but it's also putting america in the driver's seat. this has a long run if we can let keystone and the oil company work and we have a great opportunity become more competitive visa vee tee vis-a- of the world. >> "squawk on the street" begins right now. ♪ i really want to love somebody, i really want to dance the night away ♪ good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. bernanke gave dovish comments last night at the economic club of washington. we'll talk about that and the flurry of earnings out today. 10-year yield may see some action.

europe is down for the second consecutive day. our road map begins with jcpenney, a pleasant october surprise as comp sales rise for the month. trends look upbeat for the month and is giving the stock a big boost in the premarket. >> deere jumps on quarterlies but lowes falls. >> and you're going to want to hear what yahoo! ceo marissa mayer had to say last night in san francisco. we'll have that for you. >> shares of jcpenney up sharply despite a wider than expected quarterly lost. mike ullman says penney's is encouraged by the open in

november. they're talking $2 billion plus in liquidity, sequential increases in margins and comps. >> there was a whisper around they would lose $2. this is the agabeginning what i have would call the normalization of jcpenney. they're going to go back to being nothing, just another retailer. they'll be like kohl's. we'll talk about jcpenney like kohl's. main thing is you want to buy pvh because they were the supplier that stuck with the previous guy. notice i didn't call him clown because i came back from the west coast, i'm a little more mellow. >> i noticed that. you're still wearing a tie, though. >> there won't be that inventory overhang. ♪ looks like we made it i don't know. >> they lost -- $9, they lost

$1.94. 740 million in cash flow use. >> they're going to make it through christmas. i'm not saying go by the stock. >> they end with $1.22 billion in cash equivalents, raised $785 million in the sale of shares. >> the preferred has been very strong. that's kind of what i'm saying. jcpenney, it was really important to talk about when it was on life support. now it's in rehab. it's doing some p.t. it's szott some o.t. >> some don't survive rehab. >> if you're good enough, why does that not mean material upside for the stock? >> it want that good. can it go up to 12, 13 over time? yeah, i guess so. but macy's went from 43 to 50. >> it was operational improvements, significant ones.

this company was dealt a mortal blow potentially by ron johnson. >> it's not mortal anymore. it's just that i don't think with these kinds of numbers in the most important season that you want to -- you know, goes to 11? >> fabulous. >> would you rather buy penney's or kohl's? is there a door number three? >> i'd rather shop with other players. i think jcpenney -- why did we discuss jcpenney all the time? there's 110,000 employees and it would be a disaster for the u.s. economy if they folded. i think what this quarter says is we got the liquidity to go through but if you go back to when jcpenney before ron johnson's spart, it was not doing anything. it was on a slight decline. i think that that's not been arrested. it's just that the steep decline has been arrested. >> you got a lot of guys who

still may know nothing about retail, hedge fund guys, once again it's a free option. >> that's good, i like that. >> many of those guys bought it and left because they didn't turn around as they expected it would. >> i just think tjx, my charitable trust owns that, these are long-term secular winners. costco is a long-term secular winner, they offer terrific quality stuff at a lower price. jcpenney is going to be on that coupon go-round. the only one i've seen do well on the coupon is bed, bath and beyond. >> don't forget this was a horrible third quarter. >> with jepine. this is the quarter that says you could shop there and it going to exist january 5. many retailers i've seen,

january 5 they're calling people saying, hey, nice to meet you. >> you're saying this story this morning is still about hope as opposed to results? >> yes. i think if you want to own the stock, what you're betting is that retail is going to be very strong and a rises tide lifts all boats. i do think it was great when they talked about women's and men's apparel being strong because those have been what's been weak. that's why i mentioned pva. if those strongs are strong, it's going to be a pretty good holiday season, as opposed to best buy. a price war can be good for the holiday season. it just not good for those involved in the price war. >> i want to end it here. in my comments on -- >> i have more to say. >> you always have more to say. that i have no doubt about. i'll end by saying on august 20th we're going to end the year in $1.5 billion in overall liquidity.

they now have $1.7 million in overall liquidity. nd p but they did raise 785 million. >> how did they raise that money? turns out this evenings are a little better and then you issue stock. if i were them, i'd issue more stock. >> he gets the last word. let's move on to two stock heading in opposite directions. home improvement lowe's is down. i look at lowe's and i look at home depot from yesterday and i say is one company simply doing better job? >> we've been selling lowe's for the charitable trust. i didn't sell it fast enough. when you have plus six comp, you should be making more money. >> operating expensions were

down. >> i make no excuses for it. i thought the other day i thought -- >> are they on pace for the year? >> the stock was up 48, 49, home depot up 25. frank blake -- go back over that quarter. some divisions were incredibly above plans, double dj ilt for appliance. lowe's was not like that. i thought that the restructuring had more room to go. seems like low east is peaked. i'm disappointed they couldn't make more money on those sales. home depot is making fortunes on its sales, which is why they're returning so much cash. >> better execution? >> yes, period. i have nothing more to say. >> let's go to break. >> there's another housing play to some degree. lazy boy is up.

is there any halo to hd? >> hd was staggering. they're saying the pro shopper is back. the renovation in rehab going on in this country -- they have a great line in the home depot flyer, it says if you put money into your moment, you're going to feel great. by the way, cree light bulbs called out. home depot says you no longer -- that no longer like the squiggly craziness. they look like other light bulbs.

this two-tone home, they look terrible. >> we should do the show from there sometime. >> i should show you my closet. we could do shows. >> let's go to deere. >> i'm trying to see how they can screw it up on the conference call. continuing operating perform, you -- >> he know his way around, after 25 years. who's counting. fiscal year cash flows from operations, 2014 forecast is 3.9. they had 4.7 billion this year. if they focus on this chart -- look, these guys, i don't know. i mean, maybe like the american farmer is gloomy but deere finds a way to take fantastic numbers

and make them into something you don't want to own, and i hope they don't do that. what they ought to do is just say refer to our quarter. don't give us color that drives the stock down like you -- if i were producing the play of deere, i would say make it a comedy, don't give me henry iii. >> don't make it taming of the shrew. >> yeah! >> meantime the fed is going to be in focus today. we have the minutes from last month's fomc meeting coming out at 2:00 p.m. eastern time. and ben bernanke said the fed will maintain the easing monetary policy for as long as needed. >> in particular the fund rates is likely to remain near zero perhaps well after the unemployment threshold is

crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation. >> interesting set of q & a, said the confusion over the taper in the summer was neither welcome nor warranted. >> he made it pretty clear. can he get good numbers autos, get good numbers housing? i don't know. in the end, when i was out at west coast for dream force, what i was conscious of was these companies are tremendous disruptors. meaning you can fire a lot of the. there's just these counter boyi

boying. >> well, there's like four plints being built. there's nothing structurally positive about employment right now. >> he talked about the. drans of data supports it. in the drig driver of -- it takes an interstate highway system. i know people don't want big government in this country. it's talked about over and over again. there's no private industry that can get this economy going the way bernanke wants. >> we don't need an incredible infrastructure upgrade in this country. >> $4.4 trillion. >> is that all it is? it's sore live needed in so many different ways and so important to the future.

>> front page, the airports will be as busy today as they are right before thanksgiving. can you imagine that being true? >> you're right, there's a lot going on. opt co says boeing will peak in 2014. i don't believe that. china has cities that don't have air right now that will be very busy in a couple years from now. >> a coal plant every other week that opens up, and they refuse.

>> when we come back, yahoo! ceo marissa mayer talking about what her company's betting on. we'll talk about that $5 billion additional buyback and why shares are going to open up 3%. and the ceo of tumi will be here. future is looking decent here, implied open 20 some-odd points. a lot more "squawk on the street." live from post 9 in a moment. it's as simple as this. at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing. bringing the power of investments to people's lives.

invested in the world. bny mellon.

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to go the distance with you. call now to request your free decision guide. shares of yahoo! up in the premarket. the internet company increasing its buyback by $5 billion and announcing a $1 billion convertible note offering. last night's dream force convince in san francisco, marissa mayer talked about the key role that mobile is playing in his company's growth strategy. >> we don't think as design first, we think of ourselves as mobile first. when you look at what's happening with the mobile trend overall in our industry, it's clear that it a wave large enough that you can ride it to reinvention. yahoo! has to constantly reinvent itself and the scary

part about reinvention is it happens best with platform shift and we real want to ride the platform shift to mobile. >> above $35. you have to go back to '06 for those levels. >> david faber was talking about how the alibaba stake could be the biggest thing. >> it is. and yahoo! japan. it may be she's successful in reinventing this company but i would argue we still don't know. you're seeing a move up in the value of ali baba. they'll sell about 9% in that company next year when it happens. if you assume a 38% tax rate, they only have $3 billion in cash, raising another billion and don't forget the 35% of

yahoo! japan which has been performing extraordinarily well. so that's where it's come from. buybacks and increased value in ali baba in japan. >> i talked to the guy from yelp. his the only guy whose laptop is worth more on mobile. facebook's done a great job in trying to monetize mobile. yahoo! still not great. but there's always hope. in the mine time alibaba rules. >> how much up side if we got engagement and metrics that actually were better, some share that began to come back? >> geez, could you see mid 40s. >> the positive for them is they have enormous stashes of value

in yahoo! japan and in alibaba that they can continue to use to try to transform the business. or return to shareholders. >> when you hear where advertisers want to be, they want to ride twitter and not pay twitter. they have to accept the fact that they're going to pay facebook. they like aol because they want to be against aol video and yahoo! no one's sure yet. they want to make a bet but they're really making a big bet on facebook and on aol video. tim armstrong when he was on, david, you mentioned to me that tim armstrong said he was the internet of all things. that's salesforce. >> i find him to be the best in history. >> the cpms on video are in a different universe. >> that's where the prices haven't come down. if you are can curate videos so you're not against porn, can you do quite well. >> you know what time it is.

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♪ it feels good, yeah, it feels good ♪ it's "mad dash" for a wednesday. where we going? jpmorgan? >> i'm going to call jpmorgan the evil empire, that way i'm safe from twitter. my trust owns shares in the evil empire. mary lake says the importance of the justice department deal is

quite simple. it says we have a much narrower set of mortgage-related risk than we did before the settlements. when people have less risk, they say what if they earn $5, $6, then you get maybe an increased dividend and then up have a $60 stock. this is like jcpenney. the normalization of jpmorgan would show tremendous, tremendous growth. people are looking at this hit as one-time only. >> does that mean normalization of regulatory bodies all over, volcker rule, where are they actually? >> yeah but the big litigation his being risk i think is over. you should see what they did to mortgages. >> i think caterpillar is fabulous at forecasting, bad at executing. here's some october statistics. the world's down 12%.

asian pacific done 26%, latin america down 8%, rest of the world down 17%, north america the standout, minus 2%. they are not executing well but the board seems to like it because there's been no changes. >> we're going to see a lot of changes potentially in a lot of different stocks. the opening bell right after this. now access live cnbctv with your bare hands. your bare hands. it's an app, it [ male announcer ] once, there was a man

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[ male announcer ] so the magic shell went back to being a...shell. get live squawks right in your trading platform with think or swim from td ameritrade. you're watching cnbc "squawk on the street." big day for the fed. we'll get minutes from one of the critical meetings where they probably discussed a lot of communication that was during the government shutdown, speaking of which retail sales this morning, best since october of '09. actually best since july. cpi was lowest since october '09. retail sales apparently unaffected. >> gasoline, steve liesman said not spending as much on gasoline, we're biography sweaters. it's true.

if you looked at it empirically, it's apparel, a little more money in the pocket, not going to walmart, stepping up a little bui bit higher. >> down here at the big board, nuskin enterprises and over at the nasdaq, advanced energy. >> and nuskin, you do personal care and you push it, this is the opposite of avon in terms of performance. people betting against nu skin have not been rewarded. >> jcpenney a winner out of the gate, up more than 9%. your story, you'd rather by pvh. >> i'm not about surviving. i'm about making money. >> about thriving. don't survive, thrive!

>> if they're doing well, what is terry lundgren doing at macy's? just putting points on the board. pvh is going to go much higher. i think the calvin klein deal is going to pay off dividends. >> lowe's, second biggest loser. >> disappoint ing. >> and smuckers, after kelloggs and campbell's soup, something's going on in food. >> campbell's soup, they talked about how disappointed they were and then they talked about how great they were. i don't know, it's not great. we have to talk about the winners and losers. clearly lowe's is not making as much money per sale. >> i bet you the stock isn't

down this much later on. i don't think this is best buy where people at this point upgrades best buy. smuckers, they're a really good operator and they've done a lot right. so you're absolutely right. the core of the retail store is not doing well right now. people just are not -- i know that safeway brought in salesforce.com. these guys are trying to figure out new ways to bring with their customers. whole foods did have a tough quarter. i think the supermarkets, with the exception of kroeger, would seem to be a great operator. holy cow. everybody else is a little challenged receipt now. i don't shop at kroeger so it's harder to know but, geez, they've done a great job. >> when you were on the west coast, did anybody talk about the pc? next week we'll talk about hewlett packard and we heard from dell this morning on "squawk box." >> what's going on there is the

tablet. they talk about chrome as being a highlight. they like google pcs and a lot of people are feeling meg whitman has been able to develop new products around pcs that are going to surprise. i heard a lot of great buzz around meg whitman and hewlett packard. they're talking about put the printers and ups and cvs and have seamless printers everywhere. meg whitman has been successful so far. >> i believe meg will join us a week from today. >> are you flying out there? >> no, she'll be with us in the morning. hewlett packard will be reporting after the close next tuesday. i didn't hear much from dell one way or the other. >> hewlett packard is going to

be a winner because of dell. people are saying a lot of hedge funds lock in. what are they locking in? inferior performance? what are they telling investors? hey, we did a really bad job but we locked in in october so don't worry? >> priceline, conviction buy. >> i think priceline is one of the great stories out there. remember people in europe travel like it goes out of style. they believe that traveling and vacation are the fundament of life. we believe work is the fundament of life in this country. is t is selling back out to cash at 18 times earnings. that's crazy. >> boeing on the flip side. that downgrade -- >> fatuous down grade! when you get the yield going as

they make the plane. if they move their next plane build to a right-to-work state, margins go huge. huge. it's union, huge. >> i get it. >> south carolina. these are -- we have different -- look, you build in mexico, you make 120% profit. >> you just keep buying up homes in mexico so you're going to benefit from getting us out there but not the american worker. stop. >> there's plants where 120,000 cars right on union pacific, ksu train line about 20 minutes from my house. i have to tell you, this area was dirt road three years ago until the japanese decided this is where we're going to make our cars. >> don't hear as much about the drug wars in mexico that you used to. >> are you buying settes? what are you doing? >> i'm buying lattes. >> microsoft is up almost a percent here, jim. some revisiting of what ballmer

said yesterday. didn't really talk about his retirement. a good look at the x-box 1. they're trying to change it so can you get netflix and hula and amazon. >> paul raines is on later this week. >> you'll fly to san francisco in the middle of the night. >> and fly back in the middle of the night. >> all right, you forced me. maybe i will go. i think the xbox is a game changer. you get king leer, steve ballmer out of there, sticking with shakespeare.

>> let's go to bet pisani on the floor. >> modestly on the up side, dow jones industrial average, s&p up fractionally. i see tech. home builders are also nicely up this morning. october retail sales up 0.4%. that's suggestive of the idea of potentially an earlier fed taper. he gives odds -- there's a 60% chance he said the economy is going to accelerate in the coming weeks and that could increase the odds of tapering earlier rather than later. did you see bernanke's speech last night? the fed is in full court press mode to convince the whole world tapering is not tight i don't knowing -- tightening. bernanke said if the news continues to improve the fed would likely begin to moderate purchases but then he went on to say the fed could continue to keep rates low even after the

unemployment levels are met. we hear about yellen trying to make the same distinction. this is going to be obviously a main point of the fed in 2014. we'll see what that happens with. let's talk about retail sales numbers. lowe's, the conference call is ongoing but we want to get some information about what was going on with the expensionexpenses. same-store sales up 6.2%. that was a good number. they raised their full-year guidance. here's the problem. 2.15. even after raising the numbers, they're still a limb below the consensus. i know they're talking about sales. sale still a little below home depot, 7.4% for home depot. it's been consistently below. it's been at least a couple years where home depot sales have consistently been higher. i think the main reason that's happening is home depot has a

much better, much bigger professional business where professional home contractors tend to go to home depot over lowe's. that's the 1% difference you're seeing in some of the sales overall. for jcpenney, i called three or four guys who trade this stock and they said there's only one story here, the main takeaway, the company is going to survive and everything else is sort of a side show. the loss a little greater than expected, same-store sales and gross outlook margins improving. this is all just good enough. i think we're at a six-month high. they're going to stay in business. men's apparel, women's apparel, which was areas they were just getting destroyed in have shown notable improvement and i think that's the key takeaway right now. so we're basically flat on the dow s&p. also flat, though, home builders on the up side.

>> i want to talk about herbalife a little bit. we've been talking about these shares. a name unfamiliar to some, bill stiritz, as having been one of the guys who always manages to make money, normally in the food business. the great price from conagra, the split first and then the sale. he owns $430 million worth of herbalife and increased his holdings to 6.4% of the company's outstanding shares and changed a passive 13-g filing to a 13-d, meaning he's now active in the stock and is going to be talking to management. he said i'm going to talk with

management about potential financing communities and recapitalization strategies. the two go together. you great fansing et finances t recapping. he talked about confronting the speculative short position in the form of mr. ackman. this is a company waiting for its audit because of that strange insider trading thing that happened to them. they're waiting for the audit. and then there is speculation once they get that audit, they will move ahead with some sort of significant financing to fund a large recapitalization. we shall see. that's the story that's been out there but mr. stiritz's presence can't be overlooked. >> you look what he did in the go-go years, purina mills goes to bp. the guy is a wheeler dealer and

he's a money maker. this guy if he's in there, you change your mind about worth. this guy is not icahn. this is not dan loeb buying it and staying for the long term and flipping it. stiritz is one of the great operators. i don't know what he's got cooking here burr it's not idle. >> it's always worth mentioning. that was an important change from a g to a d, going up in his stake. there is speculation again that mr. ackman will in another investment presentation at the end of this week come after herbalife again. >> is it the end of the quarter? >> no, it's not the end of the quarter. but it is worth keeping an eye open for herbalife. >> look up stiritz. google him.

he's a very great investor. he hasn't lost his edge. >> that was in the 90s. >> it was when you were first looking at dex in the conference calls. >> that was the 80s. >> they didn't have dex. they didn't even have this internet thing when i started. >> they didn't, did they? >> no, i was on a typewriter. >> we called you hilly johnson. >> howard hawks, his girl friday, carey grant. >> hill green, often compared with you. >> i like that comparison, thank you. first time it will ever be made. >> john garfield -- >> wait, it's me. have i to send it to rick santelli. you're over at the cme in chicago, mr. santelli. >> just watched a garfield movie and a george raff movie the

other night. if you really want to see trading that isn't moving out average, fixed income is your market. it doesn't mean it's not hitting all the major technical levels. notice the double top intra days on these yields. big retracement. we've gone over that. if you're looking for so often treasuries, the curve steepening, you can see the curve wiggles there. now, if you really wanted to see something fascinating, open it up for couple of months. now look at the relationship between 5s and go all the way to long maturities at 30s. can you see the curve differentials between left and rights of both of those charts. let's put them together on a spread, we talked about it, 5 versus 10. higher yield versus lower yield. we made a fresh high going back to august 2011, flirting with

137, getting ever closer to 140. >> let's look at foreign exchange. let's pick a date. let's pick september 1st. if you look at the pond versus the dollar, the pound is getting a resurgence and you can see that. if you look at the euro, not as much. if you look at the dollar yen, we keep flirting with 100. this chart has redefined side ways but we need to look at all of them. between that and the euro centric nature. back to you. >> coming up, "squawk on the

street" continues. ♪ mustang sally, guess you better slow your mustang down ♪ it's as simple as this.

at bny mellon, our business is investments. managing them, moving them, making them work. we oversee 20% of the world's financial assets. and that gives us scale and insight no one else has. investment management combined with investment servicing.

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♪ clap along if you feel like a home without a roof ♪ >> natural gas is a big mover today. perhaps people in the east coast are feeling the cold and the heating demand that comes from it is something that is likely to help natural gas prices rise, natural gas up about 2% or so. meanwhile oil prices, oil traders are waiting to see what happens with the inventory data reported from the energy department at 10:30. they're also watching developments in geneva about iran and the agreement over its nuclear program, what comes of that if there is any type of agreement. and we are also watching gold prices sliding sharply, down almost $16 below the 1260 level which some traders say is a key level at least psychologically. gold is at a five-week low.

>> thank you, sharon epperson. >> amazon already sells a ton of its own products like batteries and keyboards. soon it could add supermarket products to that list. ads mentioned a launch in ads in consumables. while this hints at the direction amazon is going, it's not clear if the company will target one product type like snacks or a bunch of different areas. whatever it is, if they like it, they will find a way to finance it. >> yeah, don't go against them. it's interesting, a lot of times when i was out west, people say the sleeping giant that is microsoft, the sleeping giant that is oracle. no, amazon is not sleeping. maybe waking. they are the company that never sleeps, like a bank that used to be. >> citi? >> yes, i do.

>> they doze occasionally. >> there's things can you take for that, you know. amazon innovates at scale. that's what i keep hearing. >> i like that. >> an enormous organization with enormous product portfolio, they're able to change things quickly. >> everyone out west in technology says they are fabulous. people revere that company. you can understand why its stock is going up so much without profit. almost everybody else says the same thing, you want them to go show a profit, they'll do it. but that's not what they're about, as long as they get funding. >> here's the stock. >> holy cow. >> coming up, get your jim joe when "squawk on the street" returns. (vo) you are a business pro.

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time for "six in 60."

>> a sale on -- >> bernstein to cap ot. -- cabot. >> stock goes higher. >> workday. >> i think the downgrade is wrong, they're strong. >> secondary, a demand wearer. >> monitor secondary. if it goes back to 57, it shows you the e-commerce company, including yelp can go higher. >> and tesla. >> this was an incredible call by barclays, sales down 10% to 20% because of the fire issue. they say numbers are coming down they think. >> what's tonight? >> i always like to be on the pulse of the outlet world and that's steve tanger. ben is one of my favorite ceos

of the world. this is spirit. if you haven't listened to him, he's fabulous. he said listen, people want inexpensive planes and that's what he gives you. this is a remarkable product, they're up against jaw bone, but fitbit is the way of the future in terms of health care. >> on the fees united talking about how they want to take their target on fees to $3 billion by 2017. that's where the industry is going. >> ben has a chart about fees. united continental is not competitive. his roots are structured to areas where there are a lot of people who don't want to pay up. it's not like the services -- it's like people express. they get you from a to b in the most efficient way. if you want to carry two bags on and hold everybody up, don't go there. >> speaking of things on sale, this picture has been tweeted by brian sozioia, a retail analyst -- >> i love brian.

>> a rack of pants at jcpenney for $1.97. >> those look like fat pants. are those fat pants? >> those a return to discounting, isn't it? >> i'm going to have to check that out. any 33 with a 30 length, hey, listen, i'll take 'em. i don't care. $1.97, i'll wear them around the house. >> we'll see you tonight, jim. 6:00 and 11:00 eastern time. >> where do you think these buns came from? existing home sales on the show, we'll be live from the l.a. motor show with the president of ford americas. also ahead in the program, the activist investor who believes if he can change the rules at men's wearhouse, he can change value for you, too. ...you see o.

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welcome back to "squawk on the street." september business inventory is up a whopping 0.6%. that's twice the number we expected. and last month it was revised upward by 0.1% and 0.4%. we're in the third quarter.

this is a four quarter number. it helps explain why gdp is up. we're making a lot of widgets. are there going to be people and sales? >> diana. home building down, a miss. sales up 6% year over year. the big thing in the report, though, sales out west down a whopping 7% money to month. they're down everywhere else but 7% out west. that is due to rising prices and very, very short supply of inventory. speaking of inventory, unchanged in october, which is not good news. we need those inventories higher. 2.13 million units per sale. that is down 1.8% month to month and barely up 1% year over year. we're at a five-month supply.

median home price, up 12.8% year over year. this is a median price so mix of homes are still in there, lower end selling very little, higher end selling more. carl? >> diana olick, thank you very much for that. >> jcpenney a big mover. let's bring in court any rney r. >> there's other reasons why we're seeing that stock move higher. it wasn't all good. jcpenney missing wall street expectations on the bottom line, reporting a loss of $1.81 per share. revenue slightly missed consensus as well and the quarter is posting a negative sales result. gross margins are a key metric. many analysts asking questions about that on the call. the margins did contract to

29.5%, jcpenney but mike ullman responding to claims that jcpenney is giving away merchandise on the call and he says there's no difference between now and 2011, the last time they were promotional. but the retailer is getting better and gross sale margins are improving and they expect the trends to continue. october was the best month for same-store sales since 2011. the retailer also voluntarily repaying down $200 million on its revolving line of credit. that was kind of a surprise but a good one perhaps. wall street encouraged by the trends. it's good enough, as you can see, to prop the stock up almost 8% today but christmas is critical. jcpenney is going to have to deliver on the high stakes holiday. ullman says november traffic is positive and its customer

service scores are the highest in company histories. he expects black friday and cyber money to be big opportunities. i think it's going to have to be. now investors on wall street are really going to want to see these results positive, incremental maybe but positive yearly. >> our guest named the number one retail analyst for retail and department stores. he has a neutral rating on them now. i was surprised jcpenney's are as high as they were. if they got positive tracking and results, would that be enough for them?

>> i don't think so. thi i think they need to show the full algorithm, that if sales are there, they can be profitable. from a liquidity standpoint, either one or the other is not going to do it. you really have to get both at this point. >> so what metrics would you need to see in order to turn bullish, for example, on the shares here? >> we had issued about a month back a rally trade. i thought they had components in place from an inventory perspective to pull off positive results. i think the big test will be into the first half of 2014. as you cycle returns to promotion from last year, can jcpenney put up sales plus profitable sales? we won't know until we get into april, maybe until they begin posting since the departure of ron johnson. >> even though they say they're

not promotional, if they're selling things at $1.97, what does that mean for your space generally here? >> i think the big change versus 2010, 2011 is off price. t.j. max and ross stores are much stronger competitors to department stores. i agree when you look at the gross margin that jcpenney had in 2011, 39% roughly, they were running 592 promotions. that is roughly maybe what they're going to go back to. the gross margin algorithm to get back does make sense. the key is can they get out of the exclusive relationships, which are lower gross margin, liquidate the remaining home inventory and they're going to need the sales to go with it

over that time frame. >> as you're fully aware, jcpenney is one of the shorted stocks on the street as 26%. is that a confirmation there could be substantial down side or would you see it as spring loaded potentially for up side due to short coffering if they do surprise on the up side? >> i think sentiment's pretty mixed here but clearly given the short interest and the calls that i take on a daily basis, the sentiment is clearly more shifted to the down side. i think the big issue again always comes back to liquidity and comes back to the model. and from an ebidta, as well as a sales perspective, jcpenney lost $5 billion in sales over the last two years. with a competitive front and a promotional front, it's not going to be easy to get that back. the question is the time frame, how much they can get back and are they going to need more liquidity into 2015? i think by our math the liquidity and the capital raise

they took on, i think they're good through next holiday but into 2015, you know, we'll have to monitor that. >> a move in the right direction but plenty of more work to do it sounds like. matt boss, thanks for being here this morning. >> thanks for having me. >> retail inflation numbers at 9:30. steve liesman is back at hq having summed up this morning what bernanke said last night. hey, steve. >> reporter: carl, let's talk about the inventory number. we just got, rick alluded to this, probably end up boosting estimates for q3 growth, at 3.3%, expected to be revised up from 2.8. it can cause a down revision in the fourth quarter. retail and auto inventories surged, although the sales to inventory ratio has remain

pretty much unchanged. on moments year-on-year on existing home sales. retail numbers were much better than expected up. year-on-year, 2.4. there are those inflation numbers, headline down 0.1, the core up 0.1 year over year, 1.7%. here are the retail details. auto strong, reverse in september, furniture decline, gas stations down because prices were down, electronic appliances up, clothing up, core sales also doing well. that feeds into gdp. we saved money at the gas station, bought cars, electronics and a few sweaters. the big question is whether retail strength carries through to the holiday shopping season. if job growth and improved housing and stock prices translate noos into better spen. te take a look at this chart here.

almost no reaction despite the surge by the fed. it could be a massive excess reserve. if what sounded like a farewell speech last night, ben bernanke sung the praises of the transparency upgrade and was extremely dovish on the outlook for interest rates. >> the target for the federal funds rate is likely to remain near zero perhaps well after the unemployment threshold is crossed and at least until the preponderance of the data supports the beginning of the removal of policy accommodation. >> 6.5% threshold for unemployment, which bernanke recognizes is not a trigger, meaning once it hits it, the fed can hang around and wait, be patient before deciding to raise rates. there will be a lot of attention paid to the 2:00 p.m. release of the minutes. it's likely the fed spent a lot of time how to convince markets to remain low for long, even if it tapers.

that can man discussion about inflation and unemployment threshold. simon? >> i guess what you're basically saying is they're going to ram home that point, steve, this afternoon that tapering does not equal a rise in short-term rates. they are very different things. i just wonder the way that he went about it last night explaining why they didn't taper in september is effectively opening up the possibility of tapering in december if there's a strong employment number. because what he basically said was, look, we didn't do it in september because people couldn't distinguish between tapering and a rise in short-term rates. now eahe says he thinks the mart does understand the distinction. the yield on the 10-year, we're down from 3% to 2.7. do you think the window is now there in their view that people understand the difference and december could be the time? >> i still think december is too early, simon, but i think you make a good point. there's a lot of thinking on the street that the more the fed chairman and the fed talks about keeping rates low, the more he opens up the door or creates the

preconditions for possibly tapering. i don't think that's going to happen in december unless, as you say, we get a very strong employment report in that first week of december. >> okay. steve, thank you very much for that. so how should you play the fed's continuing easing monetary policy? let's get some reaction from our first-class market econ panel. diane diane and john, welcome to you both. >> good morning. >> good morning. >> what is the event risk once we get past thanksgiving now? are we getting to that jobs data in two weeks' time? >> i mean, there's a couple of them. i think one we haven't talked about yet is that december 13th date by which paul ryan and patty murray have to get together and put something on the table for congress to take a look at and avoid sequestration.

there's a number of binary outcomes. there's a number of things they could do and you don't want to cause that uncertainty before the holiday season. if you look at it seasonally, this period between now, november and the end of april is a great time for stocks. so that's going to weigh on investor minds as well. >> this is why i think the event risk is rising. explicitly paul ryan, house budget committee chairman said yesterday he was comfortable in saying there will not be a shutdown like we had in october. he now joins mitch mcconnell that there won't be the same theatrics over the debt ceiling. diane, if the fed was worried that a shutdown might prevent it from tapering, that seems to be increasingly less likely. >> it is less likely and there's

not really -- i think the issue is what's going on in the core economy. core retail sales revised back to august were down. and in fact with the overhang of inventory that steve mentioned earlier, that what to be worked off in the current quarter. this is going to be one of the most discounted retail seasons we've seen since the onset of the financial crisis. >> i understand that retail sales don't look that strong, but they didn't fall out of bed as a result of the government shutdown. that could equally be the takeaway for those anxious to taper for the fmoc. >> i don't think that's the issue for the fomc. i think the december press conference is the perfect point for bernanke to sort of bring home all the issues about the pivot from forward guidance that we're going to say low rates

longer than you ever thought possible and that will allow them the cushion to do tapering. i'm in agreement with steve that i think that's still a 2014 event, not a 2013 event. i think it would be difficult for them to do it at the end of the year but it's going to be hotly debated and those notes today will be important to watch. >> john, in a word, if they do taper, account market continue to rally? >> we've been here before. between may and september, the market saw what it means when it's talking about tapering. the second time around it might react a little better. the bond market might react a bit better. for the stock market, what they're going to focus on hopefully at the end of this year and through next year is not the fed but focus on corporate fundamentals. we went back and took a look at this and since the end of 2009 all the gains in the stock market have come during the

earnings reporting season. that tells you that when the market's focused on fundamentals, that goes up. >> we'll see what the fed minutes say at 2:00 eastern. john canally, diane swonk, thank you. >> the mustang, there it is, is get makeover. ford announcing the first overhaul of the pony car will be unveiled in december, just in time for the holiday season. we'll talk to the ford's president of the america's about that and when can you get your hands on when "squawk on the street" comes right back. ♪ hmm. ♪ mm-hmm. [ engine revs ]

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. get ready for a new ford mustang. the auto maker revealing it will reveal a new model of the car in december. >> i want to bring in joe hinrichs here. we do want to ask you about the mustang because it's such an iconic car. the next generation is coming in december. why now with the new mustang? >> we get to celebrate 50 years only once. next year is the 50th anniversary of the mustang. we're so excited. you have 15 days to eight to see it. on december 5th we're going to for the first time announce it globally. december 5th, an exciting day for us. >> on the other end of the

spectrum, the truck market has been red hot and you've had a great year with the f series. does the truck market continue with the strength next year? the housing market has been such a driver of it. >> you're right, the housing market continues to drive it, construction and oil industry growth in the u.s. is helping to replace those olders trucks that are in the marketplace and there's not a lot of new trucks out, which also drives demand. >> i have to ask you this. this is the one question i get from investors more than anything else and i know you can't comment on stock price. do you sometimes feel your company is not getting enough attention and respect from wall street and investment communities in that you're having one of the most profitable years ever yet the stock doesn't get the appreciation people believe it should and a lot of people look at it and say that's nice but -- >> first of all, we run the business for our customers and we're focused on the fundamentals of our business. we have very strong

profitability here in north america and we've had the most mark share gain than anybody. but you're also see in china 50% year over year and a strengthening of our european business, which has been going through restructuring. our focus is delivering great global products and results will come and people will recognize that over time. >> end the of year is heavy incentive time of the year. are we're going to see that this year? >> i think we'll see a lot around thanksgiving and strong through the end of christmas and that new year's time period. >> is that because the consumer is slowing down a bit? >> no, we have a healthy market. >> tell us about the edge concept. >> a great new look to the edge, which is a great vehicle for us. and a lot of new technologies when you talk about autonomous

vehicles, self-driving techniques, like obstacle avoidance and parking. >> joe hinrichs joins me here at the auto show. i guess i'll be talking to you on december 5th when the new mustang comes out. >> if you were going to order a mustang, what color would it be? >> it would be candy apple red. >> really? >> and coming up, marissa mayer and what she had to say last night. back after the break. [ bagpipes and drums playing over ]

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yahoo! is a company like many companies that has to constantly reinvent itself. the scary thing with reinvention is it happens with platform short. we really want to ride the platform shift to mobile. >> that's marissa mayer talking about the impact mobile is having in her company. yahoo! shares up more than 2%. have to go back to 2006 to see some of these levels at about $35.40. the debate continues about how much is her and how much is the huge gift that was left to her with alibaba and japan. >> the stocks, the weather, the support scores. being an avid user myself of yahoo! finance, the little tweaks they've made around the

edges to help you find your favorites, those help and it adds traction. >> it was summed up well and he praised her for the simplicity. >> there's also a microcosm, with financial alchemy at its best, what carl icahn is agitating for them to do is a key reason they keep going up. they're a source of the title wave, the this movement to credit and equity that is continuing to send the index to new highs. >> well, new engineering -- >> engineering, alchemy. >> real gold? >> exactly. we'll watch the shares. >> coming up, joseph a. banks

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. welcome back to "squawk on the street." the latest report from the energy department on weekly oil supplies just came out. we're looking at an increase of crude supplies of 400,000 barrels in the past week. crude supplies rose by 400,000 barrels. analysts were looking for a decline of about half a million barrels. we looking at decline in gasoline supplies of about

300,000 barrels, a decline there of about 300,000 barrels. the big surprise here, the decline in distill at fuel supplies, down over 4 million barrels. that was a surprise there. analysts were expecting a decline of about 1.3 million barrels. we're looking at oil off of their low of the special. we'd seen the december contract trading right around 93 a barrel, january which is the most active right now is down only about 13 cents at 93.76. we'll be keeps close eye on the diesel contract there because of that big surprise that we got in the distillate fuel number. >> market moving data, sharon. thank you for that. >> let's get news from robert on rupert murdoch's divorce settlement this morning. >> i'm told that the terms are going to be kept private. among the issues that needed to

be resolved and that could have been under contention were some of the real estate, including their main property here in new york city, as well as the trust. remember they have two young daughters that have a big stake in at least the income of the corporate trust. there were some issues around their protection in that trust. those have been resolved, as well as the value of some other assets that they hold. those issues, again, which could have been contentious resolved quite peacefully and i'm sure murdoch is happy to say quietly now that this divorce is final. back to david. >> the largest shareholder in men's wearhouse has been pushing for a merger with jos. a. bank. given that it's unwilling to do that, it's now in a fight to replace its board of directors. >> thank you for being here.

>> 9.8% of men's wearhouse and 4% of jos. a. bank. >> that's correct. >> why are you pushing for this? >> this is not something we typically do. we're not activists typically. at the end of the day, there are three things that really compelled pups we like the core business. we think it's an underappreciated business, a niche in men's apparel that doesn't have the same fashion cycles that has more need-based purchases. it's a more consistent, higher return on business. number two, the opportunities to put these two companies together. you saw the presentation, $2 billion of value. >> where does that come from? you're talking about half the market cap that exists. >> it comes from cost savings,

revenue synergy. we see enormous opportunity here. this is a board that i think has acted in a way that i find astonishing given the situation. in my 19 years of being in business, i can't remember a board that has acted this irresponsibly in front of an opportunity like this. >> i've heard that a lot in my 20-plus years from people like you. >> this is a board that owns less than 1% of the company and they are telling the other 99%, no, you know what, we don't want to pursue add 2 billion opportunity, we're happy with the status quo. well, the status quo has delivered flat earnings over the last two years and a stock price that has gone nowhere in the last seven years. status quo is not acceptable in front of this opportunity and have made it stronger for shareholders to effect change. >> you're trying to amend the bylaws and move ahead to potentially replace the entire

board? >> yes. >> are you in it for the long term here? what do you say faber is with the hedge fund manager, an activist, he'll be gone once any value is created and a lot of people will end up getting fired. >> we invested in men's wearhouse long term because we like the business. if it takes us until next october to get full control of the board and effect a merger here, we're prepared to do that. we have a big investment here but it's not so large we can't afford to wait. we think there's an unbelievable opportunity to put these companies together. we want to capitalize on that. >> this ends up being a pretty big fight, takes a lot of time. you're not an activist by trade. i assume it's a a lot of time and effort to be spending on this. >> it's so compelling, i think

it's obvious. when you look at the opportunities, it's amazing to me the board would have erected the fences that they are. >> what if they say we'll do a recap, get off our back? >> a recap is not acceptable. >> why is that? >> jos. a. bank buying men's wearhouse or men's wearhouse buying jos. a. bank, if it's done for cash, that's taking on cash and buying back business. you get the multiple expansion, the multiple synergies and a stand-alone plan cannot compete with a merger here. >> so would you not accept that if they were to put that ahead. >> i would not accept that. >> you end up getting a lot of fast money guys, event driven is what we sometimes call them. is that where you're going after or do you make a case more to the long onlys in this fame? >> i think we make the case for both. i think there are good

opportunities for an investor pu i think we make a compelling opportunity to the long onlys. the stock has gone nowhere for seven years and you presented in an opportunity to participate in $2 million of value creation and the board says no, we'd rather stick to hasn't worked over the last seven, eight years. >> jos. a. bank is the bigger company. i think we can have a share-for-share merger and use our excess cash to buy back stock. one can buy the other for cash. there's just a lot of ways this can go. >> let's talk about the broader market, around $4.6 billion equity fund. you seem to be getting a little more cautious. a lot of other big investors we've heard from lately. is that the case? if so, why? >> i this i we're getting a little more cautious on the

broader marketthere's cle. there's clearly been an expension in the broader market. s&p is only growing at 5% yet we've seen the market up 27% up this year on top of 15% last year. despite that, though, there are great opportunities. so all this money is flowed into the market, has flowed into the s&p and shore coverering, guys in my position trying to get better position for a market rally. then you have the high frequency guys chases what's working. it's not necessarily put into the right place. despite the fact i don't think the market is particularly attractive here, i think there a lot of incredible opportunities. >> you run a hedge fund meaning you short stocks as well. it's been really hard to make money on the short side. is that going to change? >> it's been brutal. this is one of those years that happens every so often. i would suspect as the clock

turns to next year and the emotions change from i have to get this out of my portfolio, i have to take a loss on my short to, all right, i have a whole other year, that has a chance to change. >> i want to come to one other name in your portfolio. fedex. dan loeb recently divulged he owns some stock. >> it's fundamentally a good business. you have a duopoly business, secular growth drivers, e-commerce, the lengthening of supply chains. it is a company that has underperforming metrics. that intrigues people who can see change. what's interesting here is even without an activist actually showing up, fred smith seems to be doing the right things. he launched a cost savings plan at the end of last year to save $1.6 billion on a company that

does about $3 billion in ebid, very significant cost savings plan and started buying back strock aggressively. he's starting to do the right things. we have an undervalued stock and management doing the same thing. >> still using a le ing ing a ls domestically than ups does. >> there's still a lot to improve. >> ricky sandler, thanks for being here. >> thanks for having me. >> coming up, the tale of two cities. miami has it all, not to mention an s.e.c. investigation. can the city bounce back from here? find out after the break. i have low testosterone. there, i said it.

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welcome back to "squawk on the street." nothing runs like a deere and this morning the run is to the

upside after the construction giant reported profits and sales that beat analyst estimates and offered a more bullish forecast for 2014 than had been expected. they said strength in construction and forestry equipment would offset any softness in agricultural. back to you. >> thanks so much. there are few places where inequality in wealth is on starker display than miami city and the city is in the center of a three-year investigation into finances. scott looks at that. >> reporter: it's important, especially in you invest in municipal bonds. miami on the surface seems to be making a comeback but there play be issues where it's not all the way seems. the whole metro area is at the heart of a nationwide crackdown on the municipal bond market.

the s.e.c. sued the city of miami and its former budget director for fraudulent disclosures, which they deny, settled with the operator of miami dade county's largest hospital after misleading investors in a $83 million bond offering and for telling investors $12 million in bonds for a shopping market is tax exempt when it not be. and then there's marlins park that could cost $1 billion by the time the bonds are paid off. the city, the county and the team have been served with subpoenas over the bond issue. philadelphia eagles owner does not take pride in saying i told you so. he called all public financing of sports stadium a fraud. >> there is no, zero, economic benefit to the community. they talk about -- they all give these ridiculous numbers of jobs

that are created. what jobs have they created? >> reporter: while the s.e.c.'s probe here is at the issue of disclosure, whether bond holders or bond investors were told everything that's going on, we don't know if they're going to find anything. the subpoenas are a couple of years old now. the s.e.c. in a report to congress earlier this year called for more regulation in this nearly $4 trillion market. coming up later today on "power lunch," we'll look more closely into the bond deal here and marlins park. kelly? >> we look forward to it. thanks very much for now. still ahead on the program, it's another big reveal. bmw this time revealing its all new 4 series convertible. it's apparently the talk of the l.a. all the owe show, the car everyone's been waiting to see. we'll show it to you first on "squawk on the street" when we

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nomination of janet yellen as fed chairman. he says "i would prefer to see someone who held a more modest view regarding limits of monetary policy. after speaking to her both in the hearings and in his office, he said i do believe she will bring a more transparent approach to fed decisions and dh a more rules-based methodology. guys he said he wouldn't be convinced going into the hearings, but that's key support. >> he went on to say during the discussion, she made a commitment to moderate purchases as soon as she believed the data supports that action, and shows that the current status cannot continue. i assume she says the same thing behind closed doors than she does in public. >> that was his remark, i'm glad you've been giving us the same information publicly that you gave us privately. >> as if this was something novel. >> right. that should be applauded, right. >> hey, financial services. wednesday morning, let's get to the cme group, and rick santelli has this morning's

"santelli exchange." >> thanks, simon and kelly. i always like keeping things realtime. because let's talk about something that was just brought up. so we have corker talking about he feels more comfortable with janet yellen about transpaernssy. -- transparency. and i will contend, i can't follow that logic. i'll give you a simple example. anybody out there know what the winning lotto numbers are going to be tomorrow? anybody at all? satellite radio? anybody? anybody? no. so in my opinion, talking about anything with regard to transparency and the fed's big, monstrous qe, still in crisis-mode program, it's very similar. i can't be transparent to you about what tomorrow's winning lotto numbers are, because i just don't know. and i think you see where i'm going. so i'm sorry, just doesn't make sense to me. and as far as today's markets and interest rates, i continue to think that interest rates, well, i think the world is underrated, and i mean

underrated in the form of interest rates. let's show a seven-year note chart right now. let's only show a portion of it. let's show roughly from may to july when we had that big taper move, okay? that seven-year note, and the reason i picked it, is it most closely parallels kind of the duration that matches mortgages. how long people live in their houses. okay? well, it went from basically a 1.05 yield to about close to 2.25. and it's now hovering still over 2%. but the point of this is is that this steepening yield curve i constantly look at, and a lot of people look at the twos to tens, what does it really mean in english? it means short rates are nailed against the wall because of the fed, and the long rates, even when very important to housing, which may have impacted existing home sales today, they keep on moving up. and they're even higher than they were on the initial move

when the really was going to be a taper. so now we see talk -- remember, we're underrated. rates should be higher. we see talk that bullard, just traders running around the floor, say, hey, maybe next meeting there could actually be a taper. i tell you what that means to me and what it means to a lot of the traders is whether it was, you know, mr. hunzar on questions of quantitative easer, or what's going on with the yield curve, i think the fed figured it out. the fed figured out that the market is winning, and if they don't move quickly to remove the program, they'll have less efficacy in all other endeavors. back to you. >> all right, rick, thank you very much for that. rick santelli. when we come back, wine lovers rejoice. the rumors of a shortage, you've heard about that, right? >> no! but i'm worried. what is this? >> unnerving. apparently greatly exaggerating. we'll take you to napa and show you some proof that the wine industry is not running out of juice. when "squawk" comes right back. ♪ .

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and sales falling 4% from the last quarter, even though commodity prices for peanuts and green coffee did fall. a sticky situation for sure, kelly, for the owners of the j.m. smucker's shares. back over to you. >> all right, dom, thank you very much. now, attention, wine lovers. there's no need to panic. the wine industry says that shortage you might have heard about is exaggerated, and that's certainly a relief. to make sure, our own jane wells is out in napa valley -- a tough assignment, jane -- where wineries are expanding operations. >> reporter: i had to find out myself, kelly! here it is autumn in napa, which does not suck. you know? morgan stanley scared everybody with this report that wine production had come down so much and demand was up so much that we might run out of fermented grape juice. uh, no. at least not here in the u.s. where it's estimated production is up 20%, and they're looking at another larger-than-expected crop in napa, including here at this winery, the nation's fourth-largest, with names like

sutter home and looking at an expansion, including $300 million to build a processing facility and looking to buy more napa vineyard land, despite, listen to these prices, $250,000 an acre. >> 2013 was a great crop both in quantity and in quality. it was probably up over 4 million tons, which is above average. on the heels of another big crop last year, in 2012. so two big crops back-to-back. >> reporter: are we going to run out of wine? >> no way. >> reporter: that's the legendary fred, bronco wine, the man who owns two buck chuck, and while it's two and a half buck chuck, it's nearing the 8 millionth bottle. revenues will rise 4%, 5%, as consumers buy the cheap stuff under 10 bucks. >> $10 is a high price. there shouldn't be any wine sold over $10. >> reporter: any wine? one shouldn't be -- >> especially open swan.

>> reporter: in that vein, selling well, $10 wine from the duck dynasty folks here at trancaro. later, we'll talk to them as they expand the wine-drinking audience, all red, white, rose, guys. back to you. >> i can't wait to see how your hits progress throughout the course of the day, jane, the closer you are, the longer you are in that wine field. jane wells in napa. thank you so much. we actually have some very happy news to share. our "squawk on the street" is expanding. our seen overproducer ben and his wife jamie, a cnbc producer with the specials unit, welcomed their first child yesterday. beautiful william george berna, born 2:34 a.m. tuesday, weighing in sat 7.9 pounds, measuring 21 inches. mom, dad, baby william are all doing well. big congratulations to the berna family. don't be surprised if our hasbro and mattel coverage gets a lot

more -- a lot stronger in the weeks to come. >> could reassuring they're naming them after english princes. you know, good to know. >> it's great name. >> bravo. >> congratulations to emthis. hurry back to work, we miss you. if you're just joining us, here's what you missed early on. ♪ >> announcer: welcome to "squawk on the street." here's what's happened so far -- >> i'm a fan of bernanke. for the record, he saved us in '08, so i'll always be a fan. look, we have no fiscal policy in this country, and he's trying his best to offset it with monetary policy. he's gone as far as he can go. >> the person in question did own a share of the stock until after the deal was announced, and i think that no long-term intentions or good intentions for the company or its shareholders or the people inside the company. this is the beginning of what i regard as the normalization of jcpenney. we won't be talking about jcpenney a year from now, not because they are out-thriving or

going out of business, or because they're nothing. they're going to go back to being nothing. i know people don't want big government in this country. it's talked about over and over again. the only thing to get it going, no private industry to get the economy going the way bernanke wants. it's too big. [ bell sounds ] >> our focus is on delivering great product, serving the customers around the world, and the results will come and people will recognize that over time. >> we're in this for the long term. we invested in men's wearhouse, and we're prepared to go all the way, because we see the opportunities. if it takes us to next october to get full control of the board and effect the merger here, we're prepared to do that. good morning, we're live at post 9. let's begin with a check on markets here. not a huge move in terms of the major indexes. what we've seen now for the last couple of weeks, trading in a

pretty narrow band. and this notwithstanding some comments from chairman bernanke last night about the future, of course, of the fed's qe policy. nevertheless, the dow just barely higher this morning, adding about 5 points. the s&p 500 adding 3. the nasdaq is positive by about a third of 1%. shares of lowe's are slipping after third quarter earnings missed expectations. and it's not the only thing weighing on shares. full-year guidance at the home improvement retailer came in a bit below estimates, off more than 4%. meantime, shares of priceline are rallying this morning, still going. goldman sachs added travel website operator to its conviction buy list, saying the company will benefit from a european recovery, and increase mobile traffic moving another 3.5% to the upside to 1158, simon. >> okay. here we go. the roadmap for the next 06 minutes. -- 60 minutes. a good day for jcpenney, rallying on a good report of same-store sales. we'll tell you how long the fine times will last in a moment. outgoing fed chairman ben

bernanke last night tried to explain his actions and his thinking over the past few months. we'll take a closer look at what the fed chairman had to say and what it means for the possibility of that taper. and in space, no one siri. apple getting final approval of the cupertino facility. we'll show it to you in a few minutes' time. also, the times, they are a-changing, all you have to do is look at the groundbreaking news video from bob dylan. this is something you have to see to believe, and we'll show it to you in this hour of "squawk on the street." now, we don't say this often, but today is a good day for jcpenney. the struggling retailer surging this morning after reporting positive same-store sales last month. bob pisani here now with a closer look at how to trade this one. hey, bob. >> slightly larger loss than expected. but that wasn't the key point here. the bottom line is the company is grvive. that's all anybody cared about

when i talked to some of the traders. here's what's important. same-store sales still a bit weak, but it's improving sequentially year over year. women's and men's apparel, a real problem for them, that's been improving. as long as you get a bottoming in that, and things start improving, that's what people are looking for. look at jcpenney. a lot of guys on the street were better they would survive. the bottom was actually 6.50 and change, that was the third week of october. so we've been improving since then. but it's been an ugly, ugly year for jcpenney. even sears, arguably, a competitor, has had a better year overall. put up the full year for most of the big department stores. all of them had been generally on the positive side. jcpenney, even with the improvement over $6, down 52%. dillard's, nordstrom's, not necessarily the same space, but macy's could roughly be in the same space. sears up 49%, it bottomed quite sometime ago. just want to comment on the markets here today.

quickly. we were on the upside on the dow, and it kind of came down. you see the spike down. jim bullard, a moderate, st. louis fed, came out with comments saying if we had a strong november jobs report, that would mean tapering is on in december. so the idea that tapering is on the table for the next meeting is why we come off the highs earlier in the morning. guys, back to you. >> all right. thank you, bob. we've mentioned that wall street is particularly interested in today's fed meeting. its minutes, we should say, for any sign when the fed will begin to taper. outgoing fed chairman ben bernanke last night talking in washington and emphasizing the need for the fed to manage expectations through enhanced communication, indicating that the two targets of monetary policy are thresholds, not triggers. take a listen. >> crossing one of the thresholds will not automatically give rise to an increase in the federal funds rate target. instead, it will signal only that it is appropriate for the committee to begin considering whether an increase in the target is warranted. >> on that note, let's bring in

geno, head of regulatory affa affairs, former vice president at the new york fed, and greg with risk advisors. guys, good morning. >> good morning. >> good morning. >> mark, first to you, is the fed going to succeed where some said it failed in the summer, and keep the market from expecting rate hikes even if the fed tapers? >> well, you said exactly the right word. it's expectations. and that's what rick santelli said a few minutes ago and ben bernanke said it last night using somewhat different words. and what he said, if you're linking a couple of things, is that the market misinterpreted -- a portion of the market misinterpreted the comment on tapering. what he's doing, i think, is setting expectations for the difference between tapering and raising interest rates. which was his primary point. >> and, dino, even if there is a difference, they can start to taper now. it doesn't mean they'll raise rates anytime soon. some think it could be 2016 before they do. if that's the case, isn't it

true that if the quantitative easing program was meant as a stimulus program, that if they end it, well, no wonder conditions are tightening? >> look, if they taper, it will have an effect on markets. so the markets will feel the effect. the question is, what's going to be the impact on the economy if they do? now, you know, let's look at the facts. the fact is that the economy has grown 2.25% on average since the recovery began, way below what the standard recovery has been. so even with all of that stimulus, the economy has performed pretty weak. that seems to suggest they won't be in a rush to either raise rates, you know, or, you know, unwind the asset-purchase program anytime soon, because the economy cannot tolerate -- >> do you think qe's worked? >> not -- it has not generated the effect on the economy that they wanted. >> why would they continue with it? >> the question is -- well, the counterargument will be if they stop it, if they unwind it, then you'll get the downdraft down, okay? so it's a slightly different argument. >> if they were trying to be

more effective, what about this concept, and we've seen a couple of fed speakers, reported addressing it on the european side as well, what about the concept of cutting rates below zero? >> you mean negative rates? >> sure. >> the negative rates. it's a tax on deposits. that would -- we've seen that in limited circumstances. the swiss have tried it. you know, a couple of times, over the last -- actually, over time. it has not been tried in a broad scale, at least that i'm aware of, anywhere, in any of the major central banks. so that will be a new frontier. that will be a new frontier. you will need to have something dramatic happen to go there. so i don't know if mark would agree with that. >> i was going to ask mark -- >> no, dino, i agree with you fully. that would be a step we're not taking. instead of going into negative interest rates, what we have done is going out the yield curve. the qe has worked. and the qe has totally kicked n in. we can imagine where an economy would be if the fed had not done

that. and so, i think the difference -- the distinction now is that we have to at some point stop. we can expand the balance sheet and stay there for an inevitable period of time. but trees don't grow to the sky. >> mark, just real quick, though, there's a certain irony in the fact that we're talking about all of this when the cpi headline print cams in lower in four year, below 1%. >> and imagine what it would have been without the qe. >> it also means that the fed's not going to be in a hurry to unwind this, because of worries that the inflation rate will go even lower. >> right. >> so the talk about year-end tapering is way premature. >> all right. dino, mark, thank you both. >> thank you. amazon already, of course, sells a ton of its own products like batteries and keyboards, and soon it could add supermarket goods to that list. according to all things d, they mentioned what they call the launch of a private-label business in consumables. another posting called for help to launch high-quality

amazon-branded products to global consumers. whilst the listings hint at the direction in which amazon is going, it's not clear if the company will target just one product type like snacks, or if it will look at things in a bunch of different areas. jon fortt is joining us on the set for more on what amazon is up to. jon? >> yeah, i got some insights into that. i went on amazon's site, searched through the job listings -- >> did you apply to any? >> no, i don't think i'm qualified by any stretch. >> i'm not sure they do. >> i've never seen bezos in a tie. i dug up a few job listings that maybe all things d-miss, a food safety manager. so there are a few details to pull out of here to get a sense of what they're up to. one of the listings has a senior consumables private-label sourcing manager. they want to go around the world, finding manufacturers who can make some of the stuff that they want. here are some of the things that they have in mind.

grocery, personal care, beauty, health and wellness, and baby. they call out specifically. and they talk about working with the rest of the private-label team, which includes brand management, product management, marketing, and in-stock management. so they apparently have a broad view of what they're trying to do here. it looks like they might even be getting into selling things like milk if they're looking for a food-safety manager. >> incredible. if you look at what they've done to every industry they've entered, it suggests deflationary pressures and the consumer will love it. >> yeah, and i wouldn't be surprised if they do things on packaging here, too. you think about how milk is packaged, not necessarily to be delivered to you, but picked up at the store. they're looking to innovate across the entire line. >> all right, thank you, jon fortt. coming up next, it's the big reveal. bmw unveiling the new 4 series convertible, which is apparently one of the most talked about cars ahead of this year's l.a. auto show. we'll show it to you first here on cnbc in just a moment.

first, rick, what are you watching today? >> a lot of you like to watch game shows, the one with the big wheel, you can buy a vow. the central banks in the world, they bought time. what have they done with this time? did they reform? there's talk about maybe negative rates in europe. been there for a while. look at some of the two-year german rates, but we'll talk about all of the topics with mark grant. i think you want to see this one at the bottom of the hour. you really love, what would you do?" ♪ [ woman ] i'd be a writer. [ man ] i'd be a baker. [ woman ] i wanna be a pie maker. [ man ] i wanna be a pilot. [ woman ] i'd be an architect. what if i told you someone could pay you and what if that person were you? ♪ when you think about it, isn't that what retirement should be,

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welcome back, and we're keeping an eye on the energy sector, one of the best performing on what's a relatively flat day for the markets. dominic chu at headquarters with more. >> hey, kelly. energy, like you said, one of the better performing sector, seeing strong gains among oil and gas exploration and production companies, e&p. look at devin, announcing a deal to buy assets in the eagle four region of southern texas from ge geosouthern, and it seems to be generating confidence in the industry overall. the top five performing stocks are all independent oil and gas exploration, like range resources, newfield, a lot of big names in e&p, simon. all right. heading to the west coast. bmw taking the wraps off the new 4-series convertible at the l.a. auto show this morning. our own phil lebeau joins us with another first on cnbc interview. i can't wait to see this one, phil.

>> you know, simon, it's a beautiful car. i want to bring in ian roberson, a board member for bmw, standing in front of the 4-series convertible. it wouldn't be a car show without the convertible. >> absolutely. >> all of the convertibles -- the hard-top retractable, and stacey will show us, this one you can put up and down as you're moving in traffic. is the convertible market, is it still relevant today? i know you're bringing out a new model. >> you know, convertibles are primarily united states and european cars. very little convertibles in asia for heat and smog and such things. but the u.s. is biggest market, about 50% of the convertibles are in this market. california is the biggest part of that. so we still think it's a very relevant segment. it's a brand-shaper at the end of the day. >> and the roof quickly up. it says how much things have changed in the world of convertibles. i want to shift and ask you

about the i-3. you've seen greater-than-expected demand for this vehicle. is it surprising to you because the global demand has been as strong as it has been? >> when we started out with i-3, a product vision, 3 1/2 years ago, we detected the world was definitely changing. and the world was going to become more and more sustainable in its outlook. i think we're at the crest of the wave. we have 7,000 electric cars, this year, 150,000. so a multiple of 22 in a couple of years. and i think we're now sort of poised for another big step here. the demand for i-3 is really strong. here in the united states, we got 45,000 people who've registered for a test drive. test drives, of course, are a challenge, because we have to charge the car in between drive and all the rest of it. in europe, about 10,000 orders already. >> two last questions for you here. one of them, i want to show the statistic in terms of luxury auto sales here in the united states. >> mm-hmm. >> you've led this market the last two years. >> yeah. >> going into the last two

months, you're behind mercedes-benz. can you catch them to be number one, and is number one still that important in this country? >> you know, it's very close between ourselves and our major competitor there. now, who turns out in the end, we'll see. at the end of the day, of course, it's nice to be known as number one, but not at all costs, and one thing for certain, we will go into next year with good momentum. >> and speaking of next year, this is -- i call this the dessert of the live shot, because look at this, guys. this is the i-8. it shouldn't be sold, because it's pretty obvious, but tell me about the i-8s. >> the i-8, we showed the concept car four years ago here in l.a. a lot of people said they'll never make it. here it is. and we're driving a lot of them in europe at the moment, in the final stages of development. it's getting rave reviews. and i can tell you, it drives like a sports car, like you've never imagined before. >> second quarter, we see this here? >> second quarter, sales in the united states. >> ian robertson joining us from the l.a. auto show. guys, this is a gorgeous,

gorgeous car. i cannot wait to drive it when it finally comes out early next year. >> and 94 miles per gallon. >> 94 miles per gallon. >> 94 miles a gallon? holy cow. >> it has the carbon-fiber composite design. you cannot beat it. >> wow, beautiful. thank you very much, phil. appreciate it. simon, if you had to pick, you can have the i-8 at 94 mpg, a tesla, the new mustang, which we haven't seen, or the red audi, what do you pick? >> i don't know. that car reminds me of the delorean. do you remember that? >> no. >> mood earn version -- [ laughter ] of course not. you wouldn't, would you? >> i'll google it during the break. if you're a frequent flyer, meanwhile, you probably heard of our next guest, luxury luggage maker famous for the heavy-duty luggage, and almost impossible to break. so our consumer spending on luxury goods like luggage this holiday season? we'll ask the ceo of tumi in just a moment. ya know, with new fedex one rate

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♪ try to run, try to hide break on through to the other side ♪ welcome back, and with the holiday travel season just around the corner, we want to get the pulse of the consumer with the head of a luxury luggage and accessory company here for a cnbc exclusive. jerome griffith, president and ceo of tumi. joining us from the newest flagship store on madison avenue in new york city. jerome, good morning. thank you for joining us. >> good morning, and thanks for having me. >> your shares have been on quite a tear. gone from under $19 back in october to over 23. so certainly some optimism here. what is the most popular items that you sell this holiday season, and what price points generally are we talking about? >> our price points tend to range from in the -- below $100 for easy gift, pickup item, to well over $1,000 for luxury luggage pieces. when we see over the holiday

season, what really sells for us still tends to be the best briefcases, best pieces of luggage, but we've added accessories last year and going into this holiday season. we're to the point that accessories rank up over 15% of the total business. >> it's an interesting move. and are you doing it because accessories are more affordable for people, or are you doing it just because the tumi brand is something that resonates, and that perhaps you are, you know, meeting ining demand from a mo mobile clientele? >> over the last several year, they've moved to a lifestyles accessory company, and we feel we play in the world of travel and business. all of the customers actually work in a job. they're very successful. they travel, whether it's nationally or internationally. and we try to have all of the accessories that work for their lifestyle. >> jerome, the trick for many people in luxury goods at the moment is to move upmarket. it's felt that the higher -- the higher-end of luxury goods is more defensive. is that what you're eyeing? where do you position in the longer run?

>> well, tumi today is not exceedingly well known. our brand awareness numbers are good, but they're not great. and what we're finding is that as we get bigger and bigger distribution patches in different parts of the world, our consumer tends to -- tends to range between the luxury consumer and the average working consumer. so we try and have price points for both. if you look at the average price points over the last several years, to be honest with you, they haven't changed much. there hasn't been a huge up tick or a huge drop-off. they've stayed relatively constant. >> it's interesting you're coming to us from a new flagship store, kind of the old retail model, is it not, to have the bricks-and-mortar operation used to drive traffic and brand awareness? these days, isn't there a better way of reaching out to people? is all of the online that we've been discussing -- the amazons of the world, the start-ups, the daily deal sites -- are those a better way to cater towards and build that brand awareness? our is it still what you're pursuing, kind of the flagship stores and the spreading of that

operation? >> we really have a multichannel approach. we have our own stores. we have some partner stores in different parts of the world. we sell online. we have shop-and-shops in department stores and sell through third-party online customers. what we find is our consumer tends to shop around and wants to be able to buy the product where they want to be able to buy the product. we've been growing our store base extremely well over the last few years at around 20 stores to 25 stores per year. this year, we're putting a big emphasis on e-commerce. we saw last holiday season, e-commerce was a big push for us. again, this year, we expect e-commerce to be a big vehicle for us going through the holiday season, just because of the ease of shopping for the consumer. >> sure. and just in a word, as well, and you kind of touched on this already. can you tell us what the state of mind -- the state of wallets -- seems to be for your shopper? i mean, is the competition, the discounting that we've been talking about on the show earlier, is that really kind of a u.s.-specific, and to some extent, lower-income-specific

problem? what are you seeing? >> what we see worldwide, and our business, just so you understand, we do about -- a little over a third of our business outside of the united states, and not quite two-thirds of the business inside the u.s. the consumer tends to be relatively constant. there's been some choppiness over the last couple of quarters of the business. however, we've seen a slight up tick from quarter 2 into quarter 3, and going into the holiday season. so we feel pretty confident about what's going to happen for us this season, but we'll see. >> all right. investors appear to feel that way, as well. jerome griffith, the ceo of tumi for us this morning. thank you so much. >> thank you. ladies and gentlemen, clear the runway. apple's spaceship headquarters has been cleared for takeoff. you've seen the models, but cnbc's got an inside look at what the new apple hq is going to look like. we'll show you that later in the show. plus, the bells are about to sound across europe. we're just a few minutes away from europe shutting up shop for this wednesday session. we'll have the details on the close and the impacts for the markets here right after the break.

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meeting, some at ecb are talking about negative rates, but good luck getting that past the whole committee with the germans in the present state. you will notice people are booking profits on those stock markets that have done really well since the july lows. and in the main, of course, that's the like of spain and italy, which you can see are up 24%, 22%, almost double what you've had here on the gains in the s&p. since that 24th of july marker. it's really interesting, everybody seems to be talking about central banks, whether it's the fed this afternoon or the ecb. we had minutes from the bank of england today. and what's really interesting there is they, too, are trying to play with the thresholds that they've set for when they will raise interest rates, it would appear, reading between the lines. no longer would a 7% unemployment rate in the united kingdom automatically trigger a rate hike. so again, trying to play with expectations. let me give you one last thought before i hand it back to kelly, and that would be tfr, who would have guessed that yesterday the french soccer team would qualify

to go to brazil for the world cup, but they did get through against the ukraine, and these guys own the tv rights in france, and you can see the way they've bounced there. that may be the end of the celebrations in france, kelly, because tomorrow, the farmers will be blockading paris in protest of what the government is doing. we'll talk about that tomorrow. >> do i sense some regional football rivalry there, as well? >> moderately. moderately. nobody thought they'd get through. they thought they were, you know, prima donnas. sorry. >> to borrow the italian term. thank you, simon. >> pleasure. for more on europe, let's get to rick santelli in chicago. good morning, rick. >> good morning, kelly. i love you and simon having me interactions, because i'll run with it again. central banks, negative rates in europe, what's going on with the ecb, what's going on with the monetary policy committee bank of england, and our own fed, i'd like to welcome our special guest, who knows about all of the topics, of course, mark grant. welcome, mark. >> thanks, rick. a pleasure to be with you, as

always. >> five years after the crisis, and some would say it's longer, going back to maybe the fasb in '07, and everybody is talking about central banks. i'd rather everybody be talking about a nice global recovery, but not in the cards. all of the central banks, draghi, bernanke, they bought time. have they made good use of the time in your opinion, mark grant? >> i think the -- you can argue back and forth about quantitative easing, but it certainly helped to pull the economy up to some extent, though, you have to look and say the economy really is so weak that quantitative easing is all but supported the economy. in europe, it's totally different. they've played any number of games with the stress tests of the banks. the first two, in my opinion, were worthless. and now, they're starting to look at the banks in reality as

the ecb is going to take it over, rick, and now they're starting to get very nervous. >> see, now you get to the crux of what i want to talk about. why now is there all this chatter about the ecb? i mean, there's been stories that they may want to do quantitative easing, but it's very difficult for them. they're all fragmented. what do they buy? do they buy the bonds of spain? make italy mad? buy it all, make germany mad? do they only buy -- it's starting to get dicey. and i guess my issue is, let's cut through it all. they talk about negative rates. maybe they're not going to lower rates. the key is, there's no credit being created and there's a lot of liquidity and still a lot of toxic bank assets. how will they get out of this? >> well, the ecb has some very specific problems, rick, as you point out. one of the issues is the southern countries, the peripheral countries, are in a lot of trouble, regardless of the stuff you hear in the press. if you look at the actual numbers, rick, they're in trouble.

and now, you have the ecb really starting to look at the banks. they're talking about 150 billion, 202 billion american dollar fund to support the banks, and you're getting a very real sense that some of the european banks -- we don't know which ones -- are in real trouble. and i think they're beginning to panic in europe about this, which is why we're seeing all this fluff and all this scurrying around. >> all right. one final question, we're out of time. do you think -- do you think we're going to actually see a taper strategy of any significance in the next four fed meetings? >> no, rick, i don't. i think ms. yellen has made it very clear that she's going to stay away from tapering for the time being, until the economy is much stronger. so the answer is, no. >> thanks, mark grant. my phone's ringing. i think it's jim bullard right now. [ laughter ] thank you for being our guest today, buddy. >> my pleasure. >> kelly, simon, back to you.

>> oh, boy. thank you very much, rick. "market flash," the retail space. let's send it to dominic chu. >> you would be right, aeropostale is surging higher. the firm believes that shares are undervalued. they plan to hold talks with the management. the stock is hovering near just off their session highs, kelly. back over to you. >> sure. after being one of the underperformers, up 6%. thank you, dom. the next guest's company can be described as the cloud meeting the notebook. and now, you can share your notes with anyone easier than ever. we'll tell you how that works. "squawk on the street" will be right back. with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator...

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coming up on "halftime report," only eight stocks in the s&p are up triple digits this year, so are they poised for a sell off, or is there more room to run? and we'll talk to a hedge fund manager who hasn't done tv in more than a decade and says now is the opportunity of a lifetime to short stocks. he's going to explain exactly what he's shorting and why at the top of the hour. kelly, we'll see you then. >> all right. a tough move so far, scott. breaking news. john harwood has the details in washington for us. john? >> reporter: kelly, the obama white house has been struggling obviously with the tremendous p.r. flood of negative p.r. about obama care.

today, jason furman, chairman of the economic advisors, published a report which tried to take credit for some of the positive news in health care, which is about the cost and price of health care. if you look, according to the report, the jason furman briefed us on moments ago, over the last three years, total national spending per capita on health care has risen at only a rate of 1.3% beyond inflation. that is much more moderate than at any three-year period since we began measuring in 1965. there's big debate over the source of the slowdown in health costs. some people attribute it to cyclical effects of the economic slowdown in general. other people attribute it in part to the changes from the affordable care act, and that's what jason furman was pressing, year-to-year price inflation in health care, the cost of specific health care services, is now running just 1%. and that translates into lower costs. if it is sustained for a private

individual, for individuals buying health care and for the government, projected medicare and medicaid spending is now down 10%, according to cbo, by 2020, kelly. >> yeah. it makes you wonder why we even need the obama care act, john. i kid. i kid. we can understand the white house is trying to find some good news, though, amid that difficult rollout. thank you very much, sir. john harwood at the white house. now, it was an emotional farewell during steve ballmer's last shareholder meeting on wednesday. as the company searches for a new ceo, rick sherrland had one suggestion for microsoft about potential acquisition targets when he was on the show back in november. >> if i were new management coming into microsoft, i'd probably buy evernote and box, and sigh, why don't we go after the market opportunity independent of windows? >> interesting. we are now joined here at post 9 by the ceo of evernote, phil libben, and jon fortt is with us, as well. phil, good morning. welcome. >> good morning. >> have you had talks with

microsoft? >> you know, we talk to microsoft all the time. we haven't had any discussions about being acquired. >> you'd fit right in there, phil. >> i'm sure i would. >> describe whatevernote is and where you see the technology is going. >> evernote is the external brain. it's a set of products that helps you deal with a flood of details and information that's coming at you every day in your work life, in your personal life. and help you remember things and be more productive. >> it's funny. it's almost like the digital version of a post it, but you've stolen the game, because you're going physical now, as well? >> yeah, we're partnering with post it, with 3m. we're the mainline digital strategy for post it notes. you can now take a picture of any post it note in evernote, and it makes it look beautiful and ties the color of the post it note to tags and notebooks' digital actions. >> we were hanging out in silicon valley a month ago, and i'm always giving you my quirks and ideas of evernote.

>> i've got a note with ideas from jon, for the next version. >> yeah, facts. faxing. i know it's so old school, but doctors' offices, real estate transactions, people need faxes, good to have an evernote. this first goods business. where do you expect it to contribute revenue-wise? how is it doing so far? where do you expect it to land when it shakes out? >> it's doing great so far, but less than two months. i don't want to get too excited for early results. we expect, we have three revenue streams -- the consumer premium business, the enterprise business, which is growing really quickly, especially with the announcement of salesforce yesterday, and the physical products business. and i expect when things shake out, they're roughly equal. i expect it to be a third, a third, and a third in the next year or two. >> you said that you look at an ipo potentially as stop in the journey, not necessarily as some big event for you, but just a refuelling. are you still looking at probably 2015 as the earliest point where that might happen?

>> yeah, i think two to three years out. i think it's really a good thing. i think it's a morally correct thing to be a public company. >> why do you say morally correct? >> well, you know, we ask the world to trust us with their most important information. we want to make 100-year company. and i think to build that trust, you need to reciprocate. so having the transparency, allowing anyone who wants to be an owner to be an owner. those are morally right things. >> do you think being a private company is immoral behavior? >> no, i think for, at least, evernote, we're asking the world to trust us with information, being a private company is an important first stage on the journey to being a public company. but it will take a couple of years to get there. we want to make the actual day of ipo itself as nondramatic as possible. we're not really interested in that one day. we're interested in the story afterwards. >> nyse or nasdaq? >> you know, a little too early to say. although it's pretty inspiring being here today. >> i'm wondering, too, you're talking about trust. is the -- what people put in these notes, intensely private activity, are you able to access

and use that information? >> no, no, we never do. we published our three laws of data protection, which says your data is yours, so you own the data with evernote. we don't own it. the data is protected, so completely private. we never look at t we don't use it for any business reason. we're not a big data company. we don't analyze. we don't serve ads or affiliate traffic. everything with evernote is completely yours, and your data is portable, which means we guarantee you can take it and go whenever you want. we want people to be comfortable that they can leave evernote at any time, and if they're comfortable enough to leave, they're comfortable enough to stay forever. >> it's a big thing i use evernote and not google drive as much. >> if you think about it, you can understand why that's such a valuable proposition from an investing point of view. fascinating, a little post it and now a big business. phil libon, thank you very much, sir. >> thank you. now -- that's no moon. it's no spaceship, either. that, as you may know, is a

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all right. if that music doesn't give you a clue, apple is getting final approval to build its brand-new spaceship headquarters out in cupertino, california. ♪ okay. this story's been all over from the beginning. a few weeks ago we talked to the mayor. we asked him how important the project was for his city. >> it's a very important project. not just for the city of cupertino, but really for the whole silicon valley. apple has a major presence in cupertino right now with 9,000 employees, and it's just going to get bigger. as i say, it's a lot of direct benefits to the city and to the valley, but a lot of indirect benefits, as well. >> and now, cnbc is getting an exclusive look inside of the new headquarters, at least what it will look like. josh lipton joins us now with more. hi, josh. >> reporter: hey, kelly. yeah, this was a dream of steve jobs'. now, one step closer to reality after the city of cupertino gave

the final stamp of approval for apple's new campus last night. here is an exclusive look at the model of what that new campus is going to look like. we are the only tv network that got this look at what is going to be a massive space. the new campus will sit on 176 acres. the centerpiece will be what is being called the spaceship, a circular office building that will accommodate 12,000 employees. the building will be four stories in height and total 2.8 million square feet. that's a mile in circumference. to put the size of this campus in some perspective, you could fit the new san francisco 49ers stadium, which seats 68,000, just in the center of that ring. if that's not big enough, then here's another way to think about t you could also fit the "uss nimitz," one of the largest warships in the world, also inside the center of that ring. there will also be a restaurant,

a fitness secenter and auditori. estimates range from $3 billion to $5 billion. residents of cupertino have voiced concern over construction noise and what this could mean for traffic in the community. apple in response saying it expects one-third of the employees to take public transportation, and also widening streets in the area. by 2016, it's estimated that at least 7,400 employees will be working at the campus with full-capacity reach in a few years. kelly, back to you. >> all right, josh, thank you. john, you know a little about this area. what do you think? >> yeah, i live about five miles from that. i mean, look, apple owns cupertino. they put out a report back in june. right now, cupertino's property taxes, around 25 million with the new apple campus, another 32 million -- >> wow. >> -- coming on -- i mean, what apple contributes to the cupertino economy is just ridiculously huge.

so they'll make adjustments and make sure that apple is happy. >> cupertino stimulus plan, it sounds like. maybe a stimulus plan for the renters, as well, jon. >> could be. >> all right. over 40 years after it came out, the song "like a rolling stone" is finally getting its own music video, but it's nothing like what you'd expect. this is something you've got to see to believe, and we'll show it to you when "squawk on the street" continues. ♪ once upon a time (vo) you are a business pro.

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welcome back. bob dylan's "like a rolling stone" is making waves in the music world, because it's just release add music video via an interactive video. now, as the song plays, listeners can scroll through several different channels, ranging from qvc to sportschannel. user diskind of choose the own adventure or experience as they listen to the music. let's take a listen. ♪ once upon a time a dress so fine ♪ ♪ through your prime ♪

>> yeah, pretty incredible effort there. joining us now, yoni bluth, behind the music video. welcome. >> thank you. >> what a neat project. whose idea was this? >> dylan's team came to us. they saw we have technology company called interlude that does technology-enabling for videos, a company started by me and my band. we have a band in israel, which is actually pretty famous there, but israel is such a small country, nobody cares. but the company started to enable creative story telling clinics like the one with the bob dylan video. and it lets creators build things that usually, you know, everything with the video, now we can build something that has -- >> just to be clear. how involved was bob dylan in this project? >> so the steateam, the bob dyl team, it's a bold move to do

something like that, to take a song that's -- >> so iconic. >> such a classic and give it modern treatment. >> was it something his team was specifically looking to express in a new video way, or did you go to them with the concept and then work -- >> they loved the technology, and they said, what can we do? we said, why not do a video for "rolling stone," and they said, yeah. >> is the point to emphasize our lack of attention these days? that what it says to me. i'm flipping around, not paying attention, but everything is still the same -- >> yeah, it's like with the phone, the medium, suddenly you watch the tv, but the tv is actually watching you, you know what i mean? one of the things that's amazing, a four-minute video. people watch it more than five minut minutes, and they keep on turning the channels to get the realistic experience. >> how did you get so many different groups of people involved? >> it was actually really easy. when you tell people you're doing the music like "a rolling stone," they want in. >> i imagine you didn't get many

people saying no. how long and costly of an effort was this? >> it wasn't that costly, because we had a lot of people, you know, coming to do this, because they were excited about the project. the filming took about two months and the whole project. but the activity, because the company does interactivity, took no time. it was made flawless through the tools and we were able to launch it right away. >> how do you do something else like this, though? what's the second act? you can't do exactly the same thing again. >> completely. the idea is, you know, when people create regular video, and the way they're thinking about it today, it's, like, one linear cue-rated ride, we'll let people create the playground and play in it, and it comes with completely different ideas, and so many different things. turning the channels is one use you can do with it, but none linear storytelling is such a new, deep medium that we hope to, you know, unveil. >> by the way, you have worked on advertising campaigns for clients, so this is a business for you guys, first, and a creative project second.

>> it started as a creative project for -- we started with the band, and we got the $20 million investment from the likes of sequoia and intel capital, and we have a joint venture with wpp that does advertising things. and today, yes, we're focusing most of all on music, because it's such a artistic form to create the best kinds of stories. >> i want to see billy joel's "we didn't start the fire." it's made for that, right? come on. >> yes. >> i'm sure people are coming to you, come on, we have a ton of ideas, make something magical happen. >> yeah, we have a lot of things. >> and your own band is called? >> it's my name. >> okay. all right. another thing i'm looking up this morning. yoni bluth, thank you for joining us. it's a great effort. >> thank you. jon, we're keeping an eye on markets at this point. not a huge range overall for the indexes. some smaller movers, though, if you look at the likes of the retail space. we're watching the jcpenney. speaking of the segments we've

been discussing this morning. jcp shares up 8% after the company is using deep discounts as a way of fighting back with amazon and winning back share from other retailers. >> we'll see if they can keep the stores fresh after the holiday season, generate enough sales to keep them alive. >> right. >> people hopeful they can. >> thank you, jon fortt. that's it for us. now time for "the half." >> thanks so much. here's what we're following today. black friday blitz. with only eight days to go until the biggest and most important shopping day of the year, who's ready to cash in or out? show cars. the latest and greatest from the l.a. auto show, and who's ready to speed ahead of the pack? we begin with a look at the stocks that have outperformed the market the most. the eight names in the s&p 500 up at least 100% year to date, and in some cases, much more than that. here they are right behind me. take a look. netflix leading the back, up 272%. our question is this -- are they ripe for a sell-off, or can the momentum in these names possibly continue?