11-14-13. it doesn't make sense any more to do that. i'm going to stop. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. cisco is our top corporate story today as joe was just talking about. that stock was under severe pressure after the bell yesterday. you can see right now it's down by more than 10%. this came as a huge shock to analysts that sales could drop by as much as 10%. they were looking for a gain in sales this time around. jon fortt is going to join us with more of his conversation with ceo game chambers in a moment. janet yellen will appear before the senate banking committee this morning. she can expected to defend the central bank's aggressive monetary easing. she'll say, i believe supporting the recovery today is the shortest path to returning to a

more normal approach to monetary policy. the nomination is set to begin at 10:00 a.m. eastern time. in the meantime, outgoing chairman ben bernanke says the central bank will remain alert to preventing inflation from declining too far from its goal of 2%, falling too far below that. we're going to talk about the future of the central bank with greg ipp and ir neil irwin in the next hour. he says he expects to taper in the next couple of months. beyond yellen and the fed, a few other economic event toes watch today. we have weekly jobless claims at 8:30 eastern time. at the same time, the september trade deficit hits and third quarter productivity and labor costs. futures at this hour -- well, you have to remember yesterday we did see things closing at record levels for both the s&p and the dow. nasdaq closed to a 13-year high. but with that news from cisco, you can see futures from the nasdaq ended down by 6.5 points,

now durchs up by 26 points and andrew, back over to you. >> boeing machinists have now approved a labor extension. here is the news. the contract would have secured an estimated 20 years of work, but terminated their pension plan and raised their health care costs. the decision means boeing is now going to consider building key parts of the 777x jet liner in nonunion states or in japan where it already has received an offer to do so. also, in other industry news, airbus parent eads is raising its forecast for jet orders and delivery. we'll have more from ross westgate on that from london in just a couple of minutes. also, big story today, jpmorgan reportedly paid $1.8 million over two years to a small consulting firm ran by the daughter of former chinese premier wen jiabao. the relationship is part of that wider probe we talked a lot about into the bank's hiring practices in asia. and apparently this consulting

firm that she was running was run under a different name. so a lot of news there and those are the stories making headlines. >> and we've got -- in our executive edge we'll talk about now, it was a trip tick and now it's the dip tick. did you see that? >> i saw that. >> yeah, warhol. there must be two. and it was expensive again. a demand sold for $83 million. but our top corporate story, and this is one that john chambers and cisco, they usually tell us the truth and if it's good, everybody is happy. and when it's bad, i mean, jon fortt joins us. when it's bad, it makes me think it's bad for tech in general. it's not usually just cisco. is it just cisco in this case? >> no, i don't think so. we saw some bad emerging markets news out of ibm last month. >> i thought that was ibm.

didn't you? >> yeah, well, i don't know. china was a big part of that. other emerging markets were looking bad. it didn't necessarily seem like it was just an ibm issue. and i think chambers is underscoring that saying, we saw some ibm and we're going to see it from a lot more -- not everybody, but a lot more. >> we worry about revenue not growing enough. in this case, is revenue actually year over year declining? >> yeah, yeah. >> that's bad. >> analysts have been looking for an uptick of 4% in the fiscal q2, which is the quarter from a year ago. and cisco's guidance is down 8% to 10%. >> that's pretty staggering. >> because not only were the top five emerging markets down 25%, but the declines were accelerating towards the end of the quarter. so this is kind of -- >> what about the tapering? because if you think about all those emerging markets, they were impacted. >> it's the idea -- >> the concept.

>> well, that was the second, third -- >> i'm surprised that the nasdaq futures aren't weaker this morning. they're only down by six points. they were at a 13-year high closing yesterday. you would think this would have broader impact on all those. >> is it setting up the cloud? is that what you buy cisco stock for now? it used to be -- things are changing so quickly. now it's cloud stuff, isn't it? >> it's the situations that do have a pretty good cloud today. their servers are targeting that market. but their margins and revenue were still strong in their core business. that's under a bit more pressure that, you happen, it's hard to make out. but there's something i want to point out, kind of a follow on to all this. john chambers told me he's likely to stay on at cisco longer than some folks had anticipated. and in part, it's because of this rocky period as a company. until last night, the window that he had given was he could retire anywhere from one to three years from now and the board would name a successor.

here is his update. >> in that window, then it's probably not going to be in the next year or two. it will probably be the end of the two to three window from here is the most likely scenario. and that's at the request of both the board and i think it's the right thing to do for the business. >> members approached him after they were briefed on cisco's current headaches asking him to stay towards the latter end of that window. we talked about cisco's results already. we talked a little bit about the overall environment that led to this. let's take a listen to what he had to say there. >> it isn't just high tech. it's the consumer companies of our customers. the people who sell in a brazil or sell in an india or manufacturing sells in those areas. what you see is the gdp slowed. and as they slowed and you and others have talked about it for almost six months, then confidence begins to drop and if they're looking for the u.s. to lead them out of this scenario,

truly, the last month or two has not instill a lot of confidence. >> andrew, i'm trying to figure out exactly what's happening here in emerging markets. it seems to be some of this taper fear, money flowing out of emerging markets, back into the u.s. and at the same time, fears of interest rate hikes in some of these markets, people not able to pay their debt and it's having this ripple effect throughout these global companies that have a lot of business overseas. >> i just think it's really nice that -- i hope, you know, when the time comes and i'm thinking about you guys, like, beg me to stay for a couple more years. especially in -- it's not every time when a company has a disappointing, you know, outlook and it looks like -- obviously, they're not taking these yet. sometimes they say are you sure you can't leave now? but it's not mismanaged. they want him dealing with the global -- i thought he was in his mid 50s.

i thought he was in his mid 50s. he's 64. so that wasn't crazy. >> the guy loves to work. part of the reason why i asked him about his timeline for departure was because i know they're going to have to drag him out of there kicking and screaming. he loves coming to work in the morning and getting involved with the customers. and i can't imagine him leaving in the middle of a problem. it's hard enough for him to leave in the middle of things going well. >> does he have a second act he's going to pull off after that? we'll looking at mulally now. he's -- >> 66 or 67. >> he hasn't specified exactly how his retirement is going to go. i'd be surprised if he doesn't stick around in some form, either on the board. he already advises a lot of entrepreneurs in silicone valley, ceos of go pro, for example. is there any operating know it all? we are all at risk to do a grand

macro trend? >> there is, there is. one of the areas -- a couple of the areas that have problems, the low end switching market has some issues. so part of what he said is they're going to be investing r&d in figuring out how to get costs down from emerging markets where you've got customers would can't necessarily -- >> who is stealing that market share? >> he didn't specify, but i think he's had some competition at the low end. pal jacobs was telling me the same thing a week ago. we have to look at how rerestructure. also the top box market area. >> was that essentially a good acquisition? because they were supposed to get into our living room, are they not? >> they're not in my living room, no. >> they got into -- it's a -- >> do you have a tv? >> you don't have a tv in your living room. don't lie to me. you're not allowed. do you have a tv in your living

room? >> i do have a tv in my living room. is it hidden? you see, i know how you are. new york people do not have -- you don't watch it in new jersey. with an art museum right next door, why would you ever turn on the idiot box? >> can you during the commercial break call my wife and you guys can discuss it. >> do you want me to call your wife, really? >> we don't have a tv in our living room. >> not even hidden. >> really? >> but we have room. >> even though you knocked out a wall and bought three other -- >> but one thing to remember, are you hearing these numbers? 67 years old, 66 and staying. so don't even think about it. we're talking ten before i even consider. >> you're looking good, joe. >> i feel good. so don't even -- i'm watching you now today because i know you're, like, young. lean and hungry. >> jon, by the way, welcome to

new jersey. >> thanks. it's official. >> it was official like two months ago, right? >> i'm actually here now, on the ground. >> and you're going to be around. are you going to be on this show frequently? >> i don't know. i'm happy to be up at this hour. >> but you know what inspect this is a lot better than what you did at 6:00 a.m. for us when you were back on the west coast. >> what was the actual town that you lived. >>? >> in san jose? >> i yeah. >> what does it cost to move someone from san jose to new jersey? what does it cost to do that? i don't know if there's a number that i can think of that would -- >> they promised me i would be on tt 6:00 a.m. hour. >> is it not a lifestyle change? >> tell him what your son said this week. >> yeah. my kids saw snow falling from the sky for the first time. my two boys were born in california. >> we should have snow for maybe a couple more years. i'm not sure.

but, you know, then never again, most likely. i mean, you know what's happening. >> that will be fireball. >> yeah, fireballs and tidal wave. >> jon, welcome and thank you. >> welcome again. >> let's get a check on the markets this morning as we mentioned. the futures for the nasdaq are below fair value, but both the dow and the s&p are indicated higher. dow futures up by 19 points. s&p up by close to 4 points fair value. this time after both the s&p and the dow finished at new highs yesterday, in fact, the dow, wow, you look at some of these levels. 15,800 is where it closed. check out oil prices this morning, down by about 18 points to 93.70 for wti this morning. and if you want to take a look at the ten-year note, you can see right now the yield is at 2.722%. the dollar this morning is at least at this point up across the board. trading with the euro at 1.3427. and 99.98 for the dollar/yen.

gold castle says that china is set to pass india as the world's biggest gold consume they are year. strict import rules have hit sales there. plummeting demand from india could further pressure prices which were up by $15 at this point. 1,283 is where it's sitting. >> right now, it's time for the global markets report. ross westgate is standing by in london. good morning. >> hi. we have responded to that rally at the end of the session in the u.s. yesterday by reversing the falls that we had. not quite at the session highs. in fact, we're down at the session lows at the moment. nevertheless, advancers outpacing declineser by a ratio of 7 to 2. the ftse yesterday had its biggest one-day fall since mid-august, down 1.4%. today, it's a little bit firmer. currently up around two-thirds of 1%. now, we had retail sales for the month of october coming in weaker than expected.

they contracted 0.1% in terms primarily because we haven't seen any cold weather. so no one went out and bought their winter woolleys. that was one of the reasons it was cited. xetra dax up 0.8%. cac 40 up 0.6%. we have weaker gdp growth in europe today particularly out of france who contracted 0.1% in the third quarter. we thought we would still get a tick up of 0.1%. germ unanimous gdp growth at 0.3 and 0.5 quarter on quarter. that was expected. growth was coming from generated. >> the economy than we might have thought. a couple of stocks worth checking in, burberry, the first numbers since the luxury group announced lawrence will be moving over to apple. the stock up 2% today.

first half revenue just over a billion pounds up 17% in the same period last year. and ahold today down nearly 4%. 60% of ahold revenue comes from the united states. it owns the likes of giant stock shot. she talked about low levels of inflation in the u.s. but a consumer that is not that confident comparable sales in the u.s. and strip out fuel up around 0.6%. that's some of the highlights here in europe. back to you. >> okay on. ross, we never -- andrew has to come up with his top ten bands by tomorrow, ross. i don't think i talked to you about that. and this is the -- when i really have given the uk -- you guys got it down. you guys -- i mean, think about it, beatles, stones, the who, pink floyd. >> yeah. >> and it's small over there. how many people have you got there now? i mean, i know everyone is moving out, but how many people -- >> we're about 60 million.

>> 60 million. >> a little bit more. >> musical talent over there. i don't know about now so much, but like you have to put a -- how can you not put english bands on there? >> i've got a couple already. >> all right. >> ross, you should do that for us, too. do you have a top ten? and it doesn't have to be a bantd. it can be elvis or in your case gaga or -- >> top ten golfers? does that work? >> you can do golfers. we want music, though. top ten bands. >> you want music, okay. yeah, i can do top ten bands. >> and that's not top ten of all times. your top ten favorite. if you go to a deserted island -- >> there is a show in the uk called desert island disks where you take your top ten musical artists with you. >> and it's just audio, right? you couldn't take miley cyrus's video. >> although we're now in a digital age, aren't we?

so, you know, why not? >> have you seen that one thing, it's called wrecking ball? did you see how many views? >> i've seen wrecking ball. >> i know you've seen it. how many of the 318 million are you? you're like 4% of that, aren't you? and then comments, 900 -- i don't know. coming up, the latest to run into social media trouble, the haters. that's what i think twitter is. everyone on wall street is talking about it this morning. (vo) you are a business pro.

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time now for the executive edge as the daily segment

focused on giving business leaders a leg up. jpmorgan has canceled a twitter q&a session with investment banker jimmy lee after being flooded with info. the company started soliciting questions last week. that's when the troubles started. some users started making fun of the bank's attempt to use social media. others saw that executives, here have just a few of the responses for you. how do you decide who to foreclose on? what's your favorite type of whale. and if you feel like a failure, imagine being the person who came up with the #askjpm. some rough stuff out there, guys. >> always. but i enjoyed jpmorgan's response, which was #bad idea. this is wa you're asking for, every day, nastiness. >> reminds me of an angry mob outside the castle. they're anonymous, even though

you can track them down. but when you have strength in numbers, when you have literally millions, you're not going to track them down. to say anything they want. >> the same thing as the e-mail before. >> right. >> this is even more ewe ubiquitus. >> has the country always been this angry or does the technology allow them to do something -- >> look, i think when you're mad, the social network gives you some sort of a platform and a launching pad. >> it will never be traced back if you have total anonymity, it's like cyber graffiti. and it won't be traced back. and if you ever confronted them, the stuff they say and you met them and said did you really -- did you really want me to tie of that or something like that? and they would say, no, god, i feel bad about it. you confront them, they do back down usually. but the interesting thing about this is it shows the risk for companies who are trying to

engage in social media. social media can bite back and it's not an easy path and there are risks, too. you need to be there, but it's not always going to behavior the way you want it to. >> being sociable is different than being social. there's an ugly underbelly. >> they had intended this program to be for college students who wanted to learn more about the banking system. instead, it turned into here we are. >> and to some extent, and i'm not blaming you specifically, but you are. but no, the mainstream media has -- in a vacuum has been anticorporate, anti-jpmorgan. this whole thing, and the government hasn't helped, either, i don't think. >> that has not been andrew. >> no, but you worked at the "new york times." >> i think generally the popular at large has been negative on banks. >> if she runs, your hero. >> if she runs, will be run on the own party? will it be the occupy wall

street? >> the equivalent of. >> the equivalent of. it won't be -- the democratic party doesn't go far enough left for her. and that's another thing. you know, the one interview we had with her, did you see the twitters, they get in this concerted campaign and they try to define what they -- >> the flash mob of twitter is quite astonishing. >> it's pretty disgusting, it is. but it is -- real as the power of social media and in a world where tv and print and all of these things used to be the only voice. this gives a huge megaphone to a lot of people. >> it let's everybody talk back. before it was a platform where you were talking down with them. that is a different dynamic. >> but you know what opinions are like and you know everyone has one. and you know they all stink. >> including my own, so we'll take it. >> let me tell guy about sotheby's. it is called the cotton candy colored diamond for a record $83.2 million. it is called the pink star.

it is the largest internationally flawless pink diamond ever graded by the diamond institute of america. yesterday's sales smashed the record for jewelry. and in other auction news, an andy warhol painting set a record for the pop art superstar. the 8x13 painting titled silver car crash double disaster has only been seen once in public in the last 26 years. i don't know, guys, i don't always get it. for either of these items. >> you wouldn't pay up for this? >> no. >> i remember when ge totally figures out how to make the same thing, you know? because we can make them now. >> the diamonds. >> the diamonds. >> the diamonds are really not for everybody. >> no. i can almost see the art. if you are discriminating and know what you're talking about, i could almost see the art. >> if you're discriminating and know what you're talking about or is it the emperor -- >> it looks just as good on a

platinum band, can't you? i guess you can't. but not -- >> not with a loop. >> the problem with something like that is it either looks fake or it looks incredibly gaudy. i can't believe you would wear that. >> did we show the warhol? >> i don't know. i was not looking over the -- i don't know. here it comes. >> i want to see it. wow, it moves. oh, no, that's not it. okay. he's pointing. >> take a look at it. >> there it is. there it is right there on the board. >> on the left? >> that weird looking screen thing. >> okay. is that it there? >> i don't know. >> i don't know. again, you know, on some level -- well, whatever. >> art seems a little overheated at this point. we talk about it, i guess, in sort of a -- because we're on the outside looking in. we are. we couldn't buy -- >> some of the guys who say the emperor is wearing no clothes. i'm okay with being there.

let me tell you about this story. i know you guys are going to want to talk to. remember watson? today, ibm will be announcing that watson will be available in a forum more than twice as powerful via the internet. the company is pushing to make the technology more widely available at a small fraction of the previous cost. guys, this is all about the cloud. >> yeah. you know how i feel about watson. but i just want to make sure, you know, like with genetic engineering, you don't want to unleash something that ends all human existence in a virus. in washington, i don't know, i just -- i'm not saying he is evil, but i saw what he did to those contestants. and i think we need to think about that when machines don't care about flesh and blood. >> rise of the machines. >> but he still have to control it. >> no, no, no, that's where you're wrong. >> that will be the inflexion point and the singulairty. >> self-awareness will be the point. when the machine reaches

self-awareness and then wants to live, right? >> yeah. and they won't like us at all. >> astla vista, baby. >> and i bought a book, they assume kerzwell is right about the singulairty. >> if that's right, then the opposite is going to be right, too, right? >> no. there's three things. they could be happy and like us like a dog, their master. two, they could be nasty or three they could be ambivalent. >> they could be ambivalent until you try to shut it down, that's the problem. >> that was sad to watch. i mean, each one coming out, it became a kid again and it was -- did you cry for it? that was sad. >> i didn't cry for it, but i did feel a little sad. >> you felt bad for a computer? >> yeah. >> i'm sorry, dave, i'm afraid i can't do that. >> open the pod bay doors now. when we come back, we're

going to talk about why a disrupter turned down a $3 billion bid from facebook. plus, a review of janet yellen's nomination hearing. my mantra? family first.

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> welcome back. what is snapchat, andrew? >> you know all about snapchat. >> no. >> cramer was talking -- >> it disappears in five seconds. you know how you would by nervous about anthony weiner?

>> this is what cramer asked about during the conference. and whether it's a traders might use it and other people? >> i thought never was really gone for good. >> that's the issue because technically if you're clever, you could take a picture of whatever the image is while it's there. >> i don't know what that is, but -- >> you could send nasty pictures to your friends and hope they disappear and no one can get them. >> we better start thinking about what we're doing here. we're worried about gm with again genetically modified corn. do you know whether snapchat rejected a $3 billion offer by facebook? >> i've read that. but i don't know. >> it's a service that's being lured by other investors.

snapchat's 23-year-old founder is said the be holding out because he hopes his company can get a higher valuation. $3 billion seems like a lot. >> unless you go public. >> it's like an app. this is crazy. >> have you done it? >> no, i haven't done it, but it's a totally different -- it changed my opinion. >> but we could do this tomorrow if we wanted to. facebook could do this. >> why haven't they? >> there's no intellectual prpt here. >> why do they offer $3 billion? >> it's a huge audience, right? it's a huge audience. same thing with instagram. twitter created something -- >> do kids think they can send -- >> that's what's going on. you're sending crazy pictures like that. your parents say don't ever post this stuff to facebook. >> did she send a selfie to someone? did you see that in the first episode, the girl? she took a picture of -- >> yeah, yeah. but maybe not a snapchat.

i don't know. >> i think it's a bad idea. you won't get into college. >> could be. >> right? >> we're talking about janet yellen. i don't know if she uses snap chat. but janet yellen's confirmation hearing is at 10:00 eastern time. larry summers told us what he thinks the fed's focus should be. >> the primary policy emphasis does need to be on spurring growth going forward. i think janet yellen is going to do a great job at the at the time fed and i think the test of policy is going to be what happens to the economy and it's going to be what the degree of uncertainty is in markets. and i'm sure all of that is going to be amply debated going forward. >> in the meantime, in an interview with cnbc asia today, james gorman predicting a taper will come in the next couple of months. >> every now and then, the markets behave like school children. you know, they overreact, they

run around like crazy. listen, we know we are going to have tapering. we know we are living in an artificial state of excess liquidity right now. and it's happening because the economy is recovering. >> joining us now to talk all about this, greg ip, of course, a cnbc contributor and neil irwin from the washington post. good morning, guys. >> good morning. >> is there any potential for fireworks today? if so, what does it look like? i'll start with you, greg. >> of course there's always the potential. the challenge for janet yellen is going to be to sound sympathetic to the concerns raised by both parties on the committee, especially the republicans. without tipping her hand as to what is going to happen next. are you really on a path for qe infinity? she has to reassure them that qe infinity is not our plan but not give a hint that, therefore, they're tapering immediately or

prematurely. it's a delicate balancing act. i don't doubt she wants to avoid giving a policy signal. i don't know how she gets out of that because she's going to be pushed on it really hard. >> at some point, she's trying to appeal to those in front of you in washington and yet she has to appeal or at least recognize that the markets are going to watch every last syllable that she says. >> yeah, absolutely. it will be kind of a realtime referendum on how markets are viewing your testimony, is it dovish, is it -- i think janet yellen is nothing else but a meticulous preparer. i suspect she's been doing murder boards getting ready for this for weeks. she'll retreat to language in the minutes, language in the states. she's going to do everything she can to be sympathetic in the concerns raced without tipping her hand on policy. >> what is the hardest question you can ask her? >> hardest question would be -- the easy thing is stuff that is restreeting to the minutes. so if you just ask her, when are you going to taper? the hard stuff is when you get

into the weeds of regulation, when you get into these issues that are harder to avoid and are real issues that she's not answering all the time. that's where it gets tricky. >> greg, the asian markets just on the stuff that she put out ahead of time, her prepared remarks, the asian markets took this as a sign that, look, the taper is not coming anytime soon. do you think that's the proper read of what she laid out? >> no, i don't. i think the testimony was extremely neutral. there's nothing in there that you couldn't have easily cut and pasted out of like the last fomc statement. yes, the economy is well below potential and unemployment is too high. to say that the economy needs support is not inconsistent with the fed saying you need to dial back the rate at which we are providing support. i think the bottom line is if we want to get a policy signal out of this, we're going to have to see yellen provide i tet in the

q&a. >> is there anything that could go wrong today? is there anything that she could say or she could be asked? and i'm just curious if -- you know, how far this could go or not or what we're about to see here. >> speaking for myself, i think one thing we really don't know about janet yellen is how will does she respond in an unscripted situation with questions, many of them coming from adversarial questioners. i think style is the main thing i want to see today and the thing that could trip her up, if she seems unprepared for these questions, like the ones she doesn't deal with as much on a daily basis to deal with regulation and so forth. if you think back to some of the problems other fed chairman and other fed nominees have had, for example, when rich shelby was the chairman on the ranking committee, that had to do with

proilg unsatisfactory answers. at this point, i just don't see anything getting in the way of her confirmation. >> ip, did you see that mckenzie study? >> which mckennedy study? >> it said qe did nothing for the stock markets, but saved governments around the world $1.3 trillion in funding costs. >> i didn't see that, but i'm looking at the stock market 20% this year and -- >> check it out. it's a mckenzie study that says -- you know, mckenzie, i don't know if i believe it, but they somehow determined that it had nothing to do with the rise. but the funding costs, it was something like $1.3 trillion saved global government. .after reading that, i was thinking why not make it permanent? if you can get governments to run $1.3 trillion cheaper, then hey, let the good times roll. but -- >> swroe, this is a great question. i think actually they're going to get this question because a lot of people in the markets are

asking this question which is to the fact that is qe asking the government to borrow cheaply and promoting recklessness? is it a big favor to the wealthy? show me the evidence if this is helping anybody other than wall street. >> the only problem is, there's only so much capital, right? and if you let governments decide what to do with it and you don't get it back, that's the problem. you will see a thousand cylindras every year. and central planning will finally realize it doesn't work. anyway -- >> gentlemen, thank you. we'll see you both soon. when we come back, the street's reaction to cisco's latest quarterly results and some cautious commentary. "squawk box" will be right back. right now, cisco shares down by 111%. once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve

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welcome back. it is now time for the "squawk box" planner. this morning on today's agenda, the weekly jobless claims, they're going to be hitting the taim ta tape at 8:30 eastern time. coming up at 10:00 eastern time, janet yellen is going to be appearing before the senate banking committee for her fed chair nomination committee. then on the earnings front, walmart set to post quarterly results. that's coming in the next hour. the retailer's numbers should give us a very good picture of the consumer ahead of the key holiday shopping season. becky, over to you. >> andrew, thank you. cisco was out with earnings yesterday. that beat the street's expectations. the company's outlook for the next quarter sent the stock lower. joining us on the squawk news line right now is jason noland.

jason, this came as a big surprise to the streets. a decline of up to 10% expected in sales this quarter year over year. what's going on here? >> as you said, the q1 was mixed, but the guide was terrible and they cited two major problems. service provider down double digits in emerging markets was down double digits. it's a data point there. their top five emerging markets are down at least 18% year on year in product orders. management expects on hers are going to see the same problems in markets like india, china, b brazil and russia. >> wa do you do at this point? you have a $30 price target. how long do you think it's going to be before they hit that? >> we've basically round tripped this year, unfortunately. we upgraded that at the

beginning of the year at a little over $20. we did lower our price target today, the 26, and kept the outperform rating. we see cisco as a name that can make the transition with architectural change happening across data centers and valuation is part of it at $22 stock with $6 of net cash and $2 in earnings. so you're looking at a little over seven times earnings cash and a little over 10 times earnings ignoring that cash. >> here is my question, though. if this is a situation where everybody is going to be suffering, cisco expects other to see the same. why is cisco being so heavily punished by the street? it's down over 10%. that seems to suggest that at least somebody out there thinks there's something specific to this because they're not selling everybody on this. >> the question is cyclical versus secular. the challenge in emerging

markets is a surprise. the concern here is that there's permanent damage that will be done in service provider with people like verizon, at&t .others to make substantial change to their networks, which would have an impact on cisco's revenue or gross margins. so that's the fear is that cisco will be able to make that transition. >> and you think that spend sg coming quickly? we spoke with tom lee yesterday. do you think cisco gets that from places outside the united states at the point? >> the u.s. was good. the u.s. enterprise and commercial specifically was good. the challenge here as service provider, part of that is uncertainty on the part of the carrier, where to spend money and how to spend money. they're parking their networks hotter right now. the other challenge is that cisco has introduced a couple of major platforms and that's causing people to do an additional testing and valuation

to basically put that cap ex to work. so i think this is going to take a couple three quarters to work itself out. >> jason, thank you. >> you're welcome. thank you. >> why couldn't you take a picture of what someone sends you. >> i said that. the problem with snapchat is you can save it, if you're fast enough -- >> can you see this.a occasion on someone's ipod? >> check my kids -- yes. >> still to come on "squawk box," jim o'neill. >> you're calling the house, right? u take charge of your future. your retirement. ♪ ameriprise advisors can help you like they've helped millions of others. listening, planning, working one on one. to help you retire your way... with confidence. that's what ameriprise financial does. that's what they can do with you. ameriprise financial. more within reach.

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forget the bricks. according to the man that gave them the famous moniker, now it's about the minutes. mexico, nigeria, turkey, joining us is jim o'neill, former chairman of goldman sachs, asset management. does that sum up the feeting right now, jim? >> no, it doesn't, joe. i don't know why you go that -- >> just made it up. >> -- you can't forget the seam, rick. >> maybe it's the guy coming on in the 7:00. all right. then, let me -- >> must be my twin. >> yeah. i probably would have started with this question. we heard from cisco that a lot of the marks that used to be hot hit, i guess -- slowed down a little, or investment money dried up a little due to the spector of tapering down the

road. and there's been no tapering, just the talk of tapering. what do you think? >> well, i think it's a bit complex really. i heard breecky's focus on it. cisco might be one of the old winners for china, and that's why i said, there's absolutely no way people can forget about the bricks, china even at 7.5% growth, $1 trillion to global gdp every year. the most interesting thing i've seen for weeks, certainly since i last spoke to you guys was the ali baba stuff two days ago after so-called singles day. but lunchtime, beijing time, they had already sold online as much as the whole of last year. sorry, the whole of the same day last year. by the end of the day, it was still bought. and consumer internet sales in china will be bigger than you

guys. so people involved in the chinese consumer story, i would imagine, particularly they got a product that's liked, are doing really well. i suspect cisco's -- this might be linked to some things like a caterpillar, you know, the old china is not firing on all cylinders, not least because they're deliberately slowing the place down. you'll make bets on the new china and stay away from the old china, with the idea you forget about the bricks is kind of crazy. >> okay. you don't forget about it, but the piece you wrote, you have o to -- you know, people are well familiar with the bricks but not the mints, so add the mints into your thinking, that's what you said. >> this is -- i've just become an acronym these days. more seriously, for so many years people always said why just those four, what about some others? and the four countries have also got lots of people, and differently than china and

russia within the bricks, and also got really good dynamics within the demographics, so the young population is growing rapidly. so these guys get their act together, they can grow really strongly. what's behind it? i'm in the middle -- i'm living a different life these days. i'm doing a bit of a radio documentary for the bbc which involves me traveling to all these countries. i was just in indonesia last week, and the same -- i was giving a big speech about all of this, the same day that the russians came out and said they could only grow by 2.5%. the indonesian debate, whether they grow by five or nine. this is a country of 250 million people. i went atop of a tower crane, i don't know if you have much of ikea in u.s., but it's a huge consumer here in the europe, and i went up on the top of the crane, of a building they're building one on the edge of jakarta. it's an enormous story. >> all right. thanks for clearing that up.

thanks. we'll see you later. coming up, janet yellen heads to capitol hill for the start of her confirmation hearings. we'll hear the future of the fed and a lot more. geoff: i'm the kind of guy who doesn't like being sold to. the last thing i want is to feel like someone is giving me a sales pitch, especially when it comes to my investments.

you want a broker you can trust. a lot of guys at the other firms seemed more focused on selling than their clients. that's why i stopped working at my old brokerage and became a financial consultant with charles schwab. avo: what kind of financial consultant are you looking for? talk to us today.

gellin' with yellen on the hill. >> i don't know what we're yelling about! >> what will the senate say about the next fed head? >> she has beautiful highs and her hair smells like cinnamon. >> mm-hmm! >> loud noises! >> we break down the day's big hearing and talk -- not yell -- about what it may mean for your investments. walmart and the state of the consumer. we get quarterly results from the nation's largest retailer and talk trends ahead of the holiday shopping season. plus, making boring stocks

fun. >> weeeee! >> fund manager bob olstein tells us where you can be making money as the second hour of "squawk box" begins right now. >> weeeee! good morning, everyone. welcome back to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin. in studio with us this morning, we have gary kaminski. welcome back, gary. >> oh, yeah, that guy. >> unbelievable! memories, memories. great to be here, guys. ♪ memories >> now the vice-chairman at morgan stanley. we love having you here. >> good to be here, thank you. >> we'll get to gary in a moment. but first, a look at the markets. >> the futures this morning are indicated slightly higher for both the dow and s&p. the s&p up by about 2.5% above

fair value, and part of this may be coming from testimony from janet yellen, one of the top headlines this morning. she'll be testifying before -- there's a confirmation hearing that's not until later this morning, but the testimony released yesterday did help drive the market rally overseas. yellen says the fed has more work to do to help the economy and the labor market. that's taken to mean there's no quick end to the bond buying program. we'll have more in a moment. also, morgan stanley's ceo james gorman is planning for the eventual end of the fed stimulus, even though markets have reacted negatively. >> every now and then the markets behave like schoolchildren, overreact, run around like crazy. look, we know we're going to have tapering. we know we're living in an artificial state of liquidity, and it's happening because the economies are recovering. >> he said he hopes the fed will

expand the stock buyback program. and earnings out for walmart. >> on total revenue was 115.69, and 116.8, and the fourth quarter, obviously the big enchilada here, 1.50 to 1.60, adjusted 1.60 to 1.70. >> mm-hmm. >> and that is versus expectations of 1.69. so that brackets the estimate. but they certainly didn't raise above where the street already was. 1.60 to 1.70, the estimate on the books now is 1.69. you have the usual stuff here, sam's club sales, 14 billion. walmart, same-store sales, ex-fuel, down 1.4%. if you include the fuel, down .2%. >> if you listen to the comments from the company, this is a

different story from macy's. yesterday, macy's was talking about how the shopper, the consumer was strong, particularly in october. they said that was the best quarter of the month. so they had a lot of confidence of what to expect for the fourth quarter. walmart is saying its guidance reflects a view of global economic trends, including ongoing headwinds from currency exchange rates, a competitive holiday season, and a full-year effective tax rate that's expected to range between 31% and 33%. they're not talking about the strength of the consumer, talking about confidence. they're talking about some global headwinds that could create some problems. >> for the year 511 to 521. >> and this is global. but are we talking government shutdown, potential for tapering issues? >> walmart's consumer has struggled mightily. it started in january when the payroll tax hike came back into effect. >> it shows more that the gas --

cheaper gas hasn't really helped and wall market hit both ways, because they're they sell a lot of gas. >> i don't think the gas is a high margin -- >> but if gas price guess down, that's why same-store sales were down -- >> before we get to -- we'll talk to yellen, this is for the confirmation. messing up your papers. i apologize. this is for the confirmation, the quantitative easing strategies have benefited the most the top 1% of the top 1%, and that the trickle-down economics, which we now now yellen completely continues to believe in, will emphasize, has not helped the walmart customer yet, but the belief is that yellen's belief is it will eventually. and if you were worried about the taper having an impact on more quantitative easing in some other form, i mean, that type of walmart data, if the fed is data-dependent, will continue to tell them to stay easing. >> mike duke making comments. says the retail environment on

stores and online remains competitive. not an easy -- >> well, amazon isn't making money, but they're taking share, aren't they? that's the other piece. >> they are. and we'll have someone later in the show, when you didn't have to bring cash flow to the bottom line, so we should save that. still need to do a tease for the show. >> thank you, gary. >> you have an iphone and a blackberry. >> i do. >> yesterday i needed to do an e-mail. i went, bop, bop, bop, looked at it, perfect, sent it. why do you have the stupid blackberry still? because of the keyboard? >> because this is a business -- we are still -- i think we are enabling both devices -- >> oh, you have -- send him, andrew, a wiener selfie, and can you take a picture of it, so snapchat won't work. do that right now. >> talk about the fed, and i'll work on it.

i was kidding about the wiener shot. >> do a picture of your beautiful face. don't -- >> okay. >> don't do any -- you have snapchat? >> why does he have to have it? >> both people have to have it. >> shoot. >> all right. janet yellen's confirmation hearing as the next fed chair -- >> you don't have it? >> actually don't. >> let's both get it and send each other a bunch of stuff all day long. during the show, let's do it. you want to? begins at 10:00 a.m. eastern, and senators could and probably will be pressing her on a number of key issues before they vote on her confirmation. joining us is kevin hassette senior fellow at american enterprise institute and katherine mann at brandeis international business school. and, hassett, you have to know everything about benghazi. we have to get that squared away before we get yellen situated here. will you explain that to me?

your party wants -- >> i think that's the only thing they won't talk about today, right? >> isn't that -- someone's tying -- someone is tying yellen to benghazi. you didn't learn from the obama care government shutdown, although, wait a second, one of the things they wanted to do during the shutdown was delay obama care. that might not have been a bad idea. but in this case, it's a sideshow with benghazi. >> sure. >> yellen, enough about being so qe-dependent that we need to talk about, i guess. >> right. i've been talking to a lot of people up on the hill. and i think that the headline is, this is about the most popular nominee president obama has ever sent with the republicans. she's had great meetings. people have serious policy concerns. but i think that this is going to be kind of an easy confirmation. the three things that i think people are going to press on today are quantitative easing. i think that they don't want to know, well, when are you going to stop, because they know she can't say that, but they'll feel some kind of regret, like we're using this unusual method, and

wish we wouldn't have to. a sign it won't go on forever. the second thing, the independence of the fed, there will be a number of openings on the fed board, and the republicans will try to maneuver to get some leverage to see if they can't get republicans appointed, or more republicans appointed. and i think they're going to to try to press in that direction. and the other thing, the dodd-frank expanded power, the treasury, it seems to want to extend the sifi designation. they have an office of financial research out, that has the mutual fund companies terrified. if you want to go right to where the rubber meets the road, will she expand regulation at the fed and have a big, heavy hand, then that report is going to be something you would want to talk about. that's what i'm looking for in the hearing. >> professor, i don't know if you saw that mckenzie study that, you know, sabres have been heard, the governments around the world have benefited. >> right. >> do you think there's any

truth to that? she is a qe -- i mean, it will continue under her. is it hurting more than helping, in your view, at this point? >> i think that -- >> no, kevin -- ho, ho, you're not a -- are you a professor? [ laughter ] sorry. >> i'm a professor. >> that's why i directed the question towards you, professor. >> right. >> yeah, i saw the mckenzie report, and i think what we're looking at here is different views about why the stock market is high. one view says that it's high because companies have a lot of earnings, and, therefore, you know, it's reasonable to go buy into the stocks. the other point of view is the only reason they have high earnings is the costs are low, because they fired half of the labor force. under that view of the world, the stock market is high simply because -- or in large part because of qe, and in large part because of very high labor productivity and low employment. so if you have the view that it's mostly coming from cost cutting as opposed to revenue earning, then you shouldn't be looking at -- you know, you

shouldn't be happy where the stock market is now, and you should be concerned. now, i think mckenzie's view is earnings are coming from revenues, not from cost cuttings, and the view is wrong on that. it's been true the low costs make it easy for everybody to borrow, not just governments. in terms of the distribution of the gains of qe, and it was said -- gary said this earlier -- the distribution of the gains are going disproportionately to the asset-holding class. that is a negative consequence of qe. it might come up in the hearings. >> yeah. so you don't -- the part about -- so your point is it's not just governments that have been able to cut down on their debt service, it's everybody. >> yeah, sure. absolutely. >> there's some positives and negatives. and i guess there's positives for governments being able to do that, as well. but what worries me, talking numbers in the trillions, if you have a -- if you have assets being put in places where they shouldn't be put, china, or

something, you're building up some things you need to reckon with down the road. >> well, i think there are a whole lot of borrowers out there getting the benefit of mispricing of credit risk. you know, it could be rwanda. it could be bbb-minus borrowers in the corporate environment, borrowing to pay dividends. there's a whole range of borrowers are getting the benefits of liquidity who, quote, shouldn't, but are. and there are those feeding through the asset channel, rather than the credit channel. this has been a problem with qe all along. i don't think it's going to come up with the hearings, because it's down in the weeds. but it's certainly an issue. and as -- you know, bernanke laid it out two years ago in his jackson hole speech, that there were concerns coming through the asset side, the frothiness, the distribution issues, the

intergenerational issues, that these were negative consequences of qe. they were recognized at the time. there's research at the fed trying to quantify when do the benefits -- when are they less than the costs? so we're looking at that. >> kevin, now you can answer. do you agree with the mckenzie thing, or not? >> right, i think the mackenzie thing is probably correct. what you're getting with quantitative easing is a stimulus today of some size. i think it's very uncertain. it's not really well identified in the literature. and then, a risk that down the road, if all of a sudden the economy lifts off, that you're going to have inflation pick up. and the thing that's happened so far is that the upside benefit has probably been a good bet, because the economy never took off. if all of a sudden, we're going 3.5%, 4%, they have to unwind fast, and they won't be able to do that. what they're buying is long-run inflation risks and exchanging an upside today for that, and

it's a trade that guys like john taylor shouldn't make, but it's been a trade that we have. >> is leo j. martin still open, you play dpogolf over there -- >> you keep asking me about playing golf, you ask me about my golf. i don't actually play golf. >> you need to take it up. >> sorry. i need to take it up. yes, it is. >> you know where it is? >> yeah, i do. i pass by it. right. it's a nice course. you know, golf is a very frustrating game. i'd rather study the economy. it's much clearer, much easier to understand the economy than it is to play golf. >> maybe you'll run for senate or something. you're really smart from massachusetts. i've seen it -- >> right. i have competition. i have competition in the senate. >> that could never happen. >> i won't run against elizabeth warren. are you crazy? >> so then you -- then you have time to take up golf. all right, thank you. >> yeah, right. >> see you later. coming up, we'll talk about

gauging the consumer. walmart out with quarterly results. we'll do a channel check with dana tellsly next, and find out what she's seeing. and from playing cards to fishing rods, household appliances, somebody has one of the brands in their house. we'll talk to the chairman of jarden. your flat rate shipping. fedex one rate. really makes my life easier. maybe a promotion is in order. good news. i got a new title. and a raise? management couldn't make that happen. [ male announcer ] introducing fedex one rate. simple, flat rate shipping with the reliability of fedex. [ laughter ] ♪

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walmart out with third quarter results, and although they were better than expected for the quarter, people are looking at the commentary, the guidance. not all of it is necessarily great. the stock looks like it's under a little bit of pressure. joining us to go through the numbers is dana telsey, the ceo at telsey advisory group, and also courtney reagan, the retail reporter, is here looking through this. i guess the walmart tone is what the street is reading. >> it is exactly. that's what everybody cares about. we know earnings are backwards-looking but when you're on the cusp of the holiday quarter, you don't care so much about what the third quarter said. it's about the trends right now going into the holiday season. so watching very carefully, they still have a lot of concern about the low-end consumer. some people had thought the concern might have been abated by now, but it hasn't been so much. it's a worry. >> dana, yesterday, we heard from macy's, and so surprisingly positive. everything they had to say about it. what do you read when you hear from wall smart. >> i think it's a cautious tone.

you're going into a holiday season where six fewer days, the sense of urgency is greater and the level of promotions feels like it will be higher than ever. >> is walmart in a particular problem because of the customer that it's serving, or is it facing increased competition from other areas? >> i think it's a little bit of both. i think the customer that it's serving, it's not like the wallet is open-ended. there's a limited amount of dollars to go around. they now are competing in the consumables business in a bigger way, and that's definitely a more competitive space. so it's the customer and it's the environment. >> dana, have you ever done any calculations -- if there's any company i really don't know what a minimum wage would do, i would imagine all of their employees, it would cost them, but all of the customer wuss have more money. do you know net-net whether an increase in the minimum wage would hurt or help walmart? >> don't know if it would hurt or help, but i'd have to think an increase in the minimum wage, more shoppers shopping there, it's got to help them a little bit. i'd much rather have their

customer having more sales dollars and more income dollars available to spend in this stores. >> but a million employees, and all after sudden -- >> more than a million. >> many more than a million customers. >> more than a million customers, but i don't know. if we could put that in a test tube and -- >> 1.2 million several years ago. >> it's 1.4 now. in the u.s. >> how much, going from, what is it 7 what, now and going to $8, $9? >> yeah, i don't know. >> what would that cost walmart per year in additional -- >> i mean, it's very hard to figure out the math. i know a lot of people try to figure it out in the numbers that walmart puts out for the average hourly wage is $12. >> so it's already above -- >> and that's excluding the executive salaries, so the r math is hard to back out of -- >> have they said whether they're in favor or against it? >> they haven't been real responsive to the groups that have, you know, put it forward,

other than just given the statistics, look, this is where we stand, and this is where we're comfortable. it's not to say it couldn't change at some point. that's what they say. their statistics say they're already above it. >> that's the old argument, instead of worrying about shareholders getting less appreciation, all those people, the low-end people spend the money when they get it, instead of saving it, and that would help the economy. jared bernstein -- >> a flip of qe at the moment. >> right. >> dana, if the walmart report indicates that promotions will be higher going into christmas, it's going to have to impact some of the competitors. so who would you single out as probably not very happy today of companies' stocks of walmart seeing more promotional? >> if walmart will be that much more promotional, it will impact target. you have to think about kohl's. also the dollar stores, whether it's dollar general or dollar tree. anyone competing at the low-end price point in strip centers, they'll have a big competitor if

they're going to price aggressively. >> it's like target has indicated slightly lower, but not a lot. >> they'll have to match if they come out aggressively. >> by the way, dana, i don't -- i don't know if you saw last week, jcpenney, it's like circulars everywhere. it's, like, "back to the future" all over again. do they look at this? is walmart considered a competitor to jcpenney? >> they're all considered a little bit of a competitor. i do think of walmart as lower end than what jcpenney s but jcpenney's price points are fierce, going up against a negative 31.5% comp, and he cares about driving the footsteps in the stores. >> joe brought up a good point. you would think with lower gas prices that walmart's consumer would be the one that would benefit from that. they don't mention that at all in this release. >> i know. i think part of the reason why they're not mentioning it is every time that we've had lower gas prices, we haven't really seen yet the pickup in comp. consumers are spending their

money in all different places lately, and you do have the online business where online websites are taking share. amazon's out there. >> dana, thank you for joining us. >> thank you. >> thanks, courtney. how many analysts do you have now, dana? >> we have and ten. >> how many employees at the firm? >> 65 right now. >> 65 employees. are you 100% other than of the firm? >> yes, i am. >> you were at bear stearns for years and years? >> at bear stearns for 12 years, and -- >> where you going with that? >> i'm trying to figure out who has more money, you ordain that? -- or dana? now you're making bucks at -- >> dana, come across the river, and we'll take him down together. >> no, no, no, i which -- i thought you were going to ask her if she was doing the affordable care act. >> he's loaded, and i figure -- >> she's an entrepreneur. she is an entrepreneur. >> she's so successful.

an entrepreneur. i add might her greatly. >> i will tell you one thing, my employees own a lot of the company, too, because you have to have performance tenure. >> touche. >> so neither of one of you will answer. okay. ahead, avoiding the hype with social media. all worth $5 billion and none of them -- i'm worried. >> have you downloaded snapchat yet? >> no. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present.

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welcome back to "squawk box." in our headlines, a busy morning for economic numbers coming ahead. we have 8:30 eastern time, the usual thursday report on initial jobless claims. economists are looking for 331,000 new claims. that would be down slightly from the prior week.

at the same time, we'll get two reports delayed by the government shutdown, the productivity numbers and the trade deficit. the trade deficit is expected to remain unchanged from august, while the productivity gains of 2.4% rate. boeing, the company's machinist union has rejected a proposed contract deal that would have traded concessions for longer-term job security. boeing said that it needed this deal, along with tax breaks already approved by washington's state's legislature, to build the 777-x jet in the seattle area. can you see the stock is down by about $1. >> it's coming to me, but it doesn't say my name. >> no, we're all going to wait. >> it does right there. andrew on camera. >> look, the guest host has to tell us. >> andrew on camera. >> it was a little up. >> i'm with you on this one, andrew. >> thank you, joe. appreciate that. >> you're a guest host. stay out of this.

thanksgiving is two weeks away, which brings with it the hopefully lucrative shopping season. you just don't know anymore. and it will be a sour season. retail groups are still hopeful. here with us to talk about it, franklin, the executive chairman of jarden. so the question, given walmart's news, everything else, how bad or good is it going to be? >> maybe on the sweet side of sour. >> right. >> i don't think it will be that bad. i think it will be pretty good. >> when you look at the walmart numbers, what does that mean to you? and -- >> you know, i've always had a feeling, walmart is our largest customer. great retailer. doing an amazing job. when the economy's pretty healthy, people don't only shop at walmart. people go to specialty stores, go to mom-and-pop stores, they go for a wider variety of retailers, and that's a challenge walmart has to face as a retailer. but you have to look at the overall retail environment. and i think the retail environment has been popular, you saw with macy's yesterday, a

set of statistics. >> although, kohl's is down about 6%, because it cut its full-year guidance. it almost sounds like we're dealing with the tale of two consumers. >> you don't know what the behavior will be in the last two months of the year. if i was a betting man, i would say that it will be mildly up, which is in line with what the -- >> but are the walmarts of the world going to be the losers in all of this? is walmart going to take the prices down, cut margin even more, and then all of the specialty retailers, they'll struggle even more? >> losing is relative to expectations. and the reality is walmart is very, very sophisticated and powerful in its promotional activity. it knows what it's doing. we see it as a vendor to walmart, we see them as not being overly conservative with their -- with keeping their inventory for the christmas season -- >> what percent of your business -- [ overlapping speakers ] >> -- what percent of the business runs through walmart?

>> about walmart itself, excluding international s.a.m.s, and i'm not sure that statistic is public, but overall, it's about 15% of our sales, which is public. >> it's been a difficult challenging environment for retailers in general for the last five years. but if you look at your company, bringing a five-year chart of jarden, you've been able to grow, even given the difficult challenges. and the reason i really wanted you to visit us today is through this whole period, you've been one of the few ceos who's had the confidence to continue to do deals, and do deals that become immediately accretive. why are you doing deals, others are not, and why have you been able to do it successfully when others are worried? >> i'd say two things. first thing, i'm not only the ceo, jim lily is the ceo, i do spend time as the executive chairman looking at the acquisition activity and deciding where we should place our bets. we've been a disciplined

acquirer. we don't buy necessarily every year. we've done more meaningful deals once every three years, and that just happens to have been the case. we don't chase things. again, we're disciplined. the mistakes people make are to overpay. but, you know, buying businesses is like yankee candle that fit -- you have to keep with the philosophy. the philosophy we've had at jarden hasn't changed since the first slide presentation i made a few years ago, and we look for market leading, niche market brands. >> your father was famous, right, the takeover -- >> yeah -- >> are you 50 years old yet? >> i'm 48 -- 49. [ laughter ] i'm 49. >> and you're a chairman already. didn't you make a crockpot with my -- with my face? >> yeah, we -- >> how are they doing? >> they're doing fabulously -- particularly the one with your image. >> why didn't you try --

>> the sale-through was 100%. >> why didn't you try selling them in stores and -- >> we could do that. i don't know, cnbc -- >> you're not going to do that. >> how do guys get in a question, but you do like to do deals but not as much deal making this year as people had expected. and two reasons for it. i imagine. one is the uncertainty that maybe people think it's the market, and the others that say prices are too high. where are you on that issue? broadly speaking. >> i think -- i've been involved in two large transactions, one in the chemical space and obviously yankee candle. i believe you can only buy really high-quality companies and not markets, because the really high-quality markets are tough to buy in down markets. as long as you don't overpay, and you find that balance between what is a cheap cost of capital and reasonable valuation, i tend to look at free cash flow valuations, if i can find the business, ten times

the free cash flow, it's not a bad bet. >> how many deals have bankers brought you in the last five years that you looked at it, done the work, and passed on? >> oh, hundreds. hundreds. for every deal, you see this 300 to pass on. we don't spend a lot of time or money on most of them. you know, when we spend time on something, we usually get it done. but the key is being, you know, knowing what to look for, and not chasing things that aren't going to happen. >> in terms of the retail environment, we talked about walmart being a lower end. in terms of the stuff selling for you now, is it the upscale stuff? is it the k2 stuff, the high-margin, also a high-cost business? >> i just came out of four days of full budget reviews for jarden, and it's really quite remarkable. the strength is across the -- across the board. high-price points, like the vocal business, the highest average price point, higher-end skis. >> how much do the skis go for?

>> well, probably the top ski, christoph brand, he's going to kill me, but probably $1,400 is the highest price-point ski, and the new v-works cantana ski, we're out of them. already out of stock, having gotten them all to retail. >> because the people that are buying the skis are the beneficiaries of qe. >> oh, yeah. there's no -- i completely agree with that. >> yeah. check out the week's worth of lift tickets. what's the smell of those -- >> stuffing. >> i want to smell it. >> turkey stuffing. >> what's that one? >> they're the same flavor. >> they are? >> i have to tell you -- >> can i have this? >> you may indeed. it's a gift. >> it doesn't smell like it -- >> we're having thanksgiving -- becky got grossed out. >> i'm homer simpson, i don't know why you wouldn't -- >> no, it smells more like a -- >> a spicy. >> sweet potato.

>> pumpkin pie. [ overlapping speakers ] >> smells like sweet potatoes. >> -- thanksgiving, we've given $1 per sale of this candle to the uso. >> nice. >> can i ask maybe one uncouth -- what's the margin on candles? very pricey. and yet it's -- i'm not sure that the cost of goods is -- >> so it is -- what's very interesting about yankee candles, it's the most extraordinary vertically integrated, if you like, provider of a product. 75% of the product that's produced at yankee candle comes out of the factory in massachusetts. >> i just the margins -- >> yeah -- >> -- who makes more money, and didn't think it was uncouth. you asked what are the margins on a candle? >> you know what's great about a candle? >> i assume -- >> you think that's uncouth. >> this has to cost $1 or two. >> you know what's great about a candle? the customer who buys the candlelights the candle, and the

candle disappears and they have to buy another one. >> answer the question. >> the ebitda margins in that business are a little over 20%. >> you have a lot of great -- in the past, you talked about that. >> what would this retail for, what we're looking at here, this candle, do you think? >> it's $15. i think the large one -- >> and it goes up in smoke. >> you'd be surprised, the fragrance, the yankee conditional spends a lot of money getting the fragrances right and sources from -- if you want to look at a company like iff, the fragrance providers are very high. and it's not cheap to -- >> lighting up things on thanksgiving. having everyone over. they're going to come in and go, "oh, my god." >> "you've been cooking all day." >> exactly. >> thank you for being here. always great. >> yeah, thank you. disappointed you didn't actually manufacture those crock pots, right? just with my picture. you just -- >> we will. >> no, it's okay. >> it's in the budget. up next, avoid buying good companies that make bad investments.

stock picker and fund manager bob olstein, an old friend of the show, joins us later. and pimco ceo mohamed el erian talks the fed, markets, and an interview you can't afford to miss. "squawk box" will be right back. but they didn't fit. customer's not happy, i'm not happy. sales go down, i'm not happy. merch comes back, i'm not happy. use ups. they make returns easy. unhappy customer becomes happy customer. then, repeat customer. easy returns, i'm happy. repeat customers, i'm happy. sales go up, i'm happy. i ordered another pair. i'm happy. (both) i'm happy. i'm happy. happy. happy. happy. happy. happy happy. i love logistics.

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welcome back, everybody. look at the futures. we started out this morning with the futures indicated up by about 28, 30 points for the dow. now, up by only two points. s&p futures up close to two points and the nasdaq is indicated down by about nine points, and part may be what we heard from walmart, that beat expectations, but the guidance was at the low end, or in some cases, the range fell below what the street had been expecting. not a lot of optimism, and that stock under some pressure. >> upbeat earnings from macy's helping to drive yesterday's market gains. it also happens to be a stock pick for our next guest, bob olstein. chairman and chief investment officer, was probably on 20 years ago with mark haines when we -- what, 17 years ago? >> the co-host. >> i remember you co-hosted a lot, and you said boston chicken would be a hat size, which meant -- what's the biggest hat

for -- a guy with a head as big -- >> at that time, i was wearing 57. >> you were wearing a size 7. >> the first thing when you set down, i said, is there value in any of the thens? snapchat, no, thanks, $3 billion. are you kidding me? no way. pinterest worth at least more than that. all of the social media stocks, i mean, if you have heard of the app, it's worth $3 billion, andrew, isn't it? if you've heard of it, it's worth $3 billion, no? >> the whole thing makes no sense. >> is it crazy, bob? >> it's out of control again. this is the latest -- the music's changed, the dance is the same. >> really? so this is going to end badly. >> it will end badly, even the amazon, out of control, linkedin out of control. good companies. it's the -- they're looking at revenues. you can't give revenues to investors.

look, you got the macy's and the duponts, and you know on strategy session, we did macy's back at 19, still a buy at 50. we still own it. a company generating 10% free cash flow. are you telling me, if this was a private company, john deere, you can get $3 billion a year in income, $30 billion market capitalization, and you got salesforce.com, and they're still talking about deficit twos years down the road? this is unrealistic. it's amazon, linkedin, all of the companies are great revenues, but you have to produce free cash flow. you don't? the valuation heads south. >> you can substitute pets.com. >> drkoop.com. we sat there together. i remember on "squawk box," a guy had 100 million in sales and he went public at a billion. i said to him, how can you justify a billion market cap? this is back in 2000. and the guy says, you don't understand.

>> bob, before we came on camera, we were chatting in terms of -- you don't obviously own these names. the performance is what this year? >> up 32% in one fund and 37%, and five-year compound sd over 20% a year with boring stocks. dupont, ge we own. we bought it down there. boring stocks. and there's enough studies that say boring stocks win. look at the on-screen, deere versus cisco. 1999, you buy cisco. cisco quadruples sales -- >> right. >> john deere only triples sales. it's a four-bagger on deere, and you lose 50% on your money. the social media stocks, my prediction is, the next five to ten years, you make nothing and probably lose a lot. >> this is an incredibly interesting chart, because, andrew, a lot of people reporting last night, cisco, at a time when people are valuing businesses on revenues, and you heard martin franklin say it,

buying on free cash flow yield, what's the performance, the cisco versus deere, past 13 years. >> four bagger, cisco you lost 15%, and they quadrupled. >> you have 53 there. >> it was above 100 -- >> is this tech at large? do you believe this of tech across the board, or social stuff? >> no, no, no. we look at -- we differentiate freak -- we're talking social media. you talk about free cash flow. cisco is getting down now to a point whereas probably getting real interesting. now they're overreacting to the latest quarter. everybody in it now. 80% of the trades is electronic. nobody cares about free cash flow. i'm extinct. >> tesla? >> oh, my god. that's another -- but at least they have a business model that may work. but how do you value that company worth $25 billion? >> did you mention on air what the amazon guy said -- >> yeah, you listen to the

amazon guy -- >> it wasn't bezos. >> he's very honest, bezos. he said, i don't care about investors. and i would fire, my analysts walk in to me, buy amazon, i'd fire them, and it was a triple -- >> you don't think amazon could flip the switch at any point and the margin goes up and all of a sudden, making money like crazy? >> in 1999, the citibank analyst said amazon's revenues would be $46 billion in 1999, and their earnings will be $8 billion. this is '99. he hit it to the penny. they did $46 billion in sales, they're still no cash flow, no hope of any cash flow. if they -- the only way to get flash flow in amazon now is to lower prices -- i'm sorry, raise prices. you raise prices, you know what happens to revenues? they're very, very -- they're shifting. >> they could raise -- >> i think it's a nice, sticky business. >> you would still be in. but watch the competition across the internet. listen, amazon is a retailer.

of course, now they're into food, fine art, they're into the cloud. >> tv. >> trying to control the world, okay? so let's say amazon does 6% margins, which a retailer, that's a great margin for a retailer, on $80 billion in sales. that gives them earnings of about $7 a share. does that make a retailer worth 50 times earnings? look, they're already 80 billion in revenues. their growth is going to slow down. >> bob, let me -- let me jump in here real quick. joe mentioned boston chicken. longtime viewers probably remember, you had the most epic call on lucent. but lucent, before it went to zero, doubled. so andrew wanted to know, and so i'll ask this question, what triggers something on amazon? what trigger, the collapse of these things? you were dead right about lucent, but you were wrong first. what triggers it? >> it doubled on me. i was getting e-mail, "dear clam brains," you're a used car salesman. excuse me on used car salesman.

it's like you hope they stop the music. they're overvalued, i'll say it again, overvalued, and little likelihood, i won't say none, that they'll ever produce the expectations they'll go on. just like somebody misses a quarter, okay, last quarter on macy's, and they kill it, and then here's five bucks in free cash flow with probably the greatest ceo. so anyway -- >> you're coming back as a guest host. i'm inviting you. you know what? two years from now when you're saying cnbc helped build the bubble and had nobody saying anything, we're going to bring out the tape on you -- >> my pleasure to come back, but i'm not that popular anymore, joe. >> you're coming back. you're popular again. >> popular with us. >> this is a message that needs to get out, right or wrong. >> 100%. >> it struck me this morning, it's, like, i read about the snapchat, you know, so they send this thing, it goes away in 10 seconds, and the guy's laughing at $3 billion. laughing at getting $3 billion for this company. >> we all see -- have seen this movie before. >> yeah. annoying aol comparisons,

remember? we'd add up four dow components and wouldn't add up to aol market cap. >> an ugly ending, joe. >> yeah in. >> oh, yeah. it's going to have an ugly ending. >> when is the ending if -- >> if i could tell you that, i wouldn't have to appear on this program. >> he'd have all -- he'd have more money than dana. >> and the fed has something to say -- >> that's a great observation. some of the valuations are being perpetuated by the 1%, 2% interest rates. once those rates start heading up, these stocks are going to tank. >> all right. >> bob, thanks a lot. >> thank you. >> thanks. we'll have much more from our guest gary kaminski. and at the top of the next hour, janet yellen, and what the panel will want to hear. heidi will join us. up next on "squawk box" -- don't start your day without knowing the names that will make you money. joe has your list of stocks to watch right after the break. it's as simple as this.

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♪ take a look at a couple of "stocks to watch." cisco is one we're all talking about today. sales were light, and then the guidance for second quarter, it was below current analysts' estimates. even the possibility of an 8% to 10% drop in revenue, because of weak demand in emerging markets.

>> -- growth -- >> they're looking for up 4%, which would have been, wow, not much revenue growth. >> right. >> but compared to down eight to ten, people would give anything for it. walmart? not great here either. 1.14, a penny above estimates. the revenue was about, you know, any other company misses by a billion, and you said, oh, my god, but that's less than 1%, less than 1% miss. and then, full-year, more or less -- >> that's a little -- >> you have to hit the high end -- >> the street was expecting $5.20. and they hit 5.11. >> yeah, 5.11 to 5.21. >> a wide range. >> and all the fourth quarter. and kohl's missed estimates by five cents with third quarter profit of 81 cents and the revenue was below. you throw in kohl's and walmart together, and we need to talk about this christmas season. >> yeah, the full-year guidance. >> yeah. okay. coming up, senator heidi heitkamp, member of the banking committee, will join us. and mohamed el erian, the future of the fed and a lot more.

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convince a senate banking committee she's right for the job. >> i'm a big fan of money. i like it. i use it. i have a little. i keep it in a jar on top my refrigerator. i'd like to put more in that jar. that's where you come in. senator heidi heitkamp will tell us what to expect. obama care enrollment numbers fall short. we'll ask house majority whip kevin mccarthy if changes to the law are politically possible. breaking economic data -- [ sirens ] -- government numbers on jobs, productivity hitting the tape at 8:30 a.m. eastern. the third hour of "squawk box" starts right now. ♪ why do you build me up build me up ♪ ♪ buttercup baby just to let me down ♪ ♪ let me down ♪ >> you know, my wife, one of her favorite songs when she was a

little girl. welcome back to "squawk box," first in business worldwide, and our guest host this morning, gary kaminski, vice chairman. think about that. b.c. whoa, that's the thing, are you chairman of vice or are you -- that's the thing. because we know about wall street and boom, boom, room, and all of that stuff -- you know -- are you chairman of vice or vice chairman? >> you know, as we know, as you looked at the stock price, the morgan stanley, we're a leading financial institution, servicing our clients on the high net worth side in a spectacular way. >> you know that i have -- i throw you boins all the time when you're not around. i mentioned fleming and who did more, fleming, gore, or kaminski. i say that. we love each other. not literally, but we do.

andrew. >> not that there's anything wrong with that. >> not anything wrong with that, and glad gary is here to make sense of that. including the earnings reports. walmart reporting third quarter results, earnings beating by a penny. hurt by decline if same-store sales in what they called a competitive retail environment. they expect comps to be flat during the holiday quarter. check this out. shares of kohl's also under pressure in early trading. third quarter earnings and revenue falling short, and the retailer cut the full-year profit outlook, as well. and also, watching shares of cisco this morning. quarterly revenues missing the mark pretty big in this case. and the tech giant warning revenues would drop as much as 10% this quarter and keep contracting until after the middle of 2014. cisco says a backlash against u.s. government spying contributing to falling demand in emerging markets like china. >> how did we do 2.8 on the gdp? >> what do you think about the

last part of the sentence, that spying is making it more complicated for u.s. companies who are doing business outside of the u.s.? >> no, what, in china? well, i don't care about china. you can't buy stuff over there anyway, china. you have to partner up. you have to partner up with people over there. it won't affect -- the germans fully cooperate with us on -- >> i'll make the argument on this program -- >> we can't buy german companies. >> -- as bankers have, if at&t wants to buy vodafone -- >> no. >> -- it all of a sudden becomes more complicated because of the nsa and our spying, lenovo wanted to buy blackberry, the canadians said -- >> it's canada, it's china. this is not the spying -- >> i'm suggesting others will now be worried about us. >> everybody knew this was going on. you know what? it really comes down to whether you -- >> they didn't know exactly what was -- >> there's people that think snowden's hero and people who think he's a traitor. if you think he's a hero -- >> i'm not making a judgment

either way. the judgment i'm making -- and i suspect people did understand what was really happening -- >> i don't know they knew that it was corporations. >> they didn't know -- >> complicitiveness is there's something wrong in your mind. say it loud and say it proud and then -- >> it's not what's in my mind. if there's a political backlash, the next time a big european company -- >> you think that would influence -- >> i'm a capitalist at heart, and i think an american company came in to buy some european company, and offering the shareholders a significant, you know, financial reward, i'd like to believe that -- >> and, you know, it's not the shareholders, but the government. >> yes. [ overlapping speakers ] and always politic, honeywell, ge. >> did you hear what he said, which is what makes twou different. he's a capitalist at heart. >> i'm a capitalist at heart, too. >> come on. >> i'm not saying the shareholders won't accept the deal. what are you talking about? >> i'm with andrew. there is a political backlash,

some potential -- >> i don't think so. well, we'll see. >> it may not crush the deal -- >> you won't be able to prove one way or another, because they haven't merged yet. we won't be able to prove the counterfactual. >> we'll have to wait. >> if they do, and it works, what will you do? >> i'll eat crow. >> okay, i'm going to get you a dead crow. i never have to eat it, because they haven't bought it yet. >> if they do -- >> all right. then i will eat some -- i don't know if i'll eat a crow. >> i promise you guys i will e-mail in, and announce -- >> what are you going to do? i get to eat crow, too. >> oh, no, no. >> he'll have to eat crow in new york city. [ laughter ] >> we will do the show -- we will do the show from new york city one morning, and you'll eat crow. >> are there boards in new york city? >> pigeons in new york city. >> there are pigeons. >> really like -- it's like a -- it's like a cornish game hen,

pigeon, isn't it? >> or a flying rat. >> i will eat a pigeon. can you make them up -- >> or try some of the culture -- >> no, no. >> let's talk corporate news. boeing machinists have rejected a contract extension. it would have let them build the newest jetliner in washington. it would have secured 20 years of work, but would have terminated their pension plan and raised the health care cost. the decision is boeing will consider building key parts in non-union states or in japan, where it's received an offer. the stock is up about 16 cents. a check on the overall markets. when we started out this morning, it looked like the dow futures were up 28 points, now up by 10 points. we've had the walmart news. s&p futures up three points and nasdaq down by six. the markets will be watching janet yellen, because she'll be appearing before the senate banking committee. she's expected to defend the bank's aggressive monetary

easing. senator heidi heitkamp joins us, and is a member of the banking committee and has spoken to ms. yellen. good morning. >> good morning. >> what's the hardest question you plan on asking? >> i probably won't get a chance, because i sit at the very end. i'm more curious about the questions the republicans will ask. the one thing about the republicans on the banking committee is they really focus on what's actually at issue. they don't go off on a tangent. and so, i think we're going to find out kind of what the future is for this nomination based on the questioning. >> senator, is there -- >> i had the chance to visit with janet yellen. i think he's eminently qualified. she will give predictability to -- in a time when we don't give that very often in washington, d.c., so i'm looking forward to listening to all of the questions. >> senator, two questions. first, is there -- is this just theater today? is there any chance she doesn't get the nod ultimately? >> oh, i think she's going to be approved. i think, you know, we obviously had some questions about larry summers, and that was dealt with

with this nomination. and so, i think she'll have unanimous democrat support, and i think after what we did in october, i think it's important that we send the right message, which is that we're drid to do the business of the united states senate, approve people who are responsible for monetary policy, and give the market predictability. >> senator, i had a conversation with larry fink two days ago, and one of the things he raised, or he had raised, somewhat publicly, in support of larry summers, and i said, how do you feel about janet yellen, and what's the distinction. he talked about what would happen in a financial crisis, and he was routing for larry at that time, because if there was a financial crisis, he felt larry had that experience. do you feel janet yellen has the right experience if we run into an iceberg in. >> i think that we're at a slow steam here. and i think she's got the right experience to keep us on a steady course and maybe amp up

the speed at which we're traveling in this economy. you know, i think i'm more concerned about a sluggish recovery than i am another major financial crisis. >> you know, senator, politics always makes strange bedfellows, and i've been thinking about this more. so the democrats didn't like larry summers that much, for a variety of reasons. but, one, maybe because he was less prone to continue qe as long. and i guess democrats say, well, qe will help people get jobs, although i don't know if there's any evidence. but lately, there's been a shift in opinion that qe is really helping people that are in the 1%. it's helping the stock market. it's helping people that already have assets. it's hurting savers. so it's just weird. that would normally be somewhere where the democrats would want to play and would want to say, look, we don't like the income disparity happening from qe, and you figure the republicans are supposed to like that, since

they're lining their friends' pockets. can you see how it's kind of shifted? do you feel it? >> well, i don't feel it. i think there's a limited number of tools when you're at zero interest rate in order to provide stimulus to the economy. whether this is a long-term strategy that needs to be pursued on and on continuously, i think that's a real question. >> but you can't -- you can't -- >> -- won't roll it back. >> you know who owns assets, those are people who are own assets. the ones that don't own them, are being left behind. and here we are hitting new highs and the minimum wage is -- you know, people on the low end of the scale aren't benefitting at all. so sooner or later, if it's not working, that's the definition of craziness, you know, you keep trying to do something that doesn't seem to be doing what you want it do do. >> well, you can't deny that. in a day -- in a time when we're moving from defined benefits to defined contributions, more and more of the middle class has their savings in the stock market.

>> true. >> it's not just benefitting the 1%. i think when you look at long-term strategies for saving for the future and saving for retirement, that stock market makes a big difference. >> well, randy weingarten, she wants to go back to -- i'm staggered that people still are trying to sell the defined -- it seems so hard to do, like it's fraught with risks, because you can't guarantee anyone 7%, 8%. >> whether you want it or not, it's gone permanently, i think. >> senator, very quickly, after this nomination is going to be apparently approved, there's a lot of people that believe yellen will push for congress to come up with a massive stimulus program. i mean, it's already been leaked out there. are you and your colleagues going to get behind trying to get another massive stimulus program put through post this nomination being accepted? >> well, i think there's a lot of folks in the capitol who are worried about the sluggish recovery. they're worried about a lack of investment in infrastructure. even had conversations with

people who will talk about repatriating offshore incomes, so we can put it in a stimulus bank, or in an infrastructure bank, and basically get america back to work, especially those folks that you just talked about, which are on the lower end of the economic scale. >> hey, senator, pardon me for not knowing. you weren't there for the obama care vote, were you? or were you? >> no, i was not. >> you don't have to worry -- >> well, i think everybody here has to worry, because this is about 20% of the economy. and about absolute essential ingredient of family's security. >> you should be really negative on it, because you're in north dakota, where, actually, people have jobs and are actually, you know, achieving things. what do you want to do? we going to fix it? you think the land -- >> i think we need to better understand all of the problems. i agree with so many people who said the website is the least of the problems. what we've got is a marriage penalty. we've got people being kicked off plans when they never thought they were going to be

kicked off plans, having the rates double or triple. that needs to be addressed. we also need to understand that the insurance industry has priced their products based on a set of rules. we change those rules now, we can't put this all back on the insurance companies. we've got to figure out a way that we do this in a way that doesn't completely unravel the market. >> okay. senator heidi heitkamp, thank you for joining us this morning. >> thank you. >> janet yellen's nomination hearing is set to begin at 10:00 a.m. eastern time. cnbc will bring you the complete coverage. >> i didn't say fargo -- >> you didn't. >> jokes -- the older you get, you forget you made the jokes earlier. >> like, what's happening? >> like i asked the professor about the golf -- i didn't know i asked her about leo j. martin, but you can amuse yourself more, because it never gets old. >> something to look forward to. >> yeah, kind of. what was i saying? [ laughter ] brazil's vespa hitting

competition. up next, we'll talk to the new ceo. and later, we'll continue our discussion of the fed chair, the new nominee, janet yellen. the squawk market master mohamed el erian will join us, and house majority whip, kevin mccarthy, one of the young guns with cantor and paul ryan. anyway, we'll talk to him about obama care and the slow enrollment.

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welcome back to "squawk box." making med lines, the mortgage-baked securities insurance business of fannie mae and freddie mac. it is aimed to resolve the financers, freeing them from government control. do you think fairholme? >> why did i say -- i don't know what's wrong with me today. >> today? [ laughter ] >> okay, every day. bruce berkowitz will be joining dennis later on "squawk on the street." >> so you'll get the answer. >> we will find out. we will find out whether it will

really happen. there you go, joe. >> thanks, andrew. america's trading system, brazil, a joint venture between america's trading group and urinx and expects to begin trading next year if it gains approval. here to talk is brazil's ceo -- people don't know this -- there's not enough down there to handle what's happening in brazil. is there? i mean, these are shacking 300 stocks, only 10 do 50% of the volume, and then the market's really conen is traited. you need liquidity, i think. >> correct. it's the sixth economy of the world. and the stock exchange market does not fully represent the economy. we have 360 stocks, which will place us in 23rd place worldwide, in between vietnam and mongolia. we have very little retail, you know, in our markets, considering a country where the middle class has actually grown

a lot in the past few years. >> right. >> about .3% of the population only owns stocks. so that places, also, below countries like kenya, ghana, and most impressive, despite the fact it's seen as a decent exchange in terms of turnover and volume, 50% of the volume on the stock exchange market, it's done by ten stocks. >> can you just -- the batista companies, you lost a couple, right? >> well, on the top ten, there was one, ogx. >> yes. what do you make of batista? did he just fool everybody? what happened here? >> no, i don't think so. i think he truly believed. basically what he did, he's a smart guy with a lot of charisma, has made very good investments. and at some point, he decided to start drilling oil. he came with a business plan.

he basically put a powerpoint of the business plan, and he ipo'd the powerpoint of the business plan. and quite frankly, a lot of very smart people got into this ipo, and i'm talking about huge, global players. >> you think it was overleveraged, that expecting there would be a lot more oil there -- >> yeah, listen, he had technicians there that sort of told him, listen, that's where you should drill, an that's where you have oil. the problem is not him. the problem is that a lot of people did buy into him prior to that he pumped the first drip of oil. >> yeah, and i have to thank michelle or mcc for clueing me in to a lot of this stuff and these questions. so your current president. >> right. >> and i don't want you to say physician heal thyself to us in the u.s., but is a huge believer of interventionist government. never heard of that. why should an outside investor

even trust investing in brazil when you've got someone who's so -- where the state is so involved in the economy, so much central planning? >> that's a very good question. i mean, first -- >> it's not mine. >> well, first of all -- >> -- asked that question. >> first of all, it's important to say that prior to -- all of the privatizations were done during the cardoza times, and some companies were left aside. which are the same companies that are there. the companies have not been privatized, even on a social democrat government. so it's -- it's tough to say -- >> it hasn't happened yet, it's not going to happen? >> i don't think it's going to happen. for some reason, those are the -- they would stay government -- >> we've had people say avoid brazil because of things like this. can it ever swing back the other way -- >> i think brazil is never that

good, or it's never that bad, quite frankly. usually, the time to get in is when it's -- it looks like it's very bad, which is the time right now, what is happening. if you think about it, we have the world cup. >> i know. >> in 2014. we have the olympic games in rio in 2016. those things do move the economy. >> yes. >> and very important, a huge amount of people moved from above poverty level to middle class, and there's a huge consumption market in brazil, and that keeps going on, and the economy, you have seen some weird numbers coming out every day, showing that zsh yeah. >> -- things are crazy, and things are getting better. >> mm, okay. you know, a stock market will help -- you know, preaching to the choir here. good luck, god speed. and in a strong, healthy brazil is good for -- >> good for everybody. >> -- good for the rest of the world. i think batista put a cloud -- >> i don't think it did.

>> the socialists are putting a cloud -- >> a lot of crying. >> thank you for being here. coming up, breaking economic data on jobs, productivity and trade, we'll bring you those numbers at 8:30, and reaction from "squawk" market master mohamed el erian. we'll show you the highlights of the bank's epic p.r. fail, and they're calling it a hashtag fail. back in a moment. customizable charts, powerful screening tools, and guaranteed 1-second trades. and at the center of it all is a surprisingly low price -- just $7.95. in fact, fidelity gives you lower trade commissions than schwab, td ameritrade, and etrade. i'm monica santiago of fidelity investments, and low fees and commissions are another reason serious investors are choosing fidelity. now get 200 free trades when you open an account. maestro of project management. baron of the build-out.

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jpmorgan has cancelled a twitter question session after being flooded with insults. they didn't get many until yesterday afternoon. some users made fun of the bank's attempt to use social media. others insulted executives. here's just a few of the gems that were out there. will the firm explore new markets like selling candy-backed securities to babies without disclosing the lack of chocolate in the bonds? another wrote in. did you have a specific number of people's lives you needed to ruin before you considered your business model a success? and congrats on finally proving that jpm is not too big to fail. after the onslaught of comments, jpmorgan said, the q&a session is cancelled. >> can i say something? jpmorgan a major competitor of

morgan stanley. but it's a shame. i think the attempt here was to open up a dialogue, and it's a shame that this would have happened. because i am sure there are a ton of shareholders that would like the opportunity to have a level playing field -- >> but it shows the risks of any company trying to use social media, because it's -- >> it's also why you get people on twitter who say they do one thing and they don't do it. >> right. >> also, there's a group of people throughout that think the world would be better off without a u.s. banking system and have no idea about what funds capitalism. on the u.s.s. saratoga in 1982. [ male announcer ] once it's earned, usaa auto insurance is often handed down from generation to generation because it offers a superior level of protection and because usaa's commitment to serve current and former military members and their families is without equal. begin your legacy. get an auto insurance quote. usaa. we know what it means to serve.

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welcome back to "squawk box," and we have breaking data. not just breaking data, but labor data, the ones we're most interested in. the jobless claims comes out worse than expected at 339. last week was revised to 341. a little worse than expected, also. continuing claims comes out at 2874, a little worse than 2870. the bond market ticks up a couple ticks, so tiny bit lower yields. the stock market doesn't seem to care which way the numbers are, and they prove it this time. the s&p still up about four

handles, liked it a little bit. >> well, there you go. that one says your name on it. reaction -- >> no, no, i'm reading it, you know, reading the haters that we were just talking about on twitter. >> yeah. >> with jpmorgan. it's, like, this one. this is the kind of stuff i guess jpmorgan got. that when you use capital to steal from people, it's called a crime. hence the animosity towards them. but your buddy taibbi, whatever, the giant squid and the, you know, and they talk amongst themselves. he just will put forth the notion, jpmorgan -- yeah, jpmorgan is a massive global organized crime syndicate. massive global -- >> -- how many jobs have been directly created and saved as a result of capital raises that jimmy lee did? >> no idea. >> not one. >> no idea. not one. >> because all of the people sitting in their house don't have jobs, they're on twitter. >> by definition, a profit-making venture is somehow

less, you know, it's not giving jobs. >> i agree with you completely. but i think the upside in going down this road with the unemployed becomes a challenging one for us. just, right? that's sort of the -- >> for more on yellen's testimony in the future, and the markets, mohamed el erian, co-cio, and i try to figure out where mohamed will come down on a lot of things. with qe, he's been very, very outspoken that it has helped the stock market, and has put the market, mohamed, at a place that really isn't justified by what the economic backdrop is, your so-called wedge between where the stock market is and where the economy is, and, therefore, i don't know if you've ever really said it, but are you anti-qe, and do you think we shouldn't have embarked on qe 3, and should we stop it now in. >> no, i understand why we

embarked on it, because there was no better alternative, so we were deep in the world of second and third bets. why we've continued on is a more interesting question. the more you do, the harder it is to exit. and i think mrs. yellen got it absolutely right in her testimony that was published yesterday, which is there's only one way to get us out of this, with i is high year-over-year growth, so the whole system now has bet on the effectiveness of qe, not in terms of asset prices -- we know that works -- but in terms of ultimately delivering growth. that's what will validate, if it comes, that's what's going to validate market pricing. otherwise, the convergence happens the other way around. >> i made the point earlier that the political parties could -- you could say they have it backwards. the democrats would be the ones that want to end qe, because it's been enriching the 1% and not helping -- at least we haven't seen much trickle down.

you can see it in the numbers we're seeing today, and it's certainly hurt savers. and republicans should embrace it if they really want to line the pockets of the rich friends. this is -- they should be behind this 100%. does that make sense? >> so that was a great discussion you had with the congresswoman, as was the earlier one, a distinction between the asset channel that benefits the rich and the credit channel that benefits society more broadly. the problem is, we haven't unclogged the credit channel. >> right. >> what democrats will tell you the alternative was worse. yes, you're right. it has had bad income distribution effects. you know what? the alternative would have been even worse. that's the argument you're going to hear in response to what you said, joe. >> and do you believe that? i mean, we'll never know the counterfactual? >> that's the problem, that we'll never know the counterfactual, right? and the other thing, cisco's wa results, and walmart's, you have the spinover effect. you're seeing the discussion of

that. could qe here benefit the u.s., while breaking something outside that feeds back into the u.s.? and that's the other discussion that is going to become more interesting in the monthing ahead. >> mohamed, you asked the question. what's the snaens. >> yes, we're complicating the life. look at brazil, indonesia. they're finding it very hard to deal with the spillover effects of qe. >> therefore, the answer, then, is to do what? if you were janet yellen -- >> so thank god i'm not janet yellen, because i think this is a really hard job, and we've got a very qualified person who's going to take over the job from ben bernanke. so, you know, thank god she's doing it, and we wish her well, because there's a lot at stake, especially if you're a parent. i have a 10-year-old. there's a lot at stake. what we need is the political system to come together and engage policy making entities that have better suited tools. that's what we need. is it going to happen? no. the result of that is that the fed will keep its foot on the

accelerator. it will continue with its stimulus. it will tweak it over time, a bit less qe over time, a bit more forward guidance and just going to be on this road hoping for growth to materialize, and it's really a big question mark whether it does. >> mohamed, if ms. yellen indicates today that short rates, fed fund rates, will stay at zero, let's say the next three to four years, what do you think in terms of the yield curve steepening, where do you think the longer range could go in the next three to six months if that is baked into the scenario? >> so we think the curve trade is to continue to bet on the steep curve. up to five years is going to be very well anchored, not only by indications about where rates are going to go, but also by more aggressive forward-policy guidance. beyond that, we'd be really careful. so we tell fixed-income investors make sure you concentrate at the front end of the curve also, we tell equity investors, value more fundamentals and take into

account more liquidity risks, and then, finally, position yourself for the deleveraging of european banks. it's coming, and there will be interesting opportunities. >> are we at a 2.8% sustainable economy, right, gdp growth now, mohamed? >> no, we're not at 2.8. we're about 2% economy -- call it 2% to 2.5% with quite tails. we're still stuck in the no-growth eke whiquilibriuequil europe is not emerging much stronger. look at the numbers out of europe. sluggish recovery. >> the market, the 10-year recently, went back to 2.75 based on the jobs report. is that -- they're not going -- are they going to taper in december? >> we don't think so. okay? but, joe, we've got to look beyond, are they going to taper in december or in march? you have to ask the question, what does the policy mix look like throughout next year?

and the answer is, fed very involved, but with a different mix of instruments. and that's really important. because it says maintain the beta exposure to fed policy, but differentiate more at these valuations. >> you mean the talking rates down instead of buying assets? >> correct. >> hey, mohamed, a question off of the economy, but about a guy we both know, neil kashiari, what do you know? >> he said he wanted to go back in the public domain, politics, and he has been exploring, going up and down the states talking to people. it will be really interesting. neel, don't underestimate what he's able to do, this is a guy with enormous talent and confidence. we wish him well. >> yeah, he was one of the good ones out there, pimco, a republican. he's like a --

>> are you going to -- >> a fish out of water out there in that shop. no, he was. >> mohamed, will you vote for him? is joe going to vote for him? >> joe, come over here, we have lots of republicans for you. just come over here. >> newport beach, but the people at pimco -- >> we have lots -- >> mohamed -- >> we have lots of them at pimco, joe. what we don't have is a cincinnati fan. we have one or two. we have lots of republicans for you. >> did you take the front four, the jets would be as good as they are this year? >> i don't want to jinx them. i just don't want to jinx them. >> that was an amazing -- whenever i'm watching the jet, i'm thinking about you, and every good play, i'm happy, and the bad ones, i see a pain. i feel your pain. thanks, mohamed. >> thank you. >> we'll see you. >> thank you. coming up, will weak obama care enrollment numbers weaken the resolve of democratic supporters? some lawmakers calling for changes to the health care law. we'll talk to house majority whip kevin mccarthy after the break. tdd#: 1-800-345-2550 trading inspires your life.

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>>. >> welcome back to "squawk box." lockheed closing some facilities, they say it's in reaction to continuous declines in u.s. government spending, and a noticeable announcement from dillard's this morning. dillard's will remain closed on thanksgiving. can you believe this? that bucks the recent trend with a spate of announcements from retailers announcing thanksgiving day hours.

dillard's says it wants to respect the family time of both of its employees and its customers. [ whistle ] >> yea. >> it's not all about money. >> it's hard to get employees to come in on thanksgiving. >> and jcpenney will be open. >> jcpenney is doing it. macy's is doing it. >> they're all opening earlier. last year, they opened on thanksgiving. now they're doing it a couple hours earlier. >> some of the uneducated people on twitter will be putting out, this is fantastic news for jcpenney, dillard's will be closed, because it will drive the traffic to jcpenney. >> jcpenney will say that they're -- you know, that they're closed. but if someone does happen to show up -- or to say it's open, but they're hoping that no one will actually know whether they're open or not, because someone will have to try to go to jcpenney that day, right? is that what that means? sort of. >> what did you say they have again, they don't have the buttons anymore. what do they have now -- >> the circulars everywhere. >> circulars. >> got rid of the buttons an went back to the circulars, right? >> i have that whole thing --

>> you know i can't say the word properly, because the t is a d to me. >> yeah, buttons. >> manhattan. >> you didn't say it right. >> what? >> you didn't say it right. >> buttons. >> you're saying it wrong. >> because when i do it, i say buttons. >> you do. we both do now. numbers from the white house, on enrollment numbers for obama care, came in at 106,000, about 20% of what the government had been hoping for. let's talk more about the effects of obama care with representative kevin mccarthy, who is the house majority whip. congressman, thank you for being here. we know that these are dismal numbers, but i guess the question becomes, what now? >> well, what now, it continues to see -- this is more than just a broken website. now you find the promises and pledges are not kept. you can't keep your health care. and then the third wave that's going to hit you come january is the price and the high deductibles. this is the system that just will not work, and that's why you're finding revolt inside the democratic party itself.

revolting against the president and obama care. >> i no he that there's a plan in the house put up by republicans and a similar plan in -- put up by the democrats in the senate that would try to undo this whole situation where people by the millions are getting their health insurance cancelled. but there have been some pretty significant questions about whether even if these bills are passed, even if it goes to conference, even if something is done, whether you can turn back the clock on this situation. what do you think? >> well, it's very difficult. but there's a million people just in my home state of california being denied. the challenge here is you want to make sure people can keep what they have, but more importantly, this system itself will not work. we're just wondering when the president will ever actiknowled that the system won't work. >> if you try to put those people back, you're talking about the million people in your state, the insurance companies have been following the rules for month, setting up the system to do what the government told it to do. you're suddenly going to turn around and give them, what, 20

days to undo it, and put the system back, and notify all of the people that they've already notified based on the rules laid out? >> yeah, it's very difficult. it's not a system that will work perfectly. why can't you at least try to allow people to have it? >> when are you planning on passing the bill then? >> we'll pass it tomorrow, much faster than anything in the senate, much faster than the president doing any reaction -- >> that doesn't do. >> we'll fast it much faster than the website works. >> let's talk about this seriously, instead of doing things that are political moves on one side or the other. these are people left out in the cold. what is really going to happen to them? my guess is they're still left in the lurch -- >> excuse me for one moment. how is it political if the president promised if you had held care, you can keep it. we have the insurance commissioner in california now saying that -- >> it's political if you're not talking the both sides of the aisle and finding something that happens that really gets these people help. what's going on in -- >> -- out of the house that's bipartisan. you will find the first bill

that comes out out of the house will be bipartisan, right over to the senate. the question will be, how fast does it get to the president's desk? the sooner it gets to the president's desk, the better opportunity we have to help people. >> my question is, how does this play out in theory? i ask, because i know people who have lost their insurance and are furious about it. what are they supposed to do in the meantime? >> that's the challenge that we see right now. what can you do in the meantime with the system continuing to break? we're saying we're trying to do everything we can in the process, that we're going to tell the insurance companies they have the ability to keep them on. how can these individuals -- >> but the insurance companies -- i mean, if you look at what has actually been done with the insurance companies, they've changed their systems and they've changed their premiums based on what the government had already laid out. you get my sense that this is a huge mess. >> you want to -- you want to just now say, break your promise? >> no, i want to know -- what you can actually do that is legitimate help. >> that's exactly what we're doing on friday is passing a bill that's telling the companies that, yes, you can keep -- >> that's not telling the companies anything, because you passing the bill alone doesn't do it. what do you think ultimately -- >> that's right.

that's why we have -- hopefully, it's signed by the president, and the president allows it to go through -- >> the white house has said it's not going to. my question again, what are both sides doing together, because, look, i know this is the democrats who pushed this through, there was no republican support on this. i know this is a serious mess. and that unless both sides come together and come up with an answer, it means nothing to the people who have been told that they can't keep their insurance. >> well, i think you ought to spend a little time in the house and listen to the democrats that are also going to vote for this bill, so you're going to have democrats and republicans who vote for a bill to try to find a solution. it's unfortunate that if you have a president that will be stubborn and say no, one that created this problem itself. there's only so much we can do. we will continue to fight to make sure the pain is not there. >> what if -- what if the "washington post" is right, and it's not fixed by the end of november, and what if not enough young people, you know, they get disillusioned and don't sign up for it, so that the older policies are going to be -- are

we going -- will the government just have to pay for those? i mean, it seems to me that eventually this could just collapse under its own weight. do you know when that would happen, or if it's possible that that would happen? >> well, i personally believe it will collapse under its own weight. because if you look at the structure of it -- >> when? >> well, if you want me to predict, i think you won't see that till after january, because it's coming in different waves. unfortunately, if you're going to get upset with me, look at what we've been fighting for for the last three years and look at what we've been saying will not work. >> well, everybody can say that, look -- [ overlapping speakers ] >> -- to celebrate over -- celebrate over a failure and say it will collapse under its own wait -- [ overlapping speakers ] >> -- is the prices and high deductib deductibles. we're just now getting the transparency you go through, that people have not signed up. those who signed up are being subsidized. most have not enenroll. and it's money -- >> i'm not arguing that.

i not arguing any of that. these are unintended consequences that came up, some of them intended consequences. what i'm arguing, what does it mean to people who don't have insurance, can't get through this, and come january 1st left in the lurch? >> that's what i we're consequenc consequences. what's going to happen to those who do not have health insurance? >> we're finding democrats who voted three weeks ago to deny any process we wanted to make in the process, i think you're going to see that they're very willing to repeal it. >> the unbelievable thing is that we could have more people uninsured january 1st than what the bill was supposedly -- >> you're going to have more people now uninsured. this is taking more health care away. >> and people were happy with their plan and none of this even takes into account what happens when companies say, you know what, i can take a penalty -- >> we complain about it all the

time but it's exactly what becky said, this is all theater unless we can do something -- >> there's a way to design health care around this. we can go back to -- nobody celebrates the collapse. >> nobody wants the pain what it's going to cause either. that's why we've been fighting for three years. >> none of the pain would have happened if it hadn't been passed work it in. >> that's true. >> it want a great system before. >> the people who had it thought it was a great system. >> they have some great ideas to solve this problem as well. >> at least the people that had it back then would have had it. now the people who didn't have this back then don't have it and the people who did have it doesn't have it. >> the problem with obama today is there are more people losing their insurance. >> coming up, we're not going to rise above right now. we will check in with jim cramer

about the new york stock exchange about companies in the news this morning, cisco's, walmart, kohl's when we return. bny mellon combines investment management & investment servicing, giving us unique insights which help us attract the industry's brightest minds who create powerful strategies for a country's investments which are used to build new schools to build more bright minds. invested in the world. bny mellon.

. welcome back. we're going to get down to the new york stock exchange now where jim cramer is. mr. cramer, one word -- cisco.

>> abomination. abomination. >> did you see olstein? >> yeah, i like bob. the problem is he brings up amazon, which is the big justification for everything that goes on in this market. go back to cisco. it's an unspeakable conference call. it's the beginning of the rebellion. it was just a horrendous call. my charitable trust had a blow out. >> do you buy the macro argument they're making? >> i buy a macro environment with brazil down 25, mexico down 18, indian down 18, russia down 30%. hey, the fall is in themselves, not the stars. this was just the worst -- i mean, it was the worst. and they were guiding -- how could they not have preannounced? they were taking about good

growth going into this quarter. they were talking about plus 13. they have lost control of the company. >> i'm glad jim brought that up because a number of people said to me last night, this is the regulatory reasons it should have been prereleased, right? >> how could they not have prereleased. i'm trying to come up with an analogy. i mean, you know, the playoffs -- i don't know. you have to go to nfl. this is just -- this a crash of unbelievable proportions in their business. and they can say whatever they want, name all the people they want on the conference call and talk about how great it is and talk about end to end and the internet of all things, this was amazingly bad. i mean amazingly. it's textbook. everyone should read this conference call to see how it's not done. >> jim, we will see you in just a couple minutes. i imagine you have more to say on this and i like forward to it. >> when we come back, we have the last word from carry kaminski on the markets and of

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let's get back to our guest host for the last word. >> taper news actually is priced in the market and stocks will go up because the closet indexes continue to dramatically, dramatically underperform. the first day of every month has represented a third in dow gains this year. i know we got to go. >> thanks, gary. >> right now it's time for "squawk on the street." see you tomorrow. ♪ good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. futures are steady here, despite an odd combination of mostly negative corporate news. walmart, kohl's, cisco, lockheed. we also wait for janet yellen's confirmation hearing to begin in about an hour. the q & a could get interesting, still right around