dysfunction in washington that's pretty polarized down there and i think we're going to have sort of a replay in january and february of what we've had more recently. >> jim, ten seconds. >> i think when the fed does taper, the economy will be good enough to deal with it. >> thanks, guys. happy halloween, everybody. be sure to join us tomorrow. "squawk on the street" begins right now. happy halloween is right. good morning. welcome to street treat. i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. we have a revenue miss at visa, a rough conference call, a fed statement that some are calling surprisingly hawkish. we have a big show today packed with that and more. the 10-year yield is right around 2.51.

and for the time being europe is mostly in the green over there our road map begins with facebook, smashing analyst comments. the cfo's comments about teens using the site is spooking investors. >> and a double dose of dow earnings. >> and we'll speak exclusively with the ceo kroeger in just a few minutes. >> investors were spooked when the cfo made comments about teens. >> usage of facebook among u.s. teens was stable from q 2 to q3 but we did see a decrease in

daily users, specifically among younger teens. >> this is nothing new. they've been talking about this for a while. but to hear them say it, they have denied it in the past. >> the q & a for this is the stock was at 55 and 56. first you hear teenage decline, 52, 53. and then you hear ads will decline and it's boom, to 50. >> they're doing $2 billion in revenues now. >> you listen to the call, you were kind of blown away by how well they're do bug thing but ty give you that chink. the thesis by the end is this -- people doesn't use it anymore because they're younger.

next thing you know, it's a fiasco. my charitable sold some of the stock because we feared everything had to be perfect and not everything was perfect. >> they've been able to make it up in pricing, they've been able to make it up in putting more ads on the feeds. but they admit they can't cram any more in there anymore. >> and it was questioned when are you going to do video in instagram hasn't monetized yet. >> i want to stop you at instagram. i'm getting familiar with the younger teen graphic. not quite. >> hello! are you snap chatting, partner? >> no, but instagram -- thank you for that snap chat reference. i wonder whether they're losing facebook people to instagram, which by the way is just keeping them in the family. >> that was my point. they didn't even talk about how instagram is growing and they haven't monetized instagram yet.

so i think the arc is not as negative as people portray. it wasn't as positive as 56, it isn't as negative as 45, 46 where the stock seems to be headed. >> revenue per user is now more than $1. >> yeah, they put good number. people watch the internet 5.25 hours per day, i know you watch tv 4.5 hours per days. if facebook has 1 in eight on the desktop and 1 in 5 minutes on mobile. and you think 1.2 million users and this a great story. >> at what price, though? >> they want to take it to 45, 46 and then you buy it there. >> all right. let's get on to starbucks. shares of starbucks heading lower after its 2014 profit estimates came in lower, this after a 34% growth in profits,

thanks to strong profit gains and an increase in spending by customers. >> at one point howard schultz has to say, wait a second, hey, guys, i sense the tension. you keep wanting us to raise same-store sales. it would be irresponsible. this was exactly word for word with what he said last time but it doesn't matter. the jackals will not stop, the knit-pickers will not stop. you think in the end maybe dunkin donuts is better. teavana is just kicking in. but you know what? the theme of this day is profit taking. people are looking for any excuse to profit take and starbucks is a high multiple stocks selling at twice its growth rate and the analysts turned on it as if it were weight watchers, as if it were avon.

i was at the canal last night -- >> it's like venice over there. you take a gondola, go see the new whole foods. >> you mentioned schultz's relationship with those on the call. here's a listen to what schultz said on the conference call last night. >> it seems that we can't get through a conference call without somehow this tension between us and you regarding to comp growth guidance. the guidance we're giving is the most responsible guidance we could possibly provide you, especially when you consider the maturation of our store base and the number of stores. >> he did say last year was a stunning year. funny, too, we just got done talking about facebook. there were some that thought that sandberg was combative on the call, trying to compare the users of other sites and media. >> that was a great litany of who they're doing better than.

both calls had the same commonality, which is are you kidding me, we're crushing everybody and that's not enough for you? in the starbucks call, you're talking about 8% connemps. i had buffalo wild wings on last night. we take the stock up 15 on 5% comps. some of the guys are c students, they bring home a b and you're buying them a porsche. >> but it's hard to maintain that, especially when you have a 34 multiple. in other words, at least the risk grows that the down side will be larger. >> yes. that's why these were both very expensive, facebook and starbucks. they had run a lot. people are looking for a reason to say, you know what, i think it's done. starbucks is an incredibly well-run company, it did move up a lot. you're looking for a buy point. >> to be fair to those who are not as bullish as you are, they

said revenue would be 10 to 13. now they say 10 plus. we were looking for comps, china came in 8. >> i'm not denying. i'm not saying these stocks should be up. i'm saying when they get to a certain point, my charitable trust, let's say starbucks goes down to 74, 75, you're getting the best in show. then you say who has better growth in the end? the teen-age thing did bother me. >> the platform at facebook is just so enormous, seems to have so much power embedded in it. if you believe they'll figure it out, they'll figure it out. figured out mobile and it didn't take them that long. >> but when they put it in your face, you feel like maybe i should be more worried, even though it was kind of an offhand comment. but why'd they put it in?

you want to parse these conference calls. they're giving you a heads up that this is going to be maybe now twitter comes out and says we have that cohort beat and twitter gets valued at $25 billion. we get to kind of this arms race among these companies with teenage and growth rate. i come back and say these are really good companies, they ran a great deal. >> a double dose of dow earnings, exxon mobil's third quarter profit did total 8%, still total -- visa will be in red, the company sets aside money for taxes, they see activity slowing in october. others pointing out they've got regulatory pressure, they have square on their tail. what do you have make of visa? >> i know this is going to sound like a broken record. another company you want to buy

on what i felt was somewhat targeted weakness. they had been giving you insight that things won't be that strong. why would i think to buy it? the buyback is for real. the company is a juggernaut, it's incredibly well run. you're getting it at a discount. so many companies ran into the quarter expecting things were going to be so much better than expected. you can't maintain what the analysts want. >> can you say that for the overall market then? >> yes. >> it seems to be a story that is shared. >> yes, can you say that for the overall market. >> 5% plus for october. visa is up 6, 7 in october al e alone. >> they didn't come up with a new thing for hep-c. >> they didn't do chicken wings. >> the stories that are doing well are stories where gross margins are going up. i didn't hear a lot of gross

margins going up gross guidance last night. the gross margins for a coffee and for a copy that you have generate are so immense. there's a level but they did run up. >> exxon, the journal tripes to give them kudos for at least returning capital. >> and their return on invested capital is actually quite strong. they just may not put enough it have out there perhaps. >> it was a better quarter than expected. i'm so used to production growth being down. refinery, everyone has a problem with refinery and they came out and said it. this is an example of a stock that i felt there had been little excitement to come and that's the exact opposite i thought. >> this is not a stock that's been running up for a very long time. >> no. it is a bank. there's someone here to runs the exxon buyback. and that's been a constant theme since the mid 80s.

so, yeah, i thought it was better. >> so if the theme of the day is profit taking and people are looking for any excuse to take profits, you don't buy this market? >> got to wait. when they decide collectively that we've all run too far, give it some room. give it some room. >> all right. you have to. >> when we come back, david dillon will visit us at post nine. what is the head of the largest supermarket saying about consumer spending? >> robert shiller, a lot to talk about. claims, by the way, did fall 10,000 to 340. they say it a claim number out of california at last. a lot more "squawk on the street" from post nine in a moment. ♪ here come johnny singing i got a woman snm designed by hp, will give ups over twice the performance,

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♪ i always feel like somebody's watching me ♪ gas prices are hitting new lows. what does it all mean for the consumer? let's bring in david dillon, chairman and ceo of kroegger, t nation's largest grocery store

chain. mr. dillon, this food stamps thing kind of snuck up on everybody. what will be the impact really? >> the impact is significant to the customers who rely on food stamps to pay for their food. after all, that's an obvious necessity. at kroger, we don't expect the impact to be significant. so much so that we confirmed our guidance for sales and earnings yesterday for the rest of this year and that's with the full knowledge of what we think will happen with food stamps. but the economy, as you've seen, is a bit fragile, improving but still fragile and the customers' lives are a bit fragile. if you take anything out of food stamps for them, it makes them stretch their budget. i do think it may affect them on what they have to spend on disposable income and restaurants and theaters and other places. >> you have done a remarkable job with loyalty and affinity jobs, a fantastic job with private label, better than any other supermarket. do those also play into your

hands where food stamps are cut back? >> for food stamps information, we have a good sense of what our customer needs and what applies in their household. we look at the broader world and our private label speaks to everybody, not just to those on food stamps. >> those macro dynamics, is it lost, pricing power? >> i don't know that it's lost. i look at it as we're trying to find ways to have lower prices for our customers, sort of counterintuitive. most retailers are finding ways to have higher prices. we want to find ways to have lower prices. for the last ten years we've been able to lower prices. >> what's been the key to lowering costs? we all know you compete with walmart. you perhaps and differently than

many of your competitors have succeeded in doing that but what's been the key to getting costs lower? >> you have to every once in a while go back through and say how do we want to do our processes different, things that don't affect the customers. years ago we used to do our accounting in individual locations and now we do it in a central division. lower prices drives higher sales and earnings. >> you're in the process of closing the highest tweeter acquisition, i believe. where are the opportunities for kroger? are they in continuing to continuing to consolidate the industry? >> harris teeter is a really good opportunity because they're a great chain. we've admired them a long time. we've said we're very collective on acquisitions and mergers.

we want to look for partners who we can learn as much from as we may be able to learn from them. in harris teeter's case, they're going to teach us a lot of thing. >> i had the good fortune of sitting down with the ceo of costco this morning. they aspire to be the cheapest. amazon building out warehouses around the country, maybe for delivery of same-day food, is this a pinch on kroger? >> where people want to buy there food is all over the place. it's the costcos, the drugstores, the club stores. everybody wants into the act. we think it have as the retail industry, not just the supermarket industry. we've been competing in that for a long time and we will continue to do so successfully. >> even with amazon?

>> sure. amazon is a great example. it illustrates people are interested in the digital world. they're interested in home delivery. we've been doing home delivery in the denver market for about 20 years. it's been super for us except customers aren't as excited about it generally across the u.s. yet. i think they will be someday and when they are, we will be there and be ready the other side of the digital world actually is more interesting today. customers are really into this is using the apps and digital coupons, communicating digitally and we do a lot of that. we do millions ofline coupons and our app, if you haven't tried it out, is very special. >> finally, the high end, right, we talk about whole foods, fairway, sprouts. has that brought more opportunities than challenges to the market overall? >> the high end is a really good opportunity. and we do well there as well. and that's one of the other places that the information we have about our customers works to our advantage.

we can understand the household and address you in a more personal way in a treats you as an individual customer. so we're very excited about that end of the market. we're actually excited about each of the segments of the market because of the information that we have available to us. >> you've been the used category winner, taking share of everybody. i want to congratulate you for just a phenomenal couple of years. that's david dillon, chairman and ceo of kroger. >> thanks, jim. happy halloween. >> when we come back, have no fear, cramer is in your corner when it comes to making money. take a look at futures here. we'll get the opening bell in just about nine minutes. don't go away. ♪ that's correct. cause i'm really nervous about getting trapped. why's that? uh, mark? go get help! i have my reasons. look, you don't have to feel trapped

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♪ i want candy >> there's going to be a lot of candy at my house today. let's talk weight watchers, talking about candy. >> they better hope a lot more people eat candy. this is going to be the big loser of the day other than avon. i can strategize about why they're having less traffic, but i think it's the fit bit world, i think it's the world of the device that allows you to keep track versus yourself. it is making it so that you are your own personal weight watchers. technology i think is doing in weight watchers right here. >> the digital revolution hurting weight watchers? though you still need a plan and a strategy, don't you? i wouldn't know. >> when you have fit bit, you see at the end of the day i only

walked 12,000 steps, tomorrow i'm going to walk 13,000 steps. this is a great company. >> it is? it's down 36 -- >> let me back up. that model has done a lot of good for people. that model may be being outmoded by tech. the stock is saying there's a secular trend against this company and i'm saying that it's the world of technology and the world you wear on your wrist and you're competing. >> talked to kroger about amazon. so many ways you wouldn't necessarily think as -- >> right now the world is tipping. there are so many companies doing sole things that are disrupted. can you believe it, weight watchers being disrupted by technology. >> we'll be watching that stock and a lot more. coming up, the bond king and the nobel prize winner together. we'll have yale's robert shiller

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on the street," live from the financial capital of the world, the opening bell set to ring in just about a minute and a half. a lot going on. we're going to watch visa closely today. that's likely to be the biggest drag on the dow, given the price-weighted index. >> this is a time that every time it has gotten hit, you had to buy it. when it settled down. this time is no different. i was talking with david walking over. am i a little less bullish today? we had such a remarkable run. if i stay bullish forever, what does that make me? what's working are companies that hadn't been working. expedia, disappointed horribly. visa, starbucks, facebook, those have been rockets. people are saying going into a new month, maybe take some money off the table, can't disagree. >> mastercard did beat 14% increase on a local currency basis in terms of spending.

their conference call began at 9:00. they'll likely be asked the same questions that visa -- >> i said take a look at a company like skyworks. nobody liked it coming in. suddenly they love it. [ bell ringing ] >> the operator of china'sli online ipo celebrating in the marketplace. and scholastic, celebrating children's books. >> we didn't dress up? >> no. my kids are now too old to trick or treat and it's driving me crazy. >> oh. >> we're in the zone. >> enjoy it while it lasts. >> we haven't done sony. they did cut their full-year forecast by about 40%.

they're blaming some box office figures that does bring a discussion about whether dan loeb's view of the company has been vindicated. >> costco kind of took my breath away. i had this narrative i wanted to do in the interview. suddenly he said tvs not selling well, i thought, sony, i have to talk about how sony may be hurt. the market overroad me. -- overrode me. loeb's a combative fellow. whether or not he's going to mix it up with george clooney, i don't know. somewhat unexpected, even though we know the numbers from after earth and a number of those other movies were not good, they

were not able to make it up within the division with other more stellar performances. >> hence why iger has spent so much time rolling the dice to get away from such fickle movies. >> sherry mccoy said the quarter was tough. >> so often you get these conference calls, that's good, that's good, that's good. >> sharon mccoy from johnson & johnson does just lower the boom. we had a tough quarter. what a breath of fresh air. >> they cite macro economic head winds and continued weakness in north america. >> they ran into a macro economic buzz saw. >> meantime, expedia will do okay. beats by 8 cents, revenue above consensus, increased bookings,

travel continue. >> there had been a little disruptive -- there had been a sea change in some of these online companies. the in i own, expedia is very important. you want to cut travel expenses, go use expedia. the wall has been removed. they've got some terrific, less market deleverage. >> what i've heard from airline executives is the government shutdown did have an impact but it came right back. t the minute it stopped, they saw bookings -- >> they just all fly by plane? they don't take cars? >> don't fly first class? >> no, i don't believe they do. >> and anything back below first class, very cramped. >> how would you know? >> when was the last time? give me a break.

keep your eye on starbucks. it's not the worst loser today. just a little behind visa. a 2%, 3% move here, jim, will get your attention. but in the context, you were saying -- >> stocks have been fabulous. if we're going to turn on stocks and not recognize this is just profit taking, you're going to miss a great opportunity. let it come in a little and then -- i don't want to say go right back out, that will be glib. the companies are doing so well and stocks have advanced so well -- unless you shot the lights out -- i have harmon on tonight. people thought they shot the lights out. if you did incredibly well like howard schultz did at starbucks, at a certain price you just go in and buy it again. >> exxon, marathon, conoco, that's going to be a segment to watch today. >> exxon, production growth was good. i was pleasantly surprised by that.

i'd been saying that exxon -- that exxon and chevron were like pfizer and it's nice to see a big dog get a little run here. >> you know how hard it is to keep up with you in the control room? >> i got to get to the control room while i'm doing this. >> i'm not sure but we'll figure it out with up. >> well, you take first class. >> let's get to bob pisani. happy halloween. >> happy halloween to you. >> we do have a chinese ipo. it's been a while since we've seen one, an online retailer. price talk was roughly 13 to 15. they priced it at 17. then it went to 15 and 16.

the bottom line is right now it's looking at 20 to 22. so from roughly 15 to 16 to 20, 22, looks like it's going to open on a nice pop here. elsewhere i want to pick up the discussion on big oil you were talking about. refining margins are tough but lower oil production is still the biggest problem big oil has gotten, not the fraging companies. mobil is reporting problems. so put up the screen here. for production in 2010, they did 883,000 barrels, this is oil production. 737 in 2011 and 702 in 2012 and they're going to be down again in 2013. a year ago they were $2.13 a year before that.

this is the biggest problem with big oil. they keep buying back stock. they're going to do it again, another 3 billion in the fourth quarter and the dividend is 3% almost. that's what keeping these companies up. conoco phillips has bigger problems. their production numbers have been declining for years. the stock is up this year, they have an almost 4% dividend yield. people are buying these companies just on the base of the difficult depend yield. royal dutch shell, they have big problems in nigeria, they have declining production as well as weak industry margins here. the growth is coming and jim is right, from all the fracking plays, look at pioneer natural resourc resources, halliburton, in the fracking services areas, you're up 95%. >> thanks very much, bob pisani.

>> time to talk time warner cable. time warner cable this morning reported earnings that were not particularly strong. however, the stock is up. as for the numbers themselves, let's remember the big dispute with cbs was off. the numbers on that metric at least came in worse than expected. the company losing 429,000 primary subscription units during the quarter. it lost broadband subscribers for the first time ever. it was done 24,000. consensus had been for a gain. they're running, by the way, 6% loss overall of its video subscriber base over the last 12 months and about 2.2% gains in broad band. another reason of course why the stock as you look at all the

losses in high speed video and voice, another reason the stock is hanging in there is the overhang of m&a activity. almost all the analyst who is put their notes out this morning end with this basic theme. ubs, we expect the stock to hold up better than these results would suggest given rising expectations for a deal with charter. and we expect the stock to hold up better than these results. >> it's very unusual. usually they don't like to even talk about that. >> i got a lot more on that. let's go back to the beginning of this month. remember the liberty media analyst day? during that there was this brief slide essentially put up by the ceo, playing the music of the

rolling stone, "time is on our side," that made many people believe they're going to wait for a while. i'm here to tell you i don't think they're going to be waiting too much longer. we told you mid june a proposal had been made by charter/liberty. that was given the stiff arm by time warner cable. the question is will charter and its partner liberty, 27% onner liber -- owner liberty with a number of board seats make another play? will it be quiet, will it be public, will they go after the board of directors in some way, which they conceivably could do next year? what would a price be? time warner cable advisers talk about 8.5 times ebidta. how do you do a deal that high when your charter is far smaller

than cable. they say you're just buying us with our balance sheet. that doesn't make any sense. finally, let me end on this, our parent company, comcast. the cfo of comcast has made it clear to any investors who ask that the focus is on international if they were to do acquisitions. and he said they will not do a consent decree. there are no caps any longer on terms of how much you can own, and the question, jim, becomes if time warner cable is available, if it is looking for a white knight, does comcast in some way try to play a role there? would it threat go to a charter or would it consider stepping in? the d.o.j. might have something to say on that, especially given

vertical interjection, will it continue to say no and it's a key question as this battle heats up again. >> we often talk about execution. anecdotally time warner not a well executed company. comcast anecdotally and empirically a well executed company. >> 1,200 software engineers, xfinity lauded by many. time warner cable bears paying attention to. >> so you buy a company that doesn't have the great cash flow and gross margins and execution, you run through your system and suddenly it's very accretive. >> the numbers can be extremely accretive, if comcast steps up, not that it will. >> a lot more room to make money off of time warner if you buy them than to just on the stock.

>> let's get to rick santelli in chicago to check out the bond pits. >> it looked like rates moved up yesterday. look at the context of where they started out the session. dollar index is stuck a bit. two-day chart is holding up. why is it holding? up most likely because of rate decrease. you can see dollar index at 80. now i'm going to run. in a couple minutes we're going to do chicago purchasing manager survey. >> all right, rick. thank you very much. the dow is down about 13 points. kelly evans here at post nine joining us. i think talking about maybe what larry said earlier. >> the theme is double trouble

boil and trouble. just some context on the kind of month we're about to have. the s&p 500 on track to post a gain of 5%, best month live glyn over two years, haven't had a real stock correction in over two years. we've talked at length about valuation, multiples, et cetera. that's bubble part one and bubble part two, a lot of people feel a decoupling. the other day there were comments that we're seeing bubble-like markets again and said that's in part thanks to the federal reserve. he's not the only one either who has been talking about bubbles making a comeback. bill gross making comments suggesting that prices are

artificially high. he's not just talking about the short-term move here or the fed. in his latest investor letter, this is where the toil and trouble comes in. he says myself and other managers have been riding a 20-year credit boom, this is not something we created, it's something we rode and it's time to return the share to labor that capital has accumulated. >> rick? >> i'm going to put an asterisk on this, everybody. many of the services we get our information from are showing 65.9 for the chicago purchasing manager's survey. deep inside i just find that a bit hard to believe. i think maybe there's some type of miscommunication there. if that stands, that's a whopper of a number. if we look at new orders, they also -- this is kind of crazy. they're looking at 74.3 on new

orders from 58.9? if these numbers are accurate, this is a blowout report. if you look at the employment index, 57.7 versus 53.2, that makes sense but, as i said, these numbers are stratospheric. somebody is giddy looking at what the numbers say. back to you. >> i want to look at wuba, you can see it is up rather nicely at this point. it is -- and we always like to put some sort of tag on things to make you understand them. so the craigs list in this case of china. i'm sure it not quite that but it is what they call a very large marketplace, online marketplace connecting local

merchants and consumers, not nearly as larges profits compared to alibaba. >> ipos continue to make you money. >> and china hasn't seen many given a lot of accounting concerns. muddy water, they come still and go after these companies. this is the first we've soon in a while. >> that's great you mentioned that. people got burned really seriously badly on a lot of chinese ipos. i'm told this is a high-quality company. >> when we come back, talk about sky high, shares of spirit airlines have been soaring, more than doubling so far this year. we'll talk to the ceo about the discount carrier's growth strategy and where low fares and fees fit. and we'll try to make sense of the chicago cmi number. best in two years? we'll figure that out when we come back. ♪ good-bye to people i've trusted ♪

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nobel prize winning economist robert shiller, and bond guru jeff gundlach will join to us talk about a new fund they're starting together. and shiller said that young people with a moral purpose should work at goldman sachs saying "when you study finance, you are studying how to make things happen on a big scale, on a lasting scale, that has to matter more than getting into google and programming some little things. >> it's an interesting story if in fact he means that. >> i worked at goldman. i went there to make a lot of money because i was poor.

>> unlike everybody else. >> what we did was go there to make money. if that is a higher calling, sensational. i pushed paper from here to over here. it was a tremendous exercise in greatness in america, versus the google people, all they ever do is create the greatest wealth ever. just a second, i'm going to do my goldman thing. i'm moving the paper from here to here. i made millions of dollars. google, all they did was change your life, make it so you could look up anything. >> self-driving car. >> it does bring to mind what druckenmiller said yesterday about this, best american model business. >> every kid in the world wants to work at facebook and google. can you not get a job there. goldman sachs also recruits and you want to make a lot of money but we have engineers coming out

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we feel very good about how we're seeing some of our seas seasonal christmas items selling, our perapparel and hardware are very good. the area that's probably weak at the moment is probably television sets, computer. but our tablet business, which i think is going to be a big business this holiday season i think is doing pretty well for us. >> costco's craig jelinek. let's go to "six in 60." >> when deutsche bank came out and said it could be negative at the bell, i don't want to hear that. >> jeffrey's lowers price target

on gap. >> i put this in. there's jelinek saying apparel is selling well. he did emphasize tablets are very strong. tablets the concept, not apple. >> steeple does cut soda. >> there's a lot of die hards in soda stream. it also puts a damper on bed bath, though it shouldn't. >> carbo ceramics? >> they have the best fracking materials. look at that. >> and finally, parago. >> this example is not good. look what happens when you blow it, so to speak, though i didn't think they did. i don't know why that's doing that and then you come back and everybody loves it. this is embassy ped xpedia here

here. >> tonight you got costco and harmon as well? >> harmon is a company that people love today. oh, man, i'm striking out everywhere. people do not understand when you deliver superior sound equipment, you make a ton of money and harmon is delivering. >> when we come back, a face-off on facebook after that company's quarterly results. plus a ceo hat trick. live interviews with significant in a, expedia and spirit. keep it right here. ♪

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welcome back to "squawk on the street." you are going to look at a live shot at reagan national airport, where the faa is expected to make an announcement regarding the use of your electronic devices while flying. we are going to take that live once the news conference begins. we're told they may have some findings they'll share with the flying public. in the meantime, let's bring in phil lebeau and talk about what they might possibly say, phil. everyone wants to know something about this story. >> carl, i think at the end of the day they're going to say they agree with the findings of a committee that was put together to make some

recommendations on changing the policy. i think michael is walking toward the podium now. essentially they'll say you'll be able to keep on electron ic devices below 10,000 feet but will you not be able to text or send e-mails. otherwise if you're listening to ipod or are on kindle, it's okay. it's the faa rule they're trying to enforce. on most flights i've been on and i know you've been on these flights as well, a lot of people don't listen to those warnings. >> it always brings on the uncomfortable conversation between one passenger and the flight attendant. >> what do we know about

ayannicaya avionics and electronic signals? >> when tests have been done, there's never been any conclusive evidence that a blackberry or iphone sending out a text message interferes with the avionics in airplanes. those anecdotal reports cannot be dismissed as somebody thought they saw something, there's enough there they want to be cautious, which is why i think you'll see them say they're not comfortable with people sending out signals, a text or e-mail. >> the consumer electronic association saying they want to help passengers stay connected

to their loved ones. there was a time when we were concerned that terrorists could detonate on take-off. is that not a concern anymore? >> no. they don't want to see below 10,000 people, a concern that somebody might have something more criminal in mind. that's why they're going to keep this ban in place for any device that might potentially send out a signal. the question of being able to play word with friends, it's a little silly that a flight attendant comes up and says you have your kindle on, turn your kindle off. the real current is whether or not you are sending an e-mail or potentially doing something that could interfere with the avionics of the plane. >> phil, thank you for that.

we'll keep our eye on the podium at reagan international. we want to bring in ben baldanza, the ceo of spirit airlines. i wonder if you feel strongly about the topic we're about to discuss here as we watch the faa? >> well, you know, a large number of our customers bring a smartphone or tablet on board the airplane. so their ability to use it, as long as it's safe for the airline, we'll be fully in support of that. >> well said. we'll see what they say. the quarter, ben, again we've talked about your strategy of relying on fees, revenue per seat mile up 89. i'm not sure if anyone has posted a number like that. how long can it continue? >> it's been a great quarter for us. we have a great team putting out the results. it's been a result of good

capacity discipline in the industry, which is positive, that's supported a generally higher fare environment and the spirit model of taking a really low fair and adding choices so can you customize your total price as been working really well. we think this can continue for a while. if you are look in europe, for example, we're the only airline that operates like them in north america. so i think we've got a lot of runway ahead of us. >> ben, i just want to update people, the faa statement is out and they say passengers can safely use portable electronic devices during all phases of the flight, with very limited exceptions. we were talking about fees. a lot of airlines have started to use mobile, wifa, those kinds of services as a major source of income. does this potentially cut off that source of income if people can now use their devices as

they have? >> well, it's unclear. i think the usage of paid wifi on airplanes is generally pretty low. we don't offer that service on spirit right now because we can't make it a profit center and if we can't make it a profit center, we're not going to do it. but i think it probably would affect usage somewhat. on the other hand, if can you use your device during more of the flight, it might encourage more usage. >> ben, don't go anywhere. let me bring back in phil lebeau and talk about what the faa is saying. they expect most carriers will approve that it's safe to use devices pretty much gate to gate by the end of the year. >> i'm sorry, ben, go ahead. >> i'm happy to stay with you. >> i have a question for ben.

i saw some of your comments after your earnings report yesterday that you were considering perhaps modifying your bag fees so that perhaps people would pay more to check a bag on certain flights, if it's a popular flight, and perhaps less if it's a less popular flight. can you give me any sense of how far along you are in developing that modification and how it might impact passengers? >> it's just a concept right now so we've got a lot of work to do on it before it would be a reality. the idea would be to price bags and seat assignments similar to the way tickets are pryce, higher priced during high demand periods, low are priced in lowerity manned periods. we think it would be a real consumer benefit, more people might be able to check bags and pick the seat. more often the prices would be lowered rather than raised. but in the fewer times of the year when the dee manned is in the airlines' favor, we can pump

the price a little bit. >> ben, operating expenses in the quarter actually up year over year. we've seen crude come down to 96 and change this morning. >> we look at a curve just like you guys do. we could predict it better, i probably wouldn't be in the airline business. but generally we watch it pretty closely. we try to be a really good user of fuel. we're proud of the fact that at spirit we burn less fuel per seat than any other airline. that makes as you real efficient user but we pry trito get our revenue to react quickly to stay ahead of that. but weefr encouraged by the current fuel environment and we hope that can remain. >> it's been a huge boone for the space. thanks for chatting about some of these other issues, too. see you next time.

>> ben baldanza of spirit. what a session last night on facebook after hours, experiencing what some are calling to and angst today. the company's cfo saying young people just aren't using the site as much. should investors be worried? and companies reporting bookings are on the rise at expedia today. the dow close to session lows, down 44. life inspires your trading. tdd#: 1-800-345-2550 where others see fads... tdd#: 1-800-345-2550 ...you see opportunities. tdd#: 1-800-345-2550 at schwab, we're here to help tdd#: 1-800-345-2550 turn inspiration into action. tdd#: 1-800-345-2550 we have intuitive platforms tdd#: 1-800-345-2550 to help you discover what's trending. tdd#: 1-800-345-2550 and seasoned market experts to help sharpen your instincts. tdd#: 1-800-345-2550 so you can take charge tdd#: 1-800-345-2550 of your trading.

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♪ ♪ >> welcome back. shares of facebook are trading lower this morning, down about 2%. the stock had initially popped on the earnings report until facebook cfo david ebersman made these announcement on the conference call. >> we did see a decrease in daily users specifically among younger teens. >> so the question is will that disclosure -- will the impact of changing teen-age habits hurt facebook's prospects? let's bring in our guests.

kim doesn't own facebook. i assume you still don't see value here in these shares? >> no, we don't. this is a momentum stock. we are value investors and we think one of the worst things you can do as an investor is overpay for a stock. this looks likes it's a very expensive stock at this point with an uncertain long-term future. >> before we go any further, let just concentrate on what the cfo has said here. this stock was up 15% after hours. it fell into negative territory. what he's saying is overall the teens are stable in the united states. it may be that some younger within that are decreasing their daily activity. those comments wiped out, by my calculations, 19, $20 billion of value. this is a transcript of the call last night. what he went on to say is we

don't typically call up such granular data, especially when it's of questionable statistical significance but we wanted to share this with you, since we get a lot of questions about teens. is he right to have gone out and said this, wipe $20 billion of value and potentially change the direction of this stock for the next quarter? >> well, i think we all know the stock has done extremely well. let's focus on the fundamentals and i'll get to the teen engagement issue in a second. this was the first consecutive quarter of accelerating ebidta. we don't think the teen issue will affect their moderation going forward. there will be from time to time different demographics will that slow down on the platform but i

think looking at it wholistically, the user growth and engagement growth and monetization has been secure. they've been beating numbers every quarter sin going public on mobile. they are trying to be conservative, trying to manage expectations going forward. >> kim, you're bearish on the stock but surely the fiduciary responsibility is to the shareholders to accurately represent what is going on. if this is not statistically significant, kim, should he mention it on the call? >> well, you know, i think the s.e.c. highlights that risks do need to be called out and highlighted to investors. the statistical significance is interesting but probably irrelevant here.

to looking at this stock in a more holistic view, it depends on people coming to the site. the reason it's had such meteoric growth in its revenue is because it did not build its revenue base before it went public. so we're not looking at a very mature company here. of course we don't see gains like facebook has soon in the last year in established companies, but to be perfectly honest, they need people like you and me and 10-year-olds to get on this thing and stayin gaejed and that's the real problem here. it's not necessarily revenues because revenues will come after people are spending tons of time, right? that's the theory here. >> kim, you have to admit the story for facebook works -- it seems a lot easier than it might have a year ago. you can point to their revenues -- just go back to basics. they've turned a profit now and it appears they'll continue to do so. fundamentally does this business look healthy for the longer

term? or are there reasons why this quarter we should be careful to describe as a more specific -- conditions are more specific to this quarter? >> i would say we should not even look at this company and this stock on a quarter-to-quarter basis. they're not reasoning this for the short tem. the mean reason they're trying to limit frequency of ads and news feed is because they want to make sure the use are experience is solid. number one, people are going to spend more time on digital services this year than on television, unfortunately. i think that trend is in favor of these guys. mobile advertising is growing at 50% a year and these guys are right there to capture that momentum. so in my mind quarter to quarter is not the right way to look at it. over the long term these guys will double their market share in a market that itself is going to double. >> kim, final word to you. what would change your mind?

>> me? >> i'm sorry, kim, go ahead. what would change your mind and make you want to own these shares? >> to see that they have a plan forward to make sure that their product is engaging for the long haul. normal people are pretty lousy storytellers. i'm a facebook user myself. my friends aren't that engaging. i have to see some more kind of story arc or something to keep me coming back rather than what they have to offer. i think that's really what needs to be done. and then, he's right, the money will follow. >> all right. thank you both this morning. kim forrest and arvind bhatia. >> expedia is surging on posted better than expected third quarter earnings. those results were boosted by

hotel books. the company's ceo will be on live in the next half hour. that's an interview i won't want to miss and you won't want to miss. >> you're not attempting a pronunciation on that name then? >> i could try. >> we'll all be trying later. >> coming up on the program, we'll hear from the who made retail investing what it is and what she's telling people about playing the market on main street. we'll be right back. (vo) you are a business pro.

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♪ this is halloween, this is halloween ♪ >> welcome back and happy halloween. wells fargo advisers is getting a new president. kayla tausche joins us with that special guest. >> marry mark will take the helm of wells fargo advisers. thanks for being with us. >> thank you. >> wells has flown under the radar. i'm curious about how you plan to grow the business, assets, advisers, et cetera. >> we are focused on client and client experience. our clients need us to make it simpler, getting your financial house in order can feel complex and scary. and so our focus in growing the business is a focus on clients up. >> need people to do that. there's been a land grab for talent between well fargo, morgan stanley and merrill lynch. how do you make sure you have

the right group of people to recruit your clients? >> we're really pleased the advisers who think about coming to wells fargo are focused exactly where we're focused, which is does the platform, does the experience create a great environment for their clients? >> clients have comfort levels and certain confidence levels. you talk to them every day. what is the state of the retail investor and where are they putting their money? >> retail investors are looking for guidance, looking for a plan and looking for help in terms of navigating a complex environment. our financial advisers sit down with you and help you have a difficult conversation when that's what you need to wrestle with. i've done the exact same thing myself. >> but when you think about where they're putting their money, there was a story earlier that said customers would rather pay down their debt than save for retirement. is there in input in people getting prepared?

>> it starts with a conversation. we see a lot of clients focusing on debt. so while we believe a traditional -- there a number of clients who are seeking more advice and advisory. that's probably one of our biggest growth areas. >> a lot of people have had trouble getting investors back in the market after the financial crisis. who do you see as the most underrepresented class in the investor base right now. we cover the spectrum of clients because wells fargo -- is help each one to investing and the young are investor as it moves through your life cycle. each one of those has work to do but we probably have a lot of work to do with our younger

investors. >> you have to start somewhere. mary mack, we'll keep in touch with you as you start the new job. >> thank you. >> expedia surging after reporting better than expected onli online. >> also, jeff gundlach and robert shiller are launching a new fund today. they'll be here in the next hour to talk about that. ♪ ♪ [ male announcer ] eenie. meenie. miney. go. ♪

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copenhagen khosrowshahi welcome back to "squawk on the street." i'm sharon epperson. we have breaking news from the energy department about natural gas storage levels. we're looking at natural gas prices down about 5 cents. and 3.50 will be a key psychological level. the department of energy reports supplies rose by 38 billion cubic feet. that was a little bit greater than the range that analysts were expecting. they were looking for an increase in storage between 33 and 37 billion cubic feet. it's still a lower storage injection than we normally see for this time of year or last year or the five-year average so that was expected, but we're also waiting to see what happens with the weather forecast over

the next several days into the sext several weeks. we're expecting above average temperatures this week. it's supposed to be 72 degrees in new york city tomorrow. that could also continue to pressure natural gas prices until we see the seasonal heating demand really start to kick in. back to you. >> cnbc's million dollar home franchise, all these towns have a haunted past or ties to a famous horror movie. we sent seven reporters out to give you a tour of some million dollar homes. these homes will fight to the death to advance in our tournament. only one will survive. we've asked our ghouls and goblins not to say where their homes are located. you may be able to guess using our clever clues or you may be able to guess. in round one, the spooky flendor

goes up against monstrous marvel of maine and in spooky splendor two, they go up the eerie estate. >> built in 2001, this family-friendly home is on an quarter of an acre, an oversized mud room with locker and laundry, outside gorgeous gardens and complete oaks complete the land scope. >> this is perfect for lovers of open air and space. there's an inground pool, a fresh water pond and more than half its 14-plus acres are pure green pastures. >> this 3,800 square foot home boast as wide open floor plan. the kitchen features custom cherry cabinets and floor-to-ceiling windows in the breakfast nook let in a ton of

light. >> there are three fireplaces, including one just off the kitchen for cozy family dinners. >> this house has five bedroom, three and a half bathrooms, a spacious master suite with a sitting room. there's also a huge walk-in closet with a built-in ironing station. >> gorgeous sues from any of the four bed roorjs not just master sweet. >> work from home in this custom office featuring a built-in wrap around desk. the asking price, $998,900. >> originally built to raise horses, all down the street of friday the 13th, 985,000. >> so we know the spooky

splendors on elm street in chicago or near chicago. to help us figure out the location of the eerie estate, we have this clue. joining us this morning, real estate broker to the super rich, dolly lenz. dolly will tell us if we're right about, this which house is the better bang for your buck? >> you got a guess, kel? >> i like the eerie estate. >> where is it? >> i thought eerie was the clue. >> hannibal, friday the 13th. >> where did that take place? >> eerie, pennsylvania? >> close. really close. it was blairstown, new jersey. is a really spooky and eerie place. how many people died in that movie? that was really something. which houses do you think win? >> as i said, i do like the eerie estate. i think you could camp out in the back yard, simon, don't you

think? >> how many acres that was? >> 14 plus acres. amazing. there's no question that eerie estate is a fabulous house, 14 acres, low taxes. >> in new jersey? >> in new jersey. tristate area, everything going for it. the chicago house is nice. there's high unemployment in chicago -- >> glen ellyn is a nice suburb, though. >> it is. how do you beat 14 acres? it's really tough. >> does it come with a senatoho? >> it comes with two horses. >> which is why the taxes are low. it's under $20,000 a year for everything. >> so you get a tax break for horses? >> there's a farm story there.

>> so -- >> eerie estate. >> that's right. >> you tend to like the house that's not in urban areas. >> yes. >> why is that? >> it's not what i'm used to. >> more possibilities for remodelling? >> and more room to roam. >> does history affect property value? >> many houses where famous murders took place have been torn down or burnt down because nobody wanted to live there afterwards. >> will they keep shooting crime scene csi, i keep saying it will bring down the value. >> movies are good. >> what if you have wanted to sell a house in amityville?

>> sleepy hollow. fascinate persian gulf. >> dolly, it's great stuff. let us know if you agree. tweet using #million dollar home. later she'll crown the top house during closing bell. >> let's send it over to dominic chu for a quick marketplace. >> ariad pharmaceutical is down, saying it will stop sales of its blood cancer drug iclusig. it's down about 86%, the stock, for the month. back to you. >> now to shares of expedia, which are significantly stronger today after its third quarter results beat estimates on the top and bottom line on higher

bookings. here for a cnbc exclusive is dara khosrowshahi. you're back in more senses than one. bookings up on the year and tra vargo is making money in the united states. >> travargo, we've been focused on expanding it globally. we're pretty happy so far and hoping to get it going. >> boa has you as a buy and $75 price target. dara, a quarter ago it was very, very different. your stock lost one quarter of its market capitalization on

your earnings results and you had a problem with trip adviser, which used to be a subsidiary, but you spun is out. can you explain to us in layman's terms what went on there. trip adviser changed its technology to show all the prices of all of you providers on one single page. what were you failing to do then that you may be doing better now? >> we had been working with trip adviser very closer over a number of years, it was part of the family. it changed the way it showed its offers on the site. it required us to adjust how we bid on trip adviser, how much. we paid for advertisements and et cetera. initially we lost volume as a result. as we've been working with the trip adviser team, we've been regaining a fair amount of that volume and trip adviser right now is on a positive trend. we hope to keep it going that way. >> dara, a question about share

price, which simon just referenced, you see huge swings. i wonder if there isn't an element of it that frustrates you. we've heard from other ceos, whether it's elon musk at tesla, does it frustrate you at all that there are such large swings in the share price? >> we're a company that isn't really paying attention to -- we try not to pay attention to short-term swings. we don't guide by the quarter, we guide annually. and if you're a company like ours that throws off a ton of free cash flow, you can allocate capital and take advantage of short-term price swings which you think aren't warranted. we bought back 6 million shares and took advantage of we think a mispricing of the market and think long term it can add value to the stock. >> but there's a bigger point

than that. you announced you're going to do the back end stuff for travelocity now and earn $65 million potentially profits each year for doing the work for them. you've got this mesh, it will seem to many people, within your industry of compete being brands, cooperating brands. i mean, investors surely have the possibility of huge instability here and customers actually, if truth be told, are totally unaware of who owns what brand and whether they're getting competing quotes or not. fair comment? >> i think that there is going to be a fair amount of consolidation in the industry. this is a trillion dollar industry. you're going to see larger players consolidate smaller players. i think as long as we give our customers the great customer experience, we have over 200,000 bookable properties weeks joining with home away to offer their properties on our site as well, all of this is resulting in more choice for the

customers, more properties offer better technology. we think the long-term trend is good for the customers. >> dara, good to see you again. dara khosrowshahi, ceo of expedia. >> coming up, the head of health care giant cigna joins us to weigh in on the debate. plus it's reaction to the company's quarterly results. we're back after a break. y talk. it grabbed the patient's record before we even picked him up. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before.

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we think the long-term trend is there's a new report out that the white house has pressured insurance executives to keep quiet about the obama ca care rollout. >> there are a number of americans, fewer than 5% of americans who have got cut-rate

plans that doesn't offer real financial protection in the event of a serious illness or an accident. remember, before the affordable care act, these bad apple insurers had free rein, every single year, to limit the care that you received or use minor preexisting conditions to add to your premiums or bankrupt you. >> david, it's good to have you back, good morning. >> thanks, carl, good to be with you. >> i want to talk about the quarter and conference call. the stock getting a lot of activity today. have you been asked to keep quiet about obama care in. >> we have not. we've been actively iengaged wih multiple years with the administration on both sides the aisle. we believe the make system needs to evolve, you need to improve

affordability for all and improve health care quality for all. that's what we've been working toward. >> when he refers to "bad apple insurers," i wonder if you think he's lumping you into that group? >> i'd like to think not. if you look at cigna, we have a large record -- we been an employer-- provider for decades. how do you convert those to an individual market to have the same level of engagement and incentives for individuals and partner with physicians and have them engage more on partner health. >> it's been a crazy month for the sector at large. you, yourself, had a nice beat and a nice raise. probably in the this good. what did you say during the call today in. >> we had another strong quarter and we're pleased. our team continues to execute

well. a few points are irrelevant here. one, a strong track record of delivering revenues and earnings growth through 2011, 2012 and 2013. our customer and client retention level is outstanding opinion we're expanding our relationship with nem and adding new relationships. and very important for us, both in the united states and outside the united states, our global business outside the u.s. will grow in the 25% to 30% range this year and is poised to hhit that and -- >> david k, can you make health care sexy? if you talk to people logging on to the obama care exchanges in

order to get health care, there may be 70 choices, 72 choices i think one of our staff had the other day. and the power of the brand is perhaps something that you guys have not realized at the individual level before in the way that you might, i imagine, in two or three years' time. what can you do to sex up this area of provision? >> simon, i very much appreciate the way you framed that. you're correct. historically in the u.s., for example, we've focused on working with employers and clients and then providing solutions to their employees. increasingly we're working to engage both the employer as well as the individual. you mentioned samsung. we're quite excited about that. outside the u.s., our business focusses on primarily individuals. whether you use the word sex see

-- sexy or engaging, that's what we're focused on and that's what we believe the future is all about. >> just to circle back to the affordable care act. four states i think on the federal, texas. can you tell us how many people, and speaking of individuals, have signed up in those states? >> yeah, kelly, i think that's -- the framing four states on the federal exchange, one additional state, in five states, colorado, a state-sponsored exchange, it's quite early, as you know. and for a variety of reasons, the information flow doesn't give us a good handle on the absolute numbers. i would tell you it's small, and from a cigna standpoint, in 2014 through the lens of our investors, we're not betting on a big land grab for 2014. rather, we focus on five states. we focus on specific products and we're focusing on products that could be sustainable in those states as we establish relationships with individuals going forward. specifically, it's a small number thus far and the numbers

are starting to trickle in. >> it's an interesting quarter, and we didn't even get to talk about disability and life as opposed to health. we look forward to having you back sometime soon, david. thanks again. >> carl, thanks for your time today. >> david from cigna. and still ahead on the program, former health and human services secretary tommy thompson will weigh in on kathleen sebelius and the issue of the health care act. and coming up, jeff and robert are joining forces, launching the double-line schiller fund and we'll be speaking to both of them exclusively. "squawk on the street" will be right back. tdd#: 1-800-345-2550 trading inspires your life.

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welcome back to "squawk on the street" sand happy halloween. listen, it's a happy halloween for some in the marketplace. we had a blowout -- a blowout chicago pmi this morning, right around 9:45 eastern. and when i was on the air, i put an asterisk on it, thinking maybe some of the numbers were inverted a bit. you'll see what i mean. here's the number that flashed on the screen, and i was thinking to myself, "maybe it's 56.9," because there's a lot of -- almost every number in this report is a huge outlier.

now, let's go through it very quickly on the "wow" factor. 65.9, was up over 10 point, best since march 2011. order backlogs is something i want you to put off to the side, because it's important. it was up 14.3, same time period. new orders, all up. but new orders in particular was at a nine-year high. inventories, all of these things were good. but here's the real issue, is this telling us some wonderful things are going to happen to the economy and the stock market? and maybe they are. but here's what i want to show you. let's put up some charts. let's put up a 10-year chart of the dow jones industrials average, and most notably, i want you to notice the low on that chart. of course, march of 2009. we all remember that. and then, look at the big rally that ensued late in '10 early in '11. now look at the chart of the headline number from chicago pmi. most notably, one was the

third-lowest level since they've been doing this since 1967. it was in march of '09. and if you look at some of the better numbers going back to march of 2011, they did coordinate with a rally in stocks. so there is this linkage there. but more importantly, and this is the important part, the national number that comes out, the i.s.m., wasn't a big driver of this report. i talked to a lady who does field work for this organization and said, this is the one thing that surprised here, and this is the hook, the respondents she talked to minimized any impact of the government shutdown, at least based on the chicago activity, and that, in my opinion, may be the most important aspect to this report. kelly, back to you. >> yeah, rick, in other words, the strength, as you see it, was not, you know, when the report -- when the report, first people were skeptical, what does this mean? you're saying the area of the region is still doing quite

well? >> right. and the low inventories and big backlogs -- backlogs is not something the i.s.m. looks at, was really a driver in the report. when you look at the polling period, which was about 24 days from early in october to the 24th, and the respondents kind of came in rather evenly, there seemed to be no correlation to any negatives regarding the shutdown. >> okay. rick santelli with the details of this morning's report. thank you, rick. still ahead, the "wall street journal" walt mossberg calls the ipad tablet the best tablet he's ever used. we'll tell you what it could mean for the bottom line. ♪ ♪

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welcome to "squawk on the street." here's what's happened so far. >> i think the thing we're missing is it's not so much earnings driven, this market, particularly last year. this thing has been driven by confidence. we destroyed confidence, we took it down to post-war lows for three years. >> and initial jobless claims for the week dropping a nice even 10,000 from 350 to 3 who. -- 340. >> you know what? people aren't using it anymore, when they're younger, why, they

don't like the interest of ads. you know it's a fiasco. it is not a fiasco -- we sold some of the stock going in, because we feared it had to be perfect, and not everything was perfect. >> we're trying to find ways to have lower prices for our customers, sort of counterintuitive. most retailers are trying to find ways to have higher prices. we want to find ways to have lower prices. >> there's the opening bell. the spirit model is taking a low fare and adding a lot of choices so you can customize the total price has been working really well. we think this can continue for a while. >> i've been getting numbers every quarter, you know, since going public on mobile. so i think they're trying to be conservative, they're trying to manage expectations going forward, just so the numbers don't get too far ahead. >> as we've been working with the tripadvisor team, we've been regaining a fair amount of ad volume and tripadvisor right now is on a positive trend, and we hope we -- we hope to keep it going that way.

good thursday morning. we're live at post 9 at the new york stock exchange with a check on the markets. some have said that people are looking for reasons to take profits. that was cramer's line in the 9:00 a.m. hour. and for the time being, it looks like they're doing some of that, being dragged down by visa, s&p down 1,760, by 3.25. >> and it's on a strong day that the chicago pmi, a roadmap, though, facebook did a complete 180 after comments from the company's cfo. we'll tell you exactly what he said and if you should be buying facebook today. plus, two of the biggest names in business are coming together. nobel prize winner jeff schiller and john gundlach, and they will join us live in a little bit.

and walt says the ipad era is the best he's ever viewed. he'll tell us why he's so impressed. watching shares of facebook following the quarterly results that did beat expectations. the shares at this hour, at least, up just a touch to 49.29. the shares had initially jumped on the report until the cfo, david ebersman, made these comments on the conference call last night. >> our best analysis on youth engagement in the u.s. reveals youth engagement among u.s. teens was stable q2 to q3, but we did see a decrease in daily users, specifically among younger teens. >> channing smith, co-fort portfolio, and jordan row hand is a senior analyst at stifle. good morning, guys. >> good morning. >> the teen thing is making the headlines. is that really the problem? >> not in my opinion. i think anybody who's surprised by the comment that young teens are going to instagram and other alternatives, besides facebook,

just doesn't speak or interact with a lot of young teens today. >> so you do not believe they are -- even if they're migrating to instagram, you don't believe there's a problem in maintaining the metric on these young teens? >> facebook's in the transitional period of several years, going from being cool, where it was a few years ago, to be a utility. there's nothing wrong with being a utility. it's just going to appeal to a different audience. and as those people -- as the facebook audience gets a little bit older and gets more buying power, advertisers like them more. it didn't stop the ceo from using that as a way to lower expectations just a little bit. >> channing, you know, it does feed the sort of overall worries of slowing user growth, up only 6.7 in this quarter, even though the revenue per user is accelerating. how much are you worried, how much were you worried by the call last night? >> somewhat. look, it was a great quarter overall. they beat on earnings, revenue. every user metric they beat on. i think the big concern we have at capital advisors is the ad

inventory for the news feed. there seems to be a limit on that. there will be a ceiling. and news feed and the advertisements, a big driver for revenue growth for facebook. and i guess our question, you know, what we have to ask ourselves going forward is -- to justify this enormous valuation, you have to -- you have to think about what is the earnings growth, what is the revenue growth going to be? and if news feed going to be limited, you'll have to go other places to find revenue growth, which might be, you know, pricing, which might be more users, one site. but it's a problem. and it's something that has to be looked at. it puts more dependency on video advertising that we'll see, and if they can monetize instagram. but the news feed and the ceiling on that advertising was somewhat concerning to us. >> and, jordan, to channing's point, it's what facebook can do with instagram and ads, because it might be a bellwether in general. what's your read on how much more pathway they have to expand advertising in that way? >> well, first of all, instagram

is running somewhat independently and is being very, very selective and careful about which ads they experiment with at this point. i wouldn't expect any material results out of instagram from a revenue or margin perspective anytime soon. secondly, on facebook, i do think that some of the talk about equilibrium ad load, if you will, that they've reached in the u.s., it probably ignores the fact that most of the growth is coming outside the u.s. where they still have some room to increase the ad load. they just need to get the right people calling on the right agencies and clients there, and increase the number -- the number of people who really want to advertise, the number of marketers who want to advertise in their international markets. >> yeah. unfortunately, the monetization overseas is nowhere near what it is in the united states. channing, the price targets over the course of the year have gone into the 40s, into the 50s, and now some in the 60s. where do you like the stock? >> oh, we think, you know, our approach to facebook is to take a small position.

we did this back in april. we put this in emerging-franchise category, which basically means it's very hard to figure out what the value of facebook and these type of stocks is, because there's so much uncertainty around the business model. we think that investors need to have a small position in the stock. there's a number of scenarios to where this -- you know, the stock price could go. we would suggest having a small toe in it. however, at these levels, you know, when you're thinking about 50, 60 times, 2015, you know, p/e, you know, it's just too hard to mike a big bet. we suggest having a small bet. it's an important piece of the mobile, you know, internet world. we think 55, 60 is achievable, but don't make a big bet. there's too much uncertainty. we need to find new revenue growth drivers if news feed has a ceiling. that's unproven. can they monetize video? can they monetize instagram? >> yeah, the history on this one is short, at least as a public company.

thank you for that. channing, jordan, we'll see you next time. >> and david joins us, with an update on time warner cable. >> yeah, time warner cable this morning reporting earnings, not particularly good. of course, remember this is a quarter that included the dispute with cbs. there was a larger, perhaps an expected loss of video subscribers and unexpected loss of broadband subscribers to the company. its operating income before depreciation and amortization, however, was more or less in line. margins, also, in line. the stock is up largely because of the continued questions about whether it will be part of the consolidation in the cable industry. interesting to note that at the very beginning of the conference call this morning on the earnings, ceo glenn brit addressed just that, saying, "i read in the press, and i'm not interested in consolidation, and that after i retire, time warner cable might have a more enlightened attitude, the implication i've been interested in entrerchli ientrenching myse colleagues. if you think about it, that is

absurd. in m&a, we're open to deals that do exactly that. i care a whole lot about maximizing value." britt went on to cite, hey, i was a part of the aol/time warner deal, i can see where you can destroy value. and he did come back to address charter communications, of course, a company that's already made a proposal sometime back that we told you about to try to merge with time warner cable. he said, we certainly believe there are benefits to consolidati consolidation. however, we believe the benefits are finite and easily knowable. among the companies that you're aware of, you follow the managements and boards, they're aware of the finite benefits, and the reality is, if they only wanted to do deals in which they receive all of the benefits, but those win/lose deals wouldn't be good ones." what's he talking about there? as i reported earlier on "squawk on the street," it is my expectation based on reporting that liberty and charter will likely make another -- make another foray to get time warner to the negotiating table. perhaps they would want 150, 160

bucks a share, 8 1/2 times ebitda. the question, of course, and one that britt seems to be raising in the comments, at five times leverage already at charter with the stock price that you see has run up enormously, and some would say an inflated currency, is that in the best interest of time warner cable shareholders? that remains an open question, as do whether or not our parent company, comcast -- yes, there would be some issues perhaps at the doj, but nonetheless, no caps on cable subs, would comcast be interested in getting involved, given it could be a more accretive deal and it's been delevering. i'll leave that with you. >> oh, sure, let us take the ball. thank you, david. jetblue getting the jump on competitors. the faa, if you haven't heard by now, announced it would allow the expanded use of the personal electronic devices on flights. only minutes later, jetblue did file to begin the process of getting approval for the expanded use.

if all goes as planned, it would be the first carrier to be approved. >> all right. now, health and human services secretary kathleen sebelius facing hours of questioning during yesterday's hearing on obama care, and things got a little heated. here's just one of the highlights. >> so you're saying that the president is not responsible for hhs? >> sir, i didn't say that. >> okay. so the president ultimately is responsible -- while i think it's great that you're a team player and you're taking responsibility, it is the president's ultimate responsibility, correct? >> uh -- you clearly -- uh -- whatever, yes, he is the president. he is responsible for government program. [ laughter ] >> well, that hearing, of course, is over, but she may be back, and what is the future for the affordable care act itself, is the law in real trouble? we'll ask former hhs secretary tommy thompson in just a moment when "squawk on the street" returns.

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very key. back to you. >> all right, sharon epperson with an eye on gold. amazingly, no one is talking about the federal reserve. what they are talking about is obama care. secretary of health and human services taking responsibility yesterday when she was testifying on capitol hill. take a listen. >> who is in charge, madam secretary? >> the person now in charge, as an integrator, is qssi, one of our -- >> who was in charge as it was -- >> cms was in charge up until -- >> at that team, who is the individual -- >> michelle snyder is the -- >> michelle snyder is the one responsible for this debacle? >> well, excuse me, congresswoman, michelle snyder is not responsible for the debacle. hold me accountable for the debacle. i'm responsible. >> okay. >> our next guest is a former secretary of health and human services himself. joining us is tommy thompson, also a former governor of wisconsin, in madison, as i understand this morning. governor, good morning.

>> good morning, kelly, and how are you? >> i am very good, sir, thank you for joining us. we know you're no fan of obama care, but certainly you can empathize with the position that sebelius finds herself in. what do you think she should do now? >> what she needs to do is she needs to go back and get all of the technical people together, and she's got to start testing and retesting the whole system. when i was secretary, i was tasked with setting up part d of medicare. and then, it was implemented by mark mckellan and secretary lubbock, and we did the same thing as setting up a whole new system. but we tested every week. every week i had the technical people in, and finding out what was working, what was not working, and how you could improve it. secretary sebelius has got to do the same thing. she's got to sit down with all of the technical people and say, what are the problems? who's fixing it? who's responsible? how soon? when is it going to be done? that should have been done

before it was rolled out, but now she's got to go back and start all over and do the same thing again, so that it really gets set up and runs correctly. >> it sounds like the administration has now set itself a deadline, perhaps the end of next month, which is a short period of time for a system this complex. >> that's right. >> the question now, just becomes, on the one hand, you know, a lot of inquiry into what went wrong, but on the other hand, are we actually capable of successfully launching a system of this complexity? and from your experience, as you said, with part d, et cetera, what's it going to take to get it right? >> you gotta -- you gotta start over and find out wherever the problems are, test them, retest them, fond out what the problems are, check them, and make sure somebody is responsible for fixing them and hold that person responsible. secretary sebelius, of course, is the overall person that's responsible, but all of the individual people have to be tasked for their own particular programs and they've got to be held responsible. this is america. we can fix anything.

this has got to be fixed, and it can be fixed. but they should have tested it and retested it before they rolled it out. >> governor, do you think she should stay and have to take responsibility for getting it right, or should she resign given the errors that have led up to this point? >> that is -- that's not for me or anybody else to say. that's for the president. but the truth of the matter is, what are you going to gain by changing right now? you have all of the problems that are there. she knows what they are. hopefully. and she is the one that's probably tasked to fix them. i think you would be just holding them back even further if you changed secretaries at this point in time. >> sounds like, governor, you think the website, notwithstanding, that the longer-term issues of young people enrolling, of states -- >> oh, sure. >> -- states getting enough players on board, you don't seem as concerned about those? >> oh, i am. i think -- i think the technical glitches will be fixed. but the people that are losing their insurance, the hundreds of

thousands that are losing their insurance, the hundreds of thousands of people that don't know how to get on and be able to take care of getting covered. the kind of coverage that they're going to be demanded to take will not have the choices that we as americans have always had, and it's going to be very problematic. young people themselves are going to be very concerned about trying this and are going to be, i think, reluctant to do so. that's going to help to sink the whole system, because financially, it's the young people that will support it, but the most important one, and the one that i'm the biggest -- got the biggest concern about is the one on privacy. the information going in there, i don't know if it's going to be protected enough and secure enough to satisfy americans. >> yeah, we can only hope that's part of the equation as they get this thing up and running. governor thompson, appreciate your views and insight this morning. have a great one. tommy thompson from wisconsin. >> thank you very much.

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welcome back. crazy halloween costumes and decorations translate into millions of photos taken and uploaded to the internet the day after halloween, which is the busiest day of the year for photo uploads according to shutterfly. they expect more than 40 million picture uploads in the next couple of days, and joining us now is the ceo of shutterfly, jeffrey housenbold. jeff, welcome. >> thanks, kelly. >> it's interesting that in this day and age, the day of halloween isn't your busiest, the way people on their mobile device can turn photos around. it is still the day after? >> it is. though many pictures are taken with smartphones, and with the

shutterfly apps, they go up automatically. a lot of moms and dads are taking pictures with digital slrs, loading them on their computer and sharing them with grandparents and friends. >> how much of your website, of your business, is photo sharing, something that obviously a lot of people associate with instagram, versus photo printing and using the products to turn them around for gifts and that kind of thing? >> we pioneered online photo sharing in 1999, and it's still a main part of our business. we send out hundreds and hundreds of millions of photos every year. we monetize fophotos through physical products, photobooks, 10,000 different card design, iphone cases. so we really make our money by turning your memories into precious gifts and everlasting products. >> it's been said you guide -- you tend to guide conservatively, but certainly the guidance this week was one reason the stock's now down to june levels or so. what are you seeing in the current quarter that gave analysts some pause? >> we took down our top line of

guidance by $3 million. we beat qe on revenues and ebitda by 5 million on the top line, but we'd terminated part of our costco relationship, negative 8 million in the quarter. 5 plus negative 8 negative 3 on the top line. we do tend to be, i think, thoughtful about our guidance. the fourth quarter is where we make all of our profits. it's about 53% of our revenue. we're more prepared than we've ever been in terms of new products, feature, function, designs, applications, so we're excited about the fourth quarter. >> no worries about the macro holiday season consumer in the fourth quarter? >> there's always uncertainty, and with the furlough in the government, that created more drag on gdp. there's six less shopping day this is year than there was last year. and consumer sentiment continues to go down. so we always have concerns. but as the market leader and what we execute upon, we're very confident about our ability. >> what's the most popular product right now? >> for the holiday season, it's by far and away our personalized greeting cards. so we will see -- >> old school. >> hundreds and hundreds of millions of holiday cards

this year. >> that's reassuring. people still send stuff through snail mail, even as they're sharing the pictures online the day after halloween. jeff housenbold, dressed as what as a halloween? >> i'm going to heidi klum's part. >> oh, enjoy. >> can't wait to see that picture. >> instagram. as kelly said, today is halloween, and odds are, some of you are already wearing your costumes. which major companies are wearing a disguise all year round? dominic chu has answers. >> carl, if you think about it, costumes are fun this time of year. but investors also want to know what exactly they're investing in when they go into a company. so here's a company, we found a few of them that are maybe in disguise, like you said. so this particular company, you think about jams and jellies, you may even think about peanut butter. but in reality, this company makes more of its money, more of its profits from the coffee side of their business than they do from the jams, jellies, and peanut butter. we talking about smucker's, j.m.

smucker's, yes, not just peanut better and jelly. they get more money from coffee. another one we're looking at is solar winds. this company, overall, gets a lot of its money from things like maybe solar or wind. but in reality, solar winds is not a solar or wind company at all. this company does i.t. systems and administration-type solutions. this comes to us courtesy of jim cramer. he looks at solar winds, and we think alternative energy, but they're not. it's i.t. management. and the final stock is one stock in disguise that you think about, and you say, hey, it's all about mail. it's all about those -- the postage machines and everything else. well, this particular company gets about 243% growth from ecommerce solutions and digital business. this company is pitney-bowes, so, guys, overall, in the halloween spirit, we want to kind of just show you some of the companies that have their stocks in disguise. back over to you, kelly. >> love it, dom, thank you very much, sir. two of the biggest names in business are now working

together. jeffrey gundlach and robert shiller are starting up a brand-new fund. they'll be here when "squawk on the street" continues. i'm only in my 60's... i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement insurance plans, it could save you in out-of-pocket medical costs. call now to request your free decision guide.

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an unlikely duo teaming up to launch a new fund today. jeffrey gundlach is with doubleline capital, and robert shiller, founder of the kay shiller index, and this winner of the nobel prize in economic

science. nice to see you both. you are launching a new fund, essentially. jeffrey, let me start with you. why you doing it? and what is it? >> well, doubleline started an equity business at year end, and we launched three funds in t the -- in the growth category, the first one small-cap growth, performing superwell, and we wanted to broaden out what we're doing with interesting ideas. and dr. shiller has been working for a long time, won the nobel prize for a lot of his work, as you know, with this thing called cyclically adjusted p/es and created this strategy that's value-oriented that matches well with the investment philosophy of doubleline, because we believe in better mousetraps in the investment business. my total return strategy goes back 25 years. we think this is a better mousetrap, the idea we divide the stock market in sectors and invest in 40% of the sectors based upon a value-based

calculation. and we're going to do that with a total return swap. and underneath that, doubleline managing fairly low-risked pools. the cape strategy from dr. shiller has shown to outperform the s&p 500 with lower drawdowns and lower volatility over time, and we can add value through outperforming cash on the underlying investment pool, so there's a double-value proposition. this was brought together by barclays bank, that thought there was great synergy between the investment philosophy at doubleline and the investment philosophy for which dr. shiller has been awarded the nobel prize. >> jeffrey, it's an interesting move, especially in light of the news that pimco is hiring someone to head out their investment division. dr. shiller, what's your read, the bond funds are getting more aggressive on the fund side, whether they're using your methodology or that of others.

>> well, investors have to diversify, and i think some people could use a more sophisticated deversedification strategy, and put it in a package that makes it easy. so i think it sounds like a good development from my standpoint. >> certainly, a lot of people are also talking about valuations here, because if you look at your own, as you mentioned, cyclically adjusted p/e ratio, the market looks expensive on an historical basis d that factor in at all, to get more retail investors involved in the equity market? >> well, absolutely. the cape overall for the market overall, our price earnings radio is around will 25, which is pretty high. that doesn't mean you want to miss opportunities in the equities market. you just want to avoid the sectors that have high tape. that's what we're doing with this product. >> but what happens if the cape keeps growing? what happens if stock -- if the

stock market starts to exhibit bubble-like characteristics going forward? >> at this point in time, the stock market is somewhat bubbly. it has a high cape. but we can still find low-cape sectors in the market. and even the market overall is not disastrously overpriced. if we ever get back to like we were in 2000, we might have to rethink things. >> what would be -- jeffrey, well, what would be rethinking it? my understanding is you're going to try to get a nice yield off the bond holdings, but they're held as collateral to the swaps, so the key is performance of the cape strategy, isn't it? >> well, certainly the dominating driver of the return is going to be the equity beta, and hopefully outperforming that with the cape strategy. the idea here is that investors are always diversified. no matter what you think about valuation of the stock market, i think it would be a little bit extreme to advocate a zero waiting -- weighting to an investment sector as substantial as equities.

what we're trying to do is build out a better mousetrap so investors have the better tonight to invest in the market, from a value framework, which i think is timely. maybe the stock market is higher value than average, but even against that backdrop, it seems to be a very good idea, or maybe especially against that back it drop, to think about investing in areas less overvalued. obviously, we won't be investing in massive momentum names with infinity p/es, or no earnings, or not even a 10-year history. that kind of becomes excluded from the cape methodology. this is kind of a -- a basic security analysis, graham and dodd. it's grounded in the work from the book of the security analysis by graham and dodd. this is good old-fashioned tackling and invests, and it's timely. >> for a bond guy, jeffrey, you love talking stocks, don't you? i mean, the last time you were on a couple of weeks ago, actually, you were not particularly positive on google, which i have to point out came out with a great quarter and the

stock ran. i don't know, are you going to be giving a lot of advice to professor shiller here? >> well, no, this is -- this is something that is -- professor shiller's strategy, regarding google, i'm not negative on google. i just said, when i talked, david, the last time, we talked about harvesting google. i don't like things up massively in general. i guess it's sort of in my dna. and we talked about avoiding tesla, which clearly has kind of given up the ghost as one of the signals that the momentum names aren't really as strong as they used to be. you're right, i do like talking about stocks from time to time. and, you know, i spoke at a thing here in chicago called "invest for kids," and sam zell spoke before me. he put up something very interesting, and it was a cartoon that said, if you're trying to be perfect in the world of investing, you'll end up being paralyzed and doing nothing. it's like baseball where you're trying to have a high batting average. fortunately, we've been able to do that, even the equity market at doubleline. >> professor shiller, if you don't mind, i'd like to quickly

come back to comments you made this week on google versus goldman. >> oh, that's right. >> you know, you said when you studied finance, you're studying how to make things happen on a big scale and a lasting scale. it has to matter more than getting into google and programming some little gimmick. [ laughter ] what are you talking about? >> i was set up in a debate with wawwa, who is very pro-google, and i was being a little bit flippant there. there was a solid point, though, that i think finance is a good field for people with integrity, social purpose, want to make a market on the world, want to do something that's personally ethical and moral. people don't realize that about finance. that we need -- that finance is about financing activities. here i go, i'm a finance professor. i talk about these things. and it creates activities that

last and endure and help the world. >> sure. >> so that's what i was trying to -- and google, i'm not anti-google. i was debating -- i was joking at that point. >> all right. well, jeffrey, let me just end with you on the bond market itself. those fed minutes yesterday, some people thinking maybe there is going to be an earlier taper. what's your take? >> i totally disagree. i think -- there was a little bit more hawkish thing in the statement, a little tiny bit. but really, i'm pretty confident that we're looking at several months here where it's steady as she drifts with fed policy. so, you know, the bond market rally down exactly to 2.47 on the 10-year, a picture-perfect kind of resistance point that a lot of people have been looking at, and it reversed on the fed minutes at exactly that yield level. so i think we have a little bit of a yield rise coming in the 10-year treasury. but the backdrop with fed policy's on hold until march at least. >> gentlemen, always great to

have you. jeffrey, nice to have you back so soon. jeffrey gundlach, professor shiller joining us. >> thank you. the new ipad air hits stores tomorrow. the good reviews keep piling up. walt mossberg said, quote, this ipad isn't a radical rethinking of what a tablet can be, but it's a major improvement on a successful product. it's the best tablet i have ever reviewed. walter mossberg is here to explain in a moment. ♪ abracadabra it's a growing trend in business: do more with less with less energy. hp is helping ups do just that. soon, the world's most intelligent servers, designed by hp, will give ups over twice the performance,

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coming up on a special edition of the "halftime report," is this monster market starting to spook investors? some big investors are talking bubbles, and our trader also weigh in. then, midcaps having a huge year so far, but are we starting to see cracks in that space? we'll get a four-star fund manager's playbook. and facebook losing teen users, and now the only guy who runs the social media etf breaks down where it goes from here. carl, i'll send it back to you with this advice. don't take a sip of water as you're about to do a tease. not good. [ laughter ] not good. cheers. we'll see you -- we'll see you at the top of the hour. >> thanks a lot. we'll see you at the top of the hour. >> all right. apple's new ipad air hits stores tomorrow. the next guest gives it high praise in the "wall street journal" review. walt mossberg said, quote, this new ipad isn't a radical rethinking but a major improvement on a successful product.

it's the best tablet i've ever reviewed." walt mossberg joins us from washington, where he's celebrating the red sox victory last night. [ laughter ] walt, it's good to see you. is that an air in your hand? >> this is the air, and this is a good way -- this is the best way i found to show the screen, i think. >> it is beautiful. and i'm just going through the review again, which we all red earlier in the week. battery life, display, speed, the only downside, i guess, is price, right? >> that's right. i mean, here's the thing. they've sold 170 million of these in 3 1/2 years because what they did was to make something that was thinner and lighter and had much better battery life than a laptop, and the gamble they took at the beginning was, could it do enough of the stuff laptops do that people would use it for a significant amount of replacement of laptop use? and i think the answer to that is clearly in.

it doesn't totally replace a laptop, but, you know, people are -- i know i use my laptop significantly less, because of the ipad. this ipad air is probably what they -- what steve jobs would have wished he could have introduced in 2010 in terms of it weighs one pound, it's really thin, and it has sensational battery life, even though they cut the size of the battery in my tests, which are much tougher than the industry's tests, this thing lasted 12 hours and 13 minutes, playing high-definition videos back-to-back. >> wow. >> with e-mail pouring in in the background. so it's really a beautiful job of engineering and design. but on price, it's apple. apple is premium. that's what they want to do. so they didn't raise the price, but it's still $499. >> walt, that's exactly what i was going to ask, because to

some extent, the success of the tablet that you're talking about is more categorical than apple-specific, and, in fact, their share of the tablet market has fallen to a new low. i think it's under 30% worldwide. >> right. >> so if their strategy is to be the premium high-end game in town, fine. but there's not -- for most users, the differentiation between what they're offering and what most of the other tablets can do these days isn't great. >> no, the differentiation is great. i disagree with that. the android guys have done a nice job, and they certainly charge less. but apple has done one thing that none of these other guys have done -- they have specifically gone out and encouraged developers to write apps that are optimized for a tablet. and they now have, like, a million apps in their overall app store. google has something similar. but apple has almost 500,000 specific ipad optimized apps, things that have more features

on the screen, they're not just stretched out phone apps. on android tablets, you primarily get stretched-out phone apps. so that's a big differentiation, particularly when it comes to things like creativity apps, productivity apps. there's lots of -- on price, i would say in apple world, they believe they've actually made it more -- more accessible financially to get an ipad, because while this is $499, they're now selling the ipad mini at a price cut of $299, still a lot more than you pay for a smaller android tablet, but it certainly is the cheapest entry point for an ipad that there ever has been, and there's another full-sized ipad, older

model, that they're selling for $399. so they have a number of price points covered now. >> finally, walt, last week, you said the mini really is the sweet spot for a lot of people. >> right. >> where's the line as to whether or not i should upgrade to an air or not? >> well, it's really interest g interesting. i would -- i would -- if you don't have a tablet or if you have a really older ipad, i think upgrading to the air -- and you want a full-sized tablet, i think upgrading to the air is a good decision. what they really are setting up here, though, with the new mini that will be out later this month is a -- is a thing where you're just going to decide on price and screen size. that's it. the new mini will have the same processor, so the same speed, the same increased wi-fi capability, and the same screen resolution as this air, and it will sell for 399. so it's $100 less. you have a somewhat smaller screen.

and, you know, more portability, so that's your decision basically. >> yeah. >> and apple -- i understand, although apple doesn't make this public -- that there have been quarters and months where the mini has outsold the big one, and then it flips, and the big one outsells the mini. >> huh. >> so it's consumer choice. >> yeah. congratulations on the sox, walt. >> thank you. i had nothing to do with it, but thanks. >> we'll see you next time, walt mossberg talking about tablets. oshkosh and avon are making major moves to the downside after reporting third quarter results. what exactly went wrong for the companies today? earnings squad has the answer when we come back. (announcer) scottrade knows our clients trade and invest their own way.

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welcome to the "earnings squad" where we dissect the earning stories everyone is talking about. i'm melissa lee. joining me is dominic chu and stephanie link. let's start off here with avon, the company trading sharply lower after reporting weaker-than-expected, and talk about sinking in on the conference call. unbelievable. >> this was a darling. 56% headed into the quarter. across the board, earnings miss. organic growth negative 1%.

and all of the regions were disappointing, and also sg&a up a lot more than expected. this is in the face of estee lauder beating and raising. right? and having 6% organic growth. so there's really a contrast here. i think it will take a while for the dust to settle. i won't be buying it. >> is it just they appeal to a different sort of consumer? we heard, we heard from visa, that spending slowed down towards the end. >> i think it's that, and the transition is taking longer than expected. they've gone from being more of a paper company and boring products, and really trying to upgrade. and it's taking a lot longer. by the way, a lot of competition in this arena. >> that is true. shares of oshkosh, as well. they are also sharply lower, and this after than weaker-than-expected, and what's the problem, dom? >> the problem is the outlook. there's no surprise when a company that gets 45% of its revenues from the u.s. government, that when budget sequestration and those issues come into play, their forecast is not going to be great. this is a stock that's done very

well, but down maybe 11%, 12% over the past week. with this stock, it really is about these trucks, armored vehicles, fire trucks, construction equipment, jlg lifts, they make all of the stuff. when the spending picture goes down, their forecast goes down with it. >> you said 45% from the -- >> from the government. >> -- u.s. government. this is the kind of stock, stephanie, people should be careful of, pull back the curtain and see where they're getting their dollars from. >> certainly. i was surprised on the commercial business, the margins were disappointing. that's the area where i think they would have been able to outperform. >> fire trucks and dump trucks, yeah. >> exactly. we mentioned visa. reporting lower-than-expected, and it wasn't the quarter, a beat on the eps, the revenue a little light. it's what visa said about october spending. so this is a period after the quarter was closed, but they say that spending in october really slowed down and they said it was across the board. it's not high end or low end, they saw it in travel, in supermarkets. so this really throws into

question whether or not the consumer is going to be poised to spend going into the holiday season, and, by the way, mastercard also reported, but they didn't mention october in terms of describing what the spending environment was like. so we have this data from visa and stuff, do you think it's a visa-specific issue. >> no. >> it can't be. >> i don't. if you listen to paypal, ebay, what they had to say, and mafltmaflt mastercard was saying things are not great. consumer is remaining selective, wage growth is not on the rise. it's been pretty flat. >> exactly. yes. that does it for "earnings squad." if you want to join the conversation, @earningssquad. up next, what do you get when you mix toothpaste, healthy candy, and a girl getting sick to her stomach? over 3 million hits on youtube, of course. we'll explain when "squawk on the street" comes right back. stick with innovation. stick with power.

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ad featuring healthy candy and a girl getting sick. our jane wells explains live in los angeles. good morning, jane. >> reporter: carl, sales of this promotes sales of this. and crest explained to us the strategy behind this hit video, tricking kids about treats. >> who likes halloween candy? >> all: me! >> we're going to replace candy with healthy halloween treats today. these are called veggie fruit-jus, guys. >> this is the most worst i ever tasted. >> it's not good. >> halloween is the biggest candy consumption day, that's a day when everybody wants to indulge in the sweet tooth. >> mine tastes like broccoli! yuck! >> mine tasting like poo poo! >> we thought, let's have some fun with it. we said, what if we had the all spin-around, taking candies away? >> kind of good, kind of bad. >> be honest with me, adrianna. >> it's bad. >> so we wanted the spontaneous reaction. so we deliberately kids who were confident in front of the

camera, outgoing. >> asparagus flavor, beet flavor. >> in their minds, they're thinking they'll get some really delicious, sugar candies. as they ate those, some of them had a very natural reaction, which we captured. >> what about artichoke-buttercups? >> one really good, adrianna, quick-reflex reaction, but so nonchalant about it, and cutely says, "i threw up," and just went on with it. >> i threw up. >> you threw up? okay. >> which we thought was -- it was very watchable. so we kind of kept it in the final film. >> oh, you can't -- the banner covered it up, but you actually do see her spit up. adrianna's parents were there, and everybody was cool about it, and they kept it in. guys, the video has 3 million hits on youtube. we'll see if it sells crest. >> got to watch p&g, and they say it don't work with kids and animals, but it seems to work for them. >> it did. the kids, it was a casting call,

none of the reactions was scripted. >> yeah. >> amazing. >> unbelievable. there will be a lot of candy-eating tonight, we know that. thank you, our jane wells in los angeles. we're coming off the session lows here, down about 28 points, as people continue to digest not just the visa conference call and the fed statement yesterday. >> turned positively, about to turn positively on the dow. one to watch. let's get to wapner back at hq and "halftime." here's what we're following. mega midcaps may be up 27%, but are there cracks starting to show? face mask. what's behind facebook's earnings report? and the drop in teen users. the stocks about to close off the best month, an october surprise that's pushed the s&p up 23% this year. ♪ monster mash but the question, has the monster market come to scary for your money? let's play the action. josh brown, are we too frothy at this point? >> i would get nervous here. you know, that's