sky. wednesday, october 29th, and "squawk box" begins right now. about morning, everybody. today is the 85th anniversary of the 1929 crash. at for the current market, the s&p and the nasdaq are once again in positive territory for the month. the dow is close to it. it's closing back above 17,000 for the first time since october 3rd. the blue chip index is now down less than 2%. the s&p and the nasdaq are each off by about 1%. today's trading session is likely to be focused on the fed. policymakers are set to wrap up a two-day meeting with an announcement at 2:00 eastern time. the fomc is expected to announce the end of its qe bond buying

program that was first launched during the crisis. now the question is just how long janet yellen and company will keep the fed low. you'll see the dow futures are indicated positive, up about 18 points above fair value. nasdaq futures slightly weaker. if you watch what's been happening in the early trading in the european markets, you'll see at least right now there are green arrows across the board with germany up by 0.8%. the ftse in london up by about 0.6%. and in terms how how things closed, the shack high, positive territory 1.5%. hang seng up 1.25%. andrew, it's not only the anniversary of the 1929 stock crash, it's the two of had year anniversary from sandy hitting our shores. >> that is true. i had not thought about that. thank you. thank you for that. let's tell you a little bit about some stocks that are on the move this morning.

electronic arts posting better than expected results and raising its forecast for a video publisher getting cost controls and strong digital sales. falling short of that mid shares. panera missed the mark citing higher ingredient costs. then there's marriott. then there's shares of orbital science. they are getting slammed. we showed you some video before the company built and launched an exploratory rocket that was unm unmanned. this is the first accident since nasa began using private operators to deliver cargo to the international space station.

the rocket exploded seconds after liftoff on the launch of a code in virginia and dropped into the ground in a huge ball of fire. the good news, no one was hurt and jane wells is going to be joining us with more in the next half an hour on that. >> 5,000 pounds or stuff, supplies or something. you remember a couple of years ago, we couldn't get a rocket off the ground. but some of them were russian, weren't they? >> russian or chinese? can you imagine being the guy up on the space station right now waiting for your supplies? >> well, they would send it out before they're out, wouldn't they? >> yeah. >> we do send rockets all the time. it's not like airplanes. >> no, but that is why this is new. >> i just remember seeing a similar short. facebook beat expectations

on every or not metric. but the shares turned negative once the conference call began. and the company warned of an increase in spending next year. joining us now is ron josie from j&p securities. jon fortt is here, as well. i checked with jon fortt first thing. this is the movie, the me work, facebook going on the internet, put your pictures on there? that's what we're talking about here, isn't it, ron? >> that's exactly right. that's the business that's going to do about $12 billion in revenue this year and is massively profitable and has lots of opportunity ahead of itself. >> i'm told they're on instagram, as well. my kids are on instagram. i know about it because i need to check exactly what they're up to on instagram. so i've seen knit that respect.

no, but seriously, is this an amazon situation? they let amazon spend money for five years before it came home to roost. but the stock has had a heck of a run. >> the stock has had a heck of a run, that's exactly right. the bottom line is, in our opinion, yes, they're going to degree this eir expenses by 70%. we added an additional $1.2 billion to our expenses. but when we think about it, this is still a company that is generating 50% ebitda margins, growing very fast with, changing the world in advertising perspective. i think they should be able to splend a little bit of money here. they're spending for the next -- as the ceo put out, three, five and ten years down the line the. >> do i have to retract my contention that this is a fad?

does this company need to do anything different ly? can facebook just do what it does and keep doing it better in terms of, i don't know, aggravating big tigz? >> i think the next three years you'll be talking about facebook continue to go change the overall advertising environment. when you think about the earnings, the earnings haven't really been clean from an internet perspective. in the next ten years, i think you have an opportunity around whatsapp, maybe around -- >> oh, i forgot about that. >> can we have a conversation about where they're going to make money on all these new acquisitions? so, for example, joe who is just wondering about instagram here,

there is no advertising on instagram as far as i can tell. >> just starting to roll out advertising on instagram. it doesn't get talked about a lot relative to some other instagram properties. and brand wooifz, it's all based on pictures, that's a lever that -- >> okay. what'ses ddz apps? >> this is more than a subscription fee. these are, in many cases, people who don't have a lot of communications options, but are finding whatsapp to be essential. even if you're living on a dollar a week, a dollar a month, if you're paying a dollar a year for whatsapp because you're using it to get fresh vegetables ordered and eventually delivered, that is providing value to you in india. so it's an emerging markets play.

>> thoor able to charge people a dollar and get value that way. so while the advertising market is not very robust, we saw average revenue peruser in rest of world, that category for facebook i think around 89 cents versus more than $7 in the u.s., they are able to charge a subscription through whatsapp. but they're being very cautious in examinationly how they turn on the revenue spigot. >> they don't want to turn everybody off. >> yaet. when you look at facebook overall, the quarter was good. they tend to sandbag a lot on revenue, right? so they said 40% to 49% revenue growth. they said last week we turned on these ads a in news feed. that would have made it better than it otherwise would have been so. also on operating expenses, they said expect those to be up 50% to 70%. but laugh year, they said expect opex to be up 40% to 45%.

but it oent ended up being up 35% to 35%. clearly they tried to throw a lot of things in a good quarter. we'll see what they do in the holiday season. >> so the question for a while was how do they do mobile? they weren't doing that enough. so i'm a company. i have something i want to tell to someone. what do i do with facebook mobile and i pay someone -- what do i get back? how does that work? >> joe, it works. tigdz can go up or down very quickly, depending on multiple different factors. the holiday spending season is

as robust as some mietd think it is, maybe that guidance might be light. but that is one. i think a few years down the line, maybe that can enable more social commerce. so there's a lot of opportunity that available to you. >> even with google, we think who actually clicks on these ads? >> but the words, you know, i sort of understand that. and with facebook, one of the xamps they gave was selling insurance, right? because facebook knows who is made, who is female, who is young, who is old, they can target people who are already buying insurance or people who are not already buying insurance. and facebook is saying that they're able to target women,

say, in a certain age category. >> life insurance you're going to sell to a woman on a cell phone? >> i don't know. >> see if they can find the right person, joe. >> you can do it. >> so you nirg out what people need and you advertise to them and they say, wow, i need that. >> only 5% of the american population at any point if time is in the market for a car. if they can figure out which 5% that is, it's much more targeted advertising. >> and i think the opportunity is it's not every vehicle out there, whether it be life insurance, car insurance, buying

a car, or any sort of aparamedic that's out there. that is because they have 1.6 billion users. >> there is some good stuff on cable. >> there is. >> especially on financials. >> and you need it early in the morning. >> still here. >> still here, i know. the days are running out. >> are you is going tread on this, say something that will embarrass becky again? >> probably a good idea. >> ron, thank you. >> it's 6:12. you're a very nice man. >> are you based back here?

>> i'm nice sometimes, yeah. >> he lives here. >> i've been here for a year or so. >> aren't you our tech guy? weren't you just over for barbecue? >> no, that wasn't you. >> let's talk about oil. this is all greek to me because -- >> harrison ford. >> oil prices down 20% over the last month. this driving price e at the bump below $3. joining us now is carl larry. carl, good morning to you. i don't go to the -- i don't own a car. >> you're aware of the oil -- >> i heard this whole oil thing is happening. >> this is like me doing facebook. it's the brilliance of the anchor assignment this morning. >> so, carl, which way are oil prices at the pump headed? >> i think oil prices will probably stay around the same

price. i think there's a little bit of room to go up, maine maybe not so much room to go down. but the other factor is we're going to see a pretty good holiday shopping season. the economy seems to be a little bit better. and, you know, as long as we see, you know, weather acclimated enough, driving may go up into the end of the year. >> how long do you think we stay at these levels? because when you start to try to model out where the economy is going to be in 2015 and '16, if the prices stay at a these levels, it could have a huge back, probably. >> we're getting into this transitionary period. i think oil prices and gasoline places stray around this area. we have oil independence now and the more oil we keep making, the more we're ignorant of what

happens outside the world. we're getting to the point of oil independence. >> tell must how you think this affects the economy in europe and asia. >> well, i think europe and asia are going to have to worry about what opec does because they're going to have to, you know, figure out what kind of prices they're paying. europe and asia are doing fine. they're not great, again. but they're increasing demand. especially the oil is not going to be sky rocking that oil prices should see -- it's an incremental thing. china's oil demands are about 6.5 million barrel a day. but maybe five or six year ago, it was around 5.5. i don't think the oil demand is going to shoot up that many times sooner if the oil prices go to $125. so now it's kind of tempered.

>> explain this, though. talk about salaries letting prices fall to curb american production is silly. why is it silly? >> the saudis have a budget. 90% of their export budget comes from oil. they just can't let it drop like this. they have a pretty high social agenda there. they keep their budget pretty high. if they drop production, that's ridiculous. they are trying to grab market share. the rest of opec was busy supplying the rest of the world. >> did you take a seflty of yourself at the gas pump? >> i didn't do that.

i was here yesterday. i did get gas yesterday. >> what did you pay? >> i think 318. you use super unleaded, right? >> you have to pay gas, too. >> what's your middle name, carl? >> andrew. >> no way. >> yeah. >> carl andrew larry. >> it sounds like three guys, doesn't it? >> yeah. >> so carl andrew larry all coming over to watch the game. he's got three first names. weird. >> i do. >> you know, we trust you, though. a lot of people i don't trust that have two first names. it's like they're hiding something. what's your real last name? do you have a record or something? do you keep moving around? how many wives have you got? >> you know, my dad came from indonesia and they shortened his last name. that's kind of what happened there. >> it's a good reason. >> thank you. i just want to mention one thing about the -- because i thought

that was pretty interesting yesterday, 180 points after durable goods. and then i read in this morning, and i understand that they're going to spend it today. >> yeah. >> the qe. but the option -- this should not be a surprise to anyone. the option will remain part of the policy arsenal. when they get out today -- >> it's a tool that they're never going to not have. >> if there is indeed a yellen put following on the bernanke put, which is something these guys need to do if necessary, you would need that left there in case something happens because you can't -- if you're at zero row, you can't keep saying considerable, considerable, controllable. 20% of people think it will be a can we support. by definition -- >> so you think it was 180

points based on bad news because bad news -- >> no, i'm not saying necessarily that. that wasn't the only reason. but i just saw it was once again a really bad economic number resulted in 180 points. not resulted in, but that was the back drop and it still was able to happen. and i'm not saying it's just because of the fed. it's something worth talking about. now we're down, it's almost back to the highs. we're not far. >> the s&p and the nasdaq are both on positive territory for the year. >> some people said we're hitting double digits for the year. we're going to have to have a good november and then a good december. >> even jeremy steagall cass wind of backing away from the 18,000 point. the last time we had him on, we'll see. >> on twitter, it's that a liberal of our shore that people

that might have ebola -- >> i know some of these people -- >> they can self-monitor themselves, we don't need to watch them. but big gulps on another -- those need to be mandatorily enforced. so i'll trust your judgment. if you decide to stay home, type. if you want to go to a bowling alley, fine. but if you try to order a 17 ounce sugary drink, we're going to have to step in as a nanny state. which is what i like about -- isn't that sort of interesting? >> there are people that -- i'm going to flip it around. i've now come to a conclusion what should happen. >> okay. >> which is that the -- with ebola. we shouldn't let people self-monitor themselves. we should be monitoring them on our behalf. and we shouldn't let them drink -- so you're going with both. >> my crew is you can't trust

anybody. but i think in this particular space, we should be monitoring people. >> now people -- they don't worry about chris too much any more because they think hillary can beat him. but if you seen him pillaring them on all of those top projects. >> can i make one -- i'm make one other -- >> can i stop you? >> go ahead. >> the tense thing i think wasn't so great. >> i bet if they could have found a hotel or some other venue -- >> a nicer place. >> like you're used to. right. with the spa. >>. >> i think he should have -- to the idea that it was not a great idea. but i think we should provide hotels or home moner toring and let people do it.

>> a big gulp orr -- >> both. >> okay. all right. when we come back this morning, doing panic that there are only 56 days until christmas. just about eight weekends left, folks. forecasts for holiday spending have been all over the map. we've made a list and checked et twice. sfiend out weather the industry looks naughtdy or nice for retailers. and the dow is back above 17,000, the s&p now wiping out those october losses. right now as we head to a break, check out the overnight action in asia. "squawk box" will be right back.

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get fire adapted now at fireadapted.org the royals forcing a game seven in the world series, which is something that mlb is pleased about. kansas city routing the giants definitively, 10-0 last night. and the decisive game is tonight. whew. who are you going for? >> san francisco has had a wealth of -- you know, good things happen to them. i like the midwest. i like the midwest a lot. and you've got -- you know, kansas city is both missouri and kansas. so you get two states that you can -- so you're -- >> you don't want to be a -- >> i love san francisco.

do i. it's the most beautiful decide around, the city by the bay. >> every other year they're there, i think. i said i was rooting for kansas city. ? they were in the super bowl a couple of years ago. baseball. >> baseball. >> very, very good. >> that little ball. it's not like badminton. >> are you a ranked badminton player? >> i can't deny my badminton skills. it is less than two months before christmas. courtney reagan has been keeng track of the sentiment. >> good morning, becky. there's a lot out there when it comes to forecasting holiday sales. but so far, the major forecast

and surveys are -- as far as whether vicious holiday sales and consumer will beat or disappoint what we saw last year. lower gas places often help sales. but none are willing to say whether or not they think it will be an issue for this holiday season. in fact, kohl's, jcpenney and among those who have issued a lower forecast for the current quarter. and gas prices have been lower than they were a year ago for three months compared to last area. 5,000 strong customer online survey today is optimistic. investors say they plan to spend a disease amount more this holiday season over last year. many still have gloomy economic perspectives. 29% think the u.s. is still in recession. this is down from last year, but still almost a third. 11% think the economy is headed

back into a recession. the number of bullish consumers doubled in this year's online survey. it's a small group, only 8% actually say the economy is helping. retailers have on their wish list for their holiday season. back to you guys. >> okay. coming up, details on the first rocket accident since nasa began using private operators to deliver cargo to the incidenter national space station. on this day in other, black 29, the start of the great depressi depression. and five years ago, the u.s. officially emerged from recession. the annual growth rate of 3.5% for the first quarter of 2009. as becky mentioned, a few years ago, as we head to break, take a look at yesterday's most clicked stocks. cnbc.com. we're back in a meemt. moment. opportunities aren't always obvious.

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good morning. big uptick. it's supposed to be connected to your story. a rocket blowing up story, "i like my milk." welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin.

coincidentally, i bought the milk yesterday, remember? >> oh, you did? >> yeah. >> how much? >> no, i mean how much did it cost? >> oh, i don't talk money ever, a guy like me. a story for all of our viewers watching while eating breakfast this morning. for years we've been told milk, it does a body good or what's the other one, got milk? now a new study out of europe finds people with a high intake of cow's milk die younger and women suffered more bone fractures, which makes no sense. doesn't milk have calcium? >> yes. you have to take calcium supplements if you don't drink it. >> and i wish other researchers would admit that maybe more study is needed when things don't -- >> i think milk is one of the dpaet -- i even like whole milk. >> i like it. i did, too. >> i had the best ice cream yesterday, mama fuku has an ice cream called cereal milk where

the ice cream takes like milk that's been sitting in cereal. >> it's the sugar that does -- it's amazing. >> interesting piece, the last -- not a totally separate issue, but the last anti-factory setters, there was something called a cascade when science comes to a dmeet -- and then it becomes consensus. the number one fact was supposedly going to kill every person. there is really very little evidence that fat is bad for you at all in hindsight. >> there's too much of it. it's everything in moderation, right? >> probably true. making new headlines this morning, new evidence fast traders are getting data from the s.e.c. seconds early. "the wall street journal" reporting on studies that show a lag in posting of company filings into the company's website. subscribers receive filings through a detective feed from an s.e.c. contractor. that's apparently how they're getting that news early. >> doesn't sound like much, but seconds matter.

>> in this bits, seconds matter. millisecond matter. shares of orbital sciences are getting slammed this morning. that's the company that built and launched the 14-story rocket that exploded on liftoff last night. jane wells is here and joins us with more on this story. what happened? >> well, they dope knowo. if you look at the video, it's pretty dramatic. spacex gets a lot of exposure because they're out there. they really don't know what happened. obviously something, it cleared the tower and then there was smoke and fire trailing out. there was a new, more powerful second stage engine they were using. this is the first time they had used it on the rocket and it's not clear if there is anything that -- this would have been the third of eight launches that orbital science is going to do for $1.9 billion for nasa. now they're going to have to

rely on spacex for now. the russian res also sending up supplies. >> engineers or physicists, if you talk about the thrust we're talking about to do this,ite not rocket science -- actually, it is rocket science. and when things like this happen, it's surprising because we think we have it handled. but the amount that is required, it is like an database it's an engineering feat. so we shouldn't be surprised if it doesn't work, right? >> well, i think we are surprised. >> it could be highly engineered. >> right. >> and the concern, of course, is that these private rocket companies, orbital sciences not being one of these, are competing now. well, boeing and spacex to do the crew carrier to take astronauts to the international space station. you know, and spacex had a rocket fire in a test system in texas earlier this year. but they have had absolutely no problems with any of their four

launches they've done so far. orbital sciences, again, is not going to be involved in the crude carrier comp tig. but they have plans themselves to do more things. they have a long history. they've been around 30 years. they do missile stuff. they've been very, very successful company. but this was -- this was rough. they have to figure it out. >> nasa was not without its own trials along the way. plenty of them. but this clearly raise tess questions about what a contractor should be doing. as well as the government. >> it will never be riske free, either. no. nasa side while they were disappointed, they were fully move forward to the next attempt. orbital has demonstrated extraordinary capabilities. these are not beginners. but something went wrong. they just have to figure it out.

>> so in terms of going up there, i have this big high def tv now. i put on george clooney and sandra bullock. >> that's enough for me. i feel like i'm there. watching that movie in gravity, beautiful view. >> would you go up, andrew? >> i would, but after a lot of -- >> not on the first? >> i applied for the journalist space program way back there on the -- on the shuttles way back when. i did apply. i was turned down. but back to orthal -- >> orbital is trying to -- obviously, they're going to lose a lot of market cap once the market opened. they had raised guidance just a couple of weeks ago. they came out with earnings and they're trying to close this deal. i think from a shareholder's perspective, what does all this do to that? >> musk had some problems years ago, didn't he?

he had one launch that had to happen or he would have been out of business. >> he was successful. >> well, this engine fired that they had earlier in texas this year -- oops, sorry, that's me. was for what he's trying to do is create a reusable rocket where you can -- a rocket will go up and then it will come back down and land and you can use it over and over. haven't a reusable rocket is like the holy grail. >> i like it here. >> we're not always going to be here. >> i think we are. >> you think the sun is going to hang around? >> yeah. i think the sun is around for another billion years or so. >> okay. getting too philosophical here. >> jane is a big thinker. >> because apparently i've got

big hair. >> i mentioned that. you're ready. you do not need a space helmet. >> just get some glass in front. >> no one said we had to talk about this on the air. . >> anyway, jane, thank you. we'll see you a little later this morning. the s&p and the nasdaq are once again positive on the month. but once the fed pulls the punch bowl, will that cause a market tantrum and induce volatility? joining us now is jason pride, director of investment strategy at glenn meade. covering the economic angle, we have chris rupkee. first of all, gentlemen, what is the likelihood that we see something coming, chris, from the fed today that is out of the ordinary?

we know they're going to end qe3. what happens? >> i hope so. would that be the height of abdomen towardy, they cut it by 10 billion qe and buy 5 billion government for another month until december? no, i hope they won't do that. it comes down to three basic words. significant slack they're saying remains in the economy. maybe they drop the word significant. there's a tremendous battle over whether or not the economy is entering full employment. the other two words are considerable time. it's going on be a considerable time after qe ends that they think about raising rates. do they drop considerable full time and say we're going to be patient for a while? when they did that in 2004, when they said they could be patient after dropping the words considerable, they hiked rates five months later. so the economy looks pretty good to me. their forecasts were so bearish

on interest rates a month ago in september. they're looking for 1.5% fed funds rate at the end of next year when unemployment is 5.4% to 5.6%. they need to get going. but i'm not expecting a lot. >> what does the market want to see? >> i think the markets want to see progress. basically markets going into the first hike tend to move to the tune of 7% per year upside. after the fist year, they tend to move to the tune of 6 pirs. we're hitting that longer

stretch of the middle of the economic expansion that tents to exhibit moore volume tullett. it is now down to earnings growth. and the fed better not put on the brakes too hard. i think everybody understands they need to gradually put on the brakes. >> but you think we'll get out of this today without much friction from the market, if the fed goes ahead, doesn't change much with the statement, you think the market is ready to digest and handle that at this point? >> i think the likelihood of them changing markets is slow.

the latest numbers i'm seeing from the market are the first quarter. so i think the markets pacified a little bit thinking, well, if everything that's going on, with the slower growth we've been seeing, maybe the fed can take their time a little longer. but it's that kind of -- just getting across the idea that the measured approach that i think the market wants to hear. >> chris, you say you think the market is doing fairley well overall. but some of the signs have not been that great. durable goods yesterday was weak for the second time. >> i'm glad you mentioned that. but it was down 1.7% from an all-time record high. the level we're at now, this is like flow of sales of orders. it's higher now than it was during the housing bubble years. investment is fine. we've lost a lot than when we had greenspan.

>> you think greenspan is clearer than this man? >> he had an instinct about moving. i think they've delayed their exit too long at this stage. heave done people a disservice here. >> if they raise rates from 0.25 to 0.5 it's going to slow the economy. i go out and see u.s. corporate clients and they say, they could tank the economy. in the old days with greenspan, we thought they could raise rates without slowing the economy. without slowing it. so i think there's a cost to this policy. right? rates are very low. you had 90,000 of bond power. that's a lot for those people. >> jason, quick response spp. >> the thing that's kind of missing from this is that this is a very different environment.

we've been going through a deleveraging that greenspan never had to encounter. >> jason, chris, thank you both for joining us today. >> coming up, planes, trains and automobiles, what the transports are telling about this economy. "squawk box" will be right back after the break. she inspires you.

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coming up next, check out this chart. it's the price of oil over the last three months versus the transportation average, which finally went up after some favorable moves on the texas ebola situation.

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the dow transportation average, like most of the averages, have rebound sharply from a recent pull back. it's near an all-time high. the index up 18 %, though, year to date, which is much better than most while drud is down 17% over the same period. joining us now is jason from

cohen and company. jason, watching this, you can never definitely attribute moves to the new cycle, but there were concerns about ebola as crude came down and the transportation average came down, the airline issues were getting hit. looked clear that there was trepidation, and once it lifted, they snapped back, but the other thing is as oil prices go down, you wonder about growth. it's not surprising that oil prices go up if oil indicates growth is slowing, right. this is good for both? >> well, you know, i think it's definitely good on the cost side. if you look at oil, it -- it's a major cost component with the rails, major cost come point with the truckload carriers. with the way it looks, there's a lag, but there's a surcharge,

and on the truckload side, they can't grab 15% of the fuel and recover all the time. when it goes down, it boosts margins, and if it puts more money in the pockets of consumers before the end of the year, who buys more, guess what, more is transported. >> someone who covers this industry, though, over the years, have you looked at the effect of cheaper oil being positive for the transportation average if it means that there's a global slow down? have you looked at which is more important in terms of boosting the economy? >> well, i think the main thing is why is oil going down? i don't think the fact that oil goes down is good or bad. >> we never know why. why is it going down? >> i'm not an oil analyst for sure, but i can tell you this. you know, when you look at it, the biggest impact it's had over time is on the market. when oil prizes, you see more shares shifted towards versus sheer truckload.

it's gone out the window. there's such a tightness in capacity for the trucks that we don't have any drivers. >> if you look the the crude oil, it's taken out, right? that's part of the reason, i would guess, that froze the old carloads stuff, too -- >> would be great to have cheap oil in a good economy, instead of just cheap oil in an economy you are worried about. >> maybe it's possible if the global demand is china aeroeurope and things continue to go here. >> crude is an important point. look at the rfds, and there is near term concerns. >> 3.5%. >> it is small, but it was.3% years ago. but going forward, there's concern the spreads keep it, you know, pretty much in tact right now. >> jason, thank you. >> thank you. >> good to see you, thanks. coming up, as the fed prepares to pull the punch bowl, are corporate earnings enough to

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the feds' policy graveyard. letting qe rest in peace, or the ghost of easy money haunt investors? >> facing strong numbers, but warning of higher expenses to come. >> why didn't you raise any of the concerns before? >> it's raining. >> i'm sorry? >> it just started raining. >> why that warning is taking a toll on the stock. >> and an unmanned nasa rocket exploding seconds after liftoff. closer look at the company that built and launched the rocket. as the second hour of "squawk box" begins right now.

welcome back to "squawk box" on cnbc. there's a new reality show that premiers tonight. it's a little of a political twist on this. senators from each side of the aisle are marooned on a deserted island. this was a six-day experiment, but it raises the question about how long joe and andrew would survive together on a deserted island. >> i think we could survive for a very long time. forever, actually. >> this is like a three hour tour every day. ♪ a three our tour >> you've seen "cast away," tom hanks, he fell in love with a soccer ball. wilson, i would love you, i would love you as my brother, and actually more than that at some point, for the duration, right? if we're there forever?

>> last people on earth? >> yeah, yeah, no problem with that. >> right. >> we'll become very good friends, very close. >> like we are now, already. >> i think we're there already. >> we are. this is the island. >> this is an island every day. >> if i had to pick, you know, you wouldn't be the last pick for me. ♪ >> on -- >> just second to last pick. >> no, no. ♪ >> that's nice. >> they want you guys to tweet us today. ♪ >> do you remember our date? we went to the boardwalk empire. we'll show you selfie of us. >> yeah. >> there's a paternal thing here. there's a paternal and fraternal and more. >> and more. >> coworker. soul mate. >> we'll tell you about the headlines this morning right now because facebook, which joe spends a lot of time on. >> yeah, yeah. >> trading lower in the

premarket. company boasted stronger than expected quarterly results, but in the conference call, the company warned of a big increase in spending next year with a slow down in revenue growth this quarter. talk to facebook ammists in ten minutes to talk about it. also, the government is suing at at&t, alleging the carry yore sold consumers' unlimited data plans, but would reduce interpret speeds once they exceeded a certain amount of data. fcc says speeds were slowed by 90% in some cases. jpmorgan is dropping plans to build a new two tower head quarters on manhattan's west side. they ran into hurdles over a size of the subsidy package of the bank, and the bank plans to stay now in the two buildings. if they were going to move, they have to buy from related japanese buyers that came in and bought the new space. >> on the west side highway? >> over to the hudson -- and

there's reports that you don't want to necessarily be seen buying new shiny towers, washington's not going to love that. there were a lot of things going on. >> we should mention that shares of orbital sciences slammed, the company that built and launched the 14 story rocket that exploded last night, unman, but carried a load for the space sags. exploding seconds after launchoff off the coast of virginia. no one was hurt, and the launch facility suffered significant damage, though. this is the first accident since nasa began using private operators to deliver cargo to the international space station. the second supply line is run by spais kpx, preparing the fourth flight-under-par the nasa conflict. the central bank is expected to take qe3, and lay it to rest.

it marks the end of three rounds of asset purchases to more than $4 trillion, and the third was amazing in that there was no end in sight when it was announced. it was unlike the first two, knew what the quantity was going to be. this was extraordinary, and it was shock and awe. as put it, you know, the day it happened. more dissolve. i feel like halloween now. the fed will not be expanding the balance sheet further, but who knows how quickly they'll shrink it. interest rates remain near 0 where they've been since 2008, but low interest rates actually help improve lending for anybody, for entrepreneurs, kate has more which is, i guess, people think the answer should have been yes, but we're disapointed. >> so true. seems like a no-brainer.

low interest rates would be a positive, accessing cash for cheap, but rates at low levels, small business lending is steady, but not robust. lending nor 2014 at $19 billion, up from 17 billion in 2014, but down slightly from the 19 preponderate 5 billion sent out in 2011. in fact, some small companies are turning to alternative lenders with higher interest rates, but easier credit standards and shorter terms because post recession lending standards are too tight. now, latest optimism index from the national federation of business finds 2 % siting financing as a business problem and half flat out don't want a loan at all right now as low rates have not triggered the growth in spending promising a good cash flow on business investments. separately, a capital index survey finds had 42 % of companies saying the current business environment is holding them back from growing. experts say while low interest rates are a small factor, they

do not matter as much to main street, and consumer conditions factor more into the decisions on hiring, raising wage, and investing. eyes on janet yellen on clues whether or not she raises the rates, it's likely main street does not care either way. >> they are going to do it today for sure, right? i mean -- >> an economist who raised questions about that, but he said they'd be crazy not to. >> yeah. but there are others that say they would -- >> hold on, if they do, what would the market do? >> if they stayed? >> yeah. >> i think the market would freak out. >> freak out. >> what do they know? right? >> right. >> i don't think they take it out significantly. >> considerable amount of time before we raise rates. >> why stay here for that very reason? it's not causing, you know, there's regulations, other reasons why. >> they care about the consumer. we see consumer confidence now at a seven year high.

small business does not feel it yet. that's not inspirational for them to hire, expand, invest back in the business, raise wages, pointing back to the consumer, they don't have the money to spend. >> you would have been thinking there's more borrowing across all classes of borrowers given where it is. but it's a proverbial pushing on a string. just -- interest -- 0, and you have not seen that much leave, right, reserves and go into where it helps. >> even in regard to sba lending, pretty much flat, the 19.5 billion in 2011 was replacing capital, not capital in to expand, but money they lost trying to make up. >> okay. all right. kate, thank you. >> thank you. more now on the taper fay finale? will it the end of qe rattle the markets? i know that jay's not pronounced now. >> took you awhile. >> one time.

t timmer, now, these are thrown out. was this assigned to you? i don't know. >> no. >> michael, head of u.s. rate strategy at rbc capital markets. gentlemen, what do you think? it's going to happen? we're going to be fine? >> yes. good morning. i think the fed has a free option to end qe3 this month. probably be announced today. if the markets were still at the lows from a few weeks ago, you know, maybe, there was some talk about maybe delaying that final taper to december or something like that, but the way i look at it, the fed has a free option. the market's kind of basically priced everything, and really the big question is, when do they start normalizing rates? how fast do they do it? to what terminal level do they end up going? i think those are the bigger

questions for the market. >> you know, michael, jurrein said something, not necessarily on purpose, but it is telling. that is, if the markets were still down, the fed might reconsider it, i mean, that's not normal for the fed toe have on its shoulders, the own nesz of where the market is trading. they have a a due mandate, stability of the dollar and growth. it's not target above 17,000. >> we've had a mandate creep, but i agree with what you said before. if we had expansion, it would spook everybody, and it will be worse than helpful. >> you didn't answer what i wanted you to talk about. jurrein, is it weird to you that

maybe we don't taber. qe was to boost the markets, that was the intention, and if it was lower, they should consider qe? >> as long as 0 interest rates in general are about buying time for the financial system, and you see this in europe right now, but like you were saying, it does not do much for the economy, the lower rates, lower mortgage rates, better that home financing, but generally speaking, buying time to give the markets a sense to really recover, and we had the taper transfer a year and a half ago and backtrack because the markets were not ready, and now they taper all year, and the markets are fine, interest rates low, and i think, you noerks they do take their cues from the marngts, especially inflation

expectations. certainly, where tips trade and where the dollar's going, and, you know, markets calmed down here. there's a free option. >> so, michael, the fed was our bridge to a better economy, and now they pass the baton to the economy. is the economy ready to do it ob its own or will trouble from europe, trouble from china because us not to give above stall speed, out of the woods? >> mostly. the bond market prices as if it's likely europe drags us down in growth an inflation. look at the linkage between the u.s. and europe over the past decade, it's been tight, but that's because we had two of the greatest financial shocks. the sub prime crisis, and in that environment, yes, things are to be correlated. moving forward, correlations break down and u.s. will be able to continue to bounce around above 2% growth, even though europe is, you know, remains

weak. >> we're -- are we halfway through earnings? b-plus, a-minus? how do the results fit, up 8 % or so? >> on qe as a whole? >> no, no, on earnings. how have the earnings been in terms of being good for the economy? b plus? a, a minus? >> i say b. >> really, become, haven't been that good, really? >> i mean, as far as economic impact, it's been helpful, but, you know, not exactly lightning in a bottle in here. you know, i think if you look at the justifications for qe, it changed a lot over time. it started out that it was going to figure a refinancing wave, and the expectations morphed into an asset bubble wave. i think you look at the biggest effect from it was the signal that if the fed was trying so hard to stimulate things they kept rates down, it meant we were ages away from tightening. look at the curve shape, you

actually got help theed with ded tightening and third year rates. now that we're at the end of that, that's why the focus is on the process of tightening. >> jurrein, and michael, thank you. we have to run. already 7:15. >> it is. coming up, challenges ahead for facebook. we're going to talk about it. that company warning higher expenses coming out, a closer look at mobile ad revenue, user numbers, and what mark zuckerberg might have to do, and we'll head to a break. as we do that, look at european markets now, in the green. we're coming right back in a second. opportunities aren't always obvious.

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i'm just looking over the company bills.up? is that what we pay for internet? yup. dsl is about 90 bucks a month. that's funny, for that price with comcast business, i think you get like 50 megabits. wow that's fast. personally, i prefer a slow internet. there is something about the sweet meditative glow

of a loading website. don't listen to the naysayer. switch to comcast business today and get 50 megabits per second for $89.95. comcast business. built for business. welcome back, everyone. the futures this morning have taken a turn for the worse. s&p futures, dow futures, nasdaq below fair value, s&p down two points, dow down two points, and nasdaq down 15. hershy three points short of expectations, revenue in line with expectations. the company says demand for chocolate ahead of halloween stronger than expected. >> okay. facebook having a pretty strong quarter, third quarter, that is. beating the street's estimates on top and bottom line, but here it is. more people are worried and they are focused on what's happening forward looking with the

company, specifically at the expenses announced in the conference call. joining us, gene, who covers facebook, and looks like you just -- looks like you are keeping the price target at $8 or decreasing the target? now at 82 from 90, right? >> that's right. we are tweaking it back. as you said, the critical question here is around expenses, the level of expenses, the spending they ramp up in the next year, and we felt like that's having an impact on the price target. >> as an investor, are you unhappy they spend this money? >> as an inveszer, no, i think you are delighted they are. they got five big opportunities ahead of it not impacting the business now, really invested in those, and so i think as someone who is more interested in what happens to the numbers near term, i think you are concerned, but i think if you truly own the stories, this is something you would be optimistic about. >> talk about two parts of the long term story. we know the facebook piece of it.

we have not really seen yet is how they try to monetize instagram in a meaningful way, whether it works, and whether customers stay it and play along, meaning right now, it's a great user experience when you add and introduce ads, what happens, and how you really monetize what's an app. >> well, instagram has huge use and teens' use continues to ramp up. that's kind of one of the key trends. as far as the what's app, close to a billion users. >> back to instagram. are you convinced you can introduce ads into service in a meaningful way without putting off the consumer? >> i think so. really focused on that, saying the next year they will not be doing much in terms of montization, but i think they will. they've shown ads that are discreet, pictures, pretty provocative, and i think that

advertisers will find ways to engage instagram, and so i think they will be successful at that, and the great thing for investors is they are going to go at this slow as they have in the past, and so i think that analysts do not have this in the numbers, but, ultimately, should be positive in the back half the next year. >> do you think what happened with facebook shares and amazon shares earlier is just a reflection of some investors losing parties with companies to wait when it comes to profits and monthization. >> i think that's part of it. i think the other part is the stock had a huge run over the last six months. you know, facebook, held 50%, and so i think that there's some natural recalibrating expectations around some of the expenses in given the stock had a big run, i think that impacts it. >> okay, gene, leaving it there, appreciate it. >> thank you. >> thank you. still to come this morning, southern companies' ceo tom fanning joins us to talk energy prices, earnings, and the end of fed taper, but first, turning

politics into a reality show. senators from opposite side of the aisle mariooned on a desertd island. how long would joe and andrew survive together? we'll have your answers after the break. time now for today's aflac trivia question. what was the most expensive halloween costume bought on ebay? the answer when "squawk box" continues. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim in just four days. ahh! four days? yep. see why speed matters at aflac.com. [sfx] duck snoring

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now the answer to today's aflac trivia question. what was the most expensive hall week costume bought on ebay? the answer? an iron man suit purchased for $4,999. >> wasn't me. it is election season, folks, but a big political faceoff is not decided at the poll. rival survival is a new show on discovery. takes two senators, republican senator flake, and democratic senator hooin rick, and, yes, nay are actual u.s. senators from the united states' senate, left marooned on a remote island for a week. this is an experiment in

cooperation in compromise, if they can get along. the others should as well. we asked you to tweet us how long you think joe and andrew can survive. >> as long as it takes until we are rescued. >> some responses that came in, indefinitely, would not notice it was deserted, circle around each other forever. >> true love. >> that's nice. >> as long as andrew listens to joe, they'll last for months. >> that's a good one. >> three days before they are opposite ends of the island, fifth day, joe begs andrew for food. before they are opposite ends of the island, don't get that one, but okay. >> i would give you the boot. >> we share things. >> we would -- like i said, this is ripe with politic -- you know, there's a lot out there that would be funny. we'll leave it that we would be wonderful. a wonderful time. >> look, and i think the first thing i said was perfect. if tom hanks loved a wilson

ball, and that volleyball, you could love me too. >> and you would even love me. >> they are mixing metaphor. this song is from "titanic." ♪ that is how i know you go on >> there would be no -- you know on the island there's no government -- ♪ far across the distance ♪ the spaces between us >> nobody telling us what to do. that could be the hardest thing for you, no supervision, the end of the year, do i contribute something? ♪ near far wherever you are >> let's organize the government to play the infrastructure on the island. >> donations from the others. >> thinking "lord of the flies." >> it's not fair. we'll have to work on this. by the time we're done, you will be like me. that's the thing, though.

>> you think? >> yes. i'm set in my ways. i'll work on inversions on the island. coming up, midterm elections less than a week away, and balance of power is in question. we'll broke it down next with political power players from the reagan and clinton administrations. look at u.s. equity futures at this hour, in the red, dow opens 5 partnershipoints. back in a moment. "i'm 16 and just got my first car" feeling. presenting the buypower card from capital one. redeem earnings toward part or even all of a new chevrolet, buick, gmc or cadillac - with no limits. so every time you use it, you're not just shopping for goods. you're shopping for something great. learn more at buypowercard.com what if we finally had that would be amazing. hey, what if we took down this wall?

what if this was my art studio? what if we were pre-approved? shut up! from finding to financing, how'd you do that? zillow.

welcome back to "squawk box," the fed set to take away from proverbial punch ball, announcing the end of the asset purchase program at the conclusion of the two-day meeting this afternoon. delta airlines is now the subject of a transportation department probe. the agency looking into complaints about delta's role in blocking development of a second major atlanta area airport, and drug maker is showing chief executive officer the door, dismissing after a growing riff between him and the company's

chairman. sandfi's shares tumbling after that ousting. joe, this is your favorite artist. >> i like her. tair lore swift, named a global ambassador of the big apple after her single "welcome to new york," and not everyone is happy with the choice. she promoted new york life promoted off the mark. see, i couldn't -- if the village voice criticized me, i don't know what i'd do. i just might go into hiding. the village voice criticizing swift of singing the praises of lattes rather than new york fair like pizza or bagels. really, just awful she would say that, really, do we have to talk about that? >> lattes instead -- >> would you look at that and take offense from that? >> no, no. >> a closer look at swift's

impact. >> big op ed in the "wall street journal." about music and bank payments and how it's -- >> and why she's not on -- >> anti-spotify. >> why? >> because she thinks artists should be paid for their music. her view -- >> good to have a big artist standing up for people, it's the artists not in that spotlight who struggle with if much more. >> right. >> i'm just not sure that -- i think when you're in that position, you have a much easier time of not being on spotify. it's the little guy who has no audience who needs the audience who needs spotify. in the meantime, spending this midterm election is breaking records, and joining us now to patalk about the balancef power in washington is ken, former chairman of reagan administration, and mac, former chief of staff for president

bill clinton, and, gentlemen, welcome to both of you. >> great to be here. >> morning. >> great to see you both. talk about the money and influences outs there. ken, there's a lot of money on the line, always has been, though, how is this time different? >> this time, it's grown exponenti exponentially. the problem is the media, sorry, cnbc, but the media is expensive to buy ads on, and ads are the name of the game as well as the ground game, but it just has gone up as no, ma'amically to the point that it's absolute pure insanity, but there's no n end in sight. >> mac, pick up from that. >> yeah. >> if money is what matters, money and influence determines things, who has the upper hand this time around? >> it's even, becky. it's too much money, too much money from outside the state where voters reside. i think the north carolina race is going to cost $100 million. that's just too much. i don't think it's just money and influence. clearly, that impacts,

campaigns, no doubt about it, for campaign finance reform, but there's a a longer subject. it's about the mood of the country, and turnout. turnout is going to be key to this very close election. >> turn out is key, the end game is what happens. ken, mac, let's assume that the republicans take control, assume that we're trying to figure out how the nation is governed following that. mac, if that happens, can president obama work with republicans in both the senate and the house? >> she should. i think he can. he has the ability. whether he does, time will tell. i will not season cede the republicans will takes senate. >> i'm not saying that either, just where do we work from sneer. >> no, i'm kidding you, know, i think he should, and ken and i talked about this before, there's several areas from trade to tax reform to immigration reform or steps in that regard,

infrastructure, there's a lot of areas that he can work with a republican senate if that happens, and he should do the same regardless of the outcome. that's what the american people want. >> hey, ken, let me ask you, seems like we constantly have a case of poor winners when it comes to watching politics in the game. every time somebody wins, they say elections have consequences, this is where things are headed. our side won. as a result, we have a mandate. that does not seem like reality to me. how do you get to the point where somebody wins the election does not mean they think their decision is right on every call? >> look, assuming the republicans win the united states' senate, they get 51, 52, maybe 53 votes, you need 60 to get anything done in the senate. there is a huge incentive for the republicans not only in the senate, but also in the house to demonstrate an ability to govern. in my way of thinking, it also is incumbent upon the president who has a lot of incentive to figure out ways to compromise so

he, too, can have the last two years of consequence. all i think right now is that, you know, four years ago, president obama, after the election, when he lost 63 seats in the house, said he took a she lacking, and it's called the united states senate. but i think both the republicans in the senate and in the house, if they control both bodies, have a huge incentive to find ways to put accomplishments, achievements up on the wall. that's what the american peoplement, and, frankly, as you head to 2016, as favorable as the map is now for republicans in favor of the blue states in 2016. >> mac? >> yeah, ken's got it just right in my opinion, becky, regards of who takes the senate.

tremendous incentives on both sides to govern and get things done. people of this country are tired of the bashing. they are ready for government to be on their side and help them have a better life, and more confidence in the future. a lot of areas to work in. >> i feel good hearing you say those thing, and i'm not convinced that the parties are necessarily there, that they are necessarily reready. what happens to make the heads of the party hear those messages? >> well, you know, importantly, our system of government works best when there's presidential leadership. the president has to be engaged and be willing to compromise. on the same side, with mitch mcconnell or john boehner have incentive if the republicans control both bodies to say here's things we want done, work with the president and try to get these done.

corporate tax reform. immigration reform. not comprehensive, but huge steps. trade, it creates jobs. it creates more opportunities for all americans. those are the things that are in the sweet spot of the republicans, but also important to the white house as well. so i think there is insentive for people to come together. >> ken, mac alluded to 20 16 and how things shape up in 2016. i know you're a former clinton chief of staff. is hillary clinton the best person for the democrats to put forth? >> she's certainly and imminently qualified person. her leadership is proven. i think she'd be a great president. she's got to make a final decision to run, but i think this is important in this next two years to make some progress to hand off that baton, whether it's a democratic republican president in 2016. >> we've seep her get pushed further left before she's officially announced she's running. we saw what happened recently

with the gap that was made, and, obviously, that was an attempt to go after elizabeth warren's camp of things. can she move left, will she move left, or will she stay center? >> she has to put forward, becky, a vision for the country, a plan how to achieve that. and i'll she'll do that. it's always a balanced walk in the primaries whether you're on the democratic side or the republican side. i believe she's got the ability to do that. >> ken, who do you think is the best conditi candidate for the republicans? >> the person who unites the party, in fact, could be a superb president is jeb bush. there's a lot of candidates out there, a lot of people waiting. i would hope that jeb can unite the republican party and certainly has a vision to take us to the next step, not only as a republican party, but as the country. jeb is so comfortable in his own skin, well grounded, and he makes sense. he may not be republican

political orthodoxy on a few issues, but i think that helps with the independent vote, not just with the republican base. i think jeb is the strongest candidate the republicans can put up. >> okay. ken, mac, thank you both for your time today. >> thank you. >> and stay off the island with joe and island. >> yeah, we don't want anyone to -- three's a crowd. two's company. >> three's company. >> no, three's a company, two's a crowd? working for us. there you go. telling us what to do all the time, get up, go do this, do that. >> because you always listen to me here. >> we're going to relax, tax it easy. >> i'm waiting for the island. >> you're looking forward to it, aren't you? >> yes, we could have a good time. >> fun in the sun. coming up, a new project from google that could help detect cancer. that story's next. we got to bring sunscreen, by

the way. >> yes, remember the sunscreen. >> okay. then the effect of cheap oil on southern company, ceo, tom fanning, talking energy prices, earnings, and investment in solar. we could need solar stuff on the island too. i don't know. we'll talk about it. back in a moment. er stops, tdd# 1-800-345-2550 even on the go. tdd# 1-800-345-2550 open a schwab account, and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550 so when a market move affects one of your positions, tdd# 1-800-345-2550 schwab can help you decide what to do. tdd# 1-800-345-2550 with tools like free live-streaming cnbc tv tdd# 1-800-345-2550 that give you the latest financial news and trends. tdd# 1-800-345-2550 and bubble charts and price charts that let you see exactly tdd# 1-800-345-2550 how market activity is affecting your positions. tdd# 1-800-345-2550 so when the time comes to decide whether to scale in tdd# 1-800-345-2550 or scale out you can make your move, tdd# 1-800-345-2550 wherever you are. tdd# 1-800-345-2550 and start working on your next big idea. tdd# 1-800-345-2550 ♪ open a schwab account and you could earn tdd# 1-800-345-2550 300 commission-free online trades. tdd# 1-800-345-2550

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twith available forwardd collision warningigned. and new blind spot monitor and a 2014 top safety pick plus rating. cost of entry? a fortune. until now. hey sarah, new jetta? yup. can i check it out? maybe at halftime? introducing lots of new. the new volkswagen jetta. isn't it time for german engineering?

zplmplg welcome back, google is working on a new project, this one, a pill that tests for cancer and other illnesses, containing particles that travel through the bloodstream in search for malignant sells. switching gears, southern company, just out results a couple moments ago, the chairman and ceo, tom fanning, deputy chair of the federal reserve bank of atlanta, and, tom, you're yielding 4.43%. hard to move utility stocks for capital gains, but utilities were both, a little capital appreciation and capital income. what are you doing with the company to try to actually grow earnings per share, not just to

cover the dividend? >> well, listen, we're one of the most capital intensive industries in the united states, and so what we do is invest in capital, distribution assets to serve the customers. we're kind of at the end of the long term cycle in that republic. we are running the renaissance, a big capital investment, and then we have other projects along the way, so we're kind of at the end of a cap x cycle now. will be interesting. >> you also know about input costs for power, and you get it where you can get it cheapest, i guess, for your customers. >> you bet. >> what happened in your view in the last year or so with oil prices and energy costs? has it been because of the weak global economy or because we're increasing the supply with all these efforts for bringing new sources on stream? >> you know, joe, i think it's a

little bit of both. the united states is in a position that neither you nor i have been in and probably our parents have been in in our lifetime. we have the ability as a nation to promote energy security. that is not independence, but effectively a net exporter, and so i think the supply side of the equation with oil and natural gas and coal is something that can serve it country so well for so long, and i think in essence give people a dividend in terms of their household income growth. >> pretty funny, so for six years, all we heard about were renewables. what did you mention? none of those things were emphasized by the government, the current government, the white house at least, which ones? all horm things you said. what were they again? natural gas, coal, and oil? >> sure. >> filthy, dirty carbons. go ahead. >> joe, i think the issue here

is that could put america in a position where energy security, breeds economic security. that's what we need in america today. >> right. >> the appointment is those that, you know, backers of, you know, the government where we are now, we'll take credit. they have no shame in actually taking credit for the energy renaissance here as if they greased the skids or made it a better environment to operate in, when, in fact, everything that's been accomplished are in spite of the current administration. >> well, as ceo as one of the leading energy companies in america, i really don't care. >> they'll do something to you. you'll get audited personally. lois lerner -- >> joe, i don't care who gets the credit. make sure we do the right thing for the economy and get us going again. we can do better than we are doing now. >> tom, you place bets on all sorts of different energy streams, and i want to understand now that we have the price of oil where it is, how it

changes the economics of the businesses and investments in the businesses over the next several year, and i'm talking about wind, solar, and all the new energy. >> sure. >> so oil has almost nothing to do with our business. it has to do with the consumptive power of the customers we're privileged to serve. when i think about generating resources, the full portfolio, all the above, whatever you want to call it, it's new nuclear. it's 21st century coal, natural gas, renewables, energy efficiency. ask about renewables. they are growing. i've always been a particular fan of solar. wind is applicable other places in the united states, not necessarily in the southeast. solar matters to us. we announced another deal here recently. >> yeah. >> my sense is that continues to grow. when you think about everything that we've either invested in or procured, it rempresents 4% of

the generating capacity. now, that's still a big number. southern company from energy production stand point is a little smaller, but similar in size to the nation of australia. >> right. >> got to do it. got to do it. not as big as everything else. you got to do it, but worth less than what you paid for, but that's okay. you don't have to market to market, do you? did you say this, the market does not expect qe to expire? so you don't think there -- that's wrong. you expect qe to expire, but you don't think the market knows it's coming, so -- that's a mistake, right? >> i'm speaking on my behalf, my opinion, not as my role at the fed. i think the market discounted that. the interesting question is interest rating. i said this before on the show that i think the most over optimistic in america is unemployment. consider the jobs created today are the lower paying variety,

more hapart-time labor and more disinfected labor, therefore, incomes are not growing, and therefore we overshoot gdp growth. we expect in the southeast 2 .2%. here again, we can do better. consider monetary policy and the effect of slowing growth, my sense is they are likely to keep it lower for a longer time. >> you think we'll have -- what -- if you had to guess, and you don't need to speak as a fed guy, but when will the next round of qe be? a year? five years? 20 years? 50 years? any idea? >> impossible to speculate on that. it's -- >> wouldn't surprise you, though, still around if we need it? >> it's an arrow in the quiver. >> it's the only arrow we have now at 0, but, okay. you don't know. >> the real arrow in the quiver is get the economy growing again. that's what we have to do. >> right. >> that's the long term deal. >> we might have to address structural issues at that point, or, you know, there's things we

have to do, and we're not -- are you optimistic after this election we're going to do anything? you know, i guess as a rule, i have to be optimistic. we always have to. you know our company is active in washington. we've got to push for the right policies for america, and i think energy is a way to play offense, and otherwise this challenge environment. i think energy and tax reform are two areas to get bipartisan support. >> what about energy, tom? what specifically? a lot of times that's code for making sure the pipelines are passed. what do you mean? >> well, again, if anybody mewas my full position, go to youtube or whatever, but it is the notion of energy securitiment taking advantage of the blessings of the natural resources this country has puts us in a different position. give us an unassailable advantage to grow manufacturing, jobs, personal incomes, and all we to do -- >> it's not progressive, goes

against the progressive agenda. you're barking up the wrong neck of the woods there, tom. you're not saying the right thing. >> at the end of the day, joe, we can get support to move in this direction. i think particularly in the senate and in the house, i think we can get people to agree. >> maybe in the senate and house because they will go republican, but we're going to have the democrat in the white house. >> at the enof td of the day foe good of the economy, people will do the right thing. we have to put that in front of them all the time. >> we can hope. thank you, tom, appreciate it, see you later. >> great being with you. >> hope springs eternal. when we come back this morning, the premarket movers, and check this out. it may look like the white house, but you will be surprised where this replica is being built. that story right after this. ♪

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all right, check out the building. i know it looks familiar. well, guess what, a wealthy iraqi businessman is building a two scale replica of the white house in the kurdish capital, located in iraq's most expensive communities, and one that has huge mansions, a little unclear as to why it's being built there. here it is. >> wow. speaking of the white house, could the executive office have been hacked? activity suspected on the computer network coming from the washington post, reporting that hackers believed to be working for the russian government

apparently breeched the network in recent weeks, raising questions. when we return, competition for apple pay, but has payments moved from traditional plastics to mobile phones, how safe is your data? internet security expert michael is going to join us, we've not seen him in a while. he's with us, plus, a portfolio check, and we'll explain why tina is the acronym to know before you invest. what that means when we come back. ok, if you're up there, i could use some help. smart sarah. seeking guidance. just like with your investments. that sets you apart. it does? it does. you're type e*. and seeking another perspective is what type e*s do. oh, and your next handhold... is there. you don't have to go it alone. e*trade gives you the support and guidance to make informed decisions. are you type e*?

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welcome back to "squawk box," first in business worldwide, i'm andrew with becky and joe, and today is two years since sandy hit the east coast, sending waters flooding new york and new jersey. the serge hit 14 feet, swamping subways and commuter rail tunnels and knocking out power to the southern third of manhattan. the storm was blamed for at least 182 deaths and property damage estimated at $65 billion.

wow. >> we've come a long ways since then. >> we have. >> we decided this was the anniversary of the big crash. >> 85 years since the 1929 crash. the number of people applying for mortgages falling 7% in the last week. the average rate rose slightly during that period. opec secretary general says no need to panic about the recent collapse in oil prices, arguing low prices curve completing supplies and leads cartel members to pump more by the end of the decade. >> we're not worried, dude. we like this. we're not panicking. i hope it goes to 40. >> there you go. a story in the "wall street journal" suggests fast traders get data from the sec seconds early, a direct feed from the contractor, and others wait for them to be posted online. research shows there is a lag in filings appearing on the

agency's own website. >> wow. check out stock movers at this hour. facebook shares slammed, earnings and revenue beating, but the company warns of an increase in spending next year and project the slow down in revenue growth this quarter. also, gilead results fall short, risen 61%, and sanofi under pressure, firing the ceo after warning pressure would hurt growth, and we have a mixed quarter for soda stream. the makers of the home soda machines -- sorry, i was not laughing -- i was looking at gilead, seriously. earnings fell short of revenue citing challenging selling conditions. i skipped the name. >> oh, i didn't see. i'm laughing. you're laughing at yourself now. they have a 10 billion bigger market cap than merck. did you know that? >> it's a big company. >> almost as big as -- amazing.

>> investors answer. since the launch of the iphone 6, apple stock son a tear. everybody -- how many days do you have left to turn the 6 plus in in people around the world are waiting to any. >> it's big for me. >> it's so much bigger than your face. >> let me intromichael, just sitting off the all time high, but many say more upside is ahead. let's get to dom chu. michael, what do you bring to the island? the 6 plus or the 6? >> i need battery life on the island. i won't need pockets. >> we have to save the battery life. >> we can get one of the things where you can actually crank a battery and recharge that way. we have a look at key moments

for the stock in the past. sorry, dom, i'll get to you eventually. >> i still have the iphone4s. i'm behind. i have not even seen the 5 for goodness sakes. the stocks there are nay sayers and bulls as we know. there was a record high in yesterday's trade, but to put it in perspective, over the course of the last month, up 7 %. a decent move recently. look at the majjor milestones ad how far it's come. 2014, beginning of this year. when it started, apple worth $4 70 billion, one of the most valuable companies in the world. that was the beginning of the year. now tack on a 33% gain seen in shares just this year to date, getting us to a $626 billion valuation. that's how much it gained this year. so that gain in market value, about $156 billion, is like

tacking on an extra disney to the value of caple at the beginning of the year, and that's where it is now. that's why we call it the big apple. look at the milestones because it gets more impressive. this is the interesting part about the 7 for 1 split. people think, oh, will it pump the stock up? we don't know, maybe it was a factorment since june 9, that was the split, stock is up 14 % since then. already a market out performer. it's a megacap stock. look at this. ceo tim cook, we thought, oh, maybe things will be weird with tim cook as ceo, but the stock since august 24, 2011, when he took over as ceo, rose to record highs, came down, and now back to record highs, doubled under cook's tenure. doing a decent job for mow by some measures, and this is the staggering one. it's been a long time, seven years since the original iphone was introduced. i did not have one. my first was a 3g.

that was june 29, 2007. since the release, this was a $17.50 stock, split adjusted. it's a six bagger, up 512%. there are bulls and bears, but you can't argue with the fact for whatever reason, investors pumped it up to a level that is historical in proportion to everything else. back to you. >> amazing. cook has killed it, you know, a hundred percent. remember after jobs passed, you said -- decently -- decent is not -- >> well, remember, guy, the stock hit a near -- the previous record high around, we'll call it a hundred dollars a share back in 2012, but it fell 40% spring of the following year, and people thought, oh, it gets dicey, but it's back up to record highs now. >> thank you, we'll continue the conversation because apple stock

has been on the run, but the company's new payment system is under fire from competition and a consortium of retailers like walmart and others backing a separate mobile payment initiative known as customer exchange. mtx is the acronym. and joining us now to tell us about the breakdown and which better protects consumers' privacy, our internet security analyst, cnbc's john ford as well. we talked offset when you first got on, we talked about whether it's a bug or a feature for none of the information that you share on your phone to actually really be shared with the merchant. >> so, here's how it happened. apple, adq, he made an announcement saying apple pay will not and does not collect personal data or transactional information, and he's an honest guy, i'm sure, but i think there's marketing speak there as

well as a promise of privacy. the positioning was that we at apple will not collect your data, data is safe with us. turns out, it's not a future of the system if you look at it from their point of view at apple. i think it's a bug. apple pay works on nfc, near field communication. put your phone next to the payment structure, push a button with the fingerprint, and, boom, you paid. it's slick. it's good. going to be better than anything else on the market. there's a limitation of nfc. nfc cannot collect skew data, the individual data item purchased or location data. they are overcomeble, tech anilany anically, and now the retailers are not able, without an extra swipe of the card to marry your phone purchase data with loyalty and other information. apple and the retailers are incentivi incentivized. it's short lived. >> is the competing system a better system? >> well, i -- i don't think it's

necessarily is. on paper, current c, part of the mcx thing looks like a dog because you got to get this bar code on your phone or the computer and hold the phone up. it's like the old lady writing the check at the grocery store every single time or getting your id checked for liquor every time even if you buy a pack of gum. that's inconvenient. on the bug versus feature thing, i like the choice whether i hand over extra information over to the retailer. when they ask for the zip code, i like saying, no. >> do you say no? >> i do. >> i do too. >> i do too. >> kpends on the retailer. >> i like the option, but i don't think it's around for long. it's a short term option. apple pay works better than google wallet, better than the other options. apple does the way it does, slick, sexy, and dumb easy. i don't think the privacy thing lasts. that's my prediction. >> apple wins, and walmart and cvs and everyone else come pitch

lates? >> takes more than a day to win. others will get smart. the iphone is no longer a unique snow flake like it used to be, right? the cool kids at my company, 250 kids, the cool kids no longer feel like apple is special, whether their -- look at the table, none of us who have an iphone uses that without an extra barrier between it and the world or extra battery. no one buys a rover or jag or a ford and says, i need an extra gas tank as an accessory. it's an incomplete product on some level. >> because the battery's awful. >> it's awful, fragile, and no one uses the way it surfaces in the ad. the cool kids i know who bought the iphone6 plus, returned it. it's so large. i could hear him because he was speaking in one end of the phone, he could not hear me back. if he could hear me, the phone

was so large, i could not hear him. >> i find it's like an old school phone. >> yes. >> reaches from the ear to the mouth. >> he's got a very large head as well. it's like an old timy situation, you have the speaker -- the shine is off. i can't speak to sock, i'm not a sock person, but not a special product. >> the shine being off. or apple not being a special snow flake. look at samsung in china now. they absolutely are creaming them by kmodtizing the lower end, but at the same time, in hong kong, we have not mainland china, there's a gray market people buying up the iphones from the apple store and selling them outside out of marketup. exact opposite situation. there's a mote where savm sunk does not. everybody thought it was the opposite a year ago. oh, samsung has market share. >> i don't know if china is the

canary in the coal mine for future of the consumer products. other places i look first. it's where purchasing happens. >> it's a codty issue. >> that's fair. >> networks, pcs, apple has gins. >> you use the finger now, super cool for now. will somebody hack it? >> yes. >> yes. >> yes. everything's hackable. it's hard. not only is it a finger print, but there's a special chip inside the 6 and 6 plus and there's a one him transaction code that goes through the system, not the credit card number, but a one time goad. they get the code, what good is it? hack the retailer. somehow try to steal your fingerpri fingerprint, which is hard, and if they have a different phone, there's not that secure element. it's hard. easier to hack the retailer than the phone. >> no one should worry about the finger printing hacking, that's true. don't worry about it at home.

if you want to connect to commerce, you should want to be investing in internet security. why? internet security's an unwinnable war. you're an arms dealer. the bad guys get better, complication is larger. you want to invest in internet security, saying connecting it to the markets. >> who do you invest in? >> well, i think that, you know -- not any public name calls, but i think the older school security companies are individual are ready for disruption. what i like is a dave dewalt company, fire eye, a stud, real deal, one of the best ceos i met. i don't know whether it's the right price of the stock now, it's not my domain, but the company is awesome. >> just the one that found some potential russian hackering -- >> good at that, and dave dewalt in terms of ceos in silicon valley, one of the best, and fire eye's an amazing company. i don't know if the stock is right, but the valuations, a different question, but in terms

of legit pipeline of real stuff. >> do you own stock? >> no not in fire eye. >> thanks, guys, appreciate it. you're taking it back, the minute he said the cool kids get rid of it, that's the death nail. >> right about the rat ri thing. tim, if you are watching the show, tim cook, just a better battery. >> that's all you want. fix everything for you? >> rethink it. it's not a complete product. i think you need something else that sits around it or an extra battery or plug it in, it's not complete. we have to acknowledge it's not a complete product and stop imagining it's an amazing thing, saying, hey -- >> what is a complete product? >> i think if you have a better life on the nexus -- i still use

the iphone, but i use that with this, it lives with housing around it, it's a house around a house. >> okay. up next -- i said, okay. that's your line. stock picks from a platinum portfolio, why the 3-d movie business is a good place. today's policy meeting marks the end of three rounds of asset purchases that balloon the feds' ambulance sheet to more than $4 trillion, but who is counting? steve has more on the feds' big day just ahead. financial noise financial noise financial noise

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welcome back, short of estimates, companies lowering guidance for the year. citing macroeconomic challenges and lower than expected international sales. at this point, you see the stock is down 3.7%. >> you have heard of a bull market and a bear market, but what about a ti in a market? an acronym coined by wumpb of the platinum portfolio managers, and oscar is here to explain, chairman of rivera capital, joining us on april 8th to share his picks and look at the performance since then.

forget how to say it. help from andrew. in -- oh, boy. >> you had problems with that last time. it's interaction. >> oh, man. i like that. interaction, up over 11%. bioscript down 11 %, and real d up 8%. oscar, thank you for joining us, to your stocks in a second, but i want to tell you i saw another one of our smart guys, and we had a recent move and previous moves like this rung out complacen complacency. this time, almost 10 % and the complacency is high, making him think that maybe we need volatility or bagging and filling before we move higher. you have the same feeling? >> we're not market timers, but the whole thing for complacencc,

and i just think money managers are all buying the dip, and maybe it'll work or won't work. that's one of the worries along with the fact that the market's been very narrow. you guys talked about apple all morning, and apple accounts for 10% of the increase in the s&p this year, and, in fact, 14% of the s&p accounts for 50% of the s&p so it's been a narrow market. apple leading it all. those two things worry me. >> there's no alternative. >> that's how it's been so far, people want to put money in the stock market and b in the u.s. it's fine so far. i don't know how long it lasts. that's all. >> i know you're not a market time e but those are good points. people are not buying strengths, the dippings, everybody. i don't care what happens. nlsz there's a horrible black swan, as long as we're at 0 interest rates, people buy stocks. >> exactly. i don't see people talking about stocks at cocktail parties.

there's a lot of money out there. >> that's a longer term co complacen complacency. >> exactly. >> paulson had the same feeling, near term get some hr, just to shake people's confidence a bit. go to interaction, and you like this one? >> i like all three stocks i picked in april. this is a large data center company in europe, announcing a company that's key for optic fiber in australia and africa, the stock's worth 50% more. >> bioscript? >> as you pointed out, down 15% since i recommended it. one of the reasons is walgreen's is spinning off a home infusion therapy bisz. there was speculation they would buy. i think the reverse is the way it should work. i think walgreens rather than selling 50% of the business to a private equity buyer, bioscrip should buy it, huge energies and benefit from the growth in the

companies. when the stock went down, as we do in companies we own, we bought more. >> and then yoeb aboi don't kno 3-d. tell me about it. i like some in 3-d, others shouldn't be. >> a movie producer said it's all about the movie, not necessarily 3-d. every time there's a 3-d movie, they make 50 cents from the movie when you go in. the business stabilized here. people think it's dead. it's not dead. it's been stabilized in the united states. it's growing fast in china and in russia, but next year, joe, there's "avatar" and "star wars," there was a takeover bid at 12. it's under valued. especially the runway they have for 2015 and 16. >> i wonder -- do they -- have you looked at the new curve tvs, oscar? >> i have not. >> they do immerse -- have you, andr

andrew? >> i've seen them. >> they are -- samsung -- yeah, anyway, i wonder what 3-d looks like, would be right there. oscar, porsche, there is no alternative -- no, porsche there is no substitute is what tom cruise said in the movie. >> exactly. >> remember? he didn't say there's no alternative. >> risky business? >> yeah, "risky business." oscar, good to have you. >> thank you. >> all right. coming up when we return, a rocket mishap to splice the space station could be delayed. we'll explain in a minute, and as we head to break, look at the russell 2,000, index rallies 3% over the moving day average when "squawk box" returns in a moment.

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an unmanned rocket exploded in spectacular fashion moments after takeoff. >> main engine at 108%. power is normal. >> the 14 story rocket owned by orbital sciences was carryi in50 pounds of cargo. no one at the launch site was injured at the explosion, but there was massive damage to the site itself. the cause of the explosion is not known at this point, but the

investigation is underway. operatal sciences built and launched the rocket, a company that specializing in the design of medium class rocket system. the stock took a hit immediately. you see this morning down 14 %. coming up, the fed kpnlt expected to end the purchase program today, and now the question is where are rates headed? a meeting today, and what to expect and find out if it they will stop buying bonds. heading to a break, here's a look at european markets at this hour. taek a quick look, what's going on, dow looks like from the u.s. side, dow looks like it's opening up higher, 15 points higher, nasdaq in the red, and s&p 500, call it lunch for now. back in a moment. e financial noise financial noise

financial noise

going to end qe. q er qe's going to end? rockets blowing up, i don't know, this music, very serious things happening. welcome back to "squawk

house" -- squawk alley -- awkward alley we call it. and here on cnbc drk not usually. i'm going to get in trouble. i'm joe along with -- [ laughter ] >> filter, filter, filters. >> when you host it, i call it awkward, not -- becky and andrew, welcome to awkward box with joe -- oh, holiday shopping season is around the corner. you may not want to see this particular ups guy show up at your door. what he does next will shock you, and it is just ahead. i saw another one where the guy -- remember -- the post office guy, was throwing stuff, boxes -- didn't want to -- right. now the ups guy. not quite as common maybe as a private -- let's not go there either. andrew, company. >> here comes awkward box. let's look at the stocks -- >> oh, here we go. you know this guy, though.

>> we do know this guy. beat estimates by 20 cents and did cut in revenue forecasts, though, for fiscal 20 15 and da stream beats bottom line, revenue below estimates as the company faces difficult selling conditions, especially in the united states. wellpoint raise the the full year forecast as the membership roles continue to increase. >> all right. a look at the broader markets this morning. watching futures, and they've been kind of hanging out, and not getting too much ahead of themselves or too much behind. in fact, you can see now, dow futures up by 15 points, s&p futures marginally low e and nasdaq down 10 and a half points below fair value. in europe, you can see earlier there was gains there, the gains continue, but they have declined by a bit. the dax up seven tenths a percent, ftse up three quarters a percent, and overnight in asia, bigger gains with the nikkei up 1 .5% and shanghai

composite. >> qe ends today, and needs to end before they start again with a new round, which makes the next guest pay off on his bet that they'll never do that by shaving his head. steve is with us this morning, and it's going to happen today, and you're going to explain, right? >> i'm not shaving my head today? that would be awkward. >> before they do a new round of qe. >> they have to end it. then i collect on my bet, and they start it again. >> depending on how long -- with my tattoo. >> but here's the thing, joe, qe ends, but the wonderful or the horrible effects of it do not. let me show you the balance sheet. went up to 4 .5, you see over 4 trillion earlier, like 400 billion is chump change. it's 4 trillion. that's where we are, okay? how did we get there? by buying long maturities, five to tens, and then buying ten

plus. there you did. what those two lines equal there? 1 .4 trillion. essentially, more than 30% of the balance sheet is -- has a greater maturity than five kwleers. >> meaning there's no pressure to ub wind any of this? >> the balance sheet does not go down? >> there's no plan to go down. here's the prips. s fed laid out for what i call the real qe exit. one, reinvestors end, and -- the -- sometime after rates rise, not immediately when rates rise, but sometime. you understand the portfolio winds down, fixed income security expire or term out. they will take that money and buy new ones. the timing will depend on the data and the evolution of the economy, and no plans to sell mortgage backed securities. there's a big balance sheet that's going to stick around for quite some time. it could be five years. it could be ten years. it's a very -- they may end up,

the operative thing is to taper the end of the reinvestment. >> so we act like this is the end of quantitative easing, but it just means we're not adding anything new to it. >> people said there's good effects, some people said bad effects. whatever effects you think there are, good, bad, ugly effects, they will stick around for a while. those ten year bonds that other people would otherwise buy, they are 2409 available for them to buy because the fed holds them. that's the way it's going to to be. i don't know if you want to look at data, then and now, how much does it have to do with qe? unemployment, average six months before, 8%, down to 6 2, job growth up, jobless claims down, and inflation fell, that's capable of causing -- >> just qe3, how long has it been going on? >> two years.

>> we find out about it on set. >> time flies. you're not talking about qe -- >> just that one period there. i started in november 2012, the period of looking at the data. >> wow. >> and, of course, as -- did not get the boom in the housing market. >> right. >> there's been a lot of weird movements. steve, stay with us, we have another voice on this, the vice chairman and form earn executive vice president at the new york fed, and christian, it's great to see you this morning. >> thank you for having me on. >> we know we are reaching the end of something, as steve pointed out. it's not the end of all involvement at this point, but what do you expect to hear today from the fed? >> look, i think in the base case, relatively incremental changes, steady as she goes, so, yes, we end qep. we keep in place the existing dovish guidance, considerable time, we also continue with the assessment of the significant underutilization in the labor market. i think they tweak up the

description of employment. they've tried to find some way to show additional attention to weaker inflation. that's probably about it on the bay case. you can certainly get rid of a lot of stray words there just for the qe program, but i would flag up, if i may, one extra thing, which i think the committee is looking at ways to tighten a link between the path of interest rates going forward and outlook for inflation. maybe it's not implemented at this meeting, but something they think about over several meetings if inflation break evens stay concerningly low. >> what do you mean? if we are not seeing inflation how they want to see it, we point to the fact that what? >> well, you know, basically what -- they want to get across is that they are going to start tightening rapts that they are confident that rates head back to 2% in a reasonably timely

matter. some think it's two years, three years, and the pace of tighten is going to be such they make sure they deliver inflation octoberive. now, you might well say, well, that ought to be obvious, right? except it you look at what's happening to inflation break evens as of late. it's not entirely clear the market agrees. >> you've been inside the room there, and there's two dissents already. what's the possibility of a third dissent today in your opinion, and i think that would be the new cleveland fed president, and what's the impact? does that matter to yellen, the chair, if there's three against her, she still has, what, 14 for her in her favor. >> so i don't expect her to dissent today, although i certainly could not rule it out. i think relative to the last meeting, she -- things moved on net in a slightly dovish direction since the last meeting.

the fact she did not dissent then suggests to me she's unlikely to dissent now. she's a relatively now president, does not want the reputation as dissents, but get more influence as a fed president. now, i add, though, this -- and some risk, again, not in my base case, but they could descend on the dovish side. we're not doing anything about it. inflation's soft. i think going forward, if necessary, yellen accepts three dissents and sticks with the policy platform she has. she has solid support from a dovish board of governors, permanent boats with her ali, my former boss in new york. >> loretta who? >> here's the specifics. she was the research director for charlie at the phillie fed, and you know how charlie feels? >> right. >> she like that? >> she's a very smart person with her own view.

>> a hawk? >> she's -- what do you think? i mean, she's not a as hawkish as charlie or jeff, but on that side? >> yeah, i think you're right, steve. i'd call her a moderate hawk. >> yes, a moderate hack. >> cleveland, your home state -- she's in a bad mood probably? >> sunny personality. >> frowns. >> you write that down because you never heard of the person before. >> before you go, if you guessed when they raise rates, it's data dependent, but last i saw, steve, july when most people guessed? >> fed survey is jaw 20 -- july 2015. >> i stick with june. the debate's gone from being june and march, i think to between june and september. like the committee, i'm going to hold my fire for a bit and see how the dust settles in terms of

global economic developments, in terms of global market developments, between june and september. >> before we go, i know we got to go, but you did not respond to the fed survey for that. >> i apologize, steve. >> what's the probability of another round of kwaup at a timive easing in the next year and two years? what's the answers? i need numbers. >> numbers, look, somewhere in the region of 10 to 20%. >> 18 % was the average. >> there you go. i'm not way out of the ballpark. there's a high hurdle getting back to qe. >> i agree. >> at the same time, you know, look, if you want to do more easing, you talk about a later liftoff, summon formal guidance i talked about, tieing rate liftoff to the inflation outlook tightly. if that does not work, well, there's not that many tools left

in the locker of qe. >> thank you for joining us. >> big day. >> thank you, guys, take care. >> are you excited? i am. >> back to qe. >> back to qe and then shave the head. >> taylor swift is everywhere. she's on nbc's "the voice," a newly named tourism ambassador for new york city, and one place you cannot find her is spotify. why she's seeing red over the idea of free music. that story's next. speaking -- speaking -- speaking -- one more time, speaking of seeing red, here's a look at yesterday's losers on the big board. keep it up. keep it up. go even slower. 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.

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i love that. what would taylor do, that's the question the music industry might try to figure out as they figure out how to save the ailing music business. this year, overall, album sales down more than 14%, and not a single artist has cracked the million mark in sales and do downloads, and swift's new album, 1989, expected to be the firsts and it will take a week to do it. here inside the numbers is steve, the contributing editor at rolling stone and just wrote an article about the ways that taylor swift, what she means to

the music business. steve, help us just understand this piece of it. she wrote this on-ed in the wall street journal, talking earlier about the economics of the music and how she's not on spotify. the question that -- and becky raised the question about what she's doing and how it supports the other artists, but my question is to you, can other artists do what she's doing? >> probably not. at this point, the record industry as a whole, major record labels who produce all the big music, most of the big muse k i they are in transition from selling cds and downloads on itunes and so forth to huge deals with streaming services with spotify, and taylor's going against the grain. her own record label has a deal with spotify, and that's encouraging her and other artists to basically put their

music on spotify for free with the idea to push the $10 a month premium subscriptions for spotify as a means of replacing all of the lost cd and download sales that happened over the several years due to piracy. taylor and her management have a different philosophy than most artists right now which they feel like if they put out a big, big album, and she is thee biggest pop star now in terms of record sales, they don't have to deal with spotify. they go directly to the sales. it's worked so far. the last couple albums did a million sales in a week, and retailers expect the same for this album. >> is she making any kind of mistake, though, making more money if she was on spotify? any argument to be made? >> i think there is an argument to be made. the idea is that you use free music as a way of -- it's like a lost leader. you're drawing attention to your product. you're getting the free marketing through spotify, all kinds of people listen to it, and then later on, you sell

something more expensive, perhaps that's a cd, perhaps it's a deluxe cd, she deals with target. perhaps later on down the road, it's a concert ticket, which are expensive and lucrative for the artists, so i do think there's an argument to be made for artists participating in spotify, not to mention that most artists are -- most are signed to record labels. they have a deal with spotify. hard to get out of it. >> if she's there, she's not the winner, but every other artist that cannot sell stuff independently, right? >> now you're taking the other argument, and basically that's what taylor swift's magnificena is saying. she's the biggest pop star in the world, maybe adele, but she disappeared. swift feels like, i'm sure her management feels like, well, why do we have to participate? we're not unknown. we don't need a free service marketing or youtube or whatever. everybody knows here, let's sell

records. that's their philosophy. we'll see down the road when the record industry is further transitioning from selling things, selling units of things to selling $10 streaming subscriptions. >> steve, we saw the mishaps of what can happen in the new world, though, with youtube, and youtube having to apologize for the free song that it gave to everybody on their iphone. >> that was a weird thing. i thought the backlash was a little bit over done, i mean, i -- you know, i have an itunes library, and i was happy to get a free album. not as terrible as everybody said, but i think in the case of youtube, it was over marketing, just too much too fast. you know, youtube in your face all the time. there was a backlash because of that, frankly. >> okay. steve, thank you for joining us this morning. >> absolutely, thanks for having

me. >> appreciate it. >> jim cramer live from the new york stock exchange, and losing to alibaba by one important measure. details after the break. feds expected to end qe3 today, and yellen just arrived moments ago. we'll be right back. but your erectile dysfunction-that could be a question of blood flow. cialis for daily use helps you be ready anytime the moment is right. you can be more confident in your ability to be ready. and the same cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours.

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alibaba briefly muscled ahead of walmart by one important measure yesterday, market valuation. shares climbed as much as 2.8% intraday to touch a new record of $100.50, lifting its market cap above $247 billion. it f-- former baseball star jose conseco was hurt in an accidental shooting at his house in las vegas. according to police, he accidently shot himself in the left hand while cleaning his handgun. he was rushed to university medical center where there is no word yet on the seriousness. >> no, there is a little bit. i saw some reports. he hurt one of his fingers.

the wife was talking about or girlfriend was talking about either amputating it or whether they do reconstructive surgery. i got all crazy when i was reading about it. >> strange story. pretty clear, even with -- >> it's loaded. >> even if you put a clip in, you know when you take it out, you know full well whether there's -- well, at least you should. let's get to the new york stock exchange. jim cramer joins us now. jim, something that occurred to me earlier was that for the second time in a couple days, i've heard someone say that the complacency wasn't really wrung out of the market as much as it had been with certain indicators that people use, with the latest pullback, which was pretty significant with a lot of volatility. oscar schafer said it's because there is no alternative. i've heard that. even when people get a little nervous, they say there's nowhere else go to. that's almost become a mantra

now. i wonder if we need to have our faith shaken. >> i think that the market's by f -- bifurcated. the industrials turned out to be putting up the best numbers. group that was most loved, kind of pharmaceutical and household products, not bad numbers. if you look at hershey today, that turned out to be a dangerous stock. social media obviously all over the map. u.s. steel, there's a company i thought was going to have a shortfall because of china's dumping. no? it turns out u.s. steel is doing great. industrials doing great, don't seem expensive to me at all. the expensive part of the market has been percolating, like the salesforce.coms. >> are you going to talk about qe? are you just going to talk about stocks on "squawk on the street"? >> sorry? >> you hear me? you going to talk about the end of qe, or are you going to -- >> oh, we have to.

look, i think that between 2:00 and 3:00, someone in the futures is going to try to knock the market down, say it's radically overvalued. about 3:15, the mutual funds will come back in and start buying stock again. we go through this ridiculous r routine every time there's a fed meeting. >> if you were on "jeopardy" and they said current head of the cleveland fed, would you be able to come up with the name? >> i'm not allowed to make any fat jokes. >> i read it doubt when leesman mentioned it. she's new. might be considered a little hawkish. she's -- it's like we learn. i wrote it down. not saying you need to. >> no, i should. you always want to know

something about these guys beyond the fact whether they can get a mortgage or not. >> thank you. >> thank you. >> okay. coming up, u.p.s. expecting a big holiday shopping season. an update on hiring expectations. and one guy who won't be working for them this holiday season. you've got to see this video. we'll show it to you when we return. take a look at futures before we get to this commercial break. dow looks like it will open higher, about 13. s&p 500, we'll call it unchanged. nasdaq down marginally. where you headed at such an appropriate speed? across the country to enhance the nation's most reliable 4g lte network. how's it working for ya? better than ever. how'd you do it? added cell sites. increased capacity. and your point is... so you can download music, games, and directions for the road when you need them. who's this guy? oh that's charlie. you ever put pepper spray on your burrito? i like it spicy but not like uggggh spicy. he always like this? you have no idea. at&t. the nation's most reliable 4g lte network.

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♪ well, it's not even halloween yet, but the countdown is already on for christmas. u.p.s. is expecting a surge in shipments. the company forecasting an 11% increase in december shipments. that's also planning to hire up to 95,000 seasonal workers. that's up from just 55,000 workers they hired last year. hopefully, by the way, this guy won't be delivering packages to your house or business. a long island u.p.s. worker caught on camera rolling and kicking a $12,000 pressure gauge out of the door to his truck. a piece of equipment is used to measure pressure in pipelines.

it was being sent back for repair. now it will probably have to be replaced. u.p.s. issuing this statement. u.p.s. drivers are trained to handle every package with care. we're investigating the issue and will take corrective action with the driver. blah. >> we believe you. make sure you join us tomorrow. "squawk on the street" is coming up next. ♪ good morning. welcome to "squawk on the street." i'm david faber along with jim cramer. we are live from the new york stock exchange. yes, we are. carl continuing to be on assignment. let's take a look at futures this morning as we're a half hour away from open. what do you want to call that, jim? i call it a mixed bag. >> yeah, mixed. mix mixed is good. you haven't mentioned fed yet. >> how about the ten-year note yield? i'll start