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Transcripts For CNBC Squawk On The Street 20121024

german business confidence unexpectedly weak. green arrows at a 40-month low. our road map begins with what to do after the sell-off. we finally have a dow component raising guidance but has anything changed with 40% of s&p companies beating on the top line? we travel to get cramer's take on at&t. >> facebook is up 20 plus percent this morning. that's after beating by a penny and showing signs it's monetizing mobile at a decent clip. upgrades are in full force. shares are still to be unlocked. >> if there's a true disappointment, it might be netflix. missing its target on the year on subscriber growth. what does reid hastings need to do about that? first off, markets looking to bounce back from yesterday's sell-off in which the dow fell more than 200 points for the second time in three sessions. haven't done that since last thanksgiving adding to positive sentiment this morning, pmi out of china three-month highs a sign the country's manufacturing slump may be bottoming out on a day in which fed policy makers wrap up the two-day meeting on rates. earlier on "squawk," warren buffett was asked if he's been doing any buying during the recent market downturn. >> last week i bought some wells fargo. >> you did? >> yeah. we only have 430 million shares. i feel we had enough. >> so the question is, jim, do we all -- >> a billion of wells. what the heck. the interview was remarkable. it was just -- becky always delivers. this was to me one of those interviews where he just is not only bullish but just basically laying it out saying under either guy it's going to be good. things will be better next year. he has too much credibility to just dismiss it. wells apparently a lot of people felt was a bad quarter. $6 billion buyback announced. buffett is doing another billion. a billion year and billion there. you got a real thing going. >> talking real money. >> talking real money. >> so today, what's the game plan? >> look? today is the day dominated by the worst ipo in history. delivering the best conference call of the year opposed to the last coveranference call which like a broadway play that never got to broadway. >> relative to expectations? >> quarter call improvement. zuckerberg must like being an underdog. this was a call where i thought he was a guy who had been ceo for a dozen years. he owned up immediately to screwing up. not getting mobile right. exaggerated by the fact we didn't have a mobile plan. mobile doing great. mentioned advertisers that are big. zynga. we don't have to think about zynga. i think the justified move is occurring. >> what about those buybacks? >> we should mention facebook is up 20 plus percent this morning. >> we want to talk a lot about it. we also want to talk about the markets today in terms of what we're going to see. to your point, i mean, it is funny that on that conference call he talked a lot about monetizing which is the opposite of what he said he was going to do in the s-1 if you recall. as you point out facebook up sharply. information on visa. a succession plan. citi may want to learn from them. this is way you do do. charlie sharp will become ceo to succeed joseph saunders. that will be effective november 1st. that is very quick. former director of visa and mr. saunders served the company ceo since 2007 continuing as executive chairman. it's a huge company with an enormous market value. we don't talk about it very often. >> it is a winner. a.m. lot of banks owned it. it's a community bank. >> $110 billion market value. >> we have buffett saying the right things. our network has tremendous power. don't even credit ourselves because there's humility. who was that company that disappointed yesterday? it was -- was it dow? no. doing better than expected. it was guys in wilmington and not the credit card company. that's what happens in this market. the memory is not long. china was good last night. i got up for china. went back to bed. it's good. i can sleep. >> you can't be an investor in the memory isn't long. think about facebook. quarter to quarter of the changes that you are seeing or what you get from one moment to the next where you finally get the general perimeters around which this business is unfolding for the first time. you're getting some sense. you didn't know that that long ago. it's hard to be an investor. >> facebook brought in a new operating system. they distinguished themselves from google which was a conference call that was jumbled. there were other little tidbits that occurred. buffett wants to buy another 100,000 houses. i guess probably wants to rival ellison in the number of houses that people have, oracle ceo. you see positives that make it so the taste of yesterday is diminished. >> europe didn't help overnight. then you get flash pmi showing a slight uptick here. 51.3. this is a new series. it does a good job tracking u.s. pmi figures because they dictate everything from the industrial cycle frankly to earnings estimate. if there's some strength and stability there, that will quell concerns coming into the session this morning. >> let's zero in on facebook for just a moment this morning. a year ago mobile has a percentage of overall ad revenue was 0. it is now 14. citi calls it a nice beat. says they can probably effectively grow revenues during this transition without the key is whether or not they grew on the user experience in the meantime. >> i think that one of -- this call unlike the last one was full of facts. data which indicates advertisers like it. a bold claim. 40% of users are likely to use facebook with desk top but 70% use it on mobile which is why proctor & gamble reports tomorrow. walmart. amazon. capital one with the best bank quarter all like facebook. i wouldn't be surprised if gm didn't want to come back on facebook and maybe they say, hey, nice to meet you. we're going with the other guys. >> there is a concern though that too many sponsored stories hitting a communications device and people start to say you are loading me up too much here. they want a run rate. at $1 million a day. they went to $3 million a day. they gave us numbers they had never done. they said they won't again. at least it gives some people a sense as to ramping of this significant revenue stream in mobile. that being said, do you really load people up too much on their phone and they're like enough already. >> even upgrades are cautionary in that there are a billion shares coming up. the lockup expirations are not done. it will be a nuance trade, isn't it? >> it's interesting. i wonder whether a lot of hedge funds owned in this lockup whether they overly hedged. >> what i hear is long onlies are coming into the main. they are good old fashioned straight ahead buy stocks money managers are starting to buy the stock ahead of even the lockup expiration. >> it makes sense. there's a quote that zuckerberg gave on this amazing job which said, you know what? on mobile going into the year, we hadn't started trying yet. so now they start trying. they didn't have the right operating system. >> okay. >> just kind of funny. >> i used to use that one all the time. i wasn't trying. >> i thought that was a remarkable line. you guys who said we don't have a mobile strategy, it's true. turns out the mobile strategy is pretty good because the user experience people like on the mobile. did you see the super bowl line, david? did you see that? it's a remarkable line. listen, that might have been sandburg that said targeted audience of the super bowl three times. three times the audience and they do it every day. super bowl one time a year from what i can tell. >> sandberg used that line before. >> suddenly you have different advertising firms agreeing before the i thought advertisers were skeptical. now it seems like they are checking it off. >> a huge move in stock. 25%. by the way, what was only a $70 million beat on revenue line. it's a very small beat so to speak. it is clearly the language on that conference call, detail they gave us, that's emboldening investors to step in. we'll see if it keeps up. that is quite a move today. payments business was weak. sorry. payments business was not strong at all. >> the other guys had better gaming. zynga is -- >> although, zynga now accounts for 7% of revenue. it was 10% in q-2. 12% in q-3 '11. >> the last conference call talked tremendously about zynga and about rival gaming. this was a conference call -- this was the conference call that was ready for broadway prime time conference call. the last one was amateurist. zuckerberg led this conference call. >> no wonder. they had a great quarter. of course they're going to deliver on the conference call and deliver the level of detail investors want. what i wonder going forward when they aren't able to serve it up the way the market wants whether they are as forthcoming on the level of detail that we get in this report and whether they will handle the call the way that people are expecting going forward. this is basically taking them from as you were saying earlier underperforming on past quarterly results to more in line with what we expect of a talent of this caliber. you want that consistency going forward. >> what happened here was they were so bad that the comparisons to themselves was positive and comparisons to google were positive. happens to come at a moment where there was tremendous despair last night. think about it. when you left the office, you were left with netflix which was disgusting, i believe. >> disgusting. >> okay. >> you were thinking about norfolk southern which unfortunately was dark hole than ever. here we have a different picture of facebook. a rosy clove. >> at&t up profits of 62 cents that beat estimates. phone giant also increasing free cash forecast. as for boeing, blowing past expectations with earnings of 1.35 raising full year guidance. good work on commercial side. david, you want to start? >> we'll do more later on. big news here, huge buyback. 101 million shares. $3.8 billion. will they keep it up? free crash frs are quite strong as a result of lower than anticipated capital expenditures. the subscriber edition in wireless, that was not so good. 151,000. just to put it in perspective. verizon did 1.5 million. we'll talk a little more deeply about at&t and iphone 5 and everything else later. >> how is that possible that verizon can be so far ahead? >> i don't know. >> it's remarkable. >> that was remarkable number from verizon that quarter. >> we didn't give it enough attention. >> so far above what anybody was expecting. 1.5 million additions talking about for the third quarter. >> we're going to hear later. integral to the food chain of cell phone. cell phones, we have ipad mini. there's a lot of conflict right now about how good cell phones are. arm holding that they are excellent smartphones. so you have this void that was the pc being mentally washed away by the excitement of the smartphone. in other words, some hope where data center, some hope in tech. tech was the disgrace of the quarter. it's tougher it feel horrible about tech as you did yesterday. >> just on at&t point, i wonder what a beefed up sprint is going to do here coming into the market with capital behind it at a time when at&t and verizon are relying on moving toward more tiered pricing for customers. will sprint try to come in and undercut their ability to do so and take some of the user growth away? >> no doubt. pricing is one key question when you look at the soft bank investment. there are a lot of questions. it will be very interesting, i think, when that deal is completed. sprint has taken in 3 billion in capital through that convertible. it's convertible $5.25 a share. it could create real competition. not that there isn't. >> we've been hearing from very large global companies with a weak outlook. big exporters with a weak outlook. boeing is number one exporter in this country. outlook is better. what does that tell us? >> i have been very hard because we had dupont which as i said yesterday was the super bowl of bad earnings. they distinguish themselves. gold medal for worst performance, best belly flop, it was that. boeing seems to only go up four days a year. when they report. in between people just worry and worry. this was a triumphant quarter for boeing. that's another area that you can feel better about. >> and the deal falls apart. doesn't that make boeing have a better outlook from here? who knows. >> sprint has the backer. i was concerned for boeing if that european merger came off. united technology, remember you talked about goodrich and how good the acquisition was. if you have aerospace doing well and housing doing well and autos doing well -- we'll hear from ford soon. domestic and foreign. you end up with a scenario where a lot are doing well. then you have to try to figure out what in this country is not doing well. we heard coach was good. >> it's the consumer sort of business split personality. which of those two is the more reliable signal at this point? >> our economy is a service based economy. housing and retail based economy. i'm not hearing bad things. >> that's a good point. >> europe is bad. i was pessimistic about europe. china, maybe a little positive. united states, i'm not hearing enough negatives to be as glum as i would like to be. >> you would like to be glum? i don't think you want to be glum. >> buffalo wild wings wasn't that good even though i ordered three free separate orders of wings last week in ohio. that didn't make it. didn't happen. >> you must have worked those off in this morning's 4:00 a.m. workout. >> i'm dropping weight. people at home, it's by design. >> when we come back, exclusive with one of wall street's heavy hitters. lloyd blankfein, 11:00 a.m. eastern time. a lot to discuss and ahead, broadcom will be in talk about it's quarterly results. one more look at futures as we try to compare some of the damage from yesterday. back in a minute. 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[ ] i'm with scottrade. throughout our lives. one a day men's 50+ is a complete multi-vitamin designed for men's health concerns as we age. it has more of 7 antioxidants to support cell health. one a day men's 50+. what does this mean for the company now? you mentioned that netflix gave an ugly tone to the entire market before we get better figures from facebook. is this company specific or something more broad at play? >> i think it's company specific. streaming subs, huge miss in terms of contribution of profit. the best line and i think you can probably take heart in this. we have been very successful in nordix. when you are focused on trying to come up with a positive and you have to go to the nordix, what does that say? is that an ikea moment? >> there are no shortage of shareholders that want them to cut international and raise pricing. that would do positive things. you get chatter that why doesn't take a shot at them right now? i said they may want to wait. when you look back, they should have sold it when things were going gangbusters. the question is will anyone try? john malone was quoted as saying maybe directv should take a shot at them. i don't think anyone will do it. it is interesting because you could raise pricing. serious charges. a lot more than netflix. >> international is costing a lot of money right now. >> i was surprised to hear there's a credit card problem. there's tons of online companies that do well in latin america. >> being in u.k., you see a lot of these illegal streaming websites that people use to watch tv and movies. i wonder if that's part of their challenge in gaining traction overseas. it would call into question how aggressively they can raise price. >> i like david's call. maybe it's time. maybe it's time to reassess. what do they have to lose? holy cow. >> we'll see. we'll see. >> last night on "mad money," cramer showed you the way toward a few bright spots in a tough market environment. what's the pathway to profits today? jim's mad dash is coming up next. and later panera bread raising guidance in a tough earnings season for many restaurants. we'll speak with chairman ron shaich about what's ahead for his company. d t the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students. let's solve this. are we there yet? are we there yet? 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[ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. >> every morning you provide in-house a memo of what you're watching. this thing must be ten pages long this morning. >> a lot of earnings. i try to give you more meat. i got to tell you, this is a company that was as breather as a lot of people were saying. it's run too much. you know what? hiv franchise and hep c franchise are humongous. this will go higher. >> disappointed out of lillian and others. >> hep c is a huge market. it's a horrible disease. it's paying off in spades. the bell of the biotech ball is gilead. >> we'll talk dollar tree after the bell. it's a ceo triple header on "squawk." live interviews with lloyd blankfein, ron shaich on earnings and in the world of tech, scott mcgregor will join us in the next half hour. opening bell comes after this break. [ male announcer ] this is joe woods' first day of work. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. >> what a week we have going. dow down 243 yesterday. last time we had two 200-plus point losses within three days. november 21 of last year. we'll see where we go today. breath is more positive at the big board. release of business insider's list of innovators in the tech community. nasdaq, america israel chamber of commerce. we talked facebook at the open. it is poised for its best percentage gain ever. i know we're only going back to spring. that's a big move. >> i wonder if they have a slide show of henry ringing the opening bell with subtitles. >> you have to go through each one because it counts as a hit each time. >> 50% of the traffic is from facebook. i want to tie that into facebook. >> well done. shares up 23% right now. there it is you see it. i wonder, we mentioned a billion shares. still to come and yet from what i hear, there is real long only demand for the stock that could help. the company is buying back everything. zuckerberg is not selling. wale see if that ends up being a concern again as it has been for a number of months in the past. >> wouldn't it be something if google could rally. there were so many things that went wrong with google. google came to facebook. companies keep flipping. people liked google and they didn't. they thought they had it. zuckerberg says they do. an amazing moment where i want to reference something david said. these are bad ways to think about the market. what i just offered is not something you can do at home. people are going for pay up for facebook and sell google. there's a day-to-day judgment being made about companies that is so snap that very few people can keep up with it. you get up really early. go to bed really late. you still haven't gotten to norfolk southern conference and there's a stock down. >> every morning and every night drinking through a fire hydrant. if facebook is the crystallization of what's happening in mobile, then people are going to have to do a big rethink around social. >> i want to -- now a company that i like very much and they were on our show and they came on "mad money," they did a big secondary. the stock is screaming. someone is going to need to buy these guys because these are the arbiter of mobile media. yahoo! they said would not be big acquisitions. this company will be bought quickly. it reminds me of yelp which did underwriting and it was a buy. i think social media as a business had a been given up on 24 hours ago. suddenly people say, you know what? i'm going to put my hands in social media. >> with facebook, there's still a great deal of uncertainty. i don't want to get too carried away. it's not that big on numbers still. the mobile revenue number is still a relatively small number. it is growing. they did sponsor stories and it's gone up a lot. let's see. i'm not a regular facebook user. i don't have a real sense as to what it is like. maybe you do. >> i'm not either. >> overnight zuckerberg went from being a frat house guy to -- let me do this because it will provoke you to know end. the jamie dimon of social media. >> that's ridiculous. that's okay. >> remember pandit? i think they took him out. people defriended that guy. he was defriended. blocking him on twitter. >> it came to me in a dream that i'm going to leave. it happens. >> you want to talk -- we have not discussed our big story from yesterday and that is the pricing of the ipad mini, right? we know amazon sells these things at cost. 329. as if they spit on investors yesterday. stock was at a high and sold off in the middle of the presentation. >> and that calculation about 100 million and how many did they sell. 16 million. if you were buying an ipad at the last minute, maybe you should have waited. i liked what i heard from apple yesterday. john ford, unbelievable job covering that press conference. just fantastic. offering far more insight than wall street to it. i liked what i heard from apple. if it's a $30, $40 difference in the cost, the ecosystem is worth that. we'll hear from scott mcgregor. mentioned amazon as being a key client because of the kindle. maybe there's room for everything. >> a nice parallel. they say apple is taking the macy's route trying to grab middle end to high end but not going the discount route. the idea is not to compete directly with the kindle. >> i don't think they have to. those of us who are applepeople who live and die by apple, you got to have the ipad. you have to have the ipod. this new imac. the numbers that imac are putting up. how cool is that? >> that's what i own of all of the apple devices is that sleek thin -- >> don't you want to say it's too heavy and clunky and freezes constantly. please go to apple. >> i will use the keyboard until it's the last keyboard on earth. i can't stand touch pads. that's why i have a blackberry. i like the laptop. it's been so expensive. interesting to watch google with the new intro to the market. >> my favorite thing on a new launch is to geek out and watch in-house corporate video on the website. they had to find a new way to weld this mini ipad together because the glass is so thin. fascinating stuff. >> i am doing an interview this weekend. such great detail about the actual engineering and how jobs was -- every little detail. that edge isn't rounded enough. just an amazing attention to detail that i think tim cook is doing too. >> meantime, bob pisani is on the floor watching what's moving today. good morning, bob. >> the important thing here was we got two data points to help the markets overall. number one, pmi data better than expected. futures started moving up at 10:00 last night and stayed up most of the night. the second one was better tone on earnings. i don't want to make too much of it. i look at 10, 11 companies this morning and looked at the numbers here and five of the ten upped their guidance. boeing, kimberly, lockheed martin, windham, all talk about better guidance in the near term for 2012. that helped. the major earnings trend this period though, we all know what it is. light on revenues. a good example is lily. earnings were light and revenues were on the light side. stock opened now down. conference call still ongoing. we'll get you more on that later. we're still only up 1% for revenues for q-3. that's the new data we're getting. companies consistently missing on the revenue front here. six of ten of the companies that i read this morning, six out of ten were light on revenues. that's not a good sign. job cuts continue too. there's another little trend i don't want to make too much of it. dow chemical cutting jobs. northrop cutting jobs. dupont announced yesterday they were cutting jobs. that's something i see as well that's out there. how about time for a bounce. on a short-term basis the markets are definitely oversold right now. the markets are disappointing. the greatest numbers of people, remember what happened on monday? we had that big rally going into the close. everyone who bought puts got stripped. yesterday everyone who bought calls got hurt. one thing that's not helping at all is volume. we're not getting volume on days when we were down. we didn't get big volume yesterday. normally technicians look for some kind of volume increase for a sign of a bottom or a top. we're not getting that. the problem is high frequency trading 60% of the volume now. it makes it hard to use traditional metrics in technical analysis in volume to mean anything. i don't think volume necessarily means what it used to mean with 60% in high frequency trading. notice all of the guys who are hedge fund people are still underperforming market. big article in the journal today about that. that may be bullish going into the close. back to you. >> thank you, bob. let's head to the pits. rick santelli at the cme group in chicago. >> everyone continues to talk about how the bubble may or may not pop at some point. with inflows going into corporate bonds and high yield bond funds but a two-day chart of tens, not a lot going on. we're hunkered in between the 50 day and 200-day moving average along with other technicals, wedges, consolidation, really isn't going anywhere. as you open the chart up to september, pay attention to how we're hovering around that 175 to 180 area. the next chart is the s&p going back to the same beginning of september. you can see how we've deteriorated over the last several sessions. there's been very little response from the bond market. many traders are scratching their heads about that. it's something to pay attention to. especially of late. usually weakening in equities brings buying in treasuries. you talk about a market that is going sideways. look at this chart on the dollar index. many traders made money selling against that 80 on the top of the range. will it continue to work? maybe. the dollar is getting traction against the yen, which is part of the reason why the dollar index is up at the top of that range. now we're going to david faber who has info on at&t. >> thank you very much, mr. santelli. shares of at&t down. they had been down as much as 3% at the open. really coming back a bit. let's call it down not even quite a percent at this point after the company reported third quarter results. some real positives in the report and some other things that investors seizing on perhaps less positive about. one positive, well, let's start with churn. only 1% of the subscribers are coming off. that's pretty good. it got better year over year. but wireless subscriber growth. that's your net additions to subscribers. 151,000 versus 1.5 million for their main competitor. total adds, 678,000 for at&t. that churn number as well there. iphone activation interesting to look at. verizon added a subscribers but iphone 5s weren't part of that. it gives you a sense that at&t has a lot more built in iphone or larger installed base of iphone users and so the question that some investors need to ask is as the iphone 5 starts to proliferate. there is supply constraints. they would not say specifically but clearly there are supply constraints for the iphone 5. what will that mean for this quarter? the fourth quarter? what will it mean for at&t if you're trying to compete on lte network and they have a lot of things -- there's a look there. they have a lot of things in their slides that talk about how strong their network is. how much they built. how many people they were addressing in the country. interesting question. will they lose more as they compete on iphone 5 now with verizon or not. can they hold their own? >> how much is the spectrum verizon playing a role. >> it's not just spectrum. it's all of the things they've been doing for all of these years. it's the blocking. very unexciting. >> i have to tell you, i think you made a good point on apple. we'll have to focus on. the presumption is apple disappointing on ipads. we heard apple is disappointing on iphones. if you wanted to catch a moment where apple has the reduced expectations ahead of the quarter, we have it. people think that apple has been caught flat footed in major devices. stocks down tremendously. it's a good softening. >> expectations tomorrow night. >> they've been reset to the point where people think that apple is just not as good as we thought. >> not a demand issue. a supply issue. >> fourth quarter could have good numbers. you have enough demand. >> finally on at&t let me just quickly add, free cash flow is strong. $6.5 billion. they took capital expenditure expectations down or it was down to 13.8 billion year-to-date from 14.7. look how many shares they bought back. that's a story for so much of corporate america. played a role here and one reason they beat on the bottom line. >> that's impressive. buying equivalent of whole companies. a lot of cash flow there. those companies are better than people realize. joe kernen asked a great question. why doesn't warren buffett buy the phone companies? he said he doesn't know what they are going to look like. has anyone looked at their phone book? >> it makes up a large percentage of household expenditures. >> it's more than my mortgage now because i reduced -- i would like to refinance my verizon bill. >> give them a call. maybe they'll help you out. you never know. they'll cut price sometimes. things are high. there's competition. it's why you want competition. >> that's ridiculous. >> i've done it. >> chips are up for broadcom and shares rising on better than expected earnings. scott mardi gras gregor on where despite a challenging environment, the product pipeline for the chip maker is stronger than ever and how is lloyd blankfein preparing his firm for the fiscal cliff and a look at this morning's early movers. health care companies moving on up. we'll be right back. 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[ male announcer ] fedex office. now save 50% on banners. shares of worldcom are down. this is unbelievable. this quarter was the best of all of the semis i have seen. scott mcgregor is the president and ceo. i'm shocked the stock is down. shouldn't you be standing there right now 33 bid for 1 million shares? >> it's great to be here. we did have great quarter. we had growth in all of our businesses and wireless in particular grew almost 14%. >> okay. so are people seizing on broadband not growing as much? talking about expenses being too high? i'm grasping because i listened to the call. i heard you guys really are in the sweet spot of everything including amazon obviously talking about apple but apple is big. please tell me what i'm missing that the sellers are grasping? >> i don't know what you're missing. we had a good quarter. going forward taking mid point of guidance for q-4, we'll be up 11% year over year. that's showing we're taking share and we're growing faster than our peers. >> there's concern that operating expenses will outpace revenue again this year. what are you doing to stem the doubts that people have? >> you have to look at what's driving the cost. it's coming from investment in r&d. in q-4 we're seeing growth from tape outs and that's the last process where you tool to go to production for a product. it's a great leading indicator. >> isn't it also the case that part of the reason why your gross margins were doing better is from selling down net logic inventory? >> there's some accounting charges related to acquisitions and that's stepping down in q-3 and will step down in q-4 and gives us a slight tail wind in terms of gross margin. >> when you were on "mad money" you talked about 5g and how it's coming. what's the goal here for 4g and 5g. one thing that distinguished this period, it seeps like at&t and verizon stopped spending. give us a sense of a two to three-year outlook because of 5g. >> you see growth in cellar going for faster band width. i think what a lot of people do with tablets or cell phones is connect over wireless land and that's where 5g products deliver band width. if you want to look at video content, download movies, do your facebook application now that they push mobile, all those things will be even better experience if you do it on wi-fi. 5g gives you that giigabit performance. >> you mentioned amazon. i know that people aren't supposed to talk about apple. i won't put you on the spot there. how is the kindle selling? it seems like you're signaling that they're doing well. samsung says they're doing well. this is so out of sync from what we hear from dell and hewlett packard. amazon is taking share in this. >> i think in the tablet space, you have to look at what is the business model. what drives the sales. apple makes fantastic products. they're the leader. they make just a splendid product with a splendid user experience. kindle is interesting because it comes in a with a difference business model. they are able to sell tablets at a low cost. so there are different business models. they could be successful but each is great at what they do. >> i got to tell you, scott, stock was up premarket. maybe it will come back. want to thank you. president and ceo of broadcom. second best in show which is entirely apple. great to see you, sir. >> no answer on that 33 bid but a great question. when we come back, ceo parade continues on "squawk on the street." an interview with lloyd blank fine with goldman sachs later but first -- >> coming up, investing in this market can be as tough as an obstacle course. a dirty, muddy, ugly race. but we've got cramer here to steer you in the right direction. six stocks in 60 seconds is next. now, go hit the showers. we'll be right back. instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-294-5373. between listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. >> the question is whether with a goes down must come up. >> this is one of the best performers in the mark today. they did 1.89 versus what people were looking for 1.15. a nice beat. >> itw? >> a lot of guys didn't get industrial side right. they did. >> citi downgrades norfolk. >> it's a great company. >> anheuser downgraded. >> you're not going to stop the cement heads. people will drink bud no matter what. >> they shoot horses. >> costco down a bit. a recommended buy. >> carl, you know power of costco better than anyone. i've been waiting for entry point. it's here. good call. >> a lot of levels the other company is mcdonald's at 88. >> 85 is the right level there. i'm more concerned because of the price wars. no price wars. >> what's tonight? >> we have a really sexy biotech company that's been absolutely in the crosshairs of the bulls and bears and then david and i love martin franklin. he's just a wild man. he's delivered, delivered, delivered and we'll have him do a victory lap. not just because i have two margaritaville mixers one at the vacation home and one at home. >> more after the break. don't go away. looking for a better place to put your cash? here's one you may not have thought of -- fidelity. now you don't have to go to a bank to get the things you want from a bank, like no-fee atms, all over the world. free checkwriting and mobile deposits. now depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity. welcome back to "squawk on the street." september new home sales up 5.7%. much stronger than expected. the annualized rate 389,000. last month revised lower from 373 to 368. this now represents the best level of new home sales going back to april of 2010. now, granted it's well below a billion annualized units which '04 and '05 and entire two years above that pace but the best since april of 2010. carl, back to you. >> all right. thanks so much, rick. let's get reaction to those numbers from diana olick who joins us from washington. anything to worry about inside these numbers? >> i'm looking at the regional look and it's very different when you go northeast big jumps but not so great in the west. sales dropped a lot. new home sales dropped 37.3% in the midwest. you have to look at where these markets are looking. this is signed contracts in september not closings. this is a good jump. 5.7% is well beyond expectation. four to five-month supply. we know builders have been ramping up production. housing starts and permits going up in september. they're looking for that demand. it's good to see that demand is still there because there was some concern going into this fall that we might see a weakening in these numbers. prices up to 242,000 on the median home price. that's way up from a year ago when it was 217,000. obviously builders are able to push the prices higher. that is because they're not seeing quite so much competition from foreclosures. foreclosure supplies have really been eaten up by investor and pulling up the price with it. that's a help for the builders. all in all a good report. >> interesting. the market not impressed. sold off just a tad on the news. thank you, diana olick. a good dose of breaking news here at the top. facebook shares on track for the largest percentage gain ever on the back of that strong earnings beat. is the boost from mobile enough to stabilize growth for the long-term? >> goldman sachs rock star will be here to talk markets, economy, fiscal cliff and china. in fact, the man who coined the term brits, jim o'neill will join us live. >> what is reid hastings next move as competition increases? >> let's focus on the astounding moves that we've had on facebook. shares of facebook absolutely rocketing today after it beat the streets expectations on the third quarter. the street praising the social network for advertising. we dig deeper into an important stock. we're joined by an analyst at stern ag with a buy rating and target of $26. that right? >> that's right, simon. >> it's astounding. facebook announced it managed to sell now $153 million of mobile advertisements and the stock increases in value by 8.8 billion as a result by my calculations. why is the conversation changing? >> you have to put that in perspective. a few weeks ago people were expecting mobile advertising revenue to be no more than 50 million or $60 million and the big concern was this mobile transition is going to be very hard for facebook. they have shown from march is they created what is a billion dollar run rate in advertising. wouldn't be surprised if they were closer to 2 billion in the next 18 months. you have a powerful network platform that can monetize the huge population on facebook as they proved last night. >> is the case proven? there are those that would say this is so new. the fact that people are for the moment clicking on these mobile ads doesn't mean to say when they learn that that's a commercial operation that they will click on them in six month's time. we still are groping around with a new technology and we still are not sure, are we, really? >> really, look, i think in many ways the stock has always been a story about where the long-term is for these guys and again they have a very small market share relative to the number of people they get every day. so the engagement on mobile i think is eight times what we've seen in other platforms and i think that people are realizing the potential power down the road. so will there be hiccups? sure. i think people are realizing that there's a lot these guys can do. they just dial up a little bit and here you are. again, the beat wasn't big. i think the story for the next 12 to 18 months look powerful. >> what about the attitude? mark zuckerberg was not only on the call last night, he was very strident on the call last night as ceo. and sandberg saying it's a priority to focus on getting more mobile ads on news feeds. in other words, that commercialism, that profitability is a major priority. to a certain extent that is new, isn't it? >> yeah. i saw a different mark zuckerberg last night. i think he was very focused on monetization. he cared about the shareholders from the tone and discussion he had around the company's future. i think investors like that as well. >> so would you be looking to raise your price target? we're almost at the level you think it should trade up. i don't want to comment on where our target price can go. suffice for say that i see a big opportunity for facebook over the coming years. >> it's good to have you on the program. thank you very much. a big move on a big stock. >> for the 12th year in a row goldman sachs holding asset management symposium. discussions with over 40 founders from the leading hedge funds and private equity funds and real estate funds. time for another cnbc exclusive. gary cam ikaminsky has an exclu. >> a spectacular conference. amazing group of people. set the table for us. explain to the viewers who the clients are, what this is about and what the agenda of the next few days are all about. >> i'm glad you asked me about that. it seems people don't really understand that ssam is goldman sachs asset management and our purpose is to manage money on behalf of our clients. many of them are here today. and they are typically u.s. pension funds. ones of state pension funds as well. insurance companies. many important similar type of entities from around the world. sovereign wealth funds. these kind of people. and as opposed to the rest of goldman sachs which is doing other things with some of them and others our prime purpose is to purely look after managing their money. we are owned by goldman sachs but we have a different purpose than is incorrectly reported on from what i can see from a number of places. >> let me set the record straight with that. with that in mind, i want to go around the world with you. you are looking around the world for investment opportunities for those clients. i want to start in europe. i just want to know, is the eyo a are -- your eurozone in recession? >> yes. if it was as easy as that, life would be straightforward. the big issues looking forward because part of the problem of investment management is we all get influenced by the past and there's tomorrow and we have to think about the future. the big issue is about how bad is it going to be, how long is it going to be, will it get an even bigger recession or some of the policies and initiatives going to bring it out of it. >> what is your assumption now? how deep will it be? you know they haven't done much since they said they would do anything. is this going to be a deep prolonged recession? >> we probably need the rest of the year to talk about this issue. it's so complex. what they are doing is a game changer and for investment managers i think it just changed the risk reward for much of the past three years you would want to sell good news rally. i think because of what they've done and strength of commitment to try to keep a shell in the road, now you want to buy any news sell-off which is a subtle change. the idea that we're through the problems because of what they've said unfortunately is not the case. >> in terms of looking at a global waiting, would you consider europe as a market wait in terms of looking at a global portfolio? >> thinking about it in what i still do in two-year anniversary of doing this job, i call it my new life. i look at a lot more conservative ways of valuing and big picture things. and because of the mess, european equities are really cheap despite how much they have grown since summer. my view and the way i try to steer people is to look through a lot of the daily noise and look for opportunities to invest so if anything i'll be slightly overweight european equities both absolutely and relative to the u.s. given the big move. >> we'll get to the u.s. in a minute. let's go to china. some data out of china today. i'm somewhat surprised before we came on air what you said about china. explain what you think about the opportunity to invest in china. not necessarily the chinese economy but invest in china now. >> this is a dangerous week to quiz me about one of my favorite places in the world. i think the chinese data is showing strong signs these guys have pulled off yet another adjustment. the numbers this morning suggest a bounce coming on top of what we saw last week. and most importantly, they are doing it stopping a housing taking a trade surplus from 10% to 2.5% and the consumer is showing signs of accelerating relative to production. it's fantastic. if it was as simple as that, we would buy chinese stock and forget about it. unfortunately it's not. one of the reasons that these adjustments are taking place is deliberately raising wages so it makes it for many chinese companies particularly exporters, the profit margins are under a lot of pressure. and so there may be other winners from that so i find myself thinking mexico. big winner from the new china. australia a bit of a loser. but i think from some of our guest speakers which you are interviewing later, it would seem to me a fantastic time to be a genuine chinese stock picker. by that i mean stocks other parts in the world that may be a good way to play the new china. i call it apple versus caterpillar. not obvious to me caterpillar is a big winner as it has been in the past whereas consumer names in the u.s., big winners. >> the message here is going to be to find specific stocks in china to be opportunistic. let's go to the u.s. you hinted on that. i know you have been down in d.c. for the last 24 hours. just got up here. not so optimistic in terms of the u.s. it sounds over the last 24 hours. >> i have been very optimistic relative to most of the people about the u.s. this year. i've been a business dismissive of the election and fiscal cliff as being that bigger issue. i'm hoping it's just the fact i've before in d.c. for 24 hours and after the weekend i'll forget about it all. i had a horrible experience. for all of the listeners that influence washington dollars, get it sorted out. it's not a good experience. it seems to me the american people are stuck about big choices, about taxes and spending and we all hope that this election is going to clear some things up but it's not entirely clear to me that it is going to. >> will the election have a monumental impact on the u.s. stock market one way or another in two weeks? >> even that's tricky. i think people look at the simple fact in theory at least romney is more pro-business relative to obama. that's good for stocks. it's not that easy. beyond that there's a whole issue of the future of the fed and their commitment to the five-year ranks where they are and under romney that would not be the case. the big thing for us in the election is the bond market. that's highly asymmetric. could be a big loser on romney victory and the stock market has to deal with that even if the risk premium would come down. >> thanks for having us. sounds like jim was listening to the "squawk on the street" discussion we had yesterday on why the romney victory may not be great for stocks. >> cramming in a lot of information in a short period of time. we'll come to you later. you just heard from jim o'neill. still ahead, an exclusive with the man at the head of goldman sachs. that's lloyd blankfein. >> one restaurant stock that's still feeling the love this earning season. we'll talk about panera. for how long can it stay on top of its game? 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[ male announcer ] download zeebox free, and let your tv go where it's never gone before. panera bread raising full-year guidance. shares up 5% and up more than 40% in the last year. here is ron shaich, co-ceo and founder. ron, welcome back. congratulations on a quarter that i was just talking with jim. looking through it for anything to quibble with whether it's margin targets, transaction growth, check growth, guidance, there's not a lot to quibble with. your job is to worry. what's left? >> i do worry. we're feeling great. i mean, this was a superb quarterback. we're targeted another superb quarterback in quarter four. we're looking at earnings on our targets up 31% to 33% in q-4. we're growing. we're at the high ends of our growth. our average weekly sales of new stores are at an all-time high. we feel good. >> all right. ron, great to see you. your store on saturday, jammed. took me more minutes than i like to get my food. >> you should have called. that's a block from my house. >> i know it is. that's why i bring it up. right down the block from you. chipotle goes from 12 to 8 to 4 this year. buffalo wild wings last night goes from 4.7 to 3.8. how come you are able to buck that trend and go higher? what's the secret sauce here? >> jim, it's a stew. we've been at this now for two decades as a public company. for the last ten years we've been driving growth through a stew of factors. it's about food. it's about operation. it's about marketing. it's about catering. a whole bunch of things have worked for panera over the long-term and continue to work. all of our investment and energy is about building long-term competitive differentiation. it's not complicated. it's just hard. >> how do people know one and one? everyone wanted to order a salad and ordered a half sandwich. what are you done so the younger demo gets this? >> we're basically talking about food that they want. i think as you know, this is healthy food. there are real options. we're the largest provider of all natural chicken in the country. we talk about a range of organic ingredients. we talk about food that gets people excited. great success this last quarter with our chicken cobb with avocado. we're not talking about an avocado paste. they trust panera. this is food you can trust. it is served in an environment that engages people by people that care. it works, jim. it's been working. that's why we're the best performing stock in the restaurant universe for the last decade and last two years and year-to-date. >> looking through sales in the quarter, 6.2% is your comp. the composition of that is 0.6 transaction growth, 3 percentage points is price and so what of the mix is changing in a way allowing you to grow top line? >> that's great. that's been going on a long time. there's often a misunderstanding about mix. mix is driven by changes in the nature of our business. for example, our kpcatering business has grown 50% on a two-year rate. it's been growing 50% two years of comps throughout this year. that growth in catering changes the mix. it brings up the average check, the average profit per transaction so that's what shows up in mix. all we're doing is driving pieces of the business that are more profitable for panera. it's something we've done for a long time. it's something we expect to be able to continue to do. it's not about price. it's about mix of the business. >> 3% growth in price is significant. how are you able to raise prices in this environment when we've been sort of told and warned about how the consumer is holding up. >> we have never taken price beyond inflation. we have been able to through the recession to be able to take price to cover inflation. i think that consumers vote with their wallets. they choose things they consider good value. good value isn't how cheap it is. it's whether it's worth the money. what panera continues to do is try to put out a better and better experience that's worth the money. >> major agriculture problem this year. drought. you're talking about wheat prices going down. you're a huge bakery. >> we've bought forward now for the bulk of next year. we forward buy our wheat and lateral it in. we're already prepared to take very modest price increases to accommodate that inflation. >> ron, we've had a lot of ceos on as earnings quarter is gotten under way from both fast casual and qsr. everyone denies losing share. everyone talks about share shifting. it's not coming from us. is the consume e er influx to a degree? maybe you're stealing from grocery stores. it's hard to tell. >> we continue to see panera grow. this is not a quarter story. it's not even a one-year story. this has played out over the last decade. people want real food and places that feel good to them. they want people that care. panera has continued to take share across a range of competitive options. >> what part of the country is growing fast as we've heard troublesome and dottidotes abou west, northeast. >> we have seen no material differentiation between various markets. panera continues to grow and to perform across the country. i would tell you, it's much more important to look at individual companies and look at how they're performing and whether they have competitive advantage. if they have it, they'll continue to grow. if they don't in this environment, they're going to be in trouble. >> you pointed out the share price for performance that you've had. i see there is harvesting of insider share position here. your co-founder just over a million dollars. is there a feeling that perhaps the stock might have topped out for the moment? >> i think there's de minimis selling among officers of the company. i think as you know i'm the largest individual shareholder than options that are at the point of extinction in the last couple years. nothing material to that. >> where do you think the stock might go? at what point do you think it would be worth -- >> you know, i don't ever focus on the stock price. i focus on delivering something that makes a difference to the guests and frankly that strategy has worked for panera for 30 years. i'm here for the long-term. our management team is here for the long-term. what we're focused on is building something of quality. it seems to reward investors when we do so. >> don't be surprised if jim calls on a sunday sometime soon. >> too crowded. >> thank you. >> ron shaich from panera. thank you so much. >> breaking news here on crude oil inventories. sharon epperson is back at the nimax. >> oil prices are falling fast. a big surprise here in terms of the crude oil supply build. 5.9 million barrels. remember, as of last week we were already 11% above five-year average. 17-year high and now we get 5.9 million barrel build in crude supplies in the past week. analysts expected around 1.7 million barrels for the increase. they also saw an increase in gasoline supplies where a decline was expected. increase of 1.4 million barrels. this is according to the energy department. also fuel supplies declined as expected by 600,000 barrels. this report today from the international department definitely a bit of a surprise. bigger increase than analysts were anticipating but they were anticipating an increase. that is part of the reason why they are at three-month lows here for the u.s. oil price. there's a great deal of ample supply here in the u.s. compared to the market which is tight even as it comes out of maintenance season and we have seen brent crude around $108 a barrel. nowhere near the decline that we see right now in the wti futures. back to you. >> all right. thanks very much for that. stick around. netflix shares are plunging after the company reported third quarter profit took a sharp hit on higher costs. we'll sort through those competition concerns and expansion woes next. also still ahead, goldman sachs chairman and ceo lloyd blankfein will join us live for an exclusive interview. back in two. i don't spend money on gasoline. i am probably going to the gas station about once a month. last time i was at a gas station was about...i would say... two months ago. i very rarely put gas in my chevy volt. i go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and it's not just these owners giving the volt high praise. volt received the j.d. power and associates appeal award two years in a row. ♪ at legalzoom, we've created a better place to turn for your legal matters. maybe you want to incorporate a business you'd like to start. or protect your family with a will or living trust. legalzoom makes it easy with step-by-step help when completing your personalized document -- or you can even access an attorney to guide you along. with an "a" rating from the better business bureau legalzoom helps you get personalized and affordable legal protection. in most states, a legal plan attorney is available with every personalized document to answer any questions. get started at legalzoom.com today. now you're protected. good morning. 10:34 here on wall street. main headlines, new home sales up by 5.7% in september to 389,000. the highest level in almost 2 1/2 years. facebook shares soaring 22%. the quarterly results beating consensus estimates. an upgrade from a number of wall street firms today and boeing is the biggest gainer on the dow reversing course after last year's fall on upbeat guidance. >> netflix shares taking a big hit after reporting profit fell 88% in the third quarter. we have an analyst joining us to talk about what's being seen as one of the high profile misses today and what hastings does to correct it. was the big sin in promising the 7 million for the year? >> absolutely. no doubt. the beginning of the year the street expected new subscribers and company came out early in the year and said they will deliver 7 million net subscriber additions and back end load so that created expectations and that expectations being revised downwards is what we see today. absolutely. >> aside from a stock that's down more than 15% today, how do they back themselves out of that corner? >> i think you have to wait for the negative sentiment to wash out. it will take a day or two. third quarter tough for them last year and stock was going down 25% for three days. we're going through adjusting expectations here and i think we'll pause several days from now and see where it shakes out. >> international just keep hitting it like with a hammer. is it nearly enough to make up for what's going on in the u.s.? >> no, not at all. internationals are actually where the spending money. despite downward revision of guidance they are making money domestical domestically. the majority of it, a lot of it comes from dvd rental and they spend money internationally. if the company admitted, 7 to 5 million net ads move was because they misforecasted. if they can't forecast it because of how new the market is and can't forecast three-quarters domestically, how can investors be sure the forecast for international where they spend hundreds of millions of dollars are not optimistic. >> do you think the business fits with other businesses? is it a takeover target further down the line? is what it is doing be easily recreated by amazon or apple? >> not only amazon and apple, you and i could start a service like that and technology is silver life and content is nonexclusive. the advantage that they have is the subscriber base and knowledge about subscriber behavior they accumulated over time. rather than proprietary content. >> is that near $57? >> there's downside left. the problem with the stock is there is -- because they spend money on international expansion, there are no earnings to talk of and no variation support. it's all up to the momentum in the market. we've seen it move from 120 to 70 on pretty much no news. >> to be fair, i guess there is news in between quarters but largely it surrounds something like a content issue expiring, right? you lose stars or you lose something to amazon. is there anything like that in the near term that's a potential risk? >> not that i see. that cut both ways. remember, i was on the show in january and netflix was the best performing stock for the year. remember the headlines were. >> those were good days. >> there was just speculation that yahoo! would buy it. nothing changed fundamentally. the stock moves on headlines that have little to do with reality very often. >> live by the sword die by the sword is momentum. good stuff. >> thank you for having me. >> okay. we're up 37 on the dow. let's get a market flash with taylor. >> we're looking at shares in delta seeing weakness today in a percent into the red. that's off the lows. delta profit missing estimates for the third quarter. the company having a problem with costs especially nonfuel unit costs. jets, et cetera. the company also saying it will switch out its 50 seaters for bigger jets and it's also taking a billion dollar reinstrustruct hit this quarter. >> ahead on the program, goldman sachs ceo and chairman lloyd blankfein will join us live on cnbc. it's an exclusive interview. plus, a race to the white house gets fever pitch, what might the impact be on the federal reserve and fed policy? 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[ all ] i'm with scottrade. as the fed winds up the two-day policy meeting, expectations are muted so the attention turned to the presidential election and potential impact on federal reserve and fed policy. steve liesman joins us with what the election will mean. >> wall street is beginning to game out. what will happen to fed policy and rates in the event of a romney presidential victory. the market is taking more seriously his vow to replace ben bernanke and criticism of fed policy including a monetary cliff. fund manager writing today the election may impact everything from mortgage costs to the costs of financing the u.s. debt. trillions are at stake as well as fate of the u.s. dollar. columbia business school glenn hubbard is a favorite to lead. he says hubbard will lead toward mopping up liquidity sooner. but a report that came out yesterday any new fed chairman after january 2014 in a romney presidency is likely to be more hawkish than under an obama presidency. changes will be gradual as a new chair needs the support of the open federal community. they will pull forward higher short-term rates in a leadup to an announcement in the summer of 2013 of bernanke's replacement under a romney presidency. there will be little effect on the long end. in other words, curve flattening but also a question of whether romney would push for tighter policy even before the chairman's term is up. economist steven stanley saying the fed chairman could resist triggering an ugly standoff. it seems doubtful that bernanke would risk the ire of congress and administration that can alter the fed's institution structure at any time. the next president will have the ability to appoint the fed chairman, vice chairman, one board member through 2014. another board member's term is up in 2016. simon? >> that's a standoff that congress could reign the fed back in. this doubling down is -- you know, the independence of the fed is not necessarily guaranteed as it has been. >> i think that's right. on one hand, bernanke would resist the pressure from the administration and congress to assert fed independence. he would need to resist it up to a point where congress and administration could potentially depends again on how the congressional elections go and how big a republican majority there is there and how much of a tea party presence there is. they could ultimately change the fed starting. >> and dependent upon whether they have outcome based guidance or increase the buy and all sorts of stuff for the next meeting. steve, we'll leave it there for the moment. thank you very much. still ahead in the program, live and exclusive interview with goldman sachs chairman and ceo lloyd blankfein. first, rick santelli working on the next hour of "squawk on the street." >> simon, i tell you what. good morning, big guy. we saw some better than expected new home sales. now granted, they're not a million annualized units but they are better than expected. so we're going to talk about some of the positives of housing. of course, the more positive thoughts i think about housing the more i think about things like fannie and freddie. we're going to talk about the whole picture top of the hour. apple's launching its latest versions of the ipad and imac yesterday. consumers are looking to trade up. gazelle experienced a 700% jump in trade-ins. israel joins us here at post nine. israel, hi. >> how are you? thanks for having me on the show. >> thanks for stopping by. what was the reaction like and when did you start to see the impact on your website? >> we've seen with the rumors around the mini and the ipad but we were taught by surprise as soon as the announcement took place in san jose we saw an immediate spike in the trades online. it was incredible. >> 700%? >> 700% over the day before. it was about 1,000 ipads in its first hour since the announcement. >> it's incredible and it comes at a time when people are looking perhaps at what they can do with their old devices so now that there's all these new product cycles explain how your company works. >> we try to keep it simple for consumers. we know the consumers want to upgrade to the latest device and we provide consumers an easy way to look up the product that they want to trade in, look up the price and if they're happy with the price, we'll pay for the shipping, send you the packag g packaging, we get the device and pay you. for an ipad 3 you can get close to $500 towards the upgrade of the new ipad so it's a meaningful amount of money. >> you're not necessarily linking buyers with sellers. it's almost like cash for gold. it's cash for old devices, correct? >> we're trying to keep it trustworthy for consumers. we want to tell you when you get up to $500 you get exactly what you were promised online, trying to remove all the friction associated with selling like ebay and craigslist trying to keep it simple. >> my ipad 3 was stolen. would it have been resold through your site? >> we take a lot of care around the issue of stolen goods. it happens a lot with mobile phones. so currently there are a lot of databases you can access sbi databases where you can look up the imbi and if we ever get stolen goods we make sure it's returned to the appropriate authorities. >> so to know if you've resold my stolen ipad do i have to look up what you've got on your site or are you automatically checking the database? >> we check it and make sure we do not sell stolen goods. >> the sell rate, i only need one iphone, right, but i might have two or three ipads in my house so is the refresh rate on ipads lower than on the iphones? >> it is less than the iphones. iphones we're talking about hundreds of thousands of customers trading in their old iphones for the purchase of the 5. the ipad we're seeing a lot of activity but not as robust as with the iphones. >> we got a bunch of imacs as well. does it work with desktops? >> works with all apple products and high-end smartphones. we saw triple in trading activities for macs in the last day. >> when you find old pcs, you have to check the hard drive is clear otherwise you can see what people have done on them. is that also true of ipads, if my ipad is resold, will they be able to see what my bank account details were? >> you're touching on an important point for macs computers we have to take a lot of care how we wipe the data, we use a three-round department of events software to wipe the data. iphones easy, one click, wait a minute, clears the data and your device is safe. and it is something we take seriously at gazelle. >> you can trade in a blackberry? >> absolutely. >> was there a spike or any reaction in those product areas during or after these apple product launches? >> we did see it around the iphone announcement, saw a lot of samsung and lg customers trading up to iphone and when the last samsung came out, upgrading and staying current with the latest devices is very important for customers. >> you're a 6-year-old company, growing quickly. what do you expect revenues to be this year? >> we've been growing revenue 100%, last year $30 million in revenue and the growth continues. >> as the prices come down, the launch at the lower level presumably it's more economical for many people to not buy secondhand, they'll buy a new one. will your business die over time? >> we're seeing two different phenomenons. one in the developed world there is insatiable demand for upgrades to the latest models, see it in the u.s. and europe. >> lots of supply. >> that's supply of products coming our way. what you see on the sell side of the business where we sell the devices that goes to the emerging markets where the consumer demand for apple products for high-end device is high, they just can't afford to pay the $700, $800 in some of the countries, i think i mentioned last month, it's $1,500 to buy a new iphone in brazil. not everybody can afford to pay $1,500. are they happy paying $300, $400 for last year's iphone 4, absolutely. there is insatiable demand. when i spoke a month ago there was expectation, we had no problem selling the devices. >> that's got to be temporary. the manufacturers have got to move in on that space, i mean you're arbitraging something that they've got to fill. >> they continue to move into the space and if you look into the stats the volume for tablets in the world will triple the next three years, in nigeria 4 million smartphone users, growing to 25 million. lot of people come for new devices but there is tremendous space for use, high end use devices and great conditions. >> can people trade in their apple shares at $614 and get the ones that sell -- >> that will be our next segment in the next couple years. >> it's called recommerce. israel thank you for stopping by. >> thank you for having me. breaking news to brian shactman in hq. >> multiple sources are reporting that the new york islanders are going to move to the barclays center in brooklyn. there's a 1:00 p.m. eastern time news conference that will be attended by mayor michael bloomberg and charles wong, owner of the new york islanders. you have to keep in mind the new york islanders play in one of the worst and oldest arenas in the entire world of professional sports and of course this is big news, but it seats only about 14,500 for hockey so they have nba and nhl in brooklyn. they haven't had professional sports there since '57, when of course the dodgers left. back to you. >> already on twitter, brian, david, people are wondering, do i have to move to brooklyn now? >> i know, it's a boon for brooklyn. brings the nets and islanders together. they were together many years ago in the days of dennis potman, ben bossey, dr. j. >> there's jokes about sustainable pucks in brooklyn because everything is sustainable and artisanal. >> msg it is a challenge to the hegemony of the rangers and the knicks, given it is a part of the burrough. >> extra points for the hegemony. >> squeezed it in, in the last second. we knew it was a fashion brand so we launched "gq" and "vogue" and the company shot off like a rocketship. >> how goldman sachs may be helping the company shooting up further. we'll talk to lloyd blankfein. we're back in a minute. ty gets the most rewards of any small business credit card! how does this thing work? oh, i like it! 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[ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice. at optionsxpress we're all about options trading. we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options - from income to risk management to diversification - you'll have the tools to get it done. strategies. chains. positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? around here, options are everything. yes mom, i'll place a long call to you tomorrow. i promise. open an account today and get a free 13-month eibd™ subscription when you call 1-888-280-0154 now. optionsxpress by charles schwab. welcome to hour three of "squawk on the street." here's what's happening so far. >> the general economy, i think it's a little bit better in the u.s., certainly better in the u.s. than it is in europe and in terms of the rate of decline in asia, it's reasonably steep, and we're still inching ahead. >> i think everybody believes that we're going to be plus or minus 10% of simpson-bowles. let's get it done. >> this was the conference call that was a ready for broadway, prime time conference call. the last one was amateurist. zuckerberg led this conference call. and it was dramatic. optimistic as i was pessimistic that europe is bad and i was pessimistic about europe, china, maybe a little positive. united states i'm just not hearing enough negatives to be as glum as i'd like to be. >> what a week we have going here. >> seems to me a fantastic time to be a genuine chinese stock picker, and by that i mean stocks in some of the parts of the world there may be a way to play china. >> a whole bunch of things worked for panera, they continue to work, all of our investment and energy is about building long-term competitive differentiation. it continues today. it's not complicated. it's just hard. good wednesday morning. we are live here at "post 9" at the new york stock exchange. markets climbing back after yesterday's sell-off, the dow up around 50 points, currently up 46, s&p is up 3 and the nasdaq is up 3 as well. yelp one of today's biggest gainers benefitting from facebook's rise but the company announcing it's acquiring kype, located in germany. buffalo wild wings falling after weaker results, after citing increase in opening expenses. goldman's ceo lloyd bank fine talking about everything from venture capital to the economy to the fiscal cliff. don't want to miss that in a few moments. investors liking facebook as signs of hope surge on its mobile business. then he spent 14 years with goldman and runs a best performing hedge fund, dinakar singh gives us his take on the market and what he's investing in now. netflix takes a tumble. should investors steer clear at this point? we'll show you how to play it. an exclusive on cnbc one of the most prominent names on wall street made its way to the west coast. julia boorstin joins us from there now along with goldman's chairman and ceo lloyd blankfein and two entrepreneurs. good morning, julia. >> good morning to you carl, here with lloyd blankfein at the goldman builders and innovators summit. thanks for having us here today. >> thank you, julia. >> you're gather so long many interesting entrepreneurs. what opportunity do you see with the entrepreneurs for goldman's business? >> this is what we do. we try to identify entrepreneurs, wealth creators, job creators, we provide advice, we provide financing, we help them build their businesses, this is a core function of the firm and so really it's right down the middle of the plate what we do in our business. >> how important are the next generation of startups for goldman's business and the economy as a whole? >> so important and i have to say our business and what's good for the economy line up. we profit from growth and we help contribute to growth but these are the business growers, and we in some ways use our convening power to draw people in, to have these entrepreneurs meet with entrepreneurs from a prior level, from a different generation, learn some stuff, do some clinics, try to help them in their business, but all from a point of view of helping them to do what they do. >> a lot of these companies seem like they'll be ipo targets down the road. how is your perspective on taking companies like these public change in the wake of facebook's ipo debacle? >> not everything works out well. i think everyone in the market will try to learn from what mistakes were made and sometimes just things happen, but that won't deter everybody. i would say a lot of the people here have plans. plants. some have small operations. some have very big dreams and want big operations. lot of people want ipos and want to make their companies bigger. everybody in our country should want that to happen. these guys are growing very, very quickly and hiring a lot of people along the way. >> so neil blumfeld, how has your perspective changed? is there new momentum for ipos with facebook stock rocketing today? >> we're early stage company, two and a half years in. we look towards the future. we have a little over 100 people and looking at the next step now so it seems like the situation is improving, but we're more focused on how can we get glasses to people as quickly as possible. >> you're taking out a giant in eye glass space, luxotica. >> as lloyd mentioned they've been a great convener and bringing along other founders and ceos that are in our similar space but also we had a conversation with the founder and ceo of under armour how he built his organization to 5,000 people or talking to danny meyer the famous new york restaura restauranteur about hospitality and customer service, something we hold sacred to learn about how the coat check is the first and last impression on a customer and how important that is, he created a hotdog stand during the summer to employ his best coat checkers so they wouldn't leave and get other jobs so when restaurant season kicks back up it's lessons like these and how that hotdog stand turned into shake shack, which is an amazing hotdog hamburger sort of. >> keypads, you're president of keypad.org. you have a unique approach to microfinance. what are you looking to learn and how are you looking to innovate? >> one of the things that i've learned from the conference is reid hastings who is in the news i found him to be incredibly wise. he's had to make tough choices at netflix and he said it's the leap of faith an entrepreneur takes once you have a successful enterprise. if you look at the railroads none of them have become airlines and we to think about shifting his business completely online and at kiva our model heavily relies on local intermediaries on the ground, around the world. the website allows to you make a microloan to developing world entrepreneurs as well as people in the u.s. so they can lift themselves out of poverty and what we're wondering about, are there new ways to reach people directly to go completely digital and one to one and there are risks with it, but the opportunities for greater efficiency and lower cost of capital to entrepreneurs especially some of the poorest entrepreneurs on the planet, it's really great if you can incorporate technology so looking at different leaders who have had at a point in their company's history a big decision to make and how they thought about it. >> we have 100 entrepreneurs here, they offer different products and services, but what dominates here is what they have in common, they're all risk takers, they all need capital, they all get tested in the market and they all go through trials. we had larry ellison speak to us and he, as you would look at his career and think my goodness what a straight line, what a rocketship but he went through a lot of turmoil and soul searching in the early '90s when he had to make certain changes to his business model. lot of this is very, very reinforcing, and validating to the people who will go through their own moments. >> carl you want to jump in from the studio? >> lloyd, guys, it's a great discussion. lloyd we know the flow of financing to a lot of these innovators and small business owners to some degree we keep hearing has been paralyzed by uncertainty over the election and the fiscal cliff. we know that you've thrown your weight behind getting something done, along with simpson and bowles, but can you put on your trader hat for a moment and aside from what you hope gets done what, do you think is going to get done as best you can read it at this point? >> with respect to, carl, with respect to the fiscal cliff issues? >> yes, yes. >> look, the election is only a couple of weeks away now so i think we're going to see the outcome but my own view is whatever the outcome, the country is looking at this election as a referendum on specifically those issues that are being thought over now with respect to the budget, with respect to entitlements, with respect to the progress i have y i progressivity of the tax rate. whoever wins the election, the other side is not going to go into a funk, two years to the congressional election or four more years until the white house is up again. the country will have spoken. if the party that wins is wise it won't be a winner take all because at the end of the day they have to bring the other 49% or heck the loser may have 51% of the popular vote, they have to bring that along and that will make the outcome and the compromise more stable in the long run. depending on who wins we should either have a right of center outcome or a left of center outcome, but personally i don't think it should veer too far from the center or else it will be a volatile and unstable situation. >> assuming it happens as you cry, regardless of party, compromise is reached, can you characterize the way in which financing for small businesses sentiment among investors will change? are we spring-loaded for a blowout q1 first half of 2013? >> you know, i can't tell you q1 but i think you can make certain parallels to the period we're in to the one that, to the context in which i got moved into, when i got out of school in the late '70s and lived in, in the early 0s. there was a lot of, you know, there was a lot of kind of a depressed mentality, inflation was over 10%. unemployment at the same time was over 11%. people were demoralized and of course that was the moment that led to a 20-year bull market. you have to, you know, the situations, we have a lot of problems to chew from. they're more than mere distractions but if you keep your eye on the ball you could see we have an extraordinary amount of terrific things going for us, specifically in this country, demographics, the energy situation, the fact that we've chewed through a lot of our problems, balance sheets have been reformed, and if you want to know what the real asset of the united states is, they're sitting next to me, these entrepreneurs. we looked out at a group of 100 entrepreneurs we were working with at this summit. about a quarter of them were born outside the united states. the attractiveness of the united states to people around the world who have ideas and energy and passion, that's the greatest asset that we have, and while all those things are intact, i can't tell you about next quarter but i could tell you that this next generation is going to have great opportunities. >> i want to play a bit of sound, i hope you don't mind a couple goldman questions. warren buffett was on our air earlier today talking about profits, return on equity. here is a quick listen to what buffett said this morning. >> the profitability of bank something a function of two items, return on ams assets and assets to equity. return on assets is not going to go up. usb has done the best, 1.7%, wells is between 1.4% and 1.5% but most banks are lower. >> given that lloyd, how are bank profits going anywhere over the next few years and how do you continue to pay 45% comp. with returns like that? >> well, there are a lot of -- first of all on the comp. the only cost a bank like us has is domp. that's our whole cost. if you look at our lar margins which is what we make less what our expenses are, they're actually quite high. the only expenses that we really have are comp. and the buildings into which we put our people, which is not that great. we don't have big plants and machinery. when you look at the cost structure of our institutions of course it's comp. and it's quite flexible because that's quite elastic depending on our results. when you look at what the potential returns are for banks, you know, what we do correlates with growth. you can't really, you can't elaborate from this period that we're in now, which i think of as a fourth quartile opportunity set, at a cyclical low, people aren't doing things, people are waiting for the resolution of tax issues and other regulatory issues. people are still traumatized by the recent -- excuse me? >> go ahead, finish your thought. >> -- by the recent, so you can't elaborate off that any more than you could have extrapolated off the trend, the growth trend in bank profits in '07 and also competition, carl, is a big thing. when warren is talking about the industry he's talking in a macro sense. lot of the burdens will fall unevenly on certain companies. europe is pulling in. we're a global firm and i think we're going to face a little less competition from some of our global competitors and the opening of new markets like china is going to provide tremendous opportunities for global firms like goldman sachs. >> we're catching it, lloyd. i think this might be your first appearance in the media since greg smith's book came out. i wondered just your post publishing reaction to that. there's been some discussion that his argument has fizzled a bit because of some things that people were unable to confirm in his own reporting. can you characterize the level of either monetary or reputational cost to the company as a result of his book, and we all know litigation is not over, lloyd. there's more to come next summer. >> well, on his book, i mean, it started out as an op-ed, it was jarring. we had no notice of it. i won't go into -- so much has been written now in the press about who he was and what his position was and what his motivation might have been, but the press drummed it up and of course it was damaging to us and jarring to ourselves. we spent a ton of time trying to parse through the op-ed to find out what charges there were, and i tell you the truth, i have anxiety about these things. i don't know always what we don't know but we checked on everything exhaustively, didn't find anything and frankly when the book came out i think a lot of people who reviewed the book couldn't find anything. as a result of this we did a tremendous deep dive yet again. nobody with fladulate themselves as well as goldman sachs can. we investigated and turned over everything and at the end of the day, with all the stress and i wouldn't want to go through that again we'll be a better firm for it anyway because we really, really, really did look at everything again but as far as the book itself, i think the consensus of those who reviewed the book was there really was nothing there but anything that makes us be more intro spectisp and review our processes is not a lost exercise for us. >> you talk about others review of the book. have you read the book and if so, what is your own review? >> no, i haven't read the book, and a couple of reviewers who have read the book said you might want to save that hour and a half for something better. >> julia? >> bringing it back to the conference here, you're having entrepreneurs, this generation talked to entrepreneurs, older entrepreneurs like larry ellison, jeffrey katzenberg. what is your outlook for the ipo market and m&a. do you think we'll see another range of ipos like facebooks and zyngas? >> give it enough time. it's not anything can or might happen. everything will happen. of course. the experience of these things are not bad experience. sometimes the markets can get frothy and it's partly our possibly gaobligation to assess and attach prices. we read the same newspapers and talk to the same people you do. we don't always get it right. we think we're good at it but nobody's perfect at it. this cycle of entrepreneurs like the fellows here, creating businesses, trying to go out capital, investors trying to pick the winners that, kind of cycle of people trying to do well for themselves ultimately is what causes everybody to do well for the country. >> that seems like a perfect note to end on. thank you all three so much for joining us. >> thank you, julia. >> appreciate it, carl back to you. >> julia thanks to you. what a beautiful day it looks like in california. facebook bouncing back, can it prove itsity itcritics wron the long run? and a wall street trading legend, hedge fund guru tpg-axon's dinakar singh. we're back after a short break. , or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. shares of facebook soaring on track for their best percentage gain in their short life as a public company, beating third quarter expectations, showing they can make some money from mobile advertising. there's a look at the shares at 23.85. michael packard is an analyst at web bush securities, had a bye rating on the stock since before the ipo and michael you almost apologized to investors for wanting to buy the stock so early on, riding it through the summer. is today your moment to shine in the sun? is this today your make good? >> i think today is the first of a series of great moments for facebook. i mean i think that these guys have been on path ever since the ipo. they just haven't really done a great job of communicating that clearly to shareholders and i think yesterday they were crystal clear. every single thing they said was talking about new products, about revenue. they glossed over users. they really talked about delivering ads and the growth of advertising the new products, how successful they are on mobile. everything they said really should encourage shareholders that this management team is aligned with their interest and they'll deliver in the future. i think this is the first of a series of good calls. >> does the improvement in mobile going from 0% to 14%, is that accurately reflected in today's move? the stock's up almost 25% michael. >> i think people had given up on mobile. you had a lot of hand wringing, people saying all the growth is mobile, that's a substitute for desktop and mobile doesn't monetize as well. my math is the 60% of people who use mobile are probably spending about a third of their time on mobile, so a third of 60 is about 20% overall usage. it's monetizing at 14% so it's not yet monetizing as well as desktop, 14 over 20, about 70% as well. but that's a great number and that's headed toward monetizing as well. i think mark zuckerberg was crystal clear the opportunity in mobile is really good because people use it more frequently. you'll see a lot of innovation from facebook in ad delivery and i think you'll see those revenues continue to grow a lot so it's a really encouraging sign. i think investors should be really happy about what they heard and today's share price reflects that. >> even your rivals who are catching up with you going to a buy today have to layer their notes with cautions about lockup expirations and a billion shares coming online. how do you get around that? do you wait? >> yeah, i think it's the right thing to do. monday is the first of two big lockup expirations. the second is after the election, so i think that a lot of people are waiting to see if we're going to get a repeal of the bush era tax cuts or let them expire or extended. november 14th we're going to know so i think that might be the more meaningful lockup expiration. once those shares are out in the market eventually the market will absorb that excess supply. i think the stock is a screaming buy after november 14th. i think it will give back about half of the move because there's going to be a flood of shares on the market the next two weeks. >> interesting day for fb. michael thank you for your time. >> thank you, carl. boeing better than expected third quarter. lot more "squawk on the street" is coming up. ♪ feels like the very first time ♪ [ male announcer ] do you have the legal protection you need? at legalzoom, we've created a better place to turn for your legal matters. maybe you want to incorporate a business you'd like to start. or protect your family with a will or living trust. legalzoom makes it easy with step-by-step help when completing your personalized document -- or you can even access an attorney to guide you along. with an "a" rating from the better business bureau legalzoom helps you get personalized and affordable legal protection. in most states, a legal plan attorney is available with every personalized document to answer any questions. get started at legalzoom.com today. and now you're protected. wooohooo....hahaahahaha! oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more. ♪ europe is about two and a half minutes from their close. we'll get to that and details on the impact here this afternoon when we come back in just a minute. the european markets are closing now. >> fed date today but also a slew of data out of the eurozone. simon hobbs here to get us up to speed. >> the manufacturing contraction is spreading into germany so the data and the corporate side of life continue to be bad but look at the green that you see across europe. we turn through the entire session and the bottom right at greece, and the sort of gains you're getting in athens. the greeks are suggesting they have given an extension to their austerity so the austerity plans can be delayed according to what the finance minister has said in parliament we'll put through legislation next week to confirm that new program, the rest of europe, because we know draghi is over in germany today trying to sell the bond buying to the germans. the rest of europe is saying i am not quite sure that we have gotten a deal, however that's what the greeks are saying and it just adds further gains to those that are in favor of greece. the greek stock market over the last couple of months here, one, two, three, four, five months there, is up 70% and you'll be aware the greek bonds have also rallied on the yields there for coming down into negative territory during that period of time. there you go, we're way above around 30, now we've carved on that. the rally continues on the greek assets as we look for confirm confirmation what the troika has said to the rest of athens and we've not seen in public but the debate continues. i just want to mention as we're talking about yields where we are on the italian and the spanish yields because they have been creeping higher over the last week. yesterday of course certainly this is the italian yield. let's look at the spanish yields as well and that also has ticked higher during the course of the week. there is concern about the regions and the downgrade from moody's with the regions earlier in the week and the community of madrid canceling a bond issue, just check we're just drifting higher there, and we continue with the will they, won't they, as far as applying for a full bailout in order to get the ecb buying and that's the same as it has been for some time. the corporate side there are winners and losers today as we work through earnings. oracle sap are raising their targets for the year, the stock gained up almost 5%. i wanted to mention on the upside arm holdings the chipmaker in the uk having a phenomenal wake as it unveils its results and so many appliances, samsung and apple and so on and so forth. stock is up almost 13% so far this week. big focus on the automotives amongst steelmakers and the like in europe. ford is closing its plant in belgium. volkswagen doing okay, they're up higher, but the second largest truckmaker in the world is having difficulty in asia and latin america and peugeot has finally got a credit line or guaranty, from the french government to the tune of $267 million to save it from bankruptcy, the stock down 90% over the past five years. i had a peugeot before i moved to the united states. i loved my peugeot. >> you got to bring photos in. >> it was a beautiful car. i had to sell it. >> always time to get another one. >> you'll go into a uk garage and they'll go, it's french isn't it. but they'll go it's not renault. so complicated to fix. >> i love that internal european stuff. thanks, simon. let's hop over to the cme in chicago, rick santelli looking at evidence some say of a recovery in housing. >> absolutely and the number was pretty good. now granted there's seasonal adjustments that tend to push the number better than it should be but all things being equal i've always looked at the seasonally adjusted number and i like to be apples to apples so here i stand trying to make a case for improving housing but i can't do it, carl. i can't do it. i'll tell you why i can't do it. because it's improving but it's dysfunctional and i'll tell you what i mean by that. here we have housing improvement, but what lies beyond just out of reach? freddie and fannie. we continue to see gses totally ignored. how many questions did any moderator in any debate ask about freddie and fannie? nothing. probably between 150 billion and 200 billion in counting, they have liabilities of 5 trillion, i bet you the number is more. so it's like half baked and fully ignored. it's very difficult to get optimistic. let's look at the stock market. yes, people are optimistic about the stock market. what's behind that? the federal reserve. what else can we get optimistic about? i'm optimistic about a variety of issues with regard to business, but the problem is, jamie dimon, we covered him in front of the foreign relations council on october 10th, something he said stuck in my mind, talked about dodd-frank his number was maybe 25% written. the volcker rule we could have various agencies, the sec, cftc, all have different interpretations and different rules. you see where i'm going here? the problem is is that it won't take much to get our economy on track. we've talked about that. that's a good thing. but the problem is, this election really, really, really is big about philosophical issues, because there's very little evidence i can give you that the government's ever going to fully finish any of this. how many years does it take? we're not shooting ourselves in the foot. we've cut our feet off. dra carl, back to you. >> good stuff rick and your point about the questions in the debate well taken. see you in a few moments rick santelli. bob pisani is on "post 9" looking at oversold conditions, revenue continues not to be a hot spot? >> we've got a modest bounce. it's an oversold situation and that's certainly good news. market acting a little bit on the rational side. i want to point out what the earnings situation is like. we got a little bit of good news. number of companies raised guidance, particularly it's row space companies. boeing, lockheed, northrop, raised guidance, trading all to the upside but that's not the big trend. the really big trend you know what it is, the slowdown in revenues. i walked, looked very carefully this morning, 11 companies, all big companies, 7 of the 11 had revenues on the light side. delta, emc, kimberly-clark, eli lilly and owens corning, all in different kinds of industries, all with the same kind of problem, most of them with the exception of owens corning which had a terrible time recently trading to the downside. this is where we're at right now in terms of the earnings right now. so 37% of the s&p 500 had reported so far for q3, earnings are basically flat at 0.4%. this is not a surprise. this has been expected, it hasn't changed much. what has changed is right here, your revenues only up 1.4%, this number was much higher even a month ago. that's what's changing. look at q4, the numbers are coming down but they're still talking about a trough here, earnings 8.4%, revenues were higher a little while ago but still better and this gets back to the earnings trough concept that everybody is talking about whether or not if we are at some kind of trough. that's the debate. china is the other debate. i want to show you something quickly. there are people calling troughs in china that may be important. here is the hang seng index for the last six months. we've been coming off it, up 6%. this was three and a half year lows web they started talking about stimulus a few weeks ago and people started buying. since then, the market has lifted, the hang seng, have you looked at the hang seng? 52-week high on the hang seng index today as people have come off the lows recently. the important thing here, a number of people have been called, isi made a positive call on chinese stocks. daiwa says chinese economy has hit the trough. before i let you go let me comment on rick's statement on the housing situation. he's right, things are getting better and nobody is more happy than me. here is the story look at 2005, 1.4 million sales new home sales. today what we've got multiyear highs, 39,000. it's a long, long way to the downside and yes we're moving up but even here in the middle we still have to double the new home sales, double them just to get somewhere around the 10, 12-year average, that's how far away we are. >> that's a great chart. that's depressing to look at it. thanks so much, bob. in the last half hour we spoke with goldman's chair and ceo lloyd blankfein and asked him about his reaction to the new book by former employee greg smith. here's what he said? >> we checked on everythingively and didn't find anything. frankly when the book came out a lot of people who reviewed the book couldn't find anything. as a result of all this we did a tremendous deep dive yet again, nobody can fladulate themselves better than goldman sachs can. at the end of the day with all the stress, i wouldn't want to go through it again we'll probably be a better firm for it anyway. >> gary kaminsky joins us from goldman's headquarters with reaction to that in. >> i never tend to mince words. let me say this, we're fortunate timing wise to be here at this conference today. i wish i could share with you at tendees but this is a who's who of the institutional investing world. you do not build a client base like this if you don't do the right thing for clients. and that's simply the bottom line. as far as mr. smith is concerned, i would not be surprised that we never hear another word from mr. smith by the end of this week and guess what? if you want to buy his book it will be on sale at walmart for $2.99 by sunday so stay there, wait, could you buy it probably $2.99 if the publisher is lucky. i think we sort of ended that chapter as far as talking about a firm and whether or not they work for their clients, carl. >> i also asked him which he did not respond to as explicitly, gary, that the issues aren't over. there's some more litigation, there's more trials that are going to happen next year. i mean, the question will be whether the reputational costs have had a lid put on top of them yet. >> lloyd told thaw there was always reputational damage that they've had to fight through. at the end of the day as i know from experience, i've attended these conferences in one way or another for the last 25 years, if you don't do the right thing for your clients, reputational damage or not, you're not going to have a business, and i think the numbers here and when i look around this room and the people we're going to be bringing to you on air the rest of the day from the conference call wouldn't exist if you didn't do the right thing for clients. >> good to know and thank you very much, gary. we'll talk about more to come from you in a few moments. in the meantime i go to kayla tausche back at headquarters with some news on iac. >> carl we saw a big spike in iac shares, they had been down almost 10%, now down just 5%. you can see the jump just a couple minutes ago triggering a circuit breaker at the nasdaq on comments from diller, he said someone may have misread the guidance. now iac beat estimates on the top line and the bottom line attributing that to internet search growth. they're unclear what exactly was misread about the guidance but someone was trading on that comment. we don't know when the stock will trade again, currently still halted. carl? >> yeah, reuters has a headline as of 11:39 that trading has resumed, kayla. >> okay. >> but there might be some discrepancy. >> we're seeing it move up and down just marginally right now. >> any additional headlines we'll come back to you. thank you. when we come back, he quickly became one of the industry's top performers, tpg-axon's dinakar singh live from goldman after the break. we'll be right back. it's a new day. if you're a man with low testosterone, you should know that axiron is here. the only underarm treatment for low t. that's right, the one you apply to the underarm. axiron is not for use in women or anyone younger than 18. axiron can transfer to others through direct contact. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acne in women may occur. report these signs and symptoms to your doctor if they occur. tell your doctor about all medical conditions and medications. do not use if you have prostate or breast cancer. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet, or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. see your doctor, and for a 30-day free trial, go to axiron.com. gary kaminsky is at goldman with another exclusive. >> thanks, carl, we're here with din awar singh, great to have you here. runs a very large hedge fund. i want to get right into it. you've got some strong opinions about a lot of different things on the minds of viewers. first off, many people have been buying high dividend stocks because of what's been happening around the central banks of the world. you have a warning for people buying a lot of the high dividend stocks and what they may expect in the years out. explain to us. >> sure. the biggest factor you've seen already is there's been a multitrillion flow from equities of credit. we know that. rates are low now but if you want to make money you have to buy something, so people are moving into dividends. it's not a crazy idea, makes some sense but when you look at where yields have come in, you have to make sure the dividends are real and going to go up so is verizon cheap? it's okay. it's high earnings, and dividend yield. we're trying to find stocks where there's a ton of cash flow which they can use to buy back stock and pay dividends but the market hasn't recognized it yet, time warner cable, sirius, you're getting more return of capital by a lot than you are in reads for sure or stocks like verizon or at&t. >> a greater strategy would be try to identify the stocks and the companies that will be the future difficult payers. >> yes. >> as opposed to ones you are buying today and buying them on the yield. >> great cash flow, good businesses and imagine turning the cash flow into cash coming back to you. >> are you short at&t and verizon or think people buying them here are making a mistake? >> we are some but they're okay, but i think if you go one step further there are other companies like wind stream et cetera dividends are high but not sustainable. the market is buying the dividend but it's not just they're not going to grow. the warning sign are companies line telefonica in europe. people get the fact a lot of the companies can't maintain the dividend. telefonica had a big yield until they cut it. >> another long short thesis, you look at what's happening in terms of central banks and the regions and you're long some of the investment banks. explain to us why you think regional banks overvalue many investment banks undervalued? >> when you look at what's happening the good news is a lot of the macro headwind is settling down for financials. capital ratios have doubled pretty much at this point. if anything basel three might bring those back. lot of the regulatory and capital noise is done. today most financials have a lot of capital. their problem is earnings. in regional banks, a bit like with dividend stocks if you had to own a financial, if you're that one person on earth who did you bought regional banks because they're safe. now they're full valuations and their problem is that earnings are going down because their interest margins are getting depressed. low rates work both ways, they bring down profits, regional banks and some insurance companies. if risk appetite goes up it brings up profits for companies with more capital markets businesses, the credit suisses of the world. if you can find the european banks that fit in the category or banks that fit in the flows, their earnings go up and it makes sense to buy those but if it's about interest margin you're going to get hurt going forward. >> you mentioned the safety of regional banks. people bought them for the safety much like the high dividend stocks. you don't see the regional banks as having safe dividend streams when you look at what's happening. >> i think there are safe banks but earnings are going down or they're flat, they're not going to grow from here. when people buy a financial they think it's a bargain, a sense this is the sector that's been underweight and by buying them now you're getting a good deal, a good deal shouldn't mean low valuation on earnings are going to go up. >> carl you want to jump in here? >> good stuff. dinakar you said japan is cheap. how do you answer the conventional wisdom they still have big demographic issues long-term, this brewing trade war with china, what looks good about the japanese market? >> sure. i think the issue in japan is a bit like you see in almost every country in the world, you've got the public sector, the government somethingor, but their private sector has done an incredible job of restructuring over the last ten years. profit margins are good. more than any other place in the world we find people not focused on stocks but we talk about verizon before, take at&t in japan, their dividend payout ratio is half of verizons, their balance sheet is in good shape and for the first time unthinkable for a japanese big company they're buying back stock on top of dividend. you get 8%, 9 % total return with earnings that are growing and a balance sheet that's good. that's incredible. when you look at japan a lot of the companies, some global, some defensive, actually after ten years of restructuring in pretty good shape. i think the comparison is about germany in a way. strong currency has forced companies to finally change in a way that a hedge fund could not change before. on the government side the government will be missed. taxes go up or the currency goes down. looking forward for companies in japan, many of which have assets everywhere and good balance sheets i think it will make a difference but frankly your starting point to this point is very good because you've got low multiples and a lot of room for profits to grow. everywhere else in the world profits are coming down, profit margins, japan is the one place where there's room to get bet per zblm jim o'neill, same with asia, he said china may be the best opportunity in the world right now. you agree with that or no? >> i think it's mixed. it wouldn't shock me if we never see another double digit year in china of growth. it's not a bad thing. it's china being mortal. once you get to a certain point you can't grow so much. there's investor expectation issue if you're betting on a big rebound in stimulus and recovery you're going to be disappointed but there are a lot of stories that now are cheap because the valuations have fallen in half from where they were a couple of years ago. >> carl, it's always good to get a good reminder of what is value and cheap and why things are cheap. >> i'm with you, garr yea. when we come back, big numbers out of the airline sector, we'll wrap that. s&p has gone negative and the dow's gains are fading. we're back in a minute. how they'll live tomorrow. for more than 116 years, ameriprise financial has worked for their clients' futures. helping millions of americans retire on their terms. when they want. where they want. doing what they want. ameriprise. the strength of a leader in retirement planning. the heart of 10,000 advisors working with you one-to-one. together for your future. ♪ together for your future. if we want to improve our schools... ... what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. boeing, delta, u.s. airways reporting this morning. >> strong numbers across the board. delta reports earnings a penny shy of expectations at 90 cents per share but a strong quarter, limited capacity and corporate customers, made 3% more per passenger in the third quarter, moving on to u.s. airways, big number, beat the street by six cents coming in at 99 cents per share, u.s. air's third quarter doubled profit compared to the same quarter last year. u.s. airways sees strong travel demand continuing through the remainder of this year and finally on boeing, beat the street by 22 cents but more importantly for investors here, boeing has raised its full year guidance due to commercial airplane demand and also seeing the cancellation rate slowing down so strong numbers across the board. carl? >> working our way to the most important quarter of the year. thanks so much, phil lebeau. netflix trading sharply lower after their third quarter. we'll tell you how to trade them in a moment. look, if you have copd like me, you know it can be hard to breathe, and how that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both. spiriva handihaler tiotropium bromide inhalation powder does not replace fast-acting inhalers for sudden symptoms. tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. these may worsen with spiriva. discuss all medicines you take, even eye drops. stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine. other side effects include dry mouth and constipation. nothing can reverse copd. spiriva helps me breathe better. (blowing sound) ask your dr about spiriva. netflix the big story slipping due to disappointing subscriber growth numbers. is it time for the online movie dealer to power down? martin, good morning to you. >> good morning. >> people generally get the idea this morning about the pain, it's the biggest loser on the s&p. >> right. >> anything in there on a positive note that people are overlooking, voluntary turn for instance relatively low? >> well, you know, netflix is going to add they say 5 million streaming subscribers in the u.s. that's not what they thought at the beginning of the year but it's still a lot of subscriber growth. they've got a lot of traction internationally, added a couple million subscribers there, they're showing some good uptake internationally. but i think the concerning thing about netflix is not just their inability to guide streaming subscribers but the question what is the market opportunity here. they're spending two or three times hbo, but i think the trajectory of subscribers slowing down makes people question that. at the same time they're spend so long much they'll be burning cash over the next year there will be free cash flow negative. they could lose $300 million or so of cash off their 800 million balance. you're having difficulty guiding your burning cash, you've got a business under a lot of change with a lot of competitors so that's making the stock volatile and for us we're holding back. we have a neutral rating, don't want to go long or short today. >> you can't guide well, you're spending money, i guess you could argue like a drunken sailor, you don't need to raise cash. do they? >> they say they don't need to, so the risk is that if you can't successfully predict what your business is doing, can we have 100% confidence in their ability to sit within their cash cushion? given the massive amounts of capital flowing into a massively changing business it's a risk. i expect they'll do what they say but it is a warning right now. >> finally we've seen the story in other sectors, mobile phones comes to mind where you're burning cash, your best successes appear to be behind you but there's always that possibility of someone coming in and making a bid. how real is that for netflix? >> netflix at the right price would be interesting to potentially some players out there but the question is build versus buy. they offer you content that a

Transcripts For FBC Markets Now 20121024

back to the floor of the stock exchange with nicole petallides. stocks posting modest gains with a long way to go to make up losses. nicole: the late losses friday we got 200 points to virtually flat. yesterday we drop 243 points so clearly we have to make enough on wall street. if you are able out there with some up arrows earnings were better today than we have seen over the last three trading days and that was something that contributed to the selling. dow jones industrials up 30 points. the gain is 1/4%. and again like the s&p 500. three 2 dow components, first in boeing, first quarter profit, the profit is something to watch, down at 6% and hurt by higher pension costs. they did raise their full year diet and that was good news but they miss the analyst estimates. it is now 3/4%. third quarter revenue missing the estimate there. the other thing at&t to note, this name is coming. lori: oil extending loss of trading down for fifth straight day. phil flynn with the future of the cme, the fed decision, are traders watching for that? will that be a factor at all? >> already is. it is one of the reasons oil is down more than it might have been especially after that bill we had, 5.96 million barrels. this market has been down five days in a row. it is very oversold and plenty of supply but this fed decision could change everything. doesn't mean anything about supply and demand. the fed will be more accommodative which is almost impossible to believe. we could see a rebound in oil. lori: what is going on with ben bernanke? any comments about ben bernanke and his behavior at some of the other fed officials those of weight? >> what we're seeing is pricing ben bernanke, probably going to be done no matter who wins the presidency. that has been the talk on the floor. even if you believe ben bernanke will quit or not people are pricing him the profitability of a romney victory. why is that significant? mainly because it leaves less quantitative easing, stronger dollar policy and stronger dollar policy is one reason commodities are getting crushed the last couple days. lori: fewer dollars to make up the price of the oil. very simple, thank you so much. we have breaking news. bank of america is being sued by the justice department for $1 million for mortgage fraud, for losses at fannie mae and freddie mac. here to explain his liz macdonald. liz: the first time the department of justice has brought a suit of this time to recover losses against fannie mae and freddie mac. let's get to the details. here's what the manhattan u.s. attorney's saying about this lawsuit against bank of america having to do with countrywide loans. reckless mortgage practices spectacularly brazen and taxpayers have the bill. the department of justice basically seeking maximum damage and penalties over a loan program run by countrywide. countrywide originated $1.3 trillion of mortgages between 2005-2007 and represented a third of fannie may's book in 2007. the lawsuit imply the essentially that countrywide helped push them into the arms of u.s. taxpayers with their very reckless practices that remove the underwriters and swapped in loan processors who were paid bonuses based on volume, based on challenging quality-control of defective practice. lori: the justice department is point mr. j almost a single finger at countrywide alone for pushing fannie and freddie in to bailout territory? liz: yes. the department of justice has moved -- the sixth time they have moved against the bank the we have never seen them -- trying to recover losses incurred by fannie and freddie and the justice department, watch this, serious and significant misrepresentation that bank of america made before and during the time taxpayers invested $45 billion in the banks for the t.a.r.p. program. bank of america reached out to them and return calls for comment and the lawsuit is alleging bank of america refused to repurchase from fannie and freddie, and defect rates ten times industry standards. this is a seriousslosses we are going to be watching closely. -- the euphemism is a high-speed swim lane for the mortgage loan program to get volume out the door and into the hands of fannie and freddie. the hustle is what it was called behind-the-scenes. we will get back to you with more details. lori: the defense sector reporting, earnings and a common thread, the risks surrounding uncertainty and cuts to u.s. spending but could the election lift this cloud over the sector? the global head of aerospace sector research at credit suisse, welcome. the right of sequestration, deep cuts in defense spending that come along, is it an elephant in the room to forecasting? you must wish we could get past it one way or the other? >> it is difficult not to much from an earnings perspective in the near term because most of these cuts if they should happen actually lagged by a couple years but from a sentiment perspective it is weighing on multiples. lori: tell me our earnings reports came in with northrop grumman, was there an overriding theme? >> it has been continuing all year. we are seeing weaker revenue giving the uncertainty, those in washington are somewhat more cautious with allocation of fundss but what we are seeing at the big offsets to to that are higher margins driving earnings and raises across the companies. lori: who is in the best shape from investor perspective? >> we are recommending raytheon which reports tomorrow morning. what we like is raytheon is not a prime contraator so it has less headline risk to specific program platform cuts for ships and planes. it is more of a tear one supplier of tires and electronics. that end of the value chain is more resilience, a fairly attractive and has a high percentage of international business, the highest among the piers. lori: what technology is most in demand? >> something we call c 4 i s r, appellates and electronic surveillance reconnaissance computers communications, anything that has to do with getting data and information to the war fighter. lori: your research points to a romney victory as being more beneficial to the defense and aerospace sector. i you putting out two different outlooks or waiting until after the election? >> there is a prudence to some extent. we are in a better position to predict the election than anybody else. we understand this could go in both directions. it is interesting to try to figure out what is priced in the stocks and sequestration has certainly been dominating on that front. we think the market is generally discounting some alternative sequestration post election regardless of who wins, some negotiated outcome but remains to be seen what will happen. lori: thank you. melissa: wall street friending facebook. stock is soaring to the. did you miss your chance? we will talk with michael actor who has been hitting the like button well before the ipo and even after all the criticism because of the botched ipo and stinking shares and always been bullish on facebook. we will talk about the latest earnings and prospects going forward and in the meantime gold is down by $7.20. more markets now after this. lori: facebook adding friend on wall street, raising price target on the stock and ratings today after facebook posted a surprising jump in and revenue. look at shares of the social media giant. they are storing up $4 and change. that is 20%. my next guest has been bullish from the start. we are pleased to welcome back michael proctor. you were always confident in facebook yet there was a lot of concern especially, using mobile supply platforms. >> i can't say that i knew what was going to happen but it was clear to me that facebook usage was supplemented by mobil usage the company had to address that and figure out a way to deliver ads on a mobile platform. they were early telling us how they were going to do that and sponsored stories and news feedback at the end of june and stock kept going down and investors expect investors expect immediate results. [talking over each other] >> facebook approaches delivery of that on the platform where any broadcaster would think about it. and they deliver ads appropriate for the viewer on a mobile platform. it takes a lot ingenuity to deliver them and talk about that last night. the introduce a ton of product that can to be working maybe not as well as they do on desktop but it is only a matter of time before they figure that out. i don't hear anything from users that say they're dissatisfied with the way they're advertised. users are ok with it and investors are very happy and advertisers are happy. lori: are not unhappy with the share price. we are still way off of the ipo debut at $38 a share and there is a lock up. we have locked up over the next couple weeks which is going to be more than likely but what is your share price out what? do you see retracing the $38 level? >> a $35 target is a twelvemonth targets and i say it gets new year next year. i am confident that will happen. we really only had two quarters of performance to guess by and we are guessing what we will do on the spending side but if they expand at the same level which is 60% of revenue, i have been making $0.65 next year and that implies something more like 80 or $0.90 the next year. you could get to a $35 target pretty easily. if they spend less than 50% of sales they will deliver a ton of operating leverage. earnings will grow much faster and we will shoot through that. [talking over each other] lori: that there on the right track? >> strategy is fine but they need to communicate strategy. [talking over each other] lori: mark zuckerberg has been quiet lately. >> he spoke last night for the same length of time he'd get on the earnings called three months ago. he stuck around and answered questions and 90% of what he talked about was new products and modernization as opposed to talking about user experience. he at least is demonstrating he cares about investors and acknowledges fiduciary responsibility. is he ready to the ceo? i am not sure but him and sandburg, a pretty decent team. lori: we will leave it there. thank you so much. melissa: it has been 15 minutes since we checked on nicole petallides. let's see what she is up to. changes at the top for visa. nicole: we want to look at the credit-card company. remember the initial public offering? a big one on the stock exchange. now we are talking about a change at the top. joseph saunders, 66-year-old current chief executive with a change at the top which will take place on november 1st in and the new head will be charles sharp. charles sharks at on the board of visa from 2007 into 2011. he is an executive at j. p. morgan and heavily involved, $950,000 a year in base salary and bonus of 500%. he will get $19 million restricted stock options. lori: speaking of management changes why did vikram pandit leave citigroup so abruptly? the fcc wants to know when charlie gasparino broke the news, he has breaking details on the story just ahead. check the dollar here, head of the fed, stronger, weaker, stronger, a bit of a stronger dollar here as we expect more accommodation or steady as she goes, nefarious monetary policy leading to dollar weakness of weight, $129.48. we are back after this. >> 22 minutes past the hour your fox news minute. fox news has exclusively obtain state department females declaring the responsibility for the attack on the consulate in benghazi, libya. this e-mails were sent as he was received by 400 security officials including those manning the white house situation room. julian assange's health is declining and asked britain to guarantee the wiki leaks founder saves passage to a hospital if he needs medical treatment. julian assange has been holed up in a london embassy since june to avoid extradition to sweden where he faces re charges. sources telling wall street journal and the york islanders plan to move the berkeley center in 2015. the islanders have called it homes in 72. the hockey club's owner plans to announce the change later this afternoon and that is your fox news minute. lori: thank you. fox business network reporting exclusively last night the sec is looking into the circumstances behind vikram pandit's to parter from citigroup. here with the latest is charlie gasparino. what is the sec looking into? charlie: think about how bizarre the announcement is an reporting by as too when we got to the bottom of it. the announcement when it came out tuesday the sixteenth -- lori: the morning after reported earnings. charlie: not a word about this. i know wall street firms, wall street analysts that have done the analysis of vikram pandit's language during the conference call and he basically acted like he was going to be there forever or that is how he portrayed himself. this is what happened, this is what happens. they basically have the conference call, not a hint, the market closes they basically, mike o'neill, ceo, chairman says we like you to go. and mounted the next morning. clearly ousted him. and when--after they ousted him, the decision to resign. why is the sec looking at this? the decision to resign is a material statements -- miss statement. if they did oust him and they went out and telling people he resigned. the second thing is how they roll this out was bizarre. weird, insane. that morning, the tuesday they announced it, there was every rumor in the world that they uncovered some scandal. i heard insider-trading. we have no proof but that was bouncing around the market, something causing him to do it because ceos don't go like this. it is much more planned, you have an earnings call you expect him to announce a material adventure in the earnings call. lori: after the earnings call, we would like you to leave, that is definitely not -- charlie: they decided before hand. my sources tell me -- cheryl casone has done some great reporting on this. she said john corbett replaced vikram pandit was on the ground the day before. team manages their operations from europe. that gives a few more indication of this thing was planned. that this thing was planned and premeditated yet they didn't tell analysts. i am not saying anybody is going to jail. i can just tell you during a financial crisis firms like citigroup, i can't remember, they were at the worst but all the big firms were guilty of this. they misdirected the market. people like me who didn't believe them but other investors were caught off guard. lori: the market wants two weeks notice. what would -- [talking over each other] charlie: if they ousted him say it. i don't think you lose anything. we have a differing view, we want to do something else, you are done. we told him to go. number 2, the way they did it, doomed before the earnings call, and do it at the earnings call. one of the things they're trying to avoid is to have korbut answer questions about vikram pandit. that may put him -- begged him to do it "after the bell" but very messy. there has not been a ceo departure this messy that i have ever seen. i have seen a few. this is -- you saw stuff coming with chuck prince when he got blown out during a financial crisis. he knew that o'neal was getting blown out. was a train wreck because of what was going on in the markets because he saw it. this was insane. people are asking questions. it is so insane. wall street firms have hired these sort of security firms that look -- fbi agents and cia agents to look at voice patterns to guess whether vikram pandit was -- tell from how he gave the earnings call, what he was -- he thought -- the people who know that have looked at that and said there is no way. he was too confidence. there was no hesitation. rich: -- lori: part of the frustration is the questions asked subsequent to the announcement we never got a firm -- charlie: we got firm answers that contradicted what we reported and wall street was reporting and wall street journal reported after. it contradicted what we first reported in the journal did later and bloomberg as well, that he was ousted. it wasn't his decision. maybe it was his decision to leave that very second they wanted him out. we ran this by harvey pitt, a former sec chairman, one of the best white collar lawyers i have ever seen and said point blank, if it was x and they said why they got an issue and they do have an issue and an investigation and that is what we reported last night. lori: thanks for the chat today. should you follow suit, pulling back on treasurys? the head of the fomc next hour but first look at today's when his and losers. the dow up 22 points. we are back. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong. tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonighti'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies. tdd#: 1-800-345-2550 i use their global research to get an edge. tdd#: 1-800-345-2550 rates specific foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, momentum and risk. tdd#: 1-800-345-2550 and i also have access to independent tdd#1-800-345-2550 firms like ned davis research tdd#: 1-800-345-2550 and economt intelligence unit. tdd#: 1-800-345-2550 plus, i can talk to their global specialists 24/7. tdd#: 1-800-345-2550 and trade in my glal account commission-free tdd#: 1-800-345-2550 through march 20. tdd#: 1-800-345-2550 best part... no jet lag. tdd#: 1-800-345-2550 call 1-866-294-5409 tdd#: 1-800-345-2550 and a global specialist tdd#: 1-800-345-2550 will help you get started today. lori: stocks now as we do every 15 minutes. it is book to the floor of the new york stock exchange and nicole petallides with stocks off the highs of the day now. hope we don't go too much lower. >> let's see where we are. the dow jones industrial average up about 20 points right now. you have seen a little bit of back and forth action from the highs pulling back. here we are right now with the s&p moving higher. it is up .1 of 1%. the truth is the major averages are not too far off the unchanged line. the nasdaq composite is sitting exactly there. look at two names on the move and decisively to the downside. we're talking drugmakers. looking at eli lilly and bristol-myers squibb coming in with results that put pressure on stocks. both missed analyst estimates top and bottom line misses. eli lilly is being hurt by the diabetes drug not doing well the both companies under pressure with news we heard from the two of them. back to you. lori: nicole, thank you as always. talk about fixed income. the "wall street journal" reporting pimco founder bill gross, the manager of the world's biggest bond fund is pulling back from investments in government debt. joining us to talk about that, the fed decision coming up this afternoon and all things related to fixed income, head of strategy at rbs. hopefully we get that for you. the rally is running on tired and faded legs. bill, great to see you. what is your take? >> lori, you know i have great empathy for what bill gross mentioned this morning. at the same time i've been all around this country talking to major fixed income investors and i hear the same refrain. as we get closer to the election on november 6, with tightening national polls, fixed income investors are becoming increasingly concerned about the potential for a digital outcome on november 6th. just, you know, with respect to the conduct of tax policy, government spending, all of that. as a result we just see a lot of fixed income investors pulling back in what i would call derisking their portfolios. lori: i'm watching results of the 5-year action put out a few minutes ago, and it was pretty weak actually compared to some earlier rounds. but my question is this, bill. are we facing a situation where we see interest rates rise sharply once we get past the election if they come to agreement to avoid the fiscal cliff? what is your outlook for interest rates? >> almost everything is predicated on what transpireses on november 6th. if we're lucky enough to get, avoid the recount debacle we had back in 2000, in our view, in the view of the markets generally is, that you know, a romney victory would be a great event at least in the near term for risk assets which would be the detriment of fixed income and treasurys. money would flow out of safe haven fixed income to assets like stocks. lori: would you recommend to investors similar to bill gross and you and your advice pare back on government debt in the portfolio? >> truth be told that is exactly what is happening. you saw huge investor demand for two year notes yesterday at basically 30 cents of yield. we saw a decent auction with a near record amount of direct bidders for today's five-year auction. this two to five-year sector of treasury curve or fixed income markets generally is a lace where people like to hang out because it is sort of locked in or tied to the fed's policy guidance out to the middle of 2015. lori: no one is confident about the long end right now especially with our fiscal situation? >> investors tell you they don't know how to price the long end. we understand with qe3 and qe inifiti call it what you want at that inflation expectations are rising. it is harder to price higher inflation expectations in long duuation and long maturity treasurys with the twist which is removing net supply of treasurys in the middle of the curve and nbs out in the market. that is very difficult for investors. that's why we've seen derisking ongoing past two or three weeks. lori: not a lot of attention leading up to the fomc decision this afternoon but there is some talk that bernanke morn than likely won't hang on for much that longer if we have an administration change. also we might hear some of the fed members be more vocal trying to state their case. do you think that will get some, let me ask you for what you're expecting out of today's meeting or what we should listen for because we know monetary policy will hold steady? >> as always we want to see what the fed will say about their assessment of current conditions. we don't see the current conditions have changed that much. consumer sentiment helped a little bit. retail sales have been relatively robust. home prices have continued to rebound. but it's a, it is a relatively recent rally. so i think they're just, we expect very little out of the fed, especially now we're down we're within two weeks of election. we think they want to keep the election at arms lien, stay the course and see what happens after the election and who is in power and adapt to conditions that result from that. lori: great stuff. bill, always great talking to you. have a good afternoon. happy fed watching. >> thank you, lori. lori: tune in next hour for full coverage of the federal reserve decision on interest rates and more importantly as bill was talking about the accompanying statement and the fed's as sent half the -- assessment of current economic conditions. president obama dei will at thatting plans to bring the economy back to life but it might be too little too late. can governor romney one up him with less than two weeks to go to election day. we were talking specifically with bill o'donnell. remember he said no one knows how to play the long end of the curve. how do you factor in inflation expectations with our fiscal policy? 2.92% is your yield. we're back with more after this. you see us, at the start of the day. on the company phone list that's a few names longer. you see us bank on busier highways. on once empty fields. everyday you see all the ways all of us at us bank are helping grow our economy. lending more so companies and communities can expand, grow stronger and get back to work. everyday you see all of us serving you, around the country, around the corner. us bank. >> i'm adam shapiro with your fox business brief. wall street is swinging between gains and losses ahead of the federal reserve's latest monetary policy decision do you out next hour. the central bank is expected to stick to the bond buying program it unveiled last month. hackers stole credit card information from barnes & nobles customers the bookstore chain is recalling all 7,000 pin pads at nearly 700 locations of the barnes & noble found hackers planted bugs in 63 pin pads across nine states. it might be time to change your passwords. flash data, password management company analyzed a list of millions of passwords released by a group of online hackers and compiled the most used passwords of 2012. topping list, usual suspects, password, and one, two, three, four, five, six. that is the latest from the fox business network giving you the power to prosper lori: just 14 days before the election president obama released his new economic plan. or is it the old plan or the plan that never existed before that always was there? there is so much conjecture and confusion about it. what exactly does he propose to fix the economy bottom line is what voters want to know. here to break it down is rich edson. >> not exactly new. the booklet is new just that its contents were not. for weeks the republicans charged that the president had no plan for the future. with that the president's campaign printed millions of booklets to deliver around the country, pages of pictures and accomplishments for economy. he asks for more spending on domestic energy. first term featured unprecedented push on green power. renewal of tax measures, for business invest. calling for familiar tax and deficit plans. on entitlements, promises to stop and oppose new republican plans to stop them. as far as comprehensive economic plans go, this one falls short. >> in terms of the specifics, specificity apparently doesn't win votes. so that is not part of the campaign agenda. >> the obama campaign says the booklet simply highlights proposes the president has been detailing for months and the white house has released long term and detailed budgets. they have gotten little or no support in congressional votes. lori. lori: rich, i mean can't disagree that it is a nice looking booklet. >> very nice. and not very he have had heavy either. you can bring it around. lori: lunchtime read. thank you. get more insight on the president's economic plan if there is anything new to rich's point, probably not. david hawkins editor at cq roll call. can governor romney even say the president doesn't have a plan? can he accuse him of not having a plan to revive the economy? >> no, he can't accuse him of not having a plan. that is a bit of a overstatement. as your report just said old wine in new bottles or old ideas on glossy paper. we saw almost the same things, those of us who covered conventions saw on really thin newsprint the night of the acceptance sheet hand out. very similar document. what the president has been talking about. it is, however, probably not really the plan i don't think. i think that a lot of this has been looked at and rejected by congress. if he is reelected it will be refined significantly in preparations for the so-called fiscal cliff talks which will be put off until next year. lori: is it interestingly the pamphlet is only sent around to the nine key swing states? >> well there is a limit how fast the presses can run. i mean what that is a signal of to me is, and it's incredible for those of us like you and me, lori, who have been thinking about the election 18 months, two years now, there are probably a couple hundred thousand people, these are the undecideds, if you're undecided in this race it probably means you haven't tuned in yet. there are people waiting to the last go weeks to tune in. presumably the obama campaign thinks getting this on the doorstep with less than go weeks to go will be the right time for their moment to focus people's attention. lori: we've known, david, to your point, all of those months, key driver, key moat site for voters, right, is the economy. find us jobs, improves the hoisting market. >> right. lori: does that change that at all? pamphlet, crisis unfolding and scandal with benghazi is any of that influencing voters? >> a tiny bit at margins. moving one point here, one point there, a couple of points in nevada, maybe which we now think trending off that list of nine and into the president's column. maybe a little bit the other way in north carolina which we think is trending out of obama's, out of the toss-up column into the romney column. but really not much if anything, this is not a new point, probably had this on the air last couple days, it was discussion in last debate about auto bailout is really important. the president's line about detroit is alive or auto industry is alive and bin laden is dead, that he is hoping resonate in one state, ohio. whoever wins ohio is going to have a hard time losing the election. lori: i can't go without asking who you think should win? rasmussen, they're all neck-and-neck. they're tied up? >> i think it is, it is a national deadlock is all the polls show. i think if you play the electoral college map game, it, it is, you have to give the edge to the president. if the election were held now he would probably carry just enough of the states to get just over the 270 magic number of electoral votes. just over. just over. lori: appreciate your expertise. thank you. david hawkins. we're a little late to check the market. nicole on the floor of the new york stock exchange. looking at movers in the restaurant sector. >> that's right, these are movers in the restaurant sector. let's start off with panera bread. it is a winner today, based in st. louis, missouri. beating the street and releasing full-year guidance. that is good news for panera. we'll look at buffalo wild wings based in minneapolis, minnesota. chicken wing costs are on the rise and that did in turn hurt their numbers. they in turn had to raise menu prices. they also lowered their full-year numbers about. back to you. lori: thank you, ma'am. google gone wild. street view feature going off-road. we'll show you where. more signs the housing recovery is gaining some strength. latest read on the new home sales. as we go to break, latest winners and losers. back with more after this [ male announcer ] the markets keep moving. make sure the news keeps coming with thinkorswim by td ameritrade. use the news links breaking stories with possible breakout stocks, options with potential opportunity, futures and forex with in-depth analysis. it's an all-you-can-eat buffet for all things trading. thinkorswim by td ameritraded. it doesn't just deliver news. it's making news. trade commission free for 60 days, plus get up to $6 when you open an account. lori: breaking news. severe weather. hurricane sandy, meet her. she is slamming into jamaica with heavy rain. the tropical storm upgraded this morning to category 1 and the threat may be headed to u.s. forecasters at national hurricane center say tropical storm conditions are possible along the southeast florida coast, upper keys and florida bay by friday morning. nothing to mess around with. a scary looking storm. on a bit of a brighter note home sales hit a two-year high last month. even in the hard hit midwest there are signs the housing market is picking up. we have jeff flock in indiana. >> lori, if you invest in home building stocks a year ago you would be making big bucks. first i will show you on the ground, this is outside indianapolis, had is ryland homes development called strong bow. i have the president of ryland homes indiana. we are surrounded by activity. does this mean the recovery is for real? >> i believe so. we hit our bottom in 2009 and we've been slowly increasing since that point. >> take a look at ryland homes, lori, if you would. walk over here. there are cement trucks coming. we have a load of sod walking through here. look at ryland compared to the homebuilder etf. that is xhb. up 57% is the homebuilder etf and ryland is up 140% in terms of your stock, alan. >> we take a conservative approach and take advantage what the market is. >> you bought the piece of ground from a developer that didn't make it, right? >> yes. we come in, the great thing is, with, as a corporate, corporation with cash we're able to take advantage of good land situations and good markets. >> real quick before we get away, lori. i want to show you homebuilder stocks today. up today thanks to increase 5.7 and ryland the greatest up 2.7%. if i look at my numbers today. all doing well. all doing well. they were not doing well not too long ago. there you go. lori: those are beautiful homes. all ryland homes? >> these are about 350 by the way. 350. move to indianapolis you can save a lot of money. lori: prices in new york and surrounding suburbs that is a bargain, jeff flock. thanks for bringing that story today. a slew of weak earnings results amplified concerns about economic outlook. homebuilders really a bright spot in this otherwise dreary earnings season. ryland shares risen 138% in the last year. up almost 2% today, as jeff flock showed us. set to report third quarter earnings after the bell. let's get the preview in today's trade with sandra smith. hey, sandy. >> hey, lori. what do you do with them? most analysts say the stocks are pricey at these lofty levels. look at ryland group reporting after the bell tonight. as jeff flock reported this stock hhs doubled so far this year about $33 a share. even better if you compare it to standard pacific, one of its main competitors. you see, standard pacific up more up 143% so far this year. only thing analysts like about ryland group it is underperforming its piers and could have catching up to do. analyst looking at, sales up 40%. expected to post really big numbers, guys. we're looking for cheesecake factory, another stock that performed very well in 2012, guys. it is reporting after the bell. we'll have those for you. two stocks looking pretty good. not today though. cheesecake factory, lori, down 1% heading into the results. lori: that is not a bad omen people concerned ahead of it. thanks as always, sandra. tune in for all the breaking earnings reports on "after the bell" on 4:00 p.m. eastern. google street view cameras taken you through the palace of versailles and streets of new york city and now through the grand canyon. they have begun the mapping the grand canyon using its technology. google using cameras mount the on a backpack for the first time to capture 360 degree views of the national park. a google trek tore hiked 10 miles on monday with a 40 pound backpack as you see here, following the bright angel trail which descends over 4,000 feet in elevation. scenic any way you look. fed decision moments away. tracy byrnes, ashley webster will walk you through it next here on fox business. 4g lte is the fastest. so, which supeast 4g lte rvice would yochoose, based on this chart ? 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[ all ] i'm with scottrade. >> markets really drifting going nowhere fast as we await the 2:15 eastern fed decision. i'm curious in the fed acknowledges slightly better economic data. ashley: they will probably tout housing for sure and we'll get some language of more positive signs. as we know the recovery is ekingly slow. we're not expecting that much else to be honest. we have a panel of experts. and end of operation twist. so what happens then? >> i will twist myself on out of here. tracy: you have a fabulous die. >> thank you. ashley: hi, everyone, i'm ashley webster. tracy: i'm tracy byrnes. we're waiting on the fed with the dow just hanging out up 17 points right now. what will chairman bernanke and company say about economy, jobs and fed's ongoing stimulus as we mentioned. fed's statement and our full analysis is ahead. ashley: uncle sam is suing countrywide for one billion dollars. they say they dumped mortgage loans on fannie and freddie in a massive fraud. tracy: boats real estate, stocks, cash and more all before the new tax changes kick in next year.% this is assuming we fall off the fiscal cliff. so will giving now lead to bigger savings in the future? we're going to find out. first, top of the hour. time for stocks as we do every 15 minutes. nicole petallides on the floor of the new york stock exchange, also awaiting this big fed decision. hey, nicole. >> hey, ashley and tracy. this is very interesting. one thing they have done on the floor of the exchange on fed day they await to hear from the fed and get quieter. i all right started to hear a few shhh. it builds anticipation from what we may or may not hear on fed day. what is interesting on this particular fed day i talk to traders they're not expecting too much. they know the election is coming up, right, 15 days away. we heard a lot of companies talking about the global outlook and some softening. so they're expecting much of the same for the fed. we key into every moment because you never know what they may or may not say. let's take a look, the dow, nasdaq and s&p, you do see up arrows across the board. just barely heading on to gains for the nasdaq and s&p. and some names leading dow, jpmorgan and united technology. back to you. tracy: thank you, nicole. we'll see you in 15 minutes or so. ashley: as we just said, just minutes away from the latest fed decision. they're going shhh on the new york stock exchange floor. let's get action from the cme. fox business contributor phil flynn of price futures group standing by. phil, we're minutes away from the fed. i get the sense people are not expecting a whole bunch of anything today but we shall see. >> you're absolutely right. a lot of apathy. normally we're on the short end of the yield curve. before the fed decision you see a lot of orders coming in. people going against or betting on the consensus. we're hardly seeing any orders come in. that is very unusual on a fed day. that kind of shows you a lot of people don't expect a lot to happen. if you look at the fed fund futures of course, they're not even pricing in the possibility of an interest rate increase until august of 2014 for the july meeting there is a long way in the future before they will move. that doesn't mean the fed meeting will not be very exciting because a lot of people are looking at the last fed meeting before the big jobs report, before the election right now, could be very important depending on ben bernanke's future. that has been subject of a lot of debate for two reasons. rumors that he will quit no matter who wins the presidency and surge with romney in the polls right now increasing the odds we could see a change in fed leadership and policy. look at the different fed governors to see if they're leaning a little bit more independent than hey have in the past. that's what a lot of traders will keep their eye on. ashley: big talk about mr. bernanke's future. phil flynn, thank you very much. tracy: almost more talk of that than the statement, right? for more what to expect from the fed let's bring in our all-star panel. we have former economist at the federal reserve, now a resident scholar at the american enterprise institute. mike crofton president and ceo of philadelphia trust company and mike coatae, ing investment management. thank you all for being with us. doug, i can't to start with you first because i thought your notes were flat-out interesting. you say the fed is flat-out interfering with the markets. how so? >> i think they are. the law of unintended consequences i mean their qe3. i was all for qe1, qe2, operation twist. i think qe3 is crossing the line and i think they're interfering with the markets and the unintended consequences is if they are not doing with this policy we might have resolution on fiscal cliff. we might have resolution on growing debt. we might have pro-growth economic policies. i think they need, they're doing too much. ashley: let me bring in steven with that in mind, what doug just said, do you expect perhaps the fed to consider expanding qe3 to compensate for the end of operation twist? is that a possibility? >> i think it is more than a possibility. i think it is probably going to happen but not at this meeting. i they will defer that decision until december and make it at that point. they will have the benefit of a couple more labor market reports between now and then as they try to assess what the economy looks like. tracy: mike, you too, i know you're expecting not to hear a whole heck of a lot out of this announcement mere but at the same time could well be market moving, no? >> yes, it could be market moving. i actually think the markets expect the fed to say something positive along the lines they will continue to expand their programs. although if they don't say that, the market will probably give up some more ground today because earnings and revenue forecasts off quite a bit and the market needs something good to latch on to get to higher levels. if the fed comes out and does nothing, the market trades off. ashley: let me go back to doug. the fed is in a holding pattern if nothing else until it sees substantial improvement in the labor market. when do you think that will be? i'm sure they will tout, we've gotten down to 7.8%. but you think it will take more than that. how long could they wait until they see that turnaround? when will that turnaround come? >> well the fed was pretty clear, even if they see a turnaround they're going to continue the program which is a concern to me, is, they, they are the market now and in mortgage backs, and i think that doesn't bode well for price discovery. price discovery is gone. they're using quantity. they're using quantitative easing. i think that is a problem going forward but they will keep going and i think it is working. housing, the numbers today were great. unemployment is starting to come down especially if you look at initial unemployment claims which we think are a better barometer of real employment. so it's working but they said they're not getting out for a long time. tracy: how can they quite frankly, right? ashley: yeah, my question how much of this improvement is in the real economy or is it banks that are getting the benefit of all these really low rates and extra money. >> that is a great question. we'll pose it to our guests when we come back. ashley: steven, mike, douging don't go anywhere. fed decision moments away. what the fed will say about the economy, qe and more? that is coming up next. tracy: as we do every day at this time how oil is doing. oil down 93 cents at $85.74 a barrel. we better start to see that at the pump. we'll be right back hahahaha! hoooho, hahaha! this is awesome! switching to geicodreds sure are happy. i'd say happier than a slinky on an escalator. get happy. get geico. melons!!! oh yeah!! well that was uncalled for. folks who save hundreds of dollars switching to geico sure are happy. how happy, ronny? happier than gallagher at a farmers' market. get happy. get geico. if you're a man with low testosterone, you should know at axirois here. the only underarm treatment for low t. that's right, the one you apply to the underarm. axiron is not for use in women or anyone younger than 18. axiron can transfer to others through direct contact. women, especially those who are or who may become pregnant, and children should avoid contact where axiron is applied as unexpected signs of puberty in children or changes in body hair or increased acnen women may occur. report these signs and symptoms to your doctor if they occur. tell your doctor about all medical conditions and medications. do not use if you have prostate or breast cancer. serious side effects could include increased risk of prostate cancer; worsening prostate symptoms; decreased sperm count; ankle, feet, or body swelling; enlarged or painful breasts; problems breathing while sleeping; and blood clots in the legs. common side effects include skin redness or irritation where applied, increased red blood cell count, headache, diarrhea, vomiting, and increase in psa. see your doctor, and for a 30-dayree trial, go to axiron.com. tracy: nicole petallides on the floor of the new york stock exchange. phil flynn at cme. doug cote and are financial --. ashley: "brady bunch.". tracy: you guys are really good in the little boxes actually. i will throw to mike. one thing we were talking about earlier is about ben bernanke. what do you think of that? >> i think ben bernanke we like to get out regardless who is elected. probably a good time for him to go. it will be very difficult from this-point moving forward. the fed has done all it can. he talks about the legislature needs to take a next step which is fiscal policy. that will be the hard stop. i don't think he wants to be around to watch his handy work go down in flames. ashley: mike, i want to bring you in to answer the question. just before the break, has quantitative easing really helped the real economy? we know it helped the banks but the banks are not really passing on all of this liquidity. so has it really helped the real economy? >> i think it's helped in two ways. one, it put the stock market. it helped banks obviously as you mentioned. but it also helped consumer confidence. i think that is what is was designed to do all along. consumer confidence is reflected from two basic components, the stock market's performance and housing's performance. both are performing well. i think that led to increase in consumer confidence so it had its effect. tracy: nicole, let's go to you on the floor. what do traders think about ben bernanke leaving? right now he was their punchbowl, right? money kept coming, market kept going up what if he leaves? >> when if ben bernanke leaves? the truth of the matter is traders are talking about what ben bernanke has done this far. of course you see the market running up, the whole idea of qe3 helped to boost markets throughout this year. however now at this point traders are looking to not hear too much from the fed right now. they are not really focused on ben bernanke at the moment but the anticipation is that he does leave. they don't expect him to stay at the helm of the fed at all. ashley: phil, let me bring you in. you mentioned mitt romney. if he wins how does that change fed policy? we know ben bernanke will be out according to mr. romney. >> i think you will see a big debate within the fed about just this, qe3 3. mitt romney made it very clear he is not a qe3 guy. he is a strong dollar guy. that means everything we believed in for some time. you ask the question has qe3, qe1, qe2 worked? it did stop the bloodletting. it slowed everything down. now it is the great enablesers for government not to act. that is the big issue. why are we heading to the fiscal cliff? because the federal reserve is carrying the load. they don't have to ask the in europe because the federal reserve is qe3. that is one of the reasoos we're pushing back a spanish bailout. we're seeing a lot of pressure on these markets in recent weeks and uncertainty about the fed can have a major impact you. but even though it will maybe tank markets initially, long term could be very bullish because it will force governments to do what they need to do to fix the economy and not just depend on economic policy. tracy: steven, we're awaiting on the decision. we'll bring it to everyone as soon as we get it but as doug mentioned earlier there is unintended consequences of all this money flowing into the market and one would be inflation or at least we thought. where has it been? >> there hasn't been any significant inflation. most inflation measures are still around the fed's target of 2% or maybe a little bit lower and i think that is the reflection of the weak global economy. ashley: yeah, doug, let me bring you in because i liked your notes on this you were saying, look, the low rates of alan greenspan of course helped to create the housing bubble. what do you think will be the consequences of all of this cheap money? >> well it might not be inflation because there is so much mon terri destruction and in some ways they're mitigating deflation. it might be something with the banks. it might be, if you look at the interest margin banks -- >> no change in policy. no change in policy. qe3 remains in place. no change in short-term interest rates. i'm peter barnes at the treasury department with the statement from the fomc as it wraps up a two-day meeting starting with the economic analysis the statement reads quote, information received since the federal open market committee met in september suggests that economic activity has continued it expand at a moderate pace in recent months. growth in employment has been slow and the unemployment rate remains elevated. household spending has advanced a bit more quickly but growth in business fixed investment has slowed the housing sector has shown some further signs of improvement albeit from a depressed level. inflation recently, inflation recently picked up somewhat reflecting higher energy prices. longer term inflation expectations have remained stable. the committee remains concerned that without sufficient policy accommodation economic growth might not be strong enough to generate sustained improvement in labor market conditions. furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. the committee also anticipates that inflation over the medium term likely would run at or below its 2% objective. to support a stronger economic recovery and to help insure inflation over time is at the rate most consistent with its dual mandate the committee will continue purchasing additional agencies mortgage-backed securities at a pace of $40 billion per month. the committee also will continue, through the end of the year its program to extend the average maturity of its holdings of treasury securities, operation twist twist, and is maintaining existing policy reinvesting principle payments into agency mortgage-backed securities. these actions which together will increase the committee's holdings of longer term securities by about $85 billion each month through the end of the year should put downward pressure on long-term interest rates, support mortgage markets and help make broader financial conditions more accommodative. the committee will closely monitor information on economic developments in the coming months. if the outlook for the labor market does not improve substantially the condition will continue purchase of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until such improvement is achieved in the context of price stability. to support continued progress towards maximum employment and price stability the committee expects that a highly accommodate taif stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens. in particular the committee also decided today to keep the target rate, target range for the federal fund rate at zero to .25 and currently anticipates that exceptionally low levels for the federal fund rate are likely to be warranted at least through mid 2015. the vote was 11-1 for this policy action today with jeffrey lacker, the president of the richmond federal reserve once again dissenting. ashley, tracy, back to you. ashley: peter barnes, thank you very much. pretty much as expected. everything the same. the one, you know, accommodative policy will remain appropriate for considerable time even after economic recovery strengthens. tracy: yep. additional asset purchases will continue. to your point, it will keep going. this is qe infinity. nicole, we've got a dow at 7 points right now. markets not particularly happy i guess? >> what is very interesting we saw the dow dipping into negative territory after we got this news. there is a couple of factors really don't bode well. just talks about the global economic picture and the uncertainty that remains and basically talking about the growth that we're seeing for our economy currently. still needs the stimulus. still needs the help from the fed and they made it very clear, that they still need to do all of these things that they're doing, which is buying mortgaged-back securities, operation twist. keeping these low levels until 2015 in order to keep everything afloat so we don't collapse. basically showing you while we're seeing moderate improvement nothing's great yet. that's what they're telling you. ashley: also seeing the dollar adding games against the euro of a the fed's statement. also mentioned spot gold staying lower at around i guess 1700, phil flynn, after the fed's statement. not a big surprise. >> no, it wasn't a big surprise. seemed like as they were reading the statement they were hitting buy and sell buttons for every syllable. at the end of the statement now we're turning a little bit more positive commodities, negative dollar. the dollar index went negative there for just a minute and the metals, the gold after dipping just below 1700, it is creeping back up here. but you're seeing here the market got exactly what they expect. no shaking of the boat ahead of the election. ashley: right. >> ahead of the jobs report. there was really nothing in there that really changed our outlook. i think it was a very, very much, not a courageous statement. we didn't see any of the fed governments, not a lot of dissension from the decision. ashley: yeah. >> i think a lot of people don't want to make waves ahead of the election. tracy: but steven, as our former federal reserve economist i throw this to you. the statement did say that the growth in fixed spending basically company spending it's slowing. that is not a good sign, is it, for the economy? >> it's not a good sign and a really lot of cross turns in the data. it is true retail sales look good and housing sector is starting to recover you about business spending is very weak and that's going to create a drag for the economy along with weak conditions in the rest of the world. so, no, i don't think the economy is doing very well right now at all. that's reflected in the fed statement. ashley: mike, to that point, i want to mention housing. the fed did note that the housing market has picked up but it also noted from extremely low levels. so do not get too excited because you have to consider where we're coming from. >> yeah, that's true. plus there is a big overhang of existing homes still in the market. a lot of housing numbers reflect new home market picking up steam. a lot of existing homes are not moving. they're not priced to clear. so the housing market has a lot of ground ahead of it before we actually say it is recovered. what i found interesting about the meeting there was only one dissenter. i would have thought there might be more than one dissenter if bernanke were thinking about moving on. tracy: doug, earlier we mentioned that you thought qe3 crossed the line. they're interfering with the market. how are you feeling now because sounds like interference will be around for a long time? >> everyone is saying nothing really happened. a lot has happened. they will maintain an extremely aggressive stance on monetary stimulus. that's not nothing. that's a lot. i thought i got mixed signals on operation twist. seems like they kept the door open that operation twist could be continued. so they're all in. ashley: nicole, back to you on the floor. seems like we're getting back to where we were, not a whole lot in this statement to move the markets i don't think other than same as you were. >> right. well they talked about the economy expanding moderately. housing improving moderately. talked about business spending slowing. the one piece i think is interesting, the american people, just shows a resiliency throughout this time, tough economic times. household spending actually advancing. you see americans who really want to do more and spend more and build the economy and build gdp and yet they get caught again with that spending because there is no jobs to support that. how do they buy a house? how do they buy anything for that matter, if they don't have the jobs and economic expansion to support that? tracy: doug, to your point, they saided there would be additional asset purchase, considerable time after the economy strengthens. even when we see the economy getting better there will still be flooded this market with money. again, i don't know how much longer we can keep the market floating on air like this. >> you can't. it is unsustainable and any way you look at it. congress breathes a sigh of relief because once again they don't need to do anything. but at some point in time you need some real policy. ashley: you know i wanted to bring in, i had a question here, i think, i could mention it to doug. let's go with doug on this. there is the belief that the fed should take on numerical targets. as long as the unemployment rate remains above 7%, as long as inflation doesn't rise above 3%, then rates will remain at zero to a quarter of a percent ad nauseum, way on into the future. do you think that is reasonable? >> no, it's not, it is not reasonable at all. i think it is another policy tool. it shows they have more but i think, again, this is all unsustainable practices policies and we're going to get to the sustainable ones like pro-growth, economic policies. tracy: you know, phil, throw to you. one of the changesswe did see that they mentioned inflation was slightly ticking up and it was because of energy prices. what happened going forward? you're seeing prices increase down there. >> well, right but apparently the guys a the fed must be brought to the meeting in a limousine because they haven't filled up their gas tanks. one of the most dramatic drops in gasoline prices we've seen in history. that goes to their point these inflation pressures we're seeing because of food and energy are transitory. it is not going to impact their long-term outlook. in other words they're saying don't worry about inflation. and you have this compadre over in europe, mario draghi in europe saying listen guys we need to get the bond buying going because i'm still worried about the inflation. that is the mind set for them. europe is saying the weakness in the market because europe can't get their act together. the fed is all in. europe is on the sidelines. i think if we got a clear signal out of europe on board, we would get the sugar high rally but right now the fed can only do what they can do. tracy: when gas prices were going up said inflation was contained of the now we're seeing oil prices dropping we see inflation down there a little confusing. ashley: with all this money flying around inflation is not an issue. fingers crossed. we shall see. thanks to nicole petallides, phil flynn, steven, doug cote and mike crofton. thanks for being here on fed day. tracy: good stuff. that was the big change in the language they saw little inflation in their big ol' limousines as phil points out. coming up we'll have much more on the fed's statement and market reaction. ashley: plus two weeks before the election president obama's campaign is passing out new pamphlets on his plan for the economy. what exactly is in that plan? we're on the story coming up next. first let's take a look at some of today's winners and losers. the dow up 15 points. nice day. a monster day for monster beverage, up 13% as we do every 15 minutes. the dow dipped into the negative but back 25. nicole petallides on the floor of the nyse with a very -- the very latest on what we can expect. nicole: we are looking at a market that right now has come back. we dipped into negative territory briefly as we heard from the federal open market committee and the latest in their findings and decisions as to what their next moves are through the year 2015. it shows a weak global economic picture and shows you how much the fed really believes we need continued stimulus and low rates and low mortgage rates. look at the dow interday for you. we see something else worth noting which is the vix, the fear index which is to the down side. the dollar accelerated is pulling back and gold is to the downside. these are the factors we look at very closely after we hear from the fed. a couple other things we noted with business spending, that was a little slower. we talked about inflation in the short-term getting a pop from energy but long term looking more stable and traders expected they would get what they expected considering the election is 15 days away so that is very key as well and they got what they expected to a certain extent. you don't want any surprises election.ore the presidential ashley: you don't want to rock the boat. thank you so much. we will be back in 15 minutes. tracy: two weeks until the big election and president obama just released his new economic agenda. let's go to rich edson in d.c. with the details. there is a brochure. rich: sort of a booklet, 20 pages but for the most are a summation of the plans. republicans charging president obama with failure to lay out specifics for a second term so the obama campaign has begun handing out this booklet detailing the president's first term. ideas, pictures of the president with school kids, seniors and health care workers and includes 20 agenda items like spending energy including green energy and renewal of stimulus tax measures like special expense business investments, very familiar tax deficit plans and on entitlements mostly offers promises to stop the republican medicare plan and oppose their old social security one. one economist says the book what falls short. >> if i were looking for a serious plan for jobs i would want to see some projections about unemployment, people who have given up and putting them back to work and i don't see that in this document. rich: the president has been offering his full agenda for months and released budget and the campaign says governor romney needs to offer more details on his plans like which tax deductions he wants congress to eliminate. >> people barely one to read 140 characters on twitter nowadays. [talking over each other] dennis: we want to get you up to speed on the other big story, the justice department finding a mortgage brought suit against bank of america seeking $1 billion for losses at fannie mae and freddie mac. liz macdonald all over this story with the latest. liz: that is right. this is being called a new front in the government's prosecution for the mortgages and the government saying it will try to recover damages suffered by fannie mae and freddie mac. and after bank of america acquired country wide, the government is now saying it wants they hustled program, high speed high volume loan program to initiate rapidly all sorts of mortgages and is being called by the u.s. attorney reckless, spectacularly brazen. sticks taxpayers with the bill. the inspector general for release -- for t.a.r.p. is joining the suit as well. christine romero says serious misrepresentation they made before and during the time taxpayers invested, $45 billion in the bank and what we are hearing is according to the lawsuit bank of america paid out bonuses based on volumes and bonuses to individuals in the bank who objected to any quality control of these loans. some of these loans had defects ten times industry standard. they were then sold to fannie and freddie and the bank is essentially being charged with allegedly helping to drive fannie and freddie into taxpayer's arms via considership of the treasury. bank of america has yet to respond to allegations in this lawsuit. a very intense, very heated back-and-forth. we are behind the scenes between the bank and justice department and it is one we are watching closely because it involves countrywide and is the sixth time the department of justice has far back against the bank in recent weeks. wells fargo and deutsche bank are among the six. ashley: eating it up. thank you so much. traay: oil closing down $0.94 at $85.73 a barrel. that is a loss of more than 1% to phil flynn's point earlier, they fill their own. new home sales bouncing back to their highest level in two years. we will visit one housing price that is booming in america's heartland. ashley: let's look as ten and 30 year treasuries with the fed's statement pretty much as you were. the yield 177 on the ten year, up one basis point. on the 30 year, pretty much the same story, about three basis points at 2.19%. we will be right back. [ male announcer ] this is steve. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef wh sharks, or jumping into the marke he goes with people he trusts, which is why he trades with a company thadoesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade. lori: i am lori rothman. the market swinging between gains and losses after the federal reserve's monetary policy as expected central bank is sticking with the bond buying program that is q e 3 that it unveiled last month. the dallas 16 points at 13,118. the u.s. may surpass saudi arabia as the world's top oil producer. america is expected to produce eleven million barrels of crude a day. saudi arabia byycomparison produces 11.6 million barrels a day. the u.s. will likely produce 15 barrels a day by 2020. new york islanders staking their claim, the hockey team will call the barkley center their home come 2016 season. the islanders called uniondale, long island home since 1972. that is the latest from the fox business network giving you the power to prosper. >> new home sales to a level last month not seen since the first time home buyer tax credit was in each act. another sign the housing recovery is under way? jeff flock in indiana. is it? jeff: one reason i think so if we look at home builder stocks, i want to show you on the ground, this is a development outside indianapolis. take a look, putting the paint on this one. in the dust booming. if you look at the numbers let's put the numbers up on new home sales, if you look compared to the boom times we are not at huge numbers we were in the boom times, you are coming back and you feel it has legs. >> it definitely has legs. we have been sitting back for many years and we're coming back and making strong investment and seeing real productivity and real demand. jeff: this is one of the homes your building outside indianapolis. inventory finally is down so you are getting people who now are looking for new homes and there's not enough to supply them. >> inventory sales have been good. we are low on inventory and high in demand and people selling homes not waiting for a new home to be built and buying inventory. >> what is the average price? this is all ready for drywall. take a look at the electric in here. this is one of the places that could put electric, a conduit in chicago. they charge you a lot. before we get away, the stocks, we want to tell our investors what stocks are doing. look at the home builder stocks. is incredible what they have done over the last year. pulte up 140%, lennar up 120%, k. b. holmes, they have all done well. that is good news for allen and other folks out there who are being told are finally being able to sell their other homestead buy new homes. that finally happened. >> everything is more expensive in chicago. [talking over each other] tracy: thank you so much. ashley: they called the battle of the egos between media moguls gwynn going to liberty media's john malone and the ceo of serious acts them will step down in february as liberty prepares to take over. dennis kneale covering the story joins us with the end part of the final chapter. dennis: a tale of greed and the trail. no harmhisson calling it quits as the company he built gets taken over by the billionaire return to for rescue. john malone controls liberty media and the deal is one of his best ever. in early 2009 sirius in danger of defaulting. malone had liberty loan $550 million when no one else would. cereus pays him back in full and six months later, malone got as his loan fee of a 40% stake for all of $12,500. that stake worth $3.6 billion. liberty spent a few hundred billion more to raise it to shy of 50%. he doesn't like working for a boss and malone told me mel ott to get over that. he has too much pride. lookouts seriously successful he has been. he came into serious in late 2004 and sent subscribers of 30fold and now 70% of new cars acquired the main rival x em with revenue of 50fold to $3 billion this year so john malone knows mel big time. but mel bones malone too. started stocking last april and that is when mel started selling his share. since then mel has sold ninety million shares reaping a staggering $170 million in profit. as successor search inside and outside now underway. liberty guys are running it. mel is 69 years old but people who know him say they would be shocked if this really is his last rodeo. take a watch on this one. ashley: we have not heard the last of him but the numbers are impressive for what he did. thank you so much. tracy: i think malone is 71, happy someone is calling him a cowboy. quarter till the hour. time for stocks as we do every 15 minutes ago to nicole petallides on the floor of a stock exchange. you are looking at facebook but no reaction to this fed announcement. nicole: let's look at the market averages. you see the s&p and the tech has the nasdaq are just kissing that unchanged line. going nowhere fast these major averages. you can sense of feeling of wait and see. we did not get much from the fed one way or the other but the global picture, the economy, the economic outlook is soft. we have a lot of earnings that have been weak without outlook such as microsoft, ibm, intel to name a few, ge, other names on a move like facebook, that is a winner after is a came out with their numbers so don't lose sight of facebook yet, zynga a less risk and mobile that revenue less risky, some analysts were saying. even talking about the lockup, the expiration as they start to come to gauge where insiders can sell. lot of analysts saying that is your chance to buy in. the ceo is $38 ipo but up 20%. >> 20% is nothing. see you at the top of the hour. ashley: wealthy americans rushing to give away big money just in case new tax laws take effect and maybe give some of that away. tracy: look at today's winners and losers on the nasdaq as we head to break. monster beverages recovering from news the other day of 60%. we will be right back. ashley: a slew of weak earnings results had concerns about the global economic outlook, a big lineup of earnings today could make all the difference. sandra smith here today with today's trade. look at two big names, boeing and zynga. tracy: billing should have impressed the market and seen a big bunt but we are not getting it and the stock is not. no boeing but even though they beat wall street expectations and raised outlook for 2012 for the third time this year which could be part of the problem but the company -- the ceo credited the spectacular results of big increase in aircraft sales, the company doing very well but when you raise your outlook three times you set the bar pretty high. this beat expectations is not going to cut it for the stocks those stocks fell flat and pension costs a problem for the company. income was actually down and -- [talking over each other] tracy: zynga if you don't know what it is is gaming and accessible on facebook, mark zuckerberg on the phone call after facebook earnings said gaming isn't exactly what we thought it was going to be, counting as much revenue as it fought so zynga reporting "after the bell" tonight, two forty million average monthly active users, but going public. the stock lost 77% of its value so has a lot to prove so we will let him see what happens jon corzine. ashley: don't miss extensive coverage of earnings with results from zynga and cheesecake factory at 4:00 eastern time as i host "after the bell" alongside liz claman. tracy: save later? if the new tax law kicking in in january changing federal gift tax exemptions, protect your gifted assets. price waterhouse coopers personal financial service partner here with us to sort this out. more people are talking about this. a single person can gift, no taxes, $5.2 million. if we fall off of the fiscal cliff it goes down two million. >> a lot about the income tax people need to take advantage of this window of opportunity to get the tax rates. as you are saying the lifetime exemption could go from $5,120,000 per person down to $1 million in january. same thing with the rates. the gift tax rate is 35% scheduled to go to 55% come january so it is really a time to think for your gifting strategy and whether to take advantage of the law. tracy: the estate tax mirrors the gift tax. >> so much planning for people who have money. they can really be benefiting from free gifting. >> a lot of consideration. lookit your financial situation. and gifting appreciated assets, and errors is a good idea right now. tracy: if you give to education and medical expenses send the check to the institution doesn't even bite into your exclusion. >> you have an annual exemption of $13,000 a year and if you decide to pay directly tuition or medical it will not count against the annual amount let alone a lifetime amount. tracy: anyone who needs something to do with their money on will send you my kids to college fund. the other thing i am thinking in my twisted head is married couple can get this twice which brings me to $2.4 million. even if i'm not married should i get married and give away $10 million and deal with the marriage next year? >> i won't give you marriage of vice but you are absolutely right in the sense that you have trying to -- [talking over each other] >> the appreciation, if this is time to consider it, and the other thing is how to gift. because if you want to give them out right $8 million probably not, probably want to take advantage of trust. at least hugh can set up and dictate when they can get the assets and under what circumstances. you want to be smart about it. tracy: you can put life-insurance policies to your house or anything in a trustee--people need to sit down and talk to their adviser. wish we had more time but it will come back again and again. come back before the end of year. [talking over each other] tracy: if i were rich i would be getting married tomorrow. [talking over each other] ashley: i will be back in an hour. i will be back in an hour "after the bell," liz claman will take you through the hour of trading. and we will talk to the f squared ceo and president. your ago he wasn't begun stocks. 50 visages portfolio intact and now he is fully invested. why he is hot on u.s. stocks and where he is investing. count down to a closing bell is next. before copd... i took my son fishing every year. we had a great spot, not easy to find, but worth it. but with copd making it hard to breathe, i thought those days might be over. so my doctor prescribed symbicort. it helps significantly improve my lung function starting within five minutes. symbicort doesn't replace a rescue inhaler for sudden symptoms. with symbicort, today i'm breathing better. and that means...fish on! symbicort is for copd including chronicnchitis and emphysema. it should not be taken more than twice a day. symbirt may increase your risk of lung infections, osteoporosis, d some eye oblems. tell your doctor if youave a heart condition or high blood pressure before taking it. with copd, i thought i'd miss our family tradition. now symbico significantly improves my lunfunction, starting within 5 minutes. and that makes a difference in my breathing. today, we're ready for whatever swims our way. ask your doctor about symbicort. i got my first prescription free. or click to learn more. 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