throughout. tom lee said himself, the financials, the idea that we're out with some of those, that sounds like great news to him. it's something they're going to be covering in "squawk on the street" right now. expired, by which the underwriters can start saying what they think. and guess what eric schmidt thinks is the company's biggest rival when it comes to search. the answer may surprise you. got his attention. a big day for bank earnings. jpmorgan chase posting a third quarter earnings miss. revenues, though, did exceed estimates, helped by fixed income, currency, and commodity training. citi reported better than expected quarterly results while wells fargo came in right in line with what was expected for its third quarter earnings. the bank earnings coming one day after stocks posted the worst three-day losing streak we've seen since 2011. the s&p 500 down nearly 1.7%, closing below its 200-day moving average for the first time in almost two years. i said 1.3, it was 1.7. and adding that to last week, we are looking at significant losses. are these bank earnings going to do anything, jim, to stem what seems to be this sentiment change. i can give you a lot of reasons why we shouldn't be going down that much. all these worries about global growth, but are the earnings going to do anything to change market sentiment? >> i think j&j could. i think one of the things you mentioned, a pop, was this interest rate move, which suddenly, you know, you get kind of a rate that is so low, that you're going to get more people going back to those accidental high-year-olds, let's call them that, or bond market equivalents, that can deliver numbers. j&j is obviously not a cheap stock, but when it delivers a perfect number and you know, raises guidance and you've got a lot of medical issues going on all over the world, that anybody's got anything that can solve a health care problem, so to speak, good. now, citi is the best. >> citi is the best. >> michael corbett is really good. >> this is a major change. >> is that going to be a conclusion or is that sort of a statement in time that could change in the future? >> no, no. initially, look, i didn't -- i didn't understand the strategy initially. because i had felt what was great about citi was its far-flung nature. what he is saying is, what's great about citi is profitability. and c-car, returning capital. every single line item that i read in citi was better than i expected. now, in this environment, wells fargo, obviously, was the most important bank, because i say that because wells fargo has got the pulse of america. and it is reflective, if you will, of the domestic economy of a certain extent. we often talk about wells. it's simpler to understand, net interest margin becomes so much more important, perhaps, because it does have capital markets activity and things of that nature, but they aren't -- we're not focused so much on fixed income commodities as we are -- >> it has moving parts, but you've got the rates going down again and that's not so good -- >> look, i'm going to say something positive about wells. this quarterly growth is just incredible. it's endless, it's consistent, you understand why warren buffett likes it. so i guess i'm presenting a world here where these stocks can't take the market down. how about that? it has to be other things? it has to be the transports taking the market down or it has to be the industrials, where we get a lot of negative notes. the autos. it's german weakness, it's chinese auto figures, it's the tend tenderhooks about ebola. >> every day it seems like there's something that scares the market. yesterday, that plane at logan. >> when you get off the desk with guys who are really serious about disease, they are telling you, look, this is just a frightening thing. we know, but let me tell you what kills people. >> but it can freeze things. >> it can freeze things. and we know sars -- >> -- decision making, and it does seem to have been having an impact on the market. >> every time we talk about it, we're being overly dramatic. >> no, i don't think we are. >> okay. >> i don't think we are, and i think you have to include it in any dialogue about what's been going on lately in the market. >> right, because people don't go out. >> you can't point to any one thing in this market, at all. and i think we try to define it here, we will spend most of the days trying to give you reasons why the market is up or down. but the fact is, it seems to me as much sentiment as anything else. >> and risk coming off the and the usual things we talk about instead of, sure, you have bad numbers out of germany. yeah, europe is in not a great place. things don't look so great in terms of gdp expectations, but the trade number was pretty good. >> right, the september trade number. everyone overlooked that because of a dallas nurse. >> right. >> but the dallas -- we don't know what happened. so suddenly, you have the cdc looking in disarray. >> so you're back to ebola. here, i'm trying to get us somewhere else and you're back to ebola. >> because it has a sars feel. and the airlines were down gigantically. now, there was 18% of the traffic, thank you, wells fargo, was international. this is very small. but i just feel like -- it's the newspapers! >> you can't ignore it! and the world that we live in. you know every single thing that's happening in every moment because of things like twitter. but also, something that we know, which is oil, it's going to 80, isn't it? isn't that good for the airlines or am i missing something? isn't that good for consumer spending or am i missing something? >> if it were not for ebola scares, you would be buying the airlines hand over fist. >> okay. >> but you can't because of ebola. you would be going on the dining out stocks. you would be buying darden, not selling darden. there's a downgrade today. it was just fatuous. that's what you would be buying. retail, you should be buying. but what are the stories in retail you read? tepid, tepid, tepid. and one of the things, i think, david, and i've worked with you for a long time, when you talk with people about what's going on in the market, here's what they say. something's lurking, something's lurking. that doesn't do anybody any good. but is it kabul, is it baghdad? will we have to send in the marines to baghdad? it's got a feel about it, this market, that there's another shoe, because every time we rally -- the close yesterday, reminded me of 2010, 2011. vix spikes, doesn't mean a thing, vix is going much higher. all of a sudden, what does that guy that i don't know? in all the hedge fund trades, they're falling apart. or the united rentals. >> or hertz or any of the oil or energy names or event names. he did this yesterday. the hedge fund pain is significant. >> we're talking, we're down as of friday, down 6, 7% for the month. for the month. and add that to yesterday, some of them may be down 7, 8, 9%. you're losing your year for sure. >> years are being lost. >> that said, there may be some real value -- >> i did a piece last night on "mad money." it was a checklist of ten things you get. and people, twitter, jim cramer said, that's an impossible list. no, there are things, there are values being created. we've got stocks. i don't want people to buy them, but there's a company called emerge, which is a fracking sand company. it was at 75 months ago, it's at 70 now. in the interim, went to 140. yield 6%. there's no sign right now, i'm going to have howard ham on tonight, the premiere oil guy in this country, who is going to tell you not to panic. that we do not stop drilling at 80. but this morning, chevron canceled a $12 billion project, a deepwater project in indonesia. shocker. i'm in shock. that was a project that was being done because of china demand. canceled $12 billion project. >> but is oil really a function of reduced demand or is it simply a function of opec's sort of, keeping the tabs open, saudi arabia saying we're going to take it down and down and down, and we're not going to cut back on production? i can see it both ways. >> right. >> but it may not be necessarily a reflection that things are really slowing dramatically. >> saudis made a big deal with east asia to sell things forward. the oil guys want us to stop being self-sufficient. they know if they can get it to 75, they break us. just putting that out. >> all right. you know what, let's come back and go through the banks real quickly before we hit the break here, so we can just sort of square that away. you mentioned wells. fine? >> yeah, fine. people panic and then they come back -- >> we all know that. the refinancing worm has run its course. >> and i think that's untrue. because i'm frantically trying to refinance. >> and looking at a -- >> 3.5 is going to go to 3. okay, cramer, you're rich, you can get -- no, no. you can get a refinance now through 4 1/2 to 3 1/2. and i think that that's possible. closing costs, obviously, if you include, goes to -- >> citi, by the way, getting out of 11 countries in its consumer bank. >> citi's doing everything that you want. the return of the capital. let's talk about jpmorgan. that's the one that everybody -- i love the fact that everybody's an expert on jpmorgan. it is impossible to be an expert -- >> well -- >> david, it's a hard read, jpmorgan, many moving parts, but making some money in volatility. september good. >> and after the crisis, in particular the lead up to it, i always caution people not to rely on press releases, regardless. that's what the company wants you to see. these are finance companies, financial services companies. they are very difficult to understand. if you had read every press release from merrill lynch from 2005 to 2007, you would have had no idea the risk they were taking. nor would you have understood it at citi or lehman. >> credit costs really good. look, we are seeing the peak legal number, because west left the justice department. and when you get a peak legal number, you're going to begin to see, it's not just the fees they pay to the lawyers, all the people on the other side who talk to the lawyers. i know it's absurd that lawyers could actually impact earnings -- >> fine, so they can take all that money and put it into cybersecurity. >> they have to. >> right? >> it's a great point. cyberarc. palo alto networks, very inplaited stocks. i like them, but we saw what happened with gopro when someone, you know -- i think gopro peaked when i was in hawaii last week, when i saw the goat riding the surfboard. can you top this game of gopro, it's too much for me. what are they going to put on a gopro next? a giraffe? a giraffe rides a surfboard. >> you know it doesn't align with my interests. >> it's done, it's enough. >> well, coming up, it's not nearly enough for us. google chairman eric schmidt spoke about what is the company's biggest search competitor. >> who? who? >> and how much does it cost tesla to produce the sedan? we'll have a tesla teardown coming up. we are one day removed from a 1.7 decline on the s&p following last week's significant dleclins on the broader averages. we've got more "squawk on the street" live from post nine after this. what are you doing? the dishes are clean. i just gotta scrape the rest of the food off them. ew. dish issues? cascade platinum powers through your toughest messes better than the competition the first time. cascade. now that's clean. google chairman eric schmidt with some eye-opening comments about his company's competition. at an event yesterday in berlin, schmidt said, quote, many people think our main competitor as bing or yahoo! but really our biggest surf competitor is amazon. people don't think as amazon as search, but if you're looking for something to buy, you are more often than not looking for it on amazon. >> that's totally true. >> it is totally true. a couple of things, first, they're fighting monopoly charges in europe, so you want to do anything you can to create the sense that you have competition. but there is a theme among some investors that amazon has a lot of fertile ground to plow, if you will, when it comes to search. when it comes to organic and sponsored search on its site, that advertisers will pay for the key words, and it is a significant competitor, perhaps. right now it's about $500 million. we're not talking about a number of any significance for amazon now, but it could be. >> my charitable trust owns google, one of the reasons, i had domino's pizza last night, a big upside surprise. they just advertised a win. the shift -- did you see the defenses all day? they all have the same characterization, don't worry about all the money going towards online. i mean, you have to. the budgets are shifting so quickly that amazon, i think is going to be a major player in that. because we all -- just think about your day. i'll look up -- you want something -- >> and you'll conceivably just go to amazon and search it. >> amazon search is fabulous. >> and that is -- perhaps will be a significant revenue source for that company. so schmidt may be correct in that. not forgetting, of course, he is fighting these monopoly and anti-trust charges. so, we'll see. i mean, on amazon as well, though, there's a lot of other things to keep in mind when it comes to that company. >> i was talking to a very good analyst who doesn't like amazon or downgraded it, and i was saying, okay, well, what happens if "the new york times" writes about ebola every single day on the top of the right-hand corner, you'll want to shop more amazon, fedex and u.p.s. go up. and he said, i hadn't thought about that. here's what i'm saying, if that's true, there'll be another case of some health care worker and people are going to freeze spending and stay at home and that is an insane thing to say on air. that that one health care worker could do that. but that's how the stocks reacting. so i have no choice. those who think i'm fear morninginmorning i ing, i'm reading "the times" and "the journal." they're thinking twice wildfire they put those headlines out. >> no doubt. on this whole idea of search, by the way, we can end on alibaba, which we're going to talk about later, because all the recommendations for the stock are starting to come out. that is key to their business model. where they have millions of merchants, the way you get recognized is by advertising on the alibaba platform, hence search. somewhat equivalent to what amazon at least in some ways might be able to do. >> let's say you want, you own a commercial enterprise and you want stuff in manufacturing. if you're in new york, it costs a fortune to have things manufactured. so you go on alibaba and figure out where you can get tables, where you can get chairs, where you can get things made. bangladesh this morning, you have slave slalabor free. it tells you what slave labor -- because i don't care how much, you don't want to be in violation of the 13th amendment if you want chairs being built. but it's a natural intermediary that gets rid of the wholesale. i mean, my dad was a jobber for 50 years, a wholesaler. and what this is about is disintermediating the jobber, and that cut is gone. people understand a business model, it's a wholesale -- >> and very different from amazon, which holds its own inventory, enormous amounts of it from all those warehouses, where so much of their technological edge is on that side of things in terms of fulfillment. we've got a mad dash coming up, you ready? mad dash as we count down to the opening bell. taking another look, getting so ahead of myself, at futures, as my face disappears. and you see the futures board. more "squawk on the street" from the nyc after this. guys! you're not gonna believe this! >>watch this. sam always gives you the good news in person, then the bad news on email. good news-fedex has flat rate shipping. it's called fedex one rate ®. and it's affordable. >>sounds great. (cell phone typing) (typing continues) (woosh) (cell phones buzz, chirp) >>and we have to work the weekend... great. more good news-it's friday! woo! ship a pak via fedex express saver® for as low as $7.50. ♪ who's going to do it? who's going to make it happen? discover a new energy source. turn ocean waves into power. design cars that capture their emissions. build bridges that fix themselves. get more clean water to everyone. who's going to take the leap? who's going to write the code? who's going to do it? engineers. that's who. that's what i want to do. be an engineer. ♪ [ male announcer ] join the scientists and engineers of exxonmobil in inspiring america's future engineers. energy lives here. the all new, head turning cadillac ats coupe. it's irresistible. ♪ ...the getaway vehicle! for all the confidence you need. td ameritrade. you got this. that new music is stressing me out a little bit. >> yeah, i don't know what that is. more disease-oriented music. shark tank. and a profit. profits off of "shark tank." >> it's that profit. >> let's move on to skyworks in "the mad dash." >> yesterday we had microsoft preannounce. skyworks is pretty much in every major cell phone company, including apple. david aldridge, who was a remarkable manager, one of the best ceos in tech, comes out today and preannounces a better than expected quarter. so this is it. these stocks were all oversold. watch this. if this stock gives up the game, we're going down big today. >> really? >> yeah, because this is as good a story as you're going to get right now in this market place. i'm just saying, this is the litmus test of this rally. this is a great preannouncement, saying that basically microchip doesn't -- >> don't take -- that was one of the blow-up of earnings season early here. hurt the chips and brought the nasdaq down sharply on friday. >> as it should have, because it was so hideous. this is as hideous as microsoft was. this is a thing of beauty. >> let's move on to retail. >> now, i don't like this kind of downgrade, but i respect the firm. sun trust, home depot, and lowe's. high valuation, cutting 2015 numbers. looking at the suppliers into these two stores, and saying the stocks have gotten ahead of themselves. why does this matter? because retail, gasoline going down, non-ebola related going out. these two have been the strongest, lowe's and home depot. and frankly, this stock has been amazing. if it gives up the gain from that great quarter, this is what people are looking at. people are saying, cramer, you're too negative. i've been negative ever since alibaba. that was like the liberty bell. >> could it really be that easy? let's do the biggest ipo of all time and send it up 35%. that'll be a market top. come on, it can't be that easy. >> well, k-i-s-s, keep it simple, s. yes, it was! remember in march, we had the dancing food and that was a top in ipos. things happen. bells go off, okay? now, can we recover? if you can't -- if there was an ebola vaccine. if russia were to say, we're done with sanctions and i hope you are too. if china picks up off the export number, we have scenarios that can be better. if isil somehow will be stopped -- >> iran's president says they're going to reach a deal on the nukes with us. that, by the way, will send oil down even further. >> venezuela needs it and nigeria, if ebola goes to nigeria, so far have been very effective. that's 3 million barrels. there's a lot of moving parts. and they're not all negative. but right now, the panic, because of, david, something you've taught me, the 200-day moving average -- actually, you didn't teach me that. you've been foxed on the fundamentals. you're a dinosaur. i'm a trier ceritops. what are you thinking? >> that we'll go up this morning. but you can actually confirm that by staying tuned. we've got the opening bell just a few minutes away. this is kathleen. setting up the perfect wedding day begins with arthritis pain and two pills. afternoon arrives and feeling good, but her knee pain returns... that's two more pills. the evening's event brings laughter, joy, and more pain... when jamie says... what's that like six pills today? yeah... i can take 2 aleve for all day relief. really, and... and that's it. this is kathleen... for my arthritis pain, i now choose aleve. get all day arthritis pain relief with an easy-open cap. you're watching cnbc, "squawk on the street." we're live from the financial capital of the world. the opening bell is going to ring in less than a minute. look, hgtv is doing the honors. we'll get to that in a minute. you know, it's funny watching scripps is going to be ready. hgtv is celebrating 20 years here. a lot of concern about media companies -- >> it's interesting -- >> we've got time warner having its big meeting today, showing how it's going to create value far beyond what fox is going to offer. >> that will be another skyworks, a very important tell. meanwhile, "walking dead," incredible how many people watch it. that's a major misdirection play. >> well, scripted show, some would say in the case of time warner -- you know, "big bang theory" is not getting it done. >> no, but we're seeing all transports rallying. >> yeah. >> no new ebola news is moving those stocks up. i know that's crazy. that's what's moving. no new ebola news. >> all right. you're watching the opening bells at -- right here at the nyc. you just heard it and you can see back at hq, our realtime exchange is almost all green, almost all green here at the big board, by the way, that was scripps network interactive, celebrating hgtv's 20th anniversary. over at the nasdaq, teraform power. we're off to what looks to be a pretty strong start here, if you are positive on the market, jim, what's going to be a tell as to whether we can sustain at least the momentum through this day. >> industrials. i want you to watch caterpillar, okay? and boeing. boeing has been going down, because ebola fears to airlines. so you can watch american air and delta to tell you boeing, okay? caterpillar has been chinese fears, but copper was up -- >> will you stop saying the word "fear"? that's all you're doing, fear, fear, fear. >> chinese is right on the griddle here. you're right. that makes me a fearmongerer. >> you're not afraid? >> no, i'm not. >> you're fearless. >> well, i'm not fearless, that would make me stupid. but you see no new health care worker, stocks bounce, there was fear that something would happen overnight and it didn't. the futures were up, when you got up to adjust your lineup. >> the ek was down sharply. europe did not look -- still is not looking great. >> and j.p. morghab is an outlier here. a rather strong market given the fact that jpmorgan is not going up here. we want to see the industrials rally and we want to see the utilities go down. but it's very hard to manage, when you have the interest rates where they are. i think that this market is reacting to the fact that if you have a 3% yield, suddenly i like it. can we see the chemical stocks stop collapsing, david? what is going on with that group? that's been a collapse. >> that's got to be a reflection of the slowdown in the global economy? >> but the stocks are so cheap. getting cheaper. doesn't matter. >> right, they're a main source -- right. are we not seeing a response to the fall in oil that you would typically expect? >> yes, we aren't -- >> and why is that? i mean, we've had a dramatic fall in oil prices. take a look at anadarko or any name. you pick a name. >> right. >> because i think that -- >> but why aren't we seeing the other side of it? >> i think people feel the consumer is weaker. i think there was an article today in "the times" about the consumer not spending the way that the jcpenney quarter wasn't -- >> have you seen the labor picture in the u.s.? the last i likeooked, it wasn't that bad. >> i think we should talk darden for a succeecond. a new management comes in. >> a new board and a new management. >> has a great yield. i don't see any sign they'll cut the yield. the former ceo came on "mad money" years ago and said, if you want to know what drives us, it's the big tax cut from oil going down. that's a great stock to watch. because new management, new board, levered the oil, cheap -- a lot of the commodities coming down. let's watch darden. >> right. a few things we're also going to watch this morning. i want to come back to time warner, because they are having this meeting today. you can, of course, remember the short- lived battle there, where fox is trying to acquire the company. but what needs to be done at time warner today is to articulate why and what the growth strategy is and why that is going to supersede anything that they would have been able to get from fox. now, fox was not going to a hundred bucks, but the idea is still, how do you get that stock price to triple digits within a reasonable time frame? let's call it a couple of years. and then they may sell off that number, because he wasn't ready to sell this summer. but two surms from now, perhaps he is. >> is he in a situation where he's got to be like -- listen. >> he's not now, but fast forward 18 months, if they haven't delivered, it's a different situation. people are willing to give him the benefit of the doubt, and that begins today with putting targets out there, explaining to, for example, why, you know, why the big bang theory reruns on tbs is their highest rate showed and whether that's a good strategy. >> remember what he said. >> whether it was worth paying all that money for the nba. what are you going to do with hbo? are you going to go to direct to consumer at some point. do you leave it as it is. a lot of questions. >> i've always lacked to les moonves to see why you should be investing in cbs. because of the big buyback, whatever. there is a kind of feel that it's bewkes now that can save the group. so there's a lot of pressure on him. >> there may be. you mentioned cbs. of course, the stock is down -- >> no, i said cvs, which is at $80. >> no, you didn't. one of the greatest trades was cbs, and the guy said, cvs, and the stock went up a dollar. just sell it and bring it on home to me. it's a sam cook strategy. >> that's really funny. i wanted to mention some activism this morning. corvex, more than $7 billion under management, writes a letter to crown castle. you know this company a bit. >> geez, how much -- that's been an unbelievable stock? what, is he unhappy? >> a lot of times you do see the activists take part in names, not always, that are -- that have been fairly strong. we think think about, for example, pepsi and the arguments there, but it doesn't necessarily mean that there can't be more done to get things moving. for its part, crown castle says, we're happy to hear from our shareholders. what did they actually hear? well, you know, the company's asking for -- or corvex, which owns about $1 billion of economic exposure and 12.6 million shares, paid dividend of at least 4 bucks a share by 2015, guide to 10% dividend per share growth, maintain leverage of at least 4.5 times, flex leverage up to 6 times net ebitda, and you know, do a number of other things that they want you to do at this point in terms of the capital structure of the company at crown castle. that stock was up. i missed it if we went through it just now. >> it's been such a great stock. i like them, i like american tower. these have been real winners. the losers, no one goes after the losers, david, they just go after the winners. >> by the way, there are a number of stocks, we don't talk about them as much. hertz, for example -- they are trading so far below where the activists came in, whether it's carl icahn and hertz or barry rosenstein, or casa blanca and clifs. >> oh, my god, clifs -- clifs is -- well, you know, good luck to you there. they need an iron horse being pump std. there isn't a single guy blinking in the iron ore industry. they just keep pumping and pumping. the costs are so low. the market is taking back that last half hour of horrific sells. where what i'm saying is, what's going on in this market, people keep thinking that somebody else knows something. which is the kind of thing that does not lead to a bottom, necessarily. and i think that people who, frankly, are upset with this market, you're getting a nice chance, if you really don't like the market, to lighten up. i don't like to -- i think if you take a longer term view, you don't have to worry about this. because we're talking about 2, 3, 4% decline. those traders who are concerned, here, here, sell now. >> right. >> in terms of the banks, which we started the show, of course, having heard earnings, quarterly earnings from citi and jpmorgan and wells fargo, three of the biggest banks in this company, citi is the biggest beneficiary. jpmorgan was down over 2% at the very open, although they have pared those losses considerably, now down less than 1%. bank of america appears to be benefiting from wells. >> it's a charitable trust name, but i still like to know. the net interest margins for citi -- >> even though wells is the biggest loser now on a percentage basis. >> citi, let's go over some of these lines. revenue, 28 billion plus 10% year over year. first time in the third quarter that the revenues were better than in the second quarter. that's a really remarkable statistic. that interest income was absolutely terrific. the holdings business, i'm not worried about holdings anymore, because they said that holdings was going to go to break-even in 15. they're already there, david. this is a beautiful quarter. 10.7% on the tier one and net interest margin up 10 basis points. you doubted -- no, that was me. >> how about gorsky? >> i think gorsky's terrific. >> ceo of johnson and johnson, stock that's up about -- >> he's got unlimited firepower. >> stock's at par, 100 bucks. >> it was 108 two weeks ago. >> so was the world. >> 8% loss, that's not too bad. >> the declines have been so horrific in things other than coned and dominion, i mean, look, this has been a bear market within a bull market, and that is very uncomfortable for me. but do you see the split in the rails yesterday. union pacific, oil-related down. a lot of chatter. i didn't get to hear your latest on csx. >> yeah, the journal reported -- i think there may be more to it than simply canadian pacific came and said, hey, what do you think, and csx said, see you later. there's still something to watch there. we'll see. consolidation amongst those two would make some sense -- >> but the railroad consolidation in this country -- >> the surface transportation board might look askance, but it's not like there's a lot of overlap. >> none at all. >> you would want to buy csx up to 36 if you do that. >> i believe mike ward is going to appear later on in the show today. the industry is so well run. >> i remember him from when he fought off the children's fund. >> first it sounded like -- i remember him calling and saying, listen, i'm not against children. they were like radiders, the children's fund was like the pirate capital >> we're doing it all for the children. >> yo-ho, yo-ho. >> it's all for the children. bob pisani is on the floor. >> my e-mail is chock-full of comments about the technical damage done to the market. only 30% of stocks are above their 200-day moving average. but it's worth noting, two big bank ceos this morning emphasized the improving u.s. economy. did you see what john stump says? ceo of wells fargo. he said, we continue to see signs of a steadily improving economy. jamie dimon at j.pmorgan went ot of his way. mr. dimon said the u.s. economy is an exception, showing signs of steady improvement. two bank ceos making comments about the u.s. economy that were positive this morning. take a look at the earnings from the big banks. citi beat on earnings and revenues to the upside, jpmorgan was a miss. wells fargo, let's call it roughly in line with expectations to the downside. away watched wells, you heard this earlier from david. 60% of their revenues are community banking. biggest mortgage originator in the country. loan growth. i don't know what happened in commercial. that was really a great number. 2.6% increase in commercial, consumer, kind of a slight disappointment, down 1.4%. mortgage banki ingbanking, we'r. but the originations, the amount of loans they made were up 2%. i think the problem is, the decline in rates means that mortgage revenues go down a little bit. and i think that was the problem. let's call it okay, not great quarter. the conference call is at 10:00. we're getting more on how the u.s. economy is doing at that time. elsewhere, we're getting oversold bounces. we talked about this all day yesterday. and everyone who was predicting it was proved wrong in the last hour. take a look at the airlines, for example. delta, united airlines, most of the major ones are up a little bit here in the first few minutes of trading. they dropped late in the day. we're also seeing some beaten up sectors bouncing back, semiconductors, for example. there's the excess, the xpi is up today. xop is exploration of production, which has been annihila annihilated. down about 30% in the last few weeks. that's also bouncing up 2.3%. even germany is bouncing. it was down earlier on. they took down their growth outlook for 2014 and 2015. their investor confidence outlook number was weaker than expected. but, again, after the disappointment this month, germany is down about 7% so far in this month alone. it's to the upside, just fractionally. spain and france also to the upside. luxury is down, understandably, on the comments that we heard from burberry and its true, china is a concern. ukraine, russia is a big market for them. the one thing i would point out with burberry, guys. sales in china, you would have thought from the comments that sales were plummeting. sales in china were up in the high single digits for burberry. they made it sound like a disappointment because they had been doing double-digit growth for a number of years. but sales were still up in china in the high single digits. my point is that while this is a deceleration in growth, it is not a collapse in growth. everybody needs to bear that in mind, considering how negative the acceptabilisentiment in sub now, the dow jones industrial average up 3%. >> we are really being stupid. i mean, everything that i see in this market is just pure emotion. there's just nothing but emotion. >> emotion will move markets, oftentimes. sentiment of psychology. >> it's a beegees. >> that's what's going on. >> you saw it at the bottom of the screen, the yield on 30-year u.s. government bonds fell below 3% for the first time, i think it was since may 2013. let's head to the bond pits and get more from rick santelli. >> you're right, may of 2013. and before we get to the charts, remember, the dax is hovering at the lowest prices in about a year and that's growth fundamentals, pure and simple. and remember the equity markets the in the u.s. when they could ignore everything. well, now they can't ignore anything. it's because the market's ready to be pushed. it's at a point where it can fall. let's look and surf the curve. let's look at how far back these two-year note yields go before you find a lower one. this chart goes back to june of 2015. the fives, you have to go back to roughly december of last year. the tens, june of last year. and as david pointed out, if you want to look at those 30-year yields, under 30%, you have to go back to may of last year. what about the bund, it's easy, this is a 20-year chart. you'll not find a lower 84 to 85 basis point point level, because there isn't one. when it comes to foreign exchange, things have changed bit. yes, the dollar is still holding on to the bulk of its big-time gains, but things have changed recently. look at a chart, month-to-date in the euro versus dollar, it's down a little bit, but you can see what i'm talking about. dollar/yen is down, so we want to pay attention to that. as far as data, we'll get it into as the week progresses, but right now, the only data the treasury market is concerned, weak fundamentals out of europe and which direction it couldn't markets are going. back to you, david. >> thank you very much, rick santelli. coming up, a conversation between cramer and a rock 'n' roll hall of famer. stick around. and later, luxury fashion designer and entrepreneur, tory burch, who is making her presence felt in wearable technology. that's going to be on squawk alley at 11:00 a.m. eastern. we are going to be right back. when change is in the air you see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company. one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement. i lochecked bag.free with my united mileageplus explorer card. i have saved $75 in checked bag fees. priority boarding is really important to us. you can just get on the plane and relax. i love to travel, no foreign transaction fees means real savings. we can go to any country and spend money the way we would in the us. when i spend money on this card i can see brazil in my future. i use the explorer card to earn miles in order to go visit my family which means a lot to me. ♪ a very special interview on "mad money" last night. neil young talking about his ultrahigh quality digital music player as an extension of steve jobs' vision for the ipod. >> you have always tried the to develop what steve jobs tried to develop, which is the car that doesn't use gasoline. >> right. >> i would think these days if steve jobs had this, he would have recognized he defeated music in some ways. >> he would love this. and in his house, he had vinyl. he listened to vinyl in his house, in his living room, and he was a real music lover. and i talked to him about it, and he understood why we were doing this. and i talked to him about what they were doing and everything, and he said, neil, it's a consumer product. and that's one of many things that the iphone does. and you know, so he has a point there. and he made -- they made a lot of inroads into this. we're just perfecting it. this is a device that is dedicated to making music sound great. >> explain that to me a little bit more. >> well, this is no longer the kind of -- it's hd tv come to music. it's the way that music used to be play, just like when it was on a stylus. >> so the sound quality is better. >> no, it's much better. it's almost as if you're listening to a long distance phone call versus talking to a person. i mean, it literally is that much different. they had to compress sound so much to be in your mp3 that they lost a lot of it. this will be in cars, i believe, in 2016. he was talking about dealing with harman. neil young is a great businessman, a great thinker, obviously, one of the great musicians alive. but this is his mission. pono, they're sold out. they're sold out for christmas. they'll send you a certificate, if you want to get one -- it really is an amazing device. i mean, i found myself listening to it, and just saying, i want it in my car, i kind of want it everywhere. because those of us who are audi audiophi audiophiles, who love the idea of the old days, this is it and all the artists know it. >> a lot of the artists -- i mean, vinyl is actually up. now, it's off a low base -- >> i bituy it. >> because it sounds better. and this is the logical extension. i've got to tell you, it was a kick starter project. it raised $6 million. the third most popular. and the big -- like mo austin, who really understood records and music better than anyone, he is the guy, if you go to the videos -- that's the best video about understanding why this thing is for real. >> all right. up next, it's stop trading with jim. we'll have "squawk on the street" coming back, right after this. .. at optionsxpress by charles schwab. and we'll give you a one hundred fifty dollar amazon.com gift card when you open an account. if you're looking for a trade idea, start at the idea hub... where options and futures opportunities are organized by volatility, earnings, market activity and income strategies. then run your new idea through the trade and probability calculator to get a quick look at the possible upside and downside. streaming charts give you the real-time quotes and customized views of the market that can help you make your final decision. and when you're ready to make it happen, walk limit helps you save time by searching for the most favorable price. find new ideas, analyze and execute your trades with just a few simple clicks, with optionsxpress. for a one hundred fifty dollar amazon.com gift card when you open an account, call 1-888-980-5745 today. optionsxpress by charles schwab. all right. it's time for stop trading. jim, 20 minutes ago, j&j was trading at over $100 a share. >> that's why i don't trust this market. he was talking about the medical device business, and also a price war in gilead, against gilead. that's why gilead's going down. i do not trust this market, because you sit there and you have a j&j trading at 109, now it's at 97, my charitable trust owns it. it is not a bad quarter, there is a forecast raise. people will come back to it when the smoke clears. but the fact is, you don't want to hear a price war. >> and gilead is also down. savaldi being one of the biggest drugs for hep "c." >> you'll see biotech roll over because of gilead. the medical device companies will roll over because of j&j. the pharmaceutical companies. this is the kind of thing that makes me not trust the market. because we're not in a position where people want to buy or overlook anything bad. >> all right. i have been paying attention, so i know what's on "mad money" tonight. but tell everyone else. >> first, we have domino's pizza, delivering a big upside surprise. i was looking for something like 5. and then we're going to solve the oil dilemma. charif souki will be delivering natural gas 2015. and harold hamm will tell you why the oil is not over. i'll do an off the chart situation about where oil is going to go. oil is at the fulcrum of this decline, because that had been where all the hedge funds were. i don't trust the market. it's a treacherous market. j&j is a classic example of total treachery. that's ridiculous, but it's down huge. >> great show tonight, which i want to watch very closely. let's get to simon hobbs, with a look at what's coming up. >> we're obviously losing some ground now. up 43 points on the dow. black rock's russ koeskteritch will be with us. their analysts will join us live. and we'll take a good look at the banks, how do you report them now. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. and potentially another big day for the markets. stocks bouncing back since the worst three-day decline since 2011. the dow now up just 24. blackrock's global chief investment strategist will tell us where we can find safe havens. big banks reporting big numbers today. we'll get all the details on the quarterly results from jpmorgan, citi, and wells fargo. and just makes the tesla mo model-s tick? we get a look under the hood. first, let's take a look at where we are on the market. the dow lost 673 points over the last three sessions. we were up triple digits, we're falling back. it would be really cool on the s&p if the bulls could regain 1905, which is the 200-day moving average. let's bring in russ koesterich with blackrock. where do we go from here? >> i think in the near-term, we have more volatility. the market is responding the to a couple of things. they're responding to clear evidence of slower growth, and they're responding to the fact that we're starting to exit this period of extraordinary monetary policy, at least in the u.s. that is having the predictable effect of pushing volatility back towards its long-term average. >> i mean, what people could really try to do with this is a context of where you think we're going to go. if people are sitting on the sidelines at home and thinking, at what point do i pull the trigger and buy? what would you say? are we going to go through a major re-rating, further, of energy, for example? >> well, energy, i think, is already re-rated. if you look at the energy sector, it's already down close to 20%. so while the broader market is only down 6, 7%, there are segments of it, energy, small-cap emerging markets, that are already clearly in correction territory. so i think the answer to your question, it depends on the time frame. >> well, what i'm asking you is, do you think we're at a bottom, on, say, energy? >> no. in the near-term, i think we're going to see more volatility. i think stocks can move lower. however, having said that, i don't believe this is the beginning of a bear market. i do believe there are segments of the market that have become oversold, and there are some bargains out there for long-term investors, potentially include energy stocks. >> and another question, russ, i would ask is, what does this mean for the fed? we know that the federal reserve, this fed in particular, has been watching the markets carefully, and has also been watching what's happening with a global economy. does this push out the timeline of raising interest rates? all the fed members, including stan fisher, this weekend has made it clear that they're watching global events, they're watching the data, and they'll move appropriately. >> i think it does, to the extent that international weakness affects the u.s. economy. i believe the fed is probably less concerned about the day-to-day volatility in the stock market, but they will be concerned about, to the extent that international weakness leaks into the u.s., it hurts exports, potentially a very strong dollar is deflationary. these are factors that will affect the fed's decision and will affect the timing of a fed hike in 2015. >> although we should point out, russ, that you know, you have a huge consumer sector in the united states, which is probably not too worried about what it sees on the market today. they will continue to spend in the holiday season and protect this economy. and exports in this nation are still actually quite a small percentage of gdp, compared to the number of companies who have earnings on the market exposed to foreign markets. >> i would very much agree with that. this is a domestically focused economy. however, it's important to keep in mind that while consumption is decent, it's still not great. we have an economy where real consumption as grown about 2.5% on an annualized basis. that's roughly 1% below the long-term average. household spending is okay, it's not great. if there is a shock to the economy, there is some vulnerability. >> what about what's happening in the interest rate market, russ? sub-3% on the 30-year. new lows for the year for the 10-year treasury yield. do you want to stick to these dividend-paying stocks. i think there were more than 100 in the s&p 500. >> i think this is a very viable strategy. you know, i have to say, i'm very surprised, we're at close to 2% this late in the year. we thought rates would be higher, although not that much higher, but i think the issue you're raising is an important one. bonds, particularly treasuries, are not offering much yield. and while there is much more volatility in equities, when i look at some segments of the dividend-paying space, where i can get some growth, where valuations are a bit more reasonable, i would rather at the margin be getting more of my income from other asset classes, a little less from bonds. >> and people who want more information on that, russ, can conveniently read what you wrote in the "financial times" today. it's nice to see you. russ koesterich, blackrock's global chief strategist. a dallas nurse who was infected with ebola has now received a blood transfusion with a survivor of the virus. meg is live with that and other new developments in the ebola outbreak. >> that's right. we know that nina foms is 26. she's a nurse here at texas health presbyterian in dallas, where she was involved in the care of thomas eric duncan, who passed away last week. health officials say that she was fully suited up in her personal protective equipment. they don't know how she became infected. they're investigating that now. they also say, we could see additional cases from other people involved in mr. duncan's care. they're currently compiling a number of how many people that was. we should here about that later today. we also know that fom received a blood transfusion from dr. kent brantly, who survived ebola earlier this year. it's his third blood transfusion to somebody battling ebola. he also donated to dr. rick sacra, and to ashoka mukpo. now getting updates from ashoka mukpo via twitter, saying he feels like he's on the road to good health. now, mukpo is also receiving an experimental drug ma. because it is experimental, it's not known whether it's working or how well it's working. there's no word yet on whether many fom will receive any experimental drugs. all drugs being tested on ebola are in the early stages of development. we got an update on west africa, the death rate is now up to 70%. they say there could be up to 10,000 new cases of ebola per two weeks in new months. and 8,914 with 447 deaths. a lot of calls for more aid to west africa. cdc saying over and over again, we have to stop it there before the risk can be zero everywhere else in the world. and one coming from ashoka mukpo, who says, now that i've had firsthand seerexperience wi this scourge of a disease, i'm even more pained with how little care sick west africans are receiving. coming up, jpmorgan, citigroup, and wells fargo all out with earnings. citigroup the only one saying significant gains. what you should be doing with these stocks. citigroup up 2.25%. "squawk on the street" will be right back. 24/7 it's just i'm a little reluctant to try new things. what's wrong with trying new things? feel that in your muscles? yeah... i do... try a new way to bank, where no branches equals great rates. ghave a nice flight!r bag right here. traveling can feel like one big mystery. you're never quite sure what is coming your way. but when you've got an entire company who knows that the most on-time flights are nothing if we can't get your things there too. it's no wonder more people choose delta than any other airline. i have the worst cold with this runni better take something. dayquill cold and flu doesn't treat your runny nose. seriously? alka-seltzer plus cold and cough fights your worst cold symptoms plus your runny nose. oh, what a relief it is. welcome back to "squawk on the street." we're watching shares of signet jewelers, the stock is moving lower, although off of its lows now on the session. this on news that the ceo, michael barnes, has received. he will also step down from the company's board of directors. he has been with cigna since 2010 and barnes will be seceded by president and coo, mark lite. the stock is now off session lows, but down about 2.25%. >> they had just reported a really good quarter. thanks, dom. it is a big day for the banks. jpmorgan, citigroup and wells fargo all without with earnings. i guess citigroup is the standout. >> if you're watching banks earnings, there's something for everyone, with all three of the some of the big banks reporting today. for citi, we have a "b." for wells fargo, a match. for jjpmorgan, a match. jpmorgan's analyst call is just wrapping up. the company saw profits slumping in almost every unit, except asset management, for several reasons. on the consumer side, it underwrote way fewer mortgages this quarter and its new loans were at lower yields, too. we know what's been going on in the yield market. consumer commercial banking, which has been a standout also fell. the investment banks on mixed markets and it also to go a big legal charge, about $1 billion. the cfo marian lake says will go towards foreign exchange issues, among others. wells fargo moving on matched on earnings after cutting costs. mortgage originations were roughly half of what they were in the third quarter last year. another issue for wells fargo, banks have stashed away billions of dollars to cover loans that go bad. and as credit begins to improve, they release some of that money. they've been doing it for a few years, but now there's less and less of it to go around, less released each quarter, which means more earnings engines will need to be more apparent. citi released 552 million of those types of funds. that's the most of any bank so far. that's one factor in its bottom line beat. another, a surprise profit in citi holdings. its so-called bad bank. but perhaps of bigger focus, guys, for investors, were some strategic actions that citigroup is taking. it will exit consumer businesses in 11 countries, including japan. that's the one that surprised people. also exiting consumer businesses in six countries in latin america, where the company has faced issues related to that. it will no longer do business with the personal security unit of vanamex after uncovering about $15 million in personal fraud. there are a lot of moving parts at citigroup, even though that's the stock that's moving the most today, but it's likely because investors are saying there's a lot going on and the company is willing to shed businesses to exit markets that are not going to be profitable in the long-term. >> what was with that early release of jpmorgan? hours online, hours before they were supposed to. >> the company is calling it an operational error on behalf of shareholder.com. this is a nasdaq-owned website. it came out about 4:30 this morning. it wasn't all of the earnings, just the supplement with much of the details supporting those underlying earnings. that being said, the market got an early look at that miss, which did move stocks and futures early in the market, but is really only moving jpmorgan now. >> the deep dive on their servers? >> no suggestion with that. >> thanks, kayla, for rounding out the results of the big banks. let's take a closer look at how you should be playing this sector, citi and jpmorgan. brendon hocken is an analyst with ubs. and just sort of holistically, it doesn't sound like the big banks, although they have their own separate issues and tailwinds, gave us anything to really worry about in terms of the strength of the financial sector, as they have in the past? >> that's true. when you think about it, the results were largely in line. once you adjust for all of the moving parts, as you just laid out, there were a bunch of legal charges, some reserve noise and things like that, once you adjust for all of that, tax issues, jpmorgan marginally beat and citigroup -- excuse me, jpmorgan marginally missed and citigroup marginally beat. the biggest delta from a systemic perspective were these legal charges we saw around fx, or jpmorgan confirmed fx, we'll find out about citigroup if about an hour. >> it sounds like about a billion of that. we know they're dealing with this fx scandal and market manipulation allegations and working on some sort of settlement. after that, is there anymore? is that it? is that the last of the major charges? this overhang going to finally calm down? >> no, we can only wish, right? there's still libor, remember? there was the charges of manipulating libor, which have not really largely been settled yet either. so although the rbs working group was settled. those were the large residential mortgage charges we saw both citigroup and b of a settle this summer, and last year was jpmorgan. so at least we got that in the rear view. looks like we're coming to fx here in the end of this year, and then we'll have libor left. >> jpmorgan didn't, from what kala was saying, didn't give a huge amount of detail on the billion-dollar charge. as an order of magnitude, do you think they're covered? what other provisions will there have to be through the sector? >> there's really no way to answer that, with any degree of honesty, from my perspective. i'll tell you this. we talk about it a little on the call. i actually asked marianne about it. they said it's about fx, which was a good level of disclosure. not only do you get that out of banks, but they wouldn't comment on whether or not it was specifically from any jurisdiction, or they couldn't comment. day didn't say it was from multiple jurisdictions. we heard, it has a lot to do with the london regulators. hopefully, it's about more than that. hopefully they can bring several of these jurisdictions to a close, including the united states, which would be great to move past and put this all behind us here. >> brennan, which is the best investment for the next year, of those that have reported today, do you think? >> my favorite idea is morgan stanley. i really like the emergence of the wealth management business. they've been the most proactive in embracing the new regulatory reality. the new shift to business is positive. i really like morgan stanley. i like what they're doing. >> at of your fellow analysts like jpmorgan, of the big ones, and i thought it was reassuring to hear ceo jamie dienon smon s he's bettin better health. do you think that lifts some of the overhangs off jpmorgan's health? >> it could be. we wish jamie dimon nothing but the best. the financial world is a better place with him running jpmorgan. we had got news that the treatments were going well throughout the summer and it wasn't a major concern for most investors, the specific health issues around jamie. >> brennan, what about the cost of increased security against cyberattack cyberattacks, which obviously came into great focus, given that unusual and significant attack against jpmorgan this summer? >> jamie talked about that a little bit on the call. he talked about the costs for cybersecurity doubling over the next four or so years. and these are just a few hundred million dollars. so we're not talking about anything dramatic. jpmorgan keeping contacts is spending an additional $1 billion on legal costs and compliance. in the context of that, not really a huge driver. >> the outperformance, wells fargo for the years, shares is up 11% so far this year. now that rates are remaining very low, do you expect that -- do you expect more gains to be made in wells fargo, more mortgage originates, better u.s. economy, consumer loans, et cetera? >> continue cover wells, explicitly, but they're one of the most levered banks in the u.s. economy and the u.s. economy has certainly done a lot better here. >> all right, brennan, thank you very much for join us. brennan hawken is an analyst with ubs. up next, getting an inside look at tesla's model-s, quite literally. find out what's inside the car and how much it actually costs to produce. a teardown of the "s," right after this break. ♪ (train horn) vo: wherever our trains go, the economy comes to life. norfolk southern. one line, infinite possibilities. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. it's in this spirit that ingu u.s. is becoming a new kind of company. how's that for an encore? one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement. health can change in a minute. so cvs health is changing healthcare. making it more accessible and affordable, with over 900 locations for walk-in medical care. and more on the way. minuteclinic. another innovation from cvs health. because health is everything. 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. let's get over to meg terrell in dallas with some breaking news on the ebola outbreak. >> reporter: that's right. just getting word via facebook that mark zuckerberg and priscilla are donating $25 million for the center for disease control foundation to help fight ebola. they say the ebola epidemic is at a critical turning point and they hope that this is the fastest way to help, to empower the cdc and experts in the field to help prevent this outcome that reaches a large scale, like hiv or polio, they say. mark in this post on facebook. he says, grants like this directly help the frontline responders in their heroic work. we hope this will help save lives and get this epidemic under control. mark and priscilla zuckerberg donating $25 million to the center for disease control. >> in about ten minutes, we'll be talking to a republican congressman, whose committee will be hearing the case on ebola on thursday. in the meantime, the electronics research team at ihs is taking a look under tesla hood, quite literally. the company breaking down the tesla model "s," piece by piece, at least the dashboard to see what's really behind the hype. joining us now is eric hessendahl. i was wondering where they actually got this model-s from, and then i read it's roadkill according to your article. >> the folks at ihs, we usually deal with them when they're taking apart iphones or other consumer electronics, but they're also very well known for their automotive intelligence. they got a rare opportunity to buy a wrecked tesla model-s, a slightly older one, older 2013 vintage, not the very, very newest one. but the electronics were completely in tact. so completely working, so they took that opportunity to get it in the lab and start taking it apart. >> what do we know, arik? >> first off, there's that gigantic 17-inch screen. and what most people expect in a car, a touch screen in a car, is not very responsive. this one is much more consistent with what you'd expect from an iphone. there's a reason for that. it's the same supplier for the display, tpk, from taiwan, that supplied the for very first iphone screens back in 2007. that's one interesting thing. another big winner in this is nvidia. they supplied two modules per car. they're high-end, tegra-3 processor is inside this module that they sell. one drives that main display in the dashboard. the other one drives the instrument cluster for the sp d speedometer and the other things the driver sees. lots of electronics in here, lots of custkus custom work. ihs says it had almost 5,300 individual components. and in terms of head end units for any car, it is substantially more costly. although we don't have any specific cost estimates. no number on this one. >> so arik, why is the fact that there's so much kus tomorrow work important? >> it's pretty clear that the folks at tesla really wanted to control that experience. typically what you see with an automotive situation like this is that the carmaker will outsource the design and the interface and so on of the head end unit. they'll take that to a harman or alpine or panasonic. this has all been custom designed. the assembly has been done by an odm, but the custom design. tesla has gone to the trouble to design ten individual circuit boards to their own very rigorous specifications, and it's all about controlling the experience. i daresay, very similar to what we might see from an apple. very -- a lot of the obsessive detail to controlling the experience and the functionality. >> i'm reading were piece, and you compare it to how many parts are in the iphone. you made a comparison to the apple. i wonder how it compares to other autos that are out there on the market. how much more technological savvy it is really is inside, than, say, comparable models from gm and ford and chrysler. >> yeah, what i know about that, i don't do that market specifically, but what do i know, the component count here was almost 5,400. on an average one, you're talking more like 4,000. so much more cost, a lot more attention to detail. also, we're seeing a lot of high-end products. there's a company that ihs had never seen before. it's called s-1 inn. it's based in germany and splice a lot of electronics for entertainment systems. on the high end, day supply the audio chips. never seen them before. >> arik, good to see you. a senior editor on the breakdown of the model-s. straight ahead, apple shares up neurosurgeon 25% this year, riding high on reviews of the iphone 6. also, news of another big event on thursday, but is all this priced in the stock. one analyst doesn't think so and he's raising his price target today. we'll speak to him live after the break. take a closer look at your fidelity green line and you'll see just how much it has to offer, especially if you're 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 you're really investing for. tap into the full power of your fidelity green line. call today and we'll make it easy to move that old 401(k) to a fidelity rollover ira. today could be the day. the day we give you hope. relief. a cure. today, we believe every life deserves world-class care. as one of the top four hospitals in the nation, over 100,000 people from around the world come to cleveland clinic for care each year. and we're ready for you with a second opinion or a same-day appointment today today today and everyday. call today, for an appointment today. federal and state health officials are now re-examining safety protocols for working with ebola patients the today after that nurse in dallas contracted the deadly or potentially deadly virus. the cdc says improved training and education is needed to help hospitals better prepare for the disease. joining us now is texas republican congressman, michael burgess, a doctor from north texas. he'll be part of a house hearing on the ebola outbreak on thursday. congressman, welcome to the program. >> thanks so much for having me on. >> this is clearly a very important shift now from the cdc and from the white house. rather than saying, look, we've got this thing covered, a more constructive phase, where they admit that the protocols may not by transmitted on the ground, as they had hoped. what can you do in constructive phase as a committee to further strengthen the resolve here? >> well, i think one thing that everyone has learned over the last six weeks is to have a great deal of humility in your approach to this illness. look, i believe if someone involved in research wants to study the virus, they have to go to one of four very specialized labs in order to do this. but you can go to apparently any hospital and take care of it? i don't think so. i think once the patient is identified and stabilized, they do feed to be transferred to a specialty facility that will provide the care where the personnel have the training necessary to provide the care and not endanger other people or themselves. >> that may be your recommendation, as a medical doctor, but that's not the system, is it, sir? >> no, it's not. and, yeah, i've spoken to people offline about this. i do believe -- i'll be honest with you. i think the thinking is evolving as new information comes forward. but, clearly, the days from the early part of september, where we've got this one in hand to where we are now in the middle of october, it's a different situation. but don't forget, people were telling us in mid-march and mid-april, that this disease would burn itself out in western africa, it would never reach the proportions that it has over the last six months. so i think all of us are learning a lot about this illness, with the passage of time. >> well, given that officials in this country have totally underestimated this, and that there have been mistakes made, you alluded to this, but you underprepared are u.s. hospitals for this, with now a nurse contracting it from a patient and other health care workers around the country concerned. >> well, last summer, i had some discussions with the cdc, and it was pretty obvious then that the virus, of course, has a very high mortality rate, 50 or 60%. but 10 or 15% of those deaths were among health care workers. so there was a real vulnerability. but you look at the experience of a group like doctors without borders and the almost ritualistic or militaristic way they go about preparing to go in and take care of the patient and then depart from that environment, there is a lot to be learned there. some of the e-mail i've seen is that people say, we're exposed to almost toxic levels of chlorine while disrobing after coming out of a patient care environment. you know, the average anti-room in a hospital in the united states is not prepared to deal with that level of decontamination. >> you mentioned doctors without borders were working in west africa. mark zuckerberg is just getting himself some headlines, because he's donated $25 million to the cdc foundation in this country. if people are concerned about this and they want to help, are they better, in your view, donating to the cdc foundation, or doctors without borders? >> i'm not qualified to provide that level of discernment. i welcome mr. zuckerberg's donation. i hope others will follow his lead, but doctors without borders is also an excellent group and certainly worthy of people's support. >> the point i was going to make is, one is obviously operating in a different field, as the origin of the virus. let me ask you one final question. you can help me with the involvement and the cost of what is going on in hospitals. i read that the missionary, kent brantly, had 26 medical staff caring for him. they were pumping 5 to 10 liters of fluid into him every day. who is going to pay for this level of reaction from the hospitals and for their potential liability if one of their staff gets sick and they then sue the hospital on the basis of the hospital hadn't properly prepared them? where does the cost for this and the liability for itened up? >> well, those are two separate areas, the cost and the liability. but the answer to both of those right now is not knowable. you're in the phase of fighting this right now. it has to be fought. the challenge has to be met. i think there are things that can be done, that mitigate some of the dangers. i do think, i'm one of those, who thinks that visas for people traveling from western africa right now, we need to put a pause on that. clearly, things were not as we were told at the first of september by the federal agencies responsible for preparing our hospitals. we need to put things on pause for a period of a few weeks and allow ourselves to catch up. >> we'll watch what you do on thursday with the committee with great interest. thank you for joining us. the dow now up 34 points. let's send it over to dom for a quick market flash. >> we're talking about management changes over at darden restaurants. appointing jeff smith as its chairman and named chief operating officer jim lee as its interim ceo, replacing clarence otis. darden shares up about 1.25% as jeffrey smith of starboard value takes over as chairman and gene lee as interim ceo. >> a score for the activists. up next, an upgrade during an upgrade cycle. apple's price target up by credit suisse ahead of the company's big product unveil on thursday. should you with a buyer before the event? we'll talk to the analyst who upgraded it, next. twhat do i do?. you need to catch the 4:10 huh? the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me? go. right on time. right now, over 20,000 trains are running reliably. we call that predictable. thrillingly predictable. ghave a nice flight!r bag right here. traveling can feel like one big mystery. you're never quite sure what is coming your way. but when you've got an entire company who knows that the most on-time flights are nothing if we can't get your things there too. it's no wonder more people choose delta than any other airline. apple is getting a vote of confidence this morning. credit suisse upping its price target for the stock to $110 per share. sees apple selling more iphones and margins improving. let's talk to that analyst. covers apple for credit suisse and joins us now. you still have a neutral, but taking the target from 96 to 110. why? given such high expectations going into this product unveil, why now are you raising the target? >> i think the point that we're reallyrying to make is that we need everybody to think that iphone volumes are going to be strong going forward. the point additionally we want to make is that there's a very positive mix shift happening in the iphone business. much burn the street anticipates, but much more towards higher memory content devices. and what that basically results in is gross profit dollars in the iphone business expanding, as much as 45% from the fiscal year 13 base. we think it's that mix shift that is really underappreciated. >> and that is more people buying the iphone 6 plus, higher margins. what sort of proof do you have? do you have any indications, say, that they're trading in their android-based samsungs for the iphone 6 plus? >> well, it's actually much more about apple's existing product cycle. existing product users upgrading to the iphone 6. so we estimate now, that the 6 plus users are going to be about 20% of volume going forward. that's significantly higher than apple had previously had. and that's supported by a number of checks we've done, as well as our proprietary survey. additionally, it's not just the iphone 6 plus issue, we'll also highlight there's a shift towards higher memory content. we think many of the users are buying the 64 gig phones as well. >> so 110. it's still pretty far away from carl icahn's aggressive $200 price target. what do you think apple would need to do to get there? that would be a pretty -- a higher multiple. almost 20 times earnings. >> yeah, so we are probably at 12 times multiple. and one of the things we want to factor in is some conservatism. we recognize that it's a peak number. the margins are going up. to that kind of an earnings number, i don't think you should be applying much more than 12 times. the proposal that carl icahn put out implies a 19 times multiple and i don't see a company of this size rerating to that magnitude especially on an earnings number and the sustainability of it, which we might want to question going forward. >> can i focus on the margins in particular? we had peter teal on the program. and we put carl icahn's point to him, that you should massively increase the buybacks. and peter teal said, yes, but that assumes that the margins are going to hold on in there. and that the margins won't actually fall for apple as they do with most consumer electronics overtime. are you saying importantly now that apple does not have a problem with its margins, because it is able to push people up to 64 gigabytes, effectively. that it's doing something that nobody else can do in the industry? >> no, actually, what we're saying is apple can expand margins over this product cycle through fiscal year 2015. we think gross margins will go towards 25%, but specifically in this morning's note, we also acknowledge that these margins are our significant premium to any of the competitors historically, and over time, they are more vulnerable to fall. but what won't happen, they will actually expand in '015 and decline after that. we don't think this is an up tick. >> why do you think the margins will fall? because from what you've just said? that's not what you're seeing at the moment? it's a really important point. >> i think the reason being, there's been a lot of pent-up demand for apple's largest devices. you're seeing a one-time makeshift towards a plus. additionally, this memory content upgrade is because apple has stopped shipping a 32-gig version. that forces you to 64-gig. i don't see having the same conversation in a year's time, the consumers from 128 gig, or we're going to be buying 7-inch devices, because, you can't have a phone of that size. so there's a one-time optic that drives this. but going forward, you have to factor in, apple's gross margin in the iphone business over any prolonged period of time have actually been coming down. >> kulbinder, quickly, what are you expecting on thursday, product announcements? >> we're expecting a refresh to the ipad air and to the ipad mini. we think the devices could be thinner, a new processor, they'll probably incorporate the touch i.d. fingerprint scanner and probably incorporate apple pay. the one thing with the apple ipad business is, it's basically stalled to no growth. this should hopefully reaccelerate it somewhat. we do have a much more mature business. the iphone is two-thirds of gross profits. it has less impact on the model. >> absolutely. thank you for joining us on this call that you made today. neutral on apple, takes up the price target to 110. coming up, walt mossberg will be joining us. >> and earnings on monday. >> yes, of course. we're back after a quick break here on "squawk box." i have the worst cold with this runny nose. i better take something. dayquill cold and flu doesn't treat your runny nose. seriously? alka-seltzer plus cold and cough fights your worst cold symptoms plus your runny nose. oh, what a relief it is. we've taken a leg higher now, with the dow now up 70 points. s&p 500 up half a percent. let's send it over to dom chu for a quick market flash. >> one stock moving in the opposite direction. gw pharma, they're down in trading after posting gains earlier. the biopharma company that specializes in marijuana-based treatments announced positive test results for one of its drugs targeting seizures in children and young adults. the doctor's report shows signs of effectiveness and safety that's consistent with previously disclosed data. the stock has been on a steady downtrend since hitting its highs in early july. the stock is down about 38% in that time. and in a programming note, justin gover will be live here tonight at 5:00 p.m. eastern on "fast money." tune in for that. >> now to rick santelli in chicago with that sub-3% 30-year yield, rick. >> sarah, i know that the world may be surprised, but this gentleman isn't surprised. i'm not surprised. i remember the last time, a while ago, that we were flirting with some serious sell-offs in the dax towards the end of last year. you and i talked about the issue of when the water recedes on everything going on, that equities cover up. you're going to see, still, toxicity within the banking system. nothing's changed. it's metastasizing. >> absolutely. and we have the asset quality review scheduled for, now, i think it's actually october 26th. so what we're finding is the dax did cover some ground. and when you see the run-up, but it can't cover it forever. and the most important part, i know a couple of weeks ago when i was on, we talked about it. the dax went up. but it started to give ground after the ecb went to negative rates. so it showed you, and for the united states and for all equity markets, that low interstates can only carry the water so far. eventually, good economic news is going to have to be -- >> which is so funny, because when we had decent economic news in 2011, 2012, 2013, the equity markets, obviously, paid attention. but they didn't pay attention to any of the negative attributes of fundamentals. now, you get mixed fundamentals and even some good ones, the market seems -- it wants to go down. which leads me to the point that, it may not be a cause/effect, it might just be a timing,, that the markets and equities are ready to roll over, which could be very dangerous for the policy of central banks dangerous for the policy of central banks. >> of course. stanley fisher's speech is unbelievable and a must read. because if you see that speech and see the fed thinking. >> let's summarize. he is an international guy. used to be at the bank of israel. so looking our our central banking activities more from the purview of international playing around. >> don't forget he's also at the imf and a high position. >> what is the danger there? >> because you can never be wrong. i can look around the world and always see some facet and go that is going to have an impact for us. now the fed has -- he'll see it is in the dual mandate because it's protecting the down side. >> what you're really saying is if you have a neighbor and you see somebody is delivering them big time high fidelity management. so yes the fed and the u.s. has to deal with that. but to get more proactive which is what i think you are saying is nervous. >> and it's over reach. a hypothetical. let's say the united states government imposes sanctions on a large country somewhere. they start to bite the global economy. ought the fed to respond and override -- >> in another area of the foreign policy. do you think this it is the big ench la disagree in the marketplace? >> no. what. >> sure. we see bond -- and the bond market isn't quite there yet. we loon look -- i'm looking at the 210. the 530 curve is interesting. it's the trader curve. the 210 is the investor curve. if we got below 160, i would be a little nervous. >> back to you. >> slets a look at where we were on oil. oil continuing its slide after the international agency cut its foerks for demand growth. >> as equities seem to rebound here we are seeing oil prices continue to slide. wti down almost 2%. brent off more than 2% today as a matter of fact. a couple of data points contributing to that. you mentioned had iea reducing demand for 2014 and 15. right now we know the market is very well supplied. the wild card was demand. this is putting a nail in the demand column and signaling to the market we are going to see less than expecting and you get this equation that's really off balance here. in addition i want to point out more economic weakness out of europe. we got that german economic number and that is signaling that the european demand will be week as well. a lack of a spotty of opec response here. you have the middle eastern countries saying they are not going to be cutting their supply. they are willing to eat the price decreases and suffer through it. some traders tells me this is signaling saudi arabia is saying wie we're going there alone. every man for itself. we're going take the price cuts and everybody else it's really too bad. in the meantime if you talk about the sweet spot for oil, you could say that it really is right now because saudi's braecbreak even is about where it is trading. and gas prices under $3. which is really good for the consumers. so if we can hold at these levels it is probably the best thing for the oil market. also saying don't panic. if you remember back to 2008 we saw oil prices go from 140 down to 33. it was not just the financial crisis but dollar fluctuations. but a very big move. and we're in the 80s right now. a far cry from 33 dollars. so no real need to panic just yet. >> 33? >> 33. it was a drastic drop. no one realized it because of all the other annerky that was happening. >> squawk alley takes the air in 6 minutes time. chris dewolf will explain what's happening in the tech world. ♪ the all new, head turning cadillac ats coupe. it's irresistible. ♪ there was no question she reminds you every day. but your erectile dysfunction-that could be a question of blood flow. cialis for daily use helps you be ready anytime the moment is right. you can be more confident in your ability to be ready. and the same cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. it's in this spirit that ingu u.s. is becoming a new kind of company. one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. we are putting in quite a decent bounce here. currently up on the dow. but in the last two sessions we've sold heavily right at the close. yesterday maybe that was because somebody was trying to dump three quarters of a billion dollars of market stock if you like on the e minis. but still treacherous markets as jim cramer said. >> and you are seeing a nearly 100 point gain on the dow jones industrial average. and follows recent action which is a 100 point swing. something we're not accustomed to seeing all yearlong. >> the one thing as you look at this board, to focus on is level of the s&p 500, if you are not often in this game. the 200 moving day is 1905. for many the enact we are below that is a gauge of some concern. if we were able to regain it the bulls would be cheering into the close. >> and just in terms of the market action, what we're seaing in terms of the highs, utilities are still going strong and that is the play on the lower yields. what we've seen is the 2014, a 30 year yield below --. >> enough of that. let's get over the squawk alley and the gang led by andrew. >> i'll take it from there. thanks so much guys. it is nearly 8:00 a.m. at google headquarters in mountain view, california. 11:00 here on wall street and squauk alley is live. >> carl is off today. joining us this morning. the chris dewolfe, co-founder of the himyspace. you just heard from simon and sarah that we are you have at the three day rout in the markets. the dow up about half of one percent. it had been up in the triple digits but given off some gains at this hour. the s&p has been close to correction territory. but you can see that is up about 10 points and gives a gain of about half of one percent. the nasdaq also seeing a the healthy 34 gain. and it is the german data that continues to be the weakness that is driving the markets but at least for today there is some healthy volume leading to the upside. part of that people will say banks. >> are we saying germany? are we putting it on germany? >> at least that was for futures. >> i would put it on ebola but anyway. >> there is a lot of stuff. let's be honest right now. >> switching gears and talk briefly about alibaba. several analysts starting to put out research notes on the
crude continues to fall. some americans can watch for $2.50 a gallon gas. can halliburton defend its oil business? retail sales better than expected. nordstrom earnings beat. a number of downgrades to contend with this morning. a richard branson-backed ipo at the nasdaq, virgin america. we'll have the first trade and interview with the ceo coming up. oil the big story, below $74. baker hughes confirming it is in preliminary merger talks with halliburton. "the journal" story said motivations behind the talks were unclear. i think we know what these boards are thinking. >> justice department is very good when it comes to business to consumer. they'll block a telco deal. justice department has been tone deaf when it comes to the oil patch. they allowed enterprise partners to become a gigantic, basically own the natural gas liquids market. this would be farce if they let this deal through. the way you get halliburton to give you good prices to pit it against baker hughes. if at&t were to merge with sprint and raise prices, it is ridiculous. our anti-trust division may not understand how this works. and may not understand the overlap. it's entirely possible they just don't get it. and this goes through. that's why i go back to enterprise. they let enterprise buy everybody and never said a thing. >> still, even the combined company would be far smaller than schlumberger. >> they have certain sets of skills you use. in terms of the comical nature of this, halliburton has been innovating. baker hughes says it's innovating, too. mostly to stay one step ahead of baker hughes. this is boeing and airbus getting together. it's the oil patch. the guys from washington don't follow it that closely. >> do you think it has big obstacles? >> only if they are as stupid as i fear they might be in anti-trust. i don't use that word stupid lightly. this is lawyers blessed the talks. they think they can get away with it. it's ridiculous. maybe you can. this is not telco. it doesn't affect you. if it affects the consumer, the anti-trust department is all over it. >> this is a second derivative of the companies. >> i'm sure they are saying we can get away with this, we can raise prices. every oil company is hated in this country anyway. will you give me a break? it's comical, but it could happen. now, if we have an anti-trust department that said let's talk to all the customers and see what's going on here, this would never have gotten to this point. a lot of the lawyers must think it's okay. i was going to say it's an enigma, but it's a farce. >> you have been consistent oil's direction would be down. >> yes. let's go the other way. this has to happen. a fabulous conference had a conference call yesterday. do the oil companies -- everyone should listen to that conference call. >> the number $60 was said in that call. >> though were talking $75 below, people are going to say we have to scale back. there was a moment in the conference call. they said dividends. people are panicking. there is a sense of panic among everyone in the oil world. this deal will say maybe weatherford will get a bid that would pass muster. the fact no one else said this morning this deal is ridiculous shows me how desperate everyone wants to have this deal occur. >> to stop the slide. >> the slide. the slide is just huge. at a certain point we are going to scale back. we haven't scaled back a lot because of technology. it lowered the price to $40. >> it's about maybe not doing a well you were going to do, right? >> yes. that's really the issue. some of these wells like eagle ford make a fortune. the issue had been storage. when the price of oil was $89, suki owns a brilliant company and said it's going to $60s. another said it's going to stop in the $80s. suki was so bearish. he is a visionary. no one thought it would go there. >> on the consumer front, people are talking $2.80. $2.50 in a big number of markets. >> you sit down with ceo's. i sat down with the ceo of popeye's. she is a great operator. she said what is driving comparable store sales other than the terrific beer can chicken, gasoline. a little bit more money in the pocket. this is an untold story. let's be marxian. we are wealthier than the average people, we don't feel it. when you talk to people who actually for a living have to drive 60 miles. they can't believe that they have this spare change. it's a big rebate from opec and some oil companies and doing remarkable things. today was the first day the "times" said it. wow what is this going to do to anadarko? they are going to do fine. how about america? >> on that front, lower gas prices giving consumers more purchasing power last month. retail sales rebounded in october. up by better than expected 0.3%. take out gas purchases, sales rose 0.5% after falling in september. nordstrom, better than expected results. comps up 3.9 in the period. we got downgrades on half a dozen names in retail. >> i wanted to buy every one of those, tjx. not abercrombie and fitch. they have to leave the office. i would tell you the nordstrom call -- they are so good. nordstrom is so good. they talked about their opening in calgary, which i thought was funny. first store in canada. they had great comps there. target opened 125 stores in one year. it's a $900 million loss. nordstrom does everything right. they opened a couple of stores. by the way, in terms of the way they handled their conference call and how open-handed they play. first thing, they had too much inventory at the rack. the outlook was terrific. if you want to sell nordstrom, i want to buy nordstrom. they didn't give themselves credit for omni channel where they spent a couple of billion dollars to have top notch technology. this is a fantastic company. >> you mentioned abercrombie and fitch. credit suisse cuts it to neutral. target goes from $53 to $28. >> abercrombie has stuff overseas. they are talking about dramatically cheaper prices. the one thing i don't buy about this, the kids who shop there aren't as price competitive. they don't pit aeropostal versus abercrombie. the numbers in the basket of these deep value discount eers they are extraordinary. this is one more reason to sell amf. the guy who runs amf is on the wall of shame. feels like the babe ruth of the hall of shame. an original inductee. right in the thick of things. bingo. >> bmo cuts walmart to underperform. >> they had a hold on it for the whole run. sorry, guys. you missed the big one. now you are going to try to get involved and make a statement? i reiterate, i thought walmart was good. i got a lot of blow back @jim cramer on twitter. most people wish i would go away. not anywhere where you could see me. there was negativity that i thought walmart might be getting better. i'm going to respond, go to some. actually visit, recognize that the smaller stores are good, but mainly what's happened, walmart has gotten the product people want. it's better. walmart is not as bad as it used to be, which is enough to move the stock. >> it's a town square. >> there's a lot of village idiots on twitter. >> a couple of valuations. stern cuts nike to neutral. average price target is $96.70. >> there are a lot of stocks. i saw this in the 90s when you didn't see it -- since the '90s. stocks gallop here. you look at 3m. analysts are going to fight it. they've never seen anything like it. analysts tend to be much younger. they never see it when you see nike go from $40 to $80 in a straight line. we are in that kind of market. they are not used to a bull market. this is the old -- i used to joke about it. stocks $90 go to $120. there is no rigor to that analysis other than people are paying more and more to be in winners. this is the apple issue. if you don't own apple at the end of the year, people say i've got to take my money away from you. that was the biggest company in the universe and you missed a 40% rally? nike is a loved company. put up good numbers. bf is the same way. when it gets cold, north face. >> which it is. it's making its way to where a lot of americans live. >> sell nike, sell walmart. buyers are going to be all over these names. >> got a lot more to cover this morning. another setback for hertz which lost 1/4 of its market value. we'll get you details next. >> richard branson's virgin america going public. stay tuned for a live interview with the ceo david cush. we are halfway through q-4. it is by far the best quarter of the year for the dow. >> people have been fighting this. when the fed stops buying bonds. >> a lot more in a minute. go ahead and put your bag right here. have a nice flight! traveling can feel like one big mystery. you're never quite sure what is coming your way. but when you've got an entire company who knows that the most on-time flights are nothing if we can't get your things there too. it's no wonder more people choose delta than any other airline. hertz announcing it is restating its 2012 and 2013 quarterly financial statements amid an accounting review. it will need to make material adjustments and the prior numbers should no longer be relied upon. the company announced it would restate 2011 financial statements. the press release is titled "hertz announces new u.s. rental car fleet strategy." has nothing to do with the news. >> i heard over and over again, i always think accounting irregularity equals sell. i have been getting comfort from people that these irregularities were small. there is no comfort. when you see accounting regularities, anybody at home, your company has that, just go. pricing is very good. avis is doing well. i made that same argument in the mid $20s, when they kicked out the ceo, everything would be fine. he said he wanted to spend more time with the family. family is so important. it is just amazing how bad this one is. it's terrible. >> the positive elements of the market do not offset what's going on here. >> avis has come down a lot. i'd rather buy avis. they are kicking butt. hertz is in disarray. there is a core business there, no doubt about it. these are hedge fund favorites. if you're a hedge fund, look at avis with 65%, hertz down 7%. hertz has to try harder. >> ford yesterday was up 3%. any idea? is this an f-150 play? there were numbers out of europe. >> i don't know. china has been playing with the numbers. i think the f-150 will be a big hit. the problem with the f-150 it's not a gas guzzler at a time when gasoline doesn't cost that much. >> something to keep our eye on. >> there are a lot of companies betting on higher gasoline and are doing things to be able to really convince the consumer it's the right thing. the natural gas company were. there is a percentage of this company heated by oil. even in new york city. new england. it's going to be tougher to lean -- the payback won't be as easy to switch. >> like watching dow chemical. >> dan lobe has a new funny video that is a spoof of dow. i think it's a spoof of itself. it's not exactly the great movie quality we do at cnbc. 80% of dow's business is not related to oil. that's something put into place. lobe, this is third point -- they make it very personal, very quickly. they put up two people. they have one with steve miller. and a guy from foster wheeler, hired guns to get on that board. lobe wants to split into good company, bad company. i happen to be fond of what he's done. what makes me fond of liveress, chemical average is 9.8%. he's beaten everybody. five years, $1.45. before we kick the bum out, let's look at his numbers. he's made the playoffs. it's not like playoffs. he's made the playoffs. >> something big at the nasdaq today. simon hobbs has more on that. >> good morning. it's a big day for the nasdaq here. mainly because virgin america, the ninth biggest airline in this country is ipoing. they priced above the middle of the range last night ranging $300 million. valuing under $1 billion. many questions to ask the ceo later on david cush. "business week" asked if it had too many thrills to be a good investment. david cush will join us on a first on cnbc interview. >> nasdaq unveiling a new television studio. this is above the one which "fast money" comes from every day. importantly behind me, you'll see they introduced a human element. this they tell me is the market intelligence desk where they are monitoring all nasdaq trades. at the end of that desk is an ipo execution officer. a human element they tell me has always been there would you see more obviously at the new york stock exchange. they want to make it more obvious to people. as we track through the history of ipos. the other thing is a great view of times square here. let me show you that before i send it back to you guys at the nyse. great morning here in new york. this is the view you get from just outside the window here. the new studio of the nasdaq market site. back to you. >> very nice. >> jealous. >> a lot more lunch options over there. go to hard rock after the show. >> very true. >> when we come back, cramer's mad dash. we'll count down to the opening bell. later, raise your glass. "wine spectator" magazine will reveal its number one wine of 2014. >> take a look at futures. s&p's up 200 points now from the october 15th low. more "squawk on the street" straight ahead. there was no question she was the one. she reminds you every day. but your erectile dysfunction-that could be a question of blood flow. cialis for daily use helps you be ready anytime the moment is right. you can be more confident in your ability to be ready. and the same cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial. open port twenty-two-oh-one-seven on the firewall for customer db access. install version two-point-three of db connector and ensure verbose flag is set in case of problems. (clapping sound) isn't the cloud supposed to make business easier? get the one that can connect to the systems that you already have. today there's a new way to work. and it's made with ibm. >>. >> just about seven minutes till the bell. let's get cramer's mad dash. we were chatting with the irish prime minister. >> what a joy he is. just fabulous. >> retail downgrades. tjx and ross stores are down. >> these are two fabulous companies. okay? really well run, great discounters. precisely the kinds of companies i want to buy when gasoline goes to $2.50. i think these are places to go rather than sell. they are both too well run to dish. ross had a big move. be careful selling these. these are excellent companies. >> estimates too high. valuation too high. >> no. not after walmart. you could argue maybe tjx isn't going to get the inventory because they've come in with cash buyer inventory. these are well-run companies. i think they go higher. >> irwin simon was on our show last week from hain. maybe the two or five-year chart is one of the best looking charts. >> he always predicted to me one day walmart would become the big gorilla. walmart is saying to hain, you could argue this is an irwin view. high, guys, here are three aisles. fill them. >> that is crazy. >> this is the natural and organic theme. you want to get -- this is what general mills should have bought. they get it for $8 billion. walmart's push was so really emphasized in the prerecorded comments. all you could think was irwin is going to coin money. he's got stuff in every aisle. he built a great american food company and has business in europe. he is probably the most forward-looking executive in the food industry. >> wouldn't you have been tempted to take some off here or here? >> not with irwin. he's a killer. he exists to compete. he's amazing. >> you think the market can sustain more? >> you like united natural food, too. irwin simon, when that stock was hit -- i think "barron's" hit it a couple of times. if you have any guts, come on the show. are you kidding me? i'd be thrilled to. this is a great buying opportunity. i just believe when you look at the kellogg's and look at general mills, campbell soup, all they can do is buy irwin simon out. he is building the great worldwide food company. he's terrific. >> opening bell a few minutes away. ♪ there's confidence... then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. you are watching cnbc "squawk on the street" live from the financial capital of the world. opening bell in about 90 seconds. we wrap up a crazy week. global m&a is going to hit $3 trillion. >> it's amazing. halliburton wants to be in a lot of markets. the goal was to get them to compete on everything. how much better to just have them merge like all the airlines were allowed to merge? all the prices go up. it's great for shareholders. there is that problem with users, but hey justice department. halliburton doesn't have to spend all this money to compete in those areas. they can buy them. it's a match made in heaven for everybody other than people involved in being customers. >> the last four closes on the s&p. 2038, 2039, 2038, 2039. >> that's almost like it didn't happen. >> what's going on? >> i don't know. >> cracking through 2040. >> a lot of people feel we are one step away from the big decline. ukraine will happen this weekend or oil is signaling things are bad. there are a lot of shorts going against the longs. it's imbalance. >> we'll find out more in the days to come. let's get the opening bell and look at the s&p at the top of your screen. at the big board. irish prime minister doing the honors. over at the nasdaq, virgin america celebrating its ipo today raising more than $300 million. richard branson, minority shareholder. our simon hobbs will talk with the ceo david cush. what does this say about the airline sector? >> there are plenty of good airlines. spirit is a good airline. they do a great job. american has done a fantastic job. you don't need to be involved with this one. go with the ones i think have proven themselves. >> even with the transports since the october low, we are going on a 20% gain soon. >> gasoline. gasoline is the principal ingredient. there was an ebola hiccup where they didn't have a decline in use. the justice department blessed a lot of anti-competitive root structures. they said listen, we'll give you guys the store. the store feels good, especially when your costs are going down. >> baker hughes will be the biggest gainer followed by hog. >> brunswick, polaris and harley-davidson are signs the consumer is alive and well and spending. particularly to the upper middle to wealthier class. polaris has a competitive motor bike. all three of those, hog, polaris and brunswick are things you don't need that do well. >> other winners, halliburton, schlumberger, nabors, noble. >> that group is so heavily shorted. you should see that -- if you look it starts at $84, goes down to $77. then does a u-turn. the world is short these stocks. this was the hedge fund annuity. if these two are allowed to merge -- >> you would vote against it? >> i would tell them, guys, give me a break. do you think we are this stupid? do you think we went to college to get stupid stupid? >> we do have breaking news on the postal service, i believe. >> that's right. the united states postal service is announcing this morning post master general patrick donahoe is going to retire in february after 39 years with the postal service. he oversaw an organization that slimmed down dramatically under his tenure. down by 220,000 employees since 2004. donahoe has been post master general since 2010. this is one of these overlooked jobs in washington because it is the second highest paid government job there is. it's also a job that was once held by benjamin franklin. donahoe's successor faces a real challenge trying to figure out what to do with the postal service as it faces intense financial pressure as a result of e-mail, the cost of printing and mailing and managing all that staff. all of that a real challenge for the successor here to donahoe. the post master general will be selected by the board of the postal service. we'll have to see who gets that job and what direction the postal service goes from here. >> comes a week after they were forecast -- thank you -- for the holiday season 12% to 14% increase for package volume? >> the free ride for the catalog companies has been amazing. it's a great thing for restoration hardware, fantastic for williams-sonoma. these guys have been the big winners because they don't have to pay their own way. everyone knows that. we have the best government money can buy. that's one of them. it's another shame. again, if you're williams-sonoma, stand for the companies. williams-sonoma wins. i like that cassoulet pot. >> what about government versus businesses being able to duke it out? mark cuban's tweet on neutrality comparing the debate to something out of i rand? did you see this? >> no. >> arguing what the government is proposing is straight out of a darby and john gold. >> if you freeze spending for the telco companies, you are going to lay off a lot of people. someone said yesterday, that is such a republican view point. i don't know, i'm pro-hiring. you heard john chambers yesterday. the telco companies don't know what to do. remember, all the telco companies want to do is have clear. if the fcc says one thing and obama says another, they don't know what to do. they are not saying let's just go with the president. they are regulated by the fcc. they are frozen. they are not necessarily -- the people who run at&t and verizon are very thoughtful people. most people feel like anybody you have to send a check to is an idiot. they are very good. they don't know what to do so they are just stopping. >> biogen is going to have a rough morning. citi removes it. >> saw that. they elect some other guys. >> celgene is in the mix on the down side. >> you buy celgene. it's not down enough to buy it. they have isis. i had a the doctor on who had the name isis first. he has to deal with that. the biogen was one of my four horsemen of the big forma apocalypse. people worry about pricing, competitive product. abbvie important upgrade. deutsche starts abbvie with a buy. >> i talked to nelson. he's done great things with wendy's, legg mason and heinz. i wonder if that isn't an option exercise. he has not said listen, i just bought more pepsico. i know he has said over and over that it is not doing enough. even though the stock is up 18%. coca-cola has gotten a free pass the whole way. dr. pepper is up the strongest in the group. >> i think it has outperformed the sector in past periods, as well. >> the guys at dr. pepper, they are like soda guys. they senlt a palette to mayor bloomberg. did he not get a joke. >> we don't talk a lot of politics on the show. >> no. thank heavens. >> there is this bubbling school of thought there may be a showdown regarding the short term funding resolution in congress in december if the president decides to go ahead with his executive action. are you worried about government shutdown or not? >> when i read these stories, the republicans have been complete liam bushed by the president. he's just out there acting as if he's won. "new york times," the coverage is a little bit surprising. immigration would keep wages down. they never want to hear this. the orthodoxy is you keep wages down. i'm not talking about immigration per se what i think of it. it would help housing. one thing that hurt housing was the no doc. the no doc was a big issue in california. immigrants, florida immigrants, where the housing markets were hurt so bad. it's real why i great for housing. if you're an employer you keep wages down. >> regardless of your politics, if he does it? >> it's very good for housing and employers. that's just what happens when you get offline. i run a restaurant. i have well documented. you would be surprised what people will do if you could get work visas, permits. there would be a lot of people who are really difficult to hire without fear you will be closed by the government. this is very major this story. you've got to stay on it. it's so hard to talk about immigration. i'm saying what the employers have told me would happen. >> right. we'll keep our eye on it. dow is down about six points. bob pisani on the floor. >> oil is up, energy is the leader. really, oil services stocks are the big leader right now. let me show you what europe is doing. we did have q-3 gdp. as anemic as it was, it was better than expected. germany gdp, third quarter up 0.1%. france was up 0.3%. italy shrank 0.1%. generally, that was better. that's how sad things are over there. 0.1% is considered a victory in germany. in the u.s., nordstrom impressive numbers. they bucked the trend of lower sales in department stores completely. the real standout, comp store sales 3.9%. that was much better than expected. 3.3% comp store sales in the second quarter. this company is doing well right now. the offprice business is doing well. the online business is continuing to grow. none of the other department stores are doing much today. they certainly deserve a nice move to the up side. they are up fractionally there. cosi have a problem. they blame it on higher food costs. i've been using this as a theme the last several weengs. there is a lock line of food and restaurant companies that blamed higher food costs. pinnacle, dean, sysco, texas road house, papa john's, noodles. a dozen companies cited higher food costs. there is definitely inflation in the food chain overall. there you see cosi down fractionally. hasn't been a grit performer recently. talk about ipos today. hope you'll stay tuned. simon hobbs will be talking with the ceo of virgin america. they priced 13 million shares at $23. good pricing. a strong brand name overall. got a lot of loyalty. known for their wi-fi, generally good service. the last ipo that went public was spirit airlines. was early part of may 2011, as i recall. stay tuned, simon hobbs. and also fibrogen. this would be, we pull this off, second biggest biotech this year. they provide oral therapy to solve anemia and fibrosis. we were waiting for china's ehi car services. it didn't make it they were supposed to ring the opening bell here at the new york stock exchange. it was postponed because the ipo itself has been postponed. no clear reason why. they did have a filing last night. there have been some allegations that the company may have misrepresented the size of its fleet and other allegations. i think that is the likely reason. at any rate, that's been postponed. we'll see if they get that in the near future. it's largely the oil services group. you see baker hughes and halliburton. schlumberger had a nice move up yesterday. weatherford was up at the open, now on the down side. dow's down three points. back to you. >> thank you, bob pisani. getting word janna going into mcg among other names. >> this is big. there's got to be an activist. jim skinner chairman of walgreen formerly ran ceo of mcdonald's. janna is going to push for change. mr. rosen stein will push for change. it is a stock that is cheap. hasn't done anything this year. they are doing things right. my charitable trust owns it. i feel janna is not going to rest, i think. they are going to do something. when you speak to greg watson ceo of walgreens, he think it's very constructive. i wouldn't be surprised if maybe barry rosenstein who david faber knows well might want to be involved in mcdonald's rather than just having a big mac, fries and diet coke. >> a nonexecutive chairman of mcdonald's said they are happy with don thompson. >> it's an inexpensive stock with a good yield, great balance sheet. they can do a lot of things. >> let's get to the bond pits and check in with rick santelli. >> 4-2-1. fives are up four, flattening usually means we are going to probably see yields tip down more today. watch that five-year, especially around 1.65. 14, 17. 14th day ten years are going to close in a tight range between 2.30 and 2.38. 17 days for 30-year bond yield between 3.02 and 3.10. it's flattening. there is a lot of trading. a solid retail sales. i like to look at nonseasonably adjusted. that was strong too. if you look at interday boon, same dynamic. let's go back to the bond, open the chart up to august. you can see why 2.38 will be big resistance. santelli exchange the other day, the average 50% retracement between the recent high yield, exactly at 2.38. let's look at 24-hour chart of dollar/yen. your screen scaling isn't wrong. 116.60 depending on which set of data points you look at. that's a fresh low on the yen versus the dollar going back to right around the fall of twoechb. two-day pound versus dollar. pound continues to get pounded. you open that chart up, this is a fresh 14-month low on that currency versus the green back. carl, back to you. >> thank you, rick santelli. we are on ipo watch waiting for virgin america to open for trading. simon's live interview coming up. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. ghave a nice flight!r bag right here. traveling can feel like one big mystery. you're never quite sure what is coming your way. but when you've got an entire company who knows that the most on-time flights are nothing if we can't get your things there too. it's no wonder more people choose delta than any other airline. professional sports. he is where it should be brought out of the underground and into the sunlight. he cited the new jersey bill as an appetite for online gambling. congress should adopt a federal framework that allows states to author he's betting on professional sports. you talk about fantasy betting. it looks like the leagues are looking for growth and this is a way to get people to watch. >> everyone knows it's, people talk about the $50 billion, $20 billion industry. the nfl doesn't like to talk about the line. the nfl will fight this tooth and nail. this is great. they just don't want to hear about it. this was a breakthrough. silver is an intellectual. >> what about the so-called negative extranalities on gambling in society. >> people do it. >> you mean informally, office pools? >> yeah. and those who do it with bookies and stuff. it's not like marijuana where you can prove with younger people their brains get hurt. it's something that is done and should be regulated if it's done. i remember when there was only gambling in vegas. the idea it might come to atlantic city was breathtaking. now anything can happen. i love to hear what goodell has to say about this. they discouraged talk about gambling. >> after the clippers and this, silver has come out with a bang. >> he is way out there. we'll get stop trading with jim and breaking news on consumer sentiment. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. oooh! mattress discounters' $197 mattress sale! television announcer: get a serta mattress, any size, for just $197 each piece when you buy the complete set. the $197 mattress sale... bulldog: oh boy! television announcer: ...is on now. ♪ mattress discounters 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. you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's 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. >> usually business is done at a high level. i want to urge people to go and look at the dow chemical video. i think it's amateurish. this thing has gotten very personal, very quickly. andrew livers. this is ridiculing him. using old clips when he was on years ago. be careful, he is doing a lot of good things. this is just starting up. this is going to be where dan lobe wants his guys on. it is the most personal, just vicious attack on a ceo that i've seen in some time. >> just getting started. janna mcdonald. mcdonald's is the best performing component of the day. what is this renewed activist activity saying where stocks are? >> activists have been going after companies that in many cases like dow have done well. but everybody listens. dow has been taking dan lobe seriously. they just had this gigantic love fest. right on top of that he does this massive satire of dow. i'm surprised he doesn't have medians. they have more money. they can burn money. i think it's amateurish but it is making the round this video. making the rounds. >> let's get consumer sentiment with rick santelli. >> holy cow. 89.4. that's the november preliminary. we'll get the final read at the end of the month. if we look at that in the context of all the other final reads, it takes out last month's 86.9. why is that significant? because that was the best level since july of 2007. our next comp is february that same year 91.3 we didn't quite make it here. 89.4 solid follows solid retail sales. back to you. >> we'll check in with you a little bit, rick santelli. >> that can turn the market around. retail sales. there was also ebola. it's gasoline. stay in front of it. huge game changer for about 50% of this country that found money. the wealthier people. >> what's on "mad" tonight? >> lam research has been the best of semiconductor equipment companies. they do not talk much. martin has done a remarkable job. i'm going to have an analysis of a $2 stock that many people want to find out about that. tune in tonight. we have a good show. what a week this was. i love working with you so much. >> this weekend will be eagles/packers. >> that will determine whether i go to arizona between the end of january and beginning of february. that's going to be the game. whoever wins that game will be the nfc champion. >> best of luck to the birds. jim cramer of "mad money." 6:00 p.m. night. >> virgin america's opening trade. simon's live interview with the ceo. in time for the holidays, "wine spectator" magazine will reveal their number one wine of the year. dow down about nine points. "squawk on the street" will be back. robot butler, can you shut the shades? oh and could you turn on air conditioning i'm starting to sweat. i'll just do it myself. useless. that's nice. set's the mood. have your entire house within reach, even when your devices aren't. introducing relay by wink it's like a robot butler, but not as awkward. ok, if you're up there, i coulsmart sarah.elp. seeking guidance. just like with your investments. that sets you apart. it does? it does. you're type e*. and seeking another perspective is what type e*s do. oh, and your next handhold... is there. you don't have to go it alone. e*trade gives you the support and guidance to make informed decisions. are you type e*? starts at 6:30 a.m. - on the (vo) rush hounose.und here but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours. get to the terminal across town. are all the green lights you? no. it's called grid iq. the 4:51 is leaving at 4:51. ♪ they cut the power. it'll fix itself. power's back on. quick thinking traffic lights and self correcting power grids make the world predictable. thrillingly predictable. welcome back to "squawk on the street." we are going to be putting the tomb stone on inventory numbers for third quarter. the can figure with those revigs. survey says up 0.3%. better than expected. may add to the revision on gdp. if you look at july, august, september, three months third quarter business inventories were up 0.4. 0.1 instead of 0.2 they revised last month. of course, it adds to what has been a solid u.s. economic day regarding data point. carl, back to you. >> thank you very much, rick. sara and i are here post nine while simon is at the nasdaq. first up, let's get a check on the markets here. it's been muted action on stocks. s&ps had trouble cracking 2040. crude continues to be the story of the day. >> having rebound right now. not far from four-year lose. u.s. stocks moderately lower. a lot to cover with our next guest who says positive third quarter 2014 earnings surprise. that's helped fuel the recent market advance. the target is $2,200. citigroup chief equity strategist with us. pretty much in line with what other equity strategists are forecasting. looking at retail sales, is the impact of the consumer priced in at this point? >> investors should realize about a $10 drop in price of oil is about 0.5% of consumer spending. that is a big deal. we had about a $20, $25 drop. that will set us up well for the holiday season. that is a one-year phenomenon. you can't expect that kind of thing to keep going. >> as we look at the gains here going into a seasona a seasonab period for the market. investors are getting euphoric. >> the market was too positive for september. our sentiment model is sitting right at the line. set us up for the turbulent market, if you want to call it, late september/early october. now we rebounded not quite up to that level. we've seen the sentiment move up meaningfully from depressed levels about a month ago. >> we are still near the highest levels of optimism for the year, right? >> no. we got into the euphoria territory in the march/april time frame. this is a good short term, not just longer term indicator for us. i think the market's probably ahead of itself. people are too excited about the fourth quarter rally and late-year phenomenon. >> we have virgin america opened for trade. simon might have more on that back at the nasdaq. >> good morning to you. welcome back to the nasdaq. virgin is trading at 26.75. it priced at $23, mid point of the range. valuing the company up to $1 billion. this is the second biggest airline ipo ever. the first one we had in 12 years. still a lot of concern into whether long term it will be a good investment. given the fact it is trying to pitch itself as a frils airline in increasingly a value environment. we will talk to david cush later in the show, the ceo and president of virgin america as the stock gains 20%. back to you guys. >> thanks, simon. we'll check in with you later. tobias levkovich here. you can't common on individual names. virgin america, not a bad time for an airline to go public. >> i was so tempted with the pun of it's taking off. >> leave that to the media. seriously, this has been a group that's been on fire, fundamentally speaking. with the help of those lower fuel prices. >> airplanes have done a number of things right. they got costs under control. they reduced capacity in terms of how many planes out there. for those of us who fly a lot, planes are full. you hope for that empty middle seat, but it's not there. at the same time, oil prices are coming down. they have pricing power. that is a nice combination. >> is $2,200 year end '15 or '14? >> '15. i think the market a tad ahead of itself. >> 10% gain in 2015? >> just about. 7%, 8% on the earnings side. i think valuation is fair on market emphasis. if you look at history, they'll say markets are a tad above historical averages. >> you don't buy the notion that managers are going to chase what they wish they owned in the middle of october? >> it's become too consensus a view. everybody is talking about it. i was in asia and people were upset we weren't more bullish. we were in europe and heard the same thing. you're not bullish enough. i get nervous when everybody tries to go to the same side of the trade. >> to the degree anyone does chase anything, are they going to go for value or momentum names at these valuations they want to show they own? >> i suspect momentum. investors are horrible at times chasing the tape. we shouldn't be that harsh on our clients, but sometimes they are. >> i know you're encouraged by earnings. is revenue growth where it needs to be? >> revenue growth is fine at 5%, 6% level. it isn't as strong as people like. commodity prices coming down hurt those sectors. >> strong dollar. >> and the dollar. the combination of both. >> that has to be a head wind going into next year. >> it is, but isn't. 70% of s&p 500 sales are north american derived. while we are not looking for robust growth in europe and looking for lesser growth in the emerging markets, we are not looking at recessions either. >> are you impressed with the market's ability to withstand the end of qe? >> it should. >> that's not what a lot of people predicted. >> i tell investors, 60%, 70% investors have ten years experience in markets. their view is a crisis then really aggressive monetary policy. if you go back 20 years, 30 years, 40 years and think about when fed policy withdraws, it's when earnings are growing again and businesses are starting to spend. businesses are looking to hire. you see mergers and acquisitions. they are doing all the things that would intimate a revital of corporate annual spirits. >> and raise interest rates. judge, that's normal. people forget what normal is. >> tobias, always good to have you here. >> combining two of the largest names in the oil industry. jacqui deangelis with that. >> that's right. balker hughes confirming it is in preliminary merger talks with halliburton. a deal like this if it were to go through would create an industry giant worth $67 billion. pretty significant. that is still half the size of schlumberger whose market cap is $225 billion and leader in the space. bringing these two companies together would be a big deal. i want to discuss why talk about it now? most people are saying they think it's this recent decline in oil prices and projections that oil prices will decline further, maybe to the $50 range. that has gotten the conversation going between these two companies. not only would you have cost savings when you bring the companies together, you would be combining their technologies. also, you would be combining their intellectual property. a lot of people say that is very important. critics have been looking at this deal saying there will be a lot of regulatory issues here. especially when dealing with a merger of this size. that is not going to make it an obstacle that couldn't go through. the other issue is regulatory issues you might face overseas. you would have countries like china, europe, brazil and mexico also looking at a situation like this. the oil field service companies abroad are few and far between. baker hughes shares were halted yesterday on this news. they spiked 20% when they did start trading. today seeing halliburton, baker hughes, schlumberger higher on this. this would be the second largest energy deal we've seen this year behind kinder morgan when it said it would bring its units together. that was a $70 billion deal. a lot of eyes to see if this will go through. time framewise, a lot of hurdles to get through. >> what a week. jacqui deangelis. how the iphone 6 and disney's "frozen" could be responsible for making this holiday shopping season a successful one for retailers. dow is flat. financial noise financial noise financial noise financial noise welcome back to "squawk on the street." let's check out shares of petrobras, the brazilian state-run oil company. the stock plummeted after the company delayed results amid a police investigation. police arrested 18 people in suspect of money laundering and bribery scheme. the big news down at the nasdaq is we had our first trade on virgin america. quite a big bounce at the open. it priced at $23. it's risen substantially. it has a gain of 24% there is some euphoria or there was in the studio above me where you can see there the virgin america senior executive team and a number of staff members. we will be talking to the ceo and president of virgin america david cush in about 15 minutes time. an interesting stock and many questions whether or not such a flashy airline can be a good investment. in the meantime on the broader economy, retail sales coming in better than expected this morning. up overall by 0.3%. if you strip out oil and gas and fuel and automotives, it's even better. up 0.5%. therefore, a good omen just two weeks away to black friday and the holiday season. according to our next guest, higher unemployment and the strong u.s. dollar will support consumer spending at this crucial time of the year. michael gregory deputy chief economist. welcome to the program. >> morning. >> it seems to be such a mood of pessimism about what the holiday season may bring. you are taking a different stance. a top down approach, i guess. >> absolutely. first and foremost, we've got decent job growth. nothing like creating a million jobs every four or five months to get consumers into a buying mood. add in lower gasoline prices, lower heating oil costs, stronger dollar pulling down import prices, you've got solid consumer spending. >> why do you think so many people are negative at the moment? a lot of retail analysts seem down beat. how do you kind of square your thoughts with theirs? >> another factor that will likely get consumers spending, continue aggressive discounting by retailers. that's where the retail analysts have a little bit different than our view. consumers are going to be spending more. will retailers profit from that? that's the uncertainty. >> i have a question on the link between the labor market improvement we've been seeing and retail sales. why isn't there a stronger correlation there? we've seen 200,000 jobs created each and every month. more americans are quitting, a good sign they are confident they can find new work. why isn't that translating to higher retail sales and consumption numbers? >> the belief as to whether or not that strong job growth will persist. it's a confidence issue. wages themselves aren't growing rapidly. that is a cause for concern. whether or not we get a good holiday shopping season or great holiday season is whether we can unleash that confidence effect. are consumers prepared to dig deep in their wallets and take out loans because they truly believe the job market is solid and they start spending more money this holiday season. >> you lost me. we started the interview with you saying to us it was going to be a great holiday season. now you say it's a question of confidence and the jury's out. >> obviously, good is better woon he had the last couple of years. looks like a solid 4%, 5% year on year growth in sales. can we get 5% or 6%? that's the big difference. whether or not consumers are prepared to believe wage gains are just around the corner. what we are seeing on the ground now is solid job growth that will continue into the new year. >> you mentioned another big question would be whether retailers profit from it. presumably, if you are a retailer, you know you are going to go into a discounting environment from the get-go. you bear that in mind when you're with your buyers working out what to buy and at what price. none is a surprise to a big retailer, surely. >> absolutely not. they factor that in when looking at their retail sales volumes, projections. hopefully they'll cut prices a little bit and you'll end up with more sales as a result net/net okay sales revenue. again, it's a situation where if it turns out that consumers are, in fact, responding to the job growth, responding to the incentives to spend more money, maybe we don't get as much discount as we otherwise would. there is always that prospect. we get several rounds of discounting. maybe the first round goes through. maybe not the second or third round. >> i'm looking into what your team is saying. it's the gamers you think will profit the best. we have to leave it there. thank you for joining us. >> thank you. up next on the show, what are the chances for tax reform now that republicans are in control of both houses of the cook? pulitzer prize winning "new york times" columnist jim stewart will take that up. location. location. (shouting) location. here's the location that matters the most. here. or here. or here. it's wherever this is. to get customers to come here and stay here, you're 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. it's tough out here; you better be on the right cloud. today there's a new way to work. and it's made with ibm. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor. as marijuana legalization gains more and more, co-founder of ben and jerry's thinks the companies will be vying for a piece of the pot pie in the future. kate rogers live at the marijuana conference in las vegas. ben cohen is a very big advocate for pot legalization. not just because he is hoping more customers get the munchies. he told us here at the conference, he thinks one of these start-ups could be become the ben and jerry's of the cannabis industry. that will have big businesses wanting in on the action. >> make a lot of money. i guess my hope would be that this industry is not taken over by existing big businesses, but that the businesses here remain independent and that they become the big businesses of tomorrow. >> any advice for marijuana entrepreneurs just starting out? >> my advice for marijuana entrepreneurs is to imbue your business with social values. use your business as a source of progressive social change. use your business to support the community, to help people that have been disadvantaged. >> what is the best ice cream flavor to go with cannabis? >> well, i haven't really thought about that. i think whatever flavor you're into probably works. >> do you think we'll see a ben and jerry's themed one? >> i like cherry garcia. that's been my all-time favorite. >> hey, guys, if they come out with that cannabis-inspired ben and jerry's flavor, they would have plenty of customers from the conference lining up for a taste. >> that is the one question everyone wished you would ask and you did it, kate. cherry garcia. >> mine's chubby hubby. >> republicans campaigned on it. with the gop now taking control of both the house and senate too next year, might a tax overhaul be possible before 2016? joining us post nine, pulitzer prize winning columnist and cnbc contributor jim stewart. you think compromise is possible on any issue? >> well, look, i've been beating this drum for years. i have kind of given up on the idea. i think the stars may be aligning here. i'm very cautiously optimistic. i had good interviews with republicans and democrats. on the framework of tax reform, the parties are not that far apart. a couple of things happened that might help. republicans want to show they can do something. obama wants to burnish his legacy. there are some key issues that republicans support. >> did inversions have a big part of this? >> that didn't really come up. that's a specialized thing. the corporate tax reform could do that. >> it was a good mainstream story not too long ago. >> it's an important issue, a legitimate issue but can be addressed as part of this broader framework if they will get past immigration. let's all calm down. that is a different issue. i had a great interview with david camp, chairman of the ways and means committee. >> what is going to be the sticking point within that tax reform? >> you've got to get over the issue is this going to be revenue neutral or not? one thing representative camp said let's put that issue to the side now. that would promote growth, promote fairness and everybody agrees would be better for the country. let's look at revenue impact. so what if it isn't exactly neutral? maybe that isn't the be-all of tax reform. >> do you think it will have to come with an infrastructure spending mackage ining package president to sign it? >> one of my pet peeves here is the carried interest loophole which is still there six years after obama said he would get rid of it. people estimated $10 billion to $15 billion. one professor said $50 billion. >> hedge fund managers and private equity and lower tax rate and capital gains. >> the richest 0.1% will privately admit this isn't fair and they don't need it. then they'll lobby for it. they get all this money. you get $20 billion, if you want to put that to infrastructure spending, could you do a lot. this country needs it. >> there are stories in the "times" today about how net neutrality, climate change, immigration, the president is actually girding up for fights. not compromise, fights. it's only days since the midterm. >> we've been watching them fight for years. has that gotten us anywhere? i'd like to think there is more to fighting going on there but that's the pattern. >> market temperature, you feel p comfortable be long stocks? >> i'm sitting pat. the stocks have been very firm lately. we got over the october foibles. i'm watching more closely interest rates. we had the sudden dip down in october. things started creeping up a little bit. fed last week was talking about there may be volatility. sounds like they are saying we are going to raise in 2015. i think they've been sending that message loud and clear. >> always good having you, jim. >> thank you. we'll bring you the ceo of virgin america live for a first on cnbc interview as the stock begins trading the first time at the nasdaq. currently up 27%. they're coming. what do i do? you need to catch the 4:10 huh? the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me? go. right on time. right now, over 20,000 trains are running reliably. we call that predictable. thrillingly predictable. ameriprise asked people a simple question: in retirement, will you have enough money to live life on your terms? i sure hope so. with healthcare costs, who knows. umm... everyone has retirement questions. so ameriprise created the exclusive confident retirement approach. now you and your ameripise advisor.... can get the real answers you need. start building your confident retirement today. get to the terminal across town. are all the green lights you? no. it's called grid iq. the 4:51 is leaving at 4:51. ♪ they cut the power. it'll fix itself. power's back on. quick thinking traffic lights and self correcting power grids make the world predictable. thrillingly predictable. welcome back to "squawk on the street." i'm jacqui deangelis live from the nymex. we just got the weekly natural gas inventories delayed because of veterans day from the department of energy. we have a build on our hands. 40 billion cubic feet. that was in line with what platz was looking for and traders were expecting. this is a smaller build than last week. 91 billion cubic feet we saw. prices are going lower. we were at the $4.03 mark, $4 now. nat gas has been volatile because of the predictions of the cold weather that is on the way. it's priced into these numbers right now. it is getting colder out now, especially here in new york city and windy, as well. demand is going to increase. i want to remind you of a couple of things. traders are looking at total stocks of the year. that number 3.5 trillion cubic feet almost in line with the five-year average. also in terms of rebuilding the stocks from the depletions last year, we had record injections. traders feel good about this. nat gas prices now under $4 at this point. guys, back to you. >> thank you, jacqui. check out where we are currently trading with virgin america at the nasdaq. it priced last night $23 a share. substantial gain for those people across the country involved in that nine-day road show and got in on the stock. it was priced just below $1 billion. the ninth largest airline in this country is valued $1.25 billion. joining me in a first on cnbc interview is david cush, president and ceo of virgin america. welcome to the public markets. >> thank you. >> we've been waiting for you. >> we have. >> timing is very good. your bigger rivals are recording record profits. jet fuel plunging in value. you were able to move to profit last year. >> it was good getting the company ready to go public and finding the right time. we did our part and the market did its part. >> speaking of doing your part, you did nine days on the road show. for an ipo of this size is a long time. you left no stone unturned across the country. what worked best in explaining the airline? >> the key thing we wanted to talk about is the fact even though we are a high-quality product, we have a low-cost model, a simple operating model. we think one of the pure models, single fleet type. point to point. ears deviated from it. we stayed true to it. >> now you have to report quarterly results, debt. you have a desire to have a more market service. that costs more than your rivals. delta and american are doing up their fleet. >> our costs are lower because our production model is simple. yes, they are putting amenities onboard aircraft, but we have 30% cost on head-to-head markets. >> southwest and jetblue are cost effective. they are under huge pressure from analysts to reduce the leg room, to increase fees for changing a ticket, to charge more for baggage. in your environment where you still have richard branson as a key shareholder, would you be able to do that? >> we charge for baggage. we think there is a customer-friendly way of doing that. as far as jetblue and southwest, we have a revenue premium. we operate on a unit revenue basis. we operate where the legacies are. we've got about a 25% revenue premium on like to like market. >> richard branson remains a shareholder. you warned any adverse publicity surrounding richard or virgin would have an adverse reaction. how has the galactic crash affected you? >> it hasn't affected us at all. they are trying to do something visionary, very difficult to do. >> road show? >> not at all. >> you are a veteran of the industry. you spent 20 years at american. you know most of the other ceos personally. we discussed it in the past. as you look to expand out of california to more routes, how are you going to stop these big guys whose valuations are bigger than yours, predatory pricing, putting volume next to you to undercut your efforts? in july you warned specifically of what you called aggressive competitive practices from united. that could hurt you. >> look, this has been the way it's been since we started. when we go into a market, we see aggressive competitive response. generally doubling capacity by our competitors. we found it's more harmful that their income statement than ours. >> but they are bigger and can cross subsidize. >> that is what they are doing. they are losing money when they come in and make those moves. we are able to operate at a profit even though they basically destroy their own market. >> how do you feel about that? how do you feel about doing business in the airline industry? >> well, it's basically legalized warfare. that's what it is. it's an aggressive business. it's a network business. these guys are smart guys. >> dynamic pricing must make it more of a nature. >> it does. on the other hand, if you've got a good product people want to buy, that helps. >> you've got ten new airbus 320s coming on stream the next 18 months. it takes the fleet from 56 to 66. where will it take you? a lot of people across the country may not know the brand. where will you go? >> we are a small player and comfortable being a small player. we are 1.3% domestic industry. where we go from now, our focus will continue to be on l.a. and san francisco. this gives us an opportunity to look at hawaii, other new markets we haven't had the opportunity to penetrate yet. >> competition notwithstanding. >> yes. competition everywhere. >> good to see you, david. david cush, ceo and president of virgin america. currently up 27%. >> thank you very much. let's get over to courtney reagan for a market flash. >> earlier, you told us janna partners is taking a new stake in mcdonald's. it is taking other moves. it upped its stakes in petsmart by 4.75 million shares. walgreen by 1.39 million shares. ebay by a million shares and aig 758,000 shares. it has taken new stakes in alibaba and valeant. amgen 2.8 million shares and rackspace 7 million shares. it eliminated its position in cvs. back to you. >> thanks. when we come back, this is the best bottle of wine in the world according to "wine speck tagtta" we can't tell you what it is yet. ♪ there's confidence... then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ [annit's working forny. new york state. already 41 companies are investing almost $80 million dollars, and creating 1750 jobs. from long island to all across upstate new york, more businesses are coming to new york. they are paying no property taxes, no corporate taxes, and no sales taxes. and with over 300 locations, and 3.7 million square feet available, there's a place that is is right for your business. see if startup-ny can work for you. go to startup.ny.gov. for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. 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. they take us to worlds full of heroes and titans. for respawn, building the best interactive entertainment begins with the cloud. this is "titanfall," the first multi-player 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. this is the microsoft cloud. dow is down about 21 points. health care sector falling sharply in today's session. courtney reagan is back at hq with more on that. >> the weakest sector in the s&p is the health care sector. leading the way lower, bigeneral followed by gilead science, celgene and aalexion pharmaceuticals. a tough day going into the weekend. >> thanks. let's get the santelli exchange with rick santelli. >> i'm always a tough critic when it comes to the economy. i thought today's data points, michigan even though it was preliminary, was very solid. retail sales was very solid. nonseasonably adjusted retail sales was solid. let's get our guest's opinion. thanks for taking the time this friday morning. >> thank you, rick. >> you heard the set-up. what did you think about this morning's data points? >> they were good, but off a soft september. we need to take it together. it is a decent set-up for the year end. we have to separate what's decent and what's great. i still think the economy is decent, not great. >> that really is. our economy is decent when we look at our economic bouncebacks from previous periods of tumultuous activity, whether it's credit crisis or recession. when you, most of the comps are to europe. today we had european data. i can understand why we look so much better. they avoid a recession outside italian data points. >> and the extraordinary steps ecb has tried to take to listen to their economies. the sclerosis is more structural than liquidity based. >> that is very important. it's structural. structural issues in europe, even in the u.s., they don't get fixed quickly, do they? >> they don't get fixed quickly. you pile on the debt they have and there is no amount of liquidity central bankers can rain on them. that will move the needle. >> this morning i enjoyed professor cochran's op-ed regarding disinflation that is not the type we should be garnering all this central bank future activity over. did you read it and do you agree? >> i completely agree. there is central bank manic attitude towards having no deflation. i think it's more because they lose control of their responsibilities rather than it really being an economic philosophy. lower inflation or lower prices can be either because things are more efficient. look at technology or because of lower energy prices. it's a group that inflation or deflation is bad or good is insane. replace inflation with cost of living. lower cost of living is good. a higher cost of living is not good if wages remain stagnant. >> in the final half minute we have left, the yield curve has been flattening for much of 2014. i've been pointing out 13 days of a tight close in ten, 16 days between 3.03 and 3.10 closie ii yields on a 30-year bond. what does that mean? >> global growth is punk and fed will be raising interest rates well before the market thinks. >> peter, thank you very much. have a terrific weekend. look forward to having you back again. carl, sara and the gang, back to you. >> have a great weekend. up next, we reveal "wine spectator's" number one wine in the world. the conference call. the ultimate arena for business. hour after hour of diving deep, touching base, and putting ducks in rows. the only problem with conference calls: eventually they have to end. unless you have the comcast business voiceedge mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions. i've never felt so alive. get the future of phone and the phones are free. comcast business. built for business. welcome back to "squawk on the street." i'm julia boorsten. pandora shares higher. the stock is now trading almost 12% higher. >> thank you, julia. 'tis the season for holiday dinners and parties. no one wants to celebrate with a bad bottle of red. folks at "wine spectator" have been working hard to compile a list of the best wines of the year. joining us with the big reveal of the year's number one wine is executive editor tom matthews. joins us once again at post nine good. to have you back. we did this last year. you've been doing this all week. >> yes. monday we began unveiling the top ten on wine spectator.com. today is number one and monday is the entire top 100. >> it's a core interest to our viewers. what is it? >> first time live, nobody ever knows. this is it. our number one wine of 2014 the dow vintage port 2011. >> that was like the oscars for best picture. >> the top rated vintage port of a fantastic vintage. it costs $82 and 5,000 cases were made. >> now that it's number one, how much harder will it be to get? >> walk us through what it's like. give us the notes. >> vintage port is a historic kind of wine made since the 18th century in the douro valley of portugal. the grapes are fermented briefly. then alcohol added to stop the fermentation while the wine is still rich and sweet. that brings it up to 20 degrees of alcohol. that also gives us an incredible aging potential where it could last 50 or even 100 years in the bottle. this is a keeper. >> is this an after-meal drink? >> the british who drink most portend to have it at the end of the meal with blue cheese or walnuts. it can go with a meal if you like a big, hardy where is wine in terms of growth relative to other types of alcohol. >> it's grown every year nor the last 20 years. we see strong growth because americans are becoming more culinary. they are interested in food and wine is perfect with food. so the interest in wine has come with the interest in food. >> i'm into lambrusco with pizza. it's a little bubble. >> two trends. that's sparkling line. and champagne and bubbly the wine world is so diverse there is stuff from everywhere there's good. and you are doing some exploring. >> yeah. trend setter. >> that's how i look at you. has weather foiled the market any ways. >> vintage always changes. a great vintage like this lifts a whole wine region. france has had a tough in 14. so look for good wines from 10 and 9. california was fantastic in 12. there's always something where the weather was fine and the wines are good. >>. the millennial are exploring and going everywhere, looking at everything. we did a cover story on sicily. that is a trending area for millennial. >> your point on inflation and we've seen it broad apply in fo and wine going up. >> this wine at $82 is not inexpensive. the last time a port was number one was in 57. cost 55 dollars but those two bottles now trading at nearly 150. so you can make a good investment if you buy the right wines. >> good question. you are not going to leave this here are you? >> it is not ready to drink. >> please come back next year. always interesting. >> thanks. thanks for helping us unveil the wine. >> you can read up on all the best upcoming wiensd in the next issue of the wine spectator. >> we have a big lineup. a lot of topics this friday morning. mark cuban comparing what the government is trying to do with net new neutrality to iran. and microsoft overtaking exxon. and finally how mark zuckerberg created a facebook product to ring in a special anniversary with his wife priscilla. all next on "squawk alley." you, my friend are a master of diversification. who would have thought three cheese lasagna would go with chocolate cake and ceviche? the same guy who thought that small caps and bond funds would go with a merging markets. it's a masterpiece. thanks. clearly you are type e. you made it phil. welcome home. now what's our strategy with the fondue? diversifying your portfolio? e*trade gives you the tools and resources to get it right. are you type e*? ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. [annit's working forny. new york state. already 41 companies are investing almost $80 million dollars, and creating 1750 jobs. from long island to all across upstate new york, more businesses are coming to new york. they are paying no property taxes, no corporate taxes, and no sales taxes. and with over 300 locations, and 3.7 million square feet available, there's a place that is is right for your business. see if startup-ny can work for you. go to startup.ny.gov. welcome back to squawk on the street. shares of movado plummeting after company warning third and fourth quarter rules likely to come in below forecast due to slow growth in the industry. and credit to outlook for the full year as the name sake watches are not selling well overseas. down almost 34%. >> tough day. two weeks until black friday amazon is bringing back a special offer for some prime customers. 30 day free trials for kindle tablets and ereaders. customer who is redeem the offer aren't charged at checkout but will be charged if they don't return the device before the 30 day window expires. deliveries and returns are free. i don't know how great an offer that seems like. >> i'm not sure if it's cunning or desperate. somewhere in the middle probably. >> right because they have had strength in prime, not so much in the hardware. >> before i say goodbye, can i show you where we're trading at the moment. at virgin america of course. that was the new ipo today. and we created roughly about a quarter of a billion dollars on the price action you see. currently about 1.2, 1.3 billion dollars. 35% was priced at the ipo. the other thing is a, i'm concerned that you are drinking lambrusko wine. let me tell you, drink responsibly. there is nothing worse than drinking the majority of a bottle of the port in the morning. you will be unable to bring your head off the pillow. it is the worst advice. i'm here to help sarah. >> they took the bottle of wine. they did not leave it. and that value typically quadruples. he said that lambruskos were popular. i just want to do a broad market check. virgin america, what a successful debut. we're looking at the dow jones industrial average. relatively flat. it's down one point off session lows. not a lot of movement with the s&p in positive territory along with the nasdaq. which follows so i s simon. this theme marginal gains and losses. a light week of the economic data. next week fed minutes for one. >> you have to remember where you come from. a month ago with the strong rally up 8% on the s&p and five consecutive record highs. yeah the last two or three days we've not gone anywhere. but the bigger picture is that the very strong rise out ebola fears and the growth. >> a 9.5% rebound since the october 15th low. and there is a lot of bullish momentum going into year end in what is typically a strong time for the markets. simon see you back here at the stock exchange. have a great weekend. carl over to you. >> 8:00 a.m. at google, 11:00 a.m. here an wall street. "squawk alley" is live. joining us, kara swisher co-executive editor at re/code. and kayla tausche here on a relatively flat day. we'll cover tech first. google is shutting down google wallet. in a post the company said it would close the payment service in march next year.
you know, and the president's expected announcement tonight as he takes executive action on immigration policy as well, right? >> that's exactly right. bill, we were at the white house this afternoon. i can tell you people are buzzing about the fact that he's doing this. the questions it raises about the office. the executive action itself and what it means for the business community. and for the future of employment and wage growth in this country. we will get to all of those topics coming up. >> we have many important interviews to come over the next couple of hours here, including senator from wyoming, we have mary jo white, the s.e.c. chair, chris van hollen, the always outspoken and controversial michele bachmann coming your way as well. you're going to be talking to the president's council of economic advisers chair, jason furman and in a separate interview this hour, we have john barrasso from wyoming as well. a lot of things to talk about here, kelly, in terms of economic policy, political direction, where we go as we head into the new year in 2015 and we begin the new congress where the republicans will be very much in control of both houses. that's exactly right. the language is already heated, bill, as greg put it, going to be something for everyone to hate in what the president's doing on immigration. all hell will break loose.. again, after the bell, when we are going to speak with more heavy hitters, s.e.c. chair mary jo white on a big day a big week for them. the s.e.c. moving forward with some regulations on the equity markets, but a lot more to talk about we will also hear from top ranking house democrat, chris van who will., always outspoken and controversial michele bachmann on the gop side and can't forget about the big, huge issue of regulating the internet. former fcc chair, reed hundt will be here. >> show what you is going on in the markets right now. anymore, especially this month, kelly, as soon as the european markets close, that's when we see our markets settle down quite a bit and that's happened again today. the industrial averages up just three points, as you see, the s and p is virtually unchanged now and the nasdaq is up 18 points. by the way, the dow and the s & p are very close to record territory once again. let's talk about it all, our "closing bell" exchange today, ron wiener from rdm financial group is with me here at the big board. we have kyle brownly from weimer brownly, jim low lowell from adviser investment and own rick santelli joining us from chicago. jim lowell, this decided lack of volatility in the marketsing we have seen in the month of november, does that mean the market has everything figured out right now? >> absolutely not. clearly, we have seen low volatility. i think the sense is that we have really got to get more data to provide a catalyst for sustainable further gains, but against that backdrop, despite sort of man's inhumanity against man, we continue to see good fundamentals continuing to pave the way for slow growth, not no growth, that's reasonable road for intermediate long-term investors to take. >> ron weiner, what did you think about the consumer price inflation data this morning? what does that tell us about the environment here? >> you know, i don't think much at all. i think employment's growing reasonably. people can handle any increase in inflation on a relative basis, taxes, a different story there going up, though we don't actually see it till we get our tax bill. i don't -- it tells me that there demand out there, tells me that it's okay for the economy to grow but grow slow. >> are you worried about deflation at all as a possibility here, especially in do the lar continues to strength here as well? >> ron brought up things happening outside the u.s. that may be contributing to this let's talk about iron ore prices, commodity space, outside of oil, a lot uglier moves this year, what does that tell us about the health of the economy? >> well, i think it tells us a lot about weather, a lot about growing cycles, a lot about cattle feeder cycles, i think really energy in agriculture are some of the big movers and i think for two very different reasons. i think the energy commodity move is something we should pay a whole lot more attention to, because i don't think the weather on that is going to change very much. we are making permanent long-term generational changes on energy and coming home to roost in pricing. >> that is not the case with iron ore, rick. i'm sympathetic to -- >> iron orself. a different scenario. >> that's what i'm -- [ overlapping speakers ] >> the message is that china overbuilt out the sector, probably overcompromised their collection of various resources like iron ore and like copper and then they were forced to use them as collateral on loans and none of it worked out well. i actually think in many ways that the picture of the man in iron ore is as important as it may be is not the biggest issue. the biggest issue is that china really screwed things up. they got a bit greedy in the cycle about two and a half, three years ago, my opinion. >> kyle brownly, for the first time in a long while, a communication came from the fed in the form of yesterday's minutes, yesterday's meeting and the markets did absolutely nothing with it, but at the same time, we are seem to be focusing more on what's happening with the european central bank and of course, the japanese central bank. is our fed becoming a little more irrelevant now? >> you know, i don't really think some i think that we've seen this fed movement, we have expected it for years, actually forrant -- for months recently. i think it is healthy for the u.s. economy to be on its own and off the government stimulus. and really, we are doing the inverse of what those european nations are doing as they continue to inject money into their economies. i think it's healthy for europe, as has been discussed before, since we are dependent on part of that economy, but i'm really pleased for the fact that our fiscal policy conservative and more independent going forward. >> go back to rick on a point here as well, which is that we see what's happened in europe, those breakevens if you think inflation expectations are.i don'ting here, take a look at what they are doing, rick. i know do you follow this. we can shrug it off. >> [ overlapping speakers ] >> prices to move down to loosen up the economy, they are going to prevent a healing process and going to spend a whole lot of money and create a whole lot of debt not to be any better off. now that you asked me something, i like in washington on the immigration speech night. my big question, i was just mazed that the major non-cable networks aren't covering it and that the white house really didn't seem to mind much. [ overlapping speakers ] . >> who are the major broadcast networks? >> the broadcast. staggering and the conspiracy theories running rampant what it means. i'm not sure i believe any of them but really is kind of surprising. >> we are hearing some reports that the white house does care to some degree about that, rick, but your point is well taken. >> in the past when they had these issues with football and whatnot, there was a give and take between the networks and the white house. i haven't read that that's been going on very aggressively with regards to this speech. >> i can tell one of the questions we are going to ask the democrat who is joining us from congress is going to be, you know, how upset are people in owe bam in's own party with the moves that he's making on the immigration front here and the precedent that it sets, bill? >> we have a lot to talk about on immigration. we will get to that. let me get back to the markets for a moment. jim lowell, ron wiener points out the multination as have a problem with the strong dollar here, you like the u.s. megacap nationals now, how is that -- make the case for them if the dollar continues to strengthen here as expected. >> the case made for them for years, the dollars continue to strengthen, see europe enter into deflationary spiral that is going impinge some of the dollar badge our u.s. blue chip balance sheet companies continue to plow their way forward to better earnings growth and i think they will get a slight tail wind if they can start selling goods and products into a recovery midyear next year. we continue to hope europe recess but bic quick and recoverarecould have -- recoverable, [ inaudible ]. >> i know the way the president is going about it being one part of the issue, do you support free movement of labor? in other words, do you support immigration policies that loosen what we could see in this country today if it were to come from congress? . >> listen, i'm old enough to remember the executive orderers from ronny reagan, executive orderers from bush. didn't like them then, don't like them now, two wrongs don't make a life. all my grandparents were immigrants, immigrants, the cornerstone of the united states of america, but so is the rule of law. they have to find a way to work both of those together to the advantage of the country. >> all right. all right. we got to go at this point, ron, thanks for joining us today. and everybody else, too. we will see you a little bit later. heading toward the close here, we got 50 minutes left in the trading session here, it's early, but art cashin came by the bias is slightly to the upside now, kelly and we do have a slight upward bias the major averages now. the dow is not in record territory. the s & p very close right now on the end. the nasdaq up 20 points. >> we will have much more ahead on this special washington edition of the "closing bell." jason furman, the chairman of president obama's council of economic advisers will be joining us next, how will the president's unilateral move on immigration impact wages, already depressed? we will get to his views on that and more. >> plus, we have wyoming senator john barrasso with us, he is warning that the president's executive action on immigration would, in his words, and i quote, hurt cooperation on every issue. we will get his viewpoint on that coming up in a little bit. and then later, securities and exchange commission chair mary jo white along with chris van hollen and michele bachmann on each side of the aisle and former federal communication chairman reed hundt all joining us on "closing bell." we are back in two. ♪ music ...the getaway vehicle! for all the confidence you need. td ameritrade. you got this. ugh... ...heartburn. did someone say burn? try alka seltzer reliefchews. they work just as fast and taste better than tums smoothies assorted fruit. mmm... amazing. yeah, i get that a lot. alka seltzer heartburn reliefchews. enjoy the relief. fewith up to $400 off. it's posturepedic vs. beautyrest serta icomfort and tempur-pedic go head-to-head with three years interest-free financing. mattress price wars are ending soon at sleep train. ♪ your ticket to a better night's sleep ♪ generally speaking what kind of macroimpact do you expect this executive action to have? >> it is important to understand this action is motivated by strengthening our borders, holding people accountable. when do you that it's also going to help our economy. it will expand our labor force some people here are now able to work but even more importantly, it will expand the productivity of our economy, as people can match themselves to better job, as it brings in people with ideas and innovation, people that will start businesses, hire americans to work. you will see it add to our economic growth. you are going to see that growth reduce our deficit and see that help people here in the united states today. >> are you largely talking about the impact of work -- of so-called low-skilled workers or high-skilled workers? >> both of those contribute to our economy. businesses talk a lot about uncertainty and what it does to their investment. just imagine people who are here in this country facing uncertainty, take some of that uncertainty away, they can make investments, they can start businesses, they can go to school, other things that will contribute to our economy. now it's not going to be everything you would want to do. we're going to continue to pursue legislation. only congress can fully address the set of issues we have. but there are some the president can address, and he will be addressing. >> is it probable in the near term this will depress wages on the low end of the market? >> no. i don't believe that would happen. we did a huge experiment on this in effect in 1980 with the mariel boat lift when a large number of cubans showed up in miami. it increased the labor force in 7% with low-skilled workers. economists who have studied that didn't find an adverse effect on wages of workers there. n in fact, if anything, they went up as the new people helped the economy and complimented the work. you're not going to see anything like that quantity here. in fact, we're going to toughen up enforcement at the border. it's going make it harder for people to come over. and it is the people -- >> what do you mean toughen up enforcement. a lot of employers across the country will be wondering if they have a de facto wink from the federal government if you will to allow illegals to keep working for them. so what do you mean by enforcement? >> i don't want to get ahead of any of the details. that's something the president is going to be talking about tonight. by better focusing our resource on the problems we have, for example, felons in this country and deporting them, people crossing the border, rather than the people who have been in the united states for a long time who can create jobs, contribute to our overall economy and society. >> and this isn't the only executive action the president is taking, or that we expect him to take. but there are other things as well that we're trying to debate the impact of that are happening at the same time. the keystone pipeline, which failed in a vote just earlier this week, for example. there have been plenty of people saying look, if we wanted an economic stimulus, that would be a great one half. is your understanding of how many jobs the passage of keystone pipeline and the building and construction of it would create in this country? >> keystone is something that is being evaluated by the state department. they have to figure out if it's in our national interest. and that's something that they're working on. the president has pointed out before, though, that there is only about 50 permanent jobs at stake in keystone. and that's why the president said that our national interest is not served if it significantly exacerbates carbon emissions. and that's what the state department is look at. >> sort of related to that, there is going to be a lot of focus on how healthy the petroleum part of this economy is. and as you know better than anybody, it was a huge part of the contributor to our recovery. it's a part of wages and jobs that are relatively high skilled and high income in this country, and the oil price has pretty much cratered as of late. are you concerned about having the negative impact and could having projects like keystone offset that? >> i think it says something i mazing that we're even worried that falling price might hurt the economy. it won't. it will help the economy. it will add to our growth. and we're going to continue to see growth in the oil sector as well. we've added production equivalent to discovering a new iraq here in the united states. at the same time, we've cut our consumption. as a result, our net imports are down 50%. that makes us much less vulnerable to fluctuations in the price of oil than we were before. but the fluctuations at least when they're in the down direction are still a net positive for americans. >> i would be remiss not to ask. we learned you are one of the people jonathan gruber visited with while he came to the white house over the last couple years. and you worked on the affordable care act. do you feel as though the true cost of that was hidden from the american public? >> i think the affordable care act was enormously transparent, was enormously debated. every one of those numbers came out from the congressional budget office. every one of them was scrutinized and understood at the time. >> but why would he use that language then? >> you'd have to ask him why he used that language. all i can tell you is there wasn't any ambiguity about what the policies were, what the consequences were, and ultimately, that the goal of it was exactly as you just said in the language, making health care more affordable, expanding it to more people. premiums are lower than anyone expect they'd would possibly be. >> does it matter whether it was framed as a tax or whether it was framed as a tax on the consumers or on the insurance companies. was that part of the discussion that you had? >> you can leave these types of debates to others. what i'm focused on is just look at premiums. premium growth has now at the lowest rate it's been in 50 years. the affordable care act has contributed to that. it's helping create more jobs and it's helping raises for workers. that's what is really important in the affordable care act. >> jason furman, thank you for being here this afternoon. as we continue our special coverage here in washington. bill? >> back here on wall street, kelly, still the major averages seem to be showing a quiet day on wall street. right now the dow is up three points. the s&p up a fraction. but that is masking some of the big movers we're seeing today. best buy, for example, surging almost 7% right now on the heels of a strong earnings. we have kate rogers standing by with a roundup of some of the big movers in the stock market today. >> and then coming up, senator john barrasso speaking out on president obama's immigration policy. one of his colleagues thinks it will lead to riots. du he agree? we'll ask him that and more ahead. stay tuned. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. welcome back. let's get out to our kate rogers, tracking the biggest movers of the session for us now. hi, kate. >> hey, kelly, let's kick it off with best buy moving higher after they posted better than expected quarterly results. same store sales increased by 2.2%. the street was expecting a loss. best by up over 6 1/2% right now. gopro moving lower after its $800 million secondary offering announced last week will be priced at $75. about 10.4 million shares are being offered. that's about a 5% discount to its wednesday close. the stock is currently trading down over 8%. also, dillard's gaining ground mercado capital management is calling for a reit spin-off saying the value would source 75% above current prices. mercado owns 4.9% of dillard's. the stock trading up over 8.5% and will end with intel after they increased to 96 cents a share. it's had revenue growth for 2015 will be in the single digits. that stock trading up near 4.5%. over to you, bill. >> thank you very much. let's talk about the economy. a rather encouraging economic data out this morning on manufacturing. somewhat on housing and on the jobless claims. is the economy here in the u.s. doing better than most believe? that's the question. >> let's ask cnbc contributor greg and our bob assani, it's great to see you down here. and it was posited by the folks at citi today is the u.s. actually in the middle of a boom that nobody appreciates? >> there actually is behavior in this cycle that's a bit unusual in that the usual business cycle has you coming out of the starting blocks really strong right after the recession. and then things taper off to trend rates of growth later on. the offset seems to be happening where look at the payroll numbers. the decline inton employment rate in the last few years is one of the fastest in the last 30 years. it's almost as the headwinds have deleveraged and the crisis faded this underlying force of stimulus is beginning to be felt. which is an interesting question for the fed. some time in the next year, they're going to be looking at unemployment rate that is very close to their measure of full employment while this global weakness continues to hold inflation down below 2%. so at that point, what do you do? do you tighten because of unemployment or not tighten because of inflation. >> bill? >> we said near all-time highs for the avrjts. i was joking that the quiet market we're having this month, maybe the stock market has already figured all this out? >> i agree with greg. this tremendous sin nymph about the markets, a lot of people neil is a fed engine new year's day rally. the market is higher because of the fed's actions. but i look at record earnings right now. we're up another 10%, the third quarter. we were up 10% in the prior quarter. and most important for me are the margins. 9.8% margins. that's close to the all-time high. it was 10.1% a little while ago. we're not seeing any significant slippage in margins, and a lot of people feel that would be the telltale sign. so far that's not happening. >> this is so fascinating, greg. so if we lay this out we have an environment where unlike past recoveries, this is pick up steam as it progresses. should we take it for granted that then we pick up more steam next year? and if that's the case, first of all, how reliable are historical example to what the fed should do here, and secondly, what do you think they should do here? >> i think all else equal we probably do accelerate next year. if you look at things like credit growth and the stock market, the financial indicators, they're all talking about a head of steam being built up there. again, you're looking at labor market indicators tending to get better faster. however, i know you're right. nothing in this cycle has been like before. so you really need to be careful about assuming it will be like the past. one is the global picture. japan just crawling out of recession. europe probably still stuck in the doldrums. they're holding things down. but most important, you look around the world. almost every country, not just the united states and europe, but almost every country has inflation too low below their target. i don't think we've seen a situation like this in the moerner ra of floating exchange rates and central banks where so many companies are trying to get back to their inflation targets from below. and that's a situation where you're probably going to see central banks take a few chances in terms of letting economies run hotter than usual. we saw bill dudley from the new york fed say that the other day. he would like to see the economy run hot for a while. let the unemployment rate drop below its long-term unemployment rate. >> wow. >> and bob, quickly, as the economy accelerates, that means the fed is likely to raise rates sooner rather than later. but the stock market doesn't seem to be acting as if it's anticipating that. >> so many things have gone wrong this year, so many theories that used to work don't anymore. last month was supposed to be weak. it hasn't been. i wouldn't be surprised to see big surprises. i think inflation could emerge very quickly. emerging markets have underperformed for a long time. i think they may do a little bit better in the next year. counterintuitively to what you might think with higher inflation rate. >> right. >> i think a lot of interesting things are going to happen. goldman is just out. 2100 for the s&p. we're at 2050 right now. that's a pretty conservative no growth at least in the stock market target. i want to see what other people have to say. i'm surprised by that one. >> see what happens there, yeah. >> thanks, guys. >> thanks, guys. bob and greg. good to see you, greg. we've got about 30 minutes to go. what are the markets doing? >> they're up 16 points. a very, very slight upward bias as we head toward the close with 31 minutes left. and the s&p is up two points. we are in record territory on the s&p and now in the dow. so there you have it. we could do it again today, kelly. there. >> it goes, punching through 17,700 on that dow jones industrial average. and president obama's speech on immigration tonight already sparking a furor. one senator says it will cause americans to riot. senator john barrasso will react to that and more when we come back. ♪ there's confidence... then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. i have a cold with terrible chest congestion. better take something. theraflu severe cold doesn't treat chest congestion. really? new alka-seltzer plus day powder rushes relief to your worst cold symptoms plus chest congestion. oh, what a relief it is. here we go! 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. you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $89.95 a month. comcast business. built for business. welcome back. shares of wynn resorts down about 2% at this hour. jane well stepping in with this still developing story. >> dow joness is reporting that wynn resorts is being investigated by the u.s. attorney's office, the irs and the dea for possibly money launders, specifically sports betting by high rollers and whether vips laundered drug money through the company's casinos. the company tells us it is unaware of any investigation, and the u.s. attorney won't comment. but according to the story, the irs sent wynn's lawyer a letter in august requesting information on the very biggest clients both in america and foreign, and also the staff working in the casinos. wynn tells us the fact that information is requested from us by a governmental agency in no way implies the accusation of any wrongdoing by the company. but this makes wynn the third biggest casino company being investigated for this sort of thing. back to you. >> all right, jane, thanks very much. we have more on that as they develop. in the meantime, president obama expected to announce a controversial executive action on immigration tonight. and that's not sitting well with republicans, is it, kelly? >> let's ask our john harwood. john, is this city more divided than you've seen it? >> cue the fireworks, kelly. it's about to get even more divided. yes, it's more divided than it's been in the very long time that i've been covering washington. but this is going to be uniquely volatile order. the president is bog to lay it out in a few hours from now on television, although the major networks aren't carrying it. as we've been saying for a couple of days, the core of this order is going to be the extension of legal status to several million people who are relatives, immediate relatives of either greencard holders or u.s. citizens already. this is in lieu of the immigration bill that congress has not been able to get through both houses. the reaction from congressional leaders today depending on the party is about what you would expect. >> this is pretty exciting. it's bold. it's courageous. it's as good as it can be under the law. >> if president obama acts in defiance of the people and imposes his will on the country, congress will act. we're considering a variety of options. but make no mistake, make no mistake, when the newly elected representatives of the people take their seats, they will act. >> the new senate majority leader who begins that role in january. the question is what action does that take. does it take shutting down the government? is it stopping selected appropriations bills? is it an impeachment drive, which some republican members have raised that possibility. managing that reaction as well as trying to counter the president's policy is going to be a real challenge for those leaders and a challenge for the white house. guys? >> and john, thank you for now. a likens it a hand grenade thrown into congress just when everyone is trying to work together. >> joining us in this exclusive interview, john barrasso, the republican senator of wyoming. good to see you again. welcome back, sir. >> thanks, bill, thanks, kelly. >> you have said that you feel this executive action by the president would blow up any possibility of bipartisan cooperation with the president. but with all due respect, sir, is there any expectation that there would ever be any bipartisan cooperation with the president? there hasn't to this point. >> that's what the american people wanted when we had an election a couple of weeks ago. well want you to work together. find solutions, and we should be doing just that. so what the president is doing tonight flies in the face of things he has said in the past in terms of following the rule of law and working to help jobless americans. so i think he just makes it that much harder. remember, 22 times the president has said he doesn't have the authority to do this. so once again, we have a situation where the president is intentionally misleading the people, misdirecting, saying one thing and now doing another and setting himself up as kind of judge and jury and executioner, which is not what you would expect in a democracy. it's more what you would see in a dictatorship. i want to get things done. i don't worry about the president making an end run around congress. i worry about him making an end run around the american people. >> and senator, that's why we heard mitch mcconnell there saying make no mistake, the new congress would act. would you support a government shutdown in return for these actions, or what kind of measures are you guys planning to take? >> well, what is being shut down is the opportunity to work together to solve the issues of immigration. we need to reform our immigration laws in this country, modernize things. and that's why we just had an election. and yet i was at the white house luncheon with the president to discuss these things, and that's all he went into is his issue of executive amnesty rather than waiting until the newly elected members show up, get sworn in and can start working on the ways that we need to move forward on immigration reform. those are the problem. so the president seems to intentionally be trying to divide the nation in ways that he should be trying to unite america at this time. >> not surprisingly, sir, congressman javier becerra, the democrat from california had a different take on that very meeting. he was there as well and said that it was speaker boehner that brought up the immigration issue, that the president then talked about the executive action there let me ask you. the president in an interview elsewhere on cbs said that if -- and let me quote from that interview. he says the minute congress passes a bill on immigration that addresses the problems of immigration reform, he will sign it and it will supersede any executive action he takes. isn't the president leaving wide open the possibility that congress can come up with some immigration reform? >> well, i don't believe he is. i think that he is actually making it much more difficult. i think we ought to be passing immigration reform in a piece by piece fashion, focused on border security, enforcement, e-verify. you can go through the list of things we need to be voting on to move forward on immigration. the president is not going to get everything he wants. but there are areas of common ground. there are issues of cooperation where i think we could be making a substantive difference and improvement rather than what the president is doing, which i think is intentionally designed to be divisive at a time that he continues to be unpopular as a president and ineffective. >> senator, do you agree with your republican colleague who had suggested that this immigration action will lead to more violence in the country? >> well, i would hope that that wouldn't happen. what i want to do is work together. and i've been talking to senators on the other side of the aisle. we want to work together on jobs, the economy, getting america back to work again. and i think we have a great opportunities. but what we told the president at the white house lunch the other day is that this will poison the well and make it that much more difficult. >> but it doesn't sound like you -- >> the president has ignored completely. >> understood. >> what we want to do to help the country move forward. >> understood. just on that point, though, i'm not hearing you express any concern about an increase in violence as a result of the immigration executive action he is announcing. >> well, i mean, i've heard what tom coburn has had to say about this. i always have concerns about that across the country. but i'm hoping, again, that cooler heads prevail, and i wish that at the white house cooler heads had been prevailed and the president would do what he promised six years ago which is try to bring the country back together. but he has been i believe intentionally and deliberately divisive as a president rather than bringing people together. >> just a final question, senator, then, would you support a government shutdown? is that what mitch mcconnell is talking about? terms of what the new congress in just a word or two if you could is planning to do? >> we've been very clear. there will not be a government shutdown there is not going to be a default on the debt. what is being shut down is the opportunity to work together cooperatively and find common ground on improving the immigration system in the united states in terms of modernization. >> senator john barrasso, our deep thanks this afternoon. >> thanks, bill, thanks, kelly. >> thank you so much. 17 minutes left here. we have had a modest gain now. the dow and the s&p comfortably now in record territory. and yes, we do get excited about a gain that puts us in by about 15 or 20 points. the dow is up 33. the s&p up 4 points right now, kelly. >> and it's a busy day down here in washington. amid that immigration showdown, a senate panel hearing a holding on wall street banks manipulating commodity prices where. consumers may have ended up picking up the tab. did they, for example, end up driving up the cost of the new ford firefighter-150 truck which now sport answer aluminum body? kate kelly is at the hearing and she joins us next. u could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 so if you get a trade idea, schwab can help you take it on. tdd# 1-800-345-2550 we're getting a lot of questions tdd# 1-800-345-2550 about organic food stocks. tdd# 1-800-345-2550 [ male announcer ] sharpen your instincts tdd# 1-800-345-2550 with in-depth analysis by schwab experts. tdd# 1-800-345-2550 and if you want to run your idea tdd# 1-800-345-2550 by a schwab trading specialist, tdd# 1-800-345-2550 our expertise is just a tap away. tdd# 1-800-345-2550 what's on your mind, lisa? tdd# 1-800-345-2550 i'd like to talk about a trade idea. tdd# 1-800-345-2550 let's hear it. tdd# 1-800-345-2550 [ male announcer ] see how schwab can help tdd# 1-800-345-2550 light a way forward. tdd# 1-800-345-2550 so you can make your move, wherever you are, tdd# 1-800-345-2550 and start working on your next big idea. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 open a schwab account and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 call 1-877-670-3357. tdd# 1-800-345-2550 or visit schwab.com/trading. tdd# 1-800-345-2550 schwab trading services. tdd# 1-800-345-2550 your go-to for trading know-how. tdd# 1-800-345-2550 ♪ tdd# 1-800-345-2550 your go-to for trading know-how. having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. welcome back. this also happening in washington right now. a u.s. senate investigation looking into if wall street's top banks used their commodities businesses to gain unfair pricing advantages, bill, which ultimately hurt consumers. >> our kate kelly has been covering that hearing today. what did you see, kate? >> bill, i just walked out of a tense hearing ongoing right now on capitol hill where senators are grilling executives from three of the nation's top banks -- goldman sachs, morgan stanley and jpmorgan over their handling of risky and capital intensive commodities businesses and what they tell the public as to what they appear to have withheld. at particular was jpmorgan. their commodities business consists or did until recently of a range of things from power plants to metal warehouses. they already settled with regulators to the town of $400 million overcharges they manipulated certain power market notice the u.s. but senator carl levin, who is leading this investigation and this hearing today has gone on to say that they have underplayed the risks to their balance sheet from some of those activities, sort of pulling the wool over regulators' eyes and that regulators like the fed, the occ and others have had trouble really keeping up with what they're doing. now earlier today, very much of the focus was on goldman sachs and their role in the aluminum business. goldman has a large presence in detroit where they own metal warehouses. and the issue is there have been long waiting lists for people to actually get their physical metal out of those warehouses, and that the waits themselves have contributed to literally record high prices in the u.s. we spoke to a metal user earlier today, nick madden from novellus, one of the largest users of aluminum in the country. he works on things like cars, cans, and other consumer products. and he says, guys, that aluminum is 70% of his company's cost base, and they're in the markets dealing with these issues, kelly and bill, every single day. so both the consumers and these companies could be vulnerable. >> all right, kate kelly, thank you very much for that important. boy, a lot going on in washington and a little bit going on here on wall street as well, kelly. we have about 12 minutes left in the trading section here, and the dow and s&p, albeit with minor gains still in record territory right now. >> that's right. >> and another avalanche of after the bell earnings tonight, as you know, kelly. we're going to bring those numbers the instant they hit the tape, including from retailer the gap. >> and much more ahead from washington. the securities and exchange commission's mary jo white. we're going to ask her about some of the issues you just heard from kate kelly chris van hollen and michelle become man. don't miss any of it. "closing bell" is back right after this. e financial noise financial noise financial noise financial noise for that moment, where right place meets right time. and when i find it- i go for it. (announcer) at scottrade, we share your passion for trading. that's why we give you the edge, with innovative charting and trading features, plus powerful mobile apps so you're always connected, wherever you are. because at scottrade, our passion is to power yours. we're for an opens you internet for all.sing. we're for creating more innovation and competition. we're for net neutrality protection. now, here's some news you may find even more surprising. we're comcast. the only isp legally bound by full net neutrality rules. welcome back. small gains on wall street. art cash just telling me we got about $600 million to buy as we head to the close. i think as you're highlighting, kelly, they're in washington. a lot going on this lame duck session of congress, and the tone probably is going to be set for the coming year in washington by what does or does not get done over the next few weeks here, right? >> bill, i look forward to hearing from representative chris van hollen next hour. again, the question is about whether some democrats are really finding their hands tied by the approach the president has taken to this immigration executive action. we heard senator john barrasso there echoing mitch mcconnell about how upset they are. and we heard what mitch mcconnell had to say. he said we will act. we will act when the new congress is formed in january. so we asked the senator does that mean a government shutdown? what kind of action are they talking about? he reiterated no shutdown. we're not going to breach the debt ceiling. it doesn't sound like impeachment, they're going the take the bait on that one. so the question remains, interestingly enough, if they were to act, for example, on immigration, would that be the very outcome the president is ultimately after? >> and you know, the way that wall street is acting to all of this, as we often joke, you know, wall street loves when there is gridlock in washington. but that seems to be what the anticipation is in the stock market right now, right? >> sure. and we've gone back and forth on this. and whether or not it is still good. but i can tell you, and you know, bill, the one thing everybody talks to us about is the need for corporate tax reform. what is the one thing that looks like it isn't going to get done? corporate tax reform. >> even though there was so much hope going into the election that that might be possible for next year. at any rate, we will see how you've tonight, what the president has to say on immigration and what the fallout will be politically in other areas of d.c. there. >> we'll be right back. we're going to take a quick break. we'll be back with bill and the closing countdown and bring you today's batch of after the bell earnings today. autodesk, gap, intuit. they're all set to report. we'll cover that too. only gap on the session today. you're watching cnbc, first in business worldwide. you're driving along, having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. (vo)solver of the slice.pro. teacher of the un-teachable. you lower handicaps... and raise hopes. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (pro) nice drive. (vo) well played, business pro. well played. go national. go like a pro. heading to the last couple minutes of trading for this thursday, a typical trading pattern lately. we had some weak economic data out of europe this morning that may have contributed to the sell-off here in the u.s. this morning. european stocks lower. that pushed our market lower. until the european markets closed, and then our market came back again. and we sort of meander the rest of the afternoon. we're seeing a little bit of action here this last hour of trade. the dow up 28 points. it's enough to put us into record territory. not only for the industrial average, but for the s&p 500 as well. and yes, there are more earnings. the emphasis this week has been on retail stocks. but we have also coming our way in terms of earnings tonight, we have auto desk and intuit announcing earnings. but you also have gap, which is one of the few gainers today in that sector, up 1.4%. mark spellman from alpine funds is here along with bob pisani. do you like retailers here? consumer staples have been doing pretty well. they've been a leading group here. >> sure. and you're getting the lower gasoline impact. >> which help. >> absolutely. at alpine funds, we've been vf corp., phillips-van heusen, those kind of names, tj maxx just reported a terrific quarter. generally speaking, we continue to like that consumer discretionary space. >> you're not buying hand over fist here. >> i'm a little nervous about gap's earnings. we'll see how it goes. >> a highly cyclical company, that's for sure. but earnings for the most part, as you pointed out, bob, have been pretty good. >> that's what i keep saying. when you have margins at close to 10%, and near historic highs, not slipping, as the concern inflation, there is various concerns about margin slip. but still growing 10%. still at record numbers. you might say the fed has engineered this. i believe the market is higher because of the fed intervention. but there is no doubt that the numbers are still validating very high levels. >> sure. >> and we get an economic number. the fed was great. >> very strong. >> good existing home sales. this is not irrelevant numbers that we're getting. and the european numbers, the manufacturing numbers disappointing. so the whole world is saying we want to be in the united states. we still don't overweight europe. >> do you view europe right now as place to avoid or is it an opportunity? >> i think we're mostly domestic. and in alpine equity income fund. we are staying even in our international companies, trying to focus on the u.s. we don't see global growth still not very good. people are starting to dip their toe in there. but i don't think there is a lot of evidence there is so many good things going on here. the economic numbers have been good. lower energy prices are going to be a benefit going into 2015. i don't see any reason to be doing anything when you can find opportunities here. >> there is a great inverse chart i saw today. inverse oil versus economic growth. as oil drops in the 30% range, it gives a notable boost to economic growth, particularly next year, big international companies, lower energy costs, major factor. >> all right. good to see you both. thank you very much. bob, we'll see you a little bit later. and that may be one of the reasons we're seeing begin gains with major averages over on wall street. all-time highs for the industrial average and s&p 500. stay tuned. our focus now going to washington, d.c. and the second hour "closing bell" with telly evans. i'll see you tomorrow, kelly. record closes. in fact, the first close i think over 17,700 coming in at the level of 716 as you can see there. so picking up some steam into the close. that's enough for another record high of 2052. let's get straight to it. a very special group. david wessel joining me from the hutchins centered on fiscal point. dean baker from policy research and the american enterprise institute. our fast money trader john najarian joining us in a moment. i promise not to ask you about those guys right away. we really want to talk about washington, david. >> you don't want to talk about gap? a lot happening this week in washington. can you help us understand the most important things to be -- what is the takeaway from everything that we're seeing? >> i think this is the first stage. >> trying to show bill clinton that he is still relevant. he is going to do this executive order. he knows they're going to react negatively. but i think he promised his base that he would do it. and i think that he thinks that the only way to get republicans to do an immigration bill is to threaten to do something on his own and the republicans are sounding like they're going to use this as an excuse to start another fistfight with the president. >> right and your reaction here james? do you see everything wrong in what he's doing? everything right? is the whole approach wrong? is the policy itself wrong? just what do you make of the whole executive action on immigration? >> listen i would prefer this be done legislatively and not through an interaction which is probably pushing the president's powers to the limits and my concern is that the reaction -- if i was going to give republicans advice adopt the n hannibal rule. don't let your heart beat go over 65 beats per minute. stay cool and calm. you could get a problem with the budget. government shutdowns. they try to use the power of the purse to delay the executive action but it's going to happen. heaven forbid i hope this doesn't yield corporate tax reform because we're so close. >> does anybody here think that's going to happen? >> this could be the one thing. >> there's no way. hold that thought for just a second. let's get to the earnings results from gap with our kate rogers. >> kelly that's right. so gap has a beat on earnings. they're reporting 80 cents a share versus dthe 79 the street was expected. $3.97 billion versus the $4.4 billion expected. down about 2% and also lower their fiscal year guidance to a range of $2.73 to $2.78 per share versus the $2.82 that was expected. the new ceo announcing changes to the line-up here. he starts in february and apparently has the blessing of the current ceo glenn murphy and gap stock here down almost 3% kelly. back to you. >> kate thanks a lot. not a very impressive move there from gap shares. we'll get to the rest of the earnings in a second but i did want to give you a chance to respond. do you see good in what is happening here on the immigration front? >> i'm glad to see him do it. the reality is there's millions of people here living in this limbo and he's not doing anything that hasn't been done by president clinton and president bush. these people have been living here and working here and they have children here so he's saying you've been here and you can stay here. you don't have to worry about being deported. i think congress made it clear they're not interested. >> is that true? we heard this line today as well saying the president is going back to eisenhower and taken executive action on immigration and there's nothing new here. is that the case? >> the president is in an awkward position. previously he suggested he didn't have the power to do some of the things and now he is doing them. i was interested in what you said jim. seems to me if the republicans wanted to really show him up they could pass an immigration bill. we'll repeal your executive order and here's our plan. in a way i think he's calling their bluff and i think they'll not be able to do it. >> what do you read into when he said we are going to act in this new congress what do you think he means? >> i think you're going to get smaller actions. there will be a legal case made. i think there will be a push to do something with the budget. i think they'll try to make progress coming up with the immigration bill though i don't think they'll come up with anything the president will sign. what it's going to be is a border security bill. it's not going to be a comprehensive piece of reform. they don't want to have an amnesty piece. they want to do border security first and then maybe work on like a high skill immigration piece. >> hang on one second because i want to get into this. we do want to hit the gamestop earnings though. it looks like the shares are taking a hit on this. josh, what can you tell us? >> well, kelly gamestop just reporting. 50 cents here on $2.09 billion. now the street was looking for 61 cents on 2.20 billion so a miss on the bottom and top. more importantly is what to look for in q-4. their 2.08 to 224. the street wanted to see more like 2.30. also narrowing that range now to 340 to 355. the company talked about several titles being moved out of 2014. this is a stock under pressure. the concern being digital downloads. expect a lot of questions about that when the conference call kicks off at 5:00 p.m. eastern. >> that's a big move in those shares. they're down 12%. john i hope that you heard and saw that and see what's happening. what happens now for gamestop? >> there's a whole bunch of negatives. josh did a great job covering upmost of those. one that stood out to me additionally is i believe same store sales for the coming quarter they're projecting to be down 5% or some sort of number like that, in other words, there's nothing good in this report. top line, bottom line, hit, miss, guidance week, the whole gamete is being thrown at this stock so where does it shake out? going into a holiday shopping season, this should be a good time for a game stop like any retailer but instead this is a pretty significant warning. i think 12% sell off is warranted. >> is it too much to tie back to gap. is there a theme here that's simply about brick and mortar going into this holiday season? we heard the spin might actually surprise to the upside but especially with regards to cyber. >> yeah and for my money anyway kelly i think where people are spending that additional ching in their pocket is data plans. not necessarily game stop although they could be getting some but with some of the games being pushed out later people are waiting until closer to the door buster time next week when that obviously wouldn't have shown up in these numbers on a positive way. instead that would be the negative that the stock is down here. so i don't think it's the same as gap stores but i do think that they have some issues because of the competition from other tech items like the iphone 6 and so forth and i'm not saying people play their games the same way with that as game stop products but that money gets spent somewhere probably not with gamestop. >> maybe it's on obamacare. >> will they sell more gizmos? >> you're thinking like a trader. i interrupt you guys as you were just getting into the point here about what we're expecting from the president in a couple of hours. >> i think that the republican party overall has moved away from thinking that immigration is a good thing. everybody wants to bring in the braniacs. what i have felt is even that they're less confident that we actually need all of these immigrants. they view it as a capitalist thing for silicon valley so the party as a whole certainly out in the grass roots tea party just don't think immigration however you describe it is a particularly good thing. and as far as the president's authority goes i really look forward to him not enforcing the corporate tax rate. i'll be very excited in 2017. >> the point is these people have been here so how come they vnlt been deported. immigration isn't perfect but if we wanted to we couldn't find these people? we've had a policy that these people could live here and work here. >> but do you have any concern on the low scale with that automation, today there was news that amazon is going to buy like a billion dollars worth of robots. do you have any concern that the automation issue changes the studies. >> two separate issues. one is having more immigrants come in. sure that would push down wages and be a serious issue but the people here are going to stay here. do we treat them as criminals -- >> i think the concern, particularly on the right is that's going to be more immigrants come across the border. >> it would be great to have something worked out to normalize our our number and unfortunately no one is interested in talking. >> do you have thoughts on how this action will play out in the markets or anything else happening at post midterms here? >> well, obviously the president has decided this is the fight he wants to pick. he can clearly do something whether or not it is deemed to be within the rules. that will be something that they'll fight about. but if this rallies the base even more, only 38% of americans according to polls we had on cnbc this morning support this move. so there's 14% undecided out there. if they get swayed the other way rather than to the president's side that would enforce more of the sort of agenda that the republicans want pushed through in the remange two years of his presidency. >> dr. jay, thank you, sir. this afternoon. stick around everybody and check him coming up with the rest of the fast money crew at 5:00. they'll be talking to the ceo of live nation about their new partnership to launch a digital music platform. yes another one but don't miss that. huge issue. up next an exclusive interview with sec chair mary jo white. does she think the can't lose bet on allergan was a loophole on insider trading laws and later president obama set to unveil his executive order on immigration. we'll speak to chris van hollen and michelle bauchmann. plus whether you think president obama or congress should be making this policy on immigration. your chance to vote is coming up. you're watching cnbc first in business worldwide. (receptionist) gunderman group. gunderman group is growing. getting in a groove. growth is gratifying. goal is to grow. gotta get greater growth. i just talked to ups. they got expert advise, special discounts, new technologies. like smart pick ups. they'll only show up when you print a label and it's automatic. we save time and money. time? money? time and money. awesome. awesome! awesome! awesome! awesome! (all) awesome! i love logistics. from san francisco to silicon valley, boston private bank works with all kinds of people who are innovating, building, contributing -- individuals, business owners, private partnerships, non-profits, families planning their financial futures. people like you. if you want the individual attention and expertise your financial needs deserve, this is your time. this is your private bank. welcome back. breaking news on the federal reserve and the way it reviews banks. >> kelly the federal reserve board announcing two separate actions. it's own review of the supervision of the largest most systemically important financial institutions to in the fed's words ask questions whether the decision make as good that the board received enough information to ensure consistent and sound supervisory decisions regarding the supervision of the largest most complex banking organizations and whether adequate methods are in place for decision makers. separately as well they are requesting that the inspector general look into two additional aspects whether there are adequate methods to obtain the necessary information and whether the channels exist for decision makers to be aware of views among the examination teams regarding those material issues. the fed responding to criticism that perhaps it's relationships with the largest banks could use tighter scrutiny. back to you. >> all right hampton, thank you very much. that's as good a place as any to introduce mary jo white joining me for more on that and much more here in washington. >> thank you very much. glad to be here. >> do you have concerns about the feds lapse of oversight of the biggest banks in this country. >> i think sufficient robust oversight is very important for all of us as regulators. the fed does an excellent job at that but we can all do better. >> there's more and more concern from your own commissioners that the sec's teeth aren't there. that the last five year versus been occupied by rule making that's not pertinent to what's really going on these days. is it true the sec is rendered almost impotent by having the agenda dictated by issues not that pressing. >> it's no question the sec got a large number of rule makings in those act and that's our responsibility to carry out. we also must not let them crowd out in our other priority agenda items and we don't. we're a major law enforcement agency and we had a record year there. it's a challenging job. we have vast responsibilities in a lot of areas and there's no question that the rule making is a part of that challenge. >> i bring it up with spending years on conflict minerals. the kinds of things that didn't bring it down and the fact that there are issues not only in the equity markets but the fixed income space about liquidity, transparency for the retail investor and again no prospect of being able to tackle any of these in a way that near term is going to do anything to change that. >> well, i think a major priority of mine and my fellow commissioners are the market structure issues for the equity markets as well as the fixed income makrkets and there's short-term initiatives and enhancements as well as the longer term once and in the fixed income markets working with the msrb and best execution rules are there for government bonds. they have both just publicly put out a regulatory notice to deal with the principle transaction and mark ups on those. that's part of it. pretrade transparency is a major issue in the markets that we're focused on and we also have a full plate on the equity market structure side. again moving forward with initiatives but also doing a comprehensive review of those markets too. >> you have a very full plate. >> no question about it. we have some wonderful staff fortunately but the challenges are there but i think the sec is quite focused really accomplishing a great deal. really every day. i have been there about a year and a half. very pleased with what we have done on the policy side and law enforcement side and they're challenges. >> and there's about 100 rules your agency has to write. >> that's right. >> 55 still have to be written. >> we have either proposed or adopted about 90% of those but in terms of actual ones to finish there's 30 or 40 of those left to finish. >> the reason i ask is that when the new congress comes in there will be almost nobody in the congress that created and passed the legislation. it was a single party bill at the time. how much of the work that you've done since that bill passed in 2010 might be changed, delayed, taken up by a different direction. >> again, you can't predict that i think. i mean, obviously we in the other agencies that were given congressional mandates have to take those very seriously to carry them out. implemented them in as optimal a way as we can and consistent with our mission if we can but if congress chose to act differently we'd be responsive to that too. >> thinking about another matter on capitol hill where we're having many people testify about the bank's involvement in commodity markets one interesting thing to come out of this among many is investors had no idea how much capital was being put at risk. a lot of this happened after the financial crisis when the likes were reclassified and able to get more involved in these markets. do you agree that basically we need to go back and separate banking from commerce and specifically separate or very much inkeys the transparency in capital involved so that shareholders and investors are aware of what banks are up to. >> certainly we're all about transparency at the sec. i haven't actually read the report that's been put out. that's more for other regulators in terms of these particular kinds of commodities but in terms of material risks, material trends that's something the sec is focused on across all business types including these institutions. >> have you looked into bill's activity on allergan the work he did with valiant involved with whether they would buy that company whether there was inside information there. >> i can't comment on that as i couldn't with respect to any manner we are actually looking into. clearly there's been some policy issues raised that our staff is obviously considering but really couldn't comment beyond that. >> understood. generally speaking you have expressed that you want to see more criminal indictments from the banks and from some of these investigations. the latest round with regard to the fx probes doesn't seem to have materialized much of that. are you disappointed? is there more to come? should we expect more from the sec? >> is, ec doesn't have the criminal powers and my prior life as a federal prosecutor where we did and the department of justice does there's been more criminal proceedings against financial institutions by the department of justice and there's nothing that sends a deterrent message as strongly as that. i think if the sec and financial crisis cases and after the financial crisis cases we have charged many institutions with a vigorous enforcement program but it's a civil law enforcement program. >> but to go back to the overhanging issue here to quote one of your own commissioners dan gallagher he says the sec is teetering at the edge of irrelevance because of time taken up with rule making and they need to be a preimminent federal agency and thought leader. how are you going to do that? >> i think the sec is a preimminent thought leader and federal agency. it's an independent agency with expert staff and vast responsibilities carrying out on all cylinders i would say. there's no question that the legislation was and remains controversial. some of that obviously we need to deal with in terms of the mandated rule makings but it's up to me as the person that sets the agenda that we attend to our priorities among them carrying out the mandated rule makings. >> with a very full plate. we thank you for taking the time to be with us this afternoon. mary jo white. >> my pleasure. >> president obama likely igniting a fire storm in washington with his executive action on immigration yet stocks keep hovering at record highs. the economy is chugging along. is gridlock good for the market and the economy. we'll talk about that next. later is all hope for bipartisanship off the table with president obama's go it alone plan. representatives will be here later on the closing bell to weigh in. we'll be right back. [ breathing deeply ] [ inhales deeply ] [ sighs ] [ inhales ] [ male announcer ] at cvs health, we took a deep breath... [ inhales, exhales ] [ male announcer ] and made the decision to quit selling cigarettes in our cvs pharmacies. now we invite smokers to quit, too, with our comprehensive program. we just want to help everyone, everywhere, breathe a little easier. introducing cvs health. because health is everything. introducing cvs health. for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. 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 there's a new way to work. and it's made with ibm. we begin with breaking news. scott has the story. >> hertz has a new ceo and his name is john tage. he was the first choice to lead that company. icon has an 8.5% stake. he has three board seats and he personally interviewed mr. tague. a search was on going for the replacement. remember he stepped down in september. hertz has had a number of issues, in fact, just this week announced that it was going to have to restart three years worth of earnings and they had found their man after that search. again john tague is his name. what's really interesting is here is that just yesterday janna partners and barry rozenstien made a filing saying they would shake up the board of hertz depending on the outcome. they were angling for scott thompson. he lead dollar thrifty. so one can only think about what he thinks that tague has been named and not mr. thompson. with a proxy contest who knows. as for mr. tague he's new to the karenal business but not to the transportation business. he was the former president of united airlines. he was instrumental in that company's turn around and instrumental in getting the deal with continental done and he has a long history in the transportation business. i can also let you know, and you know by now, he has a long history of finding credible and capable folks to leave companies. in fact, we just heard from another one earlier this week in the allergan deal. remember it was brent saunders that ran forest labs when activists took over. saunders was an icon selection. now he will lead that combined company. there's the chesapeake ceo. carl icon himself says believe hertz hired an excellent ceo. urges companies to read the press release which you heard from here first is out. but there's a shot of mr. tague. it is an interesting choice and as i said perhaps most interestingly it now sets up perhaps some what of a tussle between icon who has an 8.5% stake. and just filed that amended 13-d yesterday saying that if preferred scott thompson to be the ceo. he is a veteran of the car business. perhaps that's why the folks preferred him. carl icon says this is the right guy to take the top job at hertz and try to turn the company around. the company has had a number of problems. avis out performed that stock over a long period of time. hertz has its man. his name is john tague. >> scott just a question here. they may be changing the leadership of this company but how deep do the problems run? these accounting problems have barely been mentioned and that was -- they were stated a couple of years worth of earnings. >> well, look there were a number of big hedge funds in this name for some time. it was one of the most favored stocks if you will in the hedge fund community. there was considerable concern over the last at least year about the direction of the company under mark and then the accounting issues came to light earlier this week so make no mistake, there's a big job ahead of mr. tague. there are many problems at hertz. i think carl icon and the others in this name would be the first ones to admit that and perhaps that's why you have a number of activist investors invested in that company because they all feel it's in need of a turn around. they may differ now especially today on who the right person is to turn that company around. icon thinks it's tague. perhaps he still thinks it's scott thompson but it's going to be interesting to see what the reaction is from the jana camp but i can tell you from the press release from mr. icon's own tweet, the fact that he personally interviewed mr. tague with his own board members this is the guy he thinks is the best guy for the job. >> thank you for bringing us the news this hour. we thank you very much following the developments there. we'll take a quick break. president obama is set to announce a controversial executive action on immigration. who do you think should be making policy here? the president or the congress. give us your vote starting now. and also chris van hollen and michelle bauchmann will weigh in. did president obama try to influence the fcc to regulate the internet like a public utility? well we're also joined on that issue all ahead on the closing bell. ♪ there's confidence... then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ having a perfectly nice day, when out of nowhere a pick-up truck slams into your brand new car. one second it wasn't there and the next second... boom! you've had your first accident. now you have to make your first claim. so you talk to your insurance company and... boom! you're blindsided for a second time. they won't give you enough money to replace your brand new car. don't those people know you're already shaken up? liberty mutual's new car replacement will pay for the entire value of your car plus depreciation. call and for drivers with accident forgiveness, liberty mutual won't raise your rates due to your first accident. switch to liberty mutual insurance and you could save up to $423 dollars. call liberty mutual for a free quote today at see car insurance in a whole new light. liberty mutual insurance. i'm just looking over the company bills.up? is that what we pay for internet? yup. dsl is about 90 bucks a month. that's funny, for that price with comcast business, i think you get like 50 megabits. wow that's fast. personally, i prefer a slow internet. there is something about the sweet meditative glow of a loading website. don't listen to the naysayer. switch to comcast business today and get 50 megabits per second for $89.95. comcast business. built for business. welcome back. president obama is set to launch the first in what is shaping up to be a bitter battle with the soon to be republican controlled congress. he will bypass congress and issue an executive order giving temporary relief to millions of illegal immigrants. we asked who you thought should be making policy on immigration the president or congress. you can weigh in right now on cnbc.com/vote. with me now chris van hollen of maryland. thank you for being here. welcome. what's your opinion of the president's move this evening. do you support him on this? >> i do support him. congress should act. i think a lot of people don't realize that almost a year and a half ago the united states senate passed a comprehensive bipartisan immigration reform bill. as we speak that is sitting in the house of representatives. we have not been allowed a vote on that. speaker boehner could have a vote. the president could sign it so the action the president is going to take is not a substitute for congressional action. i need to be really clear about that but the president does have the authority to prioritize enforcement and that is what he is doing. it's not going to be a substitute for the comprehensive immigration bill, the president can't do that but president obama like the republican and democratic president before him can take action that's important for the country. >> you know these words are going to haunt you, aren't they going to haunt everyone when the next president down the road does something that you or congress doesn't want to do or doesn't support. >> within the area of immigration reform. >> but it doesn't matter if it's about immigration or not. all that matters is he's taking this issue. >> the issue is whether the president is acting within the scope of his authority and there's ample precedent from previous presidents including president reagan and first president bush to take this kind of action. what we're doing is saying on a temporary basis the president is going to prioritize enforcement against felons, against people that have been involved in criminal conduct in some cases as opposed to family members and others and the presidents in the past and this president also has the ability to do that. does he have the ability to pass through executive order comprehensive immigration? not at all. congress still needs to act in that area and they should. >> aren't we supposed to trust the law making system. in other words even if the president is expressing the will of a large group of the population it's still in the fullness of time as suggested by the legislative process does not reflect the will of the people. if the gop is blocking this if boehner doesn't want to bring it to a vote it's because there is legitimate opposition that's out there so i guess i'm trying to understand why this matter needs to set the kind of precedent it is in danger of setting. >> i would think the best way to reflect the will of the people is for the people's house to vote on it. let's vote tonight. let's vote tomorrow but let's vote. that's how we express the will of the people. the speaker decided not to allow democracy to work it's will. so the president is not going to substitute for congress but he's going to act in the scope of his authority. it's not going to do what the comprehensive immigration reform bill will do which is why congress should still act but he's going to do what previous presidents have done. >> is it possible that there will be an immigration bill that comes out of the new congress? >> well, all i can tell you is speaker boehner has said for the last year and a half that it was his intention to come up with an alternative to the senate bill and here we are today with no alternative on this issue passed. so the president has called upon the speaker if he doesn't like the bill that's before us put another one on the table because every day that goes by more harm is being done to the country. you have an underground economy right now and this will prevent employers from paying people wages under the table which actually suppresses everybody's wages. >> that's why listen it's an issue that actually a lot of people on wall street in the business community are behind opening up our immigration system or however you would want to phrase it but if you take a look even at the poll we're doing right now 80% of people are saying congress should make policy on immigration here and i suspect a lot of that has much more to do with the general idea of letting the typical legislative process work it's way out as opposed to having the president ultimately be trying to make laws even if you can phrase it very narrowly in this case. do you know what i mean. >> i do. but the best way to allow congress to work it out is to allow congress to vote. all the effort that was put into that bill in the united states sent on a bipartisan effort is sitting before the house. at the end of this calendar year that bill gets wiped off the books. you start a new congress. what we're saying is mr. speaker vote for it, vote against it, vote whatever you want but goodness sakes let democracy work it's will. let the people's house vote. >> thank you so much for being here this afternoon on such an important day. we appreciate it. we'll get reaction from the other side of the aisle. michelle bauchmann joins us after a quick break and our poll will remain open on who you think should make immigration policy. cnbc.com/vote will be right back. welcome back. we are continuing the discussion on immigration here. polls are still open on cnbc.com/vote. let us know who you think should be making the policy the president or congress. so far by about an 8 to 2 margin people think congress should be doing it. joining me is michelle bauchmann from minnesota joining us here as closing bell takes on washington. it's good to see you. >> good to see you too. thank you for having me on this afternoon. >> i don't know if you heard the maryland democrat before you but he said time and time and time again that the way to handle this issue is for speaker boehner to let the house vote on the bill that the senate has already passed. is speaker boehner standing in the way of the will of the people here? >> he's not standing in the way of the will have o the people. the will of the people just spoke at the ballot boxes and if you look at the exit polling 2-thirds of the people of exit polling said they didn't agree with president obama's executive amnesty. that's an amazing number because we're way beyond republicans and independents this includes democrats too. so your polling from your viewers is reflective of where the american people are at. they want us to observe what we call regular order. in other words follow the rules that congress has set up because that gives the american people and businesses safety because there's more certainty when government follows it's own rules. >> do you think this country needs to have a better immigration policy? >> of course. there's no one, republican, democrat, that doesn't believe that we have a problem in immigration. we do. we love immigrants as a nation. i'm married to an immigrant. we love them because we are all part of an immigrant community but it has to be orderly. that's really what this is about. will we have complete open boarders where it's chaos and pandemonium or will we have an orderly system where it works for america. our system has to work for our country. >> you're on your way out of congress but the new congress in january, we heard mitch mcconnell saying there will be a response to what the president is doing tonight. is it possible hah that response is actually to pass it's own version now finally of an immigration bill in the house? >> well, as you know, mitch mcconnell, senator mcconnell has revealed what his plan is yet in the new senate and john boehner hasn't revealed what his plan is but i do know that they're going to uphold what the people of this country want and that is to make sure that we observe the laws of the land which is we pass a law through congress and put it on the president's desk. the president is forcing this issue by deciding that rather than do what we do across the street and pass bills he's going to speak a law into existence. that's not our form of government because that takes away the right of every single voter in this country. >> it does seem like immigration -- listen that's exactly what i was just asking your colleague from across the aisle but it does seem on the issue of imgags as though there is a history of presidents having to act on this front. does the narrow issue of immigration change your general view on the matter? >> no, the law applies to one issue. there isn't one issue that is exempt and this issue more than others needs to be respected. i think a lot of viewers don't know that america is the most generous immigration country in the world. if you look at any other country. >> any developed country. >> no, all countries. if you look at any country in the world the united states received more immigrants every year than any other country in the world. we allow over a million people legally. >> i was in the u.k. there they're much more restrictive but we still hear from business leaders every day that tell us do something to loosen up this immigration policy. what i want to ask is about something i thought you had said about this. you thought this was presidential politics so the president could get illiterate voters to turn out for the party in the future or something to that effect? >> what this is really about is the american worker and will the rights and values of the american worker be protected? this is going to change the dynamic literally overnight. we'll have a flooding of the marketplace with new relatively low skilled employees and the president is saying 5 million. no one knows what that number is going to be. i think people are shocked and what is its 10 million. >> what if it's 15 or 20? what's the real concern? >> what's the impact on the american worker because the law of supply and demand tells us that wages will be depressed. >> now you know better han that. >> no i don't. >> this is about the freer movement of labor and capital and supporting the policies that build this company. >> i am an employer and former federal tax litigation attorney and the laws of supply and demand are the laws of supply and demand. no one is saying we shouldn't have reform and there's areas and industries that need to be addressed in particular. in fact, you know, stapling a green card on to a ph.d. in tech makes sense. there's a lot of areas we can get to yes. i want to see us get to yes because i don't want industries in america to suffer. ultimately i want american businesses to succeed and thrive but everybody has to win at this game and so let's make sure that we have a reform that will benefit workers and those that want to come into this country because that's good that people want to come into this country. >> we have to go. i want to point out as well that as you earlier indicated 81% of our voters think it should be congress making policy on immigration. thank you. >> i agree with your viewers. >> coming up we're going to take a quick break here on closing bell and president obama wants to regulate the fcc, the internet like a public utility. but is he putting improper pressure on what's supposed to be an independent agency? reed hundt joins us when we come right back. friday night, buddy. you are gonna need a wingman. and with my cash back, you are money. forget him. my airline miles will take your game worldwide. what i'm really looking for is -- i got two words for you -- re-wards. ♪ there's got to be better cards than this. [ male announcer ] there's a better way with creditcards.com. compare hundreds of cards from all the major banks to find the one that's right for you. it's simple. search, compare, and apply at creditcards.com. first round's on me. welcome back. we have some breaking news here. in fact, a quick update on hertz with our scott walker. scott? >> kelly, thanks. i last left you thinking, i wonder what barry rosenstein thinks about hertz. i just got off the phone with him and he said the following. while i trust carl, as in icahn, i don't know anything about john, but i hope to meeting him. we made it clear in our letter to hertz that whether it was scott thompson or someone better, we just wanted them to get on with it. we look forward to meeting john. remember, janna has the 8.3% stake, carl icahn has the 8.5%. jana was hoping for scott thompson. now we know how jana's barry rosenstein feels. kelly? >> scott, we very much appreciate the update as we following that story. an open internet crucial to america's very way of life. those were president obama's words earlier this month on the idea of regulating the internet. while many are challenging this idea, former fcc chairman here agrees with the president. he joins us now to explain why. welcome, reed hundt. it's great to have you here. >> nice to be here. >> so you support this. and we've talked with different fcc chairs past, you can often guess which administration they've served with, with who have felt quite differently about this. why do you support it? >> i think barack obama has been very consistent on this topic for seven years, at least, based on my count, and he has always said the internet ought to be available for every single business to use, without discriminating against some businesses that are too small or start-ups or entrepreneurs. >> is that the case right now? >> yes, it can be the case. there can be companies that cut special deals to get faster access. and what the president is saying, let's not do that. let's let all the businesses connect to the internet and compete with each other on a level playing field called the internet. >> there's been concern, though, that if the fcc has to regulate this more akin to a public utility, it will involve their decision-making on so many different pieces of investment, of infrastructure, of pricing, of competition in different markets, that it will slow down the entire process of innovation that has driven the internet to become the phenomenon that it has for this country over the past couple of decades. >> you know, that kind of regulation did not discourage the creation of a telephone network back in the old days that touched every single home and every single business in america. and back in the telephone days, all the businesses equally used the telephone network to reach their customers and reach each other. all the president is saying is the internet has replaced the telephone. let's treat the internet in the same way as a common medium of communication. >> except that it's not, is it? in a way, the telephone is a very lymph open line of communication between you and me. whereas the internet can either give you a page of search results or a video you're streaming on netflix. and i think about the cable model right now and the way in which people are saying, i don't want to pay for the fact that you want to watch espn. let's let there be more ala cart pricing. why is that such a bad idea? >> well, the president has said and i'm pretty sure that the fcc has agreed that the price paid by the consumer for the access, that can vary according to the consumer's demand. but the key point here is, let's let all the businesses connect to this medium on equal terms and conditions. >> the best argument that i've heard for it is quite factually you have a de facto monopoly of the internet in certain markets, especially those that don't have a lot of competition. but you have to admit, that's where the googles of the world come in with the massive amount of capital expenditure they have in this country to create these new fiber systems, et cetera, and ultimately spur that kind of competition. we've seen the announcements from at&t and others saying on the back of this, they may begin to halt some of these investment projects. is that what we really want? >> i don't think that we're going to see that at&t's investment or not investment defines the future of the internet. and i really think it would be great if google would decide to spend hundreds and hundreds of billions of dollars building an alternative network. but until things like that actually occur, the president is laying out the right way for all businesses to compete fairly on this common medium. >> all right. we've tried to get all sides of the debate here. so reed hundt, thank you very much for joining us this afternoon. former chair of the fcc. up next, the panel back with final thoughts on this market and on president obama's immigration plan that will be announced to the american public. ♪ for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit pnc.com/wealthsolutions to find out more. 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. ameriprise asked people a simple question: in retirement, will you have enough money to live life on your terms? i sure hope so. with healthcare costs, who knows. umm... everyone has retirement questions. so ameriprise created the exclusive confident retirement approach. now you and your ameripise advisor.... can get the real answers you need. start building your confident retirement today. welcome back. time now for some final thoughts with our panel here. david wessel, dean baker, james pethokoukis. let's start with you, wessel. >> i think what's interesting is we see the market going up, the economy seems to be getting better, even though washington seems to be paralyzed. it suggests to me that there's little short-term cost for political gridlock in washington. i think the problem is, they're not going to address any of our long-term problems. but the markets and the economy seem to have shrugged off this craziness here in washington. >> dean? >> i don't see it as quite that benign a situation. if you go back to where we were after the crash, 2008, 2009, tall the projections were, we would be much better off today than we are. i think it's unfortunate that we accept where we are and go, well, this is good. it could be worse, but it's far from a good story. >> you agree, jim? >> listen, three axioms i learned, you know, buy low, sell high, market climbs a wall of worry, gridlock is good. the first one may be true, that last one is not good, except in the very short-term. gridlock is not good. >> why not? >> i think we have big problems to solve here, whether it's regulation, whether it's a tax code -- >> but we can't agree on how to solve them. every debate seems to be -- >> but you can't have long-term problems and you say, we're not going to solve them until the next election, which is two years away, then you never solve them. 10,000 baby boomers retire every year. the temperature is rising and we're not doing anything about global warming. everyone agrees that the immigration system and the tax code are broken, but they can't agree on what to do with it. >> and i would say we have short-term problems. we have millions of people that should be working that are not working. people that are working part-time that want full-time jobs. those are short-term. >> there seems to be general consensus that maybe it would be good if we do something about infrastructure. help us in the long-term and maybe put some people to work. >> but it never happens, nor does tax reform. >> in the world, they would join together. the healing power of the world "and." in an alternate earth ii reality. >> all i know, im going to run screaming out of washington. but it's been great to be here. thank you all so much for being here this hour as well. "fast money" is coming up in just a few moments. back up to the nasdaq with melissa lee. what's on tap? >> we'll talk to the ceo of live nation, a stock that is up 52% over the past 12 months. this is the ceo's first interview off of that deal, kel. >> got to watch it. over to you guys. >> thanks, kelly. "fast money" starts right now. live from the nasdaq's market site, i'm melissa lee. our traders are here. a lot of big earnings movers after-hours. we'll tell you how to trade gamestop and gap coming up. and the ceo of live nation coming up in an exclusive interview. but first tonight, falling stocks. some of the biggest leaners seem to be losing, gas, gopro, el pollo loko seem to be getting killed. what do you do with some of these names right now. let's kick it
and conservative forecast. general elec profit in the co industrial u low crude prices could restrain overall growth. all that and more tonight on "nightly business report" for tuesday, december 16th. welcome, everybody and good evening. susie gharib has the night off. but if you like market action, then you loved today. volatility was everywhere. in stocks, in oil, in bonds, and most especially, in russia's battered currency. let's start with stocks though. the dow was of and then up 247 point, it jumped 155 points in 30 minutes. then came a slow fade that quickened in the final hour. here's what the dow looked like in graphic form today. kind of an ekg in desperate need of a beta-blocker. at the close, the dow was off 112 points, nasdaq down 57, a drop of 1.25% and s&p lost 16. now down 1.4% fo far. as for oil, it was a wood blast job too. at today's finish, west domestic texas crude snapped a four day losing streak. it ended a whopping 2 cents higher to close at 55.93 and traded above 57 too. brent international global prices contin prices lower at fresh 5.5 low at $60 a barrel. as economic tremblers rattled around the globe, epicenter most cow, money haven u.s. bonds. ten year treasury, its yield, landed to 0.27%, lowest close of the year. well, now to russia where so much of today's attention focused its energy driven economy is a mess to put i bluntly. its stock market all but crashed today. one reason? the country's currency is in free fall even though russia's central bank raised interest rates to 17% last night. access to internna >> russian stock market is down too. . it still wasn't enough. >> russia is in a full blown currency crisis, the ruble plunging in the past two days. selling the ruble in large part due to the dramatic fall and the price of oil. russia is one of the world's largest exporters of oil and it's an important source of revenue for the government. just this week, the finance ministry announced russia's economy would fall 4.5% next year if oil stayed at $60. also causing fear, russian business investors have $100 billion in debt coming due next year but because of sanctions kboefd by the west, nearly impossible for them to refinance because western banks are prohibited from helping them borrow money. carlos pasquale said this may be the thing that backs vladimir putin into a corner and getting him to stop backing russian separatists in eastern ukraine. >> i think this is an opportunity, actually, to find a way out of this crisis because the way out of the crisis for russia is to get access to international capital markets. you can't fix it any other way. >> reporter: thus far, russia remains defiant. denies that russia is suffering an economic meltdown. >> russia would come out stronger out of this. we have been in much worse situations in our history. >> reporter: like the currency, the russian stock market is down sharply too. long time russian investors don't think the worst is over qu >> there are signs of bottom formations but there are so many other factors at work here like the oil price that geopolitical situation. we need to see what putin is going to say on thursday when he gives his speech. maybe he'll say positive things. that would give the market a boost. >> reporter: although putin makes important end of the year speech later this week, some investors say it doesn't matter what he says because russia place to invest peri >> we like places where there's some semblance of the rule of law. russia seems to be much more the law of the ruler. >> reporter: thus far, putin appears to be unphased by the market's negative response. for "nightly business report," michelle carusa cabrera. some of the major u.s. companies with exposure to russia are citi, exxon mobile, and visa. paul christopher joining us now to talk more about what russia's ruble collapse means for you and your money. chief international investment stra advisors. paul, good to have you with you. in 1988, russia had a financial crisis that almost crashed the world's economy. is this anything like that >> well, you've got some similar external conditions with the u.s. being the strongest and the leader in the world. you've got falling oil prices and you've got a falling ruble and rising interest rates in rouge. a lot of concern there. but there are things that isolate russia more than 1958. the russian foreign currency concerns are much larger. russian official debt, government debt which was the source of the trigger of the problem is much, much lower. russian corporations do have some debt overseas but low by international standards and really not enough to really tank or cause a big disruptio the western financial systems. and finally, most importantly, russia's economy is really quite isolated. aside from one product that it sells to one part of the world, it really doesn't have a lot of trade ties with other people. >> that would be energy to western europe you're referring to, right? >> exactly. >> i hear you say it's in a better position than it was 15 years ago and so the west needn't worry quite to the extent that we did back then but you may have heard in the prior segment, former ambassador of the ukraine, saying the only way russia can get out of this mess is to have access to foreign currency markets. do they have that? >> no, they don't have that. i believe he's right. i think that's the way out for russia. certainly the most strags forward way out for russia. but it doesn't mean we have the financial crisis that ends in default for russia. could be mr. putin to let the currency fall further and print more money at home to pay wages, allows a lot of inflation to creep up, even to explode. and let the problem and the pain be felt by the russian people worst while he consolidates his military gains into political gains in the eastern ukraine and then once he has those regions, he can be more open minded about negotiating or perhaps even his oligarch friends to remove him. >> putin is nothing, if not unpredictable. there is a weaker russian economy, does it mean more dangerous or potentially a sooefrl -- severely crippled? >> i think a weaker russian economy first ha pain of the russian econ the russian people which is where the pain is mainly going to be felt. the pain has to be unsupportable for them before his hand is forced or the pain has to become unsupportive for the people in power. the oligarch types. once that's in reach, he's in danger. >> thank you with paul christopher from advisors. big impact on the dow component. general electric with the annual investors today. could it help or hinder the industrial giant's oil and gas businesses and its overall outlook for 2015? mary thompson with us. i gather it was a conservative one today. >> reporter: it was a fairly conservative outlook but also, i think it's a first time in a few years since we've actually heard g.e. give actual numbers. the company is expecting to earn $1.80 a share and $1.75. on the call, jeff said this did include a worst case scenario. they don't know where oil is going but it gave some room to manage if oil prices -- >> what did he say beyond that beyond oil and gas and why is it so important? >> the reason it was so important, oil and gas business has been a revenue and profit driver for g.e. it's grown tremendously over the past few years. that won't be the case in 2015. lower oil prices mean revenue in this segment will actually decline by about 5%. that was the forecast given. additional, keep in mind, g.e. is making these acquisitions to $4 billion and tend to be in the energy space. said he likes the space but th right now. >> what about the broader company, what about the integration of the french company that's buying? >> alsome is on track. what's working for ge is the records orders were high, he said. transportation, locomotives are going to set a record this year as far as orders go and also, what's working, they anticipate lower gas prices to help the u.s. economy to which g.e. has the g exposure. >> you think about the evolution of this company ten years ago, you think lightbulbs, ge capital. nbc universal, it got rid of, it's n industrial com >> it's a very dif and it remains on track to have 75 of those earnings from these industrial companies he's working on, 25% from g.e. capital which they say will continue to try to shrink in an investor . in the fin >> mary thompson reporting, thank you. in the meantime, troubling news about a company g.e. is in the process of acquiring. we just mentioned it. reports say u.s. prosecutors are close to reaching a deal with the frenc engineering giant alstom to pay close to $7 million for a foreign bribery probe, the biggest settlement of its kind ever. well, with oil prices half of what they were in june, volatilit returning to the stockke raising out russia and europe escalating and the federal reserve kicking off its final meeting of the year. what do top economists expect to hear from the central bank tomorrow and in 2015? steve liesman reports. >> reporter: wall street sees the federal reserve reacting to lower inflation and concerns about global economic not by delaying rate h hiking rates more slow respondents of the nbc survey see the first rate hike coming in july 2015. that would bt eight years. but they see the feds hiking west and taking longer to get to the end of its cycle. two-thirds of respondents expect to remove the phrase considerable time from the policy statement tomorrow, a move the fed has to make in order to hike rates in coming months. now seen below 2%, the end of 2016. janet yellin and the federal market committee are seen taking it all the way until first quarter of 2018 to get to their end point for rates, a very low 3.2%. a tenth below what the market previously bou >> hey, how's it? >> reporter: the forecast comes amid rising optimism for the u.s. economy. the chance of a recession in the next year has fallen to the lowest level in the history of the survey. growth is estimated to pick up in 2015, all the way to 3% 2.4% this year. and lower oil prices should add more to that growth while reducing inflation. the outlook for inflation looks to be the real driver for that. that and european economic weakness which is now seen as the bigges economy. although there's good agreement on the path to policy, now looking to janet yellin and her press conference tomorrow for any hint of plunging oil prices and global economic weakness could alter the fed's course. for "nightly business report," i'm steve li >> and william lee joins us now to talk about what we may hear from the fed tomorrow and into 2015. he's head of north american economics at citi. mr. lee, good to have you with us. you heard steve's report there. do you side with the general consensus that suggests that interest rates, when they start to move up, will move up slower and less steeply than maybe we might have thought three months or four months or five months ago? >> absolutely. because one of the things you've emphasized in your report, all the repo uncertainty now and decision role on uncertainty? do less, do it later. consensus, i think starting later, probably december of this year but i absolutely agree that whatever they do, it will be a lot less than what they would do before because the key is they need to figure out what's going on. and right now, we're getting a positive there's a lot of downside risk to the economy's wealth. >> you anticipate my next question. what does oil mean to the today? >> what it means is that for at least 2015 and possibly a little bit into 2016, the consumers are going to be a lot better o. they're going to have more income to spend and we expect a lot stronger economy. but maybe on the order of extra, maybe .75%, 1.5%, those are the estimates to how oil will hel also you a temporary help. if all prices stabilize at 65 or even 40, right, we will all only get whatever benefit we have as the oil price declines. once it stays there, that's the end of the b what we have then is a return potential growth. >> you know, bill, economics, they may call it a dismal science but i got to tell you, it is anything but uninteresting. when you think back to how we started this year with the ten year yield at 3% and most people forecasting that it would stay there or maybe edge higher, we're going to end the year at roughly 2%. how much did that surprise you and what do you think you be surprised by next year? >> i think that was a great surprise to everybody because we were all anticipating a more robust recovery and instead, got meandering 2.5 to 3% recovery. what we're anticipating also is the rest of the world is going t matter more for the u.s. than ever before. the sector has grown in the last five years from 15% to 20% of gdp to almost 30%. we're much more vulnerable. that's the lesson into next year, i anticipate more surprises abroad as well as in the economy. >> that's interesting. bill, let's bring it home to stock investors as we look tomorrow with the fed and the possibility of rising inte rates next year. are we past the point where equity investors are going to worry so much about whether and when and by how much the f raises interest rates and we move to something different? >> i think equity inveor been interested . where are the profits comi from? we have a robust recovery and we start to have some positive price increases because after all, the market over costs. if we can mark up over costs and raise pr a very good pi equity market. >> bill, thank you very much. bill lee with citi. thank you for your help. just when it looks like things won't get worse for son they did. that story next. there has been a surge in sign-ups for a health insurance plans under the affordable care act this year. more than a million americans picked a plan in just the past week bringing the total of enrollees to nearly 2.5 million this season. that's according to the obama administration and that number is just for the federal healthcare.gov marketplace. 13 states have their own web sites and marketplaces. well, apple is making some headlines. first, it is halting online sales in russia because of the extreme fluctuations and the value of that country's currency, the ruble. the company apologized to consumers over there s needs to review its prices now that the ruble has lost half its value. also, a victory for apple in a decade-old billion dollar class action lawsuit over its pricing of the ipod music player. a california jury decided apple did not use restrictive sore in the ipod to freeze out make of competing mp3 players from accessing the itunes marketplace. well, a different mood at sony pictures where the fallout from that massive hack attack on the company's computer system just keeps getting worse. julia boorstin has more on the latest troubles at the studio. >> reporter: the group that claims responsibility for hacking sony systems and releasing a personal e-mail and information is now going as far as to threaten theaters and theater goers over sony "the interview" threatening unspecified but ominous action for the premiere in new york on thursday and film's release scheduled for christmas day. >> we're now in a completely different level. they have complained. they have brought sony's internal network to a halt. they have released one trove of data after another. leaked movies to file sharing sites and now we have an implied threat of violence. >> reporter: we have to keep in mind, the threat comes fro group determined to prevent the movie from being released and people from seeing it. sources telling nbc there's no credible intelligence to indicate an active plot against u.s. theaters. landmark theaters hosting the premiere said they're moving ahead as planned. the fbi issuing a statement saying, quote, the fbi is aware of recent threats an continues to work collaboratively to investigate the sony attack. this latest threat comes along with reports of a new data dump of e-mails from studio chairman and ceo michael linton. >> who knows what's in michael linton's e-mail? hackers promised to release more. more data yet to be rele. who ? >> reporter: sony is hit by the first class action lawsuit against sony on behalf of current and former employees. alleging the studio is negligent failing to secure computer systems despite weaknesses known for y quote, failed to timely protect confidential information of current and f from law-breaking ha sony did not immediately respond to requests for a commen the suit or the threats. we're also awaiting our request for comment from amc and regal theater chains. i'm julia boorstin for "nightly business report" in los angeles. a dow component raises its quarterly dividend and that is where we begin tonight's market focus. the diversified industrial giant 3 m lifted the dividend and said it expects 3 to 6% in foreign exchange rates. shares of 3 m up 1.5% today it closed at $16.05. not to be outdone, cvs health raised dividends 27%. announced new $10 billion stock buyback plan and raised its growth as much as 16% over 2014. that was just what the doctors seemed to order. shares of the drugstore chain rose nearly 3% today. it finished at $92.31. not what sprint wanted to get. various reports saying that the fcc is preparing to fine the tell come gi for unwanted services. sprint said it doesn't comment on rumors or speculation but investors sent shares 6% lower. sprint closed today at just $3.81. after the bell, earnings from garden restaurants, the parent company of the olive garden, long horn steak house and other eateries in the first report since it spun off, red lobster, better than forecast profit and 5% jump in sales next quarter. even though it did lose $33 million. shares initially rose in after hours trading but they closed the regular session 2% lower at $55.91. after the closing bell today, american apparel officially terminated the controversial company founder and ceo dove charni. willful misconduct and past harassment claims. paula schneider, a former exec has been n company's first fe and coming up -- from houses to works of art, the eye catching price tags of some of the most expensive things bought this year. and this story under they paid how much? with 2014 coming to a close, we took a look at some of the outrageous prices some of the wealthiest people in the world paid for massive homes, one of a kind artworks and others in 2014. >> reporter: starting with real estate, the most expensive homes sold in 2014 was the 18 acre estate in the east hamptons that wasn't even on the market. it sold for $1 hedge funder barry rosenstein. the most expensive real estate listing was the square foot house in bev hills called plattzodiamorte. listed for $195 million, got a 13,000 square foot entertainment complex and the wine cellar holds 3,000 bottles. the most expensive work of art sold this year was chairiot sold for over $100 million and broke a record for the most expensive car ever sold at auction. this 1962 ferrari 250 gto sold by pebble beach for $38.1 million. but some experts are warning that the car boom may be about to stall. >> no one wants to be made a fool of and i think we just might be seeing a little bit of a collective inhale, maybe people taking a little bit of a break and waiting to see where this market goes. >> reporter: the same one cent magenta expensive stamp ever sold at $9.5 million. and the henry graves super complication by fe leap for $24 million for proof that the cupcake trend has reached its ridiculous apex, t $900 cupcake sold by a toronto bakery with jamaica and champagne and 24 karat gold flakes. 2014 was good to the rich and it may end up being a warm-up for spending the wealthy in 2015. for "nightly business report," i'm . >> no comment. finally tonight, if you plan on hitting the roads or taking to the skies over the christmas and new years weekend, expect to have a lot of company. aaa is out with holiday travels forecast as it is this time of year. it predicts that a record 99 million americans will travel at lea from home over the h most of them will be on th jersey turnpike, thanks to growing consumer confidence, lower gas prices and a lot of people taking the fridays after both holidays off. that's "nightly business report." i'm tyler mathisen. thank you so much for watching. have a great evening and hope to see you right back here tomorrow night. "nightly business report" has been funded in part by -- thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr. this time on "spark" -- first, "spark" joins renowned visual artist kerry james marshall as he creates two massive new murals in sf moma's atrium. >> i wanted to completely transform the entire atrium into something else to try and compete with the architecture. next, performer dan hoyle gets to work on a one-man show based on his experiences driving through small-town and rural america. >> part of what made me begin this show was wanting to do political theater that had conservative characters. then, the modern dance company levydance collaborate on a piece based on a previously untold family history -- next on "spark."
and conservative forecast. general elec profit in the co industrial u low crude prices could restrain overall growth. all that and more tonight on "nightly business report" for tuesday, december 16th. welcome, everybody and good evening. susie gharib has the night off. but if you like market action, then you loved today volatility was everywhere. in stocks, in oil, in bonds, and most especially, in russia's battered currency. let's start with stocks though. the dow was of and then up 247 point, it jumped 155 points in 30 minutes. then came a slow fade that quickened in the final hour. here's what the dow looked like in graphic form today. kind of an ekg in desperate need of a beta-blocker. at the close, the dow was off 112 points, nasdaq down 57, a drop of 1.25% and s&p lost 16. now down 1.4% fo far. as for oil, it was a wood blast job too. at today's finish, west domestic texas crude snapped a four day losing streak. it ended a whopping 2 cents higher to close at 55.93 and traded above 57 too. brent international global prices contin prices lower at fresh 5.5 low at $60 a barrel. as economic tremblers rattled around the globe, epicenter most cow, money haven u.s. bonds. ten year treasury, its yield, landed to 0.27%, lowest close of the year. well, now to russia where so much of today's attention focused its energy driven economy is a mess to put i bluntly. its stock market all but crashed today. one reason? the country's currency is in free fall even though russia's central bank raised interest rates to 17% last night. access to internna >> russian stock market is down too. . it still wasn't enough. >> russia is in a full blown currency crisis, the ruble plunging in the past two days. selling the ruble in large part due to the dramatic fall and the price of oil. russia is one of the world's largest exporters of oil and it's an important source of revenue for the government. just this week, the finance ministry announced russia's economy would fall 4.5% next year if oil stayed at $60. also causing fear, russian business investors have $100 billion in debt coming due next year but because of sanctions kboefd by the west, nearly impossible for them to refinance because western banks are prohibited from helping them borrow money. carlos pasquale said this may be the thing that backs vladimir putin into a corner and getting him to stop backing russian separatists in eastern ukraine. >> i think this is an opportunity, actually, to find a way out of this crisis because the way out of the crisis for russia is to get access to international capital markets. you can't fix it any other way. >> reporter: thus far, russia remains defiant. denies that russia is suffering an economic meltdown. >> russia would come out stronger out of this. we have been in much worse situations in our history. >> reporter: like the currency, the russian stock market is down sharply too. long time russian investors don't think the worst is over qu >> there are signs of bottom formations but there are so many other factors at work here like the oil price that geopolitical situation. we need to see what putin is going to say on thursday when he gives his speech. maybe he'll say positive things. that would give the market a boost. >> reporter: although putin makes important end of the year speech later this week, some investors say it doesn't matter what he says because russia place to invest peri >> we like places where there's some semblance of the rule of law. russia seems to be much more the law of the ruler. >> reporter: thus far, putin appears to be unphased by the market's negative response. for "nightly business report," michelle carusa cabrera. some of the major u.s. companies with exposure to russia are citi, exxon mobile, and visa. paul christopher joining us now to talk more about what russia's ruble collapse means for you and your money. chief international investment stra advisors. paul, good to have you with you. in 1988, russia had a financial crisis that almost crashed the world's economy. is this anything like that >> well, you've got some similar external conditions with the u.s. being the strongest and the leader in the world. you've got falling oil prices and you've got a falling ruble and rising interest rates in rouge. a lot of concern there. but there are things that isolate russia more than 1958. the russian foreign currency concerns are much larger. russian official debt, government debt which was the source of the trigger of the problem is much, much lower. russian corporations do have some debt overseas but low by international standards and really not enough to really tank or cause a big disruptio the western financial systems. and finally, most importantly, russia's economy is really quite isolated. aside from one product that it sells to one part of the world, it really doesn't have a lot of trade ties with other people. >> that would be energy to western europe you're referring to, right? >> exactly. >> i hear you say it's in a better position than it was 15 years ago and so the west needn't worry quite to the extent that we did back then but you may have heard in the prior segment, former ambassador of the ukraine, saying the only way russia can get out of this mess is to have access to foreign currency markets. do they have that? >> no, they don't have that. i believe he's right. i think that's the way out for russia. certainly the most strags forward way out for russia. but it doesn't mean we have the financial crisis that ends in default for russia. could be mr. putin to let the currency fall further and print more money at home to pay wages, allows a lot of inflation to creep up, even to explode. and let the problem and the pain be felt by the russian people worst while he consolidates his military gains into political gains in the eastern ukraine and then once he has those regions, he can be more open minded about negotiating or perhaps even his oligarch friends to remove him. >> putin is nothing, if not unpredictable. there is a weaker russian economy, does it mean more dangerous or potentially a sooefrl -- severely crippled? >> i think a weaker russian economy first ha pain of the russian econ the russian people which is where the pain is mainly going to be felt. the pain has to be unsupportable for them before his hand is forced or the pain has to become unsupportive for the people in power. the oligarch types. once that's in reach, he's in danger. >> thank you with paul christopher from advisors. big impact on the dow component. general electric with the annual investors today. could it help or hinder the industrial giant's oil and gas businesses and its overall outlook for 2015? mary thompson with us. i gather it was a conservative one today. >> reporter: it was a fairly conservative outlook but also, i think it's a first time in a few years since we've actually heard g.e. give actual numbers. the company is expecting to earn $1.80 a share and $1.75. on the call, jeff said this did include a worst case scenario. they don't know where oil is going but it gave some room to manage if oil prices -- >> what did he say beyond that beyond oil and gas and why is it so important? >> the reason it was so important, oil and gas business has been a revenue and profit driver for g.e. it's grown tremendously over the past few years. that won't be the case in 2015. lower oil prices mean revenue in this segment will actually decline by about 5%. that was the forecast given. additional, keep in mind, g.e. is making these acquisitions to $4 billion and tend to be in the energy space. said he likes the space but th right now. >> what about the broader company, what about the integration of the french company that's buying? >> alsome is on track. what's working for ge is the records orders were high, he said. transportation, locomotives are going to set a record this year as far as orders go and also, what's working, they anticipate lower gas prices to help the u.s. economy to which g.e. has the g exposure. >> you think about the evolution of this company ten years ago, you think lightbulbs, ge capital. nbc universal, it got rid of, it's n industrial com >> it's a very dif and it remains on track to have 75 of those earnings from these industrial companies he's working on, 25% from g.e. capital which they say will continue to try to shrink in an investor . in the fin >> mary thompson reporting, thank you. in the meantime, troubling news about a company g.e. is in the process of acquiring. we just mentioned it. reports say u.s. prosecutors are close to reaching a deal with the frenc engineering giant alstom to pay close to $7 million for a foreign bribery probe, the biggest settlement of its kind ever. well, with oil prices half of what they were in june, volatilit returning to the stockke raising out russia and europe escalating and the federal reserve kicking off its final meeting of the year. what do top economists expect to hear from the central bank tomorrow and in 2015? steve liesman reports. >> reporter: wall street sees the federal reserve reacting to lower inflation and concerns about global economic not by delaying rate h hiking rates more slow respondents of the nbc survey see the first rate hike coming in july 2015. that would bt eight years. but they see the feds hiking west and taking longer to get to the end of its cycle. two-thirds of respondents expect to remove the phrase considerable time from the policy statement tomorrow, a move the fed has to make in order to hike rates in coming months. now seen below 2%, the end of 2016. janet yellin and the federal market committee are seen taking it all the way until first quarter of 2018 to get to their end point for rates, a very low 3.2%. a tenth below what the market previously bou >> hey, how's it? >> reporter: the forecast comes amid rising optimism for the u.s. economy. the chance of a recession in the next year has fallen to the lowest level in the history of the survey. growth is estimated to pick up in 2015, all the way to 3% 2.4% this year. and lower oil prices should add more to that growth while reducing inflation. the outlook for inflation looks to be the real driver for that. that and european economic weakness which is now seen as the bigges economy. although there's good agreement on the path to policy, now looking to janet yellin and her press conference tomorrow for any hint of plunging oil prices and global economic weakness could alter the fed's course. for "nightly business report," i'm steve li >> and william lee joins us now to talk about what we may hear from the fed tomorrow and into 2015. he's head of north american economics at citi. mr. lee, good to have you with us. you heard steve's report there. do you side with the general consensus that suggests that interest rates, when they start to move up, will move up slower and less steeply than maybe we might have thought three months or four months or five months ago? >> absolutely. because one of the things you've emphasized in your report, all the repo uncertainty now and decision role on uncertainty? do less, do it later. consensus, i think starting later, probably december of this year but i absolutely agree that whatever they do, it will be a lot less than what they would do before because the key is they need to figure out what's going on. and right now, we're getting a positive there's a lot of downside risk to the economy's wealth. >> you anticipate my next question. what does oil mean to the today? >> what it means is that for at least 2015 and possibly a little bit into 2016, the consumers are going to be a lot better o. they're going to have more income to spend and we expect a lot stronger economy. but maybe on the order of extra, maybe .75%, 1.5%, those are the estimates to how oil will hel also you a temporary help. if all prices stabilize at 65 or even 40, right, we will all only get whatever benefit we have as the oil price declines. once it stays there, that's the end of the b what we have then is a return potential growth. >> you know, bill, economics, they may call it a dismal science but i got to tell you, it is anything but uninteresting. when you think back to how we started this year with the ten year yield at 3% and most people forecasting that it would stay there or maybe edge higher, we're going to end the year at roughly 2%. how much did that surprise you and what do you think you be surprised by next year? >> i think that was a great surprise to everybody because we were all anticipating a more robust recovery and instead, got meandering 2.5 to 3% recovery. what we're anticipating also is the rest of the world is going t matter more for the u.s. than ever before. the sector has grown in the last five years from 15% to 20% of gdp to almost 30%. we're much more vulnerable. that's the lesson into next year, i anticipate more surprises abroad as well as in the economy. >> that's interesting. bill, let's bring it home to stock investors as we look tomorrow with the fed and the possibility of rising inte rates next year. are we past the point where equity investors are going to worry so much about whether and when and by how much the f raises interest rates and we move to something different? >> i think equity inveor been interested . where are the profits comi from? we have a robust recovery and we start to have some positive price increases because after all, the market over costs. if we can mark up over costs and raise pr a very good pi equity market. >> bill, thank you very much. bill lee with citi. thank you for your help. just when it looks like things won't get worse for son they did. that story next. there has been a surge in sign-ups for a health insurance plans under the affordable care act this year. more than a million americans picked a plan in just the past week bringing the total of enrollees to nearly 2.5 million this season. that's according to the obama administration and that number is just for the federal healthcare.gov marketplace. 13 states have their own web sites and marketplaces. well, apple is making some headlines. first, it is halting online sales in russia because of the extreme fluctuations and the value of that country's currency, the ruble. the company apologized to consumers over there s needs to review its prices now that the ruble has lost half its value. also, a victory for apple in a decade-old billion dollar class action lawsuit over its pricing of the ipod music player. a california jury decided apple did not use restrictive sore in the ipod to freeze out make of competing mp3 players from accessing the itunes marketplace. well, a different mood at sony pictures where the fallout from that massive hack attack on the company's computer s tem just keeps getting worse. julia boorstin has more on the latest troubles at the studio. >> reporter: the group that claims responsibility for hacking sony systems and releasing a personal e-mail and information is now going as far as to threaten theaters and theater goers over sony "the interview" threatening unspecified but ominous action for the premiere in new york on thursday and film's release scheduled for christmas day. >> we're now in a completely different level. they have complained. they have brought sony's internal network to a halt. they have released one trove of data after another. leaked movies to file sharing sites and now we have an implied threat of violence. >> reporter: we have to keep in mind, the threat comes fro group determined to prevent the movie from being released and people from seeing it. sources telling nbc there's no credible intelligence to indicate an active plot against u.s. theaters. landmark theaters hosting the premiere said they're moving ahead as planned. the fbi issuing a statement saying, quote, the fbi is aware of recent threats an continues to work collaboratively to investigate the sony attack. this latest threat comes along with reports of a new data dump of e-mails from studio chairman and ceo michael linton. >> who knows what's in michael linton's e-mail? hackers promised to release more. more data yet to be rele. who ? >> reporter: sony is hit by the first class action lawsuit against sony on behalf of current and former employees. alleging the studio is negligent failing to secure computer systems despite weaknesses known for y quote, failed to timely protect confidential information of current and f from law-breaking ha sony did not immediately respond to requests for a commen the suit or the threats. we're also awaiting our request for comment from amc and regal theater chains. i'm julia boorstin for "nightly business report" in los angeles. a dow component raises its quarterly dividend and that is where we begin tonight's market focus. the diversified industrial giant 3 m lifted the dividend and said it expects 3 to 6% in foreign exchange rates. shares of 3 m up 1.5% today it closed at $16.05. not to be outdone, cvs health raised dividends 27%. announced new $10 billion stock buyback plan and raised its growth as much as 16% over 2014. that was just what the doctors seemed to order. shares of the drugstore chain rose nearly 3% today. it finished at $92.31. not what sprint wanted to get. various reports saying that the fcc is preparing to fine the tell come gi for unwanted services. sprint said it doesn't comment on rumors or speculation but investors sent shares 6% lower. sprint closed today at just $3.81. after the bell, earnings from garden restaurants, the parent company of the olive garden, long horn steak house and other eateries in the first report since it spun off, red lobster, better than forecast profit and 5% jump in sales next quarter. even though it did lose $33 million. shares initially rose in after hours trading but they closed the regular session 2% lower at $55.91. after the closing bell today, american apparel officially terminated the controversial company founder and ceo dove charni. willful misconduct and past harassment claims. paula schneider, a former exec has been n company's first fe and coming up -- from houses to works of art, the eye catching price tags of some of the most expensive things bought this year. and this story under they paid how much? with 2014 coming to a close, we took a look at some of the outrageous prices some of the wealthiest people in the world paid for massive homes, one of a kind artworks and others in 2014. >> reporter: starting with real estate, the most expensive homes sold in 2014 was the 18 acre estate in the east hamptons that wasn't even on the market. it sold for $1 hedge funder barry rosenstein. the most expensive real estate listing was the square foot house in bev hills called plattzodiamorte. listed for $195 million, got a 13,000 square foot entertainment complex and the wine cellar holds 3,000 bottles. the most expensive work of art sold this year was chairiot sold for over $100 million and broke a record for the most expensive car ever sold at auction. this 1962 ferrari 250 gto sold by pebble beach for $38.1 million. but some experts are warning that the car boom may be about to stall. >> no one wants to be made a fool of and i think we just might be seeing a little bit of a collective inhale, maybe people taking a little bit of a break and waiting to see where this market goes. >> reporter: the same one cent magenta expensive stamp ever sold at $9.5 million. and the henry graves super complication by fe leap for $24 million for proof that the cupcake trend has reached its ridiculous apex, t $900 cupcake sold by a toronto bakery with jamaica and champagne and 24 karat gold flakes. 2014 was good to the rich and it may end up being a warm-up for spending the wealthy in 2015. for "nightly business report," i'm . >> no comment. finally tonight, if you plan on hitting the roads or taking to the skies over the christmas and new years weekend, expect to have a lot of company. aaa is out with holiday travels forecast as it is this time of year. it predicts that a record 99 million americans will travel at lea from home over the h moom of them will be on th jersey turnpike, thanks to growing consumer confidence, lower gas prices and a lot of people taking the fridays after both holidays off. that's "nightly business report." i'm tyler mathisen. thank you so much for watching. have a great evening and hope to see you right back here tomorrow night. "nightly business report" has been funded in part by -- thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr. this time on "spark" -- first, "spark" joins renowned visual artist kerry james marshall as he creates two massive new murals in sf moma's atrium. >> i wanted to completely transform the entire atrium into something else to try and compete with the architecture. next, performer dan hoyle gets to work on a one-man show based on his experiences driving through small-town and rural america. >> part of what made me begin this show was wanting to do political theater that had conservative characters. then, the modern dance company levydance collaborate on a piece based on a previously untold family history -- next on "spark."
and conservative forecast. general elec profit in the co industrial u low crude prices could restrain overall growth. all that and more tonight on "nightly business report" for tuesday, december 16th. welcome, everybody and good evening. susie gharib has the night off. but if you like market action, then you loved today. volatility was everywhere. in stocks, in oil, in bonds, and most especially, in russia's battered currency. let's start with stocks though. the dow was of and then up 247 point, it jumped 155 points in 30 minutes. then came a slow fade that quickened in the final hour. here's what the dow looked like in graphic form today. kind of an ekg in desperate need of a beta-blocker. at the close, the dow was off 112 points, nasdaq down 57, a drop of 1.25% and s&p lost 16. now down 1.4% fo far. as for oil, it was a wood blast job too. at today's finish, west domestic texas crude snapped a four day losing streak. it ended a whopping 2 cents higher to close at 55.93 and traded above 57 too. brent international global prices contin prices lower at fresh 5.5 low at $60 a barrel. as economic tremblers rattled around the globe, epicenter most cow, money haven u.s. bonds. ten year treasury, its yield, landed to 0.27%, lowest close of the year. well, now to russia where so much of today's attention focused its energy driven economy is a mess to put i bluntly. its stock market all but crashed today. one reason? the country's currency is in free fall even though russia's central bank raised interest rates to 17% last night. access to internna >> russian stock market is down too. . it still wasn't enough. >> russia is in a full blown currency crisis, the ruble plunging in the past two days. selling the ruble in large part due to the dramatic fall and the price of oil. russia is one of the world's largest exporters of oil and it's an important source of revenue for the government. just this week, the finance ministry announced russia's economy would fall 4.5% next year if oil stayed at $60. also causing fear, russian business investors have $100 billion in debt coming due next year but because of sanctions kboefd by the west, nearly impossible for them to refinance because western banks are prohibited from helping them borrow money. carlos pasquale said this may be the thing that backs vladimir putin into a corner and getting him to stop backing russian separatists in eastern ukraine. >> i think this is an opportunity, actually, to find a way out of this crisis because the way out of the crisis for russia is to get access to international capital markets. you can't fix it any other way. >> reporter: thus far, russia remains defiant. denies that russia is suffering an economic meltdown. >> russia would come out stronger out of this. we have been in much worse situations in our history. >> reporter: like the currency, the russian stock market is down sharply too. long time russian investors don't think the worst is over qu >> there are signs of bottom formations but there are so many other factors at work here like the oil price that geopolitical situation. we need to see what putin is going to say on thursday when he gives his speech. maybe he'll say positive things. that would give the market a boost. >> reporter: although putin makes important end of the year speech later this week, some investors say it doesn't matter what he says because russia place to invest peri >> we like places where there's some semblance of the rule of law. russia seems to be much more the law of the ruler. >> reporter: thus far, putin appears to be unphased by the market's negative response. for "nightly business report," michelle carusa cabrera. some of the major u.s. companies with exposure to russia are citi, exxon mobile, and visa. paul christopher joining us now to talk more about what russia's ruble collapse means for you and your money. chief international investment stra advisors. paul, good to have you with you. in 1988, russia had a financial crisis that almost crashed the world's economy. is this anything like that >> well, you've got some similar external conditions with the u.s. being the strongest and the leader in the world. you've got falling oil prices and you've got a falling ruble and rising interest rates in rouge. a lot of concern there. but there are things that isolate russia more than 1958. the russian foreign currency concerns are much larger. russian official debt, government debt which was the source of the trigger of the problem is much, much lower. russian corporations do have some debt overseas but low by international standards and really not enough to really tank or cause a big disruptio the western financial systems. and finally, most importantly, russia's economy is really quite isolated. aside from one product that it sells to one part of the world, it really doesn't have a lot of trade ties with other people. >> that would be energy to western europe you're referring to, right? >> exactly. >> i hear you say it's in a better position than it was 15 years ago and so the west needn't worry quite to the extent that we did back then but you may have heard in the prior segment, former ambassador of the ukraine, saying the only way russia can get out of this mess is to have access to foreign currency markets. do they have that? >> no, they don't have that. i believe he's right. i think that's the way out for russia. certainly the most strags forward way out for russia. but it doesn't mean we have the financial crisis that ends in default for russia. could be mr. putin to let the currency fall further and print more money at home to pay wages, allows a lot of inflation to creep up, even to explode. and let the problem and the pain be felt by the russian people worst while he consolidates his military gains into political gains in the eastern ukraine and then once he has those regions, he can be more open minded about negotiating or perhaps even his oligarch friends to remove him. >> putin is nothing, if not unpredictable. there is a weaker russian economy, does it mean more dangerous or potentially a sooefrl -- severely crippled? >> i think a weaker russian economy first ha pain of the russian econ the russian people which is where the pain is mainly going to be felt. the pain has to be unsupportable for them before his hand is forced or the pain has to become unsupportive for the people in power. the oligarch types. once that's in reach, he's in danger. >> thank you with paul christopher from advisors. big impact on the dow component. general electric with the annual investors today. could it help or hinder the industrial giant's oil and gas businesses and its overall outlook for 2015? mary thompson with us. i gather it was a conservative one today. >> reporter: it was a fairly conservative outlook but also, i think it's a first time in a few years since we've actually heard g.e. give actual numbers. the company is expecting to earn $1.80 a share and $1.75. on the call, jeff said this did include a worst case scenario. they don't know where oil is going but it gave some room to manage if oil prices -- >> what did he say beyond that beyond oil and gas and why is it so important? >> the reason it was so important, oil and gas business has been a revenue and profit driver for g.e. it's grown tremendously over the past few years. that won't be the case in 2015. lower oil prices mean revenue in this segment will actually decline by about 5%. that was the forecast given. additional, keep in mind, g.e. is making these acquisitions to $4 billion and tend to be in the energy space. said he likes the space but th right now. >> what about the broader company, what about the integration of the french company that's buying? >> alsome is on track. what's working for ge is the records orders were high, he said. transportation, locomotives are going to set a record this year as far as orders go and also, what's working, they anticipate lower gas prices to help the u.s. economy to which g.e. has the g exposure. >> you think about the evolution of this company ten years ago, you think lightbulbs, ge capital. nbc universal, it got rid of, it's n industrial com >> it's a very dif and it remains on track to have 75 of those earnings from these industrial companies he's working on, 25% from g.e. capital which they say will continue to try to shrink in an investor . in the fin >> mary thompson reporting, thank you. in the meantime, troubling news about a company g.e. is in the process of acquiring. we just mentioned it. reports say u.s. prosecutors are close to reaching a deal with the frenc engineering giant alstom to pay close to $7 million for a foreign bribery probe, the biggest settlement of its kind ever. well, with oil prices half of what they were in june, volatilit returning to the stockke raising out russia and europe escalating and the federal reserve kicking off its final meeting of the year. what do top economists expect to hear from the central bank tomorrow and in 2015? steve liesman reports. >> reporter: wall street sees the federal reserve reacting to lower inflation and concerns about global economic not by delaying rate h hiking rates more slow respondents of the nbc survey see the first rate hike coming in july 2015. that would bt eight years. but they see the feds hiking west and taking longer to get to the end of its cycle. two-thirds of respondents expect to remove the phrase considerable time from the policy statement tomorrow, a move the fed has to make in order to hike rates in coming months. now seen below 2%, the end of 2016. janet yellin and the federal market committee are seen taking it all the way until first quarter of 2018 to get to their end point for rates, a very low 3.2%. a tenth below what the market previously bou >> hey, how's it? >> reporter: the forecast comes amid rising optimism for the u.s. economy. the chance of a recession in the next year has fallen to the lowest level in the history of the survey. growth is estimated to pick up in 2015, all the way to 3% 2.4% this year. and lower oil prices should add more to that growth while reducing inflation. the outlook for inflation looks to be the real driver for that. that and european economic weakness which is now seen as the bigges economy. although there's good agreement on the path to policy, now looking to janet yellin and her press conference tomorrow for any hint of plunging oil prices and global economic weakness could alter the fed's course. for "nightly business report," i'm steve li >> and william lee joins us now to talk about what we may hear from the fed tomorrow and into 2015. he's head of north american economics at citi. mr. lee, good to have you with us. you heard steve's report there. do you side with the general consensus that suggests that interest rates, when they start to move up, will move up slower and less steeply than maybe we might have thought three months or four months or five months ago? >> absolutely. because one of the things you've emphasized in your report, all the repo uncertainty now and decision role on uncertainty? do less, do it later. consensus, i think starting later, probably december of this year but i absolutely agree that whatever they do, it will be a lot less than what they would do before because the key is they need to figure out what's going on. and right now, we're getting a positive there's a lot of downside risk to the economy's wealth. >> you anticipate my next question. what does oil mean to the today? >> what it means is that for at least 2015 and possibly a little bit into 2016, the consumers are going to be a lot better o. they're going to have more income to spend and we expect a lot stronger economy. but maybe on the order of extra, maybe .75%, 1.5%, those are the estimates to how oil will hel also you a temporary help. if all prices stabilize at 65 or even 40, right, we will all only get whatever benefit we have as the oil price declines. once it stays there, that's the end of the b what we have then is a return potential growth. >> you know, bill, economics, they may call it a dismal science but i got to tell you, it is anything but uninteresting. when you think back to how we started this year with the ten year yield at 3% and most people forecasting that it would stay there or maybe edge higher, we're going to end the year at roughly 2%. how much did that surprise you and what do you think you be surprised by next year? >> i think that was a great surprise to everybody because we were all anticipating a more robust recovery and instead, got meandering 2.5 to 3% recovery. what we're anticipating also is the rest of the world is going t matter more for the u.s. than ever before. the sector has grown in the last five years from 15% to 20% of gdp to almost 30%. we're much more vulnerable. that's the lesson into next year, i anticipate more surprises abroad as well as in the economy. >> that's interesting. bill, let's bring it home to stock investors as we look tomorrow with the fed and the possibility of rising inte rates next year. are we past the point where equity investors are going to worry so much about whether and when and by how much the f raises interest rates and we move to something different? >> i think equity inveor been interested . where are the profits comi from? we have a robust recovery and we start to have some positive price increases because after all, the market over costs. if we can mark up over costs and raise pr a very good pi equity market. >> bill, thank you very much. bill lee with citi. thank you for your help. just when it looks like things won't get worse for son they did. that story next. there has been a surge in sign-ups for a health insurance plans under the affordable care act this year. more than a million americans picked a plan in just the past week bringing the total of enrollees to nearly 2.5 million this season. that's according to the obama administration and that number is just for the federal healthcare.gov marketplace. 13 states have their own web sites and marketplaces. well, apple is making some headlines. first, it is halting online sales in russia because of the extreme fluctuations and the value of that country's currency, the ruble. the company apologized to consumers over there s needs to review its prices now that the ruble has lost half its value. also, a victory for apple in a decade-old billion dollar class action lawsuit over its pricing of the ipod music player. a california jury decided apple did not use restrictive sore in the ipod to freeze out make of competing mp3 players from accessing the itunes marketplace. well, a different mood at sony pictures where the fallout from that massive hack attack on the company's computer system just keeps getting worse. julia boorstin has more on the latest troubles at the studio. >> reporter: the group that claims responsibility for hacking sony systems and releasing a personal e-mail and information is now going as far as to threaten theaters and theater goers over sony "the interview" threatening unspecified but ominous action for the premiere in new york on thursday and film's release scheduled for christmas day. >> we're now in a completely different level. they have complained. they have brought sony's internal network to a halt. they have released one trove of data after another. leaked movies to file sharing sites and now we have an implied threat of violence. >> reporter: we have to keep in mind, the threat comes fro group determined to prevent the movie from being released and people from seeing it. sources telling nbc there's no credible intelligence to indicate an active plot against u.s. theaters. landmark theaters hosting the premiere said they're moving ahead as planned. the fbi issuing a statement saying, quote, the fbi is aware of recent threats an continues to work collaboratively to investigate the sony attack. this latest threat comes along with reports of a new data dump of e-mails from studio chairman and ceo michael linton. >> who knows what's in michael linton's e-mail? hackers promised to release more. more data yet to be rele. who ? >> reporter: sony is hit by the first class action lawsuit against sony on behalf of current and former employees. alleging the studio is negligent failing to secure computer systems despite weaknesses known for y quote, failed to timely protect confidential information of current and f from law-breaking ha sony did not immediately respond to requests for a commen the suit or the threats. we're also awaiting our request for comment from amc and regal theater chains. i'm julia boorstin for "nightly business report" in los angeles. a dow component raises its quarterly dividend and that is where we begin tonight's market focus. the diversified industrial giant 3 m lifted the dividend and said it expects 3 to 6% in foreign exchange rates. shares of 3 m up 1.5% today it closed at $16.05. not to be outdone, cvs health raised dividends 27%. announced new $10 billion stock buyback plan and raised its growth as much as 16% over 2014. that was just what the doctors seemed to order. shares of the drugstore chain rose nearly 3% today. it finished at $92.31. not what sprint wanted to get. various reports saying that the fcc is preparing to fine the tell come gi for unwanted services. sprint said it doesn't comment on rumors or speculation but investors sent shares 6% lower. sprint closed today at just $3.81. after the bell, earnings from garden restaurants, the parent company of the olive garden, long horn steak house and other eateries in the first report since it spun off, red lobster, better than forecast profit and 5% jump in sales next quarter. even though it did lose $33 million. shares initially rose in after hours trading but they closed the regular session 2% lower at $55.91. after the closing bell today, american apparel officially terminated the controversial company founder and ceo dove charni. willful misconduct and past harassment claims. paula schneider, a former exec has been n company's first fe and coming up -- from houses to works of art, the eye catching price tags of some of the most expensive things bought this year. and this story under they paid how much? with 2014 coming to a close, we took a look at some of the outrageous prices some of the wealthiest people in the world paid for massive homes, one of a kind artworks and others in 2014. >> reporter: starting with real estate, the most expensive homes sold in 2014 was the 18 acre estate in the east hamptons that wasn't even on the market. it sold for $1 hedge funder barry rosenstein. the most expensive real estate listing was the square foot house in bev hills called plattzodiamorte. listed for $195 million, got a 13,000 square foot entertainment complex and the wine cellar holds 3,000 bottles. the most expensive work of art sold this year was chairiot sold for over $100 million and broke a record for the most expensive car ever sold at auction. this 1962 ferrari 250 gto sold by pebble beach for $38.1 million. but some experts are warning that the car boom may be about to stall. >> no one wants to be made a fool of and i think we just might be seeing a little bit of a collective inhale, maybe people taking a little bit of a break and waiting to see where this market goes. >> reporter: the same one cent magenta expensive stamp ever sold at $9.5 million. and the henry graves super complication by fe leap for $24 million for proof that the cupcake trend has reached its ridiculous apex, t $900 cupcake sold by a toronto bakery with jamaica and champagne and 24 karat gold flakes. 2014 was good to the rich and it may end up being a warm-up for spending the wealthy in 2015. for "nightly business report," i'm . >> no comment. finally tonight, if you plan on hitting the roads or taking to the skies over the christmas and new years weekend, expect to have a lot of company. aaa is out with holiday travels forecast as it is this time of year. it predicts that a record 99 million americans will travel at lea from home over the h most of them will be on th jersey turnpike, thanks to growing consumer confidence, lower gas prices and a lot of people taking the fridays after both holidays off. that's "nightly business report." i'm tyler mathisen. thank you so much for watching. have a great evening and hope to see you right back here tomorrow night. "nightly business report" has been funded in part by -- thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr. announcer: the national christmas tree lighting 2014 is presented by the national park service and the national park foundation in collaboration with google. girl: when you learn to code, you can create anything you can imagine. something beautiful. something wonderful and bright, like a holiday tree that lights up outside of the white house. the holidays i love are made with code. ♪ announcer: from president's park in the heart of the nation's capitol,
and conservative forecast. general elec profit in the co industrial u low crude prices could restrain overall growth. all that and more tonight on "nightly business report" for tuesday, december 16th. welcome, everybody and good evening. susie gharib has the night off. but if you like market action, then you loved today. volatility was everywhere. in stocks, in oil, in bonds, and most especially, in russia's battered currency. let's start with stocks though. the dow was of and then up 247 point, it jumped 155 points in 30 minutes. then came a slow fade that quickened in the final hour. here's what the dow looked like in graphic form today. kind of an ekg in desperate need of a beta-blocker. at the close, the dow was off 112 points, nasdaq down 57, a drop of 1.25% and s&p lost 16. now down 1.4% fo far. as for oil, it was a wood blast job too. at today's finish, west domestic texas crude snapped a four day losing streak. it ended a whopping 2 cents higher to close at 55.93 and traded above 57 too. brent international global prices contin prices lower at fresh 5.5 low at $60 a barrel. as economic tremblers rattled around the globe, epicenter most cow, money haven u.s. bonds. ten year treasury, its yield, landed to 0.27%, lowest close of the year. well, now to russia where so much of today's attention focused its energy driven economy is a mess to put i bluntly. its stock market all but crashed today. one reason? the country's currency is in free fall even though russia's central bank raised interest rates to 17% last night. access to internna >> russian stock market is down too. . it still wasn't enough. >> russia is in a full blown currency crisis, the ruble plunging in the past two days. selling the ruble in large part due to the dramatic fall and the price of oil. russia is one of the world's largest exporters of oil and it's an important source of revenue for the government. just this week, the finance ministry announced russia's economy would fall 4.5% next year if oil stayed at $60. also causing fear, russian business investors have $100 billion in debt coming due next year but because of sanctions kboefd by the west, nearly impossible for them to refinance because western banks are prohibited from helping them borrow money. carlos pasquale said this may be the thing that backs vladimir putin into a corner and getting him to stop backing russian separatists in eastern ukraine. >> i think this is an opportunity, actually, to find a way out of this crisis because the way out of the crisis for russia is to get access to international capital markets. you can't fix it any other way. >> reporter: thus far, russia remains defiant. denies that russia is suffering an economic meltdown. >> russia would come out stronger out of this. we have been in much worse situations in our history. >> reporter: like the currency, the russian stock market is down sharply too. long time russian investors don't think the worst is over qu >> there are signs of bottom formations but there are so many other factors at work here like the oil price that geopolitical situation. we need to see what putin is going to say on thursday when he gives his speech. maybe he'll say positive things. that would give the market a boost. >> reporter: although putin makes important end of the year speech later this week, some investors say it doesn't matter what he says because russia place to invest peri >> we like places where there's some semblance of the rule of law. russia seems to be much more the law of the ruler. >> reporter: thus far, putin appears to be unphased by the market's negative response. for "nightly business report," michelle carusa cabrera. some of the major u.s. companies with exposure to russia are citi, exxon mobile, and visa. paul christopher joining us now to talk more about what russia's ruble collapse means for you and your money. chief international investment stra advisors. paul, good to have you with you. in 1988, russia had a financial crisis that almost crashed the world's economy. is this anything like that >> well, you've got some similar external conditions with the u.s. being the strongest and the leader in the world. you've got falling oil prices and you've got a falling ruble and rising interest rates in rouge. a lot of concern there. but there are things that isolate russia more than 1958. the russian foreign currency concerns are much larger. russian official debt, government debt which was the source of the trigger of the problem is much, much lower. russian corporations do have some debt overseas but low by international standards and really not enough to really tank or cause a big disruptio the western financial systems. and finally, most importantly, russia's economy is really quite isolated. aside from one product that it sells to one part of the world, it really doesn't have a lot of trade ties with other people. >> that would be energy to western europe you're referring to, right? >> exactly. >> i hear you say it's in a better position than it was 15 years ago and so the west needn't worry quite to the extent that we did back then but you may have heard in the prior segment, former ambassador of the ukraine, saying the only way russia can get out of this mess is to have access to foreign currency markets. do they have that? >> no, they don't have that. i believe he's right. i think that's the way out for russia. certainly the most strags forward way out for russia. but it doesn't mean we have the financial crisis that ends in default for russia. could be mr. putin to let the currency fall further and print more money at home to pay wages, allows a lot of inflation to creep up, even to explode. and let the problem and the pain be felt by the russian people worst while he consolidates his military gains into political gains in the eastern ukraine and then once he has those regions, he can be more open minded about negotiating or perhaps even his oligarch friends to remove him. >> putin is nothing, if not unpredictable. there is a weaker russian economy, does it mean more dangerous or potentially a sooefrl -- severely crippled? >> i think a weaker russian economy first ha pain of the russian econ the russian people which is where the pain is mainly going to be felt. the pain has to be unsupportable for them before his hand is forced or the pain has to become unsupportive for the people in power. the oligarch types. once that's in reach, he's in danger. >> thank you with paul christopher from advisors. big impact on the dow component. general electric with the annual investors today. could it help or hinder the industrial giant's oil and gas businesses and its overall outlook for 2015? mary thompson with us. i gather it was a conservative one today. >> reporter: it was a fairly conservative outlook but also, i think it's a first time in a few years since we've actually heard g.e. give actual numbers. the company is expecting to earn $1.80 a share and $1.75. on the call, jeff said this did include a worst case scenario. they don't know where oil is going but it gave some room to manage if oil prices -- >> what did he say beyond that beyond oil and gas and why is it so important? >> the reason it was so important, oil and gas business has been a revenue and profit driver for g.e. it's grown tremendously over the past few years. that won't be the case in 2015. lower oil prices mean revenue in this segment will actually decline by about 5%. that was the forecast given. additional, keep in mind, g.e. is making these acquisitions to $4 billion and tend to be in the energy space. said he likes the space but th right now. >> what about the broader company, what about the integration of the french company that's buying? >> alsome is on track. what's working for ge is the records orders were high, he said. transportation, locomotives are going to set a record this year as far as orders go and also, what's working, they anticipate lower gas prices to help the u.s. economy to which g.e. has the g exposure. >> you think about the evolution of this company ten years ago, you think lightbulbs, ge capital. nbc universal, it got rid of, it's n industrial com >> it's a very dif and it remains on track to have 75 of those earnings from these industrial companies he's working on, 25% from g.e. capital which they say will continue to try to shrink in an investor . in the fin >> mary thompson reporting, thank you. in the meantime, troubling news about a company g.e. is in the process of acquiring. we just mentioned it. reports say u.s. prosecutors are close to reaching a deal with the frenc engineering giant alstom to pay close to $7 million for a foreign bribery probe, the biggest settlement of its kind ever. well, with oil prices half of what they were in june, volatilit returning to the stockke raising out russia and europe escalating and the federal reserve kicking off its final meeting of the year. what do top economists expect to hear from the central bank tomorrow and in 2015? steve liesman reports. >> reporter: wall street sees the federal reserve reacting to lower inflation and concerns about global economic not by delaying rate h hiking rates more slow respondents of the nbc survey see the first rate hike coming in july 2015. that would bt eight years. but they see the feds hiking west and taking longer to get to the end of its cycle. two-thirds of respondents expect to remove the phrase considerable time from the policy statement tomorrow, a move the fed has to make in order to hike rates in coming months. now seen below 2%, the end of 2016. janet yellin and the federal market committee are seen taking it all the way until first quarter of 2018 to get to their end point for rates, a very low 3.2%. a tenth below what the market previously bou >> hey, how's it? >> reporter: the forecast comes amid rising optimism for the u.s. economy. the chance of a recession in the next year has fallen to the lowest level in the history of the survey. growth is estimated to pick up in 2015, all the way to 3% 2.4% this year. and lower oil prices should add more to that growth while reducing inflation. the outlook for inflation looks to be the real driver for that. that and european economic weakness which is now seen as the bigges economy. although there's good agreement on the path to policy, now looking to janet yellin and her press conference tomorrow for any hint of plunging oil prices and global economic weakness could alter the fed's course. for "nightly business report," i'm steve li >> and william lee joins us now to talk about what we may hear from the fed tomorrow and into 2015. he's head of north american economics at citi. mr. lee, good to have you with us. you heard steve's report there. do you side with the general consensus that suggests that interest rates, when they start to move up, will move up slower and less steeply than maybe we might have thought three months or four months or five months ago? >> absolutely. because one of the things you've emphasized in your report, all the repo uncertainty now and decision role on uncertainty? do less, do it later. consensus, i think starting later, probably december of this year but i absolutely agree that whatever they do, it will be a lot less than what they would do before because the key is they need to figure out what's going on. and right now, we're getting a positive there's a lot of downside risk to the economy's wealth. >> you anticipate my next question. what does oil mean to the today? >> what it means is that for at least 2015 and possibly a little bit into 2016, the consumers are going to be a lot better o. they're going to have more income to spend and we expect a lot stronger economy. but maybe on the order of extra, maybe .75%, 1.5%, those are the estimates to how oil will hel also you a temporary help. if all prices stabilize at 65 or even 40, right, we will all only get whatever benefit we have as the oil price declines. once it stays there, that's the end of the b what we have then is a return potential growth. >> you know, bill, economics, they may call it a dismal science but i got to tell you, it is anything but uninteresting. when you think back to how we started this year with the ten year yield at 3% and most people forecasting that it would stay there or maybe edge higher, we're going to end the year at roughly 2%. how much did that surprise you and what do you think you be surprised by next year? >> i think that was a great surprise to everybody because we were all anticipating a more robust recovery and instead, got meandering 2.5 to 3% recovery. what we're anticipating also is the rest of the world is going t matter more for the u.s. than ever before. the sector has grown in the last five years from 15% to 20% of gdp to almost 30%. we're much more vulnerable. that's the lesson into next year, i anticipate more surprises abroad as well as in the economy. >> that's interesting. bill, let's bring it home to stock investors as we look tomorrow with the fed and the possibility of rising inte rates next year. are we past the point where equity investors are going to worry so much about whether and when and by how much the f raises interest rates and we move to something different? >> i think equity inveor been interested . where are the profits comi from? we have a robust recovery and we start to have some positive price increases because after all, the market over costs. if we can mark up over costs and raise pr a very good pi equity market. >> bill, thank you very much. bill lee with citi. thank you for your help. just when it looks like things won't get worse for son they did. that story next. there has been a surge in sign-ups for a health insurance plans under the affordable care act this year. more than a million americans picked a plan in just the past week bringing the total of enrollees to nearly 2.5 million this season. that's according to the obama administration and that number is just for the federal healthcare.gov marketplace. 13 states have their own web sites and marketplaces. well, apple is making some headlines. first, it is halting online sales in russia because of the extreme fluctuations and the value of that country's currency, the ruble. the company apologized to consumers over there s needs to review its prices now that the ruble has lost half its value. also, a victory for apple in a decade-old billion dollar class action lawsuit over its pricing of the ipod music player. a california jury decided apple did not use restrictive sore in the ipod to freeze out make of competing mp3 players from accessing the itunes marketplace. well, a different mood at sony pictures where the fallout from that massive hack attack on the company's computer system just keeps getting worse. julia boorstin has more on the latest troubles at the studio. >> reporter: the group that claims responsibility for hacking sony systems and releasing a personal e-mail and information is now going as far as to threaten theaters and theater goers over sony "the interview" threatening unspecified but ominous action for the premiere in new york on thursday and film's release scheduled for christmas day. >> we're now in a completely different level. they have complained. they have brought sony's internal network to a halt. they have released one trove of data after another. leaked movies to file sharing sites and now we have an implied threat of violence. >> reporter: we have to keep in mind, the threat comes fro group determined to prevent the movie from being released and people from seeing it. sources telling nbc there's no credible intelligence to indicate an active plot against u.s. theaters. landmark theaters hosting the premiere said they're moving ahead as planned. the fbi issuing a statement saying, quote, the fbi is aware of recent threats an continues to work collaboratively to investigate the sony attack. this latest threat comes along with reports of a new data dump of e-mails from studio chairman and ceo michael linton. >> who knows what's in michael linton's e-mail? hackers promised to release more. more data yet to be rele. who ? >> reporter: sony is hit by the first class action lawsuit against sony on behalf of current and former employees. alleging the studio is negligent failing to secure computer systems despite weaknesses known for y quote, failed to timely protect confidential information of current and f from law-breaking ha sony did not immediately respond to requests for a commen the suit or the threats. we're also awaiting our request for comment from amc and regal theater chains. i'm julia boorstin for "nightly business report" in los angeles. a dow component raises its quarterly dividend and that is where we begin tonight's market focus. the diversified industrial giant 3 m lifted the dividend and said it expects 3 to 6% in foreign exchange rates. shares of 3 m up 1.5% today it closed at $16.05. not to be outdone, cvs health raised dividends 27%. announced new $10 billion stock buyback plan and raised its growth as much as 16% over 2014. that was just what the doctors seemed to order. shares of the drugstore chain rose nearly 3% today. it finished at $92.31. not what sprint wanted to get. various reports saying that the fcc is preparing to fine the tell come gi for unwanted services. sprint said it doesn't comment on rumors or speculation but investors sent shares 6% lower. sprint closed today at just $3.81. after the bell, earnings from garden restaurants, the parent company of the olive garden, long horn steak house and other eateries in the first report since it spun off, red lobster, better than forecast profit and 5% jump in sales next quarter. even though it did lose $33 million. shares initially rose in after hours trading but they closed the regular session 2% lower at $55.91. after the closing bell today, american apparel officially terminated the controversial company founder and ceo dove charni. willful misconduct and past harassment claims. paula schneider, a former exec has been n company's first fe and coming up -- from houses to works of art, the eye catching price tags of some of the most expensive things bought this year. and this story under they paid how much? with 2014 coming to a close, we took a look at some of the outrageous prices some of the wealthiest people in the world paid for massive homes, one of a kind artworks and others in 2014. >> reporter: starting with real estate, the most expensive homes sold in 2014 was the 18 acre estate in the east hamptons that wasn't even on the market. it sold for $1 hedge funder barry rosenstein. the most expensive real estate listing was the square foot house in bev hills called plattzodiamorte. listed for $195 million, got a 13,000 square foot entertainment complex and the wine cellar holds 3,000 bottles. the most expensive work of art sold this year was chairiot sold for over $100 million and broke a record for the most expensive car ever sold at auction. this 1962 ferrari 250 gto sold by pebble beach for $38.1 million. but some experts are warning that the car boom may be about to stall. >> no one wants to be made a fool of and i think we just might be seeing a little bit of a collective inhale, maybe people taking a little bit of a break and waiting to see where this market goes. >> reporter: the same one cent magenta expensive stamp ever sold at $9.5 million. and the henry graves super complication by fe leap for $24 million for proof that the cupcake trend has reached its ridiculous apex, t $900 cupcake sold by a toronto bakery with jamaica and champagne and 24 karat gold flakes. 2014 was good to the rich and it may end up being a warm-up for spending the wealthy in 2015. for "nightly business report," i'm . >> no comment. finally tonight, if you plan on hitting the roads or taking to the skies over the christmas and new years weekend, expect to have a lot of company. aaa is out with holiday travels forecast as it is this time of year. it predicts that a record 99 million americans will travel at lea from home over the h most of them will be on th jersey turnpike, thanks to growing consumer confidence, lower gas prices and a lot of people taking the fridays after both holidays off. that's "nightly business report." i'm tyler mathisen. thank you so much for watching. have a great evening and hope to see you right back here tomorrow night. "nightly business report" has been funded in part by -- thestreet.com and action alerts plus where jim cramer and fellow portfolio manager stephanie link share their investment strategies, stock picks and market insights. you can learn more at thestreet.com/nbr. >> this is "bbc world news." >> funding of this presentation is made possible by the freeman foundation, newman's own foundation, giving all profits from newman's own to charity and pursuing the common good. kovler foundation and mufg. >> build a solid foundation and you can commit for centuries. that's the strength behind banking relationships too which is why at mufg we believe
are you conservative enough for republicans? many gop voters have their doubts about jeb bush. we put together a focus group in new hampshire. it is high-tech. a luxury watchmaker is joining forces with silicon valley. welcome to "market makers." our stephanie ruhle. >> and i am bill cohen in for erik schatzker. it is march madness. stephanie: it is and we will discuss it over the next couple of hours along with bill's beard. we have some breaking economic news. the leading economic indicator scarlet fu is in the newsroom. our viewers want to not hear about bills beard so much. scarlet: business outlook survey is a disappointing read. the index came in at five which indicates a drop from the previous month of 5.2. this is an unexpected decline. economists were expecting an increase to seven. the second data point is leading index. it has seen a sharp deceleration over the last half year from 1% in july 2 .2% in january. we have stayed at that .2%. in terms of effect on the financial markets, u.s. stocks are still lower at least for the snp in the doubt -- the s&p and the dow. 1.9312% in the dollar is at the best levels of the session but it took a big hit yesterday following the fomc announcement. stephanie: thank you so much. now it is time for the bulletin. the top business stories of the morning. there is one more sign that the labor market is remaining strong. last week, fewer than 300,000 americans filed first-time claims for. the numbers show that employers are hanging on to those workers. apple is making its official debut in the dow jones industrial average today. the most valuable company in the world is replacing at&t. apple have been kept out because its stock prices were too high and the index is price-w eighted. activist investor and lehigh university alumni barry rosenstein is selling off a big chunk of his hedge fund. it will by 20% of jana. jana manages $11 million and has been involved in several well-known activist campaigns including safeway, petsmart and hertz. the bank promises to keep interest rates at record lows in switzerland. it was a big blow to the company's exporter and thomas jordan told bloomberg that the markets need time to adjust. >> i'm convinced the markets will realize the swiss franc is overvalued and that is not really attractive at the moment. stephanie: we couldn't afford coffee when we were in davos. a warned the swiss economy may contract up to two quarters. the death toll is climbing in the attack at a museum in tunisia. authorities say 23 people died when gunmen stormed the tunisian parliament and fled to the museum. most of the dead were foreign tourists. no one has claimed responsibility. tunisia was the birthplace of the arab spring uprising but it escaped most of that turmoil that other countries saw. michelle obama is traveling in japan and reacting to the attack. >> on behalf of myself and my husband come i want to join in with the others to express our condolences over the horrific events yesterday in tunisia. our hearts go out to the loved ones of those who were lost in japan and around the world. stephanie: at least three of the victims are japanese. two of the attackers were killed. just a few moments ago, authorities say four people have been arrested and five others detained. we have to turn to the fed. janet yellen yesterday signaled an interest rate hike could be on the horizon but that it could be years before rates completely normalized. let us look at what all this means with roxanne martino. welcome. how much do you think the comments affect your business? roxanne: our managers have to have a view of where the interest rates are going. long before the statements yesterday, they said they felt the rates would go up in the latter half of the year and perhaps even next year. before those comments, there were already saying it was not going to be imminent at all. when rates do go up, it is better for hedge funds. i know that is controversial for some people don't think that. i like to see dispersion of equity pricing. a lot of winners and losers. we have seen the dispersion in energy being a real positive for our long short energy managers with oil. managers can find a winners and losers. certainly health care over the last two years. a lot of winners and losers again. i think with managers of businesses like corporate boards and corporate management looking at interest rates going up in the future we all agree it will happen, they are saying we have a lot of cash on our balance sheets. if we will do something or by something or merge, let us do it now before the rates go up. we see a lot more activism. bill: i think what you are saying is you like volatility and action. stephanie: is not why you pay two and 20? bill: if you can make people money based on trading volatility and this action that is where you guys are focused. i assume comments from janet yellen yesterday add to the volatility and make the markets going up and down. roxanne: we like dispersion in general. a lot of activity is great. bill: this version is the new word for volatility. roxanne: the m&a environment has been very good. activism. boards realize and corporate management that they have to worry about shareholder value. also, the environment with interest rates on the rise going forward is creating a lot of activity. stephanie: what have january and february been like for you? people said there was no volatility in the market. now we have volatility so what does performance look like? roxanne: february was a great month. a fabulous month. a lot of it is what is happening in some of the areas. the change in oil pricing -- some people were predicting a rise in oil with the demand we were seeing from emerging markets. look what happened. it came out of left field and it was completely surprised given -- completely supply driven. there will be a lot of winners and losers going forward. in the future, i think what we will see is there will have to be a lot of companies in energy that will have to restructure. we have had a long. of that's we have had a long time without distressed activity and we are starting to see some of this. companies will have to restructure their balance sheet and reorganize. that will be a boom to managers. stephanie: what is in your special sauce? people said not only do i not want to pay two and 20 but i do not want to pay anything on top of that. how you make your business flourish over the last five years? roxanne: there is a lot of activity in specialized areas. a lot of the growth in the hedge fund industry has gone to bigger and more well-established managers. that has left a supply and demand imbalance on smaller managers that are coming out which is an advantage for people like us institutional allocators that can negotiate preferred economics. we can negotiate capacity. we can give those managers the capital they need to start. stephanie: is that because of the typical endowment out there will not bet on emerging managers anymore because they say no one ever gets fired for investing in millennium and they are no longer betting on the small upstarts? roxanne: i think you really hit the nail on the head. it is also consultants. it is a lot easier to place large institutional pools of capital with large institutional managers. the advantage we have on this supply and demand imbalance with the smaller managers really benefits our investors. in a way, we can take a percentage of the profits that they have on all the capital they manage overtime when we negotiate these deals and then pass it on to the investors. it is almost a synthetic out for that we are adding to portfolios. bill: how is janet yellen going to wind down the interest rate problem? how will hedge funds deal with this? even the mere mention of being impatient set the markets reeling. it is an addiction. roxanne: everyone expects it to unwind pretty slowly and gradually. i don't think anyone wants shocks to the system. we saw that in 1994 in february where there was a shock. i think people learn from that even though it is kind of ancient history. it will be done gradually so people can digest it and predict it coming forward. bill: we shall see. this is one of the big issues of our time in the markets. stephanie: we have to leave it there, but thank you. she is the ceo of aurora investments, roxanne martino. when we return, republican voters weigh in and what do they think of electing a third member of the bush family for president? bloomberg politics team went to new hampshire to find out. when luxury meets silicon valley and the world of high-priced watches will never be the same. maybe it will. maybe it is just a fad. ♪ stephanie: welcome back to market makers. jeb bush may be raising buckets of money, but he is still facing an uphill fight for the 2016 republican nomination. many of his views are out of step with his party voters to the bloomberg politics superstar team decided to talk to real human beings. and focus group made up of 10 likely republican voters in the state of new hampshire. here are 10 of them with bloomberg politics managing editor mark. >> i don't need to keep voting for bush over and over again or a clinton over and over again. when he some fresh faces. >> the common core issue -- i am a teacher. >> i understand where you are on immigration and things like that. that is not someone i would vote for. >> i think he has no chance at all. >> who would here would vote for george bush -- jeb bush? >> i am just not a fan. i don't think the bush family is bad but i would not vote for him unless he was the only choice. >> that is a ringing endorsement. >> i don't like him. >> after his father and brother, i don't think he has a chance. >> anyone thinks he has a good chance? anyone think he is the front runner? probably not. stephanie: there you go. marcusk is here with more. this kind of slides in the face of pundits who said jeb bush is the man to me and he is the guy. it was a no across-the-board. mark: i have been going around saying i think he is a strong front runner. it is a focus group so it is not scientific but these are people who will likely participate in the primary. they were down on him and not just because of his views on immigration and common core and not just because he is a push but because they don't think he can win. stephanie: who do they think can win? mark: they think someone from outside washington will win. they are more interested in someone they think they can agree with that a winner. elect scott walker and carly free arena and rand paul. they like them much more than jeb bush. when i asked if he was a front runner, they left laughed. these republicans have pressed them on it and said he want someone who can win a general election? most of them basically said we want someone who is conservative and we agree with and let us hope they can win. stephanie: but are they realistic because as you noted if you can get past the gop, you cannot win in a general election. to they not see what the whole picture looks like and they haven't won an election a couple of times? mark: i asked them what they want someone they can agree with. there are two things you can say about what happened in that room. jeb bush says when people know him, they will like him better. the other is a lot of voters want a winner. jeb bush will be able to make a case that he can win a general election. these voters were not interested in that. publ george bush one the second time around. stephanie: i want to turn to hillary clinton for a moment. we have some sound i want you to comment on. >> let us think about some of the negative things about hillary clinton. what do you like least about her? >> the e-mail thing. >> transparency issues. >> it was not handled very well and that plays into your ability to make decisions in a big office. >> i feel as though you have to be aware of how things appear to the public. >> who went through her e-mails? >> i think it would have been smarter to use a third-party to sort through. >> seems just like a lack of judgment to do that. you being the one deciding what e-mail you will delete -- if anything, she should have released everything and a third party can decide what is relevant. stephanie: people clearly felt unsettled about hillary clinton and transparency and the e-mail issue. via feel like they were still going to vote for her? mark: almost everyone in the room. one of the greatest condemnations of her came from the people in the room who most support her. a lot of her supporters say no one is paying attention and voters don't care. even her supporters raised substantive concerns. they were troubled by what she did. the republicans are looking for someone a agree with, but these people want a winner. this inner is no one else in the party that can raise the money and take on the republicans to keep the white house. stephanie: seems like they have a house in order much more than the republicans. mark: much more. a lot of people in the room love her. does she have the personality want a president and some of them said no but that is not her strength. they said president obama's weakness was he did not know how to get things done. they love the fact that she has washington experience and can get there and get things done. the republican group does not want washington experience. they want an outsider to go in and change things. republicans say an outsider can change things but the democrats a only someone who is an insider can change things. stephanie: may be an outsider can change things but an outsider cannot get elected. are they not thinking about that? mark: pull-up and said scott walker and rand paul. -- republicans said scott walker and rand paul. if you can work on issues with democrats that you believe are good issues, then bye-bye. stephanie: thank you so much. bloomberg politics' mark halperin and there will be much more on the new hampshire focus group coming up tonight at 5:00 p.m. eastern. "market makers" will be back in a moment. stay here. ♪ stephanie: coming up, one lawyer says the real market madness is that players don't get paid. this guy is suing the ncaa. we will be asking the ceo of a luxury watchmaker what impact the strong greenback is having on his business. stay here. you are watching bloomberg tv. ♪ >> live from bloomberg headquarters in new york this is "market makers" with erik schatzker stephanie ruhle. stephanie: welcome to "market makers." bill: don't mention duke losing. stephanie: don't mention the $20 i am about to discuss. key economic figures are out this morning and the conference board index of leading economic indicators rose 2/10 of a percent last month. index measures the outlook for the next 3-6 months. the philadelphia fed factory index came up short of estimates. the order shipments and employment fell. the weather may have had an impact. i will say it is more than possible. the federal reserve opening the door to the first interest rate hike in almost 10 years. at the same time, the central bank indicates once it starts raising rates, it will go slowly. policy makers including janet yellen ended their assurance that they would be raising rates. she said it doesn't mean rates will rise in june. ellen's honor fed to be very cautious. >> i know we have been there for so long and it feels like a fed that has an itchy trigger figure that wants to get off of it, but why risk it? it is much more safe to wait longer and make sure you're good to go when all the conditions are in place. stephanie: she says before raising rates, they want to make sure the labor market is stronger and inflation is approaching the 2% mark. go daddy has filed for an ipo seeking a valuation of $2.9 billion. it has been more than three years since go daddy was acquired by a group led by silver lake and kkr. its valuation would be at a discount to other servers. americans are not buying music the way they used to. the u.s. music industry shrank one half of 1% last year. it has been shrinking for years. revenue from web radio and streaming services like spotify sort of 29%. that can offset the sales of cds, vinyl records, and digital downloads. it is a changing of the guard here in new york city. our famous yellow cabs are now outnumbered by uber cars. there are more than 14,000 ubers . new yorkers take 440,000 taxi rides a day. they use uber for no more than 30 south -- more than 30,000. bill: what is a $20 billion startup? makes go daddy look cheap. stephanie: we have to talk about march madness. it is here along with the short-lived hope of filling out the perfect bracket. your bracket is not going to be perfect, but guess what we did here. we brought together a group of titans to take their best shot in our bloomberg bracket. we talked to the world top hedge fund members and ceos and leaders. everyone is donating $10,000 for a charity. 36 members have joined in. even if you are a basketball insider, it is anybody's game. might all modern be duke -- my alma mater beats duke a couple years ago. along with most of the people playing, i picked kentucky. 64% picked them. less bang through didn't. -- let us bang through who didn't. surprise surprise paul picked uva. he is playing for robin hood foundation which he also founded. we have four participants playing for robin hood. $360,000 is a lot of money. we need to go to kerry: -- to gary cohen. he will wisconsin -- he went wisconsin. gary chose harlem r.b.i. as his charity. i don't think wisconsin has a chance. bill: i do. i am a loyal duke alum. i think duke has a special team this year but everybody loves to hate duke so no one will pick them. only 5% of your dream team picked them. stephanie: it is the princeton of the south and its campus is very nice and the weather is nice. the girls are beautiful. it is hard not to like. not to kevin, who is the founder of under armour. he chose notre dame. this is the first year he is outfitting notre dame. they are wearing his sneakers on the court. he may have six teams playing. bill: notre dame won the acc tournament and they are actually very strong at the moment. stephanie: he is not the only one. the games begin today. at 12:15 today, notre dame is playing. i bet $20 if you hours ago that they were playing for bill said they were not. all you have to do is type in when his notre dame playing and there you are. bill: happy to do it. stephanie: i hope everyone will be watching. you can check whether it is on the bluebird terminal or on bloomberg.com/charitybrackets. you can watch all 36 playing. i am talking titans playing celebrity march madness. when we return, we will continue on a march madness beat because there are millions of dollars in the ncaa but it means nothing to the players. we will speak to the lawyer who is suing to make that happen. ♪ stephanie: welcome back to market makers. it is time to bring you up-to-date on the top stories of the morning. the labor market is showing signs of resilience. for the second week in a row, fewer than 300,000 americans applied for the first-time unemployment benefits. claims have fluctuated this winter probably due to severe weather. the last two weeks indicate employers are holding onto workers. target will join walmart and t.j. maxx in boosting the wages of its lowest aid workers. in person familiar with the matter says target will raise employee pay to at least nine dollars an hour. retailers are boosting paychecks in an effort to reduce worker turnover which raises overall costs. target is the second-largest discount chain. a nuke new poll shows obama is gaining support. 41% of those polled support the affordable care act. 43% oppose it but that is the smallest gap we have seen in two years. supporters like the expanded access to insurance. more than 16 million have gained coverage through the slot. some of them don't like the cost. the supreme court is extended to rule on a case that could unravel obamacare lately. those were your top stories. coming up in 10 minutes, the luxury smart watch. a swiss watch company teams up with silicon valley. plus the showdown in greece. richard branson's new gig is auto racing with electric cars. nobody does rich better than richard branson. we have to get back to march madness. it is officially in full swing 16 games scheduled for today. and case bill forgets, notre dame is playing. with three weeks of wall-to-wall basketball, the ncaa is set to profit big-time. big-time is a gross understatement. it is the event everyone is making money on. tv networks of bringing in billions of dollars in tv revenue. colleges themselves are making more than $700 million from tv contracts alone. all of us will make $9 billion in bets. think about vegas and the oddsmakers. guess who is making none of it. the fuel, the engine behind this, the players themselves will not get a dime. our next guest says he wants to change that. attorney jeff kessler is suing the ncaa. he wants the schools to have the option to pay their players. what is the case? mr. kessler: the case is simple. the ncaa is a cartel. it prevents the schools in division i basketball and football that generate billions of dollars from deciding whether or not it is fair to compensate the athletes in any way. stephanie: for one of the reasons people love march madness or college hoops is because of the heart and soul. these are real guys playing their hearts out. they want to go on and play in the pros. many would argue that is why it is a much better than pro sports because you are taking out the big money aspect. mr. kessler: i don't think that is true at all. people of this game because they are playing for their schools. that is 100% true. whether or not in a save and gets $8 million to coach, people don't care. whether or not the basketball coach of kentucky is making $6 million, nobody cares. if some of that money were to trickle down to these poor kids most of whom never become pros and most of them never get a graduate degree, what do they get out of this contribution? i do think people would lose any interest in the game if a little bit of money went down to them. stephanie: is a little bit of money? bill: that is the problem. they can't be just markets because that will corrupt it immediately. i am not saying the system is great. i do agree they deserved to get some money. they are getting a college education. that is worth a lot. they are not getting as much as they quit on the open market but then you will destroy what we all in to love about this. mr. kessler: you are a business network. you feel corrupted because there is no rule that stops you from getting paid what you are worth? you think mike bloomberg feels corrupted? stephanie: but we are not in school. mr. kessler: these are businesses and that is what is important to understand. looking at ncaa best ball, it is an $11 billion contract just for this. the schools on their own cable television networks. as i have anything to do with being in school? schools have sponsorships. they can't drink anything other than gatorade. bill: people get charged for failing those silly rules and that is ridiculous, but there is a great area between that and what is being proposed which is let the market decide to pay one person $5 million to pay best basketball in kentucky. mr. kessler: would you watch duke one game less if the athletes on duke were to make 10% of the coach's salary? stephanie: is it about him as a dude fan -- a duke fan? let us talk about how it would affect the university and all the other sports at the university that don't make money. mr. kessler: if they are extracurricular activities where they do not generate revenues they should be treated as extracurricular activities. nobody said you should support the hockey team. why are these poor largely minority kids who generate all this money forced to bear this burden of being the only people associated with this business who do not get compensated? bill: what about the rest of the kids at the schools? mr. kessler: stanford university has a fund that it lends money to get the best and the brightest to develop the next apple. to develop the next big company and the use that to compete and get the best kids. is there any ncaa rule that says they cannot give that money to those kids? nothing. if you want to get the best musician on the band playing at the ncaa tournament, do you think there is a limit that stops the schools from giving more money to get the best trumpet player? bill: are you saying other schools pay the band members to play during the tournament? mr. kessler: the schools give extra scholarships and extra housing and extra inducement if they want to have the top band members. that don't get millions of dollars because they don't generate millions of dollars but they get an amount that no one restricts except for these athletes. these poor largely black athletes that they don't get paid by everyone else does. it is not fair and it is not legal. stephanie: clearly he has a view. bill: without a question. you're in a very dangerous area where you're going to destroy something everyone seems to love quite a bit. mr. kessler: they said that about pro sports. i started out doing that for basketball players and football players. every owner got up there and said if we allow players to change teams if we allow them to make all this money, the fans will stop watching. we are destroying the business. .guess what no one loves the sports more than today. the olympics used to ban people from making money. do you like olympics less? stephanie: we have to go to commercial. you have to take this on the road. jeffrey kessler is a partner and he has a feeling about march madness. see you in a second. ♪ stephanie: welcome back. i'm stephanie ruhle. move over apple. a swiss watch maker is teaming up with google. 's ceo is with us now live from switzerland to explain. welcome and tell us what you are up to. >> thank you very much. i just left a conference or we announced the huge enormous partnership. google and intel will partner together in order to make the next tag hheuer watch. it is an enormous contract because we are going with the two giants to make an incredible swiss connected watch. stephanie: what do you think of the apple iwatch? will you wipe it out? >> no. we are not doing anything against apple. we are trying to make a watch an hour characteristics with our history with our emotions and design. we want our watch to look like our watch. apple is a great company and has a great watch, but we are not at all fighting against apple. we are trying to satisfy our customers who are demanding tagheuer to make a connected watch. we could not do that alone because in switzerland, we do not have the technology at that level like intel. there is only one intel and only one google. those two are the best. we needed the best hardware and people. we decided the best people are at intel. for the software, we needed the best people and we decided the best would be google. that is why we are connected with the best people. if we have the best people on both, you know you are going to be successful. bill: where are you in the process of developing this competitor to the iwatch? >> google and intel have been in switzerland for weeks working with our engineers. we have met 10 to 20 times in silicon valley to present the first watch by the end of the year. the end of the year is an four months. in four or five months we will show the result of this giant partnership. bill: do you have an example of what you are trying to do? you have a prototype you can share with us? >> on purpose, we can share nothing with you today because we did not take any photographs. we want the world and our competition and our customer to discover all of the same time in october or november and to say wow at the same moment. we are working on the surprise. we do not show anything. the only thing people know now is who are the two partners. imagine if you have those two partners, you cannot fail. stephanie: i've like to say wow so i am glad you are here. thank you. stay with us. we have more on smart watches when we return. how are developers going to come up with apps to fit those little screens? ♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. stephanie: a new frontier for developers. smart watches. how do they get the apps to fit on the tiny screens? and wes's lone voice in the wilderness. the only lawmaker to vote against annexing crimea. he has been barred from the country. and car racing goes green. we are going formula electric. and who to do it but richard branson? excuse me, sir richard branson. i am erik -- i am stephanie ruhle. bill: i like formula e. stephanie: branson knows how to spend money and a fun way. in tunisia the government has arrested 9 suspects in the attack on a museum. 23 people died. most reformed tauris. anisha says that five or -- tunisia says that five or directly tied to the attackers were a cell but they're not saying that they were part of a larger group. do not expect miracles on greece at the summit in brussels that is kicking off in this hour. don't expect any break through it all. european leaders one degrees to come up with a plan to reform the economy before they hand out emergency loans. greece agreed to a framework a few weeks ago. they have not come through with specifics that would convince countries to hand out anything. in switzerland the central bank promises to weaken the franc. it soared in january when the swiss national bank abandoned its feeling of 1.2 per euro. that was a bit low to exporters. the bank president told bloomberg that markets need time to adjust. >> the only time i can pick of the frank being heavily overvalued, it is not attractive at the moment. stephanie: time to adjust. this was economy may contract for two quarters. russia has the clear the worst of the economic crisis over. the russian finance minister says the peak of the crisis is behind the country and he has seen signs of stabilization. russia is shaking off to be problems. the lowest oil prices since 2009 day economic sanctions over the conflict in ukraine. mortgage rates are falling. freddie mac says the average 30 year fixed-rate loan fell below 3.8%. a year ago the average 30 year mortgage was under .3%. -- under 4.3%. the rates are historically low even though the fed has ended its program holding down rates. a touchdown worth nine points? check out this idea from the indianapolis colts. a team would have to trail by 9 points in the closing minutes. if it scores a touchdown and a two-point conversion it is eight point. the colts suggest the team try a 50 yard real go --yard field goal for one more point. we have to take you back to the showdown in brussels. is it a showdown? and more pressure on the greek prime minister to firm up a plan for the economy. what do you really expect from these talks? pomp and circumstance or results? >> germany's angela merkel has played them down. the eu president said a while ago, before the summit started that this is not greece possible last chance. i'm not sure that we expected any big deals or announcements. angela merkel and the other players want to hear what the greek prime minister has to say. they will sit down with him on the sidelines of the summit to see if they can get more information about the reform proposals that greece is putting forward. bill: jones, do you have any idea on the status of the deal with the creditors that the investment bank lazard was heading up? you have any insight on where that stands? jones: at this point it is on hiatus. they have put the taught loca -- they put in a technical talks on policy to wait and see what the outcome of the meeting today is. we are waiting to see what happens. what the language is after the meeting. it will be late in brussels, because they have the regular summit, and then they have the special meeting. stephanie: are the greek finance officials realistic about their situation? it seems like the comments we have been getting out of the finance minister is that he is not a technology how grave things are. jones: this is one of the things. the eu, they icbc, they are trying to get a close look at the books in athens. they are not satisfied with the answers so far that they have gotten from the officials and advance. they're trying to dig into the re. bill: and have the willingness of greece to engage with these creditors. has that hurt their standing at home with voters? jones: you have two different messages. greece has made commitment to the eurozone and to its creditors to get the $240 billion euro bailout fund. at the same time separates has made campaign promises during the election to say that to the austerity program tied to the bailout money will end. that has been the negotiation going on. merkel france and the ecb will be telling them that you cannot have it both ways. you have to work with us to make this happen. stephanie: let's be honest. he may have made his promises while he was campaigning, but is he in a position to fulfill them? jones: he is the leader of the country. you could argue that he can do what he wants. if he does not satisfy his creditors, if he does not satisfy the eurogroup, the ecb and the imf his funding will be cut off. that will be a big problem. greece is facing a credit crunch at the and of the month. they hope they can satisfy the creditors and the euro group and the ecb to get another eight payment of where the end of the month. stephanie: hope. i wouldn't like to thank my country's finances rested on hope. when we return, this young man is leading yahoo! into the wearable era. figuring out etiquette apps on a smart watch. when a 16-year-old gets paid $30 million for his cap, -- for his app i was a 10. and we will speak to the only legislator in russia who voted no against annexing crimea. you're watching bloomberg television. ♪ stephanie: welcome back. i'm stephanie ruhle. let's bring you up-to-date on the top stories of the morning. the philadelphia fed factory index came up short. falling to the lowest level in over a year. the bloomberg economics seen says the philadelphia fed survey is an indication of weakness to come in the economy. indicators rose in february reflecting high stock prices and an increase in building permit. the two tents of an increase is short of 2014. a website hosting company, go daddy, has filed for an ipo. it has been over three years since it was acquired by a group . the valuation would add discount to another provider. at the high end there would be a multiple of two times of a sale. amazon, is in -- is expanding the same day service. previously, amazon prime service was limited to selected areas in new york city. a two-hour delivery is free. one hour will cost eight dollars. amazon will brought the service to other cities. in 10 minutes russia's voice in the wilderness. the only lawmaker to vote no when russia annexed crimea. and bracket busters. can some of the other names in businesses make it better march madness picks than you? and music airplanes, and outer space. what will richard branson do next? olivia sterns found out in miami. we will talk apple watch. it is going on sale next month. the stakes are high for developers trying to figure out how to fit an app on the tiny screens. you know him as the founder. the teenage founder of what he sold to yahoo! for $30 million when he was 17. he is 20 years old and runs a company's yahoo! news digest product. i've not seen you in a year. you are working a look with the mustache. this is a whole new you. are you trying to get into bars in silicon valley? nick: i am still 19. i'm studying at oxford. i thought i would try to look older. stephanie: it is working. let's talk about your day job. getting apps on a tiny screen. how will you do it? nick: the apple watch gives opportunities to developers. we expect a higher frequency of sessions with a five to 10 session length. this is being done on a large screen format. we now have a logarithm that can be summarized down into a visual point. we think that this will be great on the apple watch. stephanie: how small does it need to be? how will you take a longform piece of news and make it that small? nick: you will be saying next month what the manifestation is. we have been thinking about assimilating new stories. digest, the product we have now, we send them once in the morning and evening. they contain all of the need to know stories. it is comprised of a textual summary and visual news that we call atoms. we will give you visual forms in atoms and the textual summary. in september at of the watch launch we were approached as to how we would integrate digest. we had a long time to conceptualize the ideal musical experience. we tried to come up with something unique and specific for a wrist experience. bill: can you explain how yahoo! will make money working with apple to miniaturize the news? nick: there are motivational strategies. because of the small screens and micro sessions, the content needs to be very native and useful to the user. the only have five to 10 seconds. users need the information they came to the service for. if there is an advertisement and needs to be relevant and part of the experience. flashing a banner halfway through the experience will turn off users. we are trying to elevate news consumption in general. when we have gotten to a threshold when it comes to the volume of users, we can look at different approaches to the advertisement and modernization. stephanie: for app developers you can not fit five or 20 apps on the small screen. will the boom of wearables hurt apps? nick: i don't think so. they will have to rethink their approach to the watch. it provides an interesting challenge for developers. a lot of innovation comes out of constraint. and also tackling new platforms and getting the process to look at user feedback to quickly update the product as we see fit. stephanie: are you going to wear the watch? nick: i cannot wait to test it out for myself. stephanie: as a cool 19-year-old, are you going to buy the $10,000 version? nick: no, i will probably get the color for one to fit the shirt. bill: i don't know if you are aware of the announcement that was made in switzerland that they're working with google and intel to create a competitor to the apple watch. is there any buzz on that in san francisco? are you developing apps for that? nick: we have looked at the android watch experience. there is a massive opportunity for the fashion industry to collaborate with the technology industry. they symbolize a certain status or class. the watch has come up with a visually appealing and technologically relevant experience. over time i think you will see the fashion brands working with the tech companies given it is such a fashion item. stephanie: we know how secretive apple is. have you worked with the watch? when you are creating the app? nick: we were just told to work on new and interesting ways of consuming news on a smaller screen. some developers have been selected to go in and do testing . we are excited to get it out there with everyone else. it is survival of the fittest at the end of the day. the best apps will dominate the program. a lot of the other companies are taking their content on the phone and mimicking it on the watch. they're not thinking about how to make the content experience useful when they have the concentrates -- the constraints of a small screen. stephanie: what made you decide to go back to school. especially now that you are in the tech world. you sold your company for $30 million without a high school degree. nick: i very much in two nourishment through knowledge. i need to be intellectually stimulated. i wanted to study a course like computer science and philosophy at oxford university to broaden my skills in the philosophy section. i am enjoying balancing the oxford education with what i do at yahoo!. stephanie: what are you majoring in? nick: philosophy and computer science. it is an interesting combination, but very relevant. it is similar to what marissa mayer did herself. stephanie: you never cease to amaze me. i went to college and i never thought it was because of a nourishment of learning? nick: a nourishment of knowledge. bill: that could be the tag for yahoo! on their homepage. stephanie: it is great to see you. i love the mustache. congratulations. nick d'aloisio a product manager at yahoo! news digest. nourishment of knowledge? bill: i want you to call your sons in college and asked them if they are experiencing a narrative that of knowledge. stephanie: i didn't at the time, but i am clearly not nick. game start at 12:15 for march madness. i know that because i bet that they were playing and i won. we'll be back with more. remember, the charity tournament, 370 grand. stick around, bloomberg tv. ♪ stephanie: welcome back. i'm stephanie ruhle. with bill cohan. the market has turned green. we have seen volatility. people are looking at the doubt. apple officially joins the dow. it is price weighted. that will make apple that the biggest stock in the dow. yesterday it was ibm. today it is goldman sachs. i am surprised that apple stock is not doing much. i thought we would see a boom in retail action. it has been quiet. bill: it shows you how goldman sachs is everywhere. they have the vampire squid thing going on today. stephanie: i fight you all the time about the goldman. i fight you all the time about how you love to say this is the golden age of thinking. -- of thinking. it is the golden age of thinking if you are a shareholder. if you're outside the industry a you are not. six years ago when you are an employee it was fantastic. it should not be, you are just a employee of the company. finally you have it right sided. i can learn. the issue is, i preferred it when i was an employee and it was wrong sided. bill: finally they are getting shareholder friendly. stephanie: a little bit. every once in a while bill cohan is right. will back with russia and vladimir putin when we return. ♪ announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker and stephanie ruhle. stephanie: welcome back. i'm stephanie ruhle. bill: i'm bill cohan come in for erik schatzker. stephanie: the dow jones industrial average is given back. the nasdaq outperforming. i'm going to take you to scarlet fu. scarlet: for the nasdaq, facebook is hitting a new high trading at a new record above its closing high of 81 .45. up by more than 2%. we know that earlier this week the company said it is rolling out a 20 let users send money to friends through the messenger app. i guess now we know why you have it. so facebook can get in on this digital while at space area this comes after facebook hired a former president of paypal. we should also mention piper jefferies has downgraded ebay. one of the reasons why is because of increased competition. he says that will all weigh on ebay's market share or the next one to three years. i wanted to give you a quick check on europe as we enter the final hour of trading there. the two date eu summit. uncle of merkel said do not expect -- angela said do not expect a breakthrough. greek stocks are falling for an eighth time in 10 days. yields on greek bonds are moving higher. this is the three-year right now. auntie 3.82. -- 23.82. a lot of people calling that jump a short covering rally because of what the fed did. stephanie: as it relates to greece, if you listen to anything happening in brussels we just spoke to our bureau chief. i do not think we are going to see those greek numbers turn around. thank you for giving us the latest markets update. i'm going to talk about a basketball update. march madness is here. we are doing something special. we have asked some of the worlds top ceos and hedge fund managers to give us their brackets along with a pledge to donate $10,000 to the charity of the winner's choice. 36 people are playing which means a total of 360 grand to a very worthy cause. tying and competition philanthropy and college hoops. bill: i am very impressed by this. out of nothing, you have created a charity that is going to give away $360,000. stephanie: my team and i had the idea to do this. i went to mike bloomberg he said, i am in. almost across the board basketball fans or not, everyone said, i am all in. not surprisingly, over 60% of the participants picked kentucky . let's look at a few specifically. founder of payment capital -- of hayman capital is playing. he has chosen kentucky as the winner. i thought we were going to have team names. i wanted him to go with bass balls. kyle disagreed. bill: i'm not sure i see carolina or louisville in the final four. stephanie: who did you pick? bill: duke. they have a great team this year. i think they could have a repeat of the victory. the christian laettner shot. there is a whole espn show about it now. this is a great show for duke haters. stephanie: let's look at t-mobile's ceo john leisure -- john ledger. he did not necessarily go with kentucky to win. he is a guy who likes to go against the grain. he picked wisconsin. gerry connolly goldman also picked wisconsin. vikram pandit, former ceo of citibank he is playing with us. he went with the lead choice. kentucky. he also has arizona, lower bill and he -- louisville and gonzaga. i would have loved if president obama was playing. he is not. mark lazard he is playing. i do not know who mark chose. mark is a co-owner of the milwaukee bucks. he may be eyeballing that kentucky team. bill: they are not a one and done cruel. we will see if they take it all the way this year. stephanie: you can follow it not just on bloomberg tv but on the bloomberg terminal and online at bloomberg.com/charity brackets. i'm going to be talking about this because i really want my cause, girls inc. of nyc, to win. robin hood is actually the leader. i think four of our participants are playing for robin hood. check us out online on your terminal, on tv. we are all about the titan edition of march madness. bill: i think you started something. stephanie: a million dollars next year. we will see. i'm glad bill and i agree on something. it is so rare. i want $20 from him today. bill: notre dame is playing at noon. stephanie: when we come back, we are talking about richard branson. he has always got something new going on. olivia sterns went down to miami and found out what he was up to. he managed to work in the miami dolphins cheerleaders into a car . leave it to richard branson. ♪ stephanie: occam back to market makers. formula on racing is one of the worlds most popular sports. there is a younger greener version of the race, formula e. olivia sterns this girl works so hard. she went down to miami to talk to serve richard branson on a beautiful saturday about why he is backing this new sport. olivia: nothing fuels innovation like a little competition. at least that is the idea driving formula e. >> when you have tens of millions of dollars invested to win a sport, new breakthroughs happen. olivia: formula e is the world's first fully electric racing series. it is aimed to promote our and the electric cars. the combination of glitz and green energy make this a natural fit for richard branson. i tracked him down at the virgin racing garage in miami. >> formula e fits in perfectly to our whole aspiration for new -- for renewable energy. i hope people will walk on the streets -- people find it as strange as finding someone smoking in restaurants. olivia: formula e is a spinoff of formula one. there are a few key differences. formula e drivers do not just taint -- change tires. speeds tap out at 160 miles per hour. >> you hear the screaming of the tires on the road. it is different. you don't have the roar. it is just as exciting to watch. as people get used to these drivers the amount of people who watch will grow. olivia: one of 10 teams competing in formula e's inaugural race. for now, teams all use the same electric car. next year they will be behind the wheel of their own technology. is there a business opportunity for you? >> we have virgin racing engineering on this side of the car. we have teams of people trying to develop and work on electric cars. you may well find virgin competing with tesla in the car business as we do in the space business. ♪ stephanie: here with us, olivia sterns, breaking this very serious story. that is rad. olivia: i loved it. there is tons of money, a lot of celebrities in formula one as there are in formula e. the first difference is the sound. the cars go by with high-pitched whine. the guys in the pit whistle to make sure you know they are coming. formula one, you have this deep engine roar. you see the driver, he jumped out in between in the middle of the race because the car battery only lasts for half the lap. bill: half a lap? olivia: half the race. this is all about trying to get innovation and the technology they develop for all the investments. to trickle down onto main street. bill: is this not really about the racing? olivia: it is just like formula one. stephanie: formula one is about partying. olivia: i was talking to richard branson about partying and formula one. here's what he had to say. >> i did work for a formula one team wants. we won the series. olivia: you're the only person who has not lost money in formula one. >> we were very lucky. i got so drunk that night. olivia: i am hoping that you win and we can all replicate that. >> we will all go out and celebrate. olivia: there is a business opportunity in this form. there's a reason why virgin engineering is spending all this money. as he says, one day they might take this technology and give the lawn mosque a run for his money -- l onelon musk a run for his money. bill: how much has he invested in this? olivia: it is not public but obviously he has -- the whole enterprise, it is got to call it -- cost him $50 million. stephanie: what does he care? olivia: he is not looking at this as charity. it is an investment into green technology he will use. stephanie: maybe it is an investment in fund and you cannot put a price on that? bill: that is a novel thought. is there a sense that the drivers like raising these cars? olivia: we spoke to a couple of professional drivers. have you ever driven electric car? the pickup is instantaneous. they are lighter and move differently. they have a lot of professional racers now driving formula e cars. branson himself is in third place. if he does in fact when i hope to be at that party. stephanie: of course you do. i was trying to go kite boarding with him. those photographs are incredible. bill: you just want to go to the sea. stephanie: the thing about mystique is you need to be invited. you can rent a house anywhere but if you show up at mystique uninvited, you would rather stay home. olivia: agreed. stephanie: olivia is on my team. that is tragic to go to mystique with no party to go to. on that note, olivia is going to be leaving us. "actually stephanie, i was invited." you know what, i just cut olivia's microphone. let's get to some news. islamic state says it was behind that deadly attack on a museum into easier. the group issued a statement calling the attack and invasion of a den of infidels. authorities now say 23 people died when done men stormed -- gunmen stormed the tunisian parliament. most of the dead were foreign tourists. tunisia said it has arrested nine suspects. apple is making its debut in the dow industrial average today. replacing at&t. apple had been kept out of the dow because its stock price was too high and the index is price weighted. apples lit seven for one. that cleared the way for the company to be added. the lowest paid workers at target are getting a raise. a person familiar with the matter says target will raise employee pay to at least nine dollars per hour . walmart has made a similar move. retailers are boosting paychecks in an effort to reduce worker turnover. target is the second-largest discount chain. "market makers" will be back with more. stay with us. i have to think about the fact that i never get invited to go to places like mystique or hang out with richard branson. bill: that might change. stephanie: stay with us. ♪ stephanie: welcome back to "market makers. i'm stephanie ruhle. the only member of the duma who voted against the annexation of crimea. he got stuck in traffic area unfortunately, we are out of time to read we bring you that interview tomorrow. you will have to sign off but we have a lot more to cover. it has been a big year for big pharma. bill and i will be sitting down with the president of astrazeneca. we will also be talking march madness. tip-off at 12:15. hopefully some of those titans in the match with me will get knocked out early. we will find out. bill: big again tomorrow night. ♪ >> bloomberg television is on the markets. u.s. stocks pulling back after yesterday's fed induced rally. the nasdaq holding up the best. it is still positive. it is trying to make another run at the 5000 level. wti resuming its plunge. joining me for today's options insight is max brier. give us your interpretation of the fed's actions yesterday. max: a goldilocks outcome. patient was dropped but it was more than offset by lowering of the dots. concerns about the dollar. things that offset the hawkish outcome that dropping patient came with. scarlet: what does this mean for volatility? chair yellen has opened the door to interest rates. she is also removed the forward guidance. max: what it means is that these data points are going to be scrutinized. the fed has restated they will be data w dependent. scarlet: is volatility priced appropriately? max: i think it is going to be hard to tell when ball picks up. -- when volatility picks up. kind of a conundrum in terms of should volatility be hired now or a few months from now. scarlet: when it does pick up it could be violent? . you are also looking at dollar strength. a lot of people saying that the fed has decided to stabilize the dollar before it does damage to companies and exports. consumer staples are very did -- very dependent on a weaker dollar to boost sales overseas. you are looking at the xlp. how does your strategy fit in with what the fed did? max: the group as a whole captures a lot of international exposure area that the movie the dollar has been extraordinary. know where can you find a group that is more collectively exposed to a stronger dollar. some of these companies derive more than 50% of revenue overseas. this dollar strength is going to impact their bottom line. i think it is a group to look at. maybe with a cautious eye in terms of how that dollar is going to affect revenues. scarlet: what is your trade specifically? max: looking at something like a 4641 put spread gives you a nice range of protection for about $.55. nice leverage for a downside play. scarlet: lows lower than the past 12 months. max: the dollar is an unprecedented territory. scarlet: even after yellen's statements yesterday suggested the dollar's rise may slow down? max: the reversal today in the dollar is what is giving me some pause. we are seeing those unwind. scarlet: thank you so much for joining us. "money clip" is next. ♪ ♪ >> welcome to "money clip. ." apple joins the dow jones industrial average. in motors, richard branson of urgent alert -- of virgin electrifies racing. it is luxury getting it for less in the far east.
noon. ♪ here's a good place to start. is in advanced negotiations to acquire all the lucent. it would help no p.m. compete with eric -- help nokia compete with ericsson. calpers had an increase of 6% over last year as the value of its portfolio rose by 8%. shares of profits have more than tripled since the recovery brought on by the recession. walt disney is investing in a steven spielberg film "the bfg. -- "the bfg." it is based on a terrific children's book. if you haven't read it, it up. -- pick it up. there are less than 60 minutes to the close of trade. scarlet fu had and i on some of the late action. scarlet: we've been drifting around in search of earnings before tomorrow. cautious trading in europe helps to set the tone. tomorrow, jp morgan, wells fargo, j&j, intel reporting. ahead of that, down slightly for the nasdaq s&p, and doubt. the fix is moving up, which shows the increase in prices investors are willing to pay. it is just below 14 right now. you gave us some great approaches him a dollar right now, but here's another one. the dx why dollar index rising to a 12 year high. the chinese index is expected to drop, sending other currencies higher, such as the aussie. oil is up for a third day as well. erik: we will be digging deeper into those chinese data later into the show. right now, talking about investors overlooking trillions of reasons why the rally will keep going. imf economist stephen jen says pent-up demand will lead to depreciation and those forces will outweigh any long-term fed policy. is he right? here with us is alistair newton and lisa abramowicz. alastair: why don't we start with you -- alistair, why don't we start with you? is your bias toward an ever stronger dollar? or do you think this fellow stephen jen, is wrong and fed policy will interrupt the rally? alistair: let's make this that i am a political strategist, not a currency strategist, and your readers need to take that into account. i know the market is likely to soften. it has rallied for the last several days, but we have access in opec coming out right now. -- excess coming out in opec right now. look at the amount of oil going into storage in this country right now. you've got to say that nothing is going to stop the shale boom in the long-term even priced at this level. shale will prove to be remarkably resilient. that means the u.s. will move increasingly to domestic security energy over the next 10 years. that has to be dollar positive. i am not particularly concerned about whether we see the dollar softening in the short term, but relative to what? the euro? we could still see a greek exit. it is still an uncertainty in the u.k. right now. certainly in the yen, given what we've seen in the japanese data. a lot of that you could put down to bad weather, i think. frankly, it is not -- it is hard not to be a dollar bill -- the dollar bull. lisa: frankly, i think everyone is a list. how much of as a bride can this have definitely would have to be a massive surprise to the upside to think it is not -- how much of a surprise can this have? it would have to be a massive surprise to the upside to think it's not going to be there. that's got to be part of it. karl: if i could jump incommode, setting monetary policy is a real possibility. that does point to a stronger dollar. and getting back to alistair's point, a big part of our trade deficit is energy imports. if shale producers are helping to narrow the trade gap, -- alastair: since 2012, 80 percent of the trade deficit is energy. that is a huge amount of money. the trade deficit that year with $560 billion. erik: going away, if you are right and shale production continues uninterrupted. alastair: yes. erik: we have not even brought into the conversation the notion that i started with, that stephen jen has documented that there are $9 billion in dollar denominated liabilities that have to be repaid. and in effort to repay those debts, companies and borrowers of all stripes will have to find dollars. lisa: there is always that dynamic and are frankly, people concerned about that. you have these emerging markets that will have to pay back this debt and it will make things more expensive for them and weaken the currency. and people will want to favor the dollar because it creates instability elsewhere and people want to put money in the u.s. there is also the structural short position with just central banks. they are less heavily weighted toward the dollar than they have in traditionally right now. -- have been traditionally right now. their investment fell to a record low in 2011 from a high of 63%. that could potentially be a really strong process of for the strong positive for the dollar. carl: and we are seeing some indications of a strong holding in the dollar. that is a relative -- a relevant point. if you look at the dollar the last six months, there has not been this long-term structural story. which you highlight and i think is a very valid point, but more to the central bank invasion. in terms of dollar strength now, we've seen this short-term horizon. the structural part has not kicked in yet and i think that is what will drive it over the longer time. erik: allison, perhaps it's a bit -- alistair perhaps it's a bit unfair the way i put that question to you. alastair: i'm used to unfair questions. [laughter] erik: to what degree does the rubin rule apply, the strong dollar in america? alistair: america imports a very large amount of manufactured goods from china. cheap energy costs will help boost domestic investment. i would like to see a boom in homegrown manufacturing. that would be good for america. but because america manufactures here are the things that are largely bought by americans, i do think that bob rubin, who i have a very high regard for, is actually right. a strong dollar is good for this country and will be again in the future. speaking as the one non-american on this show -- erik: hey, hey, hey. alistair: i beg your pardon, one non-north american. i do think that a lot of this conversation is misplaced. in relative terms, america is not as strong as it was 10 years ago and we've seen the rise of china. but america has a great story to tell and i do firmly believe that america will remain a major, if not the major global military power for decades to come. and probably the world major economic power for decades to come, despite china perhaps being number one on ppp. erik: and they have a strong dollar to go along with it. alastair, thank you for speaking with me. lisa abramowicz and carl riccadonna will be the -- be with me on the inside of this break. and jordan speith this weekend. a lot it on those young shoulders. ♪ erik: you are watching street smart here on bloomberg television. i'm erik schatzker. three years ago, morgan stanley 's james gorman told me he would put money on a fed hike this year. as it turns out, they were betting on a 2016 increased. now those same economists have come around to the view of a fed liftoff in december. here with me, alastair newton, lisa abramowicz, and carl riccadonna. you know some of these families as well. the cynics want to somehow believe it was influenced by gorman. carl: never bet against the boss. i think the bed -- the fed and a lot of the policymakers have done a pretty good job of at least initiating the dialogue of one and done, or two and down. -- and done. getting off of popping to assess the implications of one move. as the fed is getting better at telegraphing message, they saw, ok, they will do something this year but not a lot. erik: that said most market economists are still producing a fed increased before december. karl: the cap is kind of split between the june and september meeting. i would not be surprised if we saw a little more emphasis on the july. probably not a good idea to skip that. erik: i don't how much insight you have into this kind of dynamic but clearly, the ceo has accessed information he will not share with his economists. he meets with his client and he knows to what degree the ceos feel good about investment plans and he might know a little bit about their spending. again, information he may be able -- unable to share with his economists. it's kind of unusual frankly, to hear a ceo bs bold as james gorman was about his view. many ceos will say the house view and say, my economists say so and so. alistair: to be fair, i don't begin with particularly brave three months ago to say a fed rate hike will be happening this year. i don't agree with our economists a lot of the time either. and the good news is, she married doesn't pay me to agree with them. -- my company doesn't pay me to agree with them. despite all the movements in the data, for the very good reason that none of us can be sure until there is a persuasive argument to come down from somewhere else. and at the moment, i don't think that exists. it could be june or it could be december. there is that much uncertainty about it. clearly they will be a big impact on the emerging markets when this does take lace. -- take place. and a lot could happen between now and then, because clearly inflation pressure is nonexistent. growth in the u.s., low at the moment, but that could be a seasonal thing. we could see a big uptick as business gets going in the northeast again in q2. and the core thing that the fed will be looking at, i know unemployment is only at 6% in the u.s., but look at the participation rate. it's not very impressive right now. erik: we are just talking about economic fundamentals. what about the macro prudential role that the fed also has? carl: the fed repeatedly signals that yes, monetary policies could be used to deal with these macro prudential issues, but certainly not at a first resort. can they approach this through regulation and other impacts? and arguably, there are not any big bubbles. alan blinder highlighted as much in the wall street journal today. global yields are low. there is a tertiary bubble -- is there a tertiary bubble? it's hard to hang onto. very much to your point, we have to see the extent of the bounceback in the economy. maybe it is the weather and will prices and these transitory factors but we are not sure yet. we have to see how much the economy is recovering in q2. 1% in the fourth quarter is not a momentum that policymakers want to see to start the great liftoff, if you will. we have to see what the rebounded in q2. will we be the same as last year we are growing 5%? or is it something much tamer? the fed will air on the side of waiting in a bit longer. erik: carl riccadonna, as always, thank you. alastair newton is staying right here. coming up, could marco rubio steelal a vote from hillary clinton? ♪ erik: the list of 2016 candidates keeps growing. senator marco rubio of florida told his top donors he would be running for president. he is the third republican in the race after senator ted cruz and rand paul. earlier on "market makers," a former reagan advisor told -- talked to me and stephanie ruhle about marco rubio's tax plan. here is why he doesn't like it. >> it makes no sense. what you want to do in personal income is lower rate the rate -- lower the rate is much as you can. all caps's are bad and some are worse than others. you want to collect your money in the least damaging factors -- fashion. erik: for more, so with me is alastair newton. john, you were with me and stephanie when we were stepping all over the marco rubio tax plan. it is very decidedly end of the middle class. how successful do you think that can be amended the constellation of republican points of view? john: good to be with you again. i wouldn't say it affects the candidates or potential candidate, because he has had to be more specific than the other potential candidates have had to be yet. driving back to the reagan era sweeping across the -- sleeping, across-the-board tax cut chopping those as much as possible, rubio is saying we have to do something about upward mobility and income inequality. and he said he wants to focus his tax relief on families with kids but i will leave the rate where they are. especially the top rate on personal income. on the other hand, there is a whole camp of the republican party that are known as reformed conservatives who are attracted to this kind of vision. there are some who think it is the right way to go and will help marco rubio differentiate himself. at the same time, those guys at the wall street journal and others will give him a hard time. erik: alastair , what about you? alistair: i kind of agree with john. looking at marco rubio overall i kind of feel like i did about barack obama in 20 -- in 2007. in theory, it may be too soon for him. there are other factors that will we against him -- way against him. if he truly has something, then other republicans will be inclined to support. erik: is alastair is right and rubio does not end up being the nominee, does some of this begin to change the conversation about economics, and more important cap policy within the republican army? does he arrested out of the hands of -- does he wrest it out of the hands of art laffeyr and others? john glenn it is a good question. it will be a noisy fractious -- john: it is a good question. it will be a noisy fractious nomination road for republicans. we will see who wins the debate. there is not doubt it will inject a contentious element into this republican nomination of which there will be a lot. i agree with alastair that no one says marco rubio is the front runner for the republican nomination. and the analogy to barack obama is quite good. no one would have said in 2007 at barack obama -- that barack obama would have been the front-runner, and then he went on to become the president. we will be covering it on bloomberg politics and bloomberg tv as he brings himself forward and launches himself at the white house. erik: looking forward to it. a big show coming up on bloomberg politics. don't miss it. ♪ erik: welcome back, everybody. you're watching "street smart" and i'm erik schatzker in for alix steel. over 200 world caribbean passengers onto ships are suffering an outbreak of vomiting and diarrhea. it's happening again. the vessel was alone coast of california and mexico. the coast guard will board the vessel's when they dock today or tomorrow. harvard once the school to divest fossil fuel investments from its endowment. harvard's president said she opposes them in favor of other strength for the endowment. and five years after the fatal bp skill -- bill in mexico, adopting of outside audits of oil drilling equipment. let's take you back to the breaking news desk. scarlet fu was looking at some of the notable stocks of the session. scarlet: netflix briefly talked its -- topped its numbers at the close. the catalyst for today, ubs upgrading it to a byuy and raising its price point to $565. last week citigroup upgraded the stock as well and there has been a re-rating over netflix in the past few months. the stock is up 47% in the past three months with subscriber additions outstripping stock growth. and an increased 6.2% in passenger traffic for jetblue. that is good for a 4% gain right now. and apple is little changed. i did want to bring it up because there was news after the preorders of the apple watch. buybacks will boost its return to as much as $180 billion. of course, does want to use any of its cash overseas because it will help to -- have to pay taxes on that. erik: in the meantime, greek officials denied the report that athens is nearing declaring default unless they can reach a deal with his creditors by the 24th. bruce told me and stephanie he owns some greek bond. what are the odds of greece leaving the eurozone? here's what he said. bruce: maybe 10% to 15%. on the base case, the outcomes are that they stay in the euro. erik: alastair, you have some views on greece. are you inclined to agree with bruce richards? that there is an 85% chance of greece stand in the eurozone? alastair: our economists are pretty much in the same place that bruce's. if you look at market participants today, they divide into two main camps, those who think the great fear is -- those who think that greece is negligible and those that think it is inevitable. most of the debt is owned by the ecb these days. erik: it's hard to get a good trade on the marketplace. we see the yield at about 11 and a half. -- 11.5. alistair: most markets are looking at markets in europe. they are looking at athens which is where most of the problem exists today, and they are looking at berlin, because that is where decisions tend to get made. but if you're looking at those who are strongly opposed to making further concessions to athens today, they are they government in madrid, rome to an extent lisbon to an extent, and dublin. they all have election issues coming up with their own parties to deal with. and we have a finish election coming up at the end of this week. there is a fair to medium chance that the finns will be part of the coalition. there will be an election spending cut in finland. it will be difficult to persuade voters that they should be doing more for the greeks when they are suffering and austerity program themselves. that is why it is probably higher. erik: why is the influence moving past berlin to the italians, to the spanish, to the portuguese to the irish command as you put it, to the financier: alistair: first, there has to make -- to the tfinns? alistair: first, there has to be concession made. and secondly, angela merkel. the voluntary and are probably around 35% and the german government acting would still prefer to keep greece in the eurozone. but not at any price. erik: you think angela merkel would be willing to hang herself on the cross? alistair: prefer not to, but keep in mind you have a situation in which the german and the anti-euro party -- not anti-europe, but anti-euro -- have already won states that could push merkel out of power. in the end, did o'neill summed it up all very neatly with his "all politics is local" soundbite 30 yard years ago. merkel has to be aware of her domestic constituency and sentiment in other eurozone countries as well. and it's not as if the weeks have come to the table and made a sensible offer for what they would prepare -- be prepared to accept. when you have greek ministers coming out and saying they want billions in war reparations from germany, that's not very helpful. erik: do they not seem to be handing anything to the populace? alistair: as far as spain, they have important elections coming up at the end of may. with amos --podemos is likely to do well in those. as for his italy is concerned, i have seen a real shift in public opinion in italy in the last three years. three years ago, it was pretty hard to find eurosceptics outside the core. today, just about every opposition party is anti-euro to a greater or lesser to us -- or lesser extent. they have to be aware of that. erik: that is a terrific conversation about greece. and you nailed it. we will be back in a couple of minutes. alistair newton will be with me. ♪ erik: this is "street smart." i'm erik schatzker in for our steel. -- alix steel. qualcomm is being asked to spin off its chipmaking unit. with me to talk about this more is "request" editor-at-large cory johnson. also here alastair newton. we discussed earlier today this is not exactly foreign to qualcomm. what we want to get a better idea from you is whether barry rosenstein, who has had a pretty successful track run as an activist is going to be successful with qualcomm. cory: what he's asking the company to do is something the company already said was a good idea in 2000. qualcomm positioned the exact same idea, that they should split their business into the chipmaking business and the technology licensing business. the unit that is looking at 20% gross margins and the unit that is looking at better than 80% gross margins. and they propose doing a tax-free spinoff of the technology licensing side to investors. the problem is that side of the business is now a much larger portion of the business and a tax benefits would be harder to come by. and the management and the founding of the company, the jacobs family, would indeed tremendously benefit from this is the market took this at a better price when they look at the two did businesses. -- the two businesses. erik: i will not pretend you are an economist, but you cannot ignore qualcomm these days. alistair: i will give you a specific example. cyber attack. i have nothing against sony and i think they are a very fun company, but i'm glad what happened did happen last year. not because i wish the company harm, but i like seeing this roster the four. -- this brought to the fopre. erik: because you know that sony was targeted by an activist investor, dan loeb, who as far as i know was not pressing tony for more information about its cyber preparedness. dan loeb wanted to spinoff sony entertainment. alistair: i think this is a big question. the risks are much bigger than people realize. a lot of cyber attacking is going on all the time and firms are not declaring it. it will be a good thing to pass legislation saying if you are hacked, you have to declare it. shareholders have a right to know what defenses are being put up against is increasingly serious cyber threat, and exactly whether you've been hacked or not. we have a big conference going on in asia at the beginning of june. we are bringing in a big cyber expert to talk to our investors about the risks and how you counter them. this is a very 21st-century threats and investors need to pre--- be more aware. erik: i want to bring cory back into this conversation. do you think there is a role for activists over cyber terrorism? activists are constantly trying to sell you on where the value is in the stock that is not being recognized. they rarely talk about the potential for downside if a company or ceo doesn't do something. cory: there is a risk that they take with activists, too saying , why are the costs higher? one of the costs might be because of the money they are devoting to protect themselves from cyber attacks. the conversation has moved to the boardroom, but i don't think it has moved to the executive offices of the hedge funds that are trying to find value in these companies. erik: always great to see you cory johnson. alistair newton will be with me after this break. we will be talking about the sales of the apple watch. how many of them in these luxury goods? and nuts make no mistake, these are luxury items. ♪ erik: demand for the apple watch is strong in it debut weekend. the company may have sold as many as 2 million watches. it puts the delivery date for some buyers back to july. how does this compare with the release of other apple products? with we now, josh. who i believe is wearing an apple watch. josh: i do have one on. you guys are always so dressed up, so i wanted to wear something casual. this is a different kind of launch for apple. they normally get people lined up outside of stores to buy the product. this is a launch to get people to pre-order to wait for the watch to come to them. which is relatively unique for them. erik: a good idea? josh: i think necessary idea. you have to get people to play around with it a little bit. as a whole supply chain issue for apple. it's not just a different screen and body. it's a completely different product and there are so many variations of it. i think it's a good idea and if estimates are right, then pretty strong sales for something that a few months ago nobody thought they wanted or needed. erik: alistair, you didn't know this but you've been wearing the apple watch for how long? josh: about two weeks now. erik: why would you want to buy one? alistair: why would i want to buy one? josh: that is the question i asked in my interview. the question is have they made a product that you have to go and get? i'm not totally convinced. i think the answer could be do you fetishize gadgets? that would be a good answer if you have to have the latest and greatest shiny thing. they are trying to solve a couple of things and one of them is distraction not getting sucked into your phone all the time and having something more subtle. they kind of get there, but i actually found it to be overwhelming. do you have a watch on right now? alistair: i do have a watch and i was early adopter of ipod technology living in new york 15 or so years ago. i have an apple mac. and i have an iphone. i find all of those incredibly useful devices and the reason i have them is principally -- of course, the brand does influence me, but it is the utility. erik: here's the thing, you think of apple as a consumer electronics device supplier because the products they sell you are utility. but this is a luxury item. josh: it is a beautiful expensive in some cases, accessory for all of the things you just talked about, for your phone, your tablet, your laptop. this thing cannot stand alone. it is clearly designed in a way that it cannot stand alone. it really is an extension of the other apple stuff you have. there is an argument there when it comes to how you get notified and how you interact with people. this can be useful in certain scenarios. but it is not another iphone. it's not suddenly an epiphany that you've got to have one. erik: when you think about apple as the kind of company you want -- you know it to be, do you want it to be selling accessories? alistair: i think i will stick with what i've got, to be honest. i'm not the person to ever spend a lot on watches. erik: what kind of watch are you wearing? alistair: 25 pounds, something i picked up on the -- at the airport. erik: i'm actually struggling, because i have a nice one that i wear. we've got to end this. who would be back. -- we will be back. ♪ erik: welcome to our viewers around the globe. i'm sure -- i'm erik schatzker and this is "street smart." numbers have been fluctuating throughout the day and are now recovering. they would have to recover a great deal of ground to get back into the green. let's go to scarlet fu at the breaking news desk. barlett -- scarlet: qualcomm started off with a bang, opening up with a 3% bang after jana partners the activist investor, called for the company to spin off its chipset business from its licensing business, its patent licensing business which is facing challenges in places like chana -- china. both the s&p and the nasdaq got within 7/10 of 1% of their all-time highs before retreating. it does look like we will be closing near the lows of the recession. right now, it is a waiting game. jpmorgan and wells fargo kicked things off along with johnson & johnson and intel. erik: we back with you in just moments. right now, lisa abramowicz and carl riccadonna join me. and world equity strategist tina martin adams. we will talk about your outlook for the market. you think the rally. i want to talk about one reference, and not specifically the position that jana partners has taken against qualcomm, but the idea that activists are constantly having to look for larger and larger target. and because they only have so much money to put to work, the percentage of the stock that they are able to own of multibillion-dollar companies like qualcomm and that dean quite small. jana partners has $2 billion invested in qualcomm, but walk-on -- qualcomm has a market capability of $13 billion. will that change the market of activists cannot get done what they have been so successful at doing, which is getting ceo's endboards to capitulate? gina: it could, and i say that because activists have had a substantial part in driving share reduction dividend payment increases, share count decreases by way of their activism. the reason it may not matter much is because earnings may grow faster going forward. earnings have been growing slowly so they have impacted share count and cash deployment. these are factors that have impacted share prices. if we get earnings growing much more quickly, revenue growth driving earnings growth, reduction doesn't mean as much. it blunts the voice, because success is more ample. in an environment where success is fairly limited, they have a much eager impact in my view. it depends going forward how successful the earnings stream can be on organic growth. erik: quickly, before the closing bell rings, have we seen activism in the bond market yet? gina: certainly in the smaller deals. as farce the bigger -- lisa: certainly in the smaller deals. as far as the bigger deals not really. i mean, to some extent, but it underscores the same idea that it's getting harder and harder to do very well without being an activist on some level. [closing bell] or being more of a -- erik: when bill gross was with pimco, would you call him an activist? because of the amount of money he had under management and -- lisa: an activist with what, the fed? erik: yeah. >> he was involved in the biggest, deepest market in the world, treasury market. erik: we will continue the conversation about stocks in just one second. i want to bring you up to speed on where things ended today. dow down 79 points s&p down 9.45 points. in both cases decline of slightly half a percent. let's go back to our chief corespondent. scarlet, what caught your attention? scarlet: as days go, today was meh overall but for the year we v.a. seen rotations out of u.s. stock where valuations are north of five-year high and into europe and china where stimulus is on the agenda. for china evidence of fuel slowing economy is fueling the economy. so the exchange traded fund that tracks large cap is at a six-year high and mirroring gains in hong kong and shanghai. just to put the chinese equity bubble in perspective here erik, i have a chart from alberto gallo from r.b.s. which shows return of chinese stocks versus that of the u.s. and europe. the real divergence beginning around the fourth quarter of last year. the return of chinese stocks all things considered going back to the start of 2014, four times what we have seen in the u.s. and seven times what we have seen in europe. that gives you some perspective on how powerful the gains have been. erik: scarlet, thank you very much. our chief corespondent scarlet fu. let's continue with our chief u.s. economist and wells fargo equity strategist gina martin adams. there are so many things influencing the direction of stocks in particular but bonds as well. among them the dollar. which if you measure by the d.x.y. is trade weighted basket of currency. sixth day of gains for the dollar. as scleart mentioned we had economic data out of china suggesting the chinese economy is slowing further. what's your view on the importance of the strong dollar vis-a-vis the stock market? >> it all depends on the pace at which the dollar rises. the dollar has been rising since 2011. stocks rose in 2012. rose in 2013 even though the dollar was rising in those years well. it didn't become a problem until the dollar made a parabolic move in the second half of 2014 and rose at a faster pace in the fourth quarter and that's because it was a surprisingly strong move. it naturally fed through the expect the pace of future earnings growth and came at a time in which oil prices were also plummeting. there are a lot of moving parts to capture. i think stocks absolutely can rise and earnings can rise as well if the dollar rises at a more normalized pace. let's say somewhere close to 5% annual instead of 10% to 30% change we're in. in the near term it's volatile violenting an impressive impact on earnings growth. what i will say is that as it goes on, however investors increasingly fear the dollar and it becomes less and less of a broader concern, right? because we start start to price in the dollar will never stop rising. we start to embed that in our expectations and it becomes less risky. >> it depends why the dollar viesing. is it pick your bad cliche here? the best shirt in the dirty landry? cleanest shirt in the dirty hamper whatever. the fact is it just everyone else is so bad or we're doing so well? and that makes a big defense about whether it's a good thing or bad thing. erik: what's remarkable we have seen the continuing strength in the q-1 where much of the economic data looked lousy, we're now out of the q-1 slump and insight into the second quarter, tomorrow's retail sales for march show significant headline gain. if we get strong data here, bounce-back maybe in the industrial production data and retail sales figures, people have more confidence that the economy has a permanently downshifted to a 1% handle on the growth rate, that could be the next leg in the dollar here, pushing us very close to parody. erik: carl, that very conveniently takes us to the next topic i wanted to raise with all three of you, op-ed in "the wall street journal" by former vice chairman alan blinder. he says current chair janet yellen is correct to implore patience. he writes -- here's the question, is blinder right? we talked about this a little bit earlier in the show. what is the role of the fed? is it to police the job market and inflation and if so, which of those car aries more weight right now or is it to sort of take into account the bigger picture where financial markets are headed what's happening in europe what's happening in japan? carl: alan blinder is very much of the same ilk as new york fed president dudley and chairman janet yellen. his continued case for administration of federal policy gives us tremendous insight into how the fed is actually operating. we have heard very similar comments from new york fed president dudley recently and i suspect he speaks for freely than the fed chairwoman who is sensitive to the market overreacting to what she says. >> there's an argument you're not just going to prevent inflation by hiking rates but you actually could stimulate growth by raising rates. it sounds counterintuitive but people are getting paid more for deposits and paid for more investments, they might have more money to go out there and reinvest. there is sort of this growing undercurrent saying -- >> i would argue against that. the cost of financing and higher the cost of financing is that rerestrains economic growth. erik: gina you have an s&p 500 for your end of 2222. call it a couple points higher from where we are right now. to what degree does that target assume a rate hike of 25 or 50 basis points? >> it actually assumes we get 50 basis points through the second half of next year and pickup in earnings growth as well. the more important aspect quite frankly is earnings growth. in our model every 25 basis point increase in fed funds takes only .2 x off the multiple in the s&p 500. what matter is we get an acceleration earnings growth the second half of the year and into 2016. so i'm not going zero to 50, we're probably in pretty good shape with our forecast. is it will we -- at this point in the cycle the teeny tiny moves in interest rates have very, very limited impact on futures. carl: quhiped of g.d.p. growth do you have baked into your mod until >> it's not baked into g.d.p. at all. it's based on leading model indicators and we run 10 sector models to the total. g.d.p. is a trailing number anyway. what we rely on is leading economic indicators which is very good forecast record and l.e.i. rising 6% and that implies 6% growth in earnings in the second half of this year. erik: let's bring into this conversation lisa, the bond market. lisa: please. erik: you see the bond market opportunity. there are a lot of reasons to argue the bond rally should come to an end. lisa: people have for many years. erik: and they lost a lot of money for doing so. pimm co -- pimco, latest to sell treasuries in a bet perhaps this rally is over. once upon a time that headline alone might have been something of a market mover. not any longer. put it into perspective for us. lisa: sure, everybody is hating on bonds for a long time, hating on treasuries for a while saying if the fed will hike rates, that means yields go up, prices go down. will you have losses. and that has been the prevailing wisdom for many years and that got turned on its head in a massive way this year and last year. it's been sort of a very punishing bet to try to bet against treasuries right? but here's the thing, it's a question of, is it a long-term strategy to be short or is it sort of reducing the exposure to the thing, it's treasuries right now because there might be volatility coming up or the yields might cream up a little bit? i think what people are looking at is they're saying in the u.s., if inflation rises enough you start to basically get negative real rate of return if you own treasuries at too low yields. there's sort of a floor to how low they can go. that's the argument. at the same time when you look at the trillions and trillions of dollars of negative yielding assets in japan and europe it's hard to see how yields will rise that much. so this is sort of the conundrum making a lot of investors right now. erik: carl, some at least of what appears to be driving treasury yields lower is the quantitate tive easing that the european central bank has taken across the atlantic. to what degree is that a help or behind drens to the fed? carl: to some degree the more q.e. done in europe, the marginal investor moves into treasury securities so that's helping keep yields low. as long as the fed is looking to nudge comet into faster growth, q.e. actually helps. from the perspective q.e. is weakening the euro, vis-a-vis the dollar, i'm in the camp the dollar really mattels for u.s. economic output. from that perspective it's actually hurting things so it's a double-edged sword if you l i hate to be the economist saying on one hand and the other hand but it is double-edge side. erik: great conversation, carl, thank you very much. chief economist here bloom intelligence. lisa and as a matter of fact, i wanted to tell everybody before we finished about retail sales. there's a big report coming out tomorrow. we are so focused on what's happening in the economy. retail sales for march. gina martin adams of wells fargo, great conversation. thank you very much. up next on "street smart," it's also a big bang -- big week for bank earners. j.p. and wells fargo kicking things off. how much of an impact will they have on the bottom line? erik: good afternoon. once again you're watching "street smart" on bloomberg television. here are some of the top stories we are watching after the closing bell. pimco is cutting way back. the government fund cut debt from 22% down to 35% in february. america's triple a credit rating was affirmed by fish. fitch cited the strength of the u.s. economy. fitch said the outlook for america's credit rating is stable. citigroup named steven bird head of its global consumer bank. bird will take on the new role june 1. speaking of citi it's among the banks reporting. jpmorgan and wells fargo kicking off tomorrow and citibank and goldman sachs reporting this week, followed by morgue an stanley. bloomberg's michael moore is here. michael, will this be the quarter when trading finally shows some signs of life? michael: analysts expect a little bit of sign of life here. jpmorgan kicks off tomorrow. they're expected to show the first quarter increase since 2010. it's been five years since we had a little bit of an uptick in the first quarter. we might finally see that. but it's expected to be 2% to 5%, so not a huge bump up. a little progress maybe turning the tide. erik: is this on the basis of weak comps or is something changing in financial markets to the trading environment that makes it more track tive for these banks to do business? michael: you had a little bit of volatility in the macro markets and rates and currencies and you have -- your previous conversation, you have the fed going one way, europe going another. that's caused a little bit more activity in the macro markets, i think that is the biggest thing. first quarter is typically seasonly a little bit better than fourth quarter so that will be up there. erik: what about what we heard from citigroup earlier last month? citi suggested fourth quarter trading down 10%? michael: citi would be down i think mid-single digits and part of that was a one off. they said they lost money on the swiss depegging. so there's a little bit of one-off there. which happened in mid-january. but some analysts pointed out that was early march when citi made that warning. march was fairly active so perhaps they can do a little bit better than that. erik: and let's talk about goldman sachs and morgan stanley. the other banks are principally commercial banks. so much of the income and profit they generate is dependent on the interest rate environment. still waiting on the fed. lord blank-fine said in his letter to shareholders it's a good thing it's a smaller firm. are we to buy this? michael: he pushed that line a few times, that there are -- this economy is to scale now because of capital requirements because of the complexity. so i think, you know, that is -- and they are more narrowly focused. so they have more of -- they believe they have more of a culture of being more of an institutional firm and not having a commercial. erik: but they have a bigger balance sheet than morgan stanley? so if it's good to be small in theory better to be morgan stanley -- michael: when you're comparing yourself to jpmorgan you're going to look small no matter what. erik: how about the retail business? that's been a source of strength for the most part, for morgan stanley and also bank of america, which still owns myrl lynch. so we have a sense of what that environment is like? stocks continuing to go up. we're not having a year like we did two years ago. stocks continue to rise. michael: i think -- and a lot these last year was such a good year for stocks, that a lot of these managers are moving into managed accounts. relying less on clients to be active on a commission basis and really pricing it based on the level of the assets. the last couple of years the -- they have benefited from the rise in asset price. erik: most of the time that that happens if you switch from a commission account to an account you're charged a management fee, the broker becomes a fiduciary in that case does he not? michael: they're still working on the rules of that. in many cases you are a fiduciary and you feel the clients charge 1% to 2% of assets. the banks like it because it's a more stable stream of fees and has benefited from the rise in asset prices. erik: michael, good look forward. bank earnings begin taupe. i know we will see more of you on bloomberg television. bloomberg's michael moore. coming up on "street smart," why are chinese investors going on a hong kong buying spree? you will hear about it when we come back. erik: here's another reason for investors to worry about the chinese economy, exports unexpectedly slumps the most in more than a year last month. for a look at the challenges facing beijing and chinese central bank the chief strategist at silver cyst asset management is here. is there reason to worry? can we now count on the pboc to do whatever it takes to keep the chinese economic engine humming? >> no, a lot of the optimism is driven by the sense bad news is good news because the chinese government will step in and stimulate the economy. if this bubble is going to have a tombstone, it's going to read an eternal hope of stimulus. the chinese have been stimulating their economy ever since 2008. the reason why that's being reined in now is not for lack of trying. it's because it's having less and less of an effect. more and more credit is achieving less and less in the chinese economy. the credit he mechanism is broken. erik: you call it a bubble. >> yes absolutely. you have a fundamental disconnect here between the stock market and its going up steeply, it's doubled really in the past six months domestically in china and the steady drumbeat of negative information that we're getting. erik: we have as good an illustration as you're likely to find. yellow line is the shanghai composite and white line hang seng. >> there's been this gap between shanghai comp and hang seng for a while until chinese -- erik: beginning to close, right?s0 >> until chinese domestic investors started to recognize that and funnel money into hong kong market. and that's being driven by look, you got to take a step back here. back in 2007 the shanghai comp was at 6000. and in early 2008 this was before the financial crisis, the bottom fell out of that market and it lost two-thirds of its value. down to 2,000 and stayed around 2,000 the next five years. and now what we are seeing is -- what happened was people went from investing in stocks to investing in real estate. you saw big real estate investment boom that's because where people put the money. they stayed away from the stock market. now the bottom is coming out of the property market. property market in china has been in couple the past year. people expect td to be better. it's not. people are shifting their money somewhere else. of course, it's going into higher and higher valuations. instead of reflecting any kind of fundamental improvement in the stock market. erik: have we already seen the canary in the coal mine? is the property mart canary in the coal mine or is it something else? >> property markets is a big factor in china because it drives a lot of g.d.p. growth. it also what underwrites a lot of collateral in the lending system in china. there are other canaries. the fact iron ore is below $50. that is a reflection of the falloff. overcapacity is being created in a lot of industries and falloff in construction and industries that feed that. i really do worry about this disconnect. when investors ask me what i think, aren't we really missing out, look how fantastic the chinese stock market is doing, i say if you want thrills, if you want risks, hop a flight to vegas. you will get the same excitement and really the same fundamentals. and you might even get your room comped. erik: do you have a view on what we should expect to see in the g.d.p. report tomorrow? >> look, the thing is numbers out of china reflect what -- erik: what they want them to. >> -- what they want them to say. a lot of economists, me included, are not worried about whether china will meet its 7% g.d.p. number, we believe it's already substantially below that. maybe 4% or 5% range. that's not necessarily bad. china needs to switch gears. some slowdown in the chinese economy is good but people expecting a quick rebound are betting on the wrong horse. erik: patrick, thank you very much for joining me. from silvercrest asset management. we will talk more about china. a new report of decade-long hack is up next. just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room. fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. erik: welcome back to "street smart," everybody. i'm eric shafter in for alex steele. here are the top stories we are watching after the closing bell. the u.s. budget deficit widened in the first half of fiscal 2015 to $440 billion up 6% from a year ago. speppedsing on social security and health services increased according to figures from the treasury department. sprint is going to start making house calls. the nace's number three wireless carrier will deliver phones to customers using 5,000 sprint-branded cars. the company is rolling out the service in kansas city and will expand to miami and chicago later this month. chrysler chairman elkane seized the nation for more consolidation in the auto industry. saying take into consideration the culture. and open to general motors and ford. stocks closed in the red and dow dropped about 80 points, unable to extend its winning streak to a fourth day. scarlet fu is at the breaking desk with after-hours action. what's making news now? scarlet: slim pickings but a couple announcements. solar city has given details on its plan to bond sale issuing bonds in five parts. fee churting 5.6% to 5.45% and funds will come from rooftop systems leased to solarcity 190,000-plus customers. one of the futures on this plan, it's interesting is offer retail customers the opportunity to buy these bonds through their existing brokerages or through their ire r.a. accounts. we will keep you posted on movement there. stock not moving in after-hours trading on that. meantime under armor, notable how the broader market rose, as nike flailed and jordan spieth won the masters. he was apparently covered in under armor logos. there were three under armor logos on his hat, one on his belt and two on his pants and logos on his shoes as well. eric smallwood, an analyst, said that earned under armor $4.7 million of exposure over four days of masters coverage on cbs and espn. tiger woods, mr. nike, ended tied for 17th place, erik. erik: scarlet, it it was one heck of a masters. there will be a little more golf here for you. scarlet: he's only 21 years old. signed him when he was 19. erik: what i worry about the weight of expectation for the entire game is being placed on this poor kid's shoulders. he's 212. he won a green jacket. let him enjoy it. scarlet: i it think he's enjoying it. erik: i'm sure he is. scarlet, our economy market competentant, scarlet fu thank you. according to a new report by cyber security from fireeye, hackers are believed to be backed directly by beijing and accused of targeting governments, companies and journalists in southeast asia and india. with me is the manager of threat intelligence, laura gallant. laura, the news china has been spying should shock people just as much as gambling in a casino. quite seriously, why are your findings important? is it because china is spying on neighbors who are perceived perhaps the chinese government to be more of a friend than a foe? laura: i think the regional dynamics you're alluding to is key here. there hasn't been the dialogue especially southeast asia, to the same extent we had in the u.s. and europe around the widespread data theft, whether it be for political gains like we see with this group of hackers, or for economic gains that we frequently see out of china. that dialogue and awareness hasn't had the same sort of attention it already has in our market here. erik: and so what will the diplomatic and political implications of such a finding end up being? laura: i think with the raised awareness around targeting to organizations across southeast asia it's a combination of a rethinking of what governments and commercial entities think of information assets. what do they have that's valuable and what's going to be targetsed? how do you put a defensive structure, whether it be information security or the behavior that diplomats who are getting targeted for instance, undertake? how do you change your behaviors in your network postures to better defend against this type of threat? erik: do you know what it is china was going after? laura: we do. we made several judgments in the paper around what we think this group that is likely backed by the chinese government is after. we think a combination of political information about the legitimacy of the chinese government, so the inner workings of the chinese government. we also saw a lot of activity around border disputes and sea disputes, standard bread and butter diplomatic type of information that was getting targeted. erik: why are you confident that this hacking was state sponsored? laura: well, we looked to the resource effort behind the tools that a group of hackers will use. the malwear development effort, if you will. when a group of hackers is creating their tools, their tell tail signs of how much work goes into it. with this group we saw the operation spanning back almost a decade now. back to 2004. and when we looked at the tools even deeper, we were able to understand that, that group was acting as a team. they were working in shifts. we can see the times they were compiling the tools by and get an understanding how cohesive the effort was behind the tool development effort. erik: is china working as hard as ever to conceal its tracks when it sponsored again, according to your findings, sort of cyber attacks and cyber terrorism of this nature? laura: in this case we actually had analysis and assessments that led us to think this group wasn't particularly worried about being caught. and the reason was this the infa structure -- infrastructure behind the tools they used did not change a whole lot. with some groups we think are operating out of china, they will change the background tools and infrastructure every three, four years or even more frequently. this group operated very consistently for 10 years. the implication being companies in the region and governments in the regions probably weren't deekting a lot of the malware this group was successfully using to compromise victims. erik: do you think we will find ourselves perhaps someday soon at a place given everybody knows what china does, it's not going to bother trying to conceal its tracks as much as it does on occasion? laura: we might already be at that point where the dialogue around this is so hop it's almost becoming established norm. maybe that's overstating it but there's sort of acceptance this is occurring. i think the side that we will have to change is companies and governments' tolerance for this type of activity. intellectual property, whether diplomatic or economic is getting taken, you have to think about what the long-term consequences of that will be not just for your company but for your industry sector and really for your economy. erik: laura, thank you very much for spending some time with us on bloomberg television. the threat intelligence manager at cyber security firm fireeye. she was in washington. next up, spotify wants to take on apple and google. can it do so without taylor swift? erik: spotify is raising new financing in a round that would value the streaming music site at about $8 billion. so people familiar with the matter, our west coast editor at large cory johnson is with me from san francisco. cory, if this deal gets done spotify would be worth effectively, because that's the last trade double what it was worth back in november 2013. why would that be the case if you have so many other entrants in the market? apple with beats, jay-z getting into the business and, of course, in such a well publicized mini scandal of sorts, taylor swift doesn't want anything to do with spotify? cory: yeah, i think it's really interesting, i think that's part of the same thing. the reason the valuation goes from $4 billion to $8 billion isn't because they sold the company for $8 billion, latest round of investment. but i think there are two factors. the frothiness of the private market loving some of these big companies. they're being known as unicorns out here in tech land, these private companies valued at more than a billion dollars. you have that to nom none. more money looking for those particular companies doing well in the private markets. the other phenomenon is spotify can be a dominant business in the music business. can you see the reaction from the biggest artists in the city trying to find some way around it, perhaps responding to the historical impact that apple had with itunes. but also recognizing that this is a place and predominant place where people are getting music in the way that they increasingly likely to get it, streaming rather than owning. erik: you looked at some of the research market out there, how many streaming services is there room for in the music business? cory: i think that's an open question. we have never seen anything like this in the music industry with the possible exception of call it eight years or so or five, eight years that itunes was the center of the music industry. never have seen a single, dominant company in the music industry really ever. licensing services like b.m.i. but in terms of providing music, recording music, places to buy music, concert venues, ticket master had a hold on the venues but nothing like what we might be seeing in the music industry where the catalog of music carries the day. and the question really -- i think the jay-z supposition is a very interesting one. will a dozen artists or so and biggest name artists be more valuable to a consumer than all of the rest of the artists in the music industry? and all of the catalog in the music industry? and can that change over time? i think one of the more interesting things that isn't as widely known is the roles of the companies underneath that front layer, so behind beats, behind spotify, behind samsung's music service and so on are companies like omni phone that license music, digitally record it and it on a cloud, so the company providing the music is just the front end in the same way tower records or sam goodey was once the front end to the music industry but they were not the provide are. distributers and jobbers and people would fill the records and bins were not well known but that's where the real music industry happened. erik: what do you use? cory: i'm a spotify guy principally. i met the c.e.o. of spotify at a party one night. it was a crazy -- it was a crazy shawn parker party where he had snoop dogg performing and -- erik: is there such a thing as shawn parker party that's not crazy? cory: i sure hope not. this party had incredible music acts performing and i found myself outside talking to a bald dude who was the c.e.o. of spotify. he begged me to try it. i insists the music i listened to jazz music is more obscure and harder to find, wasn't going to be there. it was there. i think it demonstrates how that business really is about cataloging individual tastes perhaps even more so in an era where the long tail allows individual users to have the choices they want, not just the tent poles of the jay-zes and jason el dean's of the world. erik: cory, good to see you good, our west coast editor at large out in san francisco. next up -- i too, am i spotify user. i tried itunes radio, waiting to see what the modified beat service looks like. next up -- view from the top rope from the world of sports entertainment. we will look at the wwe's aggressive expansion strategy. erik: you're watching "street smart" here on bloomberg television. here are some of the top stories we're watching for you after the closing bell. a former blackwater worldwide guard was sentenced to life in prison for his role in the killing of 14 unarmed civilians in a baghdad traffic circle. the massacre inflamed anti-american sentiment and led to curbs on u.s. military contractors. the nba is announcing today the league would switch from coke to pepsi as an official partner. this gives pepsi partnerships with every major american sports league. coke has been an nba sponsor since 1986. ohio state university's urban meyer receive a three-year contract extension at an average of $6.5 million a year. that will make him the highest paid football coach in the big ten conference. meyer led the ohio state buckeyes to the national championship last season and is now under contract until 2020. you know the names, folks, the rock, hulk hogan and stone cold steve austin bona fide icons outside the ring, these are the individuals who helped make the wwe a global publicly traded sports entertainment company. for a view from the top rope, you might see, george barris is here chief strategy financial officer with the wwe. you have $ -- 1.3 million wwe subscribers. that figure alone will surprise some people. before i ask you how you're going to get to the -- how you're going to clear the next hurdle, how did you get there? what is it about the wwe do people who stopped watching wrestling in 1986? george: who stopped? i don't know anybody who stopped. thank you for rolling the r's. my mom will be very happy. erik: tell me about the company. george: sure. as you know, you talked about stone cold, hulk, rock, you left out johnsenia, our current top superstar. he has over 36 million likes i think last time i checked on facebook. number one u.s. athlete on facebook. you talked about the network, i think to put the networking in context, we have what i call a three-prong media strategy content strategy. first, free video on demand, our key platform there youtube facebook coming on hard. on youtube, 4.2 billion video views over the last 12 months. put that in context we just passed the nba as number one sports property on youtube. big, big part engaging our fan base worldwide. we do five hours every week raw smalkdown live programming. that sits in the pay tv bundle around the world. so here on u.s.a. and sci-fi, and india. third tier you mentioned direct to consumer. that's where we took our pay-per-views, events that happened once a month $60, $70 retail price point in the u.s. and said we're going to bundle that, take our rich archive -- erik: monthly description? george: $9.99 a month. erik: how do you monetize beyond that? what other thing s can wwe do? that's what your shareholders want to know. show me the money. george: first i mepsed monetize on youtube with ad share -- erik: something new, beyond what you're doing now. george: that will grow, number one. number two, as an example around the world we renewed our four biggest tv license deals. another source of economics. we think the network has a lot of potential over the long term. so as that grows and you know subscriber economics. leverage significant 80%, 85% for each subscriber. erik: how do you reduce turn? that's a problem, right? you're in the subscriber business. you're in the midst of moving to new technologies. so are your fans but they don't love everything they try. george: sure. it's important you mention every subscription business deals with churn. the goal is day after day, make the content better so there's new content. develop better features. get on more platforms. give everybody more reason to continually engage with our superstars with our content. we have been successful on a lot of platforms. erik: george we have to leave it there. thank you very much. the chief strategy and financial officer at wwe. when we come back from the belt to the green jacket. erik: on sunday texas native jordan spieth made history, becoming the second youngest chairman at the masters with a record-tying score of 18 under par. "taking stock" anchor pimm fox is here. what's your handicap? pimm: i don't have a handicap. a lot of top courses in brooklyn. but here's the deal. when you talk about money and you talk about golf, you talk about numbers right? the idea is to be consistent and consistently good at whatever it is you do. here it is over 72 holes, he ends up shooting an 18 under. and if you take a look, there was a scene yesterday at the 16th where i don't know what this -- he's putting there for the green jacket. but there's a point at the 16th where justin rose could have narrowed the tournament, and really could have been 2 under instead of 4 under. this guy holds his poise, he shoots rose missed the putt for birdie and this guy just takes it all the way. it's this consistency. a lot of people said well, you're coming out in the first round going to do a 64. you will never be able to hold on to that. then do what 66, 70 and 70. this is a guy who knows a lot about pressure as well. he was at the shell u.s. open. erik: to be honest with you, i expect nothing short from an extraordinary performance from the winner of the masters. the thing is this kid is 21. there are a number of other hot young players on the tour, rickie fowler and rory mcilroy -- pimm: all good for golf. erik: good for golf in theory but how good for golf because one thing that many golfers may not have noticed because they're still playing is over the past decade the game has lost 5 million american players. can you believe that? pimm: yes. and there are two specific reasons you can point to. one is go back to 2008 and you have a financial crisis with basically wipes out an entire segment of the golf playing population. you can no longer spend 4 1/2 hours on a golf course when you're worried about your job or making payroll. that's the money part of it. the time part of it is who now has 4 1/2 hours to just leisurely and joy 18 holes? erik: one of the reasons i suppose mandarins of golf talking about 19 holes as a way to get people interested. i don't need nine holes to work out the kink in my stroke. i need the back half. pimm: they say don't focus on the short game if you want to improve it. there are more golf courses in the united states than we know what to do with. the business of golf as you say, troubled by declining membership declining interest -- erik: look at the stocks of companies like calloway for example. pimm: professional golf, the kind of golf this guy is playing, it is doing very, very well. there's big money in it. the sponsorship has never been better. 1.8 million. he got a million for the previous tournament. there's a lot of money in golf. erik: endorsements. pimm: they say upwards of $10.5 million easily for the green jacket. erik: the question ultimately is without another tiger woods does golf go back to what it was once upon a time, a suburban country club sport for middle-aged white guys? pimm: could be but they're not all going to shoot 18 under like this one. erik: that is true. pimm, good to see you. pimm fox, anchor of "taking stock." is coming up at 5:30 eastern time. that's going to do it for "street smart." tomorrow, everybody, alix steel will be back speaking to former homeland security security second tom ridge. have yourself a terrific evening. what's up next? mark: i'm mark halperin. john: and i'm john heilemann. and with all due respect to hillary clinton, it would have been an uneventful weekend that wasn't for those meddling kids and that dog of theirs. at the national scrabble they sports fans. in our lineup tonight, marco rubio, hillary clinton, and marco rubio. but first, hillary clinton. perhaps the most criticized and hyperbolic size -- hyperbolicize
even with what we heard. i think what the greek government wants and european partners wants are great different things. all sides are so scare of the possibility of a crisis if the greeks were to leave the euro. they're willing to do a compromise which is kicking the can farther down the road and not a real compromise, but a short time solution. betty: the greek official says the government should have enough money to get through the week so far. warren buffett says the new ceo of berkshire hathaway must be more than a stock seeker. he spoke in a annual meeting and omaha. he is unlikely to back someone who has expertise only in investing. he also will support someone who has operational experience to succeed him. you might need a scorecard soon to keep track of the falcon presidential candidates. to outsiders are joining the race today. former hewlett-packard ceo carly fiorina is in the running. she made the announcement in an online video that was just released. that she had the morning shows. >> yes i am running for president. i understand how the economy works, who's in it, how the world works. i understand the argosy's and that is what our federal government has become -- a giant, bloated unaccountable bureaucracy. betty: retired neurosurgeon dr. ben carson will also announce. he is backing among grassroots conservatives. he is an outspoken opponent of president obama and health care reform. former arkansas governor mike huckabee is expected to jump into the fray to expand the list of declared republican candidates up to five. some pundits think the gop could have 14 presidential candidates by midsummer. incredible. two men are dead after they attacked an event where cartoons of mohammed were displayed. at happen last night in a dallas suburb. police say they shot back after there were fires -- shot fired. >> two men got out and opened on a garland independent security officer. he was dressed like a police officer, however, he was unarmed. they started shooting towards that man and did shoot him. he was taken to the hospital and he was treated and has been released. garland officers that were close by saw what was going on and gauge the two men, shot and killed them both. betty: the gunmen have not been identified. officials have not cited a motive for the attack. the event was sponsored by an anti-islam organization. many muslims feel that the painting mohammed is blasphemy. it was america's second-biggest movie premiere ever. disney's "avengers: age of ult ron" made $188 million over the weekend. it was only second to its predecessor. they say would have done better if not for the other fight that happen on saturday night. you know the one -- mayweather impact yell. -- and manny pacquiao. those took away some have eyeballs. happening right now, mcdonald's rolling out the details of its turnaround plan and a video message. as statement is going to follow in less than half an hour from now. there's going to be a conference call with management at 11:00 a.m. eastern. scarlet fu is monitoring the presentation for us as it is happening online. are we getting headlines out ge? scarlet: we have not. it is a video message that is coming out at the top of the hour. the statement will follow in 26 minutes. that is where investors are hoping to get some details. we had some indication that management led by ceo steve easterbrook is open and flexible to many options. santa burstein had met with management and said the management indicated that it is looking at all options. among those options include unlocking some value by converting real estate assets into a real estate investment trust. that is one possible the. a lot of people looking for a simple solution. there are too many items on the menu and consuming -- confusing investors. they hope to rebuild their relationships with franchisees. there is a lot of disappointment and confusion and distrust between franchisees and headquarters. these are all things that management should be addressing according to investors. we are looking to get any kind of detail on that. to give you an indication of how highly anticipated this announcement is, when steve easterbrook said he would announce a turnaround plan last month, the stock was at 3.1%. since then, even as the numbers of mcdonald's where disappointed. a six straight quarter of declining sales plunging sales in asia and weakening and europe as well. even as that region struggles and mcdonald's would be in a tract of option for consumers there. we will continue to keep an eye on headlines. nothing has come out yet. in the meantime though, we do have some headlines on dow chemical. the company is cutting jobs. it is going to eliminate 1500 to 1750 positions. that is about 3% of its workforce overall. it looks to post a charge of up to $380 million as a result of these redundancies. dow says it has added minor adjustments to assets. i don't know what that means. we will look at the release. a main headline here is that it is cutting up to 1750 jobs worldwide as part of an overall effort to reduce costs. betty: asking for that cost cutting out of it. but there we go. they are still on that path. scarlet, thank you so much. that's our chief market's correspondent who is going to stay on top of the presentation right now by steve easterbrook the ceo. it is when to run 23 minutes long and they're going to issue a press release at 8:30 a.m. detailing this turnaround at the restaurant giant. onto another giant, the giant in the cable industry -- comcast just reporting first-quarter profit that beat wall street estimates and its shares higher than the premarket as you can see. the cable giant signed up more than 400,000 new internet customers. it also announced it was boosting its stock buyback by 59%. the results come 10 days after the company said, you know what? we are not going to go after time when the cable anymore. bloombergs report and joins us now on the phone. you look at his comcast results now and you are let down because there isn't that much to talk about other than ok, they're poking of the internet subscribers. that seems interesting. alex: it is back to normal for comcast. i think investors are not to displease. one of the things about comcast is that their earnings are almost always good. if you look back over the past 3, 4, five years, they are by far best in class in the cable industry. that is one of the reasons why some investors were incited about the -- excited about the possibility of buying time warner cable. if you add another 7 million cable subscribers and put comcast management on that and that of time warner cable they haven't streets of outperforming. you saw at this quarter with adding more than 400,000 broadband subscribers. that is a lot. that is a big number. it topped estimates and reminds people that oh yeah, these cable companies are still adding high-speed broadband at a very fast clip. it is quite impressive. betty: it is impressive. i want to let viewers know that the call on comcast has just started. we are listening now for more details about the company. one thing that they are saying and we will get to the headlines here as the call begins, they expect their programming costs to increase by about 8% this year. just beyond what the industry is seeing? alex: we have seen growth in the low double digits. 8% is a downtick. can't -- comcast benefit by being the biggest player in that street meaning their costs are lower than any other cable company and pay tv distributor out there because they have bigger scale. that is the big thing among all cable companies on why the need to consolidate. it is not and if but a win in the cable industry about when all these companies get together. the only question is how they do it. we but they would be able to do it by the biggest plays coming together and creating this big giant cable company that would really be able to push programming costs lower, but regulators step to that and now looks like we may see accommodation of charter and time warner cable. betty: alex, thank you so much. you have been writing about that. talks continuing on charter. alex sherman of bloomberg news. not to one of our other top stories on the political front. former hp ceo carly fiorina making a presidential run. she made the announcement on abc's "good morning america pick." >> yes, i am running for president. i understand the argosy. that is what our federal government has become -- a giant, bloating, unaccountable you are crazy. betty: she is one of three candidates expected to join the gop presidential for. along with dr. ben carson, he made his formal announcement today in his hometown of detroit. former governor of arkansas mike huckabee. his speech will include presidential rollout. three more jumping on. julie has been following the candidates. she joins us now from washington. julie, the question is about then. and maybe even might have to be. -- mike huckabee. do these guys think they can win ? why are they jumping in? julie: they feel like they have something different to say and something to bring to the full. for a dr. ben carson, it is a compelling personal story of rising from personal poverty in detroit and becoming a world-famous and world-renowned neurosurgeon and baltimore. he is really just embracing a lot of conservative ideals. he will talk about his story throughout the entire campaign. for carly fiorina, it is her resume. she brings a detailed business resume that is unmatched. betty: it is unmatched but very mixed good she will be asked about by that time at hp. are they angling for the vice president position or a cabinet job ? julie: if you have the money or can raise the money to run for president, there is no downside. for someone like harley, she could be considered a vice president candidate or considered for a number of cabinet post. the same could be true of dr. carson, but regardless, they will improve the name recognition. they sell books. they make speeches. it is all just upsides for the both of them. betty: julie, thank you so much. a lot happening on the political front over the weekend. julia bloomberg politics. make sure to tune in as mark hartline -- mark halperin talks about these presidential bids right here on bloomberg television. we are staying on top of the mcdonald's story. steve easterbrook unveiling the strategy in a video message. there he is online talking about positioning the company for growth. don't have a lot of news nuggets yet. we want to bring that offer you as soon as they cross. ♪ the betty: here's a look at our top stories this morning. u.s. chancellor says the conservative party is the one who can staple and economic recovery. in an interview with guy johnson, george osborne says that sticking with david cameron is the way to go for voters hitting the pollls thursday. >> there are two choices as the general election looms. you can either have a bit cameron back in the job on friday leading a strong and stable government or we can have the political instability or economic chaos as a result of the week ed miliband propped up by a scottish nationalists. betty: the polls continue to suggest a hung parliament with cameron and miliband sinking a last-minute swing to form a majority government. the tech word is offering tributes to dave goldberg who died friday night. the 47-year-old was the husband of facebook chief operating officer sheryl sandberg. the couple were vacationing overseas when he passed away. the cost has not yet been disclosed. those are your top stories this morning. when it comes to mcdonald's, everybody has an opinion on how to shine back the golden arches. this morning, steve easterbrook is taking charge. he is right now unveiling details of a plan to turn around the company's fortunes. happening now, the company just released a video message at the top of the hour outlining action points for growth. steve easterbrook is talking about that right now online. for more, we are joined by christ. there is the feed we have of steve easterbrook. cried covers consumer companies for bloomberg. he wrote a story overnight outlining the five things that mcdonald's needs to address. headlines coming across. our viewers aren't aware of them yet. mcdonald's says they're going to reorganize into four different segments. you have the u.s., international, something they call high growth, and foundational. what does that mean question ? craig: instead of a strict geographical approach, they going to put businesses together with needs. china and italy will be in the high-growth caligari. -- category. they want to put them under leadership to focus what they need to do in those areas. betty: foundational -- what is that? craig: we'll have to see what they mean, but we are looking like germany and perhaps france in that area. companies that are more sound. betty: u.s. is its own. craig: they have 40% operating income from their alone. it is the market where they struggle the most. strong short was at home and that is the key market for them. they say they need to get back on track in the u.s.. betty: you said that one of the issues they will address as the re-franchising. we heard from steve on this moments ago. craig: burger king has done really well. they have gone from 99.9% franchises. burger king only owns 50 restaurants -- less than 1%. much different from mcdonald's owns 81% of their system franchises. 90% in the u.s.. what they're saying this morning is that by 2018 they want to add 3500 restaurants that they're going to sell from the company to franchises over the next three years or so. betty: they want to add on more franchises into their system? craig: they want to sell restaurants on the company to unless restaurants. betty: it costs money to run these restaurants? craig: chipotle has fewer restaurants. starbucks is one that owns all the restaurants. burger king has done great with a franchise system. there has been a push and investors once mcdonald's to sell these restaurants. here they are saying they're going to to get to 90% by 2018. betty: at the top of your list this is something we may not hear from steve easterbrook. real estate is at the top of your list. we know that there is one hedge fund manager who said that they could add $25 to their share price by spinning off the real safe -- estate. craig: mcdonald's came up in a time where land was much cheaper. it was more abundant and that is not the case this day. it is a good problem that they own all of their real estate. the franchisees is off billions of profit every year. tremendous cash flow. i've heard that people say they want restaurants to own real estate if they could. you have people like robinson saying to get rid of the real state and make wi-fi dollars on the share price. mcdonald's has shown no signs they want to do it. betty: have they examined it? craig: they have thought about it before, but i come a few years earlier. they showed no interest. wall street seems to want it. betty: anything that smells like a boost to share price like $25 is not a small thing. cried, great to see you. thank you so much. that is cragin bloomberg news. we are monitoring that video message coming up from steve easterbrook. carl icahn calls out larry king. the activist investor says the blackrock ceo is just protecting his friends. his other ceo friends who are underperforming. is he right? more on that next. ♪ t ceo larry fink. he says that last month think told ceos to avoid giving in to pressure from activist investors like carl icahn who wants immediate dividends. carl icahn says that is a more difficult thing to get rid of underperforming ceos. >> i don't begrudge them of that money but the stock goes well. if against the stock up, let them have some good money. look at what you have. you have this clubby system. and you know what? a lot of them feel like they can do what they want because of guys like larry fink. betty: larry fink has not responded to carl icahn. we will see what happens. it is twice six minutes past the hour. bloomberg television is on the markets. we are staying on the mcdonald's story. scarlet fu is staying on the markets as well. scarlet: futures and focus. oil is down after a low survey from china. the game fell below $60 a barrel. the bigger picture here is that crude is coming off eight straight weeks of gain of 21% in the month of april alone. what is the likelihood of oil building or is a pullback now on the cards? joining me now is chris who is the director of strategy at bell curve capital. you call oil and momentum trade. his oil still higher? chris: it is absolutely still higher. we took out over seven loans position. our algorithms have switched the trade from a hold to abide just based on the level of momentum carrying into last week in the news coming out of the mid east and production continuing to grow here in the next third or fourth quarter. scarlet: you reference iraq. opec is now seeing production at a three year high. they are likely to increase their production. chris: a lot of this has been priced in what you are seeing right now. it is just the carried through of a stronger dollar. it is fuel to the fire at the end of last week. the fact that we did not have reaction to the downside like i thought we would this morning with the china numbers disappointing -- that really makes me believe that it will continue to hold throughout the trading session. a lot of traders see this runoff above 60 day nothing more than potentially speculative. a bearish tone has taken over here at the floor of the cme. scarlet: what about the smart money? how are hedge funds positioned when it comes to oil? chris: a lot of the hedge funds, especially the large ones, take note and i think bloomberg broke this that a lot of the hedging had been done by a large oil industry company and they have actually hedged out from 58 to 62 a barrel levels on the futures running out to 2016. what does that mean in layman's terms? that means for the pricing to go higher -- that sort of oil production is not seen as a huge advantage for these oil companies. what you will see is potentially a rage bound of a 50 to 65 range for the next month or so. scarlet: i want to go back to china for a moment. the pmi numbers are disappointed. you had saudi arabia talking about how demand from asia is picking up. do we have reason to distrust saudi arabia g? chris: i think you do. asia with a little bit of pull box -- pullback is not a kick in the pants to opec members. i think they see this runoff as an opportunity to get locked in games above $60. a lot of the tone for hedge funds is that revisiting $50 handle here in the next i would say, a trading sessions -- eight trading sessions. they have been designated i do say key area. -- as a key area. we are on a hold level. it is a goal that we are seeking and 5240 seems like the high mark. we are selling after that. scarlet: thank you so much. betty back to you. betty: betty: thank you so much. deadline on the greek crisis is three days away. the debt ridden country must make a $230 million payment this week to the international monetary fund. there is still no deal. the greek government won't cut pensions or raise sales taxes. the investment world is watching the crisis closely. >> we think there is potential for better talks this week. that being said, greece has large payments beginning of june through august. we think there will be a back-and-forth over risk of capital controls, and there's certainly a risk that they will take a recommend -- a referendum. i actually don't think ultimately that a greek exit is as devastating as people think but the headlines will create some volatility in the coming weeks and. betty: a greek official says that government should have enough money to get through the week. the overnight curfew in baltimore is over. national guard troops patrolling the streets will leave soon. they were deployed when riot erupted after the funeral of freddie gray, the black man who died in police custody. maryland government says baltimore is safe. grexit i think lifting the curfew is a good idea. it has been a really rough week. let's get back to normal in the city and get people back to work and back to pool and getting people coming in the city to visit the shops. the mom-and-pop stores and restaurants they need your help. we want to encourage anybody to come back to the city. it is safe. betty: officials say the latest protest have been useful. several hundred people demonstrated at city hall. speakers urged the crowd not to rest just because six police officers are charged with the debt. the death toll from the devastating earthquake in nepal nine days ago is now more than 7200. in thousand were injured will stop more than 180,000 homes were destroyed. nepal is one of the world poorest countries that depends on tourism and that business is now crippled. and officials in texas are now identifying a man who attacked -- police say they shot back after they were fired upon. christ police officers nearby saw what was happening and engage the two men, and shot and killed them there i. the security officer was taken -- there at the scene. security officer was taken to the hospital where he was treated and released. many muslims believe it is best -- blasphemous to depict mohammed. you can see on the right-hand side of the screen cisco saying that john chambers, one of the longest-serving ceos of a major company is stepping down as ceo. chuck robbins will succeed him as the next head of cisco. i want to get to scarlet fu with more details. scarlet: this move is effective on july 26 and john chambers becomes the executive chairman of cisco. he remains chairman of the board. chuck robbins was named to the board of directors, but not taking over as chairman. just some background on chuck robbins. he's 48 years old and has worked at cisco in his most recent position as senior vice president of field operations for the last 3.8 years. he began that position in july, 2011 also he joined cisco in 1997, according to a statement put out by the company. and he has led the global drive for about $47 billion for the business. they also credit him as the key architect for one of the faster growing parts of the business that now represents one quarter of cisco's overall business. he is being pulled in from one of the faster growing segments of cisco to be named the said -- the head of cisco overall. chuck robbins is starting on july 26 stop -- on july 26. warren buffett making some comments. i'm not sure if this is from the videoconference call or not but let's get you the headlines. there is some general statement from the exalted about how they want to re-organized into different -- reorganize into different segments. it sees meeting the top and of a three-year $20 billion cash return by the end of 2016 and is targeting $20 billion in net savings by 2018. these plans go out three to five years. mcdonald's is looking for a cost structure to be a lot leaner than it currently is. these warren buffett comments at this point only relate to being franchise owned. betty: scarlet, thank you. the cisco news, in many ways it is surprising, because john chambers has said over and over again, do not ask you. -- do not ask me and i have asked him over and over again about stepping down as the company's limits of trouble. and here he is nothing down. -- stepping down. coming up, a massive opportunity for insurance companies. ♪ betty: watch out, last year half of all small businesses feel that into cyber attacks. in a new survey by jerome international, they're coming at a much higher cost will stop in 23rd income it cost small businesses nearly $8,700 for ciber said -- cyberattacks. that has now increased to nearly $21,000 last year. we are joined by the ceo of an international group that helps small businesses, line and build out their tech platform. he is joining us now with the result of this survey. harvey, it's great to see you. it's also small business week. you surprised by these findings by how much, first off, the cost of these are jumping every year? guest: thanks for having me. we were not that surprised by because every year, it gets more and more sophisticated. a lot of criminals have evolved more into social engineering trying to get at data, trying to get at transactional information. the cost to thwart these are more than just putting here at the appropriate network, or trying to keep their network secure. it's much more an all-encompassing exercise now so the cost of managing these has gotten quite a bit more. betty: what is also interesting and we got this from your survey as well, is that just 5% of small businesses are prepared for this by buying cyber security insurance. we talked to the ceo of xl, a big insurance company, where they mentioned last week that cyber security insurance is a huge opportunity. i want to play for you what he said about that. collect the earliest phase of how cyber will be addressed to make the fastest-growing part of insurance as well. but it needs to be built out and become more robust before you see it take off. betty: only 5% have insurance. what is the potential here? hari: the difference is, is such a new trend. i don't think companies are really thinking about how they can use insurance or other vehicles as something against the risk of cyber attacks there's still some education any to happen. -- education that needs to happen. first, you have to get them to understand there are more tools available to them as they understand there are other ways to prevent risk and create outside for themselves. -- create outside for themselves. -- upside for themselves. we need to do a better job showing them what is available to them. betty: thank you very much for joining us. much more ahead from the kentucky derby to the mayweather-pacquiao five. the first week of may was overflowing with sporting events. we will discuss all the winners and losers. ♪ betty: just moments ago we heard this big news coming out from cisco. john chambers is stepping down as ceo taking on the executive chairman role. chuck robbins, who has been at the company since 1997 will take over as chief executive. the stock is up slightly on this news in the premarket. cory johnson, our "bloomberg west" editor at large who knows the company well, is joining us. john chambers has been at the helm of this company for decades. actually the stock is now down 0.3%. how big is this that he is stepping down? cory: for a long time he has led the investors know there is a process underway. he has been telling everyone about this for many years. that has been very clear. i think the choice of chuck robbins is a little bit of surprise. there was a widespread belief throughout the ranks that had misread warrior, a woman who was a thing of officer was named the cto and strategy officer for cisco. it was seen as a tapping of the sword of john chambers because she was going to be the next leader. betty: if john chambers had been telegraphing for quite a few years that he was looking to a successor and looking to step down, that is news to me. because he has been very adamant, and so has he said that the board was adamant that there was no talk for years that he was stepping down or that he would be resigning, even when the company was reporting quarter after quarter of bad numbers. cory: i will say that he wasn't going to be there forever. i don't think it's a huge surprise that he will step down this year. if you look at 17 years there let's just go back 10 years. if you look at what is going on with john chambers and what has gone on with that company and who their competitors are. we used to talk about during the.com bubble there were -- there was cisco and sun microsystems. keeping this company alive has been impressive. and a lot of the focus has been a change in terms of the product lineup even their core router business but moving into other areas, not least of which is security. and that is the thing that chuck robbins is best known for being the champion and mixture that cyber security was a big focus in terms of the software and hardware of the company. that has allowed cisco to remain central in the business when all of their other competitors -- look at juniper, look across the world, look at alcatel lucent, all struggling to stop -- all struggling. cisco is still dominant. betty: and the -- and switching topics, the sad news that we heard over the weekend, david goldberg dying suddenly passing away on friday. you can imagine silicon valley is shocked by his passing. cory: gave the guy that was really well -- a dave is a guy that was really well known in silicon valley. a lot of people had a chance to work with him directly. he had a really wide network of people in silicon valley. it is often said of the dead that they are well remembered but i have to say that he was a friend of mine as well. i'm kind of struck by how many people -- i was looking at facebook last night. everyone from bill gurley to bob iger. he was a corporate executive that was really beloved for his brilliance and his humor and he's such a young guy. it was just a shock to the entire valley. he was so well-liked, and a big warriors fan, should mention. it was shocking. betty: they so much, cory johnson, bloomberg editor at large. 46,608, that is how much it would have cost for a dedicated fan to attend all of the events over the weekend including airline ticket and hotel accommodations. it kicked off thursday with the first round of the nfl draft in chicago. friday at fenway park the red sox at the yankees. on saturday, 12,000 dollars for the kentucky derby. and it was also finite in a get -- fight night in vegas. and then the golf championship in san francisco. according to a harris poll commissioned by nielsen, 52% of adults said they plan to watch or attend at least one of those sporting events. mayweather-pacquiao, that is what i want to talk about. overwhelmingly, people were texting me sunday morning and saying, this is kind of a disappointing fight. collects in the weeks leading up to this fight, we heard every superlative, biggest of the century, and while the money would be over $100 million for each fighter, it would not be the fight that would save boxing by any means. it was kind of boring. it's not the brawling fight that you saw from mike tyson, or even lighter guys like hagler. betty: they will each go away with $100 billion or more, but it it break television records? eben: we will not know that until later this week, but it's pretty much guaranteed. these guys have been talking about fighting for six years. i'm sure a lot of you tuned in. betty: and the photos in the philippines, it was crazy. gathering all over the country. is it unusual to see a favorite actually win? eben: and he was supposed to win by a lot more than he did. david papadopoulos, who covers horseracing, mentioned that he was with 32 times during the race, which is rare for that horse. american pharaoh worked harder than a lot of people thought to win this race. betty: does that goes well you go eben: -- does that bode well? eben: i don't know. i'm not horseracing expert. the horseracing world has been waiting for this for a very long time, as you know. betty: since 1970. before you were born eben. [laughter] and one of baseball's biggest rivalries, the yankees versus red sox. a rotted this homer what was it, his 650th? he made -- a-rod hit a homer what was it, his 650th? eben: when jeter retired, you could buy his dirt that he stood on at-bat. but it sounds like they did not market it and they will not pay him a $600 million bonus. it's a weird situation and the baseball association will have something to say about him not getting the money. betty: thank you very much. mayweather may have taken the title in the ring, but was periscope the big victor bianco the live streaming app -- the big victor, the live streaming app that left many people watch the fight for free. ♪ betty: flying high, amorous -- emirates reveals first class details coming up. ♪ betty: welcome back. we are 30 minutes away from the opening bell. here's a top -- a look at top stories. wall street is expected to hear an upbeat report an hour from now on orders in march. the next debt crisis in greece is three days away. the debt ridden country must make a $233 million payment to the imf this week. there is still no deal and the greek government won't cut pensions or rate sales taxes. one economist tells bloomberg that what each side wants create a huge gap. >> it is very hard to be optimistic, given what we have heard. what the greek government wants and the european partners want are two different things and the only possibility of agreement at this point is if both sides get so scared of a crisis that they are willing to do a compromise which in many ways would be to kick the can further down the road. betty: a greek official says the government should have enough money to get through the week. you might need a scorecard to keep track of the republican presidential candidates. to outsiders are joining the race today. currently fear any major announcement and then hit the morning show. collect she wasn't transparent about benghazi -->> she wasn't transparent about her server and her e-mails or about benghazi. and we see donations that she said she would disclose while she was secretary of state. all of those things get to trustworthiness. betty: ben carson is being backed among grassroots conservatives. he is an opponent of obamacare and health care reform. and mike huckabee is also expected to jump into the fray this week. rtwo men are killed as they attack an event where cartoons of mohammed were displaced. -- were displayed. the government has not given details yet. david goldberg, 47 years old ceo of surveymonkey and husband of cheryl says -- sheryl sandberg passed away while on vacation over the weekend. disney has changed released of second-quarter earnings so that employees can attend the funeral. they will now report tomorrow morning. bo peabody of great craft partners is joining me. and bob emery is joining as well. we have a lot going -- happening. who watch the mayweather-pacquiao fight? >> uhhh this is where my life is. i was in bed at the time. betty: oh, my gosh, we are also exhausted and aged here. bob: it was not on my pop-culture radar. betty: it sounded like you did not miss much anyway. everyone seemed disappointed. unisys was going to happen twitter's new video platform come a periscope, apparently that was a winner in saturday's boxing match. people were periscopeing the fight and it allowed people not to pay the $100 that you needed to watch the game -- the fight. bo: this is a big deal, hbo, twitter, google hbo, and showtime. betty: who's got bigger muscles right? though: controlling the eyeballs -- bo: controlling the eyeballs a lot of people wins in the end. bob: this was kind of hilarious because it reminded me of those people who recorded off the television and it's so bad because you cannot tell who's talking and somebody will pay the five bucks to buy it. betty: the cable giant signed up more than 400,000 new internet customers during the quarter. the result come just 10 days after it abandon it $40 billion bid to buy time warner. everyone is saying that comcast is just going back to being this cable giant. bob: if it were not for 50 shades of grey grade, they would be in the red. am i on the wrong story echoed you guys -- on the wrong story? you guys are looking at me. bo: this has nothing to do with the economy. good management teams make the numbers and bad management teams don't. and you know where they will end up making their money. the one thing i did not like out of the story that i read 4.7% raised in the subscriber fees last year. bob: that's almost 5%. janet yellen loves it but as a customer, i hate it. that's where they will make their money. betty: it also shows why their deal got -- a little bit of a monopoly there. number eight, sprint versus t-mobile. investors are looking to sprint earning report. to see how many subscribers it added in the past quarter. in the last of, t-mobile increased it monfils of trevor bayne by 36%, while sprint fell 2.5% at the end -- increased its subscriber base by 36%, while sprint fell 2% at the end of last year. bo: it's such a tough market now. we have a couple of small companies dealing with sprint. they are difficult to deal with and have not been that innovative from our perspective. i'm not surprised by this. betty: how have they been difficult? bo: when big companies are really adept at working with small, innovative companies, that's a really good sign. sprint has not been. bob: any experience with t-mobile? they bill themselves as kind of the little guy. and that's another welterweight fight right there, right? for third place. we love competition, don't we? betty: and competition for the international business travel, our number seven story to my guys. if you want more privacy on your first class flight, emirates maybe your future carrier. they are changing things for passengers who want more private space for either work or relaxation. bo: i find this so interesting. you have some airlines pulling all of their first class seat out and then others doing this. who is right? bob: i would think, maybe with the doors that close, it's almost like the old orient express. bo: i was on a flight to allay and was in business class, but there were only 10 rows of economy. they had literally half the plane that was premium seating. bob: they have to pull feeds out for the showers and sauna. [laughter] betty: if they can find a demand, why not? bo: a focus on a focus on the 1% is what you see here. betty: speaking of the 1%, how many private jet work crowded -- were crowded on that one way? they look like roaches on the tarmac. number eight, out of the berkshire hathaway annual meeting, warren buffett addressing the buyout of 3g practices. he also resisted calls by activists to break up berkshire. it won't be broken apart, even after he's no longer at the helm of the company. bob: we love to mythologize warren buffett. and he's done a great job of being the folksy grandpa. we had him on bloomberg on friday with the ukulele whatever that was, singing the coca-cola team. t --heme. this is a brilliant move by him because he's seen as a grandpa and then goes into negotiating room and he's a cold-blooded killer. that gives him an edge. how many people have gotten the best of goldman sachs? in 2008, warren buffett horns for them. bo: but that's what i don't understand. he should have kept to the folksiness. i think he got a little lazy here with really tough vocabulary. we all know costs need to be cut sometimes. but i wish he would have kept the folksiness. save the cold-blooded for the negotiating table when it's private, instead of revealing -- bob: toto got a hold of the curtain, and there is warren buffett. betty: maybe he is more like mafia like the godfather. bob: he might just be getting old. betty: after the break, diving into the details of mcdonald's and their turnaround strategy. we have some details. it may be time to ditch the "create your taste" you know the old customize your order. one guy took the builder -- build your own burger trained at mcdonald's and he built that order. betty: he's got to try to get that all in. -- bob: he's got to try to get that all in. blo: what is that? betty: that if they can. ♪ betty: we continue to count down to the opening bell and we are now halfway. number five, if mcdonald's. last hour, eeoc for detailing how he plans to turn around the fast food giant. he posted this video message. steve: i'm changing the structure. our new structure will be simpler and more concentrated around a reality of where our operating income comes from. this is the first time -- betty: this is the first time we really heard from him as ceo. i want to get to susan. a couple of changes here. for new segments -- four new segments, international lead market, high-growth markets, and foundational, like the rest of the hunters. [laughter] is this transformational? susan cole and night yet. these changes seem important if you work in the mcdonald's headquarters, but not if you are a customer, at least not yet. how will we know? how much of a difference will it make, and how quickly? can they really change anything just by reorganizing? betty: right, i get it, they want to work -- look at the world a little bit differently. what surprised you that they have not mentioned yet? susan: i wanted to hear a big strategy about how they would deal with their food. that is their product. steve easterbrook has made a lot of announcements since he started in march. taking the acrobatics out of the chicken, trying in our teeth and all chicken, a sirloin burger --an artisinal chicken, a sirloin burger, that the overall view. he wants mcdonald's to be called a progressive burger company. betty: right, he wants a better burger. so where's the beef? [laughter] susan: lets the see what that really means. we don't know. betty: the stock is down in the premarket. investors are not selling you down tremendously, but not all that impressed with what they hear. susan: i think when you make a big deal about may 4, we will unveil how we will transform the company, i think people want to hear -- betty: they want to hear big things. susan: yeah we want to see, or we want to know what to look for. betty: there was a q&a with press, but no answer russians. -- no answer to questions. susan: a big thing they have not really touched on is how they want to change the perception of the company. certainly, changing the food might help, but people need to be persuaded that the changes are real, that they are offering something other than a kind of industrialized burger. what is a modern progressive hamburger when you have 14,000 restaurants in the u.s.? betty: exactly, how do you change that image? susan: i see a big disconnect and i haven't seen anybody from the company talking about how they will bridge that. betty: susan, they do so much. susan brooks field of bloomberg news. -- susan berfield from bloomberg news. ♪ betty: let's get back to bring you the most important stories before the bell. ok, guys, number four. let's talk politics. another slate of candidates. world famous surgeon, ben carson, seeking the nomination for president. he will make the announcement in detroit, his hometown. and on top of that, former hp ceo, carly p arena, announcing she will -- carly fiorini announcing she will take on hillary clinton to be the first female president. >> three weeks ago, this was looking boring. now it's looking interesting. we have neurosurgeons, ceos. it's interesting now. betty: it is. bob: is an interesting, a black woman -- a black man and a woman on the same day. and one thing you can say about ben carson that you cannot say about carly fiorini, is that ben carson is successful in his field. betty: i'm so glad you mentioned that. i talked to carly last week. ok, that the bell, but basically she said she came at the peak of the dot com boom and she was not alone in seeing that company sink. number three, chuck robbins is replacing john chambers as ceo of cisco. he most recently served as the cto of operations. the commercial business segment now represents one quarter of their business. it is the fastest-growing segment. and he's the new ceo. bo: i like change in general. i just hope they keep buying companies. bob: i think they will. that is what has been identified. in the new guys involved in acquisitions, that will be good, too. bo: they really wrote the playbook for how to acquire companies fast. bob: hats off to john chambers. bo: a great run. betty: number two, the incredible rise in u.s. oil production is over according to one crude traitor. andy hall, remember him? he's known for making aggressive bets and has said that we have three citrate point and called for a rebound in crude prices from here on out. -- said that we have reached a turning point and he called for a rebound in crude prices from here on out. bob: he was a $100 million for one year by citigroup. remember that? are you going to listen to him or to me? that is a make any sense. i want -- low oil prices because i buy gasoline for my gas guzzling minivan. betty: is it a subaru? bob: no, it is a minivan, japanese made. every guess that comes on your show that i'm on with, i say, what is going on with oil prices? and none of them seem to know. if they don't know, how are we supposed to know? listen to andy hall, i suppose, and make lots of money. bo: it make sense to me. betty: a quick check of where futures has settled and they are slightly higher on this monday morning. the opening bell is next. ♪ just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room. fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. betty: welcome back. let's get back to bring you the most important stories you need to know before the bell. the number one story the fight, mayweather-takeo -- mayweather-tpacquiao. and now we have carl icahn. betty: i would put my money -- bob: i would put my money onicahn. by his here off. betty: carl icahn is accusing him of making it harder to protect ceos and doing things that are bad for business. what you think? bo: carl icahn's point of you is that they should be operating the companies and not making acquisitions and landing for the long-term. and larry fink just has a different viewpoint, right? if you have the right guy or gal in the post they should be able to do that stuff. there is good data on both sides. i actually think when ceos, when allowed to than cash, they make a lot of mistakes. they make -- they do a lot of m&a that in the end doesn't work. i think i'm on carl's side here, believe it or not. betty: what about you? ball: what he's doing is accusing larry of voting consistently against the activist investors. [opening bell] i agree with bo, he ought to loosen up a little bit. let's open it up a little bit. betty: he is accusing think of --fink -- accusing fink of protecting his bid. let's bring in mark. let's get your take on this carl icahn versus larry fink. who do you side with? mark: that is the beauty of an indexed world. with the etf and larry fink's prominence in that part of the business, we don't care what management does, so long as it is part of the index. i'm guessing has to buy shares accordingly. if you go into the holdings on the hts page in bloomberg right now, you know, blackrock is one of the bigger holders because of the proliferation -- excuse me, it's early in the morning -- of etf's. why bother? just see what it looks like an index and go play golf. betty: like you, mark? mark: i'm a terrible golfer, betty liu. betty: i want to bring in mike regan. i forgot to mention you were joining us as well. questions for mark? mike: so many people have loaded into high-yield debt and the really -- if there's any set of weakness in that space, think his quote was "a run for the exits." and i know intrepid has a pretty good state in high-yield capital. i'm curious what you think of that. willie potential rate increase caused -- will a potential rate increase cause a run for the exits? mark: we are not quite to away were in june of 2007 where things went up in the night with a bear stearns mortgage-backed runs that set all the fun off -- mortgage-backed fund that set all the fun off. but i am kind of a believer that we have boxed ourselves in, or the fed has, in that they have allowed the congressional leaders to get by because of cheap rates. and now we have borrowed so much money we cannot afford to pay it back and not only that, we cannot afford the higher rate on it. i think it will be a long time coming but as i mentioned with the bear stearns mortgage-backed fund in july of 2007, things can happen that we cannot perceive of right here. but i think oaktree will be ready and able to take advantage of the dislocations, as we will hope to do at intrepid capital. betty: mark, did you read bill gross's letter? it came out today. he sounds depressed. bob: he does. mark: what part of depressed with your own fund of $700 million do you have? betty: [laughter] good point. he says the super cycle and bull market is over. what else did he say? mark -- mike: if you like he thinks he is over. reflect on your own death is pretty shocking commentary. bob: it sounds like he's resting well at night. betty: good for him. mark, what do you think of that? mark: i pity bill, with as much money as he has that he is depressed. i guess you can get a bear market in time, and i guess that's what he's inferring. we certainly had a bull market for the past 36 months. look at 2013 and 2014, we took the s&p up 50%. i don't think prices are compellingly cheap, and they could stay somewhat elevated and not drop precipitously, but not make any forward progress. who knows what bill is thinking but he's going to be ok. betty: oh, he will be fine. i don't know about his fund. boggle and he cannot take it with income i think is what he's trying to say -- bob: he cannot take everything, which is what i think is right to say. betty: this bull market is coming to an end itself, right, like it's getting long in the tooth. my: dividends with a whimper instead of a bang, i think -- mike: if it ends with a whimper instead of a bang, i think we will be ok. we have already had two of those bangs in the past couple of years. it was awful. mark: think about the things he could not have foreseen. the guy with the flash crash, the guy with a finger on a button and suddenly vaporized a couple trillion dollars. or who would have thought that a couple of nobel prize winners would have blown up a hedge fund in september of 1998 or that the united airlines merger would not have happened and the market cracked? when you have cheap money like you have, you have people live for -- leopard significantly -- levered significantly. betty: mark, it does like you are worried about something. bo: he's worried that a bang and not a whimper. mark: i am prepared for prices to go downtown any given day. i like to have cash to take advantage of those dislocations. to be fully invested today means is no better opportunity tomorrow and that is not an assumption we make at intrepid capital. betty: thank you so much, mark trapp the -- mark travis of intrepid capital. bob and go, they give for staying with me, and also thanks to mark read -- mike regan. still ahead, matt miller is out there in kansas city. he will sit down with gm's north american president. plus, how much did you pay to watch saturday nights fight between floyd mayweather and manny pacquiao? some people paid nothing. ♪ betty: another factor we're watching this morning is general motors celebrating a massive milestone, the manufacturing of over 500 million vehicles in the long history of the company. matt miller is live in kansas city at the event with alan beaty, gm north american president. it is his first television interview. matt, i will send it over to you. matt: thank you very much betty. allen, congratulations on the milestone. are we looking at record sales for gmalan: if we are coming off -- for gm? alan: if we are coming off of a quarter of very strong sales. a very good march and a really strong april and now we go into may with a lot of: -- a lot of optimism. matt: we have seen a concentration in compact cars. obviously, you are selling small and large in the suv market which you dominate, and small and large trucks. you are the only one who really makes them. what does this mean for the margins at gm? alan: what you said about the margins is absolutely right. it is the fastest turning vehicle in the industry. we are really doing well. and what is really cool is that we are attracting new people to chevrolet and to general motors. we will -- we look forward with a lot of optimism. matt: do you expect that to continue, the low fuel prices? do you plan for that? alan: if someone had told me that this would happen over the next 18 months or so, i would not have affected that. matt: you have come out with a ton of new trucks and more coming out this year. the chevy malibu is bigger, more luxurious. why are you trying to step up with these models into a bracket higher? alan: malibu competes in the biggest car segment in the market. and our performance has not been up to par. with the introduction of this new beagle, we have put our best foot forward -- of this new vehicle, we have put our best foot forward. it is bigger and lighter. we have gotten great reaction to the vehicle. we are excited to be here today to celebrate an incredible milestone, but also to launch. matt: would you overtake the sonata, the ford fusion? alan: it has done quite well and i expect we will do that. matt: and i expect to see the camaro coming out. mustang got the jump as far as releasing earlier, but the camaro at this point, will you retake the crown? alan: i will put my neck out and say, yes, we will do that. it is stunning and beautiful. and i think what research is showing now is that we have reinvented general motors where we are looking for leadership in everything we do. we have more to come. matt: you are putting a lot of money where your mouth is. $17 billion that you have invested in u.s. factories alone since the you -- the new gm was formed. are you worried you are over investing? 12 billion in cadillac, $15 billion in china, a lot of money in mexico, it's a lot of money. alan: it shows the confidence we have. we are putting our money where our mouth is. we are investing with the right products for the market and we are investing with the customer in mind with everything we do. to your point, we are making those investments. this is a time when we can show we are here to win and we're here to be a leader. matt: allen, thank you so much. we appreciate your time. back to you. betty: thank you so much for bringing us that interview. trading now underway. let's get to scarlet fu. cisco is up marginally on this news about chuck robbins becoming the new cbo -- ceo. scarlet: that is right, and john chambers will keep his role as chairman of the board. even of the stock price is not reacting much, take it to her -- a look at the total -- take a look at the total return. look at the chart. these are the go-go days leading up to thedot com bubble. cisco was forced to split its stock for different times between 1996-99. and there was the crash and the high. and in 2011, cisco began paying dividends, reflecting how it changed from this highflying growth stock to a more mature tech company and it has consistently been paying dividends since then. we have seen microsoft did this and apple as well, but for far different reasons because it has a surplus of cash. on a civil price change bases, 100 -- 14.2% on an annual basis. if you reinvest dividends, 1955% almost a 50% return for cisco shareholders. that is something to keep in mind as john chambers passes the baton to chuck roberts. and comcast has been in the news because it was not forced necessarily, but removed it bid to take over time warner. no word on what it will do next. first quarter profits beat analyst estimates $.79 on an adjusted basis versus a consensus of $.74 after comcast signed up more internet customers. other highlights from the conference call, although it did not touch on what it would do with its many and what it might buy next, programming costs will increase a percent this year. i don't know if that means higher cable bills for you and me, but if the cable network continues to -- but the cable network continues to operate the majority of the cash flow for the service. betty: i am on verizon files, so i guess i won't be part of that. still to come, stephanie ruhle will be headed to a conference will hear from bill ackman and much more. ♪ betty: many of wall street's biggest names, including bill ackman, are taking part in the stone conference, where they will be doling out their best ideas to eager investors and listeners. stephanie ruhle and erik schatzker wishes. -- will be there. stephanie: erik schatzker witches. he's not coming today. but we are both headed to vegas tomorrow. but for today, the sohn conference. it happens every year, the biggest in the industry come and present their best ideas to eager investors and it's all for charity, for cancer research. at 12:00 we will stream david einhorn's presentation live. and you know that as soon as david einhorn get on the stage and get behind the podium and utters a civil -- a syllable the stock moves. it's all very entertaining. we will have barry rosenstein, a very well-known activist investor. and think about it just a day after carl icahn talking about the value of activism kind of taking a jab at larry fink, it will be interesting to get very resins point of view. barry rosenstein;'s's point of view. betty: herbalife earnings are out. will he talk about that at all? stephanie: bill ackman will never miss an opportunity to beat that drum, and so he will definitely cover herbalife, but what else he will present, we don't know. betty: what else could he say about herbalife that he has not already dead? -- already said? thank you, stephanie. it's all starting at 1 p.m. eastern time right here. still to come from a very -- an end to a very long road for cisco's john chambers. after 20 years he's stepping down as ceo. ♪ betty: back to some news that broke earlier this morning, the ceo of cisco, john chambers, is stepping down. jack robbins will take over on july 26. -- chuck robbins will take over on july 26. i want to get more this morning from cory johnson our "bloomberg west" editor at large, who i didn't know is actually here in new york. cory: i didn't know either. but here i am. betty: cisco announces, and you show up. cory: yes. john chambers said in 2012, i'm going to retire sometime soon and then nothing. it has been a couple of years since that announcement. indeed, it's been 20 years and a quarter since being named ceo in january of 1995. since announcing his pending retirement, he listed a few people to replace him. in some senses, it has been in the cards for a long time, but it has been a very slow bake-off. betty: there's slow. it seems like the market -- the stock hardly moved on this news. it seems like it will be a smooth transition. cory: i think his long-term record is overlooked, because the stock hasn't done great over a long time, but two survive and be a dominant company during this time when all of their competitors are following -- falling away. and i mean all of them. back when the dot com was soaring, who would have thought that any of these competitors would fall away? of patel lucid, very strong in telecom, but -- alcatel lucent, very strong in telecom still, but others are gone. 3com, long gone. juniper, an interesting and important companies though, but cisco really dominates the business they are in, not least of which is because of the focus on security that has been very important to the company in the last few years. betty: is robbins going to keep the ship steady? will he do? cory: who knows? it is such a behemoth of a company. it has done a lot of acquisitions and issued a lot of stock options to do it and use the free cash flow to buy back stock. the game has been to try to acquire the best. acquiring the best engineers what they call the manquisition. it's a time-honored tradition and cisco is loving it. betty: i like what you are doing with the phone. cory: it is a huge deal and because of the foot of twitter, -- the footprint of twitter, a lot of people have access to this. you saw a lot of piracy this weekend with people using periscope to watch the mayweather-paquiao fight. the fight was subpar anyway. betty: exactly. if it is free, somebody will take it. cory: why not? betty: great to see you, cory johnson. tomorrow, moving and shaking on the vegas strip. then national finally gets what it wants. it is buying tropicana. it's a bloomberg exclusive. ♪ >> live from louvered headquarters in new york, this is a market makers" with erik schatzker and stephanie ruhle. erik: mcdonald's promises to stop the bleeding, its new ceo promises to strip away layers listen to the customer, and change what people think of the food. stephanie: billionaire blackrock calls out mr. fink. he says his argument is making harder against investors. erik: and carly fiorini is joining the race for the presidential nomination as well as ben carson. they won't be the last. stephanie: