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 today. our road map begins with the

markets looking for a modest extension to tuesday's rally. results from boeing helping combat global data. ceo marissa meyer defending her m&a repurchasing strategies and jamie dimon says it shouldn't be so hard to get a mortgage right now. we'll talk more about that. stocks hoping to main ttain the upward momentum. nasdaq up 2.4. first triple-digit move in almost two years. the dow now back to positive territory. boeing is going to have a big part of that today. >> boeing, once again, the premarket from 129 to 131 has since come back. this is a conference call story because you got to hear about what military -- because they didn't have good execution last time. return of capital, we got to hear that. the tone is better, confirming

what alcoa said, which is they have the biggest share of each plane. let's take a hard look, but i like the tone of the big industrials. i think that literally has been the theme now for the last four days. >> boeing is going to go positive for october this morning, which was down 3% at one point. you mentioned they're raising their forecast, basically coming into line with where analysts were. >> a week ago we would have ignored it. why? because american air was going down. delta was going down. people were concerned about ebola. i believe that ebola has been contained. i don't mean to say it's been cured, but it's been contained in the sense that the government has gotten ahead of the story and people don't seem to be afraid of flying. judging by the recent numbers. by the way, six flags last night saw no degradation in theme parks because of ebola. that's another reason why disney can go up. the orders for aircraft remain very strong. you don't want to see the dollar any stronger because i think that in the end air bus will be

able to take advantage of a discount. but boeing is doing great. i think the stock remains inexpensive on 2015 numbers given they have a ten-year game plan. >> and that new 777 coming out in just a few years. >> they make a lot more money per plane. they're very organized. people get too excited when they see the headlines because headlines are always good, but it's the nitty-gritty. we await the call. there's been a lot of quarters where we get on the call and find there are things we didn't count on that mystify us. so i don't want to say this thing is going right back to 133 where it traded in the premarket because there's still more to come. >> right. david, we've heard from a bunch of big names in the past 24 hours. it'll be interesting to hear what kyle bass thought about the last ten days or so. >> yeah, without a doubt. a number of the hedge fund managers here at the barefoot economic conference who i had an opportunity to talk to last night. as you might not be surprised, some of them were hoping it would be more of a down market.

we'll also be talking to john burbank. he was a bit more short. it is interesting to note that we're talking about a week in which ibm, coca-cola, and mcdonald's all had significant disappointments. if this was the 1960s and the nifty 50, it would have been a worse week, i guess. >> yeah, these are -- i don't want to say they're -- the relevance is being questioned. when i look at coca-cola, when are they going to do the big moves? not a good quarter. the analysts still love him. poorly executed. 1% growth in some lines. minus 1% in another. if i want 1% growth, i'll take it from yahoo! with a gigantic buyback and a company that i am now saying is not as poorly run as people think. i think coca-cola days are over, period, end of story.

>> wow. >> i didn't even go to ibm and mcdonald's, which were really bad. >> it's creeping into a mainstream story. "usa today" with a big piece on coke and mcdonald's and whether tastes are truly changing around the world. not just a u.s. story. >> what coca-cola needs is frito-lay. they need something to offset it. green mountain coffee. monster, which some argue is really bad for you. monster and convenience store selling is very good. coca-cola, there's fat and happy. they've got the umbrella. we know what the umbrella is. the umbrella is warren buffett. ibm, they have the umbrella, which is warren buffett. pepsi co. has no such umbrella. >> not a tech company anymore. specializing in financial engineering. >> well, i never go to the other side of cuban because he's in the end someone i've known from when he bought the mavs for very little, when he sold to yahoo! the broadcast at the absolute high. he's just an engaging, terrific

guy. i know he thinks netflix is a buy here. i think that's a longer term view. i think that yahoo! did a lot of things right. and ibm did a lot of things wrong. i think that coke did a lot of things wrong. yet, mutar is loved. meyer, all i hear is she's got to go. the buyback -- remember, when she came in, in 2012, coca-cola and yahoo! were at the same price. yahoo! was at 15, goes to 42. coca-cola when she started was at 40, it goes to 39. she is cat called and hooted and negative, and he is loved and revered. >> a lot of price target increases on yahoo! today with a five in front of them. a lot of that is based on the assumption they can find a tax-efficient way to unload some asian assets, yahoo! japan among them. >> she said, look, i am a great

steward of cash. why? because she comes in, alibaba and yahoo! japan had terrible relations. she points that out. she was able to renegotiate the agreement that allowed her to keep back 122 million of shares that she would have had to sell on the ipo, which obviously wasn't that good. people say now that it's no longer an alibaba story, how do you look at it? are you crazy? it's still a great alibaba story because it's blown through 100. in the meantime, she buys back 293 million shares at $26.37. most of the buybacks i have seen this quarter have been miserable. there's a buyback. >> yeah, i spoke to her last night after the conference call. as you just point out, jim, there was a great deal of focus on the call and the conversation we had afterwards on this very matter of capital allocation. i think in some cays try and rebut this idea they've gone out and made poor acquisitions when they've only spent $1.6 billion on acquisitions. over $7 billion on buybacks at very, very good prices.

not to mention, again, what you just said, saving the company they would argument $2.5 billion by putting a bad relationship back on much better footing with alibaba. i mean, she said to me, you know, we've come far and fast in the relationship with alibaba. and also, actually, said that in the future there could be further partnerships between these companies. although, when i said, well, what are you going to do with this stake? because of course there is great deal of focus on being able to unwind, what is it, almost 18% of alibaba they still own in a tax-efficient manner. i've been talking about that for over a year. they on the call, as you know, said they're very optimistic, that they'll be able to do that. they didn't give any specifics. that said, they talked to every expert out there. as a result of a change in disclosure, even though they're locked up for a year on alibaba stake, they're going to be able to update investors on these

plans they may have for it. it is no the considered strategic. therefore, at some point they are going to divest themselves most likely in a tax-efficient manner in that stake. as far the core business, that seems to be the key question. they had strength in mobile. 200 million in revenues, really showing strength there. display on pcs continues to be a not good business. she came back to the core percent display without pcs and doing very well on native ads, it's a mobile app company that sells native ads. mobile apps will win is what marissa mayer told me last night. >> i thought that was really important she was talking about 1 billion in revenue. one of the things that annoyed me in what she did in acquiring 1.6 billion. she got some great people to lay out the controversy of what they bought and what they got. google paid $2.3 million for nest, which is a company that basically if you wave your hand,

the beeps go off. turns out they also wave the hand and beeps go off if there's actually a problem in the house. that's a $3.2 billion acquisition that was horrible. she's made half the acquisitions of that and she is criticized. i think david's right. look, you get all that capital and you do it in a tax-efficient way. she can go buy netflix. the much-loved netflix. mark cuban likes netflix. she could go buy netflix. she could buy yahoo! grubhub, zillow. >> you don't believe the notion that relying on your tax team to deliver a higher share price is a substandard way to grow? >> i think she had this amazing asset, which she augmented, and if she had focused on just buying more display ads, which googed destroyed by the way when it did its program, then i think she'd look like a real idiot. instead, she looked at the assets she had. she increased the amount of alibaba she would have after the ipo, which was a brilliant move.

they got $39 billion in alibaba. i look at it and say, look, i'll go buy that whole company and close it if i have to. i can make a fortune. >> again, none of us are addressing their core business and growth in their core business. >> they can by buying companies with all that cash, david. >> yeah, i mean, they took in 6 billion from the sale of what they already sold in alibaba, the 140 million shares for the ipo. of that, half is going to be returned to shareholders. you can always take on debt to do a larger acquisition or conceivably use stock. there's no doubt about that. she did go through her thoughts about acquisitions in terms of some you do for buying people and certainly the bigger ones strategic. they've only done two strategic, tumblr being the largest of them at $1 billion. the narrative that yahoo! is putting out there now is to strengthen her hand.

i think they're doing that fairly effectively in speaking to people and their investor base. but they have to actually succeed to a certain extent in turning this business around in a meaningful way for that narrative to really take hold. capital allocation is not unimportant. it's very important. when you're talking about $10 to $12 a share, if you can figure out a way to not pay taxes or a lot less in taxes on that alibaba stake, that's a big deal too. but there's no doubt, when it comes back to it, they still got to show real momentum at some point, which they haven't quite yet in the core business. >> no, but it's a $40 billion company with cash equivalents if they do a tax write that shows this core business is worth, i don't know -- they have some business here. it's worth something. but if you watch the way alibaba is trading right now and how it's been trading, then you have a company worth nothing. i think the possibility of being able to monetize that money in a way that is not advertising

orie oriented, there's a host of companies they could buy that would please wall street. don't look at this company as it is now. look at the fact they were great stewards of that capital and didn't blow it. they didn't buy nest. i like it. >> that's fair. some discipline is what you're pointing to. david, walk us through what the rest of this morning is going to look like for you. >> we're going to sit down and talk to kyle bass, of course. he of the big short in japan, he of the long position in gm and no stranger to our air. certainly new things to discuss on japan. talking to john burbank later. we'll talk stocks there in particular. and the market overall. and later, you know, those comments from karl icahn about the market being overvalued. of course, there's a lot of other people always to catch up with here at barefoot as well.

we'll be sharing their thoughts. >> does look like a gorgeous day. you're missing the rain up in new york, david. >> i want to hear about gm. it's been a disaster. >> especially with the news that phil lebeau just broke. >> utter disaster. >> when we come back, scott mcgregor will tell us what's working for the company. first, jpmorgan's jamie dimon speaking out on the economy, including comments if you're interested in getting a mortgage. we'll tell you what he said when we come back. take another look at futures this morning as the s&p tries to make it five in a row to upside. more "squawk on the street" from post nine at the nyse in just a minute. greenline do for you?ity just take a closer look. it works how you want to work. with a fidelity investment professional... or managing your investments on your own. helping you find new ways to plan for retirement. and save on taxes where you can. so you can invest in the life that you want today.

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mortgage applications up by 11.6% this week, led by a pickup in refinancing. but late yesterday at a conference in new york, jpmorgan's jamie dimon said mortgage credit still too tight that, quote, it's still hard for many to get a mortgage and it shouldn't be. as for the global economy, dimon said the u.s. financial system has, quote, completely recovered and in the long-term, the u.s. has had the best hand it's ever been dealt. interesting comments and pretty specific to the availability and credit. >> what you need in a fico score is still way too high. i think anyone who's been involved in buying property knows that you really have to put up a huge amount. i'm hoping the fannie mae rules

really matter. they look at, do you have enough money if the house -- if you default in your account. you're looking at your balance sheet and say, listen, you want to buy a $1 million house, do you have $1 million? if you do, we'll lend you, if you put down 30% of that, the rest. honestly, i've been involved because i do a lot of real estate and property, it is impossible to buy that second house, impossible. no one wants to lend you money for a second house. they're so afraid of the examiners. it really is the examiners. plus, the paperwork is absolutely impossible. >> that's exactly what dimon pointed out. >> dimon -- i don't think we're in the best place possible. he got to write the check to the justice department. the idea we're in the best place possible is a little facetious. the regulations in this country a horrendous. >> that all said, mortgage rates this morning are the lowest in a year and a half. one reason applications were good. last week you advised our

viewers to re-fi if you could. >> bbm&t, wells fargo reached ot saying absolutely. when i went into refinance, what you find it you get a five-year -- we're not doing 30 year. every e-mail that starts with, you don't know what you're talking about, i want to send them my mother's phone number when she was alive. i'm done with you. i don't know what you're talking about. i'm in the market to get refinancing a bunch of things and you're getting a seven-year arm, 2.6 and then resets every year. that's like the deal. that's still a lot better than the 5.6s that bbt sees a lot of. wells fargo on twitter just saying, we're inundated. it is a great time.

i'm going to save $800 a month, which is a lot of money. you have to very careful how much it costs to refinance. i will not be able to start getting a payback until month 12. >> by the way, we should also mention dimon addressed his difficulties with cancer, called it a journey. appears to be doing well and says he still has hopes of one day using his talents to help run a charity. >> i hope so. the justice department took these guys apart. the negotiations with the justice department were like, look, you owe $15 billion. why? because, i don't know, you owe $15 billion. fdic says it. well, no, we're not going to. fdic hasn't said it at all. the miscarriage of justice going here. but the banks are hated. go after the guys who wrecked us. put them in jail.

>> when we come back, we'll count down to the opening bell. we'll get cramer's mad dash, take one more look at the futures. got 37 companies, major companies, reporting earnings. we have not yet gotten some. we'll be right back.

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upside surprises that when people sit down with them they want to know how good they really are. this was one where i was concerned that perhaps the top line would be weaker because of europe. they have big business. taking advantage of the raw costs going down in the united states, selling a lot of plastic. this is really one of those moments where the costs are way down. the revenues are way up. and the margins are terrific. i want to know whether dan loeb is happy. there's two parts to the story. a great earnings report, and is it enough for the avtivis. >> probably crude back to 100 within a year. high-cost shale is going to dry up faster than we think. >> i care more about -- they are running the refineries at 88%. that's extraordinary. you get into the mid-90s, you get into burnout of the refineries. this is a company burning full

out 24/7 around the globe and can't meet demand. that's unusual. >> let's get to 3d. >> last night opco put out a piece. i've been telling people sell 3d with everything you have. just get out of it. 3d systems said, oh, boy, opco put out this piece. valuation, pessimism and comps set the stage for why you should buy it. i wake up this morning and 3d preannounces a hideous number. this may be the shortest lived buy i have ever seen. these guys are addicted to saying a great story. because -- like, listen, we missed the numbers it really badly. there's strong demand for our products, we couldn't meet it. i'm going to just say eyebrows are a skans. i've learned the way you have to say these things. i found this quizzical. >> meaning you didn't believe them. >> exactly. >> that's another way of putting. we'll get to a bunch of other names out this morning. the opening bell is just a few minutes away. don't go away.

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a lot of companies reporting. boeing we've already got. we covered dow. some other news as well. tesla, for instance, losing this fight for direct sales in michigan. >> tesla is a charm stock. i think people are going to momentarily sell it and come right back because there's just a belief that musk can do no wrong. there was a belief that reid hastings could do no wrong. i don't like the situations that are perfect. by the way, you mentioned who's doing well versus who's doing badly. i noticed that north rummond put up a pretty good number. we're trying to get a hand on that because defense stocks have been bad. a lot of people bought them ahead of isis and ahead of the belief that the middle east would cause a rearming. the retailers, a lot of them seem to be overrun by technology. that's not terrific. we really have a very mixed market. industrials have distinguished themselves as being the group that people like. and biotech too.

>> still got to get through some automakers and caterpillar and others. >> caterpillar i'm very concerned about. we have some rolling numbers out today for cat. the problem with caterpillar is china. the problem with china is it's terrible. but baltic freight was up big again last night. i'm getting more optimistic about china. >> there's the opening bell. a look at the s&p at the top of your screen. you can see how volume is after 97% positive breadth yesterday. unbelievable. >> yesterday was really kind of an -- it's been all clear now for a couple days. i like the action in the banks too. >> at the big board, ed rendell's fans for the cure, increasing awareness for prostate cancer. dvv technologies, a specialty bio pharmaceutical company celebrating its ipo. >> this is the group. i don't mean to interrupt. i've been watching agios

pharmaceuticals. that's got the most amazing story. i talk with meg turrel a lot. that's the one to watch in terms of a new template for cancer. >> and bio gen. >> scripts weren't that great. people were freaking out. >> last night you rolled out a series of things that need to happen for an investable bottom to take place. we're talking real containment on isis, real containment on ebola. >> isis high water mark. ebola, yes, the government understood that americans were panicked and the cdc was pushed aside. the one i'm most worried about now is russia. i like the fact the germans seem to be ready to do more. >> ten things. >> that they've already met. >> that's a lot. >> they met on friday. things have been going up ever since. you needed to see so much go

right and so much went right. a testament to how the hedge funds were offsides. who would have thought that 40 people who surrounded thomas duncan would not come down with ebola? who would have thought that? the cruise ships wer ships werey shorted. six flags, disney. who would have thought -- i mean, rather remarkable things that have occurred that we had so many beaten races in technology after microchip. who would have thought that leadership would come back, the airlines and the biotech. are we due for a pullback? the market has gotten excited. >> we're up 7% in five or six days. here's the question. 1943 on the s&p is where a lot of people think -- is that the retracement level you need to reverse the bearish trend? >> yeah, i think it is. there's a lot of companies that will be very telling tomorrow. i think that when all is said and done, the thing that needed to happen most is the one that's

most bizarre and counterintuitive. you needed to see oil bottom. first of all, a lot of hedge funds were in oil. secondly, there were a lot of covenants that would be triggered. a lot of problems in the oil patch. a lot of companies would literally have to go bankrupt if that thing went to 70. and it didn't go to 70. it went to a level where there absolutely is a win/win for everybody. most of the oil companies make a huge amount of money in this country. a really big return on investment at $80. obviously the consumer does quite well at $80, which translating to under $3 in a lot of parts at the country. >> and cpi very tame. >> we don't want to see it go negative. we don't want to see deflation. i feel like i should mention the fed right now. so i just did. now we can move on. check that box off. >> a lot of the names that posted this morning are doing very well. stanley black & decker, dow chemical. >> broadcom got out of a bad

division. some capital equipment companies have done quite well. i still don't think the deal gets done. we saw terrific technology earnings. very few companies -- it really turned out to be much more like texas instruments and sky works solutions. turned out to be microchip. by the way, i still think intel is overlooked. >> check out fdx. fedex is forecasting another record holiday. they now see 290 million shipments between black friday and christmas eve. that's 8.8% increase in overall peak of volume. >> that was fantastic. u.p.s. broke 100 yesterday. online shopping is just going to be terrific. fedex, by the way, ever since it hit that double bottom in the mid-'80s, they've been off to the races. they've done a lot of things

right. >> emc just can't seem to catch a break. >> no, and i don't like them. there's a secular seat change. not as bad as ibm. they're way ahead of ibm. vm ware did not do the numbers. that had been a company -- i owned vm ware. huge percentage of vm ware. you figure out, why do i want to be the mc. not as irrelevant as ibm. how much is ibm down today? look at that, stabilization. >> for the month down 14%. you know what's getting hammered again? coke. >> it should be. going through all the stories this morning. people obviously recognize the company is challenged. on the earnings call, hey, man, hang in there, you're doing well. pepsi co. remains the one that i felt had the coca-cola is so anemic it really deserves to have a discount the way that a general mills has,

not a premium. that has to change. the price to earnings multiple has to shrink in coca-cola. the dividend won't protect it. it's not where to be. pepsi co. is where to be. >> do you think this series of up days we've had have been because there have been no new cases of ebola? is it jawboning by the ecb? >> i think the fact that germany looks like it's blinked -- >> you do? >> yes, i don't think herbert hoover -- you know, it went viral that merkel in a pants suit is herbert hoover. she seems to be changing to a little more fdr-like. i think the fact the cdc, which we had lost all confidence in, kind of like in that first year of "walking dead." we said, let's not go to the cdc. i don't know if you remember that. they were going to ft. bragg and cdc. we decided not to go to cdc. >> i don't want to equate this whole thing with "the walking dead." >> no, but americans did. there were 17 million people who watched that. it was a mass panic. i don't mean to make light of it. many people are dying of this.

there was a mass panic in this country. we've gotten that under control. and that's what mattered to me. the mass panic meant people didn't want to leave their homes. they didn't want to go to restaurants, didn't want to travel. i think that subsided. i also like ron clain, by the way. people say he's a hack, he's an idiot. smartest guy when i went to harvard law. well, harvard law is awful too and it's a joke. not everything is a joke. not everyone is a joke. not everyone in government is an idiot and moron. there are people in government who have some bearing. i know i'm going to take a lot of heat by saying not everyone in government is stupid. i'm sorry. they're not. >> and now people are watching j&j this morning and glaxo and the degree to which a vaccine can be developed. >> i had the company that does all the testing. that's letter q. let's calm down on this. many, many months.

i would never if i were in a hedge fund buy this stock off this. the trials are going to be very extended. the fda is clearly fast tracking. everyone is fast tracking. everyone is going nuts to do it. you still have to try a vaccine on people before you see it work. here's a shot, go into that tent. you don't need to hazmat. so people stop trading off this. the actual process of getting something approved is not going to be suspended. even for the people who are deathly ill, they're not going to suspend it for the people them who actually have it. so stop trading off the idea that tomorrow the fda is going to bless something. >> finally, let's circle back to yahoo!. this is going to be a 4% day. breaking out mobile revenue for the first time. >> mobile is going to be over $1 billion. this is one of those calls that just said, you know what, you think i'm really stupid, i'm not as stupid as you think. it was a very challenging call that basically said, listen, you think we're dumb, but take a look at what we did. we bought back 293 million shares at $26.37.

the stock was at 15. now it's at 42. reducing head count, getting rid of the bad. a lot of deadwood there. there were a series of ceos before she came in. dealt a very bad hand. >> dysfunctional board. >> kind of like ibm. dealt a very bad hand. i think she's slowly but surely getting the cash to reinvent the company. don't look at the company now. look at what she buys. if she continues to buy back stock, then the company is going to be a company that is, you know -- it'll be 100 million shares and worth 70 if she keeps buying that. >> people call it a closed-end fund with an interest in tech. >> i like closed-end funds. i think the stock goes to 60 if baba keeps going up. it went to 84 last week. i should have told people to pound the table on it. people who don't play into baba are also being foolish. she says she mended fences to make it so she was able to pull back a lot of stock from the

ipo. that may have been the smartest decision that a ceo at yahoo! has ever made. those who continue to attack her, you better come up with more ammo. if you look at what google did to destroy this business, they're way too heavy in display, which google destroyed. people don't understand. google destroyed the idea that a page view mattered. they destroyed it. i was out with jim stewart last night. we were all just talking about the web got destroyed. the advertising business was destroyed. it's not a business anymore. so she had that hand. google wiped it out in a period of 18 months. >> dow not doing a whole lot of anything for now. same with the s&p. let's get to bob posani on the floor. >> good morning, guys. flat open overall, but the important thing is oil is stable, on the upside slightly. what's interesting is earnings. most of the companies that have been out there today have basically reaffirmed their fourth quarter with guidance and full year guidance. a couple of exceptions. the biggest worry of average investors and fundamental

investors have been that the big companies might lower their fourth quarter guidance due to slower global growth. by and large, that's not happening. you want to watch the big industrials for this. the companies i watch most carefully, look at ingersoll-rand today. 40% of their earnings overseas. heating, ventilation, air-conditioning, security systems, thermo king refrigeration systems. their numbers were very good. a 6 cent beat overall. thermo king bookings up 20%. those are excellent numbers overall. fourth quarter guidance a little under consensus. they're not really changing the midpoint of their full-year 2014 guidance at all. stock is down about 2% right now. by the way, that went from 59 to 52. look at this. these price swings have been amazing. ryder, they raised the low end of their guidance. trucking business has been very

good. lease sales have been very strong. that's excellent. ryder is down 2%, but that stock went from 89 down to high 70s. that's just a few day ago. now it's back at 84. look at the ride these stocks have had overall. owens corning, another good example. they reported a strong beat. they've had one big problem. they haven't been able to raise their prices at all in a long time. that's impacted their margins. that stock was $35. went to $27 or $28 a few days ago. look, it's back near $33. just look at the charts and the way these stocks have swung in the last two weeks. if you look at stanley black & decker, they had a nice move up. they reported a strong beat. power tools, locks, do it yourselfers. they narrowed their guidance for 2014. 552 to 558. that's a good number overall. here's another one. this was $90 a few weeks ago. went to $78 five, six days ago.

look, it's back near $90 again. just incredible price swings for these companies overall. the one exception today on the guidance is lumber liquidators. that's just a disappointment. right across the board. not only were earnings below expectations, sales were below expectations, and the fourth quarter guidance was a disappointment. there is no other conclusion you can make other than their business is weak. and their business is primarily hardwood flooring. there's just no way around the conclusion that the business there is weak. that's clearly a bit of a disappointment. i want to keep up with the steam about how violent the swings and the prices have been. if you look yesterday, i emphasize energy and airline swings. all the way down and all the way back. chesapeake energy, good example here. dropped 28% from september 18th to october 15th. it's risen another 21%. it's come all the way back practically here. any of the airlines. they all dropped dramatically 15% on average. most of them have all come back. american airlines is another example. same situation. it's come all the way back.

that's just in a one-month chart you're looking at. royal caribbean, i'll give you another example here. that dropped about 20%. it, too, has come essentially all the way back. my point here, guys, is panicking at the bottom as some people seem to have emphasized was a very, very bad idea. with ebola quieting down, oil quieting down, and the fed looking to remain dovish next week, the market seems to be back in a big way. back to you. >> bob, thank you very much. let's get to the bond pits and check in with rick santelli. >> good morning. looking at a two day of tens tells you the story. today's low yield and today's current high yield, we've run up in that span about ten basis points. if you look at boon, their low to high yesterday to today on a two-day chart is up about six basis points. remember, we're always trying to look and study to see what turns are coming and what's changed.

cupping things have changed in the month of october. we see the spread between boons and our tenure narrowing a bit, turning. look at these three yield curve spreads. twos to tens hasn't moved that much, but it's still steepening in october from its recent lows of flatness. fives to tens. month to date it steepened about eight basis points. clearly 5s to 30s has steepened the most, about 15 basis points. since all these were driven by flatteners for 2014, really need to monitor the change and investor sentiment on various parts of ownership and duration adjustments on the yield curve. also, one of the steepening reasons today is you have deals out, corporate deals, issuance from verizon and citi. the hedging process puts a little selling in, but it all comes out in the wash when the deals are priced. a lot of that gets purchased. look at the two-day euro versus dollar and two-day pound versus dollar. weak, weak, weak. the first, why euro? a lot of issues regarding the covered bonds they bought. a lot more questions on any corporate securities any time

soon. we'll continue to monitor that. in terms of the pound, it's easy. bob said it at the top. dovish, dovish, dovish, dovish. every central bank around the world is growing wings. after reading the minutes, the pound really did get pounded to some extent. one thing we want to point out, greek bonds have dropped close to 100 basis points. carl, back to you. >> rick, thank you very much. when we come back, david faber's exclusive with kyle bass. live from the barefoot economics summit in texas. you'll hear the hedge fund manager's take on this volatile mark. first, the reviews are in for apple's new ipad. what the tech watchers are saying about that. apple now 50 cents from an all-time high. "squawk on the street" is back in a minute. ok, if you're up there, i could use some help.

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the reviews are out for apple's ipad 2. the consensus seems to be while impressive enough, not enough to upgrade. in a vacuum, i'd recommend the new air 2 without hesitation, but your current ipad can accomplish pretty much everything the latest ipads can. and walt mossberg says, overall, the new model reinforces my view that the ipad is the best full-sized tablet, but this latest iteration isn't much of a leap. mossberg is going to join us later this morning on "squawk alley," 11:00 a.m. eastern time. >> everybody who loves me, buy me one, okay? i'll put one in the beach house. just buy it for me. i read the reviews. please buy it for me. everyone nitpicks apple. whose ipad am i supposed to go buy? the other guy. who is the other guy?

this is one of those things. remember samsung? remember they were supposed to crush apple? i read these things and keep thinking, well, i guess i'll keep my ipad. it's not like i say i'm going to suddenly buy the amazon product. i've never seen a company this dominant in terms of consumer products ever. the average selling price of the phones is up big. the phone companies are subsidizing it. people want it. i keep thinking that coca-cola says it's a bad macro environment. 39 million people. apple's a dominant company. google's a dominant company. we as a nation are dominant in technology. we have such a chip on our shoulder. >> it is a nice bragging point we have around the world. these are our guys. >> facebook, twitter. >> zeroing in on that 103.75 all-time high. you still think it's cheap. you say don't trade it. >> it's just very cheap. not as cheap as google. google is much cheaper.

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time for cramer and stop trading. we have to go back to boeing. this stock traded at 133 in the premarket. all people care about is the expenses at the 787, which they're not cooperating cash flow. they did a step down in buybacks. it is a hated stock, okay. look, the 787s cost a lot of money to make. had they gone with the aluminum, they'd make a lot of money. that's why boeing's not doing

well. you have to stick with mcnerny. the long knives are out. i think it's a mistake. >> people also point to defense. revenue down almost 2%. >> yeah, and you know, he came on "mad money" and said, we're not worried about the sequester. i think a lot of people felt by this time congress would say, we're not spending enough money on defense and congress hasn't. so companies have to cut back again. defense is a bad business in this country. it was a good business because the world is a dangerous place. but congress apparently thinks the world is not a dangerous place. >> we'll keep our eye on b.a. today, which is having an outside effect on the dow. what's on "mad" tonight? >> we have rick goings. and the man who i think knows more about oil in this country than anyone, rich kinder, from kinder morgan. they're the big pipe company. they're consolidating their enterprises. rich is the man who identified it to me in 2009 that we were about to have an oil renaissance. i thank him for steering me correctly by just calling me and saying, jim, you're in the

bullish enough about oil. thank you, rich. we'll deliver tonight. >> it'll be good to take his temperature. >> what a show. my head is exploding. >> see you tonight. 6:00 p.m. eastern. let's get to simon. >> david's having an away day with the boys. we'll be live from texas as he interviews kyle bass. also, broadcom, we'll talk to the ceo. we'll look again at yahoo! and boei boeing's results. what do they tell us now about future investing? hour two of "squawk on the street."

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welcome back to "squawk on the street." our road map begins with a tale of two earnings reports. shares of boeing in the red, even after that strong quarter. yahoo! spiking nearly 5% after its results. we'll hear what ceo marissa mayer had to say. >> also, kyle bass joins us live from the barefoot economic summit for an exclusive interview you don't want to miss. >> and broadcom getting a boost in the third quarter thanks partly to apple. we'll speak to the ceo exclusively in a few moments. >> we start with one of the top

gainers on the session so far, yahoo!. shares rising sharply on third quarter earnings, but is it enough? josh lipton is live in san jose with more on that. >> good morning. you know, maybe somewhere this morning marissa mayer is breathing just a bit easier. yahoo! reporting third quarter results that bested wall street's estimates. net revenue clocking in at 1.09 billion. that was a gain of only about 1%, but it was enough to please investors. the big help here in the quarter came from the mobile business. companies saying mobile revenue exceeded 200 million in the quarter and will top 1 billion for the full year. the latest results coming at a critical time for mayer as she goes head to head with actavis investor, which last month sent a letter to mayer urging her to cut costs and even consider a combination with aol. mayer didn't speak on the conference call too specifically about acquisitions, but she did talk a lot about capital return.

>> from a capital allocation perspective, i want to call out that we have spent $1.6 billion on acquisitions, but we have returned more than $7.7 billion through share repurchases during that same time period. underscoring the bulk of our capital allocation plan has been devoted to share repurchases and these have been accomplished at very accretive prices. >> now, yahoo! also said it netted $6 billion from that alibaba ipo. mayer reiterated that half of that will be returned to yahoo!'s owners. yahoo! stock rising this morning, though it hasn't done much this year. the company still does face some big challenges. this year e-marketers says yahoo!'s share of the digital u.s. ad market will be just 5%. google controls 38% of that market. facebook, 10%. but mayer seems to appreciate the challenges ahead. however, noting on the conference call that she continues to work at transforming, as she put it, an iconic company back to

greatness. sarah, back to you. >> thanks very much, josh lipton. now let's look at boeing. another mover today. checking out the stock action right now. it was lower. as you can see, still is, more than 1%. even as earnings and revenues came in above analyst estimates. our phil lebeau live in chicago with the details. phil, looked like a good quarter. >> it is a good quarter for the third quarter, but there are going to be questions about operating cash flow when the conference call starts in about half an hour. i think some of those questions might give us more insight into why the stock is trading lower. you look at the top and bottom line for boeing, it beat the street. beat the street by 17 cents coming in at 2.14. on the revenue side, thanks in part to the commercial side of the business, $23.78 billion over the estimate the commercial side of the business is the one that's getting a lot of attention today. 186 commercial planes delivered in the third quarter for boeing. operating margins, 10.2%. and the backlog now stands at

5500 planes. by the way, that's $490 billion. boeing is also raising its full-year earnings guidance by 20 cents. now boeing expects to earn between $8.10 a share and $8.30 a share for the entire year. by the way, that's boeing coming up closer to what the analysts have been expecting. the kp a reminder the boeing conference call starts in about 25 minutes. we'll be on that call and we'll have updates for you. back to you. >> all right. thank you very much, phil. meantime, our david faber is in texas at the barefoot economic summit where some of the top asset managers have discussed the global economy. david, good morning. >> good morning, carl. i should tell simon, some of those asset managers are also women. it's not just a boys' club here. certainly has changed, actually, over time. of course, our host is kyle bass, hayman capital. this is my fifth year, i think. >> we're getting old.

>> yeah, we're all getting old. although, the conversation is similar. i want to get to macro in a minute. i want to start with gm. another story this morning our phil lebeau has been sharing with us about a potential recall. not a large one. very small, about malfunctioning air bags. you've been on with me many times talking about your love -- and i use that word carefully -- love of gm while it has continued to plummet in value. do you still own it? if so, why? >> we do. it's still our largest position. it's been a tough year for us. primarily because of gm. look, gm makes 3 million cars a year. we think there are 35 million gm cars on the road in north america. they've recalled 30 million cars. the good news is there's only 5 million more cars to go. i mean, for god's sake. look at the valuation of this company. it's worth $28 billion today in enterprise value. they'll do 16.5 billion next year. they'll do 6 billion in free cash flow. it's a 20% free cash flow yield.

if there was a private equity firm large enough to buy it with debt where it is, you could have 30%, 40% leverage-free cash flow yields to a buyer. >> 20% free cash flow yield is almost hard to imagine. it is extraordinarily cheap, but those who believe it's going to stay that way, there's not enough belief in management, and why would you buy a gm car when every day there's a recall? >> interestingly enough, if they convert 1% of the recalls into new purchase, they can make lemonade out of the lemons they've been dealt this year. i think they're working on that. their operating performance is actually pretty good. this recall issue is a disaster. fineberg's done a decent job in trying to ring fence this issue and pay out what gm is going to pay out this the victims out of the goodness of their hearts. i think when you look forward, the doj will probably fine gm whatever the number is. in the toyota case, i think it

was proven that there was knowledge all through the suite about their rapid acceleration problem. they fined them 1 billion too. 1 billion, 2 billion, it doesn't matter. gm has 28 billion in cash on their balance sheet. what matters is they put this issue behind them and focus on the next generation of cars. i disagree with you. i think management is doing a great job. >> why do you believe that? >> look at the operating performance of the company. they're making market share back from ford, which they lost during the bankruptcy. they didn't invest in one full cycle of rnd due to the bankruptcy. they're a much leaner capacity yutlization. by every metric you look at gm, it's going great, except for a recall issue that i think will be behind them at some time in the next few months. >> so you're going to hold this very significant stake that's caused you pain at this point at the expectation it's going to bring profit. >> correct.

rvel . >> all right. i'll leave it there for now. a lot of talk about the fed and zero rates and how long that can be sustainable given where we are in unemployment and whether it should be. i know you also believe in a policy divergence that's going to start to show itself quite clearly between us and the rest of the world, particularly japan, where you've had a very well-known, let's call it, short in place for quite some time. why is that going to happen, and why is it important? >> i think what's really important for the last -- since the financial crisis, all of the world central banks have been easing monetary policy. they've all been qe'ing in one way or another and trying to affect change through primarily monetary policy. that kind of -- that experience that we've had over the last five or six years or longer is changing and literally changing next week. on the 29th, the fed meets. i think we taper to zero. we take the last 15 billion a month and taper to zero. two days later, the bank of japan meeting. i think kuroda is going to go

and have his draghi moment. he's going to say, we're going to have to do whatever it takes to get to 2% cpi inflation. they still run 10% fiscal deficits. we think they're going to run a current account deficit of 2% to 4% next year. japan is going to have to buy more bonds, and the u.s. is going to buy no more. so when the training wheels come off the market in central bank land, macro becomes functionally much more relevant. so this policy divergence is going to be something not only between the u.s. and japan but u.s., japan, and europe as we heard. europe is going to have to go all in to arrest their deflat n deflation. you have the u.s. tapering to zero. you have europe. draghi is really going to have to go all in and finally get to overt qe. japan is going to have to print much more money than they ever have. that environment means strong dollar, no matter how anyone looks at that. how does that get factored into

corporate america as we've seen in the last several months? it has proven to give some consternation. >> without a doubt. whether it's coca-cola or ibm. of course, they have their own execution issues. we're seeing it starting to emerge in the quarterly results we just saw reported. but what else do you do from an investment perspective if you believe this divergence is going to take place and going to be significant? you go long the dollar and short all these currencies? what's the play? >> you do. biggest position that we carry today is a yen position. this policy divergence is something we haven't seen. very few people know how to think through. i'm not saying i know how to think through it, i just think that given the policy divergence, the dollar is going to strengthen. we heard inside the unemployment rate is going to be sub-five a year from now. >> it doesn't mean it's going to happen, but belief it could. >> i believe we're going to see a sub-five in the next ten months.

we can't have zero interest rates when we're at technical full employment. the fed's in a box. >> that being said, what then do you -- i mean, where's the end going to go? give me a number. >> we think it's 120 in 12 months from now. >> 120? >> yeah. >> 120. you've been talking about the problems in japan for many, many years. we've had this conversation to a certain extent. and they've been unfolding, but at the same time, they've held together. the current account deficit may be through the roof. their ability to repay interest on the debt may at some point be in question, but it hasn't yet. is this the end game, in your opinion? >> as churchill said, it might be the beginning of the end. i think we said three years ago they could have a current account deficit in three years. this fiscal year it's not going to be through the roof. it's only going to be about half of 1%. that's the first time that's happened in 34 years. so it takes a long time for things to metastasize. we think it's going to go from

negative half a parse to negative two to four depending on the privatization expectations for post bank, their big pension fund. what's mostly relevant there is it's changing, and it's changing while it feels like at a slow pace, they've had a 70-year debt super cycle. i'm not going to be able to predict when things dramatically change and pin point it within a year's time frame. however, these changes we've been discussing for the last couple years are happening. >> so what's the blowback then from the financial calamity that is japan if, in fact, you're correct? >> all it means is we're going to see currency valuations change dramatically. i think we're going to see a lot more volatility in the macro landscape like we saw last week with u.s. interest rates moving dramatically, global rates moving, currencies moving all over the place. that's something we really haven't seen in the last decade. what we're going to see now with this tremendous policy divergence is a lot more volatility in the currency markets. >> finally, i've been attending

this for the last five years. there's always a great deal of worry in that room. some of it perhaps justified. others, i mean, i'm sitting here five years later and if i had listened five years ago, i would have run for the hills and never come back. does it get overdone? yeah, we're all eventually going to be dead too. >> yeah, what's fascinating is this business, people think it's easy to manage money, whether you run a long-only asset management firm or a global hedge fund. it's actually the most maniacal, difficult -- >> well, it should be for what you guys get paid. >> it is a really difficult business. you know, like you say, five years ago i think the entire marketplace should send bernanke a thank you letter. minus the action of the fed, who really the fed and the treasury saved everyone by printing, what, $3 trillion, $4 trillion. great. that's fantastic. were the policies homogenous?

i don't think so. in the end, they saved the world. going forward, the training wheels come off. what happens next? well, then market forces start acting. i think that's what we're here for. we're here to decide, help decide as fiduciaries what those market forces are going to mean to everyone. that's why we come to this event and we talk about what's likely to happen with this divergence. >> to your point about difficulty of investing, of course, gm being an example. you've had a lot of successes. i would add the stock has turned around on what seemed to be your comments of a few moments ago. back to gm, would you buy even more at this level? >> yes. >> perfect. kyle bass, thank you. thanks for having us, as always. >> thanks for coming. >> when we come back this morning, broadcom up sharply. third quarter results getting a boost on big demand for apple products. will the company be able to keep the momentum going? the ceo will join us for an exclusive interview. the best performing stock on the s&p this morning in just a minute. when change is in the air you see things in a whole new way.

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a big stock mover today, broadcom. it is the top gainer right now in the s&p 500. shares of the chip maker gaining about 7% this morning after the company beat wall street's earnings expectations. call it the apple boost. broadcom chips used in iphones and ipads. the company reporting third quarter revenue, 2.26 billion. that's up more than 5% from a year earlier. joins us exclusively, broadcom

corporation's president and ceo scott mcgregor. thanks for joining us. clearly a strong quarter. how much was it the strong sales of the new iphone 6 and 6 plus? >> our quarter was very strong. it was a record revenue quarter for us. it was really broad based. we saw strength in connectivity, which goes into things like smartphones for bluetooth and wireless lan technology. also in set-top box and we also outperformed our peers in the industrial side in the high data rate kind of products. >> i want to ask about the sector in general because some of the chip stocks have been beat up after a warning last week that certainly sent a chill down this sector. that came from microchip's president and ceo, when he came out with earnings last thursday, a warning that, quote, we believe another industry correction has began and this correction will be seen more broadly across the industry in the near future. sounding an alarm bell on the economy, on consumer demand.

is that something you're seeing? >> we saw a number of smaller companies report early and cautionary reports. i think as we saw in our report and reports with companies can like ti and intel, there's really good strength in the industry. i think broadcom is very broad based in terms of our customers. we also have the opportunity to gain share and launch some new products. i think that contributed to our strength in the quarter. >> undergoing a major transformation, letting go of some of mobile chips that you've been making to focus on other efforts. how is that going, and i've been reading a lot of analyst reports on the matter. there are still some concerns about you losing market share with some of the big mobile clients. >> well, i think our report was very pleasing to our investors because what they saw is we were able to wind down that other business which we were losing money in very quickly ahead of schedule, and the strength in our other businesses was better than many people predicted. a combination of improved business in the core businesses

as well as faster ramp down than people expected. a good quarter in that respect. >> sir, can we talk about the vision thing where you see the industry going? i know you're quite anxious to distinguish between wearables and the internet of all things as being very different chip propositions moving forward. in particular for the wearables, can you talk about wiced sense, which i believe is about $20. it's something that you believe that people will be able to -- i thought you might have it with you -- enter the wearable space. do you comodtize that down like apps? >> we see the internet of things as basically connecting all your appliances and all your devices in the home. so that'll be exciting because you'll be able to put very low-cost cameras in your house for security, home security systems. those are the kind of things. we also see an interesting market in wearables. wearables are going to be accessories for your smartphones. we've developed something, you mentioned it, called wiced

sense. this is actually a development kit we offer for $20 retail. if you get this, it includes bl bluetooth and sensors and battery and everything you need to create an application to have a wearable. you can be in the wearables business for $20. >> so who do you think will drive the wearables business? because most people's assumption will be the hardware manufacturers like samsung and/or apple. those are not going to be the customers of that. who's driving your bit of the market? >> i think you're going to see a dichotomy. you're going to see the big players continue to do a great job. they really create great products. i think they'll create demand in a lot of new categories. the thing i'm excited about is because the barrier to entry is so low for the internet of things, you're going to see a lot of new kinds of companies get in there. imagine things that are very specific to industries measuring health and life, measuring ultraviolet exposure for kids, sports activities, games, all

kinds of things will be enabled. >> and just a quick question on samsung, because i know you make the i chips in samsung's galaxy s5, do you see them losing a lot of market share to apple and other competitors? >> i think there are a lot of dynamics in the market. both have been very strong competitors. between the two of them, i think they do a great job creating hardware and certainly are the largest players in the market. >> we'll see where the technology goes on all of those things. thanks so much for joining us. broadcom shares up more than 7%. ceo scott mcgregor there. >> a lot of big guests on the show today. still ahead, hedge fund manager john burbank joins us live from the barefoot economic summit with david in texas. find out what stocks he's buying right now. we're back after a quick break.

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let's get to dominic chu and get a market flash. >> we're watching shares of biogen. the stock has take an hit after third quarter sales of its top selling ms drug came if below some wall street estimates. otherwise, the company posted better than expected third quarter results and boosted its full-year forecast. but investors focusing more perhaps on the sales. those shares currently down by about 8%. back over to you. >> yeah, 8.5 now. thapgs, dom. straight ahead, whole foods launching a major market campaign, running tv commercials for the very first time. more on what that's going to look like after the break. (vo) you are a business pro.

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welcome back to "squawk on the street." i'm jackie deangelis. we are watching oil prices ahead of the weekly crude inventory report. wti pretty much flat, up about a penny.

82.51. what's interesting is traders are telling me these prices are not really moving by supply/demand economics at the moment. they are moving more on what the equity markets are doing. so we've been seeing a slight, slow, steady increase in prices, but basically we are looking for a number of about 2.5 million barrels. that would be a build for the week. we did get an api build last night as well. again, a lot of expectations are to see these supplies continuing to build throughout the week. actually, a huge build here. 7.1 million barrels. you're seeing these prices go down right now. this is a bearish number. down about 44 cents, 45 cents here. i do want to check on the brent price. 86.31, still trading a little higher. the traders looking at this number for a short-term trade. they're looking at the equity marks to take their cues on crude right now. >> thank you very much, jackie. whole foods jumping into the world of television advertising. the health-centered store debuting its first national marketing campaign during the first game of the world series

last night. the ad concentrates on the theme values matter while focusing on where food comes from. take a listen. >> at whole foods market, values matter. so all of the fresh beef we sell comes from cattle who have had room to roam, no antibiotics, no added hormones. third-party rated for animal welfare, raised by people with responsible ranching practices on over 1,000 u.s. ranches. >> whole foods, by the way, is down 30 some odd percent. >> 40% in one year. >> i'm looking year to date. it's been even rougher. they also had to combat the issue their whole paycheck, which is one of the monikers they've been given. >> we know that has hurt them in the past. it's not just about the public perception that you have to pay a lot for whole foods, but they have increased competition. kroger has jumped on the bandwagon early when it comes to the natural, fresh, organic sector, which is so hot and that whole foods traditionally dominated.

>> this is how supermarkets in the u.k. used to advertise to everybody. it was on quality. it was on where the food had come from. it's a vicious price war with those low-cost competitors coming in. whole foods is obviously pitching itself high, but the stock price would indicate they're competing on price might be a bigger issue. >> and kroger, which has stocked its shelves with this sort of thing. we'll see if this ad resonates with the broader public. interesting to see they're going at it. >> nice cows. cattle, sorry. wish i was in texas. >> know where your beef is coming from. >> this morning's other data is stoking deflation fears. steve leesman is here to explain why. i assume this is about the inflation data we had today. i'm surprised that people would say it would stoke inflation fears because it's come through slightly higher than expected. >> it was right in line, simon, actually. and you're right in the sense

that this is why we're watching the cpi and consumer price indices for. all the risk is to the downside on inflation. here are numbers. 1.7 year of year. core also at 1.7. food up 3%. energy down 3.3%. inside that, gas and home heating oil down. the electricity and natural gas part are still at least for now. do we have the cpi versus the core? i don't know if we do. what you see is it's remarkably stable. pretty flat. what we're waiting for is oil prices and what's happening in europe to bleed into the core. so far that's not the case when you look at things like apparel and even some of the other indicators. 3% on food is going to create some problems for people, maybe be offset by gasoline prices and the declines there. the medical services also have been declining as well. those are things we're watching for. there's no inflation fears.

this report is just something we're watching. so far it seems to be stable. but maybe in the months ahead. carl? >> well, i just wanted to point out, steve, that when you break it down in terms of food even more, every single food category was up with meat, poultry, fish, and eggs up 9.4%. the only one that was down was cereal, interestingly enough. i'm wondering how much that is going to hurt the consumer and whether, as you said, those energy costs can really offset that and ramp up consumer spending toward the end of the year. >> i think that's an excellent point, sarah. for economists, the issue is the following, that they thought the windfall from lower gasoline prices. could show up in discretionary spending, but if instead it goes to pay for food, then that might take some of the shine off what people are expecting for the holiday season. >> can i point out one thing since we're on the subject of the economy? the note that goldman sachs put out last night where they see all things considered with the market rebound we've had and everything tallied together, the

net hit on the u.s. growth outlook is one-tenth of one percentage point. it's tiny. the growth is strong and the growth is there, steve. >> sure. >> because i know what you're doing. you're laying the framework for the fed to try and push back potentially the horizon of raising interest rates next week. that's what you're trying to do. >> i'm not trying to do that at all, simon. what i am talking about -- and you raise an excellent point, right? the united states, unlike a lot of other countries -- for example, where you come from, simon, where we're much less reliant on foreign growth, much less affected by foreign growth than we are compared to other countries. i think there's significant concern about what's happening in europe. and for my money, i'm actually more interested in the impact from asia where that 7.5% growth rate from china is the one people are questioning. seeing boeing's earnings this morning seemed like the asia effect is not happening inside orders and deliveries.

>> can i point out one thing on china? with the rate they've grown over the last five years, their economy is 50% higher, bigger than it was five years ago. that surely is the bigger issue here. >> am i missing something, or did you turn bullish on the american economy? >> i don't have a view, steve. >> oh, you have a view. you're very skeptical of some of these growth numbers here. >> he's just the devil's advocate. that's his permanent view. >> we've had a lot of conversations about how a higher dollar would impact profit streams from abroad. >> that's an issue. i think -- can i just point out, speaking of music, i'm playing tonight at the hedge fund rocktober fest. tim seymour is going to be there. it raises money for a leg to stand on, helping bring artificial limbs to third-world countries. rocktober fest. altso.org. >> thanks a lot, steve. when we come back, passport's john burbank joins us for an exclusive interview from the

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take a look at the defense sector this morning, one of the best performing in the s&p today, although some concerns about the defense side of boeing, for instance. dominic chu is back at hq. >> as part of the broader industrials group, industrials may be one of the worst performers, but defense sector stocks overall are having a decent day. very much in the green. this after better than expected quarterly results. northrop also raised expectations. here's how all the sectors are trading right now. you can see the major players in defense, carl, at least for today right now showing some signs of life, despite whatever boeing has in terms of its outlook. back over to you. >> thank you very much. we head back out to texas now where the barefoot economics sum is under way. back to david faber.

>> thanks, carl. sitting here with john burbank. we were just talking actually and we'll continue to have that talk. john burbank runs passport capital, about a $4 billion hedge fund. you have a couple funds, of course. that macro trade way back during the crisis made you a lot of money, made your name. we're in a somewhat different environment now. in fact, we're in an environment where the fed is finally starting to potentially stop tapering and even tighten. how does that change your approach to the u.s. market, which i know you are somewhat constructive on? >> yeah, so we got really constructive on u.s. versus, say, emerging markets or commodity equities in 2011. i think the crisis in '09 really has changed in america in a way that i think investors underrate. i'd say the fed and the white house has wanted the economy to expand faster by investment and hiring, et cetera. and what i've seen is a great resistance by corporations who have been sobered up and now are

doing things that are very shareholder oriented and really in the best interests of their shareholders and employees. i think also the difference is american companies used to not need to think they had to go global before the crisis. now it's just assumed that you're going to be a global economy if you can because that's how you're going to grow. so i actually think being long u.s. companies is a far better proposition right now, and on the other hand, the fed is now tightening. when you have a tightening environment, you have a lot of positioning that gets unsettled. i think this year what we saw was small caps topped at the end of february, growth stocks topped at the end of february. basically, risk got upset. emerging markets bottomed in january and then topped in august and have pulled back very quickly with the dollar rising. large caps is where the money went. then they topped in september. >> so what does all that mean?

i mean, it's a bear market for risk. >> it is. the funny thing is that a lot of the companies, it's not that they miss their numbers, it's that the price, liquidity, is moving around under the surface this year. it's really been a bear market year. treasuries have outperformed everything by a lot. >> by a lot. >> exactly. >> that seems to be the story in any number of years since the crisis. >> right, but if you're a bottom-up fundamental investor, your companies by and large are hitting their numbers. so it feels like a deception, you know, to have prices lower than no follow through. that said, i think with the fed actually ending qe and with i think the dollar can rally. the dollar rallying in the third quarter really upset a lot of positioning. the dollar stopped rallying begins of october and stocks took on all the volatility since. longer term, i think the s&p and the dollar are what you want to

own. i think whenever risk avoidance ends, you're going to want to own growth. you're going to want to own these tech companies, these innovators that really took off in 2013. but we've got to sort through, you know, what actually happens when you remove policy. then what's going to happen when europe, you know, if they're able to enact policy. right now we're in a policy gap. >> i mean, i was speaking with kyle bass earlier. he was talking about this divergence, not a policy gap, but a divergence with europe on the one hand and the u.s. and japan particularly. he also sees the dollar moving higher. you seem to subscribe to some of that same belief, although there's obviously a lot of uncertainty that comes along with it. >> yeah, i see it as a gap. i see the fed -- what happened last week was fed officials talking. ecb guys talking. there's nothing they can do

right now. so i see it as an air pocket. and that's why liquidity -- you know, we're in a very poor liquidity environment. >> you were saying that to me last spring when we talked as well. that's not going to change, is it? >> when i met you last time, i said i'm fully invested, fully hedged. it's a strange concept because i'm very confident in the things long, but i'm not confident at all in the liquidity environment. >> you thought we'd take a bigger dive than we did last week, or at least longer. >> i did. again, it's not because of the fundamentals of, say, the s&p. the s&p is really quite attractive. it's just this changing negative liquidity environment can create moves because of, you know, positioning or leverage or whatever. it's very possible for the market to top right here on this bounce and move back lower. liquidity is terrible. >> you're confusing the hell out of me over here, john.

>> what fundamentally should happen in the short term versus what happens because of how people are positioned could be two totally different things. if you think about it, the subprime trade that you referred to, you know, it wasn't until february of '07 that the market started pricing in those things when the problems were -- >> there for a very long time. i want to talk specifically about a stock. yahoo! you mentioned technology kpaen companies doing well. yahoo! is a top ten position for you. i spoke to marissa mayer after the conference call. they're talking about what they believe has been a successful allocation of capital on their part. why do you own this company? >> well, i own it because everybody -- the market knows much better than she seems to know how poor the capital allocation is, how poorly the business is doing. they know that alibaba, now that it's public, is listed, has a

price, they know the value of that. i think the market is underestimating in this sort of era of hyperrationalization, it's not okay to waste $15 billion in taxes. i think either they have a plan that the market is going to like, in which case the stock will go up, or they're going to have a plan that's unsatisfactory and they'll be a tacked further. >> you think more activism in yahoo!. and you disagree on this point of asset allocation, they went out of their way last night to point out, we've only spent $1.6 billion in acquisitions. we saved $2.5 billion by selling a lot less alibaba than we otherwise would have. >> that may be true. every deal they do, i ask people i know what they think of the price. they say, that was a ridiculous price. >> you could say that in technology all the time. >> not the way yahoo! does it. >> whatsapp and facebook, you could say that. >> instagram looked like a

terrible buy for $1 billion. now it's one of the greatest buys. a lot of these are aqui hires, like overspending to get talent. the problem is the talent doesn't want to be there. >> so you're saying -- i would think you're short yahoo! not long it. >> the point is, if they have any tax efficiency with alibaba, the stock is undervalued. i guess i think what would john malone do? if john malone ran yahoo! the stock would be a lot because they presume a reverse trust separation of assets. tax free, spun off. >> and yahoo! japan stake potentially. >> you could just separate the two parts. the value of yahoo! would be a lot more. because the market has seen through marissa mayer and seen through the board -- of course, the board has known for our long time not to be a smart board. although, they did make a smart investment with alibaba. i think the market is overdoing

it, presuming a waste of capital on the taxes and then of the cash. so i'm just saying -- i'm not saying that they're wrong about that. i think this corporate governance environment will not allow a wasting of money to pay taxes when you could separate assets. they haven't articulated their strategy. if it was malone, you would already know that's going to happen. i think they're waiting. they have to wait two months after that ipo in order to properly do this. either they have it and they're going to say, or it's not going to be enough and the market is going to say, that's not enough and you have to do more. >> so interesting. john, we're out of time. thank you as always. >> okay. >> and very interesting, of course, carl, how activism comes back yet again in a conversation here. it is a real power in these markets. back to you. >> nice phrase, what would john malone do? david, thank you. still ahead, venture capitalist bill gurley will join "squawk"

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welcome back to squawk on the street. wick santelli here. and we're about to interview peters bookvar, my wednesday guest. we've had big boys on. kyle bass, and the judge talking to mr. einhorn yesterday. and being in the trading community there are people who get it right and people who get it wrong and past performance no guarantee of future outcome but they all arrived at an intersection we've been at. and centralbackers are going to have a hard time continuing to operate in crisis mode post qe.

>> a lot of bullets have been spent and if we look at qe, it's just a perennial bubble blower. and in the markets we've seen the realization that qe is ending and air is coming out. so asset values adjust. we get into the situation where central bankers who don't look in the mirror and see a pattern here say oh wow something is wrong. we need to do something more but that something more is running out of gas. >> peter, i think the problem is -- i don't disagree that if europe continues to deteriorate that there could be some transmission lines that come into the u.s. and i'm not talking exports. i'm talking more credit issues and banking issues and what not. at the end of the day my question is simple. if the fed takes that into consideration they would have been better off not missing a step at some point in the last

16 month, putting up rates up like the taylor rule. they would have had more flexibility. >> the asymmetric policy of slashing rates to zero and volcano them sit there. imagine if markets set interest rates. and if market set the overnight rate, it would go up and down. sometimes the market would get it wrong but they would adjust. whereas the fed leaving rates at nothing not only creates problem in the distortion of markets in the economy but leaves them nothing to respond if there are any problems. imagine if the market actually continued to go down in price. and let's say that reduction in asset prices started to have impact on the economy, what does the fed have left? another qe? they need to better calibrate to something related to australia central bank where rates go up and down. we can handle that. but not this asymmetric policy. >> i think so too. 20 seconds left.

so make this quick. at end of the day my question is simple, what's changed between last week and today? why was the market so iffy last wednesday and rebounded today? >> to me the qe off and the possibility of qe on emotions have taken over the market and that is what you get when the air is coming out of qe. the possibility it is not dead brought t back to this point. but it is going to be dead for a little while next week. >> thank you peter. and sarah eisen, i get's your turn. >> thank you rick. over to jon fortt with a look at what's next on "squawk alley." good morning jon. >> a really fun show coming up. bill gurley talking about risk, maybe a little about yahoo from a venture capitalist perspective. also walt mossberg with the details behind the ipad air 2

and twitter singing the old jackson five song. they want you back. that's coming up how do you beat the number one seed?

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sunnyvale, california. 11:00 a.m. here on wall street and "squawk alley" is live. welcome to "squawk alley." bill gurley joins us. benchmark capital investor and companies. bill, great to have you back. with us as always jon fortt, kayka kay kayla.