next star wars film has a name. it is friday, november 7th, 2014, and "squawk box" begins right now. good morning, everyone. i'm barack obama in new york today. joe kernen and andrew ross sorkin are back at headquarters. we had a great time here in the big apple at a galla event for cnbc's 25th anniversary. it all started od red carpet where we caught up with a who's who in the world of business. bob johns job, melody hobson, bob kraft and many, many more. we'll bring you some of the highlights in just a few minutes, including conversations with martha stewart and barry diller. find out what martha had to say about drones and online dating and where barry is having a hard time with the newest mobile devices. i'm still in new york city

because we are attending the annual baron investment conference. the man behind it, ron baron, will be joining us for the next two hours in just a moment. we will bring along some portfolio managers and the ceos of some of the best performing investments. first, andrew and joe have some of the morning's top stories. guys, how are you feeling this morning? >> i don't know how we're feeling this morning. joe has his eyes closed. that's how we're feeling this morning. >> i rolled in about 5:44. yeah. >> i had about ten minutes before. >> come on, bright eyed, bushy tailed, boys, we are ready to go. >> we're raring to go. >> my buddy, mac, said coffee, joe? and you know i -- why are you? that's the first thing he said to me. >> you never drink coffee. >> yeah, i don't. but i might. >> i heard you asking for decough. i didn't understand that. >> becky drinks coffee. >> i drink decaf every morning. >> becky, you didn't go back to

the garden state, did you? or did you? >> no, i didn't. >> okay. in a -- >> in a hotel. it was a long pause. >> and andrew, you live there. >> i just went home. >> i had to get all the way home and -- anyway, you got ron baron, and i just think you have a lot to talk to. >> i have ron baron who is tanding right here. >> just take it away, becky. don't feel like you need to save time or something. >> no problem. it's all about us today. we don't want to hear from you guys, anyway. >> fine. we'll talk about the jobs report. we're going to get the october employment report set to be ready at 8:30 eastern time this morning. the economy likely added 233,000 jobs last month. the unemployment rate seen holding steady at 579%. that's the number to watch. and average hourly earnings are forecast to increase by 0.2%.

take a look at futures ahead of that report. of course, these numbers likely to change everything at 8:30. the dow looks like that right now. the expectation is up by 10 points, s&p by a 0.8 and nasdaq up by 7.5. >> with elections coming up -- oh, no, no, no. now it's about hillary, it's about what kind of economy the obama administration is going to hand off. i know. but you can never -- wait a second. i was going to say we really can't hype it today. i still think we can. and i think we can because lately we have seen the notion that we have passed the baton. that the economy is now -- like melody hop last night b she used jumper cables. by the way, we have "star wars" because george --

>> george lucas was right there. >> he was. and we'll talk about star wars. anyway, this is still a -- michelle, harry lofton, i don't know where she is. we'll have her. it's an important number today, andrew. it is. and i would say that, like, for republicans, finally they can say i want the biggest number we can possibly get because the midterms -- i know that's a bad thing to say. it is cynical. >> didn't you say you wanted the number to go up before? >> people do have interests before and after elections. in this case -- >> i didn't realize. >> yeah. i'm talking about traders, as well. at this point, we're really to embrace good news all around. >> i wish it would get up to like 300 some day.

wages go up and everything starts -- itself. >> if the numbers are good for the next couple of months, would gets credit? >> the republican senate. we have some other news this morning. i'm going to put this in the bad news category, though, with corporate news. another bank forced to adjust earnings because of legal costs this morning. >> yeah. i have my caffeinated coffee. >> you're ready to go? >> howard shurlts was there, too. >> you normally wouldn't have to do this. >> i do this because i like you guys. >> yeah, but you were still there when i left, right? >> yeah, well, you know -- >> did you go somewhere after that? >> no, i didn't. i turned in so i could sit here and bring you the news. >> was it yesterday when you turned in? >> no. >> it was after 12:00? >> no, no, it was 11:00. >> come on. >> we're talking about bank of america. after the bell yesterday, the

company restating its third quarter earnings. roughly $400 million new legal charge larger on the back of advanced talks over a probe involving alleged currency market manipulation. this takes bank of america's earnings for the quarter prolonged at 4 cents a share rather than the 1 cent per share. analysts had been expecting a loss of 0.9%. so in large form for the banks, but, of course, yet another addition to those tabs for the bank. and this foreign currency probe is something that has been in the works for a long time, but it's relatively new, the bubble to the secrets. but when bank of america filed the quarterly earnings filing after the bell yesterday, it did get some interesting language about how advanced these talks might be. and that's actually the first time that we're get something language. and i want to read this to you. the banks in particular in late october, the corporation is the formal draft documents with banking regulators concerning

the imposition of mandatory remedial measures, penalties associated with its fx business and its systems and controls. you know this probe is something that has been spearheaded in the u.s. by the federal reserve, the comptroller of the currencies, the cscc as well as the department of justice. some have risked sentiment as advanced in this language from bank of america will involve all of those four authorities here, just some of them. so that at some point, guys are back a broader settlement with some international regulators, as well. it's not just bank of america, either. several firms, citigroup last week on the same issue the foreign currency shows. and there was a conference going on in the stocks with you guys. they're now saying, well, maybe we should just -- as a line item going forward for the banks. because of something that the consumer coming out of the

woodwork. but we'll always do something, no matter how far away we get from the financial crisis. >> there is no cost box there. i was looking at you in high de def, even though you were -- youth is an incredible thing. >> makeup is already an incredible thing. >> you're absolutely flawless. then they come back to me and it's like -- whoa! >> the makeup artists do all things. >> sth squawk-ward moment is brought to you by joe kernen. >> this is not awkward. this is a compliment. >> what do you need after a night like last night? >> i'm going to sleep for an hour or two when i get home. i am. disney masking estimates. revenue at its media network

trailed and closed at a record $92 before earnings were reported after the bell. julia boorstin will join us with her conversation with bob iger in the next half hour. first, polar earnings fell short of consensus. the company says it's not going to spin off its solar power plant into a separate entity as some of its rivals have done. i guess that is somewhat responsible moving the stock down over 7%. becky, it's 6:09. we'll see you at 7:00? >> sounds good. no, at 8:00. ron is on with us at 8:00. >> no. i mean you'll toss backs to you, we'll see you again at 7:00? >> yeah. i did, too. >> take it away. where is ron? is he there now? >> anyway, listen up, ron is sitting right here. he's waiting at the camera. we are live at the 23rd annual

baron investment conference. this year aels's theme is built to last. our host today is ron baron, chairman and ceo of baron capital. good to see you this morning. >> it's great to see you. >> we're talking about how this started. it's been 23 years, which is amazing to me. the very first conference, what happened? where was it? >> it was at the harmony club in new york and there were 35 guests and 45 speakers. every one of the 35 guests was a friend of mine. i had to ask them to come so i wouldn't be embarrassed. i knew every single person there. >> how many people will be here today? >> 6,000. >> yeah. they're already lined up in a holding tent outside waiting to come in this morning. baron capital has grown along with the number of guests that have come along. >> talking about that, the last time you had me on television, you had me talking to steve

liesman and i was saying that i didn't really believe in economists, i believe in fortune cookies. and then i had a dinner the night before, my wife had takeout. and the fortune i had then was all the effort you're making would ultimately pay off. that was last time. and then about last week, we also had a takeout dinner when we came home. i opened up my fortune cookie and there it was, many will travel to hear you speak. >> all right. that's perfect. many have traveled to hear you speak here today, ron. >> pretty cool. >> what are you going to tell people this morning? looking at the markets at this point, seeing how far we've come over the last several years, what do you tell the investors who show up? >> well, i'm a long-term investor. and as i've told people for a very long time, i didn't start out to be a long-term investor. what happened is when i was selling when i was young and i was recommending nike, disney, mcdonald's and federal sxers at

the beginning of my career, what happened is that i made doubles and triples and quadruples and fold them and then that over a number of years, what happened is they had gone up 30, 40, 50 times. i said oh, my god, what a terrible mistake i've made. and you can't just invest in your company and expect it to last. there's a lot of elements that go into it and it's not just about having a special kind of business. you develop a people and establishing a culture. we invest in people that make these differences last for a very long time. and a couple of examples that i used in my speech today that i'm talking about are the differences that people -- it sounds great. i'm investing in business is going to last. people think they're going to last and you can using kodak, for example, they were giving kodak stock in order to help you

pay for college. and then what happened is photography became digital, and they explored it. and instead they thought it threatened their film and paper business. what happened? they went bankrupt. so they should have been a leader and they weren't, they went out of business. >> it is easier for a culture. how do you identify the place that is not going to get passed up and disruptive? >> it's the idea that the people and the business, the way they think about their business. they think about a risk aversion. the individuals who run the businesses, are they investing, even though it's going to penalize current earnings. so you have to understand the personality of individuals with younger businesses to be able to invest in that business for comfort. people have been first identify

what is the competitive advantage of the business and after they do that, why other people can't do it. ultimately, when other people do do it, they have to make sure that the people who are running those businesses are going to be fast enough on their feet and innovative enough in their stocks to be able to make their business pivot and do something differently or take advantage of the opportunities. if they're a leader, they should be able to figure out how to make it more palpable and lasting. >> let's talk about an example of one. i think one of your largest holdings and schwabb. am i correct on that? >> yes. >> what do you see in schwab? how do they live up to that bill? >> schwab was our largest. then in 1992, business was 150 million. the in 1982, 1034 billion.

it's a 50 million mutual fund and nobody could do business with you. you have to put a check in the mail, send it to north carolina. so they opened a check and you cashed the money and you couldn't get your money back without a signature guarantee. impossible. all of a sudden, charles schwab comes along with this program for the marketplace where you can value the funds on the phone and business continues to grow and they say oh, my god, look what's happening. suddenly major change had taken place. everything charles schwab has done over the years, keep trying to do differently. and making better service to the clients. >> and forget about the zone today. it's all over the internet now. >> yes. and, in fact, what happened with charles schwab early on, this is the internet business. why do they need any offices? what happened is they were short of money and he had to, he was in sacramento and they wanted to

have a business and he says, look, i'll give you some money, but you have to open up an office where you have somewhere to go during the daytime. so they open up an office in act men toe. that business starts to go dramatically and you see, geez, this is very interesting. be aware of what's happening in your business. if something happens, you take advantage of it. that's what schwab does. we've also made it -- the biggest profit. >> the biggest profit in any stock that you held? >> yes. so we have over the years had people from valors in the last 20 years to management, made 18.5 billion in profit for them. of the 18.5 billion, a billion to each. >> wow, okay. you can hear the music behind me. people are warming up. i think they're getting ready to open the doors downstairs. that's when we will see everyone rushing in. we're going slip in a quick

break right now. joe, andrew, just want to make sure you guys are paying attention. but when we come back, we will have more. >> i'm taking notes. >> oh, i knew you could take some notes and pay attention. guys, when we come back, we will have more from the baron investment conference. including the ceo of concho resources. the stock up more than 170% over the last few years. (vo) you are a business pro. maestro of project management.

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welcome back to "squawk box." we had a really big night for cnbc last evening. joe, becky and i caught up on the red carpet for the start of the festivities. we were not alone. a great list of attendees joined

in. i had a great conversation on the stage with martha stewart. there were a couple of highlights. >> are you on tinder, too? >> no. >> whatever happened on that? >> two bad dates. >> oh, martha. >> i'm sorry. try again. >> i tried. i tried. you know, i'm a little bit -- for match.com. >> yeah, i have several. and, you know, for cameras. >> where? >> on my property. i take pictures. they're very good for landscaping and for -- and for seeing where -- >> do you have them delivered yet? >> no. today i had a cup of coffee delivered by a drone in my office. >> you look at my dinette, but -- >> no, it's just too big. it's not too big. >> you're not going to be blind?

>> no. it's on one side. it's -- in a way, it's too small because it's not a big enough screen with a big keyboard and all that. and it's too big to put any place unless you build some big thing to carry it like a silly person. >> he just upgraded to a 6, but he wants his 5 back. he wants to go back even farther. he wants to go to the tiny one. >> there was only one steve jobs, but certainly barry is very visionary in a lot of ways. he went and talked about -- like when he went into qvc, i was like, you're joking, right? that cheesy, home shopping -- and look at, that was before the internet, but it ushered in, like he said last night, screens that aren't one-way. they suddenly become two way and that was the very beginning of it and he knew. as a hollywood guy, they're slow

off the mark. for the internet and everything else. >> it was abc. >> and paramount and fox. >> helped create fox. >> you're right, there was a history of just being really -- he's just really smart. >> and martha is just a trip, isn't she? can you imagine her on that, the guy that gets the hi, i'm on a dating site. >> she went on two dates, though. >> right. >> we were trying to get this her on tender afterwards, but i don't know if that -- >> you know what? if i was -- i think that would be a pretty good -- you know, if you were on the other side. contemporary, but say -- i'm not quite at that point, but you would think, wow, a date with martha stewart. it could be worse than that, right? >> i think everybody would be trying to get on that date. >> a heck of a great meal, everything would be presented beautifully on the table. >> i think it would be good. >> anyway, becky, i'm scared of where i'm headed here.

i'm a little groggy. let's go back to where things are more comfortable with you and ron. we've had a couple of awkward moments already. play some music for me or the -- >> have they? >> this squawk ward moment was brought to you by -- >> let me save you from yourself, joe. oil prices, you know they are near three-year lows. they've been putting pressure on oil-related companies. we've been watching this every morning. our next guest is one of the largest producers in the permian basin. thank you for being here today. thank you. it's a pleasure we've been watching oil prices every morning with a little bit of shock and awe. unbelievable to see things dip further than we ever thought they could this quickly. this morning, wti is somewhere around $78. as much as we've been watching the story, i imagine you've been watching it even more closely. what have you thought about this

decline in oil prices? >> we've seen this happen before. reone our business, oil is going to vary between $80 and $100. we've seen it go up to the top of that range and out the bottom of that range several times. so i think it's really important to build a business that's resilient enough to prosper in environments like this. and when you look back over our history, some of our best investments, some of our best wells were drilled during the trough. so this is a challenging time, but it's a time where we think we can create a lot of value. >> that's an interesting point. we had harold ham on, i don't know if it was earlier this week or last week. and i was talking about how you're not at a point when you're going to see anybody capping wells, but in his perspective, you will see people stopping, putting investment in. are you continuing to explore today with the oil prices -- >> they're running almost 40 rigs today. so our plan for next year is to keep that level of activity, but keep a very close eye on commodity prices. woke up and generally reinvest all their cash flow. so as oil prices go up and down,

where you had july to try to take some of the risk out of that cash flow, things will start to slow down. >> where do you turn a profit? we've heard that the united states produces a lot of time. it might be $63 for them to be able to pick up their cost. what does it end up costing you? >> well, we're one of the largest producers. there's a lot of benefits from being -- having scale. and we make about $50 a barrel for every barrel we produce. so we have a very, very large cash margin. >> $50 a barrel no matter where? i mean -- >> the cost to produce a barrel of oil is somewhere in the 20s. >> wow, that's much lower than we've been led to believe. >> that's a different number than the cost to go out and find a barrel of oil. >> what is the cost to go out and find a barrel of oil? >> it's in the mid 20s, as well. >> but the wealth you already have, you're making a big profit no matter if the price falls to $60. >> our cash margin is about 78% of revenue. >> okay.

>> it has been for the last two or three years. >> ron, when you look at prices, i know you're a long-term investor, but what do you think? >> well, i think they're unpredictable. as far as i'm concerned, the reason you want to invest with someone like tim is because twice before -- to very large profits and he's been investing in me for five or six years and we've made three or four, five times the money. now we just invested again. what was really interesting to me this time, and in the 80s and now it's 105, 110, what is was interesting to me this time is that about a month ago, two months ago, three months ago, you went ahead and raised $1 billion when the stock was 110 or 120. >> almost 130. >> and so anything up the coffer is -- in this time of crisis or peak, now you have that $1 billion sitting there. what do you do? >> we have a strong balance

sheet. we're drilling some of the best wells we've ever drilled. we also take advantage of this kind of time to consolidation in the permian basin. that's how we built our business and i think this is a time when you'll see great consolidation. >> what do you mean consolidate? >> bigger producers buying smaller producers. >> okay. so that is what you would be using the cash for is to go out on the acquisition trail? >> we're also building infrastructure. we're building pipelines and things like that, as well. >> ron, i'm sorry. >> i hear he's going to be buying companies who are in as strong financial shape as he is who have great properties. >> ron pointed out, though, that you built businesses in the past and sold them for a big profit. what's your ultimate plan with concho? >> those are private companies that we sold. with concho we're trying to build the biggest and best oil and gas company in the united states. a domestic producers. i think we're well on our way.

we're trying to build something that we can leave for future generations. >> tim, i want to thank you very much for your time and for joining us. >> it was great to be back on the show. thank you. andrew, we'll send the conversation back over to you and joe right now. >> thank you, becky. coming up when we return, jobs in america. we're going to talk jobs expectations and why today's employment report could make or break the market. as we ahead to a break, take a look at futures.

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

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visit pnc.com/wealthsolutions to find out more. welcome back to "squawk box." the nonfarm payroll jobs report is set to be released at 8:30. now joining us, michelle gerard. who has been telling me things

were getting better in qe, exit would be okay. >> yeah. it seems like we've heard this so many times before, but, you know, i have to say, i kind of changed in the middle of the year in terms of my views about the economy. particularly with the consumer. i thought things were lining up as we hadn't seen them before. i thought it was going to be a really -- i thought the economy was going to gain momentum into the end of the year. and we've seen that. the question is, will it continue into 2015? but i actually feel good about the economy. i think you mentioned before, the expectations for today's numbers, very high. >> previous times when we thought we were upticking and we had those -- are they spring swoons? >> exactly. >> two or three of them, i don't know what caused those back then. and if anything was different this time, i thought it was europe, which would have -- would have added to why it would have been -- what was it that continued to allows to gain traction? >> i have to say, i was -- in

those prior years, i was skeptical about the uptake. you know, in the sense of i actually didn't think the economy had what it needed to do, particularly on the part of the consumer to kind of step up to a better growth trajectory. so this is different for me to actually see. it's looking better. i think it could be sustained. of course, the spring contributed to it, 2010, we had the -- in japan, we had the earthquake, we had the tsunami. we had different things, actually, that kind of contributed to things slowing down. but it also just seemed fundamentally, we didn't have what it took. job growth was always kind of subpar. we didn't have the income growth that consumers needed to feel better, to go out and spend. i think that it's starting -- i think that has changed now in a way that we hadn't seen before. >> 5-9, even though it's the participation rate, people can question, but people probably left -- the people that have jobs used to be worried about losing their jobs. >> exactly. >> and that makes the consumer

feel less. >> i was just going to say, and on top of those developments, which has been steadily improving, this decline in gasoline prices is just like i was seeing on the cake is just as we would go on the holiday season in particular. so important. and so your consumer is feeling like they have more freedom to be able to go out and -- >> why am i uncomfortable that the fed looks like their diming was perfect? that never happened. doesn't it look like it's working? it looks like they got out right when the baton is being passed, right when we're going to do 240 or something? >> yes, except i think we're two or three years past in terms of the interest rate size. again, even before things looked better, they looked okay. and that has always been -- that is what i go back to. sitting at zero level interest rates, crisis level interest rates, and those weren't great in 2013 and -- but i don't think they warranted sitting at zero in terms of interest rates the. >> but it might not come around and bite them because europe --

demand was so slack that maybe it was okay to keep pumping. >> the thing is, it might not come around and bite them in terms of higher inflation, first of all. that's the thing that never has -- it's asset prices and asset price inflation that we're worried about. we may not know for another three to four years what the ksh when they think about the housing bubble, inflation went up, we didn't know until 2010, 2008 or '9that, wow, we actually had a policy mistake, too low cut, policy was probably too easy. >> and things could be mispriced somewhere and everyone gets on that side and when it ends, everyone rushes. >> and that's the problem. the regular translator makes the exit a lot narrower. we're looking at the situation in the eurozone. if there is something this price, what could it be? looking at ten-year yields at these kinds of levels, so far below the level of nominal gdp. nominal gdp running 4.5%, let's

say. as a rule of the economist, that's a good anchor, way below that and yields in germany. and indeed, the levels look so -- it's hard to -- it could be very much like housing. we all look back now and say, oh, of course, the housing price gain couldn't -- it was not sustainable. we should have all know that. i wonder if we'll look back and say why were people ever thinking that it made sense to be buying bond yields or why bond yields would be at those levels. and that wasn't a problem. >> you're like between red and blue, you've got the most purple thing on. does the election mean anything to you? >> i have to say, i'm hopeful. i mean, you know, the problem is -- hopefully on the republican side the -- >> even on the republican side -- >> well, there's a sense that -- >> you have to be hopeful on the democratic side. >> i'm hopeful that they'll be able to work -- even on the republican side, i think the leadership was probably the way to go, but i'm just -- >> they couldn't herd around. >> to maybe we will be able to

actually focus on issues that will be positive for growth. as time will tell. yet another positive development that this economy has going for it. >> it would be fun to watch. boehner said something like you play with fire, you're going to get burned. they're starting to threaten each other. it's going to get good. we're in the news business. andrew is excited about it, right? >> love a food fight. i love a good story, joe. >> exactly. conflict. conflict. >> that's what we need. >> always has to be something for us to talk about. >> exactly. >> thanks, joe. >> we'll see what happens at 8:30 this morning. coming up next, bob iger on disney's latest report. plus, huge moves for movie fans. the next star wars film officially has a name. one of the most successful franchises will soon have another installment. there will be a "toy story 4"

slated for release. >> yeah, i heard that. >> the sorkin family is thrilled. >> this is my, seeing one, two and three. >> oh, my goodness, i've seen all of them. >> only recently? there are three. >> we'll talk about toy story when "squawk box" returns. then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪

welcome back to "squawk box". in anticipation of the jobs number, there are some great expectations from michelle. up 11 points now. tell people on the radio, up 11

on the dow jones, up .84 on the s&p and up 7.72 on the nasdaq. these are for people that are driving around. >> listening on the radio. disney set to open lower today despite growth in some divisions and inline earnings. investors are used to seeing a beat from bob iger. we spoke to iger after the close last night. she joins us live from here. >> it's great to be on set. investors do generally expect a beat. one factor driving disney's growth is that it's studio expected better than operating results and its operating income more than doubled. iger said he's bullish on the new star wars and he announced that pixar will direct "toy

story 4" for 2017 reviving that franchise. >> rendz are good. they're up in the quarter, about 10%. pricing is up so that is very good sign. we feel good about the quarter for cruise ships and resorts. >> the direct to consumer streaming openings. i just stressed that creating no less to create offerings for the cable tv bundle. but when it does happen, disney is well positioned. >> the experimentation, might we be part of that experimentation? i think that's possible. we're taking a cautious approach here because we think the prudent thing to do is to do what we can to maintain the value of what is obviously a value created for this company

and for a lot of other companies in the media space. >> iger shared some expectations for the consumer products division for this quarter, saying 3 million frozen costumes in less than a year. this holiday season, it would be very, very hot. joe. >> thanks. i'm just wondering about the script, where the toys left off and who -- i hope ken comes back. that was one of the great characters in ""toy story 3,"" the ken doll, michael keet wron. >> it's a franchise that -- >> i loved 3. 3 almost won best picture. >> yeah. >> yeah. >> beatty as the teddy bear. very evil. i can't remember who -- everybody lived. i don't think he lived, did he? did the teddy bear live? >> i don't know if they killed him off. >> but ken was hilarious. i loved clothes.

anyway, i don't know where they were because they were given away a few times already. >> is tank coming back, for sure? >> i don't know. >> he has to, doesn't he? >> it was a very smart move for them. >> mr. rickels has to come back. >> they all do. >> can't do it without buzz. >> to infinity and beyond. >> tim allen has it. >> i'm sure he will. >> you need hank and -- those are the two guys you need more than anybody. coming up, going beyond our borders. the portfolio manager of the baron emerging marketing fund. how he's finding opportunities around the world. andy newman would be good, too. and handily outperforming the benchmark in the process, then at the top of the hour, david rubenstein. why he is worried that falling oil prices could eventually put

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welcome back, everybody. we are coming to you live this morning from the metropolitan opera house. let's focus on emerging markets right now. the benchmark index falling nearly 3% just in the last week. this is the worst performance in a month. that's because there's a lot of things happening around the globe right now. joining us is michael cass, a

five-star rated fund manager. great to have you here this morning. >> thank you. >> i think one of the most interesting stories is how you got into emerging markets. you have more than 27 years of experience in the industry, but you've only been focusing on the emerging markets for about seven years or so. how did he talk you into that? >> i guess, you know, really what we had -- i had many years of investing in a very similar way that ron always has. we had known each other for many years. we started talking about the baron discipline. that's been incredibly successful. we thought focusing on these value creating entrepreneurs, you know, would have a certain resonance there because it's really the minority of the cases in the emerging markets. finding these talented companies, driving value creation, driving productivity is something really unique and special. we've really been able to stand out against an index which we would call handicapped.

we think the index in the emerging market world. >> ron, you guys actually hit the road. you go out, talk to people, you visit the companies. you're not doing this from behind a desk. >> that's right. so when we started with michael and cliff and i had known him for probably 15 years. he had actually worked for a friend of mine before he started his own hedge fund, one of the wives got sick, they had to close it down. in 2007, an opportune time came along and we were able to recruit him. when we told him we wanted to invest in emerging markets, he said, how could i do that? i've never done it before. we said, but you're a really smart guy, a great investor, and you'll figure this out. here's money, go travel around, go visit companies, go to conferences, go to people i know all around the world. travel, go do this. and run a paper portfolio. after he runs this for a couple

years, we begin to hire analysts. so we have expenses we bear as we go along to pay for analysts, trade for travel to pay for his salary. you have to pay someone as much as they're managing no money as if they're managing a lot of money. every time we do something like this, it probably costs $15 million or $20 million before we get to make money on it. we had a $40 million fund as of last november after doing this for two years. >> just about three. >> it's performed very, very well. as of last november, one group said, boy, we really like what you're doing, and we'd like to invest $500 million. we had a $40 million fund. we'd like to invest $500 million with you. we like your process. then they recommended it to other people. now it's 1 billion. all these other people want us to manage their money because they meet michael and they say,

man, i want to invest with you, i like what you're doing. >> michael, i know what you do is very company specific. right now in the emerging markets, there are a lot of big macro issues probably having a massive impact on every one of these markets. you look at what the bank of japan did with easing, the central bank, the ecb, what they're now talking about doing. how does that impact how you figure out where you're headed? >> what that's doing is putting a lot of upward pressure on the dollar, which is definitely a source of concern for emerging markets and emerging market investors. from our perspective, what it really means is we see it as the tide going out on emerging market 1.0. that means the days of blunt capital investment in the emerging markets driving value, creating opportunities is pretty much over. so we need productivity drivers. what these countries really desperately need is an injection of corporate efficiency, of capital efficiency. that's what they've been

lacking. the tide going out is an opportunity for a lot of these countries to push through market-friendly reforms. that's really an opportunity for us. it's really a transition from the old way of investing in the emerging markets to really what we would call the value-creating entrepreneurs. it's the rise of entrepreneur in the emerging markets. >> so you have to be much more targeted. >> another way of saying that is you used to put your money into an etf and do well. now the action is beneath the surface of the index. it's totally different sorts of companies that, you know, tend to not have a heavy weight within the index. you need to be, we believe, with an active manager to be successful. >> it sounds like a risky strategy though for investors who are worried about some of these issues. is it something that's going to take time to bear out before you can see any of these positive results? >> not necessarily in terms of specific investments. those can play out. in terms of looking at the pressures that are building in the emerging markets, those are there. there might be a period of, you

know, a short-term period where some of these reforms that are taking place will take time to take hold. some of the companies to get going and really start driving value. we can find them. we're investing in them. last year the emerging markets were flat. i think our found was up in the mid teens percent. so there are enough places to look. there are enough ideas out there. >> michael, thank you very much for joining us. we have a break right now. we'll be back in a moment. right now, andrew, back over to you. >> still to come, from today's baron investment conference, david rubenstein. we're going to talk business, politic, and philanthropy. then, the october jobs report. we're going to bring you the numbers and talk to the cleveland fed president about how she views the economy. we're back in a moment. t the 15, we'll double the data and make it 30 gigs for the same price. 30 gigs? wow - that's a lot. you don't have to do that for me. oh, that's ok... no, seriously, i wouldn't want you to get in trouble... it's the same plan for everyone. families...businesses...whoever.

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countdown to the jobs report. we have the great expectations for october employment numbers and what it means for the markets. >> famed value investor ron baron on the bull run. >> the culture is what makes it last. it's the people that make these businesses last for a long time. >> this hour, the carlisle group's david rubenstein talks economy and spending time in china with mark zuckerberg. taking space flight to the next frontier. no easy task, especially with the recent setbacks. now nasa's about to launch a spacecraft to take humans farther than ever before. the second hour of "squawk box" begins right now.

welcome back to "squawk box" here on cnbc, first in business worldwide. here at headquarters -- world headquarters, cnbc global headquarters is what it says up there, becky is at the baron investment conference this morning at the met in new york city. we were all in the city last night. i wanted to comment on this last time it happened, becky. that was our one hit on cramer that you saw. that was the only time we were going to be on cnbc. andrew was not supposed to be part of that at all. for some people, being on tv is like air. it's almost like oxygen. and he saw them cut to us. he came running over and almost jumped up in my lap to be on -- that was our one -- >> i didn't appreciate that was the moment. you guys looked like you were being taped the whole time.

>> it was on a web thing. you came running over. i looked like i was happy to see you because i'm -- you know, and i put my arm around you. >> it was just all for show? >> no, but i didn't want to look like a jerk. i can't always look like a jerk. anyway, did you notice, becky? where did he come from? we were there at 4:00. >> you were on the air for an hour and a half. >> we were on a web cast. >> i did not appreciate television versus the internet. >> web is important. people keep telling me that. >> cnbc's next -- it was the next 25, but it was celebrating the last 25. becky and i were on the red carpet. we talked to a lot of really big hitters. jack welch, bob johnson, jeff bukas, who was very gracious. >> the most. >> he was. and he admitted he watches

"squawk box," but at the same time, he's got about eight screens going because he's got a lot of properties. he couldn't really say that. he's not watching all of his properties, but he does watch. we appreciate that. he melanie hobson along with husband george lucas. bob kraft. i got some grief about jettisoning the bengals. >> and he's got those awesome sneakers. >> andrew sat down with martha stewart. we had kevin plank and mickey drexler. what's plank's motto? no loser talk. he wants to take nike and grab it by the throat and take 90% of

their business away for under armour. you love that. how old is he? >> that's a good question. still a very young man. >> how old is kevin plank to be where he is? >> he's about 40. >> 42 years young. >> i'd really be bitter for i didn't really like him. loves the ability in this country to do what he's done. >> and he's done it. >> right. >> you know, my favorite part was when he was talking on stage about how you feel about cooperation, your frenemies in business. he said, no, these are enemies. he wants to bury the competition. >> if anyone in his company says, oh, phil knight, what a visionary. nike does this. i think probably just say you can leave right now if you say anything nice about nike. go, leave, because we're going to crush them. it's good. it's fun. >> it's the competitive spirit. you know, it's something you admire and love seeing. >> yeah. and ron, i know baron

understands it too. he somehow can find companies that have leaders that are able to, you know -- the other thing that plank talked about was everyone was whining in 2008 and 2009. i think those who years under armour was up -- those were the only two years they weren't up 20%. but up 18 and 19. stop sniveling and go about your business. very big morning for the markets and the economy. let's start with the jobs report. employment report set to be released at 8:30 eastern. here's what the number is supposed to be. that's a nice number. it's not 400,000, but if we continue to do 230, something over 200, that will help continue to bring down the rate. 233,000 is what we're looking for. the rate is seen holding steady at 5.9%. average hourly earnings also important. that's supposed to increase as

the labor market gets tighter. hopefully we'll see wage growth and address these systemic issues we talk about all the time. there's the futures, which have doubled their gains. oh, people on the radio, up 184. up 16.5 on the dow. >> also tell you about what's going on at bank of america. this morning the bank now tripled its previously reported third quarter loss. the bigger loss coming from additional legal costs related to global investigations into currency trading at major banks. b of a says it's in discussions to resolve those investigations. last hour made the point, maybe you can't think of these as one-off charges all the time. does this mean there's going to be ongoing charges on everything forever? it's very hard to wrap your head around. >> that's where regulators go, don't they? they go to where the money is. >> i wonder if we were to tally

up all the money handed out through t.a.r.p. and other things and all the money that's come back to the government, it might be a wash. maybe more than a wash. >> right. becky might know. let's get back to becky at the baron investment conference, where she's with our guest host, ron baron. also, ron has a guest. or you have two guests now. >> we have two guests sitting here. that's right. look, our guest this morning, joe, is someone who you know very well. joe had mentioned earlier the countdown to the jobs report is on. we are joined right now by david rubenstein, co-ceo of the carlisle group. also, our guest host, ron baron. david, thanks for joining us this morning. >> my pleasure to be here. i always love to be at the met. >> usually it's a little later. usually there's something else going on. this is a perfect time to be here. the sun is coming in. people are getting ready to come in here too. david, i know you travel a lot.

i know you have a very good idea of what's happening in global economies, or economies around the globe, but also here in the united states. where would you say things are right now in the united states? >> i think the people would say generally, and i would agree, that the united states economy is in good shape. president u.s. will probably grow about 3% this year. unemployment is under control, i'd say, coming down. not quite as low as we'd like, but coming down. i think the best news we've seen recently is the congressional leaders and the president are saying maybe they'll work together. now, that would actually help the economy. i think if we had less dysfunction in washington, business people would invest more. and i think it would help the overall mood in the country. even if that doesn't happen, the economy is in reasonably good shape. >> jim cramer says he doesn't care if there's gridlock. he says there's less of an overhang. you'd like to see them get things done. >> if we could do things on trade legislation, tax reform, that would be helpful. over the last four or five years, the economy has basically

figured out how to go forward without depending on action in washington. in other words, if you have a sore or a bad part of your body, you eventually figure out how to live with the problem. i think we've learned how to live with dysfunction that washington. >> you're calling washington a big sore? >> i would say it's been an illness that we've been suffering from. i don't think the founding fathers intended the government to work this way. clearly, we've lived with it and we've lived with it for quite some time. if we could get rid of this sore, get rid of this problem, the economy would be better, sure. >> you skipped by this quickly, but you said you think the united states is the best place for investing. >> by far. there's no place comparable. outside the united states, i think europe is very attractive. people are worried about europe because of deflation and the ecb is doing many things to get rid of deflation. but prices are low in europe compared to the united states. i think there are good buying opportunities in europe compared to the united states. prices are about 25% lower. so we're very bullish on europe as a place to invest. china has its slowdown issues.

it's not going to grow at 7.5% or 8% this year. it will probably go 7.3% or so in terms of gdp growth. still a lot of good opportunities so we're bullish on china as well. >> david just said that the u.s. is the best place to invest. ron, would you agree with that? is that your take on things too? >> i don't have the same perspective that david does. i'm finding in the areas in which i invest tremendous opportunities everywhere. >> you said you think stocks will double over the next ten years. >> in my lifetime they've doubled every ten years. so i think that's going to continue. from the levels you're at right now, which is the median valuation, i think that's going to be the case. the reason they've done poorly for the past 15 years, only up 30% or 40%, is because they were too high in 1999. 33 times. so 33 times to 15, well, businesses have grown. now you're at a very good level. interest rates are real low.

energy costs are low. everything is doing better. every company i visit, what they tell me is their business is accelerating on the growth. >> i think technically, we got out of the recession in june of 2009, but honestly, it's taken a long time to get out of all the aspects. so we're still recovering in some areas like home building. i think the u.s. economy is in reasonably good shape. we're not going to grow at 5% or 6% annually anymore. >> ever? >> i don't think it's possible for an economy of our size to grow at that rate. we're a $19 trillion economy. to grow at 6% a year is difficult. if you can grow at 3% a year, that's pretty good. i think we'll grow at 3% this year, maybe better next year. >> what about if what you suggested, that washington gets its act together, that more legislation gets passed that is helpful to the business environment, could you see us getting back to 4% gdp? >> i don't want to pin down a specific number. probably better than 3% for sure if you could get tax reform done, corporate tax reform. if trade agreements could be put

together. if we could do something timely on immigration. these are very important things. i think the mood of the country would be better if the executive branch and legislative branch actually worked together. >> let's talk about what you see in terms of energy prices. ron mentioned energy prices are low. that's great for the consumer. what does it mean for energy companies? >> i think this has been a surprise to many people. i don't think people anticipated oil prices were to be go this low. if oil were to go to $70 a barrel, that would be a problem for producers. at $70 a barrel, it's difficult to justify going in and exploring for new oil. i hope it stays around $80 a barrel or goes up a little federal the point of view of a person who's investing in oil and drilling. if it went to $70 a barrel, it would be a serious problem for opec countries. if it goes below, it's a little bit of a problem. >> are you continuing to invest in oil companies as you watch

prices fall? >> we are a large investor in drilling in the united states through one of our groups in the firm. we still think it's an attractive area in which to put money. obviously when it gets too low, it's more complicated. i think right now we're in good shape. we think it's probably attractive to invest. it probably will come back. i suspect a year from now, 80 will be the floor. >> so are you putting more money to work right now? >> we are. we think they're bargain prices. we hope they are. >> we also say one other thing about energy. when we just had this $20 a barrel decline in prices, we use almost 20 million barrels a day in the united states out of 90 million barrels produced a day. that means we just saved $400 million a day. we just got a 23% tax cut. the equivalent of a 23% tax cut for the country. that is hugely stimulative for our economy. >> that's something you'll see play back and maybe a lot of companies that will make out. does that change your investing

strate strategy? >> i don't change that much. i keep going straight ahead. >> ron holds on to his companies for quite a while. that's what he's famous for. i think he's right. consumers have more money than they had before. i think you're going to see consumer spending go up a bit. i don't know how long this will continue, but i don't think we're going back to $100 a barrel oil overnight. >> let's talk about china. you were just there with mark zuckerberg. what did you think? >> i think his chinese is pretty impressive. he spoke mandarin to students for half an hour. he didn't go back into english. he went through the entire half hour session in mandarin. while i can't speak it or understand it, my impression is he did reasonably well for someone that's not native to speaking the language. generally, i think the chinese government is dealing with a couple problems. they're still dealing with the corruption issues. they're dealing with the pollution issues. but they're also dealing with a transformation of the economy from an export-oriented economy to a consumer-oriented economy. that's not easy to do. >> so what does that mean as somebody who looks to invest in other countries?

>> the way we look at it is it's the second biggest economy in the world. you've got 1.3 billion people, a lot of consumers and when we invest there, we're typically investing in services or products that will go to the middle class. they're going to buy more and more things and they're reasonably wealthy. we think the chinese will begin to export capital and buy more and more things in the united states and europe. >> so when you look at all these problems, these bumps in the road, there are a lot of issues that china is facing. do you overlook that, or do you have to pick your points and pick your prices? >> every place has issues. there's no perfect place. if you work on a long-term investment horizon, four, five, six, seven years, china is a great place to invest. if you worry about every moment, every hour, china has its issues. we tend to be a longer term investor. we think the demographics and other things are good in china. >> every place has its issues. what about a place like russia? is there a point when you say

there are too many issues here? >> we pulled out of russia many years ago. we thought there weren't many opportunities for investors like us. it's not a place we have invested in recent years and we're not planning to go back. >> david, i want to thank you very much for joining us today. i know you're here for the conference. we'll hear more later too. >> thank you very much. >> one more second. >> sure. >> david's company has been public for two years. >> yes. >> and just to give you a feeling for how inexpensive it is, we're an investor in his business. the reason is initially we thought the $160 billion he had in management would grow. it has. it's gone from 160 to 203, number one. number two, when you're buying in initially as you're buying it now, you're paying virtually nothing for the carried interest. all you're paying for, strip out the management fee and add a little bit of the book value, add what already has been earned, that's more than the price of the stock. you add in some very low multiple on what we think is a reasonable amount to project for

the amount you would attribute to carried interest. you have a stock worth 60 and the stock is selling at 27, 28. >> i think you're a very good spokesman for us. i'd like to have you do some more time with carlisle. >> actually, david had me speak to his 120 global partners and my son michael, who follows the company, about two or three weeks ago to tell them why i thought his company was a good investment. >> all right. well, thank you for your confidence in us. thank you, becky, for having me. >> thanks, david. we'll see you again soon. thank you very much. andrew, back over to you. >> thank you, becky. david and ron. coming up when we return, real estate porn. it's being caused the most expensive home ever listed in america. the master bedroom alone, 5,000 square feet. the price tag, the location, and the other over-the-top details. we'll bring all those to you when we come back. as we head to this break, here's barry diller last night on what happens if you don't keep up.

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get ready for this. the massive estate in beverly hills is on the market for only a cool $195 million. it's got 53,000 square feet. again, that's 53,000 square feet, 12 bedrooms, 23 bathrooms, a vineyard, a 27-car garage. the master suite said to be 5,000 square feet. you can get lost in that alone. it sits on 25 acres. it's owned by real estate mogul jeff green, who currently rents it out for only a mere $475,000 a month. >> i remember when this was being built. i lived out there at the time. it was on a weird piece of property, on top of a hill that hadn't been developed. jeff green was a guy from the financial crisis. you remember him. he made money. he found a way. he did well. he's been on the show a few

times. weird he owns that house for $200 million. i guess it's not weird. >> do you think it really goes for $200 million? >> no, probably not, right? and it will probably be a foreign buyer. >> i imagine so. >> coming up, we are going to return to the baron investment -- do you know who's singing this? you know who -- weezer. >> oh, yeah. i like them. >> me too. then king of countertops. twitter's one-year wall street anniversary. no way. you kidding me? that was a year already? oh, my god. anyway, what will the next year look like for investors? i don't know about twitter. i don't know. that's coming up right here on "squawk box." location. location.

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welcome back, everybody. we are at the annual baron conference this morning. one of the hottest trends in home building and remodeling right now is quartz countertops. one of the biggest producers is cesar stone with 12% of the global market share of a $70 billion market. joining us right now is cesar stone's ceo

our guest host this morning is ron baron. thanks for joining us today. >> good morning. >> so for people who don't know, the hot trends are either granite or quartz countertops. what are the differences between the two, and what are the advantages and disadvantages between them? >> so i think what we are seeing is a material conversion process where certain products are being transit from inferior products to superior products. >> but why? >> quartz characteristics, which are mainly long-lasting beauty, low maintenance, and low total cost of ownership fuel this revolution that we are seeing. >> i have granite countertops. why would i want quartz instead? >> granite is a good material, but quartz provides a lot more to the owner.

it doesn't stain, doesn't crack. you can apply every design that you would like to it. designs that can aspire. and it lasts for a longer time. >> so in other words, my granite countertops can crack, i can burn them, they can discolor. something along those lines. i'm crossing my fingers. >> i don't think it will happen, but if you want to apply a different look, something that will be more modern, something that can elevate the value of your house, then you better choose cesar stone over these kind of solutions. >> it's roughly the same price, maybe a little more expensive for quartz. >> more or less the same price as the good granite. >> so what we've seen in the united states is a resurgence in the home building industry but not nearly as strong or as rapid as some people had expected. i know you get about 35% of your revenue coming from the u.s. market last year. what have you seen with the u.s.

housing market? >> so i think, you know, the growth drivers is first and foremost the material conversion. this does not depend upon the situation in the market. >> so this is people doing renovations and updates. >> renovating and people transiting from the other solutions that we mentioned, either granite, marble, solid surface, toward quartz. so this is the most important one. in addition to that, the series of products we launched that were inspired by marble, we call it supernatural, is doing very well. this is reflected in our results and our growth in the states, which is close to 50% in the last year. >> ron, how about you? what did you see? how did you find him? >> he was introduced to us. we were interested in investing in home building. it was shown to us that he has very small penetration in the

united states, and the opportunity is very large. he's got very high penetration in other countries where he's been there much longer but they're much smaller markets. now we're just coming to the united states wi. we own 9.9% of this company. we have since it went public. the way we got into it initially, they were having a difficult time finding interest in investing in this business. we were introduced. we traveled to israel. we ultimately invested in this company. we thought this was a good price. since then over the past two years, three years, made five times our money. >> what's been the biggest challenge -- >> by the way, i think that's just starting. i think we can make five times again. >> what's been the biggest challenge in the united states if you're trying to increase your market share here? >> i think the challenge here is to educate the people. if you look at consumer reports from july 2013, you can see

already most of the people prefer quartz. but it takes time between people, you know, express their desire to own something until they do it. but if you look at other countries, you see the quartz penetration. for example, in israel, it's 85%. so more than eight people out of ten buy quartz. in australia, it's 35%. yet, in the states, it's less than 10%. so the opportunity is big. and the whole market is very big. it's about $70 billion globally. quartz today is only 8% out of it. so there is a lot of room for growth. >> all right. i want to thank you very much for joining us today. >> thank you very much. thank you for having me. >> up next, pushing the limits of space flight. jane wells on nasa's next mission. >> i'm jane wells at kennedy space center, you are getting an exclusive look at a spacecraft which could eventually take us to mars. it has been a tough week for space. coming up, what the orian

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nasa is set to launch the

orion spacecraft that's designed to take humans further than they've ever gone before. why is that familiar? jane wells, our own space cadet, joins us now from the kennedy space center. you're in florida? you're on the east coast? >> i am, joe. this is launch pad 37-b. it's not often you get to go live from a launch pad. that's the heaviest, most powerful rocket on earth from the united launcher lines. nasa says what's going to happen here on this launch pad is, quote, absolutely the biggest thing this agency is going to do this year. and this is what it's launching, the orion, a craft which could some day take us to mars. cnbc got an exclusive first look inside the facility at kennedy space center, where it is being housed. next week it will be rolled out to the launch pad at cape canaveral to prepare for its first unmanned test flight december 4th. the flight will test the riskiest parts of this program. the launch abort system, which

includes an aerojet engine. that's the company providing the engine that may have caused the or bial sciences explosion last week. there are no common parts between these two missions. in fact, there are no russian engines at all in this mission. >> i think that's the key part and the hardest part to test on the ground. we can test pieces and we can model on a computer. but actually putting it in flight and seeing how the aerodynamics work and how it erodes, which is part of the plan, that's going to be a real key part of the test. >> now, this is lockheed martin's biggest space program. nasa has spent over $5 billion so far on orion. while outside the orion looks not too different from apollo, there are composite material, 3d printed parts, fewer switches. >> everything -- you know, it's the shape and the heat shield

are more apollo heritage so they look familiar. everything inside is totally different. the technology has changed so much. the ways that you build things has changed so much. there's not that much heritage. >> and after a tough week in real space, science fiction hits the big screen today with "interstellar." is this our future? lockheed and nasa hope to have manned orion flights. later we'll talk about the unique business model for this particular flight. it's not particularly the old model where nasa runs everything. certainly not the new commercial contract model. it's a strange new sort of hybrid, guys. we're going to talk about that later. back to you. >> thank you, jane, for that. we're going to go from rocket ships to twitter. >> you don't want to talk about anything at all? >> i always want to talk to her. >> i don't know. she's there. she's very funny.

you don't have to. you want to go to twitter? >> we didn't have a lot of time. >> did they tell you that? they didn't tell me that. go ahead. i'm off twitter. i'm sick of twitter. >> you want to go back to rockets? >> no. you can do this. >> we are supposed to wish a happy anniversary ipo to twitter this morning. though investors may not be celebrating just yet. shares are down 9% in the closing price on its first day of trading exactly one year ago. and the question is has all this saturated social media market clipped twitter's wings for future growth? >> i just said that. >> there you are. here to break it down, the media and internet analyst. recently downgraded the stock from buy to neutral. >> my man. >> so you and joe are in the same place on this? >> we had upgraded it at 30, 31.

when we saw the last quarterly results, i decided we should go to neutral. there are really three reasons for it. the user growth is decelerating. the monotization per user is also decelerating. for me, i was hoping that incremental margin would be more facebook-like, if you will. we decided to take our rating down. our target is now 45. when you have a stock that's trading in this sort of stratospheric valuation multiples, i think you need to see accelerating trends, which is what we had been seeing in the first quarter and second quarter. now trends start to decelerate. the company's hosting an investor day next week in san francisco. we'll see what they have to say in terms of the product, in terms of their ambitions and their aspirations to become the biggest audience in the world, how they're going to get there and kind of what the product and financial strategy is. >> anthony, how do you measure this management team? are you a fan?

we had peter thiel on. he said this was one of the great mismanaged companies. i can't really measure necessarily how he's done as a manager. >> i like him. i think there's been some internal controversies at twitter about how big the ambitions of the company could be and should be, what the company is. is it a real-time network? is it a social network? is it a content company? is it a media company? since bringing on a slew of new senior managers, right, the chief product officer has changed a couple times, there are have been a lot of senior management changes. when we as investors see a lot of change, we perk up and ask, why is that? >> has that change been for the better? >> verdict is still out. i think a lot of these new appointments are still pretty new. we'll hear from a lot of the new

senior managers next week. the organizational structure has been almost completely changed since the ipo a year ago. the real question is the product. what's happening at twitter is new people are coming on to the platform, but the casual users are not staying on the platform. so you're seeing quite a bit of churn. they don't have what's called a gross add. so they're trying to improve the experience. now, how do you do that? and that's a question for the ceo. that's a question, you know, for the company, for the product. there are details we hope to learn next week about that. do they have a facebook-like page rank sort of system that ranks your tweets by relevance? the hope is that that sort of a product overhaul could improve the quality of experience on twitter. >> right. and hopefully they can monetize it too. anthony, thanks for joining us this morning. >> have a good weekend. >> you're in new york. you have a beautiful shot there of central park. i know that's not a real shot. but becky is also in new york. she's got a beautiful shot

behind her, and it actually is real. >> yeah, this is a real shot. and things are really filling up here this morning. the people who are downstairs, you'll see them in a moment, the sun is coming up over new york. when we come back, we're going to talk about whether the republican wave on tuesday night gave new life to medical device makers. we have the ceo of life sciences. he'll be joining us live from the baron conference. then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪

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welcome back, everybody. medical device makers could be big winners after this week's midterm elections. there's a repeal of the 2.3% excise tax that's implemented on the group because of obamacare. it's now gaining broad political support to be repealed. michael is the chairman and ceo of edwards life sciences. of course, our guest host again is ron baron. edward life sciences is also an investment in the baron portfolio. thank you very much for being here, mike. >> thanks, becky. >> i want to talk to you about the repeal, potential repeal of the excise tax. before we get to that, i want people to know what it is that you do.

you work with heart valves in particular. tell us about that. >> yeah, our company is really focused on the critically ill and structural heart disease. what we're most famous for is what we do with heart valves. we're the global leader in heart valves. we were pioneers of that from the very beginning, over 50 years ago. heart valves have changed over the years. they've saved a lot of people's lives. it's a big procedure. it's a big surgery to have your heart valve we placed. your heart is stopped, your chest is cut open. the quitie i exciting innovatios so many people's attention is you can replace the heart valve without stopping a heart. >> and that's done through a catheter. >> a small hole in your upper thigh. the catheter is advanced up your aorta, over the diseased valve. a balloon is inflated, and your heart valve is immediately replaced. so in under an hour, a procedure

that used to be very invasive with a long recovery time, gives these patients a quick recovery and gets them back on their feet. >> a recovery time that would take how long? >> right now we're only serving -- we're working through a regulatory process. so those patients that were the sickest, they would easily be in the hospital for a week or more as a result of this. >> what i don't understand is why it's not something for everyone at this point. if it were me, give me the catheter versus open-heart surgery. >> of course. that would be the natural promotion. surgery is proven. you get great results from it. if you're healthy enough to go through it, you get a great recovery. this new procedure is still considered novel. there's not enough history. there's not enough heart valves that have been implanted for enough years to say i feel confident putting it into a young person. so the regulators say, let's prove it. let's demonstrate success and then we'll open up the

indication as you generate evidence. that's what we're doing. >> ron, you're a believer in this because you had the same reaction. like, wait a second. >> in 2003 when i saw this, i was like, everyone has to have this. mike was like, not so fast, we have to get all the evidence. it has achieved great success. in fact, many doctors are asking the government, regulatory agencies to please let us do it faster. >> mike, let's also talk about what's happened with the excise tax under obamacare. how much did that cost your company last year? it's 2.3% on revenue. >> when it went into effect, we estimated it was about $20 million for edwards life sciences. the issue is that's really american jobs. that's innovation. that's money we would have invested back in the business. we think it's not great policy. we know the affordable care act had to be funded somehow. doing it on the backs of

innovation and the people that are the leaders in the world of medical innovation just seems inappropriate to us. we're looking forward to having that repealed. >> you think you have a good chance of that now that the republicans control both houses of congress? >> we think the odds improved. it's going to take a bipartisan effort. it's very helpful for the white house to be behind this as well. i think the odds are good. >> so back to the catheter way of inserting these things. what has to happen next with regulators? >> well, we're generating evidence. we're in a trial right now to move this into what we consider intermediate risk patients. the results of that trial will be available and hopefully by 2016 we'll see those results and we'll be on a pathway to do that for americans. right now this is being used around the world. it's in over 60 countries at this point. there have been over 100,000 of these kind of procedures done. the track record has been terrific. so we love the trajectory. it's going to take maybe another

decade before it fully penetrates. hopefully we continue to get great results. >> people say, gee, i'm not sure we can do anything to help you. why don't we just watch you? they watch them for a year or two and they die. this is going to be life saving. >> michael, we really thank you for sopping by. >> thanks. my pleasure. >> up next, one more special guest. stick around. "squawk box" will be right back. . changing the way you think of retirement.

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welcome back, everybody. for the last two hours, we've been opening up the baron portfolio, and ron has one more stock he'd like to talk about this morning. ron, we haven't talked about this all morning. one of your big investments is tesla. >> tesla is our 24th largest investment right now. it's about $240 million or $250 million. as i mentioned to you, i think i'm going to make ten times -- we're going to make ten times our money. >> over what period of time? >> eight or ten years. >> you said that about the broader stock market too. >> i think the stock market is double. >> this will be ten times. >> so better than the stock market. >> a lot better than the stock market. why do you like tesla? why did you get drawn to it? it's a very new company. there are still bumps along the road. we just heard recently when they

came out with earnings that they are doing very well. they've got a lot of deliveries. they've got a lot of shipments. but the model x is facing more delays again. >> so, in fact, one of the analysts who works with me said, i don't understand. why is the stock going up when they're having delays in production of the model x? why? you're missing something here. the opportunity here is not for them to do 35,000 cars on their way to 50 or 100,000. the response in the market is for 100,000 a year. maybe they could do a million cars a year. they could do 10 million cars a year in 15 years. the potential is enormous. so why? so if you go back to 1910, there were 4,000 automobiles in the united states. they were powered by steam, powered by electricity and

powered by gasoline. but gasoline ultimately won for the last 100 years. the reason it did is because gasoline was then 7 cents a gallon. electricity would be twice as much. now gasoline, instead of being 7 cents is $3 a gallon. and electricity is now 75 cents. now it's cheaper for electricity than for gasoline. so how come they're not going faster? the reason they're not going faster is because the automobile companies don't want this to happen. the reason they don't want it to happen is because they have enormous investment that would be stranded in plants that make engines and transmissions. so the automobile companies don't want it. the unions don't want it because it's much simpler to make one of these cars than to make a gasoline car. so there's fewer jobs. number three, the dealers don't want it. the dealers would be cut out of it. in addition to that, the dealers

make money by servicing cars. there's only 18 moving parts on one of these cars. there's 2,000 moving parts on a normal car. so it doesn't break down. in fact, they think that in eight or ten years, you're going to be able to take a tesla into a dealer -- and you know what cars are worth at the end of ten years. you bring in your car, for $10,000, you have a brand new car again. so anyway, the bottom line is that the companies now valued at $35 billion. i think they're going to be valued at $100 billion in four or five years when they'll be doing 500,000 cars a year and $25 billion in revenue. >> you are a big believer. even elon musk has said himself at times the stock price has been overvalued. >> well, it's far overvalued on the basis of what they're earning right now. you're paying for that venture capital. >> there's a moving cnbc sign bind your head. they're trying to block the

sunlight out. i want to thank you so much for having spent the morning with us. we really appreciate you invuting us in. >> thank you very much for coming. >> thank you. again, ron baron with the baron investment funds. it's been a fun morning. guys, i will send it back to you right now. >> i'm worried about the big three again, becky. i don't know. i guess we'll need another bailout. >> you should be worried. >> all those jobs. we saved them. i don't know. now i'm worried, ron. anyway, thank you. it's always great. we sit here, we don't do anything else but listen when becky is there with ron baron. up next, the clock is ticking. you're looking life ining live nation's capital where in just over 30 minutes we're going to get the number everyone is waiting for. markets are a little anxious awaiting this. are we going to get above 230 on the jobs report?

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it's jobs friday. the data point of the month is just 30 minutes away. how are you positioning your portfolio? will the numbers influence the fed's interest rate policy? what does the data say about the state of the global economy? we've tackled the issues that matter to your money and give you the information you need to make sound investment decisions. it's jobs friday. and the countdown begins right now. welcome back to "squawk box" here on cnbc, first in business worldwide. you're looking live at the clock outside of the labor department where in less than 30 minutes we're going to have the october jobs report. i'm andrew ross sorkin along with joe kernen.

s&p 500 higher. nasdaq looking likely to open about ten points higher. other than the jobs report, a couple stories we're following at this hour. the head of opec says those panicked by the plunge in oil prices should relax. the secretary general talking to us in europe. >> we don't see any nagging from anybody, but maybe i think we are looking at speculation. >> take a look at oil prices this morning. you can see wti crude right there 78.55 is the price. in corporate news, bank of america tripling its previously reported third quarter loss. the change due to additional legal costs due to investigations into currency trading. also, home depot says hackers stole about 53 million e-mail addresses in that massive data breach. this is in in addition to the stolen data for 56 million

payment cards previously disclosed by the retailer. joe? >> let's get to our jobs panel. we'll have predictions in a bit. right now i want to focus on the economy in general, the labor market and the fed. all right. kevin, the senior fellow and director to of economic policy studies at the american enterprise institute. and gary stern is a former minneapolis fed president. since i started with you, austin, in the past, you remember when things really weren't going that swimmingly

and you were always a realist about that. we've been talking about it all day today, that something does seem to have gotten a little bit better in the last six months. is it the consumer feels better with a 5.9% unemployment rate? what is it that really does feel a little bit better now? >> i think it's only a little bit better. i think people have gotten too far ahead of themselves. they were too negative when it was down. now they're probably a little too positive. i think, a, you had significantly less fiscal drag this year than you had in previous years, so you've just had a little bit. that's going from a big neg atie to zero has added some gdp. that's helped bring the unemployment rate down. as the unemployment rate has come down and they've been generating jobs, that has boosted the consumer a bit. you started to see a bit of an uptick on inest vestment. those are the things that are at least making it a little better. >> kevin, and we can't forget

crude. again, i don't want to bring it into a sort of conspiracy theory. when i think of saudi arabia and middle east, should i take satisfaction that we've produced a lot here and that we're really sticking it to people that don't like us very much? or should we just talk about it objectively? what do you think? >> i think objectively what's been going on is the rest of the world has been slowing, especially in europe. that drives down demand for oil. that pushes the price down. normally, the saudis will cut supply and opec will cut supply to push the price back up and keep it in the 80 to 90 range. fact that we're below 80 and maybe continuing to go down, that's where the conspiracy theorists start to opine about what's going on. they think maybe what's going on is the saudis are trying to hurt all those guys doing horizontal drilling, drive that production down so then when they jack up prices, they can make bigger profits. i don't know if that's going on. i do know there's kind of a horse race right now between the positive effect on the economy of lower energy prices that's a

really favorable shock for the u.s. and negative effect on the u.s. on the fact the rest of the world is slowing. when we look at the jobs numbers today, we're going to see so far the positive effects are dominating. >> and the other one that you didn't even mention is, you know, the companies in the s&p that are now producers over here. if you don't have downstreaming, you know, we have a lot of domestic companies getting hurt as if they were in the middle east. >> and you can remember there were times when it would just be like a ghost town down in some parts of texas because of the decline in the price of oil to the extent we jack up production everywhere and the price goes down. then the boom/bust cycles we've seen in louisiana could start to spread to other parts of the country like north dakota. >> so this is good for consumers. has this got something to do with why the economy seems to be percolating a little better? >> i think it does. i think both from the pocketbook side where consumers find

they're paying less at the pump and psychologically. we've been dealing with very high energy prices for quite some time. now they're moving in the other direction. i think consumers have to feel better about that, and that's showing up in behavior. >> is it now -- have we decided is it a slowdown in the rest of the world or is it the supply we've brought on? >> i think it's a combination of both. i wouldn't underemphasize the slowdown in the rest of the world. i think that's making a big difference. we're a relatively energy efficient economy. places like china are much less energy efficient. so when the growth slows there, that has a bigger impact on demand for energy and pricing. >> if you were with the fed right now, would you assume we're in a sustainable 3% economy now? >> yes, i think i'd be very tempted to assume that. you know, we've had a string of relatively positive reports

across a wide spectrum of data. i have the sense that underlying fundamentals have improved. you know, there doesn't seem to be -- yeah, there's a lot of global turmoil. you don't have to look very far to the u.s. economy has weathered that well historically and is weathering it well now. >> if you're right, when would you increase interest rates? >> i think that's a call that's a close one for two reasons. you know, you could make the case that this is a good time to be patient because of what's happening abroad. the relative strength in the dollar, slowing economy abroad, global turmoil of one type or another, disappointments in europe and so forth. on the other hand, it's very tempting to seize an opportunity to start to normalize financial conditions, start to push interest rates up a little bit. >> what we're expecting, but probably not until june.

>> probably not until midyear. i think the fed can afford to be patient. a key element is inflation has been quite subdued. i expect that to continue. that helps to bolster the patient argument. >> austan, 3%, we're there? sustainable? >> i don't think we are for this year. gdp growth is going to be less than 2.5%. the forecast for fourth quarter are again down 2.5% or below. so i hope that that's right. but i fear that it isn't. i think the fed is perhaps once again getting out ahead of itself and saying next year's the year. we're going to finally get the u-shaped recovery. we're going to come shooting up. i think we're just going to keep chugging along. >> in the past -- you sure you're not staying at in the party too long, austan?

what do we got holding us back from doing that? you orchestrated part of what i think is holding it back. >> it was a bubble. i didn't orchestrate the bubble. >> you just orchestrated all the big government answers to what should have been a -- >> no, no. look, when the bubble pops, the economy can't go back to doing what it was doing before. >> did in the '80s. >> there wasn't a popping bubble. that's the point. in the '80s, the interest rate comes down from 20 to 10. here comes all the investment. you go back to what you were doing before. >> he's with the aei, but he will never say this is self-inflicted by the administration. i'll get arthur brooks on here. he's not going to say it, i'll get him on. >> well, certainly there are a lot of things that had negative effects. the one thing i would say about -- >> that's all i'll get from him.

>> the dodd-frank, the tightening of financial regulations. >> look at him while you're saying this stuff. >> i'm looking at the camera. >> you're confused, joe. you have no memory. >> no, i'm not confused. >> joe is confused. i'm in the same place as american voters right now. >> hey, the minimum wage. every liberal i know, that's the first thing they say to me. i walked in this thing last night. what about that minimum wage stuff? i go, really? seriously? that's what you took away from the election? >> this is what always happens. in reagan, they lost the senate. bush lost the house and the senate. obama lost the senate. >> that's what the president said. he reads the tea leaves. his elections, when he wins, has consequences. this one, it means nothing.

>> i think we should try to put this in greater historical perspective. you know, we're in a rinehart world. the conclusion from that is coming out of a serious recession induced by the financial crisis, expectations for economic performance should have been modest. we shouldn't be surprised at the performance we've had. we shouldn't be surprised that it's taken time for the economy to really accelerate. yeah, growth this year, i guess, on average will be less than 2.5%, but that's affected by very unusual developments in the first quarter, which has it turned out proved to be temporary. so i think we've got to be careful about putting this in historical perspective and, you know, putting some balance into the way we're looking at the data. because things do bounce around

occasionally for reasons that aren't related to economic fundamentals or policy. >> we're going to take a break. stick around. we'll get predictions for what to expect when we do get this number in about 19 minutes. coming up, the fight to protect jobs. it can be fierce. companies constantly scouring the country looking for talent. a look at one of the businesses that's on the hunt for workers next. later, more highlights from last night's cnbc gala celebrating our next list. also, the 25th anniversary of the network. we were in attendance all along with many high-profile business leaders. we're going to hear from sandy while on the future of banking. later this hour, from several other luminaries, as you can see. "squawk box" will be right back. today, we believe every life deserves world-class care. as one of the top four hospitals in the nation, over 100,000 people from around the world come to cleveland clinic for care each year.

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welcome back to "squawk box" this morning. making shares this morning, transocean taking a nearly $2.8 billion impairment charge against third quarter earnings. it's going to be delaying reporting its results. this as day rates for offshore rigs dropped precipitously. also, abercrombie & fitch, those

shares taking a pounding. i'm not buying the cargo shorts anymore. the retailer warning that third quarter earnings will be substantially lower than the street was forecasting. some same-store sales tumbled about 10%. >> it is a problem faced by companies in all industries and an issue that could end up hurting our economy. a chronic shortage of tech or i.t. workers. mary thompson joins us now with the latest installment in our where the jobs are series. she is reporting from paypal's commerce innovation center in new york. did you stay over too from the thing last night? we waited -- you get to wait until 8:00 before you get to come on, mary? >> that's right. but i live in the city. it's just a quick drive for me. >> okay, all right. well, that's nice you got eight hours. >> i don't have as far to travel as you. i stayed a little later than you did. listen, here's the innovation

showcase paypal is able to showcase all of its new payment technologies. technologies built by these much-needed technologists. how big of a problem is this shortage? keep this in mind. in the third quarter of this year, one-tenth of the 6 million job openings in the u.s. were i.t. related at a time when the bureau of labor statistics estimates that growth in some areas of tech-related jobs could exceed 20% by 2022. there is a lot of complaining that goes on about the lack of good high-paying jobs in the u.s. but they're out there if you know tech. >> every industry's been being disrupted by software. so the demand for software talent and engineering talent has just been growing up. so it's getting more competitive. >> paypal's chief technology officer saying the payment giant's looking to hire several hundred workers this year and more in the future. a task made difficult by an

ageing work force and new technologies like the cloud, requiring a different skill set. as a big company with deep pockets, paypal can land top talent more easily than small and medium-sized firms. and the tech trade group comp tia says this will hurt not only the smaller companies but their compliants too. >> it translates directly to their customers and how competitive they can be with those customers. >> now, unlike some of the other jobs we've profiled in this series, these tech jobs do need a college degree. they pay anywhere from $50,000 to $120,000 and up. given the shortage, companies like paypal have to be creative in how they recruit new workers. we're going to tell you one way they're doing so. that's coming up on "power lunch." back to you. >> thank you for that. coming up, final payroll predictions it from our panel of all-stars. then the number of the month, the october jobs report. we've got that and a lot more when "squawk box" returns in a moment. w.

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there it is. the tree has officially arrived at 30 rock. 85 feet tall. it will be lit december 3rd, mark your calendar. you'll be able to see all of the festivities, of course, on the one and only nbc network right there on the plaza. >> that time again. >> always, always. >> where do you go?

are there places in the city where you get your tree? >> usually somewhere on the upper west side. on the street. pick it up. all the kids and my wife, we haul it down the street. it's kind of fun. >> it is a lot of fun. >> we're just a couple of minutes away, we should tell you, from those widely watched october jobs numbers. before we start the final countdown, however, it is time to play our favorite game. predict the payroll. everyone's got their predictions. at least i hope so. we're going to start. everyone's got them? okay. we'll start with kevin. your predictions, please. >> i think we're going to see about 225. >> okay. let's go down the list. austan? >> i'll say 212. >> 212. you want to rationalize that for us? >> well, i just -- as i said, i

think growth hasn't been as good as people want it to be. i think we might get a little less than what folks are hoping for. >> i don't know if you can see it. it is movember and we're giving everyone a mustache. you're looking sporty in that mustache. rick? >> if the number is good, joe is going to attribute it to the republicans winning. >> no, no. if it's good, it's the reagan tax cut. >> that's what you would done if the democrats won. >> rick santelli? >> 204,000. >> you're playing "price is right" rules? what are you doing? >> just bought 204 bonds. >> i see. okay. what do you have today? >> i have to say 210,000. there it is.

>> oh, he tried to make it bigger. i see. joe? >> i don't play lame, stupid games where people give me some stupid thing to -- that's what i say. i'm happy. i'm alive. it's a great country. the election is one of the wonderful things about a democracy. i'm happy. this is what happens if it's a bad number. i'll be sad. you know what? i asked them to play that happy music we play. where do we get these lame -- who did this? who printed this out? you did? >> our producer. >> greco does lame things on purpose. >> okay. keep that over your face. steve leesman, the professor. what does your model say? >> i have a number here. >> oh, there he is. >> 222. >> loser. look, you've got a little grateful dead logo in the middle there. >> at least he did something. >> the model says 217 on the private sector. i just make up adding five for

the government. not sure which way the government goes. everybody makes it up when it comes to the government. nobody knows. >> you put a "k" on yours. >> the sorkin model comes out at 250k. i only did that because everyone else was lower. >> under lame game show rules, you can't go over. >> if we're playing "price is right" rules. i think there's a copyright on that. it's a cbs business. i don't want to get involved with legal issues. there we have it. our lowest is santelli. >> austan's been on the you should a l-- under a lot of tim and had some big wins. this time rick is the lowest. >> austan's 212? oh, he's got the boiling point. probably because of tuesday.

>> and if it's a blowout number, who gets the credit? >> the american economy. more to matter what happens, it's the greatest economy in the world and you can't kill it. >> no matter how many saddle bags you put on it, we're still moving. >> austan, can i just ask you one question? >> yeah, okay. >> when you see the president taking credit for the oil boom, is there the slightest hint, the slightest hint -- do you hear the slightest bit of irony in watching that? does it occur to you at all, or you just swallow it hook, line, and sinker? >> if depends. i think the answer is the same as when i look over the last two years and see record domestic production. do you sense any irony of saying that the president's blocking the oil boom? >> we got to run. we'll have those numbers. we'll see who is right when the numbers come out.

up next, the jobs report for october. don't move. we'll be right back with the numbers and reaction. then an exclusive interview with the cleveland fed president. our first, i think. loretta mester. the futures at this hour are indicated higher, and they've been going up with our eminent panel in the discussions. we'll be right back. tigers? don't be modest. i see how you've been investing. setting long term goals. diversifying. dip! you got our attention. we did? of course. you're type e* well, i have been researching retirement strategies. well that's what type e*s do. welcome home. taking control of your retirement? e*trade gives you the tools and resources to get it right. are you type e*?

wow. not much time. take a quick look at the futures. then we have to get right to the number as it hits. there we are. we're up in anticipation of the numbers. hampton pierson, what are they? >> 214,000. october nonfarm payrolls increase by 214,000 jobs. the unemployment rate is 5.8%. average hourly earnings up 0.1%. that 5.8% unemployment rate is the lowest it's been since july 2008. year over year, wage gains at 2%. slightly less than consensus on the total number. slight down tick in unemployment. we did have revisions. the net revisions increased total jobs over the last two months by 31,000. job gains across the board.

food services up 42,000. professional and business services, plus 37,000. health care up 25,000. retail trade, 27,000. the only downturn, information services losing 4,000 jobs. now, among the other headlines, the total number of employed increased by 683,000 in october. that's the highest monthly increase since november of 2013. the labor force participation rate, 62.8%, a slight uptick from 62.7 in september. average workweek, 34.6 hours, up one-tenth. the total unemployment rate, 11.5% in october, down from 11.8 in september and down from 13.2% a year ago. long-term unemployed, 2.9 million, about 32% of the total unemployment force. the average job gains over the last three months, 224,000.

back to you guys. >> thank you, hanson. let's get reaction. so you still know people, obviously. >> you won. >> and you don't go over. you know "the price is right" rules. it comes in at 214. that's got to be more just luck. >> why don't you just listen to me when i tell you things? you should just pay attention. >> what the nsa could find out if there were calls made between you and the bls. this is totally luck again? >> what do you mean luck? it's complete skill. how could you say luck? >> let me ask you, you've heard the criticism about whether it's really 5.8, right? it's all part time. you've heard the participation rate. you've heard there's no wage growth. is there anything to show that as we get a little better in the economy, that some of these trends are starting to reverse that you see? >> yeah, many of those critiques

of the recovery are correct. the unemployment rate is different now than what it was in the past because there's less labor force participation. if you look at that number, it continues to come down is a good sign that the part-time stuff is improving. >> is there anything to the notion that it's easier over the last few years to stay at home and do pretty well based on the kind of assistance that you can get? and it makes -- the job has to be even better to make it worthwhile to get childcare and pay for gas and put a tie on and everything. is there anything to that, that we've made it too easy? >> i don't think there's much to that. i think there's a small bit and there's no way that explains the change in labor force participation. if you look at who the people are, they're the wrong people.

>> kevin, are you -- the same two questions. are things going in the right direction, do you think, in terms of 5.8 really feeling like 5.8? >> yeah, things are definitely going in the right direction. as for us, don't forget about six shows ago he said i'm going to take kevin's number and subtract six. that seems to be work. i have to go second next time. in any case, i think things are definitely improving. the 3.5% growth, that's the fourth out of the last five quarters where we've had mid threes to mid fours. i think the u.s. economy is very solid right now. i think in part it's because of the waning negative impact of all the measures. >> gary? >> yeah, i thought this report was positive across the board. doesn't take a lot of analysis to reach that conclusion. it was positive across the board. it's consistent with what we have been seeing. the participation numbers, i

think, are really deserve very careful attention. clearly there have been people who have dropped out of the labor force for one reason or another that you wouldn't have expected. on the other hand, with the ageing of the baby boomers, as everybody has commented, you expect their participation rates to go down. you knew in advance that the participation rate of women was going to have to level off at some point because it had been on a very significant upward trajectory for a time. that couldn't continue. i think, again, i think this is a more complex situation than pointing at just one or two variables. >> it's true, rick. i think of every argument that we have. the recovery's been tepid. one side says because the recession was so deep, the other side says because it's self-inflicted. for the participation rate, one side says it's because baby boomers are retiring. the other side says it's because of disability and food stamps and everything. everybody's got a way of explaining their own opinion.

>> yeah, but the numbers don't lie. you look at the age groups and the prime working years, kind of 25 to 54. what you'll find is that their labor force participation has dwindled over the last several years. so you can spin it any way you want. people that should be working aren't working. you could debate why. in terms of is this a good number, the relative trade works well when you look at interest rates. but the notion -- look at it from this vantage point. say you're a middle class guy and make 40 grand a year and get a raise of 10,000 to 50,000. that's like this number. you think, wow, that's obviously not bad news. if your bills are still higher than your income, it just isn't enough. it didn't matter that you got a raise. 212,000 isn't bad. it's improved. but it isn't enough to put the type of personnel back into the 8:00 to 5:00 work force that we need. it isn't enough. so it doesn't matter that it's better.

doesn't matter who's in office. it doesn't matter about politics. if we're going to be honest about getting the middle class to participate, getting their skill levels up, addressing the issues of education, these numbers are not enough. so relative value all you want. we need to do better. and we have improved, yes. >> austan, i don't think you'd disagree with anything rick just said. >> wow, i agree with everything rick just said. i don't know what happened to me or him. >> you didn't drink this morning then obviously. >> wow. >> drink what? >> obviously just kidding. >> no, drink the chicago kool-aid. the administration kool-aid. you weren't talking about alcohol. >> no, no, no. >> just a couple quick things. >> sorry, steve, i forgot. that was not deliberate. you're going to have a big interview anyway. >> just 30 seconds here. remember that august number that so upset the markets at 142,000? you know what it is now?

it's 203,000. so the one little blip we had that suggested there was a certain jerkiness to this, that's gone away. it's been revised away like a lot of other data on the jobs number. when it's come in lower, it's been revised up. the average weekly hours ticking up a little bit. that might flatter some of the gdp forecasts for the fourth quarter. that's a good way to start off with that 33.8 number for average weekly hours. again, the wages at 2%. we're not seeing the tightness in the labor market coming up in wages, which is what you would expect. finally, one of the things we're looking for is this idea that yellen has. people come backing into a strong work force. well, you had 416,000. which, by the way, it fell in september, fell in august. a very volatile series. but that's something to look for. the unemployment falling sharply but the work force rising by nearly half a million. you said everybody has a different side to the debate. one side is going to be, you know what, the labor market is

tightening up. the others say you had almost half a million come back into work force with this number here. >> what did challengers say yesterday, steve? >> they had a lot of cuts. >> why? >> but from a very low level. my explanation is large businesses should be taking a bit of a pause here. i take that from the adp numbers that showed large business gains of just about 5,000. i think there's a period of time where they were adding a lot of workers, now there may be more leveling off on the large business side. that's just a theory right now. a couple more months of data would look better. >> before we go, one more question for my friend austan. when you were on the phone with the people in the white house getting this number, what exactly do you think we'll be able to accomplish? anything over the next two years? what's going to be a priority? what do you honestly say we might do? >> look, six months ago i said the chance they'd do something before the election was zero percent and if republicans won, i thought that would be cut in half. i still stand by that.

>> that's a good one. all right. thank you. rick santelli, thanks. gary, thank you for being in studio. kevin, it's been a fight. say hi to arthur. steve, we'll see you again. >> loretta mester coming up. >> when we exclusive interview with cleveland fed president. her reaction to the jobs data and what the fed should take away from the numbers. we'll bring you that next. speaking of cleveland, the browns beating the bengals last night 24-3. >> god almighty. >> cleveland quarterback brian hoyer now 9-3. >> i cut him loose after indianapolis. i have not accepted him back. this does not surprise me. i didn't even notice. s from a trip around the world. but you can't always bring back customer data. because many customers don't like it when their data moves around. can i go now?

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general mills, before we get to steve, the shares are under pressure. there you can see it down 4%. the company cutting its full-year earnings and sales guidance, citing a weak food industry trends and slowing growth in emerging markets. don't they sell stuff you buy no matter what? it's weird. >> some of the branded stuff, the cereal. >> you can get other stuff. >> then there's the carbs. >> that's right. who needs those? >> who needs those? take a look at futures right now after that jobs report. see how things are setting

themselves up for the day. dow looks like it would open up higher by 26 points. s&p would open three points higher. nasdaq up 14. okay. let's check out what we just got, the average hourly earnings. i don't know what this is saying. oh, i see what's happening here. there we have a wonderful chart you can see. we're also going to show you the unemployment rate. we'll flip that chart around. you can see 5.8, the lowest we've been in quite a while. let's get over to steve leesman, who's brings us an exclusive interview this morning. >> morning, andrew. thanks very much. i'm here with cleveland federal reserve president loretta mester. just took office in june. thanks for joining us. >> i'm glad to be here. >> right out of the box, your reaction to this jobs report? >> it was a solid jobs report across the board. as you know, i like to look at trends in the data and the trend has been up for quite a while, nine months, up plus 200,000

payroll jobs, unemployment down, average hourly earnings up. i think it's a solid report and consistent with what we've been seeing. >> what do you do with the unemployment rate? it came down. you had this 416,000 coming into the work force. you had decline of the unemployment. you had this participation rate that's been sort of stable to down recently. >> so i think the unemployment rate is still a very good indicator of what's going on in the labor market. but of course, we look at a number of other indicators as well. as you know, the unemployment rate is a ratio. it does make it a little hard to discern participation rates have a cyclical component but also a trend component. i know in the segment before you were discussing that. that's why that's a little bit hard to gauge. again, i think it's a pretty good indicator of the improvement we've seen in labor markets. >> does it change your outlook on policy at all that this unemployment rate has come down? fairly precipitously. you could be at 5 in just a few months from now. >> i think again we look at a broad set of labor market

indicators. i think the payroll jobs are a strong indicator that the labor markets are improving. there's still room to do better, right. there are still people without jobs who want jobs. so we're going to continue on hopefully with the economy improving along those dimensions. >> i'm going to ask you what i think is a question everybody wants to know about you. you were charlie ploster's research director. everybody wants to know how much like charlie are you. i see your hair is much better. but are you a hawk like charlie? are you similar, really kind of leaning against this current policy? >> so i like to consider myself an owl. owls are wise. so that's how -- if i had to pick something, i'm going to pick an owl. i come into the meeting open minded. we have a very great discussion around the table about the economy, about economic development, about our outlooks. then we talk about it and we

discuss different -- people come in with different models of the economy. there's not one right model. and we discuss it and we reach a consensus opinion about the best policies. >> if i asked you, do you think the federal reserve is behind the curve in policy s how would you respond? >> you know i voted in favor at the last meeting. i'm not thinking we're behind the curve. >> so you think there's still time for the fed to exit and to get policy right and remove stimulus over time? >> the fed is going to react, as janet yellen says, and the statement has indicated we're going to react to developments in the economy. that means we're going to be looking at how the economy data comes in, the economic information, the input we get from our business contacts at the regional feds. we all bring in that into the meeting. then we have to look at how that data informs our outlook. is the data going to change our outlook or not? is it not significant enough?

and we have to think about how close we are to our goals. it's basically looking at sort of how the economy is evolving, how our outlook is changing, and our confidence about the outlook is also important. >> so let me get you on the record with some of the major points here about where you stand on policy. when do you think is the appropriate time right now for the federal reserve to raise interest rates? >> when the economy is closer to its goal. >> do you have a time in mind? the market is at mid-2015. is that the right gauge? >> my forecast is the economy is going to grow around 3% over the next couple years. so the unemployment rate is going to come down. i was at 5.5 by the end of next year. as you said, maybe we'll get there sooner than that. i believe that inflation is going to pick back up gradually to the 2% goal. i see the economy improving, and as it improves, we're going to need to calibrate our policy to that. but 2016, sometime during there, is the appropriate time. >> can you be more precise?

>> i'm not going to be more precise. i think i want to look and see how the economy evolves. >> energy prices are plummeting. the dollar is much stronger now than it was before. how much concern do you have about deflation in the economy? >> okay. so i do not think we're in a deflationary environment. although, the low oil prices are going to keep pce inflation down in the near term. >> consumer inflation. >> exactly. but inflation expectations by the survey measures have been very stable. that's an important determinate of inflation. we're not in an environment where people are delaying spending because they see prices falling and therefore they're going to delay spending and that's like the bad dynamic. >> i'm out of time. i really have one more question. there's a huge divergence between where the market prices the federal reserve and where the fed is in the dots. is that a problem? does the fed have to lean against markets to raise those expectations, or do the

expectations of the fed have to come down? >> i think the fed wants to be as clear as it can about -- in its communications about where we see the outlook for the economy and therefore where we see appropriate policy. the market is going to react to th that, modal things, distribution. they are putting weight on low trajectories. that will feed onto those market expectations. >> how much better are the cleveland browns and cincinnati bengals? >> they are both in my district so i'm agnostic. >> should they trade johnny manziel, that's my question? >> i don't think she has an opinion on that. >> she's an owl. she is wise. >> the data will dictate, joe. >> all right. all right. these fed people, i thought there was more transparency. anyway, up next, jim cramer. thanks for staying. we didn't have an ear piece --

we'll have jim with what investors should be watching when the bill rings on wall street. we were celebrating 25 years. i've only been here 24. i missed it by that much. >> you got the kiss, both of you. >> i did. i got a kiss with sandy weill. comments on the future of banking are next.

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óóñt 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. jim cramer sitting down with sandy weill last night's cnbc 25th gala. he's continued to keep his finger on the pulse of banking. shared his thoughts on the industry and most young people graduating from college are not going to banking any more. >> we are not attracting the people. it's not a fun place to be. you can't have compensation that you can let the free market decide. i think something's got to happen about it. our banking system really helped build the emerging markets.

it created economies around the world and markets around the world that allowed over a billion young people to go from poverty to middle class. >> the man is here himself, the man asking weill those questions last night, jim cramer joins us now. talking about this thing last night. did you hear that number cnbc president mark hoffman gave when it started there were 12 million houses and we're 800 million now globally. >> yeah. i felt mark, his speech reminded me -- thank you for your kind comments. remind me where we come from since '89. we are such a more sophisticated world, not country, but what we've done is being the spokesperson for the changes that are remarkable, including

the ones sandy talked about. this is the kind of -- we had a high water mark of banking. it's just all been down. for the first part of the 25 years, business was unimpeded. the second part has been about how business is impeded. we are trying to chronicle both. >> it's amazing, jim. i made the point, "mad money" in its 10th year? >> will be 10. >> you've been -- when were you first on "squawk box?" >> more than 20 years. >> like 22, 23. >> yeah. you chronicle it great then, you're doing it great now. everything had to morph. those days was all ipos. >> thank you. you get a christmas tree every year. we talked about it many times on the air. you see what we have to deal with? thank you, jim. we'll see you in a couple of minutes. up next, it says here the shih

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36,000 farmers protesting against european new recommendations. throwing manure and rotting vegetables. make sure you join us on money. "squawk on the street" begins right now. good friday morning. welcome to "squawk on the street." i'm carl quintanilla, jim cramer and david faber. nine straight months of 200 plus. futures are taking it in stride. ten-year yield got close to 24 today but did settle back. wage growth up a paltry