>> happy birthday to our director paul defabo. he's a genius. >> he can get anything to work. >> happy birthday, paul. have a great day. right now it's time for "squawk on the street". good morning and welcome to "squawk on the street." i'm david faber along with jim cramer. carl is on assignment. the latest home shiller report released. taking a look at futures this morning. we are set, poised for a higher open at this point. let's look at the ten-year note

yield. how much is the u.s. government paying you? there you go. crude oil which we have been taking a lead from. >> i've got good stuff on crude. >> you do? can't wait to get to it. we start with twitter. sheriffs getting hit hard after the company reported slower growth and guidance. not good for the rest of the year. a couple of dow components reporting before the bell this morning, as well. we are going to have headlines on two big names for you. talking pfizer and dupont. plus, apple and alibaba working together. ceo jack ma -- he's not the ceo, he's the founder of alibaba. he speaks at length on that idea and we'll tell you what he had to say in a couple of minutes.

far from the ceo. joe tsai is not even the ceo. twitter shares are down sharply premarket despite posting revenue that doubled in the third quarter and beat street forecast. q-3 the number of users that logged into that service once a month rose 4.8%. that represents slower growth compared to the prior quarter. in an exclusive, the ceo told our julia boorstin that mobile is paying off for twitter. >> in the last year we released our mobile profiles experience. those new mobile profiles have dramatically increased the number of views, the number of engagements and the number of specifically media content views on those profile experiences. we like a lot the strategy we've got. >> give me your thoughts on twitter this. morning i managed to talk to a

number of people long and potentially short the stock. talking hedge funds. they say it's not as much the monthly average users they are worried about, it's the revenue. the revenue guidance, which they said don't go above us. don't model above us. keep it to 444, 450 the next quarter and you have to get out 2017 to get out a multiple under 30 times earnings. >> my charitable trust owns it. i have to tell you that this was incoherent. >> really? >> i thought costolo was incoherent on the conference call. i had no idea what the heck he was talking about. i would like to think since i started street.com in 1996 and the union square people were my initial funders, that i would, other than nodo, have a sense of what was going on. this was like amazon without the

revenue growth. amazon, at least they say, listen, we are going to do whatever we want. this is a public company. >> that is a significant charge to say he is incoherent. >> that's why i brought the board of directors list. >> why? >> concentric circles. i regard this like the nfl. you don't say we didn't execute and sorry. >> you do if you're rex ryan of the new york jets. any how -- >> rex is a neighbor. i'm not going to talk about house sales. when you look at the overall numbers, the overseas additions were terrible. they had, i'm looking at a bunch -- i read through everything this morning. frankly, the company, i don't want to say they're in trouble, i want to say this is a really good product that someone else could do a better job with. >> you're questioning management. >> i have to. >> although you've been a huge

fan of mr. noto in particular. >> part of the conference call that was coherent -- what i mean is, if you look at what they were saying, you keep thinking, what are we supposed to be looking for? monthly average users? the growth isn't doing what i thought it would be. it's an inconsistent company. people are kind of shutting it down. they are not watching it as much. the trajectory seems odd. i don't understand why they are not monetizing. they are spending like mad. they are issuing stock like that. i have to believe these guys, evan williams is a total hitter -- >> the board of directors. >> absolutely. they might be saying, you know what? we've got to look at what's going on in our company. we are spending a lot of money, not showing results, looks like we are showing. if guidance is real, then they are slowing. so then you have the situation where you just talked about the

price-to-earnings multiple. this is now in the pantheon of stocks that are, don't put me in gopro. i'm saying this was poor execution. >> i understand. and to your point and from what i heard, there is no valuation support. you can make a valuation case with strong growth, a la gopro. valuation may be crazy, but you can get to numbers quickly if you assume those growth rates that make it at least you can think reasonable. >> i was talking to analysts about the idea this stock gets hit so hard maybe yahoo comes in and buys them. desperate times for desperate measures. >> that would be fun. >> stock could be down. >> charitable trust, what -- do you get rid of it? you punt it? >> no. there is another meeting coming on. not punt it because i think the franchise itself is worth more than how the company is running

it. i think that costolo is not the correct steward. i am being extremely diplomatic. >> i will make a note of it. today is october 28th. you are turning on costolo. >> what is it? this is like dantes. >> he comes on rain or shine. >> right. i'm raising my price target because he comes on. it's something. >> dante's inferno. it's costolo's inferno. >> onboarding, bringing people on to the platform. >> waterboarding is an issue. >> waterboarding -- >> i was listening to them. excellent interview with julia boorstin. he said, i don't know what i'm doing. if you give me time, i won't

know what i'm doing. i don't know. we are who they say they are. is this a danny green situation? playoffs? let's switch to another one. use another coach. playoffs? i'll give you another one. iverson. practice? not a game. practice? this is like -- no, it is a game, costolo. practice? no. i'm putting them all in. >> okay. >> playoffs? >> stop it. >> playoffs? >> let's move on to two dow components. big, big companies with very progressive simple growth, usually at least. talking about quarterly results this morning we are seeing from pfizer which beat on the top and bottom line third quarter. the drug maker narrowed full year guidance due in part to generic competition. dupont exceeded street forecast with profits of 54 cents a share fourth quarter. that excluded items as cost cuts helped boost operating margins

in five of seven businesses. revenue shy of consensus. dupont is under attack from trian right now. ed gardner leading that charge for that large activist firm. they've been busy with so many different things. >> i thought dupont was fine. i thought it was in line. a lot of companies got hurt by ag. it didn't feel it. i think she did a good job. it's not really an issue. there are other companies in the chemical space that haven't done as well. there are a lot of different divisions doing okay here. is it 3m? no. most companies aren't 3m. >> right. >> it's okay. it's better than it used to be. >> how about pfizer which we talked about in the past, of course. famously sort of brought inversions to an in attempts to buy astrazeneca. it got the attention of people.

>> i like lyrica, the drug itself, and the numbers. it's a great nerve block pain block. the buyback was extraordinary. this is the anti-celgene. lyric af lyrica. not that they didn't spend a lot of money on r&d. $1.8 billion in the course. >> you want r&d spend you go to david pyle who was on "mad money" last night. allergan under attack. if you spend that much money on r&d, i want to see new drugs. merck, there is nothing to write home in that one either.

you go over celgene. just creating drugs by the day. i want companies that grow. >> while we are at it, and we'll get to this, sanofi shares are going to be down. >> fierce pharma, here is the headline, don't fire me. david, don't fire me. don't fire me. >> they are citing competition in the diabetes market. he potentially was attempting to sell them mature drugs which they are no longer doing and seemed to have run afoul. >> diabetes. is this "don't fire me" the same conversation rex ryan is having right now with woody johnson? >> i don't know. probably. >> don't you think this is embarrassing? i like him. he's been on the show. don't fire me approach has this, maybe i shouldn't buy that stock. >> when you're asked not to be

fired. >> the geno smith of diabetes. meg terrell is at the amgen investor meeting. >> just now ceo bob bradway was presenting to analysts and investors. the company announced restructuring in the second quarter that would have eliminated up 15% total head count. they are adding 5% head count reduction to that. now a total of 20% head count reduction expected to result in savings of $1.5 billion annually. also responding to the suggestion by dan lobe that the company split itself up. they considered it but because they have a centralized supply chain, they don't see that adding value. they are not saying never, but right now that doesn't make sense for them. addressing a lot of the questions raised by dan logan. others about cost cutting, returning capital shareholders, saying they planned to increase

their dividend by 30% beginning the first quarter. they did provide guidance for next year, $20.8 billion to $20.3 billion in revenue. they plan to pay out about 60% of their adjusted net income on average to shareholders through 2018. bottom line, not planning on splitting up. back to you guys. >> of course, under pressure from mr. lobe last week in his letter. >> company is doing great. they are under pressure. allergen, allergan. why don't people go after the companies that aren't doing great? >> it is doing well. activists have less down side when they go after a company doing reasonably well with the belief it can do better as opposed to these companies that they lose, look out below. >> now they go after the good guys. >> robert shiller on the just released case shiller home price data and volatility in the stock market. let's look at futures. we are poised for a higher open.

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let's get back to the key housing data. the latest shiller report showing deceleration in home price gains. home prices did rise on a year over year basis in august, but fell short of expectations. joining us first on cnbc, the co-founder of the shiller index,

robert shiller, professor of economics at yale university. professor, always good to see you. what are we seeing here in terms of deceleration? how significant is it? and does it portend perhaps more price declines to come? >> i've learned over the years, forecasting home prices that the latest month is very important. but the trend is also important. this is not the stock market. what we've seen nationally, big increases a few months ago and now a softening. where that means, the latest month suggests price declines might be coming. if you mix that in, it's an ambiguous situation. maybe they won't do much of anything. >> our housing guru here at cnbc diana olick sent a question to ask you. with the easing of these price gains, is there any chance of

annual prices going negative nationally even for just a few months? >> there is a chance, yes. we are seeing a kind of -- we had a big increase. we've seen a flattening out. historically, that's a weakening sign. especially in the bubble state. there is a big difference between california and say texas. or colorado. california has been bubbly. that's where we are seeing the sharpest declines. >> professor, one of the things that concerns me is that you have a guy like stuart miller. a great ceo. he said we are almost at a recession level. this says we are building too many houses or there are too

many houses on the market. how is it possible we have a surplus of houses? >> demand is shifting. so it seems like we have a new urbanization. people are not so interested in these houses they've built in recent years. >> do you believe that is a seminole change in terms of urbanization and not wanting to own your own home? similar to people who weren't that interested in owning their cars either? >> the american dream was a car and house. that will continue. on the other hand, america is an outlier on that dream. there's a lot of common sense in support of renting and taking public transportation. it makes sense. we'll probably mean revert

somewhat on that. i'm suspecting it won't be a hugely dramatic trend, but will be a trend. >> does it matter if fannie mae expands the help it would give to the housing market? does it matter if the fico scores somehow were allowed to be lower? would any of that stuff matter? >> of course it matters. they're all part of -- it mattered a lot. this bubble or boom, i won't call it a bubble, we've seen since 2009 or 2012 must have been affected by these things. also, of course, quantitative easing. those are massive programs. yeah, we have a government that's behind, has been behind the housing market and that's been part of the story. it's part of the reason why people are bullish. now they are starting to wonder with quantitative easing unwinding. >> professor shiller, as always, appreciate your time. >> my pleasure. >> robert shiller with the

latest numbers on the s&p k. shiller home prices. >> interest rates are incredibly low. we are building fewer houses than we were building in 1960. there's got to be some sea change here. that was some boom. it lasted, what, for 1 1/2 years. >> a couple of years. up next, we are going to have the mad dash as we count down to the opening bell. here is another look at futures. we are set up for potentially higher open.

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let's get to our mad dash. we have a couple of stocks we want to focus on. >> buffalo wild wings is an amazing story. here is a situation where a lot of people felt maybe it lost its ability to grow. not only has sally smith talked about how they are going to put up more stores, but they are putting through a 3% menu increase. they expect very little to no resistance. chicken wing prices have been high. there is a chance prices are going to come down in 2015. extra thursday night games in the nfl. this really plays to their strength. stock's going higher. >> they benefit from lower gasoline prices, as well? >> yes, they do. this is a virtuous psyccycle st. they come up with new ways to make money. they have a new pizza chain coming, too. this is a story that has not run out, yet a lot of people feel it's run out of gas. wait till you see what happens

when wings' pricing comes down next year because of the bumper harvest we had in grain and they'll be able to feed chickens -- having owned chicken i know that's the case. increase in prices and margins win explode. >> interesting. talk about running out of gas. coach did that some time ago. lou frankfurt gone, new management. >> there is a silver lining here. silver lining handbag. the same-store sales from north america were down only 24%. many were looking down 27%. when you see the beginning of that you think maybe it's jc penney and they can turn it around. they did have better than expected. 53 versus 46. >> market doesn't seem to be reacting positively. >> people were hoping they would see more of a turn. >> stock down 39% this year.

>> it's been a hard stock to cotton up to. let's listen to the conference call. i'm not being facetious. the fact it didn't go down, someone will get interested in this stock. maybe it's one of your activist friends. i don't know. >> what do you do for a fashion-related company? tell them how to do their, you know, make hand bags? >> jones got bought. that was fashion related. think about that. there are a lot of activists involved in that area. >> there are. more for sales. we've got the opening bell 3 1/2 minutes away. you can bring back a lot of things

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of companies that can't make their budget. the mismatch between refinery capacity meant largely for keystone and heavy crude. this is from rpn which is by far, rbn energy knows more about this than anybody. five-fold increase. you have this huge backing off of crude the world doesn't want. can we shift, can we not shift? when you have that backup at the eagle ford and where we don't

have enough pipes to take the oil, something's got to give. you need to see oil go higher for these guys to continue to grow. >> let's tell how rang the bell at the big board. u.s. physical therapy, national operator of physical therapy outpatient clinics. iss, facility services company based in denmark. we are largely positive on our realtime exchange back at hq. talking about oil. bp reported a quarter. profits no the quite what they hoped for. you followed this company for a while. stock is up. i had them on a bunch of times. they are very good at what they do. this is a company where you want russia to be resolved. he said we've got to go where

the oil is. russia is always in the balance. production growth not bad. i don't know. it's not that bad. let's go back to the key of this market. no one wants to own these stocks. >> the market keyed on that call even though analyst behind it has been wrong. >> january 2013 they said with oil around 100, they said higher. oil will go to $150. there are a lot of people saying, you know what i've got to do the opposite of what goldman says because they were so wrong the other way. the issue is that there is tremendous oversupply in this country. there is.

i don't know what gives. they have to cut back production. >> been to the movies lately? >> i like going to the movies. >> do you? >> "gone girl." that was good. >> did you see that? >> yes. regal cinemas this morning says it's potentially exploring a sale. >> they make a lot of money. a lot of these trends, whether it's netflix teaming up with the weinsteins for debuting movies on the service. or amc investing so much capex with the great shares. you can go to sleep if you want to.

>> they are paying a dividend. they've got extra cash. it reflects everything you said, but not a lot of positives. >> at almost this price around $23, the stock is trading at over 11 times ebitda. >> that's expensive. >> that's a lot of money. they've already gone through this cycle. >> they did go through this cycle. >> chinese control amc. >> i look at the company and think about what i pay for candy. you can't sneak that cvs candy in. you can't stuff your pockets. >> will you get stopped? >> it's not a stop-and-frisk situation. they don't like it when you bring your candy in. >> it's a good will thing. >> it is a goodwill. you can't sneak popcorn in. >> twizzlers you can sneak in, but i feel guilty. >> do you? that's because you're you.

>> thank you. >> some people don't. i'm going to get to msg a bit in the favor report. looking at the names we've gone over this morning. dupont is up a bit. pfizer also up a bit. obviously, the market itself has a positive tone with the s&p looking up almost 0.5%. >> you have a lot of areas that had been beaten down coming back. for instance, notice agco which i've got the chairman on tonight. the stock has been down so low, it looks up to them. the numbers were good. gopro has been beaten down. they get a recommendation today. spirit air has been beaten down. another guy will be on "mad money." then you've got the flip side which is kohls which took me by surprise. they did say pajama sales are good. >> did they, pajama sales? twitter as we knew is down sharply, over 12% right now.

you were quite critical of management at the company. no other way to put it this morning. >> this is a franchise that is one of the great franchises. >> maybe it's not -- maybe it's not the larger universe everybody seems to think it is. maybe the platform has limitations. >> it's too hard to use. for those of us who are the victim of endless vitriol. >> you're always on it. >> yes, but i was hoping it would be more personalized news service. i follow the nfl. i have everything nfl and constantly look at that. i felt like that's what many people were going to do. now it seems episodic. there was no world cup. if it's episodic, do i have to wait for the olympics? what do i wait for?

i think under different management how to monetize it better, just be more coherent about what the story is. is it monthly average users? modernization? what are we supposed to be looking for? it's a mixed message. >> right. >> i find it troubling. >> yahoo shares up again. up sharply yesterday. alibaba, which i can look behind us to see where the stock price is. it's approaching $100 a share. >> it's tripling marissa meyer. >> they could have sold the baba. >> she is focused on keeping her job. they articulated a real narrative there that says look at all the things we did. even if you want to say it's not about the core business, let's

talk about capital allocation. let's talk about the 2.5 million we saved cutting the amount of shares we sold. we made peace with alibaba. they didn't share 120 million. >> ken holdman does a very good job, too. >> and tax efficiency. >> if they get tax efficiency, the stock will go substantially higher. >> the stock is going to $110. you sit here and think if they can get tax back, it sells less than 30 times next year's earnings. they have a substantial amount of money and yahoo could go do a series of acquisitions and we would say it's a growth company. they don't just sit there and shovel the money into a chimney furnace. they're not. i think that the acquisitions have not been nuts. i think there was this great honeymoon period then the long knives came out.

i think the long naives were unjustified for a company that had a triple while this woman is running it. >> let's get to bob pisani on the floor with a lot more moving this morning. >> modest movement on the up side. oil is down $80 and change. a lot of companies out today. several raised their guidance, but there is a little trouble in retail land. sherwin-williams, full year guidance was raised modestly. they had a modest beat on the bottom line. parker hannifin, i love the multiindustry companies. they make aerospace products, refrigeration, 40% of their sales are outside the united states. they raised the low end of their full year guidance and beat on the current quarter. this is the first quarter of fiscal year. to raise full year guidance, even the low end, i think, is

noticeable. that stock is up 5%. it's unusual for parker hannifin to move 5%. cummins had good demand in north america, europe, weak in brazil. they went out of their way to note they are returning 50% of their operating cash flow to consumers in the flow of higher dividends or buyback programs. they made a point of saying that. elsewhere, very mixed on the earnings front. you mentioned kohls. not to give them a break on the weather, it was 80 in chicago over the weekend. it was 70 in philadelphia. there is some weather impact we all know what's going on at the malls and the macroinfluence. millennials are not into apparel. you go to the mall, you see what's busy, the verizon store, the at&t store, the apple store. that's generating a lot of excitement. there is some change going on in the buying habits of

millennials. we all know kohls is blandly competent. they don't do much to stand out. we'll have an investor day today. maybe we'll get more news how they are going to remake themselves. it's a continual process and ugly business. coach, we all know. the same problem with them. i went shopping with my wife for hand bags -- don't judge me, please. she went right past coach and to michael kors. i said why didn't you look at coach? she said it's not that interesting. she bought a michael kors bag. i think that's their problem. north american comparable sales down 24%. i don't care how much you remove the promotions from a lot of your stores. department store sales were down, as well. you can't get my wife interested in coach, there is your core shopper. that is an issue. elsewhere, whirlpool, they seemed okay. north american revenues were up 6%. that's very good. latin america is very big. they were up fractionally. looks sluggish for them.

martin marietta. they are doing well because some of the -- they are doing fair because highway expenditures are doing well in colorado and texas. their earnings had a big miss. bp. i can't see anything in there where they commented on the lower price of oil and how it will affect their earnings. why not? everybody is frightened of commenting on this. not a word from them. but they did have a little bit better numbers than expected. back to you. >> great report. parker hannifin last week announced a buyback. cleveland is back. did you notice in the k. shiller the only game was cleveland? parker hannifin reporting a great number. maybe lebron. maybe there is something going on. >> maybe. cleveland, detroit. that is where the value may be. msg.

>> i'm against gluten. i'm gluten-free. i'm msg-free. >> madison square garden. >> oh, i thought you meant natural organic. >> i want to find the press release. the company announced its intent to explore a possible spin-off. this comes after what has been pressure from shareholders. it started with jt owned a significant stake. filed quietly on a friday late in the summer. applying pressure. one would think activists would not want to play in a company family controlled. family controlled company. when you took a look at the board of directors you, see a lot of family members or in-laws on that board. alan schwarz one of the lead directors.

they kind of push things along there. from what i understand from people close to the situation, there were threats made along the lines of we know, mr. dolan, that if we were to take a close look here we might be able to unearth things and say, hey, questions about whether you're spending money appropriately or spending money on your own interests. so i think the board may have said, you know what? we might be liable. it's family controlled, but let's go down the road here to at least give them a few directors. nelson peltz goes on the board of directors. he was approached by the company. the activists did have their own slate in mind. here's the new directors,

sperling, of course, friend of mine. dick parsons and nelson peltz if they pursue to choose the split, they will split into the venues. msg will go with that part of it. music, bookings, production, entertainment, joint ventures, then separate the teams. with that clippers sale, that will give greater value to the clarity of the teams. >> that is a great point. especially with ballmer saying we'll make a ton of money. >> does the company ever really consider selling the teams? dolan does seem to be handing over control of the knicks to phil jackson. he's the owner, but not making the decision. jackson seems to be. so there is the possibility if this were to happen down the road you could see a sale. i'm not saying it's going to

happen. there is a possibility being raised you could try to create a ri reit structure for the other part of the business. talking about the arena and radio city, things like that. interesting to see activists -- and this guy thaler is not an activist, but active shareholders. hedge funds came in getting what they wanted in a family-controlled company, or making progress. >> so interesting. nelson peltz, first initially didn't want peltz on. >> here is a company that welcomes pelts. >> he hasn't necessarily bought stock. one would think he is looking for an economic pay-off. he is going to want to make money. that's what he's all about. >> making money in dupont. making money in pepsico.

>> he is about making money. the durable goods put buying back in the market. we are doing a beeline for wheat durables. back to 2.25. if you look at the two-day, we are within yesterday's range. we want to keep an eye on this 2.28, 2.30. you can see why after the big deck axbeing deb back al. the market continues to crawl back in a stable fashion. boons overseas, their resistance is around 90 basis points. if we look to the foreign exchange markets, euro currency is doing a bit better. it seems they have a hard time holding 1.28.

if you look at the dollar/yen, same scenario. dollar improved after initial reject of 1.10 but seems to be stabilizing in a fairly nonaggressive fashion. what is fascinating, if i look up at the futures market, the dollar is only doing better this morning against the yen. it's under pressure. all the other currencies and maybe one pairing we continue to monitor prime minister cameron is having an issue on the pound. the pound versus the euro, the pound holding up well. >> as opposed to a lot of other currencies. coming up -- alibaba executive chairman jack ma talks inspiration. who he watched to learn how to make a speech. what you'll hear might surprise you.

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get every month free. alibaba executive chairman jack ma says his company is interested in partnering with

apple in the payment business. his comments coming last night at the global technology conference in california. apple ceo tim cook added that he is intrigued by that idea. perhaps more intriguing was ma's comments on the late whitney houston. ma credited the singer with making him better at public speaking. take a listen. >> i learned how to make a speech from the movie called "bodyguard", whitney houston. when she sings the songs, i look at her, well, that's the way you make a speech. i never know how to make speech. cause i'm not actor. when i saw the movie, i say, wow, if you sing from your heart, if you sing naturally, if you are yourself, so i realize that. >> he's fun to listen to. >> forrest gump.

>> and "bodyguard." two of his favorites. >> i don't know what to say. that is stunning. whitney houston. >> there has been a talk about alibaba taking a look at content and hollywood. >> he should just go buy netflix. >> i think the lions gate thing came and went. we've got stop trading. tigers, both of you. tigers? don't be modest. i see how you've been investing. setting long term goals. diversifying. dip! you got our attention. we did? of course. you're type e* well, i have been researching retirement strategies. well that's what type e*s do. welcome home. taking control of your retirement? e*trade gives you the tools and resources to get it right. are you type e*?

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time for stock trading. >> we could talk about whirlpool and the incredible reversal. celgene upgraded by merrill lynch. no. we'll talk about apple pay. apple pay has taken the country by storm. a million immediately. tim cook said it. >> by storm. >> i've been working behind the scenes about walgreens. >> walgreens is taking it. >> yes. all the data stored on your phone so you can be secure and have privacy. i think when you go to a drug store you want to have security, but you want privacy. i think walgreen will take customers from cvs and rite aid

because they are a doctor of apple i-pay. apple will do what they did with itunes music. >> all right. you heard it from me first. >> that is a subject we could talk about a lot longer. >> they know it's a game. >> what's on "mad" tonight? >> we have agco, a beaten down area. agriculture has been terrible. then we have spirit air. i don't know if you fly spirit air. they charge you for everything. they charge you to walk down the gangplank, they charge you for the ticket, but they make a ton of money. ben baldanza is one of the funniest ceos in the country. >> i'll see you in the morning. breaking news on consumer confidence when we return.

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♪ meet chris jackie joe. minor damage, or major disaster, when you need us most, we're there. state farm. we're a force of nature, too. ♪ welcome back to "squawk on the street." breaking news, and it's good news. unlike durables, we have strong consumer confidence read for october at 94.5. that is the best level since around halloween of 2007. if we look at richmond fed

october number, it jumped to 20. 20 is the best read going back to december of 2010. so we see two strong reads following the weak durables. we watch the market trying to assimilate. yields moving higher on this and potentially challenging the big resistance at 230 and ten-year trading 2.29. sara eisen, back to you. >> thanks very much. one of the big movers in today's session is twitter. a loser, that is, down sharply after disappointing third quarter revenue forecast and numbers showing a slowdown in new users. julia boorstin sat down with twitter ceo dick costolo following those results. she joins us with some of the highlights. you talked through some of the weak spots. >> we did. with the fourth quarter guidance disappointing investors, dick costolo responded to questions about management upheaval and

comments that there is a lot of, quote, pot smoking going on at the company. here is what he had to say. >> what i lack in hair and 20/20 vision, i more than make up for in self-confidence. the team i've got in place and the strategy we've got, we love. we all believe in it. we know that when we're successful, twitter will be useful and vital to every person on the planet. >> what i asked about the need to rev up user growth, he told me the monthly active user numbers don't tell the story that logged-out users have been growing and are no less valuable to advertisers. twitter wants to be less reliant on users. he talked about the new developer tools to help expand the reach beyond just its app. >> fabric is about being part of the foundation of the entire mobile application ecosystem. helping developers around the

world build apps across platforms from the moment they start developing them to the day they want to start monetizing them at scale. if we are part of the foundation of every mobile application in the world, then enormous opportunities will accrue us to. >> on the earnings call yesterday evening, cfo noto warned investors not to expect twitter to outperform guidance. he said the company is trying to be accurate in its guidance and that disappointed investors. >> thank you very much. for more on this story, let's bring in managing director and senior research analyst with stern aji. he has a neutral rating on twitter. >> thanks, simon. >> this quarter and this move today is in stark contrast where we were three months ago where the stock surround 22% on the view they were getting more aggressive on user growth. why the difference? s. >> i think this was one of those quarters where investors were looking for some kind of

confirmation that the growth last quarter was not an aberration. that it was not the main reason for user growth. coming out of the third quarter, things were not as clear because growth in user base was in line optically, but investor expectations were for a big beat. that did not come through. also more importantly, i think the fourth quarter implied year growth is also soft. i think that is again giving rise to concern and starting another debate on what the ultimate size of the opportunity for twitter actually is. that's the reason the stock is selling off. >> costolo made big management changes, the coo, cfo, promising it will be easier to use, more hollywood content and better messaging service. to cut to the chase, is that like facebook was after its ipo

before it could prove it had mobile and monetize facebook subsequently doubled in value. could this happen here? >> the stock is already up quite a bit from its ipo price. that is one difference. second, mobile is not an issue for them. the issue is different. it's a more fundamental issue. it's biuser growth and whether that can be very large or not. i think -- third thing is valuation. the multiple that twitter is trading at today is actually higher than facebook ever traded at. those are the main differences. if the company can solve the issue of user growth and retention, more importantly, what we heard from them, they don't have a top of the funnel issue. they get users to come in, they just don't stay there. that's what they have to fix. >> i'm reading the analysts'

commentary. they are looking at ad margin per user, timeline. beyond the monthly average users which is what we were watching, what is the single most important metric for to you see they are making the progress they need to? >> people look for engagement metrics, which is measure in terms of the number timeline views per user. when somebody comes to twitter, investors want to see if they are staying there long enough or not. that has an impact on engagement and advertising dollars down the road. >> that metric has been going down, in part because twitter is reducing te ining the friction platform. it's a metric investors are focused on. they will anniversary that in the fourth quarter. hopefully next year we'll start to see that metric pick up.

>> when i talked to investors they were concerned about the revenue guidance. you mentioned valuation or lack of support at this value. and that revenue guidance, is it dead money this stock for quite some time to come? >> the next couple of quarters they have to prove a lot. people who own this stock for the long term are probably a little bit more skeptical after the third quarter. >> i was going to ask you what you were hopeful for analyst day in two weeks' time. in a sense you answered that. good to see you, sir. thank you for joining us. >> thank you. want to take a moment and check the markets.

we are seeing green arrows for the s&p. nasdaq positive for the month after one of the worse weeks of the year. october has been an absolute roller coaster ride. here we are positive for the year. helped by better earnings across the board. >> it reminds me of the "saturday night live" character who used to say, "never mind." earnings seem to have provided some support. there have been plenty of not great numbers. >> we'll see what the fed has to deliver tomorrow.

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good news this morning. a 5-year-old boy in new york testing negative for ebola after concerns he might have the disease. and the dallas nurse is expected

to be released virus-free today. nbc is outside bellevue hospital in new york where one patient is being treated for ebola. sara, good morning. >> reporter: good morning. dr. craig spencer entering his fifth day of treatment here at the hospital. last update he was in serious, but stable condition. we are expecting more details later this afternoon. this as the news comes that another ebola patient is set to be released from the hospital. this time in georgia. nurse amber vincent contracted the illness while treating thomas eric duncan in dallas. she has been declared ebola-free and is expected to walk out of the hospital and speak to the media late they are afternoon. we want to give you an update on casey hickox the nurse who has become the face of the this quarantine debate for health care workers returning to the u.s. from these three ebola-stricken african countries. she is back after being forced

in quarantine in new jersey despite having tested negative for ebola. at least seven states issued some type of quarantine, none of which are consistent. cdc issued guidelines that suggests treatment based on risk categories. they issued a statement that reads, "in determining the right approach, we have put the health and safety of americans first and more foes, and our deliberations have always been informed by our most knowledgeable public health and homeland security professionals. as with everything we've done to respond to the threat of ebola, we have been guided by the best science possible." it is important to note the cdc cannot enforce these guidelines. they can only suggest. new jersey governor chris christie in an exclusive interview on the "today" show doubling down on his state's policy for this mandatory quarantine for returning health care workers saying the cdc has been behind on this and it's his number one job to protect the citizens of this state. back to you.

>> thank you. the federal reserve is holding the first day of a two-day meeting with a decision on interest rates expected tomorrow. what are top economists and experts really worried about? steve liesman has the details on that. >> thanks. we did ask about ebola when we asked our panel responding to the october fed survey. ebola doesn't rate that high when it comes to the biggest global risks or threats out there scale of 0-10 with 10 being the highest global threat out there ebola is a 2.7. russia/ukraine, isis, all down there below 5. asian weakness the biggest global threat is seen as european weakness. when you wonder what spooked the market the last couple of weeks with all that volatility?

this group says european weakness is 2-1 a bigger threat than ebola is. looking at the s&p outlook, the first time we look at the ten-year yield. this is an extraordinary chart. the first outlook was 3.4% in december 2013. it has come steadily down with another just about 1/4 point being shaved off for the outlook for the end of this year. you can see where it is now. moving on, you can see the whole outlook. 2.9% for june 2015. moving on to the end of the year, it's 3.2%. looking at the s&p, that's also come down quite a bit. if you look at the next. here we are. 1999, that is a 2% gain between now and the end of the year. moving on up to mid 2015. 2066, a 5% gain.

it came down, but still higher. 8% between now and the end of 2015. if you want to read more about this, go to cnbc.com. we have the full survey results right there. >> thank you. i know we'll check in with you later to see what we can expect from the fed. coach may have beat sales estimates, but shares are falling as you can see. they are down more than 7%. what should you be doing with that stock? twhat do i do?. you need to catch the 4:10 huh? the equipment tracking system will get you to the loading dock. ♪ there should be a truck leaving now. i got it. now jump off the bridge. what? in 3...2...1... are you kidding me? go. right on time. right now, over 20,000 trains are running reliably.

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john is back at hq with more on that. >> if your political ads tell you there is a ton of money in the 2014 election campaign, you're not imagining it. the question is how much difference will it make? let's look at the totals and how they changed over time.

look here at the 26 midterm elections when democrats were surging to take both houses of congress. 2.8 billion on the midterms. up $3.6 billion in 2010. this year our friends at the center for response in politics project it will be $4 billion total, significantly up from 2006. there's been a surge of outside money. you can see it's more than tripled since 2006, especially going up since the 2010 citizens united decision from the supreme court. let's look at individual sectors. wall street money. larger than any business sector. it has gotten slightly more republican over time as president obama star has faded. in 2006 wall street money was 54% republican, this year up to 62%. tech money. that's tended to lean toward democrats. less so than four years ago. in 2010 it was 65% tech money to democrats. now it's down to 60%. energy money is more tilted than

either of the other two. that's toward republicans. they are fighting president obama on climate change and carbon emissions. you can see it's up 78% republican in energy and natural resources money. here's the thing about campaign cash. the red team and blue team tend to end up with comparable amounts of it. 2006, when president bush was in the white house and republicans held congress, in $84 million edge for republicans. democrats because they controlled everything in 2010, they had a slight edge, $40 million. this year the republican edge is back up because republicans have the momentum. $157 million on a $4 billion campaign isn't all that much. what does it add up to? both sides have plenty of money to get messages out. money is not going to decide next week's outcome in battleground stakes. >> what do you think the outcome will be next week? how likely that the republicans will take the senate? >> likely. my current reading is about 52

seats for the republicans. you see most of the battlegrounds are within the margin of error. not going to be shocked if democrats end up holding the senate, but the odds are the republicans are going to take it. >> where is the money going when it comes to hillary clinton? is she a friend of wall street with those comments about trickledown economics failing, don't let people tell you businesses create jobs? that was somewhat of a surprise. >> yeah. i think those comments got a little bit misinterpreted. most was the standard democratic screen, campaign speech against trickle down economics. she neglected to say when she was saying corporations don't create jobs that corporations aren't the only ones that create jobs. she is talking about bosom-up and middle-out growth. i think wall street money with fond memories of bill clinton's presidency will be okay for hillary clinton. depends who she is running against. there can be republican candidates who will do very well with wall street. i don't think you are going to

see the advantage that barack obama showed against john mccain in 2008. i don't expect to see that repeated. >> or whether she is going to run at all, right, john? >> here is what i would bet on. she is going to run. and she will be the democratic nominee. >> i have a feeling you're right. john harwood on campaign spending. now to dom chou for a quick market flash. >> how about this for big money? alibaba shares crossing $100 per share the first time ever. september 19th it hit an intraday high of $99.17. alibaba is worth $247 billion. there are only eight companies in the s&p 500 index worth more than alibaba. a psychological threshold being crossed. >> how about that? thanks, dom. we are watching shares of coach.

coach came out this morning and beat the street as international sales helped push the luxury goods maker above forecast. there is weakness beneath the surface. equity star analyst who believes coach is undervalued. do you see signs of progress? 24% decline in same stores sales of north america does not appear to -- it doesn't seem to be any sign they are turning things around. >> don't forget they guided to mid 20s same-store sales decline. most of us modelled something in the middle 20s, maybe higher. that's why it's coming in above expectations for the quarter. yes. the transformation plans are deep cuts. there's some worry in the stock right now. >> and everybody is eager to see what the new lineup looks like. they have a new collection coming out in september. has the ceo or any of the executives told you anything about that? >> we just got off the conference call. there were several questions on

that. it was a little bit of a mixed read. a poker game in that they said yes, we are very encouraged, but it's so early, it's difficult to say. how do we interpret that? i think there's not a lot of volume. they are saying the high end and the all-leather price points are doing better. it's not enough to move the needle on the chain. the new product is not even in the outlet channel yet. >> meantime, are michael kors and kate spade continuing to take market share, customers away from coach? >> they did say that the total hand dag and accessories market is still growing. in my estimation, accessories and handbags are starting to slow in general. yes, technically, they are taking share. i think all the companies are seeing some slowdown from the high growth we saw right after the recession. >> paul, the problem they have is obviously in north america. what is happening there? is it the lack of price

discounting? how fast can they turn that around? >> great point, simon. they cut discounts and they also cut advertising and promotion ahead of the relaunch with the new, the higher-end branding and new designer stewart beaver. it's going to take at least this year to turn around. i think they are going to be flat next year. it's a 2 1/2 year turnaround. as you point out, those discounts are a big part of the problem. eventually the brand is what counts. that's where the mode is. if they protect the brand, the sales should come back. >> what do you do with this stock? it's getting beat up again today, down 7%. how much of the bad news is priced in? where does it go? do you have to wait a few years to see your transformation take hold before the stock recovers? >> that's the difficult part. we are long-term cash flow methodology here at morningstar. it's tough to watch the stock decline and look at the stores

and see no promotion and say this looks great. how long do i have to wait? if it were my own money and i was going to wait three years and i wanted it to outperform the market, would i be okay with it? yeah. there is a lot of risk. there will be more volatility as same-store sales decline mid 20s the whole year. this is a company that creates great operating margin, great return on capitals. it's a 70-year-old brand. it's one you want to own long term and will outperform the market. >> i like the new sneakers on the website. i went on this morning, whatever indication that is. paul, good to see you. thanks for joining us. starwood's initiating its share buyback to 1 million. 6% of its market cap. fritz van paasschen bought back $57 million of stock in the fourth quarter compared to almost none in the first. sparked open protests from

analysts at the time. in an interview with this show in june, van paasschen refused to confirm it mad been making space for intercontinental as a tax inversion. starwood is struggling this morning because it is reducing guidance on slower growth and the strong dollar reduces the value of earnings from overseas. crude oil down about 20% the last three months. how low can it go? have we bottomed here? financial noise financial noise financial noise financial noise

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oil down slightly after the commodity came under intense pressure. has crude reached its bottom? joining us, richard hastings at global hunt security, a division of seaport securities. are we bottoming here, is this it? >> i don't think so. this has been a complete play on supply and demand. crude oil prices are ignoring all bullish geopolitical risks. i expect that to accelerate and pass the 9 million mark. we'll see prices pushed down to the $75 level. that's where problems with opec possibly curbing or you might see labor cuts in the u.s. as oil production come into play, in addition, you might have

tightness in some of the products. >> you can get visits to $75 for u.s. crude. it's unlikely we would stay that low. i would suggest prices are probably getting closer to bottoming if we take a look at the dollar index. it gets harder for the u.s. dollar to rally continuously. that makes it more difficult for brent crude oil prices to keep going lower. right now, there is an interesting premium of brent getting about $4. i think you'll start to see a deceleration and less disorderly movement of crude oil prices at this point in time. >> we should mention gasoline prices falling below $3 a gallon in most gas stations across the

country. >> let me pick up this point phil raises which people talk. at what point does job growth slow in the oil-producing states in this country? >> not at crude oil prices where they are now. things are very stable. our oil field guys in houston are not noticing any big problem from all the companies they are covering. here is the really important way of looking at the gasoline price story. when gasoline prices go down a little bit, retail sales go up a bit. they did on a not seasonably-adjusted basis. retail sales in september were up significantly on a year over year basis 5.8%. state tax revenues go up. state treasuries start looking at that. they increase their plans for spending as infrastructure spending goes up because of retail sales related to sales tax.

revenues then better job formation occurs and it's better for construction jobs and energy jobs. >> on the subject how energy companies are dealing with this, are you surprised we haven't seen major changes when it comes to drilling or capping wells? the ceo of continental was on this morning saying we haven't altered our plans. what is that threshold price for u.s. energy producers? >> most people are considering that $70 mark to be the line in the sand. that's where some of these costs come into play and some of the oil wells are starting to lose money. that's where i think you would see those labor cuts. you would also dramatic changes from opec, as well. below that level is your cost of production. we would rebound from there. but i don't think we are going to get to that level. $75 is a key retracement from that $94 high down to $80 where

we are at right now. >> one last question. again, you raised it at the beginning of the interview. why have people not been able to run with geopolitical risks has they have done in the past and pushed the price of oil higher? >> i thought it was amazing we didn't see that kind of move. typically we do. under normal circumstances, oil would be north wards of $110 a barrel. at least triple digit oil. i think it's those supply/demand factors. again, u.s. imports are at 18-year lose. there is just not that demand for oil. it's not that safe haven play. people have been looking at treasuries. that's why interest rates are near record lose. >> thank you both for your analyses. >> thank you. still ahead, mr. wonderful "shark tank's" kevin o'leary. the disappointing quarter and future of the company. that's later on squawk alley.

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have a look at the industrial sector. best performer on the s&p. just ahead of energy. >> that ahead of technology, as well. industrial stocks are the best performing sector in the s&p. they are up by about 1% on the trade so far. the sector is led higher by shares of cummins. partner hannifin up 4.5%. flowserve, xylem, eaton top performers. good day for economically-sensitive or cyclical sectors like industrials, energy and technology. >> let's get to rick santelli in

chicago for "the santelli exchange." >> thanks. i'd like to welcome our guest mark hanson. thanks for taking the time, mark. >> hi, rick. >> k. shiller was out today. my initial impression like many was, and mr. shiller was on this morning, year over year price increases are at the slowest pace since november of 12. we'll call it two years. is that the most important issue i should walk away with with this data? >> it's all part of what we've been talking about for 1 1/2 years. that's the return to normal that most people are viewing as good. what it is is the housing market reverting back to the shoulders of the end user shelter buyer who hasn't been responsible the past three years of a v-bottom and bubble-like price gains. it was the investors looking to flip and looking to buy houses for rental that is responsible

for the last three years. yes. these price gains are not good. they are going to draw down on housing starts and building permits. as builders follow rates, monthly payments and house prices. it has consequences. these trends, they're long-term. this will carry on well into next year. >> let me interrupt you, mark. i've always complained a bit if policies aren't working, they should be altered or put under review. cross benefit analysis. we can all agree on one thing. all the different angles that the fed's trying to work towards, the biggest one is housing. zero interest rate policy, buying mortgages. it hasn't turned out well, has it? >> they've got house prices back up. >> that isn't going to make things good. isn't there a relationship of income in the middle class and

affordability of home prices. doesn't that need to get back in line? >> housing always needs to -- in order to create volume, the sector will try to do, you need lower monthly payments. in 2003 they created exotic loans. that lowered the monthly payment. in 2008 they took rates down to zero. now we are back in a hangover and there is no way to lower the monthly payment. >> in my final analysis here, stuart miller said there are too many new homes on the market. do you agree with that? >> people never look at the -- it's not just new homes. it's shadow construction. we focus and we always lean towards this and show our clients where the supply really lies. if you take all these brand-new, beautifully rehabbed houses for rent across the country and add them to houses for sale, supply

is way higher than what people think it is. supply for shelter, which is what he is talking about. >> excellent point. thank you, mark. back to sara and simon. >> there is new data showing homeownership sliding to new lows. diana olick has more on that story. >> homeownership dipped again in the last three months. now at the lowest level since the start of 1995. the homeownership rate fell to 64.4% from a high of 69.2% in 2004. add to that 3 million borrowers in some stage of foreclosure and the real homeownership rate is even lower. is housing too expensive or is there a bigger movement here? robert shiller talked this morning on "squawk on the street" about that.

we don't have that sound bite. he said demand is shifting. people are not so interested in these houses they built in the recent years. there is more interest in apartment living or renting. renting is still red hot as younger americans are choosing to have rising rents over homeownership. part of that is credit, but part is those higher home prices. we are seeing gains come down. robert shiller said this morning, we could see home prices nationally go negative even for a few months. that is a controversial statement. back to you guys. >> i certainly heard that. i hope it doesn't mean my rent goes even higher. up next, shares of twitter are tanking today, down more than 12.5% after a disappointing quarter. reaction from a twitter shareholder.

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twitter shares are taking a nose dive post earnings as the company reported a 7% drop in user engagement, a social and mobile messaging service. what can we expect from twitter going forward? kathy wood, ceo of arc investment and manager. you were telling us, you are taking this opportunity to sell off to buy more. >> yes. absolutely. >> why? what gives you -- dick costolo said he's got plenty of self-confidence. what gives you the confidence? >> first of all, there have been a lot of management changes. they are changing a lot at twitter. bringing in anthony noto was very important. i've known anthony from goldman sachs for years and years. we were publishing analysts together. he knows what he is doing. he and dick costolo have great plans. the engagement statistics have been down 7%, 8% the last three

quarters. if you look at this last quarter, despite coming off the world cup, they were down sequentially at an annualized rate of 2.5%. already at the margin we are seeing some improvement. not saying that's great, but i think they are doing some interesting things to turn this around. we also step back. we have a longer term view here. if you look at several categories of advertising, they are pretty powerful in these spaces. sports, right? it's the most lucrative part of the advertising world. the nfl has said that it knows of no other platform where it gives away content exclusively for free. so that's sports they've got. >> in terms of the general big picture, you do not share investor concerns that the company is not adding and engaging users like it needs to like a facebook? >> yes. i think they're on their way.

i have to tip my hat to scott david at steeple. a few quarters ago he caught this loss of engagement and downgraded the stock. he put out a stock. he arpu that showed facebook is four times more expensive than dwirt twitter. but we think is in a much earlier stage and between sports and branded goods which is the hardest category of advertising to penetrate, they are there. and now they are going to go pick low hanging fruit. and the third category is our vertical the financial vertical. we most financial companies are blocked from using twitter. we think when people understand how powerful twitter is in helping us do research and in

terms of information flow a lot more people are going to be using it. the financial vertical is a very very lucrative vertical. >> how are you positioning for facebook tonight? >> we own facebook. we own a little bit more as a percentage of the portfolio of facebook than of twitter. twitter is 4% position and we're buying today to keep it at that position. -- is where we would own these funds. >> what is the judgment on facebook versus twitter. given facebook has more than doubled. do you add to positions? >> i think facebook still has some of the best growth ahead of it. i think we're in the s curve in terms of the transition from old media to new media. and facebook is leading the charge. it and google. and twitter is just as a younger stage in development.

so they have got video to go. they haven't monetize ed instagm yet. they haven't monetized oculus. we'll see what they do with that. they are starting an ad network. and in terms of -- in terms of not we chat. >> what's app. >> whatsapp. i think that is going to turn into a placement platform. >> what is your sell discipline then? grouped around this theme that results in ownership of twitter and facebook but when do you choose to sell something? what we do to try and size an opportunity from a long-term point of view we pull put all of our research up or free to help others understand why we are positioned had way we are, how big the opportunities are, and loi how long-term they are. we know we're dealing in controversy when the new guard

is taking from the old guard. we know there are going to be lots of trading opportunities. so if a stock is down like twitter today we're buying it. we think it is one of the winner. we don't think either facebook or twitter. they both win. >> and that is on what? a long-term view of the strategic value as opposed to its valuation at any point? o. clearly based on the rev guidance the valuation is very high. >> it's o 25 billion dollar market cap company. aimed at 1 trillion dollars of opportunity out there in advertising and marketing. no one is doing what twitter is doing. it is capturing a great demographic in sports it. has if branded goods. they want good consumer service. they don't want people talking badly about them on twitter and i think they are going to be getting other verticals like ours and the value is only going to go up.

>> you own pl apple which hit all time high today. are you uses heart on amazon. >> no it's maybe number 10 in our portfolio. >> are you reducing the size? >> no we started at that size. we started the funds at the in. so if anything we've just increased it a bit. and i've been with apple since the beginning. i've seen -- i do believe that jeff bezos understanding return on invested capital long-term. and. >> you are all about that with conviction. thank you for stopping by. bill ackman making another big bet but this time it is not what you think. we'll be right back. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets

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>> great session for the nasdaq. bit ackman's latest investment isn't a stock. it is an apartment. >> the billionaire's version of flip that house. last year they bought the penthouse of 157, the 1,000 foot tall luxury tower in manhattan. he's telling the "new york times" ice the mona lisa of apartments. someday someone will really want and it they will let me know. the problem is there is a lot of residential mona lisa s popping up in midtown. the building has sold only two units first half of 2014. 75% sold but at this rate it could take another six years to sell all the units in the building. now extell which built 157 says

this is typical for a project of this stage but there are a half dozen others going up all targeting overseas wealthy buyers. so demand has slowed dramatically. now for new york luxury developments in manhattan, prices fell 8% in the third quarter and inventory has doubled override the past year. extell's president telling me this is all competition and slowing sales at 157. the empty apartments may make it more difficult for bill ackman to make his $100 million flip. back to you. >> though he says of course that the others being built won't be the same quality. that is the bet he's making. >> of course. there's only one apartment like his in new york is what he would say. so we'll see what happens. >> certainly where they are

going to hold the parties. over to "squawk alley." good morning. >> good morning. and it is 8:00 a.m. at twitter headquarters in san francisco, 11:00 a.m. here on wall street. "squawk alley" is live. welcome to "squawk alley" on this tuesday morning. joining us is the kevin o'leary, chairman of e o'leary funds and investor on shark tank. good to see you. we have to start with the wig story u which is twitr.