Skip to main content

tv   Squawk Box  CNBC  November 10, 2015 6:00am-9:01am EST

6:00 am
>> live from new york where business never sleeps, this is squawk box. >> good morning, everybody. welcome to squawk box here on cnbc. i'm becky quick. the bulls trying to battle back after the s&p wiped out all the gains in yesterday's session. it was the worst performance in awhile. this was only a decline of 1%. the dow was down by 179 points. still they had the worst day since september 28th. take a look this morning and the futures are once again indicated lower. s&p futures off by 6 and the nasdaq down by 15. on the agenda today, two key snapshots of the economy. october import export prices
6:01 am
come at 8:30 eastern time and at 10:00 wholesale trade. we'll be getting quarterly results before the bell. >> okay. let's tell you about some of the stories that we're watching this morning. valeant said to hold a conference call at 8:00 eastern this morning. it's going to be providing a business update to investors and take questions. town more than 40% since the short sellers report was published on october 21st. that report accused the company of fraud compared to drug pricing. now that same short seller now focussing on -- did i mispronounce it -- >> you tell me. how would you pronounce it. >> mallinckrodt. >> i thought i came close. >> good for you. >> they call citron a far more
6:02 am
defe offender. shares of that company dropping near a two year low yesterday. the company tells cnbc it's fully confident in it's business model. they will join us live to talk about it. also in tech news this morning, apple ceo tim cook is in italy today speaking at the university in milan. he was in london yesterday for the launch of the ipad pro. he was quoted saying i think if you're looking at a pc, why would you buy a pc anymore? no, really, why would you buy one? he suggests the ipad pro will replace a notebook or desktop for many people. >> though not for me. >> not for me. >> i need my laptop. >> i need my laptop. >> but it is an apple laptop. >> i'm happy to have my air. >> it's a personal computer. >> sort of i guess. >> he still wants us on macintoshes. >> i was in canada for four days and my blackberry service didn't work up there and i used the
6:03 am
iphone the entire time. although when i'm typing i still -- >> did you try the dictation on the e-mails. >> welcome to the future or welcome to the current. >> it's fast and then you do get some real funny stuff happens too. >> amusing. >> yeah. because siri is not the smartest pencil in the box. stocks to watch today, we're watching the rails. the shares moved yesterday on reports that canadian pacific is exploring a potential acquisition of norfolk southern and you kind of missed becky, i'm sure you didn't miss it but you saw the jobs number. markets immediately sold. >> although they didn't sell down as much as i thought. >> they ended up 40 but then yesterday we got, you know, sort of the delayed effect. did you see the euro today? >> no, i saw the ten year note though. >> yield is 107. on the euro.
6:04 am
>> wow. >> it was earlier this morning. we'll check it out in a second. the cap shares. there it is -- its as simple as that. worried about manufacturing again. the banks will do well. >> ended well on friday. >> yeah. >> we have like five weeks and we talk about that yesterday. >> what do you mean? a lot can happen in five weeks. >> the taper tantrum was three or four percent. they may have taken it off the table as of yesterday. oh, no, 170 points. let's just think about it. anyway, gap posting a 3% drop in october. same store sales missing wall street estimates. sales of banana republic plunge 15%. gap also warning that earnings will fall short of current consensus. that's significant even on a percent. >> rack space hosting better than expected results.
6:05 am
>> why did you say it that way? >> i don't know. instead of just reading in a monotone. >> that looks like a fun word. >> yeah. >> company also offering some upbeat guidance and lion's gate turning in an unexpected quarterly loss. revenues also falling short. jazz pharmaceuticals also getting hit. the company is offering disappointing guidance. it's 605. so they haven't had coffee so they get lulled into -- >> wake up this morning. >> right. >> makes them jump a little bit. you must pay attention to our commercial. one of the few places you can still have a commercial that peel have to watch. we should be able to charge more for than. elliott disclosing nearly 3% stake in chip maker dialogue
6:06 am
semi-conductor. the firm tends to vote against the acquisition and urge other dialogue shareholders to pose the deal as well. >> let's check on the markets this morning. >> there you go. >> there you go. the futures are a little bit weaker this morning. dow futures down and s&p off by 5.5. remember their major averages again. worst day since september 28th but you're only talking about delines of 1%. you also have the s&p 500 wiping out all of the gains and the dow in the red for 2015. a big build up over the last two months and yeah now we're back in the red for the year. let's look at what's been happening with the european markets. you'll see red arrows there as well. major averages in germany, france, and london down by .5%. in asia overnight the nikkei was up slightly but the hang seng was down by 1.4%. the shanghai composite was flat. wti crude oil, this morning, up by about 10 cents to 43.97 but
6:07 am
crude oil down at a two week low yesterday. the ten year note, this is pretty interesting. check this out. the yield was at 2.34% and that was the highest level since july 24th. this morning it's below that at 2.316%. as joe mentioned, really looking at the dollar strength here. euro trading at 107.33. and if you want to check out gold prices this morning you'll see that at least at this point it looks like gold prices. wow, $1,092.40 an ounce. >> euro 107. ten year 235. the two year, all after the really good news we had. >> there's a weird auction on the three years yesterday. i'm not entirely sure why. >> well it's weird that -- i mean, it is good news and we know it's good news but people in the past have made the point
6:08 am
that when you get a tight labor market and some wage pressure and things like that a lot of times the equity markets already responded to that good news leading into it and they start to worry about the next tightening phase. >> right. it's something we haven't seen in a long time. the last time they raised rates george w. bush was in office. it's somebody we have long sense forgotten. it's going to be very unnerving. >> they don't seem as old. >> i know. >> are you kidding me? >> joining me now, the principal and investment strategist. so you know rebecca patterson. >> i do. >> is she your boss? >> she is. >> how is she as a boss? >> she's great. >> thought he would say something else? >> smooth. >> wells fargo investment institute and chief investment officer of wells fargo wealth brokerage and retirement division. so i get it guys. i got mad on the traders on
6:09 am
friday. guilty or innocent mad at them yesterday but you can see there will be an effect of 107-on-the euro for this quarter and, you know, stocks do key on earnings to some extent and we didn't have a great earnings season over last year because it wasn't a big gain and that could set us up for not a great fourth quarter and first quarter so it's not completely warped to get negative on good news. >> no and to your point joe we had markets rally six weeks in a row. 12% from the bottom but i was just looking at the earnings numbers again last night. it's now at 107 to your point. and literally since the euro has been in existence we have seen one fed tightening cycle.
6:10 am
you have to start looking at the haves and have notes and not even energy but utilities so you're starting to see the rotation of who is in favor, who can grow earnings and whose valuations make sense at this point. when do these newly employed people start with higher wages? consumers should have more money. they're spending less on gasoline. when does that turn into a positive? it's still a half empty argument. >> it depends on the way you look at it. >> but they seem to be in a good spot. we've seen the consumer deleverage and that sets up the consumer well adding him to the holiday season. >> christmas is coming.
6:11 am
>> my favorite time of the year. >> we haven't the turkeys yet though. >> no, coming soon. >> from '08 to '13 we had the longest period of time where consumer credit tightened since the great depression now they're starting to use leverage again and use debt which is a positive sign for the economy. >> it's almost completely correlated. maybe that's coincidental. >> i don't know. we have seen stabilization. >> market up 20%. >> if you think back to the summer and the 3rd quarter part of the reason we saw this huge volatility in the equity markets, risk assets all over the world had a lot to do with chinese economic data and as a
6:12 am
result investors are focused on the economic data here and tightening policy. >> election years are simpicily good aren't they? >> who did we have on? yellen's husband. >> yeah. >> big. >> we were talking about his book. >> did you read what his point -- the other guy kind of balanced him out a little with what his book was about. but it's not totally ridiculous to think the fed is more politic political. >> if that's what happens that's exactly what they have been saying. >> i saw a tweet this morning. cramer, i don't know, maybe he's like the politicians, maybe he has his staff tweeting for him.
6:13 am
>> why. >> he's up all the time, tweeting. >> no, he does it himself. >> when i was getting up in the middle of the night for feedings we would have races to see who gets up. he does that all the time. >> i used to say don't raise because we don't need one but now i have come to grips with it because it has to happen. someone said don't waiver. there's deflation and no reason to raise. >> at some point it has to happen. >> we need this guy. we need negative interest rates. i had to unblock the guy to see what he was saying. >> is that the first-person you have unblocked? >> i've seen so many people and i go why can't i get that? >> i still don't block people that i think actually watch the
6:14 am
show. but this person said we need more qe and negative rates. there's still people out there that want more qe and that want negative interest rates. >> i'll tell you that you can still sway me either direction on this argument. >> you told me yesterday the economy was terrible. >> that was a joke. >> you told me the economy was terrible. it was a horrible economy. >> you've got 7 years -- >> see i'm playing both sides. >> and then you thought it was profound at the end of that argument to say maybe i give more credit to bernanke. duh. yeah, how did you come up with that? did someone say that into your ear? that maybe it hasn't been the president's policy? >> we were talking about whether the president gets credit or blame and i was suggesting maybe
6:15 am
it doesn't matter at all but then you have all the presidential candidates telling you about the economic policy that may be irrelevant. >> we went down to such a low number we're still not back to where we were before. so you went down to this really low number where the u.s. economy is always going to add jobs in a seven year period but you had zero interest rates the entire time and we haven't gotten above 2% on gdp. >> it's awful tnchts economy is terrible. >> it is. we have to keep interest rates low. >> part of the reason that it is terrible is the uncertainty of the low interest rates. >> politics aside you have the inflation side. >> asset inflation. >> asset inflation. it's clearly there. >> the bond market and the stock
6:16 am
market. >> we have seen assets inflate. >> that's what i mean. that's something to worry about if it's misallocated. >> i agree. you're going to see the federal reserve raise interest rates and the reason is you look at the mandate. >> they're wacky. it may be a fake number with everything else. >> unemployment. >> but even they're now at 9. right? >> but it's the participation rat rates. >> it's terrible. >> it is terrible. >> autos, jobs, housing are all hitting on all cylinders right now. that's the important thing, right? >> you're not related to diane
6:17 am
swan are you? >> i'm not. we've had this conversation before. >> do you know when i was in kindergarten i used to play super hero. >> i thought it was a video game. >> no. >> gronk is a tight end for the patriots. >> what's that dance called? >> there's a -- >> i try not to dance. >> i might get myself in trouble. when we come back this morning t international energy agency out with a new call on oil prices. we have the details next. first as we head to the break here's a look back at this date in history. ♪
6:18 am
6:19 am
6:20 am
monday night football. tight end zach miller down five points to san diego with less than 3.5 minutes to play in the game. bear's quarterback jay cutler fires a bullet over the middle to miller that makes the one handed grab.
6:21 am
touchdown t bears took a three point conversion. the fifth straight loss. and the chargers aren't that bad. >> here to stay. >> oh, no, all right? >> more than 3,000 people left without power. remember that one year we had the -- we had it before halloween and all the leaves were still on the trees and wall street branches came down because it was snowing. >> it was so heavy and knocked out power for a week. that one was of the reasons i wanted a generate. >> siberia had a lot of snow and that indicated we could have a tough winter. >> what does the farmer's almanac say. >> terrible. >> or siberian snow? >> farmer's almanac. >> but given the weather currently, it's going to be
6:22 am
long. >> the reason you can't do it. >> but this year you might. >> you never know. can get cold quick. i like it like this. >> i want it to stay like this. >> do too. >> by the way, check this out, an indiana family came home to an unexpected four legged guest who got comfortable in their master bedroom. the deer broke through a window and made his way into the room by walking all the way to the back of the house. the deer left the house after he jumped out of a window open by the police. no one was hurt but as you can imagine that deer left behind a mess. >> that overhead fan is probably dramatic for that deer. >> no jumping on the bed. >> that would get his attention. >> yeah. >> okay. let's tell you some corporate news while we have you this morning. chipotle restaurants that closed
6:23 am
after the e.coli outbreak could open as soon as tomorrow. the test of thousands of produce samples turned up negative for the bacteria. they voluntarily closed 43 restaurants after reports of illness starting in mid october. before the restaurants reopened though they must meet several requirements including tossing all food, deep cleaning restaurants and checking all for infection. lawsuits have been filed for people sickened after eating at chipotle in two states. >> everything that is in there you have to get rid of. >> being more specific. >> throw it up in the air. >> tossed salad. >> i don't know. >> throwing it away. >> and seaworld san diego, the new attraction will be in 2017. it will be designed to take
6:24 am
place in a more natural setting. no mention over whether the k l killer whale shows will also be phased out. between this and getting rid of the elephants, i have to get around with my kids quick because i want them to see the stuff. >> this is shocking. but buy yourself when you're there, a raincoat. >> because you get wet. >> not that kind of raincoat. but anyway. i know where your mind goes immediately. new this morning, the international energy agency -- >> my mind was so not there. >> i'm trying to help you. >> i know where your mind clearly is. >> i'm trying to help you. anyway, predicting a slow recovery in oil prices, jackie who just looks so innocent and had no idea what i'm saying. >> i'm still a little stunned. i'm trying to digest this as we talk about oil prices here because lively morning
6:25 am
conversation. >> it is. >> great to be here. but let's talk about this report because it really is important. it's the latest world energy outlook from the iea saying $80 oil by 2020. now the agency says that the market is rebalancing lower supply growth is a result of this lower price environment. it's going to take a little while for that to happen but demand is also supposed to pick up. the report looks at several scenarios. specifically one where prices stay lower for longer. that depends on low cost producers. their ability to weather the storm and depends on when the middle east will scale back it's pumping. on the demand side china is the main driver we have to watch. the iea is forecasting global energy demand is going to grow by one third by 2040 and takes into account more energy efficient technologies but world leaders are going to meet in paris at the climate summit less than a month away. the agency says that strong dlex direction is needed at that summit in climate change and
6:26 am
energy related security issues. this is one of the reasons that many believe we got that rejection at the keystone pipeline on friday. bottom line here, $80 oil from 4 to 5 years. this year we were talking about $80 oil by the end of this year. we're almost there. we're in the 40s. low 40s if not starting to test the lower end of the range. seasonally speaking we'll see the slow down happen in the winter at least here in the united states. a lot of the traders on the floor are telling me you won't start to see demand pick up until next spring. question is what's going to happen in between? we had a ton of volatility when it comes to oil prices. people have to buckle up and saddle in. >> jackie stay right here. we're joined also on set by john who is the founding partner and also a cnbc contributor and i have to say every time we see oil prices pick up to $47 everyone changes their range. 45 to 50 is the new range instead of 40 to 45. oil is going to keep confounding them. you have been looking at this
6:27 am
for quite awhile and thinking that prices could go lower. still thinking that? >> yeah. i just stand aside and be wrong for a few days and let it come back my day but all kidding aside. what's not changes in the present is the glut situation on this market. there's more and more talk about crude oil supplies. one thing is concerning. they raise the energy security implications of saudi arabia and the gulf states in particular being the dominant suppliers, moving from a 40% share to a 60 or 70% market share which would be terrible for us. what's being underestimated is the ability to flip the switch on the rails. >> it's underestimated. we may not be looking at $80 oil again. >> it could creep up there but they'll flip the switch on
6:28 am
ducks, drilled uncompleted wells so probably a million barrels a day standing by to cash in even on oil that gets above $50 barrel. it will be a very volatile time period. >> that's while the u.s., rush wra and opec are producing at record levels so this production slow down people are talking about, we have been talking about it for six months. it's not happening in practice yet. >> we're maintaining 9 million barrels a day. we have come down some. you would have thought there would be more and we're just not seeing it. >> what about the keystone situation? how does that change if at all what you're expecting the impact on return? >> it plays into their hands really. arguments about that oil, it's only dirtier if you will to the extent that they have to use natural gas to extract it and get it flowing. so heat it up.
6:29 am
>> what about the diesel delivered by rail. >> is it slower? or will it come out just as quickly? >> oh, no, slower. this was significant. if you're going to do the cost benefit analysis, i was saying you should do it despite some of the misgivings you may have about that particular type of oil because it's just too great a number for us to have safe, secure supply down to our finding center. >> the idea that first of all canada is no longer the top trading partner with the united states. china has taken that because of the lower oil price and part because of security. >> that would really i think almost eliminate our reliance at all. >> it's an election.
6:30 am
>> so that was a -- >> paris is coming up. >> there's no doubt about that. >> john, thank you. jackie, good to see you. >> nice to see you. >> coming up a big night at christies. a portrait selling for more than $170 million. the second highest price ever paid for art at an auction. and robert frank will be here. >> joe has been checking it out apparently very closely. >> no. it's a very familiar -- i know you've seen it before. but it's anatomically correct. here's a look at yesterday's s&p 500 winners and losers. ♪
6:31 am
good. very good. you see something moving off the shelves and your first thought is to investigate the company. you are type e*. yes, investment opportunities can be anywhere... or not. but you know the difference. e*trade's bar code scanner. shorten the distance between intuition and action. e*trade opportunity is everywhere. ♪ how else do you think he gets around so fast? take the reins this holiday and get the mercedes-benz you've always wanted during the winter event. hurry, offers end soon.
6:32 am
sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.
6:33 am
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. so you're going to work 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?
6:34 am
>> welcome back. how much do you know about your broker or financial advisor? perhaps not enough. he is here with investigative work. >> that's right. >> so we know we heard a lot about financial rule and there's been all of these commercials on tv now saying go check the background of your broker. so we went into the sec data
6:35 am
base and looked up thousands of disclosures and what we found was interesting. there was some troubling things because we found a convicted murder that's an investment advisor rep. 8% were for fraud. 11% involved drugs. 7 people were charged with kidnapping and one person pled guilty to blackmail. so we spent a week going through the sec data base. >> seriously? >> we found all kinds of things and the kind of people who are working at these advisors, merrill lynch, wells fargo and morgan stanley and to be fair there are 300,000 reps in the country. the vast majority don't have any disclosures at all. a lot were the mistakes of youth. they write it out and say what they got convicted for. oh i was on a dare. my friend told me to rob the 7-eleven.
6:36 am
i did it and got arrested. a lot of people want to know is my advisor one of them. >> like armed robbery or shoplifting. you could have a knife then it's a felony. >> yeah. >> but all of these things are in there. there's theft and armed robbery. >> do you get the notion that if you were -- well, take someone with a life that go to another profession where they have normal people and is it a higher percentage would you say? >> national average for this group of people, only 1%. the national average for adult, 9% have been convicted felons. this is way less. most crimes exclude you from getting into the business. for the most part everyone is pretty good but a few cases we didn't know what we were going to find. they're saying to go check it out so let's check it out and see what's in there. >> did you confront any of the people? >> we didn't because we didn't want to alarm them.
6:37 am
we don't name names in the story. we have a link to the story on cnbc.com. you can go to the sec data base and look up your own person. >> remember when we doorsteped years and years ago with the camera? i would think -- >> the story of the convicted murder is interesting. he served six years of a 20 year sentence. never said he didn't do it. got pardoned. we couldn't reach him. we tried to get him. we know where he works. we know what city he works in. he's using his middle name instead of his first name now. he got pardoned after 6 years. he got fined because he didn't put down that he killed somebody. so they said you need to go back and say in your disclosures you were convicted of murder. he said i thought because i was pardoned i didn't need to put it down. they said no, you have to do it. >> could you go back and look at lawyers. >> report to you. >> do you have a particular one.
6:38 am
>> just in general. >> just the trend. i'm sure it's higher. >> my guess is its higher than 1%. if your in the crime business you're probably just associated with it. >> just a lack of morality in general. >> oh, please. >> andrew's dad is a lawyer. >> so am i. son of a lawyer. >> your dad was a lawyer. >> any time you're about to say son of a something, you just say son of a lawyer. >> that's even worse. coming up the value of a smell, iff ceo joins us on set to talk about the big business of selling fragrances and flavors. first of all, check out what's happening now. you're watching squawk box on cnbc. first in business worldwide.
6:39 am
6:40 am
6:41 am
6:42 am
welcome back. it's a $25 billion sector that you can only taste a smell. the flavors and fragrances market and iff is a leading player in the space. it creates the building blocks of taste and scents in products like perfume and medicine and even ice cream. they were 4 cents above estimates. revenue did fall belocon census. here to talk about it ahead of the company's conference call is the chairman and ceo of international flavors and fragrances. we don't think enough about probably your company. you probably think about your company all the time. >> thank you very much for the invitation and i'm very excited. >> so, we can talk about your earnings but just tell us what's going on in your market because i actually imagine your market is a good sort of signal as to
6:43 am
how the consumer is doing in a way because you're effectively in the royalty business. >> absolutely. because what you see is we're a company in more than 150 markets around the globe so you see actually what's happening even in asia and in europe so the consumers are very important. we're in what's happening in these markets. >> in terms of looking at the consumer right now, if you were to go around the globe, what do you see? >> a slow down in asia which is not a csurprise but the trend i still intact because we see people rising up to the middle class. >> if you were to look at a pie chart of your business, so fragrances relative to food and other products, how does it set up? >> first of all, it's around about 50/50. it's about 52%. >> on the fragrance side i'm assuming that is actually
6:44 am
probably doing well given that even in places where the market is tough, the luxury market has stayed relatively solid. >> the luxury market is doing well. we have a couple of spots which are not doing too well like brazil which is a heavy fragrance market. we have currency and economic problems but in general it's doing good in the euro. very good. good rates on our side that is helpful and the season right now is the biggest season. >> is the flavor part, is that more derived from natural stuff, oil squeezed out of naturally occurring things that grow and is that something you can manufacture through chemical means? >> it's both. >> it's actually both. you see it on the fragrance side that we are a big corporation in france and where everything started. we have a green house believe it or not in new jersey. we do a lot of national
6:45 am
extractions. >> national extractions. so we do actually boast on fragrance and on the flavor side. >> is it hard to become more pc -- people want everything to be natural but some things are fine i'm sure that are manufactured chemically are fine as well. >> very true. it's probably a misperception that organic is always good but we cater to the consumers so we do a lot of naturals. >> so you're going to cater to them anyway. >> you see a lot of that, i know. >> i did an example, what is big is sweetness modulation. how you can reduce sweetness in a soft drink for example because some countries induced sugar taxes like mexico and there's a huge demand on the sugar. we can do that. >> different than a diet soda? >> not always in a diet soda.
6:46 am
but in a soda where you have to not take an artificial sweetener but you would use the regular sugar and put it on top of that. >> so a booster. >> exactly. >> thank you for coming in this morning. >> what would it be do you think? >> that's an interesting one. but come over to our 57th street offices and we'll do a scent for you. >> thank you. >> okay, we're done, thank you. >> stay where you are for a second. >> when we come back this morning, soldiers died long after returning home from war. in honor of veteran's day, the film maker is out for a documentary. we'll talk about it next. martinez, you might know him from dancing with the stars. we get a chance to talk with him all about it. stick around. squawk box will be right back. "day to feel alive"♪
6:47 am
♪jake reese, "day to feel alive"♪ ♪jake reese, "day to feel alive"♪
6:48 am
6:49 am
theand to help you accelerate,. we've created a new company... one totally focused on what's next for your business. the true partnership where people,technology and ideas push everyone forward. accelerating innovation. accelerating transformation. accelerating next. hewlett packard enterprise.
6:50 am
6:51 am
that is a clip from "dead of honor," and rick burns traces the history from the revoluti revolutionary war to afghanistan and iraq, and the battle soldiers are left to fight after returning home from the war. he talks to several vette raps including our next guest. jr martinez, sharing his story in the documentary, receiving burns on a third of his body when the humvee he was driving hit a bomb, and he won on "dancing with the stars" in 2011. i spoke with rick about this, and this project moved him more than any other than he worked on. how did you get involved? >> they reached out to me. as one of the veteran voices, i have people asking me to be part of promjects, documentaries,
6:52 am
things of that nature. i'm hesitant. if you're involved in too much, there's too many pieces going on, the message is thinned out, so to speak, but when i saw rick burns was attached to it, his reputati reputation, successful, okay, i want to get behind this, especially partnership with pbs, an i felt like, i'm willing to do this one. i have no regrets. when i watched the piece a couple months ago when it was sent to me, i looked at my friend who was watching it with me, and we said at the same time, this is a piece to be used for educational purposes. you know, for that everyday american that does not get it or understand it. that's fine. that's okay. we all are involved in our lives, yet this is a documentary i feel is really educating a lot of people and can and will and starts tonight on pbs. >> rick mentioned this is a situation where such a small portion of the american population is serving. >> yes. >> it is something that many of
6:53 am
us have no idea, no understanding. >> yes. >> how did you deal with that going and coming home? what was your experience? >> for me, personally, you know, my hometown is dalton, georgia, and when i came home after being in the hospital for three months, i was surprised by an amazing parade, homecoming by people i knew and didn't know. that empowered me, giving me strength to carry on for a few more months in the early stages of the recovery project. in the early days released from the military in 2006, i felt i was by myself, civilian world, tough to be employed, and i wanted to be a motivational speaker. they judged me, put me in a box, a place of where all i was was a veteran. that's all i was. thought i was beginning to talk about war, combat, and that scenario, that fire fight. it was not about that, but coming to talk about life,
6:54 am
overcoming adversity, so it was frustrating. i fell into a slump, so to speak, where i became frustrated, angry, and because i -- i knew i had a lot to contribute, but i was not given the opportunity to do t and, finally, abc, you know, gave me the opportunity to be an actor, and that's when the jr martinez was introduced to the word. look what i've been able to do, unexpectedly, successful as an actor, going on "dancing with the stars," wrote a book, a new york times best sell er and thoe are things i didn't think i could do, army, infantryman, opposite of that, but there's military aspects that trained me to be in the civilian world and ultimately excel. that's what we want people to ultimately understand about our veterans. when it comes to employment, when it comes to companies, we want them to look at veterans more than just veterans, but their friends. at the end of the day, they are sons, they are fathers, daughters, mothers, they are people just like us. they just have a different
6:55 am
experience, but if you give them an opportunity, you'd be surprise what you get in return. >> we've had several big companies that have talked to us about how they are trying to hire veterans, jp morgan, activision, walmart. >> a wall street firm, specifically, hamilton. >> we had them on. >> met them last night at the screening for "dead of hop nors," said come down and talk to them. you know, i just did an event in chicago a couple weeks ago with easter seals partnered up with walt disney usaa. they gave me my shot on "all my children", and three and a half years ago, they set out to hire a thousand veterans, and since, they hired 6,000, and throughout all six companies they had under walt disney. different positions, roles, different ways, and it was about educating the people that are in chicago, businesses in chicago, how do you hire a veteran? what do you pay attention to?
6:56 am
we just want people to understand it, less than 1% serve in our military. there's 99%, as a gentleman says in the documentary interviewed, the 99% of the country live off the less than 1% of service they get. we want at the end of the day, join us as veterans in the movement. tomorrow is veterans' day with a lot of issues when it comes to the space. 22 veterans commit suicide every single day. that's a fact. that's happening now. somebody are about to do it. we want veterans to feel like they are not alone, and it takes all of us, something we all have to take on, whether we agree with it politically, but take it on, get involved with the right nonprofits with the right programs creating a long-term solution using money wisely, and let's watch documentaries tonight on pbs at 9:00. >> looking forward to. >> starts the conversation, and you need more voices out there, and the veterans as well. it's not just you, we, veterans have to do a better job.
6:57 am
>> appreciate you being here, love to have you back. >> absolutely, not this early, though. not this early. >> we run until 9:00 in the morning. >> 8:45. 8:ha tomorrow. >> thank you very much. appreciate it. >> thank you. >> "dead of honor" airs tonight at 9:00 on pbs. david solomon is joining us, our special guest. back in a moment. is that you can create wealth through capital appreciation, and this has been denied to many south africans for generations. this is an opportunity to right that wrong. the idea was to bring capital into the affordable housing space in south africa, with a fund that offers families of modest income safe and good accommodation. citi got involved very early on and showed an enormous commitment. and that gave other investors confidence. citi's really unique, because they bring deep understanding of what's happening in africa.
6:58 am
i really believe we only live once, and so you need to take an idea that you have and go for it. you have the opportunity to say, "i've been part of the creation of over 27,000 units of housing," and to replicate this across the entire african continent.
6:59 am
7:00 am
losing value, and now the stock is getting slammed. the ceo is joining us on set to respond. a major rail tieup in the works? canadian pacific reportedly
7:01 am
considering a deal to buy southern. stocks on the move. details straight ahead. zblrchts music manager behind lady did aga and trainer has a strong track record of startups. troy carter is orphan set to talk music and his next big tech investments. the second hour of "squawk box" begins riegs noght now. ♪ live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe with becky and andrew, and guest host is ceo of the howard hughs corporation, six or seven different lives, i think. you were in a band with vanessa williams, is that true? >> we were in high school together, and she was the female lead, and i was the male lead of
7:02 am
the stage band. >> that's what i'm talking about. >> wow. >> many years ago. >> i don't know why i focused on that. like her, and i like her whole -- >> she's great. >> yeah. >> special lady. >> she's awesome. the company celebrating the fifth anniversary of the ipo today, and we're going to get to david in a minute. first, though, becky has this morning's top stories. >> joe, thank you. headlines at this hour, breaking overnight, the international energy agency predicts slow recovery in oil prices, not likely to be back to 80 a barrel until 2020. you see why. up 12 cents, but at 43.t99. yahoo! hired to help reorganize. swisher reports that yahoo!'s ceo is asking her top executives to sign a three to five year commitment to remain with the company. watching the rails, shared moved yesterday on reports that
7:03 am
canada is exploring an acquisition of norfolk southern. they are said to have held preliminary talks, and canadian pacific says there's nothing to talk about at this point. u.s. equity futures at this hour, another story we are watching, under a little pressure this morning, although, we are off the worst levels of the morning so far. dow down 19 points after a decline of 180 points yesterday. s&p futures off by 3. the nasdaq down by 5. talking banking and m&a. global m&a surpassing $4 trillion for the figure time on record. rt $4 trillion, goldman sachs leads the way. joinings now with more this morning on this block buster year for deeals, what's ahead i banking, and culture issues transforming the business, david solomon, goldman sach's co-head of banking. good morning.
7:04 am
>> morning, andrew. >> animal spirits in the business, you look in the pipeline, and you any we are where when it comes to the market and the economy? >> well, there's certainly a lot of activity, no question that activity's accelerated. m&a volume you highlighted up over 40% this year, and, you know, hard to say where things are going. our pipeline looks robust, corporate acquirers continued to get rewarded by the market to make acquisitions. an environment where there's growth, but the growth is not robu robust, the best way to characterize, and that environment with reasonable ceo confidence, there's ceos and boards looking at managing portfolios and looking to buy growth in areas. >> how much do you think the fed plays into all of this? we have a running debate on the program every morning about whether the fed's low interest rate policy effectively creates perverse incentives for mergers and acquisitions or different types of travnsactions that otherwise do not take place.
7:05 am
>> no question that with a low interest rate environment, there's an impact on m&a activity, you need confidence, and candidly, it's a low interest rate environment for a number of years, but confidence of the stability over the course of the last couple years has had impact in furthering or pushing ceos along to be more inquisiti inquisitive. you have the market over the last 24 months reward corporate acquirers. look at the stock price for a corporate acquirer on the day of m&a announcement. so far in 2015, that number's been positive. that, you know, continues to spur other deals. >> when they start raising, people say, wow, they are raising, get it done quickly or stop doing it? >> you know, part of it dpepds depends on the path of rates going up. it's slow. >> no rush. >> there's no massive rush that people need to get things done, but it's an environment where business is consolidating, sitting in the industry space, a
7:06 am
competitor consolidates, that causes you to think. >> in a line of questioning, a guy like david, this zero interest rate, it's been bad that they are doing this. there's ban lot of dislocations. we are not for it at all at this point. >> i know -- >> intellectual lonest people i know, and he would say -- you know -- >> still. >> if your business is m&a with a lot of m&a with zero. >> another question, because i know the answer. if i asked you whether you think a lot of the deals are coming from a place of strength or weakness, meaning the companies coming together have -- do not have top line revenue growth, he will honestly say a lot comes because -- right? >> that's a positive. >> positive for m&a -- >> positive thing to rationalize. >> i made the comment that the growth environment is slugslugg but there's a big impact. as a ceo, there's a handful of tools to use to pull yourself forward, pull along by the economy, pull the cost lever,
7:07 am
and people pull the buyback lever or buy growth. if you think about the combination of things over the course of the last few years, ceos are in a mode where buying growth seems like an attractive thing. >> or try to build it yourself. is that not possible in in environment? >> no, you can. it's another lever in place, but a long term lever, and incentive system is not as attractive as much as, you know, looking for acquisitions. look, there's pressure on a quarter-to-quarter basis to perform for your shareholders, and so that has an impact in the way ceos behave. >> david, if you could, talk about the culture on wall street. an issue you think a lot about, and you unveiled a new plan to try to keep junior bankers longer and to make their careers better as a time when younger people say more and more that they would prefer to work not on wall street, but maybe in silicon valley or elsewhere. >> look, our business at the end of the day is a human capital
7:08 am
business. we need terrific people in order to execute wealth for our clients. we have been very, very focused on human capital. the world changes over 30 years i've been in the business, thinking back to when i was in the business, the world was less transparent and mobile. on the context of that, we have to provide an environment allowing people to grow, develop, learn, and be in a position to gain the experience necessary to really perform in the business, and so we've always been focused on human capital. we've been focused on the development of the people. we have to work harder at it in this environment. >> what does that mean? in the debate i had with you, for example, is that young people today who used to feel a sense of mission in the old days, where they worked on a project, stayed up all night, but at the end -- there was a light at end of the tunnel, a closing dinner, a feeling, something they were doing something, apprenticeship model where the partner oftentimes or managing director stayed up with them all night. today, because of the phone, the
7:09 am
client or rather the senior banker is never at the office, right, running around with the client, and if they actually happen to be at home, they hopefully are seeing their children, and so that apprent e apprenticeship model is broken down by technology, and at the end of the night after you stayed up 24 hours, the light at the end of the tunnel, i do it again tomorrow opposed to a feeling of accomplishment that they used to feel, and maybe that's just a shift and -- >> look, the shift you identify that's correct is technology changes things massively. in the business 30 years ago, there were two ways to do something, talk face to face or talk on the telephone. when you left the office, you left the office. there were boundaries. now technology has a massive impact on how people work. true in any business, not just in our business. that impacts how people live. we attract a lot of terrific people, no problem attracting people to goldman sachs to develop skills, and we're looking to keep a slightly
7:10 am
larger percentage. >> used to be a bigger turnover, used to happen for two years -- >> two years, pushed out, and they went off to business school, model changed, and we are looking to ensure that people that come to the firm, percentage of them that are talented build careers in fans. it's not 80% of them. we need a smaller percent to do that, and with technology changing, changing the way people interact, how clients connect, we have to adapt. we are a human capital business, and we are in the prompt of that. we spend time thinking about that. >> david solomon, appreciate. >> absolutely, thank you. the university of missouri's president stepped down yesterday, and the school's chancellor will be moved to a new job. this follows protests by students for what they've called soft handling of reports of racial abuse at the school. phil lebeau is on campus at university of missouri with the latest on this, phil? >> reporter: becky, it's the morning after a day of big changes here at the university of missouri. changes brought up by
7:11 am
african-american students who say this university lacks racial sensitivity. now, over the last week and a half, the students have been camping out in tenter here on one of the quad on the campus. largely they are empty now after the president resigned immediately. the chancellor is stepping down on december 31st, and the university pledged to bring in a chief diversity officer. now, the person in the role will be brought in to address the concerns of african-american students who say, look, this university had a number of incidents. there's been a low grade tension building over several years here, just 7% of the students here are african-american. missouri students including those who have been protested, one of them was a graduate student who was on a hunger strike. he's ended that hunger strike since the resignation of the university's president. here's comments from the students we taked with last night regarding changes coming here at mizzou.
7:12 am
>> concerned students, they had a demand, and i'm glad they accomplished their goal. >> reporter: is there any change in the atmosphere, or will it take more than that? >> i mean, it just happened today, so i think it's more a wait and see thing. >> reporter: prior to everything that happened today with the chance lore and president resigning, there was no tension, and now that everything's gone on, there's a tension created. >> i was surprised that they would resign this fast, but i'm actually not surprised because of all the money that's going towards football and we couldn't not play the football game on saturday. i mean, he didn't have a choice to resign. >> make no mistake, money and football were a part of why the changes were made here at the university of missouri after the football team stepped up and said, we will boycott this weekend's game. that's when the university took action against the presidents and chancellor. the revenue in the athletic
7:13 am
department last year just over $83 million, turning a profit of $3.5 million. that's the 32nd most revenue of all public universities here in the united states according to usa today, and almost everybody we talked with, guys, said the same thing, if the football team had not stepped up, if the football team did not threaten to boycott, and the university was not threatened to lose at least $1 million immediately, they doubt that the changes would have been made yesterday as quickly as they were. that's the story from here in columbia, back to you. >> all right, phil, thank you very much. when we come back this morning, the guest host of the howard hughs corporation weighs in on housing in america. the ceo will join us on set to respond to a warning put out by citroen research, driving the stock down by 25% yesterday. later, the music manager behind lady gaga has a strong track record of picking startups. troy carter is here. "squawk box" will be right back.
7:14 am
when you're not confident you have complete visibility into your business, it can quickly become the only thing you think about. that's where at&t can help. at&t's innovative solutions connect machines and people... to keep your internet of things in-sync, in real-time. leaving you free to focus on what matters most.
7:15 am
7:16 am
welcome back, everybody, talking real estate with our guest host, the ceo of howard hughs, shares down year to date, but up 230% since going public five years ago today. >> wow. >> later this morning, the opening bell was rang at the
7:17 am
stock, but we have the opportunity to talk before that. thank you for being here. >> preergt the invitation. >> what do you see looking at the economy and then housing, how things are going. >> you know, things have been strong for us, las vegas is an example unemployment was 14%, now 8%, and land sales are at the highest levels we've seen since we emerged publicly, and in houston, things are not as robust because of the oil prices, and so we're seeing a slower velocity of our land selling, but pricing is still double as an example what we saw several years ago in the woodlands. first the the velocity. >> how much is right timing, coming out of a such a bad recession, a great recession coming out of those things, are we back to the levels of six,
7:18 am
seven, eight years ago? >> not back. we have a long way to go to get there. timing is everything. i think if you look at the gateway cities that housing has and continues to be fairly robust. >> what are gateway cities? >> new york. >> san francisco? >> san francisco. you know, the great port cities in the country. houston, actually, is a much more diversified economy than people give it credit for, although, it's certainly taking a pause because of oil prices, but, you know, at the end of the day, oil prices being where they are today for a company like howard hughs creates opportunity. >> when you think about the fed, potentially raising interest rates for the first time in years, does that worry you, what do you think happens with higher rates? how does that impact the market? >> rates have been great, being at this level, being a newer company needing to grow fast, it's been good, but, clearly, freights are moving up, theoretically, should be in the economic expansion mode, and that would be very positive for
7:19 am
property values and growth generally. >> joe mentioned that you had a lot of different lives professionally, and you have started out making money singing and entertaining, and you took that money and looked at real estate. why real estate? >> yeah, i can credit my dad, my best friend, and he's going to be with me later ringing the be bell, for that. i grew up here in new york, and i bought my first condo before i got out of high school. >> wow. >> with money that i made entertaining. and interestingly enough, i think i took all of those skills and applied them today, every day, to our real estate business and to all the businesses i've been in over the last 30-plus years. >> let's talk about the projects. the last time we saw you, we talked about the south street seaport, what's happening there. remind us why things stand there. >> very excited about the south street seaport, here with john
7:20 am
george. we're going to rebuild the fulton fish market, which was an institution and create what john george and i believe will be the greatest food experience in new york city. he's also going to do a 10,000 square foot seafood restaurant on the pier facing the bridge, but the seaport is much more about that. you know, one of the things we're working very hard to do, not just in new york, but, frankly, all over our portfolio is to disrupt, and the way we disrupt is perhaps not traditionally. >> we think of tech companies thinking disruption. what do you mean? >> what i believe is that the convergence of entertainment, culture, art, great experiences that can't be matched anywhere else, if we're going to just provide the consumer a retail experience that they can get anywhere, if they walk down the block, they are not going to come to a place like the south street seaport. but one of the great things
7:21 am
about the seaport is our rooftop, an acre and a half, and we're going to have an outside theater there in the summer to hold up to 4,000 people facing the brooklyn bridge, summer concert series, bring down some great orchestras, great talent, very exciting. >> we're looking at your ipo five years ago today. was that because you looked around and saw great opportunities because what happened with the markets at that point, and that was a point you figured, look, public funds buy a lot of things on the market available that have not been before? >> you know, interestingly enough, so bill and i know each other for many years, went to high school together. we were not close friends back then, but family friends, reconnected a dozen years ago, i became an early investor in persing, which has been great, and bill and i over the years actually sold all of my real estate between mid-2005 and
7:22 am
january 2008, sold or monetized my holdings, and we were thinking that there might be another great moment, that, of course, never materialized, and then bill was able to identify the general growth opportunity, get control of that, and then recognize the subset of assets within that company that really did not belong in a retail reit, and so discussions started about taking assets out of the company and creating, you know, what today is the howard hughs corporation. what's interesting, takes two things to have a great company, great assets, but you need great people. we are a thousand people strong, employeeing close to 30,000 people, building projects over the last five years. we've belt about 2.8 million square feet of commercial space, and it's about 1.8 billion in dollars spent on budget and on
7:23 am
time. i'm very proud of that. we built over a thousand apartment unit, and close to 500 hotel rooms. we've done a lot of good things. we have about $2.5 billion in the pipeline today, most of which is spoken more, either leased or sold, and so timing and taking these kcore assets ot that were not recognized is a great thing, and then having a great team, and i really credit the team we have today with being able to accelerate also, we have an incredible board that's very supportive in helping us execute on our business model. >> okay. david, our guest host, and more throughout the show, thank you. coming up, american pharaoh starting his career today as a stud. we'll tell you how much the stallion will make per year in fees and what he has to do to make those fees. >> it's grueling work. >> grueling, grueling work, let me tell you.
7:24 am
the ceo joining us to respond to citroen research's warning about the company that drove down stock prices. "squawk box" will be right back. this guy from engineering says directv is so advanced that you could put tvs anywhere without looking at cable wires and boxes in every room. how are they always one step ahead of us? well, because their technology is far superior. or because they have someone on the inside. is that right, gil? sir, i would never... he's with them! he's wearing a wire. take off his shirt! take off his shirt! oh! ah! alright, i'm putting you in charge of the holiday party. (vo) get rid of cable and upgrade to directv. call 1-800-directv.
7:25 am
7:26 am
american pharaoh preparing
7:27 am
for his post-racing career. the triple crown winner's stud fee stands at $200,000, among the highest for a horse in his first stallion year, which will begin in february with the projected 200 or so mares per year. >> who picked this song? >> he could generate $40 million in his first stud year alone for context. his race winnings totalled 8 million. so you imagine how much he'll bring. we said that -- i don't know whether we thought about how he wrote that, but he's preparing -- what is he doing? you know, working out? is he shaving? putting aftershave on? what does that mean, preparing for -- is a horse preparing for his career as a stud? i don't think so. i think he's doing what he's done all along, right? >> uh-huh. >> which is what horses do, right? >> yep. >> maybe he's not -- >> just got to swim.
7:28 am
>> right. maybe he's not training at least for races, but 200? really? 200? wow. that's, like, will chamberlain numbers almost. >> 200 a year and getting paid. >> not a bad business there. >> i'll think about it. >> tell you something in the commercial break. >> oh, we know. >> shares of valeant lost half the value after a piece called the pharmaceutical enron. they said the pharma has more downside than valeant. that's on "squawk box" after the break.
7:29 am
7:30 am
7:31 am
welcome back to "squawk box" here on cnbc, first in business worldwide, and among the stories front and cement nter, blackroc
7:32 am
slashing, marking the firm's broad market ishares product, making it cheaper than a competing one from rival vanguard. better than expect the results, net sales rising 19%, and gap posted a 3% drop in october same store sales, missing estimates. the retailer returned earnings fall short of current consensus. another drug company in the cross hairs of short seller citroen research. we are joined now by meg with more. >> the short seller causing issues for valeant in the recent weeks struck again with a tweet yesterday about mallinckrodt, down 17% yesterday, saying they are more down than valeant, but far worse defender, more to follow, valeant can't live in a vacuum.
7:33 am
they assume citroen is talking about a drug acquired last year, approved in the 1950s, and they had raised the price of the drug from $1600 a vile to $23,000 a vile, and in the company's last quarterly conference call, there was challenges there. joining us now that talk about that is mallinckrodt president and ceo. thank you for joining us this morning. >> good to be here. >> talk about the decision cotom on and talk with us this morning, the last target of citroen's tweet, valeant, and the reports, had not spoken with us. why are you taking a different approach? >> it's a great opportunity to talk about the mallinckrodt story, a story of value creation, talking about what we've been doing since we spun two and a half years ago, and creating value for shareholders in the long term. also, the fact we are really focused on driving growth, enhancing earnings, power, and
7:34 am
cash flow for the company and doing an effective job of doing that. >> focus on the tweet, and i don't think we've seen the report that's coming yet, but they reimbursement problems. you deuced this on the last call wi with this, and how do you look at that? >> this is a drug indicated for 19 disease, in auto immune rare diseases, used for patientins wh limited options, and typically, the cost of the al teternatives dramatically higher, and what we've found is that this is a product that's widely prescribed, used for 10,000 patients currently, and it's used across all the indications. what we do find is that as we have gone in and spoken to payers about how to best position this for the appropriate patient types, we
7:35 am
are getting good traction in getting good dialogue with those pair, and we announced on the third quarter earnings call, confirmed on our guidance call that we're having good success now in getting them in favorable positions which are going to -- which should ensure long term stability and reimbursement, which is what we're about. playing the long game with the product because it's durable, very effective for a variety of different auto immune conditions, one we think continues to drive value for the company. >> with the focus now, even over the last few weeks, mallinckrodt is lumped in with valeant and the private company raising a drug overnight approved after acquisiti acquisition. do you feel it's fair you're lumped in with two companies? >> looking at our pricing across the board, we have taken price up on some products, but we may also have taken price down on a number of products in response to competitive situations.
7:36 am
our business model is quite unique. we really focus on areas of high end medical need. we typically acquire products, invest in them, invest in collecting data that really helps physicians and payers decide where to appropriately use our products. we have what we consider a classic model in terms of the way we promote and develop our products. we reinvest in the business because, geb again, we have to create long term sustainable value. >> mark, are you saying that drug pricing, i know price change before you came on board, but when it went from $1600 a vile to $23,000 a vile, that's because you reinvest in that drug or using proceeds to reinvest in other things? >> reinvesting in that drug as well, so we are creating not only clinical data but pharmaceutical economic data as well to reappropriate the drug effectively be. >> the profit margins did not rise on the drug? >> not since we owned the drug actually. >> obviously, the price raised
7:37 am
before you owned the drug, right? >> the original price increase that was being discussed actually happened eight years ago. since that time, the price increase really averaged less than 5% annually. >> you get what i'm talking about, what people are up in arms about, a drug that's been around 50 years, rises in price, looks like profiteering. >> acthar is used for patients with few options. when the price was raised eight years ago, the product was used for a condition called infantile spasms, debilitating condition that does not allow infants to develop neurologically. at that point, the product was losing money. it was only used for a very, very small number of patients, very low volume. since that time, the volume, the number of patients that acthar
7:38 am
increased is tenfold. >> for different uses? >> variety of uses, still infantile spasms, standard of care, but variety of other rare diseases in auto immune conditions where there's few alternatives. this product makes a difference in the lives of patients, and when faced with alternatives, acthar is cost effective, and we are collecting data in specific indications to demonstrate the economics. >> describe how profitable the drug is for your company? >> we don't disclose mar ggins any particular drug, but we are investing in the product with five company sponsored clinical trials currently going with over 20 pharmaceutical trials going, and studying this for a variety of additional potential indications to further expand the label beyond -- >> another example that generics can't come in because it's too costly for the size of the marketplace or something? >> no.
7:39 am
in this case, the product itself is a complex mixture of active ingredients. >> right. >> the standard methodology of bringing in a generic product, really, that pathway does not exist for a product like acthar, and the fda made statements for products similar to acthar that says it's typically not possible to drive a generic product for ha acthar. >> someone could make it and sell for 20% less. why isn't the market working here? it's not impossible. >> the market is working, there's other diseases treated for acthar. >> not protected at this point? >> it is protected by a trade secret. similar to bilogic, the manufacturing and product are intertwined. you can't produce acthar unless you own the manufacturing
7:40 am
process, which we do, a trade secret. >> in the 50s, it was derived from pigs, right? is that still true? >> it is. this particular product was created on the basis of some really remarkable science, but what it was originally created as a naturally derived product and still is. there's a number of otherived p the marketplace. acthar is durable, treating patients effectively and safely. >> one issue arising through the valeant thing is use of specialty pharmacies. i understand you use specialty pharmacies, but the question is use of control, is it a red flag in the industry or what happened with valeant giving the practice a bad name? >> specially pharmacy channel is a well established channel in practice for many, many years. we do use specialty pharmacies. we do not own the specialty
7:41 am
pharmacies or control the specialty pharmacies. they are a third party contract relationship. we use a multitude of specialty pharmacies, typically owned by large companies, publicly traded companies. their economics is completely separate from anything we do, and a number of products and number of companies in the pharmaceutical industry have used specialty pharmacies specifically for products that have special handling needs. we use this successfully over a number of years. >> we're not going to see similar situations where there are accounting issues or questions about the behavior at the specialty pharmacy companies that you use? >> not from our perspective. we maintain a complete third party relationship with all of these specialty pharmacies. >> no specialty pharmacies serve other customers? >> they do. that's correct. we are just one of several products they might use, this is
7:42 am
effectively, there are special handling needs into the hands of patients. >> this is a question, given you're in the business, what do you think of valeant? >> well, it's very difficult for me to comment specifically on another company's model. >> you studied the models, and your model, some people compared it. you know about it. >> our model is different from the reasons articulated. we create value by acquiring products, investing in them, creating data. we think that's the way to drive long term growth to enhance cash flow, and to enhance the earnings power of the company. >> mark, thank you so much for coming in to join us. >> thank you, my pleasure. all right, thank you. >> thank you. programming note, andrew left. no. on, andrew left. >> you didn't leave. i know -- >> he is here. >> i know what you think. >> sorry, still here. andrew left of citroen research
7:43 am
will be on "fast money" noon eastern time. when we come back, the music manager who launched music careers, troy carter with a track record of picking musical talent and good track record of backing silicon's valley hottest startups like uber and spotify. he's on set after this. 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. so you're going to work 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? we'll be with you shortly.. yeah right... xerox predictive analytics help companies provide a better and faster customer experience. hello mr. kent. can i rebook your flight?
7:44 am
i'm here! customer care can work better. with xerox. wait i'm here! mr. kent? (gasp) shark diving! xerox personalized employee portals help companies make benefits simple and accessible... from anywhere. hula dancing? cliff jumping! human resources can work better. with xerox.
7:45 am
7:46 am
welcome back to "squawk box," troy carter has journeyed from the fresh prince's entourage to the shark tank, former manager of lady gaga early stage investor inle 0 companies, and still managing some of muszic industries most viral, and troy carter is founder. how much time do you spend on music stuff and how much time is investment digital silicon valley stuff? >> you know, it's like left brain, right brain, whatever raises the hand the highest that morning, that's what i focus on, but i still love music, but i love entrepreneurs just as much. >> how much is the entree to silicon valley through music for
7:47 am
you? >> you know what, i think there were a lot of similarities between the artists we represented and some of the founders that we were meeting just in terms of what their needs were in terms of scaling, communications, branding, really bringing them into our network, business development, so there's a lot of similarities there. >> personalities, too, aren't they? >> yes, be personalities. >> and then i'm going to talk music in a second, but now that you're a guest shark looking at investments all the time, both in what you do in the valley and in "shark tank," thinking about the economy in the valley right now, the private market economy, do you think we're at a high? do you find yourself wanting to buy into things now, how do you think this is a -- there's opportunity? what's the sense? >> you know what? i think that with some companies, there are an opportunity. all companies are not created equal, right? so late stage is definitely
7:48 am
frothy, very, very frothy. early stage, you still can find a lot of deals and still can find a lot of companies that attack markets and problems that have not been addressed yet, but late stage scares me right now. >> late stage scares you. so, like, an uber, great for you, you were in early, but to get in now, you're anxious? >> not anxious for uber. all companies are not created equal, and, you know, to me, i think uber is still has a big opportunity. i don't think they have addressed the total market yet, you know, and all the other verticals they enter to. you know, uber is one of the companies that, you know, i think could end up being, you know, just as big as a facebook in terms of, you know, valuation. >> what about -- let's talk music for a second. invested in spotify? >> yes. >> joe got on apple music, an apple music aficionado.
7:49 am
is that a zero sum game? >> no, dech n definitely not. consumers basically consume music all different ways, so you look at iheart media, for instance, they get 240 million, radio impressions a week, spotify streams, i just read a statistic that i think it's, you know, 1% of americans still buy, like, cassette tapes. >> what? >> yeah. >> i didn't know they sold those. >> or manufactured them. you still have all the different types of people. >> the narrative -- >> good for you that you're not on cassette tapes and moved to apple music. >> i don't know what to call when i download something, what is it? thick as a brick, is that an album? >> just for the sake of understanding what a group of songs together are, we still use
7:50 am
it as an album, but tech nickically it's not. >> no. >> the narrative in the music business is that it's relatively terrible to be an artist today, relative to a decade ago, and that all the services do a disservice to the artist. >> completely wrong. i think the music business is healthier than it's ever been. you look at the live touring business right now, and i think a lot of it has to do with a move to streaming. you rolook at a company like spotify where they are close to 100 million users on the platform. i project the streaming numbers are probably going to be, you know, a billion over the next, you know, five, six years, just the overall market when you look at emerging markets that are now bypassing cds that go to streaming, and the more people that you have listening to music, you know, there's no -- there's no coincidence that all of the sudden live nations'
7:51 am
numbers jumped the way they jumped this year. >> right. >> and more people attend festivals, buying tickets for festivals before they know who the acts are on the bill right now. >> it's got to pan out. through my life, i've had fav favorite groups. >> yeah. >> i go back now and i knew 20% of the total music that this group has, and now i'm back to every album of every -- >> and you have young consumers -- >> it's monetized. >> it's monetized, but you have to hustle on a road you didn't have to before now, though. >> you look at -- so you project out to the future, right? >> right. >> when you lock at mediums like virtual reality, augmented reality, you're going to have artists that have the ability to be at 100 places in one time feeling like they are actually there. we are seeing technologies like oculus, some magic leap in the
7:52 am
augmented reality space to change what the live spoerexper is, so children not even born today will experience live like never seen before. >> and they pay for it. >> they'll pay for it, but it's about scale. it's about scale. >> for the artist, extrapolating it, there's a much wider opportunity for them to capture different income streams than in the past. >> absolutely. absolutely. >> again, it's concerts. >> going to concerts with my kids, death cab, taylor swift, back to concerts. >> we're seeing even with our new artists that we manage at our company, you know, within ten months, they've become global superstars. it used to take five to six years, you know, to conquer half the world. put out one song, and within ten months, there's a million views. >> everything's worse. >> get back here. >> we've have longer conversations. >> nfl's going away.
7:53 am
everything's ending for you, right? >> cable tv. >> raising questions. raising questions. >> worry wart. anyway, thank you. >> nfl will be boxing is my prediction. >> oh. see. there you go. >> oh. thank very much. >> oh, anyway, coming up, more from our guest host.
7:54 am
7:55 am
7:56 am
we have been to the se january port. it is believable. it's coming back in the summer. >> this is part of the sea change program, just to give people a glimpse of where we are headed long term to make these sea ports relevant again, but i have toe mention, right now, we have a culture district going on right know, partnering with the aia, several other very important groups, and it's amazing some of the things we implement. >> quick question, you're a bill ackman guy, what do you think of what happened? i like him a lot, but he's got himself in a bit of a tough position this time around. >> well, no question about that, but don't you think he'll get out of it? >> i imagine he will. is that -- you're investor in persing? >> i am. >> appreciate it.
7:57 am
great having you. >> thank you for having me. >> congratulations on five years. >> thank you very much. >> when we come back, a bidding war last night, driving up the price for a painting or a nude model -- i'm not good with this. i never can pronounce it, second highest price for a work of art, $170 million. robert frank is joining us to talk about this week.
7:58 am
7:59 am
8:00 am
turning the clown frown upside down, shares of mcdonalds up close to 20%, can they keep investors and consumers hungry for more? a top rated analyst here ahead of today's big investment meeting. >> home stocks struggling this fall, stumbling, and the market rebounded. we go inside the results straight ahead. taking movember to a new bevel, entrepreneur founder of the shave startup, and at target. final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box."
8:01 am
welcome back to "squawk box" right here on cnbc, first in business word wide, i'm andrew with joe and becky, 90 minutes from the opening bell on wall street this morning, and futures are looking like we're in the red, the dow opening -- looks to open up 33 points down, nasdaq down 18 points now, and s&p 6 points off. checking out markets in europe at this hour, we have a bit of a mixed picture across the board. >> let's get to the stories investors will be talking about today. moody's out with the gloomy warning this morning. the ratings agency argues that global policymakers lack tools to deal with any unexpect the negative shot to the economy following years of low rates and liquidity injections. moody's forecast g 20 gdp growth of 2.8 percent, short of the significant jump many others expected. the international energy agency says oil prices are set for a slow recovery.
8:02 am
the best case scenario sees $80 a barrel in the year 2020, that's right. the 20 year 2020, five years aw with other increases after that. citroen going after valeant now going after mallinckrodt, and they will disclose more, but not sure when it will be published. earlier on "squawk box," the company's ceo said that he is fully confident in the company's business model. >> our business model is quite unique. we really focus on areas of high end medical need. we typically acquire products and then invest in them. we invest in creating a data, either clinical or pharmaceutical economical data deciding where to appropriately use the products. we have what we consider a very classic model in terms of the
8:03 am
way we promote and develop our produc products. we reinvest in the business to create long term sustainable value. mallinckrodt's stock up 2%. andrew left is on fast money this afternoon at noon eastern. a few stocks to watch this morning on the move. drhorton beat the street on a 19% jump in new orders. the home building raised dividends to 28 cents by 8 cents a share, anyway, another story at beazers. consensus flat on orders, expecting stronger growth in future quarters. watch the shares of apple today if you would. i'm asking you nicely. you don't have to, credit swiss say checks indicate supply chain orders for the iphone weakened recently. the firm is keeping the estimate for iphone demand, but cut the forecast for the first quarter of 2016. we'll see whether this becomes a
8:04 am
trend because that could -- you got to sell iphones or -- because it's not going to happen selling other stuff at this point. stocks taking a breather after six straight weeks of gains for the major averages, but a number of retail reports, fed speak, and data could set the tone for the rest of the week. we have more from raymond james, and recorrectly called the bottom in august. jeff, you called the bottom correctly, but thinking things look choppy? >> well, the model that turned cautious at the beginning of july and called the bottom much to my pleasure called, and there's retests in late september correctly, turned cautious a week ago. not that we're looking for any serious decline here, but i look for a pullback, putting money to work in the pullback, and i would note we have now had four consecutive down days in the s&p, which has not really happened in a few months so that
8:05 am
could change the trend on a short term basis. >> what's the pull back? talking the 8%, 9%, 10%? >> i don't think we'll get 10%. we saw that in the 12% pullback last summer, but you could get a 5%-7% pull back for buying, not that serious on the downside. >> long term, though, it's a bull market? >> i do. i ever since the week of march 2 of 2009. they last 14-15 years. they compound at 16% a year, past is prelude, we have another seven, eight, nine years left in in thing. >> is that -- people wonder, is this time different because we've never seen a fed experiment like what we have now, not just with our federal e reserve, does that play in, or do you not listen to the noise? >> i don't think it's different this time. i've seen the play before. i think the fed with the softening economic statistics
8:06 am
other than last friday's numbers is actually in no big rush to raise interest rates here. they probably do raise in december. i don't think that's much of a head wind on a quarter of percent, and i think earnings, if the s&p is right, the s&p's only trading 15 times next year's earnings. >> great. thank you for joining us, jeff, talk again soon. >> you bet. >> shares of mcdonald's up 14% since the ceo took over in march. today, the meeting with investors waiting to hear what the future holds for the fast food giant, we have nicole miller reagan, the restaurant analyst. do you have a good memory? >> i hope so. >> remember we talked? >> yeah. >> we totally agreed, and we were totally right about what needed to be done. this guy did it. it worked. he said, you don't need new products and all this innovation. fast, fresh, gets back to the roots, do what you need to do,
8:07 am
and that's what the company did, and it's back to new highs, right? victory lap with the clients for saying that? >> well, we upgraded the stock, overweight now, $130 price target. it's never easy. it's a recovery, but this is a global giant -- >> don't need to reinvent the wheel? >> not at all, but it's curious to me they tried everything, but, wow, did they come out right on, it's like a laser focused strategy on the employee, the customer, and the shareholder. i think that's perfect. >> what -- if there was one thing that a fast food chain needs to do, and to do it well in terms of execution, is it fast? is it fresh? is it satisfying for the franchises? satisfying the customer more than anything with fast and fresh, right? >> any brand stays true to core who to whey are. mcdonalds took care of the employee for a better service. that helps. reengage franchises, where they
8:08 am
should have started, i don't know that they did, but they are there now. >> how do you care for the employees, this is not walmart raising minimum wage, what did they do? >> they did to some degree, but technology in the store reduced friction of the ordering process, and i think that's one example. >> that was going to be yogurt and apple slices. >> that's an option. >> sausage and egg mcmuffin and cheese in the afternoon. >> i think the apple is okay in the happy meal, and the kale burger is overdoing it. >> as a mom, i like the option of the apple and the yogurt. >> what's interesting is i thought the last quarterly call went well with easter book saying, you know, just because we did breakfast, that's not the comp. comp's back base we decided to have clean stores, nice people. >> yes, clean restrooms. >> and we'll give you breakfast all day. >> how consistent do you think
8:09 am
it is across the country right now? >> i think -- >> those shifts. >> difficult, difficult to be really consistent. i think even if they do it early on, it's in some stores, the momentum carries forward and maybe they get, like, a grace period if something's not right in another store. they'll get there, but by the time they get to the end of what this strategic plan is, the point is, they better evolve another one. i think there was a lapse, and that's how they got here. >> in europe, how do they get to the point where, i mean, there are people with lap -- it's almost -- laptops sitting in mcdonalds caves, next to the mcdonalds with french pastries and it's a totally different sort of a restaurant. whatever you want to call it. can they do that here? they don't have the stigma there. >> it's very upscale. >> it is. >> upscale there. >> it is. >> can they do that here? >> they can and should. it's ridiculous to think that any one demographic in this
8:10 am
country is not going to go to mcdonalds. your kid's in the car screaming, pulling over, and they are the most convenient place to go, and so i think, you know, convenience is on their side. >> can you do both things with the brand, do this upscale brand that he's talking about that they've done in europe and also do a brand that is, you know, welcoming to kids, that has the playgrounds and all the stuff going on? >> you can. they have to. i don't know that i view it as upscale, but view it as a really clean mcdonalds with some great local food options with phenomenal service. >> over the last ten years. >> that's all it is. >> that's all it is. >> that's all it is. the perception changes dramatically. >> right. >> it's clean. >> uh-huh. >> yeah. >> people are nice there. >> and i'm thinking about if, i've seen them there, urban settings. everything is urban, even the smaller cities in europe, it's not the suburbs, but it's urban. you can't be out in jersey and
8:11 am
put a mccafe next -- >> i've seen them in europe in the suburbs, but they tend to be on travel routes and things of that nature so real estate plays into that this a big way, no reason it's not here as well. >> internationally, is there growth opportunities not thought about with mcdonalds they'll take advantage of? >> i don't think it's the near term, but i think there's development. refranchising probably is first and foremost. i think following that and getting it to the 90% mark, then you'll see the franchises grow and pick up the system. >> interesting. 130 now? >> yeah. they take share and multiple expansion. >> all the names, shake shack, everything else, the competition is intense. in and out. >> we were in -- >> five guys, whatever it is. >> you know. >> yeah. that's a draw. >> yeah. i think they are trading more within legacy qsr first and foremost, and some are smaller
8:12 am
qsrs that picked up, you know, last year, as mcdome's share, oil prices went down, the smaller qsrs benefits. >> quick service restaurants? >> yes. >> nicole, thank you. >> thank you. >> good to see you. >> thanks. when we come back this morning, art prices rise steadily over the last decade, and tonight, the post war and contemporary art offerings next. later, the national home builders's association latest read on housing shows a steady recovery. why are the stocks at 52 week lows? we'll dive in in a moment. "squawk box" will be right back.
8:13 am
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.
8:14 am
i love working in the salinas area becauseriselda zendejas. i always wanted to do something where i could help people around me. so being a construction supervisor for pg&e gives me the opportunity to give a little bit back to my community. i have three boys. they're what keep me going every day. our friends, families live in the area. and it is important for all of us that we keep our community safe. together, we're building a better california.
8:15 am
the apps is kicking af the big holiday shopping season, targets open 6:00 p.m. on thanks givening, same as last year, but shoppers do not have to trek to the store after eating turkey and stuffing. the same deals are available online at target.com on thanksgiving morning, and target says it will also offer different deals for ten days starting on november 22.
8:16 am
it's sweetening the deal for those who shop on black friday. shoppers who spend $75 receive a 20% discount they can use at the december 4th-13th, and with that extra money, you can buy some of the generic red cups that starbucks is now offering for their coffee for christmas with no other decorations, andrew. >> the art sale taking place, there's a swan estimated to sell up to $25 million, and andy warhol's, we have more. >> andrew, last night was the big news selling the second most expensive ever painting ever auction, the reclining nude going for $170 million. the buyer is chinese billionaire -- >> wait, do we actually -- we're censoring that? >> are you kidding me. >> you got to be kidding. >> i'm not kidding. >> it's a piece of art.
8:17 am
>> it's part of a $2 billion fall auction season. now that's obscene, prices high, ten of the 34 pieces, and joining us to break it down is the rich and famous gallery, this was the big test for the market this week? >> it was. >> what did we learn? >> the markets is influx, a down round by evidence of the softness of the sale and softness last night, and what you are seeing is a discerning market, but that gives more credit to the intelligence of the general art world than perhaps its due because a discerning market has $80 million guarantees wdwindles don market ps zplp it's strong, but cooling to the idea you can buy masterpieces every six months. this was an absolute ly i irreplaceable masterpieces, one
8:18 am
of 30 nudes he made, one of the best left in private hands. justifiably worth what anyone pays for it, and there were six active bidders last night. there were no shenanigans. >> chinese are still in the market. you mentioned the point where we talk about unicorns in silicone valley with down rounds, but if there was a correction in the art market, begin how a orchestrated options are, how do you know? >> you see it six to eight month the later, and you need seasoned individuals to see the subtleties that occur. when they bought the -- we were on the show talking about this, everyone thought the bacon market would take off, but it's extremely critical right now because no one knows how to price anything. that was a great picture. it justified the price. all the other pictures on the market, even the one on wednesday night, a wonderful painting, but very, very difficult because it's a male
8:19 am
nude, no one knows the real value. >> nay said, look, it's a discerning market. last night, a payments going for twice the estimate, two failed, another three times the estimate, another that failed. whiplash option. >> you can't market masterpieces when the quality is there, and people wake up because of values being exkalated, and expectation of sellers are high. >> talk about this painting and why it's worth $170 million. who was he? >> a guy who was basically defining the word bohemian, lives in paris, dies at 35 of consumption, most paintings sold for food, but mostly for drink. >> he didn't have much money. >> extraordinary life, girlfriends galore, knew when to die at the age of 35, no residue of bad late work. >> read he would sell the entire contents for $300. >> exactly. >> and couldn't do that. >> he couldn't. was in negotiation to do it, but
8:20 am
didn't. this picture truly being in the collection that it was in in italy for so long, it's a great picture, on the equivalent of the picture of modern art. >> one more picture of this. who is selling that? selling on thursday? >> steve cohen, the head -- hedge fund is selling this. >> it's the large picture, it's emblematic, a great painting, estimated at $45 million. it's terrific. i mean, you can't find a better one in private hands. bigger versions that exist, one exists in china, the other four in institutions. >> ultimate irony, isn't it? >> the idea this anticapitalist madman is coveted by every billionaire in the room, but it is an interesting irony indeed. >> the most expensive record -- this is -- this is the second? >> number two after the -- >> who was the most? >> picasso.
8:21 am
>> selling in may. >> we have the two most expensive paintings auctioned off in the same year. >> it's not the most expensive painting sold. >> right. >> that was that we know of is this card player, the national authority. >> yes, $300 million? >> that was not confirmed, but it was in the upwards of 300. it was a private sale. the transaction -- it's a number in question. >> amazing. >> crazy, this market. >> you can't buy diamonds -- report said this, you can't buy diamonds -- not enough around to park wealth in. go to art. >> i must -- >> bernanke enriched all the people, buy art. >> greatest patrons of art since the yellen. >> you have a situation where the art market, the art industry is comparatively unregulated, unspoiled.
8:22 am
there's a lot of freedom to do all sorts of transactions. >> how many in business? >> not shady? >> i don't want to say shade country, but there are elements -- >> how many american greed episodes could we do? >> you can retire on residuals from that one. >> true. >> in the art world, there's three emotions, greed, fear, and greed. >> location, location, location. >> thanks, andrew. >> thank you. still to come this morning, breaking economic news, import prices are just ahead, but up next, severe weather spreading in the country. if you plan on doing any business travel in the next few days, stay tuned to find out where the storms are expected to hit. we've got the details after this. you're watching "squawk box" on cnbc, first in business worldwide.
8:23 am
8:24 am
8:25 am
welcome back, folks, a little bit of rain here in new york city, but severe weather including tornados and severe thunderstorms are expected to break out over a large portion of the central united states on veterans day. residents from iowa to texas on alert at this point. blizzard warnings posted for parts of the high plains, the storm system marches eastward. st. louis, chicago, little rock, arkansas, and even as far south as houston are expected to be affected by these storms
8:26 am
tomorrow. >> snowstorm related to that system knocked out power and closed roads in nevada. over 3,000 people left without power in reno due to the storm. nevada highway patrol reported several incidents on i-80 caused by slippery conditions, and snowy conditions blanket northern california as well. forecasters say about 7 inches of snow are expected to fall along the s irierra-nevada passd one foot next to the peaks. coming up, check on housing stocks, and we are talking razor blades, founder of bevel is talking to us, inking a deal with target and closing a big round of funding, the entrepreneur behind it. he's joining us here in a bit. here's the futures at this point. opportunities aren't always obvious.
8:27 am
sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. theand to help you accelerate,. we've created a new company...
8:28 am
one totally focused on what's next for your business. the true partnership where people,technology and ideas push everyone forward. accelerating innovation. accelerating transformation. accelerating next. hewlett packard enterprise.
8:29 am
just a half minute away from the october import price number. the futures at this hour weak throughout -- that's better than the armyier numbers that we saw. now down about 16 points on the
8:30 am
dow jones after one of the tougher sessions we had in recent weeks, yesterday, down 180. the s&p is down not quite four points, and nasdaq on a relative basis down more than the other averages, about 16. rick santelli standing by with the numbers, rick? >> here we go. let's start out with older. we're going to start out with september whole sale trade, but that was not out. jumping to object import prices, month over month,down .50. looking at year over year, that down 10.5. how do the numbers stack up? well, on minus .50, that fits in. there's a lot of negative numbers. easier to look at the positives. only two numbers this year on import prices that were higher. that was in may and june. so this dove tails. the worst minus 3.2 in january. what about export prices? down .20 versus down .70 last
8:31 am
look with revisions for prices. originally reported down .60 last monthme menmonth. it's only down .10, a drop year over year from 11.3 to -- excuse me, that's reversed, from 10.7 to minus 11.3. both revisions are rather substantial, bigger minus numbers, reversed on the month over month, and if i look at what's beginning on in interest rates, i guess the best way to define what's going on is if you look at the last fed meeting, it was a two-day meeting, of course, and on the first day, five year note yields around 136, current ly now at 172, exactly ten trading days ago. i think that really sums it all up. of course, wholesale inventories up on the next go-round for 10:00 eastern. marin marines, happy birthday, in front of veterans' day. back to you. >> rick, thank you, see you
8:32 am
tomorrow. d.r.horton reported earnings, a strong quarter beating estimates and raising the dividendings, beazer opposite, but both companies indicated higher this morning. will, a home builder analyst at citi and thanks for coming in. >> thanks for having me. >> starting with d.r.horton, america's biggest home builder, and numbers were strong. what do you think about what you saw? >> closing numbers in line, and on a basis, they had charges, and the setup is if you look at the print with other names, we saw earnings on delays in terms of labor shortage issues. some of which how they go back. >> why is that? >> it comes down to during the downturn, you went from 2 million starts to 600,000 on a
8:33 am
basis, and so when you take a step back, you say, okay, most of the construction labor force transitioned to other job, and, also, a lot of the labor force transition is migrant lie boabo. problem one is countries like mexico is more competitive because of wages, and there's no more labor since 2006, so the guys are earning 23% less relative to the average job. and, three, most importantly, you know, most of the guys in the business are old and retiring. >> do you feel, though, this is a situation where you will see the labor come back because they have to raise prices? what's that mean for the companies themselves? >> in the road in atlanta, dallas -- >> not for what they are paying people. >> exactly. >> what we hear for every builder is, you know, the sub contractors want 5k more a house for things like cement and framing. only way to get things done is you pay up or you take a closings hit. >> d.r.horton stock is down as
8:34 am
people worry interest rates will be raised. does that concern you with the stock or pulls back 10%, that's a buying opportunity? >> well, i mean, horton right now is at the target price. i would not call it a buys opportunity. we're neutral on the stock. more importantly, a step back k think without two things, one is the initial hit for builderings, there's a 50 point move in the to year. the reason they do that is less pricing power. >> selling off before there's a move. >> anticipation in addition to, and there's preannouncements of cutting earnings expectations. it's a wall of worry. there's a lot of things buying the houses, and rates are lower for longer, cheaper to consumers in their mind, and dealing with the issues, supply constraints that they do not expect. >> if fed raises rates, it's reality, do you think there's another selloff?
8:35 am
>> most likely. >> wow. beazer, what do you think of the numbers? >> we no longer cover beazer. from a legacy perspective, these companies struggle with -- they are a little slow to recover because of tough balance sheets, and so you see evidence that, you know, you bout land late, et cetera, and that becomes difficult, levered, post to the turn. >> thanks for coming in. >> thanks for having me, thanks. conference call with valeant going on now, and we have the details. i'm back. valeantle th this morning, talk about the transition from the specialty pharmacy saying in the next the 0 days, they plan to have an alternative distribution channel for the products, and say there's an impact on the dermatology business in the fourth quarter because it flowed through, and they will pursue other specialty pharmacies and
8:36 am
another innovative model to differentiate themselves from their competitors, but they are going to see an impact in the fourth quarter in dermatology and to a lesser extent neurology giving significant discounts to hospitals on the two drugs which is the cleveland clinics say impacting them, the price increase of those, so saying the next quarter may be a 20% chance from the last quarter. >> pointed out to valeant saying all the cost savings made were eaten up by valeant's price increases alone. >> that's right. they are in the press, addressing this specifically on the call. interesting interestingly, they are not taking questions on the practices because they have their own investigation going on into what happened there. they got a question how much control and knowledge they have the business and all the things coming out about philidor. there's good financial controls, good legal compliance -- >> philidor basically bought the
8:37 am
company, pays for the option to buy for nothing down the road, meaning they bought the company. >> they did. saying it was a separate company. >> it is a company. option to buy the company for nothing down the road, you bought the company. >> right. this was said on the conference call. he says, i think it was interesting, we'd like to mention in terms of philidor, there's allegations of wrong doing, but thus far, allegations have not been proven, assured that these allegations of the bad things have not been happening. >> made any comments about why they set up arrangements? >> they didn't. >> paying for the option to pay for it later for nothing? i mean, that, to me, that -- >> did not specific sli address it, but going through the one specialty pharmacy, having them work specially with valeant would streamline. >> i don't understand arm's length when for all intents and purposes, there was no arm's length. why set up the entire situation that way? >> right. these are the questions they are getting now, but they said they
8:38 am
can't take too many questions about what's beginning on at fillidor. they said, we're unaware of other issues in the entire valeant company, but in a company this size, impossible to have full knowledge of anything at any one time. >> you talk to all the shareholders and investors in the company. the call last week, not a great call in terms of confidence in pierson in the company, do you think this is -- you've been on for a little bit, do you feel any sense of this improving the case, and what industries are locking for to give them confidence? >> yeah. so they are being more forthcoming, seems like they are not sticking to the legalese and script as much, but they are taking questions. see how much they continue to take, but i think people really want them to be up front, understand how far it goes. i think it was interesting listening even to the forward looking statements that began the call. there were so many things in there, the outcome of the philildor investigations, outcome of the business things, so it was, like, there's so much
8:39 am
uncertainty they were highlighting at the beginning of the call. the stock is falling a little bit, but not that much. >> i didn't see where the stock was before they started talking. i wondered if that was because of the conference call itself or because andrew left is coming on and talking later? >> that's a good point. yeah, i don't know if it's falling because of the call or not. interesting to see as it continues, and will they continue to take questions? problem with the last call, they ened it without taking more questions. people want them to communicate. >> one of the thing that bill ackman says he feels comfort in looking at alternatives. talking about alalternatives, i that selling the company? is that on the table? is that a possibility? >> the thing about mike pierson what people like about him is he considers anything that shareholders want him to do. >> right. >> if they were encouraging him to think about selling the company, he seems like he probably would. >> right. >> other folks said they have too much debt to break up the company and sell it in parts, that that's not a viable option.
8:40 am
>> is jublia the biggest drug? >> among the bigger one, toenail fungus is a huge problem. >> is it? >> i really don't have the numbers. >> now it's mario lopez at an awards show, oh, look, it's foot fungus! that makes me want to short. >> our kids were talking about this. >> they know what the drug is. >> does everyone have toenail fungus? do i have it? do you know? >> you probably do. >> when you trick them -- >> there's a show now. shirt off, apparently, all the time in this show, great new show. >> funny, before i was on the show, i was watching joe, someone sitting there, and i got foot fungus, and he got the other person to admit he did too. >> so mean. >> he lost a toe because of it. >> you're lying. >> no. maybe.
8:41 am
>> good thing about toenail fungus is you don't have to have a side effect of death. you have the other things. >> oh, okay. >> i know the side effects because -- there's redness and inflammati inflammation. >> we should call him. >> the quirky guy. >> ben coffman? >> gets a massage. >> i remember that. >> we loved the company. >> stuck in my memory. >> we have to call him. >> wants a foot massage. >> no, no, i do, but not -- >> when we return, thank you for that, founder of bevel joining us, a new round of funding, not to mention the winner. qgq grooming award, kristin walker is here.
8:42 am
hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.
8:43 am
8:44 am
welcome back to "squawk box," one of the few african-american entrepreneurs in silicon valley, securing $30 million in investment capital and deal with target two years after creating the first product, and it's captured the attention and support of some of the very biggest names in tech, entertainment, and sports, the founder and ceo of walker and company is here, he spoke last night with fast company innovation companies in new york with the founders of birch box, and we welcome you here during movember. i said you look like you save,
8:45 am
sort of. you have a little -- is that part of the look? >> i clean it up when i get home. >> those unfamiliar with bevel, just tell us what it is. >> yes. so bevel is the flag ship brand under walker and company, and it is the first and only shaving system clinically prove to reduce bumps et cetera, there's a great customer experience and shopping experience. >> dare i say we have the hariest guys on yesterday. >> good. >> that's okay by you? >> do what you like. >> but product for product in. >> we solve accuse health and beauty product that black men and women have and 30% of men and women in other races have, razor bumps. that is the focus. we have the best products out there for both men and women. >> what is it? >> just a single blade? >> single blade. >> old school. >> six product kit, starts with the single blade, and it
8:46 am
exfoliates the skin, oil preps the shave, shave cream, and restoring balm, all with ingredients behind clinically proven -- >> you think it's what causes razor burn? >> it is the multiblade razors. there are two things they do to a face, first, you know, the first, the third makes you breakfast in the morning, it's too much. >> is that true? >> a lot of it is true. all of it is true. >> the very first -- >> that's right. >> it pulls? >> yes. >> it pulls it out. >> that's a bad idea? >> yes. there's no pulling, tugging, you don't have to worry about it digging in the meat of your skin. bevel solk edsolved it. we solved it. >> this question has to do with those who have done a lot of work there, you had interesting guys there. i interviewed chris last week.
8:47 am
>> okay. >> he talked about two things, if there's not enough women in the ranks, in the venture capital world making investments, and not enough african-americans, but how do you change that dynamic? you know, we're both white guys, so i'm curious, though, how do you think about that issue? >> yes. so i think there's two ways to solve the issue. number one, it starts with mitigating implicit bias, understand what you don't understand, right, leading to the second thing, can't be lazy, right? one thing we notice in our fundraising process, you know, for the overwhelming majority of the nos received, nothing to do with the merits of business opportunity. it was more folks lack of context clouding their judgment, right? when i think about bevel, all of the folks had to do was get on the phone with ten black men or women and eight or nine said it's the worst thing ever. right? that would have just enhanced their investment thesis in
8:48 am
walker and company, but a lot of folks did not do that. >> the question is how do you change that, though? >> i think it has to do with just not being as lazy. right. certainly, hire folks who acquire the context or have the context to know these are great ideas. it starts with them. it starts with not being lazy, not only acquiring that context, but going out, finding folks who have that context and hiring within. >> right. you look at what's going on in the valley, talking earlier, troy, your sense of where we are. bubble, not bubble? >> so, the funny thing is, my experience in silicon valley is short lived, moved out there in 2008. what i learned about silicon valley and bubble mentality, the only folks talking about the bubble are folks not in it in silicon valley, and the running argument that folks of silicon valley have, if you look at the
8:49 am
media, look what led to the great depression, what led to bubbles is people not talking about it, right? >> right. >> in addition to that, folks are building really, really good businesses in silicon valley, right? generating profit ability, et cetera, we're in a very, very good spot right now, and it does not feel like a bubble to me. >> long term for a company like a b business like bevel -- >> yeah? >> is that something that grows beyond the product? >> yeah. >> or is it something that is sold off to a procter & gamble? >> the mission is to make health and beauty simple for people of color, builds word's most consumer es centric full stop. we want to build legacy as a procter & gamble, et cetera, so we are going to try our best at it, right, what happens 20 years from now, we'll see. we have kind of a lot on the horizon, starting with bevel, launching new products for bevel within a couple months, a new brand all together in 2016. if we excuse in the way we hope
8:50 am
to, there's walker and company with upwards of ten new things next year, right? we have a lot of work to do, and we are grinding and focusing. >> goal is to hold it yourself? >> for as much as we can. the one yourself? >> if we can. i want to build a company that folks can be proud to support. i feel when i look at this generation, future generations ahead, i can't argue that there are companies i've been proud to support. there's great companies with great products, i can't say i'm proud to support them. walker & company has the opportunity to be one of the first companies do that. i'm excited about that. >> awesome. >> tristan, thanks for being here. >> thank you. >> when we come back, jim cramer from the new york stock exchange. look at the futures after that decline of almost 180 points yesterday for the dow, just about 15 in morning for the dow. s&p futures down. make healthcare more personal with patient-centric, digital innovations;
8:51 am
from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪
8:52 am
8:53 am
get down to the new york stock exchange. jim cramer joins us now. jim, we had across the board a lot of different numbers to consider today. was there one that stood out as something that we can extrapolate bigger issues from that you saw?
8:54 am
>> no. i just think that we all have to get used to the idea that there's going to be december rate increase. and that it's not good for stocks. only good for a handful of stocks. i don't think it's necessary, but that deal -- that's off the table. they only care about employment. the only numbers that matter are thursday's claims. i think it's a done deal, joe. i think we all have to recognize that markets do poorly. now, a lot of people come on air saying it's good. don't worry about it. they're wrong. they're too young. they haven't seen it. >> let's go to europe, jim. >> europe? >> let's go. let's go to paris. it's going to be a dollar. isn't it? >> i think you go to tuscany. i was in tuscany in september. joe, the places have come down on their own because of the taxes. because of the dollar you can get a place a fraction of what it cost. >> not a single place to rent in tuscan nay. remember that in "seinfeld?"
8:55 am
no a single place in the entire area. >> i will ben super tuscany territory by the time they -- you know where the dollar is going. it's going through the roof. you know, we have a lot of people come on air and say it's time for tightening. it's not time for tightening, but i accept the fact we'll have one. if you're in stocks, you'll get hurt. that's okay. that's what happens in a rate increase. don't believe the people who come on and say it doesn't matter. those people are either too foolish or too young. they're young. youth belongs to people who get it wrong. >> take the stocks and go to paris or tuscany? >> sienna, where they have the races? >> we had it all censored. >> i couldn't believe we obscured that. >> i know. >> it's cable. >> you sell the valeant you go
8:56 am
by a studio apartment near florence. >> all right. that's an idea, too. one of those yellow ones. >> get some value for that, then you don't have to worry about the specialty pharma and jublia. >> all right. thank you. this holiday season, get ready for mystery. what's in the trunk? nothing. romance. 18 inch alloys. you remembered. family fun. everybody squeeze in. don't block anyone. and non-stop action. noooooooo! it's the event you don't want to miss. it's the season of audi sales event. get up to a $2,500 bonus for highly qualified lessees on select audi models.
8:57 am
8:58 am
can a a subconscious. mind? a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?
8:59 am
stocks to watch this morning. dr horton results beating the street on a 19% jump in new orders. shares are trading higher. >> there's a new side thing. >> that's neat. >> also the market has been tough on the beazer of late. orders were relatively flat. you can see the stock is down on the news today on its earnings report. lions gate shares dropping after the movie studio posted an unexpected quarterly loss. trading now down about 7.25%. rackspace topping estimates and offering an upbeat estimate. the stock is trading higher this morning. yet, by 7%. mylan says it is confident of a successful completion of its tender offer for perrigo, even
9:00 am
as that company is calling to reject such offers. gap shares, an earnings warning. gap right now is trading down, about 7%. i got through all of those. >> well done. >> i still have time. >> and rackspace, if you want to know what that is about, join us. >> join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. premarket is weak as the s&p takes aim at a fifth consecutive down session. that would match a streak from september. you heard them talking about gap, smartphones and more. bonds are one to watch. china cpi below expectations. oil relatively steady despite the iea saying it mayec

92 Views

info Stream Only

Uploaded by TV Archive on