good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen. andrew is off today. the dow suffered its worst session in more than two months yesterday. volatility is once again the name of the game. the blue chip index posting a triple digit move in ten out of the last 16 trading days. that is nearly two-thirds of the time. that is amazing with what we've seen over the last several years where there has been very sympathy trading ranges for most of the session. yesterday down 272 points. that's something that will make you sit up and pay attention. but with the slim number of moves that we've seen leading up to this, this is something

people are paying attention to. >> we almost had a three handle. you're in october, down 300 points, and, of course, germany is not cooperating. the ten-year is solo at this point. but still not as loy as italy. and and where would you butt your money? if you can take an italian bond or a u.s. bond? i have so many things in my head, lisping to the fed comments yesterday, my whole idea about how the fed has potentially set us up for something that could be scary, it's not going to be inflagdz. it's going to be that it didn't work. all of a sudden, europe is in its third recession since the crisis. we're in a slowdown. finally, we've got no remedies

and we finally -- and yeah. and we've tried to lessen the impact on everyone, which is -- you know, you can't blame the fed for trying to do that. but sooner or later, they finally get to the point where -- >> i didn't know about the comments until you said it. he is the minneapolis fed chief. >> and saying to raise rates in 2015 doesn't expect -- >> next year. the entire -- >> we had stimulative enough yet on the crisis. as long as we're below the inflation target, we're going to see the spigots open and he doesn't see inflation hitting until 2018. this is the nightmare situation we talked about, qe 19, qe20. isn't that how they define craziness, when you keep doing the same thing thinking you're going to have a different outcome? >> it stuns me that he was

saying no vote. he's a voting member in 2014. he is not in 2015. >> okay. >> so he's not really going to have a choice. >> but there sa mind-set, though, that could be, you know, shared by other members. >> i wonder how yellen feels about those comments. that will be interesting. >> but they don't believe the 5.9%, either. >> 5.9% unemployment. >> yeah. they know people are underworking and they know the parpgdz rate has been dropping. they know wage growth. >> but they're right, there is a real disconnect for parts of the competent. but the question is, what could the fed do at this point? the problem has all along been that we haven't had movement in washington. >> i would say that's not what it is. we haven't had movement in washington to address what people have been saying all along, uncertainty, obama care, tax uncertainty, all these

things that sum up the work for the private sector, we've been trying to overcome that with fed stimulus and it doesn't work. >> do you think it's a good thing or a bad thing right now that there is gridlock in washington, that nothing can get done? >> i don't want a lot of the things that president obama has proposed over the past few years. i don't think it would have helped. i would like to do corporate tax reform. i'd like to get rid of some of the regulations. i'd like to he up more drilling areas. i'd like to do keystone. we'll we were sleeping, major markets in wall street -- we didn't even talk about ebola. it's october, there's uncertainty, you're not feeling that great about things and you're thinking, maybe i should step aside. you see the cover on the "new york times," these care givers, are they not the heros of the

entire planet? you can't leave people that have it to fend for themselves. you have to go in and change diapers and give them water and -- they're doing all these things. >> just in case you guys vice president seen the cover of the "new york times." >> that's the daily ritual. they have to do it three times a day, get dressed in those suits, go in and scrub things down, change bedding, change diapers. it's just an incredible story. ite an incredible story. anyway, the world is -- who said that? someone said the world is falling apart. >> madeleiine albright said tha she has seen her share of issues. isis, russia, ukraine, a lot of different hot spots. >> people are trank talking about we're dropping five m-80s

per night. they look over and go, oh, let's go take over another village and kill everyone. >> our paranoia may be spilling over. >> maybe it is, yeah. for the dollar markets, i must be buying dollars even though it's not rg to tighten so soon. but not when the dollar is so strong it looks like it's going you have a can i have at sh point. >> we were talking with commercial about germany. also, we were just talking about the fed. the fed will be in focus all day today. the minutes from last month's fomc meeting are due at 2:00 p.m. eastern time this afternoon. investors will comb those floats for hints on when or if the

central bank may start to raise rates. it will be interesting to try and see what yellen thinks about these things to try and figure out who lines up where in terms of the doves and the hawks. beyond the economy, earnings are a topic for investors today. alcoa is set to post quarterly results after the bell. the warehouse club operator posting better-than-expected earnings. same-store sales rising 7% during the quarter. you can see that stock up by 1.5%. fast food giant yum earnings the mark. falling short of estimates. they do say they continue to improve in the region. let's head overseas for the latest on the global markets. sri jegarajah is standing by this singapore. first, though, let's check in with seema mody. that's a good gig, seema.

london. it's expensive, though. >> life could be worse. london is definitely good. but, guys, another tough day for the european markets. you're looking at the ftse 100 down about 30 points. weakness in froons, germany and italy, of course, after europe was sited as one of the main reasons for the international monetary fund to cut its global forecast in 2018. i am saying germany needs to start depending on frukd. now, a lot of focus on the currency space, specifically the resilience of the u.s. dollar. you were just touching on that, joe. the euro continues to weakness against the u.s. dollar been with the earnings season kicking off, a lot of concern about the impact of the strong dollar on earnings from some of the multi nationals. keep in mind some of the names that have high exposure here in europe include mcdonald's, philip morris and i.t. consulting firm ex sen temperature. lastly, a big mover in today's

trade is tesco. today, the stock is rebounding and hsbc upgrading that stock to neutral. so one of the bright spots in today's trade. joe, back to you. >> seema, thanks. now let's get over to sri jegarajah. sri, what's going on in your part of the world? >> hi, joe.. morning. >> it was a rough day in the asian markets, as well, with this exception. the shanghai composite outperforming today. up by 0.8% at the settlement. now, remember, the shanghai composite came back after a five-day hiatus. the golden week holiday. and it was the property developers that shined today because just before the holiday, we did hear from beijing. we did hear about stimulus for the property sectors. mortgage rates of first time

developers, that brought them up. the feds they got to fill it today, as well. otherwise, a fairley grim market. the nikkei 225 underperforming. remember this correlation with the currency market and japanese equities still very, very strong. we saw the japanese yen. because of the risk aversion in the global market draws something of a safe haven bid, the firmer yen hit some of the exporters, brought down if nikkei 225. just a quick word on the greater china markets, we got a surge report from hsbc saying they expect the shanghai composite to end 2015 at 2800. the hang seng at 25,000. they're putting it down to more targeted easing by beijing and reform from drn on the state-owned enterprises. very quickly, ring help today, a

lot of queens are being asked about the incoming approximated of the country, whether his reform agenda is going to be certain because he doesn't seem to be getting enough support in parliament. back to you now. >> sri, thank you very much. it's great seeing you. joining us right now for more perspective on the troubles in europe is michelle caruso cabrera. michelle, pretty big problems. >> and here is what's amazing. remember the summer of 2011 and how scary that was for europe? the european know is now worse this summer than it was the summer of 2011. in 200121, the process were in the periphery do you think we're out of let field? >> pretikzs were 24er7 going to be bad, but he we doevent annoy

how bad. you can see germany's gdp. last quarter was negative. if you get this current quarter to be negative, as well, then you have the technical reception definition. it wasn't that long ago when they were in one. so you have to choose with the german economy and add to all of this a lack of consensus about what to do. the german central bank disagrees with what morrow draghi just announced. if you think quantitative easing is coming -- >> can they stop it themselves, just the germans on this? >> it's the only economy over there. they are some sway, don't they? >> yes. but if you're suddenly looking at negative numbers, does that

change your tune? >> i think the moment we see a crisis point, margo draghi is going to do whatever he wants to deal with it. in the summer 2011, jean-claude trichet, bought sovereign debt, he bought greek debt, he bought italian debt. but are we going to get to that point again. >> if you believe consensus, all right, consensus is what should they be doing. they shouldn't be so fiscally austere, they should be more aggressive monetary policy and there should be more structure reform. we have been waiting for more structural reform for some time. that is never going to happen. >> we've been waiting for it here today. the worry that it was going to be inflation in the basement of the currency was the negative

effects of qe would be among the other -- now i think it's >> pan. if with he stay with japan and inflation -- well, i right now, europe is going to get closer, right? >> we have clay feet. this guy said it would be insane to raise rates in 2002. >> he has to be an outlier. >> i don't know. i don't know. they're all significant around, all these burrow accurates sitting in a closed room. >> the idea comes from the sense that the u.s. economy is better than europe. >> but they don't seem to believe it.

>> no. >> let's bring in a couple other voices for this. >> joining us at the table is hans. michael zen, as well. hans, what do you think? >> i think with this inflexion point, right? so to michelle's point, i think the europeans have squandered an opportunity. what's happening there has been entrained for some time. there was the beginning of some green cluhutes of economic activity there. it should have been met with more aggressive monetary policy. if there is a bright spot, it's the euro. at some point, you'll see it flow through on the big european companies. that will help. there is one other thing here. the euro is, what, down 10% from

the peak? there's the internal valuation that's been going on with the periphery. you're pretty darn close now to unit labor costs. >> internal valuation means you force prices lower. greece has suffered. >> italy, spain. what they do is they cut salaries, they cut jobs, they cut benefits. and you force your labor costs. well, when you put the external valuation, now year getting kind of competitiveness. the timing of this gets tricky, but there are some positive forces in training. >> when you look at the german ten-year low, if your inflation expectations are for deflation, if you think prices are going to go down 1% or 2%, 1% looks good, you're going to make 3% on the purchasing power of your currency, right? that's the argument why many

believe they're still to tight over there. that's right. they had squandered an opportunity earlier this year. they could have averted this. >> nikal, how does this impact us? are you as worried as we seem to be about what's happened in the u.s. economy? this is a notoriously troll tile month. it's probably a good idea for a u.s. investors to make a issue wish list of companies based in the u.s. that are high quality sectors. >> shopping list, you mean? >> we would make a shopping list for the holidays. there's a lot of great things going on in the u.s. that very, very different from what we're seeing in europe. we've got a steep yield curve, earnings power, we all have an active fed.

>> when you say a shopping list, that seems to think the overall market won't rebound quite as quickly. >> i think october is a month to be opportunistic. i think there are sectors showing a lot of promise reheren the united states. >> such as? >> we would look at health care. >> because of ebola? >> ebola, of course, is frightening. but i think what's exciting about health care is a couple of things. one, big pharma has clearly embraced biologic and cancer treatments will be exciteding over the next couple of years, number one. number two, consolidatioconsoli.

we like industrials, the cap ex cycle potentially taking off here. we think technology and innovation is going to continue to drive a lot of good runs in these markets. >> hans, do you think about u.s. stocks? a potential opportunity here. a drop of more than 270 points for the dow. >> yeah, no, i think there's a good opportunity here. the reality is even with the pullback we've seen, we're only down, what, 3%, 3.5% from the peak? that's a small change compared to what the volatility that stocks have over a period of time. i think there is a bull market in complacency right now. we've seen it in volatility levels over the course of the year. this is the time because with the dollar strength, the tradeway to dollar dook off at the beginning of the third quarter. this is going to hit earnings on big companies. we'll start to see that pop up over the next four weeks.

and as it does, and as it caught a surprise, it gives people a pretty good opportunity to come back in the market. >> yeah. hans, michael, i want to thank you both for coming in. michelle, maybe we'll see you later this morning? >> yes. coming up, can fans expect another ironman movie from robert downey jr.? but first, check out another effective climate change. the blood moon. >> i was looking for the moon this monk. too many clouds. >> some type of lunar eclipse. >> this is supposed to be a really good one.

welcome back, everybody. today's lunar ee clipt is creating a blood moon. if there aren't clouds where you live, you can probably see this right now. massive parts of the country are able to look up. unlike a solar eclipse, you don't need special glasses to see this. you may wonder why the moon looks so spooky. why does it look so red? it's not because of the -- it's not because of halloween, it's not because of the markets. it's because of the earth's sunsetes and sunrises reflecting

on to the lunar surface. here are the official times for you. the total eclipse will start at 6:25 eastern time. it will continue until 7:24 eastern time. if you're on the west coast, you're going to get a ready good view of it. >> okay. i don't know, lunar eclipses are -- >> they're cool. >> they're not as cool as solar. >> well quarterback wrae, solar eclipses are scary. >> it's like, wow, there's no moon. >> yeah, but you can watch it happening. >> true. but there's a lot of times when there is no moon. when there's a total lunar eclipse. >> you start w moon and less than an hour later you watch it disappear -- >> it's a positive source for things. >> i'm excited about it. the kids are waking up early. they want to try and see it. >> am i going to be here alone when this is happening at 6:25? >> no. i'm going to sit here because there's too many clouds. i can't see it, anyway. >> it's not going to be that -- >> don't be so crotchetty.

>> where did that com word come from? why does it start with crotch? >> but that's why it sounds so nasty. >> why wouldn't there be an ironman 4? makes money every time. robert downey jr., while chatting with ellen degeneres about this new film, "the judge," confirmed that this -- i love robert duvall. they're in the middle of negotiations, but don't expect an official announcement until after the release of avengers. the ironman franchise has been a moneymaker for both downy and disney. the stocks have been trading at an all-time high. up next this morning, a not so yummy quarter for the yum. investment giant posting earns that missed street's expectations.

some big troubles in china being blamed for much of the pain. plus, a sweet new front in the soda wars. the new natural push from a small cola company that has the big guys standing up and taking notice. right now, though, as we led to a break, take a look at yesterday's winners and losers. some big losers on this list. down was down 272 points. we'll be right back.

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good morning. welcome back to "squawk box." i'm joe kernen along with becky quick. andrew ross sorkin is off today. we have some positive news this morning for everyone except squeak emanuel. life expectancy in the united states reaching an all-time high. a report released by the cdc place tess number at 79 years and 9 1/2 months. the life expectancy for a child born in 2012 increased about six weeks from the previous estimates. statistically, women are expected to live about five years longer than men. that chaps my hide. >> look, there's a lot of important men in my life, you included. i don't want to see you guys living five years less. >> no, i know. it would make it easier and fairer if we all offed ourselves

as 75, wouldn't it? >> you know how many people out with -- >> i know, i know. >> i wish we could have that conversation with them again. >> oh, b.b. king, bb was going to do like a 30-city tour. >> he's 81, right? >> 89. he's still a little dehydrated and exhausted. he's 89. why should bb king have been -- >> 14 years ago. >> yeah. >> i agree. >> he hasn't been vibrant and creative and he hasn't been productive and he hasn't enjoyed life. >> i think the wisdom you build up over years is being able to see your great-grandchildren. >> joust to rationalize that this health thing will work, really. it would be easier on all of us. >> my grandma is 88 and just had another new great-grandchild born overnight.

>> it would help us out if we would die at 75. making headlines this morning, former treasury secretary tim geithner is scheduled to testify today. of the y he defended the defe insurer during the financial crisis saying it was necessary to provent the country to plunging into a second great depression. a lawsuit brought by hank greenberg averages it cheated shareholders. it was essentially a lot of the other banks. it didn't include lude right? >> right. it made equities and those others appear to be as absolute crap and high rated. without aig, a lot of it could

not happen. >> and the reason you wanted the government bailout from this, look, this is a massive company. as a result, you got to keep the company, people got to keep their jobs, but out doesn't mere the shareholders are going to be made whole on any of this coming through. >> we now know that the company was more than the government put into it. >> we certainly had, you know, for every fortune 500 company that depended on commercial paper and would have been locked frozen out of that market would have had to seek bankruptcy production, you didn't need to punitively punish every one of them for the risk. >> but i think aig was in a different county. who is to blame for the jittery markets? lou brien is a drw trading strategist. germany, lou, that was a shocker yesterday. >> yeah.

>> it's october. we're starting to -- i saw it on friday. this is something that i thought, lou. on friday, the number was great and good news was good news for the employment numbers. so at that point, i was wondering whether an easy fed would continue to help. now we saw those comments yesterday where maybe we never raise rates again and that -- we got a 300-point down draft. it almost seems to me like maybe the positive effects of quantitative easing and t fed, maybe people are like, we've seen this. it doesn't work and we're not going to bid up prices because of it any more. >> yeah, i don't think. i think the last time that i was on with you guys, i think the key thing coming up at the end of the month is the end of qe. now is the market, the volatility that we've seen lately, the weakness in the smaller caps, is that foreshadowing the end of can we.? because the market has not done well when the qe1 is and qe2

ended? because i think things like germany and any other politics was more easily papered over when you knew the qe was going. and that allowed the companies to cheaply finance share buybacks, dividends and things like that. now we're coming to the end of that. as far as the fed goes in general, they don't know when they're going to start to raise rates. you had the unemployment rate fall to 5.9% for the fist time in several years. but you also had wages unchanged from the third time in six months. and a continuation of the sort of things that the jobs that ever increased, they have been plentiful during this recovery earlier this year, the total nonfarm payrolls moved past the

previous peak. the leisure and hospitality sector, which is the average pay there is 3 $6/7 or only 43% of the average weekly pay for private sector jobs. that's increased by more than a million one. did entire increase of the previous peak can be found in those other positives and negatives, but the entire accuracy statistically can be found in the lowest paying sector. so i think that's one of the things, that and the continuation of low inflation is sort of the yen and yang on the other side of the stronger jobs data. and that's the thing that keeps the fed really not knowing when they're going to go. so kotchalakota can offer his opinion. but i don't know that any of them can offer a definitive opinion. >> do you think all these other

things swirling around, whether it's -- i mean, we haven't been talking about isis recently because of ebola. but isis, ee boll what have people on edge? >> yeah, i think so. and i think you can ek trap late this. i can extrapolate that saying maybe china does this wrong. maybe there is some sort of canco of tiananmen and the way it's resolved and that stops trade for some reason with china or slows things down there. ebola, can i imagine that someone with ebola goes out and becomes a typhoid mary and everyone sort of stays out of the pool and, you know, stays away from public things because of that threat? so those are the sorts of things. you can ek trxtrapolate on that. when the qe is around, it's easier for the stock market to ignore those things or at least set them aside because of the other things.

you know, like i said, the fed is allowing them to, you know, finance the buybacks and things like that more cheaply. so those sorts of geopolitics or just the world in general are easier to ignore with qe. qe is ending. they're having some volatility. >> all right, lou, this is the beginning of the 10% or not? >> no idea. i mean, the first two qes ended and we had trouble. we're having trouble coming to the end of this one. there is a peak that coincided closely with the qes. it was 15% to 18%, depending.

one of those times that, you know, europe helped out a lot. and then the downgrade of the u.s. helped out a lot. those sorts of things may not have been such a factor if qe had been active at that time. >> all right, lou. we'll see you later. >> take it easy. an earnings miss from yum brands, a 14% drop in same-store sales in china weighing down the company's results. if you check out the shares, right now you'll see they're up about 1%. this comes after some trouble yesterday. joining us now to break down the quarters, david palmer. david, did this come as a huge surprise? we knew there were some problems in china. >> it is not a surprise. they prereleased their same-store sales numbers out of china. what was new was the margin released for that china business. but they were down 460 basis points. that was a little bit more than we had expected. the other parts were the sales and the profit margins for the other businesses. those were largely in line.

so this release is probably a nonevent. what's going to be more important is the conference calls, a recovery in china. >> do you have confidence in that? the ceo just saying that things are going to be just fine there. >> that is certainly the base case for us, as well. the thing that scares investors is they had three issues in the space of two years. none of them have related to each other, except for the fact that the chinese consumer is clearly skittish about this food supply. they are getting hit.

>> when do they expect that you're going to be managing that better than other places so you bear a bigger -- when something like that happens? >> the chinese press is certainly free to talk about businesses over there. they certainly are. in this case, it was an undercover investigation of a plant -- or a supplier. certainly nailed there. they were hit hard by that. what we think is happening is that kfc is coming back faster, a little faster than pizza hut. the cumulative effect of this issue, they're making each recovery, the six to nine months from the july period. it could be positive by the end of the fist quarter. and that would certainly be a strong rebound year. >> yesterday they said that anybody who deals in protein any

of these restaurants are going to have issues. . >> well, food inflation is not really a scary thing forum brands or mcdonald's. many of these franchise global business businesses thrive in periods of inflation and oftentimes there's a weak dollar correlated to that very inflation that you mentioned. certainly food inflation is picking up and that's one of the reasons why the industry growth rate has been picking up, including yum. that is not the issue. yes or no on buying the stock today? >> we would, for people looking for a year or time horizon, plus there's an upside horizon. up next, the push for

healthier living. putting a dent in soda sales. could a natural sweer ner called stevia, steve liesman apparently helped create it. >> is it stevia or stevia? >> i don't know. we're going to ask the ceo of upstart stevia about the break. as we head to break, a quick check on what's happening in the european markets right now.

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welcome back, everybody. it is jcpenney day. that begins at 8:00 a.m. eastern time. this afternoon, the federal reserve will be releasing the minutes of the last meeting. that comes at 2:00 p.m. eastern time. after the bell, the unofficial start of earnings season is your most favorite time of the year. alcoa will be reporting followed by a conference call that comes at 5:00 p.m. eastern time. that is today's squawk planner. back over to you, joe. >> i am going to be excited about it this time. because, you happen, there's times when the world gets so scary that we can go back into our little what we do for a living and just watch companies and try and figure out how they're fairing. >> plus we'll get some outlooks. >> the rest of the stuff is quite frightening.

stevia, the side effect is -- no, baldness, it's not a steve liesman product. it's this gentleman's. it's an all-natural plant based sweetener. both pepsi and coca-cola have announced plans using the plant. consumers are shifting towards healthier, more natural beverages. let's talk about stevia, whether it can invigorate the industry. it's 200 times -- which is similar to splenda. >> similar to the sweet and low and you said something about it's equal to this. >> this is another one. >> we think of all of them.

>> stevia is a natural product. it's a leaf that is 200 times as sweet as sugar. consumers are looking for a natural sweetening solution. >> something developed in a lab and we know it's a naturally occurring substance so it's not like natural -- it's not like it's the end all be all. >> that's exactly right. what i think is challenging in soda is once a consumer perceives something as unhealthy, it's tough to turn that perception around. we've seen diet soda declining because of that perception that artificial sweetenerings might not be good for you. i don't know anyone ever says a can of diet soda can kill you. what they say is if i can go from two cans to wonder, i would wonder about my health and wellness.

the carbonation -- >> fosforic acid. >> right. it's close to amino -- >> but what is it causes the -- >> i don't know. the doctor told me. but doctors, i'm not smur. anyway, so the fda has said this is safe? >> yeah. in 2008, the fda granted what we call safe status to stevia. interestingly, coke and pepsi have had tremendous success on the noncarbon ated beverages. vitamin water. >> the zero orange. >> i like the zero lemonade. >> i like the orange stuff. .that has this in it. they've had a tremendous amount of success on the noncarbon ated side. >> how many doors of this a year

now? >> so the market for square row calorie soda sess about $100 million. >> how about for unnaturally sweetened soda? >> about a 0 billion. >> and this is earn whunder wha? >> diet soda is declining. this is where the partnership tuesday growth is. my problem is the soda. >> you go ahead. >> check it out. i can taste it a little bit. it's something a little different. >> what's interesting is it's not -- consumers are looking for a functional benefit. in this case, it's no artificial sweeteners. diet. >> this are -- do you have

certain problem with the natural food industries, the end all be all, and now they market this to people that there's things you want a preservative so if does not go bad. because there's no so-called -- everything composed of matter is chemicals whether it's natural or not. >> sure. >> there's chemicals added. if you don't have that, you have emptiness, right? >> it's fair. at the same time, there are certain eningredients folks would perform to consume less of. >> whether it's? >> a consumer perception. >> right, exactly. >> they vote with waelts. >> they are. >> you can take advantage of that. okay, nothing to do -- do you know steve? he was not part of the development? >> no, he wasn't. >> thank you. >> absolutely. >> i'm still drinking it. >> okay.

good. >> who is excited about the blood moon? you? >> thank you for coming in. >> thank you for having me. a hint heard around the world, more harry potter books in the works? we may have the answer in the next half hour, and "squawk box" will be right back. ameriprise asked people a simple question: in retirement, will you outlive your money? uhhh. no, that can't happen. that's the thing, you don't know how long it has to last. everyone has retirement questions. so ameriprise created the exclusive.. confident retirement approach. now you and your ameripise advisor can get the real answers you need. well, knowing gives you confidence. start building your confident retirement today. your customers, our financing. your aspirations, our analytics.

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big day? ah, the usual. moved some new cars. hauled a bunch of steel.

kept the supermarket shelves stocked. made sure everyone got their latest gadgets. what's up for the next shift? ah, nothing much. just keeping the lights on. (laugh) nice. doing the big things that move an economy. see you tomorrow, mac. see you tomorrow, sam. just another day at norfolk southern.

up next, tale of two retailers, costco with strong results, and jcpenney about to update investors on financial targets. both names worth taking a second look at? 77 days now, 77, left until christmas.

whenwork with equity experts who work with regional experts that's when expertise happens. mfs. because there is no expertise without collaboration.

worries of growth in wall street, will the global markets feel the bear hug getting tighter? retail round up. costco beats the street, and jcpenney going to tell its story to the investors. will it be a green christmas for the sector? >> merry christmas, ho, ho, ho.

>> no! plus, what's in your wallet? >> look at this thing, it's huge. >> depending on where you live, it could be much more than the rest of the nation. is it time for a raise? >> show me the money! as the second hour of "squawk box" begins right now. there it is, the blood moon, a live shot from the los angeles observatory. check it out. you see the red coloring? that's because of the sunrise reflecting through the atmosphere. this is what you see right now, so if you are not up and outside already, wake up. go check it out. good morning, everybody. welcome to "squawk box" on cnbc. andrew is out today. that was the moon you were looking at. spooky look, the markets were too. dow down 27 2 points.

this morning, 33 points above fair value, s&p up by three and a half points, and negative sentiment over seas, and if you checked out what happened with the nikkei, the average fell to a one-month low on the global economic worry, and bank and technology stocks led the hong kong stocks lower, and european stocks this morning in the early trading there slumping a bit. you see major averages touching the lowest levels in a month and a half. biggest decline right now is the dax in germany, down four tenths of a percent. >> where was that picture from? who shot the moon? >> that was? >> stocks -- >> i don't know, we'll figure it out. >> griffin observatory, probably. >> yeah, l.a. >> all right. stocks sliding on fears that europe's troubles put a didn't

in corporate profits. as we head into earning season, the rising dollar, a fear factor for investors and companies. to break it down, our guest host, david, independent consultant and senior adviser at morgan stanley. also with us, michelle caruso-cabrera, and when did we call you? did we call you -- booked you? >> talked about him yesterday morning. >> yesterday afternoon. >> that's what i mean. here's the point. market goes down 300. we're in panic mode. we need to call you. >> no, that's good. >> but we were thinking of hymn before. >> someone to come in here, explain things, be rational, someone with perhaps eight points to tell us that things are maybe not ending, or maybe you've got eight points to tell us this really is the beginning of something. what do you think? >> you've got a bear market checklist, and you have a

checklist. a bear market checklist causes a 20% decline. is the fed tight ping? >> no, never. >> recession looming? >> not here. >> just a lowered forecast, okay. is investor euphoria present? you'll hear in the hour about the american association of individual investors. it's like 34-30. it's not out of whack. valuations stretched? joe, on a long term basis, we talk eed before, they are egregiously overvalued. that comes from the word meaning flock, out of flock, okay? egregiously overvalued, yes. short term? no. ti finally, banks, small cap stocks and transportation stocks taking heat? yes. that's a negative. >> how many of those -- >> that's five. the last one is bond yield spreads. are they widening? they are a bit. >> how many of the -- how many of the bear market things?

>> three flashing a red light. three are flashing a red light. that's why the market is trying to come to terms with this. there there's a direct checklist, a 10 % correction. china. people worry of china slowing, geopolitics which michelle is -- >> including ebola? >> that's number seven on that list. >> oh, it's got its own. >> so china -- europe. this is the thing that's sort of -- >> sure. >> germany lowered. the next one is corporate profits up 4%. >> how many are here? don't pull a rick perry. >> supposed top seven. number four is corporate profits. number five, hourly average earnings. not the unemployment rate, but average hourly earnings. they have been sloppy, okay? 2 %. take out inflation. okay. number six is the venezuela, puerto rico, other things that

are out there. >> not worried about that. >> not worry about that. >> do you have notes on this? how do you do this? all there? >> seven is ebola. >> this here is the markets, how they have been doing, okay. >> that looks like -- >> germany's down 18 % thus far this year in dollars. >> that looks like the ravings of a lunatic. >> great point. >> i do this every day. some people learn by writing, some by listening. >> what did you decide? between 10 and 20? so 15? >> we've gone 719 days without a 10% correction, okay? this is the fourth -- >> 719 days? >> trading days without -- >> trading days. >> it can still run further, and that is my bottom line. this is a healthy period of pause, retrenchment. we have not had those healthy periods. >> right. >> i would say to you and all your viewers, loyal viewers, if you have not had your flu shot. get it now because the last

thing you want to do in this market environment, in this world environment, is to come down with flu-like symptoms at a hospital. so you want to get your flu shot. everybody that's watching. go get your flu shot as soon as possible. that connects to the market. the market is basically taking a flu shot. >> let me ask you this, michelle, as long as you're here. why is it that suddenly these relative rates in europe where, you know, people said, well, how can this be at 10.3, italian below that, why go through 300 points when the fed has so much cover continuing to -- >> bigger balance sheet, et cetera. >> yeah, but -- >> yeah. >> we have no worries about rates going up. why isn't the market go, wow, let the good times roll, why down 300? >> part is concerns that you got 46% of revenues frustrate s&p 500 come from overseas, right? you have et strengthening

dollar, and earnings, but on the other hand, though, you know, david points out, the german market is down much bigger when you price it in dollars. i think, if i'm an american incei investor or anywhere in the world and believe the dollar is going to continue to strengthen and think the u.s. economy is relatively better, why wouldn't you reallocate assets to the united states because you get the double whammy. if you bought a european stock, now it's declining, you're not just hit on the stock, but suffering on the currency. >> the question becomes for the u.s. companies, how much are they hurt by the stronger dollar if selling overseas? >> difficult to know. only 200 out of the 500 break it out. firstful all. >> s&p 500. >> exactly. you don't know if they hedge in the first place, and there are weird things, there are technology corporations that say 100% of the revenues come from overseas because they are selling into production facilities overseas rather than

making -- it's difficult to tell. i mean, the of runs are there, right, general motors, consumer discretionary, big, big impact setting overseas. the rest is hard to know. countered by an invester asset allocation, why go in a currency rather than a strengthening currency. >> you just know, man. don't show up here without a couple lists with like seven or eight. ? joseph means he shall add, okay, in hebrew. you always add to the wisdom every day, but when we basically morgan stanley, morgan stanley increased the allocation to u.s. high quality growth equities, and so we're now have taken -- added some. >> last time, they are just one of the people to pay you for your analysis and insight, right? >> i hope someday you'll pay me. >> i know you do. i think we pay you. yesterday, market's down 300, we

tried ghostbusters, who you going to call? they were not around. next guy weapon came up with was your, right? >> thank you very much. >> you're welcome, and thank you. >> thank you. >> it's a pleasure. >> you're going do be around, right? >> she has a suitcase packed next to your desk up there. >> all. >> she's the chief international correspondent. >> but to leave that quickly is amazing. >> let's talk about shares of costco. they are moving higher in the premarket trading of the warehouse retailers beats stimts on top and baht 2078 line with the earnings report. costco was help by increasing revenue from membership fees. in addition to costco, another retailer, jcpenney holding a big investor conference in an hour. the retail reporter joining us right now from that event, and here on set with us is jay rogers, worlgd wide express ceo, courtney, start it off. what do we expect to hear today? >> yeah, so today here at the

analyst day, the first one the company held in three years, and we know that all the trouble that the company has had over the course of those three years now, mr. mike olman is back in as the ceo. we don't know how long he's going to be ceo, so that's one of the things that investors and analysts alike want to hear today. the plans for the ceo search, are they ongoing? someone in the top spot that's not mr. uman, and when will it happen. financial projections, it's been quite some time before jcpenney gave investors and animal ealys go on. projections vague at best. gross margins and costs are the faye mori financial metrics analysts want to hear as well as progress on the ceo search. >> what's the state of jcpenney

today? a five year chart, down from the 40s. is this retailer ever going to get back to its former glory? >> wow. back to the former glory? that's an interesting question. they are operating so much better now than it was a year ago. >> yeah. >> they got product back in the stores, customers back in the stores, positive store for store comps, running a 6% comp, running that here in the third quarter as well. >> impressive. >> low numbers. >> really low numbers of. do i think retailing in general will be back to the former glory? i don't know i believe that. you know, i have a fairly apock lippic view of the retailing. having said that, they are doing a great job getting back in the game on retailing. stores are restocked, looks right, marketing to the customer, and they are using price. >> you know, i shouldn't under sell that. i thought the retailer was gone. once you see comps down, 25, 30%, i thought, how do they come back from that?

i won't undersell what they've done to this point, but what's the future look like for this? >> i have to mention they are the biggest competitor to sears, basically getting out of the apparel and soft goods business. maybe getting out of business all together, but certainly getting out of that part, and there's app 83% foot print with them and 100% price point overlap. they'll be the biggest beneficia beneficiary, and i think sears was the biggest b beneficiary. >> i thought macy's did realm. >> reasonably well, but sears had, you know, its first double digit comps when penney's was down. i think they benefit until boxes go dark at the other end of the mall. that's hard on everybody. if it's a gradual stepping away from apparel, they get the soft goods business to help them a lot. i expect

margins, continue to run 6% number, and i think if that's the case, the stock will be back up over ten bucks a share. as a matter of fact, i used 14 and plus per share. they bottomed at $5. people who got in near the bottom, they've seen a double already to this point. >> courtney, we talked about the national retail federations' expectations for the holiday season looking for strong numbers of, i think, up 4.5%. what do you expect to hear from jcpenney? >> we want to know the strategy are holiday. there's noise out there with marketing and promotion noise. how is jcpenney going to cut the clutter and get the message to the consumer. that's what they have done over the years, building back brand equity with the consumer. they have not caught on that millennial consumer they hoped to get. maybe we have the older demographic, the older mom going back in now that they had the return to the private label of

brands, but i think holiday is, again, key as always. it's a big time to get a big message out there, and that's what analysts want to know. what's the plan for holiday? >> jim, what do you do with the stock today. >> buy it. i think we're going to have a great back end of the year for retail. retail is easier than the stuff we talked about. retail's got 320 gas coming, maybe less, $30 billion bucks going in the retailers' pocket. better weather than last year, better holiday calendar than last year. one darn good back end for apparel, an that's great if you're macy's, penny's, or coles, anybody doing the broad cased retail for the middle of the consumer. we're also seeing a little bit of growth in earnings, personal earns, not much, but a little, and more people are working. all the things you look for year over year go the right way. the last four weeks scared the heck out of me because data came out not encouraging.

year over year, looks good. >> okay. >> if the stock market does not kill us, we'll have a strong back end. >> interesting that a weakness perceived globally allows rates to stay and cause oil prices down, and that's the way it works. less demand causes prices down, and then you get a stimulus from there. that's better than stimulus from the fed. >> as the similar strengthens, that's a good thing. look the the increases on wages abroad from manufacturing product, they do not look bad in dollar adjusted terms. >> recession, clears the system, and then the demand comes it's real, and you put the economy here and artificial floor and never clear the system. maybe this is the way it needs to happen. >> maybe the handoff won't be messy. we'll see. hand it off to the real economy for a pick up. we'll see. >> he heard us talk about this,

and -- >> did he sp. >> pointing to the hair, a side effect of the sweetener, hair loss. >> thank you for coming in today. >> oh, i don't drink it. >> oh, yeah, you stopped, obviously. >> courtney, we'll check in with you today as things get underway at the meeting there. >> you got the cool bald look there. anyway, up next, the who warning the spread of ebola is quite unavoidable across europe. i wish the "un"was not part of the word, but that's what it said here. unavoidable. they think an outbreak can be contained. details on that. plus, latest on treatments of the patients here in the united states. that's after the break. bag right here.r have a nice flight! traveling can feel like one big mystery. you're never quite sure what is coming your way.

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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. >> doctors and other scientists in the infectious disease area gather for a national meeting today, and as you'd expect, topic of ebola front and center, and meg traveled up to the city of brotherly love, meg? >> reporter: hey, joe, that's right. we are here in phillie where ebola is prompt page news. at the conference expecting to hear doctors about treating ebola in west africa and in the united states.

this week, of course, the pfocu turns to experimental drugs. he's receiving the antiviral drug, and he'll receive donated blood from dr. kent brantley, one who recovered from ebola. the dallas patient is receiving that experimental drug, in critical condition, receiving kidney dialysis. none of the 48 contacts have shown signs or symptoms. of course, there's a lot of questions about increased traveler screening into the united states here. in a news conference yesterday in atlanta, new measures will be announced soon. >> as the president said yesterday, we're looking hard at what we can do to further increase the safety of americans, and in the coming day, we'll announce further measures that will be taken.

>> reporter: and, finally, european health authorities investigate the first case of ebola contradicted outside of africa, in spain. they are monitoring and quarantining, and questions how it spread. the who says today that more cases entering europe are unavoidable, but a spread there is avoidable. you guys? >> all right, meg, thank you. just doing the math on that, nine days since diagnosed in dallas, and, i guess that's good news that the 48 contacts have not shown anything to this point. >> rounded up all the people that -- that's the total hopefully. >> right. gwen, checking in with meg later this morning. meg, thank you. still to come here, rowling drops a big hint. is the world ready for new harry potter books? geting on the hogwartz express. stick around.

we'll be right back. time now for the aflac trivia question. how much on average did the u.s. consumer spend daily last year? the answer when cnbc's "squawk box" continues. and a gentle wavelike motion... aahhh- ahhhhhh. liberate your spine, ahhh-ahhhhhh aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just four days. ahh! four days? yep. find out how fast aflac can pay you, at aflac.com.

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now the answer to today's aflac trivia question. how much did the consumer spend on average daily last year? the answer? $94. >> listen up, everybody. attention, harry potter fans, there is an explosion of chatter on social media after a tweet in the form of a riddle from j jk rowling, cry foe, run amuck, fall away, my wand won't tolerate the nonsense. confused? we were. one reddit says it's an anagram for harry returns. no details now, a week off, no comment. that's good. i don't know who figured out that anagram, but after her

first message went viral, rowling tweeted she's taking time off and the riddle referred to a character set to appear in the upcoming movie. if you want to know how much is at play, listen to the statistics about the wizarding world of harry potter. there's a huge theme park area at universal studios, new rides, and a lot of excitement. >> good butter beer. >> it was awesome. stick around, "squawk box" will be right back. where the reward was that what if tnew car smelledit card and the freedom of the open road? a card that gave you that "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods.

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>> going to get to you. welcome back, everybody. among the stories front and center this morning, the number of consumers filing for new mortgages and refinancing rises by nearly 4% in the last week. decline in mortgage rates boosting@. dow jones wins a judgment against a so-called hot news provider.

brand squawk, dow jones accused the company, a london based company, of pirating the content. they are a component of news corp. check out this picture. yikes. it's gone viral. this is an elementary school art teacher snapping the picture of a great white shark in south africa. >> brand squawk? >> the hot new news service. >> we should sue their ass too, brand squawk? dow jones sued for what? >> stealing the name. >> that's our name. >> a copy right violation to me. >> steve -- stevia is here. new data from adp that drills down on where paychecks are rising. stevia is joining us more. you listened to the discussion? >> market's down by 280 points -- >> yesterday. >> would you focus? people want to know -- they are

scared, and you talk about my head. >> you lead a horse to water. >> but you can't make me grow hair. >> shave it off, get an earring. >> i'm married, have children, and i'm in a rock n' roll band. it doesn't matter. >> you look good. >> thank you, becky. that's what matters. folks, this is big. the private payroll company, adp, making use of the vast trove of employment data for a clear picture of the job market. pleased to review here for the first time exclusively, wages of the workers of adp processes, it's formed in the indentix and where are salaries rising and what regions of the country, and tells us growth in the area, and

john brown in illinois got a raise of -- no, i can't, never moointd. this is general data. the wvi, the wage vitality index up 0.77%. one of the smallest rises seen over the past two years, they go back and do this data before they release live. it's still up on inflation adjusted basis. here's the index, upbeat picture of the wage data. we a lackluster 2012 and the slope increases there, steady growth over two years, joining me now from toronto to discuss the index is who else? mark zandy, putting the indirect target for adp with the other stuff done for adp. mark, why is this something of interest to the investers and viewers out there? >> well, treasure-trove of data, steve. there's a lot of information to come out over the course of when

we do this in the future, but two key things in the current release. one is it really shows how strong growth has been in the private economy. this is measuring what's going on in the private economy excludeing government and real growth in the private economy, excludeing government is 3% plus, and that's been the case over the case over the last sever years, and that's shining through as fiscal austerity fades. >> skeptic says, hey, the government data is not picking it up. why are you and it's not picked up by the government? >> well, in this case, this is picked up in the government data. look at gdp from the bureau of economic analysis and exclude government stepping, that's the good proxy for what's going on in the private economy. that's been growing over 3% on a real basis per annum over the last several years. >> right. >> this data is consistent with

this. what you are eluding to, there's been a substantive pickup in the growth in average hourly wages. >> right. >> wage growth, according to this data, is picked up very meaningfully over the last three years. that's not evident. >> i want to get to that in a second. that's a big story. something we talked about yesterday when it came to the disconnect in our economic polling data, and what's happening in the economy, but let's hold off a second because i want to get into the details here. one of the things we can do with this data is look at wage growth by age. one of the things we see is that the millennials are beating the baby boomers here with wage growth. tell us what's happening in the wage dynamic by age group, mark. >> yeah, so one of the beautiful things about the data is we can slice and dice along different dimensions. you mentioned age, but there's many, many others. we see the growth in wages in jobs among age groups.

you pointed out the millennial group, those less than the age of 34, their hourly wage, base hourly wage growth is meanfully stronger than other age groups. in fact, it's the older groups, over the age of 55 where it's weaker, and maybe because they started out from a low base. >> monitor that over time, mark. >> right. just catching up. >> one of the things we know from the data now, you want to be 16 to 24 and want a job in the south. the south has been a place where wage growth is higher. what's going on there? >> you know, the south and western part of the united states perform better than the southeast and midwest. we see a lot of migration into the part of the country, and cost structures are lower in that part of the country, and so we see economic activity, more jobs, and labor markets develop in that part of the country.

the northeast is really the weakest part of the country in terms of the job market and wage growth. let's get to the wage growth, you know, we had a slight bump in the percentage of the americans, and it's still depressed relative to where it was. you know, joe was saying this morning, nobody believes the unemployment rate, and the economy is far worse than the actual economic data showing. does this data understand this at all? seems to me, market goes the other way, confounds the issue more. >> it does. i think we will see perceptions about the economy shift as it becomes clearer that people's pay increases are accelerating and beyond the rate of inflation, i think it's, you know, for most people, unemployment is kind of neither here nor there because they have a job. what matters is, am i getting a pay increase and is it greater than the rate of inflation? bigger than last year?

for most people until recently, the answer was no, and the perception of the economy was, this is not working for me. the sense is looking at the adp data, getting to the point the market is tightening, we are seeing wage growth. that becomes more evident and affects perceptions, not for the november election, but perhaps for the november 2016 election. >> what does that do to consumer confidence for the holiday, how do you feel at that time? >> peopling better. look at the consumer confidence measures, they are all moving in the right direction. high as we've been pre -- since before the recession. i think this improvement in the labor market in wage growth and up employment will help to support spending. sufficiently that, you know, we'll get enough spending in the christmas season that the economy continues to grow strongly moving into next year. it won't be for another year or two i think of consistent stronger wage growth before people's broader perceptions about the economy shift, and your surveys look better. >> you're reading yesterday,

what the hell were you thinking? >> you're surprised, and he went further, but he's been -- he was a hawk, looked at data and policy, all the way over to the dovish side, as far over as you want to call it, right or left, as anybody out there. he has a simple formulation, joe. we're missing the target. missing the target means we're not loose enough. period, end of story. >> what about 5.9% unemployment? >> he thinks there's -- if the un -- if the job market were truly tight, he believes, and don't slap me with this -- this is what i think, but if it were really tight, then you'd have higher inflation. since you don't have that dynamic -- >> outlier? >> he is. he's part of the push and pull on the center. can't ignore it. >> taking flak on the other side, factor in dakota pulling from the other side. >> but he, to me, he ends what

could be the downside to all of this messing around with the way, letting things go the way they should go. people said the fed is in too much, negative consequences, what if it's not defacement or what if it's japan? >> the quantitative easing results in on economic -- >> allows us not to fix our structural problems like they have not fixed anything anywhere else. we, like -- we make things appear better, but they are not really better, and next time we have a recession, europe's in the third recession, and maybe we don't necessarily continue, and we got nothing left. >> that is the data, joe. >> just spend another trillion dollars on unions, andy. >> no, look the private economy is growing over 3% per annum. >> we have -- >> the private economy. >> i have to thank mark for bringing us the data. this is great to follow over

time, and we'll have to have a heated fomc debate in the next segment. >> only believes his own facts. >> sit here, there's something you're going to like. >> all right. >> when we come back, what it takes to be an entrepreneur, meet the ceo of a company that invests in people and their ideas. the co-founder of endeavor tells us about the power of zigging when everyone else zags. did you miss it last night? the giants move on to the championship series against the cardinals. that series starts in san francisco next tuesday, but -- >> no. >> steve, on the guitar. listen, everybody. >> oh, no. >> oh, that's okay. >> steve's playing at gacia's capital theater in westchester new york. stop by and say hi. >> how much do you pay to play there? >> you don't pay. >> oh, okay. -345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 so when a market move affects one of your positions,

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it's a place where people can come share knowledge and ideas. it's beautiful. that's deep charlie. my selfie just hit a hundred likes...(gasps) a hundred! at&t is building you a better network. the ongoing saga involving algan taking a turn, and they plan to boost the bid for the drug maker according to the dow jones, and the new bid is worth $191 a share in cash and stock. that's a $15 higher than the

prior bid, and it would value the deal at more than $56 billion, and just to throw in one more wrinkle -- get it -- botox? yeah, pretty good. rioters -- can you hang around? andrew never gets it. rioters reports they plan to approach allergan about a takeover for a second time. they had informal talk earlier this year. >> entrepreneurship is not just for young tech savvies, dropouts, and hoodies, but they can run with ideas. endeavor is a global organization that identifies mentors and coinvests in entrepreneurs in 30 different countries. the ceo is here, with a new book "crazy is a compliment, the power of zigging when everyone else zags," and she determined "the next list," and thank you so much for joining us this

morning. >> great to be here. well, you know, my voice on the next list was to say it can't just be the boys in hoodies and startups. not only a are third women and half over 40, but third a nonfounders. this relates to why i wrote "crazy is a compliment," and after working with a thousand entrepreneurs, i got people from in the companies, i need to get ahead, i don't trust my job. help me think like an entreprene entrepreneur, whether i start of my own thing or just take control of my job. >> i love how you say it's not just for techties. drop out of college to get there, but what other entrepreneurs do you deal with have you found? >> well, in the book, i actually talk about a number of entrepreneurs, actually, inside companies, i call them skunk because of lockheed's skunk moms. two moms in clorox, they want to create ecofriendly products.

they test products in the kitchen. they get feedback on the playground and create greenworks, a $60 million line. people stop planning, start doing. they give themselves permission to be contraryian, and whether they start inside their company or start something new, take a little bit of risk. half of the ink 500 companies, the fastest growing companies, started with under $5,000, and with crowd funding, it's easier. you don't have to bet the farm. >> what do you mean when you say "crazy is a compliment"? >> every innovator i know goes against the grain and does something unsafe. they will be u called nuts. henry ford was called nuts, and crazy jack was named that for creating ali baba, but riskier is not doing anything all. it's not just a compliment, but if you're not crazy, you're not thinking big enough. >> you started a path yourself

with endeavor, how did that come about? >> i decided to help entrepreneurs in emerging markets working in 20 countries, including the u.s., but no one felt it was possible to take risk in countries where ten families controlled most of the resources, and we supported a thousand entrepreneurs who created 400,000 jobs and $7 billion in revenue annually, and it's because they believed in themselves, gave themselves permission. what we found holds people back is not financial or structural barriers, but giving yourself permission to move forward with your dream. >> so when you look through the list, what jumps out the most? what were the things you wanted to make sure, aside from making sure it was not just the kids from the valley. >> you mentioned rowling, and she wrote harry potter after being fired from her job as a secretary, and blakely sold fax mere es for two years while she

got going. other things, even in traditional companies, a third of the people on the list are not founders. even if you work in a traditional company today, you have to make a change. you have to think and act like and entrepreneur, or you're not going to move forward. the job's not safe: topple rate of big companies fall faster, companies are falling off the s&p. everyone needs to think and act like an entrepreneur. if you're a boss, create an atmosphere where people take risks. they they they do that, but people don't because they with scared to fail and lose their job. >> in 2008, it's a difficult time to try and foster something like that. people went through a difficult period. the yidea of not a paycheck is scarier thing at this point. >> that's why you don't have to leave your job. if you start it, keep the day job until your idea takes off, but even inside the company you are not safe if you do nothing. michael dell says there's the quick and there's the dead. if you're the boss, allow people to fail. for example, wd 40, the name stands for water displacement 49

40 th try. 39 fails. now there's failure reports. everyone has to reply to what worked and what didn't. institute a culture of failure that allows people, workers, to take risks, everyone needs to be an entrepreneur today. it's not just for entrepreneurs, and crazy is a compliment is a road map to give people confidence and tombs to move forward with the crazy ideas. >> all right. thank you very much for joining us today. again, the book is called crazy is a compliment, the power of zigging when everyone else zags. we preergt you coming in. >> thank you, it was a great to be a part of the list. >> stocks to watch this morning including why shares of smen tick are jumping. falling prices translate into more spending. in so, where? >> check out the futures after the big sell off. this morning, we have a bounce back, up 45 points above fair value for the dow. s&p futures up over five.

the dow yesterday down by over 225 points. "squawk box" will be right back. so i can reach ally bank 24/7, but there are no branches?

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welcome back to "squawk box," everybody, a tornado on tape in kentucky. a roof ripped off homes, and warehouse flattened, but no serious injuries reported. stocks to watch this morning, sematics trading

higher, and they are close to announcing a split of businesses in two. >> another one? >> another one. one sells security programs. the other would specialize in data storage. >> we've seen a lot of activity this week, final injurying. helps stock prices of a coup. investor bankers take them together, put them apart. >> trend of the market. popular to be big and little. >> anti-buildup phase. everyone is slimming down, financial sector, drug sector, computer sector, people are slimming down. everyonements to understand quickly. it is a fee generation device for the intermediaries. >> if you were cynical. point to ties -- apparel maker

ties wider, dimensions, up, down. >> this year pointed tow shoes, last year, rounded tows. >> razors. you need at least four blades. >> joe, it's innovation. >> innovation? come on. that's what i said, if you want to be cynical, you can say a lot is planned. i'm sold on my sneak rs wear out after four months 37. >> i think it's less if you run it. you start to feel it. >> i guess so. or you're getting old. i never know what it is. it's not you, it's my knees. inside the mind of the investor and the consumer from the rising dollar to falling gas rices, those are powerful, and in that number. >> you think so too, right? >> i do. >> that's a e a good thing. pepsi earnings on tap tomorrow, coke near an all-time high, and which beverage stocks should be

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>> with gas prices falling, will the consumer start spending?

where people put extra dollars to work. >> boost returns with beverage stocks? or should they be avoided? >> i can't stop. what do we do? >> grab hold of something, quick. >> what do i do, help! >> we play sectornomics. >> what to expect when the markets open this morning. the final hour of "squawk box" starts right now. ♪ welcome back here on cnbc, business, worldwide, i'm joe with becky, and andrew has the day off. if you are just getting audiotape, shame on you. you missed two hours of show, and the blood moon. we did shoot the moon, and don't

worry, the next blood moon is on april 4th of 2015. >> not as long a way as i thought. >> where the fed will not have hiked rates by probably. >> no. >> the markets, if you are just tuning in, a horrible day yesterday, bouncing 40 points so far. >> looking better. a lot more volatility recently. up and down days, ten of the last 16 sessions with triple digital moves, up 45 points for the dow, s&p futures up five points. among stories today, the fed, minutes from last month's fomc meeting are due at 2:00 eastern time this afternoon as they come through the notes on hints on when or if the central banks raise rates. joe was concerned rs minneapolis

fed president, but seeing how the balance maps up. mortgage prices falling, a jump in loan activity, and number of consumers filing for mortgage refinancing, 10%. >> retail front and cementer, and how many saturdaying until christmas? 77 days. >> something like 11? 11? >> 7 7 days so, like, 11 saturdays. it's not a lot. work in halloween and thanksgiving in there too. >> i saw candy. had me reeling. jcpennye see if it's a different story. there's a conference in new york today to provide an updated outlook, breaking a string of nine straight declines.

31% of adults surveyed say now is aed good time to buy stocks. we follow sentiment for the american association of individual investors joining us this morning on set, we have our guest host, and, charles, welcome. thank you for being here this morning. >> thank you, good morning. >> talk about what you're seeing when it comes to invester sentiment. >> we've seen it worsen a little bit over the last two weeks, seeing bear sentiment worsen, actually increase by 8 points. we saw bears above historical average with last week's survey, just the eighth time in the last year waef seen pessimism be above average. a little bit of cautiousness, but what's interesting, look back over the last 12 months, we have not seen bull sentiments stay consistently high either,

there's distrust in the bull market, and it's been a bull market not loved much. does the market tell you when to buy or a counter indicator? >> counter indicator. it's not high levels that are buying signals, rather over the life of the survey, they get to low levels, that is usually more of a buying signal. when we start seeing it flux waiting around, it's more interesting and not so much a telling sign of what investors are doing. i think we see moods change more audiotape than we actually see allocations checked. >> charles, started this year at 55-19, 55 bulls, 19 bears, now it's 34/30, something like that. where would be a buying signal to you, a short term basis, and

could you say how many investors -- are they the same investers polled each week? >> sure. we saw bulls fall into the t20s. one below meaning outside the typical range is really about 29 % so below those levels, we have tend to see a correlation with the markets rising. we survey a rotating group of members. we sent out e-mail reminders to small members every week. we average 330 people taking the survey each week. some overlap, but also a different mix, but we do see over time we don't tend to see big changes from week to week. we see some changes, but it seems like it's a good indicator of how our members are feeling overall. >> david, what would you tell people right now who are a little nervous about the headlines they've been seeing, nervous about the volatile any

in the stock market. what do you tell them? >> time to be defensive. step back, and we've actually added a little bit in high quality. i think the small and mid cap stocks have really had a hard time, down 7%, 8% so i think you want to be tending towards international stocks that have gotten cheap now with the sell off. >> international japanese stocks and a little bit of europe. you're expecting this to cause europe to stimulate a little bit, causing it to rise. that is what you want to be doing. in the united states, stay away from mid cap and small and stay with the large cap growth good quality global brand type companies. >> david, the guest host, and, charles, thank you for joining us. >> thank you. prices at the pump down. what's it mean, though? does it mean people have more to spend for christmas? a new survey from the association of veerns stores shows a mere 15% of those surveyed spend more compared to

25% who will spend less. here to talk about gas prices in the consumer, the cheefr oil analyst at gasbuddy.com, outlying opinions. we had a guest on early kwer, tom, said you have to think crazy. a lot of the things you say, i want to talk about. we were convinced of the opposite. when prices are up at the pump, people pull on the horns. when they are down, they don't feel flush. >> it really is a holistic sort of personality. when prices go up it's magical, and people stop spending, when price are down, not so much. they want a deal. i paid $2.95 people in jersey but that does not translate to a brisk shopping season. last year, prices dropped, no real lift in terms of sales. >> continue to go down, and it is good, a tax break, of course,

but not to a buck-60 again. >> no, no, that era is gone. >> gone. >> that era basically takes place with a recession or major bank going over like lehman brothers in 2000. >> shale and oil production is a very positive trend for us, but not a free market because sooner or later, if it goes below 80 bucks, people, saudi arabia stops producing, people stop drilling. we're stuck. >> we're stuck, but probably stuck in a range that's going to be much better than what we lived with the past four years. the cheapest since 2010, paying 2.70 in 2010 and so we're not going back to that. you know, the price of finding oil on the margins overseas is $80 a barrel. getting close to that now.

consumers have to recognize is stop recognizing to the notary public sense of $5 or $6 in the middle east events. if we have that, it's because we raise revenue from a fuel tax, not because of wholesale prices. we produce too much more oil, and that's going to continue to ramp up unless we see a decline to $60 a barrel. >> does that mean opec is broken? >> you know, they have been broken. broken on the way up. they did not regulate things, and they are ineffective on the way up. opec has the michael jordan is saudi arabia, and they don't really want to cut production without cooperation from others. that's what i say. if you look at it and look at when will prices solidify? that requires the saudis getting together with russia, norway, and another producer. that underscores the notion you don't have a free and unfettered

market when youk talking about oil. it's like diamonds. i think that hurts oil exports pushing them back until later in the decade. >> tom, $88 for oil in the united states, and brent coming down 20 %. that's got to be hurting vladimir putin. thoughts about the economy effect in russia? >> oh, it is hurting him. however, the one thing that people miss is that he's moving more and more oil to asia right now. he's moving through proprietary pipelines and spurning europe. i do think that there's a chance somewhere down the road that putin, very much a pragmatist, gets together with the opec members, and have curtailments of production. that happens, do you talk about exporting oil and have a free market? i don't think so. i think that changes the narrative. >> libya and iraq have come on, and that's been adding to the supply. other areas we're missing? >> you know, i think we're

missing threats, the threat of venezuela, could default and slip into oblivion. i think there's upside risks on the global markets, and i think a 90 to $110 brent price is realistic. we'll drop below that occasionally, going above that occasionally, but -- i don't know if it's a sweet spot for consumers, but that's probably the neighborhood we'll stick around. >> okay, tom, thank you. >> appreciate. >> when we return this morning, the aig trial about to get very interesting. time geithner's taking the stand again. former fed chairman, following him tomorrow, and that's after the break. taking a look at the futures headed to the break. see green arrows bouncing back from yesterday's big decline. dow futures up 50 points. we'll be right back.

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is your network ready? welcome back, we talked a little bit today about how much of an effect things like ebola really do have on markets and the 300 points yesterday. this is not proving anything, but look at the nasdaq ticker, chimerix is going ahead of one

every four stocks, up sharply, 5%. this is a company that has an experimental oral antiviral drug that works on a lot of different viruses. there's a couple news events that's key tea. one is that both patients in the country are being beggiven the drug, not approved, but trying to treat the patients, the ebola, and also it's call ed -- and they've talked about it, studies out about a different virus, and it -- people -- it's causes a respiratory illness, a common virus, gave it to 48 patients, a mortality rate of 35% over 80%. in late stage trial, it's effective to some extent in the other type of virus, and it's also sort of looked at for maybe something that might work with ebola. >> weren't the other viruses

different? >> all different. >> but there's -- the other viruses all had -- >> actually, all the other ones were dna virus. this is rna, but if there's class of viruses, so that's why it keeps going by. up $1.91 now. geithner grilled this week, and back on the stand today as the aig case continues. mary thompson joining us with the latest. >> reporter: geithner back for an encore today after answering question the from from the plaintiff's lead attorney for over six hours yesterday. in the testimony, geithner says an aig failure would have been scarier than lehman brothers and cause mass phenomenon panic, when he did not pursue e-mails with private options out there, geithner said if there was a credible offer to take the extord yar risk, we would have

welcomed that. geithner answered most employees' questions yes, though, with the phrases, i don't know, i don't recall, i don't recall precisely. he did say he thought the bailout wiped out shareholders, and gouchedded that statement saying it was not accurate and that shareholders benefitted from the bailout retaining what became an 8% stake in the firm, and that's key to the plaintiff's suit. remember, the share hold evehol not believe the government fairly compensated them for the 92% stake the government took in aig. given he's unexpectedly here for second day of testimony, that pushed ben bernanke's testimony off to tomorrow. the former chairman slated to testify today, that will happen tomorrow instead. court opens at 9:30, and we're here throughout the day with updates. back to you. >> okay, mary, thank you. we'll pay close attention. world's most famous investor weighs in on arguably the

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welcome back, everyone.

warren buffet making a bold political prediction this week. >> is hillary clinton going to win? >> hillary clinton's going to win, yeah, i bet money on it. >> you will? >> i don't do that easily. >> talking about hillary clinton with the 2016 presidential election, making the comments at phenomenonture's most powerful women summit in california. we talked before, maybe not completely shocking because he supported hillary clinton and obama six years ago. >> six years, right. let's ask david about the market and politics. >> joseph, what the market's want, what consumers want, what the broad swath of americaments is structural reform. you talked about the fed delaying this. we need education. we need infrastructure. we need investment, okay? we need the debt and deficit to be addressed. we need societal disparity to be addressed and the value of the dollar to be treasured and

prized a bit. those are the things that we need. we need to cut taxes. 35 to 38% versus 20% average for the rest of the world. children know this. this is what's needed. this is what's going to create a sustainable, economic advance and position the united states for growth over the next 20 years, but we're in a muddle through, dysfunctional. august 5, 2011, standard and poors at the end of the day, it was a friday, 5:15 in the afternoon, cut the bond rating of the united states from aaa to aa plus and sited our dysfunction dysfunctionalty. republicans need someone who can raise money. this is a campaign about money, not about issues, and if you look at republican potential cap dats, you've got to look for people, can they raise money? i do not see that. you have a financial -- this is a financial oriented show we're on.

you have a financial treasure chest already been amassed by the candidates on the democratic side. you see to figure out people who cannot only make these structural reforms, but who raise money to run a campaign. >> yeah. i don't know. we will -- the whole u.s. economy's done okay in the last six years because it's a resilient, good economy, but i mean -- >> it is good -- >> stop talking about entitlement reform. >> that's at the bottom. >> we have obamacare too. >> in the march of 2009, net worth of us was $55 trillion. today, it's $80 trillion, up 25 trillion. of the 25 trillion increase, 21 trillion is stocks and bonds. only 3 trillion, joe, is houses, which is where most of the broad people -- >> what was? 2007?

>> 2007? 2009, it was 50 trillion. it was 70 trillion. >> above where it was. >> ten trillion above that. but this is -- this is basically simple math. you got -- you got to basically reduce regulation and taxes, and that's -- companies are not hiring. >> i think they talk, right? >> sometimes. >> well, of course. >> yeah. so do you think they would be friendlier towards the private sector? >> well, i think she and he were driving in arkansas, and somebody put gas into the suv that was driven by the secret service, and she said, let me tell you, if i had married him, he went to high school with you, he says if you married him, you'd be the wife of a service station attendant. i said, if i married him, he would have been president of the united states. >> bill clinton was a more

central president, closer ties to the community. >> talking inversions too. >> you know, this is great, what you're talking about. basically, he signed nafta. bush set it up, but he got it through. >> reformed welfare. >> can bring everybody together. he reformed welfare. i think the markets would view this package that you're talking about. view that positively. we have got to get gridlock -- unlock gridlock, markets view that positively. >> see hillary clinton as a hawk on foreign policy as well. we'll see. you know, just the private -- to me, it just -- not pro-private sector, just so crazy. there's a disconnect knowing that the jobs we want to create are not government jobs. because we have to pay for government jobs with tax revenue from private jobs. >> it's risen from a trillion overseas to two trillion overseas to bring here, invest here. >> i think that would do that too, and people say, well it's

not towards hiring. say it went to dividends, what are they taxed at now? >> taxed at -- >> 30%. 40%. every dime went to dividends, how much revenue is that for the treasury? $800 billion? >> half of the -- >> 2 trillion, it would be 40%, that's $800 billion. if it didn't go to hiring at all, the money would be here rather than over there and some of it would find it's way in the treasury. >> put it in the private sector. >> even the worst case scenario is that it's not used for hiring. goes to fat cats and shareholders. >> you could put stipulations on it. >> no, no. >> they tried last time. >> why put stipulations? they do it again, well, you combine bringing it back with lowering the rates, not happening. >> the u.s. investor has 44% of his and her asset allocation in stocks today.

europe is 34%. japan is 7%. we have -- and the japan -- that's 50% in cash. the united states individual investor, the household, is 20 % in cash. >> huh. >> there's cash on the balance sheets of corporations, cash sitting in people's asset allocation, and it's not being invested in companies or in assets. it's m&a, dividends, that's good, but it really doesn't affect and help the bottom 880%, which for this country to grow, they have to move fu too and our future is in the hands of vo e vocational schools, high schools, and we have to focus on that and invest in that. >> david the guest with us this morning. coca-cola is bright spot in the market, hitting a 16-year high this week. a sector look at beverages after the break. prepare to vote in the squawk poll. which do you prefer? coke, pepsi, or neither.

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welcome back, everybody. ksoatch this morning, software giant, sap, under pressure. a rare published report in germany suggests sap's current quarter is not going as well as hoped. sap would not comment on that report. i believe we have steve standing by. >> yeah, thank you very much. charlie evans, chicago fed president, speaking this morning making dovish comments saying significant under utilization of resources remains in the u.s. economy. concerned we will not hit 2% inflation target, fed's goals, quote, in a reasonable time peer, saying a balanced approach to monetary policy calls for been extraordinary patient in raising interest rates and mentioned china and europe saying slower global growth could hurt the u.s. yesterday and today, a flight of the doves by the minneapolis fed president, new york fed president, and bull dudley monitoring the hawks to see what

they say, and underscoring your question from 6:00 this morning, what does yellen think? she speaks next week. tomorrow, in washington covering fed chair dan fisher. maybe we'll get clarity on where leaders stand on critical issues. joe? >> a dual mandate and you're way below 2 % on inflation number and don't believe the 5.9% on the unemployment number, the knee-jerk response based on what you were instructed to do is to stay extraordinarily dovish and accommodative, and i think it's much more than just a coincidence we heard yesterday about inflation low for a long time. same words from this guy. >> he mentions that -- evans does, i side with him on this issue. >> and i don't know, saying considerable time, considerable period, whatever, but we got a

number of yesterday from their saying 2018. >> 18. >> we're supposed to raise rates in 2015. >> right, ryight. using the word insane i guess to raise rates next year. >> i think he did, yeah. >> joe, i don't think that's the center of the board believes that. i believe they want to begin to raise rates every so slightly and be patient about it, but -- >> as you mentioned, steve, the ends end up pulling and tugging the center. what impact does it have to have fed officials, and does it push off the idea of june? >> don't forget in the context, a second dissent in the last meeting with a possibility of a third with the new cleveland fed president, and, you know, she was the research director for charlie poster at phillie and made comments of concern about low rates for too long so that's a possibilities. it's hard to handicap, becky, because it will be and remains

the main challenge for the new fed children, janet yellen, and she has to do what bernanke did skillfully, steer a path between the two ends here. i have to say in the last several weeks or so, i saw the ends of what i think is diverge, move further apart, more to dissent and less towards consensus on doves in terms of raising rates. >> will be interesting and something to watch. steve, thank you. >> sure, thanks. >> what do you do with beverage stocks right now? time to buy? big moves in the sector this week ahead of earnings. domm chu is here with more. dom? >> well, joe, when you speak about inflation like you did, one place you'll see it is in consumer kpeens, right? soda companies so welcome to "squawk box" soda if tfountain. over the past month, the beverage gripe is the single best performing industry group on a one-month basis, and all the companies, except the last

one, are part of the s&p 500. let's look at the performance over the one month. coca-cola up a very respectable 5%. monster beverage energy drinks, coke cola has an equity stake in it, 3 % up last month. snappel up 3%, and pepsi co up 2%. this one here, soda stream, got all the headlines yesterday, poor preliminary results, questions whether or not people want to do the whole do it yourself soda at home kind of concept. down 34% over the past month losing 20% just yesterday. now, look at the major companies here, and that's coca-cola, and they say that coca-cola's investment in monster may have a takeover the company. he says it's a good strategy for

them, and with pepsi, it's key. tomorrow morning, they'll report earnings and there's an indicator for whether or not there's global demands. especially in emerging markets for the products. pepsi made a huge bet on the fact they want to keep those soda and snack foods together, guys, so coca-cola, pepsi, two big names, but not all best performers. guys, back to you. >> as dom mentioned, big moves for the soft drink giants this week when warren buffet was on the other day. he told us he was bullish on coke's new compensation plan. equity analysts at deutsche bank while we do that, we want to know, which do you prefer to drink? coke, pepsi, or something else? the squawk poll is open. vote at cnbc.com/vote. bill, do we like the pure play that is coke in terms of beverages, or do we want -- i love anything ending in tos --

fritos, cheetos, burritos. i like them all, but i get thirsty. >> i like them both. it's not a cop out. they are two companies and mass cost saving opportunities here. coke is their activist. they saw what happened to pepsi with the whole thing, than will not let that happen to themselves. there's costs to be taken out of coke. moreover, there's a rational pricing environment now in the u.s. i think they are under charging for the products, a lot of inflation, competitors are following, i think they understand there's a low volume growth environment right now, and so they take that, reinvest to improve profits. >> so do we -- if we have to figure out whatted to do with these, do we care if they sell in the united states, care

narcoti national, china, what do we think? >> top line perspective, look at ogranic growth. they don't care about the currency impact on the top line. bottom line, numbers have to come down clearly, currency's a problem for the international companies i follow. yeah, i think the international business drives the multiple. the per capita consumption rates are so much lower in the markets. coke has an amazing distribution network globally. there is a considerable per capita cop suggestion, happening when emerge markets pull out. the stock's down a little because of the emerging markets have been awful in terms of con suggestion, but, you know, we like, most others, are long term bulls on consumption behavior of consumers. >> people like carbonated beverages for the next how many years? don't have to worry about that? >> i don't think so. as long as they like beer and cigarettes. shouldn't compare all together because they are not the same, but, no, i think, you know, carbonated soft drinks are a

wonderful thing for the people to consume in the markets. >> who is long tobacco anymore? that's only an international play, isn't it? >> i don't follow tobacco stocks, but great cash flow businesses. >> we should point out in the pool, 7500 votes in, coke edged out at 53%, and pepsi 47. >> all right. thanks, bill, see you later. >> thanks, bye. protesters hurt the sale of the vivid pink diamond? look at the pictures of this. robert frank has that story after the break. markets this morning look like they rebound somewhat. actually, i take it back, not as they had been earlier, dow futures up by 19 and a half points above fair value after a decline of more than 225 points yesterday. we're going to head down to the cme and hear from a trader on what's moving markets today.

"squawk box" will be right back. $21. could something that small make an impact on something as big as your retirement? i don't think so. well if you start putting that towards your retirement every week and let it grow over time, for twenty to thirty years, that retirement challenge might not seem so big after all. ♪

welcome back, everybody, again, look at the picture. the futures are pointing into positive territory, but they've come back off the highs of the morning, dow futures up 18 points above fair value. how much would you pay for willie nelson's braids? well, $37,000 was the highest bid at auction. we have fake ones. >> oh, they're fake?

>> yeah. these braids, though, were from 1983, part of some 2,000 items that belonged to the late waylin jennings who passed in 2002. they had a hit, mamas don't let their babies grow up to be cowboys. it's not known who bought the locks, but that's creepy. >> a little weird, and we have some. we wore them on air. >> from road house. >> a head band. >> with the braids. from a restaurant. >> right. so -- so -- fall auction season hitting hong kong with high profile offerings december lit the excitement over a vivid pink diamond. there was a light crowd apparently. i don't know why, robert, at the auction thanks to the pro-democracy protesters. that's why. our wealth reporter, robert frank, joining us with more.

how many karots? >> i'll tell you in a second. this protest did not stop the auction inside with bidders online. the best seller was this 8.4 k diamond going for $17.77 million. it's an internetly flawless, fancy, purple pink diamond going above the estimate, said to be selling more than $75 million worth of jewels in the sale. the other big seller was wine. broke a record for the most expensive wine lot sold, 114 bottles going for $1.6 million. that's $1700 per glass. the seller was jim clark, the founder of netscape. the lot sold for $9 million and sold $60 million of art over the weekend, and collectors say

unrest in the world is actually driving the wealthy to put money into hard assets because, look, if you can put a diamond in your pocket worth $18 million, you can get on a plane, bring $18 million to another country very quickly and easily, and then you have that portable store value are panicking. >> they want to have a secure, portable asset. so, yes, this is a worrying sign unless you're selling -- >> i can't imagine why you would cough up that money for something like that otherwise. >> for a diamond? >> yeah. i don't know. come on. >> it's nice. >> so big looks fake, no one would believe it's real. >> well, among a certain crowd they'll believe it's real. >> i hear that a lot. no, go ahead. [ laughter ] wow. how many karats?

>> 8.4. it's big. it's wearable. they mounted it on ring for security reasons. they look ridiculous, but this is -- they told me, practical because you can wear it on a ring. >> they have a different idea of practical than you and i. >> they certainly do. >> there's so much money, they don't know what the heck to do with it. >> shoving it into something safe they can move quickly. that's art, wine, and collectibles. we might see the most expensive sculpture sol in the fall auctions this fall with a $100 million sculpture. unrest, rather than hurting the market, it's a weird market for collectles, but it's helping. i don't know -- >> when you see build ups like this of concerned wealthy investors doing things like this. ever led to things in the future, or just -- >> in the past when we --

this is such a strange economy right now. in the past when the world economy has gone down, the auction markets go down. when stocks go down, options come down. this is decoupled, and i don't know what will ever take down the collectables market. it's going to happen, but it's weird. when markets are good, they put money in. when markets are bad, they put more money in these things. i never seen it decouple like this, i don't know what takes it down, few were now, they keep going up. >> robert, thank you. >> thanks, guys. when we come back, more on the market with david, and right now, though, headed to the cme for a check on why futures droppdro dropped within the last ten minutes. back with that right after a quick break. tomorrow on "squawk box" business titan ken langdon, founder of lowe's, and leon cooperman, investment ideas and why all hedge funds are not the

same. starts at 6:00 a.m. eastern time right here on cnbc. guys! you're not gonna believe this! watch this. sam always gives you the good news in person, bad news in email. good news -- fedex has flat rate shipping. it's called fedex one rate. and it's affordable. sounds great. [ cell phone typing ] [ typing continues ] [ whoosh ] [ cell phones buzz, chirp ] and we have to work the weekend. great. more good news -- it's friday! woo! [ male announcer ] ship a pak via fedex express saver® for as low as $7.50. [ male announcer ] ship a pak via fedex express saver® get to the terminal across town. are all the green lights you? no. it's called grid iq. the 4:51 is leaving at 4:51. ♪

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well, trick you, welcome back, everybody. the music industry is taking a page out of the film industry's book calling for new york tax

credits. some music industry leaders are worried about the flight of music production jobs to texas and tennessee from the empire state, so they are pushing for a bill that would give $60 million in tax breaks annually to studios, record companies, and annually to studios and others that help create music. could the tax man be in trouble? the irs warning that taxpayer refunds could be delayed next year. this would happen if congress doesn't take action soon on extending or abandoning more than 50 expired tax laws. could be even worse. if they don't get this taken care of by december, millions of tax filers would have to refile their taxes after congress figures this out. this is one area we definitely want congress to get things straight and figure it out quickly. we have some stocks to watch this morning. emc is among them. elliott sending a letter to the board urging it to do a complete p

spinoff. the stock up about 1.25%. stocks selling off to the tune of more than 200 points. the dow having its worst day since july. so what do we think about what's happening? how do we make sense of some of the market action? jim is standing by at cme, director at tjm institutional services. he's also a cnbc contributor. jim, this morning we looked like we were dealing with a bigger bounceback until just 15 minutes ago. what happened? >> well, october is a volatile month. people tend to worry more in october. if we have to find like an overarching theme of what's happening here, consider this. crude got pummelled yesterday as the stock market got pummelled, despite the fact we've been saying is crude is going down because of the strong dollar. the dollar was actually weaker yesterday. this must mean the main concern is global growth. you look at the bad numbers that came out of germany the night before last. the euro should have gone lower because we have to believe that draghi is all in because he's told us 100 times.

but it didn't go lower. maybe people believe those problems can't be worked through just with that and liquidity. you look back two or three weeks and say we had the week where alibaba ipo'ed, apple had the new products. it looks like it has to trim the hedges a little bit. >> jim, how much do all these negative headlines from around the globe, from ebola to isis, how much impact does that have on a trader's mentality? >> it depends what the mentality is to begin with. we've seen us be able to convince ourselves that everything is fine despite the fact that bombs are going up all over the world. if we're nervous already because the market is more volatile, then all the sudden we focus on those things more. so does it matter? yeah, it matters. >> you guys are more nervous. what started things? why are you more nervous? >> no, we're more nervous because of a combination of market positions. that's always the biggest thing. if people think they have too much risk on and all the sudden they're waiting for the next iron and it doesn't come, that's

what begins the nervousness. headlines usually follow after that. yes, there's bad headlines, but are there worse headlines when isis was actually really taking over iraq before we stopped them? when ukraine was being taken over. there have been bad headlines and we've been able to shake them off. >> we have earnings season coming up. if you hear some positive outlooks from companies, better than expected news s that enough to take the edge off things? >> yes, that would be good because with the dollar as strong as it's been for the last couple months, the big worry is the multinational exporters will have crummy earnings, like ford warned us about a couple weeks ago. if it doesn't seem like that's going to happen, i think that could get us out of the funk we're in. by the way, i don't think this is an enormous down trend. just a little bit of a corrective phase. if they're still lending italy money in the mid whatevers, our stocks still look pretty good. >> sure. good point.

jim, thank you. good talking to you. >> thank you. >> coming up, the power of kim kardashian. one stock moving on the reality star's endorsement. okay. that story after the break.

you ever question the power of the kardashians? just check out the shares of glu mobile. it's a small market cap stock, about $450 million worth. shares of the video game publisher surged after its kim kardashian hollywood title became a hit. but the stock dropped after the game fell in online rankings. it could be losing some of its appeal. it's bouncing back this morning, apparently. i saw an article over the weekend. david darst said oscar wilde, interesting historical figure, but his deal was that you should be famous just because you're famous. >> he said the only way to get rid of temptation is to yield to it. >> he's the first one being famous for not being famous.

what is kim famous for? her dad was a lawyer. oh, yeah, there was something else. >> well, she hung out with paris hilton. >> you're not selling me on this being fundamentally something that should have put her front and center. >> i don't want to take the other side of that argument. sorry. >> anyway, david, so we had a 300-point move a couple weeks ago. then i was out. then it came back on friday. almost up 300 at one point. so are these head fakes? which way -- is the market not sure whether it's happy or sad? >> i think the market is very much in a wait-and-see mode right here. they're looking for earnings. we're at the start of earnings season today, joe. but you're going to see interest rates stay lower for longer for six reasons, okay. >> oh, boy. here we go. >> the treasury cannot afford higher interest rates. you've got the threat of deflation. we've had this whole show today, we haven't really talked about the lack of pricing power. u.s., japan, europe.

you've got the competition with other countries. france, joe, is 1.27%. supply, demand. the amount that's coming here is -- to market by the treasury, is less. you have the need for economic stimulus. this has not been a housing driven recovery. it's been automobile on cheap credit. then you get the asset price stimulus. those are the six reasons you can see rates stay lower. what you want to do is think about markets that have not moved here. japan is one. four reasons. it's a growth story. 10%, 11%, 12% earnings this year and next year. it's a valuations story. price to book is half the u.s. u.s. is 2.8. they're 1.4. it is a structural reform story. you'll see further weakening of the yen. finally, it is an asset allocation shift story. the government pension insurance fund, gpif, which is 1.3

trillion, is currently 12% in japanese equities. expected to go to 20%. >> do you, in your own mind, have a list of your own lists? how many lists do you have? we don't have time to go through. we're done. thank you, david. >> thank you for having me. >> see you back here tomorrow. time for "squawk on the street." good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber. cramer is back tomorrow. premarket indicating a fairly modest attempt at recovering the 273 points on the dow lost yesterday. the worst day for stocks in two months. corporate earnings are trickling in. fed minutes on the way this afternoon