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tv   Squawk on the Street  CNBC  November 24, 2014 9:00am-11:01am EST

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>> valid point but not news. >> no, no not news. >> thank you for joining us. >> thank you. >> it's warm, i must say. >> yes. >> it's cold in here. >> it is cold in here. >> street signs 2:00 eastern. >> see you, all of you, tomorrow. join us. now it's time for "squawk on the street." ♪ good morning. welcome to "squawk on the street." i'm david faber along with jim cramer. live from the new york stock exchange. carl quintanilla has the day off. a look at futures on this monday morning. of course, it's a shortened week, if you will. we'll have a half day session on friday, i guess, than what we normally have, after the holiday thursday. there we are. up yet again after a nice day on friday. as for that ten-year note yield, hanging around that more or less that same level of 2.33, not a
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lot of movement there. oil still in many ways, i'm going to say it, key to the market. >> yes, yes. >> he agrees. >> totally true. >> i'm glad i -- i wasn't sure you would agree. there we are. crude at 76, brent around 80. >> big meeting this week. >> big meeting this week as well. our road map this morning and it starts with markets. s&p looking to its 46th, 46th record close this year. the dow looking for its 29th. the nasdaq looks about 7% off an all-time closing high from march 2000. yeah, i remember that. gas prices fall fog four-year low. opec preparing to meet this week. raymond james weighs in on chevron, exxon, hess, occidental. united technologies announced the chairman and ceo is retiring, effective immediately. i'll tell you what's next for the company, who the new ceo is
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and ask questions. not sure we have a lot of the answers. >> let's get to the markets. for a sixth consecutive week of gains. the 45th record close of the year, the dow its 28th, nasdaq, as we told you, new 14 1/2 year high, 6 out of 10 sectors at multi-year highs. i hear all of that and i say, oh, oh! a little scared. >> well -- >> hearing all of that. are the earnings there, i don't know. >> decent valuations. byron is the key for valuations, says we're okay. i do think that this is a rally that wasn't supposed to happen. it's a rally where the second leg of it is about interest rates in europe. and about their weaken being our strength. pulling huge amount of money, i think, worldwide. when italian ten-year, remember at 7% in -- >> yeah. >> about to fall apart. >> now 2179. >> spain. >> 1947. >> part of the p.i.i.g.s, failed
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countries. there's no way you can keep your money there. got to keep it here. doesn't matter if the fed's not buying bonds. suddenly you've got a situation where you really are looking for yield. there's a lot of companies that yield better than the ten-year. and i think that basically what you're up against, no other game in town. >> no. and of course the japanese doing anything and everything they can. buying anything that's not nailed down, trying to create inflation. you've got draghi, i'll do whatever it takes. >> there's -- >> trying to do something, though as you pointed out, it's merkel who wears -- >> the hoover pantsuit. >> yes. >> people push back at me and say she's pro-stimulus. you know, maybe i'm old, but that's a stupid -- she isn't. i mean, she's very much of a balance budget person. germany's the big beneficiary of the european union. you can write all you want or criticize, i don't give a damn, but what matters to me what's
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going on here, he, draghi's, doing everything he can to prevent germany from take down the euro from the european union. and what he also wants is not to have a right wing country spring up. i mean, like nazi germany did because of this kind of thing. >> right. >> that's what he cares about, they're historically oriented. the asset buy, i misjudged it, there are billions of dollars at stake that he can buy. i've seen european banks do quite well. i'm not -- i'm saying he's doing a darn good job and has to counteract her. and those who defend her are on the wrong side of history. >> all right and back to our market, as we move into the last six or so weeks of the year. what should i be thinking about, what should i be looking at? you mentioned, of course we both did, oil the key to the market. hanging in around $76 level but not good across the board. good for the consumer. >> consumer-related economy. if you look at companies
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involved, where they want people to spend, i mean, i think you're going to have a very good holiday season. right about now we sbee "the ne york times" write a story how bad the holiday season will be. you put that story out. do we have ta story yet? someone gin up that story. it's hard to think it won't be a much better christmas when you have 2.50, you have better employment, house up in value, numbers from home depot. you saw target do a good job. walmart, what you know better than anyone, doing better. concodowngraded by conviction. >> of course. >> about given in a consumer-related economy, if the 13% of the s&p related to oil going higher, that's a lot of the s&p that is related to it going lower? >> is. some companies, dow, dupont, input is gas, to a certain extend but price output on oil. so they're not in a great position. >> no.
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i did a piece this morning for real money for the street.com about andrew libras and frank mitch is saying, didn't put it in the piece, saying they shouldn't be that correlated. if oil bounces, dow goes to 55, that's what happens. andrew saying, listen, one-fifth of the biusiness should be related to that. historically a negative correlation, undeniable. >> let's talk more about it. ahead of the thanksgiving travel weekend, u.s. gas prices falling to a four-year low. 2.48 a gallon, that is 88 cents below the peak of the year which came in may. raymond james downgrades exxon mobil. sakes chevron down as well. had been a strong buy. getting downgrades on the stocks. >> these are important. exxon has historically traded the opposite of oil. one that people has always reached for when oil goes down. this is a upgrade of oxy,
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leavered to the price of oil, particularly american oil. this could be a very significant switch because they're calling the bottom up. i think that opec is in big trouble here, and i say that because when you look at venezuela with 2.2, nigeria with 2, these are countries where we imported a huge amount of oil from. i'm predicting that we will be producing enough oil we won't need opec 18 months from now. opec has to think of countries -- >> when you say we won't need opec,s that a strong statement 18 months from now. what do you mean? won't need them? >> we're importing, let me get my numbers. >> still are. >> yes. importing -- we're at 30-year low of what we're importing 2.9 million barrels. we are pumping 9 million a day. if you add up the percentage of the big majors and the independents what they're saying they can grow production, it would mean we should be at 11 million years 18 months from now. so that's very lit that --
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>> we're getting close to nothing from them. >> right. if you add 2 million barrels, importing only 900,000 barrels from opec. remember, canada's a big importer. so -- >> we're not fully energy independent. >> ahead of when most people thought weed be continentally independent. these numbers say, opec, we do not need your oil and no place to put. china's not using oil. they can do all they want to try to maintain the price but we don't need it. they have to cut back production dramatically in order to help these ailing nations. and saudi arabia may -- there could be a rebellion against saudi arabia. >> right. it's an interesting point, one we certainly done have the time nor perhaps expertise to get in fully. geopolitical ramifications of falling oil, whether russia, iran, different areas of the world are quite significant. >> yes. and i think that, again, this rally, you started out with an important point if we moved up, when you hear nasdaq up to those
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levels and think, wait a second, is it gilead that should be this high? are we right to take sky works solutions up this high? there was low multiples coming in for technology, i don't like multiple expansion, i want earning expansion. when you have a stock like target or walmart they're downgraded as they go higher, what people have to do is come back to them because these companies haven't had good years in many years. they'll -- because of the way that people have more money, they're going to have very good years. >> yeah. let get to the united technologies, which jim and i talking about offcamera, curious, it would seem at least. how do you pronounce his last name? retire eing as chairman immediately. gregory hayes named ceo. edward kankis nonexecutive
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chairman. in the job six years. average ceo tenure is not far off from that. right around seven years that's not as unusual as you might think. but 100 billion company of this time, there's succession plan in place but more typically than not, you get the announcement, transition, anointed successor, some heads up here. this is a -- the company, only thing i've seen -- i haven't had an opportunity to get any sense here on my own phone calls, a spokesman saying nothing to do with financial performance to another reporter who reported on it this morning. >> my charitable trust owns united technologies, it's a d disappointment versus honey well. dave cody of honey well, parliame far outperformed. ge has better growth. it doesn't mater. shame on them for not putting out anything else. do they think we're this stupid?
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we're going to say, that's fine. you're curious, right word, but you can't put this out and say, we don't have to explain what we do. your big publicly traded company. this man is not supposed to be stepping down node and gregory hayes come in. they think we're a private company. >> something out of another era. we've remarked on the fact with ceos you've started to get straight change from companies saying he was fired. >> right. >> or whatever it may be. >> how about -- give us -- >> having an affair. any number of things. by the way, not saying any of that is at play. it does raise questions. >> if i were the s.e.c. i would call and say, you guys mind putting out a release? where's the obligatory spend more time with his family, it's thanksgiving, that would work. >> it's the immediacy -- >> come on. >> it's out. they obviously had a plan, you assume, in place. but i am curious, i'm hoping perhaps to speak to people close
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to see if there's another story here. many wonder whether that's the case. i don't know what he's go on to do at 57. that's young. >> they did the buyback, talking about doing a better job, the stock was starting to catch up. and then he's gone? he's just gone. like, hey, you know, here's your hat, don't let the door hit you on the way out. >> don't know a great deal about the cfo. >> gregory hayes. >> yi. >> gregory hayes. >> strong name. >> like bob hayes was very fast. of the hayes people. >> rutherford b. hayes. >> so so president. we know more about him than we thought. he was the cfo. >> see that? >> look what we've done in just in terms of like three minutes' time. >> incredible. analysis, insight. context, amazing. let's -- talk tesla. appears tesla's emon musk
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talking partnership. the stock's getting a lift on the news. sara eisen going to talk -- we call him a titan -- he's a king, titan, jeffrey gundlach. >> let's start putting this stuff in context. >> this guy's worth listening to. nine straight months of inflows, every time he goes on tv, i bet those flows heat up. we're back after this. ♪ music ...the getaway vehicle!
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"the new york times" reporting that defense secretary hagel is going to be stepping down under what the "times" cites as pressure as he will be stepping down, of course, as defense secretary. perhaps as soon as today, expected appearance later today by president obama, expected to announce mr. hagel's resignation. recall he's only been on the job, i think, less than two years. >> yeah. >> certainly during the second term, of course, of the president. "times" saying the president's decision to remove mr. hagel as a recognition the threat from the islamic state, that being
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icy, would require a different kind of skills than mr. hagel was brought on to em employ. recall he's a republican, obviously military experience had been a senator, skeptical about the iraq war. and now we're talking about afghanistan, keeping troops there. but most particularly the continued and perhaps what will be increased fight against isis. >> clearly. if you have to rebuild the u.s. troop presence in iraq, i mean, you're back to -- back to a wartime. >> unclear who is going to be nominated to replace him. a couple of names here, former undersecretary of defense, senator jack reed, democrat of rhode island and ashton carter, former secretary defense. all according to "the new york times." >> wow. >> let's move on to tesla. >> wow. >> ceo elon musk saying his company's in talks with bmw over a potential alliance in
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batteries and lightweight parts. musk describing bmw's carbon fiber car body parts as interesting and relatively cost efficient. >> bmw is supposed to destroy tesla. tesla's got nine lives this is recognition of tesla's technology. i keep thinking of the decline in what we thought was the projection of tesla, morgan stanley last week. so i'm not as gung ho about tesla because -- i think a number of cuts means you should walk away from the stock. i'm sure people will say this is the endorsement we're looking for, bmw is not coming in, smart people saw bmw electric car models and thought it was the car of the future. if they're adopting tesla, then they're not the car of future testing. >> with full knowledge people don't buy tesla as their primary reason because they don't want to be filling up with gasoline. does the falling gas prices impact sales at margin? there i think it absolutely does. we've seen according to the ceo of marathon, big -- they have
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all of the stores, right? huge number of stores, actually gas stations, that they are -- the numbers are up very big for gas guzzlers because the american consumer likes a good gas guzzler. f-150 doesn't have as much, new one gives you two more miles to the gallon. now you're selling this stuff again back on the great american dream of owning a big car. >> a big car. cafe standards are coming up, continuing to come up. >> right. >> that's a good story. interesting story today as well about solar power and wind power competing now in a real way. >> i thought that -- that was a lead story for me, because when you get that, what it says is that you're going to put a panel on your house and these utility companies are not set up for this distributed power system. >> right. >> i think that david crane at nrg would tell you that, he's a terrific guy who really recognizes that it's -- really,
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it's -- it's armageddon if everybody decides to have -- for -- if we can have -- >> brings us back to elon musk and his other company. >> it's very difficult to be able to imagine a utility where they have to take your power all over the country. there's 50 million roofs in the country. >> yep. >> i -- look, it's not a short-term consideration they're all fine. longer term, if the price comes down, it's bad for the utilities, not good. >> next, cramer's mad dash as we count down toward the opening bell. a live interview with twitter co-founder, biz stone, the social media landscape. take a look at futures here. we are looking for an applied higher open, more "squawk on the street" after this. location. location. (shouting) location. here's the location that matters the most. here. or here. or here. it's wherever this is. to get customers to come here and stay here,
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♪ ♪ all right. seven minutes before the opening bell. time for "mad dash." rbc raises dish, target from 69 to 81. this has been a phenomenal stock, talking about spectrum, spectrum's worth more. people are worried about verizon and how much verizon has to spend. >> and at&t. when you watch the numbers in the auction of spectrum, rise well beyond what many people anticipated. >> david, what i want to know is, is dish in the cat bird's seat? chatter seems.
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>> value of the spectrum holdings going up as a result of what at&t, verizon, perhaps another bidder, maybe dish, buying some. but what they're willing to pay for the up and down link. that being said, the question becomes, when will they be able to some way realize the value 0 of the spectrum? what transaction do they do that can do that? charlie ergan may have one number in mind but it doesn't mean someone may buy it from him the balance sheet constraints of those that would do is almost impossible, unless something out of the box. >> soft bank? >> ooh softbank i don't think so. >> sprint -- >> you can't discount -- what you cannot discount is dish and sprint getting together. >> right. >> or dish and t-mo. but we don't know what he's got coming. it all goes in his favor, though, again, some people saying, all right, but now you've -- it's getting overheated. >> but down here -- you have
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always been -- malone, you know, you got ergen, she's guys are largen than life figures, right? big think guys who create a lot of value. >> no doubt about it. we've got to get to eamon javers in d.c. >> sure. >> more on secretary hagel and the reports that he'll be stepping down. >> yeah, that's right. nbc news confirmed that secretary chuck hagel, secretary of defense, stepping down, under pressure here. expecting an announcement possibly from the president later on today. the question here is, what is the impetus behind the decision for chuck hagel to step down? obviously a republican senator who built a rapport with the president when he was in the united states senate, then brought on by the president as secretary of defense to manage the draw-down of troops in iraq and afghanistan. but with the rise of isis and regiggering of forces in iraq and afghanistan, the decision late on friday to extent the
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u.s. presence in afghanistan, all of that sort of changing the way the pentagon is going to be focused over the next couple of years, clearly the president deciding now to make a change. chuck hagel will be stepping down as defense secretary. no word on who his successor might be. we'll be working on that throughout the day, guys. >> thank you. as he just said, we'll be following. opening bell, four minutes away. stay with us on "squawk on the street." ♪ oh what fun it is to ride. get the mercedes-benz on your wish list at the winter event going on now - but hurry, the offer ends soon. [ho, ho, ho!] lease the 2015 c300 4matic for $419
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a month at your local mercedes-benz dealer. i am an electric crew foreman out of the cupertino service center. i was born and raised in the cupertino area. it's a fantastic area to work. the new technology that we are installing out in the field is important for the customers because system reliability i believe is number one. pg&e is always trying to plan for the future and we are always trying to build something stronger and bigger and more reliable. i love living here and i love the community i serve. nobody wants to be without power. i don't want my family to be without power. it's much more personal to me for that reason. i don't think there's any place i really would rather be.
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you're watching cnbc "squawk on the street." live from the financial capital of the world. opening bell ringing 50 seconds from now. >> i feel awful about the united technologies story. people have to understand, news like this happens. i respect that man, who has departed, mr. chenevert, who is doing a pretty good job. and he's gone. and you know, the thing that they don't -- they don't need to put out a release why or what. i'm flabbergasted. >> still it bothers you? >> yes it bothers me.
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this is a great american company. a guy leaves and we're sitting here trying to scramble about what happened? >> the old days where we're r rarly got an -- we assume he's fired. >> in the boardroom, we're seeing things we've never seen before, boards of directors, getting a level of clarity about what's happened. this is a throwback. >> without a throwback jersey. >> its a throwback, that release. >> maybe those guys who are wearing right now throwback outfits to the '50s, before there was disclosure, thin ties. >> united technologies stock not doing badly, down over 1%. you heard the opening bell at big board. who rang it? lennar. >> there you go. >> talk to the ceo. over at nasdaq, saxo bank did the honors. a look at hq, real-time exchange. good deal more green than red. >> we have to be careful about
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monday morning openings without mergers. this is an air of good feeling week. we've seen this happen so often. it's thanksgiving time, and drift up. but there are positive notes. research is positive today. i saw a note this morning about cisco and maintaining the margins. a lot of people suspicious about how cisco continues to go higher. rbc says it can. kate spade to buy merrill. that's the new winner in the handbag business, not coach or michael kors. positive notes saying, listen, let it run. have you seen walmart, david? 85. 84. >> yeah. >> in the 70s forever. target -- these things have been stuck in the mud. once they start to move, they really take your breath away. boeing breaking out here. honeywell breaking out. a broad panos pli. >> happy days are here again.
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>> happy days have been here a while on apple. we'll talk about it in "mad dash." >> talking about apple having a good holiday season, iphone 6. the beginning of the chatter how apple resurrected itself. apple turned out to be smart about one thing they bought a lot of the stock when people doubted the iphone 6 would be a big launch. tim cook does not seek celebration, does not seek -- i'll give it to him. great job. >> capital allocation, when it comes to buying back stock and/or issuing debt to fund those buybacks, they've done very well in hitting the market at low interest rates and/or lower stock prices but people will come back to 170 billion in cash and go -- >> this is a case study, how to deal with capital allocation in a world where we have the worst corporate tax system that everyone says is going to be fixed and no one is fixing it. >> that's true.
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take a look here. technology, more broadly speaking, jim, nothing -- nothing particular. alibaba up to 112. yahoo! above 51. >> people should be looking at micron. we've got -- micron goldman raising numbers. micron will break out, plain and simple. demand is too strong. there's been a lid on the number of new fabs coming in. land research, positive note. that's also because there's a shortage, i lad lamb on "mad money" a shortage of foundries, shortage of chips. we do not have that. the shorts are all over micron. they've said, cramer, you don't know what you're talking about. and i say, well, the proof is in the pudding, gentleman, the stock is raking that in. >> we've talked about dish earlier but it's important to focus on verizon and at&t as well. >> yes. >> citi does downgrade both of them this morning. the idea simply being, they're
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spend ago good deal of money at the auctions that we've talked a good deal about of late. we assume they're spending a lot of money. and that will stress their balance sheets. it's not just buying spectrum, then you've got to spend to build it out. they've have enormous networks already but it's going to take a while too put the spectrum to use for data. given where it is, in terms of its frequency, it's not actually great going through buildings. it's going to take them a while. and you've got t-mobile out there still cutting prices. >> i know. look, this business -- these are great cash flow generators but obviously the competition's heating up. i like the arms merchants. i like american tower. >> tower stocks, right. >> cc crown holdings and sbac. these companies, by the way, have been in bull market mode for so long and they quietly go
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up. only thing you ever saw about this group was there was a slam put on by american tower. i'm not going to mention the firm. it's not worth mentioning. the ceo came on, i don't know what they're talking about. >> a great opportunity to buy the stock. >> when he came on, why are they doing this? our business is strong. it was a head-scratcher. >> yeah. >> what a diplomat i've become. >> we've talked, energy, exxon downgrade today. i notice anadarko is up. there's continued theme of, are we going to see consolidation? >> you -- >> amongst the big guys, the majors. doesn't exxon do something? or not? i don't know if a lower oil price environment is the -- is the time that they do that. >> they have a long-term -- exxon's company thought to have 50-year plan. anadarko always thought to be for sale. i don't know. as soon as lawsuits were cleaned up, people felt this is the one
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to go. a lot of people thought whiting would go. i think at this prices people are figuring out drilling budgets first and then acquisitions. >> yeah. on that note, of course, last monday we saw two enormous deals, baker hughes/halliburton and actavis. >> brent saunders did a great job. i had mr. likes, a guy giving it all she's got, never enough. never enough for hedge fund. remarkable company. spin off of pfizer. it doesn't matter. there's a man who is a very good -- analyst about what they've done. they are the research leader. but that doesn't matter. allergan was a research leader, that doesn't matter. they never go after pfizer, never go after lilly. they go after winning companies. we should never feel sad for ceos who are well-paid. but i also feel there's a lot of
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pride. do you go after belichick? shouldn't you go after tom koffman? i'm using that analogy. >> why aren't you going after underperformers? no company that is immune, many spend a lot of time preparing for activist campaigns that never even come. >> right. >> but there's a lot of management distraction, even from anticipating the possibility and then, of course, if one does come, you're spending 25%, 30% of the time if you're the ceo on it. >> mr. liberse. >> they've avoided a proxy fight. plenty of people happy to see what a proxy fight might have unearthed what we might have learned as investors. >> what do you learn? other than the best performing chemical stock. >> capital allocation could have been a lot better. >> you think? ppg up 13%, dupont up 11, west lake up 16. huntsman and eastman chemical up
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8. and how has dow done? dow's up 18. better than the average, up 30% year-over-year. done a great job. >> some argue he's been in there for quite some time, lobe. it was a while ago he wrote in his investor letter about it and the stock's up in part because people anticipating the very fight that didn't come. >> okay. look, i -- i am offering two things. one, is the price up because of lobe? yes. i'm not going to say maybe yes. has liberus done a terrible job as ridiculed by a three-minute video genuine mudsling that's been removed, you can't see it? the video said that he breaks his promises, yes, he did have to slash dividend after saying on the morning he wouldn't but that was the dark day of 2009. but if you looked at that video, it said lib russ, like mo,
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larry, curly, schempp? does he deserve to be schempp? you know? >> i don't know if he does. >> i don't think he's schempp. i they he's did a good job. >> harpo, groucho. >> those guys were smart. >> zeppo. >> always an underperformer. >> those guys were smart. not that the three stooges weren't. >> actavis up again. there's a guy, brent saunders. >> no stooge. >> he's groucho. >> mary thompson more on what happens moving. >> aspe expected, dow off the bt levels of the day. the mergeer. news, of course, hoping to put a bid into the market. good news on german business confidence as well today. the s&p and the dow, of course, last week, finishing up five straight weeks of gains, closing at record highs with the dow, transports, going into this time of year, seasonally favorable for markets. add in central banks around the
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world continue easing money policy. there aren't a lot of alternatives for investors. there's a bullish bid to the market. it continues today. though you're starting to hear a bit of chatter about valuation. nevertheless, there seems to be a firm bid. looking ahead, i think, today traders expecting quiet session. economic data later in the week that could influence the markets. as we mentioned, there are deals to tell you about. renaissance reacquiring plats number underwriters for $1.9 billion. biomarin buying the dutch company prosensa, 17.75 a share and additionals, if there is some drug development by prosensa as well. dow components in the news as well today. you heard david and jim talking about verizon and exxon mobil earlier on analysts' downgrades there united technologies up 1% on the news the company's ceo louis chenevert is stepping down, replaced by the cfo. and intel gets positive comments in barron's over the weekend,
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expecting the stock to rise 30% over the next two years. we're also keeping watch on retailers, of course, this is start of the christmas shopping season. we have black friday. but also with gas prices close to four-year lows, there's a bit of interest in retailers today. friday was a tough day for them because a number of them came out with disappointing forecasts. but today seeing a bit of a rebound. bhp billiton. the company's. increasing its plan for cost cutting to 4 billion by june of next year, up from 3.5 billion, this, of course, as we see weakness in metals prices. gold right now is higher, up 40 cents. the only area of weakness in early trade seems to be the energy sector. drugs turning lower. energy down as crude oil is weaker, ahead of the opec meeting thursday. once again, dow off its highs of the day, up 33 points. back to you. >> thank you, mary thompson. to the bond pits now. we join rick santelli at cme group in chicago. rick? >> good morning, david.
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we see that all maturities are a few basis points higher in yield. and if you look at intraday of tens it paints a picture of moving up and yield down in price. pair it with friday's action, it negates that notion. and 18 under the belt. today is session 19. where it looks like we have potential closing that same range of 230 to 238. started on the 28th of october, as you see on the last chart. however, however, the 30-year has broken away from this. am i making too much out of one basis point? as you look at a chart starting on the 23rd for 30-year bonds, we had 22 sessions, it was closing between 303 and 310. we closed at 302 on friday. maybe it's going to expand that range. however, the compact range stands alone and it was broken, let's continue to monitor that dynamics, which here's the foreign exchange. if you look at dollar index,
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hovering at best levels since june 2010. we are, what, four-plus years in on this rally. let's look at the components that make the biggest difference. of course, it's usually the euro. the yen in percentage terms continues to skyrocket in the wrong direction, the downside. early august, 2007, that's the last time we were hovering at these levels but many say 120 is a breaker. so far, they've actually been correct, consolidation, but still losing ground. and the last chart, euro versus the dollar. hey, i don't know what's in draghi's mind. foreign exchange market's trying to figure it out. we're hoovering over two manufacture-year lows on the euro versus the greenback. back to you. shares of lennar up more than 35% in the last 12 months what happen is next for the home builder with its ceo stewart miller. also ahead, sara eisen's
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interview with jeffrey gundlach, his outlook for bonds as well as take on certain stocks, including apple. you never know where gundlach's going to go but it's always worth listening. we'll be right back. alookin' good! close it up! got it. ... and then, santa's helpers boarded the train, and off they went. and that's how we got it. wowww ... you guys must've been really good this year. the magic of the season is here, at the lexus december to remember sales event. this is the pursuit of perfection. right now, you can get a single line with 3 gigs for $65 a month. 3 gigs ... is that a lot?
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companies, and the only home builder i've been recommending for years, lennar ringing the opening bell at new york stock exchange. the company celebrates its 60th anniversary. i remember the company from those early years. joining us, first on cnbc, lennar ceo, stewart miller. >> great to be here. 60 years for the company, back in the day you were an investment banker in your goldman years. >> your dad was just an amazing man and had a vision and never fallered during a period where
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you and i both know, a boom-bust industry but he was secular growth. this market, you've got a beat on. i'm going to quote something that blew me away. before this downturn, anything below 1 million housing starts in a year considered almost a housing depression. this recovery's just getting us back to levels of starts. what the heck is happening? building homes like we have 150 million people in the country instead of 317 million. tell me what's go on? >> it's been amazing. this recovery has been very slow, very steady, a low slope. it is governed by production deficit at the bottom, but mortgage finance impairment at the top. we can't get mortgages approved and that's really governing demand. so it's keeping the range of improvement of the market c constrained into a marrow band. the statement i made in the third quarter is exactly the statement, 1 million housing
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starts a year, used to define a depression. this recovery getting back to the 1 million start level. >> back to the notion of the difficulty for credit. banks are saying, we're lending. fannie mae has said, we're helping things. so, i -- who is at fault? >> look, at the end of the day we went through a treacherous downturn. >> right. >> it was defined by mortgage exce excess. the mortgage market has reconstituted itself in a very limiting way. high down payments, very tight credit box, and a regulatory overlay that really has the banks rethinking whether they want to be involved in the mortgage business. so you hear about the banking overlay on what fannie, freddie, fha, va have as their standards and it's a limiting factor. >> incredible. a time when you have been able to take advantage. you sold high. it's a degree come true.
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you sold land high, bought land low. what does it mean for lennar. >> it's driven our gross margin, as you've seen. over the past couple of years we bought land at bottom of the market and it's held us in good stead. we continue to be held in good stead as we look to our future. >> now the market overview housing supply, fantastic chart that you have, this should have led to a really tremendous, quick burst in housing prices. there have been. but you talk about affordability being pretty good. >> affordability is strong. housing supply is limited. the demand -- demand part of the market is constrained. it's that mortgage overlay that has constrained demand. so what it really means is, as you look out ahead, we're likely to see a sustained upward cycle for many years to come. we think, and look at our business as we have a lot of runway out ahead of us. >> when you talk about this mortgage overlay, which is
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keeping a lid on demand, do you view it as a good thing or a bad thing? >> we think it's a bad thing. and at the end of the day, if you think about it, the people that need mortgages, the lower middle class people who want to get into home ownership are being relegated to rental housing which means, their monthly costs are changing every year. and the rental market, because of all of this demand that has been spilled into the rental market is driving rental rates higher, that rental market is thriving but it's really -- it's really making working class families feel that they're losing disposable income. >> to those who would say, we had an art officially high level prior to the crisis, 70%. we are better off being closer to 60%. and we are becoming more of a rental economy. there's a seminal change going on as people are considered renting as opposed to buying.
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>> think about that. every 1% of home ownership lost translates into 1.3 million american families going into a rental pool. that means that that 1.3 million for each 1% lost measures up to 300,000, 400,000 new rentals coming on the market. you have a demand/supply imbalance. we trend toward 60%, we are going to see rental rates keep going up, and that's not going to work well for the working class families. >> nothing to show for it for the american dream. stuart miller, fantastic job. congratulations. >> thank you. >> thanks for joining us. we told you earlier about united technologies' ceo louis chenevert resigning, to be replaced immediately by cfo gregory heys. the company tells cnbc chenevert's retirement is unrelated to financial performance, which remains on track to achieve previously
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stated goals. it says succession plan has been in place for several years. this is the same comment they've been giving others. it doesn't tell us anything. >> mr. hayes better be focus. here today, gone tomorrow at united technologies. >> every company has a succession plan, as you expect, a board should demand it of 100 billion market cap company. jim and i have been saying it's more typical that you see a planned announcement of a ceo's retirement to be followed by the announced successor and a period of overlap. doesn't happen in one day with no heads up. >> i'm going to take united technologies' face value and say, that's pretty good, i guy's in one day, gone the next day. that's the way it should be, no explanation. there, i did it. i backed you guys at united technologies. you're much better now. up next, stop trading with jim. "squawk on the street's" back after this. t, say, organic food stocks, schwab can help. with a trading specialist just a tap away. what's on your mind, lisa?
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thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $89.95 a month. comcast business. built for business. time for stop trading. >> a bone to pick with goldman sachs. buy from hole, hold to -- >> choke up. >> a fabulous ceo, this is my bone to pick, when you quoun grade from buy to hold you
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should not increase price target, 122 to 132. mary billen is billing a multiyear term in tall and it's a great opportunity. previous management people felt they were doing things that boosted earnings short term. mary dylan has a long-term plan, remarkable ceo. she is, i think, delivering and delivering, delivering on a very, very consistent fashion. goldman sachs should not have downgraded this. >> "mad" tonight? >> big secret, i'm talking about actavis. >> really. >> some of the things that we buzzed about during the break. people who want to listen during the break, good luck. we're into the going do that. we'll talk about it in a similar fashion that you did. >> i will be tuning in, as usual? spirit airline shareholders have had a lot to smile about. we'll talk about it with ceo ben
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monday morning, good morning, welcome back to "squawk on the street." i'm simon hobbs along with taye la tausche and david faber. carl is off today. sara eisen is in los angeles with jeff gundlach. she'll join us 11:00 eastern. kayla, we opened up into record territory, subsequently falling back. >> yes, of course the rate cut in china over the weekend. that has been settling into the markets. but we have a lot of other news to get to today. road map starting with ceo stepping down. united technologies announcing its chairman and ceo is retiring. effective immediately. find out what's next for the company and what you should be doing with that stock. also ahead, fedex and u.p.s. ready for the holiday season? how much the companies have to gain or lose in the next couple of months. and the ceo of spirit airlines waering s weighing in
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bag fees at jetblue. a big storm coming ahead. close to 18,000 on the dow, not quite there yet. let's get analysis where we're likely to trade to the end of the year. chief global investment strategy with charles schaub and portfolio manager with aerial investment. jeff, we opened at another record. where do we go from mere? >> probably higher. so much policy coming in to up. up the marks whether monetary policy from japan, china. seeing it from europe as well. joined by fiscal policy. remember, japan delayed tax increases, we're seeing the budget battles in europe subside. more stimulus from china. stocks go higher. but listen, there's greater risk as we look to 2015, particularly europe, the a "weekend at bernie's" situation. >> i understand, jeff, why the market rallies, i suspect it rallies more on the ceo buy
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backs of their own stock of you've had major central banks increasingly desperate to keep economies going in the right direction. it's true of japan, the eurozone. we can argue where we are on china. the backdrop to the easing is not -- it's not a one-way bet for investors, is it? as you alluded to at the end of your answer. >> well said. with a lot of central bank action, it may look like the eurozone economies alive but in closer inspection the heart stopped beating a while ago. that's the "weekend at bernie's" reference to the movie. impediments to growth are still there. and the near-term, stimulus likely to continue to lift stock but was there are risks in 2015, as there's only so much stimulus can do. what's a frozen economic environment particularly europe. >> so, charlie there are two sides of the argument laid out by jeff. am i okay to buy the market, to be long of this market, as i might have been right throughout
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the year and the knowledge that if the bad stuff happens, i'll see it telegraphed well and be able to get out or cut those positions substantially? >> i'm smiling because the answer's obviously, no. you never get a warning, you never get a bell. when you get that bell, the market moves down and you don't get a chance to get out. we're in a range of reasonableness in term of valuation. starting to get to the high end of that range. we're kind of, i would call on a scale of one to ten, tens a bubble and one is dirt cheap, i'd say we're moving towards a seven. and particularly stocks that are overvalued are yield sensitive stocks like reits and utilities. the short answer is, no, you're not going to get a warning. but nothing else to put your money in. bonds overpriced, cash unattractive, that's why the market keeps going up. this is historically a bullish season, thanksgiving week itself, 70% bullish bias. but we have the expected volatility with opec and the
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uncertainty around how that will affect the energy market and how that will trickle through to corporates in that space as well. how do you position yourself ahead of the volatility given so many other variables at work. >> great point. energy, one area of the market actually, where the stocks do seem reasonably priced, are energy stocks because everybody is nervous about the direction of oil. as you point out, opec usually cuts prode s production when oi sell but saudis don't want to help iran so they haven't been cutting production. we think oil stocks and energy is an attractive part of the market but it's volatile short term. >> interesting. jeff, what do you like? what part of the market do you like for next year? >> the emerging markets make the most sense. all of this liquidity created by the world central banks tends to benefit emerging market stocks and the economic backdrop is a lot better. the heart's still beating, some
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may be on life support. barbelling your portfolio in 2015, keeping core exposure in the u.s., but overlooking a lot of the developed world of markets and really focusing on emerging markets makes sense. >> jeff, when the fed raises rates, as they eventually do, emerging markets could be in a serious situation, couldn't they? are have we worked our way through that? >> i think we worked largely through it. we'll see volatility but things are very different than they were even two years ago when there were hints about the taper tantrum -- hard to say for me -- and we saw them work through a lot of that. i don't think they're as dependent on the liquidity as they were at the time. >> thank you for kicking off your week with us. thank you both. >> keeping an eye on shares of united technologies, this after the company announced the abrupt retirement of ceo louis chenevert today, effective immediately. he's been replaced by the chief
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financial officer, gregory hayes. the company telling cnbc that change is, quote, entirely unrelated to the financial perform 'of the company. joining us now on the phone, managing director, senior research analyst at cowen and company. this morning we've been trying to puzzle this out. it's not often you see a company this size announce something in this way with absolutely no -- no heads up to the market, if you will. what's your take? >> i agree with that totally. there's been no heads up to do this in front of their december 11th investor day. is it a surprise, you know, i think the stock is trading off because investors don't really know. there's also not a lot of explanation as to the reason, is it personal reasons? is it something else? i think, you know, investors don't like uncertainty. on the plus side, the guy taking over, greg hayes, been cfo, he's been the voice of utc, he's been
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the guy doing the public appearances. they have a strong operating group. so you know, i think they're in good hands. but the fundamental issue is that, you know, i think china's imimporta important to them. they have a transition coming to this new engine. >> right. and obviously, reference residential building in china with the elevators of otis. but you have a favorable impression of hayes? i guess you've been dealing with him on the conference calls, for example. give our viewers some sense because it's not as though, again, to the point that there was any expectation that this was going to occur, certainly not in a rapid fashion. >> yeah, no, he's basically an experienced guy. he's been the cfo for a number of years. as i said, he really is the voice of utc. they have strong operating
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execs, i think, at the divisions. it's not like there's a vacuum of expertise. so, you know, i think that's fine. but certainly the circumstances of this happening as quickly as it did, and when it did, why didn't it happen after their investor day? you know, i think that's bothering investors. >> yeah. although the stock, for its part, is let's call it almost flat to up. but i know, 57-year-old ceo on the job for about six years, no explanation given retiring immediately setting off alarm bells. not due to financial performance. any guesses what might be going on here? >> no. i mean, there could be a lot of reasons. one doesn't know. he did a good job, i think, in getting geared to orders but he's -- the history here has been the ceo is the spokesman,
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his predecessor, george david, did all of the big meetings. he's not been doing that. so that's a little bit funny. normally this company goes with an operating guy as a ceo. so to go with the cfo is a little bit of a change. and i think, you know, there could have been a lot of reasons, but, you know, unclear to say which one it is. >> what's your overall take fundamentally on the company at this point? >> well, i downgraded it in august because of concerns about china and otis and what's happening at the residence market. and because of this difficult transition at pratt, i felt we'd be looking at -- i've been out talking, mid single digit growth which is going to lag a couple of their peers. you know, it's unclear what we're going to be looking national 2016. so you know, we've been neutral for a while here. >> thanks for your insights.
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appreciate it. cai von rumohr. ferguson, missouri, sitting in limbo on a decision whether to charge police officer wilson on the shooting death of michael brown. scott cohn is live with latest there. >> reporter: hi, kayla. if the reports are correct, the grand jury is convening right now to continue their deliberations. that would likely be taking place in clayton, missouri, 12 miles from here. this is west fluorescent, that's sam's meat market. as you can see, it's a typical monday morning except they're boarded up, they are open there's the iconic hands up, don't shoot sign. you see this in business after business around this area. they've boarded up, they're bracing themselves, including one doctor who says that all he wants, if there are protests, is
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a little respect. >> i have an office here, i take care of people who are sick. so the respect is to let me continue to do that and whatever the decision could be, that people can protest, yes, they can but they don't have to burn up our businesses. tear up businesses, break the windows, that disrupts business. >> reporter: imagine, they've been on edge like this for the better part of the month. they originally told there might be a decision early november, later told by the end of the month. we really don't know if the grand jury is going to earn a decision today and at that point, how soon we will know what that decision is. so ferguson and this whole area remains on edge. >> tenuous situation, scott cohn in ferguson, missouri. shares of ebay up 7% in the last month but one analyst just cut the stock to sell.
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watches shares of visti, it sibed a preliminary deal to sell controlling stake in south korea's unit to a private equity firm for $3.6, according to korean media reports. those shares of visteon off the highs but up 3% on the trade. back over to you. >> today goldman sachs announced it's let a $15 million investment round, a computing and analytics technologien answering millions of financial questions within seconds. the deal makes goldman's large shareholder and provides for access to the technology across goldman. the nbc universal news group, our parent, owns a minority stake in kensho which has ain't partnership with cnbc. >> we saw the fruits of that last week. let's talk about ebay, downgraded at evercore isi, the
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firm giving online retailer a sell rating on payments concerns, saying increased competitive risks outweigh potential rewards for paypal unit. with the shopping season under way, what impact could mobile payments have? joining us now, managing director and head of internet equity research at evercore isi. a 32-major report, very dense. walk through every single corner of the fragmented payment industry and you ultimately conclude that paypal's business model is at risk. why is that? >> i think a lot of speculation with the new announcements around payments there's a risk of payments business for paypal. and i think we just wanted to make sure that we were doing our work there to understand where would the risk come from. while there's big-name announcements in terms of apple pay obviously, the real risk comes down to the fact that demand channels, include social in that, you can include search,
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marketplace players getting closer to sellers. in doing so, you're seeing levels of data integration and collaboration you didn't see before. the convenience for the consumers or the authentication provided to merchant in terms of making sure they have a user that they think they have, that's done by demand channels now. the question, what value does paypal provide to the merchant or consumer? the question is it needs to be attractive payment source, you want to choose to use paypal if you're a consumer because you're getting loyalty and rewards. unfortunately in that respect you're not getting those things to the degree we think you need to. when we look at paypal's position from a scales sfintd we don't see it positioned scale wise enough to compete there. it is a bit of a concern, i think investors need to be aware of it and make sure we were as detailed as possible. >> which emerging platform or product has been the most responsible for taking away some
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of pal pal's market share or what was previously it's innovative edge? they bought brain tree. the banks haven't been able to roll out a product that emulate what brain tree does. apple pay does something different to what paypal's core business is. where do you think the exact competition is coming from. >> if you break paypal into two components you have the network, provide the convenience and authentication. paypal as a payment source. i think the thing that has made it harder for, i think, issuers to want to come into the space where paypal has competed they do have that greater convenience and the ability to authenticate. and that scale was needed to do so. but now whether it's apple pay, providing it from the os layer or google in terms of integrating with merchants on back end how buying key words and search traffic for marketplace players say, one click you can buy and here are
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store payment credentials, they have a number of changes how to integrate the solution. brain tree is one of them. notice that brain tree doesn't provide a lot of branding in terms of what the consumer sees. it not a question of whether or not brain tree owns the consumer, it's the demand chan that owns it. >> people are puzzled when all is said and done you pull the sell rating on unusually but took the price target down from 52 to 49. >> ebay's not an expensive stock in a lot of metrics. we're not trying to say this is going to happen tomorrow. but i do think that this represents about 10% downside to where the shares currently trade. there's a lot of catalysts out there now where people are getting, you know, enthused to say something's going to happen whether it's activism or other. i think that folks should have a clear understanding what is changing in the space and the fact that the value proposition that paypal has historically brought to the table, it is becoming questioned, i think both on the side of the merchant
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and consumer. you're left with, what does paypal provide as a payment source? that's where paypal makes most of its money and review it as being uncompetitive. >> you say paypal could be able to surprise us through innovation. trying to move into small business lending, trying to got a foothold in the brick and mortar space. are you seeing anything out of the company right now that you think is truly innovative? >> right. no, to be honest. i think there are things that they're providing in terms of one touch, either looking at areas around lending. and i would say, for the most part, a lot of those things seem to be competitive in moving paypal in a direction where they have more competitors as opposed to doing something completely new at this point. that is where you're right, it boils down to, can paypal take its current base, merchant
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penetration? we don't think that's the case. up next on the program, newly discovered super spy wear attacking computer for years. one of most sophisticated pieces of malicious software ever seen. all of the details on that after this break.
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new computer virus discovered but it's one of most sophisticated pieces malware ever seen. used to spy on private companies and governments, they say, since 2008. eamon javers more live from d.c. astounding that it takes six years to discover these things. >> that's right, simon. this is a new white paper put out by sim mymantecs, floating around on the internet, calling it reagan and say it's been targeting specific, targeted, narrow areas of penetration. a lot of computers systems in russia and saudi arabia hit by this. what symantec is saying this is
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sophisticated that it must have been developed by a nation state. they're not saying which nation state but say, in their white paper, they suspect it might be an english language speaking state which narrows field, because english language words discovers in the computer code that developed this. also saying that this was designed to stay undetected inside computer systems for years, because of the level of effort that went into keeping this piece of malware very stealthy, and they're comparing it to the famous cybersecurity trojan that went after the iranian centrifuges a couple of years back that exposed a great fanfare. more detailed to be learned and they'll update us with they have. interesting development in the world of mail wear. back to you. >> i'm fascinated who would be an enemy state that would be speaking english? >> well, that's interesting, because one of the things that symantec has said in the white
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paper is that there are certain areas that have not seen hits by this virus. someone is the united states. another is china. so, from that you can work around the motives who would have an interest in creating piece of malware go after computers in countries that are no the united states or china. >> the united states, then? >> at least one possibility. of course in the world of espionage, there's always a double reverse fake. you create malware that look likes it point to the united states as a culprit but developed somewhere else. sourcing these things is very, very difficult because there's a lot of back and forth here. technical technically, very, very complicated system according to symantec. >> we appreciate your time this morning. it's officially holiday travel season and a storm could cause big problems for travelers. straight ahead, the ceo of spirit airlines about that. plus, new bag fees from the likes of jetblue. "squawk on the street" will be right back. pm pain reliever
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shares of fedex and u.p.s. surging in what promises to be another record-breaking e-commerce holiday season. fdx up almost 16% in the past 3 months. our next guest spend time with both management teams. david ross, managing director in global transportation and logistic analyst at stifel. >> good morning.
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>> the price of fuel is helping but i imagine you get a seasonal effect on the stocks anyway, do you? >> sorry i couldn't hear you. there's noise in the background. >> his this about the price of oil. >> no, the a seasonal effect from the holiday shopping season. demand for service dramatically increases in months of november and december. so the trading in the stocks typically takes off after labor day through the end of the year. seasonal benefit from fuel is a double benefit this year because of the lower fuel prices have a positive impact on consumer spending, we think, this holiday season. >> the big news, last year, u.p.s. was unable to cope with the surging demand they had. made much of the investments with peak capacity. do you think both will be able to cope this year? >> we'll see. it will be interesting. i think, you know, fedex had a
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more disciplined approach around it, they have taken top 30 ki customers and given them caps, they're able to promise them in terms of shipment volumes. u.p.s. has not been aggressive placing caps, trying to hire more people, handle it all using advantages technology, routing to avoid any issues like they had last season. we think that, you know, if all goes according to their plans holiday season will go off without a hitch. however, any tooil you plan around a forecast, e-commerce sales pop up 30%, 40% on a given day unexpectedly, not much you can do to avoid congestion. >> to highlight the difference, as you laid them out between the two management teams and what they're doing, fedex saying if you give us more business year round we'll give you extra capacity through the holiday season, the message to retailers? >> correct. and the retailers, too, have taken a different approach going online last few days.
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i've noticed they're trying to spread out the holiday season a little bit. not, you know, cramming everything in on black friday, for example, but a few days around black friday. also promising, you know, three-day free shipping rather than next day or two-day free shipping. i think on the e-tailer side and carrier side they're trying to make this a more pleasant experience for the holiday shopper. >> what's the margin story going for? oil and gas prices are near four-year lows at this point. also we have price increases loom, both at u.p.s. and fedex. but interestingly fedex's increases don't start until january. i'm wondering if you think there's margin play between these two logistics companies given that? >> margin play just in the fourth quarter or in general over the next 12 months plus? >> in the fourth quarter starting, because one school of thought would say fedex rates cheaper for that last week of december, maybe they'll get added business but then again u.p.s. will make more money. so do you think there's any sort
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of effect or will it be largely negligible? >> we think it's going to be largely negligible. the amount of packages shipped in the last week or few days where it would have an impact aren't going to sway the court one way or the other. also prices that they have in place with their largest customers during the holiday season have contracts in place that aren't going to affect the rate increase. it affects the normal drop-in pizza. >> bottom line it for us, two very different companies, fedex more internationally, u.p.s. heavily unionized, larger on the ground for the holiday season. which stock do you prefer, should investors chase them through the seasonal bounce? >> most of the season bounce happened. we're not chasing either stock at this point. you have to ask yourself, what's your risk tolerance? if you think the economy's going to continue to grow and can afford risk and chasing earnings
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growth i go with fedex. your on the safety side, previous a dividend and solid free cash flow, i go with ums. we're not recommending either stock at this point. >> david ross on u.p.s. and fedex. in the reason time, people across the country gearing up for holiday travel. "consumer reports" for 2014 as published its naughty and nice list out. and our next guest made the naughty list for tacking on $2 bag holiday sur charge for travelers. joining us, ben baldanza, ceo of spirit airlines. good morning to you. you're not going to be appall g appall gettic, are you, raising the price of the first checked bag? >> we think it's plus for consumers, we're raising the price of bags a little bit but not raising fares as much as other airlines are raising them. total price is awesome on spirit in comparison. >> so the first bag is 49, the
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second bag is $59. people may, however, say that you're still nickel and diming. aren't you, according to morgan stanley likely to be the most profitable airline in the world next year, anyway? >> you know, we are a profitable airline but we also have the lowest total price in the industry. if you look at our fares, they're about over 40% less than our competitors' fares and total price that customers pay after they buy the bags is about 35%. it's hard to say you nickel and dime when average fare is $85 and customers are paying $130 total. what we do is put the power of pricing in the consumers' hands and they decide to pay for what they value and save on what they don't value. >> i'm told that you talked to investors about ryanair in the european union which has grown substantially, to i think 10% market share and potentially you could do the same from a lower base, four or five times as big
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in this country. isn't there a really important lesson from what michael o'leary did at ryanair, had to apologize for unnecessarily pissing people off? it he's had to do a u-turn, isn't there a lesson there. >> there's a lesson but it's a lesson we've learned and learned it earlier in our life. ryanair is over 300 planes now. we're 60 airplanes. we understand that early on in the evolution of spirit and growth story. you know the number one thing customers say they want when they pick an airline to have a low fare and we to that great. we don't lose man y bags at all. we have among the lowest cancellation rate of any airline. we do a great job for customers. we see what's happening with ryan and the southwest and u.s. as carriers have gotten larger they've had to appeal to a larger mass of customers. and so we're fixing those things now when we're small so we won't
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have those problems when we're those airlines' size. >> much made of the falling prices for jet fuel, down 17% from last year, why isn't that making air fares lower? walk us through your pricing model and whether there could be potentially beneficial impact for the consumer given where jet fuel prices are. >> well, i think as you would expect, that prices in the airline industry like most prices of everything we buy are demand based, not so much cost base. so what i think you'll see lower fuel prices do is probably create lower prices and better values for customers in low demand times, but in peak demand times, there's never really been a correlation to price and input cost price, which is fuel is our largest input cost. in a lower fuel price environment if that's going to stay through 2015, which obviously would be nice for the industry if that were true, what
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you'll see, you will see lower fares in weaker demand peers of times. but strong demand periods of times all companies price to the demand reality. >> are you the weak link in the chain of the airline industry now? one of the reasons everybody's profitable people have restricted capacity, revenues can rise, profits can rise, margins can rise. you've got 21 planes coming online over the next quarter and year. that's potentially 40 or 60 new routes because of the way you're able to use them and utilize them so well. could you upset the industry? could you add capacity where nobody wants it? >> no, i don't think that's the case at all because you know, there's a little bit of a small number problem here. right, we are adding 20, 21 planes, growing 30% next year over this year. this year was 18% growth rate over last year. but that's talking about going from 60 to 80 kind of airplanes. when you look at airlines like southwest and delta and
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american, those, you know, 800, 1,000 planes kind of things. adding another 20 doesn't show up. it's a rounding air in the nas capacity but what it does is, because there's less capacity around in the industry, fares have gotten really high, what it does it creates low price option in a lot of new places. so we're excited about that growth. and i think customers will really appreciate the fact that while they don't see low fares in their cities anymore, once spirit cops to town they have that option for a low fare again. >> certainly the stock price has done well. good to see you. thank you for joining us. ben baldanza, ceo of spirit airlines. >> great to see you. for the first time since the dramatic exit of bill gross from pimco, double line's jeffrey gurp gundlach going on the record. sara eisen joins us from los angeles with a preview of what we can expect. this will be a news making interview. >> thank you very much.
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good morning, kayla and simon from los angeles, on the floor of the doubleline trading floor. doubleline and jeffrey gundlach having a moment. the forbes article, glory to the new bond king, and flows are backing it up. 2.6 billion into doubleline in the month of october. the ninth month in a row. we'll talk to jeffrey about that. whether it's coming from pimco and what his calls are for 2015. remember, the biggie for 2014, they are up 6% so far, was that treasury still had room to run. totally against the consensus. nobody on wall street expected this. turned out to be right. we'll talk to him about his call for the federal reserve and for treasury prices in the new year. he's also had other good hits including strong dollar. he also had a hit about oil, oil going down to 70 ahead of the key opec meeting this week. some misses as well, especially when it comes to stock picking. he told us that apple was a sell, that turned out to be at
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wrong call. he had a short on home builders, as we're seeing new highs for some home builders today. we'll cover the globe. we'll talk stocks, talk treasuries. and of course, we'll talk about that megacall on dollar/yen, he told me 200. it is quite a bold call. already that has been the most dramatic trade, i would say, of the last year. be sure a lot of currency talk as well. >> in the meantime, i believe you were spotted at american muse ache waic awards last nigh. anything to report? >> we did stop by the american music awards since we were in l.a. there's a big business story going on with taylor swift pulling from spotify. interesting to hear artists. than my first time on the red carpet. i prefer here to be with the bond rock star any day. >> wow. >> a busy weekend, nonetheless. you are packing it all in. stay tuned for your interview with jeffrey gundlach later on
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next hour. twitter co-founder biz stone out with a new app. she'll join "squawk alley" live to talk about that. plus, what he thinks about the state of social media, silicon valley and what is happening at twitter which he co-founded. "squawk on the street," though, will be right back. what are you guys doing? yoga, it's supposed to make us more productive. better mind and body keeps us efficient. you guys have misread the memo. this is the new lenovo yoga with the intel core i5 vpro processor. it combines the productivity of an ultra book with the touch benefits of a tablet. and it's custom configured by cdw. so we can stop doing this? my head hurts. [painful grunts]
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take a look at s&p telecom sector, falling sharply, down more than 1% in a mixed trade. dom chu with more on what is moving in telecoms. >> look at it, by far and away, telecom the weakest sector in the s&p 500 today. verizon one of the biggest lag ards after cut from a neutral to prior buy on higher than expects values in ongoing spec trumg option, implying higher separating costs from mobile operators. at&t, frontier, wind stream losing ground. look at at&t and verizon, those citi analysts said that verizon
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the concern is possibly slowing wireless growth. those big telecom stocks ones to watch in today's trade. >> $34 billion apparently. thank you, dom. over to rick santelli for the santelli exchange. life in chicago. >> hi, simon. i'd like to welcome professor john cochran, university of chicago. one of the op-eds he's penned recently, who's afraid of a little deflation. several days after it was written somebody wrote back in to comment, me and my friends wait many months because we suspect that big 55-inch tv may fall a half of 1% in the next year. sounds ridiculous framed that way. why are bankers making a big deal about a bit of deflation, certainly not a spriiral? >> the argument you mentioned is one of the ones we hear a lot. when you think about it, it's no
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different with deflation than inflation. you get 5% interest on money in the bank and inflation's only 1%, you have the same incentive to save until tomorrow. and what's wrong with people saving a little bit? we've been spending and borrowing like crazy. i don't buy that particular argument or most of the other ones on how a little bit of deflation's going to cause us some horrible thing to happen. >> why do central bankers make it the cornerstone of, you know, pretty much every white paper, every press conference, every statement, whether it's japan or the european union or the united states, really has that has at centerpiece bogeyman? because they want to continue to bring forth policies that address that? what's the reason? why isn't there more research as to whether a small amount of deflation is as harmful as central bankers make it appear to be? >> yeah, well, central bankers love being in the news, so whatever's going on they're out there saving us from the great problem of the day.
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i think there's a lot of fuzzy thinking about this, why i wrote the op-ed. a fear if we get a little bit of deflation, it will spiral away into something terrible. but if you look, you know, big deflation, yeah, that's a problem. 20, 30% some big catastrophe, that could be a problem and a symptom of other things going on. a little bit of 1%, 2% deflation is fine. the economy works well with 1% or 2% deflation. it did in late 19th century. there were problems here and there but it didn't spiral out of control. it didn't cause all sorts of big problems. a little bit of deflation and your money keeps its value, as millen friedman called that the optimum quantity of money, and maybe we should just welcome it. >> with the final 30 seconds, i tried to form my own theories. these are very smart people that work at central banks, from a book learning standpoint. is it because there's so much debt in all of the developed
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economies and a little disinflation has an impact on debt, it's bettor have a bit of inflation, final answer? is that the main driver, you think? >> well, there is an agenda for a lot of inflation a way of def debts and deflation means that people have to pay back in a little bit more valuable curn spin that would be a problem for a 20% deflation but a change to 1 or 2% deflation and get to roll over your debts at lower interest rates i don't see that being a big problem at all. >> thank you so much for your time, professor. it's all yours. back to you. >> thanks so much, rick santelli in chicago. when we come back the industry that needs thousands of workers can demand a salary of six figures or more and lets their employees set their schedule. it's not in silicon valley and not too good to be true. we will tell you what it is when we come back.
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zapped it, right to our house. and that's how they got it here. so, santa has a transporter? for the big stuff ... and it's a teleporter. cool. the magic of the season is here, at the lexus december to remember sales event. this is the pursuit of perfection.
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thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $89.95 a month. comcast business. built for business. welcome back to "squawk on the street." choppy trade on news that the casino operator received a notice of de fault from umb bank last week relating to senior
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secured notes of debt it has outstanding. it called the notice of default meritless saying it doesn't believe any kind of a default has occurred. caesars shares down by about a half percent. it's been a choppy trade for an interesting story with a casino that's maybe or maybe not defaulting on its debt. back over to you guys. >> thanks so much, dominic chu back at headquarters. an industry with thousands of job openings, the potential for six-figure salaries and the ability to set your own schedule. it might sound too good to be true but according to our jane wells this is for real. jane is in l.a. with all of the details and luckily for us jane has not quit her day job yet. >> but i'm thinking about it. what if you could make over $100,000 and skip paying for a four-year degree. america is suffering from a crisis in court reporters. not just in court. the fcc is expanding closed captioning demand like this program. the industry needs 5500 new reporters in 3 to 5 years. it's a hard job. >> as the centers for disease control appears to be scrambling
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to figure out how it to handle ebola in the united states. >> hiring a court reporter through her paces at west valley college in the bay area. takes two to three years to become a reporter but a lot less than a college degree. you have to be able to type over 200 words a minute while at least two people are talking. >> 70% of our current field are estimated to be retiring in the next five to ten years. >> there is a current job opening permanent job opening for a court reporter in the san francisco courts and it is starting salary is over $100,000. >> plus benefits? >> plus benefits. >> all right. katherine schilling graduated from smith college with a japanese degree. that's her on the left. gabriela woodson both training to be court reporters seeing money to be made. the school says 100% of grads have gotten jobs but you need to love words, grammar and playing piano helps. >> i love to type, i love to
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write and i'm good at being quiet. that's perfect for me. >> i know i'm going to be starting off at least $65,000 is my goal when i get out and it's just going to go up from there because i can work as much as i want or little as i want. >> when does siri replace them? court reporters have been hearing talk of doom begins the invasion of the tape recorder. siri cannot discern between two or three voices and she cannot strike a side bar conversation from the record. back to you. >> you see,jane, if you live long enough everything comes back. the typist is back, effectively. >> yes. well because the human component still makes a difference. technology has not replaced us completely yet, no matter what elon musk's fears may be. >> we've not mentioned the artist, the sketch in court, we got to go. nice to see you. jane wells there with the openings for court reporters. it is now almost time for "squawk alley" on cnbc. let's see what's on the deck with jon fortt. >> hey, simon. quite a bit.
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jeffe jeffery gun lack coming up with where he went wrong with the apple call. biz stone is joining us, the new app and twitter where it heads next and finally half of 25 to 34-year-olds are in line while they're shopping on their phones buying other stuff. we'll look at that and other trends in on-line shopping coming up on "squawk alley." how do you beat the number one seed? you just have to win 70% of your points at net. and keep unforced errors under 10%. on the ibm cloud, the us open analyzes 41 million data points from 8 years of competition to uncover key insights. data can help show you how to win, no matter what business you're in. today there's a new way to work. and it's made with ibm.
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good morning. 8:00 a.m. atpel headquarters and 11:00 a.m. on wall street and "squawk alley" is live. ♪ welcome to "squawk alley" on this monday morning. twitter co-founder biz stone will join us

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