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tv   Squawk Alley  CNBC  November 6, 2015 11:00am-12:01pm EST

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>> the game here is all about seeing if they could extend this path to the obama administration and maybe get a more sympathetic administration in after the 2016 elections. the obama administration signalling early this week that it would not pause. it would, in fact, move ahead with that decision making process. now the president and the administration ready to reject the keystone pipeline. that is sourced dow jones ace sources, and we have not been able to independently -- >> thank you for that. >> s&p back. keystone the headline right now, but following the jobs number earlier today it is 8:00 a.m. at square headquarters in san
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grifk. it's 11:00 a.m. on wall street, and squawk oolly" is live. ♪ welcome to "squawk alley." josh steinberg. kayla is here as always. john enswroig a friday off. got the jobs number. got keystone. then we got square. first trade before thanksgiving, but perhaps what's most surprising is the valuation for square which came out very early this morning. the price range of $11 to $13
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has an implied valuation of up to $4.2 billion. that compares to the previous private round valuation of $6 billion. clearly, the company is trying to sell itself as a value play in a market that has been increasingly, increasingly difficult for newly issued shares to find investors once burned, twice shy. they are trying to give them something to buy here. >> absolutely. i mean, they're putting the house on the market cheap, and they're hoping that it goes for above asking, which i think is a very smart move, right? remember, that last financing round had a 20% rachet. it was a kwauz wry-debt instrument. it wasn't pure equity. those investors paid a high price because they got 20% additional shares if it didn't ipo above that price. it's very smart. it actually moved up, and i think if they don't have a situation that they get into a debt spiral. >> there's a situation, though, where -- increasing the price
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range for this deal. we would hope demand is such that you do end up getting -- would that send a bad signal to the market? >> i don't think they're actually able to do that. my guess is if they -- remember, jack dorsey is the opposite of greedy, right? mile an hour gut is he wants the company and the momentum and the employee options to move up over time. he doesn't want people to get struck at prices. they totally demoralize the team. he wants a company to be successful. you know what, in a year if they're at a price they like, they'll do another offering. they'll raise more primary capital. i think he is being the opposite of greedy. >> the lower valuation. apple on your tail. you got losses accelerating. you got a relationship with starbucks that didn't pan out the way you thought. isn't that enough to build a pessimistic case on square. >> that's why they're going to price it cheap and take that
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into account, and the price is beaten down. >> it's still high growth. the top line is growing enormously fast, and ultimately, just like gross merchandise value for all bab bauba or amazon, that's -- >> what's noting the quality of the board of directors too. you have the former cfo of goldman sachs. you have larry summers, the former treasury secretary. you have mary meeker, the analyst venture capitalist. the list goes on and on. >> don't forget magic johnson. >>. >> let the company get currency to be able to do that as well, rett it rationalize at a price where it can be a long-term company. >> twitter is down more than 1% today on that news. >> has had trouble getting out of the high 20s. that's for sure. next up, disney out with a mixed quarter. earnings beating estimates. pretty strong quarter for the tv business. three months after the segment
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was an area of concern. bob addressed quarter and also some of the aemgs for the star wars film next month in an interview with closing bell yesterday. >> we kajtd believe. we're thrilled with the reaction so far to the trailers we've had in the marketplace. can't give away any of the mro right now. we have to be careful about that because there are so many moments in this film that are so exciting and thrilling we want people to experience them for the first time when they go to the movies. >> we talk more about disney's michael morris. good morning to you. >> good morning. >> you talk about everything in this quarter going pretty well, but you do say that valuation is a concern. am i right? >> absolutely. absolutely. it's one of the biggest debates on arguably the most debated stock in the media space right now. it's been a source of a lot of concern for investors. >> big premium to the s&p. your point is that -- correct he me if i'm wrong, that no one is
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going to et to get in front of star wars with a heavy bear case, so the next six weeks might be relatively clear sailing. what do you think happens after that? >> that really is the key question. i think this is a tale of two companies really. you have a consumers product business. a lot of enthusiasm and a certain mentality that the sky is the limit for the value on that side of the business. you have a media business that's facing challenges as the rest much the industry is. i think what i would like to see is a constructive view from the company on how to take espn directly to consumers. without that, i have to really take into account that bear case on the wreed business. >> how do we see espn play out? it did well this quarter. perhaps that's because of the sec network and the craze over college football, but also you have the company laying off 300 people, so there seem to be a
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few mixed messages here. how does this play out over the next few quarters? >>. >> i think you have a business that made a lot of investments in sports, and very large investments in sports rights in a world before we saw the extent of subscriber declines in the pay tv universe. i think the playoffs are really a reaction to right size the cost structure of the business for the new trajectory of the media industry. >> kayla, this is really the point. disney makes content that people are always going to want to love and want to buy. no one loves the company more than -- tv is over. it's over. it's only a matter of time. it's a question of what is the expiration? you can keep sniffing it. jason has a charity out.
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he says the market is moving away from print faster than we expected. faster than you expected? obviously, print is going away, right? i think that people need to go forward strategy on how they're going to get these products directly to people's hands when millenials are not buying cable and people are cutting and people are core networking. >> michael. >> there's certainly a buzz in the marketplace both from the media companies and our context on the ad buying side that scatters very healthy. you see two dynamics here. one, less inventory was purchased up front, which means there's more demand inherently. second, i do think that these daily fantasy sports businesses have really helped soak up some extra demand and drive pricing power for the network.
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>> target goes to 114 from 112. that's 20 times 16. 570. do you expect to revise that after star wars' open? is it a lot of this going to be contingent on the opening weekend, on reviews? anything like that? >> tazz pertains to me, no. that's not what i'm waiting for. this is a case of we received -- it was positive relative to concerns, but it didn't really take the story to another leg in terms of valuation in our opinion. i think that over the next several weeks we'll be doing our work and decide whering we think investors should be placing their assets, and i'm not sure which way we're going to go on that, but we will be doing some diligence on that and deciding where to go. >> some optionality regard this
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release. thank you. michael morris from guggenheim talking disney. our thanks to you. former imagineer. >> nbc news confirming the obama administration will reject the keystone pipeline. let's get to jackie deangeles at the nymex looking at how this has impacted the move in oil today. jackie. >> hi, good morning to you, kayla. we are seeing a little down side pressure in oil prices this morning. traders telling me that that is mostly because of what we saw out of the unemployment report this morning. that's sending the dollar index over 99 pushing oil down. >> keystone has become less of a hot button issue in this country as oil prices have declined. we don't necessarily need the canadian oil as badly as we did before as our production now is ramping up. trans-canada on a conference
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call just the other day said that this was not politically motivated, the fact that it asked for delay of the decision. also pointed out the fact that oil prices are where they were when it first made the request on keystone many years ago. we need to look at the long-term strategy here of how to transport oil and transport it not just across state lines, but international lines as well. having said that, you know, this will be interesting to hear what the administration has to say, if there's an appeal process. the final word, you know, and the buck stops here when it comes to keystone, but as i said, not really having a huge impact on oil prices right now. i would suspect this probably is going to be a little bit of a boost for the domestic companies that are expanding pipelines as i mentioned. those are definitely some stocks to watch.
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>> what does square's lower ipo value mean? plus, we have the beat on jobs this morning. does it set up a december rate hike? we'll talk to jim paulson and deutsche. that news on ski stone being rejected today. we'll hear from the president coming up later on this hour. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running. (vo) wit runs on optimism.un on? it's what sparks ideas.
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>> pipeline proposal this morning. 30 minutes at 11:45 eastern time. brian sullivan will anchor a special series of interviews live from texas. kyle bass, kelsey warren, energy transfer partner ceo and, of course, a little mark cuban for good measure. that all begins at noon eastern time. sflo quite a day to have all of those people there. meanwhile, let's look at the markets which are digesting an exceptionally strong u.s. swrobz report out this morning. >> reporting a blow-out jobs number. 271,000 for october. is the trend likely to continue? chief u.s. economist at deutsch bank and jim paulson, chief strategist at wells fargo capital management. great to have you. let's start with you.
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everyone is calling this pristine, perfect, textbook. it seems like it's putting a lot of pressure on. >> it's a great report, there's no question. the reason why i don't believe it's likely to continue is simply put, swrob growth typically slows when you get to 5% unemployment. it doesn't accelerate because you are running out of people. it's more likely that the wage number we saw today would show a decent acceleration. that's more likely. that continues. then we continue at 271 a month. this is basically the same pace as last year when we generated 3.2 million jobs, which was the best year since 1999. the pace will slow. the issue is how much does it slow, and what happens with wages? the bopd market has been right on this issue. have you the ten-year above q3, and you have it added to the five-year. is the bobbed market telling us december is the date?
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>> particularly a two-year blowing up towards 1%. it's telling us we're going to get a liftoff here. i think joe's -- what he is really talking about is if job creation slows a little bit and the nominal components, wages and price inflation pick up a little bit, that smells a little like stagflation to me as a result of reaching fall employment, and that's going to be a challenge for the financial markets. certainly bond as we see today. i think stocks as well. you know, the catalyst to this big rally off the lows in september was bad news was good as we pushed back tightening, and now we got good news. the question is we'll find out over the weeks ahead is this good for stock market? i think it's going to be a struggle if you start attacking profit margins and raising interest rates and inflation which challenge the valuation level of the stock market. >> jim makes a good point. if you take the gdp profits and take them as share of private
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employment, we've peaked. it is the seventh year. it's hashed to think this thing will go another 7. i don't think there's a recession around the corner, but to jim's point, if we get further margin pressure, rates are hire, fed has less -- let's face it. the fed is the only central bank that's now likely to raise rates. carney was very dovish yesterday. does the dollar reassert itself? that's a head wind. do the markets swoon between now and december. everybody is on board. it's definitely december. it's a lot of time between now and then. let's not get carried away. >> you have been cautious for, what, i would say at least six months, right? >> yes. >> on equities? >> i have been, wrau, carl. i just think -- go ahead. >> you are going to say, so what is your preferred path? i mean, if you stay within stocks, do you avoid housing because of rates? of is there to go? >> i think one thing that's very unique about this cycle is many
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things, but one big thing is the u.s. is almost a unique position in the world in regards to this economic cycle. we're one of the few, if only, economies at full employment as joe said, everyone else is still pushing upward on their policies. >> i get away from the united states and figure out what evaluation is good in a full employed economy. go to jurp, japan, go to the emother-in-lawinging world that are in very, very different places. good growth on the economy is nothing but good for those stock markets overseas. i think i have exposure in energies and i would be more inclined towards the industrial part looking for consumer stocks, towards industrials, capital goods, which includes technology, and, of course, the energy and materials. >> joe, do you agree that we're in a point where yields and stocks here in the u.s. can't rise at the same time? >> they ---ing but to jim's point so well taken, and i think back again to 1997, 1998 where
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the u.s. is the best performing economy among many of the developed economies. yet, back then growth was well over 4%. it was broad based. not just the consumer as it is today. rates fell dramatically. yes, the u.s. is the best relative performer, but we also have to be worried that, hey, look, the u.s. could have a growth slowdown here because there's not a lot of cushion between the 2% gdp we have and zero. >>. >> are the viewers -- i can't not ask you who you are wearing. >> this is my uncle's clothing store. he is a good man. ask for jimmy sinatello. >> all people want to talk about. they didn't hear a word we said about stocks or the economy. that's a beautiful coat. >> thank you. thank you. >> joe from deutsche and jim paulson from wells fargo. >> up next, the president set to deliver remarks on the administration's rejection of the keystone pipeline. that's coming in just about a half hour's time. plus, the markets about to close in europe. that's coming up after this break. squawk alley will be right back.
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>> obama administration planning on rejecting the keystone pipeline. we want to bring in the senior energy analyst over at oppin him and company. it's good to talk to you. >> it's been, you know, for a while that the us is going to block it and will be sending prison office for four, five wreerz, six wreerz. it's only a matter of if, not when. now we know that it's going to be rejected, and i don't think it is good advice. i don't think the president got good add introduce. i think he is basically, you
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know, doing things that appears all the environmentalists and the people are taking it to the left. i think it's better best for the u.s. i think it's best for canada. i think going with the pipeline would have created jobs. also, replacing the oil we import from elsewhere. canada is our best ally, our neighbor, our economies are intertwined. >> behind the decision to block the xl pipeline. >> prop enents say it would create jobs that it would stimulate parts of the country, but do you think that this strength of the economy makes this less relevant a project to start now? i mean, it's coming on a jobs
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friday where we saw 271,000 jobs created in october. you have to wonder if the economy on its own without the keystone xl pipeline is good enough. >> well, again, the decision -- once you bring politics into the mix, you end up with very distorted picture. if you put independent panel and look at their pipeline, this is one of the better projects that we have right now. as i said before, it brings 850,000 oil which is more than 10% of what we import from the rest of the world from canada. the most trusted and long-term supplier. other members of opec, which is very volatile and unpredictable. once we have the pipeline, it is
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basically a continuation of the north american market. it's almost one market, and it makes a lot of sense. the decision to block that pipeline, i don't think, it's the interest of the u.s. >> in the end, fidel, do you think this is about the environmental protests that you refer to. is it about supply in the u.s., or is it about canada's influence in washington or some mixture of the three? >> absolutely this is all environmental and politics. it has nothing to do. it doesn't make any economic sense to block a pipeline that will create enormous amount of wealth to certain areas of the country, for canada. it will create jobs. it will increase our energy security. we import oil from trusted and dependable friend like canada. i don't see anything that in my
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view would support the president's decision to basically drop the xl pipeline. listening to the wrong team with the wrong motivation, it's a knee jerk reaction to all the environmental action that you are seeing right now. i don't think it's in the long-term interest of the u.s. >> finally, fidel, while i have you here, just on the slightly different topic, a lot of discussion this week about exxon and a would-be something with hess, and then the story, last night, about the new york attorney general. do you have any thoughts on those two? >> i have been in the industry more than 30 years, and i have been hearing rumors for the last 30 years, but it is always bridesmaid but never the bride, so i am not -- >> fidel, thank you forcoming to the phone so quickly. breaking news. fadel gheit from oppenheim and company. we hilary clintons of
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course, a blow-out jobs figure here in the united states. it's actually dragged european equities further into positive territory in an environment, of course, where you are still talking about whether the european central bank at the beginning of december will double down on qe. today the data that we got out of germany, the industrial production data, let somewhere p morgan to downgrade its estimate of what we'll get on german gdp next week. the ecb and the fed even more clearly potentially moving in opposite directions. exactly what the ecb wants to see because it affects the your wroe. if you look at where the euro has traded in the last three weeks, you'll see it has lost -- about 6% in just those three weeks. that's a huge shift in the techtonic plates. you see some of the big, big banks like stock gen, pnb rising through the session, and these banks that are exposed to central and eastern wrurp in
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particular partly on results. on the done side today richemomt that owns cartier, it is going to have a halleninging environment. this appears to be centered around what's happening with watch sales particularly in, for example, hong kong, which is why you see other stocks further into negative territory. swauch clearly lvmh from similar reasons. also, the head of cartier, the guy that's running cartier is also leaving for personal reasons. that's adding to the down side. on the up side today, you see igh intercontinental hotel e hotels. up 6%. there is a report out there that they are now in play in the same way starwood is in play. we kind of knew that was the case because originally it was going to be a starwood igh combination as a tax inversion. almost two years ago. remember that? that stock is higher. then you see the airlines higher in europe. don't forget it's the youro falls, if you are a chinese traveller, a european holiday becomes so much cheaper than anywhere else.
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guys, back to you. >> simon, thank you very much for that. simon hobbs. when we come back, the president set to speak on the keystone decision in about 15 minutes. meantime, as square sets its ipo range hfd the road show next week, the one and only kara swisher will join us next. or the freedom to choose what doctor you want to see. so if you have medicare parts a and b, consider an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, these let you choose any doctor who accepts medicare patients. you're not stuck in a network, because there aren't any. plus, these plans help cover some of the part b medical expenses medicare doesn't pay. so why wait? call now to request your free decision guide and find the aarp medicare supplement plan that works for you. like all medicare supplement plans, you'll be able to stay with the doctor or specialist you trust, or look for someone new -
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>> i'm morgan brennan. here's your news update at this hour. the obama administration will reject the keystone pipeline
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capping a politically charged of the oil project that lasted more than seven years. the president is expected to cite the urgency of climate change as the reason why. he will make a statement at 11:45 a.m. eastern which cnbc will take live. the preside use the night rate -- could explode with excessive force. more people are sick with e. coli. health officials now say 40 people have been sick mostly in seattle and portland areas. >> six years blatantly cheated on final file exams and the administration is trying to cover it up. this from a detailed article which covers -- that's the update for this hour. back over to squawk alley. >> thank you very much, morgan. square, as you probably know
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by now, saying it expects to price its ipo between $11 and $13. a range that undercuts the company's most recent $6 billion valuation. joining us this morning kara swisher, the executive editor at re-code. good to see you again. >> good morning. how are you doing? >> i can't imagine you were surprised by this. >> he was just texting with our reporters. this is a super challenging company with kind of bad medicine ricks and a half a ceo. i mean, they've got a real identify here going into the public markets. there's a whole lot of hair balls attached to it with paybacks to starbucks, with rachets, all kinds of things. that's a tough idea. >> we asked the question rhetorically, why go public now? some executives at the bank have said companies at a certain point just need capital and the public market is the most attractive place to get it, but when you see in the filing that
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they sold $30 million of stock just last month, it is a little bit of a head scratcher. i'm wonder whatting you make of the company's capital structure and why they would make a decision to go public in this market at that valuation. >> well, they had to make some guarantees to investors in the last round, right? they had to make sure it went out at a much higher price than they're going out now, and probably money is getting a little harder to get. now, of course, they can get money and there's lots of investor interest in a very promising technology, by the way. i see it used all over the place, and so the question is how can they make money from it? is how can had he grow bigger and scale? i suspect the public offering is where they think the best chance of doing that is. >> we loved your re/code decode this week talking about a lot of what you have written in the ft. when you put that together with this and a couple of other things that have happened in recent weeks, can we begin to argue that tide has turned in the valley so to speak? >> yeah. i think mike, a very well known venture capitalist has had a lot
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of success. there are good unicorns and bad ones, essentially, and you are going to see a lot of the shake-out, and that's what he was talking about. the idea that, you know, some of these companies are -- i wouldn't say just -- are just not all there. some of them are very significant. the question is how investors pick very carefully between them. you know, most of them are still pure potential and a lot of them are incredibly promising. you know, the numbers don't lie here. this money -- square, for example, is losing money, and quite a bit, and it's accelerating losses. the revenues are strong, but at the same time they're not enormous, and so the we is what's going to happen once they get a lot of scrutiny of public investors, and that's a tougher road for them. >> we raised an eyebrow at cash burn and accelerating cash burn many some of these companies for quite some time now, but it was always excused because the revenues were growing so quickly and they were going to continue growing so quickly that it was
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unstoppable. now we're actually hearing from investors that revenues are starting to come in and that's why you are seeing investors mark down some of these positions. what's behind the slowdown in revenues at a time when a lot of these companies we're satisfying it was years before that would happen? >> well, i think, you know, some of the companies are going into markets that are really tough. you know, uber going into china, they'll see great revenue, but lots of costs. that's why they girded up with so much money and have been raising so much money. they need that cash to grow. there's ranges and ranges of companies that have a lot of cash in the bank and at the same time find it harder and hardtory see growth. i can think of, you know, half a dozen companies doing that. again, that said, it's not that their businesses aren't promising. it just takes while to get there. the markets are softer. there's more competition. you need to go abroad. you know, these are really tough business problems. they get over-hyped and then they hit the reality. i wonder how this cascades to other companies. you know, you think of a company like stripe, which is valued at
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$5 billion. it's a cascade, i think, in a way that investors are going to have to think hard about. >> yes. then you have. >> is the prevailing view any stretch? >> yes, i think there's a great sort of -- i think overall conceptually and general and in 20 years. he is 100% right. i think the question is how bumpy is going to be in that interim period. there's no question that the sharing economy will be huge and no question companies like --
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there's transportation changes happening, for example, and that sector or in the finance sector is not going to be disrupted. there's no question about any of this thing, and it's a question of when and how and who will get there long the way. it's a longer term viewpoint. >> coming up, two huge retail movers. both stocks downore than 40%. plus, the president is set to speak in just a few minutes from the white house. the keystone rejection already rippling through the markets. first, rick santelli. what are you watching today? >> of course, we talk about the jobs report. one part of it actually two parts, i found, fascinating. average hourly earnings both month over month and we're over we're moved higher. a good thing we can all agree on. one thing i found that nobody really talked about enough -- it's probably the real
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unemployment rate. the good news there too. we're digging deeper after the break.
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>> coming up today we are trading that blow-out jobs report and what it means for the fed and your money. an all-star cast joijs today. plus, as chipolte shares hit a 52-week low, our desk battles it out over the stock's next move, and bond buys. the bond market is the new 007 movie debuts. we tell you how you can own a
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pricey piece of the iconic brand. carl, send it back to you. we're waiting on the president, and we'll be talking more about keystone and the ramifications for the oil market as well as you guys. sfroo hi, carl. it was a good jobs report. my guess was over 100,000 off. i'm usual closer than that. i thought maybe this was a trend that ended up being mean reversion so, you take today's 271 and at last you're at 1le 7. as we're at 259. you know most of that. let's talk about jobs. we have the president coming out right after i'm done, and he will kill the keystone pipeline. in that i find iron where i. what is one of the most common
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neems whenever you talk jobs with democrats or people in power? especially in the current administration? infrastructure. infrastructure brings jobs. that's what you hear. okay? what is keystone? it's an infrastructure project. the president is going to say, oh, there's not many jobs and they're temporary. that's at least my opinion on what to expect. name me one infrastructure job that's permanent. you build a road. you finish it. you build the hoover dam. you finish it. you build a new electric grid. you finish it. by the deaf mission of fran structure, you build something for public use that makes our lives better, and then you move on. just like keystone. frarking makes it less important. the real important issue for jobs is exporting energy and there's going to be a future administration that will make the same decision we made many years ago about grains, agriculture. you wonder why we say nonfarm productivity? because all the same worries at
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one point were about if we have enough grains or food? pritsz are going to go crazy. what ended up happening is a productivity bonanza. we have to separate out anything about that aspect because it would so pole out trying to handicap what's left for the manufacturing and service sectors of the economy on productivity. my last point, ben bernanke, his book, a lot of regulations are the problem here. we're doing the best we can. okay. well, i think that's one of the reasons they may tighten because fed policies of the past, current zero interest rate policies, they can't change dodd frank. they can't change regulations. if regulations are taking the animal spirits out, it's taking the growth and the pricing out on inflation. the policies aren't going to get at inflation until you get the real transmission line fixed on regulation. kayla, back to you. >> all right. thank you very much, rick. we are going to try to sneak in
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a break here. we do expect to see the president on the other side, and we do expect him to address this decision on keystone. back in a moment.
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>> president about to deliver the statement. let's get to eamon javers. >> we expect to hear from the president here in just a couple of minutes. it's that the administration is set to rejenkt the keystone xl pipeline. this has been a multi-year battle, and obviously caught up in all sorts of politics about environmentalism and about jobs, about oil in this country and around the world.
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we saw hillary clinton come out against the keystone xl pipeline back in september, but it hasn't been until today that we're getting this official announcement now from the obama administration. part of the reason why this was drawn out was the state department had to be involved in ultimately deciding on the permitting process here. we saw the company involved heerl transcanada ask the united states government to postpone its decision making process. that the u.s. signalled wrerl this week was not going to happen. they were going to go through with it nonetheless. transcanada, it would appear, wanted to get this, punted into the next presidential administration after 2016. obviously if it we hear the president come out and say what we expect him to say, that's not going to happen. carl, i'll give you two numbers here that help you understand the political context in which this is happening. the first is 271,000. that is the jobs created last month as report by the department of labor this morning. that was a blockbuster jobs report. that helps blunt the argument that the pipeline is needed to create jobs as far as the
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administration is concerned. the other one is $2.22. that's the average price of gas according to triple-a right now. that also helps blunt some of the argument this is needed in order to overall lower gas prices. the administration will feel here that they are on solid ground in rejecting this politically, but we're already getting statements from some of the candidates out there on the campaign trail on the republican side, including jeb bush who just put out a statement within the past couple of minutes. jeb bush saying the obama administration's politically motivated rejection of the keystone xl pipeline is a self-inflicted attack on the u.s. economy and jobs, carl. >> indeed, eamon. of course, you have a change in leadership in canada, which is a big part of the story. we have the climate change summit coming up in december in europe. that's a big part of the story. i mean, everyone is going to be viewing this through a political lens no matter what the president says. >> there are a lot of moving pieces here both domestic
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domestically and internationally. you wonder in retrospect when people look back at this, whether trans-canada could have done anything else to get this pipeline deal done. were there steps that that country could have taken to make this happen, or was this a nonstart i given that the obama administration is in office at least next year. >> we'll take a quick break, and we expect to see the president momentarily. back in just a moment.
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>> that's a live shot of the -- the president is expected to reject the pipeline proposal as soon as he takes the electric turn. we'll bring it to you. >> two big retail movers in the market today as we get closer to that all-important holiday shopping season. courtney reagan in our one market bureau in san francisco with more. these are some pretty steep drops. >> very steep drops. two very different retailers, though. similar stock moves today. shares of men's warehouse plunging. down more than 40% after issuing preliminary q3 results and updating guidance. the trouble steps in joseph a bank.
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>> it's 5 25% from the current quarter. as a result, the retailer issuing a warning that total company earnings will also fall well short of prior estimates. costco, men's warehouse, and png stores increased. not enough to offset the -- doug ewert says it expected sales volatility from ending the promotion, but it didn't anticipate the sharp degree of the traffic decline, but he continued to say the company remains committed to rebuilding the joseph a bank profit model and believe this strategy is the right one despite these results. separately, iconic shares shedding more than half of their value after announce it will restate financial results for 2013. 2014. part of this year as well. this is a result of an s.e.c. investigation into its joint venture accounting. it did tell us about the investigation in august. iconix is still in the comment letter process. it won't after the 2013 statement and will operating
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income by $6 million. peanuts brand and strong growth because of the movie release, but because retailers are allocating more space to star wars products, sharply lowered its earnings forecast. >> thank you very much. >> jackie, everyone is talking about the political fall-out, but meantime, the energy complex is trying to figure out what they'll do next. >> absolutely. when you talk about the energy complex, i want to highlight the canadian oil producers going to be disappointed by this. you mentioned trans-canada seeing the impact today. the refiners here they are probably going to be disappointed as well. i do want to point out, they had a lot of choices. this could mean they take in more middle eastern oil. more oil from iraq. maybe from iran when that oil comes on-line. there really are consequences to a rejection if that, in fact, is the news that we get. i do also just want to hit the point of what happens next if president obama does, in fact,
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reject this when they hold the press conference. well, many are saying 23 the next president is a republican if we see that happen in 2016, can you see reapplication of it pipeline and, in fact, maybe it would be very quickly approved. we won't necessarily miss in the short-term, but several wreerz from now if u.s. oil output does drop because of the lack of investment and cutbacks, there will likely be a lot of regret that the pipeline never got built, carl. it's something to think about here. >> i know you've been talking to andy as well. all the refiners with this plethora of choices from which which -- from where to get their crude. where do they turn? >> that's the issue, right? do they turn to the middle east? that's exactly what we wanted the keystone pipeline for so that we could at least keep some of our production and transport
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within north american boundaries here. and rely less on opec controlled oil. if w do get that rejection, the refiners will in some cases have no choice and in some cases that oil is actually cheaper. it is a suitable alternative. >> we continue to watch on a number of different -- i was looking at csx, for instance, to see if the rails might benefit from some of this. they're down as well. not a good day for some of the transports. >> they had a rough go of it for a long time now. several years ago the state department began a review process for the proposed instruction of a pipeline that would carry canadian crude oil to our heartland from the gulf of mexico and out into the world market. this morning secretary kerry informed me that after extensive public outreach and consultation with other cabinet agencies, the state department has decided that the keystone xl pipeline
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would not serve national interests of the united states. i agree with that decision. this morning i also had the opportunity to speak with prime minister of canada, and while he expressed his disappointment, given canada's position on this issue, we both agreed that our close friendship on a whole range of issues, including energy and climate change, should provide the basis for even closer coordination between our countries going forward. in the coming weeks, senior members of my team will be engaging with theirs in order to help deepen that cooperation. now, for years the keystone pipeline has occupied what i frankly consider an over inflated role in our political discourse. it became a symbol to often used as a campaign -- by both parties rather than serious policy matter. all of this obscured the fact that this pipeline would neither be a silver bullet for the
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economy, as was promised by some, nor the expressed climate disaster proclaimed by others. to illustrate this, let me briefly comment on some of the reasons why the state department rejected this pipeline. first, the pipeline would not make a meaningful long-ter contribution to our economy. so if congress is serious about wanting to create jobs, this was not the way to do it. if they want to do it, what we should be doing is passing a bipartisan infrastructure plan that in the short-term could create more than 30 times as many jobs per year as the pipeline would and in the long run would benefit our economy and our workers for decades to come. our business is created 260,000 new jobs last month. they've created 13.5 million new

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