>> maybe this guy is a moron, this guy that wrote in that supposedly is the texas logo. tennessee is just the "t," so this guy -- did you really -- i should know tweter than to listen to these twits on twitter. make sure you join us tomorrow. "squawk on the street" is next. ♪ come on >> good monday morning, welcome to skwau"squawk on the street." i'm melissa lee live from the new york stock exchange. u.s. futures coming off a week that saw the s&p 500 down by more than 2%. green arrows looking to add some gains. mixed bag of data, retail seas up 1.1% for september. better than expected but new york manufacturing disappoi disappointing. the picture in europe, digesting a reuters report that says quit

asking for a bailout in september. the biggest ones in france, up 1.1%. a road map this morning starts with a massive telecom deal. david brought you the deal and this morning, official, softbank to acquire a 70% stake in sprint. what happens with clear wire surging? does it mean a deal with pck is off the table. >> on earnings and revenues sending citi shares higher. u.s. mortgage business and lending mexico helped boost results. >> microsoft's back in the music business unveiling a service that could compete with the likes of pandora and itunes. we have an exclusive with the head of their interactive entertainment straight ahead. softbank to buy 70% of sprint for $20 billion marking the largest ever foreign acquisition by a japanese company bringing together the third biggest mobile carriers of japan and the united states.

it was said, i'm a man and every man wants to be number one, not number two or number three. masayoshi son. >> audacious two. one assumes he is rational as well. usually only rational people have that access to -- >> godzilla-like approach and looked like mothra. >> you know, it is a large deal. no way around that and, of course, somewhat complex try to break it down for you if you're a sprint shareholder you'll have the opportunity to ee will exto get either 730 in cash and/or own 30% of newco, new sprint and it will probably end up splitting 55/45. for 55% of your holdings so 730 in cash. for 45% you'll own the newcould sprintco sprintco. what does it mean for you at home? paying $6 and you're getting

about 638 or so. 6.30, 6.38, somewhere in there. now, it's costing softbank roughly when you look at what they're spending they're buying about 1.6 billion shares at 5.25 and they're spending another 1.6 billion or so at 7.30 though their blended cost, 6.10 but it's a huge bet on the part of masayoshi son. he was saying i'm a speed freak. you have no concept of what it is. i can't stand it. i'm kind of elaborating here but -- >> it was the word. >> it was an out of body conference. truly a man of -- an ego of tremendous proportions, the i'm a man does remind me of that

chicago song but i want to ask you, david, at one point point blank dan hesse is havred what are they going to do with cleertwater and they're not saying specifically. >> but the stock keeps going up. if you recall when we first brought you the news last week i indicated clear wire was a part of the deal but part of the overall deal. it is not a condition to the close of the softbank transaction however my sources are familiar with the situation continue to tell me that sprint is working towards acquiring clear wire. how that's going to work, what the price is, i do not know. there's a reporter oftentimes you get bits and pieces to the extent you believe is reliable but i don't know price. it's very complicated. there's regulatory approvals involved. but it is as i understand it from people i believe to be not just aware, but truthful, there is that effort continuing. there are a number of outside shareholders, the first part may be getting a couple of them in

buying in stakes that are already out there. perhaps that of eagle rock, for example, the investment vehicle of craig mccaw. you have governance of the board. it will take time, jim. the dote alt clear wire traded up sharply we know because many believe it's credit cart will be enhanced when it is owned or controlled more by sprint. >> congratulations. you are well ahead of this story. i mean people have just continually wondered why the stock has gone up and it's because of your reporting. because you're well ahead and people just accepted the oh, they're not going to do anything. >> because it is a low priced stock we don't have any idea in price. this is a complicated process that they are working towards and working on from what i hear the hope is if they could get a clear wire done when they close the softbank transaction that would be beneficial. neither side is commenting, not conditioned on that the deal

itself and neither side on the conference call mayayoshi son or dan would comment. >> would they be locked up to stay in their positions because softbank doesn't have any experience in the united states and that's a huge concern and the analysts and investment committee. >> yeah, they specifically talk about the fact that they are going to stay at the company. >> dan seemed very friendly. obviously, again, i just want -- this is a non-american deal, the rest conference, another culture and, you know, not saying one superior to the other but it's just -- you just don't have a press conference where basically a guy says i'm about being number one. look at vince lombardi where the ceo of softbank, it would be similar, right, don't want to be numb number two or three. winning is everything for him. >> yes, he is an iconic figure. let's not forget one of the wealthier men in the world.

he has built softbank into this powerhouse in japan. he doesn't lack for confidence but at&t and verizon and sprint is here. >> but not anymore. >> he's still number three globally, number three in japan, still number three in the united states so he's a man but he still got some places to go here. >> the difference in the equation now will be sprint's ability to spend cash. is this all about next gen? >> they did need more money that meant greg mccall, still trying to do. mentioned the vision, the next vision was actually came up -- dan will have enough money to make it transition, keep a lot of nextel subscribers. they could offer them some sort of deal. i still believe apartment surveillance a beneficiary. that stock is in its own perndz hades. >> from what i have heard and reporting on this transaction, it is going to be or has already been embraced by the likes of

apple and mr. cook. you want a viable strong third competitor and when you hear ma masayoe masayoshi talk -- >> extraordinary deal. i saw it at jim cramer, it's nuts it's so big. in the world where you were deals people are unhappy. >> $5 billion risk. >> the leverage that softbank -- it has debt of $10 billion and with sprint you add sprint's debt, more than doubles. >> it is -- he is a risk taker. >> clearly. >> doesn't see the growth in the japanese market using a strong end to their advantage but no doubt bit. to your point about capital they are doing as we've been told the kwon verting bond offering part of the 8 billion so they'll get that money right away. >> surprised that deutsche bank is in there.

goldman, right? >> on the sprint side, yeah. deutsche bank -- they had a lot of different -- >> a lot of money to be made here. the bankers will make some money. >> japanese bankers funding it will make -- >> a stop trading event. that press conference was fabulous. >> just read the release. a lot of chatter about the language and sort of -- anybody familiar with japanese culture translate nothing english knows it's a little stilted and the language is a little awkward. we're back to -- back to the days of "rising sun". >> i loved it. it's been that years since that hubris. i love hubris. >> it's nice to see. this is a kind of guy not worried about the fiscal cliff. >> that fiscal cliff did not come up. he did not talk about the election or the debate. >> there is only one thing you wonder are things not as good as the market thought given the stock price move at sprint. are things not as good at

sprint. what's t-mobile. what kind of quarter will t-mo report. they're not in any talks, anything with -- >> why can't that be killed? why does that come up? >> this morning they put it out this deal will not deleverage sprint. it won't improve the margins or get sprint any beachfront real estate and might be forced into another deal and the only other partner would be a metro -- people keep bringing it up. >> i kept thinking -- last this been consolidated. >> the key part of the deal down the road will be you're going to have a public currency. this public can if allowed by the government con sal date. conceivable a t-mobile pcs could be consolidated by sprint down the road if, in fact, regulators allow it. certainly something we would expect mr. man, masayoshi son would want to do. >> he is the man. he confirmed he is a man.

>> he's a man, he's a man. >> part of it too, you get a big deal like this and people want to believe the train will continue. that's why i asked friday, is it the end? people don't want it to be the end. >> they want it to keep off. >> 1989/1990 the japanese every day they would have bought something new. they bought a disk drive company and a company that makes disk drives. they would buy all the innerds. they bought rockefeller center. i was going to sell immediately the manhattan bridge. i didn't have the rights to the brooklyn bridge. i know they'd be a size buyer. >> we know you got a gold mine in mexico. >> citigroup. >> let's talk about citi. >> excluding items, the bank giant earned 1.06 for the quarter, beat expectations and revenue beat consensus. their ceo says it showed momentum during the quarter, higher operating revenue. people still looking at reserve releases as one way they did

beat. >> but latin america up year to year. you mentioned that. i do like that tangible book is eventually going to play a role. they could split off a lot. i wish they'd get rid of america. they don't want to do that but the international growth here, the consumer growth, how did they get such good consumer growth? are they taking share on international consumer credit? they've got total international from 1.85 to 1.98. citi holdings. toxic waste spirit, down below 10% to 9%. a lot to like here. i've dealt with them in mexico. they are incredibly aggressive. they want your business. >> who would they be taking a share from. >> bbva ch. bbva, a great outfit to deal with. citigroup, you go to these countries and you walk around and there is like the way you used to think of american during the great karl malden campaign. you see citi and say, hey, okay,

i know they're one of us like my homeland when i'm away. >> yes. don't give away last night's because i still have -- >> no, i would never -- >> monday night business. >> that was a killer. >> especially because you watched the football game on nbc. >> in terms of u.s. and the mood here, retail sales today which we're not giving big enough play is the right number. confidence at a five-year high. "the journal" is talking about boomer range buyers once again in the market. do you think given that are we oversold at these levels? the charts look terrible. they look abysmal and you can say on citi, i'm sure someone will say, look, i'm sure they had good revenue growth but the way they're still just taking reserves back and -- >> not to mention the u.s. government still owns a lot and the question is when are they going to hit the exits again? >> this is one where i'm kind of surprised it's all the way back when you do the reverse split. it's done nothing and it's not expensive. i think it will cause people to

look at jpmorgan and realize that was a good bank, wells fargo said i think we'll got a series of pretty decent numbers from the banks and those stocks, those are the charts that hold up a bit. there's so many charts that look like things are rolling over. >> do we finally see citi as the way to play emerging markets? is that becoming clearer in terms of the vision that pandit went fort on that. >> i'll say yes to that. vikram pandit, i urged him to hold it in another country. for optics purpose you should do that. talking about, like, hey, i'm the chief adviser, i feel like citi needs to show it's not an american bank. it has a huge reservoir, north of 60, it's time for them to be able to say, listen, what we are is the world's bank because vikram is known when he goes everywhere and like an ambassador of our country -- >> is that true. vikram pandit is the ambassador

of the country, wherever he goes, vikram, vikram? sorry. >> what's with you? some sort of mind -- >> i had this vision of vikram walking off a plane. this is the ground when he gets back. >> he's got some gravitas over there. >> he does but he's not mr. exciting. >> he's cooler than we are. >> we should point out -- >> the cfo of citi on the conference wall, we've had a lot of executives say positive things about the housing market including jamie dimon. not quite as positive. a bit more cautious than rival bank execs. seeing some elms of stabilization. still significant challenges to be faced in housing and questioned about citi's cfo whether the economy is strong enough to support the rebound. >> north american went to 8.74 to 8.50 but did release some things -- case-shiller housing

index and point out this is not a mortgage bank, okay, it's just not. they don't do it. some things from wells fargo when the cfo was on, 40% of the servicing market, 33% of the mortgage market. no room for anybody else. and wells has done -- obviously the servicing market you got a lot of litigation. big litigation here, another 500 million. the banks are the greatest thing that's ever happened to big law firms in the country. sometimes i feel like i should get reaccredited as a lawyer, throw a shingle up and they throw you money like being a hedge fund manager meanwhile, the hedge fund manager are rolling back. i could take 2 and 20 at a law firm. >> the lehman estate was a billion dollar in fees. >> amazing. >> big morning ahead and big week ahead. microsoft shelling out hundreds of millions to market windows 8. how big of a risk is this for the tech giant. we'll talk to rick sherlund.

and randi zuckerberg of "silicon valley start-ups," the sister of facebook's ceo and meantime, futures are still positive after a pretty good retail sales number. back in a moment.

well, microsoft is announcing a new perk for buyers for its new tablet computer. it will offer free on demand music service called xbox music which allows them to stream for free as long as they listen to an advertisement every 15 minutes. it's available on other microsoft devices but only free on the tablet. we'll talk to the vp of their entertainment business in the next hour of "squawk on the street." what do you think of this? is it going to make people want to buy the tablet? >> well, they're competing against the customers and the tablet. i think they're monetizing xbox well. i think xbox is the hidden asset. 65 million people have. i thought it was an intriguing proposition because they have

such a hammer lock on the business. >> they tried it before. >> this seems a little more -- this is actually if i were pandora i would be a little worried. spotify. a lot like spotify. everyone seems to want to carve up that business. >> yeah also brings to mind the battle between the expectations for an invite from apple to launch the ipad mini. >> right. >> we think a couple of days before windows 8 and the surface tablet. it's getting dirty and tough. >> nobody has that invitation. >> still a rumor. >> but there is a sense among people who trade obviously that apple holds the key and apple has started up every single morning, to come and up 3 1/2 and you ask people why, no one knows then it's up 2, then it's up 1 then by 10:30 down and everyone is spreading rumors the quarter will be bad. this stock needs to open down 3 before it can really make a stand. >> capitulation.

okay. well, this microsoft story brings to us this morning's squawk on the tweet question. complete the following question. microsoft getting back into the music business is like blank getting back into blank. tweet us. we've got a new handl handle @squawkstreet and share your responses throughout the morning. coming up next final premarket thoughts. cramer's mad dash is ahead and hear them and later on the most powerful person working and you've never heard of her. a look at features as we head to the monday open. green arrow as cross the board. 25 right here at the open. more "squawk on the street" straight ahead. up your game. up the ante. and if you stumble, you get back up. up isn't easy, and we ought to know. we're in the business of up. everyday delta flies a quarter of million people while investing billions improving everything from booking to baggage claim. we're raising the bar on flying

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like to move it move it ♪ ♪ you like to move it ♪ i like to move it move it i like to move it ♪ >> well, five minutes before the opening bell on a monday. big week ahead. a lot of earnings and data. presidential debate. we'll start with individual names. including a couple of bullish calls here. one on sandisk. >> karl, technology has been in a horrendous bear market. just one of these mini bears that grips everything. positive chatter about sandisk and flash pricing. the semiconductors all rolling over. this stock needs to hold 43 and get back to here if we're going to see any tech fall trade as we see every year. this is the battleground and it's got to be won by the bulls. >> coming out of jeffrey's today and morgan stanley on sirius. >> i love this. sirius xm is the most popular traded stock every day and mell

has done a remarkable job, not that he's getting much credit for it but they are saying the subscriber growth is good now. one of the things that has to happen there's going to be some deal. i'm afraid you'll get capped here. i know mell does not want to cap -- he's been on "mad money" saying, listen, the growth is good and should let this go. >> interesting, such a crowded space, bob pittman in "the journal" today. >> i heart radio. right. radio is one of these battlegrounds where it just turns out people continue to use it. it is an auto business. mell would tell you it's sirius tracks more with autos than it does with anything else and autos have been big. talking about a $15 million sale. i am partial to mell if only because he took a bankrupt company and saved it. >> yes. >> but i don't know if he can save his job. >> big piece of retail sales, as well. start-ups in silicon valley. randi zuckerberg is the producer

of that new show. plus rick sherlund, one of the deans of the industry, does he think microsoft's new push will pay off. the opening bell a few moments away.

mike rowe here at a ford tell me fiona, who's having a big tire event? your ford dealer. who has 11 major brands to choose from? your ford dealer. who's offering a rebate? your ford dealer. who has the low price tire guarantee... affording peace of mind to anyone who might be in the market for a new set of tires? your ford dealer. i'm beginning to sense a pattern. buy four select tires, get a $60 rebate. use the ford service credit credit card, get $60 more. that's up to $120. where did you get that sweater vest? your ford dealer. he loves risk. but whether he's climbing everest, scuba diving the great barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesn't nickel and dime him with hidden fees. so he can worry about other things, like what the market is doing and being ready, no matter what happens, which isn't rocket science. it's just common sense, from td ameritrade.

the opening bell for monday at the big board. the secretary of state and the prime minister doing the honor as long with executives from portuguese companies over at the nasdaq. the national cybersecurity alliance does the honors there but, of course, we're starting off this week coming off a pretty negative week. the nasdaq was down almost 3%. the s&p 500 down by 2.25% and here we are bouncing just a little bit. >> two-month low on the nas. >> geez, how many preannouncements can we have about tech? obviously the big pc companies just going by the wayside. i was watching a dell ad and saying searching for relevance.

there was an intel ad that takes place in china and i'm thinking and saying, these companies are trying to position themselves as growth companies and they have no growth. it's rather extraordinary. >> one of the big warnings, amd shares surging today. there was a report in all things "d" that they could announce workforce reductions up to 30%. remember last week they issued a terrible, terrible forecast that warned on the quarter but the stock is higher today. >> when they do a workforce reduction of 100%, that stock goes to 5. >> 30% is no -- that is no -- no light touch. >> i have urged people to stay away from the stock. i'm going to reiterate that this is just another $2 nokia. no sprint at 2 bucks and i really feel that people who go after the $2 stocks and i mention sirius, sirius has momentum, amd doesn't. sprint has momentum. nokia doesn't and i find people

want to own a $2 badly. choose them wisely. >> goldman downgraded -- they look at nominal spending in the u.s. per capital since '98 spending on toys, traditional toys and games down 30%. >> i can imagine that. >> why is that. >> think of how much you spend on things like ipods and ipads and kindle. >> thought that we don't love our kids anymore, right? >> i still like them okay. but i think there's a -- there's a kind of consumer toy puzzle game wii and boys don't seem to want toys as much. my girls would not know what to do with a toy because, well, even when they were 10 and 12 they didn't know what to do with a toy because all they wanted was ipod. >> really nice toys are cars. >> i got a 2006 car. >> you could get them a nice car. that would be considered a toy. >> like a pink lamborghini.

>> my youngest as a 2002 volkswagen bug. >> my daughter plays with a lot of dolls, i don't know. >> mattel? >> i don't know. >> there's some apps on the ipad that they prefer to a regular toy. anyway, the downgrade -- >> apps are toys. they love apps so much. >> they're games. >> 99 cents or whatever they are or free. >> i'll give my daughter my iphone and pick it back up and she's got a app for blackjack. put in nfl dot -- they're fast. >> but back to the point of spending on ipods and iphones, you saw that in retail numbers where you saw the biggest increase in electronics since october 2011 which i believe was the last time an iphone was announced, the i phone phone so we saw 4.5% increase in spending and electronics and appliance stores because of the iphone. that's the theory. >> have you noticed we stopped talking about the mapplegate --

>> because apple's stock keeps going down. there's a big issue than a mapplegate. people saying i like the apple maps. i think we all were deciding that the iphone 5 was dead of the maps. >> we were. >> no, we weren't. we were just saying it was a screwup. >> well, but -- and the blue screen dash don't know. the big story today, again, is you can't get one because of the demand and i think people are still in line and the samsung is still saying, you ought to go to the other line. >> a lot of issues with the iphone 5 was eclipsed looking at the stock from 7.05 to 6.34. i think that would be more engaging to me in terms of topics on apple than mapplegate. >> you have to have the apple components, sandisk, qualcomm,

buy qualcomm. we needed something in tech have some sort of gravitas. there has been a move out of tech -- remember, tech is 0% of the s&p, which 5% is apple but 0% zap going down every day does not make for a healthy market. >> by the way, it's on a six-day losing streak, the longest since november of last year. it's been tough on it the last week. let's go to bob pisani. good monday morning. >> good morning, guys. happy monday. a couple of optimistic things i noticed. number one, there's a lot of debate going on about earnings growth for the third quarter. a lot being made it's negative so far and that's true and would certainly be a fairly weak quarter but so far if you take a look at some of the numbers, 35 companies that have reported for the s&p. they're reporting fairly good earnings growth, 8.3% for that 35. nick raich at key bank. is q3 the trough for earnings?

we don't know but i'll bet at this point we may end up with a positive number for the quarter. remember, positive. we're negative right now. how about it? how much? i don't know. it depends, maybe 3%, 4% but companies once again are playing it very conservative and these numbers are coming in better than expected. fourth quarter guidance. we're expecting growth of about 10%. a lot of people are saying they're not going to make it. 20% growth in financials, not going to make it and it's true the numbers are coming down but the amount they're coming down, not quite as much as in the third quarter so i think we might be surprised a limb bit and look at the possibility that q3 is, indeed, the earnings trough. that's one optimistic point. my second one, have you noticed what's going on with european debt recently? i looked at the green ten-year. good heavens it's down to 17.9%. i know that sounds ash -- absurd. there seems to be a rally going on. i was filled with e-mails about imf officials discussing the

possibility with eu officials of buying greek debt. obviously they're not going to be doing it directly but lend money to the greek government using the new eu bailout fund, that esm, good heavens, there's a rally going on and so far shorting any of this peripheral debt has been disastrous. look at the spanish ten-year, 5.6%. near its lowest level since april. i looked at the italian debt. near 5%, near the lowest levels since march. my point is that people have been trying to short this have had their head handed to them for the last couple of months and that trend is definitely continuing. finally did you notice what happened in the retail sales number? better than expected. that's a very important component of the gdp, a number of guy, saw barclay's come out and raise the gdp levels for the third quarter, at 2%. they were at 1.8%. i know the news flow is still choppy on the economics but so far a little bit better news flow in the last week or so. back to you. >> well mutt. i saw that greek debt.

i couldn't believe it. italian debt, people are telling me that's the most investable debt, at&t and verizon are being clubbed by a man who wants to be number one. right? >> yes. we're going to get to that. >> he is the man. >> to the pits and rick santelli. go ahead, rick. >> jim, good morning, everybody is talking about the data and september retail sales will figure into what we will see in not too distant future. our first look at third quarter gdp. we also had another number out this morning, the empire index, third negative month in a row, so kind of contrasting viewpoints, obviously retail sales is a bigger mitt trick. how did the markets respond? look at the 24-hour chart of r10s, r-30s and the european booms, ten-year maturity. all put in their high yield and started to drift a little bit southward after the numbers were released. even the s&p futures prior to the big opening at 8.30, 9:30

eastern at chi-town see that the s&p futures gave up a little ground and want to continue to monitor this. light data left but heavy data for the rest of the week. no supply outside of tips and now we're going to go to david faber who will give us hard facts on softbank and sprint. >> thanks, mr. santelli. hard facts and stock prices to watch this morning, of course, we did get the announcement that we first told you about last week was a strong possibility. namely softbank's decision to invest $20 billion to acquire a 70% stake in sprint, the nation's third largest wireless telecom provider. the deal itself, well, let's go through it because at the end of the day you may be wondering why is the sprint stock trading up more? it's 12.1 billion at 7.30 a share and for the election so to speak, 3.1 billions that softbank is putting into a convertible bond, 5.25 a share

and 4.9 b being sold by the company. you'll own 30% of newco and get 7.30 so for 55% of your holdings you get 7.30. foe the remainder, a lot say it's worth and $5.25, hence probably worth around implied price around 6.30, 6.38. that's why you're seeing sprint not trade up that much after last week's significant move higher. of course, we've been talking a lot this morning about a conference call that took place not very long ago. masayoshi who runs softbank, who controls softbank who made this bold decision to make this investment and dan hesse, the ceo of sprint who will remain ceo on a call together talking about their ambitions. take a look at u.s. subscribers right now in terms of where sprint stand, a look the masayoshi son. he is the man. he wants to be -- he is a man. when you're a man you want to be number one. we'll remember that kweelt for a long time.

sprint nextel and the u.s. subscribers. where sprint is, put their customer base together, u.s. and japan, they look impressive with competing with our duopoly. in many parts it is still a duopoly. every time he comes to the u.s. he's freaked out because things are so slow on the mobile network. well, there's mobile revenue. gives you some sense. china, verizon, softbank and verizon would be there. >> i am glad you mentioned them earlier. verizon and at&t are giving up 1.5, 2%. listen, i think is a fascinating deal in the sense you have one guy willing to make an enormous bet on the u.s. market where he feels like he can apply the lessons learned in japan that catapulted softbank to a much more competitive position based

on what they learned in terms of what "people" like to use in lte and how to roll things out. it's a big bet, man. a couple of other housekeeping things, clear wire, the stock, by the way, that's been the play here. of course, since we first told you that sprint's ambition is to acquire clear wire. now, that stock has just gone up sharply. bonds up sharply. people close -- familiar with the situation tell me sprint is negotiating with other shareholders to try to buy in their stakes but this is going to take time. there's a regulatory process here, the fcc has to be involved. a lot of debt on the conference call neither gentlemen, masayoshi son or mr. hesse would comment at all on potential rack question significan acquisition opportunities. it had been crushed down 17% friday and opened down again today. >> another 20% so he feels it. it's not one of the situations

where he has nothing at stake. he's not a professional manager. he is softbank. >> he is softbank. >> we are softbank. real quick correction on my part. earlier i mentioned clearwire negotiating with eagle river. earlier i said eagle rock. >> sounds nice. >> all right. well, coming up next a funny thing happened on the way to the fiscal clip. consumers and businesses developed two different views on the political impact. who should investors believe? we will explore that question. from microsoft, xbox marks the spot taking on pandora. microsoft getting back into the music business is like blank getting back into blank. tweet us @squawkstreet. your answers straight ahead. take a look at this morning's early movers on this monday morning. [ male announcer ] the 2013 smart comes with 8 airbags,

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"squawk on the street." i'm sharon epperson at the nymex. energy prices lower. great concern about energy prices. the eu hit a run with new financial sanctions with nothing between done and also transactions, also embargo that the oil embargo that came in effect in july now add to that. there will be tighter restrictions on oil tanker traffic and also a ban of imports to the eu of natural gas. natural gas futures are the steepest fall in the energy complex. a lot of that has to do with what is happening in the u.s. with the warmer temperatures coming up as well as the fact that we have seen a number of funds in their short positions

being raised. we are looking at natural gas as the leader here on the downside but weakness across the board in the energy complex, karl. back to you. >> sharon, thanks so much. sharon epperson over at the nymex. squawk on the tweet asking you microsoft getting back into the music business is like blank getting back into blank. got some good one, microsoft getting back into music like ibm getting back into typewriters. it's like michael vick getting back into football. that's harsh. shawn writes microsoft getting back into music is like aol getting back to the dialup internet. like grandpa getting back in his long johns for the winter, might fit but not pretty. i've heard the word zunify as a reference to spotify and microsoft's attempt to do the same thing. >> it is amazing how microsoft -- another era where anything they did was right and now they've become the butt of so many jokes.

still have a great balance sheet. >> they're like a bank. that's how much cash they have and the dividend yield. >> still produce a lot of free cash flow, yeah. >> but not exciting? >> they're the butt of joik. >> they missed music the first time, big as did everybody except apple. somehow jobs knew it was a way into so many other things. >> every -- didn't think any dylan after '74 was very good. >> when we come back the father of the no tax pledge will speak out ahead of the debate. grover norquist later in the program. up next -- [ playing the theme to "mission: impossible" ] >> still to come, jim cramer on a mission. six stocks in 60 seconds. we're going along for a ride when "squawk on the street" returns.

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extra curricular activities help provide a sense of identity and a path to success. joining the soccer team. getting help with math. going to prom. i want to learn to swim. it's hard to feel normal, when you can't do the normal things. to help, sleep train is collecting donations for the extra activities that, for most kids, are a normal part of growing up. not everyone can be a foster parent... but anyone can help a foster child. in order to get to the 10 a.m. you have to go through simon hobbs first. >> good morning. we'll talk about citigroup at some length. two analysts, one think it's

quite nervous and another believes the stock could rise 30% and the man leading microsoft's foray into online music. why are they being so beastly to pandora and spotify and randi zuckerberg will be here. >> with a fantastic role model. six in 60. rio tinto. >> goldman says this iron move is over. sell the stocks. >> b of a. >> these stocks they've been terrible but this one held up well. >> google, big investor meeting. >> this is about the ftc, remember they hired paul weiss. everyone is scared the ftc will come down hard on them. >> chico's. >> only a few retailers look good, williams-sonoma and urban

outfittersment maybe this can join them. >> goldman raising estimates on ebay. >> that seems to have nothing. i think it's a buy. people seem to be wanting to leave it. >> barclay's likes joy global. >> joy global. talk about risk/reward. like the iron ore trade every joe contin rio tinto. >> two weeks ago the ipo market was dead. now it's red hot. we'll analyze the bipolar carrie like from "homeland" not from stephen king. >> even ipos that were shelved in their recent past might get new life for the environment. >> this is incredible. how did we get to be bullish on the ones we were bearish? i went to dave & buster's, went right by and said i think this one will come back. >> the major averages are now

lower for october. >> way. >> dow is not lost in october, jim, since 2008. >> is that true? >> yeah. >> negative normally when september ends up being good which it was. but i just wonder whether or not you think the jinx is intact this month. >> i've got to tell you i think that the earnings are just okay. the transit -- look, tomorrow will kick it off. the bank earnings have been quite good and people are selling that group too hard. >> all right. we'll see you tonight. >> 6:00 and 11:00 p.m. randi zuckerberg stepping out from her brother mark's shadow, the executive producer of a new bravo reality show "start-ups: silicon valley." we'll talk to her and rick sherlund known for his longtime coverage of microsoft. does he think windows 8 will change the game. "squawk on the street" will be right back. between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot

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between listening to the numbers... ...and listening to your instinct. duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. welcome back to "squawk on the street." the road map for the next hour as we kick it off with another beat. citi beating on the top and bottom lines saying the firm's u.s. mortgage business and lending in mexico helped boost results. we'll sort through stea leaves with two top analysts.

>> windows 8 operating system with two commercials. will the pc market on top. the rick sherlund is here to weigh in. >> the company looks to make a push in music with the launch of its brand-new xbox music service. we'll be joined by the company's vp of interactive entertainment. >> we've got a zuckerberg stopping by. mark's cysty, randi zuckerberg is here to tell us about her new show "start-ups: silicon valley" and give us an inside peek into the world's secret society of tech start-ups. >> in the mean titime, waiting breaking news. >> we've had some fairly important date that morning. retail sales definitely surprise to the upside. we all wish those surprises were bigger. keep in mind our first look, our first look at third quarter gdp comes on october 26th so not far away. and many are now handicapping will this number get close to

2%? most calls were still slightly below 2% even factoring obviously some of the data points like retail sales, like personal income and, of course, others that will factor in to clarify that. the piece of data we have coming up in five seconds is august business inventories, a bit of an old number but, of course, always important and it came out up 0.6% so up a little more than half of 1%. fairly close to the expectations. no revision last month, so that completes the data today and the standout, interest rates have moved steadily lower after the 8:30 eastern stronger retail sales weaker empire as has the equity markets getting closer to unchanged. revealing that, you know the linkage between fundamentals and what stocks are doing has a real chronological problem. it was going up and the data wasn't good and seems to be slipping when the data gets better. back to you. >> all right, thanks very much.

rick santelli. want to get back to one of the bigger stories of the day. softbank confirming it will buy 70% of sprint for $20.1 billion. it is the largest deal that has ever come out of japan and crossed its border. and gone into a foreign company. we have, of course, as you might expect many of the shares in question trading significantly. there's softbank which has traded down sharply, not just today in japan, but on friday, as well. as you see, that stock has taken a major hit on what si huge gamble on the part of its founder, masayoshi son who was here on the conference call talking point various reasons why he's willing to risk $20 billion on sprint. the belief they can introduce a lot of new products based on lte which is continuing to be rolled out by sprint and really take it to the reigning duopoly in wireless telecom services namely verizon and at&t.

as for the deal itself, softbank will end up buying 3.24 billion shares, so you divide that into 20.1 billion and get their average price, somewhere around $6.10 a share. as for sprint shareholders you if you own a share, 55% that have you'll get $7.30, the remaining 45% of your holding is going to be in the new sprint of which about 30% will be owned by the public. i know it's complicated but that's said to be wrt somewhere in the value of 6.35, o6.38. verizon and at&t trading down on part what were strong comments from mr. masayoshi son on the conference call but that helped people analyze the deal earlier today. saying he thinks speeds in the u.s. in terms of wireless service are extraordinarily slow and that people really have no sense as to what can be accomplished when you move things along at a much faster rate of speed.

also, clearwire, of course, has been moving up sharply, the bonds, the stock after we reported last week that sprint was interested in trying to consolidate its ownership of that. that is not a condition of this deal. softbank will close this deal with or without clearwire being owned by sprint but i can tell you separately familiar familiar with the situation tell me sprint is working on that and is in talks about other holders of clearwire's stock. >> if you wanted to make money moving forward, though, arguably it might be from softbank. as you pointed out the stock is down 30%. they just put out a piece of "the journal" ahead of the streets from duncan marvin and he suggesting actually if you break it down, the markets now valuing softbank's telecom business as one-time earnings so you're pricing potentially for disaster and might be where you perceive value moving forward and the at&t move would argue towards that. >> it would. and, listen, when you combine their subscriber base in japan and what it will be in the u.s. with sprint subscribers, they are -- there's a lot of them.

now they're not. >> 90 billion. >> yeah. >> 90 million. >> they have not reached the 90 billion sdubscriber number yet. >> that would make them number one. >> 90 billion. that's his goal. >> 90 million. >> and mobile up especially. interesting in the press release. they talk about mobile internet. it's not about mobile telephoey and what they're thinking and what he believes is a real opportunity in the states getting away from the aging japan. those are his words, not mine. >> let's touch back on the financials this morning, citigroup is having a great morning after beating on both the top and bottom lines in its quarterly results. the cfo just finished the conference call and our own reporter was on that. hi, kayla. >> we did have solid numbers but cautious words on the media call just now on the potential for a sloebl slowdown and continued

headwinds in housing starting with the global markets. weakness in asia thought to be a stronghold for citi which does a lot part of its business in asia. growth rates of 4% to 5% across asia as well as continued low interest rates. loan growth is slowing and gers bach. it took a $20 million restructuring charge and expects more in q4. he says they've been decreasing exposure and slower to make loan commitments in europe and overall exposure has fallen to $6.6 billion. in the u.s., securities and banking a big winner. attributed a 26% rise in banking revenue from the prior year to new teams they hired just bringing in fees. fixed income markets also rose 63% on the revenue side. and he attributes that to just simply better market conditions.

on housing, though, he doesn't agree with wells and jpmorgan that the u.s. housing market turned a corner and says "we're all seeing elements of stabilization but there's still rather significant challenges to be faced among those, the elections and fiscal cliff which now affecting corporations, he says those will affect consumers too." we'll talk more about what he said about housing and where citigroup is positioning itself in the 11:00 hour but those are the top headlines. >> for the moment, kayla, thank you very much. from the citi conference call. let's debate the figures. jason goldberg is with barclay's and have an overweight ratio in the $46 target. he believes there's 35% todd hagman has a mutual rating and $33 price target. welcome to "squawk on the street." jaysening, lson

jason, you're the bull. that's what you were forecasting. what do you think of the quality of the earnings given what emerged on the conference call? >> no, i think the 1.06 number looks like a clean number. some tax benefits but that was offset by repositioning charges and another quote/unquote one-time items but the company benefited from very strong investment banking results in fixed income trading primarily and also saw the drag from citi holdings decline. and exclude recent occ changes and expenses well controlled. third straight quarter the company posted positive leverages. >> coming into the conference call, coming in the results rather, you were more negative than your colleague there, than jason there. the bottom line is you saw the possibility for more downside risk from current levels against any meaningful upside. i imagine what they're saying about the international part of the business, 60% reinforces that bearishness.

>> it's really twofold. you're right. obviously we've had a strong run in the group over the past several weeks well up over that%. really the two-fold concern coming into the quarter, was one, the degree, potential of slowing in the emerging markets, international, i should say. consistent with what kind of the warning signs that he was talking about earlier. and then secondly, the magnitude of the tailwind with reserve released. certainly they got the tailwind again this quarter consistent with what we were looking for but the tail wind, if you will is on the slowdown and in particular we're still seeing fairly modest reserve release out of the holdings unit or the runoff unit. >> todd, as simon pointed out you downgraded and kept it at 33 a share a couple bucks lower from where we're trading in

today's session. do you look at this quarter though and say maybe that downgrade was too early and maybe you're too harsh on this stock? >> no, i mean -- >> you point out international revenues. latin america, they were very strong. >> absolutely. latin america was particularly strong this quarter. asia was obviously a little bit better relative to the second quarter. but, you know, the point being is that, you know, with the rally and the group over the last few weeks, rather than effectively estimates migrating higher it's really been all about multiple expansion, a little bit more optimism. but clearly as you know as you go back to friday's results with jpmorgan, wells fargo i think there's still the undertone of a bit of cautiousness going into '13. if you look at the recent trade data it's certainly slowing as it relates to what's happening in europe. what's happening here at the u.s. in my opinion, it's certainly going to continue to have a, you

know, a negative impact on the growth rate, particularly with citi going forward. >> jason, i want to go back to wells fargo because the stock is down another -- more than 1% at this point. when you look at citi's results and what citigroup is telling us, and you take a look at wells fargo, where do you go with bank of america. today they're trading higher, sharply by 1.8% and so it wants to take its cue from citi but more like a wells fargo when you're doing the earnings read-through, what's your conclusion. >> i think it will be more like citi. results from jpmorgan, on wells fargo and citigroup, all three posted pretty good, you know, trading results which we do expect bank of america to benefit from. wells fargo is getting hit. it fell 25 basis points greater than the 17 basis-point forecast they gave at our conference in mid-september. i think bank of america's res t resulresul results come out and look for it to improve following head losses that affect the second quarter results. >> before we let you and todd

go, from left field, forgive me for the question if you will. in sheila bear's new book, former head of the fdic she's very investor rouse in her criticism of the favoritism shown to citigroup in 2008, the 2009, it was maintaining divide dividends whilst it was bailed out three times. why was citi given that preferential treatment and is there any potential hangover now for existing holders of the stock? >> yeah, we could debate a lot of some of the decisions made during the financial crisis. i think if you fast forward to today, the company is a much cleaner company. citi holdings is now down to less than 10% of total assets. its capital ratio is 8.6%. it's quite healthy and the company continues to grow. so a much, much improved company from several years ago and we think, you know, it will continue to improve on that. >> okay, gentlemen, we'll leave it there. have a great week. thank you.

todd haggerman and jason goldberg. >> market flash this time from headquarters. good morning. >> some notable news in pharma. eli lilly result is were positi. gastric cancer is the fourth most common type of cancer in the world. isi sees it as a market opportunity so on that news it's up better than 3%. melissa, back to you. >> microsoft kicking off a $1.5 billion marketing blitz for windows 8 this past weekend. will it pay off? rick sherlund weighs in next. >> still to come, randi zuckerberg is the executive producer of the upcoming reality show "start-ups: silicon valley," and she'll join us live right here. all energy development comes with some risk, but proven technologies allow natural gas producers

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♪ better run better run outrun ♪ all the kids with the pumped up kicks ♪ ♪ >> it's no secret the pc market is struggling with the popularity of ipads and macs. an emphasis on cloud based apps and the company spending $1.5 billion on the marketing campaign for the software which started this past weekend so it a risky bet or a window of

opportunity? let's ask rick sherlund at nomura. good to see you. and we're just one week ahead of the launch yet they're starting the advertising campaign now and we've heard so many reviews already in the media panning the tablet and windows 8 saying it's not going to live up to expectations. what's the reality. >> i think it will show nicely on touch-based tablets and these ultra book touch devices. windows 8 isn't terribly seductive to use on a traditional mouse and keyboard system. the volumes of the touch devices in q4 will be fairly limited. probably 5% to 10% of the volume of pcs in the december quarter will be the touch devices so there is a risk that you get some negative feedback on windows 8 for the existing mouse and keyboard systems but i think as you build through 2013 you get more touch devices and the price points of some of these ultra book touch devices comes

under a thousand dollars. a building story for 2013 but expect it's going to be a slow ramp given the volumes we're likely to see in q4. >> is it going to expand enough to offset the decline in the core, you know, where you use windows 8 typically and you say it's not seductive for a typical pc. >> right, so you'll see, i think, a big upgrade cycle relating to new touch hardware. so it will result in a replacement from existing notebooks and some agreed to the desktop, as well but it will create a lot of excitement in the pc market and people think of it more as microsoft against apple and that's probably true on the pure consumer side. but microsoft's very strong in the enterprise and prosumer market. so their challenge will be trying to appeal to that sticky market that values more functionality than you get on the ipad so i think you'll see tearing in the market with a lot

of success over the next year in their traditional market and i think the street's kind of blinded thinking about, well, it's ipad, ipad, ipad and it's like, that's not really the whole market and i think, you know, it's going to be tough competing against apple and i think they would concede that. >> you raise a good point. the street is using the deck of the pc and the recent quarter's nips to paint the all stocks with the same brush, you have 37 is your target. >> yes. >> you're going to stand by it? >> yes, i think so. i think that your observation is correct that pcs are down about 8%. they're being hurt by tablets so you'll get bad news this week. microsoft is going to report earnings. revenues would be up 1% if they weren't deferring a lot of coupon-related revenues so otherwise it's going to be reported down about 6%, 7%. together with the bat news about the pcs then if windows 8 ships and people are like i don't need this on my mouse and keyboard

systems the sentiment will get more negative and that will be a good opportunity for people aren't involved in the stock if you see that setup to step into the stock in front of 2013 where the story will increasingly be, yeah, but in their sticky market where functionality and utility is more important you don't get on the ipad, i think the story will resonate better. >> one thing steve jobs taught us emotion can be very important and taught us through that with what apple came out with. if you're saying microsoft will bring a windows system to the general public that it will not fooind easy to use on existing laptops or new laptops even because it's so different, i mean, you know, there was some of us that were irritated by the new outlook, that we were all given and seriously there was -- >> actually all of us here. >> myself included. >> if we now get a laptop and i buy a new one and have a win does operating system that doesn't work and doesn't

function like i expect it to function i'm going to be really angry and that is something you don't want with consumers who may regard that as the final straw in switching over somewhere else. >> simon, you're absolutely right. there's a lot of profanity when microsoft changes anything. ultimately the market comes to love it like the rib and interface. people hated it. now it's one of the most loved things in officement people hate change on a work utility like this -- >> this is more than change. you're saying you can't use wit a mouse and they are having to launch new hardware in order that it functions well because the market hasn't reduced the hardware for the operating system they're launching yet. >> it does work on mouse and keyboard systems. you click the deskton icon and go into windows 7 mode but there's some stuff in between that meme will get frustrated with like what is this other metro windows touch stuff? and the challenge microsoft faces is the traditional mouse and keyboard system is in

decline. you need to reposition where the growth is coming. >> hundreds of thousands of those -- hundreds of millions of those are being sold every year, still the backbone of what microsoft does. >> but do you want to move forward and i think people are willing to invest the time to learn how to use an ipad and learn windows 8 on a touch device so i think you're right. i think what you're saying will weigh heavily on the stock in the fourth quarter. but as you begin to see the tv advertising, it could be fairly seductive when you see the touch-based devices and the form factors are fairly creative so i think ultimately the story resolves around, well, yeah, for more functionality with these mobile touch form factors is it worth the time to learn the interface? so i agree it's a bit of a discontinuity in the market, there is some disruption coming and people will have to spend time learning it so you could get negative -- >> you say fairly creative and been following it since it went

public. there was a sense it was an innovative company althoughing oer o others would argue there wasn't. it seems they often get criticized on the pollutionic, whether it's zune or new the product of being tone deaf for lack of a better term. >> the company has not been known for innovation for a long time. i think they're finally now many kind of -- they get it now, i think and so it just looks bad in comparison to apple because it looks a lot like what apple did so it looks like they're following. for us that still need office compatibility we'll be glad to get some of these but don't win a lot of awards for innovation. steven who runs the windows 18 will introduce a lot of pretty interesting things and a lot more than windows 8 we'll like about this operating system. when you combine it with the new version of office you'll have skype built right into office for video conferencing and not

like we need to see each other when we talk but i miepts want to share a document we're working on collaboratively as a group. there's the cloud built in with skype and this collaboration technology. i think they're licensing from facebook on maybe from their yammer acquisition so i think there's a new replatforming going on that will deliver for functionality that surfaces over the next 6 to 12 months and once we stop being blinded, we start to say, yeah, but this is actually kind of interesting on the enterprise side of prosumers. >> always good to see you. we will see you back on friday with microsoft's earnings release. >> when we come back, sticking with tech, take a look at this list we put together of the mp3 graveward, two of the model date back to 1998 and of course, there's the famous zune as well, microsoft trying to get back into the music business with the launch what have they're call xbox music so should pandora and

spotify be worried? we'll talk to their vp next. >> still on the program, randi zuckerberg, yes, the oldest sister of the other famous zuckerberg will be here. she's the executive producer of the upcoming reality tv show "start-ups: silicon valley" and she will join us here live. look, if you have copd like me, you know it can be hard to breathe, and how that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both.

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well, it's become clear with the launch of windows 8 microsoft will make a big push back moo music. it announced it will launch xbox music, a service that will offer access to a global catalog of over 30 million songs, consumers can listen free to any song on computers age tablets running the latest version of wing doughs 8 as well as on the xbox console. we're joined by microsoft's vp for interactive entertainment yusuf mehdi and our own julia boston from the west coast. you'll take on pandora and spotify. >> yes, we're announcing a brand-new music service that includes the best of itune,

pandora and spotify all in one calling it xbox music. >> why? >> so you -- >> well, a big part of what we're trying to build is breakthrough devices and experiences with windows 8 pcs, tablets phones and xboxes and music is one kind of key component of that. and by delivering a great music service that we think can differentiate those devices it helps our overall business. >> julia? >> yusuf, this is such a competitive area. not only is it itunes and spotify but it has google and amazon which has music stores. how will you lure people away from everything they've already been doing to listen to music? >> well, one of the -- good question. one of the big things with music if you're a music fan, oftentimes you use different services in different sometimes you want to hear radio and sometimes you want to buy it.

with xbox we're probably the only mainstream music that gives you free music streaming plus download and music subscription and can take it on your devices. it's unique, people women want to come and try and use on the microsoft devices we sell. >> yusuf -- >> are you looking -- please go on. >> you're offering all these services, free streaming is obviously a big thing. but are you looking to make incremental profits here or more important to try to lure people over to the microsoft devices? >> well, it's absolutely true that for us, the big opportunity in music is to broaden the footprint that we have in the consumer value proposition we deliver on our devices. take xbox. today xbox has become arguably the most popular device added to the television. tv offerings and movies and we think it can broaden ow it plays as a primary entertainment device in the living room and

that for us is a big deal. with windows 8 coming out and xbox being the only free one on tablets that provides a compelling reason to consider a windows 8 tablet. it will cross our overall ecosystem. >> have you concerned packaging windows 8 with xbox music will spark antitrust concerns. >> we think it's a great choice for consumers and by making it simple to get access to all the music you care about across free streaming or download to own provides another choice. the others will run great on windows 8 and we'll want them to, as well. >> i don't know. maybe you're too young to remember the bundling of internet explorer into the operating system. that so got microsoft in trouble with european trust authorities. i know you think you're offering choice but if i'm sitting there and i'm spotify or pandora as far as i'm concerned you are

using your strength to slam my business. you might regard this as a loss lead or anti-competitive and know the europeans can fine you billions for this. >> well, again, for us it's really starts with the consumer. it's about providing them a great choice and a great offering for music. consumers ultimately are the ones that get to choose which services to use and hopefully they'll use the one we provide but if they want to use some of the other ones that's all great, as well. >> guy, good to see you both. thank you for joining us. yusuf mehdi joining us from microsoft's headquarters and julia, as well. have a great week. >> the buzz is growing over sta "start-ups: silicon valley" executive produced by a woman who might know a little something about the start-up game. randi zuckerberg is making her way to give her the inside scoop and underground world of silicon valley. >> the free fall does not involve a stock. it's this gentleman. look at that oh, my god. he doesn't even hesitate.

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oil breaking below 90 bucks a barrel. sharon epperson has more. >> melissa, this is the first time we've seen this happen in a week and the fact remains we're continuing to see strong u.s.

production, robust supplies here but there are a great deal of worries about global demand. and this is really hitting the wti market more so than the breptsdz crude. wti down almost $2. brent crude down less than a dollar and also are getting the eu hitting along with new sanctions including some regulations against their oil tanker traffic so that may be preventing a steeper slide there in the brent crude market but continuing to watch the spread between the two, also be exacerbated here and that may put further pressure on the wti contract. look at gold today too. gold has dropped below 1730 an ounce and we have seen nearly all of the gains post qe announcement from the fed on september 13th evaporate and a lot has to did with some of the stronger data we've got frn the u.s. that leads a lot of traders to believe will we see quantitative easing, monetary easing infinity like they were saying qe infinity may not be the case. back to you. >> talk about a midday fade on just about everything.

gold and oil and the markets, as well. thanks, sharon. a funny thing happened on the way to the cliffs. while economists are growing more worried about tax increases, consumer sentiment is actually rising. so who should investors believe? businesses or consumers? our steve liesman back at headquarters with more. the dichotomy between what the two believe is unbelievable. >> more this morning. a lot coming out, debate, argument about two economic reports showing a big split between what consumers and businesses think is happening in the economy today. take a look at the empire state manufacturing index, plunging for the fifth straight month if a row with declines in the assessment of the current situation as well as the outlook for the future. this is not decisive but something we do watch. several key surveys and comments from executives show this growing concern about the economy. the fiscal cliff along with worries about a global slowdown. now contrast that with the outlook and data from the consumer which is as different as could be. take a look. retail sales came in, up 1.1%.

equal with the month of august, two-year high. consumer sentiment, 83.1. reported that last week. that's a five-year high and some other indicators as well. take a look. the consumer credit number, that's a sign at least of confidence in the economy. that's at a four-month high and maybe reasons for it, well, a lot of debate about that unemployment number, but some of the data may be what you're seeing the reason for that decline along with home sales which we've shown repeatedly is a key indicator ofoptimism for consumers in the economy. here's what economists are saying, the spending data suggests low rates and easier credit are having a positive effect on the consumer while the manufacturing data indicates that companies are cutting inventory and restraining employment in anticipation of the fiscal cliff. that's from steve ricchiuto from mizuho. we are seeing signs of a divergence between consumers and businesses while the consumer may therefore help boost gdp in the third quarter the gain is likely to be offset to some

extent by weak production. higher gdp estimates for the third quarter and get that october 26th. macro economic advisers before i came on ratcheted up their tracking forecast to 1.9% from 0.3 seeing 234u78s around 2% early this morning. but neither side is ink heerp heerptsly right. sometimes the consumers lead businesses. if they cart coming in the door businesses will hire and invest. but business pessimism if it ends up being in slower capital spending and slower hiring can hurt the consumer. simon. >> consumers don't always see what's coming. depends how it's reported and whether it's part of the election campaign but we'll leave that for the moment. thanks very much, steve liesman at hq. no question bit, some drama over the fiscal cliff, one woman who just might be the most important person is being identified even as we speak. you may never have heard of her. >> there's been a lot of noise about the behind the scenes

meeting taking place on the fiscal cliff, the gang of six, seven, eight, however you want to call it but some of the most important meetings are taking place between the new york business community and washington leaders as they find out where the fiscal cliff negotiation is going to go. one of the leaders of that is a woman named katherine wiemd. the head of the partnership for new york city. i spoke to her recently and she told me that the business community in new york has a message for washington. >> business leaders are discouraged and feel washington is very insular, that they're looking at their own interests, rather than the country's interests. and they're pretty frustrated. i think that we had a great meeting with omb head jeff zion a few weeks ago and that really made a difference because he was presenting a very practical approach. >> so who else has been coming to kathryn's meetings? a list of the washington heads.

including treasury secretary tim geithner, house democratic leader nancy pelosi, senator rob portman, eric cantor, erc skin bowles and alan simpson all familiar names but the key sticking point is whether a business group would support a deal that includes raising taxes or revenues in washingtonspeak. i asked her that question. >> what we're concerned about in particular is that the tax package be done properly so that we deal with a combination of, yes, raising some revenues, but also doing that in a way that really makes our tax program more competitive globally for the business community. >> so guys, a sign that the business community in new york anyway might accept a deal that includes some tax increases if they can get the right deal. back to you. >> thank you, eamon javers. another market flash.

headquarters with the details. >> hitting the wires on google's privacy law, the guardian reporting on tuesday google will be told to back out of the changes to its european privacy policy that were implemented back in march. the article notes that the french data protection economister will hold a press conference tomorrow following negotiations with its peers in other eu nations. we know privacy continues to be a hot topic for the internet companies. google down 9 bucks on the news. back to you. > thank you very much, sima. randi zuckerberg making her way to the set, the new executive producer of bravo "start-ups: silicon valley" is here to talk about her new show and give us the inside school about what's going on behind the scenes. good to see you. of dollarsve hundreds switching to geico sure are happy. i'd say happier than a slinky on an escalator. get happy. get geico. melons!!! oh yeah!!

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a clip from "start-ups: silicon valley." the program is being executive produced by someone who knows a thing about starting a business. joining us first on cnbc, randi zuckerberg, the show's executive producer, founder and ceo of zuckerberg media, the sister of mark zuckerberg of facebook. welcome. it's great to have you. >> great to be here. >> monday, november 5th. >> three weeks from today. "real housewives of beverly" we're live. >> is it going to be housewifeish. judging from the early response in the valley they're nervous about how they'll be portrayed. how messy is it going to be. >> i think the trailer obviously was designed to be a little have lashgs, a little provocative. i think people will be pleasantly surprised on the

balance of kind of fun and technology that they see. >> right. >> part of the message you want to get viewers to understand is, "a," how difficult it is but, "b," how competitive it is. is it within one company, various companies competing against each other. >> you'll six entrepreneurs on the show that cover a wide wrath of experience, two engineer, two tech reporters, two marketers. all in different stages of starting their companies and get to see a real glimpse of what it's like to make a go for it. >> do you think there's a mass audience interest in silicon valley start-upsy is it just sort of -- we're fascinated by it. do you think facebook's ipo has helped or hurt interest the in the show. >> i think tick is such of the pop culture zeitgeist. "the social network" winning awards and geek culture winning the emmys. "shark tank" doing well on air. there's such a fascination right now with entrepreneurship. i think especially given the

economic climate of our country and so what better time to shine a light on silicon valley. >> i'm really fascinated as to why you left facebook. you were the consumer -- you were head of consumer marketing for six years. you were the guy -- the girl that got obama to do the town hall, facebook very famously. that must have been a very tough decision for you. or are you so fabulously rich you don't have to stay. you can have holdings? >> you mentioned the obama town hall. that was both kind of a crowning moment for me at facebook but also the catalyst to go out of my own. i really felt almost everyone is a media company right now. every brand, every person. we're juice sitting here talking about the 30,000 twitter followers. each individual's a media company. when i thought about facebook it all came down to the content. the content about what you're posting. what goes viral. everyone wants a viral hit. and i felt like i had a lot of that knowledge and that the obama town hall was a perfect projects to go out on.

>> so are geeks the same as kardashians or are they different? >> you know, geeks are like rock stars now, right? you can see -- i want to be an mba player or mark zuckerberg. you didn't see that a few years ago. >> you went the traditional route. instead of going social media or going right to the web, you're doing good old-fashioned television. >> for the best network. >> that's absolutely right, nbc, no doubt. >> but still it is sort of very traditional especially given what you've been doing. >> i'm taking a bit of a contrarian approach in silicon valley. a lot of new media companies want to disrupt hollywood. they want to work against -- they want to break the model. i think you need to partner with hollywood, the eyeballs are still on television. that's where it is and that's why my first project out of the gate is a television project but i do want to experiment with some new business models around content and a hybrid between tv and online.

>> we're used to that. >> there's a lot of really interesting things to be done with branted content. you see brands like starbucks with 30 million people on their facebook page. i mean some movies hope for that many people in a box office weekend and starbucks can reach them with every post. you know, maybe the tv network of the future is on starbucks' facebook page. >> a much bigger business than facebook with 900 million, a billion people subscribing. how do you apply it back to facebook because there's struggling there. >> you'll see a lot of our projects will may out heavily on facebook. i think it's an extremely amazing platform to be producing content and showcasing it to a lot of people. >> i would just point out "squawk box" has a facebook page. we'll have one soon. it's ms. we're not already there but a lot of digital guys say that's where the engagement is. if you're trying to drive viewership you can't argue with that kind of scale. now, whether or not they monetize it down the road will be an issue -- >> i don't know if you saw the

space jumper yesterday but 8 million concurrent viewers online. there's something really special going on there between integration of traditional television and online -- >> of course, it always comes down to telling a good story. do you you're telling good stories here with the show that's about to debut? >> you know, i think we'll have to leave the viewers to see that, but i really do think that content is everything online. you have these amazing platforms and so that's why i'm taking the plunge into zuckerberg media. >> i imagine a lot of entrepreneurs wanted to be on this show just for the audience and for venture capital raising. has that helped? has this show helped? >> it has. in fact, one of the companies on our show has been acquired by facebook already. >> really? >> really? >> facebook actually i don't think even knew that the company was one of the bravo companies when they acquired it, so that speaks to the actual legitimacy of the engineers. our companies have raised over half a million dollars in seed

funding from very credible investors in the community and the tech press has covered a lot of our companies again without knowing they were bravo companies just like very legitimate companies in the tech industry. >> weill you still come on our show when you're also andi cohen? >> who knows maybe we'll be dishing with the silicon valley cast all of us one day. >> what does mark think of the show? >> i think he's really fascinated by it. we've had some great conversations. >> no cameos. >> no cameos in this season, who knows. i'm so lucky to have a supportive family. >> if he does want to do television, we're always open every weekday morning down here. >> you'll have to fight me to produce it. >> randi, thank you for coming. >> thank you so much. >> startups silicon valley premieres on monday, november 5th. we should note comcast is parent of bravo and cnbc. still to come, the man who got 95% of all republican congressmen to sign a pledge against raising taxes.

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you know, it's interesting, the dow is hovering about 6% below it's all-time high but many components of the dow are trading at historically low price to earnings ratio. a handful are below ten. what does this say about the market and the opportunity for the stock pickers? mary thompson has more on that. >> 735 points, that's how far the dow stands from its all-time high in october of 2007. if you're a believer an improving economy will provide the fuel to push the dow back to and beyond that level, plenty of members of the dow 30 look cheap by a key measure suggesting now may be the time to buy these individual stocks. consider the fact that on a forward price earnings basis, the dow is much cheaper than it was in 2007 trading at 11.6 times 2013 earnings compared to

16.1 times 2008 earnings back in 2007. within the dow 30, 13 are trading below the dow's 11.6 level making them cheap relative to an index that could be poised for new records. which one are the cheapest? on a forward p ebay sis, hewlett-packard trading at 3.9 times next year's easternings. struggling to reinvent its business. jpmorgan chase trading at 8.1 times next year's estimated earnings, slightly less than the 8.2 times caterpillar is trading at. giant chevron recently warning with third quarter earnings falling short and cisco systems also priced below the dow's forward pe level. lots to think about, guys. melissa, back to you. >> thank you very much. some big movers in today's session. we'll have the names you need to know about next. what's next?

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dow is up 13, another midmorning fade. part of this pattern has got to be what we'll talk about tonight. >> part of it is we're ahead of earning season. we have the top three stocks analysts are hating into earning season. then a closer look at cyber security with the ceo of nice

actimize. what they're doing to cash in on a possibility of a cyber pearl harbor. >> 80 s&p companies reporting this week. joots insane the pace. >> you won't be here for all of them. >> i'll be on a jet plane tomorrow afternoon. >> we'll see you tonight. in the meantime, here is what you missed earlier this morning. >> welcome to hour three of "squawk on the street." here is what's happening so far. >> i think it will continue and now we'll probably see emerging markets begin to outperform. >> softbank investing $20 billion to take a 70% stake in sprint, effectively take control of the third largest wireless provider in this country. >> we've got to do the same thing we're doing. we're making government smaller, paying down our debt, and guess what? jobs are coming back faster than other places. >> this is the first giant deal in a long time. these bankers are going to make some money. >> japaneseba barnnks are fundi

it. >> that press conference was fabulous. >> vikram is joknown when he go everywhere. he's like an ambassador of the country. >> is that true, wherever he goes everyone is like vikram, vikram! >> today we're announcing a brand new music service from microsoft that includes the best of i-tunes, pandora, and spotify all in one and we're calling it xbox music. >> are geeks the same as kardashians or are they different? >> geeks are like rock stars now, right? you see young kids in school. they're like i want to be an nba player or i want to be mark zuckerberg. you didn't see that a few years ago. >> good monday morning. hope you had a great weekend. once again the markets starting

the morning relatively strong but fading as we get closer and closer at least to the european close. nasdaq has just gone negative after having six straight losing days. that is the longest stretch for the comp since november. texas instruments, one of the best performers in the s&p on reports that amazon may acquire its mobile chip business. pandora one of the biggest losers down sharply on news that microsoft is entering the internet music streaming business with xbox music. it is a deal finally. japanese wireless carry softbank in the country's biggest foreign deal ever buying 70% of sprint nextel. will sprint filly have a chance of becoming a contender in the wireless wars? >> plus the president for americans for tax reform, grover norquist will join us live, give us his take on the election, the affects of the fiscal cliff. high end shoppers keep spending. we'll find out how you can make money off that trend as well.

and the online company that is taking banks out of borrowing money. the ceo of prosper.com, a director of ebay, and the former ceo of drugstore.com is with us live. all that and more is coming up in the next hour. we'll start with citi. the bank beating wall street estimates for the third quarter after stripping out a business loss on its retail brokerage. kayla is back at hq with the latest. how complex was this quarter? >> carl, it was pretty complex. i think everyone expected that morgan stanley smith barney charge to be taken after they announced that sale in the third quarter, but we just had the analyst call getting under way now. some analysts say they will revisit their estimates. it's a beat for citi and we have some bright spots. revenue he is rose 26% for investment banking with giant jumps in fixed income. the revenues for the entire unit actually fell in most geographies except for latin america which itself saw a 54%

increase from last year. and overall latin america continues to be strong. according to citi's cfo, loan growth could stay at 5% quarter over quarter, much better than loan growth in asia. we also have citi holdings which declined to $171 billion, the first time that the so-called bad bank has comprised less than 10% of citi's balance sheet. the cfo said it's not small enough yet to dissolve back in the bank in the near term. we had a depar tour for citigroup from what jpmorgan's jamie diamond and wells fargo said was a turning point. for citigroup housing shows a different story. mortgage originations though they're up 12% from last quarter, they went down 15% from a year ago. during that same time mortgage related revenues went up some 35% in the u.s. retail banking unit. big questions there on the media call as to why that was happening, but for citi, which

ranks fifth for u.s. mortgage origination, the activity remains strong but the upswing in revenues is largely because of heavy refinancing activity. spreads are widening because they're maintaining higher mortgage rates. citi is not looking to gain more share in mortgage refinancing and he actually expects some compression on mortgages in the u.s., but that's a different approach from jpmorgan and wells who were more vocal about actually lowering those mortgage rates in order to capture more business and also saw jumps in originations in that quarter. carl, we're definitely seeing citi saying, okay, we're going to hold tight. we like where our spreads are and we're not worried about being competitive here but we're also not seeing that big jump in business either. >> interesting when you couple that with what wells and jpmorgan said last weekend. a lot more to come with goldman later in the week. kayla, thanks so much. let's get to the capital markets. gary is here ahead of the debate tomorrow night. i guess business week is posing the question, are you better off than you were four years ago.

>> today's business week, carl, and i bet we're going to hear that phrase a lot of times tomorrow night. they say that accounting is the language of business, so looking inside these numbers, i found a lot of them fascinating. let's look a couple things. if you look at the dollar share of central banks total reserves, if you thought about what would happen in this country or around the world in terms of central banks, essentially unchanged. with everybody concerned about the dollar four years ago, essentially unchanged. take a look at this one, this is great. if i told you that we'd have record corporate profits, the stock market would almost be back to its 2007 highs, would you believe that the ten-year and obviously you know where it is, 3% four years ago, 175 today. obviously the impact of easing around the world. here is some of the data. much of it is known but i think it tells a very telling story here. dow, plus 70%. the deficit, plus 151%. unemployment, bit of controversy here but we'll take the reported

numbers, flat at 7.8%. 30-year mortgage, down 30%. an hourly earnings, plus 7%. so it tells an interesting picture here. those data points that actually touch many consumers, thing like interest rates, things like mortgage rates, things like hourly earnings, all show a very strong economic recovery, and really a lot of that, as we can debate it all we want, is about what's happened to terms of central banks around the world. the interesting thing is things like the deficit to this point you ask the man on the street, doesn't mean anything. so until the deficit, until interest rates start to have a meaningful impact on individuals when they look at this data and they just look at the numbers, for the people that are working, my answer is very simple, many of them are going to think they're much better off. >> so you don't believe that a mortgage rate at 3%, 3.9% on a 30-year has much impact on the average consumer? you have to be in the market first.

>> those that have refinanced and been able to refinance and essentially take more money in their pocket over the last three years, they feel things are much better. >> sure. >> when you look at the numbers and you don't think about anything else, the picture there is very simple. for most people the numbers say they're better. >> confidence at a five-year high on friday. >> and you could blame it on the fed if that's your point of view but the numbers speak for themselves. >> good stuff. let's get a market flash here. seema is back at hg. >> promising hepatitis c data is helping the stock pop. 99% of patients that have hepatitis c and have never received a drug for -- have never received a drug for this disease showed a sustained viral response to its drugs. now, analysts on the street are saying that this da it is very impressive. barclay's raising it's price target. hepatitis c is a very

competitive space with multiple players looking to bring new treatments to this lucrative market. >> thanks a lot. softbank acquiring 70% of sprint today for $20 billion. it's the largest ever foreign acquisition by a japanese company. joining us this morning, craig move fmoffet has an underperfor on sprint with a $3 price target. >> good to be back. >> i know you tried to write about this over the weekend when not a lot was known. given the press conference today, anything change, your rating or your target? >> well, i can't speak about ratings and targets, but let me just explain what the deal is here because, a, it's complicated for people and i think people are confused about the fact they're looking at sprint trading at $5.74 i think it is at the moment with a $7.30 tender offer here. in effect what you're looking at is issuing some new shares for equity for $8 billion, and so the share price has to be or is,

in fact, a weighted average at this point of 45% -- sorry, 55% at $7.30, and then the ri ma remainder or the 45% at what you think the business will be worth after the tender. right now at the current price the market is pricing that at under $4 a share. so in some ways the market doesn't love the prospects for this business. they're actually trading down from where the stock was before all this started. but you obviously have on your -- you still have a $7.30 tender offer coming for at least part of your shares, and that's how you get to the current share price. >> yeah. you raise a couple questions. one is why the board would have chosen to sell at this time, but also what they're truly after? you think it might just be the spectrum? >> some of it is certainly u.s. assets. look, the yen has appreciated versus the dollar by 40% over

the last decade and substantially this year. so u.s. assets look cheaper. you know, i use the line that in some ways this looks like a real estate transaction. when he talks about this in terms of buying spectrum, it sounds an awful lot like buying r real estate. softbank is in the wireless business in japan having purchased votaphone japan but the synergies are very limited. this is really a financial investment rather than a strategic one. >> as best we can tell right now, what is the future for clear wire? >> very hard to say. as of last week it was being widely reported that clear wire would be part of this deal. this morning clear wire was not part of this deal, but it still sounds like and judging by the way the stock is trading people assume that it will be, but clear wire relationship with sprint is so complicated that at

this point i'm guessing that the bankers and parties involved decided let's do this in two steps. if we are going to do something with clear wire, we're going to have to do something later. the short answer is we don't know what happens to clear wire at this point. >> finally, you have a title or at least a subchapter to your report, liquidities come to the rescue. i think everybody understands that. does it change the fundamental story for "s" in a big way? >> not really. it changes in one way in that it gives them one liquidity. one of our concerns is that sprint was trying to build a high frequency network, i mean built on high frequency spectrum that doesn't propagate very well or very far and they were trying to do it with a number of towers. in effect they didn't have the financial firepower to make this a truly competitive network and we had suspicion it wouldn't be a truly competitive business. it certainly gives them more financial firepower. in that sense they could now

build a better network. the downside of that obviously is if you're going to do that, it means more capital intensity and judging by their history in japan, it probably also means more aggressive pricing, so that could mean lower rather than higher margins. >> that's going to be a fascinating story. it already is. craig, appreciate your guidance. thanks a lot. >> my pleasure. >> craig moffett joining us on the news line. he has 95% of all republican congressmen in sign a pledge against raising taxes. when we come back, grover norquist, the president of americans for tax reform, will join us live with his take on the race to the white house. plus, just how dangerous is the fiscal cliff? is the government going cliff diving with taxpayer money? stay tuned to find out from grover in just a minute. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups. and who called ups? you did, bob. i just asked a question.

it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.

. let's get to rick santelli with the "g"man. hey, rick. >> we have the g man. before we get to the g man, i want somebody else, let's call him the a man, allen simpson had something to say about the pledge and grover norquist. let's run our clip. >> you have a situation where grover norquist has obtained this pledge in the '80s and the early '90s, he got this pledge you wouldn't raise taxes under any circumstances unless there's commensurate spending cut, and those guys are in tlal to him.

there are 82 guys in the house who didn't run to limit government, they came to stop it. >> as i welcome grover norquist, you're persona non grata. how dare you have people sign a pledge about tax reform where people vote to sell their representatives to washington to represent their thoughts? what sacrilege. what do you have to say about allen simpson's quote there, mr. norqui norquist? >> allen simpson knows better. the pluge is a commitment to the voters of the state where somebody is running and to the american people. it's not a commitment to me. i know allen simpson said that and joe biden said it in the debate, but it's just not true. if you read the pledge, it's on our website, atr.org, it's a pledge that's been around for 25 years to the american people that when an elected official goes to washington or to their state capital, they won't raise taxes. they will reform government, they'll limit spending, but they won't raise taxes. the democrats don't like that because their game plan is spend so much money that the country is on the verge of bankruptcy,

and then turn to the republicans and say, hey, guys, why don't you be reasonable and help us out of our problem, and the answer is we're not raising taxes to pay for your overspending. we're going to reduce spending. >> now, you know, let's take this a step farther. ronald reagan is obviously called the compromiser, and he tried to compromise on things like immigration and, you know, spending issues on a compromise. well, neither were guaranteed, neither were delivered. he didn't get his dream on immigration and when it came to spending cuts, they were never realized. so is there any way to actually guarantee that when spending cuts are promised in front of solutions to fiscal cliff, that it will actually happen? >> well, we know history. as you said, in 1982 the democrats promised reagan, promised reagan, $3 of spending cuts for every $1 of tax increase. the tax increase was real. we're still paying them.

the $3 of spending cuts never happened, spending went up, not down. eight years later george herbert walker bush, a slightly cheaper date, was offered $2 of imaginary spending cuts for $1 of real tax increase. the tax increases were enacted, they're real, we're still paying them, we never got a penny of spending cuts. so obama and biden come and say, let's do a deal where we promise to cut spending down the road in return for real tax increases. the answer to that is no. we're going to cut spending, no the raise taxes. >> grover, as you probably know by now, paul ryan is out on the campaign stump promising that they're better equipped to reach some sort of compromise over the cliff. does that make you think maybe they don't have the same convictions that you do? >> no, because paul ryan understands i'm all in favor of compromising on the road to liberty. we wanted a $6 trillion spending cut over the next decade when we

had that argument in 2011. we got $2.5 trillion, not $6 trillion, not as much as i wanted, not as much as paul ryan wanted, but lower spending than obama was planning. obama instead of reducing spending wants to raise taxes rather than spending cuts. that's not compromising. that's losing. >> another issue, mr. norquist, it really got under my skin again to listen to the vice president debate and listen to joe biden look at the camera and talk about millionaires and billionaires. hey, i want to go on the hunt for this 750,000, the math doesn't add up. we know it's adjusted gross income on a family of 250 grand, but they jump to this millionaire and billionaire. there's 750,000 in the middle. why do they fib about it so much? >> well, look, joe biden is the old guy in that debate, and he acted like a teenager,

interrupting and constantly mouthing off and doing this sort of smirky, snarky thing that i think was cute when we were 14 years old and was considered macho or something. it was very sad to watch, but his reasoning was the same way. he says millionaires and billionaires the way 14-year-old boys use naughty words that they've just learned. it doesn't have any -- it's not part of reality. the tax increase that obama is -- says he wants will hit a million small businesses, a million small businesses will pay obama's higher rates. >> we have to go, mr. norquist, but it's big business they love. those loopholes, they're there for a reason. they like big business to be big donators and no big business could find itty-bitty loopholes. thank you for being on our show, sir. >> thank you. >> all right, thanks so much, rick, and thanks grover. there's trouble brewing in the murdoch empire. why rupert's role as chairman of

news corp. might be at risk. we'll talk about that after a short break. [ horn honks ] hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing.

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ch some potential trouble for the murdoch empire. his role may be in jeopardy along with the board positions of his son. julia boorstin has details from los angeles. she will be reporting from the company's annual shareholder meeting tomorrow. >> carl, that's right. a growing list of investors is opposing rupert murdoch and his family's control over news corp. now, calsters, which is the california state teachers retirement pension has $153 billion under management. it's voting against the re-election of every single news corp. director. another california pension fund, the california public employees retirement system, which has $273 billion under management, is opposing the re-election of rupert murdoch and his sons james and lachlan from the board. this according to the telegraph. they have not responded to

request for comment. these two join a broad list of investors against the murdoch family control. proxy advisory service glass lewis and british hedge fund hermes have come out in opposition to his role as chir. christian brothers investment services gathered 18 investors with more than $1.6 trillion in assets under management and $13.4 million news corp. class a shares. they expressed support for an independent chairman. opposition to murdoch's control of the board has been growing since the phone hacking scandal in news of the world last summer though there was opposition to murdoch at last year's meeting. this is the first meeting to include resolutions against murdoch on the proxy voting form that allows investors to vote against murdoch without traveling to los angeles. but the murdoch family is unlikely to be ousted though they own about 12% of the company. they control 39% of the class b

voting shares. a saudi prince holds about 7% of the class b shared and pledged his support to the family last year. they have freshened the board nominating elaine chao and a former president uri be. >> it's getting awfully spicy over there. thank you so much, julia. julia boorstin in los angeles. a few moments left in europe's trading day. a lot still to come this week along with big summit of eu heads of state. people get the close on today's trading and details on this afternoon with the dow up 41 in just a moment.

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the european markets are closing now. >> by most accounts the imf meeting in tokyo was a bit of a bust. leaves some big questions for the heads of state of the eu, doesn't it, simon hobbs? >> it certainly does. the politics are going to n dominate as we get to the full summit. the close there is a broad based move higher. 63% of the stocks, 600 are higher. almost a mark up more than anything else perhaps. it has become apparent that as far as greece is concerned, and we had a press conference today with angela merkel, it does appear as if there's going to be some assistance for greece to meet its dead obligations. over the weekend merkel was suggesting greece should be given another chance. today she said there should be

no uncontrollable events within the eurozone. we'll wait and see what they deliver for greece and, of course, there's a discussion about how they can juggle the debt further. what is interesting is the degree to which people continue to make money from this dovishness, if you like, that we're now getting from the germans and the greek stock market moving higher again today. we're now at a gain of 34% over the last two months. in tokyo over the weekend, of course, to carl's point, they failed to coordinate a big operation to sort things out. but what is apparent from the reporting that we've got from reuters is that certainly the eurozone would like spain to ask for a bailout in november in order that it can be bundled with helping cyprus and with also helping some of the other parts of europe to get them kind of going through the particlements at one time if you like because that certainly would help the situation in germany. they are pointing about a november application. don't forget, we got two regional elections in spain this

weekend which are potentially important. in the meantime, let me just show you where we are on some of the banks. let me show you where we are on the spanish yields which have continued to stay depressed, which is a good sign as we await the regional elections in spain. let me show you some of the eurozone banks today. they were doing reasonably well. there is some talk of m and a within europe as well and that moved some of the stocks, though not all of a them. two of the nor weekien companies came through announcing they're going to combine their aluminum and piping business in the united states. looks like the verent a kill co sell its parcel delivery. they're not sprint softbank deals. >> thanks, simon. simon hobbs. meanwhile, gary is back here with capital markets op-ed. i know you're looking at a

warning for bond investors. >> we have given a bunch of warnings. there was some irony in the fact bernanke was in tokyo and there was a big japanese deal. obviously those that love to watch the fed, japan. it's been 20 years since there's been a big japanese deal in the states. >> that's a conspiracy theory? >> irony, just irony. interest rates, we have detailed for some time what's been happening in the high yield market, the junk market. i have to remind people there's a difference between buying a bond fund and buying a bond. remember there is no maturity when you buy a bond fund. when you look at the yields h remember, you don't know what the bond managers are buying. case in point, guess who is coming back to the market in they haven't been there in 100 years. l bolivia is going to be selling some bonds. they're primed to sell global bonds, first time in 100 years. taking advantage of all the money that's been pouring into the global bond funds.

they're buying crappy junk bonds. they're going to start buying sovereign credits in countries that have not gone to these markets and again in many, many years. don't be surprised if you continue to see a flood of deals like this, and i have tried to come up with an idea of who is going to be a beneficiary. obviously all the banks are going to underwrite these deals and will benefit. if you look through the citigroup numbers today and talk about what they're doing in the emerging markets, transaction-based fees, more stable revenues in terms of that, perhaps, maybe a stretch, but perhaps this is another good sign for citi as they try to become the player in the emerging market banks. more emerging market debt, they'll benefit. >> true international story. thanks a lot. bob pisani joins us here. >> i'm starting to think the consumer is doing better than we thought. this retail sales number i was quis surprised. much better than expected and everything was good. usually something is down, gas sales or something. every single component, i went through every one, i couldn't find a single thing down. that doesn't happen very often,

folks. let's look at what's been going on. i don't know if it's some kind of consumer comeback here, but not only retail sales better than expected, no major category declined. i went through motor vehicles, electronics, gas stations, i turned into steve liesman this morning. everything was up. that doesn't happen. on friday the consumer sentiment number was a surprise. highest since 2007. we're talking about the prerecession numbers we're seeing. i'm not saying we've turned the corner but this is definitely a little bit on the encouraging side. it's impacting the gdp. barclay's raised their q3 gdp numbers to 2% from 1.8% just on the strength of the retail sales number. not only that, this could impact our earnings situation. let's look at the prevailing paradigm for earnings. this is what everybody thinks is going to happen. everybody is talking about q3 earnings are going to be negative. okay. right now they're negative, but look what's been happening. we have 35 companies reporting so far.

they're reporting 8.3% earnings growth. wait a minute. we're all supposed to be negative. these companies are being very, very conservative. you watch this. i'll bet you we're going to get positive numbers for q3. not a lot, maybe 3%, 4%, 5%. that will be the weakest in a couple years but i bet you it will still be positive. nick at key bank had a comment out on the same thing. here is the other prevailing paradigm. it's going to get worse a lot of people think. i think that dwrul find q3 may be the trough for earnings, that it will get better from here. that's a much different way of looking at things. this is part of the problem, we're not sure where we're going to be going on the earnings front so we're waffling around here. the s&p, we're 3%, off of the highs we hit. 1465 was the old high a couple weeks ago. today we're seeing kind of in the middle of nothing. half and half advancing and declining stocks. the drug stocks are all leaders, had some good news on a couple

big drug names. lily had positive results on a gastric cancer drug. essentially at new highs. let's not quibble about a point or so. pfizer is just off a new high. the drug stocks are leading today. i also want to note the bank stocks are doing very well. citi beat on the top and bottom line. since we started with the financial stocks, guys, everybody has done very well. the one exception is wells fargo, very closely tied, of course, to the mortgage market and those net interest margins getting compressed hurting them. overall so far, so far earnings have not been awful. by the way, q4 they're lowering their numbers but not as fast as they were lowering them in q3. >> are on the record time stamped with q3 is the trough? >> i think right now the evidence is it's going to be, and i think q3 earnings could be positive. i know everybody says they're going to be negative. i think you watch at the end of the day, they'll end up not a lot. >> going to be close. thanks, bob. let's get back to headquarters. seema mody has a market flash

for us. >> you better watch out, santa may not be delivering enough toys this hol dye season. goldman sachs citing accelerated declines in toy spending. lowering estimates for mattel, another player in that space, jakks also moving in sympathy. >> we've stopped buying toys, at least the old-fashioned kind. while some businesses may be concerned about the economic outlook, a new report shows that consumers are still shelling out a lot of money for luxury products. courtney reagan is also back at hq is some details. >> thanks, carl. bain and company believes concerns about weakness in the luxury marmeket are overblown. they're presenting their study today. thor forecasts revenue to increase by 10% to 212 billion euro, that's how they mesh sur it, marking the third straight double digit increase though the rate of growth has slowed a bit.

while europe is still drawing the highest revenue for luxury, its growth is forecast to be half of what it was last year at 5% as the region limps through that debt crisis. the world may be concerned about the slowing chinese economy, but bain projects luxury sales in the asia-pacific will outpace the rest of the world at a healthy 18%. 1 in 4 personal luxury good purchases are made by chinese consumers. bain says chinese consumers account for half the luxury purchases in all of asia and nearly a third of those in europe. tourists from both chinese and nonchinese consumers account for 40% of global luxury purchases. and for the first time leather goods and shoes hold the largest percentage of the luxury market thanks to increasing levels of male spending on higher quality and higher priced items. so that helps explain that continued strength in names like michael kors. younger luxury buyers are less interested in heritage brands. coach is very heavy on heritage.

brick and mortar still dominates. entertainment over shopping but does expect 24/7 access. these luxury brands available on multichannels are the ones that will likely win. >> courtney reagan back at h qument. coming up, taking banks out of borrowing money. how your business can get all the cash it needs without worrying about the red tape. first, rick santelli giving us a preview of the santelli exchange. >> we'll do a postmortem on our interview with grover norquist. remember, tax code is a lot like computer code. it's really comply kated. it's not written by just anybody. and if you tweak it, you never know what happens. 2:30, mark, because i'm going to come back and talk about exactly that. [ male announcer ] how do you trade?

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coming up at the top of the hour, finding valley -- finding valley, findy value in the rally. it's a stock picker's market and our traders are bringing their best ideas. citi beats, goldman sachs is on deck. we'll debate which bank stocks are worth owning and do you fear the fiscal cliff? why you should and what happens to stocks if congress can't make a deal. i'll see you in about 15 minutes or so. >> see you soon. let's get to the cme.

a delayed santelli exchange because we had mr. norquist on. we're going to recap what was a good interview, rick. >> you know, i think it was, but it also underscores how complex this is. you know, when you and i and scott cohn fact checks some of these debates, it gets very tedious. for people listening in, it's almost impossible to get to the truth. take, for example, the farm bill. the farm bill really isn't about far forms anymore. embedded in it are huge entitlements like food stamps. it's not a good or bad thing but difficult to extract any facts. the 15% earned interest credit, of course, that is brought up in the vice presidential debate about hedge fund buddies. who wrote that ledge lation? joe biden very well knows who wrote it. and to take it a step farther, that really is an issue about partnerships. so what is the real fact of something like that? well, people in business that

have a lot of resources are going to, of course, hire tax experts and decide, if we're going to structure something, well, maybe structure it as a partnership because we'll get some tax benefit there. it isn't that there's malfeasance here, this is our tack code. so in the end, you know, both candidates, the president, mitt romney, well, many people i talk to aren't happy about the degree of detail, but i don't get unhappy about the degree of detail about what, for example, mitt romney needs to go to congress to work out. remember, one guy can't do any of this. it's very disingenuous to think a candidate's going to go on the air during a debate with sound bites for a couple minutes and lay out all the details. but what is important is this tax code, if you modify it, it's like squeezing a water balloon. if you mot fi that earned interest, there will be another way that lawyers and accountants will get together to benefit from this looming policy. the real answer in my opinion

for most americans is scrap it. but do poliansn either side of the aisle really have the nerve to scrap it? because if they were really serious, scrapping the tax code, writing something simple, checking every time of subsidy and see if it passes a litmus test, write some set rules for all this legislation, that's the way to go. but politicians are disingenuous. they write something and then two years later they come back and use what they wrote as an excuse to elect them because the other guy, he wrote it as well. it doesn't make sense. america deserves better. carl, back to you. >> hey, rick, it's gary, let me ask you this. a number of people wrote in after that interview and they say that the way grover has dug his heels in and is not willing to give any compromise at all is essentially a negative thing for even those that are in favor of many of the things that he stands for. your take on that? >> my take on that is this, ever since he formed that group in

1985 at the request of ronald reagan, there hasn't been any way to guarantee that spending cuts in any of these packages ever came to fruition and most of them didn't. i think grover norquist and i think lloyd blank fifein gave u the answer. we know politicians are not trustworthy. they will do the hamburger. give me the hamburger today and i'll pay you tomorrow. if somebody was honest about it, wrote it down, papered it up in a way that was good, i think everybody could compromise. just can't compromise with people that are drunken sailors in the spending category. >> rick, we'll talk to you in a few moments. rick santelli in chicago. ever wish you could borrow money without dealing with the bank? well, prosper.com let's you do just that. we're going to tell you how, talk to the company's ceo who is also, by the way, on the board of another company called ebay. right after this break. [ male announcer ] when it comes to the financial obstacles military families face, we understand. at usaa, we know military life is different. we've been there. that's why every bit of financial advice we offer

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in the midst of bank earnings peer to peer lending offers are pretty enticing alternative for those looking to borrow or invest by bypassing the banks altogether. prosper.com case investors can generate returns of 10% or more by making small loans to consumers. dawn, it's great to have you on

the program. how are you? >> nice to see you again, carl. thank you. >> i'm fascinated by how this works not just because of the return you're promising lenders but what you do in the case of a delinquency. can you describe how peer to peer lending works? >> prosper is a marketplace. we bring borrowers and lenders together and in a transparent way we provide a very compelling value for both sides. for lenders we give them access to an asset class they otherwise wouldn't have access to and as you said, we've had average returns of 10% over the last three years. for borrowers we provide them a closed end product, so for debt consolidators they really can get out of debt. we provide fixed rates and transparent very compelling pricing. so it's a win/win for both borrowers and lenders and we bring them together on a marketplace. >> right. we're talking generally a 1, 3, or 5-year loan. average loan side about $8,500.

as you said a fixed rate. what happens when things go wrong? if i'm a lender and i'm somehow having trouble getting my money back? >> well, we do all the collection for the lenders and what we rend lenders do is lend across a wide variety of borrowers. so they don't do just one loan. think of it as a one to many. so one borrower, many, many lenders. our default rate is similar to what you would see in any other type of bank offering. we take care of all the collections for the lenders. >> you're growing about 100% a year. you yourself people might not be aware, you changed really -- you helped change the world by running technology for schwab. you ran drugstore.com, we know what happened there. it would be tough to bet against you. who should be worried by somebody like prosper? >> well, i don't know that anybody should be worried but i think we are a very compelling alternative to banks because we do have this marketplace and we do provide these great products and a win/win for both lenders and borrowers, and as you said,

both lenders and borrowers can come together and get a high return for lenders and access to loans for borrowers. it's a great way for debt consolidators, for instance. half of our loans are from debt consolidators who really want to take control of their financial future. and they come to us and because of our closed end product, they're able to pay off their debt. >> hismt po is not a focus i'm told at least for now? >> not for now. we're very focused on growinged business. as we've said, we've grown over 100% per year. we're very optimistic about our future growth and we're focused on great execution and continuing to grow. >> it sounds very interesting. how big can you get, dawn? and at some point would it make sense for a traditional bank or someone more traditionally involved in the sector to partner alongside you? >> well, this is a huge category, so i think there's a lot of potential, and as people get educated about peer to peer lending, it's so compelling they

are coming to the platform. so i think there's just a wide variety of -- there's a great ability to grow. >> yeah. i think the last time we spoke it was on a pier in seattle when it was freezing cold. it's a lot more comfortable being indoors. dawn, i look ford to hearing more about it. thanks for coming on. >> thank you so much. >> dawn lepore, prosper.com. keep those tweets coming. microsoft is debuting an online music service. so complete this sentence. microsoft getting back into music is like blank getting back into blank. your answers are next. you take . ...at the best schools in the world... ...you see they all have something very interesting in common. they have teachers... ...with a deeper knowledge of their subjects. as a result, their students achieve at a higher level.

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welcome back to "squawk on the street." i'm kayla tausche with some breaking news from vikram pandit speaking on the company's third quarter analyst call. saying the number one headwind in u.s. economic growth is the fiscal cliff. take a listen. >> in the u.s. there are promising signs that more robust economic growth is within reach assuming the resolution of the fiscal cliff. lack of a resolution of the cliff situation would be highly

disruptive. >> other headlines coming out of the beginning of the call, the cfo saying that consumers are still in a process of deleveraging and that's hurting credit card revenues. he wants more clarity on the u.s. economy before calling a sustainable recovery in housing. carl? >> has not stopped the stock. the biggest gainer of the s&p 500 up almost 5%. microsoft getting back in the music business is like blank getting back into blank. ross writes, microsoft getting back into the music business is like coca-cola getting back into the new business. bill rights ford getting back in buggy switch. it's like vanilla ice getting back into parachutes pants. wasn't that fun while it lasted? some final thoughts this morning? >> i have sob seto be serious. big global macrofund cutting

fees down 3% year-to-date, trailing the s&p since 2008 as these global macrofunds have had difficult times. the management fee, they're cutting it from 3% down to 2.6%. performance fees from 30% down to 27.5%. >> 30% to 37.5%. >> they do on "saturday night live," really? we'll see if there's a trend. ten weeks left in the year. way underperforming the s&p. we've talked about it for some time. will there be a meaningful cut in fees. >> i'd love to get your take on some charts lately. people talk about s&p 5-day moving average, the number of new stocks hitting new highs. that number is falling quicker than it has in recent declines on the s&p. are we oversold here or are we not? >> i think there's a sense that everyone is fearful of the party, the qe party, and when does the music stop. i saw a hedge fund manager on friday night, he said i have to keep