component. >> that does it for us. have a great weekend, everybody. we'll see you on monday. right now it's time for "squawk on the street." good morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer, david faber. busy friday taking shape. gdp above consensus. futures are mixed but well off lows as joe said. we're down 80 almost currently down seven on the dow. continued concern about the european economy have red arrows there although a couple green ones in france and germany. road map starts in cupertino, california, where apple earnings missed. gross margins fell and the stock is moderately higher. we'll go through positives and negatives of a controversial quarter. >> amazon posted first loss in a decade with operating expenses up 28%. higher as well premarket. are investors too nervous to

short those names in the holiday season? >> broad market is lower despite the gdp number. we'll get the view. bombshell ticktock in "the new york times." futures off the lows after the release of the final -- preliminary hearing gdp report from before the presidential election. data showing the economy grew 2% in the third quarter. that's above expectations and up from 1.3 we saw in q-2. numbers were boosted by consumer spending and defense and a big part of this, we'll see today whether we're still in an environment where people question data clearly gdp is more hard to manipulate than the jobs number. >> i thought the same. as soon as numbers came out, i said the people who do not like obama will say this was padded by five more planes sold. this one was padded by an error

that will be reversed or california counted twice. we're in a weird mode. whatever it said, if it's positive, it's a lie. i'm not buying that. these are good numbers. reverse the market. it's for real. >> good or just not bad? >> not bad. any kind of good news would be welcome right here and this comes under the category of good news. >> better than what we anticipated. better than we saw in the last quarter. maybe we can keep it going although one wonders where we are this quarter already given how much talk there is about the fiscal cliff and everyone pulling back and not like the numbers we've seen although those were third quarter numbers we saw from corporate america but particularly technology where it seems as though spending really did slow. >> september was bad. the u.k. yesterday posted a number of 1%. i was watching when the number came out. there were people high fiving. 2%. that's twice as good as what they did.

>> two times the amount of high five. >> romney supporters may not question the validity of the data but they'll say that 2% is not strong enough to support job growth in this economy. while the numbers are not bad, they're not bad, they're not good and they're not good enough for job creation. >> last night on "mad money" you said almost no company gets through the ridiculous gauntlet of the third quarter unscathed and you have said the next 11 days before election day are going to be tough no matter what. >> they're torture. i keep coming back to a couple -- this is the best example. we had broadcom on the other day. scott mcgregor, the ceo. they blew in numbers when it comes to wireless. they did good cable numbers. we had comcast with good numbers. they exceeded every single metric. they have tremendous apple business. i was joking about going 33 bid because stock was at 34 at a time. the stock has not had a minute's

rest. it keeps going down. what more does the market want? the gauntlet is to high. it had technology. it had a sense that the peak was reached with apple. in other words, sell broadcom. that stock would have been at least 5% if it wasn't for the gauntlet that we're in right now. >> meantime, let's talk about apple. fourth quarter profits falling short of street estimates as does current quarter forecast. apple sold 14 million ipads and that's fewer than analysts had been expecting. the company also sold nearly 27 million iphones exceeding forecasts. there is something for everyone here, jim, and what is remarkable is that in the post-market session yesterday, apple was down as much as 3% on the news on the miss. and then the stocks are recovering on the belief that once again apple is sandbagging when it comes to fiscal first quarter. >> two companies reported last night. neither plays by the rules. there was apple. more granular than i thought.

and all i could hear about was someone saying listen, fourth quarter not that great. could you tell me where the shortfall, gross margins -- meanwhile, he's stuck with r-- e doesn't see it the same way. you mentioned samsung but they're doing better than you guys. when i finished, i said the analysts think they are knuckleheads and they must be out there. i'm not sure what kind of equipment they're buying. maybe research in motion. sticking by this fabulous company hewlett packard. cook is saying they're doing well. amazon is going to say that we're great. the neck with you. >> i don't think there are any other companies. it works for amazon. for whatever reason. because of the confidence in the

ceo and the plan and long history, by the way i think in some ways you can view it as a positive sign for investing because you have to be an investor when it comes to amazon. it is an open ended growth story. you can make an argument that amazon will be the biggest company in the world one day and you won't look at me like i have four heads. >> maybe three. it's remarkable story. >> there's no valuation support for stock at this level. >> there's none. there was a moment on the call where i kept saying when will someone ask a question and they'll answer it. finally someone said, listen, now you are starting to have to pay taxes in different states. how are you doing? we're doing the same as without taxes. can you go into that? no. we're not going to go into that. >> international trading weak relative to everything else. tax trend at large is working against them state by state.

big boxes do match. does that make a difference going into a quarter where the tre pressure is on. >> netflix quarter, they are not growing international. they're talking about credit card problem. amazon is not growing fast enough because they seem to be able to control the growth. they could grow faster. trying to put up as many different warehouses as possible. it's clear that these guys have such -- david is right. if they said that international was slowing, people would blame it on anyone other than amazon. amazon, tell me what they told y that made it so that stock is flying. they said we're doing a great job. go shot up and just recommend us.

>> one thing they cannot gloss over is charge for living social. $169 million total. net is 240 something. they have -- it's been a bad horse. >> it has. >> 37 cent loss compared to what was for living social specifically versus what was expected which was an eight cent loss. much bigger in terms of order of magnitude. that was more than half of the net loss that they posted for the quarter. >> that's a tough business. i didn't say they screwed up. i revere them so much. one of the things that i think -- remember i said that the apple analysts seemed to be weighted to fantastic information technology that we get. on this call, i was waiting for the guy to say, i'm an amazon prime and i just want to say how fabulous it is next. >> i tell you what was interesting, back to apple, we all know steve jobs never pulled

any punches when referring to competitors, david. but to hear tim cook call the surface compromised and confusing felt like they were out on a limb. >> as much as a different personality today. >> but then some of the reviews have been even rougher from microsoft which had two presentations yesterday as we all know. one for windows 8 in terms of running it on everything else and then for the surface and some of the reviews have been brutal in terms of the windows 8 as well because of this mixed message so to speak that it's sending. >> i'm interviewing this as part of this homecoming. i want to ask is how much contempt did jobs really have for microsoft? it does seem there was this really weird relationship. >> between him and gates. >> there was no relationship

between hthem. you do this and i think it's an exciting product. but then i start reading reviews and i say i guess i was wrong. it's not exciting. i was wrong it's not that interesting. i'm wrong to like it. i don't like it anymore. >> you never had to make the consumer decision of whether or not to buy it. >> remember, i did see at my college reunion, i saw someone with a microsoft phone. >> we know who that is. >> he's not abandonning that phone. he's sticking by the microsoft phone, which is a statement. >> back to apple for a minute. the operating margin guy w-- guide was not good. >> there is a thinking that as the iphone 5 and ipad mini ramp

up in production, costs will go down and so this could be the trump when it comes to margins and improve by next june. >> we come back to multiple which is nine times, ten times. >> cash on hand. >> $20 billion in cash. >> did you get the funny moment -- >> it's still a huge consumer growth story. how many are out there? >> calling itv was supposed to be tim cook's hobby. and another one where they said aren't you pricing ipad mini too high. it's the greatest thing we ever created. $39 to high. when you go into an apple store do you say this is $39 too high. i got to go to see what dollar tree has. maybe they have a hewlett packard. meg whitman, able to underprice that with her tablet? >> i don't know. i don't know. i haven't talked to meg about

that. i doubt it. >> the isi note i thought was interesting. brian marshall, whether or not international is reaching some theoretical threshold of potential. we all know the infrastructure outside of this country is not what it is in the united states and international showing signs of maybe not keeping pace with the u.s. >> i remember rick hill who used to be the ceo came on "mad money" and said go outside of the u.s. samsung do what apple is. samsung reports this remarkable quarter. china, tim cook did give that double digit threshold when intel got to one-third china intel took off. you did get the feeling of this, wait a second, if i were in korea right now i would say -- >> hong kong and singapore on

the trains, on buses, on streets, you see samsungs and more rarely do you see an apple iphone. samsung results prove it. 18.8% margins. highest level in two years since adopting international accounting standards. they are on a trajectory that's higher but the holiday season may be tepid. >> who is funding the samsung expansion? apple. they use apple's chips. intel said you want to stop giving them business and give it to us. i think about what jobs said about intel which is they are plotting upward even though andy grove was a sometime friend of jobs. >> you mention seasonality at apple. there's a question about the dearth of products once new year

hits and it's not expected until spring so what happens between january and the spring when there is no product coming out because it's been a very prolific quarter when it comes to product rollouts. >> i say, okay, would i rather own new corps or apple? timkin or apple? general mills. mentioning stocks that have mire multiples. png. now, johnson & johnson. i'll take my chances with the company. >> let's move on and talk citi. back in the spotlight this morning. sources telling "the new york times" bank's chairman michael o'neill was working behind the scenes for months and that pandit was summoned to a meeting telling him the board lost confidence in you.

pandit then resigned immediately. >> it made it difficult from what i understand in terms of the relationship with the board, which was quite testy. we knew that day when it was announced something was awry. we reported quickly he had been forced out. i used the word fired. that's clearly the case. been waiting for a story like this to give us more. i've been doing reporting on this and having conversations but this is a nice story by the "times" in giving us that time line. we wondered when o'neill came in and i heard this antidotedly that he wanted this job. it has been said to me that this guy is running citi right now. that would seem to be the case from the reporting that's been done from the "times" in terms of the process he took to get board members over to his side to force out pandit. with pandit i wonder why he went

down a route of saying it was my decision. maybe better having said nothing. >> he obviously did plan this between 10:03 and 10:07. >> it was his decision. >> so certainly he had -- >> he said, maybe i don't want this job. >> opposed to saying get out at the end of the day, he chose the latter option. >> the "times" asks whether the board was unnecessarily ruthless. are you grateful o'neill is there or do you think he acted harshly? verdict? >> i don't think we can have a verdict at this point. i think time will tell. there was a feeling within the bank to a certain extent that while pandit got them through difficult periods, he was not a banker and that they needed somebody who was. we'll see whether that ends up being the case. i think there was -- we talked about this day one this feeling they need to get smaller and not smaller as in taking everything in but just more focused and he may have resisted that so we'll

see if it was the right call or not. >> it was a good quarter sbut they put out numbers saying they were the least productive bank. >> it's a heck of a read in the "times" today. when we come back, dairy giant dean foods taking a part of the company public today. rising organic and silk and we'll talk to the chairman of dean foods. we'll take you to a microsoft pop-up store for the latest. one more look at futures. da damage undone this morning as a result of a slightly better than expected gdp number. "squawk on the street" is back in a moment.

a pop-up store is in times square. there have been crowds at the store and people online waiting to pick up tablets since midnight. what's the scene like right now, simon? >> reporter: good morning to you. welcome to one of the 34 pop-up stores across america that microsoft has launched today taking the message very much the commercial message to the streets. you can see it's busy.

they opened this at 10:00 last night. there's 34 stores across america that will remain open until 1:00 monday morning. obviously it's the launch of the surface, the new tablet. you know that. also the launch of windows 8. they want to create the buzz that apple is able to create. they want to take it right on the street. guess who just turned up? the chief operating officer for microsoft, kevin turner, is with us. quite an endeavor to put up 34 outlets like this. i presume you had to train this staff. >> absolutely, simon. today we're opening up 34 of our stores in addition to 30 of our regular stores. we have 64 stores open. we have lines getting people trained and excited. there's excitement around windows 8 and certainly surface. >> i don't see a huge number of surface being sold. >> all of these bought surface and are waiting to be trained. i see a lot of boxes that have been sold. we had lines down the street in

times square. it's been an incredible turnout. we want to take this product to a billion people around the world that use microsoft products every day. >> what about this idea perhaps that the software isn't quite where the hardware would like it to be? >> the hardware is coming. it's happening rapidly. great partners, hp, dell, great hardware coming. we're excited about that. >> thank you very much. kevin turner joining us. back to you, guys. i'll race back down to the stock exchange. >> all right. see you then, simon. interesting. we understand that initial sales of the ipad mini have sold out within minutes of when they first went on sale midnight pacific time. >> they did it in minutes. that's disappointing. i was looking for them to be sold within the first 43 seconds. you know that fellow, that j

jamaican, i thought they should have done it in that time. >> his 200 or 100 time? >> 100. >> hello. >> it's very disappointing number. i have to take my price target down again. >> all right. last night on "mad money" cramer revealed obstacles standing in bulls way. how should you go today? mad dash up next. bob...

oh, hey alex. just picking up some, brochures, posters copies of my acceptance speech. great! it's always good to have a backup plan, in case i get hit by a meteor. wow, your hair looks great. didn't realize they did photoshop here.

hey, good call on those mugs. can't let 'em see what you're drinking. you know, i'm glad we're both running a nice, clean race. no need to get nasty. here's your "honk if you had an affair with taylor" yard sign. looks good. [ male announcer ] fedex office. now save 50% on banners. >> mad dash on this friday. things getting crowded in here as we await the ipo of white wave. we'll start with expedia. nice acceleration in hotels. >> why do people not understand

this country is replacing the travel part of major enterprises. people are now told you go using expedia. this company saves companies money and that's why it beats the number. >> is there a priceline halo today. >> people are saying they are still traveling chlg th ingtrav. they want to travel cheaper. value has been a theme. people keep wanting to sell stocks thinking no one will travel. people have to travel. they travel priceline and expedia. >> hotels and airlines too. not a bad quarter. >> really good. >> when we come back this morning, the home of land o'lakes is about to go public today. we'll get the opening bell in just a moment.

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 dow has not had a losing october since 2008. so far this month the dow is

down 2.5%. s&p down two. nasdaq down four. we'll see if we get more inspiration today. the maker of silk soy products and horizon organic milk. microsoft celebrating windows 8 and windows 8 pcs. amid the apple news that we talk about, we did not mention potential effect on a pandora. >> i am shocked pandora is not down. trading $1.50 in the market and they could roll out something similar. i don't want to compete against apple. >> apple is flat. exactly flat in today's session. we're also seeing microsoft basically flat and ibm flat as well. for technology, yesterday after the bell when amazon numbers initially crossed apple numbers you thought one would think it would be a bad day for technology. here we are. both of those major stocks are

flat and nasdaq here is edging toward the green. >> amazon up over 4%. >> shut up, analysts, and buy us. >> when you treat analysts like dogs, they are obedient. sit. buy. okay. rollover. all right. that's how i feel analysts behave. >> they don't listen to analysts. let's try to remember that. it is the decision of investors at the end of the day. there are numerous that believe in the company and the strategy. >> apple is a value stock. obviously they could take the dividend and triple the dividend tomorrow if they would like. it wasn't clear what they were going to do with the cash. >> for apple, i'm not trying to be an apple defender or anything like that. when it comes to estimates on apple analysts put forth,

bullish. when we say that apple missed, maybe we say that analysts got it wrong. they're too bullish. apple gave guidance lower than consensus guidance was and they've been doing that quarter after quarter after quarter which is why apple sandbags when they give guidance. analysts take that and come up with an estimate that's higher that apple may or may not miss. >> apple is running the business the way you would run it. you have a hot product. you want to get that product out. you know that people have demand for that product. analysts say if you had done this december 11th, you would have made a better fourth quarter. what are you thinking? we're not thinking about anything you're thinking about. we're thinking about running a company that's a great american company and understand that we're not general mills. general mills will do what they're supposed to do. 26. they'll do 27. cisco is supposed to be 19,

they'll do 18. apple, we're not constrained by what you want us to do. we'll run the business in a good way. >> back in the real world, goldman sachs with a nuance trade on caterpillar. keeps the buy but removes the conviction buy because they say dynamics that prompted them to put it on conviction buy in the first place have not panned out. where does that leave us? >> let's go over that. okay. they put it on the list and since then it's down 13% versus the s&p being up 11%. >> that's a strike against. >> we bought some in honor of analysts this morning because it seemed like, wait a second, it's down -- maybe up in the s&p because if you're that wrong, then it's conceivable that you could be equally as wrong when you pull it. >> right. >> that guy is clearly someone that you want to find out. i used to talk to tommy all the time. he said what you're looking for is an analyst that does the

wrong thing so next time he does the wrong thing, you know which way to bet. i always thought tommy and his father were great investors. to go against him seems too logical. >> on the right side of the scree screen, 19.5. 18 to 21. 19 to 19.5 is the best indication right now as far as whitewave. wwav is the ticker signal on this. we'll talk to the chairman in a few moment's time. this is in that health food category demanding premium valuations with whole foods. >> terrific guy. i've been aggressive on the show. i'll mention this. i have two -- at the time they were vegans. the only thing you can have is

almond milk. give me almond milk. this company is sin has the stu vegans love. people who like bad tasting -- people who like almond milk. >> land o'lakes has never treated me wrong. right on the money. >> bob? >> okay. so whitewave priced 23 million shares at $17. that was well above the initial price talk. $14 to $16. right now we look $14 to $16. priced at 17. opening around $19. should open in a couple of minutes. this is capitalizing on the craze for health related products. silk one of their products. land o'lakes.

this is a popular food category. let's just move on. i think melissa had a good point this morning. did you notice overnight a lot of worry on apple. apple trades up most of the night. amazon turns around very quickly trades up. futures were down but came well off of their lows. was never really that bad overnight. came well off their lows once we got the gdp numbers out better than expected. shorts are very nervous right here. the biggest risk to stocks all week and market has reflected that companies missing on revenues. we have seen some money managers all throughout the week suggesting lowering exposure to stocks. very respected guy on the street talking about that just recently. he had a very good point. they seem more worried about the earnings cliff rather than the fiscal cliff. that's a very valid point. i've been mentioning it all week. i had eight big companies that i followed overnight of them half of them, five of them missed on

the revenue front. that's been the big story. that's the main story that's going on. look at one company guys. goodyear tire. love the company. simple product to understand. global reach. did you see the numbers? key metric is volume. how much are they selling in tire and dollar volume. well below expectations. not just in europe. we knew that. china below expectations. asia. latin america and the united states volumes were below expectations. they don't provide earnings guidance but volumes below expectations in the fourth quarter as well. another good example, erickson, one of the biggest in the world, samsung is a rival. u.s. sales erupt. good in the u.s. europe and china sales were notably to the downside. $2.2 million getting ready to open on that one. come back to you shortly. back to you. >> all right. we should shift to bonds in the

dollar. let's go to rick santelli at the cme group in chicago. >> we had data this morning. unlike some of the previous data points that just seemed to defy logic, this is stronger than expected. traders are the cynical bunch and didn't look at it the same way they did the big drop in claims or big drop in the unemployment rate. what they are paying most attention to are the components and things like defense spending which carl brought up but all in all it kind of was in the quasi range. did it move markets a lot? not really. however, look at a two-day chart of five-year, ten year and 30 year. the five year was selling off more aggressively than the rest of the curve. as you see today, we see the effects of that as the longer maturity rates dropped harder on those two-day charts. if you look at a two-day chart of euro versus dollar, you can

see weakness creeping in there. foreign exchange traders say it's because on november 1st there will be new derivative rules. if you don't own spanish debt, you're not going to buy them. derivative changes coming. last chart, dollar yen over two days. you can see that the dollar is losing steam and had had a nice run. we need to go to bob pisani. maybe there's breaking news. >> all right. we're open. $19 here for whitewave. 14 to 16 was the range. priced at 17. opened at 19. we'll have the ceo in just a couple moments. back to you. here's the families. just get a shot. babies are here. families are bringing their children in. this is our man. his daughters standing right here. this is america. this is capital formation. this is the biggest day of a lot of people's lives here.

shareholders comie ining in. this is what america is. one reason i like being down on the floor. >> this leads the question of what to do with the company, dean foods. dean foods owns much of whitewave and intends to spin that off. dean foods is looking to sell morning star business and then it will have its fresh dairy business and what sort of valuation do you put on a fresh dairy business at a time when dairy costs seem to be rising. for dean food shareholders, that's a question with whitewave ipo. >> on "mad money" we used a $20 price target using a breakup basically confirmed value. this is a high growth business, white wave. and really dean foods is just the old commodity business. you get a really nice boost for the rest of what they own. i like this stock very much. >> does the broader consumer environment support growth trajectories in premium? anything premium in this case

premium dairy? if people are trading down from chipotle, for instance. >> that's great question. if you can genuinely feel -- people this is healthier. milk is like soda and this is a step up. dean isn't going to say our milk business is bad. the whole food halo is one of the most important left in the market. people don't trade from healthy to unhealthy. no. they want to be healthy. >> chocolate milk. >> they have good chocolate milk. >> they have chocolate soy. >> chocolate pudding is delicious. >> we'll talk to dean food chairman and whitewave ceo after this break. as we head to break, look at the early movers on wall street. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused.

tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime... tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 trade at charles schwab for $8.95 a trade. tdd#: 1-800-345-2550 open an account and trade up to tdd#: 1-800-345-2550 6 months commission-free online equity trading

tdd#: 1-800-345-2550 with a $50,000 deposit. tdd#: 1-800-345-2550 call 1-866-294-5373. wooohooo....hahaahahaha! oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more.

celebrating ipo today,

whitewave. splitting off from dean foods. shares of whitewave are trading nicely. dean foods is down. we did get a downgrade. let's welcome whitewave. a large shareholder of dean foods. good to see you. >> good morning, jim. great to be here. >> you spoke to me clearly. you have a commodity business but inside that commodity business is a great secular grower. do you think you'll finally get credit for one of the fastest growing natural food businesses in the world? >> i think so. we're already getting credit from the time we announce d untl today we added over a billion dollars of equity market for dean foods. we got a great reception out on the road. really well attended road show. people excited about the growth prospects of this business. we're just thrilled.

>> i'm a big user. even though it's more expensive than milk, it lasts longer. constantly throwing out milk. do you think there are people that are all-natural food or people that say it's a bargain longer term because i can keep it in the fridge for a while? >> clearly if you are throwing milk away, the servings are more expensive if you don't fact yfan what you don't consume. if you want 30 calorie serving of almond milk on your cereal, that's a great alternative for a lot of people and it taste great. >> at my house you're not allowed to have that. none of that regular milk. my kids think it's an insult. this is a demographic trend, isn't it? >> if you look at how the product breaks down, it skews young people and young families. >> is there a difference between organic milk and regular milk? price points are different.

is there an actual dirchfferenc? i asked a number of pediatric n pediatricians and you get different answers. >> if you take chemicals apart from chemical basis and you look at protein and fat, there's no difference in that regard. organic is how the product is abused. no antibiotics. no hormones. no pesticides used in feed that goes into organic animals. there's a genuine concern about whether or not those things get incorporated in the food and that's what i think drives the organic milk business. >> i think the question at this point as we see dean foods trading lower off the downgrade to a hold, what happens to that business? you mentioned market cap added to dean foods because the expectation of whitewave. morning star, where are you with that sale and what happens to the fresh dairy business? >> as we started into this process, one of the key outcomes of the separation that we're

engaging in is to leave the milk business with just a rock solid balance sheet. that's what you're going to see is that the milk business is going to be positioned to compete incredibly well. it's a great business. it's a $10 billion business. 38% market share in the u.s. a category that's not going away. it's a big staple food product. dean foods historic has and will in the future make a lot of money in the milk business. it's a really solid business. eet to support it in its balance strategic endeavors going forward. >> either here or in europe, how likely is a consumer that's pressured to trade down from organic? is it a lifestyle choice once you make it you'll give up something else before you give up that? >> you saw this morning i have four little girls in my household. >> we have a picture of them. >> they're hanging out on the trading floor. >> there's no chance that my wife, molly is going to bring something nonorganic into our

household. there's a few things she believes in where our kids should be in terms of nutrition. that's where they'll be in our house. as you see conventional milk prices be more volatile because the organic bilk business is on a domestic market, you see people who aspire to be in organic market moving in. >> don't you gain a soy milk user and lose a fresh dairy user? >> i think the reality is that dairy alternative products, soy, almo almond, they are sourcing volume from larger traditional dairy products category. from whitewave's perspective, the great thing from whitewave perspective is that's a billion dollar of a $50 billion category. there's a lot of volume to source going forward.

i personally believe that the plant based alternatives will source from conventional dairy for the rest of our natural lives. i think that's a trend that's here to stay. >> you talked about nutrition and importance of it. obesity is something the country is focussed on. i don't know if you know the numbers but you may. in terms of sales at dean foods, what the are the sales of chocolate milk? i heard it's extraordinarily high. >> it's not single digits somewhere. >> i thought it was higher. >> in terms of total chocolate milk. >> i do love chocolate milk. >> you should try true moo ch e chocolate milk product. less sugar than regular chocolate milk. >> people said we had this drought. costs were up. some of these prices moderating. the scare of drought passed now

for you? >> it's not quite as dire as it was in the beginning. it never really is. the important part about this is corn is a crop. we are going to have another crop next year. chances are we won't have as devastating a weather situation as we did this year. i think if you look at the long-term here, you know, we should have seen, i think, late 2012 and early 2013 the peak in these grain markets and if we get decent crops, you'll see it come back to a more normal level. >> what happens to morning star? the estimates in terms of the value. is that what you're looking for? >> we have said we're out there in the market marketing this property. we're not going to comment about valuation until it's done. we have a great process and we're moving expeditiously through that process. >> by year's end? what's the time frame on the

sale? >> we're well in our process. they don't have a fixed time line but we hope in the near future we'll have completion of that process. >> i know we went a long time without seeing you on our air and then we got you back starting this summer. welcome back. congratulations. >> thanks so much. we're excited about it. hope to see you again. >> the ticker wwav. whitewave food company. watching apple this morning. up a quarter of a percent after still shaking their heads over the price action last night. >> it was amazing. some people would have knocked apple. it is about 13% lower not including today's actions from its highs reached earlier this month above $700 a share. it was reached on light volume. here we are in the rally back from the session on a technical basis positive for the stock able to hold some ground here. >> kind of embarrassing to watch the trading last night. people knew nothing and they're trading furiously.

the after hours people who trade in after hours performance, why don't they just take money and burn it in a chimney? unless you know what the company is saying, you can't trade on the headlines. just doesn't work. >> you have to be on the conference call which starts much later. we want to check on shares of expedia. you mentioned it in your mad dash. people always travel. some analysts are saying that a switch to new technology pl platform is showing large payoffs. expect aations were lower. nice surprise here in trading off that. a gain of 15%. >> only because i have that summit do i know that expedia fills up our rooms overnight. >> they do it. it's turnkey for you. >> they look inside and you have to give them access to your rooms and they book your rooms.

you come in. they cut you a check each day. they take their cut. they automated everything. when you go to a major company and say you want to come and stay at our inn. we don't handle that. that's expedia. talk to them. >> it's not every base we get to actually have you comment directly as a participant in the business. >> i didn't know how powerful they were. i didn't want to let them in. they control our reservations? people skip. people skip. no one can skip with expedia because you pay ahead of time. >> shares of priceline up 5.5%. >> yelp. >> and finally with a few seconds left here, jim, facebook faces the expiration. a big one coming on monday. after everything with earnings this week, how cautious are you in front of it? >> this is one i wouldn't be surprised to see the stock does not trade down because of that quarter. i think the shorts didn't all cover.

this is going to be it for people. >> let's get to rick santelli in chicago. consumer sentiment. >> october final university of michigan is 82.6. remember, 83.1 was mid month. that disappears. that one when it was released was a five-year high. this number is darn close to a five-year high as well taking us back to september of 2007. 82.6 our final read and now officially follows the final read in september. back to you. >> all right. thank you so much. the dow almost exactly flat on that news. "squawk on the street" will be right back. between listening toe numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. yeah, you -- you know, everything can cost upwards of...[ whistles ]

i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade. 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. so they can focus on keeping the world moving. with xerox, you're ready for real . between black and white on keanswers...world moving. ...and 1,000 shades of grey

duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. welcome to the world leader in derivatives. welcome to superderivatives.

it is with profound sadness that we report a cnbc tragedy. our head of operations here two children die. there are no words to convey the magnitude of this tragedy. we can come together to express our unwavering support for a friend in need.

all of us at cnbc and nbc universal will be there kevin, marina and their family. we ask that you keep kevin's family in your hearts.

welcome back to "squawk on the street." let's get the road map for the next hour. a lot going on on this friday. we'll kick it off with apple's fourth quarter miss. will the iphone mini give the next quarter a boost and how many iphones 5 do you need to sell? >> disappointing the street so far but with third quarter gdp coming in better than expected, are we gearing for another move higher? amazon posting the first loss in a decade as operating costs are up 28%. are concerns over the miss overblown and how will the kindle stack up this holiday season? >> can a las vegas hotel room actually make you feel better. mgm grand thinks so. we'll take you live to sin city

for the launch of a new wellness initiative. back to fourth quarter results which disappointed as ipad sales missed targets. revenue above estimates. shares of apple are trading slightly lower at this point. guys, good to have you both. >> good to be here. >> i want to ask you first, do you think that the price actually seen in apple traded lower in post-market session yesterday and then it recovered and it's holding in there. is it a reluctance to not want to be out of apple shares as you go into what has been a strong quarter for apple? >> i think there are two things. bulls are happy about revenue guidance and management comments that they are making more iphones today than they were earlier in the month. there's clearly good indication that there's going to be strong supply which has been a factor

in the phone sales. on the bearish side are people who can pick on things like margin guidance coming down quite a bit. it's highly understandable. a lot of new products. they expect 80% of the revenues to come from new products. lower margin because of where they are in the life cycle and they'll ramp up from here. it's a great opportunity to buy. we think they're going to have a great holiday season with iphones and ipads and they're going to do well this quarter. margin will have upside based on what they guided. >> are these things understandable or are we making up excuses for apple? 36% in margins for the fiscal first quarter. that is the lowest level in about four years. they have a lot of new products. they can't keep up with demand so you risk the customers who can't get hands on an ipad mini. might go to a kindle fire or a nook. >> that's a great point. there's been so much new products and this is an opportunity for some of the

competitors and what i think is really interesting, my take away is that even if you are going to look beyond this next quarter, think about this. for calendar 2013, we'll be on the verge of something we have never seen with apple before and that is that we may have a complete year of to see what the true demand is. we really haven't had a quarter of where we haven't had supply issues until about a year ago when the print was 1378. i'm thinking consensus is 50-53. if they solve the supply issues, i think 60-65 over the next year in terms of earnings and that's the next big thing for apple is getting the supply chain to match up with demand and let's see what this company can really do over a course of 12 months just not a quarter or two but what they can earn over the next 12 months. the numbers are higher than what people are thinking about right

now. >> somebody e-mails us talking about worries about apple not being as hot a product overseas. she says she has a german friend who said you should go out and switch from a microsoft product to an apple product. no. it's too expensive. she said why don't you want to do it? i need office products. she said you can get office on a mac. she said it was like pulling teeth trying to get the european to graduate into apple. is that reflective of the broader environment overseas and is that going to be a problem? >> clearly it's the high end of the market. clearly a lot of followers who will follow it and keep buying the new product. and in overseas market you'll find a lot of people who are more cost conscious and will buy products that will be cheaper but a different type of value. those are two different types of markets. we think within the market there

is a lot of opportunity. as david just pointed out, next year is going to be great year for them because they can achieve demand and supply balance in most products. >> it's going to have to be. if you have a 750 price target from here, you are suggesting that the stock can rise 25%. given where we traded yesterday and the fact that momentum has been lost from it, that may seem -- most people watching this would hope that to be true. the skeptics would say momentum is out of this stock. who else will buy it? >> it's basically as we go into the holiday season, we get more data points about iphone production. they'll launch in china this quarter. it will be in over 100 countries. as we start getting data points they are getting into the holiday season where we see a lot of people that can't get back into the stock. that's what we think going to --

next year we'll have more distribution of the products. it should help us get there. >> when you were speaking about calendar year 2013 being a big one for apple because you're on the verge of seeing what true demand is, i read that as you're entering a period in which there's uncertainty because there's no major product upgrade or a product cycle except for maybe apple tv and maybe apple tv and that will happen likely in the spring of next year which leaves many, many months in which there's no huge new product cycle to drive apple's earnings. in your view, is that going to be a period where the stock doesn't have a catalyst? >> i don't think so. what we've seen over the past few years is every now and then we'll get a clean earnings report, supply and demand is in balance an we have a new significant product upgrade. people sit on their hands and defer purchases. if you think about the product lineup right now, the oldest product right now is a mere four

months. so again, this is going to be a different time. not a different time frame but reality with apple where we see the true earning power of this company. i submit between now and christmas, it's going to be like running of the bulls or running of the bears if you will. within just one month, all we're going to be talking about on apple isn't new products. it's how crowded the stores are. it's a different paradigm if you will. a different mindset. i welcome it. i think it will be surprisingly good for apple bulls. >> great to speak to you both. >> thank you. >> speaking of apple, the tech titan is reportedly in talks to license music for a custom radio service likely to be a direct competitor with pandora. julia boorstin joins us now with more on that story. >> that's right, carl. apple and the music labels are in ongoing talks to launch an ad

supported streaming service which could present a threat to pandora. apple teedeals are on track to final before the holidays. look at that drop. it's rebounding this morning. jpmorgan out saying pandora is a buy as it will continue to make money on mobile advertising regardless of apple competition. pandora stock dove in september when news of apple's move into the space was first reported. pandora dominates internet radio and is available on more than 600 devices but about half of its listening is on apple devices unlike internet radio which set federal rates, apple negotiate its own deals to offer ondemand streaming which would be similar to another free service. apple would pay the label licensing fee and ad revenue which is a point of concern for the labels as apple has neither

a dedicated sales team or nor the best track record with ads. apple isn't the only tech giant threatening pandora. last monday microsoft offered the free service. apple's move into this space makes sense. it wants to profit from the ways people listen to music on its devices and like facebook and google, it sees opportunity in this new surge in mobile advertising. carl? >> julia boorstin, thank you so much. >> incredibly important development. it keeps cropping up on the program. there's something generic happening here. let me give you another example. apple i believe is also working on something called i travel which will be an online travel agency for want of a better expression. google and apple and microsoft also going into this particular area of internet with music. all encroaching on the areas where we see so many small

specialized intercompanies at the moment and a lot of them -- i see you are still there could be in difficulty further down the line. we don't know where apple will go next and what business it will challenge. >> absolutely. i think the thing with apple is that it wants people to stay within its ecosystem. it wants to give people a free music service to sell them songs rather than people listening to pandora on its iphones, it wants them to stay within that itunes ecosystem and that's how it is trying to do that. i think what we see with microsoft as well is all of these companies are trying to keep people on their devices in their ecosystem using their search tools so they can capture you will of that revenue opposed to going to expedia app in the example of travel. >> huge moving forward. >> good for all of us to have all of these guys fighting over our -- a volatile start to earnings season and race for the white house just days away. what does it mean for the markets?

we'll check in with pimco and get their take. and east coast is bracing for hurricane sandy's landfall. we have a live report in just minutes. a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.

[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪

tight turning, fun to drive 2013 smart. we call this our mission.mpany, green toys teaches children that if i have a milk jug and i stick it in the recycling bin it can turn into something new. chase allows us to buy capital equipment to be able to manufacture in the states to the scale we need to be a global company. with a little luck green toys could be the next great american brand. find what's next for your business at chase.com/mainstreet >> neil joins us this morning from beautiful newport beach. good to have you back.

>> great to be here preside. >> bill taking his parallel between our own fiscal environment even farther comparing us to one of the characters in breaking bad. we know how that turned out. with that in mind, how do you hedge the possibility that the cliff is not at least fixed for the short-term in the short-term? >> our base case scenario is that roughly two-thirds of the fiscal cliff will be deferred. we think about 450 billion will get kicked the can down the road for six months or a year and $250 billion will end up still hitting the economy. our outlook is one of muted growth. it should not tip us into recession. there's a lot that can go wrong. the part that's really hard for us to quantify is how much damage democrats and republicans

will do to the economy with their fighting. just like a year ago. we didn't default on the debt. they raised the debt ceiling. that was the right thing to do. it kept businesses and individuals on the sidelines. that's the part we're afraid of right now. >> there's already cover of "the washington post" this morning from nam saying uncertainty we have seen cost us a million jobs. sounds like you're talking about close to 0% growth opposed to 2%. >> maybe around 1%, 1.5% growth next year. for the next several months, there aren't many upside scenarios. the election obviously has a lot of uncertainty. there's still a lot of uncertainty coming out from europe. will they keep the eurozone together and reform economies.

the next few months i would expect to see increasing volatility toward the end of the year and not big catalyst for upside in equities. there is downside potential and that's what keeps us very cautious right now. >> there's a consensus view that i hear more often these days. you may have heard it. i think i know your answer. basically it goes along this line. we can take the fiscal cliff. if you're worried about the deficit, we have 5 trillion reductions over the next few years that will take care of that. do you think that's an argument that's got anything? >> not a rationale argument. if the full fiscal cliff hit us, we would be back in a recession. it's very hard to tackle these major structural reforms when you are on your back, when you are fighting from a position of recession. it's much better to tackle these even if you are growing moderately you're in a much stronger position and so we need to keep the economy growing in the short-term. i think bernanke is doing whatever he can with monetary policy to try to buy time for

the fiscal authorities to make long-term structural reforms but then we need to tackle entitlements and tax reform in a comprehensive manner. that's the upside. if the congress and executive branch can come together and make tough choices, not easy choices, tough choices, then the markets will rally and we'll see upside from here. >> i want to go to your stock picks and specifically samsung on a day when we had apple earnings yesterday. samsung earnings overnight. is samsung in your view an anti-apple pick? do we have to see apple falter for samsung to succeed? >> we don't think so. the smartphone market is a huge global market. there's absolutely room for both samsung and for apple to do well and to thrive and so samsung is still one of our top positions. we trimmed our apple position over the last few months and only have a very small apple stake today. we still are long-term optimistic on samsung and at the

right price, we may become buyers of apple again. >> what happens to samsung if apple chooses to cords with samsung in terms of using it as a supplier of components. >> that's important. what if china stops doing business with america. it's a complicated business that are interwoven. it's in apple's interest to have a strong, healthy samsung as a p partner and supplier and vice versa. >> good to see you. we'll see you next time. >> let's stick with the subject of earnings. keeping a record of which companies are coming up, it says here with the worst excuses for their big misses. do you still blame the ceos? >> you know what? it depends. we'll blame all sorts of things here. deck the company put out bad guidance after the close yesterday.

they didn't just blame the weather. they blamed the hot weather, mild weather, cold weather and the warm weather. in fact, deckers mentioned weather 40 times on its earnings call. while they were at it, they blame the economy in europe, economic uncertainty and growing trend of buy now wear now which pushed back selling season. in other words, everything -- wait a minute. they also blamed the olympics. while these are legitimate excuses, the critics think these excuses deflect from a more critical issue at deckers and maybe the shoes are not the fashion trend they used to be. a bigger issue with deckers is who knew what when? the stock as we reported yesterday after 4:00 took a steep dive in the last 30 minutes of trading just before the bad news hit. meanwhile, over at diamond foods which is a name we haven't mentioned for a while, it has nothing to do with excuses but it has everything to do with explanations which we're still

waiting for. in the midst of earnings news yesterday, the company announced it is still working on its long awaited restatement of two years worth of income statements in the wake of improper accounting of payments. now includes two additional quarters. the company has been working on trying to keep itself listed on the nasdaq. still in an interim period there. simon, back to you. >> buy now, wear now. i remember that through the weekend. >> you do that, simon. you buy now and you wear now. >> do i? >> i would imagine. you are a fashionable fellow. >> united airlines pilots are fuming after a removal of a safety device. we have details next on the program. still to come, a vegas first. a shower infused with vitamin c arriving in sin city today. >> how does that help you? >> would you pay 20% to 30% more to stay in a hotel designed for the health conscious traveler? we'll take you live inside the

debut of the wellness rooms at the mgm grand next.wo . and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. it's just common sense. 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.

they optimized our data center and got us on the cloud. they even sent tour champion, paula creamer, to help with charles' swing. maybe don't do that. that's not good. no! his job isn't to look good. it's to make the clients look good. oh my goodness! i can't help you. that's what i thought.

if your tv were a glass of milk, zeebox would be a double chocolate chip cookie. when they unite...magic. cookie! [ male announcer ] and anyone who thinks otherwise doesn't deserve the extra chocolate chips. download zeebox free, and make magic when you watch tv.

melissa, since 9/11 cockpit safety has been a priority to the pilots wonder why united removed this which came preinstalled as standard equipment. united took possession of the boeing dreamliner, first of many it would get last month and pilots confirm the second barrier is gone. it drapes across the galley to prevent someone from rushing in. why take it out? federal rules do not require the second barrier. in this merger, the planes coming in from united almost all of them have it and none of the continental planes do i'm told. the airline tells cnbc flight security has various components with secondary barriers being one that we use in different combination. security matrix can vary from one type of aircraft to another. we're thorough in carrying out

our security responsibilities for every flight but safety and security of our employees and customers are our top priorities. pilots are not happy. they sent management a letter saying if safety is a top priority, stop stripping them of the safety measure that guarantees cockpit is protected. john russell is a united pilot and union representative. >> to remove the barrier, what are you telling your passengers? what are you telling your employees? you tell them safety is a priority. you are telling them something different. >> and this letter was written over a week ago to united ceo. he came over from continental in the merge. he's the widow of united captain whose plane was flown into the south tower on 9/11. >> i was indignant. i was furious. to install these as standard equipment in an airplane and for united airlines to pay extra to

remove these barriers when these barriers are needed. >> she has not heard back from the airline. back to you. >> important story to watch. thanks so much. amazon posting its first quarterly loss in a decade. shares are higher this morning. what's behind the move and how will kindles stack up against the latest mini addition.

one hour through the trading day. these are the stories we're talking about. university of michigan's consumer sentiment index posting below the forecast and down from mid month levels. devry shares are soaring. and roller coaster debut for whitewave foods opening sharply and then wiping out its gains. trading 1% below the ipo price of $17 a share.

dean foods from which it was spun off trading down by 11% as well. now back to another earnings miss from last night. shares of amazon are up today after falling slightly in after-hours trading. the first quarterly loss in nearly ten years was posted. companies saying the law stem from the ownership stake and living social. anthony is internet media analyst with barclays. welcome back. >> how are you doing? happy friday. >> same to you. your report titled great consumer brand troubled stock. walk us through that and then tell us why it's up today. >> i think it's up today because you have some relief that earnings revisions weren't negative. they also weren't positive. you have a company that trades at 100 times next year's earnings. 50 times 2014 with revenue growth starting to decelerate just a bit one would think that we should need positive earnings revisions for this stock to really work and fulfill that high multiple.

>> your current target, you were at 230. are you still at 220? >> yes. our target is based on 25 times free cash flow. the thing here is that -- the thing here is that people think they're going to get a positive earnings revision in january because we got that earnings revision this year, right? so the stock actually was great in the first quarter of 2012. hedge fund investors i talk to want to own it into the end of the year. if you look at performance, the stock went down each month of the year last year and it usually declines in december. it was down in december each of the last three years. you may not get gratification or positive earnings revision until we get to january and of course company spending aggressively fundamentally on media content and data centers. it can't even guarantee that we'll get a lift in operating margins when we get the next report in january. some uncertainty here. >> i many, you know, it may have gone down a few months but it's

gone up a lot over the last year as we see right there, anthony. investors seem to have more patience with this name perhaps than any other name out there. why don't you believe that will continue to be the case? >> it's a fantastic consumer brand and people that use it love it. the thing is you've got a company that is taking corporate profits and excess free cash flow that may go to equity holders and reinvest into lower prices and convenience to the consumer. they are sucking out margins from the rest of retail. the question is when do shareholders get gratification or returns on amazon strategy? does satisfying the consumer always mean that in the long run you're ultimately going to satisfy the shareholder? i'm sorry, shareholders are greedy and want earnings and free cash flow. we don't have that fl a.rom ama. we have to look out two to three years to see the possibility of that. i think people have been patient

with it because revenue growth has been awesome. now we saw in the third quarter that revenue growth is slowing just a tad. fourth quarter guide is for another decel. if the company grows at mid 20s or low 20s instead of high 20s, you have a top line decel. i love the brand. i love the service. i'm having hard time getting into that shareholder value. >> >> a $2 million fine. the citi fine, the journal says, is for disclosure of confidential information regarding facebook.

mahaney terminated. we'll bring you more if we get it. you own more than 34,000 shares of amazon. channing, if you're going to go short into the holiday season on amazon, you better be sure of yourself, right? >> we take a little bit longer view than anthony. you know, what we're focused on is gross margins. that's what is really going to determine the value of the stock going forward to us. amazon has been in a transition for the last two years. really since 2010 it's been investment. investment and fulfillment centers and investment in technology. we see that management team is making a big investment in digital media. we think that will pay off. there's a huge investment there. margins are pumping along the bottom. if you look back to 2010, margins were in that 4.5% range. we think the stock will get back to that level once we get through the investment phase. the key is how successful is

digital going to be? digital media is 13% of revenues. if they continue to grow, they are higher margin product categories and stock could see higher margins in the future. you have to be patient. >> can i speak to that? >> is there a point at which even shareholders say you cannot -- it's your money. we're not going to let you spend it the way you want all of the time. 100%. is there any discipline imposed by shareholders? >> it's why it's a 1.5% position in our portfolio. they have a great track record. people question when they brought third-party retailers in. they questioned them with amazon prime and he proved them wrong. he does have some wiggle room. going forward is going to be tough. as we move into digital, wyou'r not competing with apple and you're competing with google that have established networks on digital media space. the road will be tougher. it's a challenge.

it's not a foregone conclusion that amazon is going to succeed over the next ten years. they're in position now. we see margins going up. kindle fire is getting traction. necessary evil to get into this media space. it's a big question mark. can they be successful in media? if they can, we think stock will move higher. if they have to rely on lower margin general merchandise in electronics, the stock is overvalued at this point. >> anthony, i want to go back to the news that we just broke that mark mahaney of citi has been terminated. the termination follows the $2 million fine from regulators over the disclosure of information surrounding the ipo. as an analyst, what sort of information could you imagine that could be surrounding an ipo and should every analyst who covers facebook be a little bit nervous at this point? >> i think you know that i can't

comment on that. i just can't comment. can we go back to the amazon? i want to just talk about what was said about the bull case on gross margins. it's interesting. so one of the bull cases is that amazon gross margins are expanding and they have in the last two quarters. operating margins are not. so you have cyclicality in the margin that will come back. the reason they are expanding is because of third party. fulfillment stand alone. that requires investment in big fulfillment centers. you can't look at gross margin in isolation. same with amazon web services. all of the data centers that amazon invests in require operating expense. on the media content, you look at the content deals they're doing for amazon prime. that's a free service. they're giving that content to the customer. it's a subscription service in some ways because you pay for it with $79 in prime. we have seen with netflix that business is not necessarily an

economic business in terms of returns. so i don't think -- i have sort of changed my mind on this. i don't think we can look at gross margin in isolation for amazon going forward. we have to look at the fully loaded operating margin. >> i would agree with that, anthony. you look at costs to get sold and that's not include. third party sales are a big part of that margin expansion story. i think the key is that digital. if they can be successful there. i would also say when you look at the fulfillment centers, you know, they'll build that out and at that point there will be less investment there. so that's also going to boost. is it going to be a game changer? probably not. the investment mode they're in right now is impacting margins and we can argue about what extent of that will be. i would look out if you're investing in a stock not at the next quarter but next year or two if you want to play the stock. >> what fun is that?

anthony, thanks so much. we'll see you later. >> thanks. have a great weekend. >> we do have breaking news on facebook. kayla tausche is back at hq. >> federal agents arrested a new york state man who has in the past sued mark zuckerberg claiming he has a contract granting him 50% of the company. now, we expect the details will be unveiled a little bit later today. it is believed that the charges do relate to that disputed contract. he sued facebook back in 2010 claiming the contract went back to 2003 and alleged contract between him and mark zuckerberg. facebook denied this claim saying that he doctored documents. the legal team quit in june. we haven't heard much since then. we understand he's been arrested by federal agents today. >> thank you very much. meanwhile, extraordinary new details of how he was ousted from citi. should the bank have been more fort coming from the beginning?

the former s.e.c. chairman will join us next on cnbc. for your legal matters. maybe you want to incorporate a business you'd like to start. or protect your family with a will or living trust. legalzoom makes it easy with step-by-step help when completing your personalized document -- or you can even access an attorney to guide you along. with an "a" rating from the better business bureau legalzoom helps you get personalized and affordable legal protection. in most states, a legal plan attorney is available with every personalized document to answer any questions. get started at legalzoom.com today. and now you're protected. get started at legalzoom.com today. wooohooo....hahaahahaha! oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more.

this morning in "the new york times," pandit was presented with three options by the company chairman according to the report. resign now, resign later or get fired. harvey pitt is with us. good to get your insights. we had you on during the day in question. a lot of questions about the events as they went. "times" reporting here is most likely quite accurate. was there an obligation on the part of citi to tell us what was going on opposed to presenting it as his decision which appears to not be the case. >> this makes a mockery of corporate disclosure requirements. i believe it will be seen as a violation of the federal

securities laws. >> why? the process described here is one that's gone on at many companies in the past. it's not that rare that when they want a ceo out, they tell him but they plan for it in a better way perhaps and it is presented as a voluntary resignation. why is this any different even if it unfolded over a very short amount of time. >> what makes this different is that there were specific concerns about pandit's leadership and that this was a board decision. investors and the investing public have the right to understand what the board's processes were. the fact that pandit chose an option and therefore chose voluntarily to leave is one thing. the rationale for his departure and the fact that it was at the board's impetus is something that should have been disclosed.

i don't think you can play fast and loose with information like this which is material to the public. >> although the stock didn't actually -- do they have a case to be made here? they didn't really suffer losses. the stock did not react negatively to the news itself. does it come into play at all? >> that would only come into play if private parties sued. the s.e.c.'s concern would be is this the way we want corporations to handle their disclosure obligations and in particular the person who seems to have made the most affirmative statement was mr. o'neill who said this was absolutely voluntary as i recall. if that's true, he has a lot of explaining to do in the fact that the stock didn't move is not relevant in terms of what the disclosure obligation should have been. >> harvey o'neill is the

chairman of the board and so e, you know, if it is found that there were federal security laws broken, what could happen? what could be the penalty? what could be the punishment? do you think the s.e.c. wants to make this an example because it involves a chairman of a board? >> the s.e.c. has a lot of authority including the power to seek from a court an order that bars any person that violates the security laws and commits what is deemed to be fraud from serving as an officer or director of a public company. i don't know that this will be that kind of a case and all of the facts will have to be assessed but it does strike me that his conduct clearly contradicts what the spirit and letter of disclosure law is supposed to be. >> i think we sort of covered this on the day of but the

difference between a regulator taking aim and shareholder filing a suit as a result of these facts, does it make a difference? are they open to shareholder litigation? >> they may be. the fact that nobody suffered any damages makes this an unappealing shareholder case. some might argue that that would be relevant even if a regulator's case but the regulators will look at the nature of the conduct and the shareholders would look to recoup losses. if there weren't any losses, there's really no lawsuit. >> are you saying they would have been better off saying nothing? is there an obligation to say anything or only because they said something that seems to have not been true? >> this is an affirmative -- it seems like it's an affirmatively false statement. the law doesn't necessarily distinguish like -- between those. i would think they would not have been better off saying

nothing, but given the choice between saying nothing and lying, i think saying nothing was a better choice. >> usually is. harvey, appreciate it. thank you. still ahead in the show, can a las vegas hotel room actually make you feel better? the mgn grande in sin city hoping to do just that. we'll take you live for the latest on mgm's stay well rooms.

vegas gets a first today. hotel rooms designed to make you more healthy. the 44 wellness rooms debut at the mgn grande. each room has features designed to reverse jet lag and better regulate your body, while they say removing toxins and allergens. the hope is that health-conscious travelers will pay 20% to 30% more to stay in them. we have the features, co-founder, and president and coo of mgm grande drove the project through. both of them joining us live. thank you for joining us. we actually sent a camera crew to the rooms. >> great. >> the first thing we shot here is the shower. >> yeah. >> that injects -- look at the

shower -- injects vitamin c into the stream. what is it for? >> vitamin c is great for your skin and hair and scripps cletr chlorine from water. guest enjoy smoother skin, better hair. >> the lights that mimic dawn and blue flashing lights that remove jet lag. >> the dawn simulator is the scientifically proven best way to wake up. it gently lets you awaken. and the flashing lights make you more alert and energetic. >> all of the major hotel chains are now massively investing to innovate in this sort of way. we'll see that over the next year, 18 months starting to come out. why did you choose this idea? uf got a big choice at mgm. you could take any brand, any

innovation. why this? >> we're constantly looking at ways to improve the guest experience. at the same time improve our growth opportunity. and we were so impressed with the research they've done on the products, and the studies we've done, we found that there is a customer that is inspired by this. they want this when they travel. this is their lifestyle at home, why not bring it to las vegas? >> will they pay 2 % or 30% -- 20% or 30% open? as you open today, are you able to price at that premium? >> so far we've booked over 300 room nights. today's the first check-inment and we thi -- check-in. we think the premium we're charging we'll be able to get. >> how much is the upgrade to make these well not rooms? i'm wondering how long it takes to recoup the costs. >> it's hard to dedicate the cost of the wellness rooms because it's part of a $1160 million room renovation that we just completed. was combined in the efforts with

the 44 rooms that we turned into stay-well rooms. >> you've done specific work on. this you believe the cost, additional capital investment, be it in hotel rooms or real estate, is quite small. therefore, it is a huge return for entrepreneurs and therefore major business or for a lot of people -- >> we do believe that. we've learned a lot from the greensboro indust green industry and enhancement costs to green rooms. it's comparable to green or mood certification. >> green saves energy. so it saves on costs. wellness rooms, you can't -- it doesn't trickle down to the business p&l, does it? how -- >> we think the market opportunities for wellness is tremendous. it's the fastest growing industry in the world. there are travel-oriented wellness consumers. >> let me ask a final question. groups and corporates were the first part in 2008 and they've been back -- i hear the

competition for conventions, putting it away for municipalities away from vegas is huge for next year. how are your bookings? >> they're absolutely -- bookings look strong for 2013 and going into 2014. they're almost to the point where they were before the downturn in the economy. so things are really looking good with the convention business. >> nice to meet you both. thank you. >> thanks. >> thanks you to. see you tonight. simon, see you in 30. we'll talk a little bit of europe, as well. if you're just joining us -- we'll do the tape in a second.

when you take a closer look... ...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. let's develop more stars in education. let's invest in our teachers...

...so they can inspire our students. let's solve this. welcome to hour three of "squawk on the street." here's what's happening so far. >> we need to put in place a framework so that markets look and see that after the economy recovers, whenever that comes, it will take time. after the economy is fully recovered, that the nation's finances are sustainable. >> we need to have both sides kind of go -- one hand, $250,000 in income, on the other hand, effectively infinity, they need come together in some way or

we're not going to have a deal. >> our first look at third quarter gdp, 2.0. 2%. >> you're in some weird mode. whatever is said, if it's positive, it's a lie. i'm not buying that. these are good numbers, reverse the market. it's for real. >> some of the reviews have been even rougher from microsoft which this two presentations yesterday as we know. one for windows 8 in terms of running it on everything else, then for the surface. some reviews have been brutal. >> is $39 too high? when you go into an apple store, do you go, this is $39 too high? i got to go -- i need to see what the dollar tree has. [ bell ] [ applause ] >> now our outlook for the u.s. economy is one of muted growth. but strong enough growth that that $200 billion or $250 billion fiscal drag should not tip us into recession. good friday morning.

welcome back to post nine of the new york stock exchange. check the markets on a day where the dow is in the red. we started the day out relatively flat, up a little bit. we loftst some ground. s&p 500 down 6.5. white wave foods, the dean foods spinoff, making its trading debut at the nyse. shares opening at 19. pulling back a bit, trading around 17. dean foods also down sharply. the ceo was on the show earlier, addressing the company's balance sheet. >> a category that's not going away. it's a big staple food product. and dean foods historically has and will make money in the milk business. it's a solid business. now it's going to have a really solid balance sheet to support the strategic endeavors going forward. >> meantime expedia, priceline, some of the biggest gainers after expedia reported better than expected results. and benchmark citing to buy at a

solid execution. a tale two of apples. the company missing earnings but selling enough white ipad minis to sell out in about 20 minutes. we'll find out which story should matter most to investors. plus, just as facebook seems to have found its footing, another lockup ex-police statlo. should you sell going into the weekend? then hurricane sandy bearing down on the east coast. we're tracking the storm and with several refineries in the path, what could that mean for oil prices? and apple on track to launch its own internet music service. the news spooking investors in pandora. we'll find out if pandora really has anything to fear from apple. that's coming up. we'll starts wi with breaki news. internet analyst mark ma haney being dismissed from citigroup. we have more what turned out to be a barn-burner of a story. carl, the termination comes in the face of a $2 million fine

that citigroup faced from a massachusetts regulatedor, largely concerning failure to supervise analysts. mahaney as well as an unnamed junior analyst in a consent order we just reviewed from the state of massachusetts, noting that mahaney gave reports to a reporter at the french capitol over revenue estimates for youtube, a subsidiary of google. revenue estimates that had yet to be published by by mahaney. the junior analyst shared a preview of the forthcoming reports on facebook even as citigroup signed a nondisclosure agreement with the social network in conjunction with that poip. t osteoporosis -- ipo. when asked whether that could be published, he said, "my boss would eat me alive." an interesting story for citigroup and the analyst community. a lot of them are quick to make comments. mahaney, according to the consent order, made the comments to the french reporter. then when the approval was

signed said he did not respond. going back on his words. a very interesting read if you pull it up. that's the latest now. >> also raises questions about the degree to which senior analysts like mark who was perhaps the biggest gun at ci citi in a lot of ways responsible for the junior team. >> i think that's exactly right. obviously the junior -- if you go and read this e-mail correspondence, the junior reporter was merely sharing it with a reporter at tech crunch to give a sense of how the street was viewing the facebook ipo. when you share the information with a reporter, you're opening up a whole other can of worms. it largely raises questions about maybe the culturn that group, carl. >> all right. thank you very much for that. now to the ipad mini. the newest gadget sold out on line. john ford tracking numbers, here with the latest. john? >> hey. we have at least one sign of a strong strong for the ipad mini less than an hour after opening at 3:00 a.m. eastern. the white mini sold out. apple won't be shipping many for

weeks. many who preordered the black version are being told it will arrive a week from today. it's hard to read too much in the first hours, apple tends to make fewer white versions and sometimes has a harder time puttingle this togeth le thilel putting them together. selling out of white minis might not be a huge deal. two signals i'll be looking for. one, will apple put out a release letting us know how preorders are going? two, we'll have to look at apple stores a week from today. will there be lines? will apple staff up like it's an iphone launch? even if the ipad mini preorder demand looks strong, there are a couple of things to keep in mind. apple made it clear yesterday that the profit margin on the minutesy y mini is blow the market average. it's clear it uses the same materials as the iphone 5. this is not cheap. if you're an apple noinvestor, i look at this as apple spending a ton of money to push devices

out and capture holiday demand? is this an invest that will pay off in the medium term? or thcould this be the new realy for apple margins? from what i heard yesterday, it sounds like this is an investment apple hope will pay off later. >> that is a key, key question, john. thank you very much. something that hasn't happened in more than a decade. apple missing earnings expectations for the second quarter in a row, and the company warns of a drop in holiday earning because its gadgets are so expensive to make. should you be bobbing for apple at these levels? eric jackson is an apple shareholder, founder of iron fire capital. still has an aggressive longer term priets targprice target an scott kessler, cut his price target from apple to 800 to 700. good morning to both of you. eric, everybody's worried, three quarters in a row. margins down. john asks the question, are we in a newi iity for margins?

do you care? >> i think margins are obviously a concern. and nestedably they're going to go down because -- i'm expecting that the volumes that apple's going to sell of all their products is going to increase over time. so how they manage that will be a key thing on earnings which is obviously a driver of the stock. now take a step back in relation to analysts' earnings for the quarter. last quarter they sold nearly 27 million fountains. -- million iphones. in the quarter, there were 440 million sold worldwide, smart phones or dump phones. apple hedge e only honly has a . i think it's reasonable to assume that more people will buy smartphones and apple will get a chunk of the business. you know, if they only got a 35% share of that larger number, we're talking about 155 iphones in a quarter.

and i think that's where we are headed a few years from now. >> yeah. scott, going from 800 to 700, that's not an insignificant move even though you keep the buy. what's your thinking? >> the thinking is pretty clear. over the last number of quarters, they've shown that the business is more product and hit driven than it's ever been. that increases the rate of challenge in terms of execution. also increases the volatility in the stock. nonetheless, we expect a very big and successful holiday season for apple. really no other company comes close at this point. and now we think with the ipad mini, folks who were looking for a form factor smaller than the ipad have somewhere to go other than amazon and google, for example. >> yeah. the big chats e-- chatter was pattern recognition.

they're looking for the sandbag. they've done this before, cautious guidance, come in three months later and beat it by a mile. is that trend getting tired? are they really going do that again, scott? >> it remains to be seen. it seemed like the guidance particularly in terms of gross margin which john was talking about earlier, that seemed particularly conservative. we understand that the ipad mini has higher costs, a new product. so's the iphone 5. and so's the new ipad. but the reality is that a 400 boun basis points sequential reduction seems important to us. >> you said $1,600 in three years or five years? >> three years. >> three years. you've also pointed out that we have seen corrections in the stock beyond the 14% that we -- hard to remember it's been so long. you say we've seen corrections as severe as 42%. are you calling for that in the near term? i mean, how much damage can be

done between now and 1,600 if that's what happens? >> it's hard to say. i think now we're about 14% below the all-time high of 705, just a month ago. you know, my -- my gut feeling is that we're probably close to the trough here on this particular pullback, about 14% which, again, not that all significant when you go back. i think since in the last eight years there have been between -- pullbacks of between 17 and -- you know, in '08, 52% in terms of pullbacks. they were always followed up by huge run-ups, sometimes a doubling of the stock or more. i think probably we're in a holding pattern at the beginning of this quarter until we see how the minis sell. i funding people get a sense that the minis are a hit, you could see the stock start to ramp back up again toward the end of the year. >> that mentality changes quickly as we know. guys, have a great weekend, thanks for your insight on a tough quarter to analyze. scott kessler, eric jackson.

at least one company is trading at some all-time highs. we have that back at h.q. brian? eastman chemical dating back to 1994 when it split from kodak. they reported late yesterday eps was a beat, revenues light. we've heard that story obviously in the entire earnings season. the key here is they increased their eps guidance not only above what they said before but also well above consensus. it's trading with heavy volume. back to you. >> all right. talk to you in a bit. now to the cme group. rick santelli talking some global stimulus and a lot of people, rick, think there is more to come in the near future. >> absolutely rights. -- absolutely right. almost as if the batman sign goes up, a big sign in the sky that says "we want more stimulus." you know what, it isn't the u.s. at this point. maybe it's europe, but i'm referring specifically to japan. okay? and you know, here's something fascinating. many people in this country think we're really unique. we have gridlock in the government. we have debt we can't afford. and we keep wanting to add more

and more, and the government's very ineffective at dealing with the problems. hence, the fiscal cliff. but it transcends borders. it's japan, it's europe, to some extents it's china. and the funny part about it is it isn't unique. they're all experiencing it. so japan, they're calling potentially for new elections, why? because the opposition government doesn't want to give more stimulus money. what has it done? so they might run out of money in november. it's like a bad rerun. we have a lot of people, a cross section of america on this trading floor today. they're from l.a., kansas city. >> miami -- >> miami. and when they walked on the floor, the first thing they said to me was, do you want more stimulus or not -- >> no stimulus! >> i'll tell you, it's just so funny how it just seems to transcend. we have some democrats, we have some republicans. but one thing seems assured now. whatever medicine is being administered, it knows no boundaries. really doesn't seem to be making a difference. and as we come to elections in

this country, we're so not unique. leaders around the globe had to deal with a crisis. and have they done it well? do you think they've done it well? >> no. >> no! >> are you proud of your leaders? >> no way. >> when you vote, are you going votes in the same people or vote out the incumbents, what i hear from everybody? whether it's japan, whether it's greece, whether it's spain which, by the way, 25% unemployment today, deterioration in the euro. we will continue to march on to try to fix what ails the globe. one thing we know for sure -- that the rerun we get over and over and over isn't funny, isn't interesting, and it isn't working anymore. carl, back to you. >> rick, the voice of the people. hard to argue with that. thank you very much. we'll come back to you in a bit. when we return, facebook has had a pretty solid week so far. that could all change on monday. for the second time since the ipo, a lockup on millions of shares will be lifted. we'll show you how you should be playing the stock ahead of the expiration. later, hurricane sandy barreling toward the east coast bringing both rain and snow.

we have a live report. plus how it might impact the energy market. mike rowe here at a ford dealer with a little q&a for fiona. 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.

you're taking a look at how facebook shares performed the week of its first lockup expiration in august. that was painful. a second expiration looms on monday. current and former employees of the social network will be able to sell shares for the first time. question is, how do you play it ahead of that expiration? victor anthony is a senior

analyst at topeka capital markets. kept his buy through the summer since the ipo reined in its price targets at 34. good to have you back. i guess the thinking, most people say, if you're liking it, if you are tempted at some of these prices and given the quarter you might want to wait. is that -- is that safe to say? >> i not that's safe to say. you know, i think they're entering the lockup periods with the wind to their back. it was a great quarter. they clearly refuted the bad news on the stock which is more -- which i thought was -- would have become a part of the revenue mix. it happened several quarters ahead of my expectations. but it was great. it was only on one -- they've since launched several other ad units, the gifts, free commerce, mobile ad network, facebook ad network, as well. and mobile ad installs. all of these setting up facebook to reaccelerate against in the fourths quarter. they're entering lockups with the wind to their back.

however, based on past history, i have no reason to believe that the owners of the stock won't sell. i don't know their liquidity issues, i don't know their time horizon. so you know, i wouldn't advise people to wait it out and then jump into the stock in a big way. i think the stock goes into the 30s. >> hard it put your mind in the head of an employee. >> right. >> there are tax implications coming here -- >> exactly. >> chances are this will be movement on it. what are expectations for the quarter we're now in? >> i think it's ticking it up significantly. say it was 14% of revenues in the third quarter. i think it will be 20%-plus in the fourth quarter. you're looking at mobile probably becoming roughly close to 50% of revenues over the next year and a half. so it's changed expectations. like i said, i think it's refutesed the bear thesis in a big way. i think the company fundamentally is on good pharmaceuticaling n ifooting

now. >> do you see big marketers come on line, basically refuting what g.m. said months ago? that is, we are in. they've proven the return to us, and we're going to be making investments on this platform? >> well, you know, i've spoken to several ad agencies, several marketers, as well, over the past few months. it's still experimental. they're running facebook, learning how to use it, learning the metrics. trying to understand the roi and how to benefit from the platform. but you're seeing the walmarts, seeing the amazons, the big brand advertisers, procter and gambles. they're advertising on facebook. they're on a desktop, on the mobile feed, as well. so they're coming around. i think when they learn how to use the platform better, i think you will see all of them rush in in a big way. >> finally, i don't know if you've seen the news on one of your rivals, mark mahaney at citi, on your beat. he's been terminated according to the "wall street journal." it looks at this early stage that it appears to have had something to do with a junior analyst, disclosing information, as well. does that weigh on the community in terms of how you manage your

staff? >> well, you know, i've only seen the headlines. from what i know about mark ma haney, he's a great analyst, great guy, i've met him. that's unfortunate. i think it definitely will force people to reassess how they function and work together. >> we'll see what happens with that on monday. thanks for coming in. >> thank you. when we come back, the u.s. economy grew by 2% in the third quarter. that was better than expected. still might not be enough to offset the effects of that fiscal cliff. we'll see what the ceo of blackrock had to say next. [ male announcer ] do you have the legal protection you need? at legalzoom, we've created a better place to turn for your legal matters. maybe you want to incorporate a business you'd like to start. or protect your family with a will or living trust. legalzoom makes it easy with step-by-step help when completing your personalized document -- or you can even access an attorney to guide you along. with an "a" rating from the better business bureau

legalzoom helps you get personalized and affordable legal protection. in most states, a legal plan attorney is available with every personalized document to answer any questions. get started at legalzoom.com today. and now you're protected. tdd#: 1-800-345-2550 this morning, i'm going to trade in hong kong.

tdd#: 1-800-345-2550 after that, it's on to germany. tdd#: 1-800-345-2550 then tonight, i'm trading 9500 miles away in japan. tdd#: 1-800-345-2550 with the new global account from schwab, tdd#: 1-800-345-2550 i hunt down opportunities around the world tdd#: 1-800-345-2550 as if i'm right there. tdd#: 1-800-345-2550 and i'm in total control because i can trade tdd#: 1-800-345-2550 directly online in 12 markets in their local currencies. tdd#: 1-800-345-2550 i use their global research to get an edge. tdd#: 1-800-345-2550 their equity ratings show me how schwab tdd#: 1-800-345-2550 rates specific foreign stocks tdd#: 1-800-345-2550 based on things like fundamentals, momentum and risk. tdd#: 1-800-345-2550 and i also have access to independent tdd#: 1-800-345-2550 firms like ned davis research tdd#: 1-800-345-2550 and economist intelligence unit. tdd#: 1-800-345-2550 plus, i can talk to their global specialists 24/7. tdd#: 1-800-345-2550 and trade in my global account commission-free tdd#: 1-800-345-2550 through march 2013. tdd#: 1-800-345-2550 best part... no jet lag. tdd#: 1-800-345-2550 call 1-800-790-3801 tdd#: 1-800-345-2550 and a global specialist tdd#: 1-800-345-2550 will help you get started today.

gdp coming in better than expected. the economy growing at a slightly faster 2% annual rate from july through september. steve leaseman breaks down the number and tells us if everyone is on board to believe it. steve, good morning. >> that's a good question. better housing, decent consumer numbers. the best thing you can say go dp is a number with a two on it sounds better than a gdp with a one on it. beyond that, the government avenues first look at third

quarter gross domestic product showing an economy that improved marginally from the prior quarter but growing too slowly to take up the significant slack in the economy. that's the important fact there. and a 2% growth level not enough to offset what will happen to the economy if we go over the fiscal cliff. blackrock's larry think on "squawk on the street" was straightforward and downbeats about the fallout. >> if it's another kick the can down the road, another small attempt to reducing our deficits, then i think we're going to have a recession in the first quarter and we're going to have -- we're going to have markets are going to be unsettled. >> what we saw in the data this morning is an economy we've been talking about for a while. consumer growth, the white line, it's hanging in this. up a bit which we saw in the confidence numbers, too. business investment, that's the yellow line, is flat to down. here's a breakdown of the contribution to the percent change. we get to the 2%, consumer spending adds 1.42. business investment and inventories takes off a quarter

point. housing up from a low number, chugging along there, up .3 point. trade detracting and government up 0.71%. a big part of that gain, federal defense spending up 17% for the biggi isgest gain since 2009. it follows straight quarters of decline. looks like the drought took away half a point of growth and inflation was higher than expected. still sluggish growth that faces a big challenge in coming months. i would say this is the economy the fed forecast when it decided to do qe infinite. >> i wonder, too, steve, given the make-up of the components. is the number more or less subject to revision than past quarters? >> you know, it's hard to say. i don't think there's any particular trend there. the inventory numbers will be rejiggered, probably the investor numbers. everything can come in. trade is a big factor, inventory's a big factor. hard to know, carl.

right now it just -- it doesn't change your mind, right? had the number been 2.5 or 3%, i would have said, hey, time to rethink the economy. 2%, 1.8%, six of one, half a dozen of another. >> we'll get a lot of numbers t. >> we'll get to the european close in 2:38. simon hobbs here in a moment. if we want to improve our schools... ... what should we invest in? maybe new buildings?

what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this. you won't just find us online, you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... all ] i'm with scottrade.

the european markets are closing now. >> a lot of attention stateside with the gdp number and earning. spanish unemployment always lingers, simon. >> yes. absolutely. absolutely. and 25% one and four. today you had the finance minister coming through to explain that and saying they needed more labor reform. to be honest, while they have their news conference in madrid, the bigger issue for many as far as spain was concerned is that you had the ue.u., imf, done a lot on banking. furthered the banking situation. that seems to have buoyed the markets. if you're in market, you're more focused now on u.s. affairs like the fiscal cliff for direction and arguably what's happening there. you've got a move higher. the result was we pushed down yields on spanish bonds. but the biggest story is this growing belief that spain is pushing out the idea that it will apply for the bailout and therefore the ecb will generally

buy their bonds and during the week you've had a gentle rising in rates, not serious, not dramatic. they are beginning to drift higher as people sell out of the margin there. spain is -- as we learned, is basically funded all that it needs to on the markets. this year the government more or less is talking about funding next year. will they bother to ask for a bailout before the end of the year? that's one of the next catalysts that many people in europe are looking for. let's look at where we are on the weekly performance. what's interesting is according to reuters -- and it's obvious really that more european companies would miss their earnings estimates than the u.s. because they will be more weighted to economies in europe which obviously are performing far worse than the rest of the world. reuters now says 40% of e.u. companies have missed earnings estimates so far this earnings season. whereas in the united states, it's closer to 30%. interestingly, during the course of the week, we've kind of traded the same on both sides of the atlantic. this is the top 30 blue chips or the dow. this is the top 50 blue chips

within the eurozone. similar for the week overall. for the record, more profit warnings for today coming through ranstad, a large dutch temporary employer. warning that conditions are deteriorating in france and germany. that stock down 5%. ericsson, what a business, selling those mass -- the equipment from mobile phones, down again today. marine harvest is the largest salmon producer in the world. i think that's got more to do with the environment and how many salmon they'll catch moving forward. they down. there are always bright spots. as jim cramer would say, always a bull market somewhere. bank of america is suggesting that you should buy strauman, a medical devices operator over in switzerland. that stock has done well. there you go, up 8.5%. and belgercom -- belgacom, deutsche telekom in belgium, raising estimates for next year.

>> have a great weekend,citement -- weekend, simon. >> thanks. >> pleasure. >> let's get to rick santelli at the cme talking bailouts in europe. of course, it's a big topic. and our head guest is dimitri. my first question is a simple one. let's start with greece and go to europe proper. do you think the current bailouts and revised bailouts and new bailouts ultimately going to work and save greece? >> i would say the simple answer is now. but you know, the european leaders haven't understood this. they applied the first bailout, and the results were abysmal. unemployment is unprecedented. people have 25% unemployment, their poverty is at the all-time high, and also i have the social

conditions that actually deteriorating. there are more suicides, soup kitchens and so on. to answer your question, no, it will not work. i think that the bailout will be passed by the parliament. but when supplied, it's going to give us again abysmal results. something different is needed. >> before we get to what may be needed, let's open to europe proper. we obviously would see what's going on with spain, and you know, yesterday reuters reported that the finance minister in spain said, listen, 95% of my funding needs for the year on done. but then you have the 17 autonomous regions that are crying that they need funding. can you weigh in on this, and also whether the medicine that's being potentially applied in spain's case is going to turn out any better than what you said about greece? >> well, one can understand very well why the prime minister of spain is reluctant to seek a bailout because as we know the bailouts come with very tight

strings attached. and even though some of the austerity measures have been applied in spain by the government, they expect those measures will become even harsher and avoid that. whether they will be able to ultimately avoid the bailout, i think it's a big question. as you say, the regions are expecting a bailout from the central government. the central government is running out of money. so unless something different happens in the -- in brussels and in berlin, i think we will see a repetition of what happened in portugal and especially in greece. >> well, dimitri, we have one minute left. if you right now were put in charge. european bailout -- in charge of the european bailout, what change would you make? making them simple or overreaching, do you have suggestions? >> yes. i would use a marshall-type plan for development in the countries of southern europe. those countries cannot be competitive and cannot be

competitive through an internal depreciation by having low wages. that kind of a competitive cannot happen because it will be erased to the bottom. the second thing is i would put a banking union so that i can have insurance for all the deposits, will avoid the bank runs. and the fourth thing is i'm going to try to create a fiscal union because a monetary union does not work. it allows the experiment to separate governments from their sovereign currency. this is something that has not worked and will not work. >> dimitri, thank you, a succinct wrap-up. back to you. thanks. bob, the market in your words, have disappointed everyone. >> this is why people go nuts dealing with the stock market. everyone was sets up for volatility today. going up or down, something happening. nobody was set up for nothing

because that's what happened. it's about apple. apple tends to be volatile the morning after earning historically. look what happens. apple opens, it's down about 1% but opened flat. that made people crazy. the markets are basically flat. the volatility level is basically flats. up and down a little, it's flat. and the volume is light. nobody was thinking that this was going to happen. everybody was thinking something was going to happen. now apple, traditionally volatile the morning. put up apple, i'll show what's going on here. q3, stock was down 4%. q2 next day, stock up almost 10%. then 8% -- they're set up, either options are up 5%, down 5%. and what happens -- it closes at 6:09 last night, opens at 6:09. nobody set up for that to happen. it's frustrated. the greatest number of potential investors that are out there. let me move on. you get the point. this is why people go crazy dealing with the stock market. let me show you other things of what's going on.

there's a little worry about the banks. they've been drifting lower all morning. they've had a fairly rough week. and this is the thing they're watching for, long-term movements around the net interest margins being weak. these banks are down 2% to 3% for the weekend or week again. let me show you the q3 earnings picture. so far, better today. remember, earnings basically have been flat for the quarter. but the big story have been the revenues. the revenues were expected to be up about 5% even just a couple of months ago. now it's down to 1.3%. that's been the story for the whole week. and that's how people are trying to adjust their numbers. there's been a lot of discussion about whether we should be taking down their stock exposure on this. barry ridholz discussed this the other day, bringing down exposure based on the weaker revenue numbers. he talked about the earnings cliff, not the fiscal cliff, as being more concerned to stock traders. i agree with the overall analysis. that's the news, the earnings cliff we're seeing now. >> bob, see you later. bob pisani. meantime, hurricane sandy is making its way toward the east

coast, expected to make landfall in a few days. could ruin halloween for a lot of kids. find out how the area is preparing in the northeast and the effects on energy prices. jack, you're a little boring.

boring. boring. [ jack ] after lauren broke up with me, i went to the citi private pass page and decided to be...not boring. that's how i met marilyn... giada... really good. yes! [ jack ] ...and alicia. ♪ this girl is on fire [ male announcer ] use any citi® card to get the benefits of private pass. more concerts. more events. more experiences. [ jack ] hey, who's boring now? [ male announcer ] get more access with a citi card. [ crowd cheering, mouse clicks ] [ male announcer ] get more access with a citi card. wooohooo....hahaahahaha! oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy.

how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more. hurricane sandy leaving a paths of destruction in the caribbean and threatening the east coast of the united states. the storm expected to make landfall early tuesday. our maria la rosa's live at the weather channel tracking the storm. maria? >> already beginning to leave

the bahamas. so that's good news for them. we're feeling the effects already on to the eastern coast of florida with gusty winds and squali weather. here are the stats now. still a hurricane, maximum winds at 80 miles per hour. slow to move a little to the north now at about six miles per hour. and that puts it about 25 miles northeast of the island. notice through tomorrow, we're still going to see the gusty winds on the east coast of florida from miami to daytona. high rip current risk, obviously when you're talking about waves 10 to 15 feet, that's not going to make for a very good beach day. but at that point, it will be on the move. of course, everyone want to know what's going to be happening next. i'm going to show what's not going to be happening. this is a look at all the computer models. we're not seeing any of the mcdonald el models take this away from the northeast. we're confident that between long island sound and the chesapeake bay, this will make landfall into tuesday. here's the official track. notice how widespread it goes inland. we're expecting not just those areas along the coast to feel

the impacts, but we're feeling it inland and likely for days, well into next week. >> yeah. a lot of chatter here at the stock exchange involves all the hotels close to us booked for next week. it's going to be crazy. thanks, maria. maria la rosa from the weather channel. sandy threatens five refineries with a total of 1.15 million barrels a day of crude capacity, in delaware, philadelphia, new jersey. how bad will the impact be on the energy market? andy lipow, president of lipow associates. joining us from houston. welcome. >> thank you. >> how dense relatively speaking is the northeast when it comes to capacity? >> the capacity of the refineries is very small, only the 6.5% relative to the rest of the country. and the northeast depends on supplies from europe, as well as canada and the gulf coast which are really going to be unaffected by the storm. >> yeah. you make the point that at least here in the northeast you might have some supply disruptions, but you're also going to have demand disruptions. can you explain? >> exactly. i mean, although we know that

most of these refineries are going to shut down and we lose supply, the fact of the matter is that business is going to close for several days up in the northeast, as well as airports will shut down. that's the mitigating effect to the supply disruption. >> obviously in hurricanes, you know, the old saying as you know goes if the wind doesn't get you, the water will. wind, rain, flooding, what is -- where are refineries most vulnerable when it comes to the elements? >> well, in the northeast in particular, i would say it's the wind affecting damage to some of the equipment that's around the refinery. i don't anticipate much flooding depending on where the eye of the storm falls, we've got the philadelphia area refineries, water" k can go into the river. unlike the coast where you is a storm surge preventing water from draining. >> we have made this broader move in crude which i'm curious to get your thoughts on. we've got a little relief today.

still, you know, awfully close to 85. where is that trend headed given the fact that we were trading north of here in a band north of here not too long ago? >> well, i see that crude supplies are quite amp ample. you look at north america with increasing production, i'm expecting to go to 85, then back to 82 to 83 just in light of higher and higher inventories and good production out of both saudi arabia and iraq. >> and then there's gas prices. you know, i've heard -- seen more stories in the media lately about how gas prices are going to fall 50 cents in the next 30 days. is that overstating it, or are we going to see immediate relief to the consumer in the next few weeks? >> i think it's quite overstating it. today we're at $3.57. by halloween, i expect $3.50. as a average in, a pharmaceuticals later to get around $3.35 to $3.40.

>> missouri's close to $3. some other states will catch up, too. >> in fact, if you look at texas, missouri, and south carolina, you'll already see stations well below $3 a gallon. >> if you were going to have a hurricane, andy, that did not hit the galveston coast, is the northeast the next worst place you could put it? >> well, it is because of the concentration of the refineries in the philadelphia area. of course on the gulf coast we've got 40% of the nation's refining capacity. so a hurricane here takes out a lot of the supply that the rest of the country depends on. >> right. we're so used to watching storms hit where you are. this time it's your turn to watch us go through it again. andy, thank you very much. >> thank you. >> andy lipow in houston. pandora taking a hit for the second day on news that apple is making a foray into internet radio. is it time for investors to just face the music? this is america.

we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! [ male announcer ] one pill each morning. 24 hours. zero heartburn.

welcome back to "squawk on the street." brian shakman taking a look at moody's, touching a 52-week high. great earnings, great eps growth. they raised their guidance, as well, by 7%. and of course it's up 5.5%. the most interesting thing, say what you want about ratings, their ratings revenue up 71%. >> yep. a lot more instruments to rate. that's for sure. thanks, brian. pandora meantime down about 2.5% now. the news that apple is launching a radio streaming service driving the stock down yesterday. the question is, will pandora be able to compete, or will listeners simply tune out for good? rich greenfield's co-head of research and media analysts at btig. good to have you back. >> thanks for having me. >> at first blush, you're dealing with a company in apple that has more money than god. does not look like a fair fight. >> you've got a company in n pandora that doesn't make money today. they are begging the government for corporate welfare in terms of relieving them or giving them

relief on their royalty structure which simply isn't going to happen, certainly not with this congress and i doubt in the next one. now you've got behemoths, not just apple, but microsoft launched a music service. you've got the big technology heavyweights can tons s with t in the music business, and people spend a lot of time, over two hours a day, listening to music. there's a huge opportunity to control out of home and in your car media that companies want to own. >> right. is this -- for all -- pandora has a decent subbase already. i listen to it every day in some capacity cd it get taken out? how does it survive in this new environment? >> well, imagine you get off work today at cnbc and want to drive to the garden stated mall. apple's getting in your car, they want to be eyes free siri. you say you wanting to to see the mall, it will note through apple maps, know where you want

to go, plot your course. you will say, hey, i'd like to listen to music, pick your type of station. siri will auto tune to that music and will know you're going to the mall, it will know what's in the mall because it knows exactly where you are because they own the device. they'll say, hey, would you like a coupon for starbucks? that will be the ad in the middle of the show. automatically it will go in your pass book. when walk up to the starbucks, the coupon will pop up on your phone. that's what apple's after. the control of the local experience. pandora doesn't control the phone. they don't know that information. this is going to be a serious competit competitor. and i think what might be most compelling for you to switch services is, one, they'll auto download it i assume to your phone, and it's going to have basically significantly more skips, it's going to be global. and it's probably going to have the ability to cache. you'll be able to go to a subway or airplane and still keep listening which pandora can't do. >> the ipad. so if apple is literally spinning aweb around the pan -- a web around the pandoras,

groupons, you make the point they're not just devices, they are really into e-commerce and local advertising. they want to know where you, that explains maps. is this all done organically, rich, or not just pandora, but anybody who has the tiny piece of that pie, can they be acquired, be a part of that party after being purchased? >> y >> well, anything is possible in terms of being acquired. i would be surprised if someone tries to buy pandora. doesn't make any money. anyone who wants to launch a music service, you know, the compulsory rights that pandora has are easy to do. what apple's doing is different rights. they're not going after the compulsory rights where you don't actually need label approval. my guess is the people that actually would want to compete with the so-called apple service that we're talking about, they're going to want rights that are far beyond what pandora has. buying pandora actually doesn't do very much. i mean, look, if it falls to a low enough price, we've got a 3.75 target, this is our first short idea, anything is possible. when i think about why google

did android, why apple does ios, that control of the ecosystem is one of the key reasons why we're skeptical and have a short sell rating on facebook. that control of the operating system is very important. and i think leads to a lot of different opportunities in a mobile world. businesswise. >> yeah. rich, you're known for concise, provocative points of view. i appreciate you sharing them. see you later. rich greenfield at btig. the yacht business used to be a party, but the party may be over thanks to the financial crisis. we'll find out what the state of the ad industry says about the state of the world's wealthiest individuals.

when you take a closer look... ...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. let's develop more stars in education. let's invest in our teachers... ...so they can inspire our students.

let's solve this. yachts may look glamorous, but the multibillion dollar yachting business may be rounding aground. our reporter robert frank is live in ft. lauderdale where they don't have a hurricane on the way. following the yacht economy and all the details, good morning, robert. good morning, thank you very much. well, the yachting industry is an $85 billion-a-year business. a little like the weather in florida this morning, the industry is going through some very stormy seas. let me give you some numbers as an example. in 2008, there were orders for more than 100 new boat of 130 feet or more, mega yachts. that number fell from 100 to 10

the following year, a drop of more than 90%. now things are coming back a little bit, but basically prices for used boats are open more than 10%, 2 0%. sales way down. china's good, other parts of the world are fine. but industry, sales are still off by more than half of what they used to be. let's take a listen. >> this is bad. it's been bat since 2008 when the crisis hit. >> we saw the two big boats, more than 170 feet, they are understanding the meaning of buying yachts. china needs. they are growing but have not passed in this business. >> now at this boat show, there are more than 1,000 boats for sale just to give you a sense. one for sale is this pretty amazing boat called diamonds are forever. built by john stalupa. he loves to name his boats after

james bond movies. this is incredible. it is filled with gold, with silver, with all kinds of diamonds. it's got pictures of bond girls all over the walls. it's got two jet skis down below, in case you need to make a bond-like escape. of course, there is the martini bar upstairs. an amazing boat, yours for only $63 million. i am told by everyone that that is a bargain. hard to believe, but bargains are relative in the yachting business. back to you. >> that is an amazing number. quickly, you've -- you know and have talked to so many wealthy people in this country, where to yachts fall on the spectrum on their wish lists? above or below a corporate jet? >> it's usually the last thing that people buy. i mean, corps jets, people can use those for corporate business to get somewhere faster. there's no excuse for owning a yacht other than you really enjoy. we'll talk later about how much they cost to own later