>> we know the fed can't help the economy. it's at 2%. they tried for nine years. >> they have been helping the economy. >> they helped asset prices. all right. any way -- >> the debate continues. >> thank for your time. join us tomorrow. "squawk on the street" starts now. good monday morning. welcome to "squawk on the street," i'm carl quintanilla along with jim cramer carl faber. the bulls trying to reclaim some of what was lost on friday. the worst day of the month so far. as you can see, the ten-year yield bouncing just bit. oil up a dollar after falling 5% on friday. comments from st. louis fed president james bullard arguing for a rate hike and going head to head with cramer.

>> apple hacked in china. this time the app store. apple says it is working to address that problem. >> and as alibaba marks one year as a public company, the final lock up on share selling expires. will the stock see more pressure today? stocks poised to open sharply higher, looking to recoup losses from friday's selloff which did include a 290-point drop on the dow. there continues to be buzz over the fed's decision to stay pat on interest rates. earlier this morning, st. louis fed president jim bullard who didn't have a vote at last week's meeting said he would have dissented, then he said this -- >> i have a message for your friend cramer, the fed cannot permanently raise stock prices. he's one of the great people at looking at businesses, how good is this business, what's the

profitability of the business, what's this thing worth. and, you know to have him cheerleading for low rates 24 hours a day is, i think, unsavory. >> also said a number of other things, guys. larry somers should know better there will remain accommodation after a hike. you had a bit on squawk a few minutes ago. >> other than the unsavory comment, typically i like to have combat that doesn't have attacks. mr. bullard came back with a softer approach as i extended an olive branch to chemical warfare, which i'm typically against because of the geneva convention. i said on friday one day we should tighten. i think china is on tend tender hooks. europe is not on firm footing. i lived through 1987, when germany was fooling around with

rates. mr. james baker said he wasn't going to let them jerk us around that weekend was the beginning of the crash in '87, '97/'98 we lived through that we imported a slowdown. 1994 we had the peso crisis. i wish we were america first, an island. unfortunately we haven't been. i'm taking janet yellen's position which is also unsavory, i guess. >> i guess. you're very kind. >> i'm -- just like colonel kurtz. >> he did -- he did bless your ability to analyze companies. >> that's good. he said i have friends. i'm not friendless. >> though i don't like the way he said friends. >> as a real friend, i didn't appreciate that. as often is the case in political discourse, he set up a false argument because you

haven't been saying what exactly he said you've been saying, that said, here we are. >> am i cheerleading for higher prices? i've been negative about the market. i cheer lead the idea that main street needs to be on firm footing. we have housing that's good. lennar reporting else. what else is good? maybe autos. mr. bullard, i like the fact he disagrees. i disagree with the fact he thinks it's sanguine out there. he did clarify the word sanguine. i just don't think it's sanguine out there. what's the real issue here? the real issue is that i think -- if we don't take into account international, we would have been down much more. as it is, we were down. i think china is a black box. i don't like a black box. europe is trying hard to come back. i find our economy took a step down. employment is to our economy as the chinese stock market is to china. they're not as relevant as they used to be.

because the jobs that we're creating are not the kind of jobs that are the kind of jobs that the president would favor or all of us would favor in terms of low pay jobs. not creating the kind of higher pay jobs or wage increases. i'm worried about deflation. reasonable people will disagree provided we take a higher road. >> it's been hard on bullard, he is the justice kennedy of the fed. he's been a swing. a couple years ago he was saying to hike then. he used the word sanguine not long ago. >> equity markets are forward looking, they're trying to assess the trends in the global economy, and we're also trying to assess the trends in the global economy in that sense, we're looking at the same things. i'm not sure i would have exactly the same assessments as the markets are having. i knows there worries about global growth, probably a lot coming from china. i would probably be more

sanguine than the market is today on that dimension. >> with all of that we'll hear from yellen this week. we'll continue to kick this around as we go into the october meeting. >> mr. bullard was sanguine at 16,455 on the dow, then it went to 15,566, the problem is it did that in 48 hours. i think a lot of it had to do with his -- he may think i'm a cheerleader for higher prices. what i am is a person who wants reasonable discourse that doesn't in itself create a bear market. and i think that he said that -- my comments are unsavory. all i said is his comments were, i felt, irresponsible at the time. not that he's an irresponsible man. >> that's true. you did go after him a bit. i'm just trying to remember why -- why -- now i'm starting to -- >> he clearly had a chip on his

shoulders. >> eli manning lives about a mile and a half from my house. will you be knocking on his door? >> i could go after him, but i maintain a high road there, too. i am, in the end, a high roader, like the verrazano narrows brink. i'm not like the holland tunnel. >> and that is an expensive bridge to cross. >> let's see how high i am, versus the brooklyn battery t tunnel. tappan zee. thank you, you am a tappan zee guy. >> mr. bullard has every right to say what he says. i have a right to say what i said. if he got heated this morning, called me unsavory, um always looking to look the other way. i'm a turn the cheek the other way. i'm often confused with ghandi. >> apple ios hit with its first

major attack with a number of chinese apps infected. apple confirms a tool that the developer used was modified by hackers to put bad code into apps on a week where china's top trade official telling u.s. companies ahead of the visit that a lot of these concerns you have are visible. >> i don't want the president to call off the meeting because of hacking. there's a lot of positive news -- a lot of apple surveys about the iphone. this hacking issue, i talked with chuck robbins, the ceo of cis cisco, he talks about even the users of devices and hardware have to be more sensitive. there is still kind a belief that you're safe. one thing david talked to me about when he was worried about his cell phone in china, the presumption that you're safe is what we have to deal with because you're not.

>> you're not. this is an issue we deal with every day. whatever form it comes in. it's also an important issue in the conversations that do take place between president obama and the chinese president. they may be focused in part -- the u.s. continues to push the chinese to stop cyberespionage. at the same time, maybe they will make something on cyberwarfare which is extraordinarily scary when you think about it. the most important parts of the visit will take place in seattle with the business community as opposed to in washington with the president. this is just another example, i think, of the focus that needs to be there on cyberand what it means whether it's on the commercial side or on the national security side. >> i'm always worried about this issue. if you put the sum total of what has been hacked, we can be very

vulnerable. i always worry that we're one step behind the policy of the bad guys. i look at our terrific companies, palo alto, fire eye, i say are they -- are they really a jump ahead or are they playing catch up? even though i like those companies tsh companies, it feels like we're playing catch up. >> the office of personal management had how many peoples identities taken by the chinese? that's another thing g geopolitically. if that begins that introduces a new set of issues. >> don't forget, h & r block came on "mad money" they said when you see identity stolen by other guys, that's often because they want to put in your tax return. they get your tax i.d. and they get your refund. that's been a major focus, stolen refunds. >> finally speaking of china,

alibaba, lock up period on 63% of its shares expired on saturday. that allows the company's largest shareholders to start selling their stock starting today this as alibaba enters its second year as a public company. one of those key shareholders is yahoo! which owns roughly 15% of the outstanding shares. it did have a plan to put those shares into a new company to be spun off to its existing shareholders. it is unclear where that stands right now. initially my reporting was they were going to move ahead with it. then there was more jawboning from the irs that may have given them more pause. i don't have any great i sight into this point on what yahoo! will decide other than it needs to make a decision fairly soon whether it wants to move ahead or perhaps pursue a different way to go about spending things which could golf spinning core business in yahoo! japan and leaving alibaba stake on its own. >> anything that would bring out any value, which demonstrates

there has to be, i think, a core worth. i know a lot of people are down on yahoo! as a business away from these holdings. even if you're down on yahoo! to think there's no fundabilitial worth to another company would be facetious. i remain -- i think this private letter ruling what happened they let you think could happen, they spoke for the irs. those of us who have dealt with the irs knows that the irs doesn't like to be spoken for. >> on alibaba itself, that's a lot of stock. it's sitting there. i know joe sy, jack ma said we won't be sellers, but there could be others. >> this comes back to how china is doing. i'm getting more positive on the consumer there, only because a lot of american companies said don't extrapolate the stock market. the stock market, which we may all think is completely rigged,

has held up better than ours over the last six weeks. >> take people in for questioning if they short sell -- sold short or done anything it can send a message. >> well, yeah. it does concentrate the mind -- maj yin those discussions between the party and the short sellers. i don't think it's hey, it's pretty overvalued. it's more like, okay. okay. i'm a buyer. >> the exchange of ideas may not be as high minded as the one you and bullard had. when we come back, lennar one of the big winners. and jamie dimon has a message for congress. take another look at futures. trying to get back some of what was lost on friday. the worst day since september 1st. more "squawk on the street" from post nine in just a minute. to folks out there whose diabetic nerve pain... shoots and burns its way into your day,

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jamie dimon speaking out on washington yesterday on "meet the press." he warned congress not to shut down government to push ideological agendas. >> i think people -- i tell

them, you guys compromise with your family, with your friends, where you eat dinner. democracy is a compromise. anyone who says my way or the highway on one issue is not thinking about the united states. so i wish people would overcome that stuff. a government shutdown is just bad management. >> all that said, politico said a 75% chance we will get one in some storm. >> the history is you get a downturn in stocks when you have this. this coupled with what's happening in europe would be a terrible thing. it's something that i think the fed was conscious of when they made their decision. not to belabor the situation with mr. bullard, but i was laughed at by the fed in 2007 when they said -- i said they knew nothing. i hate to be laughed at again. this is the kind of thing, coupled with europe and, you know, china bad, that would make

it so we would be down another 5% to 10%. i'm not cheerleading stocks. i haven't even like the stocks. >> you haven't. you've been neutral lately. >> i like certain stocks, but -- >> so do a lot of people. if you're running a fund right now, a lot of people say it's a stock picker's market. >> you go over stocks, they're in a bear market. i looked at them this weekend, i felt like i was in jelly stone national park. >> a lot of names this week are names you have gravitated towards. general mills. nike. >> general mills, you go to whole foods, will you see aisle after aisle of what is general mills, but you don't know it's general mills. it's annie's. they're blowing annie's out. general mills was late, now he's well ahead of that food group in terms of natural and organic. the dividend is terrific. general mills is the company i want to be in. i know it's boring.

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pet petrobras, this isn't a high yield segment that the u.s. talks about. if you don't think about petrobras, if you think about the u.s. while some are on the fed, you miss a larger picture, like you might miss volkswagen. >> we get to volkswagen. unbelievable story. i think you're making a great point here. 100 to 76. we're not talking about a little bit of debt. here talking about one of the biggest debtors out there in petrob petrobras. don't forget about the stock, but also remember the bond mark and what is going on with brazil, the economy overall. >> i remember russia. i didn't think russia could have impact. next thing you know, i was on tv

talking about russia. i felt very ill-equipped. i don't want to be ill equipped this time when we talk about petrobras. this is the number one problem in the world right now because it has so much debt. brazil, the eighth largest economy. people are not talking about it. i think it's falling apart. you mentioned volkswagen. an incredible story here. they installed software in their diesel cars, four cylinders, pasatt, so they could fool regulators when they went for emissions tests. otherwise they were emitting 40% more than they should have been. >> again, largest vehicle maker in the world. this is owned by everybody. this is owned without a doubt, these are the adrs -- that's a stunning deline.

>> what were they fined per car. >> according to the coverage today, $18 billion at the total max. we have no idea whether the epa would venture there. but it's certainly serious. >> this one of those situations where the justice department might be involved? >> your guess is as good as mine. >> can they ban volkswagen? >> they have stopped manufacturing those particular automobiles in the u.s. >> when i heard this initially, no. that's some sort of flash crash in germany. no. this is a huge company. if what they say played out -- i know they pretty much admitted it. i don't know how you couldn't think about banning the economy. at least put it on the agenda. you can't lose this company. this is a maimer part of europe. >> we'll have more coverage of this story as we should, given that incredible decline. not to mention the news itself.

let's put something in there that only kicks in when you put on the emissions meter. thought it was genius, in the sense of evil genius. >> okay. we have more "squawk on the street." join us when we have the opening bell. it's more than the cloud.

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. you are watching cnbc's "squawk on the street" live from the financial capital of the world. busy week ahead. a lot of visitors, chinese president xi coming to the u.s. to talk to business leaders and the president. the pope making his way to washington, then new york and philly. traffic, as we know, will be snarled in those cities. and some macro data. existing homes today, durables, final gdp on friday. >> i like this number from lennar in terms of homes. homes -- those are the backbone of the recovery. lennar made you feel that will continue with some good order

growth. a nice tone about how there's pent up demand. i also want to say that if they had raised rates, i think that the tone of that call would be far different. the need to focus on rates and main street, not stocks, is important. you have these industries that you don't want to roll over. >> lennar, delivery up 16, new orders up 10. stock is double housing stocks for the year. >> stewart miller runs a good shop. there was a downgrade for horton today. lennar is -- took advantage of the downturn. they bought a lot of land and now are bringing a lot of projects together. toll is doing better, i think, than people realize. not keeping up with lennar, but they industry deserves a breather. they were hit hard. they have done a good job. >> doesn't stop deutsche from

cutti inting d.r. horton today.y at the big board this morning, it's diamond hill capital. over at the nasdaq, the ovarian cancer foundation doing the honors. we have upgrades at goldman, paypal, lulu. >> lulu is interesting because that last quarter was terrible. yet the cohort is good. i saw praises for nike, lulu was the outlyer, this is morgan stanley saying this is a good business, but they did execute poorly. >> energy in the news this morning. wti up about 2.5%. worth mentioning a couple names we have been mentioning.

freeport, of course, sold more stock on friday. carl icahn increasing his position in that company by another 12 million shares. don't know if you saw weatherford this morning selling $1 billion. that may be to get them ready for vedivestitures taking place. >> we see these deals, freeport has to hold the -- freeport, there's a lot of stock flying out there. not unlike a company we don't talk nearly enough about, glenn corp, which did a $2.5 billion deal last week, and it's not holding. >> not holding. >> no. freeport went up a lot when they cup their cap x. they have done a lot of offers. icahn in there, but it's back down to levels it inhabited prior to the run up on the big cap x cut. almost 9% of the company. >> it's not as good i found on energy as on other companies.

>> he's patient. >> patient is right. >> you have to be patient. he doesn't have any investors. he doesn't have anything calling his capital. he is sit there and wait. >> production will decline about 500,000 barrels. the iran decision in congress, you would have thought that would get hit harder. it hasn't. i feel like it's in no man's land. it's a bear market. >> we have sub $2 a gallon averages in five states. and the expectation is that will continue. >> hotels have been so weak. sometimes i wonder if they're not secularly challenged because of air b & b. when you go overseas -- people are savvy. they use priceline. they use expiecedya. they use air b & b. i think the hotel industry has benefited, there's been few hotels built during this period, but the disappointments in

hotels, like la quinta. >> yeah. >> do you have a line on la quinta? >> not really. simon has been following it. did we see that the stock is down 9% on weatherford? as we look at la quinta. $1 billion combined equity debt offering, likely to help it divest it from the potential merger of halliburton and baker hughes. investors don't like it. though there's never a bad time to sell equity. if you can do it, just do it. >> here's one where the window doesn't close. they take off. there were a lot of people who felt transocean had bottomed, sea drill had bottomed. this is a company that's somewhat involved with those. i'm worried about weatherford, if only because i'm worried that the industry has gotten

technological. the amount of money needed to throw at it is much less than it was. you have halliburton out there doing that front now, pay later. ensco has been a disaster. it's a bear market for these. we're not used to calling things bear markets. we kind of forgot. it's been six years since we had a serious bear market. but there's a bear market. friday, by the way, was really horrendous. that kind of day happens, and people just try to forget about it. monday, i can't. it's engrained. friday was really bad. >> we know historically over the last 25 years weeks following options expirations in september are the worst of september which is the worst month of the year. >> that number you reiterated

last week, i mentioned twice on "mad money." typically i don't like comments what's going on, year over year, the calendar, how do you disagree with that idea? you have yom kippur this week, a light volume day. anything could happen on a light volume day. the whole market is based on light volume. >> barrons had a couple of aggressive story. the alibaba story of a week ago this time it's gopro arguing it could go to 25. looking at the latest product introductions calling them underwhelming. >> apparently, y the new hero is underwhelming. on the conference call, your breath was taken away. they're saying, listen, gopro, it's terrific. there's a lot of competitors. with a lot of competitors you say, wow, gopro's margins have to go down. the opposite of fitbit. a very good story. jay sparkman, i interviewed him

last week. fitbit has a lot of momentum because they're under the price of apple. apple is a twice that has a health component. fitbit is a health company based on a device. >> it's not a merger monday, but we did get a deal announced sunday that's playing out now. dialogue semiconductor acquiring for $4.6 million of cash and stock, it was supposed to add up to $10.42 of atmel share. look at shares of dialogue. there's atmel, that's up nicely. why not closer? that's the reason. that thing is getting crushed. >> wow. >> it's going to be dilutive in

2016. >> they're tricky, they don't say that. we can deduce that. investors are not happy with short-term dilutions. they are talked about $150 million annual cost. atmel is still up, given there was a significant premium, because it is cash and ads, it's not nearly what it was valued at originally. >> originally, i thought it was a good deal for dialog. it is mostly industrial. i thought the combination was good. the outgoing ceo left the door hope in the conference call saying it's a dual track, maybe we'll pick a new ceo or sell sources. it makes sense for both companies. this is the kind of action that's frightening to me, given the fact this was such a good

deal for dialog. this can force other ceos to consider a deal. to say, whoa, i don't know, maybe the market is changing, maybe i won't get rewarded. one time does not make that happen, but if you see that a number of times, it may give others -- we have a lot of chip deals. broad come, intel, this one, it's been a significant year for consolidation. >> there's a million companies in this business. atmel been rumor ford a long time. they had a series of product introductions that are exciting. they have a product cycle that has driven the stock down. this was the right time. i thought this stock might be up. >> dial og.

>> hbo crushing it last night at the emmys. i was almost surprised to see you in today. >> i did tweet that no one is allowed to talk to me. don't tweet me about the eagles. i'm a fan, which makes it difficult to criticize, so i won't. i do think -- i won't. i think the netflix, reed hastings last week, very, very accepting of the strength of hbo. very positive on hbo. he likes that kind of, listen, they're doing well. we'll beat them. we can beat -- very to to beat them content, if they beat us technology. this was a content tour de force. i don't know if anybody is watching "narcos" next big one for netflix. amazing brazil actor. >> i think anderson cooper said he binged on seven episodes at once.

you did speak to reed hastings last week. >> is it happening right now? people cut the court and are binging. >> very few people cut the cord, what's happening now in sports networks, we'll go to on-demand. you will be able to watch any game, on any device. think of all the current linear networks. they'll go to on demand also, just like hbo has. >> that's very threatening if you're a traditional company. i look at a cbs, that stock is in a terrible bear market. viacom, terrible bear market. really struggling. >> it's the worse. viacom is the most disadvantaged n part by netflix. its kids programming and so many other things. it trades at six or seven times earnings, viacom. at some point these things become cheap. as for cvs, moonves will tell you he's getting on every

bundle. every over the top offering includes cbs. he's saying we'll be okay. >> netflix is saying over and over again, tv is internet. if it's internet that does make the -- explains the stocks. hastings was a delight, i felt, in terms of his long-term view about how content does sell. they have china next year. he said something about how he will be everywhere next year. he's quite a confident man based on, i think, very strong number numbers. >> only two components in the red, let's get to pisani on the floor. good morning, bob. >> happy monday. 4/1, advancing to declining stocks, very good start to the week after a poor close on friday. dramatically a poor close on friday. important thing is the futures. the futures have been in positive territory since the european open. that helped us get some

momentum. look at the sectors advancing. global growth sectors, finals doing better than expected. energy, crude up almost 3%. that's helping. energy and tech and health care. fairly broad rally that we got here. if you look over at europe, europe generally doing okay. the important thing to note is spain is down. they're holding regional elections on sunday. the c pro-independent parties may win over in catalonia. the central government said if they vote for independence, they may get kicked out of the euro. so secessionist things are being

kicked around. germany is on the upside. france is on the upside. there have been five greek elections since 2007. generally europe performs well. the hope is things will be better. the five times it's happened, the german dax has been up all five times. the average again almost 2%, that's in the five days after the election. that's happening now with germany to the upside. you guys mentioned lennar, but it's important to note that trends are in the right direction. deliveries are sort of revenues for these companies. that was above expectations. the average price above 5%. that's good. orders up 10%. i think that was a bit of a disappointment. i saw some notes that said 12%, another said 13%. if you want one blemish, i think orders could have been stronger.

if you look at look at lennar, the bottom line, what's happening with these companies is they're closing more homes at a higher average selling price. selling more homes, higher average price, those two things are ultimately what you really want. as you can see, the trend has been up despite concerns about potential higher rates. lennar is up 15% -- now 17% on the year. home builders by in large have been outstanding performers. the average up 7, 8, 9, 10%. you guys were mentioning that deutsche bank downgraded d.r. horton. d.r. horton has been the leader this year in terms of price appreciation. that's up 25%. i wasn't at all surprised to see somebody come out, deutsche bank came out and downgraded them on a relative valuation basis. makes sense. trading more forward earnings than everybody else at this point. finally, something very interesting.

i spent a lot of time talking about etfs. goldman sachs is getting into the etf business, they have active beta, large cap equity etf. they weight stocks, larm cap stocks by four metrics, one is value, the second is momentum, that means prices are going up, three is sustained profitability and finally low volatility, so they're avoiding extreme price swings. what got my attention, the cost. not basis points. that is cheap. nine basis points is what the spyder is. spy, that's indexed to the s&p 500. i think a lot of people will look at this and say, huh, you know what? active management hasn't been that successful with equity etfs, however nine basis points?

gee, i can get an algorithm that goldman is running for nine basis points. i think that has some interest for some people here who will be successful? i have no idea. but that price point will get the attention of a lot of potential investors. carl, back to you. dow is up 135 points. >> thank you very much, bob. let's get to the bond pits and check in with rick santelli. >> the week after the fed meeting we are alert to any type of issues affecting some movement that was precipitated by the statement, and lack of normalization. i think the area to start out with first is the area most dramatically affected, that still has residual effects. that's the dollar index. two-day chart gives us a nice reference into friday, the day after, how the market responded and how it built. the dollar index is building nicely on a bit of a rebound.

looking at the yield curve, the shorter maturities have had a different take. so if we look at twos and recognize they're up two basis points they have surmounted friday's yield. as you move down the curve, you will see the effects kalter. t they are about a push. tens are up 5 on the day, but you can clearly see it, they have not made it to friday's high yields. the 30 is the most dramatic demonstrating that against friday's range. why is it important? because conventional wisdom would dictate that the buying would continue, the fed is not raising rates, there's a question of whether october, december, or the first part of 2016 will qualify for the constantly moving targets as to what qualifies with regard to the economy and all the s

sub parts of the economy to get a normalization by the fed. the last chart year to date is the dax. i picked the dax for a couple reasons. keep in mind, it settled last year around 988 9805. it's hugging and looking to break through significant bottoms. we want to pay attention to this, mario draghi is on the qe path. what's happening with the chinese economy and what the ripple effects will be in the u.s. we'll talk to the president of china beige book international and cramer's stock trading is after the break.

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time for cramer and stop trading. >> the strongest area of the economy in terms of software that i talked about at dream force is cybersecurity. cyb cyb cyberark was upgraded. there are bear markets

everywhere. there's still lots of opportunity, but be aware this stock, which is, i think, one of the best cybersecurity plays has been horrendous downward. horrendous. >> have you recommended your take on gold? >> there's pressure to have some gold. i always felt that people should have some gold. other people have been oblivious to gold, dr. bristow is probably the foremost miner in the world today. many mining companies are challenged. the supply of gold could drop. can't produce it, not at these prices. >> allergen on the list, too. >> allergen had a meeting, we will have brent on to talk about the idea of the aspirational numbers ahead, possibly the teva deal in selling, i think,

generics at the high. they have a great multiple for generics. the deal won't close for a while. no shortage of rumors of allergen doing a deal one day with pfizer. >> he reminds me of a classic general manager in football, constantly looking, making moves. that's the only vailed reference to the disaster at the linc. >> we'll see you tonight. when we come back, existing home sales at the top of the hour. excellent looking below the surface, researching a hunch... and making a decision you are type e*. time for a change of menu. research and invest from any website. with e*trade's browser trading.

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you're going to change the world. good monday morning. welcome back to "squawk on the street." i'm carl quintanilla along wisa eisen, simon hobbs. the worst day since september 1st on friday when we were down 290. dow trying to reclaim about 100 points. crude oil which was down 5% on oil, the worst day also since september 1st has managed to

climb back above 45.50. we have breaking news on existing home sales. it will be a busy week for the macro. new homes on thursday along with durables, university of michigan and friday a big day with final gdp in addition to the fed speak. yellen speaking on thursday. let's get to diana with some of those housing numbers. good morning. >> good morning. existing home sales down 4.8% to a seasonably adjusted annual rate of 5.31 million units. that's a big miss. the street was looking for 5.53 or down about 1%. down 4.8% in august, from a downwardly revised july figure. sales up 6.2% though year over year. the biggest drop came in the south at 6.6% and in the west, down 7.8%. the south and west are where prices jumped the most.

median home price, $228,700, that's up 4.7% year over year. inventories, 2.29 million homes for sale, that's down 1.7% year over year, a 5.2 month supply lower than a year ago. the realtor saying there has been no meaningful improvement in that inventory supply. that's been hurting sales so much and keeping price gains elevated. we did see days on market at 47. the first time home buyer at 32% of buyers in august, that's above the 30% line, which is higher than recently, still way off the normal of about 40%. those first time home buyers still not coming back into the market. distressed sales at 7%. that's unchanged. still realtor saying they expect distressed sales to normalize by the end of next year. back to you guys. >> thank you very much. stocks are in the green as investors await some clarity

from fed speakers after last week's selloff. for more, thomas custart joins us. john this seems like the calm after the storm what do investors do now? >> very watch is to be considered is what we have here is pretty much what is to be expected. the fed didn't come through on thursday. the market expressed its di disappointment on friday. i think we want to see the fed stepping up to the plate, begin raising rates modestly but it will confirm the fact that the u.s. economic expansion, though modest, is intact and is

sustainabl sustainable. >> thomas, john may want that to happen, but that's not what the fed is delivering here after what would appear to be a heated debate, if you look at the comments over the weekend. you just returned from asia, how concerned are people in asia? >> people are quite worried about china and about the economy in asia. cloebl trade has slowed down quite a lot. on china, there's a lot of fear about the economy. though if you look at the data, the data is still quite good. so, in our view, we think a lot of these fears are probably overdone and we think the data will improve, and we'll see more signs of that, we think, in the data, with more stabilization. >> what shocked people is that janet yellen is putting china front and center, almost like a third reaction function, a third target. you and i were talking before you came on, you were suggesting if they don't move in december

they may not be able to move at all. why do you say that? >> there's a window now. any have to go now, now being between now and december. in 2016 the picture will be different. the u.s. business cycle may be more fragile by then. we are on the downward phase of the u.s. business cycle. the peak may be behind us. we will see weaker data next year, and we think inflation is not likely to move up. and don't forget the presidential elections. so the political noise will probably prevent the fed from moving next year. they have to go now, even if december. >> even if it's relatively liquid. >> one area of the economy that was holding us up was housing. we just got an ugly existing home sales number, down 5% is that something to worry about? >> in the near-term, i think housing will be doing well. i'm more worried about 2016. i think housing is getting a bit

expensive. that's a problem for first time buyers and for construction. so actually i think that's more a worry for 2016. i think housing could slow down next year. >> the other question is, we'll turn this to you, john, housing has been a bright spot in the market, home improvement stocks, home depot one of the best performers in the dow. is that stilt the case in. >> we think so. if anything, housing data tends to be volatile. you have to figure the situation with inventories, in addition to that, the consumer naturally expressed a bit of nervousness over china, perspective slowing on a global basis. but overall those housing numbers have been fairly consistent. the builders are telling us that things are looking good. let's say for the sake of argument that you don't get what you want. let's say the fed continues to not raise interest rates because it's concerned about china bullard was on cnbc earlier today, he said i want to raise rates now so we can have a

longer expansion. let's assume that doesn't happen and you go into a position where potentially you overheat. bullard was suggesting that unemployment could come down to 4.5% which is why he wants to raise rates if we enter that scenario, what part -- just for the sake of argument what part of the stock market would work well for, say, a year? >> simon, that would look like we would be looking for defensives. we don't see that picture. you wanted to be in cyclicals. we think this is part of a mid cycle slowdown. those mid cycle slowdowns have been with us for quite awhile, since the recovery process began. every so often we run into it. the problem is if we extrapolate negatively, we miss the next upside not only in the markets but in the economy. >> john, you have a year-end target at the s&p of 2311. we're at 1970. how much conviction do you have

that we can make your target? >> sara, this bull market has proven it's capable of great surges to the upside. but he would have to say that right now it looks like that target is a bit challenged. but we're not blinking yet. we have seen markets in the fall to the end of the year move significantly higher during this recovery process on a global basis. with the expansion intact in the u.s., the fed just needs to got off the time. we don't think it was just about china. we think there was considerations in terms of the strength of the dollar and impact on multinationals. >> john, if you're right, if the market rallies strongly to year end, let's hope it does, where do you see the greatest upside risk? jp morgan casanova suggesting it would be energy stocks. >> right now, from a market strategy perspective, we are

underweight energy. it's the technology genie that's out of the bottle. there's more oil all around the world than we've had in my recollection. i've been in this business 32 years. we just have to consider that oil prices will remain threatened to moving lower. but we don't think much lower than around 35. >> all right. good to talk to you both. thank you for your time. >> volkswagen halting american sales of some cars after allegedly cheating on u.s. emissions tests. this is an incredible story. phil lebeau live in chicago with details. >> volkswagen is down extensively in european trading. when people look at volkswagen today two thing also stand out. not only the losses in terms of shares of volkswagen but the stop sale of vehicles in the united states. that was issued over the weekend from volkswagen. essentially it comes down to

this, 2015 clean diesel models, that's about a quarter of what volkswagen sells, the passat, the gulf, the jetta, the beetle and some audi a3 models not being sold. also over the weekend, the ceo of volkswagen issued an apoll jish. martin winterkorn saying i am deeply sorry that we have broken the trust of our customers and public. we were talking to dr. winterkorn earlier this year and at that time he was hopeful of volkswagen dramatically increasing sales in the united states. that was one of the primary initiatives of volkswagen. it is currently number one in global sales. here's what dr. winterkorn told us in march about his prospects or his belief in growing its business in the u.s. >> translator: yes. we did procrastinate and wait too long. of koucourse near small end we

to close a factory so we were reticent, now we're going into the offensive in the states. >> that was back in march going on the offensive. they are clearly on the defensive now since they have to suspend sales of certain models in the u.s. they're already down in terms of sales this year, down 2.8%. look at shares of volkswagen, hard to tell, but on the farp right su see shares down more than 20% today. the bottom line is this, it remains to be seen how much volkswagen will be fined by the epa. potentially it could be up to $18 billion. realistically it will be far lower. but this is not something where they'll write a check and it will just go away. a lot of volkswagen enthusiasts and diesel enthusiasts are saying why i did buy this consider or consider buying this car? >> phil, if you believe what epa is alleging here, and why not since they apologized for it,

the cynicism of what they did is extraordinary, a sophisticated algorithm that depicts when the car is going under emissions testing and turns off emissions controls for the duration of the test. that's an extraordinary thing for any major company to be engaged in. surely it raises bigger questions as to whether others within the industry, if they're doing it are similarly doing it and are covering it up. >> most people in the industry do not believe this is widespread as far as a practice. we should point out that the epa says volkswagen has admitted to doing this. while we don't know what recall or remedy will be in terms of these vehicles, you have to wonder how many people will say i'm not happy, but it's not like i have a life threatening thing going on with my car, i'll live

with it. you have to wonder how many of those customers feel duped now. >> it's a big reason the dax is underperforming. phil, thank you for that. when we come back, oil rebounding slightly over the last month but still down more than 20% since july. we'll talk to citi's ed morris warning bankruptcies could be ahead for some producers. cialis for daily use, is the only daily tablet approved to treat erectile dysfunction so you can be ready anytime the moment is right. plus cialis treats the frustrating urinary symptoms of bph, like needing to go frequently, day or night. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach, delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away.

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>> turning into an eventful morning, shares of pandora halted now. last was 2098 on no specific head lines that we can find. you might take note that pandora is down about 21% over the past 52 weeks. once we get some headlines or fresh indications, we'll get that to you. checking in on the energy sector. crude oil gaining more than 2.5%, rebounding from friday's biggest daily drop in three weeks. crude has halved in value over the last year amid soaring global production and slowing global demand. drillers cutting the number of rigs in operation for three straight weeks. joining us this morning is citi's ed morris. good morning. >> good morning to you. >> we're always wary of big generational calls, but you say it's highly unlikely we will see

hundred dollar oil again. why? >> that's because there's so much more oil that can be produced at lower prices, and the world has kind of a big abundance of these new unconventional oils, particularly shale oil. opec companies have a need to produce more. they'll produce more. saying not ever again is a hard thing to do, but certainly not likely in the next 10, 20 years. >> what would get us back in that neighborhood? something short of a massive alteration in opec strategy? something else? >> well, we'd have to see a reversal of trends in global gdp growth and more importantly in global petroleum product demand growth. we've seen the relationship between growth widening considerably for every 1% increase in gdp, there's less than a a hahalf percent growth.

the demand side is a big side of the equation. on the supply side, undoubtedly companies can find oil at lower prices. we're in a period of significant overwhelming cost deflation what it used to take to produce oil in deep water is now 15% to 20% lower than what it used lower. what it used to take to produce shale oil is 50% lower. >> ed, i'm curious, away from supply and demand how the federal reserve impacts all of this and the fact that we had a strong dollar over the last year or so, lately that's come off. a lot of people attributing that to the slide in oil prices. now that the fed has indicated some hold, we don't know what will happen next what does that mean for the commodity price? >> on the oil side, cheap money, low interest rate money has been

responsible for two things. one longer term and the other shorter term. longer term there's significantly more money, more capital into the oil and gas sector than was probably warranted. we estimate as much as 30% of u.s. production growth would not have been there had there been more financial discipline in the market. on the other hand, on a short-term basis we get moves like the move today. we get a 4% move in oil, a 3% or 4% or 5% move in gasoline. that's cheap money going in or coming out of the market based on limited news. we have headline news out of last friday's oil recount, but not much has changed the last month. >> we can move, regardless of what mufundamentals are, we can move 25% in three sessions, we

did that three weeks ago based on some story what studies might or might not do down the line. if, for example, in addition to the dollar story and what the fed is doing, you were to get a view that perhaps china wasn't as bad as a lot of us had thought, and that would be hotly debated through the fourth quarter, couldn't you see the price of oil move substantially higher? >> i agree with you entirely. about 70% of price movement is probably explained by financial flows rather than by market fundamentals. market fundamentals eventually catch up. they bite those who are sometimes long, surprisingly and significantly. we saw that with the downturn in the third quarter. facts are facts. you get to the point where you can't shove too much inventory anywhere. you have to get a lower price. we're seeing the brent forward curve widening because there's so much light swede crude in the atlantic basin and the global

oil markets. the market has to shift to accommodate that. it shifts to allow floating storage to be economic. we see iraq producing at record levels. noneconomic factors are at work. we see iran coming back into the market. as the oil minister of iran says, we'll produce 1 million barrels a day regardless of the price. so you have really fundamental factors that will inevitably weigh on the market, despite the financial flows. >> ed, thanks to you. it will be an interesting several years ahead. ed morse joining us. some remarkable price action in pandora. was resumed and then immediately halted for volatility again. the last indication, 20.30 to 22.30. the last 21.30. that's a live shot of the post over at post five at the nyse. you can imagine what people are speculating about right now. there are literally no headlines that we can see that would

justify this sudden move. any details, we'll get them to you. >> it's halted again? >> yes. >> when we come back, netflix and amazon walking away winners at last night's emmys. added to your brushing routine... listerine(r) kills up to 99.9% of germs... and helps reverse early gum disease in just two weeks. listerine(r). power to your mouth™! also try listerine(r) floss... formerly reach(r) floss.

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take another look at the post where pandora is traded at the nyse. reopened for a second time after two halts. 21.95 the latest price. it's a 10% plus gain. we'll keep an eye on why this is happening. started about ten minutes past the hour. also watching shares of amazon joining netflix as the only other online streaming service to be nominated for the emmys. those companies winning awards for original content. how should investors think about it? let's bring in the internet analyst from rosenblat securities. i know you have a buy and like netflix. in terms of the emmy wins, 4 out of 34 nominations. wasn't exactly a sweep, but the fact they were present has to be a victory for reed hastings, right? >> yeah. it is. it's early in the game. netflix has been investing in

original programming for several years. amazon has well. hbo, obviously "game of thrones" was a big winner. the takeaway for investors is to realize you have to have big hits. the emphases is on big hits. if you're doing average or above average, it's not good enough. in the tv business, traditional, cable, streaming, it's disproportionately revenue. netflix, i keep using one a month, but they need to have a new or returning popular show. they're not quite there yet. "house "house of cards"" and ors the new black everybody is talking about. but they need more. >> the last month or so has been difficult if your a netflix bull. down double digits. is that a buying opportunity or are there concerns out there? one of them is that apple may

enter this space. >> apple was mentioned. we saw their event a couple weeks ago. no big news. i don't think they'll make a big push into original programming. they'll do more licensing. amazon has been talking. there's a lot of talk about them pushing the throttle a bit more on originals. basically more people getting into the business, companies getting into the business of streaming, development has been holding it back. yeah, i think it's a buying opportunity for netflix, especially if you have a one-year horizon, which our price targets are based on. i think it's attractive here. it's not based on valuations. the stock has an insanely high valuation, but i think it's a good buy here. >> on the subject of binge watching, i want to play some sound of reed hastings who talked to jim cramer last week. >> is it happening right now?

we're cutting the cord and we're binging. >> few people have cut the cord but it's very, very small today. it's a worry about the long-term. what's happening now is within sports networks, we'll go to on demand. you will be able to watch any game on any division. all the current linear network also go to on demand as well. >> the bear case, too, the bullish point that helps netflix is that they're burning through cash, profitability is low and it's costing more and more to acquire new subscribers. >> the cost of subscription acquisition is higher. as you get into foreign markets, nobody knows what that acquisition cost will be. i think it will var will vary w you're in brazil, parts of asia, so forth. netflix knows more about what people are watching, when they start, when they stop, if they

paused, did they resume, than any tv network in the traditional world knows. they dial that and use that information to acquire subscrib subscribers. it's a science in that sense for netflix. eventually that will be something that pays off in their subscriber acquisition costs. >> walter, thank you for joining us. i -- martin, excuse me. >> thank you. straight ahead, our next guest says that china's pessimism is not based on fact. he's the president of the china beige book international. he will join us live after this break.

good morning. pope francis spending his second full day in cuba hosting a huge outdoor mass in havana. hundreds of thousands are expected to attend. he's also meeting with bishops in santiago. tomorrow the pope comes to washington. volkswagen halting the sale of some 2015 diesel cars in the u.s. last week federal regulators revealed they found software in the cars designed to give false emissions data. the automaker could face fines of up to $18 billion. a second chance for greek's prime minister. his left wing party won about 35% of the vote. last month tsippras resigned.

and last night, viola davis became the first african-american woman to win best lead actress in a drama at the emmys. thank you very much it would appear the federal open market committee was deeply divided on its decision last week. james bullard speaking out on "squawk box" this morning for his argument for a rate hike. steve liesman has more. good morning. >> good morning. the st. louis fed president making a strong and impassioned argument for rate hike on squawk. bullard said he would have dissented from the consensus last week. he got visibly inpatient with those saying the fed should stay at zero and not hike. >> we are going to have a very easy monetary policy over the

next three years no matter what we do. so don't come to me and say there's not enough accommodation in the system. there is enough accommodation in the system. we are addressing all the things that we need to address. and i understand there are risks out there. but you have to take a prudent policy and have to inch your way back to normal. >> bullard accused of those advocating that the fed shouldn't hike being too reactive to markets saying they were looking for a war. >> we are about 0.4 away from inflation on our target. 59.1% is right on top of our estimate of the rate of unemployment. we basically vanquished all our foes. the tanks are on the field. the enemy has left the field. we're looking for another war to fight. we shouldn't be doing that. asked why he would tell average

americans higher interest rates are needed, bullard said would have a better chance of avoiding recession. if the fed starts sooner, you could hike rates more gradually and avoid a bubble. as a fed reporter, it doesn't get more emotional than this. he took on jim cramer and larry summers in the same interview. >> i saw that. he was feisty. spirited. unusual for a fed member. yeah. thank you. great interview. those touting china's fragility are either exaggerating current problems or have missed the slowdown of the past year. that's a quote from a report of the china beige book, a look at chinese economy based on more than 2,000 interviews in china. joining us is leland miller, editor of the china beige book. you found some pessimism that everyone in the market has been worried about is overdone. >> that's right. we've been seeing a slowdown for years now. the idea that something magical

happened in june or jewel that upended markets and destroyed the economy from within, it's not reflected in the fact. >> talk about your process. i mentioned the interviews. who are you talking to? which sectors? get more granular for us about what you found. we surveyed the whole economy. 2300 chinese firms, mining, agriculture, finance, we do qualitative interviews, banker surveys. we try to check out what the growth environment is, what the labor market is like in all the different regions and sectors in china. >> what most people are concerned about is not where we are now with china but where we might be in three months. they are battling clear forces. we saw the devaluation, we have seen them matching the dollars

with the yuan. while you may give us a snapshot which is reassuring, other people may be concerned about where we're heading. >> what happened over the summer is not important in and of itself. it's the fear that -- >> the stock market crashed in fairness to the chinese people. >> showed economic mismanagement was very, very bad on that issue. the stock market has had no correlation. it is its own beast. you can be fearful the way they handled that. >> it was clumsy. >> it was clumsy. they realized that. >> the concern is if they handle the stock market like that, they could handle the transitions in the economy which are huge also in a clumsy way. if they do that, they should be pillared for it. the reality is, when you look at the data, what's happening in the real economy, that's not what you're seeing. >> of the high frequency numbers we get, which ones should we pay attention to, which ones should we ignore?

>> our institutional view on this is every data point is theoretically a good data point. look at everything. the reality is certain official data points, like on unemployment and others are throw-away numbers. you want to look at less what the chinese official numbers are telling you. specifically, what message they're sending you. so a what is the chinese government say being future growth? are they scared? are they starting to announce slower growth? will you see announcements of slower growth going forward. >> in general you take the pmi seriously? you take power generation data seriously. >> here's the problem with the pmi. monthly data is full of white noise. you get the wrong message unless you look at a longer time series. the other problem is that manufacturing is the pmi that everybody looks at. manufacturing is not microcosm of the chinese economy. people look at the performance of manufacturing, they think it means china is going up or down. that's not what's happening.

it hasn't happened like that for two years. >> what about the deflationary fears? >> well, deflation is -- the fears are re, they should be there. but people look at the ppi and they see this number that's been in deflation for 40 straight months or something and they think china is one in deflation and it's battering profits at firms. the ppi does not signify broad deflation. and profits are okay. >> it's a very clever business proposition that you got now to go in privately, privately owned, survey what people are doing, to come out with information that the rest of the market arguably feels it's starved of. janet yellen has put china front and center on thursday as we all know as a reason not to raise interest rates in this country. in your view, is they correct to do that? >> i think she's wrong, wrong independent of china but certainly wrong when you look at what's happening across the china. there's not the volatility, there's not the deflationary environment.

they can talk all they want about the dual mandate, they're worried about importing deflation from china. >> why is it wrong to wait and see? >> at what point will you get the answer you're looking for? if they're not going it now? will they see a better mick chore in two months? six months? >> if janet yellen called you up, would you go to her and talk to her? >> absolutely. >> president xi is in the u.s. tomorrow, he will be in seattle talking to tech firms, then to washington and then to new york. what do you think he wants to accomplish on this meeting as it relates to china's projection as an economic superpower. >> he wants to reassure the world that china has not been battered by what happened over the summer. he wants to show there are two great powipowers, the united st and china, and that nothing has changed. >> what do we look for in terms of currency? >> what they have done is not the start of a currency war.

it's a mild depreciation against a strong dollar. >> leland, always good to get your analysis. still ahead, it's asia's answer to amazon. it has an valuation of more than 1 billion dollars. what you need to know about flipkart. it's been shaken, rattled and pummeled. it's innovative enough to brake by itself, park itself and help you steer. it's been in the rain... the cold... and dragged through the mud. introducing the all-new mercedes-benz gle. it's where brains meet brawn.

it matters to the stock markets, so where is oil likely to trade in the weeks and months ahead? find out on "trading nation." it's more than the cloud.

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exchange. >> i would like to welcome ira harris, my favorite guest. let's keep this simple. since the credit crisis, how much more dollar denominated debt is out in the world? >> this gets into, as i read over the weekend, what can janet yellen's fed be so worried about? i went back and looked at the mckenzie study put out last year that since the second quarter of 2007, global debt has increased over this period -- >> dollar denominated. >> dollar denominated by 57 trillion. that's not a problem unless the economy -- the global economy slows down and you're not earning enough to service the debt. and at the bottom -- at the end of the day, that's what janet yellen has to be worried about. >> that's why we ended up in a trident scenario. 77 stable prices, maximum employment, but if you have a world with an ever growing pile of dollars that have to be serviced and rates move up, it's

going to potentially cause issues. my question is how can they get rid of this debt without causing issues? >> only two ways, restructure it away, default on it. which we learned from greece takes forever and not a lot of movement. >> or you can inflate the hell out of the system and -- >> which is what they're all trying to do. >> correct. >> it seems as though formula and processes and policies can't create real growth or real pricing pressure because zero -- i have a friend who is into physics. he says it's like quantum physics. when you get to zero the universe is different. everything behaves differently. >> right. i'm not a physicist, i don't claim to be one. i claim to be an economist nor a physicist nor a mathematicians. yes, at zero we don't know. >> so bullard today was saying a lot of things. my issue with bullard is it doesn't matter -- first of all, this is not china. if you speak to the notion that

the fed has 100%, without a doubt -- no doubt conditioned the market that zero is a positive for equities, okay? when the zero bell rings, buyers in the market salivate. why should he complain? who caused that? >> of course it's the fed. nobody more than him. last october 15th when we were in the middle of a bond -- huge bond rally and the stocks were suffering, he came out that morning and beat his chest about it, we may have do another qe. that stemmed the fall in the stock market. so he's ever bit -- i tell you what, i take great umbrage at this. he comes out and talks about this, you know what? it wouldn't have happened under alan greenspan or bernanke. i find that rather appalling, to tell you the truth. >> we only have ten seconds left. my final question to you, do you think we'll see another round of qe before we see any rate rise? >> yes, i said that on december 24th of 2014 standing right here

with you. i think we will because of this debt overhang. i wasn't sure what was bothering -- she won't say it, but she spooked the market herself by being so dovish on thursday. >> when it comes to international t should be the effects into the other pillars. it shouldn't be a preempttive scenario where that stands alone. am i not correct. >> correct. she set off forces, we saw it on friday, because you have the ecb guys talking about how to lower the euro. >> yra harris, thank you. sara eisen back to you. up next, millennials may be doing majority of online shopping, but they're not the ones spending the most money. i

>> you will follow up and find out? >> the navajos have not reached that issue with me. >> to the chairman, chairman bishop's point earlier, that we needed everybody on the same panel. evidently, you made the assertion that epa helped new mexico shut off the intaits for public water systems. >> i indicated that the

notification. >> that's what i was talking about. >> secretary flynn's comment was that you weren't involved at all in the decision. it was done entirely by new mexico. the whole idea of accountability, your comments, if anybody is negligent or criminal activity at different times, you said any administrative oversights would be dealt with. >> how long would you think that we would be before we would know the outcome of that? how long will that invest dpags take? . >> in october. >> my point to the others that maybe distrust that you will actually follow through on that, does the name robert beale or john beale mean anything to you? >> very much does, sir. >> so he is thrown in jail for three years for bilking the tax

payers out of $1 million m minimum? has any money been received back from him? >> we actually have and we continue to look for that. >> so there were people in the agency who had to sign, leave, travel, salary bonuses, all that sort of stuff, right? >> i'm aware of that, yes. >> has anybody been held.0011. per play. and so there is the opportunity here for pandora to increase market share at a lower cost. hence, investors reacting positively. final decision not for a bit, not until november. >> spin being like a giant juke box in the sky. >> yes, the old days. where we used to spin records. >> by the way, 22% in the last 12 months. >> facebook is the mobile king, make no mistake about it. that's according to a new report on the digital habits of

millennials. 18 to 33. advertisers take note, it's the middle aged shoppers, what we more kindly call generation xeres, that are spending the most online. good morning. >> morning. >> so the middleabled a e ed mi aged are the big spender, but the report is on millennials. >> the 18 to 34-year-old segment has long been the focus. not because of their spending power, it's a little lower than average, but it's believed if you can establish loyalty to your brand early on in somebody's life, you have a better chance of them maintaining that brand loyalty as a person ages. so that's why there is this focus on the younger segment. >> before we work our way through the metrics, let's punch out the fact that facebook still has an astounding performance, despite what some people may say. >> yeah, we are not seeing any

evidence that millennials are reducing their time spent on facebook. somewhere about an hour of their time per day is spent on the facebook app. in total, they spend about 4 hours a day online. they're very heavy digital users and very heavy social users. >> i guess combining what you found here with social and specifically with e-commerce and spending, what's the biggest takeaway for advertisers? >> i think they have the challenge of having to focus on the millennials for the reasons i outlined a minute ago. but you can't ignore that middle aged segment because that's where the spending power really lies. their index of spending power is about 25% higher than average. so you have to spread your winning wider and that increases the costs a little for any marketer. >> there always used to be an argument of course that people

who were middle aged were less likely to be swayed by advertising, which also would account for why you have that focus on millennials. less subject to peer pressure, or so it would be said anyway. >> yeah, i suspect that theory is maybe changing a little today. because i think the millennials are a little more swept tall today than people used to be about advertising. maybe believed that it doesn't affect them as much as it might affect other segments. the other reason to think about millennials is the way their digital habits are different from older people. especially in the way they're consuming video. they are much, much heavier viewers of video and television content on these mobile devices. >> yes. >> and that's something that's a great concern to all the advertisers. coupled with a question about

whether, as they age, will their behavior patterns revert back to some degree to mimic more of the older people. that's a big unknown question at the moment. >> that was highlighted by the ceo of verizon on the program. thank you for your time. let's send it over to john fort with a look at what's next. >> middle aged? really? we'll talk about that. on squawk alley, we'll cover the latest on pandora. some apps on the apple app store have been hacked. we'll look at what that means for the store in general. and flip cart. we've got the chief product officer of that very important product coming up.

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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. awe believe active management can protect capital long term. active management can tap global insights. active management can take calculated risks.

active management can seek to outperform. because active investment management isn't reactive. it's active. that's the power of active management. good morning. it is 8:00 at pandora headquarters in oakland, california. it's 11:00 a.m. on wall street. squawk alley is live. ♪

good monday morning. joining us today, the co-founder of ala ventures. also, the ceo of indigo go. back after a long vacation. honeymoon's over. we've been wanting to see that. >> real life begins now. >> the dow's up 175. shares of pandora have had our attention after being halted not once but two times since the open. our bob pocsni is on the floor. >> the way halts work, this on all the ex