good morning, everybody. earnings season is still going strong. boeing, the only dow component to report this morning. the s&p will be out after. biogen, amgen are some of the names reporting today. up more than 1%, then it's at 16,614 points. an even stronger rally in the s&p 500, up nearly 2% for its best day since october 2013. we'll look at that, 1941. all of the concerns last week. >> is that nasdaq? >> this index is now at 6.6%

since last week's low. the nasdaq had its biggest percentage gain since january 2013. it was up 2.4%. >> that was a gain of more than a hundred points to close at 4419. >> that would be -- do the math -- another half, that would be like 400 or 500 points. >> yeah. >> a big move across the board. >> and you noticed that -- i think maybe the music does not imply up or down. it's not ♪ the markets are dog gogoing d♪ >> of the two music strings that we have. >> i would, too, but it's

confusing now because people at home are like, oh, no, what happened? >> no, no, this is a hey, everybody -- >> if i can say one thing to you who pushes back -- if i have an opinion, you have the opposite. but did coke and mccdonald's yesterday matter, as i said? >> and the day before, did ip about m matter? and ibm was down another 6 yesterday. >> these are singular issues. >> no, i decided that you -- >> you were agreeing with me now, in hindsight, looking backwards. >> with hindsight, 20/20 vision? >> and i do want to talk about something today. i don't know if we'll get a chance with ibm. i think he's selling. i think buffett is selling. i juflt want to pose a question. is he selling? a. b, is he just holing? or c, is he buying? is he buying more? we will find out. >> we'll find out soon enough.

>> but there was a guy yesterday at credit suisse, did you see his price target? 1.25. it's absolutely clear, he made this investment in a -- he's not usually comfortable with. he's down half a billion right now. that's what he's losing, he's lose a billion and a half in the last two days. but from his entry point, he's down a half billion. i think he, a, looks done for buying it now, but he'll look even dumber if he just sits on this thing as it goes 1.25. he hates to look stupid, doesn't he? >> not likes to look stupid. >> why did he buy ibm? why did he buy that? >> that is -- how would i know anything about this? >> he wrote in letter in 2011 talking about the buybacks. instead, we should hope, meaning berkshire should hope that the

shares of ibm don't actually go up too much because we want to be able to buy the back on the cheap. >> all part of the plan. >> he would argue, i think -- and i don't speak for him at all because i have not talked to him about this particular issue. that because of the dividend on that stock, if you could literally hold steady, if that stock could just stay flat, they could -- and they could actually buy the stock back the whole time and get the dividend, that he's actually still ahead of the game. if mcdonald's is a whole point higher, the whole thing becomes problematic unless you get down -- >> kodak. >> it did drop like a rock so far. >> but right now i would argue -- >> but t -- >> down. >> probably he's even with the dividend, he's still losing. it's down more than 2.7%. >> the question is where does it go from here.

>> do you think he's still thinking about what do i do with this at this point? >> i did call and try to get an answer this week. i couldn't get one. >> what did he is? can you do an imitation? >> no. >> carl used to do a pretty good one. >> i can't. >> can you? you're a tech guy. can you do a buffett imitation? >> you're a tech guy? >> you're our tech guy, no? maybe siri can do one. i can check. >> should we talk about yahoo! too? >> we will know when we talk to him the next time. >> yoo-hoo beating, we don't usually say this. they beat on both the top and the bottom line. a bright spot this quarter. was it mobile ad revenue, which is expected to see $1.2 billion this year, investors are liking what they hear. yahoo! shares spiking after hours. take a look at the stock chart.

it's now soared over 160% since marissa mayer became ceo back in july 2012. the company is experiencing growth now. what about yahoo!'s long-term prospects? that is the question this morning. joining us now is edmond lee. cnbc editor jon fortt. guys, i should tell you, i talked to her last night. >> you talked to her? >> she took my call and we spoke. >> was it a conference call and you were just lynching? >> no, no, no. this was a real phone call and we spoke for about a half an hour. >> way to bury the lead. >> i am a little -- i have been a little skeptical. >> i know about henry sleeping in your bed last night. >> henry, that's my son. >> just to explain -- >> i don't want to seem too skeptical, but we've talked about the value of alibaba and whether this thing can --

>> with henry? >> no. we've talked about the table about alibaba and whether you take alibaba out of the business whether the business is worth anything. and i have to say that i was impressed, not only by the numbers, and you can disagree with me, but by at least the prospect that the company was not -- when she started at that company, the whole thing was going to hell in a hand basket quite quickly. even if you decide the strategy isn't all baked and all that stuff -- >> you've been saying for a long time the strategy was not baked. >> i know. i'm saying it. i'm saying it. i -- maybe i'm drinking the kool-aid, but how -- >> how did she change your mind? what did she tell you exactly? >> i thought if you really looked at what happened over the quarter with -- and i want to get your view owes this because you guys are here. but the display advertising pooem piece has been the issue in terms of deteriorating -- >> display advertising for everybody. >> if you look at some of the mobile stuff that they were doing, you could start to see the line potentially crossed. >> right.

>> and to me, that was -- that's the first sort of thing i'd ever see where i thought -- the first time i'd ever seen it at yahoo! where i thought, okay, the mass ultimately works. >> who decided to buy alibaba? >> jerry yang, years before. >> so what does that have to do with your new friend? >> steve jobs had arm holdings when he was trying to turn apple around as an investment with apple. yahoo! has alibaba. i think the message from marissa mayer is leave me alone, i got this. she put some hard numbers on it and display is worse than a lot of people realize, dropping $50 million per quarter. the problem that still exists is that there's no major accelerant that we can see to where mobile is. it gets yahoo! alive. it doesn't necessarily take them to the next level.

it's not clear that they're entirely in charge. how do you get a 2x from here? she needs to do something. >> that's what i -- i still didn't see a vision from marissa in items of what this company is. >> when we were on the phone, i asked, i said, what is it? what are you? she basically said, it's going to be a little bit of a complicated explanation. and i think she's trying to figure out what to do with the assets. but i guess the only thing i would suggest, and maybe i am drinking the kool-aid, i feel like at least some of the operational stuff is buying her time to figure out what the next thing is, whereas two and three years ago, on an operational end, it was nothing. >> it's not the time process. >> but, again, i still haven't seen an articulated vision in terms of what the company is supposed to be, where the accelerant is going to come from. a lot of financial engineering i

want to say in this quarter in terms of -- not that they're cooking the books or anything, but simply i think there's a lot of one-time noise in these quarter's earnings. it was a huge beat. it was a bizarrely huge beat in a lot of ways. i think it this wouldn't explain from the earnings column what we saw in the statements. >> all i said is revenue is hard to fake. but the thing is, they're -- whatever their adjusted eps is. whoa, that's a huge number there. >> talk about buybacks. they've been buying back stock like crazy. i would argue buybacks are great if you're buying back the stock when it's cheap. >> but we don't know that. >> and that's the question. >> so the question is they've now spent $8 billion at yahoo!. would you have preferred they -- i think 7.7 is the real number, but let's go with about eight. what would you prefer that they spent $8 billion on?

>> they had to do that. one of the things marissa has been great is pras pragmatism. she got the activists off the board at the right time. she released these mobile metrics at the right time. i think she and ken golden know they have to do buybacks at a certain rate so they can compare, where is the little bit we spent on acquisitions. here is all we spent on buyback. she knows she has to balance those two things. i think the question is going forward, is it a strategic acquisition of something on the skill of a pintrest? i don't think they will. what is it that will boost this? i thinkite kind of like she has the steve jobs imac stage. it wasn't itunes, it wasn't the ilife suite. you got to see some big vision, something strategic, that's something that the other big guys haven't thought of. >> and you think it's a big acquisition? >> yeah. if i'm a shareholder, i want some dividend, i want some money back. short of that, yeah, i want to see a big acquisition, a big,

big one, something that articulates a vision that explains what yahoo! is going to be three, four, five years out. >> do you think it's a realistic possibility? no. it doesn't seem like the type of company that likes to do that. >> it has this declining business for ibm, it's hardware for yoo-hoo, its display ads on the pc. and it has this growth business that's still too small, you can show up on the top line. >> we've got to run, but real quick, they're going to -- starboard is trying to push her on the tax front on how to sell and beat alibaba shares in a tax efficient way. what does that actually mean? >> again, i don't know. >> they said so the phone last night. she said we will a million tax experts trying to figure out how we can get rid of these shares at a different rate. does that ultimately mean buying other businesses and combining them and spinning them -- >> if they could. tim goldman tried to be careful

on how he explained this last night. he said i can't really say because there are a lot of things we're considering, including trying to minimize the corporate tax we would have to pay. i think they're trying to figure out what is legal. >> there is a lot of cash on the books, though. >> would you agree that that's unpatriotic, too? >> of course. >> i will tell you that i would -- as i was reading through the transcript of the call before i got on the phone with her. >> that was what your take away was, wait a second -- >> well, how do you say it to her? do us can you be more patriotic? >> i -- >> but you're building the money from china. >> there you go. where is that money coming from? >> you typically -- >> you lost me, thank you. >> no, no, you see they alter

the premises they made, they don't ever matter to you. you're not bog go to change your view no matter what. >> hfk. it's my definition. it's a ridiculous noelgz that patriotism -- tax -- >> even if you do a tax efficient method, it's what do they do with it? >> or does it become a takeover target? >> so you've got to get rid of it. pfizer, 3.7%. mcdonald's, 3.7%. exxon mobil, 2.7%. there are a lot of big yielders in those dow components now. there's an argument that you want to see some of that cash back. >> thank you. you're still wearing a summer suit. >> i think with this underneath it it becomes french. >> not dem, chambray. >> andrew, someone wrote in, i

guess they listen to you and have the same feeling that you have. companies with declining revenue who borrow to buy back stocks go bankrupt. >> buying or -- >> we're talking about ibm. i guess i have to connect the dots for you so you can follow me. companies that borrow money to buy back stocks get earnings per share up as revenues decline for 14 straight quarters. >> yes. >> and then go bankrupt. >> and then go bankrupt because eventually they go bankrupt. there is ohm one place you can end up like that. >>. >> sthef to take these things into account. i think it's a great question. he wants to make people think he has a long-term plan, but he

doesn't like marrying losers and riding them down. that's human. and he is not human. he is not human. >> with the about face -- >> but he is not human. remember, he said that was a big mistake that i made and he hates to make mistakes. but in this case -- >> we have to get him on the phone. >> finish his selling. >> on the buybacks? >> it is possible, only jamie -- >> jamie is like -- >> the void? >> it is possible. that is a company that is sdmrsh and the whole reason for -- >> then the investment piece is made. i'm just saying it's not a company that is going out of business tomorrow. put it out there. >> thank you very much for joining us. it is only right now 63 days

until christmas. target is first out of the gate with some holiday offerings for shoppers this season. courtney reagan joins us right now with more on that. courtney, good morning. >> good morning, becky. i don't want to freak you out, but we only have nine weekends before christmas. they're focussing on offering great value, great experience and great products. easier said than done. the retailer is getting rid of last year's $35 threshold for free shipping on all target.com orders. that starts today and runs until december 20th. more than 65,000 items will be available for order online, pick up in store and 80% of those can be sold conditiwithin an hour. target tells me it continues to distribute stories with mini distribution orders. if they do it right, 90% of the country could have next day delivery under that model. and a recent survey conducted found target's prices were higher than contenders, at least in that one survey.

now, the big box retailer is, again, extending its price mesh program beyond its normal seven-day time frame from november 1st until christmas even. forge ago digital connection is going to be a key focus. target launching a wish list for kids that are that's shareable, relaunching its mobile and tablet apps. applepay will be there for the iphone app. it's going to have a daily offering including 50% off a toy that will change each day. there's an idea that came right from mr. cornell. partnering with new york city boutique story will help the retailer cure rate holiday gifts from target. you could shop right here in manhattan. so it's sort of the original pop up shop. i will check it out and see how it looks like and see how that partnership really works. >> courtney, thank you very much. and you're right, nine weeks, i can't take it. >> too much to get used to, too much to do. >> and we found out -- i guess

was it yesterday or early today, legendary newspaper man ben bradley passed away at the age of 92. the former executive editor of "the washington post" led that paper's coverage through the water goods gate scandal. he was one of the four individuals that knew the identity of deep throat. he died after suffering a long battle with alzheimer's disease. they said he was -- he was 93. 93 years old. when we come back, the big dow compback, shirrs of united, nike, helping up three straight days in a row now. are investors ready to put last week's bear scare into the rearview mirror? stick around and find out. i'm type e. i know what my money is doing. i rebalanced my portfolio on my phone. you know what else i can do on my phone?

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get fire adapted now at fireadapted.org the s&p and nasdaq riding a four day winning streak into the session. the dow got a three-day winning streak going. the industrials dpaepg almost 500 points during the run and the gains would be even higher if ibm, coke and mcdonald's weren't dragging down the averages. yesterday wasn't the biggest day for the dow. we've had 380 points -- a three-day -- >> it cass coming on top of -- yeah. we're something like 6.5% from where -- >> joe k.j. kin na hahn is with us this morning. strategist at td ameritrade.

how high did it get? >> the vix is down just a tad under 40%. >> did it get to 30? >> yeah. it got to 30 in a day. it didn't close there but but it got to 30 in a day. aus talked about with the s&p 500 rallying significantly over that time, also. i find it hard to believe we're going to stay quite this low. the vikts is down almost 15% yesterday. and if you take that against the rest of the moves, didn't make quite as much sense. it was an expiration in vix options yesterday. it may have got overdone. the vix futures rallying today. i would expectite more of a 16 on the low end, 22ish on the high end. >> let's talk about what we can expect. people say the s&p intraday was

down 9.7% or something. that might qualify. but people also were saying that there is damage that needs to be repaired and it only was repaired over time. and it can take one to two months to get back to the highs, even after a correction that doesn't get into the bear market. even in a continuing move, do you think we need to do some backing and filling here and we don't go straight to new highs? >> well, you know, healthy so to speak market tends to have some downward moves up. i do find it hard to believe we're going to continue straight up, not go back down and the touch this 1907 area on the s&p 500 which is the 200-day moving average. the one thing i will say, joe, that was lost in all of the excitement on the down move is if you look at the financial stocks, and i really thought this got over-shadowed, the ceos were all unified in their message in that most of the road block needs to be out of the

way. i won't say they're going to explode to the up side. they were all bullish on the fourth quarter and all very bullish going into 2015. but i really think the financials, more than any other sector, are the most important because they touch every other sector there is in one way or another, be it through loans or whatever it might be. so to hear all those ceos say that, i thought was great. it was a tone change from six months ago or two quarters ago from their conference calls. >> so friday was good. friday we -- was okay. that was a day when i was worried about an ebola case. it should have never academy the stock market, but you can't help it with uncertainty and what it would mean to commerce and everything else if it were to become -- you know, if the worst case scenario, what we called it with low probability and high

impact. and the probability is very low but high impact. we've gone kind of a week and there has been anything in nigeria and some of the patients here no longer are at risk. all that allows people to go back and say, you know what? interest rates are going to stay lower longer than we even thought before. it's almost like people have said, i've got to return to where i might get at least something for my money, even if it's dividends. that's sort of how i would interpret what's happening over the last three or four days. >> i would ten to agree with you. i caught a little bit of your show on the way to work. i agree with you, i think these blue chip -- obviously, mcdonald's has some problems along with coca-cola that seems to be just to that company. maybe not the sector overall. but i think stocks like that, that are blue chip type companies, that pay yields nearly 3% or above 3%. if you think about how we started rallying all those back

in 2008, those are the stocks that actually started the rally as people started to turn the yield even back then. so i think with these ten-year rates down near 27.25%, you'll see people with using these downward drafts maybe more as buying opportunities. the other thing that i think was interesting was that the russell 2000 was the first index to weaken, so to speak. and i think you're going to start to see that correlation come more back in the balance because that's been off for the last couple of weeks with the russell rallying as it did or the s&p 500 following. that sort of makes sense. now we have to see where is the next leadership going to come from? and i believe it's going to come from the blue chip high yield stocks. >> j.j., thank you. >> always a pleasure. when we come back, bond market master peter fisher is

going to join us live. you see a bubble in the high yield markets like carl icahn apparently does? plus, more and more democrats are running away from the president. will this strategy help the dems keep the senate from turning red? we have a live report after the break. as we head to break, take a look at yesterday's winners and losers. when change is in the air you see things in a whole new way.

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. the government has expanded its warning about cars containing air bags made by the japanese company takata. those air bags could be defective and harm passengers if deployed. you know, we've always -- it's -- >> you can't -- >> you should not put a child in the passenger seat because it's a forceful event. but you don't think there's shrapnel, necessarily. and hearing the first hand accounts where it came upon individuals where it happened, it was terrible. this gentleman watched this

young person life just -- >> the problem is, they don't have enough parts to fix everything right now. >> there's a lot of them. >> they will turn off the air bags bass you're safer not having them. >> and they're in gm and some gm and ford cars so that it's mostly japanese cars automakeres. but ford, gm, chrysler, but toyota, 7.8 million vehicles are now -- >> you haven't been in a car with an air bag deployed, have you? >> i have not. >> have you? >> i have. >> my mother was back ended at one point, but not hard. and it came out and -- she actually got injured a little bit. >> the air bag. >> the air bag, it wasn't -- >> that's what i mean. it's a forceful event, but you don't think of shrapnel. my car will turn off if the person sitting there is under a certain weight. >> like 95 pounds or something. >> yeah. and tall enough. you shouldn't put kids in the front seat of a car.

>> car seats or anything else. >> exactly. >> elsewhere, ibm is close to buying the i.t. infrastructure business of lufthansa. according to the german airline. lufthansa put the unit up for sale earlier this year. the price has not yet been determined. and dow component boeing is set to report numbers, quarterly numbers in just about an hour. and it will be a busy day for earnings. we'll get the latest numbers from dow chemical, talk to andrew liviru, general dynamics, northrop grumman and xerox this morning. at&t will release earnings after today's closing bell. >> let's talk about the midtermers. we are less than two weeks away from them. the races down south are heating up. republicans are looking to use the president's poor polling number toes win back the senate. the question, can the dems hold

on to the majority? ben white, chief economic correspondent and a cnbc contributor, he joins us now from atlanta where he's been following -- ben, tell us, what is going on? i mean, we read or waits on sunday where people -- the president shows up at a campaign and people actually walk out? >> yeah. that was in maryland. he's not a popular guy on the campaign trail right now. he's certainly not popular down south here in georgia. and michelle nun, who is running for the senate seat against david purdue, you wouldn't know she's a democrat unless you prepared her. i asked her in a interview the other day where she regretted her vote for obama and she talked her way around it. she sociologies herself with george her better walker bush. you might expect that. but it's true across the country, true in north carolina, kate hagan is getting beat up

relentlessly for being a quote/unquote obama clone. and the president is not helping matters where he goes out there and says repeatedly, my agenda is on the ballot. obama is not having vulnerable democrats in these races. they're struggling to hold on. i don't think they're going to do it. >> that was where i was going to go with this handicap. what are the chances they hold on? you say they don't. >> i say they don't. they have an outside shot at picking up this senate seat in georgia. this they do that, that's one against the six that republicans need to pick up. but i think they may well lose north carolina, they may lose louisiana in a runoff. they're going to lose south dakota, west virginia, arkansas is going to be against them. there's so many target opportunities here for republicans. all of the polls in those republican races are moving a little bit in republicans'

direction. it would tie a heroic efforts from the democrats in the final days to stop this from happening. >> just arguing with el-erian, he was telling me that it's all about congress. and then the approval rating for congress, nasty republicans in congress. you know, there's two houses of congress. there's the senate, too. and democrats instituted. he was saying that because the president's approval rate sg 40, and congress's is 10, that the president is four times more popular than congress. my point is that that 10% includes democrats. it includes democrats in the senate and it includes democrats in the house and it includes -- >> nobody likes their own congressman, that's the deal. >> but the animosity and anger towards congress is bipartisan and it includes the executive branch, as well. and the wrong direction and all this stuff that you read about,

the population, it's all of them. that's my only point. >> it's all of them. and you find -- and i'm talking more to voters down here than i am the candidates. you hear a lot of dissatisfaction. what it comes down to is obama is in charge. they're more inclined to protest vote. and people are smart. i've noticed they also say, well, maybe if we get a republican senate, republican house, republican senate, they could agree on some stuff, send it to the president, force him to veto it. maybe it's one way out of this gridlock to have one-party control on the hill. so, you know, that is a calculation that people do make. >> okay. she's lucky in georgia that that gives her a shot, but a lot of it has to do with how georgians feel about the senator now. >> yeah, that's true.

and purdue, she's hitting him hard, outsourcing stuff. that's worked for her. his numbers have come down, hers go up. i don't know if that will drive her to a win. >> and chicken, you know? ben white on the campaign trail. there it is. >> look at him reporting. >> he is. out there on the street, no tie, no jacket, i'm a man of the people. >> yes, we knew that. anyway, georgia is great. look around down there. >> i have been looking around. a lot of great places. lots of chicks down here. >> what? >> fil-ets. >> lots of chick-fil-ets. >> don't get me in trouble with my wife. >> my bad. misunderstood. >> that's okay. >> we know what the democrats are doing to hold on to the senate. can the republicans win over before election day? joining us with more on this is

shera bagan. so much polling, so little time. so i see different things every day. it seems to me in the last couple of days i've seen that suddenly kansas looks like it's going to go to republicans at this point. >> it's close, but roberts is doing better there. >> also some other places that were -- >> some places moved to the right. north carolina is moving to the right. >> i know you're republican, but is this a bigger wave than people are anticipating? >> it's start to go look like all of these races are going to break for the republicans. ap had a poll out late last night, showed the generic ballot, the generic republican over the generic democrat. i spent my years in survey resimple. i don't ever remember it being eight points.

he had on the show, these trends. the republicans are going to win the senate. >> trying to save some of their -- at this stage of the game. >> can you figure out -- and, andrew, i don't know whether you can see into the mind of the president, but when he doesn't seem to be that concerned about -- they say throwing some of these guys under the bus. does he figure i'm not going to get anything done, anyway? and, you know, he would be in a position where he could be holding the line from these two, he would have two terrible houses of congress to complain about if it goes further. he's not going to get anything done with. >> let me tell you, i was political director in 2006 when the white house and republicans lost the senate. and if democrats lose the

senate, which looks like they're going to do, these obama democrats in the white house are going to spend the next two years in investigations. every one of them is going to have to hire an attorney and you'll see even less get done. and so the fact that they're not doing more or he doesn't appear more concerned on the trail than he does by making some of these gaffes, it's stunning when you stop and think about what they're facing. >> but they're going to have to spend the next two years in investigations. >> we did give them a few things to investigate. there are a couple of ripe areas. >> there are some huge ripe areas that haven't been fully vetted, for sure. >> i know it's tough at this point. what would you contribute that

to? >> i'd say 80% at this point. these things tend to break late and they tend to break in one direction. and you see some of these races where kay hagen in north carolina has led for most of the years. democrats pulling out of these house races. all the signs lead to this is going to be a pretty good year for republicans. >> i don't want to take any -- they're kind of fun to watch. people run from -- yeah. i have been fighting for people for keystone. it's funny to watch all the people distancing themselves. >> we're going to do well, but the reality is it's not because we're republicans, it's because we're not democrats. that's the thing that republicans can't forget. are we going to do something positive or are we going to squander it and that's the real question. >> will you admit you -- on plank?

>> you won't, either. >> you're just like the democratic senate candidate. up next, billionaire investor carl icahn sees double. is he right? he can tell us if icahn is right. "squawk box" will be right pack.

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you can't control where that ember will land only what happens when it does get fire adapted now at fireadapted.org welcome back, everybody. investors keeping a close eye on interest rates. the fed set to wind down it's

buying program next week. carl icahn souning the alarm yesterday. >> i think the high yield market is in a bubble. i think that sooner or later, it's going to -- i'm not telling you next week or next month. i'm not telling you what i'm doing next week or whether i'm buying it or selling it. we do a very arcane product, we buy the cds, the insurance, and we buy the cds on the high yield versus the treasuries. that doesn't mean i'm right. in fact, i'm losing money on it right now. but i think that that is a no-brainer, also. >> let's get some insight into the fed strategy. the impacts that that exit strategy is going to have on fixed income from peter fisher from the blackrock investment institute. peter, you are a man who knows a thing or two about bonds. why don't we carl with carl's contention that high yields

could be a bubble. what do you think? >> it depends on how the fed exits, as you suggest. i can see it in our future. i don't think it's around the corner, but i can imagine the fed tiptoeing out, exiting so quietly over the next six, eight months that that pressure continues to build in some of its product. i can see that in our future. i don't think it's happening now, not yet. but that's definitely a risk going ahead. >> what are the warning signs? what are the things that would make you think the potential bursting of a bubble would be closer? >> well, i think valuations would have to be even more stretched than they are now. the high yield market, a lot of credit markets have pulled back from the high prices they had earlier in the summer, during the volatility the last couple of months. so it really depends on the pace of the fed. now, there are really only two ways the cycle comes to an end, an mccycle. either the fed raidses rates more than we expect, or we all borrow too much money. and i think what carl icahn is

imagining is the process of we all electively borrow too much money. i don't think we're there yet, but i can see that unfolding. the fed has given a lot of signals that they plan to that' really a tightening at all, and that creates that risk. >> let let's talk about that a bit because that was really -- that theory on the fed is what calmed markets last week, the idea they are in this for a long time, not raising rates drastically or quickly. that's what calmed the stock markets down last week. was that the right assumption do you think by the stock market, and, therefore, do you think the decline was a head fake? >> well, i don't know. we know from last year, 0 2013, we saw volatility in the market, the fed flinched, blinked, and in september, they put it off to september. a lot of the rhetoric last week, we see the market volatility, and it looks like the fed is

flinching again. now, i don't think they will flinch. wind down the bond buying program. i don't think they will surprise us in the coming weeks, but i think they'll try to see what happens when they stop the taper, and then come back in january and assess the outlook, and so i think that's the right thing for them to do. i don't think they know whether they will be raising rates in march or june next year, but see how much moe moan tum is in the economy in the new year and wait and see, but, certainly, seem to soothe the markets. although, i think the markets got ahead of themselves. there was a lot of momentum in the markets, and that's what came out. whether the soothing statements made a difference, we'll never know. >> peter, that's interesting to me, just the whole idea about the fed flinching just because we were down 6.5%. will we never see a correction because the fed will not let it happen? >> no. i think the fed has -- it's not

been in the habit of raising rates for a long time, so i think that they have to face the fact it's a reversal of the momentum. central banks have been in the asset markets with easy policies, good reasons for that and less good ones, but they have to -- the fed is going to have to change its tune sometime, i think, in the coming year, unless the economy rolls over. which i don't expect. oil prices coming off is a boost to the consumer. there's offsets for the global weakness that the fed's got to be braced for. odds are the economy does well in the u.s. and fed's going to have to begin normalizing rates. i think they will, by habit, i think they believe in this, will tiptoe into this, and that creates the risk that the markets keep going because they never jolt us. >> very -- >> i think there is a risk. >> very quickly, ten year, where do you think it is in six months? >> oh, right where it is is a

good guess because in six months, i'm not sure the fed tipped its hand yet. >> right. >> could be higher. it's tight now. that's global weakness. maybe 25, 30 points higher. >> normalizing rates, we don't know what normal rates are because we don't know what inflation is. so low. >> i agree. >> thank you very much, great talking to you. we'll have more "squawk" right after this. cute little guy, huh? this guy could take down your entire company. stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm.

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up next, we are standing by, dan gilbert, the chairman and founder of quickin loans and owner the cleveland cavaliers and a driving force behind revival effort of the city of detroit. a lot to talk about it. he's with us the rest of the show. >> good morning. >> we'll be right back. e financial noise financial noise

financial noise financial noise

welcome back to "squawk box, everybody, this is cnbc, first in business worldwide, i'm becky with andrew, and our guest is dan gilbert, founder and

chairman of quickenloans, and owner of cleveland cavaliers and brought friends with him today. we have a lot to cover this morning. all of that with dan in a second. thank you for being here. >> great to be here. >> first, we have earnings results. >> from dow, not the whole dow, but the chemical company, dow, reporting estimates above wall street expectations. dow chemical reports third quarter results moments ago, and it was adjusted 7 it 2 -- 72 cents versus expectations of 68 cents, 4 cents ahead, which is good. street was looking for 14.309 billion in sales, and the company was able to beat that at 14.41 billion. there are performance plastics,

materials, sierciences, and all those bloken out, and 2.27 billion dollars, and the stock a minute ago couldn't tell where it would open, but now it's higher, up 63 cents, now i have a 48.98 bid on my machine. above that now. joining us now for a first interview to walk us through the numbers, chairman and ceo of dow chemical, and, you know, the economy's not awful, andrew, but, i guess you'd say some of the performance is due to some of your initiatives bearing fruit over the past couple years, yeah? >> yeah, thank you, joe, good morning, self-help, our eighth straight quarter of year on year eps beat and 44% growth in eps and 5% growth in the top line.

the compa the company's roberts rate in the high 80s, and we have not see the margins since literally 2005, 2006 looking like these, year to date or the quarter. saw growth in all businesses and geographies like performance plastics, up 31%. performance materials up an equivalent amount. had strong results. it was a good quarter, very pleased with it. good cash generation, and year to date, our share buybacks are on track, 3.4 billion, dividend's 1.3, generating a lot of cash to give to the shareholders, bringing our big projects online next year. spotty economy, this low oil price should be helpful to gdp, but takes a while to work through the economy, but we're targeting growth, we've got self-help. got productivity. that's the way we got these results. >> able to raise -- i mean, i have a couple of things that strike me. number one, you had pricing power, but it's in -- it's very

specific. i don't know whether they are out liers or not because of the tightening demand conditions in key regions, but can we say anything about what we believe right now that inflation is low, low around the world, the fed is talking about low inflation until 2018. what -- your ability to raise prices here, your pricing power in contrast to what they are saying? just because of where you are operating? >> well, i think, like you said, about half the company has price power because of where we are operating. the u.s. economy is strong. we had actually 11% growth here in the united states. i would tell you, you know, use the term, we're sold out in the united states, so there's price power. the rest of the world in the drop of oil price, there's a couple business lines we have notably plastics, that are in tight supply conditions that gives us pricing power, and unless gdp really -- and low oil

prices, it's not doing that. low oil price is not because of weak demand, but because of supply, and we know about that, joint jentures with the saudis. we see what's going on out there. this should stay because of the shortage of supply in the key product lines, notably performance plastics. a record quarter for performance plastics, but that's a cycle in plastics. we see an upcycle here in the next 24 months. >> andrew, i have to ask about the outlook. in the release, it says you are committed to the financial goals, committed to hitting a lot of the numbers, but by beating in the third quarter, that gives you a push of four cents. the street expects you to earn $2.96. fair to say you'll earn $3 or above for the full year? >> yeah, so, becky, good morning, and we don't give guidance, so what i -- thank you, though, for the question. i will tell you the run right now is eight quarters in a row.

these are four strong quarters with solid beats, four quarters in a row, we'll continue to surprise everyone who models and estimates us, we run an integrated diverse business model with targeted growth and self-help. we see commitments to the eps targets that weave given, breaking through $10 billion. this current run rate is in the eight to nine range. you can see we've been making announcemen announcements, high end of divestment targets, ahead on buy backs and cash generation. expect us to continue this momentum no latter what the economy throws at us. joe said in the ferg question, we're doing this despite the spotty economy through self-help. >> that's just good management. i think that's what you are trying to say, andrew, at this point. >> andrew, you've been working with or under pressure from or however you want to describe it, dan lobe, activist investor,

curious about a competitor of yours and what's going on over there which is dupont is under pressure to break itself up. look at the industry and specifically the dupont situation, living through the situation with dan lobe, what do you think they should do? >> well, good morning, dan, and, yeah, i'm -- being from michigan here, i don't comment on the other team, but i would tell you that i would tell you that the industry and all big industries that run integrated diversified models, we all have to get better on transparency, where we make money, how we make money. you can't do point in time analysis. we just ask the question by becky on cycles, and, i mean, in a point in time, you can make an argument for split. make an argument for being together. i think over a cycle, you've got to show that the combination is the sum of that, sum of the parts isle less than the combination itself.

you run a physical hedge, and the portfolio manager is stronger than the sum of the parts. we at dow prove that because we are physically connected. our break up costs would be enormous because of the way we run our plants. that's the difficulty with some of these software engineering models, these desk top engineering models. you can't look at them just from a balance sheet and just from a pnl statement in the quarter or in the year. i would make an argument for the long term value creation and short term by running these businesses connected. >> okay. >> so the industry's under pressure. i think if you got a lens on any company or industry, i think, actually, that's not necessarily a bad thing. >> all right, andrew. andrew, 48.21. we'll see you later, thanks, thanks for coming on so you could take a victory lap. we understand that. we know you would come on either way, but i got 57 -- 51.25 now on the bid.

that's up $3? >> yeah. >> on the bid, up -- yeah, up $3. okay. thanks, andrew, see ya. >> thank you, thank you very much, team. >> all right. up $3. >> let's get to our guest host this morning, dan gilbert, founder and ceo of quicken loans, owner of the cleveland cavaliers, a driving force behind the detroit revival effort. correct me if i'm wrong, but outside the city of detroit, you are the largest land owner or property owner in detroit, is that right? >> something like that. we acquired quite a bit of real estate downtown in the last three or four years, and, you know, happy a lot of people are moving in. you know, tens of thousand of young people down in the city now, come iing out 6 out of bankruptcy shortly. detroit's looking up. >> how are thing there in terms of bankruptcy? detroit is looking up, talking about downtown, not the

surrounding suburban areas? >> detroit's downtown will never continue to grow and thrive like it's beginning to unless the neighborhoods are addressed. you can't have a city that's app island by itself. there are a lot of initiatives, and one is blight removal, being the major one, and then, of course, there's a lot of initiatives around education, job creation, and crime. with the new mayor, new administration, it's been since january, but it seems like a lifetime already. there's been major initiatives made and major changes made within the city's culture, philosophy, and there's move. . not happening overnight, but i think detroit bottomed a while ago, downtown and neighborhoods back as well. >> i ask this because it's a huge problem in the country over the last 50 or 60 years, watching decline of urban areas. look to gary, indiana, camden, new jersey, people think revival is there, and falls short every

time. do you think it's really there? >> no, i really do think it's possible. there's an overall macro trend driving this. that is the young people, the my help yals -- millennials are moving back in droves -- not moving back, but moving into their homes and moving into urban cores, or staying there already. any surveying you do, polling of people in that age in their 20s and 30s, overwhelmingly want to be there for a lot of reasons. that's a good trend. that's the trend that these cities now have the opportunity to take hold of. i mean, in the past, it was maybe more of a, you know, pushing it, and now you pull the string versus pushing the string, if you will, and now i think as long as the policies of the city and you got business leadership in line, you should do well in this era. >> you know, i should say, put your money where your mouth is, investing $1.3 billion in buildings in downtown detroit. is that right? >> somewhere around there.

you know, tell you what, it's not just an ultraistic, do it because we're from here generationally, but we believe investment is good there. every day we field calls from people in new york, china, what's going on in detroit? how can i tour? how can i get involved? they feel like with the bankruptcy coming out here, all the other good news of auto makers compared to the past, and what we're doing down there, and what the family is doing, just announced a brand new hockey arena with 40-something blocks of residential and commercial development around it. there's a lot going on. >> if i was going to start a business, how much cheaper is it? that's the argument. >> yep. >> to start my business in detroit today than if i wanted to start it, for example, in, let's say, new york, which i assume is the most expensive. from a real estate perspective, square foot, but then everything else in terms of the buildings,

everything else require. >> 60% cheaper overall for residential, commercial, combined, including labor costs. that's a good discount. for example, and right now, prime office space in downtown detroit is going low 20s per foot per year. okay? 22, 23, 24 a foot. i don't know new york or manhattan, by my understanding is it's three or four, five times that. that alone, labor costs are lower, and you have a very educated work force there. i mean, there's a lot of smart people. there's engineers galore, and you have, you know, as hokey as it sounds, we talked about it the other day, becky, there's a midwest work ethic that you do get, and i know it's sounding -- >> no, it doesn't. >> i know it's true. it's true. >> i'm trying to -- i can't believe you're not a lions fan. >> oh, i am. i'm a frustrated lions' fan. deep down, just hurt, a little

bit hurt. >> you're weary of embracing the 5-2. >> we've been at 6-2 several times in the past and not make the playoffs. ? a good ending -- >> that was good. >> trying to figure out, you know, number one, you picked cleveland and detroit. you had the country to pick from, you pick cleveland and detroit. i like those places too, but, i mean, certainly -- >> primarily -- >> a browns fan? that's more stupid than a lions fan. >> i like the browns' prospects, medium term here. >> i'm ready to go with the lions, bengals i'm done. >> bengals, i went to that super bowl in pontiac. >> joe montana terrible. >> forest greg. >> a while ago. anyway, that was exciting. guy's got more passes than lane now. i think he went to the same high school, did you know that? >> i did not. >> i believe so, if i have my facts right. >> crazy.

i think you ought to -- 5-2, think about it. that's part of the story. >> look, i know bill ford, jr., a great guy -- >> he is. >> he's very excited. >> wounded fan. >> same with me, but i've learned. there's no saving me. i'm done. all right. >> all right, dan, we'll talk housing and a lot more. >> great. >> dan, fortunately, is with us the rest of the show. >> mortgage rates back to 4% and existing home sales hit a one year high. is the housing recovery back on track? a fresh read from the chief economist, and, later, cutsing teeth working for ralph lauren: today, john is bringing his rock n' roll roots to the world of fashion. one-on-one with the man who's dressing howard stern, tom cruise, and many more when "squawk box" returns in a moment. hey matt, what's up?

i'm just looking over the company bills. is that what we pay for internet? yup. dsl is about 90 bucks a month.

that's funny, for that price with comcast business, i think you get like 50 megabits. wow that's fast. personally, i prefer a slow internet. there is something about the sweet meditative glow of a loading website. don't listen to the naysayer. switch to comcast business today and get 50 megabits per second for $89.95. comcast business. built for business. welcome back, futures now, markets setting themselves up, dow opening up higher, 15 up, nasdaq as well, and s&p 500 higher as well, about a point or so. >> quicken loans is tracking the housing market, doing it on the second tuesday of every month looking at the gap between appraisers' opinions and homeowners' opinions about the value of their homes. joining us to explain the housing data points is bob

walters, quicken loans economist, and dan gilbert, the chairman and founder of quicken loans, welcome to the table. >> thank you. >> we have a lot of housing must remember numbers we look at, everything from housing starts, to case schilling numbers -- >> we were just looking at the wrong picture for a moment there. anyway. stop. >> why do you keep taking my shot? >> why these two indexes, what do they measure? >> what we hope to add to the conversation, because to your point, people look at the numbers, most based on loan closings, home purchases, what it ignores are home appraisals, and especially on refinance appraisals, we get 40,000 appraisals every single month, many on refinance, those are not part of the conversation, and when it comes to the perception index as we call it, so when it person comes in, we asked what the home is worth, and they give us their perception of what the home's wort. we have an appraiser appraise

the home. the appraiser gives their opinion of what the home's worth, and there's a unique data point. what's the difference? >> i imagine over the last five years it's a shocking number because people think their homes are worth more than the appra e appraiser does. >> exactly. in 2005, they were similar, and through the crash, the appraisers thought their home was at 10% less than what the homeowner did, and just everyone knows that feeling of, hey, my house is worth $250,000, and appraiser says, no, $220,000. we map that, see that index, giving a unique data point to the conversation that nobody else had before. >> if my house is worth less, i'll stay put and hope it comes

back. >> does that mean the disparity is large, and, in fact, believe it or not, it's only slight, but appraisers think the homes are worth slightly more than the homeowners do right now. more fairly valued. it's a really unique data point that a lender like us can get because we have the conversation with a client and say, what do you think your home's worth, then send out the apraiser. traditional methods look at closing data. we don't have that. that's something we bring to the conversation. >> how much does it differ by geography and state? in omaha, think the home is worth 5% more, and how does this vary? >> absolutely. we find that the harder the areas are hit, wider the gap is. at least at first. takes awhile, and whether it's denial or just that appraisers doing more valuations than the homeowner, obviously, it takes awhile for the homeowner's opinion to think what the home

is worth. wherever it's hardest hit is widest. right now, actually, it's constant across the nation. there's a few spots in the midwest, for example, but it's constant. >> property tacks, what about what the tax officials think it's worth? that has not caught up. >> they are usually bullish. >> that's not necessarily something where you have seen a break in these. dan, let me ask you, how would you rate the housing market right now across the country? it's a local market, market by market, but if you head to, say, where we've come since 2008. >> well, obviously, we've come up significantly since 2008. the housing market, though, still is not where everybody would like to see it. there's a couple reasons for that. number one. millennials, we use that term for the age group, they are not buying homes anywhere near previous generations, the pace, for their age, and, you know, look at that, why is that? well, student loan debt is an at an all time high by far.

in fact, we looked at the number last night or this morning, actually, if you look at inflation of tuition from 1985 to today, it's over 500%. the cpi is, like, 118%. because student loans are not what you call a private market of lending, you grant loans almost in every single possible case, and loading up people with debt, which is allowing, you know, the universities to probably raise prices -- taking a lot of heat for this, but raise prices at a higher pace of inflation, by multiple, and, you know, that allows the student loan debt to go further up and feeds on each other. similar, maybe -- not calling it a, you know, a bubble like we had in the housing market, but similar sort of economics working behind that where we have so much capital flowing in allowing prices to go up, and in the housing market, how it connects so that is it's saddling people, young people,

with a lot more debt than they are used to, and they have hesitanhe has ten si, and wage stagnation. wages are not moving up. you know, it's putting a dent, i think, in the housing market. >> we have you here for longer today to talk more about this. bob, thank you very much for joining us. >> thank you. >> looking forward to seeing the numbers. >> coming up, talking markets with the top brass at goldman sachs, yep, the president and coo, gary cohn joins us at 7:30 a.m. eastern. we'll return in a moment. time now for today's trivia question. what percent of u.s. mother chapters currently accept apple pay? the answer when "squawk box" continues. and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming...

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boeing earnings are hitting the wires, and they must be significantly interesting, phil, because of the music. the numbers, phil? >> ha! it's better than expected, joe. boeing beat the street by a wide margin, actually, by 17 cents,

earning 2 .14 in the quarter, expecting $1.97, revenues stronger than expected. the street expected just over 23 billion. much of this beat is atritted to the commercial side of the business, and strong mar gyps on the commercial side, 11.2%, profit margins, and boeing delivering 186 commercial aircraft in the third quarter. that compares with 170 last year. up 9, 9.5%. this gets people talking. boeing is raising guidance for the full year by 20 cents a share. it was expecting to earn between $7.90 and $8.10, now the new guidance is 8.10 and 8.30. the street is expecting 8.27. boeing beating the street by 17 cents in the third quarter. back to you.

>> it's interesting because as you say, the street's up, so -- >> yep, yep. >> high ends of the new guidance, but that's not stopping the stock of being $4. >> right. >> it's a clean quarter. the focus is on the operating cash flow. the operating cash flow is lighter than expected. that's a focus of questions on the conference call, but make no mistake, raising the full year guidance. >> i'm not going -- you think we make mistakes, i'm not going to. we understand that, phil, you don't have to -- >> take a look at the dow futures, the component, as joe mentioned, up $4, helping with the dow, and it's up 16 points. s&p futures are slightly lower, nasdaq up 6 points too. >> dow is not a dow component, but that's a company you see a

lot of what's happening in a company like dow chemical, and that stock is up, and that was a -- those were good numbers. >> we have been saying they are individual stories. andrew said himself no matter what the economy -- >> the ones that are bad, have their stories. the ones sort of dealing with corporate conditions seem to be doing better. >> point is, i just wonder about the economy. usually, we have big bell weathers that talk about the economy. >> i think they are more than mcdonalds. micron technology is not -- >> although it's been the canary in the coal mine in the past. >> not anymore for that stock. i think dow chemical and boeing -- we'll see. >> arguing the point just to argue it, but i agree with you. i think the economy's better. >> ge is up four straight days too. >> i want to know what gary cohn will say. >> i think it's going to be better, not seeing the capital investment that i think we should be seeing.

people are risk averse still and sitting on a lot of cash. >> let's talk more about what else we have in the headlines this morning. we have economic data ahead, september consumer price index figures hit the tape in an hour. economists expect cpi to increase a tenth of 1%. johnson and johnson accelerates work on ebola vaccine hoping to have a million doses ready in 2015 and test on healthy volunteers in january. also, the treasury's offering banks to beef up the defenses, and deal book that officials are especially concerned about outside vendors used by the banks and want to assure the companies to have at least basic defenses in place. >> at least you didn't read that. you would have had to -- >> i did not sneak it in, just so you know. >> you have to give the reads -- founder of deal book, you can't read that. >> it's a conflict. >> you shouldn't talk about it. >> we're going to talk about

goldman sachs now, crashing it in the m&a market this year with the bank leading the global market advising on more than 30% of all mermgers and acquisitions in nine months of this year. right now, we're going to go to goldman sach's conference. gary cohn, the president and coo joining us. gary, thank you for being here. i'm going to be coming down to see you later. i think this is gary' -- by the way -- debut on squawk. you've been on cnbc before, but i don't think prime time like this. is this a first? am i wrong on that? >> well, it may be, andrew, thanks for having me. it's a pleasure to be here, and it's really excited to have you guys here at the 14th annual symposium where we have over a thousand investors here today and over $20 trillion in assets in the conference. we're excited to have you here this afternoon to talk about new opportunities in the investment world. >> here's the question. maybe you can help us sort of answer the question we've been talking about around the table this morning just in terms of the way the markets are moving,

and, frankly, the way the economy's moving. we've seen earnings this morning, for example, from dow chemical, boeing, looking good, but we've been looking at what happened yesterday and in the past days, looking at coca-cola, ibm, and you look at mcdonalds, but you see the tale of two cities or two worlds. how do you see it? >> earnings have been mixed, but overall, they have been slightly better than i think people had forecast. i think it has to do a lot with business mix and where your businesses are growing. you know, we are all acutely aware that europe is slow right now, and that depends how much european exposure you have. the united states is strong. the extent you have u.s. exposure, the business is probably outperforming, and growth markets are, you know, volatile. that depends where the order flow is. take someone like boeing, you know, they sell planes all over the world, and that's a telltale sign that the world economy, in

some republspects is growing, a air service is growing, but food service, people are discerning on what they eat and are not eating. there's mixed results out there, similar to what we see in the global economy, mixed results. >> right. big name, though, the ibms, mcdonalds, cokes of the world, are those individual stories? is the world changing on the individual stories, or do you think that says something larger about not just those companies, but the sort of broader mix? >> i think it tells you a lot about what we see in markets. telling you that the world's not a hundred percent sure what's going on economically. there's been a fairly rapid change in sentiment about what's going on in european growth. people have been recalculatinin what's going on in china, although we are relatively

positive on china at lower levels. the united states is strong, but the question is, how strong can the u.s. be with the major trade partners weak? >> right. we had volatility in the last two weeks. where do we end the year in your mind or even -- not christmas, but 12 months out, what's going to happen? also, given what i imagine may or may not happen from mrs. yellen. >> you know, where do we end year? in many respects, you go to go market by market, region by region, talk about different specifics. you know, as your prior guests have been talking about, you know, i think the interest rate picture is benign between now and the end of the year. that said, we have a move in ten years in a day, not a day, but in an hour last week. to say it's benign, i don't know what that says in a market

environment that's that volat e volatile. i don't believe we'll have a shift in interest rates in the united states or anywhere else in the world between now and the ends of the year. that feels to me equities will be a relatively safer harbor as money has to go somewhere, and it seems to me that the europeans are involved in growing the economy, and right now, they are entering a phase of quantitative easing or devaluing the euro, which, in essence, rallies the dollar, which i think those trends are trends that we'll see not only between now and the end of the year, but next year as well. >> gary, it's joe, i want to thank you for coming on as well. good for goldman, great for cnbc, obviously. i want to ask a question the other day i heard from some people, calling the feds' moves courageous, raising a couple eye bros in that point was opening

the spigots, everyone feels good, flooding the system with liquidity and raising stock prices. that's the easy thing to do, and something that paul voker had to face, do what people didn't want you to do to save the economy and break the back of inflation. that's courageous, to remove the accommodation would be courageous. there's skin in the game, i understand that, but comment on that. has the fed really been courageous keeping this is wash in liquidity? >> joe, i think that the feds been doing what they think they need to do to keep the u.s. economy going. you know, we went through a really tough cycle where we had contracting growth, no job creation, and that stimulates growth. i applaud what they did.

now they face the tougher part of withdrawing the stimulus, and, you know, we're all assuming that in the next fed meeting next week, it's the end of tapering, and the fed has a tough decision. where they go from here because the global economy's around the world are not in good a shape as we'd like them to do even with all the stimulus in, and, in fact, u.s. interest rates are not that much lower considering all the stimulus that the u.s. fed put in. >> gary, i want to switch topics for a moment that you are at the goldman sachs asset managements conference, and there's a debate going on in the asset management world around what was decided to be done, which is to withdraw money from hedge funds, a story on the front page of the "wall street journal". other firms are considering the same. what do you think about the decision? how should pension funds think of the issue?

>> individual pensions, endowments, family's trust, they go through different asset allocation decisions all the time. what calpers does is up to calpers and what others decide to do is up to them. as i said before, andrew, we have a 20 trillion dollars of assets in this room today where you'll be later this morning, and all of these people are committed to the alternative space, and it's a space that we see continuously growing. if we bring out a new hedge fund management and take them out on the road, their ability to raise capital today, it's out there. we can go out and raise capital for a good manager, and there's many pools of capital out there looking for the alternative space. >> right. one of the great barometers of confidence is mergers and acquisitions. we said at the beginning of the segment, you guys have been killing it. curious about your views of what's happened to washington to inversions. that was helping not only you, but the broader landscape,

looked like they were headed for a lot of deals, and now maybe we'll see less of them, theabvee shire deal. what's going to happen? >> at the end of the day, companies need to grow, and companies want to create jobs and high pays jobs in america. the question, to me, is, is america competitive? can america create high paying jobs for american citizens? what companies are trying to do is create high paying jobs for the u.s. citizens, and right now, tax rates are somewhat a hindrance for them in the united states, and they have been trying to get around u.s. tax rates, but not trying 20 get around creating jobs domestically in the united states. you know, it would be

heaviliful. the fed need that, the economy needs that. >> do you have any hope that we're going to change tax policy soon? >> e always have hope. >> ha-ha, okay. that's a nice place to leave it. see you later, down at that conference, gary, thank you for joining us this morning. >> thank you very much, and i have to wish dan gilbert success with the cavaliers this year. >> thank you. the season starts in a week. can't wait. no promises. no guarantees. we'll be better than last year. >> that sounds like a promise. >> i can't wait. >> and so you'll take him back too. that's what dan said, too, gary, if people said, never take him back, and there's not a single person saying they don't want him to come back. >> a lot though, joe, was the essay he wrote. >> you accept him back too? >> yeah. >> you don't accept former

goldman people back. >> i'll accept anyone back to cleveland. >> anyone back to cleveland. >> i'll accept you back to cleveland too. >> thank you. >> we'll talk more about lebron, and also, mark cuban is long on netflix, buying 50,000 shares of the company. we'll ask about that. the future of streaming media and, of course, basketball, all starting at the top of the hour. that's right. we're going to have two nba owners here talking about all these things. up next, though, he learned at the feet of fashion legends, ralph lauren and calvin cline, a detroit native brings the rock in' roll fashion to men's fashion. outfitting iggy pop to the self-proclaimed media, howard stern. "squawk box" will be right back. today could be the day. the day we give you hope. relief. a cure. today, we believe every life deserves world-class care.

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stars, not to mention the self-proclaim king of media, howard stern. flag ship, new york store, is the site of the famed underground music club. returning to the roots, opening up the shop, in his hometown of detroit. joining us for the first interview, american fashion diner, john barvados, and with us, our guest host of quicken loans. it is about us, always, trying to figure out if there's anything we can do to be cooler, and andrew -- we don't wear jackets. >> andrew, for sure. i don't know -- >> thank you, john. thank you. >> see, i'm already -- i think he met that you have a long way to go. it's going to be tough to make me cooler because i'm already cool. >> that's where i was going. >> that's where you were going. we don't wear jackets. what do we wear? >> shirts, ties. >> scarves.

is that a tie? >> i'm a designer, i wear what i want, right? you're on cnbc, you have to wear what you have to wear. >> exactly. they they, wear it, i'm afraid to say no, aren't you? >> i want to wear that tomorrow. >> you've. close. being from detroit, it was not a stretch for you to go back to detroit, was it? >> back all the time, my family's there, and so it's actually -- it's -- one of the most exciting things i've ever done since my business has been in tact since 2000 is, really, going back to detroit. it's app exciting opportunity, and gist the buzz when you're back there, there's just so much happening. it's -- i want to bring bus loads of people there to show what's going on in detroit, all they know is what they read, and you don't get the juice you feel when you're there. >> you know, we've done a lot of things in the four years, fortunate to be in the position to participate and partner with

a lot of people, bring a lot of people down, and i really mean this. you opening up your store in downtown detroit, i mean, being one of the -- if not thee hottest r you know, men's retailer in the country or world right now, is a big statement, and i know you're not -- you're doing it because you care about detroit, from detroit, but people need to understand this is also a capitalist move and profit making move. tell us that angle of it. >> well, it's a business opportunity for sure. i mean, the first thing is the passion of wanting to be back and be connected, and be a part of a legacy there as well. i see all that's happening there with new hotels coming in, and new restaurants, bars, retailers. you did a great job of bringing people down there, and we want to bring the level up in terms of bringing international and national fashion people into and designers into downtown detroit as well. >> your statement that you're making, and i have to tell you,

i mean, i'm all giddy here. i don't know if that's a word people use even, but you can tell i don't wear the cool stuff using that word, but it's just so important because i think other retailers are going to see, you know, joan's opening up on woodward avenue, and now all the other retailers, we talk to a lot, you are setting the standard. i can't thank you enough. i think your store's going to do great. >> you drew me there, for sure, and for me, you're the architect of what's happening in detroit right now, which is amazing. when i grew up there, woodward avenue was the place to be. i loved hanging out on woodward avenue whether it was music shops or hudson -- that was the department store at the time, bigger than macy's square footage at the time. it was a great place to be, and you sense it's happening again there. >> john, when you decide to open a new store, detroit or elsewhere, you look at the market, say, there's enough people in this particular city that would buy a $80 t-shirt. it's super luxury.

how in the case of detroit or other cities, how do you measure the opportunity? >> look at the demo for sure. part you look at that, but the other is the gut. you can't always look at the numbers. you can't. detroit's one of the cities that has been pushed out to the suburbs, so there's some very, very strong suburbs, and you see influx of young, affluent people moving downtown detroit again, and, so, for me, it's -- you know, it's less about the demos you look at rather than your gut. what dan's doing there was not -- he was not looking at demos when he made the move to buy all this property and reinvest because he's investing so much money into the city. it was really a gut on what he could do for the future of the city itself, and that's, for me, that's how i'm looking at it. i -- sometimes with the numbers on a business sense, and other times, you go with your gut. >> john, we've seen sad news of passings this week, and ben

bradley of washington post this morning, but earlier this week, oscard de la renta. what was his impact on fashion? >> just the ora he had in the fashion industry, so for the industry, it's a sad loss. in terms of, you know, he dressed queens and prip sencess kennedys, and people like that. you know, he's touched a lot of important people over the time, but for me, the biggest loss, as i said, to the industry, and that he was really a very special man, and he was a true gentlem gentleman. >> john, people don't know this, you have a car named after you, the chrysler 300, and you invented the boxer brief. >> what! woah, woah, woah, back up, you invented the boxer brief? >> the combos. >> i don't know what i'm wearing. i don't know what it's called. >> it happens with a team. in calvin cline in the early 1990s, we developed the boxer

brief, which has taken over the industry since then, launched it with marky mark them, if you remember that, now he's mark wahlberg, and the banners and commercials, banners, and it happens by mistake, it was one mistake, playing around with something in the design studio. >> we can talk later, but i don't know if i wear boxers or briefs -- >> you're in trouble. [ laughter ] >> i don't know. >> i know they are both. bob, looking at some of the -- i don't know -- i can't pull some of the things off, but he might be able to. a lot to do with youth, doesn't it? >> make women's clothes? >> unless you're a rock star. >> really, there's a lot of customers that -- >> well, did you advise him on the beard? >> he did. >> there's a lot of the customers that are business customers, and we sell wall street. a third of the business is --

>> you already dissed me. [ laughter ] >> awesome. john, thank you for being here. >> appreciate it. >> pleasure. >> owner of the dallas mavericks, "shark tank" cohost, mark cuban joins us when we return in a moment. teacher of the un-teachable. you lower handicaps... and raise hopes. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (pro) nice drive. (vo) well played, business pro. well played. go national. go like a pro.

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it's the side slap that's coming back. >> huh. >> oh, it is me. okay. welcome back. this is "squawk box," and if i had to say the two things that's struck me it's that the america looks good, and boeing and dow chemical look good. i don't want to say speaking of rough belt, dan gilbert is here from detroit, but he's here. >> so huge, talking about john varvatos opening in downtown detroit. >> i said only andrew can do it, but i saw the young models -- they don't look like me, andrew, but more like you. >> you can do it. >> i will do a willie nelson pull it off. >> totally. we should both -- i want to make women's clothes for becky, and we're done. >> and the young demo in. >> totally. >> the dow, we have to get to someone who -- >> who can give john tips.

>> the dow riding a three day winning streak into the session, s&p 500 and nasdaq up four straight days, here to tell us who the big winners are, and last week's mini meltdown. yahoo! on the list? >> yahoo! is not on the list because it's done well, but not quite as good as the other companies in the recent shopping lists dips. if you have these on the shops lists, there's 32 companies in the s&p 500 that rallied 10% since the october 15th lows seen in the s&p 500. i can't go through all 32 of them, but interesting stocks to watch, though. number one, micron technology, which is up 13% during that time, so this is a company that a lot of investers and traders say got sold off to the oversold level, too far, too fast to the downside. a big decliner, and then it's up 13%. this is one of the stocks, and

number two, an interesting sector that watch was overall the airlines. the industrial sector. southwest airlines lost 20 % of the value since its recent highs. you see here, rallying up by 15, 16%. this, as the specker of ebola is not as much as of a worry. oil prices moving down, southwest has done very well. the number one, the single best performing s&p company sinoctob 15 blows, energy sector, sold off the hardest, chesapeake made asset sales that helped the stock along. that stock up 24% just during that time, so, as you look at the 32 companies, andrew, becky, joe, an interesting theme was that a lot of these companies in that 32 were either in the energy sector, in the industrial sector, or the material sector,

went we know those are the sectors hit the hardest so when things did rebound, investors looked there first for the shopping list picks, guys, back over to you. >> all right. thank you. >> sure. >> mark cuban did buying on the dip last week, scooping up 50,000 shares of netflix after the stock fell 26%. well, we are rluckyoff to have him join us this morning. thank you for being here. >> anything i can do for dan gil berth, that's my life's mission. >> two nba owners on set, dan gilbert and mark cuban. mark, before we talk basketball, i want to talk tech. i have the feeling once we are in basketball, we're not coming back. talk about netflix. what happened with -- obviously, the price dropped so dramatically, but what do you see here? why jump in and make a big buy? >> it's a disruptive company. talk about media, talk about the

future of television, talk about over the top, talk about content, the one company that always comes up is netflix. when you look at what they are doing, very little content is being created in the united states, and i think it's going to extend internationally without someone talking to netflix to see if they are interested in investing in the content first or distributing the content. when the market cap plus debt fell down below other companies that, you know, relatively speaking was just ridiculously low market cap, i went in and bought a chunk and sold. hopefully i'll own more. >> the one big thing people look at is there's a lot of competition. you're right. there's app awful lot of content out there, but they'll face stiff competition. to fund the content they are buying, they need subscribers in bulk. do you have any concerns about the idea that maybe the subscriber growth is not going to be what they expect? >> no, not at all. look, there's never been a high flying technology company that's not hit a bump in the road. but they are smart.

they have a lot of momentum. price point, even though they raised prices a bit, it's not so significant that relative to the competition it's going to be a negative. i mean, cbs is doing great things with their over the top analysis, but six bucks basically for one network. you know, hbo will be much more expensive for limited set of movies and shows, so i like what netflix is doing. if there's a concern, always is, is that they have to continue to replenish great content, and soings you know, "house of cards," "orange is the new black," good shows, but finding replacements for those to bump the subscription cycle is a challenge. there's also changing the paradigms in content creation. used to be that when you create a new tv show or a movie, you know, you had a specific set of risk factors. now with netflix, you know, paying 140% of production costs, keeping all the back end, and that's a new paradigm.

>> i'm not done yet, but dan wants to jump in. he's chomping at the bit. he wants to talk trash. >> no, no, i have a question. how would you feel if a state legislature, a republican governor, a republican legislator years back said to protect blockbuster, put up retail stores to sell your movies, and that made that law -- just curious, wouldn't like that. yesterday, the state of michigan -- our republican governor, who i like, governor snider, signed a bill basically telling tesla they cannot sell directly to the consumer and have a dealership to do so. what are your thoughts? i know you think about this stuff. >> obviously, i'm not a fan of that. uber is going through the same things. it just goes to the heart of the whole approach to convincing politicians to do something for you. i mean, it sends a bad message when lobbyists convince, you know, a governor and legislator

to do bidding for them. i'm, obviously, not a fan of that. >> i wouldn't think so. >> dan, i'm surprised that you're so outspoken against it. it makes sense to me because you don't like rules that come along, but you're building up detroit. will that help detroit? >> you know, to me, you have to have a philosophy and stick to it. you can't let your personal circumstances sort of compromise that. what would this country be like if every industry just outlawed innovation? why don't the dealers -- why don't you man up and compete like everybody else does? why do you have to go to the legislature and ban innovation? >> it's crony capitalism. mark, is that worse than socialism? they both vie. >> hand in hand, don't they. >> they do. it's one in the same. >> i don't know if you know this, and this is off topic. did you hear with jennifer lawrence's favorite show is, cuban?

>> guessing "shark tank." >> "shark tank." >> crazy. >> if we didn't love her already, and then -- not saying because of you, but you're cute. >> i'll take credit when it comes to jennifer lawrence. >> right. >> mark, are you looking forward to the team meeting this morning? you're not at the meeting because i'm here. yeah. >> yeah, right. >> you know that. >> yeah, i'm looking forward to it, dan, not the same without you. >> oh, geez. >> ibm is on sale this morning. it's -- you can get 20% off. not quite, it's going to be 163 today. is that on sale for you? >> absolutely not. i know warren's a big investor, a fan of warren, but ibm is not a tech company. they have no vision. what they evolved into is a company that does acquisitions, stock buybacks, i mean, who is

ibm anymore. there was a day when you said, okay, big box, big blue, services big blue, software big blue, you knew where they were going. now they are -- they -- they specialize in financial engineering, and to me, that's not a future. they are no longer a tech company, but a -- different companies ashing on wall street. i'm not a fan of that at all. >> tell us what you really think. >> okay. >> no, yahoo! had earnings yesterday, first time they had positive revenues in quite a while. your take? >> you know, for of reasons, i hope that yahoo! does well. they -- they have a platform that is incredible. they added tumblr, an incredible platform. tumblr continues to grow. if they continue to grow and build mobile, which is becoming an entirely dif yenuated

platform, interesting things happen. i'm hoping that she takes, you know, one or two pages from google, one or two pages from facebook. because facebook is doing a lot of great things, yahoo! could step in the conversation. i hope they do, but they are not there yet. >> a stock you'd buy? >> no, not really. it's valued so much with the alibaba investment. it's relatively free to the cash and stock they hold, but you don't know how much they are going to use all that, so i wouldn't touch it here. >> mark, before you go, we talk about it for several year, could this be the year of the all avs finals? >> we'll talk about that when we come back. >> mark's sticking around. >> yeah. >> we'll press pause and continue the conversation right after the break. think we can get a daytime

"squawk box" favorite from her? >> mark, can you -- maybe -- we'll have to have mark work on that. >> have you seen all her movies? i have. i'm going november. >> the one where she -- no, the other one, with bradley cooper. she was great. i saw "american hustle." just start watching "squawk box. ". >> the futures, dow up higher, more with mark cuban in a moment. an unprecedented program arting busithat partners businesses with universities across the state.

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welcome back, everyone. a couple headlines before we continue our conversation with mark cuban and dan gilbert. first up, dropping the total from the the fund, and the decision was made after the recent resignation of bill gross who left pimco. beating the street, boeing earning 2.13 a share for the third compare compared to excitements of $1.97, and reflecting in jet demand, and the sock at this point is actually down by 1%. it was up significantly earlier. that's a dow component. that will affect what we see with the averages. >> we are back with dallas

maverick owner mark cuban, and, also, what -- where -- who are you now? are you a "shark tank" star, an entrepreneur, or the mavs owner? >> the mavs owner, entrepreneur, investor, just a guy having fun, right? enjoying life. >> it is scary. if you went into someone, said, here's the premise for the show, and if you -- if you would describe the success, you see what it does on cnbc markets, like, off the charts. >> crazy. it's crazy. when i did the show, i was a guest shark. three episodes. 24 is a business show. it's not going to last, but once i've done the show, i learned quickly how aspirational it is. number one show in all of television, is what they said. watched by families together. parents come up to me all the time talking about how their kids understand valuations, how they understand what profit is. it's a new age lemonade stand in terms of getting kids and families excited about business.

if i can be a part of telling millions and millions of people every day now that the american dream is alive and well, that's the key. >> right. and it can be done. >> yep. >> you have a good idea, and -- you know, we forget that it was not until you could own -- like the 18th century or something, not until you could own a patent or intelligent property or private property. go from rags to riches. >> there you are on that high, high, high horse. i don't know if it was the patents, but that's what the country is about. when people talk about debt for the country, talk about the government, when we talk about politicians, and the reality is the core of the company, the core of the country are the people, you know, the fact that we are raising our kids to be excited about business, to go out, start companies, that it all, you know, it matters what politics do, but it almost doesn't because we got a great group of young people out this starting companies that are going to change the world in

ways never manaessaged. >> a tv show brings us back. we need saving right now. >> i think we're getting old and don't catch it all. >> you know what it does, mark, and i think that you really hit that point earlier. it shows everybody in the world that wealth is actually created, that it's not something -- >> good point, dan. >> wealth and jobs are created. it's not just, here is the pie the government issues, let's split it up. people through their ideas, innovation, people are not worth anything can create stuff. >> i tell people all the time. dreams are worthless. ideas are almost worthless. they become valuable when you do something with them. we still are in a country where if you have the ambition and willing to put in the effort, go out and create wealth, create anything. you know, the one thing we control in life is our effort. >> innovation is rewarded. execution is worshipped. i know you believe in that.

>> absolutely. >> mark, i agree with you, but how do you change the political conversation so prosperity is a part of the conversation again? >> you know, as long as we have the two parties that we have, i don't think it's going to change. i mean, if i was going to give guidance to the republican party, i say, stay kpeel out of social,s. if you are out of social issuesissues, the conversation from that said is economics, business, growing business, and ideas. >> it's like -- they want the government out of your life -- but it's not a big leap to stay out of the social issues, is it? >> no, it should be easy! >> seems consistent with the philosophy -- that's a libertarian philosophy -- >> i was having the conversation with someone yesterday, like, the generation of sex, drugs, and rock n' roll did not turn out like we planned, right? we thought we would be live free, stay out of the bedroom, everybody's lives, focus on business. well, it turned out to be the

exact opposite. good news is 25-year-olds, 20-year-olds are not listening to politicians like we never listened to politicians. they go out, follow ambitions, you know, work hard, and anything is possible. >> why do you think that there's so many people that you talk to in the world that say i'm socially liberal, economically conservative, but there's never a party or there's never been one of the parties that went that way? seems like there's so many people that believe that way. >> it's just gotten so much money involved. you can't, you know, it's hard. i mean, i've been involved in efforts to create third parties and this and that, it's almost impossible. but, you know, nothing's completely impossible. hopefully somebody has the piss and vinegar to do it. >> all right. we promised a basketball conversation. >> we did. >> you will be friends at the end of next year, you think, really? >> oh, yeah. >> we're always friends. mark has a ring. dallas won it all in 2011. >> okay, i have an owner question for both of you. steve ballmer paying $2 million. did that make sense to either of

you? >> absolutely. >> a bargain. >> yeah. >> they are owners, of course. >> only 30 of them. only 30 teams. to get a team in los angeles with the new tv deal coming up with the opportunity once his lease is up to build a building and build around it, you know, we'll look back -- look, when i bought the mavs 15 years ago, i paid 285, the highest price for any professional sports team. people thought i was crazy. it's all relevant. >> what did you pay, dan? >> 375 in 2005. you were at 200? this was five years later, and then suprises stagnated. >> with microsoft at 45, you got a deal. that's all i'm saying. >> exactly. >> mark, though, you're a media guy too. here's the question. do sports rights continue to go -- is there a breaking point on sports rights? do you think that some of the

regional networks end up going on to premium tears other get removed from the cable, and how that changes the economics in this? >> two questions, one is on a national basis, and all the major leagues have long term sports deals with television. you're not going to hear about new, huge multibillion dollar deals for a long time, those rights are locked up. local tv, depends on the markets, depends how many teams are in the market, but i think we'll see an evolution where rights continue to go up, but they'll multifaceted, cable tv, broadcast, and potentially over the air and over the top. that's driving the value as well. even online, sports drive consumption. >> another reason why that sports rights continue to go up is if you watch -- i have teenagers, and if you watch teenagers, teenage boys, sometimes teenage girls, of course, you watch them, two screens, sometimes three screens. it's not just the television

anymore. i mean, they are interacting with their fantasy, interacting with applications, all kinds of things together, and it's just, you know, all that together creates a participation. they used to be docile, watch the game, drink something, and talk to the friends, and then, of course, now they participate in it. sometimes kids will know what individual players do, and they can't even tell me the score of the game because they are just compiling their own teams with the statistics. >> a fantasy league. >> it's interesting when you look at it. >> all right, mark, thank you for joining us today. >> of course. >> preergt you coming on. >> last time you were on, were you buzzed from the anesthesia? you went off. you were on prof nol. >> i was on everything. >> you were better or worse -- you said -- were you? were you feeling it then? >> oh, yeah.

>> i want some of that. >> i was feeling a lot of things. it was hard to get off that stuff, but i did. >> how is your hip? >> it's great, been three months, i'm just starting to run some. >> good. >> working out, it's great. >> fantastic. >> do you think you could pull off john's clothes? >> totally. he could do it. he knows it, though. you know what? do you look bad walking on to a g 650? >> i don't have that yet, but i'm comfortable in the 550 plus. >> no one looks bad walking on to a gulf stream. >> that's the truth. >> mark, thank you, hope to see you again soon. >> any time, see you soon, danny. >> american dream. toys "r" us pulls the plug on a toy after getting heat there a florida mom. that story and more as "squawk box" rolls on.

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a florida mom had trouble with barbie and breaking bad dolls sold under the same roof, and toys "r" us agrees. they pulled the set of four collectible dolls based on the series. the toys have a detachable bag of cash and make believe meth. that blue meth you remember from that program. the florida mom launched an online petition to end the sales. the toys "r" us rep says they are on indefinite sabbatical

noting the characters were sold in limited quantities and placed in a store featuring adult action figures. talking about adult action figure. >> i love the idea of adult action figures. that's a new growth area for what i think an adult action figure would be. mind going straight to the gutter. with the technology available today and what i read on drudge, it's not full off, full service adult -- oh, my goodness, we went to it. >> go ahead, read your thing. we're almost done. >> read my thing? the star spangled chopper -- oh, i met him -- nicest guy. reportedly rid p by peter fonda in the film "easy rider" sold for $1.35 million at auction making it one of the most expensive motorcycles ever sold. this -- that shot right there, is that jack back -- i don't think it is, but this made jack's career, jack nickelson

too, the bike sold far above the reserve price of a million dollars. the chopper known as captain america, that was peter's name, actually -- oh, yeah, for his character in the 1969 film, owned by a los angeles collector, michael eisenberg. the were stolen. >> we have more just minutes away. ♪

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welcome back to "squawk box," seconds away from the september release of consumer price index. the number is one tenth on both, headline and core. these are close to expectations. you can see core's light. headline is just a bit heavy. all in all, it is close. when you really get into it, look at the year over year, up 1.7 on both. for all practical purposes, we don't see inflation as an issue. we don't have an overwhelming helping of growth in the byproducts of growth most likely will be when it comes in a normalized fashion. higher prices, all the byprices of growth. interest rates moving to the

highest levels that we've seen since the intraday drop of spectacular proportions, exactly one week ago. approaching two and a quarter, 2.22 on tens, significant level arou around 1.45, above where we are trading, continuing to watch europe and dreams of buying various securities so they will be in the same bode boat we are and assess whether that boat is a good boat or addicting the market to something that's hard to get off of. either case, those are the big stories. the foreign exchange market looks like the dollar's definitely getting its sea legs back. no surprise we're at two and a quarter. doing a number on the pound and euro currency pushing the dollar index up to more than a quarter of a zent. back to you. >> thank you. more ones pulse of the consumer counting don to the holiday shopping season. nine weekends left?

>> nine. that's it. >> joining us now is nate flo forbes, and with us, of course, dan gilbert of quicken loans. you are now related -- you're not related -- >> no relation to the forbes. >> gone through the whole life, and now you have a company. how many times a day are you asked the question, related to the forbes family? >> quite a bit. >> are you related to walter forbes? >> no, we're the franklin michigan forbes. >> that's right. >> that i remember. okay. a little recognition. nate, here's the question. we got earnings reports, figuring occupant where the economy is, where the high end consumer is, the space that you play in, but where is everybody else? give us a state of play on luxury right now. >> the luxury industry really held up well through all the ups

and downs of the recent economy, all the numbers, the reports, everything else. luxury consumer is here to stay, and on the luxury end, higher growth rates, especially this holiday season, and you'll see that in the broad based sector. ? does the retail stuff you do, you know, one of the biggest issues is the brick and mortar, the on line digital, idea of showcasing, used to walk in best buy, check it out, and buy on amazon. what's happening -- people walk in the stores, not buying, checking it out, buying elsewhere or going to the sites of the retailers? how do the retailers try to measure what this whole sort of vicious circle is like? >> retailers have become smart, andrew, including the luck ri retailers. it's seamless to the consumer. consumers walk into the store, and there's point of sale machines. if they don't have it in stock, they order it right there from the tablets onlit

shipped directly to the home within two days, free of charge, and you see it from all retailers from luxury all the way down the line. everybody's really becoming smart. they don't want to lose that consumer. once the consumer is in the store, they don't want to let them out without a sale. >> are some of the retailers ahead of others? who is nope as the brick and mortar retailer taking the leads -- not amazon in its own category, but, you know, the ma macy's of the world, one of the department store, and even the smaller stores. who leads this? >> started with app 8. apple started the point of sale business. you walk in the store, there's display tables r there's a sales consultant working you at that table, there's a device on the belt, give the credit card, he has a bag under the table, pull it out, and you walk out with the goods. apple, from a retail store base, and really macy's started this years ago, had point of sale, walked up with your product, put it under a scanner, and check the price of the product from several places throughout the

store. >> discounting, always the big question ahead of the holiday season, a question when you start discounts and whether you pull forward sales, starting discounts there or later. what do we see this season? >> more of the same. starting the monday before thanksgiving. >> before thanksgiving? that's even -- when did it start last year? wednesday -- thursday? >> it was -- used to be black friday, then black wednesday, and this year is black monday. >> is this a mistake? >> it's a fight to get that consumer in your store. all of these retailers try to develop relationships through social media forms, direct to consumer pieces, want to bring the consumers into the stores. >> to the point of having lost leaders, basically. >> for sure. they'll forego profits to generate sales volume. >> is that the right play or do it because everybody's doing it? >> that's what's happening. people open the day after thanksgiving, consumers and retailers open earlier, getting

in the stores earlier, but it's a balance. you have to look at profitability versus inventory levels, and you want the full price consumer to still understand that relationship. >> two things, a couple big potential positives, but there's a potential problem too. the positives are, first of all, there's a longer calendar, more days between thanksgiving and christmas, great news, turns outs to be good, and oil prices have come down significantly, and gas prices are down at the pump. those are massive tail winds, but you have the potential of a problem with ebola, going back and forth with january, the retail analyst who said, you wouldn't believe how many people regularly throw up in malls, and every time someone throws up in the mall between now and christmas, they'll think it's ebola. how do you match it up? >> if you chase that scare, you'll chase ghosts for a long time. look at positive tail winds we have. more shopping days in the holiday season, and lower gas

prices puts more money in the consumers' pockets, relating to a percentage of the dollar spent on retail sales. >> you sound like tom, nothing to see here, you don't have a horse in the game or anything, do you? >> what is the regional malls' role? do you have a role tieing them together more than before? how do you do it technology-wise in. >> biggest challenge in the business. how do you capture the consumer? drive them to particular stores with events, sales, or other things? the wireless social networking, interaction tech world within regional mall walls is being developed. there's not a platform today followed nationally. >> okay. we're going to leave the conversation there. thank you for coming in. >> thank you. >> nate, quickly, the vice chairman of the cleveland cavaliers. how it is looking?

>> great, dan. >> i just wanted to make sure i ask. >> good to be on the other side of that. >> needed a quiz. >> great. >> how do you do it? no. >> we have more time? >> we'll have you back and talk more about the season as it progresses. meantime, up next, digging into a quarterly earnings from breaker. why their results gave investors indigestion. the owners of chilis has reportings in line. >> what else they own? something else? >> down 6% yesterday. italian place, right? what gives? hear from the ceo next. check out the futures at this hour. take a look. "squawk box" returns in a moment. dow looks to open up higher, 18 points higher. a brand new start. your chance to rise and shine. with centurylink as your trusted technology partner, you can do just that. with our visionary cloud infrastructure, global broadband network and custom communications solutions, your business is more reliable - secure - agile.

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fast food casual stocks under pressure, in the red, due to fewer dining out and rising food costs as well. the parent of c chillies has lines with exceptions. it's increased 12% over the last year, but hit hard in yesterday's trading, down over 2 s% in three months. joining us now inside the numbers is the ceo of brinker international, and thank you for joining us today. >> thanks for having me, becky.

>> tell any what happened here. >> well, first, we had a good water, you know, a solid quarter, comp sales up 2.4%, delivered the eps growth of 16%, and so we were right on target with what we expected the quarter to be, and, actually, pleasantly surprised ourselves and the street with the strength of the casual dining segment through the summer. i think what surprised some folks was some of the pressure that we experienced on the margin line, specifically in cost of sales, and i think that's the similar story with some of the other players in the category. the -- the beef and meat prices that were kind of elevated this summer and stayed higher, and the dairy, and with us, with our push to so much more fresh product and the increase used in avocados caught us by surprise too. there was pressure on commodity and labor lines that offset some

of the positiveness that we saw in sales. >> you know, it's not a surprise to see fluxuations in commodity prices and what you pay for inputs. i guess i wonder why it came to such a huge surprise to the street. things like that are generally easy to track. >> yeah, ooi'm not sure where t reaction was big as it was. it was not, as you stated, it was not, like, there was not a good lead into it, and full knowledge of it throughout the summer, but i think when you just kind of put the numbers out there, sometimes they have an overreaction potentially to magnitude. good news is we're seeing those costs mitigate, you know, the cheese markets coming back in line, dairy markets coming back in line. as you talked about the fundamental issues around commodities like the harvest this summer as well as oil prices that dried a lot of the commodities as you transport are mitigating and going to give us a lot of optimism to see lower

cost structures going forward. >> you admitted to yourself the new strategy is to get fresher foods on the table, things that draw in millennials looking for that. there's tough competition out there when it comes to that. that in itself sounds like it is something that leads to higher costs overall. it's not as cheap to put that kind of food on the table. >> well r you know, i think it's a real partnership that we're working towards with our suppliers, and it does not necessarily have to increase the cost as much as i think it used to in the past or as people think. a great example is we've just rolled out a new burger line, and in the process of doing that, we've partnered with growers around the country to have a lettuce product we think works exceptionally well within the burger, and it's not created an increase, a significant increase in the cost that is just a fresher, better product that works exceptionally well in that in our burgers, and so we're able to do that without putting a lot of pressure on the cost of sales. >> wyman, quickly, mcdonald's

shares crushed, down 3.3% in the united states. that is largely because of decline in traffic. what have you seen in terms of traffic? what have you seen in terms of strength of the american consumer? >> again, in our concept, we're fortunate to grow the top line, three years of comp sales growth, and, again, last quarter, 2.4 % growth, and the comp sales have. able to address the needs of the consumer and competitive environment, and grow, share, and grow sales, and last quarter, we grew traffic, which is the biggest challenge in casual dining, and as we grow traffic again, i think we've got a lot of initiatives in place allowing us to do grow traffic in sales as we move forward. >> okay. wyman, thank you for joining us today. >> thank you for having me. stocks to watch this morning, dow chemical, third

quarter, four cents above estimates, helped by increased sales and prices for some high performance plastics and other materials. as a result, we've got dow up $1.8 had. beating estimates, but sales of the best selling multisclerosis drug fell short of analysts' forecasts for the first time as a result, a pull back of over 4% in the shares, xerox earned 27 cents a share, one cent above estimates, and demand fell short because of the printing business. up next, jim cramer on what's moving the markets this morning, and later, can lebron james lead the cavs closer to the ring that dan gilbert -- you want it, don't you? >> for cleveland, for all those people in cleveland. >> good answer. good anxious. we'll ask him about that and move to bring the all-star forward back to cleveland.

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let's get down to the new york stock exchange, jim cramer

joining us now. we had -- i like -- i like -- i like watching dow, they raised prices. i'm just looking for that ability anywhere because someday it will be nice to be able to do that, but nay said it was in areas in specific products. so it's not something that we can assume is going to come up. but some day that pricing power might return. and that would be a positive. >> well, i think actually pricing power is there for a lot of the emerging markets. i thought that was a terrific interview. i want to go over polyurethane, which is this gigantic line of business for them. raw costs going down, prices going up. i know they have a new crop protection line next year. these are the guys that have really taken advantage of the american renaissance. doing a lot of refinery building. they're running the refineries down there 98% cap, which means they're going full out and getting good price. that stock is going to go up bigger. >> i know if andrew were talking, you'd probably talk

yahoo!. i want to know once and for all, mayor or minor. >> i'm going with mayor. >> i want to know once and for all. >> jim, i spoke to her on the phone last night. i was impressed. i know we've raised lots of questions over the past year or two and said she's had a bit of a honeymoon period with alibaba. i think she's bought herself some time. >> i'm so glad you felt that. she came in july of 2012. the stock was at 15. now it's at 40. coca-cola, where is the stock in july of 2012? $39. now it's at $49. the analysts absolutely love it. the long knives have been out for marissa for a long time. i don't get it. she's been a great steward of capital. >> nice. >> come get me. i'm going to carpet bomb you.

>> where do you think this stock is two years from now? >> two years from now, if alibaba keeps going up and they get a better corporate tax rate and they're able to buy some of the revenues away from advertising and display, i think the stock goes to 60. >> boeing should have red, white, and blue in their insignia, don't you think? >> yeah, i got to go through the comps with boeing because last time it was the same thing. people didn't like the operating cash flow. i think it looks good. that is a quarter where you have to listen to the conference call. i have total faith. the airplane orders are up. when you see some of these industrials reporting over and over again, you really got to question, why were people throwing these away? i got an answer. because they're stupid. >> you had that beard long before john came on here too. >> he's a sharp dresser. that stuff doesn't fit me. it's too european. >> it's an andrew thing. i looked at those guys walking along the ramp or whatever.

me and you, there's no way. people would laugh. they would point. >> you're not going to get that. >> getting old, jim. >> vf corp., initial read on the quarter was not good. stock up gigantic since then. i really like that retail fella you just had. many more days, as becky points out, between thanksgiving and christmas. retail is going to be when urban outfitters is the outlier. >> all right, cramer. thank you. >> coming up next, with the basketball season about to tip-off, what does guest host and cleveland cavs owner dan gilbert expect from lebron james this year? we're going to discuss the upcoming season, the business of the game, and much, much more when we return. location. location.

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welcome back to "squawk box." i'm phil lebeau with breaking news regarding this ever-expanding warning to drivers who may have a vehicle with a faulty air bag. we've learned that general motors will be sending out a notice via overnight mail to these select number of owners of vehicles in high humidity states, telling those people that they have a vehicle that is

impacted with a faulty air bag and that until they get the inflater for those air bags replaced, those people should not allow anyone to ride in the front passenger seat of those vehicles. gm says it is still trying to figure out exactly how many vehicles will be impacted by this warning to have somebody not in the front passenger seat, but it's likely around maybe 15,000 vehicles. again, that's not a final number. that's what they're trying to figure out. guys, we're talking about pontiac vibes sold with these faulty air bags as well as saab 92xs. >> all right, phil. thank you very much. let's get final thoughts from our guest host today, dan gilbert, owner of the cleveland cavaliers. i want to go back a few years. you talked earlier about how you have a brokenhearted lions fan. what was it like when lebron left? >> well, it was a four-year period, right, and lebron obviously won two championships and now he's come back.

i think for those four years, you know, for us it was a painful time, but it was almost a blessing in disguise. we were able to acquire significant assets. assets meaning on the basketball assets side. a little bit of luck in there in the lottery. and we were able to turn those assets into a real enticing situation for lebron. and it's not just lebron coming home, which obviously was a huge part of it, but he's also coming to a team that is going to look r pretty good this year with a lot of years ahead of it and still some assets we can turn into other good players around him. >> when he left, did you ever think there was a possibility of him coming home? >> for the first few months after the way it all happened, you know, as i said many times, the five years we spent with him, first two years was a different ownership. we bought in really in the last five years. we never had a word. everybody got along well and great. we had one bad night. that's actually the first thing i said to him when we met this summer. you know, i tell you what, right

now it's just so exciting in cleveland. it's been since 1964 since a cleveland professional team has won a championship. they're the most loyal, dedicated, great fans in my opinion anywhere in the world. no promises or guarantees, but we should be able to compete for the ultimate prize over the next few years. nothing would be -- just please myself more to watch the fans and supporters. it's generational in cleveland. the one thing i learned after lebron left and all the mail and the letters, you know, people don't just talk about it in terms of the context of an event that happened to them. they talk about it in generational terms. going to the game with my father, my grandfather, remembering the cleveland browns championship. this is in the soul of the city. we're going to take it one game at a time. >> i want to congratulate you on winning him back and having this opportunity. >> lebron is a good person, and he wants to impact things positively. i think not just on basketball,

on the basketball court but off of it. particularly in the last year or two, you hear more and more of him realizing he won't play basketball forever, and he wants to impact his whole community. he's going to do that at home. >> thank you so much for joining us today. >> thank you. a lot of fun, you guys. >> it's been a pleasure. >> good luck. >> make sure you join us tomorrow. "squawk on the street" starts right now. >> good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer at the new york stock exchange. david faber is at the barefoot economics summit in texas where he's going to talk to kyle bass later on this morning. meantime, futures relatively stable here after the s&p's best day of the year. five straight up days, the longest streak since about june or so. ten-year yield steady at 2.2. consumer yield prices once again tame. oil has $83 back in its sight