kansas city royals win their first world series since 1985 beating the mets with a ninth -- a rally in the ninth inning and a 12-inning victory where they scored five runs. it's monday, november 2nd, 2015, "squawk box" begins right now. ♪ ♪ good morning, everybody. welcome to "squawk box" on cnbc. i'm becky quick with joe kernen and andrew ross sorkin. asian stocks selling off over the night. the pmi showing trouble for the country's manufacturing sector. contracting for an eighth straight month. though the pace of declines slowed in october, but you can see what that did to asian stocks. the hang seng was down by 1.2%.

the shanghai composite was off by 1.6% and the nikkei down by over 2%. other news out of china today, a top investor has reportedly been detained by police and authorities have taken control of his officeness shanghai and beijing. a state-owned news agency says the legendary 37-year-old business manager is being investigated for charges on suspected insider trading. we'll have a discussion with eunice yoon. check out the u.s. equities futures. green arrows with the dow futures indicated up by about 30 points. the s&p futures up by 1.5 and the futures for the nasdaq up by 8.5 points. of course, this comes after a week last week where stocks edged out gains. >> among the other stories we're watching, here's what's going on. sprint saying it officially wants to cut costs by as much as $2.5 billion in fiscal year 2016. how are they going to do it?

layoffs are among the plans. no word on how many jobs will be lost. hewlett-packard splitting into two companies. hewlett-packard enterprises will trade under hpe. the printer company will keep hpq. more on all of this from a tech watcher in 20 minutes. there's chipotle. i went there last week. closing all of its restaurants in two west coast markets. seattle and portland. they reported an investigation of an e -coli outbreak. this is the third outbreak since august. the others involved sal momonel and the neurovirus. down close to 6% just this am. stocks to watch in addition to what we already talked, pmc-sierra says microsemi's

latest in stock versus cash is not superior. the chip maker says the cash proposal provides more value certainly to investors arguing that the market volatility makes it more risky. hsbc posting better than expected quarterly profits. europe's biggest bank benefitting from reduced regulatory stocks. shares of avis, barron's says the stocks could double. it's underestimated earnings potential. november 2nd so we've got a few retailers left. other than that, we should have a pretty good take on the most recent earnings season which if you back out oil and back out energy, it wasn't bad. up i think 5% or so. compared to the rest of the world, that's not the thing that you say is going to cause the market to shake. it's in the books. wasn't awful.

>> it wasn't. ian shepard son, i don't know if you've seen this this morning from pantheon, they say they couldn't find a time when they disagreed so much with the narrative. they think investors and the commentary is way too bearish. some of the numbers, the weaker jobs numbers we're getting are because you traditionally have seen major revisions for both the august and september numbers. >> a lot of people think we're getting close to full employment. you look at the claims numbers and everything else and, you know, that could mean some eventual wage gains and that filters back into the economy. >> his concern in all of this is that the fed is behind the economy if not behind where it should be itself in terms of raising rates. they'll have to raise rates more quickly than anticipated and that could cause a recession. >> it will be interesting for the december meeting. they said so much about doing it in 2015. that's their last chance, is there not? >> right. >> if they do it in january,

they're running out of time -- >> days on the calendar. >> exactly. >> unless there's something really negative in the numbers, we have a friday report, we'll see. >> right. >> december might be the time. we have a story to tell people about. shire is buying diex. $5.9 billion is the headline number. diex shareholders will be receiving $4 in cash per share upon approval representing a potential $646 million. i apologize. there's what they're calling aggregate contingent consideration. this would be if one of the drugs gets approved. so that's an interesting wrinkle to how that deal is getting announced. you're looking right now. the stock already up in futures market this morning up 26, almost 27%. let's switch gears now. the remains of the victims of

the russian plane crash in egypt over the weekend were flown back to st. petersburg. metro jet's airbus a-321 crashed saturday shortly after taking off. all 224 people on board were killed. the vast majority were russians. they say the plane broke up in the air. no word at this point about what caused it. let's get a check on the markets once again this morning. as we showed you, the stock market futures are indicated slightly higher. dow futures up by 34 points points. s&p up by 2.5. if you're checking out the early trading in europe at least at this hour it looks like things are mixed. in germany the dax is up b by .75%. the cac is up .41%. the ftse down by .25%. big gains of almost $2 in the course of the week. oil trading up to $46.59 this morning giving back some of that

down 47 cents to 45.80 for wti. the bond market, treasury market, story on the front page of the wall street journal how the corporate market is heating up. the ten year the yield is sitting at 2.713%. when it comes to foreign exchange it looks like the dollar is down across the board today. euros still sitting at 1.1026 and the enis 1.1027. gold down 3.10. major averages logging their best month in four years for october. we've been telling you it's going to be a busy start for november earnings. still coming in below average. we're here to get you set for the week. todd gordon founder of trading analysis.com and a cnbc contributor and michael gapin

from barclays. >> good morning. >> if you were giving out grades, let's say the earnings season, we have some more coming in, stragglers, given what we've seen, b plus, what would you call it? >> it's been well, well received. i would say the markets have kind of consolidated for a period of time. in a set to make it a leg higher was on august 31st. i said technically the markets look okay, look supported. i've been concerned about the leadership of the rally in. it's been in the worst performing sectors of the year which are materials and energy. in the last week once we're starting to get the earnings, the leadership which you would expect to see, discretionary, technology, financials are the top of the year. i'm a price action guy. i like to let the markets indicate to me how the scenario is. it's positive. >> we don't much like that word here, crash.

>> okay. >> that lull pull back? the buying opportunity that was set up -- >> i'm telling ya. i left the set here -- >> were you around in 1987? >> i was. i was. i was in grade school. >> right. you know what a crash is? >> i do. i do. >> this is not even a fender bender. this is a ding. >> this was nothing. this was nothing. i'm happy to say the market was well supported technically and the market has come back and rallied. i was very concerned by the leadership. now it's improving. >> interesting chart. that is one where a lot of people said this is not the time to buy the dips. this is the time to sell the strength. has not been borne out unless we should be -- do you think we should be raising cash here? >> no. i think our view is you should be buying the dips. there is some near term volatility surrounding the data flow and the timing of a fed rate hike. >> no. back then we were saying any

kind of down draft in the u.s. would be a buying opportunity. on a relative basis we know where europe and japan was, we felt the u.s. was more fully valued. any pull back we would say we would be getting in. >> if you went back in time and -- although the movie -- you know that we're now more in the future than any of the "back to the future" movies? >> unchartered territory. >> kind of weird. nobody's fleeing around at this point although there are drones ready to -- >> there you go. >> i think you put an eye out. >> you know what -- >> anyway, the point i'm making is if you were to go back in time and say, okay, here's where we are. interest rates are zero. u.s. economy is the best in the world relative -- >> by far. >> -- to everyone else. central bank easing all around the world. corporate profits still pretty good. people would say, what are you whining about? >> more to your point and the fed didn't hike in september because of the interplay with emerging markets in china and if

you look at the actual technical overlay of what china and eem that tracks emerging markets, they haven't participated in a stock market rally since 2011 and '12. all of a sudden china corrects and everyone is all hot and bothered. they haven't participated in years. for the fed to rely on that as a reason to not hike, i don't buy it. the u.s. market can go it alone without china in confirming. >> if you're not looking to nitpick, if you're looking on ten things to invest, what would be the two or three negative things that people would talk about here? just that there's a change in the direction of interest rates maybe. that's one. >> that's one. >> product margins are -- >> they're towards the high end. >> towards the high end. zero interest rates, they're not that high. >> from here you need economic

growth to generate earnings growth. that's really the only point of, well, do you like getting in at this level? how exposed would you be? it's not an outright negative. >> which sectors do you think lead from here? how's health care doing? >> it's doing okay. i would just say the economic strength in the u.s. is about the domestic economy consumption services. it's not about trade. it's not about manufacturing right now. if you're exposed to earnings growth, those earnings would be difficult. we focus on where the domestic economy is. >> did black friday move to -- it didn't move to the day after halloween because that's not necessarily a friday, right? >> right. >> someone asked me and i said that was pinocchio's birthday. does it fall on halloween. it was you! does it fall on the -- >> october 31st. >> right. >> no, but thanksgiving does change. >> thanksgiving changes. >> aren't we in the christmas season right now?

isn't -- have they moved -- >> no, november 1st the retailers look at it as november 1st, game on. >> now that's the next thing to worry about. how is consumer stocks? how's the consumer? >> consumer's good. some of the best leading stocks within consumer discretionary look good. stocks in holding, amazon, nike, starbucks, these charts are spectacular and on the up side. consumer discretionary space, oil and stocks, buy them? >> oil is in a holding pattern. i am a technical guy. the correlation now between crude oil and the emerging markets in china is spectacular. i think they are in a holding period right now. if the u.s. market were to make a leg up, they are to maintain. if they were to make a leg down, that's a -- >> buy all stocks or not? would you? >> yeah, i think so. >> you would? >> yeah. >> going to use them. we're going to use what they make i'm pretty sure for a little while anyway until your

car comes -- that's a ways off. wind driven -- >> we're still in a leveraging economy. we're still in a disinflationary -- do you guys agree, disagree? >> we don't really have opinions. don't really care. >> i think you do. >> not me. thank you, todd gordon. gapen, could be gapin. >> could be, but it's gapen. only higher. >> only higher? >> only higher. let's talk about some earnings just in for a dow component. visa, the credit card issuer earning 62 cents a share. for the latest quarter that was a penny below what the street was expecting. revenue did increase. the stock looks like it's up by 20 cents right now. visa, what's the -- >> what are you looking for? >> $184 million.

dow component. when we come back, a legendary investor in china detained by police this weekend is being investigated on charges of suspected insider trading. a live report from shanghai. as we head to break here's a look back at this date in history.

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welcome back to "squawk box." top investor in china has reportedly been detained by police. authorities have taken control of his offices in shanghai and beijing. eunice yoon has the story. good morning to you, eunice. >> reporter: good morning, andrew. there are more and more signs that the government here is really cracking down on what it sees as illegal dealings across the financial industry. over the weekend shanghai police detained a man named xu xiang. he manages $1.5 billion. he created a firm called zexi investments. it offers investors 300% returns over the past two years. so he's had a lot of attention on him and now he's been detained. separately, the chinese

authorities said they're going after two foreign nationals. these two people, they said, had set up companies in hong kong and then hired chinese nationals to set up foreign trading -- sorry, futures trading accounts and so now the authorities hearsay that those two men were able to manipulate the futures market by creating and designing a high frequency trading program and then using it here in china. so those two eventually happened now after the chinese authorities have said that they're going to crack down even harder looking at the books of state-owned enterprises, state-owned banks, even the central bank and the stock market regulator to really go after all the corruption. the impact on the stock market here was somewhat minimal. it was down by 1.7%. what was interesting was watching some of the individual plays that they had invested in.

two were down and limit downs. we're seeing a bit of the impact of the investigations on these individual stocks. guys. >> eunice, thank you. eunice yoon. hewlett-packard entering a new era. it's going to begin trading as two separate companies today. hp inc. will sell personal computers and printers while l hewlett-packard enterprises will have networking. will they have to play catchup with some of the other giants. let's bring in eric hesselbell. thanks for coming in this morning. >> good morning. >> the reason for the split is what? >> well, hp was too big a company. it was -- when you talk to meg whitman she uses the phrase smaller, nimbler, and basically what it meant was the pc and printing business was dragging down the larger, allegedly healthier enterprise by which has potential for growth. that's a complicated question. that's the large reason for it. she decided they were better

apart. >> which of these two companies do you think is in the good position. we've seen cbs and viacom. everybody thought viacom was in the best position and cbs took off. >> the real question is which one is meg whitman running? >> you do remember it was the opposite. viacom was a great example. is it possible that the pc business turns out to be the better business? >> it's entirely possible but right now with the way the pc market is looking, it's in a long, slow burn decline. printing especially continues to decline, too. so it's just really -- they do have some ambitious plans in 3-d printing. >> part of what they're doing, dionne wiseler is the ceo. they'll research in research and development a little more aggressively than under the parent company. >> right. that was part of the split. you can do the research and

development without having the split agenda. the argument was they would become two different businesses and they just were going in different directions. the one thing they will lose is scale. they'll lose some capacity to negotiate scale with some of the suppliers, things like chips, hard drives, things like that. that's one piece of it. the other thing is hewlett-packard enterprises really also is a services company. that's what its big problem now is. this services business. tech outsourcing. i.t. outsourcing, it's the real problem now that whitman -- >> just in terms of what we've seen with ibm and other companies that have struggled with it? >> exactly. a lot of the restructuring work has been done there. they took a $2.7 billion charge over there. lots of job cuts. lots of relocating workers from high labor markets to lower cost labor markets. maybe not lower enough -- low enough. i saw a note this morning that only 60% of their service

workers will be in low-cost markets. that's lower than, say, ibm which has 80%. >> isn't it also the situation that the enterprises group is going to now have some money that they might be able to use for ma? >> yes. i talked to meg about this. targeted m and a is the phrase they like to use. 5.5, $6 billion in cash between the end of the year. they did a deal for aruba which is a wi-fi company earlier this year. more like that rather than big deals. more like small target m&a. >> a little off topic. you broke a story. worth mentioning this. emc and dell. >> emc and dell. >> pivotal, one of the software manufacturers is going to be spun out. >> it will be spun out in an ipo, partially very much like what emc did with bm back in 2007 will float a 20% stake. they've always intended to do

this. the plan that now that dell is coming after emc with the ak which silgs plan, the plan is moving up. >> well, part of the reason is that we're going to be looking for cash. michael is talking about having to delever. the deal has been blessed by dell to be consummated before the close. so this ipo will happen before the -- >> it will get spun off before -- >> before the dell -- >> actually buys it? >> is that a way of trying to sweeten the deal? >> it is but also to look for cash. now there's a possibility that they think they can raise potentially billions. >> therefore, we saw the movie play out when they tried to take their own company. will they say you will with more money now? >> it's entirely possible.

the shareholders seem not to like tracking stock with vm wear. they have come down by 1/3. they were at 90 in august. down around 60 today. so they don't seem to like the tracking stock. they don't seem to understand it. they don't seem to like the notion of a lot of extra shares that they don't have any voting power with coming in to the company. vm share -- >> is that deal actually closed? >> i'm giving it right now a 50-50 chance. there are a lot of moving parts. this is a new one. the mcdl continues to get more complex every day. >> arik, thank you for coming in. david faber will be sitting down with meg whitman who will run hewlett-packard enterprise. later this morning at 9:45 eastern. coming up, viacom and tivo teaming up. k-mart is bringing back the blue light specials. those stories and more when "squawk box" comes right back.

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♪ ♪ welcome back to "squawk box" right here on cnbc. making headlines, viacom and tivo are teaming up. tivo will use audience data for viacom programming from about 2 million households that are part of the research panel. tivo will link details with shopping and other information from third parties. companies say names of the viewers will be kept anonymous. could be good news for tivo, could be good news for viacom.

visa, we have little tivo noise. visa reporting quarterly profits of 62 cents per share. thattest a penny below estimates. they announced a $5 billion stock buy back. separately visa announced it is buying visa europe in a deal worth $15.2 billion. debate demands. eamon jabers has the details joompt they met in alexandria, virginia, in terms of organizing future presidential debates. this is all coming in the wake of criticisms by the campaigns of cnbc's debate just last week which some of the campaign felt was unfair to them. here's what the campaigns wrote in a first draft of a letter that is now being circulated among the campaigns and will be sent to the rnc. some of the wish list they would like to see for future

presidential debates starting with 30 seconds at the hoping and closing for each candidate to make his or her point. they would like to see a maximum total time here of two hours for the debate. they'd like to see a similar number of questions per candidate and the discussions took place in the meeting last night of who should lead negotiations with the network am. whether that's the rnc, a particular official at the rnc or the campaigns collectively. this meeting last night was honchoed by a republican lawyer not necessarily by the rnc itse itself. that's one point of contention. another point of contention emerging in the room telling sources at nbc news a question of whether or not the republican presidential candidates should go forward with the upcoming nbc telemundo debate. the bush campaign, bush being a spanish speaker himself, would like to go forward with that. the trump campaign pushed back on that in the meeting last night, guys. they're going to go forward and circulate this letter now. we'll see where they end up with that. they have a certain period of time to come up with edits to

the letter and send all of that back to the rnc. obviously an ongoing process here in terms of the republican presidential debates going forward. >> eamon, i thought i saw the rules for the next debate did not include opening statements. did they get a pass? >> that was out last week. >> yeah, this is going to be all in flux now. what the campaigns were saying last night is that they would like to see at least 30 seconds at the opening and closing for statements here. but, obviously there's some question going forward about how these things are going to be formatted. the rnc has led negotiations. the campaigns collectively would like to do it now. the problems for the campaigns, there are a lot of them and they don't all agree on where to go. any kind of collective agreement here can be tricky going forward. >> want to split it up, too? right? one of the other questions is

whether or not there should be the over -- >> whether they should randomly slot this. in the past the higher polling candidates have gone in the lower debate. the lower polling candidates have gone in a litter debate. do they randomly mix them up. do they put them in different groups. do they do three instead of two? all of those things are in the mix for discussions. obviously all of the television networks that will be hosting these will have a big voice in where that goes as well. the candidates frustrated trying to gain some control here but at odds with each other. >> democrats, no complaints there. they'll still go with the general question from when they have a debate. how do you do it so well, so often? does it get boring being what you do? is that the cnn approach to the democrat's debate. >> the democrats don't have the same thing going on. >> i like that one. that's always -- does it get

boring to be so good and so, you know, competent at what you do? anyway, thank you, eamon. >> you bet. >> good to see you. coming up, evercore founder will join us. the debate on inversion. quick check on what's happening in the european markets. "squawk box" will be right back. hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony.

you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.

welcome back, everybody. the u.s. equity futures have indicated a little bit higher. you'll see they picked up steam. dow futures up 45 points. s&p futures up by 3.5.

the nasdaq up by 11. in the passing in the world of politics. fred thompson has died at age 73. he briefly ran for president and before that you can remember he was an actor before he was elected to office. remember him in "cape fear?" i think he was on one of the "law and order" shows. >> you buried the evidence. as an actor he was often cast as an authority figure, a political leader or a military officer. is he in "no way out" too? known for district attorney arthur francis on the nbc series "law and order." thompson's family said he died in nashville after an recurrence of lymphoma. he's 6'6". he was a big man.

he had a -- >> gravely voice. >> and accent. >> "hunt for red october." >> yeah, he was. >> briefly ran for president. >> yeah, he did. i said that. also this morning pfizer announcing the preliminary friendly discussions for a potential merger. the deal would be structured as a tax inversion causing a bit of controversy for a way for u.s. based pfizer to have the tax inversion debate. joining us with more on that and a whole other host of issues, roger altman, former deputy treasury secretary. i thought or supposedly i remember the obama administration about a year ago, along with jack lew, had tinkered around the edges with some of the tax provisions to make inversions less popular and more difficult. >> that's true. >> not so much. >> well, that's true. they closed certain aspects of inversions, hopscotch, such

things, but it fundamentally didn't block them. everyone knew at the time it wouldn't block them. the reality is that the corporate tax differentials, off shore, on shore, are so wide that these are continuing and more of them are going to continue, i think, until this corporate tax return and that, in turn, doesn't look likely until 2013. >> what's the upshot? will the deal be allowed to move forward and will it force or cause real tax reform to take place? >> first, we don't know if there will be a deal. our own firm is not involved in this but we don't know -- >> you were on the other end when pfizer was looking in -- >> pfizer first tried to bias stra z -- buy astra zeneka. it was a political deal in the u.k.? >> yeah, it wasn't about politics. it was deeper. first, we don't know if this will actually happen. second, if it does, i would be

surprised if it did not go through. third, will it spur corporate tax return before 2017, i think the answer is definitely not. because of the point of where we are in the political and presidential cycle. >> the question though, this deal because of its sides, because pfizer is so iconic, the government we talked been this is such a large buyer of drugs, of pfizer drugs, the question is whether this gets put into a different sort of political frame and, therefore, you know, the nods come out from washington to stop a deal like this in some other way. >> i think the rather relentless pace of inversions, andrew, is unfortunate. it's not good for the country. it's not healthy in various ways, but until those differentials are closed or at least narrowed a lot, i don't think the pace of these is going to change. so we're going to see more of them. i could be wrong -- >> all in the drug space? >> no, no, no. they're being -- they have occurred in lots of different

sectors. it's always amazing to see how many companies now that are household names. >> right. >> are domiciled off shore and i really would be surprised if pfizer allegan results in legislation, both houses passing a bill, and obviously the president signing it, which would stop this. i would be surprised. >> one of the big questions we keep asking about mergers these days is whether the mergers themselves are coming from a place of strength or weakness. whether there's sort of a fundamental weakness in most of these, in the economy and these businesses. that's what's driving the deals as opposed to a real effort to grow. what's your sense? >> it depends on what you define as weakness. i think -- of course, every single deal is different. >> right. but i think top lines are weak and, therefore, to get growth synergies are appealing and

reasonable mergers generate substantial synergies so that provides for earnings and cash flow growth even if it doesn't provide for revenue growth. that's a big driver. at the margin, weak zblness. >> right. >> in terms of the bond market, people are surging back into the bond market, that's a sign of potential strength, is that what you think? >> well, everybody who needs to borrow or has any reason whatsoever to borrow should either have already borrowed all that they could reasonably do or should now do it because of the level of interest rates. any moment now interest rates will begin to slowly revert to the mean i think that's a sign of relative -- again, marginally relative confidence. it's a sign of confidence in the status quo. not a kind of resurge gent grow.

i don't buy that. we know what the economic forecasts are. goldman's 2.4% for next year. they lowered it a month ago. we're in the zone of call it 2.5% growth and ups and downs around that. i think the good news is that it's pretty predictable. i don't see any scenario under which we have a recession. i think the bad news is it's slow. so i don't think corporate bond surge is a sign of anticipated upward movement in the economy myself. >> i have a philosophical question for you. >> please. >> "the wall street journal" wrote a philosophical piece about your business, the merger business, about how there's been effectively too much consolidation over the past two or three decades in this country. "the new york times" wrote an editorial you might have seen suggesting there was -- there are too many mergers and that the mergers unto themselves have created inequality citing a report that your friend peter worzack and petat furman wrote.

what do you think of that? >> i don't think merm gers ager part of inequality. the likelihood that the digital revolution is just now beginning or just in the infancy. i think that problem may, unfortunately, get worse. i don't think mergers are a major cause of it. could you argue is there more of a cause? i suppose. as for whether there are too many mergers, i don't think so. about consolidation, you know, we see waxes -- we see the cycle wax and wane. hp, now it's dividing itself. de-mergers as they call them in england are occurring just as often as new mergers. splitoffs and spinoffs are a thrust of activism are occurring

at a high rate. you have as many demergers as you have new consolidation. i think the net of it is not more, you know, giganticism. it's like saying too many people are trading stocks or too many people are watching espn or something. this is part of the world we live in and i don't think too many mergers is really a core problem. i don't think it's a big contributor to inequality. could you argue it's a little one? maybe. >> i love when people take their private jets to the conference income and equality. they could solve a lot of the income inequality. take 10%. take 10% and spread it around of the net worth. oh, boy. when they jet back to their -- >> only one other comment. i do think we've seen periods when conglomeratization went too far. one of the reasons you're seeing so many de-mergers, splitups, so many activists are pushing for

that, we saw that going back in the '60s with ltv and companies like that. too many companies being big for the sheer sake of it. too many ceos thinking bigger is better. i think that has gone too far. that's why you're seeing so many splitups and spinoffs. as to whether mergers themselves are -- >> well, the economic argument against mergers would be that the consolidation creates less competition, winner take all society, pressure on labor. i mean, those are the sort of larger issues that seem to be born by the peter orzak argument. >> take the example of tech. tech happens to be one of the active merger sectors. really very active, top two or three. the rate of startup and venture capital flow and so forth in tech is greater than ever so i don't think mergers in tech are suppressing innovation. it's really -- it's really mostly -- not all, but mostly

mature tech companies who are merging for synergies reasons and growth reasons. they're at the low end of the cycle. i don't know, i don't particularly buy that. >> inequality should be viewed in global terms as well. >> i mean, we have a big inequality problem. >> we do in this country but globally the inequality, if not globally the inequality between poverty and the people that have has been -- we've made great strides in the past 50 years. let's leave it at that. >> okay. that's absolutely true. 500 million people in china over the past ten years out of poverty. >> before we throw out the capitalist baby with the bathwater, maybe we ought to think about the global perspective. >> roger, thank you. >> thank you, everybody. when we come back this morning, dave briggs is here with a roundup of a busy weekend in sports. among the highlights, the royals winning the world series and american pharoah going out in style taking home the $5 million breeders cup. stay tuned.

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welcome back to squawk box everyone. retail news this morning. k-mart is bringing back the blue light. kicking off a targeting campaign last night on nbc sunday night football. the blue light special was created in 1965 to try to clear

slow moving merchandise. you probably remember. attention k-mart shoppers. >> they're ready if anyone happens into one of their stores. they're ready. anyway, disappointing night for the mets fans. kansas city royals winning the world series. first championship in 30 years. here with the sports round up, dave briggs. mets were a good team. >> still are actually. a very good team. >> the royals are a very good team though and i remember pete rose is back which is funny watching him. that was something to behold. >> him and a. rod. >> but this hit my point. he early on said the royals play like a national league team and they play like a national league team. they hit-and-run and steal. they generate offense. >> they are relentless in a word. the first team in world series history to win three games when trailing in the 8th inning or later. they outscored 15-1 from the 6th

inning on. they force you into mistake. that's what they did last night. it wasn't just disappointing. it was devastating for mets fans. >> how many times did they not get a guy on in the first inning. >> wow, you're asking me to go deeper. >> no, it seemed like they never had a first inning where great pitchers were we got this guy on the mound and immediately they seemed to get in trouble. >> what this team does, they wear you down. the kansas city royals is the best in baseball. they make you pay late. it was 2-0 going into the 9th inning and they were dead and gone and matt harvey talks his way back into the game last night. they had taken him out. he comes out for the 9th. gives up a walk. gives up a double. a terrible throwing error by lucas duda at first but a tremendous performance. i think he's the brightest star

in this big city here in new york. >> i thought murphy's law was going to be what happened in the playoffs but then it happened the other way. >> tough ending for him. devastating ending for this mets team but the best young staff in baseball, they'll be back in this world series. they have a formula built to succeed in the next five or ten years. they'll be okay. but the royals aren't going away either. they're young and relentless. >> what can i look forward to now? alabama lsu is saturday. what else? >> how about the nfl? cincinnati bengals are one of three undefeated teams in the afc. >> listen to me, listen to me -- now out of the corner of my eye i might have been watching what was happening. the steelers were doomed with those uniforms. >> that is terrible. >> i acknowledge those are awful uniforms but an even worse

performance by ben roethlisberger and the real news is bell, the best back in football out for the season after only playing a couple of games. he is done with an mcl tear and now bengals look like they're in the driver's seat but you refuse to talk about it. >> when they win a playoff game i'll consider being a partial fan. >> you think andy dalton will turn back into a pumpkin in the post season? it's quite likely. >> the patriots are still the best team in the nfl. that one will tell us about who is going to win the super bowl because the broncos beat the packers last night on nbc and looked ever bit as good -- >> how do you like the giants. they still would have gotten a field goal if they hadn't gotten the 15 yards. >> that's right. to score 49 points and lose -- >> on that. >> that's tough.

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earnings alert. we'll dig through the numbers from dow component visa and tell you what to expect this week. >> it's jocks week. the october job report could have big implications for the fed. early predictions straight ahead. >> and the song lyrics haters gonna hate could end taylor swift in court. why a rival musician's bad blood could cost swift $42 million. as the second hour of squawk box begins right now. ♪

>> live from the heart of business, new york city, this is squawk box. ♪ >> welcome back right here on cnbc. i'm andrew ross sorkin with joe kernen and becky quick. a little bit of news. >> that's why we're listening to the song. taylor swift is being sued for $42 million for alleged plagiarism of the lyrics to her 2014 hit song shake it off. he claims swift stole the words from a song he wrote in 2013 called haters gonna hate. representatives have not said anything but the chorus of shake it off is cause the players going to play and haters gonn

hate and fakers gonna fake. >> let's tell you about the top stories of the morning. stocks falling in asia. it came in weaker than expected fuelling fears the economy could be cooling. they're all closing lower. the weak manufacturing data putting a bit of pressure on oil prices. take a look at what's going on there. wti crude is $45.82. in earnings news, dow component visa reported quarterly profit of 62 cents per share. that was a penny below estimates. the company also announced a $5 billion stock buy back program. separately visa announced its buying visa europe in a big deal. we'll talk more about visa with an analyst later this hour. general electric completed it's acquisition. the final purchase price, $10.6 billion. the acquisition will add between 5 and 8 cents per share in

earnings in 2016. >> october was a banner month for stocks but we are looking ahead to the best performers of the next two months. he joins us now with a look ahead. >> the interesting part about what's happening with these certain stories are there's an idea that stock stories are making their way into the fold here. the stock market overall has been filled with highlights here for the month of october. the chemical giant here had it's best month ever. when i say ever, i mean in it's history. in it's corporate history. it was up 32% on the heels of or at least some of the succession plans happening there so the stock was near a 54 week low. microsoft adding billions of dollars worth of market value here. powered along by earnings

reports. best october since 2007 for the tech giant and then amazon.com doubled in value so far year to date. up 23% for the month of october so we talk about some of the big highlights and what are the stocks that are going to perhaps perform well going into the last couple of months here. now we asked our data partners to take a look at the numbers here. for the s&p 500 companies, among them that perform the best during november to december over the last decade. so if you bought at the end of october and sold, on average during this two month span, western digital up 2.4% and advanced auto parts up almost 8. look at the righthand side there. the trade is positive. western digital traded positive 90% of the time in that span over 10 years. and advanced auto parts 100% of the time as well. interesting context for the big

star performers during the months of november and december at least over the last ten years. of course guys, this is all just a backdrop like you said. the bearish case, possible slow downs in asia. possible slow downs elsewhere around the world and our own slowing economy here in the u.s. back to you. >> thank you. >> let's get more on what to expect in the week ahead with the chief economist at rdq economics and david, global head of manage investment at citi bank. you figure we go to 5% unemployment on friday with a descent number. you say we're almost at full employment yet you still think that there's hidden unemployment and not much improvement in the participation rate. so that seems like opposite -- >> no, there's hidden unemployment but that participation rate, the number of people either looking for a job or having a job has

continued to fall so i don't think that number is a whole bunch of people waiting to come back. >> they're not coming back. >> the recovery began in 2009. it's 2015. >> who are these people? >> those are aging as a big component of it. not the whole component. some are younger people that decided to extend education. i don't think we'll see people moving back out of education into employment as a trend. obviously any individual person does. >> labor markets -- >> so must be behind the curve then. >> i think the fed is behind the curve. not necessarily because of the job creation. the way the fed looks at it, it is. we created 500 more jobs or recorded 500 more jobs. last month we would have been at a 5% unemployment rate. that's how close we are. 500 would have moved the needle from 5.1 to 5% but the fed is

behind the curve for a number of reasons. not least of which is the distortion in the financial markets with having rates at zero and abundant liquidity. >> the left doesn't believe that. how can we raise when the rest of the world is still easing and we're, you know, it's not causing any -- that's flatter economics that it's doing. what is it doing? why not stay at zero? >> well, i think that if you're the reserve currency of the world and nearly two third of the worlds $11 trillion of foreign exchange is held in dollars you can't manage your policy as if you're a small economy looking at the rest of the world, you have to lead the rest of the world and the u.s. is in a position where interest rates shouldn't be at zero. you were talking about mergers. just look at the activity. look at microsoft borrowing over $10 billion last week even though they have $99 billion of

cash on the balance sheet. these rates are causing distortions. >> okay. >> you like the market. >> i do. the stock market. >> developed markets you think are fine. >> yes. >> after all is said and done 5% earnings growth. pretty good versus the rest of the world. >> it's certainly very good. consumer discretionary is here and you have what looks like a relatively healthy market in the united states. by the end of the day if investors wanted to time the market, this would have been an awful time to do it. we've just seen that result in october. the best since 2011. the reason is a lot of the things that people expected happen, a lot of the bad news, stitch simply wasn't there. it's taking place since 2012. you have to look at the world

and the data we're getting. they seem to have been exaggerated during the last couple of months. >> so at this point, even if the fed were to finally start raising, you figure you get a little volatility but markets heading higher in 2016. >> that's what it looks like if you take a look at the data and take a look at earnings. a few things going on are technical. it's going to drive the marktd higher and mergers will be one way that companies drive earnings. but at the end of the day if you think about the u.s. growing at 3% and oil being where it is and the fact that consumers haven't spent that dividend yet it's a reasonable assumption. >> what if john's right and the fed is behind the curve and they have to raise rates higher or faster than what they have been telegraphing, does that push us into a recession potentially? >> it could. the question is how far will they push it. they moved at a snails pace to

this point. >> but inflation would have to imply wage inflation and where is that taking place? so if they missed it's because they wanted to see employment higher or they're not clear what they should do. >> we had such a great october because we had such a terrible september. if the fed had the numbers it had now in the market in september, it probably would have. we have the market looking at the fed and the fed looking at the market and it became a recipe of dying of volatility surging. those have only been used once before. and the market took it okay. it is establishing leadership and right about earnings. it's not just a liquidity driven equity market. there's earnings behind it and the best way to continue this is

to start renormalizing policy. i told you interest rates will be zero in 2015. what would the equity market look like? what would the economy look like? you wouldn't come up with numbers. 10% unemployment and maybe get s&p of 750 or something. >> all right. thank you. john and balin. >> yeah. >> i'm thinking of -- did you see lord of the rings? balin was the main -- >> oh, yeah. >> you don't remember them? >> i don't know but i'm going home and looking at this. >> he's got the beard. >> i don't remember him. >> all right. well, you're not -- >> not related yet. >> taller. >> all right. thank you. >> when we come back this morning it's a big week for

media earnings. cbs discovery, cablevision, fox, time warner and disney all set to report. we have your media week play book straight ahead. and a scary october for the hedge funds. why some well-known hedge fund managers are not celebrating this october stock rally.

>> it's a big week for media

earnings with cbs due out tuesday afternoon and time warner and fox coming out. julia joins us now with more on what to expect. >> andrew, this week is all about the strength of the bundle and subscription fees and ad dollars tied to it. he warned that industry standard espn is starting to feel the impact. reducing analyst profit projections for espn. this quarter investors will be listening for updates on subscription fees, ratings and ad revenues that follow and how quickly digital dollars are ampling and how much they can compensate for digital molds. there's good news from the three largest cable companies. improvements that bode well for the content companies. comcast and time warner cable dramatically reducing their video subscriber losses while charter gained subscribers. signs that concerns about the pace of chord cutting might be

overblown. no matter the degree of chord cutting some companies may be better positioned than others. >> we like cbs is the most and they don't have any basic cable networks. whatever happens to the bundle they have a lot less risk than their peers. >> we'll have to see if expectations were so reset last quarter that the numbers we see this weekend up looking positive. andrew. >> thank you. for more on this big week for earnings let's bring in media analyst david bank. good morning. >> thank you for having me. >> so all the guys reporting this week, who do you like the most? >> i would say doug. cbs is the best position with all due respect to present company. with the biggest fear, the biggest concern being about a lighter bundle there is only one major media company with only one channel, it's a bundle of one and they have some things

going in their favor. the nfl ratings being a bit better this time, things like that are going to help them this quarter. >> you worry most about. >> i probably worry most about the pure play kind of cable, big bundle cable networks that have a lot of revenues, a lot of eye balls spread out over a lot of viewers. a discovery or a scripts. >> how do you feel about disney? that's the one where we'll -- we had this little bit of a tumble, the espn tumble. >> we have a tumble but it's come back to where it was. so i don't think they can surprise us. aside from the fact that the news otolaryngology of the cable carriers hasn't been that bad is that you're looking at the star wars opening coming up -- i know you're really excited. >> i am. >> theater full of children to sit through that. >> very excited.

>> but going against sentiment right now on the star wars opening would be tough. >> but let's take a look back at that abc stock because the comments on the abc call, the concern asht espn sparked the entire sell off through the entire media group. we brought that -- the stock has come back up. we have seen it rise again. but is that because we think those comments were overblown or taken out of context or is that because we don't care? >> that's a really fair question we have been talking about quite a bit over the past couple of weeks. these things happen much slower or much faster than i we think they're going to happen. what you've seen is that it appears to be happening a lot slower so my guess is that much of it has to do with the fact that the eco system is not about to collapse. that's put wind back in the

sails and the multiples and ahead of the news of star wars there's a little bit of momentum back in the stock. this is a place you go. it was on sale. it's disney. it's one of the greatest brands in media. >> it could be simple, it was the number one dow performing stock for the year. you get a little bit of an excuse to sell. people that love it. i don't think that netflix is all the way back so where it was and that's the stock that's supposed to aggregate all the market cap losses and that's a much smaller company. that may have come -- almost all the way back. >> i think the difference is disney is such an outlier in this group. there's a universe of buyers that exist for disney that don't for some of the other companies. it could be considered a consumer packaged goods company. consumer staple company. they're just buyers, global portfolio managers who would buy this stock on sale.

>> making a case that it was stupid that it happened in the first place on a slight lowering of guidance to see them go from 120 to 100 made no sense. >> i wouldn't say it was stupid so much as it shouldn't have surprised the market. i don't think numbers came down all that much -- >> it was sent. >> i think it was sentiment. >> different question. you made the argument and other investors made the argument that a lot of media companies are doing themselves a disservice by selling some of their product in places like netflix and amazon and hulu and how much of that is going to come out and bare out this week in terms of how shareholders are thinking about that? >> i don't know that selling the content is the mistake, necessarily. one of the biggest questions i have i think is going to come up on the call. it's going to be the decision of the partners of comcast, of fox,

of disney, to offer on hulu and ad free product. that's a big crisis to you. do you want to give your viewers the option to skip ads on current programming. that i think they'll get grilled on. in terms of selling the content on, the audience is going to fragment. the train has left the station. i'm a bull on media relative to my peers. i won't give you a real argument there. whether or not they sell the content, somebody is going to sell the content. it's the ultimate prisoner's dilemma. i think everybody is forced to do it. the audience is fragmented. >> you don't think anyone is going to try to hold back? they'll try to build their own library? what happens is if it's available on netflix or your service you might decide i'm just going to buy it on netflix. >> it could happen but it would take a commitment to ignoring

big term profitability. you're going to take a hit. >> long-term, though, is that bad for business. >> long-term -- >> long-term selling to effectively the third parties, the netflix, the amazons. >> i'm going to give you an unanswer answer which is, i think, looking backward, it probably would have been smart not to sell the content. looking forward, the train left the station. the audience fragmented. it doesn't make a difference whether or not anybody sells into these guys. the audience wants to consume more content on more platforms. >> here's a movie i want to watch, it's 1978. >> what movie was it? >> it was being there again. i want to show my kids because it's so classic. you sell rafael -- it's -- so i'm looking it up -- >> if you want to see things similar, every time. i never found it on netflix. if you want to see something similar -- no, i don't want to

see something similar to it. i want to see that. the comcast, xfinity, find it immediately, $3.95. if i want to watch it i'll pay $4. that's a better system. >> why don't you drop your netflix subscription if you're to anxious about it. >> because i watch the sons of anarchy. >> it's optionality. >> but let me buy them on demand. >> it's a tv business. tv streaming. it's so easy to get hits. they'll never have another flop. coming up, today's top stories including the box office winners and losers and house speaker paul ryan's big problem, think smoke. smoke in the carpet, smoke in the walls, smoke in the couch. anyway, he has a problem with his big new office. opportunities aren't always obvious.

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paul ryan needs a new cleaning crew. he is trying to come up with ways to remove the smell of cigarettes from the house speaker's office. john boehner is a heavy smoker and to complicate things ryan

does not have a residence in washington and many times he sleeps on a cot in his office and he also i think said yeah it's going to be the carpet. there's some o-zone machines you can try to put in there to try to get it out but hotel rooms, things like that, it's tough to get the smell of smoke out. >> yes. >> the white house is fine, right? there's no smell of smoke there that you know of, is there? >> i'm guessing he's not allowed. >> i don't know. i don't know whether we've ever actually gotten a firm answer on that. >> right. >> coming up, it was a scary october for hedge funds as well-known investors not sharing in the months big stock market gains. kate kelly is going to break down the numbers when we return. plus oil prices under pressure. facing expectations of weaker demand in china. why crude is going lower when squawk returns in just a moment.

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welcome back to squawk box. among the stories that are front and center at this hour, a number of smaller deals today. they're jumping on word it's selling it's private label operations to treehouse foods for $2.7 million. they announced plans to shed the unit in june as it works to focus more on brands. and endurance international buying online market constant contact for $1.1 billion. it's 23% premium to closing price back on friday. and then perfume maker coty buying the personal care and beauty business. the price tag on that transaction, about $1 billion in cash. >> the martian took the top spot at the halloween weekend box office. the matt damon sci-fi adventure brought in another $11.4 million.

that brings the total take to $182.8 million since it opened on october 2nd. two notable newcomers had disappointing debut weeks. bradley cooper's chef dirama film. it's a drama about a chef. burnt brought in about $5 million. even with bradley cooper. i don't know if you can do a bang up job on an adventure drama about a chef. finishing in 5th place. sandra bullock usually can open a movie but the political dramity it's called, our brand is crisis, brought in $3.4 million. debuted in 8th place. either one of those universal. >> there's enough drama in the political scene as it is. >> either one of those universal. >> i don't know. >> neither one. okay. good, then they got what they deserve. >> i'll tell you something and it is universal, steve jobs. down big. >> but you liked it. >> only made $2.58 million in

the second week. so that 14 murder in the second degree in. they probably spent $60 million to make -- between 30 to make it. another 30 to market it, maybe more. >> and truth. >> truth has had a really tough time that. movie has done even worse but it's surprising to me because i thought there was this whole steve jobs anticipation. great performances. >> although, don't get too into your own universe to think -- >> maybe that's the issue. but apparently all adult films, films for people over 25 or 30 years old -- not adult films like that. stop it, stop it. >> i can't believe you always bring that up. >> films for grown ups. >> people don't usually watch those. >> the burnt film for example was meant for -- >> this is what's wrong with playboy. you're not going to get real adult material in playboy. >> it's this time of the year. it's preaward season. they do the art house, highbrow

content. >> there's one actor trying to make the jump from adult over to -- >> what are you talking about? >> there's some guy. i forget his name but he's in some mainstream film. >> he knows. >> spending anywhere between 20,000,100 was a sand trap. the super cheap films had good margins. the tent poles were a good investment but everything in the in between range was tough. >> hugh johnson. >> anyway. >> kate kelly is here to talk hedge funds. not films. but october was good for stock with major indices logging their best monthly gains in four years. but a lot more pain than gain. kate kelly joining us now with more on that. anything else you want to say about the film industry? >> we won't have this month's average hedge fund performance for a week yet but it's safe to assume that will be something shy of the 8% rally.

it's biggest in four years. a number of well respected funds received it so far. even an 8% gain. it wouldn't be enough to reverse what's happened to them. consider a few of the numbers. these are indicative. green light capital, up .7% for october. down 16.3% year to date. bill ackman's fund down 3.8% through october 27th. glenview capital down 20% for the year and third point offshore flat year to date which is a good performance. some of these managers issued apologies in recent letters. bill ackman held a four hour investor call on friday just to talk through a single battered investment. it's shaping up to be another

year of reckoning for hedge funds in general which lost $95 billion in capital in the third quarter. that was the largest capital loss for a month in 7 years and many investor redemption requests were due by september 30th which could lead to further pain as hedgefunds raise cash to get back to people. >> what do you think they're going to look like? >> again. tough to say but, you know, i know a lot of long-short investors really worried about it. they think it's going to drag down the broad market as people have to sell things off and there hasn't been a period in recent memory where there was such a dispersion between the market and hedge fund performance. >> what are investors saying? are they going to stay in are they going to go? >> his call on friday is saying this is still a good play long-term. >> long-term. >> i thought the call -- let's talk about the call in a second. i'll just answer your question. i don't know how those investors are. they had a fantastic year last year as you recall.

he also has one of the most protective redemption policies of anybody out there. it takes 8 quarters to get all your money back. you get 12.5 per quarter for two years. it's not something you want to do unless you really thought he was done. like he had lost his touch entirely. so the call was -- it was kind of bizarre i thought in the sense that he himself is not on the hot seat. he has a troubled investment and there's questions about whether he should sell it now or hold it back. that's a reasonable thing to hold a call about. four hours, he took 160 questions and he didn't have a lot to say. >> i can appreciate taking every question that's out there. if you're going to hold a call like this, it wouldn't behoove you to take five questions and get out of the thing. >> you're sending the message we have nothing to hide and we're open and that's something that people appreciate about him for sure but there wasn't a lot of new news. he walked through a lot of recent history and got into side

notes. he talked about this 1963 commodity salad oil scandal and other things he thought bore releva relevance. >> what was it about today? >> there's a reliability related to american express there and the stock got punished. he was trying to draw an analysis. i'm sure you saw the comments as well. so ackman on the call hoped that buffet would consider looking at valeant now. he also called charlie to talk to him about valeant and he said i don't like the leverage. i don't like the business model. >> why would he think buffet would buy in? >> i don't know. >> they consult each other. >> he thinks it's that good of an investment. >> wow. >> so he is defending it and other longs on the stock have said even if there was a fraud here with the specialty pharma business it's not incredibly material. it's a small part of the business. even if there's a regulatory

sanction. it will be very manageable but the investment community has been brutal on this stock and there's supposedly more coming today with another short seller report. >> thank you. >> thank you. >> oil prices dropping this morning. we watched crude decline from its highest closing level in two weeks. there was weak chinese economic data out there. joining us right now to talk more about it is matt smith. he is director of commodity research and matt, how much of this is the demand picture? for 8 months in a row we've seen weaker factory activity in china. that's been a huge part. just the global demand that doesn't exist like it used to. >> sure. i think there's two things that play here becky. one is the oversupply story that's only continuing and also has signs of weakness coming through from demand in china. on the supply side of things, we've had q-3 earnings coming through from the big oil companies and you've had exxon showing that production is

increasing by 10% this year. you have production increasing from total by 20% so what is happening is you're seeing an on slot of production coming to market and this is because of longer term plays in terms of places in west afterkachlt from the north sea in brazil. all of these areas that were planned three years ago when oil prices were at $100 and now they're at 50, these projects are coming to fruition and oil is coming to the market as well. so the supply side is flooding the market. from the demand side of the picture, we have seen china really showing strong demand all this year as they have done historically for the last decade and a half but that's been to do with stock piling there. it's also been to do with stronger demand for gasoline. but as we see, diesel exports ramping up there. we see ships idling off the coast of china as well. we're really seeing the demand

growth kind of crumbling. >> even the most optimistic people that we speak to in terms of oil prices have looked and said maybe we get back to the 60 to $70 range sometime in 2016. what's your guess? >> i have much less constructive than in the last six months. i think in the short to near term as we move sort of through into the beginning of next year, oil prices stay low. simply because of oversupply. yes we could see the rebalancing but that isn't happening coming through in the data yet and it's unlikely to happen into mid next year. something like that. so i think these low oil prices are really here to stay for the next 3 to 6 months. >> if supply declines is that because you think u.s. suppliers will get forced out of the market with the low prices or do you think opec will actually stop pumping quite as much? >> no, i don't think opec are going to stop pumping. what is hugely interesting in

these q-3 earnings is that production appears to be holding up here in the u.s. and that's simply not because of shell production per say but because of gulf of mexico production coming online because of the projects as i mentioned before. we're seeing that offsetting some of the weakness we're s seeing. so the supply side is not showing any weakness. >> thank you for joining us. >> coming up, results from dow component visa out earlier this morning. we'll dig through that report with an analyst coming up next. it's more than the cloud. it's security - and flexibility. it's where great ideas and vital data are stored. with centurylink you get advanced technology solutions

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♪ >> all right. stock might be down a little. i'm not convinced. talking about visa i'm not convinced it's really mixed. a lot of companies would like earns like this. some analysts at 62. some at 63. but revenue did top expectations. the company also announced its

buying, visa europe. kevin mcvey is senior business service analyst. i just look at these numbers here. 14% in terms of the number of net income. 12% earnings per share. even revenue, full year, 9% higher even if you consider the dollar. the dollar was 12% higher. things like 12 and 14% share growth and 9% revenue growth. it's hard to argue with that chart right there. so, you know what, look at that. things are going pretty well at visa. >> that's mixed. i don't know what good is. >> that's what i mean, yeah. the visa europe deal. that's a good move. sit -- how are they going to buy it? they borrow to do that? >> it's a great move. >> or they put it on a visa card. >> exactly. >> 18 billion. >> tsa exactly right. so 21 billion was the total

purchase price. great deal for them. this was the option they had since 2007. makes a ton of sense for them to do this deal. if you look at the synergys involved they'll put a turn and a half of leverage on their balance sheet. which is about $17.5 billion. they'll use that to do the deal plus continue to buy their stock in conjunction with the deal. $5 billion authorization. there's a lot in this deal. it's worth $5 of equity value to the stock. just a ton associated with the deal. >> so this will help them, the -- right now you wonder how does visa continue to grow wiif the global economy stays where it is. >> this and i think they keep doing what they're doing. one of the nice tails to visa and mastercard is continued electronic acceptance. if you look at the growth relative to gdp is they out

paced it meaningfully and that continues to be the secular shift is people move away from cash and more toward credit. you get a lot of focus on the u.s. in terms of gdp but for us where the real opportunity is globally, you see people use their smartphones for purchases, particularly in developing markets, they're front and center for that. >> so i got a new one with one of the little chips. everybody in europe already has the chip and now they're slowly rolling it out here. >> that's right. >> is it expensive? >> it's not as expensive. it's expensive but given how pervasive the fraud has become. >> i have a visa card sponsor. >> that was the big debate whether it would be the banks or the merchants but what you see happening with target, they are so pervasive that they're splitting the cost. if you think about the scope and complexity of frauds it doesn't make sense not to do it and it

started in europe because you didn't have the same caliber landlines you had in the u.s. so the u.s. didn't want to do it because of the cost of the upgrades. it doesn't make sense not to at this point. >> so i'm trying to think of -- does my old card still work? it does, right? so i have two now? i have two. one with the chip and one without. i don't need to cut up the old one? >> you'll get a new one in the mail. some of the larger merchants started to roll it out. >> but if they send you a new one you have to cut up the old one. >> the old one is not expired. it still works. >> as soon as you turn the new one on -- >> what if i don't want to use the chip card. what if i want to use my old card. >> you can't. >> so do i still get one pass miles on my new card. >> it's no different than if you get a new card in the mail. >> i thought you told me wait on this new stuff until the bugs are out of it. >> you download new ios.

not with a credit card. >> go ahead and use it. >> go ahead and use it. you'll be annoyed by one thing. >> tell me these things. >> no, if you have to put it into the thing, you have to wait -- it takes a little bit of time. it's not a slice and go. there's an incremental two or three sexd. >> here's a question though too. you have to put your pin number in at this point which i didn't used to do. >> with a credit card purchase. >> debit card purchase. it's a credit/debit. >> a lot of the credits are not requiring the password i thought. >> it depends on the type of acceptance. you still have pin and signature. >> i don't want to give my pin number. if that store gets ripped off i don't want them having access to my bank account. >> that's right. but the real goal is if the data is compromised it makes it useless as opposed to the past. >> i would take my card out and

look at it but i did that once. >> people saw the number. >> people at home they zoom in and i had to cancel. >> now that it has the chip in it, they could actually know the number and it probably wouldn't matter as much. >> i wouldn't test it. >> i wouldn't test it. >> so you don't have like buy ratings. >> i do. >> what's your target. >> 85 before the deal. at least $5 of equity value on the deal. we thought initially 20 cents. if you look at the way they're modeling it, it could have up 35 cents. we think this is a real nice opportunity for them. >> great. thank you. >> thank you all. >> when we come back, this morning's big movers. we've got your list of stocks to watch, next. plus why chiptole is shutting down dozens of restaurants in the pacific northwest. that story after this.

>> as much as $2.5 billion. that's about 10% of the current annual operating costs. the cut backs will include lay offs and cost controls but no word on how many jobs will be cut. we have more details we're expecting to hear about tomorrow. also take a look at hewlett-pack card. they're splitting into two companies today. they'll trade under the symbol

hpe. and our good friend is going to sit down and talk to meg later today. >> chipotle is closing restaurants in two west coast markets. they're reporting an outbreak of e.coli bacteria. it's under an abundance of caution. this is the third outbreak since august. the other involved salmonella and the noro virus. shares down about 5$5%. $6 $607. >> an uber driver was attacked and it was caught on camera. his passenger was fading in and out of consciousness, refused to put on his seat belt and failed to give clear directions when he asked the passenger to get out of his car he was punched repeatedly from behind. the driver sprayed the passenger with pepper spray to get him to

stop. they arrested the customer. uber banned the customer and offered to have the car cleaned. the driver says he's done driving for uber at least for now. remarkable video. when we return, the squawk market master will give us his predictions for jobs friday. plus the new etf is out that tracks the restaurant industry. the founder is going to tell us why you might want to consider putting your money where your mouth is. we're back in a moment.

stocks post their best month in four years. now the countdown is on. what you need to watch from two pros. morgan creek capital will join us with their expectations. >> ford getting ready to roll out big incentives to win back customers. will the new plan spark a price war? >> what are you doing? >> a look at the company's plan and what it means for the competition is straight ahead. >> plus, are you hungry for returns? a new restaurant etf is looking to serve up some profits. we reserve a table with the creator of the new product that tracks the industry. the squawk box main course being served right now.

>> the most powerful city in the world, new york. this is squawk box. >> welcome back to squawk box here on cnbc. first in business worldwide. powerful city. maybe not so powerful teams across the board over the weekend. it was rough. mets, giants, jets. we'll have more on that later on. we're less than 90 minutes away from the opening bell on wall street. futures moderated a little. up just under 10 on the nasdaq. in europe things were going pretty well earlier but they have moderated a little as well. germany is up .9%. france up .4. the ftse is now actually negative and italy up just fractionally. >> we'll tell you about the stories investors will be talking about this morning. visa buying visa europe for $18

billion. in other news, the credit card issuers earnings missed by a penny. visa also authorizing a new $5 billion share repurchase program. continued trouble for the country's manufacturing sector. factory activity contracting for an 8th straight month. the pace of declines slowed in october and company with good credit ratings selling more than $100 billion in bonds last month. this is a record for october. some say this could be, though, a bullish sign for the u.s. economy. >> a few stocks on the move this morning, shire is buying dyax for $5.9 billion. that's about a 35% premium for dyax shareholders. nice move today. 33%. dyax is best known for a late stage experimental treatment for severe breathing difficulty. >> treehouse foods is buying conagra. they acquired the unit just two

years ago as part of the 2013 acquisition of raw corp. it makes treehouse the biggest private label food manufacturer in the united states. >> with third quarter earnings fully underway it's time to hedge your bets for the year ahead. joining us now is the hedge fund manager. he's morgan creek capital management ceo and chief investment officer. thank you so much for being here today. >> thanks for having me. >> i know you're looking at the u.s. market now and you think some of these valuations are stretched. why is that? >> well, we have been looking all year at all the indicators from price earnings ratios to the buffet indicator. the market cap of the market divided by gdp and valuations just look at the top end of their long-term range. >> does that mean you don't see any bargains or this is just focussing on the major indices.

>> it's a great point. there's always bargains and values out there. there's been bargains created here lately with some of the things going on but i think great time in the markets right now or great strategy in the markets is to be long and short. we have talked about this all year. that we thought that the true long-short hedged funds would outperform and that's been the case so far this year. >> let's talk about the opportunities, though. you have been looking at the drug space and thought that some of the concern sparked by the political campaigns, specifically with hillary clinton are things maybe overplayed but you even say that you think valeant shares may be bargain at these prices. why is that? >> well, you know, i think that motte much of what was said about these proposals is new news. many of the same things were said in 1994 and then again in 2008. most of them require an act of congress which we think is unlikely at this point. but i think the bottom line is a

lot of these companies have just been taken out to the wood shed. that's an overreaction. they wouldn't have to show it for the month end statements. we'll see what happens this morning. he was out picking on valeant over the weekend. >> does that mean you'd buy shares or you're eyeing it here? >> we have been looking closely. we haven't stepped in yet. but we talked a lot about it last monday and we'll talk a lot this monday in our investment meeting here in about an hour. >> mark, you also say there's potentially bar gains when it comes to the oil match. hedge fund managers have jumped in early and gotten burned. other investors have been trying to think this is the bottom. why do you think now is the time? >> we started this year with

this thing we call the ten surprises and one of our surprises is that oil price would be lower for longer but when he that little false rally in march, april, and then they have come crashing back down into the 40s and i was over in london with the world's greatest oil trader and he said that he still thinks we're going to stay in the 30s and 40s until the middle of next year so we think that rushing out to buy those bonds of those companies was a little premature and yet there are some places in what we call the core of the core where there are some assets that have gone on sale and one of the things i like to say is investing is the only business i know. when things go on sale everybody runs out of the store. we want to buy things still in the store. >> who is the world's greatest oil trader? >> it's a group over in london. >> and that's their take and

you're sticking with that? >> yeah, you know, i have known him a long time. been speaking with him all year about his view on things and he has been one of the few guys to stay bearish. there's a lot of people that flipped to the bullish side when oil prices started to rally in the spring but doesn't see any real increase in demand. and supply doesn't look like it's going to fall anymore soon. the u.s. supply has fallen a little bit but not enough to offset iran and iraq. >> some of the emerging markets have gotten pretty beaten up and you like what you see because of lower valuations. >> finding things that are valued. it's been pummeled because of fears of rising interest rates in the u.s. so the currencies in

emerging markets have just been pummeled. so we think there's a lot of assets that have been punished and maybe are showing good value. particularly in china and india where they benefit from low oil prices. so we think china is at the very beginning of a very long-term bull market and there's great assets. howard marks wrote in a letter a couple of weeks ago how they were finding great values in that market and we agree. >> you also point out that the russian assets at this point are cheap. maybe there's good reason for that. would you buy russian stocks right now? >> yeah, we have nibbled a little tiny bit. there's a great banking asset over there that we think is one of the cheapest banks in the world. the challenge for russia is its been cheap for a long time. it's like brazil. brazil will be the market of the future. always will be. so, you know, trouble with

russia is people still have a fear about mr. putin and they still have a fear about transparency and -- >> those don't sound like unwarranted fears though. those sound like serious concerns. are you actually putting money in russia. >> just a little bit. we have a couple percent in russia and looking for another window to buy. probably the biggest place is argentina. love the story in argentina. >> and let's talk about japan too. this is another one of the markets you think will do well. why? because they're still easing while we're looking at rates starting to rise here? >> the diver jens of central banks is part of the story but the real story is profits. their companies are creating record profits because of the weakening of the ye nerks over the last couple of years but partly because they were just at a downturn. the thing we love about japan is

you're buying earnings on multiples with riesing earnings versus in the u.s. peak margin with peak multiples and falling earnings. on a relative and absolute basis. >> thanks for joining us. it's good talking to us. >> coming up when we return, could save car buyers thousands of dollars. is this the first shot fired in a discount war? that story is next. and investors can take a bite out of the restaurant industry. the creator of the etf joins us to tell us if these companies can keep serving big returns in just a moment. (friends gasp) the app where you put fruit hats on animals? i love that! guys, i'll be writing code that helps machines communicate. (interrupting) i just zazzied you. (phone vibrates) look at it! (friends giggle) i can do dogs, hamsters, guinea pigs... you name it. i'm going to transform the way the world works.

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welcome back to squawk box. we have been watching the futures and they have been indicated higher through most of the morning. you'll see they have given back some of the bigger gains we have seen earlier but the dow futures up by 23 points. s&p futures up by close to 2 points and nasdaq by over 10. more deal news this morning, med assets is being required for

$31.35 a share in cash. the stock not trading at this point but we'll keep an eye on it. >> ford rolling out new promotions in an effort to regain market share but will it spark discount wars? phil has that story now. >> this is the biggest story going back since before the great recession because if you look at what ford is going to be rolling out over the next couple of days it's substantial programming. it's called the friends and neighbors program. they will be rolling off up to $2,000 off the msrp of different vehicles. it's not all $2000 across but it's on most ford models. the mustang and a few others are excluded and it runs through january 4th. now you might be saying, okay, what's the big deal. it's just another incentive program. well it's not. it is substantially more than what we've seen in the past. look at where ford's incentives were in september.

an increase of $660 but the average transaction price rise by $2,100. that's important. you have to look at the rise in incentive and average transaction prices. up about 10% this year but october auto sales are on a pace to top 17 million and the auto makers have bigger margins than they've had in a long time. if there's ever a time to say let's roll out a sweeter deal to bring more people into the show room, this is it. it's all about getting back market share at a time with high profits here in north america. the big three in addition to toyota, this is where their market share stands. it's flat with last year but down compared to a couple of years ago and as soon as we do this story, we already heard from people saying this is it. this is the beginning of what we saw in the early 2000s and the late 90s. the auto makers throwing out these ridiculously sweet deals. you have to look at the

incentives of the average transaction price. it's 9.5 to 10.5%. we're nowhere close to where we were in the early 2000s when insi incentives for 14 to 15%. it starts tomorrow. >> we talk about the incentives. this debate has been going on about the equivalent of sub prime loans for autos. where does that stand? >> it depends on the auto makers. some are more aggressive than others. dealers do not like that in term of a program that's out there. but it goes auto maker by auto maker. we're nowhere close to where we were in the late 90s when it was prevalent within the industry. most auto makers are trying to

stay away. >> what is vw. what are they doing and what do you think we're going to do? >> continue giving extreme discounts on all the models they can sell. >> what do they look like? >> discount relative to transaction price is going to be well over 10%. we'll get new data from true car taking a look at what it is in october. in terms of the brand in north america and they were struggling. they don't have trucks and suv. that's the hot part of the market now. the weak part of the market. damaged brand. you have to do whatever you can to get people into the show room. >> thank you so much. great to see you. >> coming up, mortgage volume is surging but you better have a good credit score. the numbers and what you need to know when home shop as good just ahead. and it was a rough sunday for new york fans. which the rest of the country really loves i know. i'm a little mixed.

i see what they're saying. giants, jets and mets all losing. the wrap up this weekend in sports. after the break. the future belongs to the fast.

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at ally bank no branches equalsit's a fact.. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda.

♪ think of it this way, don't think that we're just media s centric, take satisfaction in this if you're in the rest of the country. a rough weekend for new york sports fans. where do we start? eli manning and drew brees threw for 13 touchdowns but then they didn't cover a punt. not only did they not cover it the guy ran all the way back. still wasn't close enough to get a field goal until they packed on a face mask which gave them a 52 yard attempt and they lost. this is the third game the giants lost that they should have won. they said they're 3-4. it's a come my of theirs. then the jets, better than people thought at the beginning of the season.

they lost 34-20. more importantly, they lost two quarterbacks. they're now scrambling to find one after ryan fitzpatrick and geno smith were lost to injuries yesterday and reports surfaced last night that the jets were looking for free agents during the game. >> what? >> they can't bring tim tebow back. they already tried. been there done that. one former nfl quarterback already offering up his services. former new york giant known as hefty lefty said he would take the job tweeting this yesterday, okay, new york jets, i feel like this is destiny. let's work this out. you know you want to. #coming back to new york. and then there's the mets. >> kansas city royals 7-2 in the game five. it's the royals first championship since the george

brett era back in 1985. >> i was thinking ha ha chuck todd miami lost another one. i don't know if i was hoping for duke or miami. >> because it's political. >> no, i just love chuck. 58-0. and then i like when duke loses. the acc announcing it suspended the officiating crew. miami-duke football game for two weeks. the suspension follows errors made in the game's final play. miami beat duke on this ridiculous thing here. returning a kick off 91 yards using 8 laterals. when you see that it's never supposed to work.

just go down. this is like rugby. >> the acc says the final play wasn't handled properly by the officials. one of the ball handlers should have been ruled down before a lateral. that would have ended the game with a victory. despite the errors the results of the game shouldn't be changed. and they knock the blue devils out of the top 25. so i think they play north carolina this week. but 8 laterals and then still happening. >> football player. >> once a month. >> no, they shouldn't have won it. right. right. but the whole thing was nuts. i waited 6 seconds. >> i know. >> there was a lot going on. always like 10 games going on. >> you like to watch. >> i'm going to watch that. i'm going to watch being there.

it's very funny. >> when we come back this morning, disappointed jets and mets fan is going to be joining us to talk about this week's big jobs report. we'll get his latest read on the last two trading months of the year. as we head to a break, take a look at the u.s. equity futures. dow futures up 31. s&p futures up by 3.

♪ welcome back. general electric completed it's acquisition of the frances alstom. that comes after months with european recomme european regulators to get that approved. the supply management monthly manufacturing index expected to come in at 49.9 for october. that would be dipping below the 50 mark which separates expansion from contraction.

viacom and tivo to help advertisers better target their tv commercials. it would ling them with shopping information and other information from third parties. we'll see if they get a bump from that. >> other stocks to watch this morning, clorox with earnings and revenue that tops estimates. they see increases in domestic and international markets. it's gain was the biggest in three years. estee lauder beating the street on the top and bottom line despite the negative impact of the smaller dollars. they were helped across a variety of categories and geographic regions. boeing will match and announce production increases. airbus plans to increase production by 20% to 60 a month. emc and merger partner are reportedly considering an early 2016 ipo pivotal. that is the join venture with general electric.

they considering offering a majority stake to the public just as they have done in the past. amazon is shutting down it's local daily deals unit as well as it's mobile credit card processing division. >> chipotle shares getting hit hard this morning. the chain is closing all the restaurants in two west coast markets. for how long? >> they figure it out. >> but not closing. >> just temporary. >> shuttering them. shuttering is a good word. the company and health authorities are investigating a reported outbreak of e.coli bacteria. chipotle is closing the stores out of an abundance of caution. this is the third outbreak since august and the others involved salmonella and the noro virus. so it's kind of like, you know, on the menu, i'd like, do you like e.coli or salmonella or would you like noro virus.

>> sour cream on yours. >> that's gross. we have a special on listeria this morning. >> purchase lending is leaping but only to consumers with a 700 plus fico score. the score recently announced helped buyers get back into the markets. diana joins us now with more. these sound like my sat scores kind of. >> yeah and they're just as important, absolutely. look the number of new mortgages made to buy a home today is surging as cash heavy investors move out and regular mortgage dependent buyers move in but there's now a growing divide in housing between the haves and the have notes. surged 15% annual in q-2. up 11% in q-3 and in june the largest purchase loan volume in 8 years. all of this according to black knight financial services. here's the divide. the increase is being driven by high credit worthy borrowers.

for those below it's flat to slightly down. 20% of purchase originations for were borrowers with scores under 700. the average credit score hit a record high of 755. that's only 5 points shy of what is considered the top tier lowest risk which of course gets you the best rates. now it's around 720. fanny may is instituting a new scoring model that looks more in depth and hope is that it will help more people be able to qualify but again we're going to have to wait and see if this actually works out. that is an incredibly high fico to get a loan today. >> i wonder too if you're looking at two different scores the idea behind it being if you don't qualify on one maybe you qualify on the other but is there the chance that even if you do qualify on one the other

disqualifies you so it's harder for borrowers. >> there are three credit agencies and they take an average of those scores and when you look at that the new idea of looking further into someone's credit history that fanny mae is now doing, they call it trended model. that's going to help for those self-employed or something like that but they're looking for that score and they're such sticklers on this. i've seen them fall apart over 5 points. >> that sounds high for medium, doesn't it? 720. 720 is pretty good, isn't it? >> it's very high. >> there's still a problem. >> 720 is pretty good but 760 will get you the best rates. when we talk about the best rate on the 30 year fixed is 760. 720 might sound good. the average is actually a lot lower. >> what is perfect? what's the highest you can get? >> over 800. i think it's something around 820. i mean, in general, if you're really credit worthy, a great

credit borrower around 800. a little over 800 but they're looking for that 760 to give you the best rate. >> these three agencies, i don't like any of them diana to be honest with you. have you ever dealt with any of them? they don't update and correct things that shouldn't be on there and they're arrogant. no accountability. >> i have credit theft and had to deal with them. >> no accountability. >> absolutely. >> there's no supervisors or bosses. they don't -- >> they do have good -- they do have good models on what they're doing and that's why you get the average and sometimes it will work. i will tell you we had a bad score on my husbands because of a $35 shirt he bought at a certain store that he was a little late paying the bill on. we did apply to get that changed and removed and they did remove it pretty quickly. you have to look at millions of people that they're scoring but that's why you get the average

and that's why fannie mae is looking to longer term credit history. >> this is enough just me talking about it for them to lower me like 30 or 40 points. reminds me of a government agency almost. i can't believe it's a private sector endeavor because normally there would be some kind of accountability where you'd have, you know, you have to mind your ps and qs if you want to stay in business. i don't think these guys need to do that. anyway, a better stop before i say anything else. thank you, diana. the fed and the ecb both leading rates signaling the return of the divergent central bank policy. joining us now is alianz chief economic policy. you already like multispeed stuff. the rest of the world might be doing qe for the next year. we'll be tightening. that should mean continued

dollar strengthening and more multispeed economies around the world, right? >> yeah. it means three things joe and good morning. it means more dollars strengthening. it means a wider gap in interest rate differentials. particularly between the u.s. and germany and it means the return of larger equity volatility. this has been the theme all yearlong which is quite volatile markets and investors have to have a tactical side to their strategies these days. >> do you think, mohammed, that -- when will 2017 be the year we see a sustained upward move in u.s. interest rates? not just fed funds but like the ten year or the 30 year? will we hit 2.5 or 3% this year on the ten year? next year i'm sorry. >> so i have this notion that we are heading toward what i call the junction. the road we're on is going to

end. we cannot rely on central banks and central banks cannot be the only game in town when it comes to policy. so by 2017 we're going to take one way or the other. either to a healthy economy where we hand off to genuine growth and then rates normalize or alternatively central banks become totally ineffective and then we are in a different worldcom pleatly where we have not just lower growth but financial stability. we're getting closer to that point. it's within the next two to three years and it's an open question. just like even with the short-term, december is a open question as to what the fed is going to do. there's a lot of uncertainty out there right now. >> what would you put the recession risk for 2017 in the united states at? >> in the u.s. in particular i would put it probably 25 to 30%. but if you look to europe -- >> that's scary. most people put it at zero, don't they.

>> the liquidity and how open we are to financial stability. look what happened in august. the vicks in stability. as strong as we are we're connected. >> mohammed at this point, new normal is looking pretty smart. i got to admit. are we in the larry sommers savings glut or is it policy mistakes that are, you know, that congress and the executive branch are making. >> whether you call it new normal or stagnation and so many different it's the inability to grow and sustain an inclusive matter. that's where we are today. part of that has been prolonged

dependence on central banks and it's unintended consequences. it will be normal for the next five years. the new normal was the story of the last five years but as we go forward we're going to hand off to one world or the other. why? because central bank policies as they acknowledge themselves are not just benefits but they come with costs and risks and the longer you rely on conventional policies the worst that equation. >> how could we have a 30% chance of recession with europe. all of this qe and, you know, easing in china, japan still with easing. why would we go -- it seems like things are final lily improvingr us. we should benefit. we've been doing fine without them. but now if they do better seems like it should be additive to us. >> so we're still at 2 to 2.5%

economy and the latest numbers show you we're only 2% for the year. the rest of the world is below that. europe and japan is below that and the emerging world is slowing. that's why this multispeed issue. it's closer to lift off but the rest of the world is pulling us back and the emerging world in particular is pulling us back. i don't think that's going to happen but that is a possibility. the good news joe is it doesn't take much to change a prospect. all it takes is for the rest of the policy making entities to join central banks in responding to our economic challenges. that's what it takes. it's a political issue and not an economic issue. >> all right. were you just miserable to be around yesterday and you have a dog, right? you're just kicking that poor

thing? the mets. i mean, that was awful what happened to your mets or are you saying it was a great season. and it rhymes, the mets and the jets. how are you dealing with this? >> since we lost to the patriots it's been horrible. i'm devastated. i hate the 9th inning. i don't even want to see a 9th inning anymore. i had this sense yesterday that we were going to blow it and we did blow it. having said that joe, a year ago if i told you the mets were going to be in the world series you would have laughed at me. if i told you that the jets would start pretty good you would have laughed at me. we do need a quarterback and if i told you that your bengals were 7-0 you would have laughed at me. >> they're not mine and i'm still laughing at that. >> but get back on the band wagon. it's time to get back on. >> they have to win a playoff game and they do and i get back on the band wagon they'll lose the next playoff game. >> that's the whole point of being a fan. i'm a long suffering mets and

jets fan and i love those teams and i'll continue to love them. >> we had 1968 teams. at least you won a super bowl. >> all right. you don't play quarterback do you? >> no but i think you should come in. you look great in a jets jersey. >> really would. >> all right. thanks. mohammed. it was a goodyear. it was a good year for the mets and we all enjoyed it. see you later. >> coming up when we return, a new etf that tracks restaurants. does it deserve a spot in your investor menu or leave a bad taste in investor's mouths. we'll talk to the fund's founder and get a reservation at his table. hewlett-packard splits into two companies. the pc and printer company will keep the symbol hpq and me

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the matt damon scifi adventure brought in $11.4 million. it opened on october 2nd. two had disappointing debut

weeks. bradley cooper's drama film burnt brought in 5 million and sandra bullock's political dramity brought in $3.4 million. it debuted in 8th place. >> the company tracked and the dow jones restaurants and bar index had returns of 20%. now a new etf called bite is the first to offer investors direct access to the industry. kevin carter is here. he's the founder and managing partner. >> good morning. >> you must think, i'm curious when you create an etf like this, you say to yourself okay for the next five years you're really bullish on the restaurant business. how do you decide to do this? >> well, i think that the reason i decided to make bite was because i thought the restaurant category was a category of interest to investors and deserved to have it's own etf. i wouldn't say i'm bullish or

bearish on restaurants. >> that's the question. when you set one of these up do you have to be bullish or bearish or do you think of it as a vehicle one way or the other? >> i think of it as a vehicle. as an entrepreneur it's a vehicle to give exposure to the restaurant industry. i made other funds i thought were things that i was bullish on. >> have you ever made one that you're bearish on? >> no. >> or is that just a bad business model. >> i just wouldn't do that. it's probably a bad business model too. >> so when you just look at -- look at like the next year or year and a half, what do you think is going on with the consumer in restaurants? >> there's a long-term secular trend of people eating at restaurants versus eating at the house. that's 150 yearlong trend and one of the things that i think is a problem with indexing is the catigorazation of different companies. they're considered to be consumer discretionary and

that's wrong. people eat every day. tobacco is a staple i think restaurants are a staple as well. >> what goes into the index and tell us what's not in the index. >> well, every publicly traded restaurant company in the united states is in the index. >> how many restaurant chains are there? >> 45 publicly traded companies. so yum brands for example have kfc, taco bell, et cetera. there's only 50 restaurants but 45 publicly traded companies. >> what do we do? it wants to take it's china business on the one side and u.s. business on the other -- are you really just looking for more of a u.s. -- >> no, the global opportunities are very important. i'm an emerging markets and china investor. my main job and i'm quite familiar with the growth story of yum and starbucks in china. so i think we'll own yum-china as long as it trades and i'm confident it well. >> when i read what you were doing it struck me we have been

talking with retail analysts over the last year or so. we figured it would mean that consumers would spend more. they have not been spending it on things like apparel but more to eat out. it was an interesting time. >> i think that's right. a lot of people believe that, you know low gas prices, better economy influenced the restaurant business but there's a longer term trend. i can't make a cheeseburger at home for $3.15 that's add gos gs the cheeseburger at the habit or any other trains. this is more of a secliclar change. >> what do you make of what's going on at chipotle? >> health and food risk is part of a restaurant, you know,

investing and i think the e.coli in the northwest is a problem. >> do you think that's going to broadly effect all the restaurant chains? >> this is an isolated incident. it's not evident to me that there's a bigger problem nation nationally but going forward a broader e.coli outbreak could effect restaurants. >> more volatile or less volatile than broader indexes? >> historically, actually, less. that's what the numbers say if you look at how the index has performed over the last five or ten years. it's certainly less volatile. >> thank you. appreciate it. >> thank you. >> when we return jim cramer from the new york stock exchange. here are the futures right now. they have been up a little bit for most of the session. and now up about 30 on the dow. the s&p up 3. nasdaq up 13. we'll be right back with cramer.

in panama, which is a city of roughly 2 million people, we are having 5,000 new cars being sold every month. this is a very big problem for us with respect to fast and efficient transportation. it's kind of a losing proposition to keep going this way. we are trying to tackle the problem with several different modes. one of them is the brand new metro. we had a modest forecast: 110,000 passengers per day in the first line. we are already over 200,000. our collaboration with citi has been very important from the very beginning.

citi was our biggest supporter and our only private bank. we are not only being efficient in the way we are moving people now, we are also more amicable to the environment. people have more time for the family and it's been one of the most rewarding experiences to hear people saying: "the metro has really changed my life."

welcome back to "squawk box." busy monday morning for deal news. visa buying visa europe doing that for $18 billion. britain shire buying die dyax for $5.9 billion.

a 35% premium for die dyax shareholders. conagra is selling its private label operation to treehouse foods for $2.7 billion. endurance buying constant contact for $1.1 billion in cash. coty buying the personal care and beauty business of goodsmaker hypermarcas, they're doing that for about a billion dollars in cash. given all of that, let's get down to the new york stock exchange where jim cramer joins us now. we can talk about that, talk about the future of hp which one you want to own. i'm game for whatever is your interest this morning. >> i like not the hpq -- the enterprise con. i think the enterprise is getting better. if the dollar were to get weak versus the yen, i would like the printer company, because what's eviscerated them is literally the japanese decision to take all that business away by weakening the yen.

that's a pure commodity play. the lowest cost producer wins. because of the yen, the japanese have won. i like that situation from the point of view that the enterprise needs a new player in the game. that enterprise company may end up being a very undervalued stock even if it doesn't have growth. >> i don't know if you saw the other report talking about computermakers, emc and dell. this idea in rico that they will spin off pivotal before that deal closes what do you think the chances are that the deal does close? >> i think the deal closes. i think that -- this is a challenged space. if you think pcs have bottomed, which is what you could get from the case thof intel. and people feel that pcs won't go much lower. it's tough to own dell, you want to own hp enterprises, which i can't wait to hear what david has to say with meg whitman.

they is tireless of trying to create value out of what may not ab valuable situation. >> we'll see david and you later with that interview. thanks. when we return, a check on the markets. plus did taylor swift steal lyrics for her "shake it off" song? details when we come back. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most.

hand apparently, they also lovee stickers. ng. what's up with these things, victor? we decided to give ourselves stickers for each feature we release. we read about 10,000 suggestions a week to create features that as traders we'd want to use, like social signals, a tool that uses social media to help with research. 10,000 suggestions. who reads all those? he does.

for all the confidence you need. td ameritrade. you got this.

welcome back to "squawk box." the futures right now, look at what's going on. you're looking at the dow opening about 43 points higher. nasdaq opening up about 16 1/2 points higher. the s&p 500 looks to open about 4 1/2 points higher. >> the bbc is reporting that taylor swift is being sued for $42 million for alleged plagiarism of her hit song "shake it off." u.s. singer jesse bram says taylor stole the words from his song in 2013 called haters are going to hate. i does see the singer said originally he just wanted to be named as a co-writer of the song and a selfie with taylor swift. >> i think that haters going to

hate phrase has been around for a long time. >> there was like a seinfeld about that. george said i was the first one to say that -- and it was used for years and years and years. >> he wanted a selfie first. if i can't get that, $42 million. >> is it just the lyric or -- >> just the lyric. >> i'm not giving him anything. if he had the tune -- >> an uber driver was attacked and all caught on camera the driver said his passenger was fading in and out of consciousness and he refused to put on a satellite and failed to give clear directions. when he asked the passenger to get out of his car, he was punched repeatedly from behind. the driver sprayed the passenger with pepper spray to get him to stop. the customer was arrested for assault and public intoxication. the driver said he is done driving for uber. he look like one of those

fanduel guys. hey! high five with the fanduel stuff, doesn't he? >> yeah. >> the driver just smart there with pepper spray. >> it kind of looks like our producer, matt, with the hat on backwards like that. greco? make sure you join us tomorrow. "squawk on the street" begins right now. ♪ congratulations to the kansas city royals on winning their first world series in 30 years. good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. first trading day of november, the markets set up for a mild open. we're going to get busy with earnings from facebook, tesla, disney later in the week. auto sales tomorrow a jobs number on friday. china's pmi was a miss and remains in contraction. the ten-year