Transcripts For CNBC Squawk On The Street 20141201

Low in the middle of november. Oil is slumping around five year lows. As a new month begins for the rest of the markets spending drops double digits this back friday. But online spendsing alone jumps more than 20 . Target, best buy, home depot, others go after tally target alibaba. L chinas official pmi slipped to 50. 3. Thats below forecast. The dow and the s p each finished the month up 2. 5 . Nasdaq up 3. 5 . Nasdaq, jim, within almost 5 of an alltime closing high. Can energy at 8, 9 of the index drag down the markets . Its funny you mention that because first of all i think friday was very exaggerated. Just kind of got to really take that whole black friday for oil with a grain of salt. I think it was really an anything but oil move on friday. Its like, look, just get me out of anadarko. I dont care. Get me out of some of these consho. Corrigo, get me out. What happens . What do we put it in . It never seems to go to cash. Lets just put it in land research. Lets go to kale. It was like, okay, im going to park it in tech. Ill park it in sanders. I know that sounds odd. Or target or whole foods. Whole foods, the new whole foods, that they had finally been there for thanksgiving. We always have a whole foods thanksgivi thanksgiving. Whole foods has a whole foods tavern approach. People like it. Yes, i think there was a lot of money out of oil into whatever else wasnt oil. That was the rally. When you look at a stock like continental, which we mentioned, which was 80 a share lets call it the beginning of september. Right. And is now 40, over done or i mean from a 30 billion market cap to a 15 . I mean, i think first of all, yes, overdone. More importantly harold hamm famously came on cnbc and took the hedges off. Oil was at 85. November 5th i believe it was. He believed that oil was done going down. I had on mad money i had him on. Right after i had sharif suki. Lets go to the 60s. One guys says 100, one guy says 60. Obviously one was right. Taking off those hedges is something that is almost suicidal because the companies that kept the hedges on are ones that are still of interest to me. So now everybodys tossing around the 40 number. I mean, are you still a directional bearish bet on texas . You really have to believe that china is just going to go off line like europe. There is going to be no i was looking at the rig count, which is what i like to do. The u. S. Rig count from november 26th from baker hughes, 1517. Ive been saying the finding costs all in, i know that Brian Sullivan is up in the bakken, when youre in the eagle, they make too much money. Theyre not going to stop. They want market share. All we hear about are the saudis want to preserve the market share. The Real Companies are the anadarkos and the marathons. You have said and ive heard others say it as well, low 40s they can still make money or thats sort of break even, somewhere in that range. Remember, theyre pumping. Once you drill, youre pumping. The cost of a well thats open is almost nil, and if you drill in the permean, we know that oil is there. The price all in is really very fungible. The reason why i say this, if you dont drill any dry holes, your price is really lower. In the old days we used to drill a lot of dry holes. That was a mistake. We spent a lot there are no dry holes in the permean. Theres just oil or lots of oil. Which is the way it should go. When im looking at the totality of things as an investor or somebody trying to figure out the u. S. Economy, the importance of oil and gas in terms of capital spending, in terms of drilling new wells, then against the lower price of oil, hence, the lower price of gasoline and consumer spending, how do i balance this out as i try to figure out what may happen . 85 of the s p does better, raises numbers. The 15 goes down. 15 states directly impact it with lower gdp. Unemployment. Theres 50. In each case its the consumer versus oil. Now we started getting the reverberation, the rales. 3 of what rail traffic is is oil and people are just looking to shoot anything. Whereas merrill, merrill upgrades american. They downgrade delta because they hedged. I think the answer is its still the law of how many people benefit versus how many people go down. Beneficiaries are humongous. Gasoline 2. 55 by christmas. I paid 2. 65. Thats all a rouse. Who uses prepare zblum. Why . Thats a roux. My father told me this. What are you doing, prepare zblum now whats important just so we know, this dispute over online sales versus mall. I think the newspapers did a little disservice. Theres two outfits i monitor for online, com score whom i dont know and channel advisor whom i know well. Channel advisor, theyre the keeper of the numbers. They came up with incredibly strong numbers. Lets back up for those who might have missed it. Signs in a change of the black friday shopping. Sales did fall 11 over the thanksgiving weekend compared with a year ago. This as early promotions and a rise in Online Shopping lowered sales in brick and mortar stores. Today is cyber monday. Later on squawk in the street Courtney Reagan will have a conversation with neil ashe. National Retail Federation polls consumers, others poll the retailers themselves. This would be like if youre watching if youre looking at the cable company. They know what stations are being watched versus neilson who samples. There are real numbers when it comes to the internet and theyre real numbers. Then theres polling. Polling is irrelevant versus real numbers. Real numbers, you have the actual numbers. Amazon average up 32 . Thats not polling, this is a very good piece. Thats up 32 . Hey, listen, its up 20 , its up 40, its up 32. Thats what i care about. Howard schultz, ceo of as far bucks has been saying, this turn against the malls is happening much faster than people realize. These numbers showed you that this was the nonmall christmas. I know elle brands would disagree. Elle brands, Victoria Secret and bath and body works, theyve done very well. Yes. Theyve somehow figured something out. Yes. Ross stores. Tjx. But these are not in the mall. The classic mall did quite weve talked about that for quite some time already in terms of the decline of the mall. There are people on both sides of that debate, jim. Some say, listen, it can still be a place where people come to gather, you can make it exciting, interesting for people, for them to want to be there. They all say that and yet the aggregate numbers say that thats not true. Remember, there are Shopping Centers and there are malls. Malls, maybe they have the flying wallendas. Each mall may have something, a santa. You cant sit on santas lap in amazon. I mean, just graphically its a horrible idea. No, doesnt work. Doesnt work. Santanography. Maybe as zuckerberg keeps working on that technology, put that on and the next thing the whole gram santa. Meanwhile though, remember walmarts guidance going into the Holiday Season wasnt all that hot. Isnt it looking better now . Yes. They were one for one. You go on twitter, is there no price i cant pay for walmart . Were finding that there is a price. I know brian kornell, target, having a good christmas. These were factoring in an unbelievable christmas. Thats difficult. Some of the Apparel Companies are having unbelievable christmass. Walmart is a straight shot up from 77 to 87 in a few weeks. I think thats overdone. I just think that that doesnt make sense. Doesnt make sense . No. I think that has to pull back. All right. Were going to talk a lot more with retail for the next 24 days. Amazon knows the feeling. Alibaba being targeted by traditional retailers in an ad. Well show you that after the break. John skulleys perspective on the iphone. Talk about numbers up. The smartphone numbers heating up. Take one more look at the premarket with the dow, the s p and the nas up for six consecutive weeks. More squawk on the street from post 9 in a minute. Stamps. Com is the best. I dont have to leave my desk and get up and go to the post office anymore. [ male announcer ] with stamps. Com you can print real u. S. Postage for all your letters and packages. I have exactly the amount of postage i need, the instant i need it. Can you print only stamps . No. First class. Priority mail. Certified. International. And the mail man picks it up. I dont leave the shop anymore. [ male announcer ] get a 4 week trial plus 100 in extras including postage and a digital scale. Go to stamps. Com tv and never go to the post office again. Light that thing up soon, i think. Wednesday. Wednesday night. Traditional retailers are taking aim at alibaba. Target, best buy and home depot has produced an ad granting states more authority to collect Internet Sales taxes. Take a look. Alibaba is chinas Largest Online retailer. Their ipo was the biggest in wall streets history, now theyre coming to america. Thanks to the online sales tax loophole, this Chinese Company will decimate our local retailers unless Congress Ends special tax treatment for alibaba and other online giants, main street will never look the same. Tell congress. Close the online tax loophole before it closes main street. Alibabas denouncing the ad insisting it pays taxes according to the laws in the countries in which it does business. Of course, amazon itself faced the same backlash after it started housing all of its Distribution Centers in different states. It benefitted from not paying the state sales tax in different places. For its part its funny having spent some time at alibaba, very hard to macon clugss, but i think while there is an enormous amount of runway in china, given their dominant position, it is hard to imagine they will not be successful there. It becomes a much different construct for them when they come here. Their site is looks a lot like amazon. 90 off shying sexy lingerie, www. Gear lover. Com. Well is that where you went at the first place . I hit a button. Thats what came up. That was probably a mistake. How about mens shoes . I can contact the supplier. It looks good. Geez. Corporate i. T. Guys already know. You can use sales tax or not. As a consumer to buy things there, but they are going to try to become more aggressive here although thats long term. They own 80 in china with more and more people getting online every day. It doesnt matter. No brick and mortar there. Here, really amazon just going to roll over . Any way it works for americans is that you can order things to be built and its cheaper to have them built. Alibaba. Com. That was sort of empowering Small Business to use suppliers over in china. Mens pants. You can make mens pants. You can make hoodies. Bar chairs. I priced those out. Absolutely true. I know. Absolutely true. Amazing what an effect taxes are. Alibaba, just like the rest of the long line with amazon, you price compete. I mean, the price discovery now worldwide is embarrassing for retail. Its like, holy cow, thats how much they marked it up . Speaking of mark downs, amazon is going to cut the prices of the fire tv from 99 to 69. I mean, were back in this mode where they are giving away the store in the near term. At least theyre not paying you to take it. Its really just who knows if thats next. The phone, they are paying you to take the phone with the subsidies and amazon prime, i think theyre paying you to take the phone. Nobody wants that phone. No. Some devices you just dont need. Zoom, right . That was microsofts music player, right . There is no gain on zoom. Nice reference. Wow. Still a great one. When we come back, its cramers mad dash. Well count down to the opening bell. A lot more squawk on the street from the nyc in just a minute. 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Tell your doctor if you have a history of heart or blood vessel problems, or develop new or worse symptoms. Get medical help right away if you have symptoms of a heart attack or stroke. Decrease alcohol use while taking chantix. Use caution when driving or operating machinery. Common side effects include nausea, trouble sleeping and unusual dreams. I love myself as a nonsmoker. Ask your doctor if chantix is right for you. shouting location. Heres the location that matters the most. Here. Or here. Or here. Its wherever this is. To get customers to come here and stay here, youre going to need an app that connects to all your systems. So they can bank, shop, do what they need to do, and you gotta do it fast. Before the competition does. Its tough out here; you better be on the right cloud. Today theres a new way to work. And its made with ibm. I see that clock, paris, i think euro. Then i think maybe its time for a trip. I dont know. Wouldnt you like that . Yeah. Just get away. Some people talking about parity. Parity. Well, i dont know. You can go to jcpenney where the trends are improving or go to harrods. The pound is strong. Were going to paris, david, you and me. Well take a long weekend. I am there. Where are we starting . Deere. Going to sell the whole. Pricing in the negative. Jpmorgan, sell or hold. Now, look, one of things that is interesting i thought commodities were collapsing. If thats the case, you want to sell deere. I think that people think the crop for deere has been had. This stock is coming back. If you feel that way, you should look at agco which is dirt cheap. On the subject of commodities it is notable that copper is coming down. Not just oil, weve had a number of them. Is there a bigger message being sent . China, china, china. Still more primitive, nonsubstitutable. Iron is a price war. There is no talk about the kindle, the fire, whatever . I mean, iron has come down and it just doesnt stop. If i were cliffs resources id be concerned. Theyll tell me not to be concerned. Dont be concerned from their point of view, but iron is just sinking like an anvil. All right. All right. Now apple makes a lot of stuff in china. Now ubs says the smart watch will be big. Barclays raised it 120, 140. Were in one of those periods between here and year end you can raise your price target because its been over run. Apple is even better than we thought. Its going to be an apple christmas. I6 selling well. The annuals are way behind this number because they always wanted to trade it, they never wanted to own it. Our mantra is to own apple, not trade it. Should you be concerned when those that follow the company have come up with different metrics by which to justify their new price targets . Thats precisely when you have to be concerned. What i dont like is this multiple expansion period. Meaning were paying too much for the same earnings. There was a note today saying that micron and sandus, people are going to start paying more for their earnings be. Thats not what you want, not solid fundamentals. The earnings are going up and youre paying the same amount except for a higher amount of earnings. Thats a real bull market. Okay. Any thoughts we should have as we start december here for stock thats already up over 49 and a Broader Market . Just be aware that we did it for real money on the street. The winners keep getting bought. The battleground will be rales. They have been huge winners. People feel because they do fracking, sand, oil theyll be hurt. Watch the rales as they tell about whether the end of the year is going to include anything other than soft goods, Consumer Product goods to benefit. The rales and the battleground here. Well be watching the rales and a lot of other stocks when the opening bell rings in six plus minutes from now. Were back with squawk on the street right after this. Theres a difference when you trade with fidelity. One you wont find anywhere else. Onesecond trade execution. Guaranteed. Did you see it . In one second, he made a trade, we looked for the best price, and the trade went through. Do the other guys guarantee that . Didnt think so. Open an account and find more of the expertise you need to be a better investor. We kick off the month of december. Jim passes along a note from Morgan Stanley saying maybe add a little more to your portfolio above the benchmark. Yeah, i liked a guy who had it as a market weight. Selling it is most gravitas. Its time. This group has come down a lot. I do go back to that friday. It just was some of these declines, 30 declines in a single day are not warranted from some of the ind pen debts so i think this makes sense adding 2 to slumber j. , 1 to oxy. Thats the new stock that spun off of oxy. Lets not be too positive. We havent seen the downward revisions of the oils. You have a onetwo punch. First the stocks go down and then people explain why they went down. You have to do that before you hit the bottom. It echos what s p is saying. When the relative strength of energy is this far below the overall market, energy tends to outperform over the long term. Talking 12 to 24 months. If you look at the contango, what oil will be worth, youll see a 75 price. Its interesting you raise that. Theyre fairly highly leveraged and some are public, some are not. Are they in trouble . Their silence is a little dpaunting. Magnum hunter came on. Gnat gaz has not been bad. The other way to look at it, when gnat gas collapsed, you would think there was a shut in. Natural gas, the production exploded. Any chance that Oil Goes Back . Almost impossible. New england uses oil which is why theyre building so many pipe lines up to new england. No, you dont switch. There is some more use of oil. There is some demand that spurred as oil goes down. We know that from marathon pete which talked about one of the largest gas Station Companies but the change in and there is a spike in the number of bigger gas guzzlers, but remember the cafe standards have changed things dramatically. Right. Those arent reversing any time soon. No, doesnt mean were not going to do bill hummers. Meantime you guys talked about copper, gold. Australias ten year below 3 for the first time in a couple of years. The ripple effects are clearly happening well off of our shores. Copper and iron, the commodities that were chinese building commodities, theyre saying that china is going to decelerate dramatically. I still find that hard because of the secular shift from rural to urban. There were periods where it was secular. Its not the chokehold. Its not the heimlich. Whats heimlich in chinese . Might be heimlich. It says everything. I think it was sustained. No sales tax on the heimlich over there. Theres the opening bell and the s p at the top of your screen. A little bit more red than green. The big board, California Resources celebrating its spinoff from occidental petroleum. Celebrating cyber monday. Its interesting. Nice piece by Credit Suisse that was out november 14th. Crc, this is not the market to be an orphan spinout without debt. November 14th wasnt the market, this is the real not market to do this today. Thats some unfortunate timing for an oil spinoff involving california reserves. Yeah. Oxys up more than a percent. There can be a balance. Even a dead cat bounces which is in reference to my cat that was hit by an 18wheeler that was crossing the road. Believe it or not, 7 inches higher after it went by. No kidding . Yeah. I think it will be momentary. Thats whats going to happen to oil. Momentary. Numbers havent been happening yet. Hasnt happened for anadarko. They have rex in tomorrow. Well get to hear. They have a 50year plan. They have a new ad campaign, egg campaign, i kind of liked it. You might want to click on that ad campaign. Exciting. Been a long time since i recommended an ad campaign. We have names like fedex and costco in the green, others like best bike and i think Michael Koers close to the bottom. I think costco will be the company that people rally to every time it goes down. It does well in this reading oil, remember, because they have the lag in the refining, they do sell a lot of gasoline and the thing that theyre always looking for the best in show to be able to show how brilliant they were and costco is the one theyre going to gravitate to. Thats my view. Alcoa gets an upgrade. Citi resumes it. Ups it to say a lot of the hard work that we see, commodities, has already been done in aluminum. A lump number luminum is the show. That was kind of a reinitiation where they had a 12 price and obviously again overridden. I do think aluminum is doing exceedingly well because it had been financially manipulated, so to speak, and thats over. Klaus when he joined the board of Morgan Stanley, i think he figured out the name. That was a good move by him. It was . I think it was. Understand the way the financial hedge funds were doing, playing with aluminum, allowed him to kind of with a new benchmark that was less lma. Thats what youre seeing. Weve got amazon up and alibaba down. There you go. It may be down because its down. Amazon hanging in there. Someone believes in the com score channel advisor more than they believe in the newspapers. Today is a big day. Look, ive never been part of it. I think that one of the things thats happening with price discovery is the whole friday thing, black friday thing, thats now going to be talking about oil as black friday. I think that people have figured out thats part of the demullification. Its not about one day. Its not about the sales day before that. They will continue long after that. Yeah. It may be that we end up with a bigger number for the selling period that comprises christmas, if you will. Right. Fedex will do well. I think theres no remember from last year how you could buy it three days before. The retailers had a lot of inventory, that was the best time to buy, not that friday. The door buster. My kids were saying, door buster. Door buster is something that happened in my parents generation. They busted the door. What the heck is door buster . Meantime, the airlines are having a nice bounce here. Southwest up more than 1 , expedia. Travel getting a little bit of attention. They dont stop. When you have someone a big firm like merrill and theyre talking about jetblue going from sell to buy, Everyone Wants to be on board the airlines. A good article usa today had this great piece about how youre not going to get cheaper tickets. No. No. They go up an average i think of 5 a day going into the holidays. Yeah. Theyre booked solid and, you know, im trying anyone whos trying to get tickets knows this is the extra money, people are traveling more, Cracker Barrel being the strongest in the Restaurant Group because those terrific stores are on the side of the road. I know that one day ill have to treat you to a Cracker Barrel pie alamode with a snies slice of cheese, cheddar, on top of the vanilla ice cream. They call it the heart attack, just kidding. It is delicious. I have been to a Cracker Barrel or two in mississippi when i was doing my world com documentary. That was the main place to eat. He was at the gym. Who, bernie. Wasnt bernie evers at the gym. He was a gym school teacher. Shooting, just fantastic. All restaurant stocks have been strong because people do they just do eat out. They order more expensive stuff. People are doing more if theyre not actually buying more. Well, i mean, the idea when you read the new york times, all the articles about how shopping was bad, its not like theyre saving more. So where is the money going . I mean, theyre shopping online. Were going to see that today. A couple of downgrades. Dr. Peple, snaple cut to underperform over at rbc. Where was he the whole way out . Come on. Carnival, goldman cuts to neutral saying the turn around is taking longer than expected. Also, the industry seeing what theyre calling a stealth supply surge. Yeah. I read that. These stocks have been up huge. There was a heavy short position during the ebola scare. I think that people are finally trying to bring in their shorts. Its a welltimed downgrade. That said cruises are another thing that i think maybe goldmans underestimating. They use a huge amount of fuel and theyre not cutting their prices either. That is true. A stock that ive been keeping an eye on that has been going nothing but up is down today, time warner. On friday it hit the number that fox was willing to pay for it. Obviously we all knew that that number was higher, although not high enough perhaps to actually get time warner to the table, but it was an amazing run for time warner. Very much unexpected since fox walked away and the stock saw the low 70s not very long ago. Goldman today reinstating fox with a buy. Jeff pucas is a great american. This was clearly a decision that he made where he said other than air gas ive never really seen typically what happens. Allergen did get sold. Right. Air gas and time warner. They said staying independent where time warner was able to simply articulate its goals. The numbers havent risen. The time warner numbers havent rizzs zblen. They havent raised numbers. They have those incredibly high well, those are my words. They have very aspirational goals for 18, 17. So far so good. It was really incredible. It looks like in retrospect that fox was trying to steal it. Good job. Disagree. Disagree. No, im not agreeing or disagreeing. Thats good. Yeah. Because i feel like one day we may need to revisit this. One final note in that. A lot of studio news. Dream works, movies still drive this stock and penguins of mazda gas car was not the open that you wanted. 21 million. Getting hit badly. I know. Geez, maybe another country would have been better. Penguins under chile. Madagascar. I dont know. When i see this dream works, werent they supposed to be bought by hasbro a few weeks ago . This has been a football stock. You really want to stay away from it. With all of that and the dow is down 57, g. E. , walmart and utx leading them on the down side. Bob is on the floor. Hey, bob. Hi. December traditionally slow. Retail Sales Numbers over the weekend here in the u. S. Lets start with china. The key point, the pmi for china, manufacturing number down to 50. 3. Thats the lowest since march. Bottom line, china had a big week last week. It was because of stimulus beliefs. Hong kong has been choppy. You can see the hang seng down 2. 5 . A lot of the big iron ore names had a terrible week last week and are generally down. Bhp billiton down 10 . The three Biggest Companies in europe, germany, france, italy, those are the three biggest ones, they saw manufacturing contract for their data. New orders fell off the fastest pace in 19 months over there. These markets held up well but data hasnt been supportive. U. S. Retail sales, national Retail Federation spending fell 11 . Everybody blamed it on early promotions and online sales. Thats true. November should be called we should call the whole thing black november rather than black friday. Target was doing promotions on and off throughout the month, particularly on wednesday before. Walmart had a whole week of promotions in the week before black friday. Definitely took away. Look at the online Sales Numbers. Ibm online, up 14 . Up 9. 5 on black friday. Were approaching 15 for total retail sales. That is a percentage of online sales. I think thats starting to get very significant overall here. So much though for Lower Oil Prices helping the consumer. I did see on friday some very clear indications of some of the discounters and the Dollar Stores and some of the restaurants moving nicely. Cracker barrel, denneys up on friday. Thats fading. We have a mixed picture. Texas roadhouse had a good day on friday up about 4 . Bottom line, despite all the stimulus out there, still, very weak economic data. Thats whats weighing on the markets. Thanks so much. Lets get over to the bond pits. Check in with rick santelli. Hey, rick. Hi, carl. Were watching rates revisit the crazy november and we closed 28 basis points. The interyield of 187. The settlement was 214. The twoday chart the real catalyst was the early close trade friday pushing yields on that ten year below 220. Indeed, theyre close to unchanged right now. But they r hovering. Open the chart up at sixweek lows having settled at these levels since the day after that 10 10 15 i called it the capitulation. We last saw a close of this magnitude. Open the chart up to may of 2013. I see were under 290. Virtually unchanged from a 30 year as well from that early friday buying spree but now these are 18 month low yields for 30 year bonds. We talked about the spread holding at 50. That seems to be right about the differential. Im over simplifying. Look at the spread. Spread is lost four basis points since last week. Its not at 150, its at 146. Boon yields are virtually unchanged at 170. A quick trader on the floor said im looking for 66 basis point boon because i dont think the fundamentals have changed. Well have to wait and see. Lets look at foreign exchange. A lot has been said about what mario draghi is going to do and what its going to do to the euro. A lot of that has been priced in. If you look at november 1st to today, we havent really gone anywhere. The euro is Still Holding up rather well and has had a bounce today along with all the other major currencies. Look at the pound versus the dollar though. Even though it is up today, the dollar index is down close to half a cent. The pound and flip your thought process around, dollar versus n yen, theyre undriven like the euro. Carl, back to you. Rick, check back with you in a few minutes. Rick santelli. Meantime, oil prices getting a little bit of a bounce here after fooling to fiveyear lows. Jackie deangeles is here. Were looking at west texas intermediate, its up 1 1 4. Were seeing a little bit of a technical bounce because we fell so far so fast. I do want to highlight, overnight we did fall under 64 a barrel. That was because of the weak manufacturing data coming out of china. We are rebounding from there. This is tipped fallout after the opec meeting on thursday. No Production Cut there of course sending those prices down more than 10 on friday to close at 66. 15. The question traders are talking about is what is the new equilibrium for oil. That is something that we have to consider here. A lot of people didnt expect it to fall so far so fast. Barclays is saying under 70 a barrel. You have people talking about oil in the 50s. The question is if we can get there before the end of the year. I do want to point out that last time we saw oil fall like this, from 140 to 33 a barrel, that was in 2009. You had two major differences there. First of all, you had chinese demand and you did not have this north american production. So this is really a supply story right now, and it is very important to keep a close eye on it. Carl, back to you. Jackie, thank you so much. Jackie deangeles. Are you watching g. E. . Its funny, carl. The oil story crepes into areas, jim, you might not always anticipate. I looked at g. E. , why is the stock down 2 , oil services . Yeah. They really made it bull ush. G. E. Has positioned itself as a company that does better when oil goes higher versus going lower. People will reevaluate saying, did they pay too much . The oil Service Group is certainly one where the numbers are way too high. Now that said, the stocks overshot. Baker hughes is starting to go higher. Theres no doubt about it, the off shore drilling is where its just not going to pay. Those are longer term projects, but its very difficult to say, you know what, this is the time to go prospecting in gold. The problem with the gold in mexico, youre not necessarily going to hit oil. When youre doing it on shore, youre going to hit oil. G. E. Has a mixture of everything. Remember, the last meeting was about why we moved into the hottest area of the u. S. Ee ckcn hottest area of the u. S. Ee ckoy economy. Im saying there was a moment where everything was looking real good for oil and g. E. Made it in. When we come back with the first Holiday Shopping weekend in the books, walmart taking on amazon. Looking to capitalize on cyber m monday. Well have Courtney Reagans interview with neil ashe in just a minute. Kid hey dad, who was that man . Dad hes our broker. He helps looks after all our money. Kid do you pay him . Dad of course. Kid how much . Dad i dont know exactly. Kid what if youre not happy . Does he have to pay you back . Dad nope. Kid why not . Dad it doesnt work that way. Kid why not . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab i would not say im into it. But lets see where this goes. [ buzzer ] do you like to travel . Im all about free travel, babe. Thats what i do. [ buzzer ] balance transfers you up for that . Well unh. Too soon . [ female announcer ] fortunately, theres an easier way, with creditcards. Com. Compare hundreds of cards from every major bank and find the one thats right for you. Creditcards. 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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. Down over 2 1 3 . Friday bloomberg reported that that Company Holding internal deliberations and analyzing the financial and regulatory hurdles to a potential acquisition of Liberty Global. Internal deliberations. We have different sort of reporting standards. I guess, jim, in some ways i come at it from a different place. Companies oftentimes do analyze things because you need to be in a position to know. There is no disputing the Strategic Logic or potential logic of these two companies which if you think of it theyre supplying broadband and other services throughout europe. That said, its very much unclear whether john malone who has soft control of Liberty Global has any interest or whether they have a price that would interest them whether they could get there to try vota phone. I did speak to malone a couple of weeks ago. I talked to him about Liberty Global in part because there are always sort of rumors about a potential linkup. Would he sell, would he buy . It stopped at that. It did lead to this. Everything is a possibility, david. You know, you have to follow your nose basically on an opportunity. In the case of Liberty Global, they still have a pretty good runway ahead. The u. S. Market is more mature in video, digital, so on. The European Market still has a lot of Growth Opportunity embedded in it so i think for the moment Liberty Global is going to stick to their knitting for the most part and vertical integration is more theoretical. At least it would seem from what he says theres a lot more ahead of them in terms of what they can do. They do compete against voda phone. Competing in other companies which liberty wanted to buy and then voda phone ended up buying. I think you correctly point out, companies talk all the time about merging. Internally. Internally. Its one thing if you reach out and you have conversations. It should be noted. Now there are plenty of investors who want to know these things. I dont want to take away from the reporting at all, but youve got to keep them in at least understand the process, which is any Company Worth its salt is going to be analyzing these things often. I know. By the way, apple down 4 in a hurry. Very strange. Well get stop trading with jim in a minute. Squawk on the street will be right back. For respawn, building the best Interactive Entertainment begins with the cloud. This is titanfall, the first multiplayer game built and run on microsoft azure. Empowering gamers around the world to interact in ways they never thought possible. This cloud turns data into excitement. 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I have lived here pretty much my whole life. I have been married for twelve years. I have 3 kids. I love living here and i love working in my hometown. At pg e we are always working to upgrade reliability to meet the demands of the customers. Im there to do the safest job possible not only for them, but everybody, myself included that lives in the community. Im very proud to do the work that i do and say that i am a lineman for pg e because its my hometown. Its a rewarding feeling. Thank you. Ordering chinese food is a very predictable experience. I order b14. I get b14. No surprises. Buying business internet, on the other hand, can be a roller coaster White Knuckle thrill ride. Youre promised one speed. But do you consistently get it . You do with comcast business. And often even more. Its reliable. Just like kung pao fish. Thank you, ping. Reliably fast internet starts at 89. 95 a month. Comcast business. Built for business. Time for cramer and stop trading. I know this is going sound sop poor rifk, but sometimes you get algorithms that says you should sell all tech. Im sure some machines said lets undo the friday move which we had in tech. Lets undo the nasdaq and blow out of them and everything thats internet. Thats whats happening. I think that, you know, in f in trading, this happens. Has anyone said anything about apple . Should it be sold now . I dont want to trade it. Youve been saying that for a very long time. It did lose about 6 bucks in the span of ten minutes. Thats silly. People will say, wow, i guess im being too greedy. Were reversing everything from friday except for the oils where we continue to pound them. Theyre very rare. Exxon is up a little bit but the oils remain until i see the number cuts, i think its dangerous to speculate because of whos got the hedges off. I keep thinking about continental. We talked about it during the break. That was not a two for one split. Not smart. Not a good time to get rid of your hedge. Some people make bad calls. I think what ham did, he had a giant like first half, okay . Then he had a manning like second half. I dont know if you followed, if you had stopped that game at the first half, thats what hamm should have done but he took off his hedges and, therefore, the jags won. Whats on mad tonight . Weve got sketchers, which has been a very hot stock and then we have fiesta group. You may not know fiesta group. Thats oil tropical. Thats been very, very strong. This Restaurant Group and some of the retailers are doing quite well. Well listen to greenberg and wineberg. Sketchers is a cheap stock. See you tonight, jim. Thank you. Well get ism at the top of the hour. Dont go away. trader vo i search. I research. I dig. And dig some more. Because, for me, the challenge of the search. Is almost as exciting as the thrill of the find. announcer at scottrade, we share your passion for trading. Thats why we rebuilt scottrade elite from the ground up including a proprietary momentum indicator that makes researching sectors and Industries Even easier. Because at scottrade, our passion is to power yours. My baby drove up in a brand new cadillac. My baby drove up in a brand new cadillac. Look here, daddy, im never coming back. Discover the new spirit of cadillac and the best offers of the season. Lease this 2015 standard collection ats for around 329 a month. Chocolate, soybeans, thisand apricots. Made with what kind of chef comes up with this . A chef working with ibm watson, on the cloud. Ingredients are just data. Watson turns big data into new ideas. And not just for food. Watson is working with doctors and bankers to help transform their industries. Today theres a new way to work. And its made with ibm. Welcome back to squawk on the street and welcome to december. Breaking news, november read of ism manufacturing expecting 58. Its better. 58. 7. Last months 59 unrevised. 59. Last months read was the best since march of 2011 when we had a 59. 1. Lets go through some internals, shall we . On the week of jobs, jobs, jobs, the employment side . Well, it dipped just a bit from 55. 5 to 54. 9 and, of course, new orders, something were always paying attention to. It moved subtly ahead pretty much the opposite of employment to 66. Its last read, 65. 8. Carl, back to you. Thanks so much. Rick santelli. Bemo Capital Market research releasing its 2015 outlook this morning. Expect another year of moderate gains. S p 500 target 2250. Were at 2153. The dow is down 100 now. Joining us on squawk on the street exclusively with that call, brian belsky, chief investment strategist with bmo Capital Market. Youre looking at another positive year. To zoom in to todays action, commodities are the concern with oil collapsing, gold collapsing. Are you worried that that could interfere with your equity call . No. And, in fact, sarah, good morning. Good morning. A couple of weeks ago we talked about energy and we proved to our clients and investors that the market doesnt need energy to go up to to go up, okay . Thats number one. Number two, i think that theres a perfect storm coming together for commodities, both in terms of materials and energy. Number one, demand and Global Growth is slowing. Number two, prices are going down, right . And because of that, number three, there has to be a massive behavioral change within investors and Companies Alike as we shift our focus fundamentally with respect to these commodities from demand to supply. In the 1990s, as you know, oil prices were considerably lower and wti went down a lot. Stock market went up. So i think its one of these situations where growth is going to be coming from different areas of the world, namely north america. We have to get off the emerging market trade and get off the commodity trade. Its an interesting call. Its not just cheaper oil and better for the u. S. Consumer, but causing some concern about super low inflation. Not to mention deflation. First of all, let me debunk the situation wti. It goes into the pockets of the consumer. It typically takes a number of quarters, number one. I think thats too simplistic. Number two, the deflation trade has been in place for a while. The feds going to be on hold for a while. The triggers are going to be north American Growth and wage growth. For a while . For all of 2015 . At the earliest, second half of 2015 at the earliest. The key is wage growth. The Growth Engine is emerging markets, the last cycle. The Growth Engine the next 15 years is going to be america and north america. As growth in on shoring and the Capital Expenditures come back to america, thats going to be very, very positive. That means even more volatility in emerging markets could be good for america. Didnt we learn, if weve learned anything, is how interconnected we are. If you were on a plane with four engines, one is working really well but the other three engines is beginning to stall, europe, japan, china, can the stock market really rally substantially . Oil is falling because theres a lack of demand. We can talk about deflation in terms of just price activity. Something very serious is happening to the other parts of the world, to the extent that the European Central bank may or may not panic during the course of this week or not. Can we really and this is a genuine question. It may be that we can ignore that, it may be we can sail on. I have to ask the question whether thats the correct assumption. Right. I think its too soon to use the decouple p term like we used to there 2006, 2007. Theres a couple of points i want to keep in mind. Number one, americas still the Worlds Largest economy, okay . Number two, china and emerging markets are still growing. Theyre just not growing as fast as they used to. What do we know about the realities of both japan and europe . Aging demographics, poor macro growth and, oh, by the way, i still think that europe is in the early stages of this whole devaluing the currency and the whole notion of what the Central Banks going to do there. I think its going to be a wile, simon. In the meantime, america because of this lost decade that has spurred what we believe is a 15 to 20 year bull market lots of other polices have had a lost decade and theyre deteriorating. The difference is coming out of this lost decade is america who has the Worlds Largest economy and who has structurally reformed themselves to the tune of massive Balance Sheets since the 1950s growing stable earnings and attractive valuations, and really low interest rates. As a bull, we have to ask you, youre expecting, what, another 10 move on the s p 500 next year. How do you explain the gloom in the bond market . How do you explain a 2. 15 yield on the ten year treasury . Well, its been a 30year bull market in bonds. They still had all the money. If you see where the flows are, the majority of flows are going into fixed income. By the way, fixed income had a positive return. That means investors arent going to sell until they lose money. Theyre still in control. Thats how i explain that. I think that is a good offset for stocks. Remember, were seeing mid cycle returns here. We believe over the next three to five years well average 8 to 10 return. Its the last cycle of the trend, really the last 5 to 10 years of the bull that can get real exciting especially if and when we get Corporate Tax reform and repatriation which is not part of the next couple years. One can only hope. Brian balkie, thank you for sharing your new views. National Retail Federation, weekend sales both in stores and online dropped 11 from last year. Walmart saying its online sales have surged. We want to welcome walmarts global ceo of e commerce, neil ashe and Courtney Reagan. Take it away. Reporter neil, thank you so much for joining us. As simon just said walmart reported that online sales on thanksgiving day coming in the second best day in history, second only to cyber monday last year. Here we are, cyber monday again. Are you going to beat last year . Good morning. Welcome to cyber monday, the most exciting shopping day of the year. So, you know, as you said, we had a good thursday, friday, saturday. We had some of the best deals that are available for our customers today. So traffics starting to build as the country wakes up and were looking forward to hopefully a big day. And we should note that you are in san bernardino, california. Very much folks are still waking up out there. On black friday best buy experienced a surge in concentrated mobile traffic which caused the retailer to have to take its website off line to make some fixes. What is walmart doing to make sure you can handle todays traffic . So over the course of the last couple of years weve done a ton to improve the Shopping Experience for our customers. So weve rebuilt the entire Technology Platform so they have a new Shopping Experience on the site and on the app. In fact, over the thursday, friday, saturday, 70 of our traffic, it was record traffic, 70 of that traffic was on mobile. So the experience is Getting Better both on the site as well as on the 57s. Mr. Ashe, i believe sarah down at the Stock Exchange has a question. Hi, neil. Thanks for joining us. My question is on e commerce as a percent of total walmart sales. Obviously its the sexy part of the business, growing double digits. Still, its a fraction of walmarts total sales. Where do you want that percentage to be . How much of the pie do you want to take in terms of overall sales at walmart . Well, the i think the definition of what is e commerce and what is retail commerce in a company like ours, which is uniquely positioned to be both online and in stores, is quickly fading away. And this Holiday Season is a great example of that. As you look at how we program the Shopping Experience for our customers, we hyon line specials starting on thursday morning on thanksgiving. We had the one hour guarantee in the Stores Starting thursday night and carrying through to black friday. We have great Cyber Monday Deals starting this morning. Even including were launching something new were calling the cyber evening edition. Weve held back some of our best deals and some of our best inventory for the working moms and dads that are busy at work during the shopping time. As you think about that, what is online sales, what is retail sales . Were really just trying to serve customers. That line for us where were trying to integrate digital and physical unlike anyone else is really blurring. So the faster we can grow online, we will, but really the goal for us is to drive all of walmart sales. We have seen it. 20 to 30 growth. Are you taking share from amazon as you grow your Online Business . Is that the big elephant in the room with the price moves . Were excited about our growth and global e commerce, walmart. Com, were in ten places around the world. Weve taken share and part of the way weve donna in the u. S. Is to get really, really sharp on price. Weve built some of the most sophisticated pricing tools in the industry so we know where price is online. We know that we are competitive. So four out of five times youll find a price on the web in the u. S. Well have at least the lowest, matching or the lowest price anywhere on the web. Mr. Ashe, you have said and the company has said 12. 5 billion is the sales line forecast for online. Could the Holiday Season change that forecast . Im sorry, i couldnt hear the last part of that question. Could the Holiday Season change the forecast for 12. 5 billion for that target for online sales for the year . Yeah, i understand. Were looking to grow in the mid 20s for the year and obviously were thinking about the Holiday Season as part of that. This is the big season for us and so were counting on shoppers continuing to shop through the Holiday Season. Cyber monday is a big day. Weve got more deals coming for the rest of cyber week. Unique to walmart is 70,000 items you can pick up today. The Online Shopping experience will continue through christmas for us. Of course, that will be part of the sales but weve had pretty consistent strong growth around the world, throughout the year. So were looking to finish strong. Well, mr. Ashe, when you have more numbers from today, cyber monday, wed love to hear about it. For now, i thank you very much to your time. Well let you get back to what will surely be a very busy day. Thank you and i hope you guys get shopping. A little programming note. Were delighted to say that the ceo of walmart doug mcmill lon will be on squawk box on wednesday morning. Phil lebeau has fresh data on black friday auto sales. Hey, phil. Ive been talking to some of the dealers about how strong the friday sales were. The early report friday auto sales, black friday auto sales were very strong. Up more than 10 is what ive been told leading to a big weekend. The estimate right now for november auto sales for the pace when we get the numbers tomorrow will be about 16. 8 million. A few optimistic souls are saying we could come close to 17 million, guys, back to you. Phil lebeau. When we come back, three months ago oil closed above 95 a barrel. Now prices, of course, at fiveyear lows down about 30 . What does it mean for u. S. Producers . Were going to get a live report from the bakken in north dakota when squawk on the street comes right back. Leration and stopandgo driving, your savings on gas could be equivalent to how much . Up to 50 cents a gallon . 75 cents . 1 . The answer is. Up to 1 a gallon. Sensible driving avoids unnecessary energy loss saving you money and reducing co2 emissions. Take the energy quiz round 2. Energy lives here welcome back to squawk on the street. The analysts at jpmorgan downgraded the stock. They reduced it to 51 bucks from a prior 53 saying positive developments are already priced into the stock. Those shares down about 5 as a result, sarah. Back to you. Thanks a lot, tom. Oil prices hitting fresh prices after the opec decision last week. What does it mean for u. S. Producers. Brian sullivan is live for us in north dakota where it looks awfully cold, brian, with more on what it means for Energy Companies here. Brian. Reporter yeah. Its about negative 10 without the wind. Thats a little cold. People up here are tough. We have to be tough. What does that mean, sarah . What its meant is a severe drop in the oil company prices, we know that. There are derivative plays you have to watch for. Its not as cut and dried as the Oil Companies themselves. I reached out to one of the Oil Companies about what theyre trying to do to lower their cost. Its called wpx energize. They said margin management and Cost Management will be key. We plan to renegotiate rates with our Service Providers and continue to work on lowering our well costs. Read between the lines in what theyre saying, guys. The pipeline operators, the drill rig operators, theyre going to start hammering them for cost cuts. That could mean wage kuss. That could mean real estate costs that are soaring could be hit. Watch the Pipeline Companies and even the rail roads, guys, theyre going to get hammered by the Oil Companies to lower their prices. Speaking of the Oil Companies, i know we want a cut and dried, clear number, whats the breakeven point. Its not that simple. A lot of companies have been here for a long time. Its not that easy. Mike kelley has been a great resource for me. Heres what he said, the highest cost producers or not the highest, s. M. Energy, oasis petroleum, northern oil and gas. Some of the lower cost, kodiak oil and gas and marathon. Halcon resources. The only thing i could get a consensus on, marathon has the lowest cost of production here in the bakken. Other than that, its piece by piece. Brian, people throw around a figure of 42 as being breeneven for a huge bulk of the industry where you are. Is that not working . No. No. Way higher than that. Okay. I would say i would say 68 to 72. I think 45 is true for a lot of the bigger ones maybe, simon, but youve got to remember. Continental resources, some of the biggies, theyre probably at that level that you talked about, but theres a lot of companies that just started up the last few years that are paying huge sums to get the leases on this land. Guys, i can assure you, the land is very hard. Its expensive to drill here. Brian, thats why they call it a shale boom, of course. Its a snow boom right now. Good to see you, brian. Brian sullivan there in the bakken. For more on oil, lets bring in art hacken. Amidst all of the doom and glam, the volume has come back in, the price of oil has moved off its lows and i think were up at least 6 from the bottom of that trough to where we are now though clearly the level is a concern for many people. Yeah. No. I think the markets in general are feeling around trying to find out. Is i dont think anybody clearly knows what the costs of production are. Markets are feeling around for that. There is some sense here that we could be building some kind of bottoming process in oil maybe somewhere in the mid to low 60s. Well wait and see where they are. Then of course the technicals you bounced off 20 theres a support band in the s p, 2048, 2051. That allowed you to bounce a little bit. Youve gotten some things going. As you aptly point out, volume is up a little bit so far. After the holiday. You would expect to have had some exaggerated price moves and then the market comes back with volume and corrects which is what is maybe what were seeing. Even at that i think the volume this morning is heavier than normal volume. On the equity market . Which may indicate that our friends in europe or elsewhere are selling here because its easier to sell here than elsewhere. They may be slackening off on that. The seasonals, were going into an absolutely promising period. Believe it or not, years ending in 5 have a great history of an up side bias, better than 6, 7 to 1. The second year of a president ial term is better. The first and Second Quarter of next year all have strong upward biases. Youve been pounding the table on seasonals for a few weeks. Is that notion too consensus now or not . Well, it may be getting there. When the seasonals jump off the page at you, and they havent been wrong so far. I mean, well see. This week will be a greatest. This week also has a an upward bias. Only once in 30 years has the dow not risen between the middle of november and the end of the year. Thats right. Once in 30 years. Thats right. The numbers, the rarity, it gets even bigger when you get into some of the other things about years ending in 5. The other thing you want to watch for is the vice chairman of the fed, mr. Fisher is coming in. He may try to set the table for friday, not that he knows the number ahead of time but get everybody prepared if numbers are better than we thought, what will be the feds response. Sit back, relax, this is whats going to happen. On the negative front, geo politically, the talk is that isis may have surrounded kobani. If thats true, that will not be good. Money continues to flow out of russia and the ruble. Another side effects of what were seeing in the whole reshaping of the energy landscape. Absolutely. Many investors are still in cash. There are estimates that over 11 trillion in cash is sitting under this market and hasnt moved yet. Interesting. Good to see you. Have a good week. My pleasure. Up next, cyber monday is in full swing. Smart phones are sure to be one of the most popular items to buy for the holidays. Former apple ceo john skulley wants a piece of that market. Here at post 9 the smartphone land and what he sees for apple holiday sales. Well be right back on squawk on the street. Entina, change engineering in dubai, aluminum production in south africa, and the Aerospace Industry in the u. S. . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 70 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. Outside of the nasdaq, where we bring you live daily market updates. And today, we have a very special free gift for you. So many viewers email us wanting to know our secrets on how we trade options. So we put our secrets into a new book. And if youre one of the first 250 people to call in right now and just cover shipping and handling, well send you a copy for free. Look at the rate of return weve made on some of our recent options trades, versus what we would have made had we just bought the stock. Theres no comparison. To make the best returns in todays market, you have to learn how to trade options. And our book will show you how to do it for free. Jon has been Trading Options for more than 30 years. Pete is one of the top 100 traders in the country. And our book will teach you how to trade options for free. So call now. [ male announcer ] call the number on your screen now for your free copy of jon and petes new book. Thats. see the number on your screen call now. As e commerce goes increasingly mobile, the pressure is on for it to go mobile. John skulley wrote moon shot. John skulley is here at post 9. Good to have you back. Congratulations on the book. Thank you, carl. People trying to make sense of this weekend. I think its the wrong way to think about it. You have to think about it as the selling season when 40 of the sales takes place in the last two months of the year. Trying to nail it on a particular day doesnt make sense because theyre stretching the offers out over weeks. Do you think it has to do with the nonmallification much shoppi of shopping in this country . People are still going to the malls. Theyre taking their smart phones. They Pay Attention to what others say than they do the big campaigns of the companies themselves. So its a big game change. One of the things i talk about in my book moonshot, if you want to find the next billion dollar business, its all about customers in control, customers paying more attention to other customers than the big companies. I love the nrfs take on the data which is the economy is so good consumers dont need a bargain so much. That seems like a stretch. Thats a stretch. Everyone always likes a good price. Jeff faso says my loyalty only lasts as long as until somebody comes up with a better price. How are you getting into this idea of people not just using their phones to shop for holiday sales but theyre buying mobile phones as gifts. Absolutely, sarah. Apples had a wonderful big hit with their iphone 6. It has given me another point of view on the apple watch. I was kind of skeptical about the apple watch but now its pretty clear that apples been tuning the software on the apple watch to make it easier, simplify it and say that the heavy lifting is going to be done on the iphone 6. The apple watch may be a more interesting product than i actually thought when they first announced it. Did i read youve launched your own phone . I have, simon. Its because theres a whole new market for smart phones in the emerging markets in the world which is really budget mobile. Were introducing a world phone for the budget mobile sector. This is the 100 to 150 price point, whereas, an iphone or high end samsung can cost 600 to 800 where the carriers dont subsidize it. Is that not a crowded space . There are lots of lowcost producers in china. Absolutely very crowded. Products are being made with kmod advertised technology. Thats why we got in because as a consumer brander i like a commodity. Were doing all of our Industrial Design being done in silicon valley. By the middle of next year well have all of those pieces together. Were very excited about the opportunity in a kmod advertised market, budget mobile where we can differ ep she eight and not competing with the apples of the world. Do you think its a mistake apple didnt go into that . No, i dont, sarah, because apple has been upping its game. Its out maneuvered samsung in the high end market. Its moving into vertical platforms like health and fitness. Samsung has been outmaneuvered. Youre joining us on a day where apple was down 4 , its now down 3 . Some traders wondering maybe they had a black friday weekend just like it appears everybody else did. Is that even remotely possible . No, its not remotely possible. Apple is doing so well. Theyve got at least two years of builtin demand for the iphone 6 because apple sells to the people who love it. And the install base loves apple products. I think thats a complete overreaction. John, its going to be interesting to see how were having to adapt to the Way Technology has transformed the Holiday Shopping season. Congratulations again. The book is called moon shot. Straight ahead on the program, who will be the winners and losers of this Holiday Season. A Hedge Fund Manager who focuses on retail. This is an interview you dont want to miss right after this break. How do you beat the number one seed . You just have to win 70 of your points at net. And keep unforced errors under 10 . On the ibm cloud, the us open analyzes 41 million data points from 8 years of competition to uncover key insights. Data can help show you how to win, no matter what business youre in. Today theres a new way to work. And its made with ibm. Dad yeah, 20 something years now. Thinking about what you want to do with your money . Daughter looking at options. What do you guys pay in fees . Dad i dont know exactly. Daughter if youre not happy do they have to pay you back . Dad it doesnt really work that way. Daughter you sure . Vo are you asking enough questions about the way your wealth is managed . Wealth management at Charles Schwab. A remote that lives more wifi in more places. A Movie Library you can take wherever you go. Internet speeds that have gotten faster 13 times in 12 years. The innovators and inventors at comcast labs are creating more possibilities for more people every day. Comcast nbcuniversal. Bringing media and Technology Together for you. The Holiday Shopping season officially underway with black friday now behind us. The national Retail Federation says total spending fell 11 this weekend compared to a year ago. What does that mean for the rest of the Holiday Shopping season . My next guest is david durbin. Founder of durbin capital. He joins me at post 9. Our viewers know you, david. You talked about saa about a year and a half ago. Samsung, apple, amazon and the impact thats having overall. A lot of people have taken that piece and run with it since then. Do you still believe it . Absolutely. Thank you for having me on. Absolutely. I mean, its just blaing out the way we spoke about it a year and a half ago. Especially with amazon, amazons growth is much higher than people think it is. When you gross out the numbers you get the fee income. Its much higher than the 20 top line that theyve been showing. Right. I do want to get your take on these numbers this weekend. Youre in the malls typically trying to look at traffic. How much should we draw into this number we got from the national Retail Federation in terms of what the seasons going to be like . Well, i think in some sense its somewhat of a reality check just in the sense that things were going so well. The stocks went through the roof. 75 of retailers have been reporting earnings. Some sales are 5, 10 when before they were flattish. That was kind of a bit strange. Part of the reason for that was the weather was really cold as you might know here in new york. It was one of the coldest third weeks in november in 50 years. So people were buying a lot of cold weather merchandise ahead of time. In addition to that among the retailers this year they started at thanksgiving earlier, maybe a week or two earlier, well watch for example the monday before, all the other companies. As a result of that, a lot of the businees moved forward. So we expect to see somewhat of a weak thanksgiving period. What the real number is its unclear. Jim cramer was saying on tv earlier, who knows if this is real. Thats a survey whereas online we know what people are selling. You can track that. The saa piece is playing out exactly as it should be. Our prediction for cyber monday, actually i was doing a little bit of shopping this morning, count help myself, great deals, our predictions for cyber monday to be weaker than expected for the same reasons. People shopping over a greater period of time. Tackled merchandise and its already been sold. In a sense we are optimistic about the Holiday Season. There can be no question about that. So youre optimistic overall about the Holiday Season although you think perhaps whether its black friday or cyber monday they may be coming in lower . Yeah, its a wakeup call. Were not as optimistic. That goes to the market itself and to the stocks. It does. You make decisions whether you want to buy or sell short or simply avoid. Whats really strange and really interesting, every time a retailer, it almost seems every single quarter, when the retailers report, since we spoke about saa, they usually miss numbers. Then they say the business has improved this month. It becomes a famous sort of thing like last august three months ago when they all reported. They reported bad numbers but also business has improved. Business has improved. Go through the Companies One by one. Then they reported bad numbers. The same thing may be happening. They all reported in the last three weeks and said the same thing. Business is improving. As an investor, how are you supposed to approach na . The stocks have improved. The stocks have improved. The big difference now, which is a big difference, the gas prices have come down so much. That has helped Consumer Confidence as well. So youve got like a lot of wind at your back. Youve got employment looking good, youve got some of the eke none mick numbers looking good, oil prices looking good, housing looking good, you have a lot of numbers at your back. Its hard to make a poor end and in addition you know i spend a lot of time on inventories. I know you do. Youve trained me to look at inventory versus sales. We have recent trends. Thats looking better, isnt it . Yeah, the sales to inventory has turned around. Sales grew faster than inventories, which is really a good sign for profitability. This quarter 75 have reported. Weve collated the numbers. You see sales better than imagery. Profitability. Within that there are sections like teen apparel and the inventories are too high. Taking in all of this, the positive trends when it comes to inventory versus sales, generally positive environment for consumers but perhaps not numbers that are going to make the estimates that people had going into the Holiday Season. What do i buy . What do i sell . What do you like these days . Well, obviously i sound very optimistic about the consumer. Lets get one thing very clear. We spoke about this many times. Saa, they are taking away a huge amount of the dollars . That is a huge trend that will continue . Retail is in secular decline. Find a retailer to buy long term is not easy. Why do you have a Retail Hedge Fund if thats in a secular decline . In this market it is a challenge. It is what it is, right . Designing one company to buy not buy, thats amazon, then youve got the Branded Companies that will benefit someone from the, Branded Companies like under armour, nike, ralph lauren, van hughsen. Sketchers. Why is sketchers one of your favorites . Its on fire. Top line growing 30 plus their pe in the 20 range is much lower than under armour. That is an Amazing Company but its a huge differential. Sketchers has gone through a pair of product cycles. You remember those shoes . Yes. Its not a differentiation where it was one product, its across all products. Its really, really powerful. Inventories up 17 . Sales up 30 . Future profits should be easy to beat. Look, what happens six months from now, nine months from now, this is retail. Youve got to follow the trade. Always something worth buying out there is what youre saying despite retail being in a secular decline . Yeah, exactly. How do you play that real quickly . Whats the overall play if youre an investor who believes your thesis . Well, i mean, its obvious now in terms of, you know, you could really short the group. The problem is were in a bull market, arent we . Look whats happening to the products. If you gave out the names you would be out of business quickly. You have to wait for a bear market or some market that is flatsish. Great Companies Like macys, very well run, target is a good company, well run, but these companies have uniformly lowered numbers. They lowered numbers a few weeks ago. The stocks set a high. Its not easy to short the names and to go long, the oil prices really should help a lot of the Companies Like walmart and target. If one wants to do that, the limited brand, Great Company on fire. They should beat numbers hand dilly. Weve got berman to talk a few stocks. Why would you . You only run a hedge phone. As always, appreciate your time. Thank you. Appreciate it. Back to you guys. When we come back this morning, its cyber monday. Online retailers counting on big numbers. The founder of benobo will be here. Coming up later in the day, the president of the new york fed, William Dudley sitting down with our own steve leaseman at 1 30 p. M. Eastern time. Well be right back. My baby drove up in a brand new cadillac look here, daddy, im never coming back discover the new spirit of cadillac and the best offers of the season. Lease this 2015 standard collection cts for around 439 a month. My name is karen and i have diabetic nerve pain. Its progressive pain. First that feeling of numbness. Then hot pins. Almost like lightning bolts, hot strikes into my feet. So my doctor prescribed lyrica. The pain has been reduced and i feel better than i did before. [ male announcer ] its known that diabetes damages nerves. 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Were watching shares of amazon not just because its cyber monday, but news that moodys changed the companys Credit Outlook to a negative rating while looking at the senior unsecured rating saying that the outlook is due to the companys announcement that it was issuing new debt. Amazon shares down 2 to 3 , carl, on the day. Back to you. Lets get the santelli exchange. Hey, rick. Good morning, carl. Id like to welcome our 1st of december guest, matt mali. Thanks for taking the time. Always great to be here. Listen, weve heard a lot of talk about normalization, but lets stick with the fundamentals with the first part of this conversation. Gdp and much of the european sector is weak especially germany and yet their stock market came close to 10,000 today, very close to alltime record levels. What are your thoughts about the relationship between germany and the fundamentals and equities . Well, it just seems to me that were still getting a situation where you have qe andersen tral Bank Stimulus really having a big impact on the stock market. As you mentioned, germanys growth was negative in the first quarter, barely positive in the third quarter. We have the Prime Minister of the u. K. Saying theyre on the brink of another recession and yet their stock market is up 16 in six weeks. This is talking about germany. Up 16 in six weeks. Its within 1 of an alltime high. So the fundamentals arent as strong. As long as global Central Banks are adding stimulus, its holding up stock prices. You know, it just seems to me a perverse relationship between energy and global economies when you look at germany, theyve had a lot of issues regarding putting coal back online because alternatives to fossil fuel just arent taking up the slack. We look at japan, an island with no energy. Falling energy prices, obviously good for manufacturing. Any business in the economy but yet its putting deflationary pressures foremost in central bankers minds. Is this logical in your opinion . Well, it really isnt, but at the same time, you know, something weve talked about in the past. They seem to be more market dependent than data dependent. Every time the market goes down in any kind of way, they get nervous and step back on the gas peddle. One of the things that we go back to is that we have you know, we have look what happened. We had the gdp number for the u. S. Being a great revision and yet the bond market, weve seen yields drop since then, somewhat significantly. Were back down below 2. 2 . We have some underlying issues. Matt, let me interrupt you there. Sure. Were very close to the settlement on october 15th, which was 214, a day we settle 28 bases point higher than the interday low yield. For the last answer, were out of time, what do you explain the recent surge in buying that started early friday and still continues at this point in treasuries . Well, its got to be one of two things in my opinion. Its either got to be that the growth is not as strong as people think it is or as a lot of the pundants say it is or number two that were moving towards another flight to safety move in the overall markets. The bond market usually sees it first. Were starting to see that in the last couple of days. Thank you very much, matt. The only thing i could think of that the bond market might see coming is the spreading of weakness through systemic transmission lines via europe. Thank you for taking the time. Squawk on the street gang, its yours. Coming up on the program, the cofounder of paypal will join squawk alley live. Offering consumers a new way to buy gifts this season. It could mean serious competition for the banks. Well be right back. And youll see just how much it has to offer, especially if youre thinking of moving an old 401 k to a fidelity ira. It gives you a wide range of investment options. And the free help you need to make sure your investments fit your goals and what youre really investing for. Tap into the full power of your fidelity green line. Call today and well make it easy to move that old 401 k to a fidelity rollover ira. Were for an opens you internet for all. Sing. Were for creating more innovation and competition. Were for Net Neutrality protection. Now, heres some news you may find even more surprising. Were comcast. The only isp legally bound by full Net Neutrality rules. And after a big weekend of Sales Companies are now in full swing for todays cyber monday including the clothing retailer bonobos. Joining us is the founder and ceo andy dunn. Good morning. Good morning. Is this a new look that you should be wearing, jacket outside your coat . Its warm in new york today so i was trying to, you know, pull it all off without outer wear jacket. I mean, is this what people are going to be wearing moving forward . Seriously. Reversing stuff like that . Once they see this segment, its just going to take off. Im confused. The website offers 30 off. Yes. Correct . Today by using a cyber monday. I thought that was great until i realized that the gap and old navy and banana republic, theyre offering 40 off today. Yeah. Is it getting tough out there . So what we did at bonobos. Com is 30 and air. Com up to 60 to 65 because it is a highly promotional time. Dont you expect in your world in fashion for you to get the discounts towards the end of the Holiday Season . This is supposed to be heavy discounting for electronics only at the beginning of the season. Isnt it . We saw the news over the weekend about down 11 so we felt lucky so nar were having an awesome holiday. But it is a time of year i think where online in particular, price is such a powerful motivator. Because the whole system has become more promotional the impact of this weekend may be difficuminishing because it see like almost every day there is an event or offer. Are you making money at this sort of level if. Were surprised at how well things are going on on our side. A lot of it is our stores. Were profitable in our stores a lot more full price selling. Ten of these guide shops. All about customer service. The question is are you actually making money with a 30 Discount Online today . Do you still have substantial margin left in that . There is some margin, yes. Weve been having the discussion all morning long. How important is cyber monday versus just the entire quarter . The holiday sales, period, especially with the disappointing numbers over black friday. Perhaps black friday is not that important anymore. I think today is huge. In our business were built online. The idea was the internet can enable us to offer great clothes and great service. This this this day, this is the super bowl of ecommerce. This is a 10x day for us compared to the holiday. Tep times more important than your average holiday. People after this weekend especially are wondering about the longterm stability of the mall. Weve had you on several times about the mix of bricks and more ors and online. Do you feel like your returning into the wind when it comes to physical space, physical retail space . Our sfotores are different. You touch and feel the product, you try it on. We dont stock our inventory there. We have ten guide shops right now. We think its the reinvention of the retail store. We will open ten more next year and a number of them will be mall locations. Top malls are as strong as ever. How do you differentiate whats a top mall and whats not . Its a function of the brnds that are there, the growth that theyre seeing, the sales per square foot productivity and i think one of the realities in our country right now is people doing well are doing really well. Weve got headwinds, i think, in c malls and d malls that were not in a great position to comment on but for the top malls out there were optimistic. Any retails you want to be nearby . We love apple, we love tesla. Theyre innovative. There are brands outside of the apparel space that we admire. Are skinny suits over . Part is what has built us is more structured move toward tailored silhouettes. Perhaps the era of skinny of sinniest jeans for men is behind us. All right. Now lets go over to the always fashionable jon fortt with a look at squawk alley. We have a great show, we have max, the cofounder of paypal. Yahoo board member will be joining us. Also, the cofounders of parker, trying an innovative approach to cyber monday and the head of amazon books in kindle in a season thats turning out to be increasingly digital. All that and more coming up on squawk alley. [time warp explosion] yes where have you been . The future and it looks bright. But we need to upgrade our Network Power protection. No problem were working on a smart ups system from apc and cdw. Gonna keep our Network Powered and highly available. Did you just alter the spacetime continuum . We gotta go back. We cant. Its broke. Uh oh. 65 points, retailer is a key focus of the cyber monday. Best buy very interestingly has had a real tough open so far today. Of course the website crashed twice on friday. General concern about where we are now on the data coming through at the macro level. Another one down is game stop. We interviewed the president on friday. There was always concerns about gamestop with digital downloads. Theyve extended their cyber monday afters throughout the rest of the week. Checking on the Broader Markets here were seeing the dow falling 70 points. Off the session lows for the morning. Red arrows across the screen. S p 500 down 0. 9 . Big week ahead topped off by jobs day on friday. Well be watching also the data from overseas as well as drop in oil. Lets send it over to squawk alley and the gang. Thanks. It is 8 00 a. M. At Amazon Headquarters in seattle, washington. 11 00 a. M. Here on wall street. Squawk alley is live. Welcome to squawk alley. Markets not quite back in black but progress after being down 80 points. Roger mcame and John Steinberg is here at post 9. Jon fortt, cale kai la, of course, as always. First up, cyber monday. Fewer people shopping in stores while more and more continue to spend online for the holidays. According to adobe, both thanksgiving day and black friday saw double digit