had 200 million photos uploaded and over a million downloads of the app. Think about combining shutterflys life that can tell if their eyes are open and algorithms and lay it on this model. Youre taking 500 pictures on your phone in a month, well tell you which would make the best book. You can rip them out, share them with friends, let your kids do School Projects with them. Its a perfect marriage in what they built. Who was printing you were printing everything yourself . No, we did it all internally. Now it will all move over to your platform . Yes. And will you stay with the company . Ill stay on board for a year to make sure the transition is smooth. And make sure the check clears. It all started with this 37 the groove. This whole thing is about what brian dreamt up in a basement. It goes at under magazine ship rates because it can bend 30 degrees. Thats sheer genius if you think about it. Theres so many people that make this on the internet. But not this. This is the one thing. The little piece of magic. The one thing i will say, id like a Higher Quality one. My husband says its because were cheap and havent upgraded. Maybe thats what shutterfly can solve those problems. Our brand has stood for memories and high quality. By takes this app and overlay it on to our customer care, our quality of manufacturing, youll see the product continue to improve, expand, and well be able to put it in front of tens of millions of people which is exciting. So why couldnt i mean, with all due respect to everybody, why couldnt you go off, watch what he did effectively and rip it off . Why couldnt you do that . Patent on the groove. My lawyers suing him if he tried that. Thats why. We do that all the time. We look at whats happening in the ecosystem and given our scale we try to do it better. Google does that. Amazon does that. Apple does that. In this case the platform of shark tank. Every time youre on there, its the equivalent of getting 10 million of advertising. So that lead that groovebook created from that viralty. And you think about plugging in that mobile, social component into our platform. It made sense to do an acquisition at this early stage versus trying to compete. Jack up our Advertising Fees on the repeats. In hearing that. Really . How much . Is hoffman watching . You think its worth 10 million to 15 million . Yeah. If you look at the success rate of capital, two out of ten deals work. Were almost at four out of ten. Because we think the Marginal Company is getting 6 million to 12 million of advertising. In is nothing like shank tank now. It is unbelievable for consumer goods and products. I think the biggest deal is making sure the company is ready for all that extra traffic. We do have that challenge. In this case nobody could foresee how many people would order this app. It was number four yesterday on the itunes store. People are devouring this product. So we need shutterflys infrastructure. Theres no way this company would stand alone. Its got to go with shutterfly. Its just too big. Do you have another business up your sleeve . Working on it. Want to give us a hint on what it could be . In a year from now, be on shark tank again. Is it in the printing business . I cant say. He gets a free pass any time he wants. Any time. Anybody that has done this, this is the biggest deal weve done in shark tank. How much did you put it . Not much. I feel its bad karma to boast about money. Ive done very well on this, im very happy. Instead of knowing how much, what is the return. Three, four, five, six, seven times. Thousands. Think about it. When it came on squawk box ten months ago, it had virtually no value. Look at it now. Ill tell you what im thinking and this is because im clueless. Nothings backed up on my iphone. Im not sure why. It keeps asking me to with the cloud. Id hate to lose the pictures. I dont know how to do this, but i might ask one of my kids to take my phone and do this. Weve designed it so its only two buttons. Thats too many, but im going to ask my daughter or son. I take pictures until my phone fills up. Then i have to download them on the community. I go, im never going to need this and i just cant get rid of it. Download the shutterfly app. All your pictures get backed up for free on our servers. What do i have to do . Just go to the itunes store, type this life. During the commercial break, i will help you. If becky can do it, you can do it. What does that mean . Im just telling you, anybody can do it. What does that mean . That was a diss. Anybody can do it. The software i want you to build, by the way, to help you get the addresses to collect addresses every year. Thats always the hardest part. We agree. You dont have the solution yet, though . Were working on that. We agree. But were going to sell hundreds and hundreds of millions of holiday cards. Every household in america will get more than three of the shutterfly in tiny prints cards this year. Youre tiny prints too . Yeah. Congratulations on the sale, guys. We got to run. Brian, jeff, and kevin. Tune into shark tank here on tuesdays and wednesdays 8 00 p. M. Eastern time. Coming up, times running out for the dow hitting 18,000 before the end of the year. Jeremy siegel joins us in the next half hour of squawk box. And hes been dead on. holiday music is playing hey i guess were going to need a new santa the music builds to a climax. more people are coming to audi than ever before. See why now is the best time. Audi will cover your first months payment on select models at the season of audi sales event. Visit audioffers. Com today. Lets take a look at some stocks to watch this morning. Agilents quarterly profits dropped. Revenue, though, matched wall street estimates. Sony says it wants to increase movie and tv revenue by more than a third in the next few years. They are cutting costs and investing in films including a new spiderman film. And Urban Outfitters the last one. I need any new content when it comes to spiderman. Thats our obsession at the moment. Hes one of the coolest. I like batman because he doesnt have any real powers. He does all that just with i mean, thats a bit of a stretch, isnt it . Hes got spider dna. Yeah, well were both in the same place on the spiderman thing right now. And Urban Outfitters reporting lower than expected earnings. Hurt by increased markdowns and marketing expenses as well. Up next is the era of the twocar familying coming to an end . The surprising results. Squawk box will be right back. 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. Many americans who have prescriptions fail to stay on them. Thats why we created programs which encourage people to take their medications regularly. So join us as we raise a glass to everyone who remembered today. Bottoms up, america. See you tomorrow. Same time. Another innovation from cvs health. Because health is everything. 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. Its in this spirit that ingu u. S. Is becoming a new kind of company. Ing u. S. Is now voya. Changing the way you think of retirement. The days of owning two cars could be coming to a close. [ horn honking ] why it could be a game changer for the auto industry. Got smokey and the bandit. Do i even have my lights on . Bentley taking down the top. The ceo joins us to talk about last nights big unveil ahead of the l. A. Autoshow. And are you ready for the hunger games . If we burn, you burn with us how lyonsgate is killing it even before mockingjay hits the big screen. As 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. If you havent been outside yet, bundle up, forget about it. Its cold out there. Dangerous conditions as another round of early Winter Weather slammed into grand rapids, michigan, overnight. Here is the view from behind the drivers seat. Rough, rough roads out there. Be careful if you are going out. Grand rapids area could see 10 inches of snow, maybe more. Weve seen pictures from all over the country showing us things you wouldnt expect this early in november. The rest of the country is in a deep freeze this morning. Check out these windchills. High winds. You will struggle to get above freezing today and tomorrow with these temperatures. Its actually colder than the average january highs. Hows that for a nice hello and a good morning. Also we want to see how youre fairing in the cold. Tweet us your selfie using the polarplunge. It is chilly. I saw one where there was about two feet of snow and a dog dug a tunnel for him to go out for his morning business. Rough way to start the day. You did change it just in time. Climate change . From warming to change. Thank god. Seriously, it wouldnt make any sense now would it . Now change, you cant go wrong there. Carbon or Carbon Dioxide . Carbon pollution. Among our top stories at this hour, u. S. Investors once again waking up to major market moving news out of japan. The Prime Minister there abe saying hes going to call a snap election one day after gdp figures showed japan has officially fallen into recession. Rallying about two Percentage Points on that news. Also home depot earnings beating estimates. 28 million expense for the data breach. It didnt estimate what the total cost is going to be. And toyota plans to introduce its first mass market fuel cell car next month. The future has arrived. The vehicle runs on hydrogen instead of gasoline. They want to copy the success of its prius hybrid. Time to say byebye to twocar families. I dont want to hear about this. Are we going to three or back to one . Back to one, they claim. A new report out is suggesting something that few of us could have ever imagined. Not to have a second vehicle. Or not to even have one. Phil lebeau joins us now with the details. Is this people moving back to urban areas or something, phil . My daughter im going to have three one of these days. Not two. I do have three. Then youll do what i do. You keep one in the garage and your wife says why do we have three cars here . This study when you look at what it is, this is essentially all about the trends in america changing according to kpmg. Essentially it comes down to this. 57 of the country right now, we are twocar households. Thats going to drop down to 43 . Youve got more urbanization. Car sharing companies, theyre popular. People are saying i want to do Something Like zip car or relay rides. Then theres the cost of a vehicle, owning that vehicle as it continues to rise the cost of a new vehicle. More people are saying do i really want to buy that. Take a look at the likely to see in the future according to kpmg. If you look into the future, youll see the possibility of the number of vehicles in the u. S. Starting to decline because you have the distribution of income as well as employment and people are looking at this saying i want mobility on demand. I dont want a twocar household. We asked the head of the ford of the americas are we moving towards the end of the docar household . Heres what he had to say. A little too soon to call that in the end b. Its still a big part of america. Suburbia and going to work and school, we think its a big part of the future as well. So this is not going to happen overnight, guys. But this is the trend and this is what you get when you have more of the Car Sharing Services and more urbanization. I like that, though, phil. You asked the president of ford north america are we going to go to a onecar and he didnt think so. Of course not. No. You know what, though . With that last week where we had the guy talking about tesla and how just a couple of moving parts and i mean, the big three, you do ron barron . Yeah. You do have to worry longterm about the big three, i think. Its unfortunate because it is a big although i think i would side with joe hinrichs saying its probably not here yet. Phil, stay with us. Were going to bring in the author of that kpmg study. Gary sillburg. I have to say this is a study that makes us raise our brows a bit. What did you find and how did you go about gathering the information for this survey . Well, first of all, we did the analysis, you know, owning a car is not the most rational economic decision and in our paper we talk about it right up front. The aempl price of a car is around 31,000. The minute you drive it off the lot, you lose 11 . And by the way, it sits idle 90 of the time. So you dont have to have a ph. D. In economics to say why would i purposely buy an asset that loses money off the bat. That was the genesis of the paper. When you have this revolution going on in the automotive ecosystem with technology, we think there could be profound implications on that economic decision. And why is that . Well, one, people buy cars because theyre consumer products. People love cars. Its a you know, its part of who they are. Theyve made it in the world. But the other reason they buy cars is for utility. Right . Ive got to get to point a to point b. Becky, if you have to take your family somewhere or you have to go wherever that chore you need to take care of, you need to have a car when you want it. Right. But if i say to you, Going Forward you dont have to pay for parking in new york. I dont know what parking goes in for new york, but i think its 1,000 a month. I dont know what it costs for maintenance and insurance, but its very expensive to own a second car. And with mobility on demand with uber and lyft and all these other alternatives, we think that the twocar family over time, its not going to go down to zero. But is significant amount of people are going to reduce that number. And in our study, as phil talked about and you talked about, instead of being 57 of households that have over two cars or more by 2040, we think it could drop to 43 . Gary, i see that youre in los angeles. Is that where you live . I actually live in chicago. I live in the city of chicago although i do like given the weather i saw, i like it here for the moment. It makes sense to me if you are a city dweller that argument makes perfect sense to me. But i would argue thats been a similar situation for several years. When i lived in new york city, i didnt own a car. Or i got rid of my car because i got tired of getting it towed and finding places to park it. That makes sense to me. But there are massive swaths of the country where what you talk about uber and lyft, its not a possibility. I dont see things changing there. Well, think about it this way, becky. In terms of the population shifts, this concept of urbanization is shifting more to cities. This a global phenomena, number one. The other point is and this is a the nuance, were not arguing the twocar family goes away. We think its significant. 43 its still significant. But the implications of it if people share cars more is where were talking about. And remember, this is 2040. By 2040 if people are sharing cars and it goes down to 43 , the overall car market could decline. And we think it is an urbanization story. Phil, you got to question too . Isnt it true when you talk to people in the industry, all of them say the same thing. As hard as they try, they have a tough time putting any kind of a number in terms of mobility on demand. What will uber do, what will the Car Sharing Services do in the future . Your projection here in the future, its a bit of a leap of faith. Were not sure that these programs will take off as youre suggesting. Well, we think, again, if you go back to our thesis that owning a car is so expensive and getting from point a to point b is one of the reasons theyll do it, were in 2040. Were talking about a small decline over this period of time. But will have profound implications on the industry. Thats what were making in the paper. And i would tell you if you talk, we did research in our paper last year in los angeles, in chicago, in new york, in urban areas and we asked the question if you could get to point a and point b and you could be sure youre going to get there at a cheaper cost, would you consider not owning a second car . And the vast majority of people said yes. Look at the number of uber and lyft drivers. We think the shared economy is going to be the economy of the future. Certainly in automotives. It might make l. A. Livable. Because its not now. You like the weather out there, try driving from pasadena to malibu on an afternoon. You cant get there from here. You cant. Right. Awful. The other thing, if you think about it, if youre in a car and this is part of our paper we havent really talked about. What are you going to be doing in the car in the future. Right . We think it will be autonomous potentially. All the Different Things youll be able to do in the car. And the time, the value of your time will be very important to you. And thats another reason, you know, why people i took uber here today. Theres no reason for me to be driving. I checked my emails. Its the trend, we think. I get car sick. Me too. Gary, thank you. Thank you, everybody. Have a great day. Thanks, phil. Well talk to you soon. Okay. Coming up when we return, can the dow reach 18,000 by the end of the year . Jeremy siegel predicted it would end the year at that level. Find out if hes sticking to his guns. And later, the l. A. Autoshow starts tomorrow. The bentley is starting the party early. The Company Rolling out a bit of a surprise. Were going to talk luxury cars and check out the companys new convertible in just a couple of minutes when squawk box returns. E financial noise financial noise financial noise financial noise this time of year youve got to believe the market usually rallies into the year end. But complacency have many thinks that santa claus may have already come to wall street this year. The s p has moved less than. 1 for five consecutive sessions. The last time that happened was 1969 in january. What else was happening around that time . The new york jets had had just won the super bowl. That long ago . And as someone paid a plane to fly over the stadium that said jets have been rebuilding since 1969. And, you know, the point was well taken. Anyway, despite the lack of big swings lately, Jeremy Siegel Still Believes were going to hit a dow 18,000 in the coming weeks. Jeremy, when we had that 9 pullback in the s p, were you like, were you dialing cnbc to say that you were going to pullback on your 18,000 . Did you have any selfdoubt . Were you waking up in the middle of the night in a cold sweat . Were you questioning yourself at all at that time . Well, i will admit when that ebola scare hit, i wasnt sure whether we were going to do it by december 31st. I had a feeling that we were going to control that epidemic. And i certainly think we have. So, yeah, there were a few seconds where i wobbled a bit, joe. On that. But once the ebola scare went away, you know, theres no reason why we couldnt hit. All we need is a normal rally actually from thanksgiving to new years. And were virtually there at 18,000. Jeremy, i had the same thought. Ebola was truly that wild card that none of us really understood because right at the height of that when i guess the individual that unfortunate individual had passed away and then a couple of nurses had contracted, we didnt know we were thinking sneeze droplets and all bets were off. One thing you probably saw at the airline, oil prices were plunging and the Airline Index was down 20 . That was clear wli ebola related. Thats one of those black swan events where you saw what happened to disney, right . Yeah. Disney tanked. You know, theme parks, anything that related to people congregating was way down. Yeah. That was a scare. Fortunately it looks like we have this under control. So now earnings and Interest Rates can tell the story. And theyre still looking very good. Particularly the Interest Rates. I think the decline in oil is the huge story into 2015. I think were going to get negative readings on cpi for the next two, three, four months. You really wonder when is the fed really going to raise rates if they see negative inflation. We already had a dissent on the side of being more dovish going up. So i think the climate i mean, Interest Rate is always the biggest threat to the market. That looks like its fine. Earnings, im just hoping im looking at those holiday sales. We know that oil price dropped, gasoline price drop is like a tax cut for americans. I think were going to get a enterpri surprise on the upside on retail sales and thats going to boost the dow well past 18,000 if we get that outcome. Is there a word for the opposite of stagflation . Stagflation is the worst thing that can happen. No growth and high inflation. Whats it called if you get 3 growth and no inflation . Whats that called . That must be good. Thats the goldilocks economy, it seems to me. Yeah, if we get no inflation but the 3 . Thats the wild card. Unfortunately Fourth Quarter ive been looking at a number of forecasters, most of them between 2 and 2. 5 . So thats we want to be above 3 . We want to see people coming into the labor force. We want that Participation Rate to stabilize and start to increase. We want to see some increases in productivity which has been flagging over the last couple years. Its not all clear why that has happened, but we would like to see that boost. If we can get into that 3 to 4 , wow. Under a low inflation scenario, you know, we could be at 20,000 at the end of 2015. Now, theres a number of good things, i think, that need to happen. But certainly i think that would be even conservative for fair market value if we get some of these favorable trends coming together over this next year. So can we do it all just domestically . Or who where do our most portant trading partners live . Japan were not going to be able to count on them for much, it doesnt seem like. Chinas a little better. What about europe . Can we count on europe to be a strong or does it matter theyre not as big a trading partner as it used to be . You know, were still net importers. I mean, our gdp growth over the last couple decades has not relied on exports. We have had a trade deficit. If we get a boost in those exports and we might, you know, energy as we all know natural gas is 12 a deckitherm. We have that ability if regulation would exist permit to do good exports on that energy. We are still on that importer. We are still net benefitting from them. We just have to see that in the kumpl spending over this Third Quarter. In your heart of hearts do you still think that the eagles are in the top echelon of the nfl at this point after that game . That was very, very painful. Rodgers was on his game. My god. For four straight games. He looks like him and brady. He looked like a superman. I moo en, the first ten minutes i was shaking my head. I said, this is not going to end well. So you didnt really answer the question. We got the comeback. Of course the are the eagles in ill ask cramer too. Are the eagles in the top echelon of the nfl right now . Well, in terms of their record, the answer is yes. Okay. All right. Youre punting. Youre all over the place on this answer. Im punting a little bit there. Great coach. We are still one of the few we still havent won a super bowl. Thats our great hope. I know. Weve always had good teams. We have not won a super bowl. Hey, jeremy, youve been right about the markets this year. I know its very early. Do you have an estimate for where you think the s p will be next year . I always worry when you have a little winning streak whats going to happen later. We are certainly closer to two or three years ago i thought we were really undervalued given Interest Rates and earnings. I thought the bullish calls were, you know, easy to make. I still think we are 10 undervalued given the Interest Rate structure. But once you get closer, its a little bit of a wider range. So, you know, people ask me where do you think the dow will be . I think, well, i can see us at 1900 to 1950. But once youre closer it could be up to 2100 which would be another nice gain. I think it gets a little bit wider. I know where i think the market should be, but goodness knows those of us who follow know that, you know, in the short run we could be 10 , 20 above or below. But i still think we have the momentum on our side going into 2015. All right. Professor siegel, thank you. Thank you very much for having me. Better luck next week. When we come back, youtubes new Music Service debuts. What you can expect from the new streaming service. And later, lionsgates hunger games mockingjay expected to be a huge hit in theaters. Its logged the most advanced ticket sales this year. Take a look how the latest installment is winning before it even hits the big screen. And a programming note. The ceo of halliburton joined squawk on the street to talk about the acquisition of baker hughes. Squawk box will be right back. Ing u. S. Is now voya. Changing the way you think of retirement. receptionist 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. 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, and make america more competitive, 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. It is a big day for youtube. The googleowned site is launching its 10 a month music Subscription Service. Todays rollout is a private invite only test that focuses on youtubes heaviest music users. The company has signed deals with many major record labels. But sorry, taylor swift fans, you will not find her songs on the new service. Coming up, some breaking news on the economy. Weve got price data, index data for october. And then bentley making waves. Well see phil lebeau after the break. The Holiday Season is here, which means its time for the volkswagen gnthendrive event. 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Strip out the allimportant food and wild energy, its up. 4. Were expecting. 1 . No revisions at all. If i look at year over year numbers, up 1. 5 . 2 higher than expected. Strip out food and energy,. 3 higher than expected. Maybe its more important to switch from expectations to what our last look was even though it was unrevised. Last month down. 1 . Core up. 4 versus unchanged last month. Year other year on headline, 1. 6 last time. And at 1. 8 year over year stacks up to 1. 6 . So no matter how you look at it, a little bit hotter. Because growth was a little bit hotter. Whether its sustainable or not, you know, you want inflation, bring growth. If you want causation, use quantitative easing. Went from up 7 to up 5 . Maybe the big is e the foreign currencies are taking a bit of a hiatus on their selloff predicated on their weak economic fundamentals. I see that the pounds up a little. The euro is up a nice helping. Of course well continue to monitor the dollar yen. The yen is a little bit lower, but virtually unchanged. Coming close to pass as sustaining. Really that is the currency maybe to pay most attention to. If youre looking at the dollar index, its due to the euro. Back to you guys and gals. Rick, thank you. Steve leisman is here on set with us. He has more. What did you think of the ppi . Hotter than expected. Im trying to figure out where it was. Theyve changed over this index year to be more focused on services and wholesale services. And theres an item in here, final demand for trade services which was up 1. 5 . Im sure somebody will write in and tell me just what that is. Final demand for Services Overall sorry. Consumer demand for services up 0. 6 . So theres some kind of services component. When i look at real goods and finished goods, i dont see a whole lot of inflation in there. For example, going up the chain of processing intermediate demand goods, processed goods down almost 1 . So heres the question that i think everybodys asking. If you have this lower Energy Prices feeding into core inflation, theres a lot of thinking out there. Sullivan writing a piece this morning say b you know what . Rate hikes could be off for next year. What . Wait a minute. Back up. Say that again. People have said that. People have said that. If the fed moves further from their inflation target of 2 , lets look at whats going on around the world. Weak global demand. Theres global inflation which its a very long chart. Just for people who may not have been tuned in in the 1970s, we did have double digit inflation. Here we are down near 2 , 3 globally. And then take a look at the United States and europe. You see two different stories. And the story is if the u. S. Which is the white line starts to look more like the orange line, its going to change fed policy. You can see thats european inflation coming down near 0 and the u. S. Barely hovering above 1. 5 here. Then the fed could according to some analysts which joe has heard them before remember when people have said that. First quarter of 2016. You think thats actually well i would say thats a wild card. What we want is an inflation cross. As the headline falls because of energy, the core should rise because the fed wants that core number to be higher towards its goal. But wait a second. Do you think ive heard it before. Im not leaving here while youre confused. A wild card and theyre going to raise rates. Do you believe the people who are saying that . I think that is something for the fed heres one thing i do know. The litmus test for raising rates has shifted. From employment side of the mandate to inflation. And there is at least a palable risk out there thats what is happening globally is affecting the United States. Jay powell says the United States doesnt depend that well on Foreign Trade to determine internal prices so its not that big a deal. If these numbers show up, theess lower Inflation Numbers show up in core inflation, that makes thursday a very big day. It does . Only a couple months of lower Energy Prices. And for example, you were talking about airlines this morning. Heres a chart. You can see how sensitive airline fares are to energy. Theres jet fuel right there. And look at the direction of that that. So you have, andrew, disappoint what you think, youve had a couple months of Lower Airline fares. We did a study where they were sticking through another price increase. Its interesting. Right now youve had a couple months of declines according to our Consumer Price index. And that lower jet fuel should where are they getting those numbers . Survey them from the industry. Because i literally in the last four weeks we just did did sh. You said you had a cheap flight to chicago. I also remember we just did a story about the fifth rate hike of the year and it was supposed to stick. The boss upstairs just got a couple of cheap tickets to toronto. So i dont know. Were watching it carefully. I hope, actually, the old school airlines, the prices still go up. I think then youll finally get a new entry to come in and undercut them. But you need the rates to go up enough. Get the peoples express back to 19. Thats right. And it will force everything down again. In the meantime, were going to talk about autos. Truly high end autos this time. The Los Angeles Autoshow kicking into high gear with the first media day tomorrow. Some automakers getting a start. Bentley unveiling two vehicles at an event last night. Phil lebeau joins us once again with a preview and a special guest. Phil . Thank you, andrew. Im with the ceo of bentley. What a gorgeous car we have back here. Tell us about the grand convertible. Well, we are quite proud about it. Its the first time that we show this concept car worldwide. Its a combination of very luxurious driving together with open top driving. It takes the experience to the next level. Is there still the demand for controvertibles . I know california is the big market for you. Yes. We have an open top car and our biggest model the flagship to say, there was no open top driving up to now. And there is a certain demand. And this is why we put together this concept car and are going to test how it is liked here in los angeles. I like how youre going to test it with people and see what they want. Is that upper end market your sales are up 3. 1 . But is it slowing down at all or do you look at this and say its full steam ahead as it has been the last few years . Well, the world view is changsing. We have some markets, but also some very stable markets. And one of them is the United States. Its our big market. We do good over here. We also do good in Continental Europe and back home in great brita britain. Lets talk about china. Theyre challenging and explain why. Its a political situation over there, right. Basically its a good market for luxury product because the chinese customer likes to show what he has. They want to know they want to know where theyre getting the money for buying the car. Exactly. And they are doing some stuff and the Corporate Governance needs to be considered. And for this reason our customers are a little bit careful right now. But its not really complete crazy market. Its constantly going. And youve got the suv coming late 2015 2016. Are you hearing from the people saying bentley cant build an suv . No. I like to listen to customer. This is where we get our work for strategic thoughts. With the bentley suv, there is a great demand. It will be a revolutionary product and we are going to rock the suv market. Rock the suv market. Ceo of bentley. There you hear it, guys. Before we were talking, he said you think were going to make an suv and its not going to look like a bentley. Proofed he will be making one. Back to you. Okay. Thank you, both, for that. I dont know. Can we get one of these cars . Thanks to wolfgang and phil as well. What did you think of the car . I like bentleys. You have to be a certain type of individual to want to drive one. Really rich . Thats one thing. Whats the other thing . You need to be comfortable with people thinking youre really rich. You know what i mean . Its luxury. I like german cars. Maybe hes bringing some german engineering to bentley. I dont know who owns bentley. Its confusing. Lets check the futures. Theyre up. And europe at this hour whats wrong . Right here. Wait a second. It is volkswagen owns it now. Okay. Volkswagen bought just bentley . Im still reading. I dont know. Come back. Go to commercial. But its still operations are still in its british. They still call it british. The rollsroyce ownership. You still have to drop the transmission to change the windshield wiper blades. Its still british. Up next, lionsgate is cashing in on mockingjay. But its facing challenges. They bought it in 1988. Volkswagen bought it in 1988. Previously owned by rollsroyce. There we go. So were only 30 years behind. Julia boorstin will walk us through what you need to know about the latest installment of the hunger games series. 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. Open port twentytwoohoneseven on the firewall for customer db access. Install version twopointthree of db connector and ensure verbose flag is set in case of problems. clapping sound isnt the cloud supposed to make business easier . Get the one that can connect to the systems that you already have. Today theres a new way to work. And its made with ibm. 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 country blanketed with bonechilling temperatures. The weather channels mike bettes has more on the cold weather gripping the nation. He should know because hes in hamburg, new york. How you doing . Reporter we are here in the village of a. M. Burg south of buffalo. It has snowed about 15 inches since 10 00 last night and this morning. This is what they are waking up to. It is truly blowing and drifting and it will continue like this, we believe, for at least the next two days. So we could be looking at recordsetting snows in this part of the world. There are so many interstates that have been impacted today. Including portions of i90 through new york that are shut down. The new york thoroughway and the nay yor says a travel ban in effect for south buffalo. Schools are closed. Buffalo international has closed. Roughly 40 Flights Canceled there. They try to keep ahead of the snow on this runways. Travel is not advised. Some of the roadways will be closed down pretty much all day long. But the locals, they love it. This is what they live in western new york for. Lakeeffect snow. But the biggest storm this year and more coming today as well as wednesday and thursday. As we get close to thanksgiving, weve got good news for you. If youre traveling, temperatures much warmer. Actually above freezing for a change and some sunshine that will come back out. Lips are frozing this morning. Just about everything is frozen this morning. Thats the latest here from hamburg, new york. Back to you. This is one of those mornings where if you have a job indoors, youre lucky to have it. Youre probably trying to think of things to do indoors if youre stuck there. You may want to reserve your tickets for mocking jay part 1. It hits theaters this weekend. But lionsgate is seeing money roll in before the release. Julia boorstin joins us with more. Ive got to admit. Got my tickets. Good. Its smart to buy ahead of time. I was at the premiere last night. The audience seemed to love it. It seemed like the teenagers who turned out in droves in los angeles as well as here in london for the glimpse of jlaw on the red carpet. They have a huge fan base. Mockingjay has more than double the interest of any other film this Holiday Season. Lionsgate has tapped into that to build buzz with the video franchise starring seven youtube stars who have millions of youtube subscribers. Its already fandangos top advanced ticket seller of the year. It could match the last installments Opening Weekend which could make it the biggest year debut. Lionsgate needs the franchise to deliver and not just because mockingjay part 2 is coming next year. Its part of a Subscription Service they are working on. Plus ahead of the final films debut next fall, there will be an exhibition of hunger games costumes and props. Along with a play in 2016. While a number of analysts say the performance could swing the stock, its warned that Strong Performance from mockingjay is already baked into the stock. Saying next year is more important. One key challenge to watch is that imax is not showing the film. Its sticking instead with interstellar. This years Film Box Office will not benefit from imaxs higher ticket prices. All right. Julia, thank you. Its worth it, you think . The film . Yeah. It was totally fun. It was really fun and it will definitely keep you warm and toasty if you guys are dealing with the polar vortex there. We are. Thank you. Well see you again soon. Up next, jim cramer from the new york stock exchange. And as we head to a break, we welcome the students from Fairleigh Dickinson university. They all got up early to come in and observe the show this morning before class. So thank you all for spending the morning with us. Even though we hear the professor is a little bit of a crank. 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. Shares of apple quiet rallying this fall. Now a Top Executive is suggesting the tech giants market capitalization could go as high as 1 trillion. If so, that would make it the first 1 trillion company. Right now its at nearly 669 billion. Now at the new york stock exchange, jim cramer joins me. Other companies above 600 billion and all the ones i remember are now worth 200 billion. Yeah. Its almost as if you never want to hear that. I love lee. Im not sure about the context of what he said it. There are Many Companies in 2000 that could be a trillion dollar company. When you hear it from lee who is a seasoned investor and recognizes its not an expensive stock, i guess we have to say this time 1 trillion isnt as much as it was worth before. What do you make the journal had a big piece of what finally happened i know them because they make botox, but what happened with allergan. Did you read the piece . Yes. I think david pyatte didnt want this company to go to just anybody. If you can do 25, its worth it. I think actavis can do it. There is a drug that will come out in a couple of years that could be a big franchise. Botox is unexploited. There are a lot of studies done on what could become of botox. I dont know why the stock was at 80. The point was there are no u. S. Firms given the bidding and traction structure. Definitely. In the end, its the pipeline. I disagree with that analysis and that some of these companies could use that growth. If we are going to focus on the tax issues, yes, definitely. In the end, a lot growth of allergan is so great a pfizer should have looked at it. How about home depot, one we can count on in retailing . Some say it was a penny missed. Some say they did a sale of home depot supply. I like the comps. Some were saying the comps werent that good. This comes in, tjx, macys downgrade. You want to, if youre listening to professor segal, this is where you want to buy because of gasoline and employment. Thats so these stocks are buys, not sells. Almost at an alltime high and down a little bit today. Its tough to interpret why. Exactly. This stock had a monster move. Stocks that run up have been selling off. All right, jim. Thank you. I didnt bring up Aaron Rodgers or anything. No. The bye week. What about sanchez . Are you okay with that . You know, he looked like a backup quarterback. When he keeps getting, if he doesnt have any protection, so to speak, he looks like it starts affecting him. It can look good if he is not ready to just get hammered. He got hit hard a couple of times early on. Some guys just dont take a hit. Some guys dont take a hit well. I know i dont. Thanks, jim. Coming up next, the money marlins spending big bucks for one of the best hitters in baseball. The biggest baseball contract to date. Financial noise financial noise financial noise what are you guys doing . Yoga, its supposed to make us more productive. Better mind and body keeps us efficient. You guys have misread the memo. This is the new lenovo yoga with the intel core i5 vpro processor. It combines the productivity of an ultra book with the touch benefits of a tablet. And its custom configured by cdw. So we can stop doing this . My head hurts. [painful grunts] 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. Income inequality is setting us back miles today. Miami marlins signs geen Carlos Stanton to a record contract. Nobody needs this much money. Premarket, my man. Stanton agreed to a 325 million beautiful country. 325 million 13year contract. Averages 25 million per season no matter what they do. Capitalism is a wonderful thing. The deal includes a no trade clause. Stanton can opt out after six years. Only in america. This is what stanton looked like after being hit by a fastball in september. It ended his season and he wasnt going to be a free agent until 2016. Nobody knows if he will be the same player that he was before he gets hit by the pitch. Stantons contract is worth more than the marlins payoff. Adrian peterson suspended without pay at least the remainder of the 2014 season. This is something i think we also are going to hear about the internal study from the Roger Goodell commission. Thats coming soon. Join us tomorrow. Squawk on the street is next. Good tuesday morning, im ca carl, this is jim cramer and david faber. Europe in the green on stronger