Transcripts For CNBC Squawk On The Street 20131101

Orroad m our road map begins with a 4. 5 gain for the s p. The ipad air hits apple stores around the globe today and the lines have already formed. But but we have one on set right now. Lower refining margins again. And thinking outside the box, the Container Store makes its nyse debut today. Well talk about the ipo coming our way. Score one for the bulls in october. The dow and s p hitting record highs, dow up 2. 75 , the s p rose nearly 4. 5 , nasdaq up nearly 4 as well. We know about october. The first trading day of the month this year has traded negative only twice in april and may and we all remember the very first trading day of the year, that 300 plus point gain for the dow, jim. It seems like the old days when we used to call it Mutual Fund Monday we used to have and at the beginning of each month there would be contributions for 401 ks. Is it continuing . Is it back to that . I still dont see a lot of individuals who embrace the market. Thats empirically too difficult to refute. Which old days are you talking about, though . Everybody wants to Start Talking bubblicious here. It doesnt compare to the old days of 97, 98, 99. People dont remember what it was like. We would come in and the stock was up 30 and there was no reason. Think about what the economy was doing in 1999. The u. S. Was coming off a period where we had reasonably strong economic growth, the Unemployment Rate was probably below 5 . Its not necessarily the behavior of the market necessarily, even though there are signs of consistency, its more the fact weve still got the Unemployment Rate up above 7 and theres a sense the economy is just not clicking. I think its poetic, that the money section in usa today is the fed inflating a stock bubble, just as were finally getting to a tapering did you hear plosser today . Saying he wants to cap the signs of the Balance Sheet. He wants a number on the Balance Sheet. Were back to that. Well, look, i dont know. I know too many people who own stocks and theyre actually happy that they made money. I cant begrudge them. Its been a great time. The fed wanted the wealth effect to come up. All i can say is what has Congress Done to help the economy. What has the president done . They cant even build a bridge these guys. Thats why the feds the only game in town. The fed piled on in 37. This is not that time. Bernanke sees whats going on in washington. He knows theyre destroying any sort of hope for incompetence so he has to provide it. All kreuger had a great piece. I thought it was an exceptional piece. Congress itself is not doing anything to create jobs so who is supposed to do it . The private sector is typically the answer. The question is are we in one of those periods . Where theres enough of a gap still in where the economy needs to be going and that there needs to be some stimulus to get us there. This is all that commoditization nonsense. The International Companies theyve got a little bit better multiple. Most tech stocks i cover are trading at historically low multiple. Energy is starting to turn their way and only four times since 1990 has the final quarter of the year been negative. Especially i think when youve been up this much, you really have a remarkable quarter. Can we please stipulate when you talk about the market, all youre doing is falling prey to what a lot of the gray beards want you to do is presume there is no differentiation. Jpmorgan historically would be at 60 if we had any sort of normalized money, normalized period. Is that expensive . You ask these guys and you say jpmorgan, im not talking about jpmorgan. Im not talking about intel. Im talking about the market. I cant talk about the market. Ge is trading at an 18 multiple, 19 multiple right now. Its 45 times earnings. Remember that . Ge, and that was regarded as cheap because there were a lot of Companies Like intel that were trading at twice that. Rates obviously were higher. Rates at 3. 5. Clorox goes to 80. So clorox is really overvalued. When you take rates to 2. 9, Kimberly Clark goes to 92, really dangerous. Where was Industrial Production five years ago . We just got back to it. And its been lagging. Although its interesting, keep an eye on ism at 10 00 today. There has been a gap between chicago and what the actual production figures are. Its not quite as strong as the headlines would have you believe. As you say, we certainly have come back. At the same time, we have a changed economy. Ive been watching mexico. We had harmon on last night. The company was up 15 . Theyre moving a lot of their business to mexico. I think that most of the time when you see these companies and they change their cost structure, then their earnings go up and you got to give it a higher one question on bubbles. I made a list on twitter of a people who have made a bubble or undeserved multiple. Elon musk, shiller, bill gross, the list is getting longer. But theyre all big thinkers who dont want to look at well, no, the shillers of the world, they dont want to differentiate among stocks. I feel like thats getting your hands dirty. Okay, guys, is wells fargo really expensive . Maybe versus citi. But were stuck within the confines of individual stocks and among those, yes, tesla is very expensive but tesla is trading at a multiple to edmonds, as a multiple to the 3a. But a lot of stocks are not. We do have some outliers. Amazon is incredibly expensive. Harmon, up more than 10 yesterday is selling at more than 14 times earnings. How is that expensive . And you can back check this against the broader Financial Markets and say is it that stocks are expensive or that valuations are generally looking frothy. Look at whats happened with debt spreads. Look at the junk bond yields relative to some of the thats where you want the whole picture really. I dont disagree with that. Remember, we have huge companies, they fired a lot of people, they got free trade going on that makes it so the earnings can go up. The currency is going to go their way. Ppg is not that expensive but it just doesnt count in these big think guys. Its not his job. I regard it as my job to talk about whether aig is as bad as i think it is. And you do that job well. Thank you very much. Youre very welcome. Lets move on to a stock that is considered to have a pe multiple thats fairly low. Apple rolling out its ipad air, now available in Retail Stores around the globe. This is the first time china and japan have been included in the first day retail launch of an ipad model. Carl is going to model one for you right now. Im going to hand you both at the same time. See if you can tell which one is the 2 and which one is the air. Here we go. In is the air. Nice, very nice. Close your eyes. Were going to do a little shell game. This is the air. There you go. Were not here to show for apple, but the retina display, if you look at what mossberg said in his review, he was not kidding around. Icahn, 525 bid, thats the one i want to own. Who is trotsky, russian prune juice. Its going to go on sale today in the u. S. Well do our normal thing about looking at lines. Gene munster will have the channel checks. Munster says hugh about rich greenfield, facebook. Much better than expected. People say everything. I talked to a taiwan manufacturer of screws for this and then i met with the alcoa people that make this and i have no conclusions whatsoever. None at all . Can i see that again, please . No conclusions. Obviously, you have to work on your channel remember, this is an alcoa skin. And steve jobs loved the feel of aluminum versus plastic. And if you try to get an answer from alcoa about how well things are, theyre going to tell you youre going to have to wait a long time. Alcoa can wait. Yes, yes. Im a mini fan, by the way. You are . Yeah. That means your wife doesnt like what you watch. No, its just easy to carry with you and take with you and much lighter than this and basically does the same things. In terms of the stock and impact and this coming out and mossbergs incredibly positive review i think it does matter. But thats the problem with the analysts. The analysts think its Gross Margins. My suggestion is when you have a superior product, you will see Gross Margins go up because competitors cant compete. And Craig Jelinik at costco, he said this is the product, for christmas, this is the product. And ups has done well and percolating when apple has a new product that people buy. Said on a day that the Holiday Season does begin. Its a little regis. A little monochrome atic. In is an italian made costco tie. Its one tenth of what i usually pay for my ties and it wipes off the ketchup as good as ever. Jim bullard saying labor Market Progress in 2012 provides the most powerful case for tapering. Unemployment and nonfarm payroll gains have shown true improvement in the past year. He says not all job indicators have shown that improvement. The fomc wants reassurance. I bring this to you two days after the fed met, decided to keep its Interest Rate and qe policy in place. You have a kind of dovish guy who is talking a little bit about tapering and talking about labor market improvement making that case. And if there are any questions about how jim bullard thinks, we had him on for two hours on squawk box. Back to you. Really quickly, steve, is bullard the swing vote, so to speak . Is he the Justice Kennedy of the fomc . I think thats a good way to put it. He has been hawkish in the past. Right now he is dovish along with the minneapolis fed president. Id put those two in the middle. Theres kind of two Justice Kennedys on the fomc right now. Good context. Steve liesman at hq. Time to seal it up. The Container Store making its wall street debut, ticker will be tcs. Were told theyre bringing a hundred employees to the floor. Its going to get low. And kipp tindell coming up. A lot more squawk on the street in just a moment. I need to rethink the core of my portfolio. What i really need is sleep. Introducing the ishares core, Building Blocks for the heart of your portfolio. Find out why 9 out of 10 large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. To tostore and essentially they just get sold something. We provide the exact individualization that your body needs. 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You even get a 1 million service guarantee. Thats security no one can beat. Dont wait until you become the next victim call the number on your screen and use promo code notme for 60 days of lifelock Identity Theft protection and get a document shredder free. Call the number on your screen or go to lifelock. Com notme. Tjx sales doing great job. Raw stores. What do these stores have in common . Cheap. Private label. Kirkland. Boy, kirkland is so good. People are spending more on their tablet, their devices. Theyre willing to do that. Than they are on their sweaters. I think there was a terrific article today in the Financial Times talking about how the exmicrosoft ought to urge to spin off xbox unit. This is by paul allen. People like hard goods. They think theres a value in hard goods. Thats why home depot is up where it is. This will be an interesting story. They train their workers extraordinarily well, pay their workers extraordinarily well by industry standards. And we got to remember whenever we have these situations, its reminiscent because you did the great special on costco, they pay them high and train the costs so low. This is the old goldman thing. We used to do this thing called retention, where we realized if no one ever leaves, it saves you a fortune in training. Bucknell taught me that. If you have these workers and they do not turn over, you save a for tune tune in training ande like shopping there. The nations second Largest Oil Company was hurt by refining margins and theres a report that tesla is outselling bmw, mercedes and lexus in some of americas wealthiest communities. The model s is the most registered car in eight of the nations 25 most expensive zip codes. Thats incredible, isnt it . And this morning they come out and say theyre gaining significant traction in europe. Once again, a colt rose bigger in is a stock where people who test drive buy. They dont necessarily buy the tesla, they buy the stock. Why do we get yawns when exxon mobil and chevron report, two of the most Profitable Companies in the world . Did we wake you . What was that . Chevron . Chevron. Chevron is a company that is a Great American company that has very little growth. What do i do . Recommend that over tesla, which has super growth . The antibubble crowd heres a great experience. Chevron is right in the antibubble crowd. They have a division refining. Lets go right back to the Financial Times. Refining overcapacity hits shell and exxon mobil. Can i add chevron to that list . Yes. Why did they wisely spin it off . Theyre mad as hell and they wont take it anymore. Shell oil predicted the last gasoline car would be built in 2070. I thought it was 2069. Are you sure . Yup. That was not a good quarter. From shell. From shell. We have cars that dont use as much gasoline. We have natural gas that if you listen to the conference call, people are a little more excited about it. Diesel is 25 of our oil in this country goes to making diesel. Thank you Boone Pickens for teaching us that. If you switch that to natural gas, we would take our ships out of the straits and have cleaner skies and no one really cares. See southwest energy. Well, one day theyll listen in washington and theyll say, boy, he has no idea what hes talking about. When we come back, cramer will help your portfolio get off to a flying start this month. Next, one more look at futures as we kick off the beginning of november. I think with a little morrissey here. A lot more squawk on the street from the nyse straight ahead. Hmm. Mmhmm. [ engine revs ] [ male announcer ] oh what fun it is to ride. Get the mercedesbenz on your wish list at the winter event going on now but hurry, the offer ends soon. [ santa ] ho, ho, ho [ male announcer ] lease the 2014 ml350 for 599 a month at your local mercedesbenz dealer. 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Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens, and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Its friday. Amazing how quickly that weeks goes by. Well go to sony. Everyone wants out of sony. Can we look to loeb for help here . He bought them in japan. Its about a 6. 9, 7 stake. Well see what happens. But i would expect hes not done yet and now hes more or less flat on his investments. The parts are worth so much more than the whole. I remember the great Michael Price telling me that, look at all these different divisions. What is our phrase here when you get smaller to get bigger . Shrink to grow. Shrink to grow. Well see. That fight far from over. Listen people who think bubble, bubble, bubble. This is the shares that are owed that a Japanese Company had of theirs. This deal is 67, the stock is already at 68. 64. It sells at eight times earnings. So is that expensive . Is eight times earnings expensive david . Given the risk in this business . Come on. Has that ever supported a particularly high multiple . No, its always supported a single multiple. There hasnt been a lot of new capacity added on. This stock would sell at a 14 multiple if were really in a bubble. That means individual stocks are bubbles. Solar city is a bubble. Going up big off of first solar. So im just im just saying that you have to go case by case. Some industries have not gotten inflated at all. If its involved with elon musk, its a bubble. Its a bubble. Hes a bubble boy. Thats a reference to seinfeld. My kids want solar panels on my house. Its like, dad, go to solar city. Like circuit city. Circuit city, remember that one . Goldman sachs raised its price target today. David, get on board. I just like saying it, bubble best buy. Kleinfeld, everybody . Yes, it is friday and im getting a little giddy here, arent i . Squawk on the street coming right back after this. 24 7. Im sorry, im just really reluctant to try new things. Really . Whats wrong with trying new things . Look mommys new vacuum cat screech you feel that in your muscles . I do. Drink water. Its a long story. Well, not having branches lets us give you great rates and service. Id like that. A new way to bank. A better way to save. Ally bank. Your money needs an ally. Small Business Owners are using tools like email and social Media Marketing from Constant Contact to grow their business. Theyre getting customers coming back. Fans following their business online. And new customers through the door. See how Constant Contacts products and people can help you grow your business. Start your free trial at constantcontact. Com. Became big business overnight . Like, really big. Then expanded . Or their new product tanked . Or not . What if they embrace new technology instead . Imagine a companys future with the future of trading. Company profile. A Research Tool on thinkorswim. From td ameritrade. Youre watching cnbc squawk on the street. The opening bell set to ring in a little less than a minute. Busy store this morning as t Container Store gets set to ring the bell and go public. This is a company thats beloved with a terrific board and will be an exciting stock that will go at a nice premium. Very nice. Already had to raise the range as we pointed out this morning. Ticker will be tcs. Lets get a look at the opening bell, the s p at the top of your screen. As we said by now, at the big board celebrating its ipo. Well talk to the companys ceo in just a few moments. Over at the nasdaq, shutter fly, an online digital photo retailer. Goes a long way, enthusiasm. Yes, it does. I guess youre willing to just say this is part of the whole bubble process. It does point to sort of a larger issue as we get into retail. Were going to talk a lot about it over the next six weeks or so. Differentiation, specialty, trying to be all things to all people has not worked lately. No, it hasnt. Thats a great point. If you offer value or a unique niche, it can work, too. Whole foods is going to report next week. No one thinks whole foods offers value. It offers a unique niche. I like the fact they give it the Good Housekeeping seal of approval. Ill give anything for that. We are getting numbers on auto sales. Chrysler already came out with a miss. Phil lebeau has ford numbers. Reporter these are slightly below the estimate, overall ford for the month of october, an increase of sales of 14 . Again, the street was expecting 15. 5 . A couple of numbers stand out here. The best retail sales for the month of october since 2004. We usually dont focus on just one month. That is interesting. Best retail sales since 2004. The fseries, it continues to be just incredible. Up 63,000 in terms of total sales, up 13 for the month. That is the sixth straight month with fseries sales of greater than 60,000. Guys back to you. Phil, thank you for that. The stock does anything. I was going to ask you, you know, weve seen some of the whole sale inventory numbers showing stockpiling at auto dealers. Some of the loans are stretched out. Gm stories there about no deals, deals, i think if you dont offer these deals, you got to stay on that treadmill. These stocks have stalled. I dont know why. Im saying that its not as easy because europe is turning so you would think ford and gm would be doing a little better. Is al mulally going to leave ford . Is that the issue . It keeps coming up. The microsoft ceo job is certainly one of the bigger stories were following and i continue to talk to people about it. Its early. We dont know. But that name just wont go away. It wont go away. And number two, again, my travel im kind of flummoxed by it. Certainly in the states, the war between gm and ford continues on the pick up side. Phil mentioned the f series, gm is trying to push those si silverados. Its big money to the f series. With ford, im very, very upset with aig. Im sorry, with what . Aig. Revenues werent there. They did not deliver a good quarter. They just didnt. Weve not mentioned aig is going to be the biggest lagger on the s p, at least at the open. Netflix did get an uptick from bard. Its subscribers per share. These cult stocks, they always have a metric that we number of transactions per share. Theres always a way to come up with something that looks cheap. Thats the sign of a bubble, when you can come up with something. This is what we remember from the 90s. Its eyeball, david. Get with the program. Profitability matters not. Its only about growth in the market, measured by how about the fact that people like it. Isnt that enough . Its enough. Come on, david bard, by the way, does go into whether or not a set top box deal is in the offing. They say maybe not. But it should be offset by original expansion, even though the cost might be creeping up in terms of production. We keep mentioning bubbles and were doing it in sort of its a theme. I know. You dont necessarily think netflix is a bubble. I like to look at market capitalization. I think the opportunity is worth much more than the market capitalization, 20 billion. That idea they could own the world, own the living room, companies would kill for that. Amazon is just a great executeor. But i think the opportunity for netflix allows for the market cap to get higher and thats what i think has happened. And you had harmon on. Bob olstein was saying this is a company where theyre going to be doing double digits in every one of their enterprises. They do infotainment, this is a remarkably run company that gets very little credit. You gave them a platform last night. Two days in a row. Does a great job. Theres a harmon factory near where i have a house in mexico. You move there because its got a great workforce and its very inexpensive. Its an inexpensive place to make quality goods. Youre a free trader, im not. Youre not . No. Im tired of it. Im a fair trader. You cant get tired of free trade. I just think that we lost a lot of jobs to mexico. Hey, we did we lost a lot of jobs to china. They pollute the world, we have tight pollution controls. Doesnt seem fair to me. Okay. Facebook shares are up about 2. 2 today, rebounding after yesterdays selloff, i guess we could call it. Right. Wasnt that dramatic. There was that dramatic turn around after hours on wednesday. Facebook had the great growth. Upgraded today. Citi gives you a path to 70. It was the greatest growth of any quarter i believe of a Major Company in this earnings season and that should matter. And theres growth guys who want to own it. And i think that it is just again, theres a cohort of people who keep getting money in who is outperformed the market. Those are the growth stock guys. Theyre in biogen, theyre in facebook. They go buy these stocks as theyre looking at total addressable market, looking at 2017 earnings. Its ludicrous but thats how people view these things. Visas up, mastercard is up. Go over that call they gave you a clear growth path. They talked about a lot of good things in the pipe. That stock is inexpensive. That stock should be bought. Defense contractors having a nice day. Northrop on the docket on the top of the list for the most part. Theyve executed and executed. If theyd only given Lockheed Martin that for the web site. Nafta is not all good. We have to have cleaner skies, take our jobs away. I understand but you cant close off our markets. You cant do that. I think its just wrong to say we can open our doors to everybody when the chinese are not playing fair. Nafta has added a lot of jobs as well. Well check in with pisani at post eight as we await the Container Store. Gold, first weekly loss in three as people begin to think that qe is at a march taper, a december taper . Barrett did this gigantic deal to raise a lot of capital. You would think given how hard it is to get gold out of the ground these days that there would be some scarcity factor. That currency is not worth people, its a currency goal. The euro has regained luster. We dont talk about it enough. All these banks are starting to do recaps. Royal bank going to do a good bank bad bank. I just think that the euro is something to watch again as europe seems to be a little more yes. Criticize their germanys export policies. Lets get to bob pisani, who is awfully close to post eight. I dont know if you heard that cry that just went up a few moments ago. They boosted at the 28 to 32. 12. 5 million to 18, the price stock was 17 to 18, were looking at 28 to 32. Tcs was bought by Leonard Green in 2007. Theyre talking about expanding to 300 stores. Theyve only got of63 right now. Talk five went public a little over a year ago. Theyve had a huge run since then. They have been aggressively expanded. Restoration hardware went public a year ago in november. Theyve been expanding aggressively. That stock is up almost 200 . Not an ipo, i want to welcome east m eastman kodak. As an old guy with a dark room, it warms my heart to see them. Nice to see them back. Yields have been moving up the last two days, move up this morning, we made some news this morning, plosser was on the air from philly fed, making hawkish comments, that moved Interest Rates up, weve gone from 2. 48 to 2. 58 in the last days since the fed meeting. The concern is the tape sr is n off the table. Expectations are 55. Interest rates are going to move up again on that. By the way, speaking of ism, its been held by the oil and natural gas weve been receiving recently. By the way, they just raised it to 30 to 34 on the Container Corp now. Oil and gas really help in the manufacturing business. Did you see fluora this morning, they raised guidance talking about all the business theyre getting from the oil and gas industry. Theres your fracking premium youre getting. Chevron here short of expectations. I know the refining margins have been the issue but theyre still having the same problems as exxon and other big oil companies. They have higher cost, number one, number two, declining production and, three, they cant boost production fast enough. Theyve invested a lot of money, chevron. Thats certainly a good sign. But the bottom line is very, very simple here. Not a single Big Oil Company is outperforming the s p 500 but all of the independent oil and Gas Producers are dramatically outperforming the s p 500. I put up Pioneer Natural Resources but everybody in the shale and equipment end of the business, the halliburtons and slumbchlumberger schlumbergers. Right now 30 to 34 on the Container Store. Back to you. Well be checking in again i have a feeling, bob. Lets go to the bond pits and check in with Rick Santelli. Rick . Thank you. We finished the end of last month on a 10year at 2. 61, were hovering at 2. 58. Maybe the most important issue is that technicians really nailed it. At 10 40 today, ill tell you why they nailed the low yield at 2. 47 the day before yesterday. We can talk about all the reasons and tapers and blah, blah, blahs but the real issue down here is who really is going to control the market and how quickly it flexes its muscles. Look at the twoday chart of 10s. You can see where yields are going. If you open the chart up in mid june, its hard to predict how long it will stay above and what momentum it will build. The quote, unquote, riskfree area of the yield curves and fixed income market, lets look at some etfs. If you look at the lqd, you can clearly see all the risks are about the same, theyre turning and that makes sense. Lets switch gears. Lets look at the dollar. If you look at the dollar index, its just stellar. Its about a quarter of a cent over 80, it closed over a quarter of a cent over 79 last week. If you open the chart up here today, you can clearly see on this one, the move is rather substantial. Look at the other side, the euro. The euro is above 138 last week. Open that chart up. We are hovering at twoyear highs against the dollar. Now were below 136. With the ecb meeting thursday, this is going to be a wild ride. Back to you at post 9. Thank you very much, Rick Santelli. Shares of vodafone yesterday up rather sharply on report that at t is preparing to potentially buy vodafone at some point down the road. I guess they moved up that Container Store pricing again. Wow. Im listening. All right, good. It hasnt opened yet. You know, in terms of that, frankly, interesting that it moved up as much as it did because many people who are shareholders of vodafone already given the comments that have come out of at t over some time and things that anybody in telecom has been picking up of late would not be terribly surprised were at t to try and mount an effort to buy vodafone, once and only when its deal with verizon closes. Ta this is in europe, an ftsponsored speech he gave. I think the motivations, he goes on to say, for the European Union itself are too dramatic. I look at this and i see a lot of up side and potential for europe. It is interesting to note of course europe itself was so far ahead. 10, 15 years ago europe was far ahead when it came to Wireless Technology in this country. They completely lost sleep many would say because of the European Union, because of regulation, because of commoditization. Whether or not at t moves in there continues to be an open question. We will see. Of course vodafone, its not as if it doesnt have potential options it might want to pursue. Doesnt forget liberty mobile is out there, too. Perhaps they go like this, perhaps they go like that. One never knows. The wall street journal today pointing out perhaps the more important story, which is the nsa problem that we have. I think its for real. How will that impact if are we the chinese . Yes. You think about wallway and its inability to operate here and we might be treated the same way. I think we might be. I think we went rogue on this stuff. That may be the more interesting story. I totally agree with that. I think thats a huge story for us. The ipo buzz continues to build this morning as we wait for Container Store to open for trade. Latest indication, 35 to 39. After that, the companys chairman and ceo kip tindell will join us here at post 9. And ism is on the way in about 15 minutes. 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The up grade is moving the stock. I think its right. And groupon is getting attention here. I think groupon is making a major comeback with that new management. I would not bet against it, i would bet with it. Whats on mad money tonight . An analyst yesterday said sell first solar. I said by first solar. I try to give one or two stocks of the week now. You got to be there. I got to tell you, dalton, i am through with you. I am through with you. You wrecked my whole halloween and i came as dead mouse, too. I was dead mouse. With a 5 instead of an s . Yes, that was very nice. You want to stick around . We think we can time this right where the Container Store will start to trade when we return from commercial. Dont go away. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Its as simple as this. At bny mellon, our business is investments. Managing them, moving them, making them work. We oversee 20 of the worlds financial assets. And that gives us scale and insight no one else has. Investment management combined with investment servicing. Bringing the power of investments to peoples lives. Invested in the world. Bny mellon. Container stores just opened for trade. Bob pisani. Congratulations. Everybody is doing high fives here. Priced at 18. Opens at 35. Insiders own the stock at 5. 38. Just opened at 35. Theyre selling about 27 of the company. Thats a little larger than some of the companies recently. The current trend to sell 10 , 15 of the company. As you can see here, no problem with that pop, 35. 24. Theres all the people standing around congratulating themselves and of course the ceo will be over there in just a few moments. Back to you. We have the ceo. Lets welcome kip tindell. Thank you for being here and congratulations. Thank you. Glad to be here. What a morning. When i read your prospectus, the first thing that jumps out at the top is that you treat your employees, your labor force, your Associates Better and right. Somehow that does translate to better performance . Absolutely. Talents the whole ball game. I mean, we our most Important Foundation principles is one great employee can do the work of three good employees. So one equals three. Its the most important thing we do. We think we have the best employees in retail. I think thats why were here today. Samestore sales really important. Renaissance capital says we should not look at the deceleration, that their model say 3 to 4 same store growth. Were very confident of our 3 to 4 guidance. We think were in good shape with that. Excellent. A lot of our viewers might not be familiar with you, only 22 states, 60 someodd stores. What is expansion going to look like, 12, 24 months from now . Weve indicated we can grow at 10 Square Footage growth per year minimum. Its great to be inmature in retail. Theres a lot of runway left. Geographic diversity, does it matter to you . Do you double down on the states youre already in . No. Whats amazing is the product sells the same from new york to seattle. Can you find enough qualified employees . I know that sounds like a strange question given many people are looking through a job. You put people through rigorous training and interviews before i hire them. Your turnover rate is less than 6 . How do you do that . And is it difficult to find the right people . Its, you know, weve been on fortune magazines hundred best companies to work for in america list for 14 years, number one twice, number two twice. We have the privilege of only hiring 4 of the people that apply. So were able to really be selective. Once people join this company, they never leave. Were singledigit turnover. We train 263 hours of formal training to an industry average of eight. If you invest that much in them, you better not lose them. How much equity are you going to distribute as a result of going public . Thats one of the reasons we choose to do an ipo. Rebelie we believe in getting as much stock into the hands of employees as possible. We had a really robust directed share program. Were up to 40 of our employees owning stock, which is thrilling to all of us. 40 of the employees own stock and only about 30 are full time and so that include as lot of parttime employees, which is unusual. Even more than starbucks. Were going to put danny in charge of the food. People want to know if he caters the meetings. And walter robb, renowned. Bob jordan, who herb keller told me bob jordan is the best leader in america so we put him on our board as well. Were thrilled with our new expanded board. I cant help but notice your pin, 35 years. Might get a tight shot of it, maybe not. You cofounded in 78 with 35,000 borrowed. Yes. So the journey from that day to today, what is that like . Could you do it again if you had to start today . Gosh. Well, you know, you never expect this but we just it really is just a matter of taking care of your employees. If you take care of your employee better than anybody else, theyre going to take better care of the customer than anybody else. If those two people are ecstatic, your shareholder is going to be ecstatic, too. Thats what we kept in mind the entire 35year history. Im embarrassed to say its 35 years. That must have been my dad, couldnt have been me. Youve got to be pleased with this. Its awesome. Its a double. Kip tindell, a long way from the original range. Its the old peter lynch method, they like it here, theyll look it there. Lets head over to chicago. Well get the ism from Rick Santelli. All right, here we go. The ism National Number is 56. 4. Now, it isnt as strong as chicagos yesterday, but lets put this in some form of perspective. The 56. 2 last look, that was the best level since april of 2011, which means 56. 4 is also the best level because its competing against a 59. 4 in april of 11. But its not a bad number. Theres some strength here, just not as much as in chicago. Prices paid, moved down from 56. 5 to 55. 5. Employment index moved down from 55. 4 to 53. 2. And new orders moved slightly up. Well call it a wash at 60. 5 versus 60. 6. So lets summarize. The Employment Index didnt show strength. A pretty good report. All told as we hover just a whisker under 260, which happens to be the same level actually we closed out the month of september. Back to steve liesman. Rick, we all know everythings better in chicago except for baseball. We both know that. Chicago pmi was better. Though i dont think politics is better what it is you do there politically, you do much better than anybody else. We train for the national level. We train politics in chicago to go national and to the country, i apologize for that. Rick, lets talk about this. Your take on this is right. This is a strong report. Were talking about a National Index here, not just a chicago index. And 56. 4 is two things. First of all, its a high level. Second of all, its not the decline and the easing off of the high level from the prior month that economists expected. Everybody thought because of the shutdown and all the uncertainty created, it was logical to expect an easing of this number. It hasnt happened. And now a fourth thing that just as im thinking this through is that as rick said, the internals are quite strong. New orders up, remaining at a high level, 60. 6. Production, easing back from 6260. But still a very high level. 50 is the break even point. So anything above that when you get 10 points above it at 60, thats a good number. Employment did ease back. It was a strong number last month. 53. Still above the 50 level. Still growing. We go through this one by one, the back log also up now above 50 from 49. This echos the chicago pmi, the milwaukee and National Index suggesting that manufacturing is ahum, kelly. How is that for a word . Let me just pick up on that. Yesterday we had the biggest jump in the chicago pmi for 30 years. Are we now present to the ideas that there are up side surprises potentially, that the situation could be changing quite dramatically from what wed assumed. I think two parts to that, simon. One is up side surprise from the down side that people had in their minds when it came to the effects of the shutdown. We had a decent manufacturing employment number last time around and well look for that again to see if maybe manufacturing has some employment. The autos are doing okay, boeing is doing okay, Big Manufacturing Companies had done well, simon. I dont know if you want to do it or if i should do it. All that talk is going to accelerate the talk about tapering at the federal reserve. For sure. Oh, wait, wait, ill see you at 10 30. We have jason fuhrman, the president s economic adviser coming up. Were you going to do that, carl . I cannot wait, well see you then. Phil lebeau has gm numbers out with october sales. Hey, phil. Reporter interesting numbers from general motors. Lets bring in the vp of u. S. Sales from the companys headquarters. You were up 15. 7 last month above the estimate of a 10 increase. What are you noticing in terms of people coming into the showroom last month and how much of the impact was there from the shutdown of the government. Phil, theres no question that, you know, the beginning of the month and last month were impacted by what was going on in washington. But honestly, if you look at all the other positives going on, fuel prices down, employment stable, auto, housing doing well, we still see good fundamentals there and were still bullish on the industry and the economy. Kurt, sales dropped 32 . A lot of people are going to look at this and say whats going on with the volt . The volts still in real good shape, phil. If you look we sold a little over 2,000 units. 99 of that was all retail business. So were still in a good place. I think were about 47day supply nationally. If you look at company where were doing about 40 of our business, 17day supply. So were still very bullish about the volt. Then why not increase production, if youre bullish about it. I bring this up because tesla sales, many are believing that their deliveries are going to be above expectations and many are saying if there is an inflexion point, you should be seeing better sales about the volt. If youve got to short supply, why not increase it . Inventory is a fine line to walk. We certainly dont want too many. We feel pretty good about where we are and we can ebb and flow production, phil. We feel were in a good place to take advantage of that business. Absolutely. One last question, kurt. Incentives. There is concern on wall street were going to start to esee the beginnings of an incentive war bubbling up. They are down year over year for the industry but for you guys they are up. Are you worried in a youre going to have to start juicing the deal a little bit in the showroom . Actually, phil, weve been very disciplined when it comes to incentives. If you look at it from a percent to atp, were down under 10 . A lot of our competitors are above us and were going to continue to remain disciplined. With all of the launch products that we have coming, were excited about it, were going to remain disciplined and take advantage of those launches. Kurt mcneil, on a day when gm had good news with sales increasing 17. 7 . That vote number with sales dropping 32 is going to get a lot of attention, no doubt. Back to you. Gm sales up 2 this morning. Turning now to apple. They are rejoicing because the thinnest and lightest ipad goes on sale today. Josh, what do you see there . Here in palo alto at the apple store, the new ipad air on sale today. Theres already about 20 people online. You ask them why they want the device, some say its thinner, lighter. Some said they read the reviews and that got them excited. It is thinner and lighter, weighs one pound, ten hours of battery life, running that new 64bit a7 chip. The starting price is 499. If you want the deluxe model, the wifi and cellular activity, thats going to run you more like 929. The big question is what is this going to mean for the apple share of the global tablet market . A year ago it was more like 40 . Analysts i talk to, one question they have is is this device cool enough and different enough to jump start that tablet market share. Weve been playing with one version, very light. Our thanks to at t for making it possible for us at least to check it out as it goes on sale and might be hard to find for the next few weeks. You think thats going to be a rush . Supply has been talked about as an issue for the Holiday Season. Though i didnt see a huge rush behind josh there, not that people are necessarily going to be lining up behind what time is it . 8 past 7 in the morning. Were the die hards, though. You dont think people will camp out for the new ipad air . No. Six. Thats apparently the number of people able to sign up for the Health Care Law on its first day. Up next, find out what the former health and Human Services secretary Michael Levitt think the white house needs to do now to get the Affordable Care act back on track. Free research re, customizable charts, powerful screening tools, and guaranteed 1second trades. And at the center of it all is a surprisingly low price just 7. 95. In fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. Im monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Bny mellon combines Investment Management investment giving us unique insights which help us attract the industrys brightest minds who create powerful strategies for a countrys investments which are used to build new schools to build more bright minds. Invested in the world. Bny mellon. The report also saying that cms had not collected 225. 6 million in overpayments that it should have collected. Now thats the alleged misman e mismanagement on the part of cms. But medicare and medicaid, the programs that cms manages are among of the most widely frauded. Since 2007, theyve charged more than 1,500 defendants. In april the strike force charged 89 people for 223 million in false billing. So, guys, whether its incompetence by cms managers or fraud against cms, this is an agency that has struggled over the past years. Its one in washington that has a lot of people scratching their heads. Obama care is being run by this agency but the question is if youre going to launch a web site, is this the agency you would necessarily choose to go out and do an extremely technical, complicated process that affects the entire country . Eamon javers in washington, thank you very much. The federal site, the healthcare. Gov has been plagued from the start. Now it looks like your location could play a major role in how well or how badly the site performs for you. Bertha coombs is live in lexington, massachusetts with more on that. Good morning. Reporter good morning, simon. Were at compuware. Theyve been doing an independent end user testing and monitoring of how people are accessing the site, healthcare. Gov. It does seem there are differences. The government says it should all be the same because healthcare. Gov is the one portal for some 36 states but there are differences depending where you are. This is a map of what you have saw a couple of weeks ago. And tell us what the red means. Obviously not good. So what youre seeing here is real and user computers that were using to test the Response Time of the site. And all the states that are red are indicating an average of greater than 8 seconds Response Time, which is considered unacceptable to us in our testing. This is realtime this morning. Its certainly gotten a lot better, yet we see big disparities. Today, if you were in kansas city, kansas where its green here, your Response Time is about four seconds. If youre in kansas city, missouri, it can take you more than 30 seconds. Why are you seeing that kind of disparity . These are real world conditions where these could be on a wireless network, an office network, theyll see different Response Times depending on what browser they have, if theyre on an older browser . Could the system optimize that . Sure. Independent of these conditions you might get better performance. As an end user yourself, there are some things can you do. You have a tip sheet in terms of using the latest browser version. Sure. Also clearing the browser cache, and then perhaps consider what Network Connection youre using. If youre on a wireless network, sharing that at a local coffee shop might give you low performance. You have to optimize just how much band width youre using when youre going into the site. Well have more later. Back to you. Thank you so much, our bertha coombs. The administration giving themselves one more month to fix those glitches on health care. Com. The question is will that be enough time. Joining us this morning is michael leavitt, the former secretary of health and Human Services. Governor, good morning. Good morning. Obviously youre used to these rollouts, having implemented Medicare Part d. That headline of six enrollments on day one, how does that strike you . Well, i think the value of it is shocking, shocking headline. The reality is these situations always have glitches. Thats a profound one. Administration ultimately will be gauged or the history will judge their effort by whats in effect on march the 15th of 2014, not so much what will happen on the first day. I dont say that to minimize the difficulty of the dilemma they have. They have some serious trouble here and theyve got to solve it or the president s Legacy Program will clearly be imperilled. Your experience with part d, 43 million seniors, another massive program that had to reach a lot of people. Do you have a longer fuse than most, more patience than most because of your experience . The first six weeks or so, the same thing is happening to a lesser degree when we rolled out Medicare Part d, there were lots of accusations of that the web site was not functioning perfectly and they were right. There were problems in trying to get all the medicaid systems to connect up and that was correct. But we fixed it. And when we did, people began to use it. Now, i dont know if thats whats going to happen here or not, but i do think its a fact of history that needs to be acknowledged. What we just saw with in the previous segment with metrics used to match up hit times, thats a very smart thing that the administration ought to be doing. They ought to be creating metrics to say, look, this doesnt work the way we want it to but were making progress and heres a metrics you can measure to do that. I think thats a big mistake for them. They need to acknowledge that there are problems but were fixing them and heres evidence. Governor, correct me if im wrong. Overall the success of this whole endeavor is particular to number of amounts. If it transpires that not many people are signing up, in particular iunhealthy people ar signing up, then peoples premiums could go up. If you were currently the secretary, would you be happy with the way in which your boss is getting the message out there . Because i dont see that type of vision across the country that will empower the system and get enough momentum for it actually to deliver mathematically on what it has to do. This is an area where i think comparison to part d can be made fruitfully. We started our enrollment cam p campaign not to enroll but to educate people in advance. I went to 200 cities. We had bus tours and advertisements. Some of this has been driven by the fact they may not have had the budget, i dont know. I do think they have trouble in being able to educate people. They have a lot of challenges. The first one is the technical problem. They have to solve the technical problems or theyre never going to get to the numbers. You are right, what really is at stake here isnt whether or not they got their web site fixed. Its whether the pooling process that theyve developed is going to work. You have to have enough healthy, young people in this pool to make it affordable for. Else. Governor, i mean, it appears to be actually worse than that. According to the front page of the Washington Post today, in some states eight out of tn of the people that are signing up are on medicaid. If you continue that sort of ratio, its simply going to be seen as an expansion of the entitlement program. And a huge divergence between those states that have opted in and now must bare the cost of that and those that dont. It becomes a political mine field, does it not . Its an economic mine field. It was created around massive subsidies for low income people. And many, many of those, a big majority of them, will be medicaid recipients. Its natural youre going to see people that are, a, receiving large subsidies and, b, those that need Health Insurance because of their health. Theyre the first ones that are going to sign up. Youve got it right. The equation is there. Its the reason many have been skeptical of the economics of this. Like other entitlements that have been passed in decades in history, this is going to be much more expensive than what has been projected. Simply for the reasons that youve enumerated. Iron the glitches out, get the rest up and running. Thank you, former governor of utah and former secretary of health and Human Services. Who are the outside investors set to make major bucks when the Company Debuts right here on the big board . Well tell when you we come back. vo you are a business pro. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. [ male announcer ] eeny, meeny, miny, go. More adventures await in the new sevenpassenger lexus gx. Lease the 2014 gx 460 for 499 a month for 27 months. See your lexus dealer. [ laughter ] [ female announcer ] each one of us is our own boss. And no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. In a world thats changing faster than ever, we believe outshining the competition tomorrow requires challenging your Business Inside and out today. At cognizant, we help forwardlooking Companies Run better and run different to give your customers every reason to keep looking for you. So if youre ready to see opportunities and see them through, we say lets get to work. Because the future belongs to those who challenge the present. Go, Company Insiders hold more than 25 of twitter. But who outside twitter now controls the largest stake you may ask yourself . Julia boorstin is live with more. Rizvis will own as much as 15 of its ipo. Jpmorgan is a big investor in those funds with a 9 postipo stake. Now, for a man o whose company has such a massive stake in a highprofile ipo, he keeps an incredibly low profilf manageme. Chris sacca has been building funds to invest in twitter shares from employees and other investors. Twitter gave sacca right of first refusal to buy shares. His series of funds has brought investors. Saccas name is not listed because he signed over rights to rizvi, he also owns sesac, flipboard square. From the very beginning sacca and rizvi agreed to be longterm holders, not selling until at least 100 days after the ipo. Jason fuhrman coming up. We have lost some points here. Hmm. Mmhmm. [ engine revs ] [ male announcer ] oh what fun it is to ride. Get the mercedesbenz on your wish list at the winter event going on now but hurry, the offer ends soon. [ santa ] ho, ho, ho [ male announcer ] lease the 2014 ml350 for 599 a month at your local mercedesbenz dealer. About an hour in trading, some of the stories were talking about on the west coast. The ism Manufacturing Index for october, above expectations, rising slightly to 56. 4. Chevron is the biggest loser on the dow, falling 2 on a Third Quarter miss. The oil giant hurt by lower refining margins and a strong debut for the Container Store. The retailer nearly doubling after pricing its ipo at 18 a share. Now to obamas top economist this morning. Jason furman is the chairman of the economic advisers. Steve liesman has the lead. Reporter there is a lot going on. Jason is just the person to talk about it. Its great to be here in the studio. Lets talk about the economy straight off the bat. We just got through the shutdown and the debt ceiling debate but we had some strong economic numbers. If you look at the month of october, you saw claims go up a lot at the beginning of the month. They started to recover but they still havent recovered to back to where they were at the beginning of the shutdown. Well see in the jobs number next week, the shutdown will have taken an unnecessary toll economy. How much of a toll . We estimated that the jobs number would be about 120,000 jobs lower than it otherwise would have been because of the shutdown. And is it still your belief after seeing claims come down and the ism this morning, which was very strong . The ism was strong. The American Economy has a lot of underlying strength and were going to be able to get back to that strength and if we have certainty of not lurching from fiscal crisis to fiscal crisis, were can have a really strong economy. Im confident well bounce backs. This selfinflicted wound hurt the economy. We dont want that to happen again. I think there are a number of strong factors in the chi, the structural factors, the low rate of growth, health care. Energy is a big boom. In the housing sector, a little leveling off as Mortgage Rates rose. Were still below our total potential. Auto sales continue to be strong. There continues to be a lot of pentup demand there. We need to do our job in creating the certainty we need, making the investments in jobs. One of the criticisms of the Obama Administration is it gets in the way of business and growth through regulation and a variety of ways that it ends up hurting growth. How do you respond to that . I think thats just completely wrong. If you look at Something Like energy, administrations, all of the above approach to energy has helped fuel a huge growth in natural gas, a huge growth in oil exploration, but at the same time were using less oil and were exporting more and thats good for our economy. Youve soeen types of regulator approach that you took before was one of the things that contributed to the financial crisis. You need rules of the road to foster that type of growth, you dont want the u. S. Talk about the fact that youre here to promote Foreign Direct Investment. One of the up sides is important employers in the u. S. Tend to be more stable employers, less likely to hire and fire in the middle of a downturn. The president is always looking at how to create jobs, some this eveniof it is like im reform and yesterday the conference brought in over a thousand people from all over the world. The message was america is open for business. Foreign direct investment in the United States, its 4 of jobs, those jobs contribute 5 of our output, 16 of our r d, 20 of our exports. So Foreign Direct Investment really punches above its weight when it comes to the u. S. Economy and wed love more of it and were trying to attract that investment here. It shouldnt be said the president s economic adviser doesnt know the number. One of the things thats been a big black eye for the administration is health care. I know thats not strictly speaking your Department Getting things running. Does this really underscore the criticism of the republicans that governments just no good at doing these things and ultimately the private sector is better at doing them . First of all, Health Reform is centered around the private sector. Its centered around marketplaces. Those are private insurance companies, theyre competing for business, theyre trying to attract customers and as the secretary of health and Human Services said, what happened with healthcare. Gov was a debacle and people are fixing it now and theyre working 24 7, working around the clock and theyre going to fix it. Theres more to Health Reform than just that web site, but i think the government is doing what the private sector would do. I mean, its hard to argue that the private sector would have done as badly as the government did. Youve seen the private sector botch things before. Youve seen web sites and new Computer Games go up that are used by millions of people that cant use them the day after they go up. They do what we do. They bring people in, they bring a lot of resources to bear and get the thing back on its feet. And the product sector doesnt launch things in this type of political environment where a lot of people are rooting for your failure. Thats all the time we have. Jason furman, chairman of the council of economic advisers or, as you said, the president s top economic adviser. Thanks, steve liesman. Lets check in with dominic chu. Check out shares of spirit aerosystem, a major supplier of components to boeing and airbus, it reports a 10 rise in sales due to Strong Demand for large commercial aircraft. They expect demand to double to more than 2 trillion over the next 20 years. Spirit aero also benefiting from reining in those costs. Usage of facebooks among u. S. Teens overall was stable but we did see a decrease in daily users specifically among younger teens. Well, a 13yearold penned this oped back in august titgtd im 13 and none of my friends use facebook. Shell join us to tell us why facebook is not appealing to her and her friends. Many yachts are going high tech. Well show you lights controlled with an ipad, boats in a steer themselves and of course retractable flat screens. Well tell you about all the latest gadgets on mega yachts, as well as whats coming up on squawk on the street. At farmers, we make you smarter about insurance. Because what you dont know, can hurt you. What if you didnt know that posting your travel plans online may attract burglars . [woman] off to hawaii what if you didnt know that as the price of gold rises, so should the coverage on your jewelry . [prospector] ahh what if you didnt know that kitty litter can help you out of a slippery situation . The more you know, the better you can plan for whats ahead. Talk to farmers and get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. Busy morning here. Container store of course going public, nearly doubling. Lost some ground, though, when ism hit. Best number in two and a half years but some of the internals not so good, including employment and the production series. Maybe its that, maybe its that good news is once again bad news. Well see. But for the time being, dow is up 47 points. Lets go to Rick Santelli and the Santelli Exchange. Hi, rick. Reporter were going to talk technical calls. I know the biggest joke on the Trading Floor and all the 34 years ive been on this Trading Floor has been that technicals are interesting and charts work sometimes but at the bottom of the ocean, theres a lot of sunken ships with a lot of chart rooms. I always found that interesting. I have to tell you, theres a lot of repettive, predictable aspects to human nature. There just are. Humans tend to behave similarly under similar sixes. I think bubbles and tulips will bring to mind some examples. But in nature, many things are very predictable. I do an experiment of viewers, listeners on radio when you go home. Hold up a piece of paper and go up to any of your friends and say this is my door, knock on it. What you will find is most people never knock four times, about 90 of the people knock three times. These are comfortable numbers to us as humans. I think to that end Technical Analysis works in a very good way giving you levels. Its beyond the levels that all the questions rise. Id like to run something that was said a couple of days ago. Lets run that piece. The bond market rally down exactly to 247 on the 10year, a picture perfect kind of resistance point. All right. Now, that was on halloween. Lets run something that i did on the Santelli Exchange a month and a half ago. Can we run that second piece. If you take the 38 times each of those ranges, you come up with 46 basis points and 52 basis points in 10s, subtract that from your high yield, you end up with a yield of 139 for your major 138 on 5s, 247 on 10s. So we showed you how to do it. It pretty easy. Thats the 38 retracement. For the five year it was 138. For the 10year it was 247, right on the nose. These things really arent hard. The hard part of technicals isnt coming up with the right level, its how you frame that with regard to time. Time is one of the things along with price that most technicians underestimate. If you want to really brush up on it, i advocate you do some research and find some rare books still out there written by the greatest technician of all time, w. G. Gann. The yield curve on wednesday, where where the 5year notes . They were at 1. 24. How many times have you heard the big Bond Fund Managers saving the darling of the yield curve you want to buy are the 5 years. This is testament that this is correct. But if this is going to be the great bottom i think it could be in yields, what you need to see it all of a sudden were at 135 in 5s. If you get the 5 year and the 10year above their retracements, most likely were going to see a lot more selling. Theres a lot of way for the yield curve to steepen. You could have yields go down on 5 and still see steepening, you could see bonds go up on 5 and still see steepening. The 10year will outrun it in a fairly aggressive way. Back to you. Thank you very much. Rick santelli in chicago. Since ancient greece, yachts have been a symbol of luxury and now theyre becoming a symbol of the very latest technology, from fingerprint recognition to underwater protection systems. Well give you a look at that after the break. [ bagpipes and drums playing over ] [ music transitions to rock ] make it happen with the allnew fidelity active trader pro. Its one more innovative reason serious investors are choosing fidelity. Get 200 free trades when you open an account. Maestro of project management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Ask me what its like to get your best nights sleep every night. [announcer] why not talk to someone whos sleeping on the most highly recommended bed in america . Ask me about my tempurpedic. Ask me how fast i fall asleep. Ask me about staying asleep. [announcer] tempurpedic owners are more satisfied than owners of any traditional mattress brand. Tempurpedic. The most highly recommended bed in america. Now sleep cooler with extra cooling comfort on our bestselling tempurbreeze beds. Visit tempurpedic. Com to learn more, and find a retailer near you. It seems like something from the movies, a yacht that can be piloted with an ipad and state rooms that are accessed with fingerprints, but this is the real deal. Our own robert frank is life at the Fort Lauderdale International Boat show with a look at some of the most technologically advanced yachts out there. Robert, good morning to you. Good morning, carl. You know, youve heard of smart homes. Now we have smart yachts. Aside from size, the big race in yachting is all about technology. It starts right here on the bridge. As you mentioned, we now have boats that can being piloted with an ipad or piloted themselves with computer navigation systems, advanced detection system where the boat can avoid collisions and wildlife areas. For guests now, its all about the entertainment systems, the music, the lightings, the blinds are all controlled by ipads and smartton smartphones. This one that im on now has 16 terabytes. Everything is retractable nowadays. You have tables, even retractable glass walls. Get this. This is the ultimate retractable. Its a retractable boat. One minute, a sleek boat, then it releases, and its a party barge. A 1. 2 million expandible there. The boys on board, theyve also gone really high tech. The latest the wheels, because they look great. But im told by the captain that this wheel is used best for just putting your feet up. Thats about all they use it for these days. Guy, back to you. Wow. That is quite the yacht. Robert, what would be the date line on that one, somewhere in downtown manhattan, somewhere in the harbor this morning, robert . Reporter yeah, exactly. You know, there are over 3,000 boats here today. And just the technology today, this really is the arms race with yachts today, who has the coolest gadgets. Theyre spending a lot of money on this stuff. They certainly are. Robert frank for us this morning with a look at some of the latest and greatest. Straight ahead, look at this live shot of the apple store in palo alto, set to open in just a couple of minutes. Not a lot of activity, though. Well get the full report oh, come on, thats a queue for goodness sakes. Thats a queue. What more do you want . All right. Well zoom out. Well see whats going on, get that for you after the break. Plus, well dance down memory lane with this man. Ellen, tell us whats going on. Whats happening down here . [ applause ] [ male announcer ] eeny, meeny, miny, go. More adventures await in the lexus lx, rx, and new sevenpassenger gx. Dare to be spontaneous. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. Tdd 18003452550] tlife inspires your trading. The internet of everything. Tdd 18003452550 where others see fads. Tdd 18003452550. You see opportunities. Tdd 18003452550 at schwab, were here to help tdd 18003452550 turn inspiration into action. Tdd 18003452550 we have intuitive platforms tdd 18003452550 to help you discover whats trending. Tdd 18003452550 and seasoned market experts to help sharpen your instincts. Tdd 18003452550 so you can take charge tdd 18003452550 of your trading. An increase of 15. 2 . Again, toyota up 4. 8 in the month of october. Guys, back to you. Yeah, well shy of estimates this morning, phil. Well keep an eye on the shares. Also looking at the shares of the Container Store. They are surging after the ipo and doubling. Thats 100 . Trading at 36. Up 18 bucks. The company only has about 62 stores in 22 states and in washington, d. C. Earlier on the show, we spoke to the chairman and ceo, cofounder of the Container Store. He said he appreciates that fact and sees it as a growth opportunity. Take a listen. Weve indicated that we can grow absolutely at 10 footage growth, and were looking at doubledigit growth from here on. Its great to be immature in retail with 63 stores. Theres a lot of runway left. Wow. So they will join the ranks, carl, of companies that have done quite well in their debut. A bit of a segue there, as we look at some pictures of bob pisani, the dean of the big board. You know him well. Today, officially marking 20 years at cnbc. He joins us at post 9 this morning to talk about the past two decades. That was one of the original seats at the new york stock exchange. There was seats at the nyse, and back in the 90s, we pulled out history to explain what was going on. I was actually hired in 1990 as the real estate correspondent. David was here. Hell remember it well. And the person who hired me was david. David called me into his office and said, why do i need a real estate correspondent . And i looked at him and i said, because 35 of american households own stock, and 65 own a home you dont have any coverage for that. He looked at me and he said, that was a good answer. Youve been here longer than david, then. Yes. I had no idea until this very moment that he actually was not fully staffed i worked from 90 to 93 full time, but wasnt staffed, because they were trying to keep the head count down. They kept telling me its too tight. Finally, i walked in and freaked out on them. You did real estate before you moved down to this floor. In the middle of 96, i cam down here to sub for maria, who was here for a year, and in 97, came down full time. Its been one amazing run. You know whats wonderful about being down here all these years . You meet all of your heroes, everyone, every rock star, every heads of state, every ceo that you ever wanted to meet. I think my favorite moment was walter cronkite. He spent half an hour with me, because he was my childhood hero. Of course. Explaining the moon program and all of the things he wanted to, and advice to me. I think i really appreciated that. We were watching you dance with ellen degeneres. That had to be a highlight. She came down here when the show was sort of in the middle of things. It was very hot. She wanted to do a segment at the nyse, and her producer called me up, and said, ellen likes to dance with people, are you good at dancing . You have your answer. There you go. And you are mr. New york, bob. When i first came here, you took me on a threehour tour of the bars in lower manhattan. Well like walking with a major celebrity. Hi, bob. Hi, bob, all the way around. Im interested in the bars for historical purposes. The oldest bar in new york is just down on the corner, the bridge cafe. Indeed. Got inundated during sandy. Yeah. Unfortunately. Still hasnt reopened. Thats not a focus of my research under any circumstances. Were not that worried about it. In a way, youve never stopped covering real estate, right . No. Its always remained a passion of yours. And diana olick did a fantastic job. We didnt have one for many years, and im so happy shes covering it and doing a great job. Whats more important than the retirement issue, the home you have . And the important thing for cnbc is making sure that the retirement issue is front and center in america. Were going to have a retirement crisis, the baby boomers are not in good shape for retirement, and we need to make that a big focus. You should try the generations after that. Yeah, a tough one, too. Our generation didnt save much until late in life. Most of us didnt start saving money until late 30s and into our 40s. The average 55yearold has something, like, 60,000 in their 401 k. Its not a good sign. We need to make that a real priority. Glad they made you staff, bob. They did. That worked out for you. Two things in my life ive heard, shut up or keep talking. Thatll be the title of my biography. Shut up and keep talking. Every once in a while when youre not there, or a guest not there, theyll say keep talking. All right. Bob, thank you. David, with you all these year, always a pleasure. For me, as well. All right. As we kick off another hour, joining us this morning, heres what you missed earlier on. Announcer welcome to squawk on the street. Heres whats happened so far. Weve known for a long time how to move Interest Rates up and down, and the public and markets kind of understand that. They dont know much about how to move asset purchases up and down, and were discovering how difficult that is. If they keep providing all of this liquidity, thats great for the stock market. And if they begin to taper, it will be because the economys doing better, then i get a better e on my earnings front. This is 1937 without this fed. In november, the fed piled on in 37. This is not that time. Bernanke sees whats going on in washington. He knows theyre destroying any sort of hope for in confidence, so he has to provide it. Which one is the 2 and which one is the air . Here we go. This is the air. Nice. Very nice. It is noticeable. Close your eyes. Doing a shell game. All right. Im in. This is the air. Thats right. There you go. [ bell sounding ] most Important Foundation in principles is one great employee can do the work of three good employees. So one equals three, its the most important thing we do. We really think we have the best employees in retail. I think thats why were here today. American economy has a lot of underlying strength, and well be able to get back to that strength, and if we have some certainty, not lurching from fiscal crisis to fiscal crisis, making the investments in job, we can have a strong economy. Good friday morning. Welcome back to squawk on the street. Were live at post 9, watching the markets on a pretty busy day. Container store going public, has nearly doubled. Got some i. S. M. Numbers pretty strong, but not internally. The dow is off 61 point, the s p up almost 4 points, and after a torrid month of october. Shares of netflix rallying. Bear did upgrade the stock, focusing on the companys increase in original content. And another look at tcs, the Container Store, soaring after it started trading this morning, priced at 18, but obviously now trading at 100 gain, 36. 10. A lot more on that Company Later in the hour. Can you feel it in the air this morning . Apples ipad air is now officially on sale in Stores Across the country. Well look at the demand for the new ipad and what it could mean for apple shares. Plus, the Obama Administration, six is the loneliest number. Thats apparently how many people were able to sign up for the obama care exchanges day one. Well look at what this means for the future of the law. Maybe we should listen to teenagers when it comes to facebook. A few months ago, a teen wrote, im 13, and none of my friends use facebook. Shell be here to tell us why facebook isnt cool anymore. The numbers for obama care are not pretty. According to document, only six people six were able to enroll in obama care on day one. Those dismal numbers have people taking a closer look at the Organization Running the program. That is the centers for medicare and medicaid services. Our eamon has more on that story. Reporter hey, carl. Centers for medicaid and Medicare Services oversee them across the country, and its an agency thats really dealt with challenges in terms of its own management mistakes, and, also, massive fraud over the years against medicare and medicaid by people all across the country. The agency struggled with both of those things. Take a look here at some of the headlines from the Inspector Generals website over the past couple of months of problems at cms. Cms improperly paid millions of dollars for prescription drugs. The Inspector General said that allowed about 29 million in drug costs. Cms incorrectly paid hospitals for beneficiaries, allowing about 7. 7 million in payments. Cms is also not collected 225. 6 million in overpayments that the Inspector General says it should have collected. Those are the failures of the agency just within the past year, according to the Inspector General. And then, also here, look at this medicare strikeforce. This is a response to the fact that medicare and medicaid fraud has gotten so pervasive, the department of justice and hhs formed a task force to deal directly with it. Since 2007, that task force has charged more than 1,500 defendants. Those defendants collectively have falsely billed the Medicare Program for more than 5 bill n 5 billion, and in april, the strike force charged 89 people for 223 million in false billing, and in that case, they noted Court Documents allege they bribed beneficiaries for the medicare information that was used to bill for Home Health Services not rendered. I love the detail here in the case. The lead defendant here allegedly spent much of the money from the scheme on luxury vehicles, including two lamborghinis, a ferrari and a bentley. It looks like Medicare Fraud can pay at least temporarily, carl. Eamon jabbers in washington. Thanks. You bet. The new ipad air is available in Stores Across the country. So is demand for the ipad strong on day one . Josh lipton live outside an apple store in palo alto with more on that. Josh, first we saw pictures that suggested there werent a lot of people there, and then it looked like a decent crowd was building. What do you see now . Reporter yeah, well, here in palo alto, kelly, at the apple store, which just opened the new ipad air going on sale, i can tell you we got here pretty early. It was still dark out. About 20 people on line. I would say now theres around 30, 35. You ask them, what has them excited, theyll talk about the fact the device is thinner, its lighter. I did also ask them about the price of the device, and some of them said, listen, they use it so much personally and professionally, they werent really worried about that. Lets go over the specs of the device. 9. 7inch display, 10 hours of battery life. Weighs around one pound. Running the new 64bit a7 chip means it can handle more data quickly. The starting price is 499. If you want that deluxe version, the wifi and cellar connectivity, you want the 128 gigabytes, thats going to run you around 929. The big question, though, really is what this will mean for apple share of the global tablet market. According to idc, in q3, its share was about 30 . In the yearago period, it was more like 40 . So you have seen a drop there. A couple of important caveats there that apple bulls would point out. One is they hadnt upgraded their ipads in some time. Two, apple does have a different strategy here. Theyre actually making money on these devices, unlike some of the rivals. Kelly, that is the question, i know, analysts have, is this device cool enough, is it different enough to jumpstart tablet market share for apple . Guys, back to you. That is a huge question. Thank you so much, josh. Josh lipton. Will the new ipad air be a game changer for apple . We want to brig in ed beg this morning with usa today, and rob cera, over at evercore. Happy friday. Good to see you again. Thank you. Good to see you. Ed, you say in a sense its more name change an game change. You say even for apple aficionados, its not a mustdo upgrade. What would it have taken to make it a mustdo . Well, i mean, when you think about it, the recent ipads all run the same apps that this new one does. 475,000. And thats not to be minimized. And, you know, you guys talk about thin and light and fast. Again, not to be minimized. But theres not any real new features here. I mean, i wanted to see the fingerprint scanner that they put on the new iphone, for example. Thats not there. I would have loved to have seen time limits on parental controls. I have a wish list of features, but having said that, it is a trsk ipad for people looking to either get into the market for the first time, or to, you know, upgrade, say, the original ipad. If you have a recent ipad, its not going to do anything that your recent ipad doesnt already do. Yeah. Rob, a lot of other tech writers sort of echo what ed is saying. Is that enough to move units in the quarter . I think it could drive actually a pretty big upgrade cycle. Obviously, the software has a lot to do with it, and you can run the software in the new one and the old one. Whats different is the ipad air is a lot thin, a lot lighter and slimmed down to look like the mini. Its the first ipad in five generations that looks different, and i actually think that different look could be the thing that gets people to upgrade for the first time in a while. Yeah, rob, how important are aesthetics here relative to just the price point . I mean, apple consumers have shown less sensitivity, we should say, to prices, precisely because its aimed at the higher end of the market. Can that still be the case today when their total tablet share has dropped below 30 . I think apple continues to go after the higher end of the market, theres no doubt about that. All of the market share loss has been in the really lowend, where they dont even address it. I think that what the aesthetics mean is, when youre talking about a highend product, it does matter. Nothing makes people want to upgrade like feeling their existing ipad now looks dated. And i think thats actually the hope. Thats what drive an upgrade cycle. Ed, talk to me about the incremental improvements, and i emphasize the word incremental, but on the battery life, the processing speed, theyre doing things they couldnt do in 2010. Yeah, with the processor, the a7 chip you have talked about, its robust, faster. Battery life, theyve held their own with it. Ten hours they claim. I did a harsher test, didnt quite get up to that. The battery life is there. So no question there are improvements inside this device. But i agree, aesthetics matter a lot, and really just usability. A pound. You feel the difference between 1. 4 pound on the prior generation, down to a pound here. It makes a big difference. We tried to demo that on set, and a blind test, you know which one is the air in your hand. No question. Would you argue that if there is a gap between an android tablet and an ipad, did that get narrower or wider as the air came out . I think its probably around the same. Apple has the huge advantage, in my opinion, in usability. Theyre usier to use, and 475,000 apps, especially produced for the ipad. On the android side, you have apps that really are phone apps, that have kind of been stretched to use on the display, not quite the same experience. Interesting. Well, well see what the consumer response is this weekend, and certainly the market response over the next few weeks. Ed, rob, have a great weekend. Thanks, guys. Thank you very much. You, too. Teenagers just arent liking facebook anymore. A few months ago a 13yearold penned an op ed saying im 13 and none of my friends use facebook. You know what, the latest Earnings Report ended up proving her right. Shes coming over to post 9, and when we come back, shell tell us why facebook isnt cool with teens anymore, and maybe tell us what is. First, Rick Santelli, also keeping an eye on the floor for us. Rick . Absolutely. Both of them. Were going to have peter bookfar, a frequent guest. Im going to hit him with the conventional wisdom, how collateral is coming in short supply, highquality collateral. And talking about qe in a way i have never heard anybody speak of, and how there might be irony in the fact that its used to keep Interest Rates down. You wont want to miss this one, bottom of the hour. It raises the price of fishmeal, cattle feed and beef. Bny mellon turns insights like these into powerful investment strategies. For a university endowment. It funds a marine biologist. Who studies the peruvian anchovy. Invested in the world. Bny mellon. [announcer]. Every wish for a bed that could feel perfect under every part of your body. [man]ask me about our tempurpedic. [announcer] theyre sleeping on the newest tempurpedic bed. The new tempur choice. [man]two remotes. [announcer] firmness settings for the head,legs,and back. These real owners get that famous tempurpedic comfort how they like it. [woman]ask me about the lumbar button. [man]lumbar button [woman]lumbar [announcer] tempurpedic. The most highly recommended bed in america. Now the fun begins the dow is now up only 24 points, lost a fair amount of ground here. Looking at utilities, one of the biggest gainers today. Dominic chu tracking that. Thats right, carl. Its not the sexiest of sectors, but we have the decent move in utilities this morning. Shares of Nextera Energy are the headline of the sector, thats after americas biggest generator of Renewable Energy reported earnings and sales that beat wall street estimates. It was helped by Florida Power light unit, which saw revenues rise by 8 . Other stocks on the move in the sector including public service, peg, and pg e up around a percent, and so is american electric, but certainly, Nextera Energy is the headliner today. Yeah, especially with rates moving up. Thank you very much, sir. Remember this op ed on mashable . A 13yearold noticed that facebook was losing teens, long before the report. Welcome. Thank you. You may be the youngest guest on set. This is late in your journalistic career. Youve written quite a bit. What was it about facebook in particular that has failed to catch on with you and your friends . Honestly, its been a website for so long, and now, so many new apps and new things are coming in. And teens are just seeing new trends and facebook is kind of just getting old for multiple reasons. In a typical day, what kind of social media, to use that phrase, do you use . Instagram, snapchat, vine, twitter, tumblr, like, everything. But not facebook . Facebook if im bored. If none of my friends are posting on facebook, theres no point in going. Was there a point you were on it and you left . Or was it never cool from your experience . I dont know about other peoples experiences, but just for mine, none of my friends have posted much on it, maybe once or twice, so thats when ill check it. Ill check it if im bored and i have nothing else to do. Of the other ones you mentioned, we hear a lot of migration to instagram among teens. Is that number one now . Yeah. Or second to Something Else . Instagram is definitely the top thing were on right now, just because its really simple and new and trending, and none of our parents know how to use it. I was going to ask about the parent factor. So what happens if, you know, all of the parents start to get on instagram . Do you think it will lose some of the appeal . Well, instagram, you can put yourself on private, so you can tell your mom you cant follow me, and she will have no way of seeing your posts. Is your mom is your mom standing right there by the way . Yeah. Just making sure. What about twiter . I dont know if you know this, twitter is going public here next week. So its getting a lot of attention from a lot of people who trade stocks. Is it too complicated to use the way some people say . No, i love twitter. A lot of my friends have twitter. Twitter is really easy to figure out. Its like you make a tweet, you can mention people, you can hashtag. Is there a point at which you see too many ads, you stop watching, or do you actually click on some ads, or even buy something from an ad you clicked on . I never buy anything on ads. Most of the time, if i see an ad on youtube, ill skip it if i can. I dont like ads. I think i just want to see the video or the tweet. You know, what about television . Is it about what you guys are watching . Is it about using a netflix that how does that factor in day to day to how much you do . To be honest, tv has lost kind of my attention at points. Like, i still go on to watch certain shows, but most of the time, if i am watching tv, it will probably be on netflix, or ill probably be on a social network online. Yes. Its amazing the world youre growing up in versus the one i cant believe i just said that out loud. [ laughter ] finally, has facebook reached out to you . Have they tried to win your heart have they commented on your blog, anything like that . I dont really think facebook particularly likes me. They have not reached out to me. But im sure they may be taking some advice. Fair to say, nothing they could say would make you more more active on that site . I mean, its honestly its not their fault. Its kind of just everyone who posts some stuff its parents, its the ads, its just everything. Yeah. All right. Ruby will be back for your views on twitter valuation, maybe tesla as well going forward. Its one thing to talk about it, one thing to hear a teenager actually say it out loud. Yes. Ruby, thank you very much. Thank you. Ruby carr. The most lucrative horseracing event of the year starts today, but its not in kentucky. You have to go to santa anita, california, for this one. Our jane wells is there and she joins us with more. Hey, jane. Oh, and who wouldnt want to be here this morn, carl . On average, 160 million is bet on the breeders cup. 60 million more than the super bowl. But outside of racing, why does anyone care . Thats something theyre trying to change. Plus, meet a killer horse with a sweet instinct. At farmers, we make you smarter about insurance. Because what you dont know, can hurt you. What if you didnt know that posting your travel plans online may attract burglars . [woman] off to hawaii what if you didnt know that as the price of gold rises, so should the coverage on your jewelry . 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Im back in the saddle again hello, bob pisani on the floor of the new york stock exchange. A lot of excitement in ipo land here today on the floor. At 9 30, the Container Store opened, priced at 18, opened 100 high, opened at 35. Look, rock solid. Boy, a beautiful chart. All throughout the day at 35. And everybody was happy, the ceo was down here, 100 employees. Insiders own this stock at an average price of 4. 93. Not 5. 38, i misspeak earlier. Now, they were bought oh, several years ago, 2007, as i recall, by Leonard Green. Important thing about the company is 63 stores, but theyre planning a big expansion. Now, the ceo kip tendle indicated to us he has a lot of plans to keep expanding aggressively. Weve indicated that we can grow absolutely at 10 Square Footage growth per year minimum, and we spent much of our history doing that. So were looking at doubledigit growth from here on. Its great to be immature in retail with only 63 stores. Theres a lot of runway left. Yeah, and this has happened before. That sounds ambitious, 63 to 100, it wont happen soon. If you look at 5 below, they went public a little more than a year ago. The stock has been well. Theyve been expanding. A teen retailer. The big one, of course, in this space, expanding aggressively, restoration hardware. They went public. The price was 24. It was a year ago. The oneyear anniversary. Look, 68 right now. So a lot of room for growth in some of the Retail Stores right now. Meantime, in terms of the stock market, the thing to watch today is not necessarily stocks, its Interest Rates, because were slowly creeping up on the tenyear. Remember when Stock Traders Start Talking about Interest Rates, Pay Attention. So we were two, four, eight back on wednesday, before the fed meeting. And now weve been moving up throughout the day, here we are crossing 2. 6 . Guys, when you get the Interest Rates moving up, thats a real problem for the stock market. Thats the big topic today. Yeah. We have the ism number. Yes. It started to move. The 10year yields went up. Thank you, bob. Bob pisani, celebrating 20 years today. The most profitable horse racing event of the year, the breeders cup starts today in santa anita, california. Many people dont Pay Attention to horse racing in the fall, but the breeders cup is hoping a whopping 5 million prize will change that. Our jane wells is live in santa anita with more on that. Hi, jane. Reporter hey, carl, the 5 million prize for the classic is more than three times what orb got for the kentucky derby, yet the Television Ratings are five times what the cup gets. Thats a branding dilemma, which theyre spending seven figures to try to change. First, meet the favorite. Here he is. This is probably the nicest, sweetest horse youll ever ive had competes at this level. Hes actually owned part owned by joe torre. Reporter trainer bob bedford hopes game on dude can go all the way. Thats an hermez halter hes wearing. He calls it the olympics, paying out a total of 27 million. And the fields are just extraordinary. I mean, the horses that are running, i mean, youll never see this group of horses of this caliber running together on one day. This is your last opportunity to really run for some serious money, you know . When you Start Talking 5 million, you know, 2 million, 3 million, not only that, if you win one of those races, if you have a stallion or a mare, a philly, you made that horse worth 8 or 10 million. Reporter the cup is going with hollywood vibe with kate upton, hired a new marketing director from football. That guy started 1 million fantasy race contest online to draw in a new type of fan. Ive been to races and i see how casual fans get excited about the color, get excited about the numbers, get excited about the names of the horses, because i had a golden retriever, so ill bet anything, golden cents. Its interesting. They get into it, but they dont know why. Which is the other side, very sophisticated, gambling, handicapping side of the business. And i think theres a casual fan thats wanting to be involved, but they really havent been given the right opportunity, the right offering. Reporter now, is it going to work . That is the big gamble. Most of the races are going to be aired on the nbc sports network. But the cup classic tomorrow night will air in primetime on nbc. Guys, the breeders cup is paying the trucks costs and sharing in the ad revenue with the network. Back to you. Wow. Fascinating. Jane wells in california this morning. Jane, thanks very much. You probably heard of bonobos, the second largest mens etailor in the country. Its expanding now into womens fashion. The ceo is here to tell us why he is betting on the ladies when squawk on the street returns. But your erectile dysfunction that could be a question of blood flow. Cialis tadalafil for daily use helps you be Ready Anytime the moments right. You can be more confident in your ability to be ready. And the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph, like needing to go frequently or urgently. Tell your doctor about all your medical conditions and medications, and ask if your heart is healthy enough for sexual activity. Do not take cialis if you take nitrates for chest pain, as this may cause an unsafe drop in blood pressure. Do not drink alcohol in excess with cialis. Side effects may include headache, upset stomach, delayed backache or muscle ache. To avoid longterm injury, seek immediate medical help for an erection lasting more than 4 hours. If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet freeal. Edmunds. Com is out with a report showing tesla is outselling the market in some of americas wealthiest cities. According to the report, the tesla model s is the musthave toy this year in eight of americas wealthiest zip codes. Jessica caldwell is a Senior Analyst with edmunds, and she joins us to talk more about that. Good morning, jessica. Good morning. Pretty stunning statistics here. In eight of the 25 wealthiest, all eight are in california. What does that mean . Well, i think the car is inevitably popular in california. I think silicon valley, it has a lot of attention. Its kind of the Hometown Hero of the car. Its definitely the musthave for all those, you know, tech folks that, you know, over the past decade have built up an enormous amount of wealth. Yes. And theres a certain mindset, you might argue, that leads them to a tesla. What are they outselling, and which ones are they outselling the most . Well, i mean, i think if you look at the zip codes, you know, theyre the number one car, in many of them. Theyre outselling cars you would think would do traditionally well in wealthy areas, like mercedesbenz sedan, or a land rover, or even a porsche. I think a lot of people were surprised it was outselling a lot of the cars. The data is for this year. Tesla hasnt been around for a long time. You cant measure out everything in those zip codes thats owned. But i think if you look at the start that the companys had with the model s, it is showing that its very promising. Jessica, do you think theres room for tesla to grow in these markets in terms of saturation . The company is pivoting to be more mass market over the next couple of years, but theyre certainly on to something in the zip codes if they were to just continue to build out there. I think so. I mean, this is definitely, you know, going to hit a ceiling, because these zip codes dont account for a ton of volume. I think that moving to an suv, which is something that they have planned, will do well, because thats always a good accompaniment to an expensive sedan. And then, also, a mass market. This car this company doesnt necessarily want to be a niche player. I think any car Company Wants to get to the point where theyre making more of a mass vehicle. And i think that it is starting with a lot of the influential buyers, really speaks well to the companys future when they tend when they go more mass market. You know, of course, e. V. S have their challenges with plugins, but its still a few years out. Yeah, you go out to california, you know youre going to find a charger at apple headquarters. Youre going to find it at the grocery store. Not such not so much an east coast phenomenon. I wonder if that is putting a lid on their growth . Maybe they would have hit more counties or outsold in more counties had chargers, or were chargers more consistent in other parts of the country. Yeah, thats definitely the case. And i think thats definitely a key to their growth moving forward. When they get to that mass market car, there has to be better charging infrastructure and more areas of the country. Theyre not going to get people buying this car if theres nowhere to charge it. And thats something certainly they have on their priority list. But i think that is, you know, a definite barrier theyll have to overcome to be truly more mass market. Interesting on twitter, people are saying theyre showing up in toronto, asking if their own zip code is included on the list. Jessica, thank you so much for your time. Interesting, as we love to talk tesla, Jessica Caldwell with edmunds. Com. And now, lets get to Rick Santelli in chicago with a look at bond markets and fed programs. Rick . Absolutely. Is there anything else, kelly . Peter bookvar, thank you for taking the time today. Welcome. Thank you. All right. You know, i have lots of conversations with fixed income traders and investors, managers, fund managers, and the other night i happened to spend time with jeff gund laulach, and wha said jived with some of the fears of the big boys. And one of the fears is a collateral shortage. With the fed ownership of where it is with treasuries, and countries like china, debating whether they will continue to buying, and they go into quarantine, treasuries in quarantine. The end game is at some point, if something happened lets say we had a 1,000point break in the dow jones but what their fear is that instead of yields going up, which most people think is the new trend, that there could be one more big rally due to unforeseen circumstances. Your thoughts on that . I think thats a definite possibility. I mean, we know highquality collateral, aka treasuries, are an important lubricant in the plumbing of the financial system. As you said, the fed taking on so much onto their Balance Sheet at the same time that the u. S. Budget deficit is smaller, therefore, issuing less debt relative to what they were, can create a situation that you mentioned. And there is a consequence to what the fed is doing. In their econometric models, the effect is on inflation, outputs. What is not is unintended consequences. Thats one of the situations we are going to see, im more confident of it. There is a flip side to what the fed is doing. There is no free lunch. And whether its a big fall in the stock market at some point, a big spike in Interest Rates, then followed by a drop in Interest Rates because of what you said, are all possibilities, because weve hit such extremes in their policies, therefore, there is going to be possibly an extreme flip side. Now, under the capital i for irony, lets look at something from a different tangent. If i look at the idea that the fed was afraid to taper because of the 100plus basis point move when they just mentioned it, that tapering will be difficult. But i look at the world, i look at europe, i still see toxic assets out there. I see bad loans in china, infrastructure bubbles. You know, maybe if they would have just let the taper happen and the compression would have popped, maybe Interest Rates ironically would be lower than they are now, due to some of those factors after the initial adjustment normalization. Your thoughts. Well, we did see, to your point, a drop in Interest Rates after qe 1 and qe 2 ended. Because people were worried about the economic consequences of them not printing. The downturn then caused the drop in Interest Rates. This time around, though, one of the big buyers of u. S. Treasurys outside of the fed have been foreigners. Foreigners are net sellers of u. S. Treasurys yeartodate. That is an important crutch. That is no longer there. So this time could be a little different in the markets response to it. Also, inflation expectations, while seeing benign cpiepi readings, expectations in the fiveyear tips, theyre still elevated. Im out of time. Well have to cut it short there. I like all of the answers, and, of course, well continue to monitor the fed and Interest Rates. Guys in new york, back to you. All right, thank you so much, peter and rick. Lets get to dominic chu, for a quick market flash. You got it, carl. How about shares of sony, drifted down to session low, off nearly 3 after yesterdays steeper losses. Remember, the Electronics Giant cut the outlook for the year, and today, analysts at jeffries cut the rating on the company to a hold, and Credit Agency rating moodys has put it on a hold for a potential downgrade because of the slower progress of the profitability plan. Back over to you. Thats a tough story to watch. Thank you. All good things must come to an end, and that includes earnings season. Its with a heavy heart that we get ready for the Third Quarters final installment of the earnings squad. Before we go, lets rern the people who made this earnings quarter so special. Kiss today goodbye and point me toward tomorrow we did what we had to do once again, cant regret what i did for love happen in a second. With fidelitys guaranteed onesecond trade execution, we route your order to up to 75 Market Centers to look for the best possible price maybe even better than you expected. Its all part of our goal to execute your trade in one second. Im derrick chan of fidelity investments. Our onesecond trade execution is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. Sometimes they just drop in. Always obvious. Cme group can help you navigate risks and capture opportunities. We enable you to reach Global Markets and drive forward with broader possibilities. Cme group how the world advances. 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And inseat entertainment, for everyone on board, now when you fly, time flies too. Flight Attendant sir, were about to land. vo were adding a brand new plane, with all this, every week. Its just one way were building the new american. Coming up on halftime report, lots of bubble time, and now we hear from lazlo on where he thinks stocks are and where theyre going from here. What about the sectors that have soared . Biotechs, auto, solar, no sector goes unturned. Were watching the froth, and playing the action, as well. Should microsoft split up . Someone very close to the company is urging a spinoff. Well find out if its a good move for your investment. That and much more coming up on the half from post 9. Welcome to the earnings squad where we dissect the earnings stories that everybody is trading, and joining me is dominic chu and stephanie link. We have to start off with the fluor, and its a great read on the economy, and their commentary about metals and mining. Certainly. This stock has been all over the place, all over a market, when they reported last night, it fell 3. If you look at the revenue, it missed. New orders, missed. Earnings came in better than expected but tax related. On the conference call, the company talked about the pipeline and how strong the oil and gas pipeline business was. That is a higher margin business. Thats what the stock trades off of, and it took off. The Company Raised guidance, theyll do more in terms of buybacks and this is on the heels of another company, Chicago Bridge iron, also good numbers. I think this space, the enc space, is the place to be for 2014. How big is their exposure to metals and mining . They mentioned the suspension of the mine and how that illustrates the headwinds theyre facing and the whole industry of the metal and mining industry. Its a concern but not a surprise. Its the reason why the stock doesnt trade at the typical premium multiple that it gets relative to the group. As you get to betters havibility on that front, and again, oil and gas, much more important for the margins story. Thats what people are paying attention to. Right. On Madison Square garden, topping analysts expectations, and, dom, doing some homework here. Three major segments. You have sports, media, you have entertainment. On the sports side, you know them for the blue shirt, the rangers, hockey team, the knicks. On the entertainment, the radio city music hall, and msg network and the fuse network. Entertainment underperformed, so that was a bit of a drag. But sports and the media side did well. With msg, the story is whether or not this company can sustain some of the healthy stock gains despite the fact they had less revenues from some of the entertainment units they have. Theres some real questions from the Investor Base as to what the company is doing with its cash. They just embarked on a j. V. , and it was seen that that would delay them returning capital and being able to make acquisitions as needed. Theyre going thank you huge capital deployment, right . Theyre trying to rebuild out the new Madison Square garden, everything else. The question it becomes for an investor, do you believe in the story that this will be a bigger, better deal . This is the way to spend the money. I think, you know, with sports teams like that, you have to make the venues big. The company has great pricing power. You cant say that about a lot of its competitors. Thats very important for the cash flows. Linsanity last year. You cant forget that. The maker of arm hammer reporting an increase in net sales. An interesting quarter. Fourth quarter guidance light, but they came out and backed 2013, and they dont typically give guidance for 2014 until february. Thats the norm. Whats to make of the stock . They had strong growth at the most recent acquisition, and thats the gummy vitamin business, apparently very high growth. Analysts bullish on the stock cite that as a great source of revenues. Also, they specifically cited arm hammer and trojan, a new line of lubricants, new line of concentrated detergents. The question is, do they are have power when tide produces the lowerpriced detergents . And thats the milliondollar question. If you look at p g, compare the organic growth of the two, p g had 4 , and they had 1. 6 , so you can see where its starting to hit. Yeah. That does it for earnings squad. Well be back with street signs with the three best earnings stories. Coming up next on squawk on the street, one of the mens largest etailors is going after a different kind of consumer. Clients are always learning more to make their money do more. ann to help me plan my next move, i take scottrades free, inbranch seminars. Plus, their live webinars. I use daily market commentary to improve my strategy. And my local scottrade Office Guides my learning every step of the way. Because they know i dont trade like everybody. I trade like me. Im with scottrade. announcer ranked highest in Investor Satisfaction with selfdirected services by j. D. Power and associates. More than a new interior lighting system. It is more than a hot stone massage. And more than your favorite scent infused into the cabin. It is a completely new era of innovation. And the highest expression of mercedesbenz. Introducing the 2014 sclass. The best or nothing. cause every girl is crazy about a sharpdressed man sneds. Welcome back, the next guest has been on a mission to fix baggy pants for men, but today, theyre joining us to announce the launch of a new brand, air, the all mens etailor will have an allwomens etailor under its belt, as it will be the first line of womens apparel from bonobos. Andy dunn is the founder and ceo here at post 9. Welcome. Thanks for having me. Its great to be back. Its been a fascinating story for the retail space. You launched online, and now several locations in the real world, so to speak. Now it sounds like the womens brand, division, whatever you want to call it, will follow suit. We built air with the idea that were actually solving a different problem in womens than we are in mens. The machines brand was built around fit, fun, service. Air, as we got to know, the founding merchant, and cameron, about solving for the welltravelled woman. Shes busy, she wants quality essentials, she wants a bonoboslike Shopping Experience but a brand her own. Its a acronym, ayr, for all year round. Its an antidote to fast fashion, amazing essential pieces, great fit, and highly edited assortment, and a great shopping assortment that youve come to known on the mens side. Thats something, an etailor would emphasize fit. Because one reason people go to stores is to try the then on and see if it fits. Were starting with ayr in denim. You can go on to ayr. Com, and well soon release a thousand units. And the idea is its an amazing fabrication, it has a 30 stretch. The denims fantastic in terms of the softness and how it works. But well be able to offer more sizing and assortment just like we did with the website, because were directtoconsumer only. Our hope and our belief is that if we can build trust with this female customer in bottoms, weve seen on the mens side that that is an unbelievable way to build customer loyalty. If you can earn her trust there, that will earn us the right to do woven shirts and sweaters when we fully launch in february of next year. You brought on management from the likes of j. Crew. You were involved with warby parker. Are you going after the aesthetic that j. Crew has done so well . Its different. We think theyre a phenomenal brand. And our inclination isnt to go head to head. Our belief is theres something missing in the market where, you know, you want to get the perfect tshirt, the perfect jean, the perfect woven shirt, you dont want to jump in and spend designer prices on everything, because we think our woman is too smart for that. But you actually want something that will last, you know, quite a bit longer in terms of being an essential piece in your wardrobe. Moreover, on the bonobos side is weve seen tremendous potential from being digital only at the core in terms of how you build, and then figuring out the offline for now. So for us, we have eight of the ecommerce showrooms austin, texas, bethesda, maryland, chicago, d. C. , two in new york. And its a new way to build a brand with digital at the core. We want to ask about the numbers. In fact, you guys are, i believe, the second biggest etailor, which is a u. K. Company . Not the second biggest etailor. Theres an ipo with zhu littly. And think we have the next to build the next great Standalone Company rkt and we envision a family of brands instead of just one. Well find out how we do with ayr. Cant wait, andy. Watching you is always fun, especially going into the season. Please come back, give us a progress report. Yeah, thanks for having me. Perfect. Andy, thank you so much. Andy dunn, ceo and founder of bonobos. In the meantime, an update on googles mysterious barge in san francisco. After all of the speculation, the purpose of the barge has reportedly been revealed. The local cbs affiliate says the barge will be used for parties. It will feature luxury showrooms and a party deck for the company to market google glass and other gadgets to vips. The report says the project has been in the planning stages for more than a year and is being personally directed by google cofounder sarah gaye brynn. So how about that, kel . We thought it might be servers cooled by the ocean waters, no. But all sorts of questions about whether they were trying to avoid onshore taxes. Party disbe expensive. Who knows . Lets hope we get invited to a couple. Yeah. Coming up, the new York City Marathon is back, but not without major changes. Find out how the city is preparing for this iconic event. The ceo of the new york roadrunners joins us live after a break. Ct management. Baron of the buildout. You need a permit. To be this awesome. And you. Rent from national. Because only national lets you choose any car in the aisle. And go. You can even take a fullsize or above, and still pay the midsize price. aaron purrrfect. vo meeeow, business pro. Meeeow. Go national. Go like a pro. Americans take care of business. They always have. They always will. Thats why you take charge of your future. Your retirement. Ameriprise advisors can help you like theyve helped millions of others. Listening, planning, working one on one. To help you retire your way. With confidence. Thats what Ameriprise Financial does. Thats what they can do with you. Ameriprise financial. More within reach. Just by talking to a helmet. It grabbed the patients record before we even picked him up. It found out the doctor we needed was at st. Annes. Wiggle your toes. [ driver ] and it got his okay on treatment from miles away. It even pulled strings with the stoplights. My ambulance talks with smoke alarms and pilots and stadiums. But, of course, its a good listener too. [ female announcer ] today cisco is connecting the internet of everything. So everything works like never before. [ female announcer ] today cisco is connecting the internet of everything. At a ford dealer with a little q and a for fiona. Tell me fiona, whos having a big tire event . Your ford dealer. Who has 11 major brands to choose from . Your ford dealer. Whos offering a rebate . Your ford dealer. Who has the low price tire guarantee, affording peace of mind to anyone who might be in the market for a new set of tires . Your ford dealer. Im beginning to sense a pattern. Get up to 140 in mailin rebates when you buy four select tires with the Ford Service Credit card. Whered you get that sweater vest . Your ford dealer. One of new yorks most iconic events returns on sunday, and its a comeback of epic proportions. New yorks i. N. G. Marathon returns, a year after being cancelled from hurricane sandy, of course, in the wake of the horrific bombings that took place in boston. Our Mary Thompson is live in central park with mary whitenburg, the ceo of the new york roadrunners. Hey, mary. Reporter hey there, carl. Thank you so much. As you mentioned, were hear with mary whitenburg, and two topics of conversation, a lot of people want to touch on, the comeback after the cancellation and security. Youre spending 1 million more in the wake of the boston bombings. What can runners expect to be different and what can spectators to be different . It will be a race full of meaning. Well be thinking about all of those affected by sandy last year, and our heart with those affected by boston. So were just so committed to having an amazing day for new york, for boston, for the u. S. , and for running. And security will be at an alltime high. And i think youll see more presence of security and police. But the idea really is to be supportive of what is such a celebratory day. Runners cant wear camel backs and big costumes . Right. Runners have been prepared sometime now. Nothing over the shoulder and nothing over the face. Lets talk about last year. You were criticized for trying to put on the race so soon after sandy, and then cancelling it two days before. Did you lose any sponsorship because of this . We didnt. You know, it was an unprecedented time. If we could only go back and have that all happen early in the week and make sure it was so clear to everyone, were here to support the city. What we do is we just continue on in supporting new york, supporting running, and all of our partners are back and strong, and everybody is just really looking forward to continuing to support the mission. Is the sponsorship up or down this year . Sponsorship is up. I dont know if you know, were already looking forward to well celebrate i. N. G. This year, and we structured premier partnership for next year, for the next eight years. Its stronger than ever. You said youre ending a decadelong relationship with i. N. G. As a primary sponsor. An Indian Company will become the primary sponsor. What can we see differently visually or financially . Financially, Additional Support to our programs year round. Our youth programs, grassroots programs. Visually, it will be a very big change. You wont see as much orange, and its a chance to rethink the entire presentation of the event. So were excited, and i think youll keep feeling the Great Community and neighborhood essence of this event. Just tell me, when you look at revenues from the race, how much of it is sponsorship, how much of it is admission fees . About half is the admission fees. What were trying to do is grow sponsorship and grow philanthropy in donor dollars, so we can make running as accessible to as many people as we can. How is tell us about the state of running. Is it still a growth sport . Running is booming. It is. You know, the beauty this is all about, for us, helping and inspiring people through running. We want to help people live healthier and fitter lives, and running is so effective. Thats what its about. More and more people are about. Marathon day is our running day, and it gets everyone excited. Its not about 26. 2 miles for those watching. Its get up the next day, and well support you one mile, two miles, getting moving again. Who are your picks for the men and women im not allowed to have picks. It will be a great race. Noethank you so much for joig us. Were been speaking with mary wittenberg. Back to you. All right. Mary, thank you so much. A lot of people excited for that, carl. And a lot of people excited about the fact that, at least, the market opened on the first day of the month. Its off, on the strong i. S. M. , so important to watch. Only twice this year has the first trading day of the month been negative. April and may. And, of course, we got we started the year with a bang. Well see what the afternoon brings us. For the time being, barely hanging onto the green line. Exactly v a great weekend. You, too. Lets head to post 9 and wapner, the boys and the half. Thank you so much. The berini bull case, he is live here with his call on where stocks are heading next. Coffee talk. Off a big run this year, can starbucks power even higher or are shares already overcaffeinated . Our traders are going to battle it out. We do begin with the great debate over where the market is and where it might go over the final stretch of 2013, and what a year it has been going into today, the dow is up 19 . The s p nearly 24 . The nasdaq 30 . But it is those