tv Squawk on the Street CNBC October 26, 2015 9:00am-11:01am EDT
piedmont. pay pal added to the conviction buy list. and bridgestone is buying pep boys. the price $15 a share, $835 million. 23% premium over friday's close. congratulations, manny, mo and jack. >> join us tomorrow. "squawk on the street" is next. good monday morning. welcome to "squawk on the street," i'm karl carl, with jim cramer, david faber at the new york stock exchange. final week of october. a lot to watch. a fed meeting, a cnbc presidential debate, 150 s&p earnings, world series, pre-markets have been soft after four weeks higher. bonds will have plenty to digest and oil is a tad lower after the worst week in about two months. valeant shares down sharply
premarket. the company forming a special committee to review allegations about its business relationships. analyst's call going on now. >> mixed review for yahoo! first ever live stream of an nfl game. >> and trump speaking out in a town hall today on the "today" show. first up, the dow, s&p, nasdaq each aiming for a fifth consecutive week of games. the s&p up more than 8% this month, vaulting back into positive territory for the year. as we said, a busy week ahead. a lot of earnings including results from apple, pfizer, merck, exxon, dupont, starbucks, twitter. the two-day fed meeting, on wednesday, right here on cnbc, the republican presidential debate. coverage at 5:00 p.m. eastern time. as far as stocks go, jim, october remains the best month since 2011 for all the major indices. >> we have seen an incredible
rotation out of health care, out of retail after the vf corp numbers last week. into industrials. into technology. the financials have held up fairly well. not great. not bad. insurers have been good. visas of the world have been good. the money sloshing from health care into the industrials and tech helped the s&p. the rotations, these rolling bear markets, have been positive for the s&p overall. when you go through the charts, a lot of stocks are damaged, but in the end the big cap stocks, a lot look good. >> just come around. at what point do we worry more about this -- put me to mind of it, you guys going to the debate. the debt ceiling issue. we had the two-year auction put off last week. jack blue writing an editorial in "usa today" this morning. is it a lot of posturing about nothing or will we get to a
point where it worries the market. >> we'll see something wednesday on the debate that may answer this. people at debate are central to this hostage take. >> i'm looking forward to hearing the answers, if and when the question is asked. we're not so worried, boy who cried wolf. jack lew a conciliatory man. when we're not worried about it, it does happen. >> that is a point. his first letter was seven months ago. now we have eight days. what's happened in seven months? a whole lot of nothing. >> i can't believe we're in this jam even though we have a deficit that's been cut. it's gigantic still. >> it's been lower than quite some time. >> not talked about enough. >> we measure debt at a company as a multiple two its ebita. >> i have to tell you, i thought
about this this morning coming in. i said maybe we should talk about this debt ceiling. i said not when apple is on tap. maybe the earnings are on curing something that's bigger. >> earnings so far for the quarter, 77% beating consensus. better than the one-year average of 74. they're beating by a bigger margin, 5.2. but on revenue, 43% beating. that's worse than the one-year average, and they're missing by more. >> it's almost as if the revenues were just deciding or are hostage to the strong dollar, but we're willing to -- everyone is surprised at that what is going down to the bottom line is very, very good. i find when i was going through the earnings this week about what happened last week, there really were -- vf corp was bad, sketchers was bad, it was bad. i had them on. the vast majority -- i'm worried about retail. retail is bad.
i'm wondering whether this is not amazon quarter. >> you see this guidance on halloween retail? down 7 for the year? the worst since 2011. granted federal express, fedex saying shipmentses will be way up. >> i bought two of the three amigo outfits, one might be too tight. >> you'll see some outfits next week. >> you start to wonder whether it's being measured properly. i hope they take into account amazon. have they caught up with the web yet? >> i don't think so. there's an interesting note about macy's which is below when we delivered alpha, talking about macy's is getting hurt by amazon. but it's apparel, accessories and footwear -- i think this is the quarter where you saw the department stores really get hurt. because i think amazon, when you go to amazon now, you see everything that you can get on macy's. i did some comparison like jim
stewart did i was at macy's this weekend, i said there's not anything that i haven't seen on amazon. i did not feel that way about nordstrom, by the way. they had a better selection. nordstrom has a great website. >> we'll get first up, fresh da first ever live streamed nfl game. julia has that news. >> yahoo! announcing viewer numbers for that first live streamed game yesterday morning, yahoo! reporting a 15.2 million unique viewers. that's less than the 17.6 million that thursday night football draws on average, but more than the monday night football average of 13.5 million. roughly one-third of the audience was international and this does not include digital numbers from china. this spells a win for yahoo! which promises advertisers an audience of 3.5 million viewers,
a win for the nfl and the other leagues may also do more digital deals. we could see the nfl try to find more ways to digitally distribute the smaller games which are not tied up in big tv distribution deals. if the bills/jags game had been distributed on a regional network, it would have drawn about 1 million viewers. the fact there were 5 million viewers overseas indicates there's potential to cash in on nfl's global appeal with digital distribution. back over to you. >> music to roger goodell's ears. >> i thought it was very exciting. one of the great things about this, you can get away with watching that game and the wife never saw it watch the whole thing on this. i said i'm willing to sacrifice the morning game in order to watch the 1:00 jet game. she goes i cannot believe you're not watching that game. not at all. no i'm not watching it. >> you could watch it on this it was beautiful. >> yeah, of course. yeah, hon.
>> absolutely the bills came back -- no, no. i haven't paid the bills. i have to pay the bills! >> yahoo! tells us how much people are actually watching, unlike netflix. this is the most successful thing i've seen yahoo! do. a 10:00 game -- i was able to watch football from 10:00 -- not 11:30, because the last 15 minutes of that eagles game, not watchable, but it was a great joy yesterday. yesterday was a joy for the guys. big victory for the guys. they can do these all they want. did you not watch it? >> no, i didn't watch it. >> the comeback? >> i watched the jets lose. i watched a bit of the giants. >> that guy gronk, takes a village to tackle him. >> vetting myself ready. focused. i'm still all about baseball. only two teams. >> big rally today in queens. >> is there. >> big pep rally. >> didn't know that. have go back to the hometown bar. >> i didn't know you would be in
today. >> take the number 7? what do you do there. >> a lot of ways to get to queens. >> the "f" train goes there. >> pepsico sign? >> yes. that is queens. valeant, it's looking down about 10 bucks right now. that's the stock of vrx, after that week last week, due in no small part about the story from the firm that shorts stocks. valeant members going over to philidor which it does not own, but it has an option to own and paid $100 million towards already owning. a lot of things that people who invest in valeant were not aware of. here is mike pearson, the company's ceo talking about the decision behind holding the conference call. >> to protect our shareholders,
after we saw the false report from citron, we coordinated with our outside regulatory council from cahill to make a request that the s.e.c. investigate citron. our counsel has met with the s.e.c. to discuss the matter. >> a lot of this is about engendering confidence. they put another value act partner on the board, mason morfit, also on the board of microsoft. there is a value act -- valueact one of their largest share holders principal on the board. a lot of this is about engendering confidence. don't know if you had an opportunity to listen in. i did. they are now looking at slides, taking q & a. are they doing it? a "wall street journal" talking about people at philidor using different names. >> i thought that piece was devastating. they used spider-man? >> peter parker. >> peter parker.
>> also from queens, by the way. >> not as cogent as the mets, when i saw peter parker's name that was a red flag. i saw aliases being used. maybe cahill gordon is a tough firm, they will not check off on nothing. valueact moved up there. >> valueact put its reputation on the line. >> on the line. >> it would seem. i have to say people were unaware of the relationship and how important it is to valeant sales. talking about it being 6.8% of revenue, a result of what is distributed through philidor, the specialty pharmacy company that deals primarily in valeant drugs, dermatology. jublia. >> big drug. >> yeah. >> they put the stuff out there. they get it to patients, they pay the copay and they take care of the insurance. it's a different way to get the drug out there. they'll take care of getting insured. sometimes they will.
sometimes they won't. this is a model that some pharmacies are using, it's been successful in order to get doctors to prescribe those drugs. it's been a winner. but at the same time i don't hear anything -- yeah, i'm looking at the stock. that's not fair. the citron attack, go after them, that kind of time-honored thing, you go after the shorts? >> the outside council asking the s.e.c. -- >> to look into andrew. >> those usually end up going nowhere. >> nowhere. >> sometimes they don't seem to be a good sign of engendering confidence when you attack the attacker. >> right. >> though in that case perhaps they feel they have a case to be made. >> anything inaccurate yet discovered? >> was incendiary things in that report mentioning enron, smoking guns. they did put a spotlight on this relationship, frankly, jim, that a lot of people were unaware of or had not focused on. now we have valiant explaining
more about it to investor bases. they seem to be more aggressive in using this channel than do other companies. >> i remember during the bad old days of bristol meyers there were deals made to stuff -- there were always -- this was a long, long time ago. when governor christie was the u.s. attorney for jersey. deals that the old bristol made in order to get their product out at full price. i don't know. these are such -- they're so complicated. so many wrinkles that i think -- i felt the same way. i didn't know they had this relationship. i always thought valeant was aggressive. this seems like an aggressive strategy. not illegal. >> no not illegal. they paid 100 million. there's a $33 million milestone payment paid, then they have the option to buy philidor for nothing. >> why is that? >> they're answering some questions on it. it's legal, though unusual. i don't know it i'm not quite sure. >> the stock is not giving you a
good feel of -- that the call is good. i think the journal piece -- we have to find out about peter parker what that is. >> i'll tell you, he's spider-man. >> he's spider-man? >> he's spider-man. >> i thought he was valeant salesperson. who is the green lantern? >> he has to have another identity. >> is the green lantern -- >> that was terrible movie, wasn't it? was that seth rogen? >> the green goblin? >> who was the enemy of spider-man? >> the goblin. >> i would like to know who that is in this narrative. >> willem dafoe. when we come back, what donald trump said about carl icahn at a town hall event. and later, the battle for dominance in the cloud, it's an exclusive interview with mark hurd. look at futures. more "squawk on the street" from post nine in a moment.
question on how he plans to fix the economy. >> the fact is i have carl icahn, some of the greatest business people in the world all lined up. they are so anxious. they don't want money. they want to help us with our trade deals. we're losing $400 billion a year with china. >> trade is something we'll talk more about. especially later in the week. >> look, i think trade should be a total hot button when we go out to the debate because we're -- you see these layoffs going on in manufacturing america. very good piece this morning about ge having to move its -- its appliance business to canada. that was -- >> that is not necessarily trade related, not a deal. >> but i think -- some people regarded that -- >> because of what's going on in congress, they will hold a vote. >> yes, bring that back if they can. i think we're seeing lots of layoffs in corporate america
again. it's kind of surprising. out of nowhere. i know the fed has a meeting. but the layoffs seem uniquely related to trade. >> do we know if that $4 billion number is accurate? >> i don't want to give away too much, but that number did not reveal itself in the work that i'm doing with our research department. >> yeah. >> our research department -- can i just praise the people involved in this debate. i put that -- i asked point blank what is that number? it's not an easy number to find. also don't forget, you come back and you get cheaper goods, so it's really. >> how do you define what number is? >> the work they've done for me this weekend. i don't want to take credit. it would look like all i did was work. all people did was work on these questions. >> a lot of people worked hard on this. you'll hear more from donald trump and the other gop candidates wednesday night during our cnbc debate.
coverage begins at 5:00 p.m. een time. when we come back, cramer's mad dash, countdown to the opening bell. we haven't got tten to some of e mma. we're back in a minute. ideas are scary. they come into this world ugly and messy. ideas are frightening because they threaten what is known. they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile.
but under the proper care, they become something beautiful. i built my business with passion. but i keep it growing by making every dollar count. that's why i have the spark cash card from capital one. i earn unlimited 2% cash back on everything i buy for my studio. ♪ and that unlimited 2% cash back from spark means thousands of dollars each year going back into my business... that's huge for my bottom line.
what's in your wallet? whyour boss?ork for? yourself? your family? our financial advisors are free to realize a plan to fit your family's unique needs. we'll listen. we'll talk. we'll plan. baird. >> the weeks go by too fast. it's monday. halloween is the end of this week. saturday night. >> is it really? >> you know that. you already have three different costumes. >> i boost a costume from the actual distributor, but then at amazon much more cheaply.
i bought a different size. it'spolyester. you have to be careful. >> duke energy buying piedmont energy. why is this important? >> natural gas company. duke has a lot of coal-based properties. if you look at duke on the map, duke is all over the place. it is the largest. this was smart. natural gas is just incredible. there was a find in the last month in the ute utica. anything you can do to fill in using gas, not coal. coal is getting underpriced by natural gas. pep boys got acquired. like bridgestone, that was supposed to get acquired. >> you surprised at the $60 price? >> very surprised.
a lot of utilities, it's like 10% premium. this is a 40% premium. it's all cash. duke clearly wants to be more natural gas oriented. if you go to duke's remember site, they have done a lot of stuff to make coal clean. one sub texts here is coal has not been made clean. everything has failed. every single coal gasification, coal bed fluidization, everything has failed and been costly. coal and nuclear, they're boost disasters. not happyhappy. >> nuclear because of the costs. >> because of the costs. it's a great source of fuel, but you can't build them. coal is a non-starter. duke will be much less coal for what duke is doing. that's positive for duke. >> large deal. 1.8 billion in debt comes along. >> if you look at the united states, duke is right here and right here.
this toy is a reminder that someone cares. these are a chance to be part of a team. and this is the chance to succeed. female announcer: with your support, everyone at sleep train proudly dedicates their time, hearts, and resources to giving local foster children one important thing: - hope... - hope... hope... not everyone can be a foster parent... ...but anyone can help a foster child. ♪ sleep train ♪ your ticket to a better night's sleep ♪ hand apparently, they also lovee stickers. ng. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does.
you're watching cnbc's "squawk on the street" live from the financial capital of the world. we'll close out the month of october this week and the earnings parade includes names like alibaba, merck, pfizer, twitter, gopro, and comcast. >> simplifying the stock situation. david, you follow comcast closely. it seems like this is done just to make it so it's more simple to see the shareholders? the discount? >> that is the reason that is most apparent. there are other reasons?
that's not clear to me. there's a class "b" that doesn't trade, that's where the roberts family gets their voting -- not control, hard control, but 33 1/2 percent control. >> i think broadband is the genesis there. going over the at&t call and visiting a store yesterday, at&t is being aggressive with directv. almost as if -- that this is their way to get in, take business from everyone else. directv -- i have the ticket, football ticket. but the -- at&t turned itself into a directv store. i think that's an important initiative. the at&t quarter was very good. i liked that quarter. >> we'll give it more time. we said at the time analysts -- it was hard to understand exactly how they were reporting everything. >> if you go to their stores, you will be shocked to see it, they are tv stores with at&t.
overnight. >> on a day when microsoft is opening their first store in fifth avenue. >> yes. >> big day in new york city. we'll look at that later on. here's the opening bell. the s&p at the bottom of your screen. at the big board today, goldman sachs. celebrating the launch of the goldman sachs equity etf. at the nasdaq, teligent celebrating its listing. goldman gets an upgrade today at morgan stanley to overweight, even as ms cuts citi to equal weight. >> i thought -- they were talking about the return on assets of city. i thought the city call was a beautiful call. doing terrific things. the goldman call was not that good. very interesting what happened here. they're saying goldman, the area that had been weakest, equities caught on fire. it's a very compelling story. now the stock is up 10 points from where it broke down to when
they first reported the quarter. that's a nice comeback for goldman's stock. >> it was not a great reporting period for the financials. >> no. >> morgan stanley, we spent a great deal of time on in question when they reported. market somewhat disappointed there. >> that group is trading water. jpmorgan was supposed to be not so great, and they were terrific. do you regard visa as a financial? if you do, a lot of excitement about the chatter with costco. big upgrade to costco today. costco should -- costco should never have been down this much off of what happened with the vf corp and -- you know. costco is not apparel. >> ubs takes it from neutral to buy, on the prospect of higher membership fees.
>> that's what it is about. the vf corp was devastating. they're saying there's a definitive slow downin the month of september, when you speak to retailers, the end of back to school was bad. i'm trying to get my arms around why it was bad. stock market, weather, not really. but that was a major deceleration of the consumer after back to school. it was just plain bad. almost everybody felt it at department store level. that's where the weakness is. >> how about this story in the journal about inventory levels and walmart as they start slashing skus. you don't need six brands of salad dressing. all the suppliers are fighting for shelf space. >> you can imagine what's going on now at the different companies when they get the word from walmart that you're not in anymore? doug mcmillan shaking people up. that article implied a lot of managers going. true turmoil at walmart. it's not like, geez that will
hurt their earnings. they already told you earnings would be in trouble. >> the way we talked about walmart, you can forget the market power and size which is still incredible. $485 billion worth of sales. so well on the way to a half trillion dollars worth of sales, which they expect to go up, even though earnings are not going to be going up for a number of years. interesting when you think about amazon, which had such a great day on friday after those unexpectedly strong numbers. when i think about technology at both companies, walmart won its position, to a certain extent, a lot of success because of its ability to deal with data. in a way that had not been dealt with previously in retail. sam walton understood the power of not just being a merchandiser, but also of getting ahold of information as quickly as possible and getting to the stores, understanding that. yet, there they are unable to make inroads.
>> of the ones that have, home depot, if you use home depot, the stuff is brought to you that day. walmart, i don't know how great the pickup option is i think walmart is playing catch up in a game that's going so quickly. this amazon web services, wow. that was -- there were some breath taking calls last week. we have so many this week. some of these companies should move to report to today. >> smooth it out a bit, will you? take a monday or a friday. >> like gopro. don't pile in that same period. we're not going to focus on it who has a gopro on, there's a beaver on his head wearing a gopro while surfing. a lot of companies have come public and they ought to realize there's days that they shouldn't report. because they're so filled with
reta retail, oil or drug. we can't keep up. >> good point. michael koors gers gets a downgo market perform. i'm thinking of the green light at the end of last week. >> accessories. we're hearing so many bad things about high inventory, including accessories and sports wear. the amount of inventory piling up at retailers -- a lot of them end the fiscal year in october. they're reluctant to take on new merchandise, sketchers told me about that. you have to be careful with these. these will not turn around until you get a new data point. vf corp, when they guided down, lots of defenses of vf corp. but the inventories are high throughout the system.
highly unusual to see that right now given the fact that we thought back to school was pretty strong. be careful. inventories high, it's the kiss of death right now. that's a big reason why some people say q2 gdp was so good. and we're going to give some of that back in q3. >> great point. exactly what i'm thinking. the ones that have done best so far are the kimberly clarks. you don't feel that kind of pressure. pepsico, doesn't have that pressure. coca-cola. coca-cola has been doing quite well. dr. pepper has been good. these are companies that have come on strong, whereas apparel and retail has been horrendous in the last two weeks. >> and health care, of course. which you mentioned at the top of the broadcast, rolling mark was the term you used. looking at it today, the hospital stocks last week which had such a difficult time when
we heard from hca, community health. hca, the volumes weren't bad. the mixed commercial versus noncommercial was worse than expected. they did reduce guidance. cyh was the big ebita. >> why were the analysts so surprised? how did they not see this? >> no let up there. >> none. none of these stocks are showing traction yet. >> tenet -- >> we spoke broadly about health care. then you go to drug stocks which had been similarly hit, some of them. >> a lot of this was affordable care, looked to be great thing for the hospitals. some payments -- some bad dead again. i thought the hospitals were insulated. remember, this is going to shock people. what's bad for the hospitals is good for the hmos. nobody seems to care at all right now. >> no. >> there you had hillary clinton say some things about mergers that put a scare into everybody. >> yes. >> as we await. we have humana.
anthem and cigna. >> the other thing is that the -- it remains -- in the semiconductors we don't like the acquirers. i know we have the pep boys deal. bridgestone won't be a factor and duke won't be a factor. you need to see a valeant rally today because valeant stands for buying. it can happen. it can happen because, frankly, if they were explaining things on the valeant call there are some big money managers who want to buy more. on a cash flow basis it's cheap. i saw some people who were short valeant, they said if they can prove in this call they're not doing anything wrong and that the value act -- you know -- >> listen, they have a strong reputation. two members on the board now. >> two. >> they're putting their reputation at stake. they pushed microsoft --
microsoft was one of the best calls last week. they did a good job valueact at microsoft in terms of pushing. pushing. valeant is important. it could be the key to the market. >> various analysts giving their take on the call. barclays saying they did a good job calming things down. answered a lot of specific questions. they do have this ad hoc committee that will be looking into things. >> you wouldn't do an ad hoc committee if there was just a smoking gun. you wouldn't bring in a tough law firm. i don't know. i want more questions answered. but if they answer them, people will say the cash flow is big at valiant. >> it is. but the strategy of using stock in part -- they also have done cash deals to pursue that strategy of roll up. that's done. they can use cash as they did he
leave they delever. how do you use a multiple stock to do these deals. i don't know. it puts a lot into question here, jim. i wanted to hear you on perigo. they are going around the world saying please don't take our share, don't take our company away from us. everything has been called in question by valeant. >> ford has quietly made its way back to the highest level -- you have go back to april, 15.81. they report tomorrow. apple down a half percent. they report tomorrow. >> ford, i'm seeing some redeceleration in volkswagen. first month. people are staying away. volkswagen sales, they were the world's largest. toyota's been a pick up. ford has been a beneficiary. volkswagen, don't talk enough about volkswagen. >> we don't.
one of the great corporate scandals of all time. still ongoing. >> what's weird, we get german confidence today, above expectations. >> i was shocked by that. volkswagen will lose sales. greens around the world will be tough on volkswagen. this is a great opportunity for ford, gm. the consumer is not going to step back from volkswagen. >> you believe they will? >> i do. i believe the consumer feels fooled, but it's a stock that's impervious. i don't even understand the ownership. >> you know, they -- the porsche family, then the saxony owns 20%. >> how is saxony's performance? are they taking a stake in valeant? >> they should have hedged their stock. >> is lower saxony delivering? >> i don't believe so lately. and i don't think volkswagen
will be delivering new models any time either given mouhow mu they are spending money on everything else. dow is down. >> a lot of the buzz down here from the traders is about two main things, pep boys is a part of the conversation. then you're talking about with what's happening with large cap technology stocks. you have apple coming out tomorrow. it is technically a technology company. it's going to be a huge focus. it's going to be about whether or not we can see that carryover from last week. remember, huge market cap gains. 90, $100 billion in market cap gains. from alphabealphabet, amazon. large cap tech has been the best performing sector in the s&p 500 since the turmoil lows.
as we talk about discretionary, industrials, health care, a continuing theme, not just because of the valeant stuff, also the hospitals. very much a part of the conversation. as we look at the biotechnology stocks, tracking a lot of those nasdaq biotech companies, it's still about 3 percentage points below where it was during the august lows. during the turmoil. certainly stuff to focus on. as you talk about energy, you see there, energy a big part of the conversation. it, too, is one of the best performing sectors that we've seen in the markets ever since those august lows. remember, chevron, exxon both reporting their numbers at the end of this week. you talk about apple in the large cap tech side. exxon, one of the biggest oil companies out there, chevron in that same league. those will all factor into the conversation. there's a small group behind me, it's a tour. another group at post six behind me, a small group forming there because shares of the
intercontinental exchange, i.c.e., parent company of the nyse, shares halted for news pending. we'll tell you details as they become available to us. back over to you. >> thank you for that. let's get over to the bond pits, rick santelli at the cme in chicago. good morning. >> good morning, carl. if you look at the short end, virtually unchanged. long ends down several basis points. we have a curve flattening day. let's look at the two day of tens. if you look at the two-day, we have come down from some slight elevation in yields on friday, three basis points. here's what's fascinating. contrast that with what's going on in the european curve or the german curve with regard to the bunds. bunds are giving it up in a more aggressive fashion. if we continue to monitor bunds, another area that we should go to is the difference between fives and 30s. we're seeing a flattening after a major steepening.
fives to 30s was not that long ago, two weeks ago the steepest it had been in a year. now it's giving away. why is this important? because many of you traders out there will remember when bund yields intraday moved down to their historic low of 4 basis points, it was one of the factors driving u.s. rates down as they were paired arm in arm. if you look at tens minus bunds, we have repriced to some extent. we moved about ten basis points from the range last week and hover now at some of the highest levels, 1.56, since early august. we want to pay attention to this dynamic. let's keep that early august date. let's look at august as the start of the dollar index. look at that, realize it's a mirror image of the euro. so the strength you see on that chart is the weakness you see on the euro chart. euro weakness and dollar
strength is important. case in point, the dax, patterned very similar. carl, back to you. >> rick, thank you very much. rick santelli. >> when we come back, microsoft coo, kevin turner, as the company begins to open its new flagship in new york city. and just two days away from the cnbc presidential debate. dow is down 5 points. we're back in a moment.
kevin turner will join us in the next hour. 22,000 square foot. it's called the answer desk, not the genius bar. >> i think people have to start respecting some things that microsoft is doing. a lot of hoopla around this. surface on the conference call was doing well. x-box has become the king in this. gaming remains -- you watch these gaming ads during the nfl and realize they look like movies, they have numbers that are better than movies. >> i would think this is more an advertisement as opposed to actually selling real -- up the block is the apple store which sells more per square foot than just about anything in the world this will not set records for selling stuff. >> no, but it's a showcase -- >> showcase. >> not on it at all? >> they're spending a lot of money to be on fifth avenue to have a presence there. as many retailers do. but they won't be selling a lot of stuff. >> the object is to get things
in peoples hands. talked about the way we moved online, just this weekend in chicago, nike opened a new jordan store. people need tactile experiences. >> yes, they do. you want to try it out. that conference call, the microsoft -- the microsoft conference call was so good. such a good job on cloud, on x-box, on windows 10, which is so huge. this stock will still go higher. it's not that expensive. >> not that far from an all-time high. >> deserves it. >> good return. >> 58, start talking some all-time highs. >> real turn going on there. >> we'll get stop trading with jim in a moment. sure, tv has evolved over the years.
it's gotten squarer. brighter. bigger. thinner. even curvier. but what's next? for all binge watchers. movie geeks. sports freaks. x1 from xfinity will change the way you experience tv. time now for cramer and stop trading. i think first we'll do this deal that involves i.c.e. >> i.c.e., the owner of the new york stock exchange. stock was halted. spending $5.2 billion, 3.65 billion in cash, 1.5 billion of common stock, giving that to warburg, pincus and silver lake which control idc.
financial data, mutual fund data, bank asset management data, securities and financials, all of those kinds of things idc does. they will now be done by ice. as you see, large deal. 5.2 billion. >> ice stock has been a huge winner. >> 3.6 in cash. interesting that private equity firms are willing to take that as currency. >> don't know when they bought it or what they paid for it. >> it's funny, there's a couple things happening. dialogue, a german company, gets more than 70% of its revenues from apple, reported a short fall. avago down, nxp down because of that i'm struck by kinder morgan last week saying they wouldn't raise equity. 32 million shares filed. that's not a master limited partnership, that's corporation. supposed to be some method they were thinking about doing,
nonequity. that didn't work out. a lot of negative news today. a lot of negative news. not so good kmi, not so good apple, not so good nx. >> what's on tonight? >> one of my favorite stocks, deb cafaro on from ventas. this stock has been a disaster. deb, i think, has been very good when she comes on. 5.8% yield is nothing to sneeze about in a year where it's hard to come by with income. lots going on, guys. tomorrow is brutal. wednesday, geez. >> will get busy. >> i won't sleep. i have a ten-hour energy drink. i won't sleep between tuesday and friday. >> ten-hour energy drink. >> little sleep friday, saturday, no sleep at all. >> halloween. >> i'm going to try go sleepless
"super food?" is that a real thing? it's a great school, but is it the right one for her? is this really any better than the one you got last year? if we consolidate suppliers, what's the savings there? so should we go with the 467 horsepower? ...or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. sure... ok. but are you asking enough about how your wealth is managed? wealth management at charles schwab.
good monday morning, welcome back to "squawk on the street"s is, i'm carl quintanilla, david faber, simon hobbs. busy morning. earnings, a fed meeting a presidential debate this week. mild negative tone as the dow is off slightly, oil back below 44. let's get to rick santelli, breaking news on new home sales. hi, rick. >> good morning, carl. yes. we have a new read on september home sales. we are expecting a number around 550,000. but expectations are not reality. a light number here, 468,000. of course, that's annualized and seasonally adjusted that comes on the heels of what was released at 552,000 last month. that was the best number going back to february of '08 that gets downgraded to 529,000,
which means it moves into second place now. the number one number for the year was 545,000 in february that, of course does take us back to the comps of '08. just to give you perspective on this number which is down 11 1/2%, it's high water mark, way back in july of '05, just shy of 1.39 million. sara, back to you. >> that was a different time in the housing market. thank you, rick. let's keep an eye on the broader indices. the dow is down 25 points, relatively flat to negative as investors await the upcoming fed meeting. let's bring in steven wood from russell investments. the summer swoon turns into a strong october rally. the s&p up 8%. how does it keep going? what's going to be the catalyst, if it is built on this idea that central banks are going to continue with easy money, easy policy and we'll get some bright
spots in earnings. >> that will be the larger picture. you and i were talking at the central bankers world. mario draghi last week reminded us how much it is a central bankers world that has been favorably received by the markets. third quarter will be tough on the earnings front. fourth quarter should stabilize. as we push into 2016, we have been seeing some positives from the oil price drop over the last year. a lot of losses in earnings space and energy were concentrated in the first, second and third quarters. it will be 2016 story to get some of those benefits. we think the fed is going to do nothing this week. the december meeting for a rate hike is a live meeting. >> you do think it's a live meeting. they've been telling us -- key members of the fed have been telling us they want to raise interest rates before the end of the year what is propelling this market? the promise of easy money from europe and what we're seeing out of china?
>> it's a two-speed story a decade ago, it was all brick, all emerging markets. now that has flipped around. the u.s. is doing okay on the economics front. earnings will be challenged. we think they'll be stabilized and improved going into next year. you have an easing cycle in europe, japan, china continuing their pace. the fed wants to say at last in their mind they think that the market is strong enough to withhold -- not a rate hike but they're coming off of hyper accommodated policy to slightly less hyper accommodated policy. what the fed sees now is the -- they want to have their sweet tools available to them as they go into 2016. deflation is basically a mind set. it's a psychological game. they will use forward guidance and their bully pull pet to conference world markets we are not in a deflation situation. >> let's look at ice, this is
intercontinental exchange trading was halted in a $5.2 billion cash and stock deal. shares of ice opening here under some pressure, david. big deal. >> it is a large deal. private equity bought this firm back in 2010. stated price at the time looks to be 3.5 billion. you never know in terms of trying to generate an actual idea of what return was. let's hold off on that. you can see -- we'll keep an eye on ice shares, which seem to be moving in the right direction. having been halted. idc, 5.2 billion, 3.6 billion of it in cash. the rest in ice shares. again, somewhat unusual for a private equity exit. in this case, they'll own an ownership in ice. >> steve, are you playing this mma story? >> i can't comment on a specific
deal or firm, but mma is part of this healing process. i think mma is likely to continue into 2016. that's part of the story. that speaks more so to an active environment. the markets could finish the year up and it could be an average this year for 2016. we think that active management, looking at it from a global perspective, not just equities, not just fixed, but multi asset is going to be important. security selection, active management becomes more important as there are harder yards going into 2016. >> steve, back to one of the main things you said earlier, that a rate rise in december of '16 is a live possibility. just thinking that through. if that's the case, if you take the fed members, janet yellen at their word, then the risk this week is presumably downside. the market doesn't believe they'll hike rates in december. it is their duty to inform the
market or keep that alive as a possibility if they are going to move. if she is going to rein in the other members, give a signal to everybody, clearly the market is assuming that everything is benign. if december is a possibility, there's down side risk this week to the message that they give us surely. >> nice to talk to you, simon. i don't think a cogent messaging has been the fed strength. >> no, but they may have to get it together. at some point they have to get this together. >> one would hope. that hasn't been the case so far. one would hope they need a more cogent, lucent, coherent message going forward. that may well be the case. i think the rationale in september was that tightening and degradation of global final conditions that were present through the summer.
that is less the case going into december than september. if there is a cogent logic to the fed september decision, one would think there's a higher probability of december given there's a pull back of those financial stressors from a global perspective. >> we'll leave it there. steve wood from russell investments, thanks. >> valeant is holding a conference call. the company asking the sex to investigate citron research and andrew left. stock is back in the red. meg has more details on that this is probably one of the shortest valeant calls i can remember. only about an hour plus. the company started off by acknowledging it was slow to respond to investor questions. the short seller report came out on wednesday, they're only addressing this today. before getting into the main substance of the call they addressed false and misleading statements by short sellers, they asked the s.e.c. so look
into left and citron research. and the substance of the cal focusing on philidor, interesting slide about the ownership. saying they paid 100 million up front for the right to acquire philidor over the next ten years over zero dollars. folks have questions about why this $100 million payment had not been disclosed. those are some main questionsers over hanging the stock. valeant said it confirmed the appropriateness of its accounting treatment for philidor but said given other allegations, an ad hoc committee will review that relationship. >> going forward, the company will consider all options which will include exercising our option to acquire philidor or to sever ties. >> this accounted for 6% of v valea valeant's revenue year to date.
valeant says it believes it has no legal liability for philidor. if they were looking to get rid of this overhang of uncertainty, this investigation has not accomplished that. >> any comment about the reports of people using different names? >> they were asked about that on the call. they said that wasn't necessarily a legal issue. but an oversight issue. and they said they would get back to addressing that. that was a big question. one they didn't answer. >> certainly one of the bigger elements in the color of all of this it's gotten attention. meg, thank you for that. donald trump speaking out at a town hall on nbc's the "today" show this morning in new hampshire. matt lauer stopped to -- tried to clarify about trump's million dollar loan from his father. >> you say it hasn't been easy for you, but your dad did give you a million dollar loan. >> a million dollars is not big
compared to what i built. you can't do this you can't do this, you can't do this. it's always been that that's what i want do for the country. i want to make america great again. >> covered a lot of ground including trade, talked about carl icahn, his name came up. took questions from the web, from the audience as well. >> i think matt lauer asked him a question which americans were thinking, do you have the temperament to be president, are you mean? is it setting a good example if you're calling people stupid and insulting people? i thought he had a good answer for it saying he was tough. this candidacy and this presidency is going to be about confidence projecting a certain image about america. >> all roads lead to one place, don't they? wednesday, the cnbc debate which carl will host. i can't wait to watch that. >> that is the debate, wednesday night, october 28th. coverage begins at 5:00 p.m. eastern time. don't miss that. up next, the new apple tv is
available for preorder this morning. the watch is going to be launched in india. not to mention the company's quarterly results tomorrow. the stock, though, is trading lower again in anticipation of earnings tomorrow night. we'll talk about that after the break. hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony.
you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you. i'm a gas service my nrepresentative. n. i've been with pg&e nine years. as an employee of pg&e you always put your best foot forward to provide reliable and safe service
and be able to help the community. we always have the safety of our customers and the community in mind. my family is in oakland, my wife's family is in oakland so this is home to us. being able to work in the community that i grew up in, customers feel like friends, neighbors and it makes it a little bit more special. together, we're building a better california.
oracle's world convention underway in san francisco. larry ellison saying in his keynote that ibm and s.a.p. used to be the biggest competitors but they no longer pay attention to them. good morning, jon. they a >> they are paying attention to amazon, to work force, sales force. larry ellison talked about them being all in on the cloud. >> here's the irony of it all. we went in the s.a.s. business and understood that required us to be in the flat form business. we went into the platform business to understand they
needed to be in the infrastructure and service business. that's how we got to where we are today. >> and they're continuing to push forward. intel's ceo joined oracle on stage talking about project apollo, where intel will work with oracle to move people off of ibm systems, competitors for cloud resources. so in this conference, there's a question about who really is best positioned in the cloud. amazon went right at oracle earlier this month. i was there in vegas where andy jaffey saying they're looking to move people off of oracle database on to their platform. microsoft trying to set things up in the platform base, it's a two-horse race between amazon and oracle saying not so fast. i will talk to mark hurd about that in the next hour.
we will talk about how good they are about competing in the public cloud and whether they are worried about threats from the like of amazon and microsoft. you don't want to miss that, simon. >> indeed, thank you very much, jon. apple is flexing its celebrity power and deep pockets in launching new iphone 6s ads over the weekend. they feature the oscar winner jamie foxx. today preorders for the new apple tv begin. shares of apple are trading negatively ahead of the earnings results. alex is an analyst at jnp securities. good morning to you. >> good morning, simon. >> let's cut to the chase as far as most investors are concerned. how worried are you at some point they'll report that they sold less iphones than they did the year before? at what point might that happen? >> we don't think we're there yet, simon. right now the signs are that
apple is having a banner transition from the 6 to the 6s. usually we see a wrinkle in sales. that hasn't happened it looks like that's primarily because of china and the availability of the iphone 6. really for under a year in that marketplace right now. i think there are a lot of investors worried over the tough compares from the 6 to the 6s, as well as the saturation arguably in north america and western markets. what that fails to take into consideration is the still massive global opportunity for apple. we think there's still a long runway for apple to continue expanding globally. >> that's the point. you're coming off a banner quarter last year. december quarter at any rate as we move forward. where they had record -- big sales and record profitability for any country ever. the issue is a lot of the fast money or hedge fund managers have moved out of the stock and retail investors have felt the pain.
do you think there foretherefore stock will rally fo tomorrow? >> with the uncertain macro economic outlook, we think they're going to go on to a banner holiday season in north america. because of market share gains overseas the chinese lunar new year comes in q1. that will allow for the outlook to be stronger exiting the year. and, so, we're not that concerned at jnp securities. if you look at some of the dots that we can connect out there, infrastructure plays like melinox and max linear have positively preannounced their september quarter results. we think the iphone and the advent of new media like apple tv is driving that strain on the infrastructure that is allowing other players to upside the way we are it's not just about the
phones, it's about the way apple is transforming the internet, the other things they can do going forward with icloud and apple pay. >> u myou meknow, how do we takm what we saw from the big tech stalwarts last week, can you value am against that and doesn't it look cheap? >> we should be valuing apple against that it's an encourage ing start. amazon has raised the bar for apple, that's true. where they have shown some strength we expect apple to be stronger, not just in the near-term but in the long-term because of that fortress balance sheet they have with the savvy of management to focus in the right areas, and to bide their time and not deploy technologies prematurely which some competition does. >> alex, i'm not sure if you had a chance to look at new apple tv
or use it i'm sure you've seen it and you're aware of what it does. based on apps it includes apple music if you want it. of course t would appear the innovation is on the remote, that you can use siri to request a tv show and cut through. also this idea that as your thumb moves over the remote it mimics a touch sensitive tv screen whachl screen. what is the stand out for you as an analyst? >> i would say at this point the stand-out is there's more to be done. this is not yet in the stock. it's an evolutionary step for apple. you touched on siri. that's very important. they added a fourth microphone to the iphone so siri would work better, now it's in the remote. that's part of capitalizing on the cloud, on intelligence in the cloud and how apple products can be superior to others. and the apple tv does not just control media, it controls the
internet to other devices that can come out in a home kit going forward. it's a bigger story than just think be thinking about hollywood, titles, it's about how apple controls the whole ecosystem. >> if tim cook continues to drop heavy hints that they might be entering the automotive industry what does that mean for the stock? presumably that is a game changer in terms of risk, isn't it? >> it is. it's also a game changer in terms of upside opportunity. tesla has proven that the automotive industry is right for innovation. apple has unsurpassed industrial design technologies, using experience through ios and through the ecosystem. it should be exciting. >> it will certainly be interesting. alex, thank you for getting up so early.
alex guana joining us from san francisco as we await apple tomorrow night. coming up on the show, microsoft's first flagship retail store opening its doors today just a few blocks away from apple's flagship store on 5th avenue. we're there live with microsoft's coo later on. (patrick 1) what's it like to be the boss of you? (patrick 2) pretty great. (patrick 1) how about a 10% raise? (patrick 2) how about 20? (patrick 1) how about done? (patrick 2) that's the kind of control i like... ...and that's what they give me at national car rental. i can choose any car in the aisle i want- without having to ask anyone. who better to be the boss of you...
just days away from cnbc's republican presidential debate, eric is back at hq looking at how to predict a winner. there's got to be an algorithm for this. >> that's right. we know trump and carson are leading the polls, but what's interesting is this new data we got showing the public expecting them do better in the next debate and rise more in the next polls. look at trump, 6% more people
expect him to win the debate than currently support him. carson is second, fiorina is third. it says a lot about their campaigns when their opponents backers and undecideds are admitting to see them pop on wednesday. on the opposite end of the spectrum, jeb bush. his expectations are the worst of all ten main candidates. not only are his poll numbers low, but some of those supporters expect a weak performance and falling polls after wednesday. it's no surprise he had to cut campaign spending. the question is will bush's extremely low bar be positive in the end? his brother used low debate expectations masterfully when he ran for president. with carson and trump, sometimes when expectations get too high, your stock can only go down even with a great performance. >> reminds me of the anticipation around apple earnings tomorrow. >> exactly. the cnbc presidential
republican debate is on wednesday. live from the university of colorado, carl will be there moderating with becky quick and john harwood. coverage starts at 5:00 p.m. eastern. straight ahead, stocks coming off some big gains over the last few weeks. are there more gainses ahead? the head of capital markets for goldman sachs asset management will join us live after this break.
good morning, everyone. i'm sue herera, here is your cnbc news update. a 7.5 magnitude earthquake in northern afghanistan killing at least 147 people. the quake shook buildings from kabul to new delhi cutting power and communications in many areas. the death poll is likely to rise as reports come in from more remote areas. the woman accused of driving a car into a crowd of people at an oklahoma state university home coming parade will appear in court. adacia chambers is accused of second degree murder in the incident which killed four people and injured dozens more. the world health organization's cancer agency reporting that ham, sausage, bacon and other processed meats can lead to colon, stomach and other companies. it said red meat is probably cancer causing as well it put processed meat in the same danger category as cigarettes and asbestos. at least five people died after a whale watching boat sank off of vancouver island.
21 people were rescued. one is still missing. canada's transportation safety board is investigating the boat's sinking. that's our cnbc news update. back to you, sara. >> thank you very much, sue herera back at hq. we mentioned apple reporting after the bell tomorrow. it's also the top holding for goldman sachs active beta fund, an etf that just launched. here this morning is steve sachs. in honor of this new etf. apple 3%, microsoft 1.5%. what's the strategy? what's smart beta mean exactly? >> it's the goldman sachs active beta u.s. large cap etf. it is our entrance into the smart beta category. we have taken four factors, value, momentum, low quality -- high quality, low volatility and combined them in a portfolio based on the u.s. large cap index tilting towards those
attributes, the opportunity to outperform the market at a low coast. >> it's in contrast to some etfs that are weighted by capitalization according to the s&p 500. how has this been doing? >> it's done well. the large cap fund is almost at 100 million in assets in the first couple weeks. the emerging markets fund has raised nearly 200 million in assets. the fund launch has been successful relative to all metrics in the etf space. again, the idea behind the space and entering this space was really to give the investment community access to the goldman sachs expertise and investment management through the etf wrapper. >> one question is why so late? blackrock and vanguard have been dominating the etf space for years. why come in now and how big do you think goldman can be? >> it's a good question that we've gotten a lot. really there were a couple of main drivers.
the first driver, the big one is what i mentioned, client demand. goldman sachs has been a solutions provider to investment clients. they've been demanding the etf wrapper in that particular package for the strategies. the active beta multi factor stock selector styles worked well for a passive, transparent index strategy. >> what is the typical cost to institutional investors? you say you're priced competitively at nine basis points what is the normal cost? >> if you think about it, the spdr is 9.5 basis points. that's a pure passive beta cap weighted index. with the active beta strategies, it's the opportunity to outperform but with beta pricing. >> where do you stand on this huge debate about the reliability and the safety of etfs after what happened in august when a fifth of them
failed to trade. some say you should suspend e etf's in trading in some instances. >> limit up limit down was never meant to be applied successfully to 2,000 securities simultaneously. our market structure doesn't work that way any longer. it's not an etf issue, but there's a couple different things we think investors should focus on. one is education. there's some basic rules of the road or best practices that can help investors in those situations. the use of limit orders, not trading in highly volatile markets. ultimately we don't think it was an etf issue. we think it's a market structure issue. there's a reason we have separate market structures for different types of products. it's time we take a fresh look at market structure as it relates to etfs, both aspects of market structure as well as
investor education are hugely important for the etf industry. >> we have kostin on all the time. he's famously said flat is the new up. is the launch of this or the amount of money you've been able to raise say anything about the back drop for the market outlook? >> we think so. obviously we've had a significant rally in emerging markets over the last four weeks. >> good timing. >> good timing. not that we planned it that way. we'll take that. you still have a volatile situation in the u.s. seasonally, tough time of year. we have not only earnings season but earnings relative to the fed. we think things normalize over the next couple of months. ultimately going forward -- >> what does normalize mean? >> means slightly lower volatility environment, slightly steadier returns now that we're
post the high volatility months. >> santa claus rally? >> santa claus rally if you want to call it that. over the next couple years we're probably seeing more normalized returns in u.s. equities, something less akin to the high double digits. >> my only question about all of this is don't you risk cannibalizing your actively managed mutual fund business if everyone switches to etfs? is that inevitable? >> i don't know it's inevitable, with the active beta strategies, we're not running them in an open run mutual fund business. we have run the strategies for a number of years in separate institutional bases. ultimately, it's client demand. it doesn't matter if it's us or others in the industry. if the marketplace demands the etf structure unwrapper, you need to provide it. >> we'll keep an eye on them. thanks, steve sachs. >> stocks are hovering around
the flat line, down 12 points on the dow at the moment. the dow and s&p are coming off four straight weeks of gains for the first time this year. dom chu has more. >> one part of the market is not flat. let's talk about the new home sales numbers. they were not very good they put that level at some of the lowest levels of the year. there are those out there who say this is perhaps transitory. the home building side of things, i was talking to steve guilfoyle fr guilfoyle trying to figure out what's happening with the housing market. he's saying there's all kinds of good data out there. you look at horton, toll brothers, lennar, poulte, they're moving down lower by a third of a percent. some of the major home builders taking a hit. if you look at the way that's
playing out, this has been a huge source of strength for many parts of the market over the past couple of years. the question becomes whether or not home builders are a bigger part of the story if there is any weakness. we always talk about the idea that the fourth quarter is seasonably strong, for right now home builders are a part of the market that are perhaps a bellwether for what may to come. health care stocks have been leading for a good part of the last two, three years and even now they're showing signs of weakness. it's whether we see that same situation happen with home builders, the data needs to prove itself out, all of this is under the guise of whether or not we see the fed move on interest rates or not. if so, when. >> or giving some dovish guidance. still ahead, an exclusive intersection view with mark hurd. our thinkorswim trading platform aggregates all the options data you need in one place that lets you visualize that information for any options series. okay, cool. hang on a second. you can even see the anticipated range
it's a great school, but is it the right one for her? is this really any better than the one you got last year? if we consolidate suppliers, what's the savings there? so should we go with the 467 horsepower? ...or is a 423 enough? good question. you ask a lot of good questions... i think we should move you into our new fund. sure... ok. but are you asking enough about how your wealth is managed? wealth management at charles schwab.
a former goldman sachs banker bank suspected of taking information. >> the goldman statement says the banker worked for the firm for less than three months and the bank began an investigation and notified the appropriate regulators once it detected this leak. goldman faces a possible fine of $50 million. separately, in massachusetts, secretary william galvin is charging fidelity with dishonest and unethical conduct by allowi allowing unlicensed investment advisers to conduct business. they have been instructed to cease the practice and make
recommended changes. we are hugging the flat line on the indices. let's check of where we are on the sectors. consumer discretionary is interesting. let's get more from sema. >> consumer discretionary stocks competing with health care for the best performing s&p 500 sector. among the leaders, vf corp, whirlpool, expedia and pvh corp up. sara? >> thank you very much. let's get over to chicago and rick santelli with the santelli exchange. good morning. >> good morning, sara. i would like to welcome my first guest of the week, fed week, john taylor. thanks for taking the time this morning, john. >> great to be here. thank you. >> listen, maybe -- let's start out, give me your assessment, your gps of where the economy is and where i'm going with this is who it's manufacturing or some of the blogs, whether it's global or domestic, it seems
like the "r" word is starting to appear. is that something that you believe in and what are your chances in terms of a recession domestic or international over the next 16 months? >> globally things have not looked good for a while if you look around the world, you have latin america problematic, europe has been away for a while. what we're seeing here is a continuation of this rather sluggish, you know, 2.1% of third quarter probably less than that. but i think of it just as a continuation of this sluggish overall economic growth. that's -- i wish it would pick up. you're right. there's always questions about whether it might turn down. >> you know, john, whenever issues become kind of religious in nature, whether it's climate change, there's a lot of issues where the actual facts of given topics seem to be overlooked for the strong opinions that some hold. has fed policy in the u.s. risen to that level?
you have written several articles just questioning the effectiveness of current policy or past policy, qe, zero rates. you catch a lot of flack for it. is there enough debate with regard to current policy in your opinion? >> you know, there's lots of debate out there in the markets and academia. i've been critical of the fed, i think they had rates too low, too long, they did well in the panic of '08, i've been critical since then. i'm not the only one. a lot of people have a concern about what's going on. the economy has not performed that well. we had a really slow recovery. when you look at it, you say what have we gotten from all these unconventional policies. >> john, on this trading floor, as many look at the slowness that you described, whether it hits in a recession in the u.s. or not, the comment is there's only two tools the fed has given they missed an opportunity to
buy insurance and raise rates. one is quantitative easing, one is negative interest rates. maybe they're connected. would you agree with that statement? >> i hear that all the time these days. to some extent it's because as you mentioned they lost an opportunity to normalize. i think you have to remember, when you hear that, policy already is in terms of the interest rate at zero. a lot of people think it should be higher. if there is some more weakness you sort of built in at a lower rate. so, i'd be cautious about just saying qe4, certainly cautious about that because the qes have not worked that well. let's just see how it goes at this point. again, i think would be good to get back to normal and leaving it alone for a while is the wrong way. but if the economy weakens it may turn out to be okay. >> in the last 40 seconds that we have, you've written to a great extent after the tech
wreck, starting around '02, rules-based fed policy went out the window. how can we bring rules base back and what would be the most efficient way do so in your final answer, sir? >> the most important thing is for the people in charge of the fed to start doing that some would like to do that. some don't want to. there's a lot of interest around the country in trying to get a more transparent policy, more rules based. maybe there's going to be some urging do that from the congress or some bills already that might be a way to do it. ultimately it's got to be the people in charge. >> john taylor, thank you. sara, back to you. >> all right, great interview ahead of wednesday. well, tuesday and wednesday fed meeting. up next, microsoft is opening its first ever flagship retail store in new york, not far away from apple's flagship fifth avenue store. we are there live with microsoft's coo after the break. [ male announcer ] whether it takes 200,000 parts,
♪ 800,000 hours of supercomputing time, 3 million lines of code, 40,000 sets of eyes, or a million sleepless nights. whether it's building the world's most advanced satellite, the space station, or the next leap in unmanned systems. at boeing, one thing never changes. our passion to make it real. ♪ start looking for a house?
neighbors such as tommy hilfiger, just a few blocks down from the glass domed apple store. kevin turn, microsoft coo, joins us now from the opening. kevin, why the need to open a store like this on 53rd and 5th avenue? certainly very expensive real estate to say the least. >> good morning, david. thanks for having us on. we're excited today to truly be on one of the world's great stages for retail here in one of the greatest cities in the world open fifth avenue. bringing the culmination of some incredible new products. today we launch our surface book as well as our surface pro 4 and be able to bring those to the marketplace here at one of the world's great retail stages is a real honor for us. >> how are you going to measure whether this is a success? >> well, i think in all retail, it's an omni channel business. we've got both online metrics and instrumentation we use as well as the physical store
traffic. i think everyone would agree on fifth avenue is one of the high traffic areas. this was a dream we had over six years ago. we knew and had a vision to be able to bring and have this culmination today. again, we're very excited about being able to bring the end to end microsoft product retail suite. we have a halo experience center here where we're going to be really enticing developers to take a look at the halo 5 launch tonight wells what we're doing with hallow lens and the hallow lens experience center. so we've got two floors. one dedicated to halo and we're very excited about bringing those as well. >> it strikes me -- i it's great you're letting people come in and see the gadgets and touch and feel them. when i think of microsoft and especially after last week's earnings report, what impressed investors so much was the growth that microsoft is seeing in
cloud, how fast it's pivoting, especially that office cloud, up 70% in terms of revenues. how many as a company are you thinking about all this hardware? >> when you think about the opportunity we have, and certainly we had a strong earnings release last week, but the culmination of that cloud business, our cloud business is on fire. over $8 million business that's growing. so we've got a lot of momentum. our office cloud is also popular across ios and android. one of the highest apps on an iphone today. we're proud of that. this store lights up that end to end experience, both cross platform, and it also give us a great opportunity to show hp, dell, wonderful hardware that our partners are bringing to market as well. we're very excited today in new york to be able to show that end to end windows ecosystem and be able to show the fact when we have great devices it drives
great traction on our platform. >> it's really interesting that you should mention hp and lanovo which had much lower price points for entry for consumers. i was up in your part of town yesterday afternoon and it was interesting, cartier has moved in next to apple on the cube site they have there. there's a big debate as to who is chasing whom, luxury goods or technology. are you part of that game? because very often you'll seem to be more of a value propositi proposition, a lower price point entry, not competing at the same price point level or the same imagery. >> i think when you see the price points in this particular store, i think you'll see there's quite substantial. not an interesting price point book by lanova. the new hp line we have in here is actually a premium line. i think you'll see some premium line goods plus our surface pro
4 and our surface book that are able to tap in to that higher price point and touch into an ecosystem that candidly we haven't been able to participate in in the past. so this gives us a broader praise to play. i want everybody to come on out and see this experience. >> and to what extend will you roll out this in other major cities perhaps around the world if any? >> well, we're opening up in sydney, australia, in the fifth street mall there. on november 12th. and, you know, we're going to continue to take these flagships out to other cities around the world. look at microsoft. we've got a billion and a half people that use our products each day. today's our 113th retail store is the fact that we now have a direct connection with our customer. we didn't have that before. we used a channel partner. we still love our channel partner because we take a lot of the learnings from our retail
store and give those to our partners. we have a connection with each customer that comes in and we're able to use that feedback and make the products better. that's what we're doing with the hollow winds. that's what we're doing with the halo launch tonight. that's what we're doing with surface book and surface pro 4 as well as giving great feed back to our partners. >> kevin turner, thanks for joining us of course and congrats on the store open. >> thanks for having me on. >> you're very welcome. >> we're excited, thanks. >> let's send it over to john ford with a look at what's coming up on "squawk alley." >> oracle, here's where it is for discussions of the cloud right now. picking up the gauntlet that others have thrown down. the coo is here, he's got a big cup of coffee, ready for the interview coming up, be sure to tune in.
when a wildfire raged through elkhorn ranch, the sudden loss of pasture became a serious problem for a family business. faced with horses that needed feeding and a texas drought that sent hay prices soaring, the owners had to act fast. thankfully, mary miller banks with chase for business. and with greater financial clarity and a relationship built for the unexpected, she could control her cash flow, and keep the ranch running. chase for business. so you can own it.
manhattan and "squawk alley" is live. welcome to "squawk alley" for a monday morning. post nine of the new york stock exchange. john ford is in san francisco at oracle open world with a special guest. john, good morning, take it away. >> good morning, carl. here with mark hurd, ceo of oracle. you did have a big cup of coffee. they keep take your coffee away. >> they take it away every time i bring it on. >> you're already on stage last night with intel