good morning, everyone. welcome to "squawk box" here on cnbc. i'm becky quick along with john kernen. our guest is miles nadal. we'll talk to miles in a minute. the hostage siege at an upscale nairobi mall. gunfire was heard this morning signaling the situation is still ongoing. at least 68 people were killed when islamist militants stormed the shopping center on saturday. firing on civilians and throwing grenades, the somali militant group al shabab has claimed responsibility saying it was in retaliation for a kenyan intervention in somalia. the focus is expected to be on syria and iran. and a chinese court has found the former communist party boss

bowe s boxilai. andrew. >> thank you, becky. we have a little bit of corporate news this morning. citigroup has suffered a significant decline in trading revenue. it threatens to decline the earnings. there's a market wide earnings. shares of blackberry today, the company warning on friday that it expects to report a huge quarterly operating loss. it plans to cut more than 1/3 of its global work force. that's big, big news in blackberry land. microsoft expected to announce a new surface tablet computer today, including a version with a smaller screen to compete with google's nexus 7. an event is scheduled in new york. microsoft began selling surface tablets last year but sales have been slow. the changes to the dow are official. visa, goldman sachs and nike are

jumping into the blue chip index. alcoa and hewlett-packard and bank of america, good-bye, you're exiting. good-bye. >> if you went to sleep early last night, there are a few highlights from the emmys that you missed. hbo dominated with the most trophies. 27 in total. abc's "modern family" won best comedy. amc grabbed the best drama prize for "breaking bad." speaking of walter white's saga, guess who got a shoutout in last night's episode? >> you're aware that there are people who suggested the motives. andrew l. sorkin of "the new york times" wrote a column suggesting that the grant was a kind of publicity maneuver to shore up the stock price on technologies because of your association with walter white. >> well, that's not exactly -- >> so to speak of having a

methamphetamine kingpin as co-founder of your company. >> did you hear it? did you hear it, a. drew l. sorkin. it mentioned your column. >> if you didn't understand -- if you are watching, do you feel like it's been spoiled? i hope not. >> i don't think it was spoiled there. >> he got his hair back. >> number two, he's a methamphetamine kingpin so apparently he gets caught. >> stop. stop. stop. >> they said it. he's not a kingpin where i am in the third episode. >> in the third season. >> if you're in the third season you're behind. >> thank you for that. >> but they did show him at the beginning of the season with the hair. >> very cool, andrew. >> thank you. >> yeah. >> the beginning of the -- >> kurcurrent season. >> i'm in the third season, fifth or sixth episode. >> trust me, to get from where you are and to there there's so much good stuff you have to keep watching. >> i will. i will. didn't ruin it that much. this is the same screen writer for "too big to fail."

>> peter gould who is one of the executive producers of the show also wrote "too big to fail." there was cameo galore. there was charlie rose just then. there was mario batali who played the bartender. >> i haven't seen the episode. >> mixy drexler was in one episode two or three episodes. >> is he doing the sequel to "too big to fail"? >> we haven't gotten there. >> we're working on that last week with the no tapering. >> right. >> we're trying to set up the failure first which we saw how well the market responded. and, you know, did you see there's a piece that intel, cisco, one other stock is now irrelevant in the dow. ge because it's a 23 or $24 stock. it's 1% now. that was the article. >> are you kidding? >> intel, cisco, ge. they're irrelevant because their price movement is so small compared to the big movements. >> wow. >> then we had that nice day on

friday. see, i think the fed would say we're not trying to pump up the stock market because that just is wealth, disparate. they don't want to do that. we're trying to work on the underlying economy mortgage rates. i can see how they would say that. >> if you think about it -- >> who are you? >> we have to welcome you. >> at the beginning you said miles nadal. >> you did? >> i had mine off. >> what about beltway ben. >> no, we did not introduce ben. >> there i am on the screen. nobody has any idea who i am. i would be happy to talk "breaking bad" the whole time new would like. >> i thought you were injured. >> i could do that. i'm not happy with the newsroom. >> did you see the white house ask everybody to start supporting janet yellen? >> no. >> i did see that. >> yes, sir, here we go. she's tough. she's -- she's very competent,

comes prepared. she's -- >> there's actually some criticism in there, too. >> yeah. >> read the whole thing. it comes across and says she's imperius, too harsh. >> not a consensus piece. >> it's a positive. >> that was to suggest that she's tough and that she's like bernanke, she'll go her own way if she needs to. >> i suppose. there was also a hint in there that she might be even more difficult to deal with than larry summers would have been in terms of consensus building that's not what the street believes but -- >> i know it's not, but it's in that story. >> i was going to say though, that the fact that the fed is behaving the way it is and it's only expected to be about $10 billion of tapering to begin with, it's only 12%, it means that the stock market appreciation is not being driven by the fed's policies going forward, that it is going to be self-sufficient for the most part, the market, and it will be driven by earnings growth and liquidity. >> well, let's get to global markets. ross westgate is standing by in

london. it's all about -- it's all about merkel, i guess, this morning, ross. >> yeah. good morning, jay. angela merkel is going to serve as chancellor for the third time. her party almost getting -- her grouping almost getting an overall majority which would have been a huge surprise. just around two, three seats short of achieving that. waiting for the official count. nearly 42% of the vote. her junior party, the fdp, failing to get seats in parliament for the first time since we've had the federal republic. so angela merkel going to have to work with coalition partners. we think they'll talk about trying to form a grand coalition with the sdp who department be do as well as some thought. those talks will take place over the next few weeks. we may not get a new coalition formed until the end be of october. market reaction to that, it was fairly sort of muted this morning. there would have been a big reaction if she had gotten an overall majority. six to four decliners outpacing

advancers. we're about in the middle levels of the session. we have been up and down. we're a little bit weaker now ahead of the u.s. open. the ftse 100 down .2%. the xetra dax, absolutely flat right now. we're only modestly high for the french and italian markets as well. we also had some data today. let's show you where we are as far as sectors are concerned. telecoms and autos doing fairly well. basic resources doing well despite china pmi coming in at 6 month high. we did have a tick up in the composite pmis as well today for the eurozone. up for the seventh straight month. manufacturing pmis in germany were a little bit weaker than we thought. some sense that we haven't quite got the export orders out of germany. we're looking for a .4% indicative growth rate for

germany in the third quarter. that's the sort of growth rate that angela merkel will be taking as a new chancellor. bond yields are slightly higher on the back of that auction result as well as are treasury yields today in european trade, too. back to you guys. >> all right. ross, thank you. finally we have some answers to what's happening in germany. back here in the united states, there are still some massive questions. one of them hanging over the markets is the threat of a government shutdown. ben white is politico's correspondent and cnbc contributor. what are the odds that we'll actually see the government shut down. >> i think the odds are good at this point giving the small time frame that we have. history would tell us that we always get a deal at the 11th hour. we tend to do that. there's a short time that that needs to happen. the senate needs to take up the cr. that's not a guarantee that there will be 60 votes to do that. then they'll send it back to the house possibly with more spending in it. house republicans, what do they do at that point. they'll be up against shut down the government or be true to

their roots of defunding obama care. they won't accept more spending. they may send it back to the senate which gets us well into next week, close to the deadline. i'd say the chances are pretty good we'd go past that. they come back and see the poll numbers. my guess is republicans get blamed for it. they come back and do a deal. i'd say the odds of a shutdown are pretty decent. there's a lot that needs to happen between now and the week from now. >> the lead of politico today was citing steve leaseman of cnbc and the poll they've done that shows the majority of americans have no interest in defunding obama care, particularly if it's linked to defunding the government. >> yeah. both the shutdown and a debt ceiling crisis in that poll. there's moderate support among republicans for defunding obama care. not a huge amount of support, but there is a majority support. if you say the price for defunding obama care is shutting down the government, possibly having a debt ceiling crisis, that support plummets among republicans who don't want to see that. the only group that is supportive of shutting down the

government or forcing a debt ceiling crisis is the tea party faction in the republican party which is powerful and probably the most powerful faction. it is a minority within the republican party and it's a minority in the the country. are they going to shut down the government over obama care, probably help themselves in republican primaries next year but take a big hit nationally. i don't think they want to take that hit nationally. they haven't figured out how to sell something to the tea party wing that can get through and get past the crises. >> they want to keep the obama care front and center. you see the articles about what's going to be spent on both sides. i think the white house will spend a billion dollars promoting it and then you have whatever, what's coke's group, citizens for prosperity. whatever it is, they'll spend money on the other thing. i like this piece that your paper did. andrew l. sorkin of "the new york times." you are not of "the new york times." >> they're talking about the column. >> you are of "squawk box." >> they could have said that.

>> did you see this, lower premiums to come at fewer choices. they talk about, i don't know, it will be a lot cheaper. apparently you have to go see veterinarians most of the time for a lot -- if you have -- did you read this, beltway ben? >> i have not read that. >> to see a real doctor there will be a -- >> under obama care, is that the deal? >> it's interesting that the "times" decided to write that piece. >> republicans want to keep it front and center. >> to see a specialist is going to be -- >> my dad go go to a vet. >> he did go to a vet? >> the dog was there for lime's disease. what kind of pills -- what dosage would you give for a dog that weighs 180 pounds. >> cramer did it on seinfeld. he had a cough. they gave him some kennel cough. he started itching, laying on the couch. >> he ran away from jerry like a dog would. >> the biggest concern among ceos is health care costs. you're looking at 30% appreciation based on current

expense ratios. it's a big problem and it's not an expense that can be transferred to the consumer. >> right. i think the deal is that people are concerned about. they're concerned about obama care, costs of it, implementation of if. not so concerned that they want to see the defunding. they'd rather see let's fix what needs to be fixed. let's do tweaks to help employers or keep the costs down. the majority of the country is not in favor of shutting down the government, threatening the full faith and credit of the united states over obama care. >> do you think even if it's a short term shutdown it has a longer term impact? >> i think it has some impact. it's one of the situations where once again the numbers seem to be doing fairly well. the real economy is healing and doing better. washington, once again, is going to threaten to knock that down. i don't think a short shut down would take a huge hit on confidence or any of the other measures of the economy. if you get a longer one, ten days, two weeks, that starts eating into people's paychecks. people get money from the federal government. it's not like it's a smaller

employer. the bigger question is the debt ceiling. if he would can't get close to a deal before we hit the zero date in october, that's a problem. >> highlights were ben bernanke may have done what he did with not tapering. >> precisely. wait out the washington storm. >> miller's point is -- >> you're making it easy. >> it's easy for them to do it. all right, beltway. dude. >> thank you. >> beltway ben. thanks. it's not -- it's advertising week. it's not like fashion week. >> seventh avenue. >> are you leaving the jacket on because that might be too much if you took it off? >> i'm leaving the jacket on because the shirt is too much. >> show me a peek. >> i had a dry cleaning problem. >> show my' peek. >> a dry cleaning problem. >> he looks like madmen. he looks like john hammond. >> i was running out of shirts, the honest answer. at home i was running out of shirts. >> it's okay. on camera, that looks good. >> i don't see a problem.

>> the collar is so spread. it actually goes around. >> no, no, no. >> that's high fashion. >> i was thinking the jacket would give a little bit of comp. >> andrew, i'm looking on camera. it looks good. >> plus, you want the pecks out. >> you look like jon hamm. >> thank you. you can come up every day. >> sucking up big time. >> in the old days collars used to come off. >> i know. >> they would detach. >> does that come off? >> that does not. maybe it should. >> it is a little too wide. >> that's a spread, dude. >> it was a purchase that only i appreciated after. >> purchase in the loosest sense of the term. did you pay for that? >> i think actually i did pay for this shirt. >> that's not one of ours? >> no. >> that's not from adam? >> brian. >> brian. that guy. >> yeah. >> you guys get free shirts? >> we have people who -- >> you're a contributor. you should help them up. >> that looks like a free one but you paid for that? all right. thousands of attend december -- >> that actually looks good.

>> -- are gathering in new york city. she wants to say something nice about rutgers because they beat arkansas. >> i forgot about that, but thank you for bringing it up. >> big win. >> didn't look like they were going to. >> are you going to the big ten? >> yeah, next year. >> you have to start -- this is something -- >> winning some big games. >> you have to be able to play arkansas. >> it's still nerve racking and it's still nail biting. >> ugly uniforms. >> the black ones. >> it's ad week -- that's why miles nadal -- >> what were you, ad person? >> i don't remember. >> you drew a lot of awards. miles nadal, chairman of nbc partners. does it happen on madison avenue? >> it happens throughout the whole city. it's a big deal. it really is a big deal. >> tell me for people who don't know. >> first of all, advertising is the seventh largest industry in america. it's about a $650 billion industry globally.

325 billion in the united states. growing 3 to 5% in the year. i think the big highlights of ad week is the growth of mobile. so mobile's about $20 billion of ad spent. it's expected to triple. so go up to $60 billion by 2017. some interesting facts. so facebook, 41% of all of their advertising is now mobile up from virtually zero, you know, 18 months ago. twitter, its ad revenue has gone from $288 million to $512 million over a 12-month period. so mobile is the big issue. >> when you think about what our economy is today. manufacturing, hopefully it comes back, but it's all about things like social media, which really at its core is based on advertising. all of the media we talk about, we're in the media, what's going to happen with dvr play back, that's about advertising. it's all about -- advertising is

a huge part of everything we speak about, every company. >> think about where we were before. you didn't have a twitter account two years ago. >> no. i don't like it. >> how many followers do you have on twitter now? >> he has a lot. >> not like katy perry. >> no. >> how many does she have? >> 44 million. >> more than obama. >> 44 million? >> more than obama. >> i thought i was doing well. >> more than obama. these are little mini media outlets. justin bieber has about 40 million. the super bowl only attracts 130 million people so this is people's money -- >> how much money do they make as media brands can they make off their twitter feeds? >> i don't think it's about their twitter feed, it's about the application to other things. it's about other brands that they build around it, etc. it is very powerful. i think it's the one area that people underestimated was the power of social media and its growth.

36% of all companies now have a dedicated social media group in their marketing areas and it is growing very, very rapidly. you know, social media, we've learned from social media is we've learned as much from the brand evangelists as we do from the brand detractors. one of the things clients are looking at is what information are we finding out quickly in a timely basis about what consumers don't like? advertising spending is strong. it usually reflects gdp growth. so third quarter i think you're talking about 1 1/2% gdp growth going to 2 in fourth quarter. ad spend will probably be 2, 2 1/2% this year and probably grows to 3% next year in line with gdp growth. it's the shift that's important. it's the shift toward social media, online spend overall will grow double digits. and i think you're seeing a huge

movement of the integration of campaigns, like super bowl. you'll start seeing super bowl activity in december and january linked toward super bowl ads on -- so you'll have, you know, contests and special events and you'll have online campaigns starting well in advance, and my bet is that you'll see a 5 to 10% increase in the cost of a super bowl spot in 2014 over '13 and last year was about 3 million bucks a minute. po second ad. >> i was listening to a game on my iphone. using an nfl.com application that allowed me to listen to the radio and i heard the bengals beat the packers on this crazy play. first time in nfl history that a team was up by 14, down by 16 and then won the game. 14-0, then it was 30-14, then

they won 34 -- >> when would you have thought that you would use that mobile device for watching a special event, sporting event? >> it's my life. hey, those craft berry nation people, i haven't heard from them. they're big, loud, obnoxious. black berryians. mention me. >> the company may have thrown in the towel on friday. >> i saw that. >> be a little sensitive. they are canadian. >> the more arrogant they get, then you know it's coming. boy, did it come. >> "call me maybe." if you've ever dropped your smartphone, becky did that. >> what was that little dance? >> i'll show you. >> you'll want to hear our story next. also, pictures. she's really doing that. futures pointing to a higher opening. "squawk box" will be back. >> announcer: monday morning strategy is sponsored by invesco.

a company that provides protection plans for gadgets tested five smart phones to see if they could withstand drops, dunks, other common hazards. the biggest loser was samsung's galaxy s-4. it failed to work after being submerged in water and being

dropped five feet off the ground. phone that worked best was moto x. >> what? >> moto owned by? >> motorola. >> this was their first endeavor. >> you've seen one? >> yes, pretty cool phone. the samsung though, which i know you guys represent -- >> he doesn't have a camera. >> miles is here, is a great phone. >> so you decided to reference it. >> i decided to reference it. the problem is you have to put a case on them. when can somebody create a phone that you can drop and it doesn't break and you don't need to buy a case? those wonderful guys, the dodo case. >> does that dodo case work? that doesn't seem like it's that you will durable. you want rubber. >> i think the dodo thing works. in a perfect world you wouldn't need that. >> i brought that dodo case home and i got universally reviled by people in my -- >> really? >> they think it's the ugliest looking thing. >> ugly? >> what did you bring home? >> i like them.

>> you brought home the one that looks like a leather notebook. >> doesn't look like leather, it looks like cardboard. >> i get compliments on my dodo case all the time. >> i'll bet you do. >> how do you keep track of all the compliments? the shirt, the collar. >> i have a little piece of paper and write them down. >> i'll bet you do. i'll bet you do. you review them at night before you go to bed. >> then i send thank you notes. when we come back, the ceo of haynes celestial, the organic food company is trading high. stick around, "squawk box" will be back. thank you. ♪ ♪ ♪ we went out and asked people a simple question:

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welcome back to "squawk box." haine celestial is a leading organic. it's been named to the 100 fastest growing companies in 2013. the stock is trading close to its 52 week high. we have the founder, president, and ceo and no longer a partner of carl icon's. carl got out of the stock recently. >> he just got out in the last two weeks. >> what was that like? was that the happiest day of your life? >> you know what, carl bought the stock three years ago. i'll never gore get i got the call. this is carl icahn. i just filed a 13 d.

he bought the stock at a 20, low 20s. and, you know, carl was an investor for three years. some day when i write my book and i get your help there will be a few, you know, paragraphs on carl and our relationship. >> he made $400 million. >> he made more, $430 million. you know, i learned a lot with carl. >> how often would he call you, badger you, scream at you? tell us just -- you know, if you're a ceo watching this program who's about to get a call from carl icahn, what do you do? >> in my next life that's what i'm coming back as. >> as a consultant? >> as a consultant. listen, my first thing is this here. carl icahn bought 7 million shares, spent over $100 million. carl icahn should not be treated any differently than any shareholder. my whole thing was how do we perform? i had every banker call me, every lawyer. you know, you've got to fight with him, you have to put this

in place, you can't give him board seats. go run the company. how many companies go out there and fight with carl and spend tens and 20s and $30 million of shareholder money? where are they going to go? at the end of the day carl is like the u.s. government, he's got time and money on his side. he's been a great investor. i will call him a friend even though carl will say if you want a friend, get a dog. he may say that. listen, the stock has performed. i'm he very happy. he's made well over $400 million and we move on. >> is him getting out of the stock a sign that the major gains and the run has ended? >> becky, i have been asked that question. i came back from europe all week. hai hain today is positioned better than when carl got in. you're talking about health care costs and obama care. we're seeing oboes city rates decline because of the awareness of healthy eating.

70% of health care costs come from self-infliction of foods, okay? so people are being educated. consumers are being educated about food. i spent the last week at mount sinai hospital going through chemicals, pesticides, the whole debate with genetically modified ingredients. where did all of these learning issues come from in kids today? where is autism? where do all of these diseases come from? there's 80,000 chemicals today that are in products or in packaging that we didn't even know about. bpa when we were growing up, i know i grew up before you, but did we know what bpa was, which was a sealer in a can where liquid touched it? genetically modified ingredients. u.s. and canada are the only other countries other than third world countries that allow genetically modified ingredients. >> pesticides. >> as a parent i'm worried about that. shouldn't be a direct link to autism to all of this.

>> there's so much research. did we hear about autism before? the awareness levels. pesticides. the awareness. >> let me ask you a question and it relates to calories and the idea of obesity and food. you do a lot of healthy products. when did you buy this. this is blueprint. i was going to say though that a lot of people are drinking juices. >> we're all drinking the juice. >> all drinking the juice. >> as long as we're not doing the juice. >> the juice is not like, you know, fat free, calorie free situation. a lot of this stuff and a lot of people drink a lot of this stuff. >> andrew, calories are not bad for you. it's all in moderation. it's the good fats and bad fats. high fructose corn sweetener? what was that? it was sugar that turned into the bad fats. hydrogenated oils turned into the bad fats into your heart. so, you know, there's a lot of -- there's 300 calories in that, that is a meal. >> right. >> if you eat a steak, i'll challenge you.

eat this or have a steak, you'll feel a lot better. >> talk about mothers and their sensitivity towards health, nutrition. you have 10 million mothers online a month and you build a huge product orientation and a huge number of skus geared towards mothers. talk about it. >> miles i heard as i was coming in here talking about social media and what's driving advertising today. you know, hain being a 20-year-old company, you look at our consumer. it's an educated consumer, becky who whose children, so does andrew, twins. >> so does joe. >> so does joe, we're feeding their children baby food and what -- so we today have a business called earth's best baby food. we feed infants and toddlers their first food. we feed them formula. you think when you have an educated mom like becky and andrew coming on our website and talking to us through social media today. we have 9 million moms and dads

a month that will visit our site and are educated about food. listen, we talk about it. you're going to be able to walk into a store with your iphone, scan the product, know every bad ingredient or good ingredient here. my kid is allergic to nuts. you'll scan that. it's not hey nut free product, it's not coming into my house. you'll walk into a store and say i'm on a 2,000 calorie diet today. >> can i afford to eat this? >> we're done. >> we're also going to have ribs. thank god we're going to have something edible. we're going to have some montgomery ribs. i'm not going to look to see if there's one chemical. >> and you have pizza. >> what's that? >> dominos pizza. >> thank you. >> coming up, retail price war. how sellers are using big data to their advantage and what the trend means for consumers. "squawk box" will be right back. . that's not much, you think. except it's 2% every year. go to e-trade and find out

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retail consumers are beginning to use big data to their advantage forcing brick and mortar companies into a constant price war in order to keep customers from walking out the door. so are shoppers getting a better buy. mike friggen is president of decide.com which was acquired by ebay earlier this month. how does decide.com work? >> decide.com is like a next generation data driven "consumer reports." we look at billions of historical price observations to predict where prices will go in the future to help consumers get a better deal. >> what is it doing to find that out? i remember the shopping box that used to be out 10 to 15 years.

i'm guessing decide.com is very different. >> well, decide.com is taking all the real time prices from across the web, both online prices and offline prices and apply and predicted algorithms to let the consumer know should you buy it now or wait for a better price. >> most of the time i would guess waiting for a better price is a better idea unless it's happening on a holiday weekend where there's a big sale? >> most consumers want to buy right away. that's the default. 70% of the time there won't be a significant price change over the next couple of weeks. what we're trying to find out is when is that price on the flat screen tv or other high priced item going to drop significantly where it makes sense to wait to save a significant amount of money. >> as a consumer will it tell me if it's going to drop a month or is it only if it's in the next week or two that it will tell me if the price is coming down. >> it will look over the short

term. we can see a longer term pattern. we've founds consumers are most interested in the short term. one of the interesting things we do as well is we actually guarantee the prediction. so when we say now is a great time to buy. if the price drops, our prediction is wrong, we pay the consumer the difference. we are putting our money where our mouth is behind the technology. >> are you using this in japan? that would be one place where it would be an interesting sort of dynamic? >> u.s. only today but we plan to scale our technology over time. >> okay. mike, thank you for joining us today. >> thank you, becky. and coming up, skip the eggs. we're having ribs for breakfast. we just heard, anything in moderation, right? the legendary montgomery inn from cincinnati used to ship these to bob hope for years. that's next. [ tires screech ] ♪ [ male announcer ] 1.21 gigawatts. today, that's easy.

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>> okay. these to bob hope for year even as the sizzling hot summer dies down, it's never a bad time to talk about ribs. our next guess, his classic cincinnati brand delivers its slabs all across the country. now with us is evan andrews, vice president of montgomery inn. founder ted gregory is a legend in cincinnati. he's here to talk about the rich glaeg si of ribs. with skyline chilly and

montgomery ribs. you can get them at the boat house. these are classic. bob hope used to get these ribs delivered to him once a month. >> for 25 years. >> that's what kept him to be 100 years old. >> i get them. you put them on the grill. four minutes on the bone side, flip them over, 3 minutes there. put the hot sauce on. we have to bring them over. you guys have to try these. these have been part of my life because i'm from cincinnati. i've known them for so long. you ship them everywhere. how much of the business is shipping versus what you serve at montgomery inn. >> of the overall business, by sales, 10% is through the mail order, through shipping. the big time is coming up right now with the holiday season ahead of us. >> normally there's graders ice cream. you can get it along with another cincinnati classic. >> right. we started a business along with montgomeryinn.com. we've started cinci favorites. grader's eye crease, skyline

chilly. go to cincifavorites.com. order a package of all your cincinnati favorites. >> overnight shipped. >> sometimes overnight, two day. >> big star with -- >> dry ice? >> dry ice. we can reach 68, 70% of the united states in two day ground and this is going to be a tough holiday season. we only have 16 shipping days between thanksgiving and christmas. very short cycle this year so we're going to have to do a lot to incentiveize customers. >> did you put sauce on it before the barbecue or after. >> no. four minutes on one side, three minutes on the other. bring it in. heat the sauce. the classic montgomery inn sauce. there's a beaked beans recipe. >> i'm coming over. >> you can have it now. i don't know where you get the -- where these pigs are. they ain't in china in the river, i'll tell you that much. >> no. >> because when you eat them, the ribs -- the bone is gone. it's gone and there's no fat. you eat it and it just melts in your mouth. mack, what's going on?

>> exciting. >> let's go. >> special family secret. >> don't be shy. >> seasonality to this? >> with the mail order business, 50% of the mail order business is of course during the holiday season. >> wow. >> but we're busy all year long. >> look at this. >> all year long. >> evan, have you noticed anything just with where consumers are now, we're trying to get a gauge for the economy. how have the consumers been doing this year versus the last couple of years? >> of course in 2008, 2009 we saw the big dropoff. but we saw people come back into the marketplace when they wanted to spoil themselves. first they spoil themselves, then they -- >> then they shared with others? >> then they shared with others. we saw the dynamic. >> what's the price point on all of this stuff? >> 119.95 for four slabs shipped anywhere in the united states. >> the sauce is not heated? >> it's hot. it's in the pan. >> we have bibs. >> right underneath here. >> all right. >> andrew, i want you to -- >> squawk breakfast right here. first we started with this

healthy stuff and now we've really gone the other way. >> just to balance that stuff out. >> this is -- this makes you feel right at home. just like mom was there. >> thank you. here you go. >> come on, mack. don't worry. >> i love the four minutes each side. >> it's incredible. >> within 15 minutes, you're eating -- >> four minutes one side, three minutes on the meat side. >> it's foolproof. >> we've got to do an event at our office for this because everybody loves it. >> right. >> and you ought to hire miles to do the big launch, worldwide laumplg. >> got to get a little sauce going. >> i like this sauce. this sauce can be purchased in the grocery store? >> about 28 states here in the united states. >> okay. >> remember, this is my mother-in-law's recipe. >> you're not doing the bib? >> i'm going to free -- i'm going to freestyle. >> all right. >> pass out the plates. >> going to make a mess here. >> that's all right. you know, eating it on tv is

not -- >> that's all right with us. >> looks good. >> do you believe that? >> how good is it? >> really good. really good. >> i'll pass this back. >> this is good stuff. >> thank you. >> becky? >> whoa! >> try some of this. this is too much for just me. >> no, it is, but you go ahead. >> this is something else. >> and there's nothing left on the bone. >> it falls right off the bone. >> falls right off the bone. >> you can do it as a gentleman and try to cut it if you wanted. >> no. all right. thank you. evan, what time is it? it's 6:51. we've got a final hang with miles coming up. you know what i do, i usually kind of cut it off and eat it on a fork. that's kind of prissy. >> it is. >> that's like sarah palin and donald trump -- >> yeah. it really is. thank you for coming in. come in more often at this hour.

>> i will. >> evan, thank you. good luck. >> we need to do an evening show, as well. >> you know what i talked about, they played "roar" at the bengals game against the steelers and everybody was laughing. who picked that? who thinks that. they were going to play a key up song. >> instead of "welcome to the jungle." >> they immediately pulled it the next week. >> it was a good day -- >> you wouldn't have beat new york yesterday if you played the katy perry. they thought they were going to use this three times a game as the new song for the bengals and the fans were like. the steeler fans were in town for that game. the laughing stock of the whole nfl. is that a sore subject? >> it's fine. >> we're going to sweep the pirates and win the other three. >> the wild card is a guaranteed anyway.

>> guaranteed, but it would be nice to win the division. >> yeah, it would. evan, thank you. i'm glad you finally got in and got to do this after 15 years of talking to you. >> my daughter lives here now. >> really? excellent. >> we'll be back. >> don't you belong to memorial too? or to -- >> we're the official -- they're serving ribs and pulled pork at the presidents cup. >> wow. >> we've got to be friends. >> exactly. >> we've got two guests that would like to come, okay. >> hey, miles -- >> he's been on scholarship a long time. >> final question, so advertising is back 90% of the way you think at this point? >> oh, it's back to record levels where it was in '07. it's growing slowly. i think big final thought is twitter ipo. so think it happens. but i think it happens more successfully than facebook. if you remember when i was on, i said the facebook ipo.

i love facebook as a company but it was -- i was concerned about the stock and rightfully so. although it's come back to record levels. i think twitter is going to be a much more successful ipo. it'll be more investor friendly. well, they've prepared themselves differently, they're much more market sensitive to do the right thing. it's a better time for social media. but also, i think they're going to price it and execute it to have shareholder appreciation. >> you're going to buy shares? >> i absolutely would. >> do you own shares now? >> i do not own shares of either of them at this point in time. but i just think it's going to be -- and i think it's really going to be a very hot ipo. and as i said, they've had over 100% increase in revenue year-over-year. i think it's going to be successful. it's going to be a big talk of advertising week this week. >> i'm looking at twitter. and it's montgomeryinn.com.

>> yes. >> one quick twitter/facebook question. is facebook over? not over, but do you think it's going to grow at the same kind of rate it has because so many people have moved to twitter? >> you know -- >> everybody seems to be using facebook less. >> what everybody underestimated was the ability to grow mobile. keep in mind that 41% of their revenue is now mobile from zero a year ago. i think the revenue growth will still be very significant as to what its long-term sustainability. you know, the second derivative, the rate of change, the rate of change. they've got over 100 billion in our market cap. th they're not going to continue to grow 20%, 30%, they can outgrow the ad spending by double. if ad spending is 3% to 5%. and so i think don't underestimate the growth of their advertising revenue versus subscribers.

>> miles, thank you for coming in today, it's been a pleasure talking to you. >> love to be here, especially with the ribs. >> it was great. >> thank you for breakfast. >> oh, you're welcome, becky. thank you. when we come back, we'll have more of this morning's top stories, including the latest in kenya. the hostage siege in an upscale nairobi mall. gunfire was heard again this morning signaling that the situation is still ongoing. "squawk box" will be right back. [ man ] on december 17, 1903, the wright brothers became the first in flight. [ goodall ] i think the most amazing thing is how like us these chimpanzees are. [ laughing ] [ woman ] can you hear me? and you hear your voice? oh, it's exciting! [ man ] touchdown confirmed. we're safe on mars. [ cheers and applause ] ♪ hi. [ baby fussing ] ♪

♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy.

beaten up, bruised, but not out, investors may have had a tough ride on friday but are

looking to bounce back this week with key housing data and fed speak. tom lee breaks down where you can make money now. blackberry has gone sour. reports that the former ceo is chatting up p/e firms to buy the smartphone maker. netflix making emmy history. so can last night's victory keep investors winning the stock? find out as the second hour of "squawk box" begins right now. well, you certainly have my undivided attention. good morning, everyone. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. after a wild ride last week, the futures are indicated higher this morning. dow futures up by close to 55 points above fair value.

s&p futures up by over two points. in our headlines this morning, just one week left for lawmakers to work out a deal to avert a government shutdown. if they can't, it would be the first shut down since 1996. at this point, democrats and republicans are far apart on any agreement about the budget and the debt limit. we'll have more on the possibility of a government shutdown next hour with former virginia governor and rnc chair jim gilmore and former tennessee governor phil bredesen. angela merkel has won a third term in office, but merkel's party did not get enough votes to rule on its own and will have to form a coalition government with opposition parties. and with last week's nontaper, investigators are looking for more clues on when the fed may be cutting back on the bond-buying program. they'll start with the three fed speakers. phil dudley and dennis lockhart have speeches in new york this morning while the dallas fed president has a midday speaking

engagement in san antonio, texas. >> they helped us a lot last time. able to discern a lot of what the fed was able to do based on all the minions. we also have some serious news this morning. our militants continue to hold h -- armed militants continue to hold hostages, and they've threatened to kill those hostages if police use force to try to rescue them. it's not known how many hostages are being held. that group has demanded that kenya pull its troops out of neighboring somalia. and you can see there, smoke billowing from what i believe is the shopping mall. there was reports earlier that there was a fire at that mall. so we will keep, of course, on this and bring you updates throughout the day. >> investors apparently no longer think the market is quite as inexpensive as it once was, perhaps. confusion over when the fed will begin tapering sent the markets into a tail spin on friday.

or was it just a little bit of just selling on what was perceived as a panacea earlier in the week. remember, yeah, it's going to be great. who else, and we had maybe even druckenmiller saying i don't like what's happening. >> the money manager. >> as a money manager, i like it, but you can't just assume it keeps going up, i guess. joining us is the chief u.s. equity strategist of jpmorgan in new york. just -- it's the reason, tom, what strikes me is the two things that are kind of maybe both can be happening. but the rationale for qe in the first place is, one, to keep mortgage rates down to help the overall economy slowly. but the other one is to increase asset values and the wealth effect of the stock market. maybe that's not a slam dunk that the market goes up. is it helping the underlying economy? and is it something -- as 85

billion comes in, isn't that going to find its way into the stock market? >> yeah, joe, i'd agree with you on both points, you know, i think we saw it last week that maintaining asset purchases really did affect the rate structure, which i do think unequivocally positive. and in terms of making its way into the equity markets, i'd be a lot happier if p/es were expanding faster. when we look at premium, the stock markets on that basis is actually cheaper today than it was in 2009. meaning, you know, equity investors are still looking past a lot of this asset purchases and are saying, you know, we're assuming the interest rates are going to settle at a higher rate. >> i guess we forgot the day of the non-taper, the markets hit new highs. that's what we're -- so the 185 points on friday just gets us back on the dow to 15, 451.

we had wells fargo on, tom, that 30% lower mortgage originations. but i would think the fed would be able to look long-term enough and say, well, of course that's going to happen because of the quick backup. but rates are on an absolute basis, still so low. seems like they keep, i don't know, they don't seem like they have any resolve. can't this economy stand on its own yet? you wouldn't prefer that? >> you know, i think we'd all love to see much better growth. i think the good news is, a lot of the leading indicators are really starting to show signs of life. you know, we've got flash pmis overnight from china. the european pmis are still strengthening. and in the u.s., still have pretty decent momentum for not only u.s. housing and autos, but i think increasingly, i think there's an argument that corporate capex is going to start moving up. there should be a good news story in the economy next year. >> what would it look like for the fed to lose control.

i worry that by not tapering that sooner or later, people would say this is too much and that the long rates -- once again, long rates came down. after they didn't taper. that's what they want. and you can have -- they are controlling rates. will the day come where people finally say, look, this is just too much. this is too inflationary. and the vigilantes no longer allow the fed to dictate long rates. >> well, joe, that is a key risk. you know, as you know, communication is one of their strategies -- maybe even more so than asset purchases. and today, the fed has enormous credibility. i think the day the fed begins to lose credibility as you say, you know, they lose control basically of interest rates is a day we have to start worrying. but as far as i can tell, the fed has enormous credibility. >> supply was so big and the economy and demand was so weak following the crisis that inflation still just looks completely dead in the water. so -- and that was probably why they thought they didn't have to taper at this point. they've got -- they even lowered

their expectations for inflation. >> that's right. and i think they saw some risks. you know, we are going through a period where there's potential budget debates, you know, maybe a short-term shutdown. i think investors are going to be nervous. and i think the fed provided us a pretty decent measure of insurance through that period. >> what's your rear-end target on s&p. we still think you're going to see at least 1,775 for the s&p 500. it's not a huge multiple. almost 15 times 2014 earnings. and one of the things to think about, next year, a good argument for earnings to actually be revised higher as europe and china stabilize and then, of course, the pent-up demand in the u.s. >> another 4%, 5%. we'll maintain the gains we've had. 1,710 basically on the s&p. 1,775. another 4%, 5%, and we keep it. that wouldn't be too bad, i guess. >> that's a 20% analyzed return over the next quarter. that's going to really outperform a lot of asset classes. >> all right.

he has not wavered that much. >> he has remained a steadfast bull. >> tom lee, thanks. >> thanks. joining us now for the next two hours, our guest host, a man shaking his head a little bit during the drew. steve rattner, obama's car czar during the restructuring of the auto industry. i take it you disagree with this bullish assessment? >> i think there's a fair number of head winds to keep in mind. corporate earnings are going up, the revenue line has been close to flat for the s&p 500. they've consistently missed their estimates. the economy has consistently missed the estimates of growth people put in front of it. people were talking about 3% growth, we're obviously not having 3% growth. and the mess in washington, which will will certainly get resolved at some point will create a bumpy road over the next month or so. i don't think there's any question about that. >> is there a shutdown? >> i think it's more likely than not. i was with a number of democratic leaders over the

weekend. and there is literally as total an impasse on these issues as i have seen. and, of course, the house is only in session for three days this week. the senate has an elaborate procedure to go through before it can pass for anything. and there's no sign of compromise on either side and we've got a week to go. >> so these are different democratic leaders. >> i'm a different generation, andrew, i was with the older generation. the young -- >> which ones were you -- how far back do you -- mondale? >> the carter people. >> that's where you belong. >> here's a different question, then. given your relationship with members of the obama administration, you were a larry summers guy. >> yes. >> you came out publicly, wrote a column about it, went on tv talking about it. so he's not the guy. what is the feeling inside the white house now about having to deal with -- and i say having to deal with as opposed to having chosen yellen.

>> as you said, the president doesn't interact with the chairman of the fed. secretary of treasury, but yellen was very profergsal. profession professional. we don't know what they would have done. i think it'll be fine with yellen. >> you don't think they would pick larry summers? >> i honestly don't know what they had done. but i think any time if i were in their position, any time you get to the point where you're 1 of 2 and the president certainly likes you and wants you and maybe he likes this other person better. >> do you have empathy for anyone dealing with the wing of your party that was so vociferous in its opposition? do you have any empathy for what the rest of the world is dealing with the far left? >> i have empathy for my wing of

the party for what we're dealing with. look, there's -- the republicans are in this huge circular firing squad at the moment. they're conducting themselves on a hill that can only lead to their destruction. the democrats are not being perfect. we've got a group of very, very -- >> that's the first time you've said that. that's a big concession. so the democrats really are not perfect? >> they're not perfect. >> it's been worth the two hours already just getting you to say that. >> does that mean i can leave now? >> if you want. >> in all seriousness, the country is very polarized. we know that. and the two parties are more polarized. and none of this is good for getting things done. >> what happens if they do go ahead with this? >> i think you have to separate the shutdown from the debt ceiling. two very, very different things. we've had a lot of government shutdowns. >> 1996 -- >> that was the last one, but we had about 20 of them over the last 20 years.

the idea of defaulting on our debt -- >> does that make it mor or less likely? >> that's a great question. nobody knows. i think less, once the government shuts down, people start to focus and say we have to deal with this. >> we'll have a lot more, mr. rattner, throughout the broadcast. >> call me steve, andrew. >> steve. up next, we're going to talk about blackberry plunging nearly 20% on friday. down again this morning. the troubled smartphone maker announcing preliminary quarterly results and slashing 4,500 jobs. meantime, its former ceo may make a bid for the company. we talked about the future of blackberry right after this. and watch shares of microsoft today, as well, the company expected to reveal a new surface tablet at an event in new york city. we've been watching the equities future and the market looks like it's going to open higher at this point. the dow futures up about 50 points above fair value.

>> the options right now, i mean, what they're trying to do is get into the business of managing all, i phones,

androids. >> basically i.t. firms in your business, your company, they all have to sort of run security on your phones. >> right. >> whether it's iphone, android, there's got to be an element of security for government and wall street firms, companies that rely on secretive information. >> right. >> so they want to kind of stay in that business and retreat from the phone business i don't think that works in the long-term. i think this sort of buys them time to get the buyer. >> steve, if i called you and said i need you to run blackberry, you are going to be -- starting at 9:00 a.m., what would you do? >> i would say no thank you. >> no, seriously, i don't think there's, i think the best they can hope for as you said is for somebody to buy them, sort of take. >> this is the kind of company you used to buy. >> no. it is not the kind of company i used to buy. private equity guys do not look for companies whose basic

business has crumbled in front of their very eyes. there might be some bottom fisher who pulls it apart the way someone from polaroid did a few years ago, but as an ongoing business. >> how long before i have to get rid of this and replace it with something else? >> you probably should've already. >> if i'm the last one holding on? >> lasts as long as a phone lasts. at&t, all the carriers will still run them, still support the products, they're just -- >> i know it's would've, could've, should've, but is there something i could have done a year ago? i remember when they came on this program and first named and he said he was just going to follow the same path. he had announced then that they were going to start supporting android, would that have changed the fortunes of this company? i hate to second guess. i would love to second guess. >> no, it's a great game of what

if, right? go to android, create a secure blackberry. everyone loves the platform. it's an easy sell for consumers. no one knew what it was, it was hard to market. >> and they can't do that now. it's too late. >> way too late at this point. they just announced another all touch smartphone. >> and that's right down on day one. >> right. saying they quietly announced it earlier this week on a day when ios 7 got released. >> roger, thank you, i have to say this is -- i know becky's depressed. >> all of us -- >> i mean i started with a blackberry and i've been rooting. you want them to succeed. >> of course you do. but these guys, unfortunately, weren't on top of it. >> who is going to give me a good real keyboard?

which phone will -- >> you know what, there's no company that's got a good keyboard out there. the other companies have tried. motorola has tried, never worked. >> anybody that gives me a keyboard. >> iphone is going to drive me crazy. it never hits the right letter, it corrects it, but i never can actually hit the letter i'm trying to hit. >> you need a bigger keyboard, or a bigger screen. got to wait for next year. >> they will do that, right? >> i think so. >> all right. >> they need to. >> all right. we've got to run. coming up, fed speak and some key housing data is going to be dominating the trade this week. we'll get ready for d it all an♪ online tv first, netflix winning an emmy for drama directing, the stock has been a winner for so investors. can the success continue?? "squawk box" returns right after this. ♪ when you think about it, isn't that what retirement should be, paying ourselves to do what we love?

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the average price for a gallon of gasoline in the united states fell by 6.4 cents to $3.52 in the last two weeks as crude oil declined and refiners passed on the difference. the lundberg survey shows that the average price was about 31 cents lower than a year ago. the very cheapest gas was in charleston, and the survey came

in at $3.14 a gallon there. drivers in san francisco, though, they paid the most at $4.01 a gallon. >> at least they put you in finally, andrew. comments, questions. stop, oh, there you go. okay. that's better. >> questions about anything you see here on "squawk box," e-mail us at squawk @cnbc.com. you can follow us on twitter. the futures right now are indicated to rebound a little from 180-point loss on friday. the ten-year is backed up a little. the "squawk box" trading block is coming up next. >> come on, let's go. nning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you.

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welcome back to "squawk box" this morning. in the headlines, the dow jones industrial average sporting a new look as of today. the recently announced changes are in effect with visa. nike and goldman sachs joining the dow. you can say good-bye to bank of america and alcoa, all out. an advisory panel meeting to finish the recommendations -- i'm looking forward to this -- on relaxing restrictions on electronic devices on airplanes.

the final report will go to the faa in the new week and the likely rules going into effect in 2014 so the flight attendant won't be telling me. finally, an 80-year-old ban on hedge fund advertising is gone as of today. that should be good for cnbc. that means the most funds will be able to use tv, radio and other ads to attract new investors. however, the income for hedge fund investors still remains in effect. all right. let's take a look again at live pictures from nairobi, kenya. the westgate mall on fire at this point. and you can see black smoke rising. armed militants continue to hold hostages. 59 people have been killed, in the last half hour or so, there have been reports of three explosions at the mall. a lot of questions about what that was, but nbc news is now reporting this was a military operation that blew an opening in the back of the mall as part

of a diversionary tactic. the hostages have been threatened to be killed if police try to use force to rescue them. it's not known how many hostages are being held, but the group has demanded that kenya pull its troops out of neighboring somalia. as we focus on currencies and oil from new york, bk asset managing director and from addison, texas, ultimate wealth report editor of "money news." boris, we'll just start with you. some of what we thought was going to happen after the fed's decision. for example, we thought that financial assets would continue to go higher and then we saw a bit of a move but then a pullback. the currencies are probably about where they were at this time last week, as well, aren't they? >> no, currencies got -- i mean, dollar got whacked buzz of the fed. >> and there hasn't been reversal there? >> not much reversal.

the short method was we're afraid of congress. and all eyes pretty much on all washington, d.c. and what happens as far as the debt ceiling, budget negotiators, everything you guys have been talking about this morning. if that continues -- as ben said, this could drag into a ten or two-week-old kind of a stalemate. i think the dollar comes back and picks up strength. >> and gold, i guess, has not given back -- looked like it was going to break under 1,300, next thing you know, 1,400. >> but kind of stalled. yeah, i think pretty much -- >> that did come back. that reversed some of the gains. >> it did, yes. because, you know, and i don't really trade gold that much. i'm not an expert on it. i would say that the thing with the market right now is everybody's in a wait and see mode watching everything that's going to be going on in washington, d.c. for the time being. so how things develop this week and next week are going to be

very determinetive. with the dollar still weaker, the euro now at 1.35. they don't want to see high exchange rates. i think you're going to see draghi become more dovish in counterresponse to what the fed has done. >> we're not going to do anything in syria near term, so that should have been bearish for oil. but then, turned around and whacked the dollar when we didn't taper. so we're still -- we're going to be above 100 forever or not? >> well, i think with no taper and the dollar starting to dive. the dollar broke a 2013 uptrend line, broke a two-year uptrend line in september. starting to have lower highs, lower lows, and i think with the weakening dollar, i think that's bullish for gold, oil, pretty much, you know, most all commodities. i think with china, manufacturing picking up, europe is healing, their data continues to come out better. and the u.s. is still holding its own. you've got more of the global economy clicking on all --

most -- more cylinders, i guess we'll say and that's bullish for oil, as well. i think it holds above 100. >> sooner or later, it allows a taper and the dollar will strengthen. >> i think this may be temporary if the federal reserve reverses course before the end of the year. >> so what -- we're between 100 and 120, doesn't go either way from there, shawn. >> i think on oil, we stay above 100 and we eventually go to 117 at least on wti and 125 on brent, eventually. >> all right. i can't imagine that the refiners are doing that well yet. because why haven't -- why don't we have $4 gasoline? >> well, i mean, there have been a lot of supplies out there, you know, for gasoline. so there's been a bit of a disparity between what gas and oil have done. but i think gas could, you know, start to pick up again. oil's definitely going to remain

higher. too much middle east tension and global economies picking back up again. >> all right. that's what you guys say all the time. there's always middle east. i can't remember when there wasn't middle east tension. $100, that just -- >> joe, by the way, i'm blinded by andrew's shirt today. >> blinded by the light. >> thank you. >> blinded in a good way? >> i don't know. i haven't decided yet. >> yeah. >> thank you. appreciate that. >> we were trying to eat too with that -- >> the ribs. i'll put my bib back on. >> would you? >> i would. >> thank you. >> see you later, thanks. >> thank you. up next, the ceo of the nation's largest privately held staffing company talks about health care exchanges and what they mean for business. and netflix in focus. the online tv giant making history last night with the first emmy. so can the stock remain a winner? we're going to find out when "squawk box" comes right back. announcer: where can an investor be a name and not a number?

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pcentury link provides reliable yit services like multi-layered security solution to keep your information safe & secure. century link. your link with what's next. welcome back, everybody. home depot is the latest fortune 100 company to move part-time workers to government-sponsored health care exchanges.

time warner, u.p.s. and walgreen's have made similar decisions. this is the nation's largest privately held staffing company. he's also the former chairman of the federal reserve of kansas city. and, bob, thanks so much for joining us today. >> thank you for having us. >> for people who aren't familiar with your company, express employment services is the fifth largest employment agency. i think you had annual sales of $2.5 billion and you're going to place about 500,000 people in jobs this year? >> that's correct, about 500,000 this year and we hope to be at 1 million before long. >> you have a good idea of what's happening with the employment picture. >> well, basically, we're on main street and more walmart style company and we deal with most of the companies with less than 200 employees across the country and we're finding, of course, an opportunity to place many good people in many good jobs. >> what do you think is happening because of the affordable care act?

>> well, i think businesses are very uncertain as to what's going to happen. if you don't know what you're budget's going to be, it's hard to make a profit in the company. and many companies are are going to flexible staffing, instead of full-time employment, and our position as a company we want to go from part-time staffing or temporary staffing to full-time employment, the government's going just the opposite direction from 40-hour workweek down to 29-hour workweek. that's not healthy for the company. great for our company, but not healthy for the country. >> it's been a boon for your business. >> it's a boon for our business, but not healthy for the country as a whole because companies e are -- especially the small companies are not wanting to be big companies. they're trying to limit their growth. and of course, we're having a shortage of skills right now. the skill gap is very important to us. and the shortage of skills in america is becoming somewhat acute and, of course, the higher the pay, the higher the skill level the companies are asking for. >> bob, you've been doing this

since 1983. how different is this from what you've seen in the past? >> well, this recession was different than the rest of them. the companies didn't lay off 10% from the top to the bottom, they laid off those that were the lesser skilled individuals. and when they wanted to hire back, they were looking for much higher skills than they had previously because, of course, the higher costs and concerns about squeezing the profit out of the bottom line of their companies. >> so steve rattner is our guest host. and steve, we have been looking in the numbers for some sort of sign. aust austan goolsbee has talked some about this, the idea that the obama care is putting a crimp on hiring. we haven't seen it in a lot of places -- >> you can't find it in the numbers. >> right. but bob is on the ground -- >> everybody's got these anecdotal report, but you can't find it in the numbers. what bob is also talking about is a separate problem, right. the issue of skills and the lack of skills in the workforce is a

huge problem but really has nothing to do with obama care. >> it is a huge problem. but many of the companies really are not interested in hiring full-time people. that's really the issue with obama care. that the -- they're not going to hire full-time people until they know what their costs are going to be. and if -- >> they are. >> we have seen, though, part-time jobs have been -- >> can you explain the participation rate? having been in the business? >> well, the participation rate has, of course gone down because of the baby boomers. >> is that the -- it's that simple? >> they can't find the opportunity and the millennials, of course, have quit looking. and my suggestion is that the unemployment rate's much higher than what's been reported by the bls. >> when you say it's not in the numbers, i'm not really sure what that means. does it seem like the job market's going swimmingly after five years of a recovery? >> no, i don't think it's going swimmingly. >> but why -- >> can i finish? >> why those numbers seem to be bearing out that there's something wrong. >> last month's jobs numbers

were lighter than we thought, but they're still all in the same range of what we've been seeing for the last year. >> right. but you would call the recovery tepid for five years? >> yes, but i don't think with the approach of obama care people suddenly stopping hiring. you know, you -- >> what if we've been slow to recover the entire time because of some of the activist policies? >> that's the -- >> does it seem like a possibility? >> well, when you say activist policy, the most damaging has been the government cutting back on spending and hiring. if you look at who has had the biggest effect. >> regulatory issues, obama care, tax policy, there's a lot of payroll taxes, you can blame it on a lot of things. >> on whatever you want. >> we're there on main street. whether it's in the numbers or not, it is affecting small and medium-size business. they're not going to hire until they know what their costs are going to be. and of course, we don't know what the rules are going to be. having read half of the rules,

it's going to take a while before we know what our costs are going to be. but it is affecting business and permanent hiring out there. and that's why our industry is growing quite rapidly. >> you're amazing. you know for sure that sandy was because of 100 parts per million co2 and every drought and all of that, we know it's from .01% co2, but you can't tie this to obama care? >> i don't doubt that obama care has created a temporary period of uncertainty. if you're going to tell me obama care -- if you're going to tell me obama care is the cause of the tepid recovery for the last five years, i think that's a stretch. >> all the things that the private sector is dealing with since 2008? >> i think that -- yes, i agree with that. all the things the private sector is dealing with, including the fact that -- >> self-inflicted. >> self-inflicted. >> by the white house. >> because the government is vastly cutting back, it's cutting its own employees. you have more people on the job market because of it. i don't think it's obama care. >> the taxpayer social security

net is a challenge, as well. in many -- i think 35 states the unemployment costs and income for the individuals higher than the minimum wage. so companies are not going to hire people when -- and people are not going to look for jobs when they're making more money staying at home without having to pay taxes on it. >> and half the states you can make $12. you can make higher than minimum wage staying home. >> right. >> 12 bucks an hour. >> that was not an obama administration program, just so you know. >> that's a situation we've been dealing with for a long time. >> right. but the reason that they're not employed and they're able to make $12 an hour because it's hard to get a job in this economy. >> i agree. it's hard to get a job. >> is there an answer, bob? it's obviously a structural problem that's been fazed. >> what's going to happen from the obama care standpoint and

from a cost standpoint. i mean, being in business, you have to weigh, of course, the effects of the costs in order to make a profit. and businesses is really the crux of america's economy and america itself, 82% of all the companies are medium and small-sized companies and they're not going to hire until they know their costs. and of course, they need to find the skills and the skill gap is an issue that we're having out there. we've got 20,000 jobs that are open as of last week. they're just difficult to fill. >> this is the real problem you should focus on. this is the real problem we do not have the right skills for these people. jobs are going unfilled. and that's where we ought to be focusing our efforts on government to improve training, education and get these people jobs. >> you have to encourage business to invest in business. there's a risk and reward in business and the government can't take care of the risk and reward factors, they have to have the ability without government intervention in order

to grow their business and that's why the staffing industry's grown so quickly. >> thank you very much for coming in and joining us. >> glad to be here. up next, a closer look at netflix. a winner last night at the emmy awards. so can the stock remain a winner for investors? we'll take a look at what's on tap for the company when "squawk box" comes right back. for his small business. take these bags to room 12 please. [ garth ] bjorn's small business earns double miles on every purchase every day. produce delivery. [ bjorn ] just put it on my spark card. [ garth ] why settle for less? ahh, oh! [ garth ] great businesses deserve unlimited rewards. here's your wake up call. [ male announcer ] get the spark business card from capital one and earn unlimited rewards. choose double miles or 2% cash back on every purchase every day. what's in your wallet? [ crows ] now where's the snooze button? [ crows ] does it end after you've expanded your business?? after your company's gone public?

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welcome back to "squawk box." netflix captured the first emmy last night. winning best director for drama series for the critically

acclaimed "house of cards" starring kevin spacey. and while the netflix series is enjoying the victory, the stock also a winner for investors. joining us now to talk about whether it's still a winner, richard greene field at btig in new york. good morning. >> thanks for having me. >> i am a big fan, i should say of "orange is the new black." it's a good program. is the stock too high? >> well, i think what's interesting, if you look at last night's emmy victory, leave aside the award they won. really look at the commercial that ran. if you looked at just before they ran the big awards last night, there was a netflix commercial that aired and it was a really emotional spot trying to showcase their original programming. orange is the new black that you like was focused on, house of cards was in there, arrested development, dexter -- i'm sorry "derek." you know, when you look at the -- what netflix is trying to do, they are trying to build a stable of original programming that looks and feels like an

hbo, like a showtime, amc. if they can do that, there's obviously lot of long-term upside in the stock. the stock had gotten relatively full. we recently downgraded it from a buy to neutral. i think it cools off for a little bit before it ultimately probably moves higher. i think the real challenge is just continuing to have to create great original programming. >> are they going to have to raise prices. >> and keeping that price low, it's 7.99, effectively half of what hbo charges you on your cable bill is a compelling for consumers. especially when it comes for

this robust kid service that can act like a babysitter whenever you need it both in and out of the home. i think the near term is don't raise price, grow subscribers, and more than anything else, give them the opportunity to trade off existing programming, meaning stuff they buy from third parties, like nbc, cbs, all of the old stuff they're buying and actually roll those dollars into producing higher quality individuals. recently made a comment on their website that they're looking to increase their spending, you know the 10%-ish cap they were talking about in terms of how much they spend on original programming that's been removed and we think that moves more toward 20% of the overall spending. >> rich, could you ever see them spend money on sports and try to create live programming over netflix? >> you know, i would never want to say never. that's a little hard to do. but i do think that the bread and butter of netflix is ondemand programming.

i think there's such a wide category of content they can attack. and we're at a very early stage. i mean, this is their first big year of original programming. think about how long it took hbo. one of my favorite hbo shows was "dream on." and think about how long it took to get from "dream on" to the "sopranos," show time, how long it took them from their early original series to where they are now with "homeland." >> those guys were all able to build businesses at times when there weren't so many other channels with so much other programming. how much do you, we haven't talked really about amazon. amazon wants to be a player in this. others that want to be players in this. can one company like netflix, can you create a new hbo today. >> i would say, though, when you watched last night's awards, something does stand out, right. other than a couple of comedy awards, the entire show is dominated by cable brands and

online brands like netflix, there's still a tremendous amount of viewership. abc, cbs, nbc, that's a lot of viewers to pick at. and so when you think about the opportunity to offer consumers the ability to watch whenever they want to watch, how they want to watch, on any platform and wherever they want to watch, i think that actually, you know, creates a big tailwind. i think there's a lot of viewers to go around. i think the real question we should be ask is what happens to broadcast television where episodes get spaced out over 22 weeks if not more because of all of the interruptions and delays that you end up seeing and end up with 22 minutes of commercials, that experience compared to watching on a service like netflix and amazon is a pretty different experience. >> hi, rich, it's steve rattner, really, i think what you're saying is it's an execution problem. everyone has access to these customers. it's a fast-changing landscape and we're going to a world where

consumers can bypass the cable operators, pay for it themselves, maybe do something with their cable bill, who knows, but it's a wide open field for netflix, right? >> yeah, the only thing i would comment is they can't really get rid of their cable service per se. they still need their broad band bill. the isp operators becomes that much more valuable. that's an important point relative to something like directv in how those stocks perform. but i do think that when you look at the price value equation of what netflix is creating. it does make consumers think about how much value they're getting out of their existing cable video package. and i think when you think about it, other than sports, it becomes that much harder to justify unless you have to watch content live. >> but sports are -- and i'm looking at what's happening. there's going to be more content, i think. we're going to -- nbc's doing -- we're going to do soccer now,

with manchester united. the ultimate fighting is coming back. and i would think if you can get someone to sit through 2 1/2 minutes of commercials, if you can get -- because they don't do it anymore. i mean, if you really needed to do something where you're trying to show it to 30 million people and you need them to sit through 2 1/2 minutes of commercials, still going to be network, it's just going to be with sports or news. >> you know what's amazing is fox analyst data. fox recently split from news corp. had an analyst day. and almost the entire day was about one thing, sports, sports and more sports. creating fox sports 1. >> and suddenly -- and now all of these other things are feeding my network sports viewing because i've got this iphone and i'm following every single game whether it's college football or college hoops and now nfl. and it's almost -- i've never followed it this much. it's almost additive with all of these new devices. but i'm still back on the networks watching what i'm watching. >> well, i think that's

critical. as steve was saying, you're going to have a lot more choice. and there may be -- there's 100 million homes that pay for multichannel video from a cable satellite or a verizon fios. how much is that going to shrink by? that's not a huge amount. the reality is the cable bundle because of sports and entertainment options is a lot stickier than i think most people give it credit for. but i wouldn't be surprised to see it dwindle a little bet when you give people more options like netflix and amazon. >> i can't imagine ever watching it on some -- >> you don't have to, though. >> we watch netflix on the big tv at home. >> where you want -- >> it's easier than -- it's easier. >> xfinity is always easier. >> i'm serious. do you have it? >> i know it's very, very good. >> oh, boy. >> rich, thank you for joining us this morning. appreciate it. >> hard to find netflix on my play station. we'll have more on the

hostage situation in kenya. in the last hour and a half or so, there were reports of three explosions at that mall. we've since been told nbc, at least, has been told by security source that the building was not booby trapped. at least 59 people have already been killed and the militants are said to belong to an al qaeda-linked group. it's not known how many hostages are being held. but the group has demanded that kenya pull its troops out of neighboring somalia. we are following the situation and we will get a live report in a little bit. plus, more on the possibility of a government shutdown in the next hour with jim gilmore and former tennessee governor phil bredesen. and microsoft holding an event in new york city. expected to unveil an updated surface tablet. can the company be a viable competitor in this space? we'll find out.

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and the emmy goes to. >> only we're not talking hollywood. the battle for smartphones and tablet sales. can microsoft crack the surface? plus, the foundation for a real estate recovery. the home builders getting a boost on the fed last week. now it's time for the sector to pay up. the final hour of "squawk box" begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joe kernan along with becky quick. steve rattner, former auto czar and cnbc contributor. more from steve in just a second. but first, we have your morning headlines. >> hello. you just looking at me for that?

>> well -- >> right now. well, the hostage siege at an upscale nairobi mall, three large explosions, black smoke can be seen pouring out from behind. at least 59 people were killed when militants stormed the shopping mall saturday. the militant group has claimed responsibility for the attack saying it was in retaliation for a kenyan military intervention in somalia. a live report from nbc's ron allen on the ground in kenya, we're going to have that in about 15 minutes. in corporate news, the financial times reports that city group has suffered a significant decline in trading revenue that threatens to depress the bank's earnings. a market wide slowdown in activity and also take a look at the shares of blackberry hit hard again today on friday, the company warned it expects to report a huge quarterly operating loss and cut more than a third of the global workforce.

it's also saying it's getting out of the consumer business entirely. we're going to talk to a tech analyst about all of that in a few minutes. in the meantime, let's get a check on the overall markets. futures have been indicated higher, although they give back much of the gains we've seen earlier. the dow futures still indicated up by about 19 points, the s&p and nasdaq futures have turned down. s&p indicated down by 3.8 points. overseas in asia, the nikkei closed down slightly as did the hang seng, the shanghai composite up by about 1.3%. and in europe and some of the early trading taking place right now, you do see red arrows. in germany, the dax down about .5%. the cac in france down about by.3%. among some of the biggest questions, the potential for a government shutdown. last week the house passed a bill to keep the government running only if obama care is defunded. that bill is now before the senate.

vowing to return the measure to the house. steve liesman with the latest survey on what americans think about what's going on in washington. and steve, i can't imagine they had too many high opinions of the place. >> we're breaking out a piece of the cnbc all-america economic survey to tell you what americans think about the news from friday. and what we find is that americans essentially oppose obama -- defunding obama care. 44% to 38%. and then we pressed a little further and said do you -- do you want to de-fund the new health care law even if it means a government shutdown? and only 19% say yes there. and you see the support arose if it means shutting down the government and defaulting on the debt. with 18%, relatively high percentage unsure. so here's what the numbers look like if you take out the support of those. you say don't de-fund obama care if it means shutting down the government and de-faulting. it's 59% to 19%. i want to show you, go back up

to the top line issue and show you some of the break downs here. men much more split than women. women pretty definitively oppose de-funding this law. men are split 43% to 42%. again, large percentages unsure. and then take a look at this chart here where we show you the support based on political breakdowns. the gop folks who describe themselves as party supporters, 68% say de-fund. all adults 38%, independents, that's where you see the majority. the gop nontea party members are actually closer to the democrats than they are to people in their own party on this particular issue defunding the health care law. if the government shuts down and if not. and you can see right there the independents start to break the other way when it comes to that and democrats firmly opposed to it. a small percentage saying to do

it under all circumstances. so, guys, we're going to have more of the results of the all-america survey beginning on thursday morning on "squawk box" but wanted to break out this one section for you with americans opinion of what's going on in washington right now after the house passed that bill last week. joe? >> all right, steve. i saved some for you, by the way. >> oh, thank you. >> you're welcome. you've got -- >> the ribs. >> i feel like you wait until i'm not going to be in the office and order the good food. >> no, but you're out a lot. you're all over the place doing your fed stuff. >> i know. >> you are. you're not here a lot. >> it's true. >> i can't plan my schedule -- >> and i miss the wendy's and the bacon cheese burger and all that stuff that comes in. i don't need it. >> you're seven minutes away from those ribs we just had. that's it. >> i'm a dry rib guy. you ever do the dry rib? >> i have. in memphis, we had some. they were good. harold ford gave us his -- >> these were wet, they came with the sauce on them. >> you'd like the sauce.

we've got a couple of governors. a member of the fix the debt campaign committee and former virginia governor jim gilmore. governor gilmore, i'll start with you. we had larry lindsey. people aren't sure what the republicans are sort of trying to set up here. he thinks they're trying to set up an eventual one-year delay they put into the budget on obama care. just getting for the personal stuff not the corporate stuff. this is like the first step towards trying to do that in future negotiations. does that make sense to you? and will the public -- will the pr backlash be too big for them to do that after this? >> i just don't think, joe, it's good tactics to think about shutting down the government. i don't think it's good tactics to talk about any kind of debt default. you know, we conservatives can offer positive programs. the obama care is a significant

problem. it's unworkable. and most importantly when it's implemented, it tamps down growth and prevents growth which is the only way out of this financial challenge that the united states is facing. but i think we conservatives can offer some positive programs will not be held hostage by anybody. and i don't think it's a political winner to talk about shutting down the government or talk about any kind of default. >> because i -- i made the point that maybe they just want to keep obama care front and center. but it's going to be front and center when we're watching to see if they sign up enough healthy young adults to pay for the expense of people rarely sick. it's not a slam dunk that, you know, that the exchanges are going to work and they're going to be able to figure out what to charge everyone. this thing could collapse in and of itself. >> absolutely. this is a radical experiment trying to socialize all medicine in the united states. it's a real problem if businesses don't want to do it, then they have to pay a big tax which is a burden on growth in the country.

if you want to grow your company bigger than 49 people, then all of a sudden there's a big tax on you. it's a real serious problem. >> yeah. >> and it really does -- it is an implementable. even the staff members of the congress aren't covered by it. but we conservatives can offer some positive approaches that allows their free market to act, puts health care back into the hands of regular people and, you know, still provides some catastrophic coverage. we can do these things. >> governor, i should apologize to you in advance. i was talking about ribs and you were the former governor of tennessee, you probably know the places i'm talking about in -- people don't necessarily think cincinnati, they might think memphis first. >> memphis is the capital of dry ribs. >> you're already on -- so what do you -- what's your response to what governor gilmore said? >> well, you know, i agree from the standpoint of tactics. i think even more fundamentally, it's such an abdication of responsibility for this country that the congress is undertaking here. in places like tennessee and a

lot of other states, we had in 2008, 2009, but we had some serious problems financial problems that came out of the recession. actually much larger, i think, than the federal government is looking at proportionally here. and democrats and republicans certainly in tennessee didn't agree about all these approaches to it. but nobody came close to things like stopping, you know, stopping the government or defaulting on debt. people know there's a place you don't go to. you know, you stay away from. and i wish the congress could kind of get back to a little more sensible -- >> yeah. but governor, you know, you're in the -- there are some that just -- they're going to say it's the republicans' fault no matter what. they don't want to work with democrats. but do you think that republicans -- can you see the point they're making, governor? do you think the democrats' side is really serious about addressing the long-term issues that we have? the entitlement issues. you're part of fix the debt.

are you seei ining cooperation them. maybe there's nothing else they can do. >> first of all, fix the debt has -- i haven't done a head count on it, but roughly an equivalent number of democrats and republicans, there's a lot of sensible people on both sides of the aisle who think this is a real problem. and, you know, the possible expenses of obama care are one of the issues to be considered. it's not the top of the list. i think anyone, republican or democrat who is serious about this has got to start looking at the more fundamental issues. the whole issue of entitlements and reform and doing that in a sensible way. this trying to de-fund obama care is a side show in this process. >> it is. but when the president -- you know that every time the debt ceiling's been raised since reagan and the democrats point out it's been raised every single time, but it's always used -- there's always something that sort of is being negotiated on both sides of a debt ceiling increase. there's no way -- i'm not going to discuss anything. you've got to do it and i'm not open to any discussions

whatsoever. it's never been like that before. >> joe, seems to me, we've got to get back on the right topic here. the fight that the impasse is going on in washington is that the left wants to raise taxes which hurts growth in this country, the right wants to do things like the sequester. there's no question that you've got to address the long-term entitlement issue or it's going to bankrupt the country. no question about that. you can't allow an open checkbook for spending. can't do that either. but in the long run, we've got to do everything we can do to grow this economy. i've been preaching it on cnbc, around the country, everywhere, and that's what we have to do. >> well, it's not grown quickly enough. >> it's not grown quickly enough. >> it's not. >> you know we're growing at about 1.6%. historically supposed to be 3.2%. and the difference in that means young people can't get jobs, african-americans are unemployed, hispanic people are unemployed. we've got to have a robust economy that allows us to deal

with challenges we're going to face in the 21st century. >> there's no better way to move forward toward giving businesses the confidence that it takes to do the hiring. there's plenty of cash out there in the corporate world than to sort of put some of this stuff behind us and give them a more stable and predictable environment. when you're sitting here and looking this fall at closing down the government, possible defaults on the debt, that's not the environment that gives businesses the confidence to expand and to hire. >> hey, governor, is this a real red line on a debt ceiling or kind of a syrian red line on the debt ceiling? can we go over it too? >> no, i mean -- >> is that rhetorical? >> we've already gone over it. we're pulling money out of other pots right now. it's a serious issue. >> it is. thanks, governors. we appreciate it. thanks for coming on today. we'll see you later. >> thanks, joe. when we come back, microsoft is expected to announce new surface tablet computers today, including a version with a

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welcome back to "squawk box," everyone. the futures are, at least at this point for the dow futures indicated higher. they have given up ground this morning. right now the dow futures up 18 points above fair value. earlier this morning, they've been up by more than 50. and the s&p 500 and the nasdaq futures have turned negative. right now, down each by over three points. in market news, there will be nearly a dozen appearances by fed heads this week. today alone, we'll be hearing from dennis lockhart. bill dudley and dallas fed president richard fisher. of course, you know, as joe said earlier, are we listening to any of these guys because they didn't give us great guidance last time around? >> given up. >> all of them -- >> not one? we should go back and watch. >> you're still going to listen. >> i'd listen to yellen, but she just canceled -- she just canceled the speech she was supposed to be giving. >> she's not giving any speeches right now. >> yeah. she's going to lay low. >> didn't you think they'd

taper? >> i think they did a terrible job of communicating. it's really amazing to me they would let the market get this far and then, boom. >> fisher, the former -- stanley fisher was out with criticism saying he thinks the fed shouldn't try to do the word guidance here. the problem is, it boxes you in, leaves you little flexibility and when circumstances change, it's a lot harder to back out. so he's a name who has been brought up as a potential dark horse candidate to run as the fed head. >> he has a different view. i would say on balance what the fed is doing toward transparency, a good thing. i was a "new york times" reporter covering the fed in the '70s. during the day, the fed funds would move a little bit. and then you would know. >> stan was here last week and he missed the days, he misses the days of volcker where things were done quietly in the middle of the night. >> i don't -- he made a lot of

money trading on that. i don't think that's the way you run a railroad. i think transparency -- >> transparency is a lot easier when the situation stays the same and when everything's lined up and when you are keeping rates low. look to see when you raise rates -- >> they could have foreshadowed this, could've changed their tone and let people realize -- >> but they're data dependent so the only transparency you need for them to say i'm data department. if they can change their minds. >> they create their own problems. >> i think this was a washington problem. i think they were worried about it and didn't want to start beforeha beforehand. >> i think, actually, they were wrong about how much the tapering was going to raise long-term rates. you saw long-term rates move so much over the last few months, i don't think they realized it was going to have that effect. >> if they saw the mortgage market and it was down 30% originations, they should still know, though -- >> it's going to happen at some point. >> as it moves up, you know, it's still a great rate and it'll come back eventually. i think unemployment wasn't great either.

i think they look and do some of the -- they add some stuff back in. what's the real rate right now? >> yeah, i agree. they said not now. they should have given us a better idea of where they're headed. we're going to talk about another company that could've given us -- i think we knew which direction this company was going. shares of blackberry getting hit this morning after the company warned of a big job loss and cuts and job loss. joining us from new york, david, good morning to you. >> good morning. >> david, i mean -- is there a future for blackberry in any shape or form that you know of? >> well, if there's one thing that gives blackberry a future, it's something called national security. it's the fact that blackberry is the standard on which armed forces and other parts of the u.s. government operate. they're not about to let a nonu.s. approved vendor or another chinese-related company come in and buy that company. >> probably not promising, however, though for blackberry. given the prospects in terms of

who could -- if you're telling me we're going to x out potential buyers, that makes it more difficult. >> well, i would say, look at the landscape of what's been going on in the smartphone area. $7.2 billion being spent by microsoft to acquire nokia's hand set business and the intellectual property portfolio. in terms of the intellectual property game has been upped. and the company that arguably kicked off the game in terms of ip buys, which is google buying motorola a couple years back, google has the war chest, if you want, to step up to the plate and say, fine, we'll take down blackberry's ip portfolio. we certain lip don't want the handsets but we'll take the blackberry enterprise server business which is something that obviously businesses do use and something that might be scaled up with google's oversight. if you're an investor in this company, it trades for how much? it sells for how much? assuming we decided it cannot remain an independent company. >> my best-case scenario is $6

which obviously says from where you are right now, another $2.50 of downside. microsoft announcing it's releasing the new surface tablet. this is another company trying desperately to try to make its way into the mobile space and struggled. >> i hope that microsoft in terms of surface tablets has a better season opener than the giants do going 0-3. but in the case of the surface tablet, you certainly can see that microsoft's focus as a company should be to make sure their software operates in a uniformly high quality manner across all of the operating systems out there. not just microsoft's own product but looking at apple's ios and google android. saying microsoft as a company is focused on making sure the pc is a device of relevance basically says that ballmer's focus is on a form factor that isn't gaining market share.

we know mobile and smartphones are gaining. >> what's the answer? i mean, we were doing would've, could've, should'ves in the last hour, and two years ago, could they have moved to the android operating system and just sold the hardware that way? is there something that microsoft still has an opportunity to do right now? >> microsoft still has, obviously, a great utility function in terms of software, whether it's with the consumer, around the office productivity suite. and as i was saying, they really should be putting their money in to make sure that remains a common use of standard people have. and from that standpoint, they shouldn't be investing this time and money into putting integrate hardware, but seems to be the direction the company's going. hopefully this may change out of the new ceo. >> thanks for your perspective this morning. >> thank you. kocoming up, china's riches man announces $8 billion film park. >> this guy's been everywhere. and then, he was one of the

few economists on wall street to get it right last week, why bank of america's ethan harris was confident the fed wasn't ready to taper. what he's looking for next.

welcome back to "squawk box" this morning. china's richest man unveiling a

plan, property developer wayne -- how am i going to pronounce his name? i don't want to get it wrong. jilin. it will boast 20 sound stages, including the world's first underwater studio. i don't know what that would look like. also an indoor amusement park and seven resort hotels. >> caruso-cabrera knows this guy. >> she profiled him. he owns amc here -- >> i'm not for profiling. >> not amc -- >> lowe's. >> yeah. lowe's. when we come back, the man behind the world's largest hedge fund wants to explain how the economy actually works. in his own words right after this.

welcome back to "squawk box" this morning. making headlines, a group of german hackers claiming to have cracked the iphone finger sprint scanner. apple said the technology promises to better protect devices from criminals and snoopers seeking access. ccc one of the world's largest and most respected hackers saying it defeated the touch

i.d. by photographing the fingerprint of the iphone's user and putting it on a transparent sheet using it for a mold for a fake finger. >> i never thought of it, you leave your fingerprints everywhere. >> and this is like james bond stuff or mission impossible stuff and if you think your fingerprint is so valuable and people can steal your fingerprint. right? >> game over, man. >> i was so excited putting in all those numbers, just stick my finger on it. >> forget it. >> we should also note this morning, the man behind the world's largest hedge fund wants to explain how the economy actually works. bridgewater's ray dalio has put together a 30-minute animated video. he's saying he feels, quote, a sense of -- deep sense of responsibility to share my simple but practical economic template. he's talked about this on "squawk box" before. take a look at what he put together. >> you need to print enough money to get the rate of income growth above the rate of interest.

however, printing money could easily be abused because it's so easy to do and people prefer it to the alternatives. the key is to avoid printing too much money and causing unacceptably high inflation the way germany did during its deleveraging in the 1920s. a deleveraging isn't so dramatic. growth is slow but debt burdens go down. >> i have to say, even a simpleton and simpleton -- just means a simple guy like myself can learn a lot from this video. i learned it on an airplane and it was cool to see. >> well, we need better economic education in this country, that we can't disagree about. right, joe? >> yeah, you mean me or what i'm hoping for? >> this is like an economic literacy class. you have to be in college -- maybe you could go a little lower. apple says more than 200

million ios devices running on the completely newly designed ios. >> i'm on it. what do you think of the new? >> my e-mail is like -- it's so white, you know what i mean? >> very white. >> it's very white. >> how do you feel about that? >> i think that's ugly your dodo case, number one, wooden. but i like a couple of things. what did you like? i guess i liked the calendar kind of sort of. >> you like the calendar better? >> yeah, what else? . . >> it's so flat. >> it's changed. >> you have to get used to it. >> like new cars. >> what do you think about the floating in and out? >> 9 million. >> with me, like i've been, i added nfl mobile. added all this stuff i never knew i could do. i follow things -- i know everything that's going on. i love actually knowing all this stuff and it's made me a better sports fan, i think. but it's not -- >> nothing to do with -- >> the stock is up. apple shares are up on this. there was a lot of concern when they weren't putting out the figures immediately last week.

people assumed that meant it was bad news. >> 9 million. first weekend iphone sales hopped 9 million. at a new record from the 5s. >> a new record for first week in sales, the demand for the new iphone has been an incredible says tim cook. and while we sold out of our initial supply, stores continue to receive shipments regularly. yeah, the stock up better than 4%. because originally when they didn't put out the sales right on the first day, people started reading into that thinking it meant bad news. >> and don't you want them to break? >> you want them to break? >> the phones. then you get a new one faster. we did a story earlier this morning about how -- >> did you forget that story? >> how they are less -- >> more delicate. >> are they? >> less indestructible. >> apparently you need the case now. >> i like having it -- >> you don't keep a case. >> i don't keep a case. >> it looks great without the

case. >> yeah, looks better. >> you like to live dangerously. >> i like the beauty of it. >> i'm waiting for the day they make these things so you don't need the case. >> built-in case. >> not built-in case, you can drop it in -- early last week, it seemed like almost every major player on wall street was betting on a scaling back of asset purchases in september. but one big bank read the fed right. saying the odds of a september taper were low. joining us right now is ethan harris. and ethan, what did you see that everybody else seemed to miss? >> i think the markets weren't listening very well to the fed. i mean, the fed told us over and over again that the move was going to be data-dependent. and the data weren't cooperating. instead of inflation moving up to 2%, it was stuck at one, growth looked like it was stuck at two instead of the three. so i think people just misread the extreme importance of data

dependence at the fed. it was really not that complicated a call. >> one of the things that surprised us is when every market watcher seemed to get on the same page and everyone was echoing this idea that the september taper was by far the most likely scenario. we didn't hear a lot of these fed speakers backing us off and you didn't have any of those lines of communication through some of the big fed reporters that you might have expected. what happened? the fed decided they didn't care? >> well, no, it was a big communication failure. the fed should have been talking more. i think two things happened. one is that i don't think they really knew what they wanted to do. i think they've decided at the meeting, you know, game-day decision, we're not going to taper, but in the run up to the meeting, they weren't sure. you were going to go out there and say, hey, guys, forget about september. the other problem is there's a bit of a communication gap at the fed. we're in a leadership transition phase where ben bernanke is kind of moving aside. he didn't speak at jackson hole

which would have been his best opportunity to straighten out the markets. and janet yellen also is less visible. think about it, she could be up for senate nomination. the last thing you want to do is be out there saying anything interesting when you've got the senate about to grill you. so she's been less visible, as well. so you've got the two leaders of the fed, both really not very visible right now. the markets took that as a sign of agreement with september. i think it was just a sign that neither of them had any talks in their calendar and didn't want to talk. >> ethan, when did qe start? i mean, it was like this -- >> last september. >> it was like this new thing, we came up with this, bernanke came up with this. haven't there been times in the history of the united states where we were growing subpar, growing under 2%, employment wasn't going gang busters, we weren't at full employment. and back then we'd do things, we'd address whatever structural problems there were and we'd get back on our feet.

wasn't this supposed to prime the pump? you almost sound like you bought into this whole thing. i thought we were priming the pump. i didn't know that the economy ran on gasoline that is qe. that the only way the economy can run was based on qe. that's -- i don't want to live in a world where the economy runs on the fed buying bonds. >> well, let's step back and think about what's going on here right now. so we were never going to get a strong recovery. i don't care what people said. we had an awful banki ining cri. and there's not a lot you can do from a policy point of view. what qe has done it hasn't given us robust growth. what it's done is fixed balance sheets. look at how low interest rates have healed bank balance sheets, household -- >> the fed's balance sheet is not going to be $5 trillion. is that okay? we took all their balance sheets and now got one big bad balance sheet. >> well, i mean, when the

economy picks up and after fixing all these balance sheets that looks likely next year, then the fed exits. >> i've heard that before, ethan. >> that's the first time -- >> no, not you, i heard everybody else saying -- >> well, because they weren't paying attention here. >> okay. so next year. next year. >> i'm saying that next year is a likely year of stronger growth. yeah. >> okay. >> we fix balance sheets. >> then we can get out, right? >> absolutely. and if they don't get out then, they're making a big mistake with qe. >> thanks for joining us. >> okay. coming up, the home builders gets a boost from the fed last week. the outlook when we return. maybe it will be okay. they had to take every bad balance sheet all the individual bad balance sheets. >> yeah. >> adds up to $5 trillion. first, though, josh lipton. he's up early, joining us from san jose with more on apple's record-breaking sales. have you been on "squawk box" before? >> no, this is the first. >> oh, my gosh.

oh, my god, yeah. >> aren't a lot of virgins out there. >> that's right. you missed the weekend launch this year, apple saying it sold 9 million 5s and 5c models. some analysts, gene munster, for example, he was saying he was actually looking for 5 million to 6 million units. remember, last year the iphone 5 at that launch, they moved 5 million units. also, we were looking for some color here on the ios 7, apple's new mobile operating system. apple saying 200 million ios systems running on the ios 7. some people are going to try to back out, do more of an apple to apple comparison. but the number of launch countries does vary with each launch. still, the headline here, apple announcing a record breaking 9 million new 5s and 5c models. more with "squawk" continues.

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the purchase business has stayed pretty strong. it's been relatively consistent. and you're even seeing that in the new home numbers and stuff. it's a consistent market. the re-fi market came down quite

a bit. and so dramatic, we'll be down second quarter, third quarter, we've been clear about that. but the purchase piece has been consistent, which is important, when you go the broader economy, that's a lot of the broader economy. people buying homes, new homes that get built. and when people buy a new home, typically a home somebody else lived in, they improve it. that's all good measure. >> that was bank of america's moynihan on the strength of the housing market. the home builders pop last week when the fed announced they will not taper. are all the home builders created equal? are you going to have winners and losers as you get into this earnings season? >> i think you could split them into two groups. first and foremost, the have and have nots. they invested in land, at the right time, not late because they didn't have the availability to finance their balance sheet. and the other side is the first time home buyer and those who aren't. >> we've got k.b. and lennar

reporting on tuesday. >> i think they would be considered the have nots. they invested over the trailing 12 months. number two, you're overlevered, you're going to have gross margin underperformance. when you look, they're a national builder. what you're going to see there is order softness probably brings down housing expectations. overall, the whole construction industry for the next couple of years. because the economy is probably from a housing perspective recovering in a slower pace we believe from a number of constraints. >> we talked to the toll brothers ceo last week and he was talking about this pent up demand out there. and finally household information. and that the building has been so far below pace for so many years at this point. is there some sort of explosion? have we already seen it? what happens? >> i think you have three key things holding you back. the first is in the housing finance side. it's well known, qm, qrm.

we're already seeing the banks pull back from some of the product as well as locking that 43% back end dti ratio. only have 1 million developed lots, that's probably number two and that's a big issue because half of those are probably considered arb. and the last piece, the labor force isn't there yet. they'd rather do jobs like fraccing or something. they get more for doing a similar type activity. >> although, we did see permits were pretty phenomenal the last report. >> it wasn't bad. you're talking low 900s. that's not the 1.5 million that people were looking for at the high end over -- call it 12 months ago. so it's a slower, gradual pace and i think that brings down expectations. and then you want to buy these stocks because people like to long them in the spring selling trade when they outperform them call it from december beginning to april end. >> so which of the stocks are your favorite? which ones would you go ahead and buy? >> i like the leverage of the first-time home buyer. we think financing might open on the edges right there -- we'll see that buyer come back.

number two, residential properties, it's not a well-known name. what's interesting, you probably have a double if you start doing intrinsic value and what the land book is based on the disclosure they provided about nine months ago. >> and the rest of the stocks if you look at them as a group, are they overvalued? >> i want say on earnings they are. and that expectation comes down. on price to book, they're about fair value. that can speak to a number of issues. most importantly, it's a sentiment roller coaster, i think it improves because you're going into the spring selling season trade. >> thanks a lot for coming in today. >> thanks for having me. coming up, jim cramer kicks off the week. his take on apple, the fed and other weekend stories. a live report when we return. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional

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. welcome back to "squawk box," everybody. headlines breaking. gm reaching an agreement to repurchase 120 million shares of series "a" preferred stocks from the uaw retiring medical benefits trust. the agreement is worth $3.2

billion or $27 a share. we just happen to have steve rattner on set with us this morning. >> this was part of how we financed the gm restructuring by getting the union health care trust fund to take some paper in effect. >> instead of cash? >> instead of cash. this is a sign of gm's health, they are in a position to get some of height-cost paper out of the way. >> good for gm and good for the union. >> win/win all around. that's why the auto rescue worked, joe. >> bin laden is dead. the auto industry is alive. i got it. let's get down to the new york stock exchange. jim cramer joins us right now. jim, we're really glad you are here to ask you about what you think about this iphone news, about 9 million being sold the first time out. that was better than the street had expected. >> i think the street has just really not understood this is the kind of product that's in control by david pogue. a great interview last week on cnbc, by the usa "today" critics. this was just basically sold as

a very low-key announcement. the critics loved it. i think that's really how wall street could have gotten it so wrong. they never factor in the actual substance. they only factor in whether china is going to buy it or what the cost is. i know i felt good about that too. as soon as you read those reviews, you knew it was going to sell well. >> up $25 at this point. we'll continue to keep an eye on that. >> can i ask andrew a question? >> sure. >> yes, sir. >> andrew, was it not, was it not just an entire way to get rid of mr. white, paperover green matter? >> i'm not reading it. >> it's in the papers. >> i'm not reading it. i'm not reading it. >> everyone is talking about charlie rose. >> have you seen the red wedding? >> do you want me to tell you about the red wedding. three major characters die. you want me to spoil that. >> all i was doing was talking. >> shut up, cramer. stop it. >> it's public record. >> i know enough now his hair is

back. i saw that. he is a king pin. i found out that he gets out, he gets caught. do i know all these things. >> we only showed a brief clip so you know what's going on. >> i'm on the third season, jim. >> i'm actually contemplating writing a column to reflect the column in the paper just as sort of -- >> i think you should interview brian, because brian can actually tell you about how p a apple and his crystal meth are the same thing. it is about distribution. >> it's in china too. >> jim, i know you have never seen the crying game. >> it's a guy. >> thanks, jim. we'll see you in just a few minutes. >> whoo, just a few minutes left. we have the last word from steve rattner right after this. first, andrew's big breaking bad moment. we just stomped all over it. that's okay. if you haven't seen it yet, you've got to stick around. we'll be right back. revolutionizing an industry can be a tough act to follow,

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with advanced hardware and innovative software. using data predictively to help power entire cities. so the turbines of today... will power us all... into the future. ♪ >> are you aware that your people that suggested that in "the new york times," dourl them suggesting that the grid -- >> that was "breaking bad" last night. not a spoiler. joe is still on the third season. >> the amc grabbed the prestigious best drama prize.

hbo dominated with the most trophies. modern family won best comedy and a special shoutout to vince gill and peter gould that wrote that episode for the name check, career highlight for me, personally. it is my favorite show. they mentioned my name. charlie rose said my name. >> you got it in with the writer. >> exactly. >> the same writer that wrote' too big to fail." >> i love the show. stock of the day up. highlight for who? >> the kaku na. this hated right-wing blowheart was the thing. apple expects fourth quarter revenue to be near the high-end of the previous range.

9 million of those breakable phones. they are a little bit more breakable supposedly. we are going to get the last word from our guest host, steve rattner. do you have a last word to leave us with? >> my last word is, this is going to be an amazing week in washington. we should all stay tuned, because the consequences really are huge. >> you think we are going over the cliff, if you will. there is no cliff this time. it is different. >> remember, there are two cliffs, if you want to call them. the continuing resolution so the government gets funded and the debt ceiling. i think we are likely to go over the first of them. we are likely to have a government shutdown. i am not sure of that but it looks like that. hopefully, that will bring some sense to people so we don't have' default which would be a disaster. government shutdowns, we have been there. we have done that. we know how to do it. >> you aren ainvestor. you invest michael bloomberg's money. what do you do if you know this is coming? >> i hate giving stock market advice but it is never right. i think the market could have some rough days ahead over the

next couple of weeks. >> go ahead. >> i was just going to say, how do you also throw in what's happening at the u.n. this week? you have obama coming and iran and syria playing into that. is that a side show from a domestic policy perspective at this point? >> i think it is a side show in the short-run. syria is on a path. if they stay on that path, that shouldn't have a great market effect. iran, we are still trying to figure out. it is certainly not worse than it is wa. the risk from the u.s. from the markets is that something goes offtrack and you have something blow up, while this diplomatic dance is going on. i'm more focused on what's going on in washington. i think that's the big action. >> where are you going to move if de blasio becomes mayor? >> i'm hopeful that he will see the light and understand that new york is a city of people of all different levels of income and need and -- >> why do you think there was no other perhaps better candidates, no one from the business community showed up this round? >> because it is almost impossible. mike bloomberg was an accidental

mayor. he got elected in 2001 right after 9/11. ru rudy julie annie. you don't have as many ethnic groups to help. >> thank you, steve. appreciate it. that does it for us. make sure you join us tomorrow. right now, it is time for "squawk on the street." fall is officially here. not only are the seasons changing, so is the dow. today, goldman, nike, visa are in. alcoa, hp and bank of american are out. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber of the new york stock exchange. we are juggling a lot. the continuing threat of a government shutdown. decent sales numbers on the iphone, pretty good economic data. the shanghai getting a