>> bigger than the job reports. you don't care about that stuff. >> no. >> except demographics say things will get bigger. >> i predict gdp will be 20% higher 20 years from now. since i'm 84, you can deal with my executors. >> thank you, warren buffett. thank you for being here. we'll see you tomorrow. join us tomorrow for that jobs report. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber on the new york stock exchange. stocks trying to steady themselves from the worst start to october in three years. ecb holds steady. claims weren't bad. a lot of analyst upgrades. warren buffett on "squawk box." our road map begins with that ugly day for the markets. monitoring the ecb news conference. a busy 24 hours for economic

data as adp delivers that strong employment number ahead of tomorrow's jobs number. you'll hear from buffet this hour, as well. >> bank stocks moving in the premarket. upgrades, downgrades and brian moynihan assumes new duties at bank of america. >> showdown approaching in hong kong. protesters demanding a resignation. police demanding an end to the demonstration. >> elan teases the new d as netflix teases new adam sandler movies. ecb standing pat on interest rates. mario draghi says bond purchasing programs will last two years. details to be provided later this morning. here in the u.s., claims fell 8,000 to 287,000. that is ahead of tomorrow's big jobs number. one day after the dow fell 238 points. last night on "mad money" you broke it down on stocks that, why some groups will fall more.

then what names you are waiting to nibble on when the time is right. >> i think a lot of this down turn started when ford motors said latin america, not good. europe, not good. then you see this morning just now, damon cut its forecast a few minutes ago. when i see this thing, i say if you are doing a lot of business in europe, the numbers are too high. we are about to get numbers in a couple of weeks. one of the things we've seen from ford which is a great template is when you cut numbers, the stock goes down. it doesn't matter where it is, doesn't matter what it is, it goes down. we are not there yet for the industrials. that stock is down 10%. >> you say the industrials are exposed to the blast zone. i love that. banks are not going to benefit from higher rates. instead, you look to restaurants, retail, defense. >> it's so nice to be vindicated within a 1-hour time frame. the darden numbers this morning

are so good. dard darden owner told me this is a direct gain when gasoline goes down. sure enough, look at these numbers. olive garden, 0.6% for fiscal september 2015. that was down minus 2.6% before this. longhorn steak was 2.2 before. capital grill, 6.4% gain versus 1.5%. these are great numbers. >> by the way, first time they posted monthly sales in a while. >> october 10th is the vote. the shareholder is going for the board. they propose eight independent directors, got rid of eight directors. that has been a nasty fight that will culminate in eight days. >> i look at these numbers. i think, okay, they got rid of red lob. they are more laser owe focused. when you cut a division, you are

now laser focused. before that you were, what? >> 150% to 160% focused, but not laser. >> maybe you were like dimly lit focus. this is a very good report. i think a lot of it is you see oil. takes your breath away. >> west texas today below 90 the first time in 17 months. >> there is no place to put the darn stuff. pipelines cost four times more than they used to because of environmental regulations. there is no place to put this stuff. epd a fabulous mlp. brought a tanker company to store oil so they can ship the unrefined crude, which allowed the department. we can't find a place to put all the crude. there are areas in this country where crude is selling for $70. >> meanwhile, the saudis are cutting price, aren't they? >> they don't want to lose

share. >> it's not often you hear that, market share of the oil market. >> they don't want to lose share. >> new player on the block. >> everyday low prices. of course, warren buffett on "squawks box" was asking what was berkshire doing in the markets yesterday. >> we bought a few stocks yesterday. we bought a business yesterday, too. if you told me that the market was going to go down 500 points next week, i would have bought those same businesses and stock yesterday. i don't know how to tell what the market is going to do. i know how to pick out reasonable businesses to own over a long period of time. a lot of people do. >> talked about coke, talked about brian moynihan doing an incredible job, in his words. ibm buying some last quarter. >> i have to tell you, what if auto sales peak, would he be buying the fifth largest car dealer right now? one of the things warren buffett likes to do is say, i don't care about the near term. at the same time, if you thought autos were going to have a

prolonged term down turn, in other words, peak autos never coming back. he would not have made that acquisition. >> he is a long-term holder, very long term. what has he ever actually sold? >> he got kraft. >> still owns coca-cola, wells fargo. 7% of ibm is no you held by berkshire, which keeps going up because they keep buying back stock. >> there was burlington, the railroad. he's got a substantial pipeline investment. is he ever wrong? he says he was wrong on the airlines. >> yes, he was. that's a long time ago. he hasn't been wrong in a long time. >> he's a great investor. there are a lot of people who very much want to say, you know what? he's not a great investor any more. i'm not one of those guys. he also gets shown a lot of good deals. i think this auto deal is significant. if you listen to the gentleman

on, what they were saying was, the average car is 12 years old. we listen to mary berra, candidly i think much ridiculed and reviled incorrectly. put up projections yesterday that were quite good for general motors. ford maybe not as good. if the peak auto theory, which is what i'm worried about because i worry about a lot of peaks, i felt better after listening to warren buffett. i don't know. >> you said last night you would not be looking to buy right away. you want to see the jobs number tomorrow. >> yeah. look. it's not a great market. i think there will be places to buy. i don't like to buy companies where i sense the numbers are too high. when i sense the numbers are too high, what happens? why not wait? why not wait till estimates are cut. we had a terrific report from an alcoa factory. ms. morgan did it.

i've been looking at alcoa. it's doubled. i wish it hadn't doubled ahead of this quarter. what numbers can it put up that will make it so it doubles again? it's just very difficult to get into a lot of stocks that have gone up, and much easier to say let's wait for a pullback. i'm not being a wuss. i love the market a long time. i want a pullback. i don't want a fannie mae pullback. >> those are incredibly speculative stocks. yesterday the common and preferreds got completely crushed, but why do you think that had a broad impact on the market? market capwise, there is not much there. >> did you see the volume? there are a lot of people who have been speculating whether it be fannie mae or gopro where there is unlocking of stock. >> 5.8 million shares of gopro unlocked, earlier than

anticipated. >> speculators are coming back immediately. tesla, netflix. i don't want to see a lot of speculation. yesterday one of the things that bothered me and i like this group and think it is a buy, the defense stocks got killed. you read the paper. there is no way our defense budget can stay as low as this. it just can't. you may think that is wasteful spending, whatever. those stocks got hit. they have a great secular growth story. the world has changed. there was a great piece today about russia and putin. the putin biography is selling well in china. i remember 1950/'51. that's the last time those guys were buds. we don't want russia and china to be buds. just saying. don't want another cold war. costly. >> very true. talk about the jobs number tomorrow, by the way. time is running out to nail that number. tweet predictions for nonfarm payroll. use the hash tag nail the number. if you are the winner, a shark

tank t-shirt autographed by the "squawk on the street" team. you'll have until one minute before the friday release 8:30 tomorrow to submit your pred predictions. >> susan li is in hong kong with the latest. >> yeah. we've got new pictures emerging making the rounds of the local hong kong press. reportedly showing that riot police are restocking, openly restocking the riot gear. we are looking at canisters of tear gas. more canisters of rubber bullets. we can't independently verify these pictures, but those pictures making the rounds right now has heightened the tension of protesters behind me. we've seen rally speeches calling for unity and those to stick together for the long haul. there are calls for marches towards the chief executives residence. i should point out there is a deadline tonight at midnight which is three hours away from

here for the chief executive to resign. this has been set by student protest leaders. if he doesn't resign, they have threatened they will occupy government buildings. also surround his personal residence. these are places we have actually seen noticeable police presence at. this is something concerning and we'll continue to watch this here in hong kong tonight. back to you in new york. >> thank you very much for that. susan li in hong kong. when we come back, an eye-opening message from elan musk regarding tesla. >> we'll get the opening trade and ceo of wayfair coming up. one more look at the futures on this morning. dow up 228 points trying to hang on to that gain for 2014. guys! you're not gonna believe this!

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musk. it's about time to unveil the d and something else. the company mentioned october 9th. that leading to all kinds of speculation. some suggesting it could mean the electric car maker is ready

to unveil a new model. in reaction to responses from the twitter verse, musk wrote, i love the internet. comments had me on the floor laughing. no, it wasn't intentional. glad i didn't mention the other letter. >> defense. the knicks are trying to focus on that, too. >> i think the "o" is winning over the "d." one thing i love about musk. he is a movie producer. the guy is masterful. you can say he's taken steve jobs' flair one step further. it is a public company. i always find it funny. public companies are supposed to have a lot of disclosure. if he's got a great thing going, he can get the stock going. didn't he tell us the stock is too expensive? >> yes. >> he should have said, listen, i've got something amazing. don't buy the stock. then he would consistent with

himself. >> right. he told phil lebeau. >> this is going to be the most amazing thing ever. don't buy the stock. a call/sell strategy. because of the hype i generate. >> 5% move on a single letter. what are people thinking this is? they are thinking it's a new model. >> that's the way the world works. a tweet with a letter, stock goes up. >> carl icahn should tweet he likes the car and therefore, is excited about perhaps being involved with tesla. >> he could say i'm focused on the "o." >> is twitter the method of d dissemination of choice now? i am concerned myself. twitter, charitable trust position, i think the monetization is going at pace. i think what could happen, you had that huge world cup surge.

this has become episodic. twitter vibes are episodic. what is going to be the next surge? if you just had in this quarter, you had world cup then you had a decline in users, must you not be concerned? >> stock was down sharply yesterday. clearly in a very bad tape. >> i think that it's an interesting balance between, do you want them to be more monetized or do you want them to have new people who come in from world cup and then they just stay. wow, i like this hotel. i'm going to stay in a residential hotel. make it my hotel. i don't know whether to do that. i believe in twitter as your personal news service. i use it extensively to get all the people i follow to be sure i've's got the news. am i a pioneer? no. that's how people use it. they hash tag it. i have everything about the philadelphia eagles that has ever -- if you mention the philadelphia eagles, i pick it

up. >> that's true. i try to impress you with some arcane statistic, you already heard. >> you had a "new yorker" piece. you were unbelievable to follow. you are the twitter upgrade at 5:00. every day i follow all your entertainment stuff. my entertainment is to find out what's behind the tesla door, alcoa door. you do things. is it fun? >> that's what it's there for. absolutely. from twitter to netflix, netflix announcing it's teaming up with adam sandler to produce four films starring the comedian and actor. they will run exclusively on netflix. current studio commitments are not included in the deal. sandler said, when these fine people came to me with an offer to make four movies for them i immediately said yes for one reason and one reason only. netflix rhymes with wet chicks. let the streaming begin. it's been pointed out sandler is

almost 50 years old. >> what's the problem with that? >> i'm just getting started. >> whoa. that is a slap. netflix rhymes with depends. >> he happens to be a family man. netflix keeps pressing its advantage. whether a deal with weinstein or this deal with sandler. they are still the interloper in a way in various areas of their echo system. >> now you have to say -- i think adam sandler is brilliant. have you watched anything he's ever done? >> i have. funny stuff. >> some of the stuff lately has been not so funny. what was that last one? terrible. terrible. he made bombs. got good reviews for the most

recent picture where he play as more serious role. >> i'm hearing good reviews of "homeland." >> i watched the first three episodes. you are going to love sunday night. >> has it reclaimed itself? i thought it was jumping the shark. >> i am such as loer. you've seen them. i know nothing. >> when we come back, cramer's mad dash countdown to the opening bell. we'll try to undo the technical damage from yesterday. new york state is jump-starting business with startup-ny. an unprecedented program that partners businesses with universities across the state. for better access to talent, cutting edge research, and state of the art facilities. and you pay no taxes for ten years. from biotech in brooklyn, to next gen energy in binghamton, to manufacturing in buffalo...

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we are seven minutes before the opening bell. time for a mad dash on this thursday. we are talking about a couple of stocks down this morning. we do some of the bigger movers. cree we start with. >> i don't want to be too much of a downer. i know we are oversold. i'm focusing on companies that preannounce now. this is a lighting company l.e.d. the curley cue lights that give a weird glow. they are getting better. their business, really bad. by their own admission. decline 20% year over year in their lighting products business. what do they cite? weaker global demand. that's what i worry about. i want to here manufacturing glitches, maybe there was a problem with the actual light.

no. weaker global demand blamed. here is the second one preannounced. agrium. i've been worried about the ag sector. they take down numbers. the most bountiful growing conditions in ages. you just don't need a lot of fertilizer when things are real good. >> you've also got cf and nara in talks. dupont big in seeds. >> should we read into dupont from this? >> i think you would be remiss not to. >> santo? >> yeah. is it not obvious since soy entered -- if you are a farmer, you are doing great. would you think some people think, wait a second, he'll buy

a lot of deere tractors. you don't need more fertilizer or seeds. you'll find ag for seeds is a buy. fertilizer, not a buy. yes, people sell first and ask questions later. i would not be a seller of dupont. that don't matter. i think people are going to say agr uf agrium. let's sell deere, sell agco, potash, mosaic. all those are going to be weaker. whole complex. i'm sorry to be a downer. i have good things. hca numbers. >> maybe that was the "d" alon musk was referring to, downer. >> he is going to unveil a car not as good. he wants the stock lower. he said the stock was too high. >> it's downer. >> gopro. my one word for you. >> got it. the opening bell. and a look at gopro after this.

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"squawk on the street." opening bell in 90 seconds. buffet on "squawk" today. ecb holding steady. challenger lay-offs, the lowest in 14 years. claims good. >> we are not falling off a cliff. it's the rest of the world. mccormick spice out with terrific numbers this morning. i'm trying to distinguish our world from the rest of the world. if we were an island, no country is an island, if we were an island, buy this dip right now. >> before the bell, let's check in with michelle caruso rivera. >> headline is mario draghi disappointed markets this morning. u.s. futures moved lower. the euro is surging. banks in europe in particular getting hit fairly hard. there were expectations for an expansion of the discussion of quantitative easing. they already announced they are going to do some quantitative easing light and expand the balance sheet. there were hopes for an imminent

announcement. >> sounds like he is saying some of this is not their doing. >> there's the opening bell. look at the s&p, the top of why you are screen. at the big board, wayfair, online destination for home finishings and decor celebrating its ipo. we'll talk with the ceo in the next hour. over at the nasdaq, vwr. celebrating its ipo today. we could run through half a dozen analyst calls today. let's start with a couple of banks. ubs on both. bank of america upping to buy. >> we own bank of america. i don't care. i think this is a not great

change. it says bank of america's got that great base. it questions jpmorgan's deposits and growth. i'm not going there. i think this is like a reshuffling. jpmorgan is fine. i don't think you ever are going to doubt them. excellent bank. even though this plays into the trust suit, i felt it was, i think it was more of like jpmorgan is up a lot as opposed to there is anything more to it. i'm trying to make a case if you are selling jpmorgan off this downgrade, get a better reason. the better reason is the yield curve. that makes me don't like the banks going into the quarter. all they do on these conference calls is talk about the yield curve. you may like them, but they don't like themselves. >> time warner getting an upgrade over at topeka, i

believe. then the directv deal going on. >> time warner was a sell. see where that stock is right now. the other time warner cable deal with our parent company comcast, spread there has been widening lately. you mentioned the ordeal. at&t direct. they finally got sunday ticket done. there didn't seem to be any real doubt they would. they made it a condition of the merger. they did. anybody concerned in some way perhaps that deal would not happen and therefore, that the merger might be done can put that away. >> i'm not a chartist. i was looking at the chart of time warner from before the announcement of the takeover until after. >> talking time warner tws. >> it came back to the trend line. if you were a chartist, would you say give me a reason to buy the stock right here. bingo. >> what is important for them,

it's october 15th that ceo is going to lay out their strategic plan. they might have moved that forward had fox been there to lay out the targets they had and how they are going to reach them so they can create a stock price at or above at least what many expect fox might have been able to pay. that will be interesting to see what their numbers are and what the belief is in terms of turner and tbs. >> how did you feel about this discovery downgrade, bank of america, merrill? currency head winds, weak portfolio ratings. >> ratings are down all over the place. there is concern about advertising. discovery has been getting hammered. hammered. >> this has just been a piano coming at us. steinway. >> it's been ugly for discovery lately. >> there are a lot of stocks in the down trends. there is a hidden bear market in the bull market. stocks never left.

look at these oil drilling companies. look at the nat gas company. >> apache, chesapeake. cabot. >> these are fabulous companies and they are all for sale. you want to see something that is a nightmare? look at transocean. don't look at it. it's like watching criminal minds and watching the stalker. >> like indiana jones when they open the ark. keep your eyes shut. >> i don't want to see seed drills. you'll have nightmares. >> doing well today, autonation, carmax, gm. you mentioned buffet. why buy the fifth largest auto dealer if you thought autos were peaking? >> you have a 198-year perspective. i'm looking at what michelle caruso cabrera said. i'm thinking can we withstand that? warren buffett, what are you

worried about that kind of stuff? go after good businesses. always if you are a billionaire, you can do it. a lot of our viewers are saying, i just lost $3,800 i didn't have. i think those people play a role. >> i did want to mention sears holdings. they came out with a press release talking about liquidity. announced their intent to conduct a rights offering. 47% of their 51% ownership of sears canada. it will provide $380 million u.s. dollars cash. they are talking about $1.5

billion they raised in various ways. whether it be the dividend from lan lands' end. over the long term, it does little to abate this massive free cash flow burn sears has been running the last few years. >> very accurate note. >> that was isi. >> i was looking yesterday and the decline in fannie mae and how much they own. >> they own a lot of fair home, a lot of preferred. ackman was one of the biggest holders. >> it was a herbalife. >> jetblue. raised to market perform. their argument is they have lower margins than their peers.

as fuel comes down, they have more room to benefit. >> a jet fuel play. airlines and cruise ships. >> how worried are you? how do you game this out? this abowla situation? >> it's i always tough to talk about, obviously. i know if you go back and look at sars, there is a dramatic decline. i don't want to instigate anything like that. the stocks could go lower again. if you take a buffet view on the cruise ships, you would say why did i cancel that cruise? right. it was the ebola thing. everything i read says it's harder to spread. obviously, i follow everything. we broke in with the 80 peop

people -- >> who may have been exposed to the initial 12 to 18. >> i have tremendous faith in our health care system because they were so prepared. but they sent this gentleman home even though he indicated where he was. not everybody is as prepared as we would like them to be. >> we'll watch that, obviously. in the meantime, dow is roughly flat as europe begins to sag. bob is on the floor. judge, morning, guys. we turned lower a little while ago. some headlines came out from draghi. just put up germany. the headline everybody played off. draghi said ecb can't cut rates further. he also went on to talk about asset-backed security purchases. they are going to purchase nations related below triple b minus. that would include noninvestment grade countries like greece and cyprus.

prices on the upside. there is disappointment here. nothing on the qe program. ads programs, buying covered bond in mid october. asset-backed securities. nothing on it further at this point. let me move on. i was at the security traders association conference yesterday. big 700 traders buy side and sell side. big topic was the known unknowns out there. specifically the democracy protests coming out of nowhere in hong kong. ebola coming out of nowhere. airline stocks on the up side. hilton down. royal caribbean all these stocks hit yesterday but rebounded today. people concerned that the symptoms are five, ten days at more. commodities still weak today. here is your main story for the last month or so. brent crude, copper and aluminum

all to the down side. brent, two-year lows. the last five weeks, this has been an ongoing story. brent down 12%. gold also to the down side. copper down 7%. aluminum down 7%. again today, continuing story is the decline in big exploration and production stocks. every day, 1% or 2% decline. whiting, pioneer natural. shale plays hard hit. becomes more iffy when you get into the lower $80 on west texas intermediate. a number of ipos playing today including wayfair. middling in terms of the prices. wayfair which is a home retailer priced in the middle of its range. jp energy, pipeline operator. priced in the middle. that was a surprise. mlps pricing at the high end of the range. tinto priced below the range.

vwr priced below. we've been seeing continuing pricing pressure in the wake of what happened in alibaba. good they are getting out, but real pressure here. wayfair just indicated opening prices potentially $34 to $37. these are first indications we had. this is well above price expectations. 11 billion shares at $29 the expected range there. roughly $28, $25 to $2. good news. pricing $34 to $37. that's the range. we don't know if it's going to open there dow down six points. back to you. >> bob, thanks so much. >> too many deals. >> you've been saying for a long time. let's get to the bond pits. rick santelli. >> good morning. if you look at a two-day chart of tens, even though up several basis points on the session, that chart puts it in perspective.

the gains in price yesterday are being held on to in a rather dramatic fashion. open the chart up a bit to the third week in august. yesterday's 2.39 yield. that chart really shows us exactly how much of a range we had and how quickly the sell side seems to have dissipated. let's switch to another ten-year. look at the ten-year boon on the day of the press conference. two-day chart. there isn't really a whole lot of volatility going on in these markets based on draghi's comments. they want more details. they meaning international investors. investors all over the globe. if you look at a chart going back third week of august in the boon, similar pattern. albeit about 190 basis points difference to the ten year. everybody talking about widening of the peripherals against the boon. we are only talking a couple of basis points. let's keep it in perspective. look at a five-year chart of spanish ten year. do you note why is a huge difference on the right side?

not really. pretty telegraphed in terms of what draghi is trying to do. bob hit on it with lower quality. they can include like greece. two-day euro versus the dollar, we've come off and doing better. open the chart up to september 2012, we are still close to the established two-year lows versus the greenback. one market fascinating, the two-day yen. had a large reversal. it's i had a large run. carl, back to you. >> thanks, rick santelli. we are on ipo watch waiting for online furniture retailer wayfair to begin trading. we'll talk to the ceo here at post nine. ahead, one of the winningest college basketball coaches of all time, we'll talk to him later on "squawk alley."

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ugh. heartburn. did someone say burn? try alka seltzer reliefchews. they work just as fast and taste better than tums smoothies assorted fruit. mmm. amazing. yeah, i get that a lot. alka seltzer heartburn reliefchews. enjoy the relief. what would a day be without a faber report involving allergan? and sabre, as well. a lot of questions because the

idea offing abegan buying salix is important whether they will avoid the clutches of valeant and pershing square. after the letters that have been written by allergan shareholders, not just the head funds, but t rowe and jackson square. and cautious comments not doing a salix deal or giving shareholders a voice, no surprise to say from what i'm hearing, of course, talks between allergan and salix cooled considerably. are they done entirely? that is not clear at this point. salix for its part, which was facing as well rebellion.

they were merging with that subsidiary and inverting. that deal has no gates to a termination that cost nothing. what i'm hearing at this point, you can expect that may very well go the way of being terminated. that deal with cosmo. that does not mean salix will find itself a partner. those trying to figure out whether allergan is going to go to valiant, i did want to share updates on that situation. >> big kibosh on that sale. >> not clear how the fit is with allergan. >> i have not been a big fan of the fitting. i think the company is a good company.

it's good. you want to broaden your portfolio, allergan we think of as botox. no. it's an opthamological play. >> general electric, of all people, out with their own attempt at a viral ad. jeff goldblum in a mock commercial. >> now you can get successful guy lighting at normal guy prices. the ge link light bulb, less for over 22 years and only costs $14.97. that's 66 cents a year. i spend that on moist towelettes every 13 seconds.

that's too much. >> that runs about 90 seconds. >> i don't want to put light bulbs in my will. i don't want to have to say, i've got a tortoise that is going to live to 110. i don't need light bulbs that will live there. >> does he have gopro on his shell yet? >> i'm worried about the tortoise's head. three years it turns out it's a woman, a female? you put pressure on the shell, it hurts them. >> the shell is very sensitive. >> yes. there is a dachshund video i watched last night. there is a lot of stuff being done with gopro. a lot of it. >> did you see the frog worm video? >> i haven't seen that one.

you say i watch everything. feeble attempt at a bounce? >> yeah. we should bounce. i like the transports being up. that is a nice -- our country is strong. take a pitch from warren buffett. there are opportunities here. rest of the world, not so good. domestic companies doing quite well today. i'll leave it at that. not crazy about the market. >> we'll get stop trading with jim as the dow is flat. more "squawk on the street" back in a minute.

time for cramer and stop trading. >> bears shortfall, constellation brands. they explain away the shortfall which was a beer recall. there is no weakness in beer. i'm going to be studying and talking about the beer industry tonight and all the different consolidations. they reaffirmed guidance. i think people were panicking constellation. the stock is down from its high. they've got a lot of momentum. a miss is a miss. today in "wall street journal," there is a column, a guy is always negative, he was positive on it today. there is a lot of hot money in constellation.

long term buy. buffet. people will be drinking beer 140 years from now. i like constellation. how is that? is that good? >> not bad. >> they'll be drinking beer under that light bulb. >> what is on "mad" tonight besides beer? >> acorda has a great franchise to walk better with ms. might have something for parkinson's. it's an oral. they get right in your lungs, but we'll find out about it. and service max. i like to inform people what companies might come public well in advance so they can put in for wayfair, letter "w." congratulations to wayfair. >> pretty cool they got that w. >> i thought that hotel chain. >> woolworth used to be z.

>> zillow. i don't like murdoch coming in against it. >> see you tonight "mad money" 6:00 p.m. eastern. how to invest like a billionaire. warren buffett's message to the markets. a look at that. still waiting for wayfair to trade here. soon as it does, the ceo will join us on the program. priced at a discount. the biggest question of all, are we in for a more serious correction after yesterday's thundering losses? hour two of "squawk on the street."

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awe factory orders hitting the wire, down 10.1%. you know what? we had several big data points that have done with factory orders just in. last month's unrevised up 10.5% was the biggest month over month positive change going back 58 years when the number series began. 1956 is a long time ago. there is a good chance minus 10.1% comes from the best month over month to close or maybe the worse month. we'll give you more during the santelli exchange. we were expecting a big takeback, maybe 9.5%. this was bigger, but market

analysts picked correctly as the two somewhat offset each other. simon hobbs back to you. >> thank you very much. this is what it looks like when the dust settles on a market after a big sell-off day. 8 billion shares traded yesterday on the market. heavy volume. dow down 238. take a look where we are. the s&p now 3.2% from its record high. let's bring in vice chairman portfolio manager with aerial investments. yesterday was scary. what are you saying to them this morning? >> i would say 3% off record highs is nothing to be scared about. clearly, it was a volatile day but we had a good market. stocks were probably a little bit expensive. now closer to fair value. look to the long term, don't get spooked by being off 3%. >> stay with us.

we are joined from london by paul donovan who is a global economist and managing director for ubs. people are worried about growth with the survey data we had. what does it look like from outside this country? is the growth strong enough to support this equity market? >> yes, of course it is. it's absurd to be worrying about the ism data. there are a couple of issues here. all sentiment data, european and american sentiment data have been prone to volatile overreaction. there is this sort of hysteria in the sentiment data. the ism data has been stronger than expected relative to the growth rate for several months. this is just bringing it back into line with the overall growth data. secondly, the u.s. economy has grown over 3.5% annualized for three out of the last four quarters. trend growth in the united states is at a push 2.7%. you're growing significantly

above trend for three out of the last four quarters. there isn't a growth problem here. >> interesting. charlie, that said, for people who are inevitably concerned with protecting their wealth, protecting and locking in the gains they made, what do you say to them? where do they go in the market now? do they go, for example, to the russell 2000 which is in correction mode down 10% or is that too illiquid in an environment like this? >> that shouldn't be your primary motivation. you have to put your money somewhere. equities are attractive relative to bonds, particularly with a 2.41 ten-year. the high-year market, we would have said bubble levels a month ago and still not attractive. the u.s. economy is the strongest relative around the world. u.s. stocks were slightly expensive.

probably still a little above fair value, but the most attractive asset class. >> the european central bank disappointed folks waiting for some type of action or more hints on action this morning. you see that in the euro stronger. european stocks under pressure. how dependent are these markets around the globe still on central bank surprises? how risky is that going onto a period where the federal reserve has to normalize? >> we saw at the beginning of the year that everybody was expecting interest rates to go up, including us. when that didn't happen, interest rates actually came down, that meant high yielding stocks, dividend-paying stocks did surprisingly well. interest rates and fed action around the world, the different central banks around the world is a huge unknown. you'll have a tough time predicting that better than the market. >> you would have spent the morning listening to what mario draghi said in great detail. do you believe the sovereign qe

is the answer to europe's problems? there was a suggestion overnight it's being overplayed. those in the market will benefit if the ecb is forced to come in and further inflate asset prices. >> i don't believe it's a solution. i don't believe it's even possible. the point of our contemplative policy, which is the proper phrase for it, it's an open-ended commitment. draghi cannot make an open-ended commitment to print money. if he stood up today and said i'm going to keep printing money until inflation hits 2%, 9:00 tomorrow morning, 20 german professors are on their way to lodge an objection. you can't credibly commit to open-ended money printing in the euro zone. the other problem is the banks in the euro zone are not lending out the money. it's not particularly a problem with a lack of liquidity. the problem lies with the failure of banking into mediation. the euro zone today is where the u.s. was four years ago. >> paul, i want to ask one very

important question. oil internationally is 20% down from its highs now. yesterday the saudis indicated they were not willing to come in and cut supplies. they are going to compete on price. what does that tell us about saudi and the need for it to pull in cash at the moment? >> i think what we've got is a situation across many middle eastern countries. many oil producers these days. where after years and years of enjoying strong oil revenues, the fiscal position of many countries do depend on oil revenue continuing to flow in. saudi, not least of them. it's one of the fastest growing populations in the world they need to provide cash to the government to sustain the local economy. >> good to see you both. paul donovan in ubs london. tensions on the rise in hong kong. pro-democracy protesters are

demanding the resignation of the city's chief executive made night hong kong time or noon here on the east coast. susan li live in hong kong with the latest. >> we had interesting activity in the last 45 minutes or so. 40 to 50 men rushed by us. some were pushing carts of supplies covered in black bags. they were in a hurry. they got access to restricted areas in the government buildings behind me. then followed up boo i more plain-clothed men carrying backpacks and splice and being heckled by the protesters. this added to the questions who they were and what their intentions were and what they were carrying. earlier we had local media showing pictures we can't independently verify of riot police openly restocking their riot gear. tear gas and rubber bullets.

all this activity heightened the tensions we are seeing tonight here in hong kong. the number of protesters are fewer than what we saw the last 24 hours. still there have been rally cries to march on to the chief executive's residence tonight. there is this deadline at midnight which is two hours away for the chief executive to stand down or there have been threats and maybe they will occupy government buildings. they might surround the chief executive's residence. i should also point out from the government's perspective, these calls and deadlines have largely been ignored. that's the story here in hong kong. we'll continue to monitor the situation. >> thank you so much, susan li in hong kong. when we come back, we are waiting for wayfair to open. soon as it does, we'll talk to the ceo. s&p in the red trying to avoid its first four-day losing streak of the year. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today.

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warren buffett speaking out earlier on "squawk box" live and discussing how he is investing this days. andrew joins with us highlights. >> what a morning it was. warren brought us a surprise this morning. a transaction berkshire hathaway buying a large car dealership,

van tile. talking about how that deal got done. take a listen to this. >> larry came by. he knew he wanted to do business with berkshire. this is just a very, very good operation. this parterer inshnership appro been adding to years. he wanted to be sure that van tile ended up in a permanent home. we worked out a deal. >> we talked about a number of other subjects in the news, specifically talked about coca-cola. coca-cola changing their pay plan for executives that had come under a lot of criticism. he abstained from the vote earlier. he had been criticized for that abstention. here is way had to say about the shift coca-cola has done to shareholders. >> the new plan makes great,

great sense. they are not reducing the amount they pay. i mean a lot of people will get cash instead of stock. they reexamined the cost of the company in terms of giving up shares and which people would be motivated by shares and which ones wouldn't. they changed the mix to performance shares. >> finally, another hot button issue, tax inversions. specifically talked about his burger king transaction with tim horton that would make them dom sil in canada. warren buffett helping to finance that deal. we asked whether that was being led by taxes or pushed by taxes and whether it was patriotic. >> there is all this material written about how tax-motivated this purchase might be. all kinds of comment. i did not read one article any place, never, where anybody looked up and saw what burger king was paying in taxes.

how much was burger king paying in federal income taxes, the highest figure? nobody knows. all they know it must be a tack deal. the highest number in the last three years burger king paid in taxes was $30 million. this is an $11 billion deal. anybody can imagine paying $11 billion for a business because something is paying $30 million in business taxes? >> i was going to show you a clip of what warren buffett had to say about the stock market. he said about the stock market, the same thing he always said. things in the united states in particular are going up, up, up and up. even if there is a blip along the way, he sees it only getting better. that's what we have for you. >> i love when he talks about buying c's candy in '72. if you can own it 50 years.

>> liesman had different data. warren buffett said all i care about is what is going to happen, 30 years from now. >> more on berkshire's dealership deal means for the broader industry. phil lebeau in chicago. warren buffett is in 2 the car business. >> that's because it is a very lucrative business. look at the deal from berkshire halfway automotive. what is the van tuyl group. 78 dealer partnerships. they have majority ownership. they have private partners in those dealerships. berkshire buying majority ownership there. $8 billion in revenue. a lot of people are saying is the auto industry near peak sales? is it possible it's going into a down turn? listen to what warren buffett had to say this morning.

>> cars aren't going like that. dealerships are. every dealership will sell more cars on average. the pattern changed. the fundamental demand for cars has not gone down. the average dealership will do more business than 30, 40 years ago in terms of units. >> i mentioned earlier dealerships are incredibly profitable. how profitable? their average return on investment or return on equity, in 2013, 29%. that's doubled over the last five years. that's for the average teal dealership. people look at the show room. they are making money off that new car. yes, but the real money is in the back end. the biggest auto dealership profits come from the service department and used car sales. they go hand in hand. the more used cars they sell, the more likely to have that particular customer to come in and have the vehicle serviced.

the average auto dealer made $920,000 pretax profit last year. not surprisingly when you look at the auto dealership stocks over the last three years. you'll notice the big move is from group one. all the auto dealership stocks had a decent move the last three years. it's hard to tell at the bottom because they are being outsized. bottom line is this. there are fewer auto dealerships and they are great cash flow generators. warren buffett is saying, they are not going anywhere. they are going to be around years to come. that's the play is to make money. >> i'm staggered by the margins we were talking about earlier in the week for the ford pick-up truck the f-150. >> that's because they are selling that to the dealership. average profit for ford is between $8,000 and $10,000 per truck. the dealership profit is not going to be $8,000 per $10,000

per truck. if you have a dealership selling upscale luxury vehicles, your profits per vehicles sold are going to be much greater than the mass market ones. when you look at the overall pie, if you will, the average new vehicle sales, they generate about 50% to 20% of the profits per dealership. >> fascinating stuff. thank you, phil lebeau with the buffet deal. up next, the latest on the ebola patient in texas. were mistakes made to cause more people to get infected?

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wayfair debuting here at the noernl just moments ago. having a nice pop at the open. trading up more than 20%. it popped about 24%. the company says it competes with amazon, ebay, one kings lane. joining us here on cnbc first is the ceo, co-founder, co-chairman of wayfair. you must be happy to see that pricing open up 24%. >> we are excited. we think wayfair has a huge future and this is another step on the road. we are excited it's gone well. >> did you wait to see how alibaba, the giant of ipos and e-commerce did before pulling the trigger here? >> alibaba, a huge success in china. we feel the home market in the u.s. is a huge opportunity for us we are excited to continue on the road.

>> talk about your business a little bit. you actually have the furniture. you sell the furniture, decor, houseware on the website. you have invin tentory. >> we work with over 7,000 suppliers. we are able to bring our selection of 7 million items to our consumers at prices affordable. our consumer is usually limited in the selections offered. what we do is we expand that because we don't have inventory and we built the supply chain logistics to deliver them. >> 2.1 million active customers. people don't have a problem buying beds or sofas online? >> we had 2.1 million at the end of last year. at the end of last quarter, up 2.6 million. some folk was want to see items, but folks love the convenience not having to go to the store, doing it in the evening and having access to that huge selection. we are seeing repeat business grow. >> your losses are expanding.

your operating costs have more or less doubled than last year. how long do you think the market will be cool with you generating losses? >> the way to think about our business, our direct retail business grew 73% last year. first half this year grew 75%. i think what we are doing is investing to creating an increasingly unique and better experience. that is causing customers to come back. there is such big potential for our business, investors are excited about. >> do the losses keep swelling? what is the plan here? what is the strategy? >> we ran the business profitably nine years without outside capital. we only took outside capital three years ago to build up the brand. i think we know how to run a business profitably. that gave investors confidence. >> more leverage to home sales

or renovations? >> one of the beautiful thing about our business, you are a onj orders are $200. you come when you need a bath mat, bedding, mirror or pillows. you have a lot of purchases you could make with us. >> what is your key competitive advantage begin what is going to be an increasingly competitive marketplace for all the products you just mentioned? >> absolutely. no one else is bringing an assortment of these 7 million items to that customer with these price points we are. when we wrap the merchandising around it with the photography out of our studioof our studiot differentiated. customers are reacting to the fact no one else does that. >> how many of your customers keep coming back after their first purchase, a good percentage? >> one of the thing driving businesses are the repeat behavior of these customers.

>> we'll continue to watch. niraj shah, co-founder and owner of wayfair. machines will be sprayed to be made. and making something stronger... will mean making it lighter. one day, factories will work with the cloud. one day... is today. whenwork with equity experts who work with regional experts

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the first confirmed ebola patient in the u.s. was released before the diagnosis. that raised concerns about the country's preparedness. >> good morning. we are just learning today state and local health officials have ordered four close family members of the ebola patient in dallas to stay in their home and receive no guests until at least october 19th that. it's end of a 21-day incubation period for the virus. that is a tightening of restrictions placed on them. learning from dallas county judge clay jenkins, the family had guests in the house. they weren't forcing that isolation well. state officials are working on 100 potential contacts. they are casting a wide net. those folks may have had brief acounters or been in the patient's home. they should have a lower number.

there are 12 to 18 people monitoring who may have had close contact with the patient. miscommunications in the hospital resulted in him being released before being readmitted two days later. there are a lot of questions about that. questions how he could be potentially treated. we are looking at names moving this week like tekmira and sarepta. and thinking how this patient could potentially be treated. a lot of question marks with the way the patient was treated here in the hospital. >> thank you, meg from dallas. breaking news from the new york mercantile exchange. >> just got the number from the government on natural gas supplies. saw an injection of 112 cubic fight. that puts us at a total of 3.1

trillion cubic feet. since march, the market has really injected an awful lot and recouped an awful lot of what we saw brought down last winter. we should be in good shape for inventories by the time we get back to that 3.5 cubic level. people are watching oil. we dipped below $89 overnight. that is a low dating back to april 2013. one of the things people are really watching closely is the fact that the saudis say they will discount pricing to china rather than cut back on supply in order to bring prices in line in this market. a lot of folks were expecting to hear opec players, particularly the saudis, saying they would cut back on production. if they are going to compete on price, that could be tough for all the players in this market. back to you. >> thank you very much for that, bertha coombs.

markets slightly lower today ahead of the jobs number tomorrow and that big sell-off yesterday. let's bring in our director floor operations of ubs joins us. where was the initial damage and how bad was it? >> when they got down to the 1952, 55 level. if you look backward at a minute by minute chart, selling began to accelerate once they punched through that. that becomes resistance today. then you got down to the area around the 120 day moving average. josh brown pointed out. that was around 143. the key today, do we take out yesterday's lows? yesterday's low was 1941. you trade below that. people are going to say, here we go again. >> where we are right now. do you consider this oversold

right now? >> yes. it is oversold. strangely, there is a history of weak october 1st being followed by rebounds on the second. when draghi came in with an empty hand, things changed here. if europe worsens, they'll take us down. >> the euro stronger, japanese yen is stronger, and treasury yields higher. some of the correlations are out of whack. >> they are. late last night there was what people call an outside reversal. the dollar saw that reversal against the end at that 110 area. >> what is happening in the oil market is potentially a game changer. the fact that the saudis are willing to compete on price. they are not going to cut back production to keep the price of oil higher.

potentially the price of oil could fall further. what fascinates me are the politics of the middle east and saudis need the oil. and where that takes us. have they driven prices down as far as they have, down 20%? >> the saudis say we are not going to give up market share. we'll compete on price. beneath that in the geopolitical anxiety, there's been pressure on the saudis from the u.s. to hold the pressure down and put pressure on putin and isis. officially it is to maintain market share. unofficially, there may be james bond behind it. >> looking at this wayfair ipo that opened up sharply higher. we are on pace for the strongest pace in ten years for ipo activity. how discerning are people when it come to the appetite for ipos?

does that tell you about risk appetite in general? >> the risk appetite moved up here. there's some high quality ipos. to see so many come and bid at premium shows people can be aggressive on this. it also sops up money that could go into other stocks. >> dow for the year, admittedly, a narrow index, up 190 points for the whole year. what happens if we start seeing headlines dow goes red for 2014. how does that affect sentiment? >> i think you could see sentiment shift. the real crisis or turning point will come if we wind up being down 7% or so. and they begin to weaken from there. everybody is going to say buy the dip game is over. the buy the dippers aren't here. that could help change sentiment. for now, you've got the theoretical yellen put followed by the dip put. we'll see if one of those

disappears. >> art cashin, thank you. >> the ceo of the german insurance giant allianz, the parent of pimco located in germany is to step down from his position next year. he turns 60 next year which is when contracts of allianz board members typically end. >> certainly what i know about gross' record, it's been terrific. it's not heeasy to run hundredsf billions or trillions of dollars. that is a real task. it may have gotten more difficult as the numbers got larger. i don't know. certainly that is true in equities, no question about that.

his record, he didn't attract that money on his personality. >> it basically makes about quarter of its income from pimco. the fact there is more news on the outflows, this is material to the company. we knew that the ceo would go, we knew who the successor would be, but the timing is interesting. >> and that mohamed el-erian maintains his relationship writing economics, op-eds. >> not going back to pimco. also warren buffett said 240 on the ten-year doesn't look like a hot return. he would rather be in equities anyway. >> said one of the greatest investors in equity. >> exactly. >> an indepth look at the state of cyber security. former advisor to president bush. where he thinks the biggest threats are coming from right now.

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the energy sector is slipping along with the price of oil. >> energy getting whacked. this sector is the worst-performing today dropping 1%. take a look at this chart. for the month down almost 9%. here are a few of the losers. nabors and apache. >> rick santelli. >> good morning, carl. thanks for taking the time this morning, jeff. >> good morning, rick. >> true or false deflation is the biggest enemy of central banks and seems to be the biggest motivation for them to move into the gray as to how they interact with various economies around the world?

>> i think the answer to that is they think it's the greatest danger to any economy or market, but in fact, it really isn't. if we are talking about deflation and asset prices for some reason that based on market imbalances, that could be dangerous. actual deflation in prices in the economy is actually pretty beneficial to consumers. if you can buy more things for less money, that is a positive economic force. >> right now, this is the corner stone of obanomics. what can we learn? >> the whole thing is on wages. the fact is that there is no

guarantee that runs into wages. in fact, the discrepancy between wages and prices is the problem. if prices rise faster than wages do you have a major big problem that is a negative factor for the economy. >> if you were to magically take charge in the bank of japan, what would you implement to make the two-decade stagnation dissolve? >> the bank of japan has become the market. so we have to have some means of mechanism for instituting actual market reform where the markets determine resource erurce alloc. true wealth, actual productivity, instead of trying to appeal that restriction over and over again. that is what inflation is. it's restriction. changing a bunch of numbers. it doesn't do anything towards

actual productive economic advance like wages and productivity. >> what do you think the ecb is going to run into should they implement the strategies they now advertising? we have 20 seconds left. this will be your final answer. >> where has that pispillover been? lending is falling as inflation. >> always interesting speaking with you. simon hobbs, back to you. >> that was stunning in so many senses, rick. thank you. >> if you think video games are high tech now, just you wait a few years. soon you'll feel like you're actually in the game. you can control things with your mind.

will that be all, sir? thank you. ordering chinese food is a very predictable experience. i order b14. i get b14. no surprises. buying business internet, on the other hand, can be a roller coaster white knuckle thrill ride. you're promised one speed. but do you consistently get it? you do with comcast business. and often even more. it's reliable. just like kung pao fish. thank you, ping. reliably fast internet starts at $89.95 a month. comcast business. built for business. the future of video games is all about mind control. julia joins us nine with that story. what a treat. >> forget about the consoles or

motion control sensors. 25 years from now, you'll be transported into a game and be able to control it in ways you never imagined. cutting edge virtual reality headsets and neuro sensors offer a window into a future where you're not playing a game on your couch. you're living it. >> gaming could be another part of our life where we go home and we jump into a different reality. this kind of technology can be embedded in various different gears that we wear. >> another biosensor tech company is working on mind control. i train the software to read the difference between me resting and me thinking. i want this flower to bloom. the sensors pick up on my brain waves allowing me to control what happens on this screen by thinking about it. oh, my god, that's amazing. headsets like this one can detect if i'm relax, excited,

engaged, frustrated to change the look on my avatar's face or change the outcome of the game. all these technologies are designed to make games more immersive. they are developing a next generation game called lucky's tail. >> we are just scratching the surface. the connection he people will have to the characters to these games and to each other is going to change everything again. >> down the line, futurists predict you won't need a headset. >> as you start to see technologies in new immersive displays, then people can engage more directly with each other in these shared dreams, these shared alternate realities. >> at usc's innovation lab, futurist jeffrey long envyings when games are played with contact lenses. >> it's possible in 25 years our

game systems are ones you put directly in your eyes. >> will you be closing your eyes? >> you never know. >> what does all this mean for real life? as games become more like life, we'll see life become more like a game, but the gamification of everything.

you can show it in different modes. >> i wonder if this will attract other people to game. >> what would women's games look like, flowers blooming, butterflies and unicorns? >> no one is listening to what you say. >> you may not have it on right. >> we'll rearrange it. it's not the most comfortable thing. they need to work on the technology. make it less invasive.

i won't put it on. >> david doesn't want to ruin his nice hair. sounds like techk in many senses. everybody is in this virtual world and interacting. >> interacting in this world. we're going to see the convergence of the social media and gaming when people can connect in these spaces. >> so people can come in even if i don't want them there. >> i think you have to write them in. but i think that is why facebook bought oculus. >> it's inconceivable that apple isn't working on a head set. because it is one of the obvious ways forward. one of the things missing at the moment. >> inconceivable. >> inconceivable. >> thank you. >> thank you guys. >> oh over to john fort and a look at what's coming up on squawk alley. sorry carl.

>> it is going to be inconceivably good. >> princess bride. you're taking me back. netflix has a deal. first crouching tiger and the hidden water boy. and also elan musk and tesla. he promises to unveil the d. what is he talking about? and we'll look into that and cyber security and security experts teaming with wall street to stop threats before they happen. next on squawk alley whenwork with equity experts who work with regional experts

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. let's send to it kate rogers for a quick market flash. >> go pro falling 11% after news of founders unlocking a big set of shares. they would give 5% of the shares to a -- they created. >> where we are in the markets. extending losses down 65 pointes on the dow at the moment. >> and the dollar also selling

off ye against the yen. against the jobs number. >> tomorrow it's over to payrolls and your chance to win this tee shirt if you nail the number. >> are you going to sign it? >> that's shark tank five days a week on nbc. >> if you are the lucky winner you will receive this tee shirt autographed by the entire squawk on the street team. >> what is the consensus for. >> we promise we are looking for 200,000 plus number. august disappointed at 140,000. so they want to see that number go above 200 which we did see in adp, the private sector.

you have until 1 minute before 8:00 p.m. eastern on that friday. >> good morning it is 8:00 a.m. at netflix headquarters in los gatos, california. almost 11:00 a.m. here. squawk alley is live. welcome to squawk alley this morning. john steinberg, ceo of the daily mail north america. and john fort onset as well. the blood letting yesterday. one of the worst -- in fact this

worst beginning to october in about three years. it's typically followed by a bounce on the second day. not today in large part of the mar mario draghi being seen as the zoimt in europe in storms of the accommodation. then traders were looking to 1941, 1939 and 1936 would suggest we are oversold in some views but of course the draghi matter didn't help. >> you have a little bit of the psychology that pushes some sellers in the market beyond a technical level. and then every technician steps in. yesterday catchen called it that cascading avalanche, and of course when you keep breaking through the levels you need a floor to be able to stop it. >> the data wasn't too bad. challenge layoffs at a 14 year

low. and then berkshire hth hath away chairman talked about stocks. >> since the third quarter of 2009 looking at our businesses they have improved at a rather constant pace. now we heard talk about double dips. we heard everything. they have never decelerated much. never accelerated much. autos are doing worse and houses are doing better. but the overall is remarkably consistent. >> talked about a number of individual names. buying more ibm during the quarter. the executive compensation plan at coke. and in general in typical buffett fashion, don't buy for tomorrow or next week, for next month. buy for ten years, twenty years. even longer. >> le's saying he's hoping the stocks we just bought will go down tomorrow, will go down next. >> buyin