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tv   Squawk on the Street  CNBC  November 5, 2015 9:00am-11:01am EST

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you always talk trash. >> you know who they do spartan with? you know what i'm saying. okay. thank you. congratulations. i'm going to have to get the shoe now. we appreciate you being here. >> thank you. >> thanks for your time. >> three seconds to burn. what you want to talk about? make sure you join us tomorrow. "squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street." i'm carl kiquintanilla with jim cramer. today the bank of england holds steady. six fed speakers on the docket today. china up nearly 2% overnight. shanghai now 20% over the august lows. 10-year around 2.23%.
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biggest increase since february ahead of the jobs number tomorrow. our road map begins with facebook shares poised to hit a new record after last night. >> whole foods misses expectations. sales growth at a five-year low. find out how the co-ceo explained this to jim on "mad money" last night. >> homeaway, we'll talk to the ceos in the next hour. but facebook is poised to open at a record high while entering the $300 billion club. the third quarter results beat estimates. 78% of ad revenues now coming from monthly active users. on last night's conference call, mark zuckerberg said video is another area where facebook is continuing to make progress. take a listen. >> on average there are now more than 8 billion daily video views on facebook and 500 million people who are watching daily. to offer even more engaging video experiences, we've added
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live video for public figures. and we now support interactive 360 videos. >> 78% mobile. three years ago it was 14%. remember that? remember when they had a mobile problem? >> they had a mea culpa. zuckerberg said he was going to get on it. stock went to 18%, 19%. i don't know for a hundred points. because i'm using 120 price target. and i've got to tell you, this call -- this conference call this quarter, starbucks may have been beethoven. this is mozart. it's so perfect. everything about it is perfect. i got to tell you, what's really perfect about it is the media doesn't get aheadline. despite higher costs, rise. no! it's because of higher costs. they invest. sheryl sandberg said we invest.
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zuckerberg said it was a good quarter. people in corporate america, don't be ashamed. go learn from this 18-year-old kid. this is the company you should aspire to be. i'm going to say something that people are going to really blow people away. they paid $19 billion for what's app. it was a steal. >> you think it was a steal. >> by the way, can i give you a sense of things? one-fifth of the people in the world check facebook all the time. one-fifth. >> it's now called the biggest media brand in the world. >> by far. time warner which i know we're going to get to later, you're not losing customers to cord cutting. you're losing customers to facebook. they are talking about media time and how much media time people spend on facebook. and i got to tell you, they had
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a great moment. when they first started they were talking about how zing was getting customers. way too early for that one. >> good. >> here it's ikea getting $2 million back. return on investment is clear. the brilliance of the people, 41 revenue growth. that means you can do 30 times. >> of course, facebook rapidly becoming an umbrella of brands including instagram. here's sheryl sandberg last night talking about that. >> this is the first quarter where the instagram ad offering has been as rebuffed as it is now. with a lot of improvements that happened this quarter including self-service rollout. that's a major step change for instagram in terms of the product we're offering to the market. >> my favorite metric is the ratio of daus to maus at 65. people who are on check in all the time. >> all the time.
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>> it's not like they come in and two weeks later check it again. >> that's why it's so fantastic for advertisers. 1.3 billion check their facebook or mobile regularly. a billion people. now, this is amazing. if you're in advertising and by the way they still scrutinize advertising to make sure they're up to facebook standards. the old joke about advertising was half the people -- >> you don't know where half your spend is going essentially. you know half of it's not working. you don't what half. >> that's over. if you give facebook money, you get a return for it. because everything is anecdotal in the world, i go to the wife. i say what are we talking about here when they say that? she says, look, i'm a member of a group. it's a group about virginia wolf. i mean -- this is -- i'll get the name. i think it's important because it's just exactly how they're succeeding. because they talk about groups as being the best way for growth. because they have 925 million people who use this thing for a
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group. and groups, by the way -- the groups are who the advertisers want. she belongs to one called "what would virginia wolf do" that involves women of a certain age, she told me, they discuss everything -- she asked me not to tell that. i said do they have ads? there's an oil of olay ad you just clicked on. i'm not kidding. they have targeted my wife's group. and 925 advertising channels. and that's my point. channels. and by the way, can i just tell you something right now? >> of course. >> $6 is not going to 525 for these guys. >> that was a reference to yesterday the conference call that time warner did talking about, if you will, i hate to say old media. listen. when you look at the basic numbers of time spent versus advertising dollars, it gets you to thinking digital still has a long way to go to catch up. because a lot more is being
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spent. by the way on the conference call that followed cvs' decent earnings report, on tuesday night they said we're not seeing it. we had a lot of ads. completely shocking the market by not including the guidance for 2016 was going to come in well below the $6 and then even the $8 for '18. if you recall, those were the two numbers the company came up with when it was fighting with fox a year let's call it 15 months back or so. they're not going to come near it. but that was a surprise as it came in at 10:30 or so. it took the entire media sector down. then this morning one wonders with this great number from facebook whether it's just going to continue pressure on these traditional players, if you will. even though they're doing a lot of non-traditional things. so we'll be watching it yet
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again. >> sandberg, 25% of media time mobile. a minute every five minutes on mobile. advertisers want that. they're talking about having so many video views that the advertisers are just scratching the surface. so you're absolutely right. it is early. but these people are coming from tv. clorox coming to it. you can bet all is coming from the daily beacon and the wichita beacon. i didn't mean that. coming from this. >> or the philly inquirer. you saw that yesterday. >> who's left? who's left in that great institution? >> instagram which they bought for a billion dollars in 2012. that generationally to me is the more powerful platform. neither one of my kids are on facebook. but both are on instagram. >> and bob talking about $2 billion in ad revenue at sun trust a couple years ago.
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they're just starting it. it's in its infancy. that's why you can put a number to get to 120 very quickly. >> on the flip side, of course, whole foods posting estimates as comps fell .2% amid heightened competition. company also outlined sales momentum including reducing strategic. here's what the ceo told jim cramer on "mad money" last night. >> we have some head winds from the comparison year over year of 150 basis points. any way you slice it, they're not what we want, not what we expect. we outlined the steps we're going to move it forward. >> everyone talking about the buyback. do they lever up to buy more? >> they are going to lever up. we know it's not much more. company reported 8.5% comp today. just because they have minus 2% comps coming up, i don't think it's the sector.
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they have a lot of problems. they have underspent technology. there was open rebellion on the conference call. >> they underspent on technology? >> yeah. >> that's surprising. how does that happen? >> you're referring to they're not converting visits to their online shopping sales. >> they're not doing that either. but the point of sale, the hardware at the stores is old fashioned. at one point, these are very nice guys, questioned whether the new attempts to fix point of sale systems would work better than the other ones they said they were going to do two years ago. that was brutal. and then just an amazing thing. ken goldman whom i respect says we've got to get back to bayics. he asked what have you been doing that's not basics, so to speak? in other words, this is a conference call if you go read it. the analysts have had enough.
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the company is levering up to buy back stock. is that the right thing to do when you have to go against the people? it's just like walmart. you want to go buy back $20 billion and fix it? forget it. >> a company like this which had incredible growth and was the leader in the category, when did it lose its mojo? >> when walmart, target, costco all got religion about it. kroger being the principle enemy. remarkable what they'll have. the natural organic next to the old, next to the store brand. kroger is the best now on anti-packaging. whole foods could do the 365 new stores which they sha will be cheaper. i love it. i want them to win. you know, they do a lot of great things and it pioneered -- they still are getting $970 per square foot. >> you think they can turn it around? >> i don't think this quarter or next quarter. i think the problem is is that we've all seen companies that
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lever up to buy back stock without a turn yet in hand. or pay too much as i would tell you that the media companies did. and it's a bit of a waste of money. now, walter rob told me, listen, jim. if question turn it's going to be a great investment. i come back and say you guys are unbelievable what you do, but the other guys are all ganging up on you. and you don't know what the future is. because retail is so uncertain. so i want whole foods to win. it's amazing, but the comp stores are going down. we have to accept that. you've got to do comp stores. you can't be an abstract artist here. >> no. i know. i've said that to sears, kmart many time. >> that's paint by number. >> incredible. expedia meantime back buying homeaway and a $3.9 billion deal. we'll talk to the ceos of both companies. also bob lutz is going to weigh in on this widening volkswagen scandal and what's at stake for
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the autoindustry. not since september 28th has the major averages lost more than 1%. and in that time, s&p has logged a 1% gain eight times. more "squawk on the street" next. here at td ameritrade, they're always working. yup, we're constantly making thinkorswim better. like a custom screener on your desktop, that updates to all your devices. and you can share it with one click. wow. how do you find the time to do all this? easy. we combined every birthday and holiday into one celebration. (different holidays being shouted) back to work, guys! i love this times of year. for all the confidence you need. td ameritrade.
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you got this.
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expedia making its largest acquisition ever agreed to buy vacation rental site homeaway for $3.9 billion. this puts expedia in competition with airbnb. the deal expected to close in the first quarter of 2016. barry diller was asked if the success of airbnb drove this company to want to own a business like it. >> this is an area we were not in. we are in every other area of travel. and so this -- we've been looking at homeaway for years now we had always thought this was an area we should get to. >> this is a 22.5 times at least
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from the analysts weighing in. perhaps appropriate. sthoe not that large a premium given some of the deals for growth companies that we've s n seen. and importantly expedia shares are responding positively. something we tell people to keep a close eye out. because that continues that narrative, if you will, that a lot of bankers will. good time. your stock's going to go up. >> we have brian coming on. he's bag regular on "mad money." this is a brilliant acquisition. >> really? why is it brilliant? >> it's the channel they really need. this is how people -- this is shared economy. expedia needs more shared economy. the website homeaway needs a bit of a tune-up. airbnb's website is much easier to use.
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homeaway had a great business. we use a bnb and fills our place. i don't know if expedia can get this. because it's that good. i said yahoo should do it. because yahoo needs more subscription revenue because this site is so fabulous. i've used this site. >> you used expedia at the end i thought. >> we use bnb to get to expedia. that's exactly right, david. bed and gets you to expedia. that's why it's a natural fit. if you own an inn, anything to do with lodging, what they allow you to do is run the place for you. get a check each morning for people who stay. they take their cut, but you don't need a night manager. you just have a phone number. expedia, homeaway, these are brilliant companies. and expedia has done such good things. takes my breath away how smart they are. another company that just
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understands the power of the web and technology. and they're just great at it. >> i think cowen has a new street high on these guys of 180. >> very reasonable. >> really? >> yeah. by the way, not necessarily going up against airbnb. it's a distribution channel. i have a place in mexico and i wanted to rent it. what you have to do is go to homeaway and put in pictures and done. you have an inn trying to fill it. boom. brian sharpels is a great businessman. very, very smart guy. and it's a win for everybody. i just don't know if that's too low of a price. >> so you made this point. are you saying you think somebody else might try and come in? >> i just think marissa mayer, they should buy this. i don't think they're swift enough to come in and get it.
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>> could priceline do it? >> maybe. they're fast and smart. >> they're going to get this done fairly quickly. it's $10.15 in cash. so the price is going up as long as expedia stock goes up. it's gone about 3% right now. >> have you ever spoken to brian? >> no. don't know him. >> fabulous guy. you're going to have a great interview. he's always been straightforward when he thought they had to spend a little more. total gentleman. last quarter was a really good quarter. he is going to stay which is good. he's just done it right. such a great company. >> can't wait for that. after the break, we'll get cramer's mad dash. we'll get to ravel lauren and coors, and preview disney. back in a minute. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about.
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♪ takes me back to my freshman year in college. all right. 23.13. >> one of the favorites on twitter is fire eye. why? because they're one of the cyber attack companies. you can use them to stop attacks certainly after attacks. david, there wnt enough attacks this quarter. >> how could there not have been enough attacks? >> there weren't. >> today it's iranians again screwing around with things. who knows what they're doing. >> i'm stuck with the facts.
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that's what they talked about in e the conference call. they talk about the chinese agreement we made has cut down the number of hacks but not to worry. there will be more hacks. so don't give up. there'll be many, many more hacks. don't give up on us. kind of a surreal moment of the call. just like, hey, listen i know there were a lot of hacks but they're coming. i don't want hacks but de wault is going to be on tonight. i think a lot of people recognize it's a headline story. when a major retailer gets hacked, they bring in fireeye. but what major hack was there this quarter? >> there wasn't one. >> there you go. >> that we know of. a lot of times we hear about it after the fact. a lot of companies have gotten better. >> don't forget there's a ridiculous call hack. so everything will go down today. i got to talk to him.
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i don't know. i mean, because this has been one of the hottest sectors. come to think of it, remember it was really hot when you found out -- >> the stock was flat on the year until now. now it's down 17% today. >> you get these segments, these hot aereas. so let's find out from david dewalt. i think we can agree there will be many more hacks. this is a stock that turned out to be going up when a retailer had a hack or someone you knew had a hack. and there were no big headline hacks. so without any big headline hacks, they weren't called in as much. they do so much more than that. i don't want to just dismiss them. >> okay. well, we'll keep an eye on the peer group for fireeye as well. we've got a lot more stocks to watch. also keeping a close eye on a lot of media names which got pummelled yesterday. opening bell after this. [announcer] during mattress price wars at sleep train,
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tour championship winner...and he does indeed take it all."
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you're watching cnbc "squawk on the street." the opening bell in just over a minute's time. once again stocks inching back to those levels we saw back in july and earlier. 2132 or 34 is as high as we've been for the year. despite what was said about inflation and rates. >> different stocks this time. we added some health care stox coming down. we saw some retail stox come down. restaurants. but there's other parts that bubble up. the banks have been strong. i find a lot of the industrials have been leading cause of the rally. yesterday was the first day that the oils went down. they had been a contributor. but there's just pockets of strength everywhere. you know, here's a good example of what's going right. microsoft. 54, 55. then there's facebook, amazon, netflix, google. all fabulous quarters.
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>> in that $300 billion club. apple, amazon, google, microsoft, exxon, facebook. >> all those had good quarters. even exxon. and netflix, now we're realizing they were right. >> i just can't say enough good about these companies. they are bargains. that's why people like them. >> fang is bargain city. >> really? >> yeah. rock bottom. >> the multiples can be fairly high. >> except for amazon. >> yeah. amazon is different. >> netflix you have to value buy subscriber. amazon you value by sales growth. google you value. and facebook is an inexpensive given it's 41% revenue growth. i can justify all these. >> opening bell, by the way at the big board citizens doing the honors down here.
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over at the nasdaq, merrimack pharmaceuticals. facebook and 292 is -- let's see. is it higher than ge? >> 306. >> $306 billion market cap. >> higher than general electric. >> yes, it is. ge is below $300 billion. >> this comparison, some businesses have tremendous growth and that's what we want. facebook is printing money. they're spending money on getting the best people. but at the same time this is developing from facebook because they don't know how to generate the content. you do. >> it's quite a business. so is google's business. incredible business. the margins in that business -- >> how many times do you google a day? i google probably 35, 40 times a day. >> if you use a droid phone you're on chrome.
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>> that's right. >> zuckerberg added to his net worth. he's far surpassed at $42 billion. >> wow. >> and at age 31. >> at age 31. >> first child on the way. >> youth in this case is not wasted on youth. i think he's remarkable. he's more involved in the call than ever. he's a joy to listen to. he's got great humility in the call. >> and he can even do it in mandarin if he has to. >> absolutely. he says china, we're coming. there's this part about india where he says there are a billion people not online yet. india has done work saying people are getting more easily educated. so he's working with the indian government. >> are those people in a position to buy anything? would an advertiser want to reach them? >> think longer term. >> i didn't mean that to be an aspersion. >> now the chinese make $10 a day. which is why china is in a bull market. 20% for the bottom. >> i have seen that. china is back in a bull market.
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>> someone said that. i don't remember -- >> yeah. all right. you know, you're right a lot. it happens. >> i'm right, some wrong. >> but you try. >> i do try. >> ralph lauren, the biggest gainer. beats $1.73. polo looked okay. like the ralph lauren of old. >> it is its first week on the job. this is right on ralph lauren, this turnaround. a lot of times when you look at what's going on, you think why didn't i buy that lower? it looked pretty dire. but, you know what? ralph lauren has got many lives. and those who have written him off were clearly mistaken. now they got a new guy from gap who has a reputation. this one's going higher but don't chase it up like this. there will be some selloff. and you get a chance to buy. >> we haven't gotten to
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qualcomm. 91 cents beated by a nickel. but they are below forecast. talking about increasing competition. >> this was not a good quarter. jpmorgan had a great line in the first paragraph. it said -- we were laughing about this this morning. i shouldn't laugh. researcher said, jim -- i said what's the problem with china here? he said according to jpmorgan is handful of chinese vendors have stopped paying royalties. this is a chinese royalty play. so when a handful stops paying royalties, that's a suboptimal situation. >> when revenue's down 18% year over year even though they're at the mid-point of their guidance range, it's not necessarily a good thing, jim. >> no. >> and as you pointed out, there seem to be some troubles in china. >> you got to have people pay. one of the things i've learned as a business person is if you sell something, you got to have people pay. it's just not a good thing when
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you sell it and they don't pay. i mean, that's perceived for the obvious wisdom. >> understood. i also am one who has a keen sense for the obvious. and i notice, by the way, 5.2 to 6 billion is now their fiscal '16 guidance. >> think about that. time warner went from 6 to 525. >> of share. >> right. these numbers keep appearing. >> to 27% year over year. >> got a good balance sheet. >> they've returned an enormous amount of capital. >> and chinese have to pay. the chinese don't play fair. >> after discoveries ad sales, but now after time warner's guidance, what's the picture for disney tonight? >> very, very hard. you know, this is one that's it's really hard to prognosticate on. a lot of it will depend on the way they present the call. people up the street have been asking me what do i think. you know what?
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i usually am willing to offer an opinion. but this one is -- i don't know what bob iger is going to say. there are few companies i could say, listen, i'm not sure what's going to happen. a reason i am gun shy is the time warner situation was so unbelievably far -- >> which i'll get to shortly. >> i'd say i think you can be fine. you've got "star wars." but that time warner call was one of the worst surprises i've seen in my career. >> that's saying something. >> it is. >> we'll have to come back to that. >> okay. we'll come back to it. >> specific to disney, though, it was the last quarter and it was the conference call. and then our interview with mr. iger that really shook up the media world. >> contentious interview? >> it wasn't contentious. i thought it was perfectly nice. >> it's business. not personal. >> it's not personal. it's not personal. never is. >> you know, look.
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disney -- if someone wants to take long-term to disney, you buy it. buy half now and buy half tomorrow. that's what you do. if you want to take a longer term view. it'll be a speed bump just like when abc was bad. remember that and people started selling disney? >> i'm laughing at something. disney is the only -- >> share with the whole class. >> mr. iger will be on "closing bell" today. >> okay there. you go. >> very nice. homeaway up almost 23%. that's actually going to take you back to march of 2014 at those prices. we'll talk to as you said sharpels later on. >> one thing he will talk about, the companies that invest of which facebook is a great investor, just win. and i think there was a great comment. i keep referring to facebook but i was so excited about it because it is such a beautiful quarter. sheryl sandberg said -- she was talking about how literally you
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have to do this -- you have to spend because, get this. this is so unlike a lot of executives. in the end our quality today is our revenue tomorrow. tell me that isn't fabulous. >> that sounds -- i don't know what -- >> do you think that don draper could have even come up with that? quality today is our revenue tomorrow. >> i like it. >> i think it's brilliant. >> before we get to bob, the daily check of valeant. down another 3% this morning. stock now below $89 right now. the journal has a blow by blow of his thought process. >> that was hilarious. every synapse. >> it's not going well, this is bad. not good. >> like i hate you, i hate you, i love you, i love you. like the triple schizophrenic. >> i'm so cold. somebody hold me.
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>> it was different. there's -- there's -- it was just great journalism. >> yeah. facebook has nearly tripled its ipo price. let's get to bob on the floor. >> good morning, carl. hey, everybody. oil on the downside. look at the major sectors. energy weak today. i was kind of hoping oil stock would buck the lower oil trend. that's not happening right now. energy down, material down. financials doing a little bit better right now. technology also out-performing. i want to concentrate on what the oil companies have been saying. because there's a very interesting trend we're developing particularly in the production space here. so marathon oil both reported numbers, the bottom line here is generally earnings better than expected and sales volumes a little bit better than expected. and they're cutting expenses dramatically. take a look at marathon, for
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example. they had a smaller loss than anticipated. their sales volume, production was higher than expected believe it or not. and here's the key. production expenses were lower than expected and they're cutting them even more. the 2016 capex looks like it's going to be cut even further. there's a real trend here. devon had the same thing. their earnings, a sizable beat here. their production was higher than expected. their spending was lower than expected. and for 2016 they're talking about very low -- even lower than expected capital expenditures than people thought. and a low single digit production growth. this is really kind of interesting to see how companies are trying to cope with the low oil environment. they're learning to do more with less. they're employing new technologies and learning to produce more. capital efficiency is increasing dramatically. the thing is we can make money or not lose as much money within the new capital constraints
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going on. it's an interesting message. we're still only about 60% through with the big oil companies. but it's already very obvious that this is the message right now. and there's even efforts to reduce that. a lot of companies have a lot of debt. denbury, they cut their dividend. they freed up $88 million in cash and made a report to say that that $88 million mostly ask going to reduce the bank debt. their bank debt is now $210 million at the end of the third quarter. it was almost $400 million at the end of 2014. they've cut almost their bank debt almost in half. that's real progress. one of the big concerns. i'm not trying to argue it's not been a terrible year, look another the stock chart. but they're trying to figure out how to do more with less. let's talk about the retails. we used to make a big deal about the retails.
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generally they recall pretty disappointing. a lot of them missed. buckle, costco, stein mart, zumiez. costco had good consumer electronic sales but that's been a trend throughout the year. we will get gap after the close. that's one virtually everybody still pays attention to. right now the dow up 18 points. >> thank you very much. let's check in with rick and check out the bond pits in chicago. good morning, rick. >> good morning, carl. well, fixed income is definitely on everybody's radar screen, of course, because of the correlation at least on this goaround with what's coming out of fed speak. now, we've all heard a two-year note yield hasn't been up since early 2011. there's your chart. a picture's always interesting to put a face on. all the rest of the charts are october 1st just to get a handle on how things are moving. no question there rates are moving up. but when you go tens to twos and
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you talk about how aggressive twos have been, that spread is a non-event. so it's a parallel shift. the yield curve is all rates are moving up. that doesn't mean it can't be in part by the fed. but there's a lot of other dynamics going on as well. look at boones. now, bunds have been drug up. there was a point where bund years were dragging 10-year yield notes down. now, let's look at what's going on with regard to 10s minus bunds that's clearly reflected of who's in control of the market with the rate and how it's dragged up u.s. side. let's look at the dollar index. straight up for the most part. looks exactly like the dax. here's an interesting one. crude oil. there's a whole lot more going on in the energy sector than just the value of the dollar as you can see on this last chart. david, back to you.
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>> thank you very much, mr. santelli. wanted to come back to media stocks. the group is down yet again. not led by any particular name here. time warner is down about a half a percent. fox the same. all in the red. this after the surprise warning, if you will, from time warner that came after the conference call that began at about 10:30. it was in the prepared remarks in which he referred to the fact he will no longer be meeting the close to $6 number in earnings per share for 2016. nor meeting the over $8 a share number they had been putting out there for 2018. i'll refer to comments from the cfo when asked about pipt this came as a surprise to the market. they give us an outlook that came out before the open. but then it was two hours later before we learned of this.
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so into account additional investments that they're making in programming, '16 adjusted more likely to be $5.25. still working through the budget process. looking beyond '16 we're in the early stages of updating that long range plan. they talked about foreign exchange being a drag. and don't expect to do anything over $8. that's what they had said let's call it last summer into november of last year. everything got turned around. remember, cvs had been up, viacom had been flat. fox did. which by the way suspended guidance. fox no longer giving you guidance anymore at that company. all of it raising these fears overall. you're investing more in programming. why? because you're losing subscribers and advertisers. that's the comments john martin was trying to address. i want to comment for one second
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in the united states that we're seeing. the prior quarters and others we've brn planning for declines to continue. we don't anticipate they're going to be material. we continue to believe that. what we're doing now is we're just starting -- just planning for next year. we're going to assume the rate of decline is similar to this year. although in an encouraging way that being comcast, charter, they've all had reports that haven't been that bad. most all reported improvements and some the best third quarters they've had in years. he also says we're in talks with numerous potential parties for the top services and we fully anticipate participating in those. if you look out on the horizon, there's reason to be really confident and optimistic that we could even stem losses all together and maybe get back to a position of growth in the u.s. that's talking about subscribers. but that goes to the heart of concerns here for so many in this industry.
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the call overall got very low marks. the way they rolled it out, even lower. and all the stocks, of course, have suffered. but it's not bad today. >> no. but i think you really said it perfectly. really talked about live programming. they have some playoffs, time warner. >> they do. moonves had talked about a rebound in advertising. an acceleration, if you will. two days ago discovery leveraged up. this put a damper on things yesterday. >> yeah. it was -- it's one of those things where you say what's to viacom? and you realize you thought that time warner, the statement, the way the release went, this is great, this is great, this is great. this is bad. but the only thing that mattered was the bad. like the one line in disney last time. i don't know, david. somebody's status might be in jeopardy. >> is jeff bukas no longer a
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great american? >> i think that everything's on the table. >> really? >> everything's on the table. >> wow. >> it got to combine with another company. you've got to do that. >> you think so? you're call frg a merger. you're not alone. they seem aspirational now. giving part of the power to resist that. not to mention fox trying to do is deal where a control company with stock. there were a lot of things that didn't go their way there. >> it's a great company. they do have good movies and they have these great margin. what you do is watch the fugitive over and over again. >> it was on last night. >> get out. was it really? >> right before bed. merchandise mart. the best scene, right? you can't turn it off. >> i don't care. >> i don't care. it's funny. lester holt was in that movie. >> pam zekman.
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all those great chicago reporters. >> holy cow. and the other is shawshank. and i feel the media is obtuse. if you listen to the facebook call, i'm not saying they should take any sharp objects away from themselves, but they should take their ties off. >> when we come back, airbnb rival homeaway being bought by expedia for $3.9 billion. we'll talk to the ceos of both companies. best day ever for shares of ralph lauren. up more than 17%. back in just a minute.
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surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better. oh! sorry, i was trying to put it away... got it on the cake. sorso you're going to work it on a train? not on a train...on "trains"! you're not gonna develop stuff anymore? no i am... do you know what ge is?
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got a record high for facebook this morning at 108. of course just a few years after that ipo date which was no good, this is feeling a lot better for them. more in a moment.
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time for cramer. >> doing a great job cellgene is blanketing the world. their key blood cancer drug,
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$1.5 billion in revs. i don't want to throw this baby out with the bath water because they have incredible data that face three chiels starting. phase three for ms. don't throw this one away so quickly. but i know it is -- it did have a glitch and we've got to do more work. but bob is a very good executive. those who have written this guy off have paid the price multiple times. >> great american. >> he's the new great american. he's also -- he was a marine. >> what's on "mad" tonight? >> okay. fire in your eye. fire in the hole. we've got dave dewalt from fireeye and the new ce ro of pp. >> very nice. we're almost home. >> oh, my. "the fugitive" huh?
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>> yeah. >> unbelievable. >> i can't revoke his status. no! i'm not going to give up his great american status for one quarter. >> all right. >> it's not right. >> that's good. >> we'll check back in january. >> when we come back, the ceos of expedia and homeaway. dow's up 43. don't go away.
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good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla. market trying to get back some of what it lost yesterday. dow is up 55. s&p back to 2,107 as we are all over earnings from the likes of whole foods, qualcomm, and facebook. >> here we go. here's our road map for the next 60 minutes. a record day for facebook. its market cap surpassing $300 billion. mark mahaney will weigh in next. >> plus bob lutz says the volkswagen scandal is part of what he calls a reign of terror. >> also bitcoin seeing a spike recently. but why? wooem talk to the founder.
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>> buying home away for $9 billion. the ceos of both those companies will join us live in about half an hour. you do not want to miss that. first up, shares of facebook are higher after the company's revenue beat estimates. getting a boost from an advertising push. the market cap now surpassing $300 billion. and mark zuckerberg answering a question from mark mahaney last night commenting on long-term investments. >> i would expect that we will see an expansion of sharing and consumption of all of the different types of things you asked about. news, video, searching the different experiences there. these are the big areas we're investing in. there are long-term investments and big investments. we're going to keep on pushing them. i think that's what we need to do to serve our community well and ultimately connect everyone in the world. >> and mark mahaney joins us from san francisco. >> good morning.
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>> every time they have made a big investment, it's been doubted and ridiculed in some cases. and then shown to have paid off. any reason why that should change? >> no. i think the way they're running their business is correct. they should be investing now. certainly there are things ahead of them. let's talk about video, instagram. the messaging platforms we haven't talked about in awhile like facebook messenger and what's app. they've got this massive base of people coming to them on a daily basis. >> why aren't they expensive? >> well, it's not cheap. we think that versus the growth rate here, valuation is reasonable. you know, we haven't had -- this isn't a back up the truck price by any means on facebook.
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but you can look at it and say 35% earnings growth, that warrants roughly 30 multiple. put that out on 2017 numbers. and you get like $120, $130. our price target is $130. we think that's reasonable. there's a grind up opportunity we're still long the stock. >> it may sound nitpicky, but do you have to worry about market saturation now more than half global internet users are on facebook that can't put up those kind of growth numbers forever? >> no, they can't. and look, the user growth here is kind of mid-teens. 13%, 14% year over year. you can only grow it so much faster. an intriguing idea came up on the earnings call last night. there are no chinese facebook users now. if, however, they were to get those, you know, you could probably layer in a couple hundred million more users to facebook. that would be an interesting
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surprise. you should expect them to hold or slow down. >> they did call the china problem complex. and we've seen different tech behemoths take different paths with that country as we know. which would you expect them to take? >> i think they'll be as accommodating as they need to be. i don't know if they wour as moralistic as google was almost ten years ago in their approach to the china market. it's not part of the growth story. there's plenty of other good growth going on. that's rare for 60% margins. that reminds me back of 2007, 2008 google. that market cap is still well above half of what google is. that's how we should be thinking about it. >> finally, mark, a lot of discussion this morning about guidance on oculus. some say they're being way too
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cautious. this is an unproven technology. how should we be thinking about that? >> i'm in the latter camp. i don't view oculus. has a near term catalyst for facebook. maybe it works out three to five years down the road. i think there are other bigger opportunities near term. those messaging platforms. come on. let's look at and see what happens with instagram. i think that's the interesting new growth story over the next couple of quarters. oculus is too far out to matter today. >> mark, it's an amazing story. fun to watch. thanks for your time today as always. mark mahaney. >> thank you, carl. to the housing market now. major annual report out today from the nation's realtors surveying thousands of recent home buyers. our diana olick is live in washington with a surprising headline here. >> right, sara. the appeal of ownership is coming back with a vengeance even among younger millennial buyers who soured on it due to the housing crash.
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the realtors found 30% of those surveyed said their primary reason for buying was the simple desire to own. that's up from 24% in last year's survey. when you break out first-time buyers who tend to be younger, the jump is more significant. 64% said it was a desire to own up from 53% just a year ago. the desire for a bigger home or a job-related relocation, those were distant second and third reasons for buying. and this comes as the nation's home ownership rate sits at the lowest in half a century. americans seem to finally be starting to see housing as more valuable and more investable again thanks to rising prices that, though, comes with tougher affordability which has kept the first-time home buyers sidelined. more on >> do you ever pause to think whether the realtors are
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creating an artificially positive spin on the housing market in this koun industry? i ask the question because i sold my apartment over the summer and it was soft, soft, soft. and i had to take big price reductions to do that. but commonly i see the data is from those interested in creating the impression that everything's hot. >> well, sure. they are realtors. but manhattan i will say is an island unto itself literally and in the real estate world. this was a survey of several thousand home buyers which was sent out over the summer and, you know, they had several questions on it about did you use a realtor or not but also questions that have been the same year to year. at least the percentage differences have to be correct. you know, we get lots of different surveys have lots of different places. companies who do investments in real estate, you got to take it all with a grain of salt. but again, this was more than 10,000 home buyers who had the
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surveys. more than 6,000 responded to the questions. >> but funded by the realtors is my point. >> yes. >> okay. thank you very much, diana. coming up, volkswagen still having a growing scandal on both sides of the atlantic. bob lutz saying that volkswagen was under a reign of terror. he will join us next when "squawk on the street" comings right back. awe believe active management can protect capital long term. active management can tap global insights. active management can seek to outperform. that's the power of active management.
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volkswagen stock losing another 10% this week.
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vw halting u.s. sales after initially rebutting allegations from the epa they, too, contain cheating software. admitting that it sold 800,000 cars in europe that misstate their consumption. joining us is bob lutz. bob, what has caused this in your view? what's wrong with volkswagen? >> i think it's a cultural thing. i think under the reign it was very much an authoritarian environment where the message was always my way or the highway. people were fearful about telling the boss that something couldn't be done. and if you tell people you get it done or i'll have your job, you know, people will find a way. even if they have to cheat. >> what do you feel about it? >> well, i'm basically saddened
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because you hate to see something like this happen to a great company with many hundreds of thousands of employees. but on a tiny little schadenfreude side, i was so tired of my import-loving friends saying what's wrong with american car companies? they can't seem to do diesels. the technologically superior germans seem to have no problem producing diesels. at least i don't have to listen to that anymore. >> i think it's really interesting you've raised -- you worked for vw. i'm interesting you should raise this question of nationalism. i was shocked to read one of the presumably senior spokesperson for vw quoted in earlier the the week when the second round of allegations were made, an issue here does the u.s. want competition in the american market or not. and i was surprised that he would take on the epa if he
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believes they are biased in this way. it says something within the car industry that we may not understand about nationalism and about how people feel. >> no. i think there's always a -- there is in the united states a tremendous pro foreign car sentiment which you could say is justified. there is certainly no bias on the part of the authorities. especially both the epa and c.a.r.b. always had a soft spot as being the company that could, the company that cooperated. the company that saved fuel by developing diesels. so if anything, i would say the regulatory agencies have been very friendly, perhaps friendlier to the imports than they have to the domestic industry. and that statement by volkswagen of they're going to have to decide whether they want competition or not is absolutely
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out of line, unprofessional, and i was very, very surprised to hear that. >> bob, the harsh diagnosis that you just gave when it comes to vw's culture that led to this, is it curable? i mean, is it a fair question to say -- is it a fair question to ask whether this can last with the mounting legal damage? >> that is a fair question because you can construct a worst case scenario of mounting lawsuits and there's already hundreds and hundreds of lawsuits. debt, fines, buybacks, technical change to the cars, lost revenue because a lot of the obviously europe is 50% diesels. those sales are suffering quite a bit. so you could construct a scenario where they could lose between $50 billion and $80 billion take your pick. that's worst case. that would wipe out any automobile company.
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now, that's not going to happen. why? because i will tell you that the federal republic of germany is not going to permit volkswagen to go under. so before that happens, there will be some sort of solution. we don't know what that is. so the idea of volkswagen and all its subsidiary brands like audi, porsche. it's the core of germans -- it's the core of germany's industrialization. >> just to come back to the central point that you're making which is that vw's undoing was it was essentially my way or the highway, do it or you're fired. are you suggesting that that is different in the american car industry? because my experience of having emigrated to the united states is people are much more readily fired, they're much more fearful of their bosses, and bosses here are much more aggressive right
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or wrong with their staff compared to europe. >> i think exactly the opposite is true. correction, it it was the doctor. second correction. i wasn't chairman of gm. i was vice chairman. i don't want to say -- >> anyway, i interrupted you. complete your thought. sorry. >> i will say, no. i have found that germans are much more authoritarian. and don't forget that he is austrian and he is the grandson of the original who founded the company and who created the original beetle for adolph hitler. i mean, not that there's anything wrong with that, but volkswagen is the car company founded by an authoritarian leader. i've had a lot of interaction with the doctor where he
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recommended chrysler. get everybody into the room, make a change. and if they don't have it done, fire everybody. then tell them to have a nice day. and i said well, you know, i don't think that would work in the u.s. culture. he said, that's your problem. you're too soft. you don't want change. you don't like -- you would like change, but you don't want it. and i think this is -- i mean, bmw was a much more compliant culture where bosses actually listened to their subordinates. and certainly my experience in american companies is there's a great deal of -- not as much as there should be, but there's a great deal of give and take between leaders and subordinates. >> the time beats, sadly, bob. we should also mention you're swiss born, of course. >> i'm actually a european. >> yes. they're everywhere. nice to see you, bob. bob lutz there, former vice
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chairman of gm and cnbc contributor. >> thank you. did want to take a look at valeant once again. it's funny. i did our check less than an hour ago and it was down about 3%. now it's down 16%. that, of course, is a new recent low for the stock. it is down over 70% over the last three months. about 41% for the year because don't forget it did have a big move up. i can't really give you any specific news. there's a significant journal story today on bill ackman on all the things he'd been thinking and doing during the course of the decline that had taken place previous to this latest sharp decline. including thoughts he had about selling the entire position. but then his decision to actually buy more, trying to get the company to be more proactive in terms of speaking to the street, more communicative, more transparent. anyhow, beyond that, right now in the other fundamental reasons
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for this decline, but a decline it is nonetheless. a great significance and pain for many of those large shareholders which include value act. >> ugly chart, valeant. on the flip side, bitcoin has been soaring. higher over the past two months, up 70% in that time. everyone on this desk owes me an apology. what's behind the sudden spike? >> i don't think so. >> i don't either. >> don't even go there. >> when we come right back. (vo) what does the world run on?
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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. for all the confidence you need. td ameritrade. you got this.
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bitcoin has surged. as much as 50% this week interest is generating volatility again for the currency. there does seem to be disagreement as to exactly why. here to clear that up for us, the cofounder of bitcoin exchange coin base. welcome back. good to see you again, fred. >> thanks. good to see you as well. >> after going nowhere, the price of bitcoin all of a sudden surges. bam. past 500 bucks. there's some talk that it's demand from china, new
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regulations like the eu classifying it as a currency. why do you think you're seeing the sudden spike? >> yeah. that seems to be the professional story. it doesn't rally until it does. i'd say a couple things. the first is if you look at the underlying fundamentals, the volume on the network has doubled over the last year. i view this citizen a catch-up really to some of the underlying fundamentals. another thing i'd like at is the infrastructure in the system overall. actually where you're sitting right now, the new york stock exchange invested in us almost a year ago. we've launched a legitimate bitcoin. i think we can support the rallies. the third thing i would look at is you're right. china does seem to have led this rally. if you look quantitatively at it. trading at a 6% premium to u.s. exchanges. normally that's about flat. >> i guess -- >> the final thing is -- yeah,
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go ahead. >> i was just going to say, there are several reasons, several catalysts. the danger here is that it's creating a frenzy and people are very emotional about it and they see the price surging again. and we got another collapse like when it went above $1,000 to $200. isn't that a risk for investors who aren't as involved in building out a real infrastructure? >> yeah. it's certainly possible. to be honest, i think the technology has so much potential. you're going to get larger swings. if you look at it over time, though, the percentage of each of these bubbles, we had about three of them in the history of bitcoin now. in dollar terms they seem quite large. they've decreased each time. and so for better or for worse, it's an inevitable part of it like early internet stocks. we'll all be better off for it in the end. >> there was a note that
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circulated wall street from an analyst. buying for $23 billion saying we believe bitcoin and its associated blocking have the potential to disrupt the disrupting financial structure over the next several years. explain that. explain why it's on the cover last month. explain the block chain and the promise it delivers when it comes to disrupting the financial system and whether these -- this excitement is just a little bit overblown. >> yeah. i think long-term it's completely justified. short-term it's going to take us awhile to get there. the best way to describe it is bitcoin is doing for financial services and moving just funds around in general what the internet did for moving data around in general. it's creating an open network and a shared standard which allows people to build all sorts of open services that are globally accessible and near free to effectively everybody on the planet.
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so while short-term, i think it's going to take us quite a while to get there. i'm a strong believer in the network. >> forgive me, there's a big difference between the block chain technology that is being used and that wall street is fascinated in and they may use for other purposes and bitcoin itself. i have great difficulty that it is being presented here as some sort of access class or currency like anything else we would talk about on cnbc. people are trying to smuggle out of china, it is argued. there was fraud and embezzlement on that exchange. this is not a normal currency. this is not a normal asset. this is highly speculative and i think for many people should remain highly cautious. what do you think about what i think? >> i think you're talking about a couple different things. are respect to crazy things that have happened in the early bitcoin ecosystem, you can say
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the same thing about the internet. there were all sort of things that happened on the internet. there still are, the percentage of the overall network has become less and less. i think the same will be true of bitcoin over time. in terms of people getting themselves into something they don't understand, that's probably true. and i would tell people to use caution and only do what you feel comfortable with. >> thanks for joining us. in defense of bitcoin. >> thanks very much. when we come back, homeaway being bought by expedia for $3.9 billion. the ceos live first on cnbc after the break. at ally bank no branches equals great rates. it's a fact. kind of like shopping hungry equals overshopping.
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welcome back to "squawk on the street". just getting the weekly natural gas storage report. injection of 52 billion cubic feet. this is less than investors were expecting and not enough to make a record in storage right now. prices a little bit higher on this report trading at 2.31 before it came out. slightly higher now. starting to normalize a little bit. it's been a little bit warmer than usual. but calling for colder temperatures to come. the 50-day moving average, $2.51. that's a little bit of a resistant point to the upside. we were very close to the $2
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range not so long ago but traders don't expect if temperatures cooperate and go the way they're supposed to go seasonally, don't expect to see that happen. unless we see those stocks over the mark that we're looking for that record range that we haven't seen before. over to you with the business news updates. >> thank you so much, jackie. and here is your cnbc news update this hour. lufthansa suspending from sharm el sheikh in egypt. it comes as the first victim of saturday's crash was laid to rest today in northern russia. family and friends said their good-byes to 60-year-old nina luchenko during a church service. chinese president xi jingping over the territorial disputes in the south china sea. wmaq says veteran police officer gliniewicz and son are under investigation under the
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news the officer faked his murder and committed suicide to conceal he stole money from a police youth group. they have not been charged with any crime. elton john telling our colleagues in europe that he wants to open access to medication for people with hiv in countries that are prejudice against the lesbian and gay community. he is looking forward to meeting president putin a the russian leader extended an olive branch to him a short time ago. that is your cnbc news update at this hour. simon, back to you. >> oh, to be a fly on the wall of that meeting. >> absolutely. we'll keep you posted. >> thank you. meanwhile, expedia is paying nearly $4 billion to better compete with airbnb. they're buying homeaway which allows users to arrange vacation rentals. from austin, texas, where they're based we're joined now by dara khosrowshahi and brian sharples. gentlemen, welcome to the
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network. nice to see you both. >> thanks for having us. >> good morning. >> let me kick off. i just want to come back up a bit from the deal itself. brian, we initially booked you today to talk about your earnings, not in the knowledge that expedia would announce the takeover last night. a and the reason we did that was you were changing the business. becoming much more aggressive in making people transact online. you put in christmas or the new year everybody had to shift and beginning to charge a fee in a different way. can you just tell us the extent to which you believe you're catching up on airbnb? >> we still operate in a fairly different space than airbnb. homeaway is the second leader in home vacation rentals where airbnb focuses on apartments in urban markets. but when airbnb launched their company, it was a fully online transactional marketplace very much like the ota companies that
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dara currently runs. our marketplace has been going through a big transition. the the old days many rental owners did things on pieces of paper. then moved to advertising. and now we're going through a big transition to turn our marketplace into an e-commerce enabled market place. yes, we did talk to our owners about a deadline at the end of 2014. we said by the end of 2016, everything on our platform would be bookable. about 56% of the properties are today. and it's going to create a better experience for consumers and it's going to take a lot of friction out of the process of renting vacation homes. >> dara, how did this deal come about? and what are you really after here? traditionally i'm assuming further down the line you'll integrate them to your technology platform. are you really interested in the
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inventory here? >> yeah, we're interested in the substantial inventory that homeaway brings. it's a lot of the inventory that's unique, alternative accommodations is a $100 billion category. and we thought that this journey that homeaway had started on as far as going from a listings model to transactions model, it's the journey we've been on. we thought the companies together could move together, be more effective. the inventory for me was the first thing. it's a good combination of the two companies. >> to the platform question, they're fairly different businesses with different business models. so i don't think it's fair to say that homeaway will be moving onto the expedia technology platform. >> that's right. >> okay. brian, i'm -- just before we talk about the deal getting past regulators and the normal stuff, i'm interested, brian, as to whether you felt you needed to exit.
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this is not a new business. i think you founded it over ten years ago. you celebrated that earlier in the year. one of your cofounders retired as ceo this year. i wonder if there's a desire to say, look, this thing is changing so fast. if we're going to capture airbnb. i've done my ten years. in a sense, you need to hand on that extreme amount of effort to somebody else? >> no, it wasn't about that. it was about the fact that what you alluded to earlier is that the business is going through a big transition. and 2016 is going to be a huge year for us. if this hadn't happened, i was going to announce on this show and we would have talked about last night that we are shifting to a model where we are going to start charging owners and travelers. and that's going to create a lot more revenue for the company. it's going to make us a lot more competitive. it's going to give us more cash for marketing, more cash for
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making our products and services better. but it is a big transition. transitions don't come without some pain. some of our owners may not like the fact that we're introducing a traveler fee. one thing that is important to us is to create more uncertainty there. and expedia helps us do that for a couple of reasons. number one, our customers are now waking up and realizing that there's going to be distribution not just on homeaway, but also expedia, travelocity, orbitz, travago. they have sites that will create distribution for our customers. so that helps lower risk for us. the second is as we move to the bookings-based business, conversion expertise is everything. even very small changes in our ability to convert traffic into bookings will create huge swings in our financial results. well, these guys have been in a bookings business -- that is their business.
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it's a pretty new muscle for us. we thought this deal would help us leverage that. really the deal is about just more certainty around the strategy we're trying to execute. >> dara, i'm worried how you're thinking of the regulatory risk here. we saw airbnb have a battle in san francisco it prevailed in. do you have to take into consideration that these new business models are totally changing the industry and as a result the hotel industry is upset and the regulators are pushing back. >> that's certainly a consideration that we took as a factor when we looked at the deal. homeaway is areas that aren't as much controversy. these are areas where people have come in. it's not really focused on renting out your primary home. so we think that the regulatory environment is more friendly in the areas that homeaway operates. but it's certainly something we took into account. the industry is going through a lot of change. and obviously will work with
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regulators to move through that change or move through that shift online in the right way. >> i noticed that you signed a confidentiality agreement or the two companies did, i think, on the 18th of september. the deal's seemed to come together quickly. did you survey the marketplace? did you get a sense given you're selling your company, of course, as to whether there was other interests and did you go with what you believed would be the highest offer? >> yeah, so we're not -- we will be filing a proxy to get shareholder approval. and there's some filings in there that will, you know, outline some of how this deal came about. i guess we do feel very confident that we've gotten the best price for the shareholders. >> why? >> and have certainly done that work. >> why do you feel confident? >> until we file documents that talk about that, we're not going to discuss it. >> okay. dara, let me ask you about google. the elephant in the room really
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should be in all our conversations is what is happening with google. it's been around for some time as far as hotels are concerned. it's really beginning to get its act together. it's obviously incentivizing smaller hotels to come online and charge them in a different way. i did a google search for flights which i confess i'd not done before. the speed at which google returns options in pulling all the data together is extraordinary. where are you now on your feelings about google and the degree to which you hold it in check by virtue of the huge budgets you already spend with it? >> listen, i don't think you can ever hold google in check one way or the other. you just have to move faster than the industry and competition. to some extent google is a great partner of ours. we advertise aggressively on
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google and get a lot of business from them. at the same time you've got to stay competitive with them. we're very confident with the innovation we're driving, the investments we're making in technology, we can be more than competitive with google. you've seen with the volumes, growth records. we're growing and google can grow. this is a trillion-dollar industry so we think there can be a lot of winners. we do have to be on our toes and investing to win. >> it's great to see you both. thank you, both. dara khosrowshahi and brian sharples, thank you. up next, the new fashion line at h & m that have people lining up outside the stores 24 hours in advance. "squawk on the street" will be right back.
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check out what's happening with the discretionary sector today. the fifth best performer in the s&p 500. you can see right there financials only one in the green today. leading today's gains, ralph lauren up by about 16% in early trading. hit a 3.5-month high earlier following a big second quarter beat. other leaders include pvh, michael kors, and amazon. it's also worth noting here that the stocks are still the best performers in terms of sectors on a year to date basis. still strong as we head into what could be a stronger holiday shopping season. back over to you guys.
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>> of course. thanks, tom. speaking of shopping, huge lines outside h & m could only mean one thing. the release of the balmain line. courtney reagan has more. >> that's right. the demand for balmain by h & m has taken down the website. these people in line have waited more than 24 hours to go in and shop the collection. they'll get that chance. they only get about 15 minutes to shop. we asked if they had stress tested the company's website ahead of today's release. here's what he had to say. >> we have tested as much as you can. you never know. you have one store and never know how many are going to come in. we learned over the years what we need to do to make sure it can manage the kind of volume.
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when we have done as much as we can, we can never secure everything. >> now, these collections never move the financial needle for a retailer the size of h & m. it's really about the buzz and brand awareness it builds. something it's been building for months. because this collection has been teasing since the early spring when some of the fashions appeared on celebrities like kendall jenner. >> a lot of hype. thank you very much. up next, marco rubio gaining ground in the polls. we'll talk to cory gardner who just endorsed rubio. "squawk on the street" will be right back.
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>> behind dr. ben carson and donald trump when averaging all recent national polls. a closer look at early stage shows similar trends. the university poll out of new hampshire shows rubio's support tripling since september, and joining us now from washington a backer, colorado republican senator cory gardener who this
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week threw his support behind rubio for the presidential bid. welcome to you, senator. >> thanks for having me. >> isn't it a little early to back rubio before the party actually has a presidential candidate and while carson and trump are still dominating the polls? >> for the past several months i've been talking about the kind of republican that i believe will ultimately be successful, not only as our -- to receive the nominee for our party, but also to win the general election against what is the inevitable hillary clinton nomination. a new generation leader that will accountable to the next generation. >> do you really think he can beat hillary clinton when it oomz down to it? her support is surging. she's closing the gap with bernie sanders. with all the clinton political machine that it is and the support of the democratic party. >> i think you have an incredible tough challenge in hillary clinton. look at what they're talking about. at their debates they're talking about how they can further out left each other. they're talking about how much further and deeper into socialism they can move this
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country. marco rubio's campaign is about freedom and opportunity. it's about a new american century. it's about unleashing the power of individuals. hillary clinton believes that uber is part of the problem in this country. hillary clinton believes that the problems the v.a. hospitals have faced around the country are made up. that's not the kind of leader we need. we need somebody who understands the future. we need somebody who understands the plight of everyday americans today and marco rubio is that candidate. zurp the first senator to get behind him. you could be a running mate. colorado is a swing state. it is closely won by obama back in 2012. is that something you are thinking about? >> i just want marco rubio to be president of the united states. i'm having the best, most incredible experience representing the people of colorado. the best thing that can happen in this country is for marco rubio to defeat hillary clinton in 2016. >> i do want to move on from the presidential race right now and ask you about the topic in the news. you are on the senate foreign relations committee. you often talk about the u.s.
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strategy in syria. nbc news reporting there's significant evidence that a bomb was brought -- that a bomb brought down that russian jet over the sinai peninsula last weekend. nothing has been absolutely confirmed, but they were sourcing u.s. officials. do you believe that isis is to blame here? >> look, we don't have the best look in terms of intel into what took place over the sinai peninsula, and there have been reports possible suitcase bomb or perhaps even somebody at the airport that was a part of this. what we do know is this. there is a common enemy in syria, and that is radical islamic jihadist terrorists. the government has targeted rebels. 58% to 90% according to testimony before the united states senate of russia's targets in their strikes in syria have been against not isis, but against rebel who's are also targeting isis. that's an unacceptable outcome, and that's what happens. terrorism knows no borders or
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boundary, and russia has experienced that through a great and terrible tragedy. >> before we let you go, just to return to the subject of rubio, where do you think he found it so difficult initially to raise money? obviously now he rises in the polls. presumably that money flows to him. that's the nature of the game. why do you think originally it was so difficult for him to do that? what was the big money that he was making that's gone wrong? >> well, look, i think we've got a dozen candidates still in the race. it's going to be a challenge as each candidate has appealed to donors around the country and i think you'll see more and more people solidified behind marco rubio as he gains momentum. one of the things that we have on the republican side is an embarrassment of riches. the fact that we have so many good and talented nominees, potential nominees, speaks volumes for the diversity of the republican party. the fact that we have such a business tent and that we can have discussions about the direction of the party really bodes well for the future of this nation. ultimately marco rube wroe will
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be our nominee. he will go on to beat hillary clinton, and i think this country's best days are indeed ahead of us because of it. >> it has been unpredictable and unfarable for the establishment candidates. in particular, scott walker was the presumed nominee, and then the race happened, and then jeb bush was the one that everyone had their eye on. why will marco rubio be different and why does the party keep under estimating the outsiders like trump and carson? >> i don't think by now anybody is underestimating donald trump or ben carson or anybody else for that matter. they're an incredible group of people who are doing an excellent job of campaigning each and every one of them. they're going to look at the plans and platforms of each candidate. they'll ultimately decide that the best people that can lead this country forward is marco rube wroe. there are plenty of people in this race. hillary clinton understands the politics of the past very, very well. only one candidate understands the politics of the future -- policies of the future, and that's marco rubio.
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>> senator, we have to leave it there. thanks for joining us from capitol hill this morning. cory gardener, republican senator from colorado. >> let's find out what's coming up on "squawk alley" with mr. john fort. good morning, john. >> good morning, simon. well, we're going to dig into facebook. an amazing corner on every metric. what does it mean for the whole group of stocks that are trying to chase facebook down? also, we're going to have the ceo of go daddy. their stock is up sharply this morning after surprisingly good results, and the nfl's larry fitzgerald on the future of streaming, the nfl, and more all coming up on "squawk alley where are" 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.
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. good morning. it is 8:00 a.m. at facebook headquarters in menlo park, california. it's 11:00 a.m. on wall street, and squawk alley is live. ♪


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