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tv   Squawk Box  CNBC  November 7, 2013 6:00am-9:01am EST

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it's thursday, november 7th, 2013. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm barack obama along with joe kernen and andrew ross sorkin. we do have a big morning ahead. so let's get right to work. twitter pricing its ipo above the expected range ott of $25 23 to $25 with an offer of 7/0 million shares of $26 apiece, the company will raise at least $1.8 billion. julia boorstin sat down with twitter's ceo. she'll join us with is that conversation in just a minute. but first, the rest of this morning's agenda, there are a number of key economic stories to watch. the european central bank is meeting in frankfurt. policymakers are expected to hold rates steady despite intense pressure to cut interest rates because of what you've
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been watching with the euro. a decision is expected around 7:45 eastern time. but the key developments for the market could come at 8:30 eastern. that's when the ecb president mario draghi is holding a news conference. we'll get previews from geoff ket mo c cutmore in europe in about 20 minutes. jobless claims are seen at falling slightly to 335,000. as for the markets, joe mentioned the dow closing at a historic high. the s&p 500 rose for the 16th time in the last 21 sessions, finishing within two points of a record. the nasdaq was not along ford ride yesterday. it closed a little lower to snap a three-day winning streak. you did see some of the high flyers that took it on the chin yesterday. you watch the futures this morning and you'll see dow futures indicated open down by 20 points. s&p off over 3 points.
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andrew, back over on to you. >> we have a lot of corporate news to get to. toll brothers is buying a home building business of privately owned chipelle industries for backside 25 billion in cash. this gives toll more access to affluent real estate markets in california. chipmaker rda microelectronics has received a second buyout offer coming from china's state-owned shinwei uni group. in september, a different state-owned company offered the to buy shares. rda says its board is evaluating both proposals. in retail news, costco is reporting better than expected october same-store sales. customers spent more at its stores and on its website. so a little bit of a double pop there, joe. >> so what time is twitter opening, andrew? >> i am told from a couple sources -- because we were talking about it last night, that you probably should not see the open on twitter close to --
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sometimes between 10:00 and 11:00. >> why? >> the expectation that somehow 9:30 is -- >> no, they have to balance out all the orders. >> oftentimes ipos don't open at the order. >> what time did facebook open? >> facebook was way into the afternoon. the expectation is -- >> there were problems, but there's going to be a lot of people. >> right. 10:00 to 11:00 is not when. >> 10:00 to 111:00. >> it will open today. >> it will open today. >> no, he said -- when i -- i said who knows when it will open. he goes, i know when it's going to open. >> 10:00 to 11:00 is not knowing when it's going to open. >> the point is is that instead of everybody freaking out this morning when it doesn't open at 9:30 or 9:345 or 10:15 or 10:30 or 10:45 as i can imagine happening -- >> well, with an ipo, they have to put all the stuff -- my monitor, look at my monitor. >> ocd boy who can't handle
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things going out of walk -- >> it's like a picture on the wall. now that's too much. >> there. it's fine. for anybody who didn't know, joe has issues. if you want to get to him, leave the closet door open. >> if they've seen the show, they know. >> anyway, andrew, this is really -- i can argue a lot of different things. we're going to beat this to death. but since it was 17 two weeks ago, so you already have 50% higher. >> yep. >> but the thing is, when you -- like on any given day when you're trading a stock with a market cap of $100 billion, only a few billion trade on any given day. and then all those shares are automatically thought to be marked up and down. >> yep. >> so we're only talking about 1.8 billion out of the 14 billion. >> right. >> so the supply/demand, suddenly the value of the whole company can fluctuate wildly based on the number -- or on a few numbers. so i worked see 40 on the open, i could even see a double.
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but then again, it's up 50% from where it was initially priced. >> right. >> and it's like really questionable, whether -- isn't it, whether it ever really makes a lot of money based on the business model? and then yesterday, you know why the nasdaq was down? >> why? it was a lot of the high flying stuff. it should take them out of those so they can put knit twitter. >> and nobody can buy this, anyway. and i'm telling you, andrew, in the old days -- and i wasn't at goldman, but i was at let's saying a merrill lynch or a hutton. in the entire office, maybe you would get 500 shares. and one of the biggest producers would get 100 shares to give to their best clients. that was it. >> but you know what's going to happen, if there was a big pop, there's a lot of people who would be willing to sell. >> so this is going to be -- >> but you have to recognize, this is a stock that's been in the secondary markets. the secondary market in particular for a long time. >> and where is it? it's $14 billion is what it's worth? >> the whole company is worth
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$1 4/.2 billion. i think you're going to have a linkedin situation where you do see a big pop. >> well, it should be. i figure 40, anyway. but what was the other thing i was saying? how much money did they lose in nine months? their losses are growing as quickly as -- >> no, it's not a company that looks -- but call jeff bezos and tell him what you think then. >> i can certainly see how that works. whereas this, if i wasn't in the media or if it wasn't someone like that, why would normal people -- i mean, are they that -- everyone can be a star in hollywood? i care what every single person is thinking every moment of the day? i don't. >> joe, it's called youtube. >> how much money do they make? >> mow they make a small fortune. now that deal looks like it was genius. it was $1.6 billion at the time. >> it's going to be fun to talk about today. these are historic. we can't overdo it. if you think about google or if you think about facebook, the
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day when it came public, amgen, they don't happen that often where an icon, apple, where it actually becomes public. so it's something that hopefully you're interested in twitter because we're going to be talking about it. >> we are. >> we will. "squawk on the street" will. morning call will. is morning call still around? oh, no, that's "squawk on the street." >> "squawk on the street" and "fast money "on ". >> "market wrap" is going to talk about it, though. >> that would be "closing bell." on. >> never mind. a few stocks moved. other stocks in after hours trading, qualcomm, earnings and revenue fell short of estimates. the company forecast revenue below expectations, said it would curb its fast growing operating expenses. the comments are raising concerns that the mobile chipmaker is facing tough competition from asia. andrew, he's got his sleeves rolled up because of the whole
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twitter thing. we have to get down and dirty. we have to get in the trenches. we've got to get some stuff on our hands today covering this, andrew, we do. cbs posting earnings. >> i usually roll my sleeves up. >> you do? okay. cbs, earnings in line with consensus. the company says it collected more revenue from advertising and the licensing television shows. and we kind of have to thank les for getting the programming is worth, all of us appreciate that. thank you. if you want to wash dch. >> fighting the good fight. >> if you like to watch, you need to pay. and we thank him for that. hopefully lowering forecasts, the super market chain, cutting prices to keep up with its competitors. it's ugly, down about 5.5 points on the session. and then transocean reported a larger than expected profit due to increased demand for its rigs. also, it was able to charge more, so higher rates. restaurant operator noodleses &
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company reported lower than expected revenue and its -- okay. that's why. it's only the second quarter of a public company. that is the nickname for my daughter, blake. her nickname is noodle. remember mr. needloodle? >> yeah. i see him frequently. >> there are two of them. >> they're both alive on youtube. >> right, right. >> i like ramen noodles. >> that was a college thing for you, wasn't it? >> now they have super fancy ramen noodle shops in new york city. >> yeah. >> it's like cure carbs, i think, isn't it? >> probably true. >> and if you want enough protein from rodent hairs and insect parts, you don't even need those. >> there's people eating breakfast this morning, joe. >> i know. where is your yogurt? it's not milk and cultured nastiness. >> it's not here yet.
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it will be arriving. >> cultured nastiness. >> no, thinking about germaphobes and what your life is like -- >> there's a difference between germ ma phophobes and people lig the subway floor. >> i never, ever thought about shaking someone's hand and whether 50i78 going to catch something. never in my life. >> probably licking the subway folds, right? >> not if it's below 30 degrees. becky mentioned the futures. let's check on the broader markets this morning. i finally said something to a website yesterday when they said it was one of our competitors, the dow jones thing where they called it a fresh all-time high. and i said, what -- i go, explain to -- and they ever me answered. the writer there who is probably 23 years old, but i said what is the difference between a fresh all-time high and an all-time high? and then i said why don't you
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just go with a new fresh all-time? no, go with a new fresh all-time high. and that's like single best idea, it's like why go with that? but i digress. let's look at a ten-year high. we do it here. i'd like to say stop with the fresh stuff. >> you fooled me on this. >> but even saying another all-time high, if it's an all-time high, it's an all-time high. >> this irregardless goes all the way back to regardless. in other words -- >> are we confirming earnings? >> regardless. >> and irregardless is wrong. and it gets you to i think the -- so you want to really do it, this is my -- >> that's a reward. >> that's irregardless? no. but people will write in and say i'm an idiot for using it. the people we've talked about on twitter, the haters.
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anyway, let's take a quick look at the dollar. 1.35 or so. oh, no, the ten-year note, dollar, 1.35. down, down. >> well, that's the big question. does the ecb cut or not? if there's a surprise cut, you could see a drop pretty rapidly. 1.34. >> we would be okay with that. >> should we talk more about twitter? >> i don't think we can talk enough about it today. today is the day. how many people do we have on here? like 40. every person should appear and say something about twitter. and they might. >> i was looking through the -- >> i think they will. >> i heard the ipo was not trending on twitter, which was weird. >> you know who we can ask about that? julia boorstin who is up early on the west coast this morning. we're getting back to twitter. our own julia boorstin sat down with twitter's ceo dick costolo for his thoughts on investor reaction and lessons learned
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from the ipo process. he joins us now from the process in san francisco. >> good morning. when i caught up with twitter's ceo dick costlo, the first thing i asked him is what he thought of investors' reaction. >> i think as we've been on the road and seen enthusiasm for the story and the way we're thinking about the future of the company and our long-term plans, that's enabled us to make the changes that we've made to the price. >> in our conversations with potential investors, do you think they understand how twitter really works and how you guys make money? >> so the answer to both questions is absolutely yes. in fact, one of the things that's been most exciting for me on the road show is the propensity for some of these investors to come in and show me examples of how twitter has been so powerful. so that enthusiasm from investors and their own use of the product both from a user basis and then from the potential of it as a
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monetization platform has been fantastic to see. >> well, knowing what you know now about the ipo process, what would you do differently? >> so you're going to -- you know, there is -- i hate to give the trite answer, but here it comes. so get ready for it. i really wouldn't change anything about the way we've approached the process this time. i think that the team has just done a tremendous job preparing both me and the rest of the executive team for everything we were going to go through and being thoughtful and methodical about everything we've gone through along the way. so i'm extremely happy with the process we've gone through to get here and how things have gone so far. >> how is your ipo process different because of the job? >> i think one of the things it enabled us to do was what obviously we've filed confidentially. it allowed us to be thoughtful and patient with the time that we spent during that filing process. we were working on it for months, of course, before we made it public. and i think that's just very
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helpful in terms of not going from zero to 100 both internally and externally and allowing the people working on it internally to start to develop, the way they're filing these things and the way of working together on it on. so that was enormously helpful to us. >> now, i asked costlo how much his ipo strategy was influenced by facebook's ipo debacle. he totally dodged the question, but he did say they drew on best practices from a range of silicone valley companies. as to weather facebook poses competition to twitter, he said he's not concerned, but he did say they want to have a good accepts of the competitive landscape. we'll have much more from my interview with dick costlo coming up, including his outlook on twitter's potential growth and his strategy for tackling twitter's biggest challenges. guys. >> thank you, julia. before you go, do you have a sense of this question we were talking about before around the table? why is twirt ipo not trending on
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twitter? what does that mean? >> well, there's been a lot of question about whether twitter's users who were primarily in the u.s., male and under the age of 35 are going to be twitter's investors. that is the big question there. obviously, we had the cnbc atp poll out earlier this week which said in fact those core users may not be interested in investing, but there are plenty of people who can see potential. people talk about a huge range of things on twitter. they might be talking about the country music ar wards more than the ipo. but i think they might change when we get closer to the stock trading later today. julia, thank you for that report. we'll have more from julia throughout the morning. then on "squawk on the street," dick costlo is back. he's going to be joining carl live from the floor of the stock exchange. >> what is his name? because that is a different way now. is it -- >> i followed julia into the pronunciation. >> let's put it aside right now.
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but i've heard him cast costolo and then i'm heard him called costello. i think you would get his name right because it's your thing. >> the teleprompter is not my friend, as you know. and so i -- >> so just seeing it in that format causes you to -- >> my brain is -- it freezes up. >> i get that. i get that. the teleprompter is -- >> oh, you get it because 15 years ago you had that problem, as well. >> i was stumbled with the teleprompter. teleprompter reading is not my strength. >> coming up, two senators -- no, coming up, two senators are calling for an end to a stock opgdz related tax break and why companies are apparently worried about it. but first, julia martin will join us from the weather channel with today's national forecast. >> hey, guys. good morning to you. we've got a couple of storm systems to talk about. one in the east and one in the
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west. and we're going to start things off in the west. that's when we're going to see rain in places like seattle today. windy conditions for you. some snow in the higher elevations and also in the east some rain making its way into the big cities by later on this morning. new york, boston, d.c. all getting wet. late week, here is the pattern then. windy here in the central u.s. by tomorrow, we could see snow in places like minneapolis. mostly quiet conditions over the weekend. just some lingering lake effect snow showers. we're going to track this cold front. today, the east coast staying mild in the big cities. but by tomorrow, we're in for a big temperature drop. places like boston, going to drop a good 10 degrees. the rain moves out tonight and we'll see lingering lake-effect snow showers. colder air coming into the east and into the south and next week we could even see. >> know is in the mid-atlantic, places like washington, d.c. we'll keep tracking that for you.
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more "squawk box" when we come back. opportunities aren't always obvious. 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.
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welcome back, everybody. it's time for the executive edge. two senators are calling for an end to a stock option related plan break for taxes. companies that issue stock options as part of an employee's pay package can take a tax deduction for the difference between what if the employee pays for the options or what the stocks are worth when the options are exercised years later. democrat carl levin and
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republican john mccain called the tax break an unfair loophole and say killing it would raise $23 billion over ten years. gentlemen. >> i'm in agreement. >> yeah. it sounds fair. look, if it's compensation, it's compensation. if you're really talking about equalizing playing fields -- >> you think they should do this? i mean, for me, it's a complete no-brainer. if carl levin had any idea what causes a tech company to be successful and to be competitive globally -- >> look, if we're talking about leveling the playing field -- >> it's not fair -- >> less money to do what it does well. >> look, maybe it's not fair to do a one off, but these are the type of things that if you're talking about getting in and reforming corporate tax reforms, this should be on the table. i don't think it's a one off, but it makes sense to me that -- >> if it's money -- it was a no-brain no-brainer. i wasn't going to respond to it because it's so obvious. to take money away from -- i think corporations shouldn't even be taxed basically. to take more money from a
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corporation and to give it to the government and allow them decide how to spend it is a stupid move by definition. >> it's part of corporate tax overhaul. if you want to bring back money from overseases -- >> you can get rid of corporations or the person spending the money the way -- >> if you come back, nobody should pay any taxes and you're never going to agree on anything. >> that's not what i'm saying. if you want to compete globally and you want jobs, look at this as to whether it helps or hurts job creation. >> if you're the president, you have to get something to give something and i don't think you should do it one off, but -- >> why would you -- >> i want a lower tax -- >> to bring money back from overseas. >> i understand that, but why -- if you have a restricted stock, why should that be taxed and your stock options not? >> it's not that they're not. the company is getting a deduction.. >> no, i understand. i understand. but why would that be -- >> if you want to figure out a way to attract talent, i don't know whether it matches up, a equals a, b equals b.
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if it helps you attract talent, it makes sense to me. and i want to lower corporate tax. i don't want to raise corporate taxes. >> i would love to find a way to restructure corporate taxes which ultimately may lower corporate taxes broadly. >> it immediately doesn't pass muster -- >> restricted stocks should be which -- >> the same way regular compensation should be. let me ask a question. >> yep. >> okay. a tech company is getting the deducti deduction, right? >> one of our few bright spots in the economy. >> a manufacturing company which has -- >> they issued stock options like this? >> they rarely -- >> it doesn't mean they can't. >> they don't get the deductions. why does that make sense? >> if they want to, do it. the if that's the way they can retail talent. this is a talent-rich industry. and it's working well. >> stock options have historically been used mostly for white collar workers and in the tech industry. >> we don't like them. >> i'm not saying we don't.
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i'm just saying that we want a fair playing field. and we can -- >> but reform the whole system. >> mccain, i like him. i don't think he understands economics at all. carl levin by definition has said u.s. corporations pay 12%. look at the two proposals to know that i'm against it. anything that is going to make our corporations let excessively and globally -- >> joe, would you give it as part of a tax overhaul? >> i don't -- >> would you give it as part avenue a tax overhaul if you were able to lower rates to bring back money from overseas, if you close -- >> if you're lowering corporate taxes, yes. >> what if it's net-net neutral but you're evening the playing field? >> that's like kissing your sister. i want to lower corporate taxes, create jobs, make companies more -- >> i would -- >> that's your campaign platform? >> that's my campaign xlat form. >> i'll go to zero on it and tax the people that -- >> because if the company
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doesn't save the money here, it's going to give somewhere else. >> look, we all want companies to grow. we agree that they're -- >> they're not right now. >> they need help, but it's not clear to me that she you should have one company benefitting while others don't. >> it was a no-brainer. >> let me get to the second part. this is another tax issue that's out there. the white house is planning to exempt some labor unions and businesses from paying part of a re-insurance fee under obama care. but unions and businesses say the move doesn't go far enough because most of their insurance plans won't qualify. the health care law includes a $63 fee on each person covered in a plan. this is news to me. i didn't realize this before. that money is going to go to insurance companies that end up paying big medical bills for new customers who buy exchanges. businesses and unions argue the fee makes it more costly to continue offering health care coverage and this is a really tricky one, too. do you start offering exemptions to these things? is it fair to have $63 a plan.
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if you're a family of on five, that's over $300 in these fees that turn up. >> i repeatedly say we shouldn't judge obama care. over and over again, there's new things that we keep learning that are different than what i think a lot of people perceived about how this program was going to work. >> watching the union which, you know, in large part signed on for this and helped make it happen and watching as they see how it's affecting them and they want all these special exemptions is my common -- >> right. the exemptions are a bit bizarre. >> and they get them, too. >> right. >> and the white house, even though everybody else, you know, was good for one is good for -- but the unions, you know, have all this influence and they're not subject to it. so that's -- i don't know. >> yeah. i think we're in agreement on that. let me tell you about one more story in today's "wall street journal" about former jails being turned into luxury loelthss. the concept is popular in europe and is now catching on in the united states. today's liberty hotel in boston
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opened in 1851 as the charles street jail. it housed the boston strangler, the man behind the infamous bring uses job and a nazi commander. >> they keep the bars? >> i don't know. the rooms looked pretty nice. >> i want in alcatraz and i wanted to leave before -- i didn't want to spend the night there. and they play the sound -- it's very quiet. >> oh, look. >> and they play the sound of all the bars closing and it's a very loud echoey sound and you're glad you have a boat to leave the island. >> it looks like they have bars still in the restaurant, maybe down in the restaurant in the bar there are still bars on the wounds, but the rooms themselves look like -- >> you have to ask yourself if feeling like you're in a jalt appeals to you, you're a strange person. if you want to admit, yeah, i'd like to be in jail for a little while, as long as i could come and go, then you have to ask
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yourself, what is it that you really -- >> the last time i made comments about things going on in jail -- >> i know you did. >> so i stay away from this conversation. >> if you ever go to jail, you'd like to be sentenced to a woman' jail is what you said. and just so order of hang out, i think, right? you're going to -- people know. this is a continuation of our last conversation. >> i know. but not all the viewers from last time -- >> do you want to go into what happened the last time? >> i think we probably shouldn't. thank you. >> but if you were going to pick, men's jail, women's jail, where would you rather spend your time? >> i think a woman's jail. >> i think we all would. >> when we come back, we have a live report from the ecb where policymakers are meeting today. many are looking for the central bank to cut rates. we'll see what happens. as we head to the break, here is twitter's ceo on the decision to go public. >> knowing what you know now about the ipo process, what would you do differently? >> i hate to give the trite
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answer, but here it comes. get ready for it. i really wouldn't change anything about the way we've approached the process this time. i think that the team has just done a tremendous job preparing both me and the rest of the executive team for everything we were going to go through and being thoughtful and methodical about everything we've gone through along the way. so i'm extremely happy with the process we've gone through to get here and how things have gone so far. ♪
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bnk ooh fwlnd .ecb both holding policy meetings today. geoff cutmore joins us from frankfurt. i got a picture from el-erian the other day of that hideous skup temperature behi sculpture behind you. who did you commission to build that monstrosity behind you, do you know? and the design -- the euro never had a chance when you designed that ugly -- what is that? it's an e? is it a dollar sign? anyway, tell us about the ecb and the boa.
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>> yeah. the problem is, joe, most of those european artists are dead. i think fortunately the person that created this one is still around. but since i last spoke to you, they have at least patched up some of the broken stars, some of those uncomfortable with being in the single currency who have broken some of the stars on this euro symbol. it's very much about the euro today, as well opinion i guess anybody who is interested in the euro/dollar rate has been watching what the ecb is going to do today very closely. the expectation was that there will not be any change in official interest rates. that's not to say that there isn't pressure. the reference banks or the barge's target rate for inflation is 2%. we are half of that at the moment on the latest inflation prints. so there are plenty of reasons for them to do something at some point. but because we've seen spain come out of recession, joe, and because we've seen some better
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growth numbers out of some of the other european economies here, i think mr. draghi today will hold pat on any interest rate cut and i suspect there won't be any other news on further liquidity support or other measure at this point. but, hey, he's learned lessons from mr. bernanke. he now knows what forward guidance is. i guess if anything, he'll try and be dovish. we might get some new language in the forward guidance. back to you. >> it's what we're going to do, too, i think. we're going to say -- we're going to trade tapering. we're going to trade the qe for the adding a couple of really, really, really longs or go down to six on the -- i don't know. monetary policy is -- i don't know wa we did in the old days. i don't know how we survived without central banks. it's really crazy. >> i think we managed our finances appropriately, didn't we? we ran our budgets like we ran
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our household budget. i mean, you don't rush out and is overspend and think that, hey, somebody is going to step in and bail you out at some point. but somewhere we drank the kool-aid and we decided that it was okay to spend today and try and pay it back tomorrow even though we didn't quite know how we were ever going to pay it back. and that remains the problem here, as well, joe, because the banks are stuff chock-full of nonperforming loans. they've been encouraged to buy sovereign debt in countries around the region. look at italy, portugal or spain. they have plenty of debt because it's risk rated zero on their balance sheets. the trouble is when they're not able to pay the interest charges on all that money that's been borrowed, of course, then everybody gets nervous. and we've still got that issue to run through through the rest of this year because mr. draghi the last time we spoke, i think, joe, said he was going to start an asset quality review of european bank balance sheets
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that was going to lead ultimately to another stress test. only the third we've had in europe and, of course, we know every time we have one of these, we have some banking problems afterwards because nobody seems to quite put out an honest report. so there's a lot coming up in 2014 for us to think about. but today, it seems mr. draghi, i think, will hold pat. >> thank you. i need to pick -- i'm not going to say that. we'll pick your brain. it's a gross expression. but i do need to talk about germany with you sometime. if i come there this summer, i don't know, frankfurt is not -- that ugly thing is not going to be -- no, i think berlin. >> joe. yeah, geoff? >> joe. you remember last time i told you that we're a stone's throw away from the red light district here. there's a very odd thing about the geography of frankfurt that we have all the bankers in one location and right next door in the neighboring block we have several streets of red light
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district. but my understanding is -- and i'm told this by my german colleague annette, that as the bankers have disappeared for natural reasons sips the financial crisis, the red light district is start to go gentrify and some of the most -- establishments are going away. now, i don't know if that has any bearing on your travel plans to frankfurt or not, but i thought i'd throw it out there. >> i appreciate you thinking that for me. bankers and profits are similar in a lot of ways, aren't they? but it's the current kill the bankers, andrew jackson sort of mentality these days. anyway, geoff cutmore, thank you. i think we'll be skipping frankfurt. hamburg is nice, isn't it? >> i like dusseldorf. >> that's what you said. >> i enjoyed that years ago. anyway, coming up, from europe to the u.s. stocks rise to go record highs, we're going to ask if the run can continue. that's next. plus, twitter goes public.
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we're looking at how everyone from celebrities to corporate america to superstars, sports stars and others are using social networking to their advantage. the executive wind the nfl's strategy, he's going to join us at 8:40 eastern tim. but first, as we head to a break, we have more of julia boorstin's exclusive interview with twitter's ceo. i think that our strategy approach in the ipo has been based on me and our investors frankly having a number of conversations with other ceos and investors around silicone valley. one of the great things about silicone valley is irrespective of how competitive you might be with another company or how closely you might be working with that company, there's a great sort of give-and-take and camaraderie from between some of the executives in the valley and some of the other investors in the valley. 982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection
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the dow hit another record yesterday. now investors look to digest more data on the economy, including gdp today and the big jobs report tomorrow, which is tomorrow, november 8th. so we should have had it last friday, but it got delayed. joining us now, lou brien and naraman aravish. we would normally have adp, but we had that last week. do you remember what -- last week, lou, when was that? i don't even remember it. was it november? it was. do you remember, what was the adp? it was weak. >> up 130. >> so was your number for tomorrow? >> you know what, joe? i'm going to be higher than the average guest, which is 120. and that doesn't happen very often. but as i've been trying to figure out if there's going to be an effect of the government shutdown on it, and i think that's most of the reason why
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people are lower than they had been, i can't find a way where you can't get a two-week period for payrolls where someone from the government wasn't working at least some of those days and getting paid, either right at the beginning of the pay period or even at the end. and i talked to some people at the government and their pay stub says the 6th through the 19th. so that includes the reference week, which is the key, the 6th through the 12th. and they were paid. so i don't think that the government is going to have that big an effect. i don't think that there were a lot of hiring that was going to go on -- >> let's not even think about that. have we moved from -- nariman, have we moved from 175 we could count on? has it slowed in the last six months? >> it has. the clear trend here, and that's one of the things that worries us even before going into the government shutdown, we're a little more optimistic on
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tomorrow's numbers. we think it could be around 150 even. the effect of the shutdown wasn't that great. the bigger worry, as you're saying, is that there already has been a slowdown in employment, in housing. so things are kind of soft out there discounting the whole mess in washington. >> so for the gdp number, nariman, what are you looking for? >> we're saying 1.8 for the third quarter. and we think it might get softer for the fourth quarter. so the second half of the year we're barely over 1.5%. so, again, not good in terms of -- >> but we have a bunch of excuses for that. >> sure, of course. but still, it's not good. >> and what's the real back -- factoring all that stuff out or can we not factor it out on? maybe it did affect us. >> it's what i called inside the beltway versus outside the beltway. outside the beltway, the economy is growing 2.5%. but when you factor in the inside the beltway mess, 1.5%,
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basically. >> nariman, what do you think for the first quarter of next year? is this a continued slump or do you think there's a quick rebound? >> i think we will see a rebound for two reasons. one, there's a bit of a bounceback and we'll start to see that underlying strength. we could easily see between 2.5% and 3% in the first quarter. >> all right. lou, in term of just the dow and these averages hitting more highs, does sentiment or -- let's see people get too complacent. does that even matter if the fed is still, you know, actually engaged? >> yeah. it doesn't seem to. i mean, when the fed has been involved, and we just have a couple of instances, the qe1, qe2, and qe3, the market head keeps rallying until the fed is done, even when we know the end date, tend of march and 2010, the first qe was over. and the market was at a peak. of course, after that, it fell about 16% and was down about 10%
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when the fed started hitting that qe2 was on the way. and then qe2, we rallied and got up to around 1350 on the s&p. and then fell. but we could also blame the debt ceiling discussion or debate or food fight at the end of july and august of 2011. by we were at 1350 as late as november of 2012. so 14 months after qe 2 ended when they started saying, well, maybe qe3 should be around. so we go up when qe is going on. at least during these circumstances here, and we don't have very much success afterwards. and i think timing, the fed, or figuring out the fed is going to be one of the key factors going through the end of this year and early next. >> pretty phenomenal, though. so it's november. what are we up, 25% or something for the year on the s&p? >> yeah. so if we went another 10, it would be one of those years that
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i've been, you know, just waiting for it, like in the mid 90s where you do 35%. and this is -- there is in an environment where the new normal was supposedly 8% max. that's all, 7% is all we can expect from the stock market long-term. and here we are. we might do that huge -- and if they keep -- they're fought going to stop before the end of the year, we could do another 10%. i don't know if we will. >> i guess we could, but how much of that is on the fed and norm i can't rememberal gdp which i like to watch, is at a level that really stinks. >> and when we get up to 35%, sell it and we don't care. it's what people do. thanks, guys. see you later. nariman, see you. coming up, michelle caruso cabrera on the chess match everybody on wall street is talking about this week. "squawk box" will be right back. farmers presents: fifteen seconds of smart. so you want to drive more safely? stop eating. take deep breaths.
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welcome back to "squawk box" this morning. wall street's focused on india this week, not because of the current account deficit, but because of the world which he has championship. chief international correspondent michelle caruso-cabrera joins us with more on that. >> the most exciting chess championship in decades because there is a new player on the scene who is considered as exciting or as good as bobby fisher. >> wow. >> 22-year-old magnus carlson. we bring this up, there's a lot of people who love games, they love bridge, poker, tons who love chess. >> looks like rogoff. >> it is. because he's a grand master in
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chess. did you know that? >> yeah. >> one example of people in finance, chris flowers -- >> he admits when he's on the set here guest hosting, i asked him, in the last two hours that you've been on, has there been any period you've been thinking about chess moves? and he goes, oh, yeah. like, seriously? >> we're going to play a sound bite from ken in a few seconds. it's magnus carlson. it gets underway. >> cool name too. >> he faces off against a 43-year-old indian guy. >> why don't you let andrew say that one. >> what? anan? >> yes. >> just -- >> if you see that in the teleprompter, you might explode. >> he's the five-time defending champion. but the heavy favorites when you look, people are quite excited. >> why is there heavy betting on him? he's been blowing things out? >> he's an exciting player.
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let me play the sound bite where he was describing their styles of play via a tennis analogy. >> anand has the bigger serve and carlsen's more of the baseline persistent player. carlsen in particular has an indomitable will to win. he aims for quiet positions where nothing seems to be going on and says, well, nothing's going on but you're going to lose. where anand sparkles at everything and particularly complicated possessions and he'll try to steer carlsen into these messier things. >> did you know that chess can be so exciting? >> the other day, there was a blind chess player -- >> really. >> that beat nine people or 15 people at once. and so he has to remember where all the pieces are. >> amazing. >> and then think about where his moves are. it's mind boggling. >> well, the whole -- the grand
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masters are the way -- it is mind boggling, they go 20 moves -- i don't know how to do. they go 20 moves in advance. rogoff does have a favorite opening. >> yeah, he told you. >> and it's always -- i also said -- he said i always like to be able to start on offense. you get to pick the way you begin the game. there's all kinds of, you know, depending on how you start. >> it's the open he said he liked. >> i forget, yeah. i asked him, though, because i googled it. i like to play. >> both of my parents played. >> i have a set at home, it's dogs and cats. >> you don't know how to play checkers? >> no, i really don't. i've never gone -- >> it'll take you three seconds. >> where people do those moves where you line up where you get ten of them. i don't play -- >> how about connect four? >> battleship? >> no. >> michelle, thank you. >> my pleasure.
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thank you. twitter's ipo, we'll talk expectations, plus more of our exclusive conversation with the company's ceo.
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the first day of trading for twitter. >> this guy's hilarious, i'm going to retweet this. >> we'll get you ready for twitter's wall street debut and talk the future of social media and what it means to be mobile. >> social media is bringing us all closer together. >> plus, bob davis on how twitter can make money and grow its customer base.
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the ecb's decision on interest rates could move global markets, the news and market reaction is just ahead as the second hour of "squawk box" begins right now. good morning, everybody, welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. we've been watching the futures this morning and after the market closed yesterday, the dow was at another high. you can see this morning the futures are indicated slightly weaker. dow futures down by about 16 points, s&p down by three. in our headlines this morning, twitter's initial public offering grabbing the wall street spotlight, the stock will begin trading at $26 a share, that was above the expected range which had been $23 to $25. julia boorstin spoke about the company's strategy ahead of the ipo.
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>> i think that our strategy approach in the ipo has been based on me and our investors, frankly, having a number of conversations with other ceos and investors around silicon valley. one of the great things about silicon valley is irrespective of how competitive you might be with another company or how closely you might be working with that company, there's a great sort of give and take in comradery between some of the executives in the valley and some of the other investors in the valley. >> twitter will be trading on the new york stock exchange under the ticker symbol twtr. another company, which is -- >> well, used to be -- >> oh, i didn't think of that. >> you don't have a microphone on, my friend. >> i know, he told me. thanks. >> it used to be tweeter. >> tweeter et cetera, which was the bankrupt now defunct -- >> i totally forgot about that. but it's perfect for twitter. >> i guess it is. >> it is. >> but i wouldn't want someone
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else's symbol. >> hmm, i didn't think of that. there's another company started by twitter co-founder jack dorsey also exploring an ipo. square has held talks with bankers. square, which makes a small credit card reader that plugs into smartphones is expected to have sales approaching $1 billion next year. and luxury home builders is increasing the presence in the california market. it's buying the home building business of privately owned shapell industries. let's get a preview of the twitter ipo. we've got a couple of people to talk to. our guest host this morning, buzz feed president and c.o.o. and rocco pendilo. what is that -- >> pendola. >> just like it's not costello.
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it's costalo. >> we wear the same underwear and he gets my name wrong. >> what kind of undershirt are you wearing? >> tommy john, baby, all the way. >> he's the social media director at the let's start here. are you buying this thing? >> well, you want to start with the numbers. 26 equates to about $18 billion. if you take the e.v., the enterprise value, that's $16 billion when you take out of some of the cash. revenues of $1 billion in 2014. you get an e.v. to sales of 14. that's a little bit higher than yelp. it's a little bit higher than some of the peers. but i'm comfortable up to 20 billion. i agree with cramer. rbc did an analysis of market cap to sales, as well, that gets you to a 15 multiple on that. i'm comfortable for 20 billion. >> rocco, you say you're not comfortable at all. >> no, i'm not. i really think at least retail every day, regular investors need to be aware of is that a
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lot of what we're hearing about twitter is being filtered through a media vacuum. in that we all love twitter. people in the media. celebrities and people like t t that. we sort of operate in this little vacuum that twitter's the greatest thing in the world. i'm not so sure the rest of the country at least feels that way. i'm not so sure i know the rest of the country isn't using twitter the way they're using facebook. when you're in the grocery store waiting in line, people are checking their facebook, talking about facebook, they're not doing it with twitter. that might not matter. they can still be very profitable, drive great revenue and be a better investment than facebook one day. but it's something we're not hearing being talked about and i think we should consider more. does it have that mass appeal? does it need that mass appeal? i would stay away. i think it's a lot of media hype. >> i think the question of mass appeal means how big a company does this get to? 230 million users doing a billion this year, you have a company that's a fifth the size of facebook. it certainly -- if you think of the four or five big things out there, linkedin, twitter,
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snapchat, it's fundamentally changed media. they've got a lot of work to do to maintain this interface. it's justified at the levels we're talking about. >> mike, tell us about the technology element of this. is your sense that this is a company that people are going to be sitting in the checkout lines using twitter? i -- or are they going to be using facebook? >> i think rocco's right in that i don't think people realize there are only 50 million people in the u.s. actually on twitter right now. most of the users are outside the u.s. so the rest of that 230 million are in the international where the arpu is not as high. so there's -- there's that sort of like, can you grow domestically? and then, they have a lot of product problems there, honestly. they don't really know how to make the on boarding experience super easy for people. and when your grandma or my mom comes on, she can get confused
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right off the bat. i think growth is the big problem. >> can i ask you a quick management question. hatching twitter, i believe it's called. and jack dorsey's going to be coming to new york and now, apparently an ipo for square, apparently in 2014, as well. he's, you know, we all -- he's been sort of lionized as this great visionary, but he sounds like a horrible manager. sounds like dick got in there and he's got his own issues, sounds like evan williams has his own issues. it doesn't sound like a particularly brilliantly managed operation. >> i think it's certainly had its creation challenges, these things are like a journey, marriages, sort of ebb and flow. i think the management team is strong. he's widely regarded by the community as one of the best sales leaders out there. dick is viewed as a person who is managing the company excellent, has a good handle on
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product. i think it's definitely a stabilized company right now. when you and i were on -- >> much better than facebook. >> i said 10 to 20 and you said, well, it's trading at 16 in the private markets. they try to do 13, the market pushed them to 16. they have a very small float. it strikes me they're doing a pretty good job with this. >> rocco, is it a good job if they take $26 and the stock doesn't move? how do we measure success today or either both today and let's say over the next 12 months? >> well, if you're jack dorsey or one of the people able to get the stock at the offering price and cash out or whatever, yeah, it's a success. my concern honestly comes with retail. talk about the media. last week we had container store go off, they ipo, and all the headlines said container store ipo doubles. all these guys see that and they're like, okay, what other ipo comes that i know? twitter, i need to get in on this thing. but that double on container
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store, the retail guy, he doesn't get that when he buys at the open. so i think really what we need to revisit. and take this opportunity to revisit is how do we do ipos? how are the shares allocated? how do we level the playing field so we don't have people buying container store at the open at $35 and then the next day, you know, we're talking about a double that these folks never realized. that's what i think the issue is. of course, the people involved in this thing on the inside are going to -- it's going to be a success no matter how you slice it. but do we get to play the game? not at all. >> right. mike, you made the point about sort of what you -- the small size of twitter. why do you think it doesn't grow internationally? you know, people talk about it revolutionizing democracy in places. why is this something we don't see -- >> well, it is 77% international. >> but the question is, why don't you think it grows exponentially in terms of users and more importantly in terms of advertising? >> i think there are a few things. one, twitter's been centered around events, you know.
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like the oscar type of thing. they get a lot of traffic through the door there. people hear about this twitter thing and think, maybe i should check it out. but as far as retention goes, i think that's their main problem. and just sort of keeping people -- giving people an incentive to actually come back and sort of experience those conversational moments that twitter loves to talk about but, you know, if you're a new user to the service, you're not going to get those right off the bat. you don't get that i got it moment probably until like six months into using the service pretty regularly. >> here's where i give the company the benefit of the doubt. first of all, they don't make that much revenue right now, 600 to a billion. and now there's only -- after the merger, there's basically three agencies in the whole world and the agencies are obsessed with them. if they go hand to hand and explain the product, getting an additional million, that's hard work, but that's not something like totally out there.
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and then in terms of user growth and new products, they're innovating there, they have to make it simpler. this much technology, i just -- i give them the benefit of it. i think the stock's going to make it there. >> one last question. >> that's a good point to realize. one thing i wrote on the street this morning is who cares they don't get the scale of facebook, right? >> right. >> let's say they have this great niche audience, affluent, highly educated. cnbc does a great job selling advertising with a niche audience at the end of the day. you don't have to have huge mass appeal to be really, really successful. >> and their monthly average for the year, going to do $2.32 all per user, facebook does $5.87. they have so many new products, they can do app install. they're going to close that monetization gap. >> that's a good point. >> what is the chance -- we've got to run. what is the chance this company ultimately gets bought out once it's a publicly traded company. >> if the share structure allows
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it, which i haven't probed into enough. i said it yesterday, apple has to buy this company. it's the biggest no brainer ever. social is fundamental to the devices, they integrated with them six months to a year before facebook. it's a perfect solution. >> john's going to be with us iffi for the rest of the program. rocco, keep wearing your tommy johns, i apologize for botching your wonderful last name. >> no worries. >> and we'll see where the twitter ipo lands today. >> and we're not done. we're not even -- >> we're getting started. >> not even scratching the surface. a lot more to come at twitter's big day at the new york stock exchange. including duncan niederaure. tomorrow, we're going to find out if the market can keep up the momentum purely based on q-3. be right back. it's twitter's ipo day. let your fingers do the talking
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and tweet the "squawk box" crew. the show @squawkcnbc. follow the show on twitter and never miss a beat of the longest running morning business show on television. "squawk box" on cnbc. [ male announcer ] once, there was a man who found a magic seashell. it told him what was happening on the trading floor in real time. ♪ the shell brought him great fame. ♪ but then, one day, he noticed that everybody could have a magic seashell. [ indistinct talking ] [ male announcer ] right there in their trading platform. ♪ [ indistinct talking continues ] [ male announcer ] so the magic shell went back to being get live squawks right in your trading platform with think or swim from td ameritrade.
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the dow closing at a record high as markets wait for tomorrow's jobs report. joining us now is hans olson for the wealth and management division of barclays in america. and the economist at ubs. some people want to look at what happened with the shutdown and try to, you know, microanalyze that. i'm more interested in knowing whether the basal level of job growth -- has that slowed in the last six months from -- zandi always says, well, we've been
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175 for two years. has it slowed? >> yeah, from the numbers i've seen, looks like -- >> why has it slowed? >> i'm not sure at this juncture. if you look at capital expenditure in the u.s. economy, it hasn't taken off. >> it hasn't tapered either. >> we haven't tapered. >> and it's slowed. >> and it's slowed. it doesn't help when you have all the uncertainty around, whether they would close or not, what happened in the del ceiling and you were giving folks a good reason not to do anything. and the folks i have talked to running businesses basically said we're going to step back, want to see where this is going before we release a dollar's worth of capital. seems reasonable. >> i agree with that. i'd say the other shoe's about to drop. how the health care act is going to start subtracting from jobs. i think you'll see it when people start paying attention to it. just because we're talking about it, everyone's paying attention to it. people pay attention to it when it hits the mainstream kind of nonbusiness news networks and that was in october at the
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shutdown. and what you saw in the adp report was job growth in the 20 to 49 category, went from 25,000 trend over the last six months to two. >> to 2,000. two or 2,000? >> 2,000. >> because two would be even worse. >> two would be even worse. two jobs. >> two is smaller than 2,000. you don't have to be a math major. >> for whatever reason, it concerns me because all of the fed's targets are based on this. and it needs to go our way or they're in a box. doesn't it? >> yeah, you know, the interesting thing about that, if you look at the private sector gdp, strip out the effects of the government and trade and look at sort of the organic activity in the economy. what you see is a economy moving along to the end of the recession of 2.7% growth. not bad -- >> without any of the head winds. >> without any of the head winds. you get a government policy in there, another percentage of gdp. you're up under 4%, right?
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that's not so bad. but it, you know -- >> well, should be below 14% on the u6. >> you're getting a fundamental change in the workforce too, right? you have more people leaving the workforce, you see that in the labor force participation numbers and all that. >> we don't know how much of that is demographic and how much that is -- >> actually, we have a very good idea of how much it is. and unfortunately, the fed doesn't seem willing to recognize how much is -- and -- >> how do you know? >> because it's algebra. i can do algebra. the fed doesn't accept anything that doesn't involve six regression models and some sort of test you've never heard of. >> you hear things people who would like to keep working but can't so they have to go on social security because they can't keep their job. >> but what we can see, you can in the numbers, break them down into every age cohort imaginable. you can look at people ages 60
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to 64. and if you combine that with labor market flows, which they report, you can see whether people are going from a job to not in the labor force. not being unemployed, just job to retirement. >> yeah, but there are people who are forced to retire because they don't have a job and can't find a new one too. i know it's anecdotal evidence. people want to retire. >> how much do you think is a skilling issue? we can't hire -- no one i know can hire enough software developers, enough math people. how much of that do you think plays into what's going on now? >> i think it's a big issue. >> you could take the number of jobs that are out there according to the jolt survey, right? they go out and survey companies, the openings they have. if you could fill every one of those jobs, you'd cut the unemployment rate by about a third? >> yeah. if you look at the sensitivity of job openings to the unemployment rate, for every increase in job openings, we have a bigger decline in the unemployment rate. there is certainly a skills mismatch. and it's across a number of things.
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it's getting a person who knows how to talk on the phone instead of text. and people graduated from college these days. you have to sift through a lot of -- >> no, i know, they come -- there's no skills, they come with ivy league skills. there's nothing they can do. >> so they can report, but they can't think. that's not a critique of reporters. >> it's an education issue. that's a huge issue in this country right now. >> you're talking about ivy league. >> i'm saying -- >> people have gone through and that is -- these are huge structural changes with no quick fixes. >> going back to these guys, people that go through professional schools to learn software skills and skills to your point about using texting a opposed to phones and sales for support. >> they need an absurd amount of oversight and they also think they should be running the show when they walk in the door. >> is the rate going to go up one of these months? >> i think it's going to be this month just because of the workforce, the federal government -- >> the headline, of course -- >> probably going up by .4% or .5%. >> what?
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>> probably in the mid-seven range. >> god almighty, that's going the wrong way. >> you'll see worse. it's all just a blip. >> right. you will see it reverse. >> right. we've got to fix it -- >> even where we are now is kind of i don't really believe it that much in terms of the way it feels, though. >> i think the big problem we have right now is that janet yellen likes to say, a ha, the natural rate of unemployment hasn't changed but then she doesn't talk about the long-term -- >> you're talking about her like she's in charge. that's funny. >> if anyone thinks she's not going to -- if you'd like to take a bet against her being confirmed. >> no, that's amazing, that's the first time i've heard someone say that as the person in charge now. all right. where are you tomorrow? 20 seconds, where are you tomorrow? >> we're at 107 -- >> probably around, you know, 140. >> all right. gentlemen, thanks. still to come this morning, we're going to talk tech with
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buzz feed. plus, want more on twitter expectations, we have the founder and former ceo of lycos, bob davis. what advice does he have for twitter execs? but first, as we head to the break, don't miss the "new york times" dealbook conference. in a world that's changing faster than ever,
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up next, the founder and former ceo of lycos bob davis shares his experience of going public and gives us his thoughts on how twitter will make money. also at the top of the hour, nyse ceo duncan niederauer is our guest. right now as we head to the break, here is dick costalo. >> i'm going to continue to invest in the near term on those
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welcome back to "squawk box" this morning. in the headlines, the bank of england left its key interest rate unchanged and a policy decision announced earlier this hour. the european central bank is going to be out with its latest rate pronouncement at 7:45 eastern time. followed by a conference from the ecb president draghi at 8:30 eastern time. also, warehouse retailer costco says same store october sales rose 3% from a year ago. that was above street forecast of 2.6%. that was the expectation. also, we're going to get the latest read on u.s. economic growth at 8:30 a.m. eastern time. one of the reports delayed by the government shutdown. economists are looking for an annual growth rate of just 2%. i hope it's better than that. at the same time, the labor department's going to be out with the weekly report on initial jobless claims.
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we're talking about the twitter ipo this morning after it priced last night at $26 a share. what lessons can twitter take from past successful ipos? joining us with his thought is bob davis, a general partner at highland capital partners. bob founded lycos, which is still to this day the fastest growing ipo in nasdaq history. from a concept all the way to the ipo. bob, thanks for joining us here today. >> good morning, great to be with you again. >> well, it's great to see you. and we want to get your thoughts on twitter. there have been some naysayers, some saying this company isn't making any money. you say it's hard to overvalue it. >> twitter's pretty exciting story when you think about all it has going. when you see a company going from 100 million to 600 million to a billion next year on revenue, that's meteoric growth. >> what lessons, what advice
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would you offer any of the people at the company at this point. you've been through this. what are the risks? and what should they be doing right now. >> well, i don't know if they need advice from me, they have it figured out pretty well. and it's an impressive team. i think it's great what they've done. but really what twitter is doing and will continue to do. it's going to diversify the revenue stream. done a tremendous job. the areas to think about are the partnerships. they've been paying attention to social commerce. you look at twitter's revenue today, it's $2.44 for monthly active user compared to facebook's $6.50. many of the social commerce sites like an open sky are looking at $10 a month. twitter will work its way down that path and see incremental revenue. twitter will expand the content partnerships, the deal it struck with the nfl was brilliant. and if there's anybody that's a keeper of that content, it's the
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nfl. they're willing to share that with twitter. it was a tremendous move. and i think they'll continue to diversify what they provide in terms of types of content and types of revenue. >> you know, bob, i'm a heavy twitter user, but we had a guest earlier who pointed out that maybe we're looking at this through the lens of a media darling that all of us are people who happen to be heavy users and that doesn't necessarily translate into the broader world this could be a fad. what do you say to those people? >> you know, i say it's easy to rain on a great parade, but sometimes a parade is fun to watch. and if you look at what's going on today with twitter, there's 231 million users, those are all media darlings. and that's not a fad, that's a real thing happening. every person in the globe need to be a twitter user? of course not. but that doesn't -- that doesn't suggest there'll be anything but a great and strong company we have. and twitter has changed the consumer behavior in so many different ways.
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twitter, for instance, has taken television and turned it into a lean-in experience. we're engaged and we comment and socialize and we're using television. and twitter allows us to do that. twitter has become the news source of choice. for so many of us and it'll continue to be that way. so i think the naysayers have a big awakening if they think twitter isn't here for a long time to come. >> i completely agree with bob on this. first of all, the numbers are what the numbers are. any kind of anecdotal stuff, it's just a media type thing, and the fact that you have 40% of them that are daily active, basically, not quite the 60% daily active of facebook, but a real user base here. the other i'd throw out there is the acquisition, was a brilliant acquisition for them. mobile ads, mobile banners work terribly. this is an opportunity for twitter to take their tweets and stick them, basically, in any app or any mobile website or any mobile news application that wants to monetize.
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imagine you're reading, you know, "us weekly" and get a tweet at the bottom for a zone bar. >> let me ask you this, though, is there any limit where this goes today? you can say this is great for the future and eventually a wonderful thing and it's certainly a good thing for the founders who held off and decided not to sell early. but if you're a retail investor sitting at home and if this stock goes to $40, $50, or $60 today, isn't there a big risk somebody's going to be left holding the bag at some point? >> i don't know. i'm not a stock picker, but i don't think so. we said that about google at $85 a share and look at it today over $1,000. we look at facebook and it did not fan out for the first few months, but look at it today and it's surged past the ipo price. fundamentally when you see something like twitter, it's a company of substance. it's changed completely, human behavior, the way we interact. >> why is this not a disruptable
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technology? why can't facebook, for example, create a twitter-like feed. every tweet i tweet out ends up on facebook. why can't they recast what they're doing? why can't somebody else do it? why can't the google plus do it? >> that never happens. >> you're right. it never happens. never has, never will happen because you have the mass movement and the power of the brand. it's becoming ingrained in our behavior. >> tivo was ingrained in our behavior until every cable company came up with the dvr. >> very, very different and better technology. >> point solutions always win by a focus -- by a focus player. look at what facebook tried to do with snapchap, facebook poke. snapchap is doing 350 million snaps a day, whole entire companies can be disrupted out of the space but it's typically not like google plus is hardly, you know, causing facebook any problems. >> it's not. the question is -- >> one of the early investors in
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twitter really smart guy, one of the smart capital investors talked about his thesis a couple of years after he made the investment and talked about the fact i invested in a verb, he invested in a great company. it's probably in the dictionary today and if it isn't, it's going to be there some day. it's a very, very tough thing to disrupt when you try to change behavior like that. can it be done? theoretically, of course it can be done. will it be done? i wouldn't bet against it. >> i think twerk is a verb now too. >> it might be. it might be. i haven't quite figured out how to twerk yet, but i think i'm going to pass on that. >> don't bother with that. don't tell us about it if you do. you know -- >> i won't. >> you need a chiropractor. >> yeah, i can see you twerking, joe, i don't know about me. >> i'd do it right now if you ask me to. no, i won't. >> no, we won't ask. hey, bob, thank you for joining us today. >> great to see you always.
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>> what reminded me of that is the cma or country music award. brad paisley and carrie underwood and -- so he said he was twerking threw his back out, said i need to sign up for obama care. and he does the whole bit where he says i signed up yesterday, still waiting to get in -- anyway. coming up, other tech stories outside of twitter, jeff steinberg will share his thoughts on netflix and the futures after a big session yesterday. consolidating those gains and mostly flat it's all about twitter. [ male announcer ] once, there was a man
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welcome back to "squawk box" this morning. let's get back to our guest host john steinberg. buzz feed's president and c.o.o. at lot of other issues we can talk about. >> well, right now joe and i are comparing our twitter feeds. >> what are you discovering? you follow about 1,000 people. >> you follow how many? >> i try to keep it under 100, but i'm temporarily over 100. i'm going to start weeding out. >> i have a real buzz feed question for you. >> i'm excited for this, go ahead. >> which is, we understand that the twitter ipo is not exactly trending on twitter. >> right. >> a, why is that? and how is trending on your site? so a lot of stories you generate, you decide to run stories because you think they'll generate a lot of traffic. >> yes, a lot of social traffic. >> are stories about this ipo being shared? >> well, i think the first point, the reason why it's not
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trending on twitter is a good counterpoint to rocco, right? it's not an insider-y media thing. if it was so insider-y, everyone would talk about the ipo. >> i think what will happen is we will run numerous stories. we'll get greater promotion and stories not being shared will roll off the home page. that's how the site basically functions for everything. >> you hi-- how is the business coverage? >> the one around cbs, the over the top news network, that was a huge hit, he was a few of those every week and the coverage did, the story way before. >> you move more towards doing what i describe as traditional journalism in the context of the buzz feed platform. how does that match up in terms of traffic compared to some of the stuff that made you famous
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in terms of the list and list. >> hard news and entertainment. if you look at an old newspaper, they do entertainment for old rich people, right? they have their politics and their news and their section of 8 million houses out in greenwich. we're for young people, we're young media. we do stories on politics, we do stories on business, we do web culture. that's what young people want instead of fine dining section. it's about 30% of our traffic goes to verticalized content. about 70% goes to that essential web entertainment. >> before we get to the other issues, what does it ultimate portend for the "wall street journal," the "new york times," the "final times," the traditional print outlets and tv outlets that spend a lot of time and money now doing digital., cbs, abc -- everybody's it's all converging. >> digital is going to become
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the fundamental way people get their media. they change the way they do it. >> changes everything. >> is it all going to change and shift towards? >> yes, it will. >> and all these media companies need to change their content for younger people. the content is not geared toward a young person. if these old media companies want any shot at rebooting themselves, they've got to change the competition and focus more heavily on social. >> you have some insight into the next cool stuff out of the valley. help us understand the valley between apple and android right now in terms of mobile. >> what's interesting about it, we look right now, about 50% of our traffic is mobile, 42% is phones, 8% is tablets and android penetration, the number of android phones is much, much larger in terms of magnitude. the app usage is higher than
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android because it's so much easier to use in an ios device. i think if android makes a simple tweak, what could that simple tweak be that spikes usage overnight almost like throwing a switch? >> which is? >> what could that be? >> hold on, guys, we have to say this right now, the ecb is cutting rates. this is a surprise decision. cutting the refi rate by .25%. the best guest had been that they were going to leave the rate unchanged but settled for a cut down the road. very important to see what this is doing to the currency markets. the euro was expected to drop pretty rapidly if you saw something -- the futures have picked up, the dow is at 52 points. if you can look at a currency board, something that would show us the euro, it was at 1.35 earlier this morning, the expectation was high as 1.36 and higher, one 1.337, it's dropped below 1.34. this is a surprise announcement, although people had been expecting you could see something like this happen at
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the next meeting. a huge concern for europe has been that the economy there has been slowing down because the euro has been so strong against the dollar. as you've continued to see central banks from around the globe. >> misery loves company. their inflation rate is zero, their inflation rate -- and over here, we're like, yes, that allows us more cover to do what we're going. currency strengthens and -- >> in fact, one of the central bank presidents we've had recently bullard pointed out we were in a situation he thought where you did not necessarily need to be in a rush to start being concerned -- >> well, we're at zero. >> the point was -- >> we don't have anything to cut. we'll get other people to cut. you've got some left over there to cut, we're at zero, you start cutting. >> it's like the punch bowl just moved over. >> well -- >> michelle's here. michelle caruso-cabrera. >> this was a close call. the consensus was they weren't going to cut, but it was
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possibly they could and would before the end of the year. because they started to see signs of disinflation. >> in germany. >> in spain, et cetera. et cetera, right? some of the things that the ecb used to do are about liquidity, making sure the banks could keep running. if you start dealing with inflation or disinflation which means inflation is really low and you fear deflation, which is what we had in the depression in the 30s. >> and what japan -- >> exactly. >> then you start to go back to traditional monetary policy techniques like cutting interest rates. >> again, the refi rate to .25% to .5%. dropping it from a quarter. >> come on in, water's fine. i love this. >> to your point, europe has a lot of issues that can't be fixed by monetary policy, right? they've got this very strict labor law, lots of things they should be doing. >> what difference does it make? >> the point was i'm not in such a rush to get to the taper because if you look at our balance sheet, it's big, but it's only the fourth biggest
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balance sheet in terms of the gdp when you start measuring it up. >> everybody's doing it, it's fine. everybody's doing it. >> you said -- >> this was an endless cycle. this is an endless cycle where people are trying to get their currency to drop a little lower to help boost exports. >> if there is one thing that central banks are supposed to do, it is to fight inflation on one side and deflation on the other side. >> that's what bullard said, he calls himself the north pole of inflation hawks. he was on monday. said you have to defend at the bottom end of your inflation targets. and if you're not meeting your targets, it's a big problem. >> remember, he actually raised rates twice in the middle of a crisis. >> where were futures ten minutes ago? >> at one point, they were up one. >> now up about 62 points on the
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dow. >> that is definitely translating -- >> i think the u.s. stock market would love easy money all over the world, right? not just here. >> if you look at -- >> misery loves company. >> up 1% in france, up 1% in germany, up -- >> remember, we were talking about 1.38 a couple of weeks ago. >> it was 1.35 this morning. >> that's a huge move. >> there were a number -- and i'd been talking to hedge fund managers in the past week who have been saying what barry told us earlier this week at some point you need to lighten your load. they might lighten their load toward the end of the year. and when you see this activity and everything else going on in the fed, whether you keep riding. >> even guys have said, i believe this is bad in the long-term, but in the meantime, ride it. >> that is not what we heard from sternling. >> no, but he's a real estate
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guy. i wasn't paying that much attention, did you say something about android penetration? is that possible now? do they have robots now? >> oh! >> no, science fiction, i heard that. you will be able to rent a -- is that -- >> i can't tell -- >> this squawkward moment has been brought to you by -- >> it's not me. >> no, i'm talking about android phones. >> i wasn't sure if you knew or not. >> but if you talk about android penetration, it begs the question, is that possible some day? >> there's no buying dinner, there's no guilt afterwards, no you have to leave. >> working for the androids. >> right. >> what are you looking at. >> the ecb did cut rates today. it cut the main interest rate to 0.25%. quarter percentage point. >> we still have another quarter point left, don't we? >> this is happening, it was
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unexpected. we knew there was a shot for this, but that was not the way the consensus was heading on this. we expected they would set up language and potentially at the next meeting go ahead and do this. you can see right now that the euro is at 1.3366, it was above 1.35 earlier this morning. massive gains in equity markets are relatively speaking, we should say, we were looking at a decline. it was flat before the announcement and now the dow up by about 60 points. in france, the cac is up by 50 points. dow futures by 83 points. this is all happening because of what we've seen. the latest report from the ecb, the concern about the euro zone inflation. fell to 0.7% in october. and as we've been talking around the table as you start getting to the low end, that's well below the target of 2%. >> do you go to the travel website for europe? that's where i go immediately. >> below 1.35. >> and 1.33 headed for 1.30.
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>> when are you making the trip? >> we have gotten a lot of cover, the fed has. i mean for years now, these policies. we've gotten cover for europe. europe has been so slow. otherwise we'd look anemic, almost. we're still the best house in a terrible neighborhood. what we do -- and they're dragged kicking and screaming. do you remember the guy before draghi? >> never going to raise rates. >> no, he was in denial. >> he raised twice in the middle of the crisis and it was the wrong move. >> they're coming to the conclusion, wow, we haven't had a single person hired in the european zone in the last three years and they're finally deciding maybe this is something they should do. >> yep. we will continue with our coverage of how markets reacted to the surprise cut from the ecb. also, still to come this morning, twitter expectations on the street. we'll talk about what analysts are saying about how the stock may perform when it begins trading today. we'll speak to btig. what twitter's listing means for the new york stock exchange.
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more on the surprise decision from the ecb to cut rates. you can see the euro right now. take a look. joe's getting ready for his big trip over there. "squawk box" coming right back after a quick break. it's as simple as this.
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a big day for twitter ahead of today's ipo, we'll talk to twitter bulls and twitter bears. plus, the ceo of the new york stock exchange will join us on the preparations for the ipo and lessons from facebook's botched offering. the nfl developing a hard-hitting twitter strategy. >> reaches a second break even point here after which enterprise falls into loss. any questions? >> you know you need a cover sheet on your tps reports, richard! that ain't new, baby. hey, janice. >> the league's head of social media will join us onset. >> and breaking economic data. we'll get a first read on gdp. the third hour of "squawk box" begins right now.
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♪ >> twitter. you don't need to put this -- >> this is better. >> yeah. >> welcome back to "squawk box" here on cnbc first in business worldwide. i'm joe kernan along with becky quick and andrew ross sorkin. our guest host is john steinberg, president and chief operating officer of buzz feed. more from john, more ideas about all of these things from john still ahead. he's got some interesting ideas. plus, we're going to talk to the whole android thing. we're going to talk to nyse ceo duncan niederauer about the twitter ipo. but first, andrew has some news that came from the ecb. every month we say, you know, could be an ecb decision today and it's always we break in and say -- >> the big story of the morning was twitter until about 10 minutes ago.
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the european central bank cutting the key interest rate from .5% to .25%. left the key interest rate unchanged at .5%. ecb president draghi will begin his conference at 8:30 a.m. eastern. of course, we're going to be tracking that throughout the morning. joining us now on this ecb meeting and decision, jeff cutmore, jeff? >> reporter: yeah, andrew, i've taken my crystal ball back to the crystal ball shop and asked for a replacement because it clearly wasn't working this morning. and most of the market seems to have been wrong footed by this move. and you've only got a look of the rapid reaction we saw in the euro dollar rate in the big decline immediately after the announcement to know this was not priced into the market. and as you pointed out, this press conference is going to be critical because there are a couple of issues on the table. by going now, he has reduced one of the options that was left in the box to deal with.
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further weakness in the euro zone, economies going forward and perhaps a response to tapering and removing any perceived tightening in the market that might come from that. the other thing we need to see here is how dovish can the language be in the press conference. he's got this euro weakener rolling here with this announceme announcement, the surprise announcement. he needs to continue with the language through the press conference or there may be those who start to pile back into the euro in the afternoon trade which removes some of the benefit of the shock and awe of this announcement this hour, andrew, back to you. >> you've still got a court appoint left. >> that's the last bullet. >> no, look what we did once we got to zero. we have so many different things they have come up with that bernanke came up with over here, jeff. first you go, you know, you talk about how long you're going to stay at zero and you can do that for a couple of years. really, really, really, really -- then you start doing qe and who knows, we're doing --
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first we start with qe on treasuries and then you go to mortgages. why not do s&ps? i think eventually we could get this market up to about 40,000. you got plenty of stuff left. >> yeah, the trouble is, joe, and this is the thing that makes mr. draghi's job so difficult, we don't have that mandate that the fed has to support the economy. you know, because we have these euro zone members and some of them are in worse condition than others. and you've got the german center of this saying the ecb is not here to stimulate economic activity or to bail out governments that quite frankly have been too spendthrift in the past. so mr. draghi cannot directly monetize the governments of the euro zone that have got these high debt loads that they're trying to service at the moment. the best he can do at this stage is just continue to promise easy
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policy through low interest rates and maybe some mechanism for extending lending into the banking system. but he can't turn around as mr. bernanke has done and say, whoa, here's your big qe program, guys. >> at least not yet. >> help yourselves. >> we'll find a way. >> and bail out the economies. >> they can always change the rules. >> oh, absolutely. well, i guess they can. which is -- it's good reason for us to be here then to make sure that we're on the watching brief just in case they start to waver a little bit on this discipline that mr. draghi insists they must pursue. >> in front of the ugliest sign -- >> we love it. thank you. mario, right? super mario. >> back on. the other big news of the morning, twitter pricing the ipo at $26 a share. the shares will begin trading at if nyse later this morning.
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bob pisani now with a special guest from the floor of the nyse. bob, good morning. >> good morning, becky, bill. man of the hour, ceo of the new york stock exchange. are you confident you and your team have done everything possible to ensure a smooth open? >> today's about twitter, the investors and the market participants. not about us, thanks for calling me the man of the hour. i'm not the man of the hour, all about getting it right today and i think we've done everything we can to get ready. >> reporter: let's talk about the open. i've gotten a lot of questions about when the stock might open. a lot of people may be watching who don't watch ipos every day. can you give us a sense of what's going to happen? >> a lot of people who normally don't pay attention to what goes on here are paying attention today. and we realize there may be confusion about that. the market opens at 9:30. as you know, covering the space every day, an ipo like twitter is not going to anticipate at 9:30. i would say it's about 10 or
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10:15, but you'll be reporting from here, you'll be able to tell the viewers what's going on minute by minute. >> we're going to be doing things never have been done before. we're going to show you opinion and commentary you've never seen before from the inside here. scott cutler, works through you ipo head here at the new york stock exchange, explaining the blow by blow. >> that's my best guess, hard to predict. but what we're going to do is make sure we're overcommunicating, trying to bring everybody into the crowd. we're trying to take the crowd into everybody's living room so there's no confusion from everybody. we all know technology fails sometimes. when it failed, it was the lack of communication afterwards. we're not going to let that happen today. so everyone's going to know exactly what's happening blow by blow. >> i've never seen such an abundance of communication. you've got a conference call at 8:30 with the market participants in the street. that's unusual, but again, keeping the lines open to make sure owe open every possible question. >> if people say at the end of the day, wow, you're
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overprepared, i'm good with that. >> what else do you want to get across? you're confident everything's been done to make sure this is a smooth open. there's obviously going to be a lot of trading going on. can we ensure it'll be smooth? there'll be things like circuit breakers in place. can you tell us about those? >> yes, so, we understand that the first trade's going to take place. after that, we all know on a daily basis the market's fragmented. we'll keep an eye on the volatility bans. and again, we'll be reporting, we're not going to stop reporting live once the stock opens. we'll stay engaged as long as you and your viewers need us to. >> the market, i've gotten a lot of questions, why have there been a record ipo this week. 1.8 billion from twitter, why is it all stuffed into this week given how important twitter is? >> i don't know it's all stuffed into this week. but i think what's happening is what you and i were talking about off camera a minute ago.
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the markets that are level where it makes sense to try to take companies out, the investors are receiving them pretty well. i don't feel it's frothy. i think people are being pretty thoughtful about what they want to own, what they don't want to own, and then the market is concerned. if it keeps working, i think the supply of ipos will keep coming. and right now, the market levels are pretty good. at an all-time high. i think it's working right now. how long it continues, who knows. >> all right. we'll be here. we'll be here at 9:00 with commentary and scott cutler will be with us all day, as well. and we'll see you on maria's show in the afternoon, as well. >> yes. >> give me the mean, median and mode for where it's going to open. i want the over and under. give me an idea. ask duncan. what's the price going to be? >> duncan, want to take a shot? >> you can always count on the intellectual questions from kernan over there. >> 40? >> i don't --
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>> you know i'm not in that game. you've tried to get me do that before. i think it was properly priced. i think it's a good-sized deal. it feels to me listening to the guys on the floor that it trades up a little bit on the opening, that would be my guess. >> would you say it was the interest of the street that everyone wants to see a smooth open, open up and then move up slowly throughout the day. that would be the ideal situation. >> yeah. >> no one can control what their clients want to do or how they're thinking about it. none of us were in the room when they talked about how to set the price and all that. we're not in charge of the supply and demand dynamics. our job is to make it operational. >> and the underwriter -- somewhat control the place a bit. all right. guys, thank you very much. back to you. >> bob, thank you. duncan, thank you. and by the way, a programming note for you as bob mentioned, duncan niederauer will check in again today after twitter's first day of trading. joining us now with
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perspective on twitter's stock is kevin landis, cio and portfolio manager of the value fund which has over 1 million shares of twitter. also paul meek. ask rich greene field, media and technology analyst at btig. rich, tell us, everybody's trying to compare this to facebook. how does it match-up in terms of that comparison. >> look, twitter is going public at a much earlier stage of its life. when you look at twitter, this is a company in 2014 we think will break $1 billion of reve e revenue. facebook in 2014 is going to do north of $10 billion of revenue. and a look at profits. at some point profits matter, facebook's going to do a 50%-ish margin in terms of ebitda. i think if you're lucky next year, twitter will do a 10% margin. you're looking at companies in totally different levels of their maturity. the growth rate of twitter is
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faster, obviously, substantially faster. but i think the challenge for investors, especially if there is excitement around the opening of this stock as you were talking about on the show is at what point does it get a little too rich and people are pricing in a little too much of the future because there is a lot of execution risk involved over the next few years. >> what is that point? >> look, we've said this is a stock -- we think this stock could be worth $30 pretty easily in our pre-ipo research we published earlier in the week. i think as you start to get substantially north of that, it really comes down to their ability to attract the less tech savvy user. they've got 54 million people in the u.s. this is not facebook, this is not baby pictures and instant messaging with your friends. they need to attract a broader universe of people. and they're going to have to make people understand why you use twitter. if they can expand the universe of people from the current group of passionate users. i'm addicted.
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john steinberg on your show this morning, he's addicted. if you can get past the people who are addicted and show the common consumer why they have to be using this, why the world series is better at home if you're using twitter, that's what could make this company worth substantially more than where it trades today. >> kevin, you own 1 million shares in the secondary market. that translates into 1 million shares once it starts trading today. if this is a situation where it goes to $30 like rich thinks, you have a lock-up period of six months. would you sell after six months? what would make you determine whether or not to sell? >> well, i guess what would make me determine, make that call is the facts and circumstances six months from now. so, you know, if it never has a down day and it's just up and to the right, surely would be tempting to try to taper the position. but, you know, we're a long ways from that. >> what do you need to hear from the company in terms of internally? what happens in terms of what they can do with revenue? >> what you look for is growth
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translating into cash flow and earnings. and unlike a lot of other investors, i think for us, we expect a company growing rapidly is going to plow that back in. and all we care about is they're cash flow positive. we know it's going to turn the dial down the road. so i think it's going to be a high-priced, high-growth stock in six months. and so it would be just like you're holding, i guess, crm or one of these other high growth stocks that everyone seems to love. and evaluate it then. >> you tend to be a little skeptical about some of these ipos. what's your concern? and how big are the risks here? >> i think the risks are substantial not in the company not meeting the analyst estimate for revenue and adjusted ebitda, and the valuation they're placing on those numbers particularly since most of the reports i've read and the other homework i've done, price
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targets being established by both the indicate analyst and nonsyndicate analyst are valuing the company at a hefty multiple. not in '13, not in '14, sometimes in '15 and '16, way too far out in my opinion. >> john is our guest host here -- >> i think it's a portrait. and rich did great work on this. when you look at the multiple. on $30 a share, that equates to $21 billion. twitter, that's 11 times revenue, facebook, that's 7.8. that's a little bit -- i can get comfortable with the company growing this fast. i don't know with rich, if he likes 30. if we look at rbc, rbc at $34 a share on twitter, that's 15 times price to sales numbers, that puts it roughly in line with what yelp trades at. yelp is really the comp on multiple. it's the most aggressive one in terms of revenue of market cap to revenue right now. i think twitter's a much bigger company, much more important company.
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a lot more growth. if you can buy it yorks uh can get twitter. >> except there's a view as you were saying that apple could ultimately buy a company like twitter. yelp is a company people constantly think is that takeover target. >> you really have to look at how twitter is integrating themselves with the traditional eco system. i think when you look at how they're extending the ability to spend advertising dollars. so look at television. lots of brands are advertising on television. people are zooming through the commercials on dvrs not paying attention, staring at their mobile devices. twitter is trying to leverage that and trying to be that place where an advertiser can actually engage because they know you're looking for content. the nfl, i think the social media director on later. the nfl is pushing out video content. pushing out short clips. the run the other night goes up on twitter, gets retweeted thousands and thousands of times. and that play, which is, you know, call it a one-minute video clip. traditional video syndication
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done all over the web. twitter's able to help the nfl insert an eight to ten-second ad. and there you have advertising. it's organic to the platform, it's not in your face disruptive the way a big full-page screen takeover ad would be in the middle of your news feed. it's giving you value and content and yet creating an advertising stream. >> thank you. >> thank you. coming up, it's interesting, a venture capitalist rayiising w highs on twitter. so it will be a reflection on the overall market of how much excitement there is. >> you wonder with the ecb cutting rates and this is setting in. >> right now the market is not popular and not that hot even at new highs, this would help and maybe we don't get it and maybe that's a good sign.
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tomorrow on "squawk box," we have a huge lineup from the baron investment conference in new york. as we talk strategy with five-star portfolio managers. it's a special edition of "squawk box." and it all starts tomorrow at 6:00 a.m. eastern. [ male announcer ] what if a small company became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade.
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welcome back to "squawk box," everyone. the futures have taken off this morning after a surprise rate cut from the ecb that at this point is accounting for about 74 points for the dow. it's trading 74 points above fair value. s&p futures up another 6 1/2 points and, of course, this comes after the dow finished at a record high yesterday. this morning, we were looking at the futures being flat until just about 7:45. that's when we heard the news from the ecb and immediately the futures took off. you saw the euro under massive pressure. it fell down to the 1.33 level and we'll continue to watch
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that. also, shares of jc penney jumping after the retailer said that october comps rose by .9%. the company says it is on track to return to profitable growth. and goldman sachs says it is being investigated for the currency trading activity. that news comes in an sec filing. the bank says that it's cooperating with the probe that's being conducted by a group of global regulators. it doesn't give any further details. okay. we've been talking all this morning about twitter and we're going to continue that conversation. twitter set, of course, to start trading today in one of the most highly anticipated ipos of the year. jeff lewis, principal at the founders fund, the firm has backed some of silicon valley's most successful start-ups from facebook to spodify. good morning to you. >> hi there. thanks for having me. >> i don't know if you physically have a red flag you'd like to wave, but i gather you'd like to. >> the questions we like to ask at founders fun, firstly, is this a monopoly business?
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we believe, yes it is the dominant singular short form broadcasting system. and because of the tremendous network effect and really fast growth early on. but the second question we like to ask is how valuable is it. i believe twitter is probably $20 plus enterprise company. how much widespread adoption is there beyond various niche communities. secondarily, a business strategy question, twitter's r & d costs are 50%, compared to 25% for facebook. 15% for google in q3. that ratio indicates that perhaps twitter doesn't have a super clear business strategy. they're trying to build a lot of monetization and advertising products, hiring a lot of engineers and product managers at high salaries in order to do that. >> full disclosure, are you guys still facebook shareholders? >> we are facebook shareholders.
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>> i ask just because there's probably good reason for you to be skeptical of twitter in the battle between facebook and twitter, no? >> you know, i actually don't think the companies are competitive. i feel like twitter is -- you know, i feel like they're going after very different use cases. the use case of facebook, frankly, arguably is a lot clearer than twitter. basically everyone in the world wants to share about their lives and know what's going on with their friends. not everyone is super curious about people they don't know. so i think fundamentally twitter is a more niche product. and the question is, how much more niche is it? and only time will tell. >> jeff, you know i love you, but i've got to tell you, the facebook thing, all this stuff you're saying about twitter is basically stuff people said about facebook, certainly said about air b & b. i feel like it's a little, it's a bit unfair coming from founders fund, i think. >> i think that one thing to be careful of with twitter is it's a highly self-referential
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company amongst both technologists, yourself and i, you may well be right, but we do have to adjust for everywhere in the media uses twitter religiously. people that love following celebrities, et cetera, that are also really engaged with that. but we do have to be careful because it is so self-referential. >> it can't -- the math makes it impossible for it to be a self-referential as all these people keep on saying. even if you look at 50 million people in the u.s. which has, what, 380 million americans right now, there are not 50 million insider-y tech user around the world. >> absolutely. >> this is a criticism people keep making that has no math to substantiate it. >> well, i'm not arguing it is not a very valuable company. and i do believe the company is probably worth certainly today where they're pricing the ipo. i think the broader question is how big will the company be long-term? the value for all of these companies, the bulk of the value exists 10, 15 years off into the
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future. and the question is, how much of that value is twitter actually going to capture longer term? how much further is it going to continue to grow? the fact that the ipo is a lot earlier for twitter than companies like facebook and linked in chose to ipo could potentially indicate there's a ton of value that people buying into the ipo could capture. could also indicate that twitter's a little bit concerned about how much value it's going to create going forward. >> okay. jeff, we're going to leave the conversation there. we appreciate both of your perspectives this morning. nice little debate. hope to see you very soon. >> thanks. coming up, we're going to talk about breaking economic data. we're going to get our first read on third quarter gdp. plus the closely watched jobless claims coming up at 8:30 eastern. more of the exclusive interview with twitter ceo. here's what he said about the company's near term strategy. >> i'm going to continue to invest in the near term in those kinds of infrastructure capabilities, in the partnerships that we've developed, in our platform
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when you open an account. welcome back to "squawk box." we're seconds away from the first read on gdp in the third quarter and weekly jobless claims and rick santelli is standing by at the cme in chicago. steve liesman in studio. and i don't -- we've got to get to these numbers, rick.
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but i'll tell you, i figure you're thinking, these euros, misery loves company, we're going to race to the bottom with currency debasement. liesman comes over and says see how stupid they are, took them a long time to realize what the right thing to do was. i'd love to get you two guys going on that. >> bring it on. >> anyway, give us the numbers. >> all right. the survey says our first look at third quarter gdp, better than expected, 2.8%. and i'll tell you what, that is definitely more than i was looking for. let's go through the internals. consumption number, definitely on the weak side. we knew this, 1.5 versus our last look at 1.8. the price index triple our last look, actually. comes in at 1.9. also hotter, if you look at the personal consumption expenditure quarter over quarter, 1.4. so to summarize, the headline numbers definitely hot. the consumption is not and the
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prices are a little hotter than we expected. 336 on initial jobless claims, that's a drop of 9,000 from 345,000. that is, indeed, close to expectations. what do we have to look at. of course we still see the rallies in the equities and the drop in the euro currency versus what you just were debating. i don't think a quarter point makes that much difference. but i know that the manufacturers especially in germany and the whisper in the euro zone that the euro 1.38 was too high. i wish i would have went with that notion. economists conventional wisdom because that didn't work out well. back to you. >> yeah. i guess the futures are holding up, the stocks here too. yeah, there they are. not quite what they were. i'd hate to say that a good gdp number means we get less, means they don't wait as long to taper. we wouldn't trade on that, would we, rick?
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is it really all about the qe still? it's fueled by qe, no doubt. >> oh, yeah, no. it is, joe. i'm not going to change anybody's mind out there that is reaping the checks. the checks are real, you can cash them. holding off the taper, the emerging markets are actually starting to potentially get talked about again as better investments. maybe they'll splash some liquidity in those areas. it goes on and on, the music keeps playing and some of the bigger institutions, at least, truly, true profit in great extent. >> for more on the day, let's get to steve liesman. and you were -- already alluded to what you said in terms of took them a long time to do this. but they don't have an unemployment rate they need to try to -- >> right. >> but then are they doing this because of inflation? is that what? >> yeah, they don't seem to have a forward looking way of doing policy. i mean, i think the writing has
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been on the wall for what's been happening with inflation for a long tile. >> over there. >> over there. >> and look, it's politically better for the central bank to wait to have the number rather than move ahead of it. but i have been talking to central bankers for two years now that have been telling me that draghi -- what draghi needs to do out there is weaken the euro because of the need for the periphery to get its act together and either using, you know, verbal intervention or some actual act. they've been calling for that and he hasn't done it. he's done some things. but if you use a forward-looking policy, you would have been where the ecb is now -- maybe as long as a year ago. and then you look at the 1.34, euro, what exporters were saying. it harms the economy there. and what do we want here in the states? it would be wonderful if japan, which is not doing too badly was firing and europe were firing. quick word on gdp.
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the consumer spender coming in at 1 1/2, that's not a terrific number. business investment, not a terrific number. but in part given by inventories. we've been saying this for over a week that the market was underestimated for reasons unclear to me why either the consensus guys did not pick up the change in the forecast. it's not a surprise, but what i have been reading it doesn't change the outlook for the fourth quarter. we talked to the boston fed president on monday. he said, yeah, it is going to be better than people expect. but it's going to come out of the fourth quarter inventory. so we want to be careful. there's a before, during and an after when it comes to the shutdown. this number is a better number to go into the shutdown with. let's hope there's not a big impact here. let's hope that all the economists are wrong there was not a big impact. we could not have missed and only shaves a couple tenths off and we can reaccelerate in the fourth quarter. >> go you have a number? have you done any work? >> i'm going to do it, joe, it worked pretty well last time and it wasn't too bad. we're off by 10 k. here's the problem, right, what
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actually happens to government employment. what happens to other sort of related government employment. >> but we decided that the basal level of job growth slowed in the last six months. >> that's true. even lower. even lower. look, you did the adp 130 before the shutdown numbers come through. they could be lower than that and i know some people are thinking that the market's not ready for a downside surprise here. i honestly don't know how you would go down the stuff i do last time and several other times before that and plug in the government shutdown. >> are you addicted to twitter? >> i like twitter. i'm into twitter. >> you're in the media and we're all addicted i'm told. >> i wonder if we're all talking to ourselves, though. you ever get that feel sing? >> that's not what the numbers show. >> i'm writing to the guys at the journal, the journal are writing back to me and we're having this big ho down, you know. >> active daily.
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>> 50 million active monthly. >> that means opening the app. >> opening the app, yes, at the very least. >> if there's anything that can save the company and valuation, it's the nfl. and that's what's coming up. >> what a segue. >> whoa. >> unofficial transitions for 100. >> that is -- i understand how this would work. >> how does it work? >> or for college hoops. >> college hoops, college football. >> something big happens and you see it on twitter, oh, i missed this place, you go to it, there's an ad for verizon and you watch the clip. think of how many games are going on. think about that. the march madness. >> i like it. i like it. >> that might be the saving -- the one thing that makes it work. >> love the transition. when we come back, more on the ecb surprise rate cut. michelle caruso-cabrera will join us next for comments from mario draghi's news conference. also, take a look at the u.s. equity futures up 76 points
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right now all because of what the ecb is doing. if you take a look at the euro, wow, below 1.33 now. it was above 1.35 at the start of the morning. "squawk box" will be right back. at a ford dealer with a little q and a for fiona. tell me fiona, who's having a big tire event?
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welcome back to "squawk box." monitoring mario draghi's news conference over in europe. here are a couple of the headlines. first, he said that monetary policy is going to remain accommodative for as long as possible but interest rates will stay low. and then he said or even lower for a long time. and that's conventional monetary policy. he then went on to talk about more conventional nonmonetary policy such as conducting these three month ltros, long-term repos that they've done to increase liquidity for the banking system over there. they're going to continue until 2015. three month ltros. so, once again, mario draghi sounding very, very dovish saying that interest rates will stay low or even lower for a long time and that they are worried the -- the reason they're doing this is because they're concerned about the inflation of data that we have seen. andrew, back to you. >> thank you, michelle. coming up, we have more of cnbc's exclusive interview with dick costolo.
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we can say it a hundred different ways. plus, we'll talk about the importance of twitter for marketing and engaging marketing fans. and a quick programming note, the dealbook conference kicks off in new york city. cnbc will bring you live coverage of the names that matter for your money. coming right back in a moment. le le le le store and essentially they just get sold something. we provide the exact individualization that your body needs. before you invest in a mattress, discover the bed clinically proven to improve sleep quality. the sleep number bed. once you experience it, there's no going back. for five days, c4 queen mattress sets are $1299-our lowest price ever! plus 36-month financing on qualifying purchases. only at one of our 425 sleep number stores nationwide.
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the enthusiasm for what we're trying to achieve and over the long-term of how we think this company and what we're building can become this indispensable companion to the moment. and i think that -- that vision, our goals for the product and the service will result in, you know, helping people understand whether they want to invest in the company or not. and, of course, dick costolo being interviewed by our own julia boorstin. he'll be on "squawk on the street" live in the next hour and it wasn't too long ago that twitter scored that big deal with the nfl to show game highlights and other content with its amplify service. and joining us -- for someone that doesn't understand things very well, i understand how this could work. i would want to see that someone
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just had, you know, a kickoff return or something. >> yeah. you would watch it on twitter. >> yeah. >> that's one of the most powerful things about twitter. it's instantaneous and broad and very few platforms that offer that. and look, our fans are there. our fans are talking about football wherever they go. twitter just actually makes it that much more engaging. and so you'll see a ton of consumption on a sunday, monday night or thursday night where fans are already talking about the game. question of getting more content in front of them creates a lot of monetization. >> can you get enough volume out of amplify? right now, there's people following you on twitter, it's already a small audience, then someone has to click to play and you've got to get the preroll and you need a lot of preroll to do anything meaningful. >> no, you'd be surprised. and you should ask the twitter guys on this. you'll find the nfl content's probably the most engaging content there.
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it overindexes everything. and you'll find the fans if they want to see a highlight, it's not that much work to click through and engage in it. >> on the average highlight, how many views are you getting? >> i won't have an exact number for you. >> it's like the obama care website. we'll answer you in january. >> but, you know, i have questions as to whether it's worth more to you or twitter to have your content there and drawing people in. what would you pay for it? >> well, look, i think the nfl has a pretty good track record of helping build platforms where we put or content, platforms, benefit. that's fine, that's where we have partners. it is certainly worth a lot to twitter but worth a lot to us. and that's one of the strengths of twitter. they have a monetization model that is really focused on helping content owners grow the pie. >> are you guys paying? or is this something where the partners end up paying. >> what's the economics business? >> the partners pay to be associated with nfl content on the twitter platform. >> so twitter's paying you? >> like mcdonald's or somebody who wants to be associated. >> so advertisers are paying and
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twitter and the nfl split the economics. >> 50/50? >> well, i'm not going to get into that percentage. >> youtube, you take 55% of the ads that run against your inventory and you pay youtube 45%. >> my guess is the nfl is powerful enough it's not anywhere near that. you take a much bigger piece of the pie. >> i won't get into the economics we like to do. >> i think you have your answer there. >> clearly we understand how this could work for the nfl and see how it could work for major league baseball and the ncaa. you could see those types of partners. how far can you get and still make it work? >> as far as television content is concerned? >> or any other media content. all your stuff is sort of mass appeal stuff. >> yep. >> and when you think about digital, you think about niche appeal stuff. but do they work in this context? >> well, i think there are plenty of models out there that, look, on advertising models, reach is important but also niche is important, as well.
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if i can reach somebody not easy to get, that's valuable to me. for us, we're a scale business. and that's the business we're in regardless of what platform we're on. it's still -- aggregating more audience as anybody and the same is holding true in social. we're always going to be a reach model. >> right. >> and that really appeals to us and our partners to reach as many people as possible. >> what do you worry about with your relationship with twitter? i'm sure you sat around and did the pros and cons. what would the possible cons be for you? >> look, i think there aren't a lot of cons. look, the nfl, we always say we don't have to be first, we just have to be good. some of our partnerships. >> did you suffer facebook also. >> we do more with twitter than we do facebook. >> is there any way we can -- >> do you worry about -- is the nfl still concerned about people going out to the stadiums versus
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sitting at home? anything you can do with social media? >> look, stadium, getting people to the stadium to watch the nfl, which we think is still the best place to experience the nfl is a challenge for us. we continue to work on it. >> your mobile stuff. they could be watching these twitter feeds in the stadium on their mobile phones. >> by the way, they're doing it already. >> i think this is a great experience for the user, for the fan to be able to see the replays. i don't think there's enough volume there for it to be meaningful. youtube with all their volume, estimated to do 6 billion in 2013, 8.6 billion in 2014, right? that's their half of the cut. >> right. >> they have 1 billion people a month going there. you don't have 1 billion a month on twitter. very tiny revenue overall, and tiny revenue to the nfl at this point. i don't know how they'll get the video volume up with this interface. >> look, what i would tell you is, look, 1 billion is certainly a big number but plenty of add models that work on a smaller scale. that's been a conversation
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around this table this morning about how big is big. twitter's big. it's not as big as facebook, but there are hundreds of millions of people on this platform. i'm interested in reaching those people. on a big game in the nfl, we get 20 to 25 million people. people. we've done a pretty good job of monetizing that amount of audience. if i get that many in a digital platform, we'll monetize it. >> coming up, we have a very busy day going on at the new york stock exchange. we're going to check in with jim cramer on the twitter ipo, and a lot more. as we head to a break, take a look at the euro, the ecb cutting its key interest rate and speaking at a new conference a few minutes, mario draghi said policy will remain accommodative as long as needed . mine was earned orbiting the moon in 1971.
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there was a whisper at the could do that. the europeans have -- 1920 was yesterday over there. so everything they do is based on history. i know draghi doesn't want to have any sort of repeat where people didn't have enough money to buy anything and they have to nip it now before it goes too far. >> i was just going to ask that question about whether it is an orderly open, it isn't just frothy, that might be good for the overall market because if the market really was in hyper drive, i mean, this would be a symptom if it doubled or tripled that we are near the end, wouldn't it? >> but, as we know, joe, the greatest thing in the world is to always call tops because if one day you get a top, you look like a genius. we have people calling tops for
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8,000 dow points. if you see that kind of froth you go it's too easy, it's a top. retail is involved. i hate investing in irony. but that's what you're going to hear today. i know the allocations were tight, there's not a lot of stock around. >> is it going to hit 40? >> i heard it's going to open at 30 and there's very tight allocations. >> tight allocations. anthony nodo is the guy who put a lot of stock, the goldman guy you have that nfl fella. anthony was the cfo of the nfl and did a great job. he was involved for dot-coms, he knows who to play. what has happened is the first price is not the high price. within 15 minutes, you get a second high price and you come back to that high price. i hope it doesn't open north of 35 because then it's fodder for everything we've been talking about. >> before you go, i just want to congratulate you. you did a mitzvah last night.
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people don't know this but the lulu and leo fund, there was an event last night, jim was the big sponsor of it and the emcee. you did an awesome thing. >> their strength is inspiring. >> it is. and thank you for doing that. coming up, we'll get the last word from our guest host jon steinberg. plus why content is king for netflix. and a live interview with ceo dick costolo. just set your start and end price. and let it do its thing. wow, more fan mail. my uncle wanted to say thanks for idea hub. he loves how he can click on it and get specific actionable trade ideas with their probabilities throughout the day. [ male announcer ] open an account and get a $150 gift card. call 1-888-280-0149 now. optionsxpress by charles schwab.
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we got about a minute left. let's talk about netflix with buzzfeed president john steinberg. >> dolan said about a month ago, maybe we'll be in the broad band business. >> but that means they all win, the hbos and showtimes, can they win playing against amazon and -- >> will amazon succeed creating content? >> i believe they will. >> it's some whacky apps guy.
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>> who wants to watch whacky apps guys. >> they said the same thing when netflix rolled out. >> i don't want to watch nerds developing apps. >> they're doing deep data to analyze every celebrity a person likes. it's a no-brainer. >> jon steinberg, thank you very much. that's it for today. join us tomorrow. now it's time for "squawk on the street." good morning. welcome to "squawk on the street." our special coverage of twitter's initial public offering. i'm carl quintanillah


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