♪ >> live from new york where business never sleeps this is squawk box. >> good morning, welcome to squawk box here on cnbc. michelle is with us today. becky is enjoying some time off this morning. also before we get started take a look at u.s. equity futures this morning. you're looking at arrows. dow looks like it would open up higher. s&p 50 looking to open higher as well and the nasdaq looking to open a little over 9.5 points higher. among the tests for the market today, more economic data ahead of tomorrow's big employment report. coming up at 8:30 eastern time we'll get weekly jobless claims and a first read on third quarter product activity and labor costs. also another busy day for fed speak. six officials have them today.

ben bernanke will be overseas. >> taking us overseas to the investigation of what brought down a russian charter jet and now it's looking like a bomb may have been the cause. we have the details on that story in just a bit but before that we'll go over to michelle with a round up of the day's top business headlines. >> thank you. expedia is buying home away for $3.9 billion in cash and stock. this is the largest acquisition and come ace year after they bought orbitz. it values the so-called alternative lodging market at $100 billion and the home away deal will help it directly compete with airbnb. the chairman will join us first on cnbc 8:30 a.m. eastern time to talk about the deal. the fed vice chairman says the central bank may be closer than thought to the inflation target.

the 2% target may be hit once oil prices stabilize and the dollar starts rising. when is that going to be? kraft heinz is stepping up it's cost cuts. announcing plans to close 7 factories and lay off 2600 employees in north america in addition to the 2500 job cuts announced less than three months ago. >> you knew that. >> absolutely. this is their play book. >> it's a great line, costs are like fingernails. you have to always keep cutting them. >> unless you're howard hughes. >> and then you let them grow and grow and grow. >> you have to save. >> the beverly hills hotel. >> i wasn't going there. >> what is amazing is so crazy but so many publicly traded companies will come from his

brillance. >> do you remember when all the clowns bought, like he decided he's going to buy gold because the central banks are going to be printing money. >> it's like bitcoin. >> it was so well-known that that had already happened and we had been a in 20 year bull market and he finally decides that i'm going to -- and he was wrong. he was at 1900 on gold so now markets anticipate things. the dollar -- >> a agree with you. conventionally -- >> he's going to say that aren't you? >> that means the dollar is probably partially priced but not 100%. >> there's people that say once the fed does move and they're wacky -- wow, they might do it in december. they're crazy. a quarter point, seriously? >> but once they do that, they acknowledge that things are getting a little better and then you start worrying about reinflation down the road. >> the best thing for the market just like i thought in september is if they raise but say unless something really extraordinary

happens we're down for six months or so and let's see what it does. >> the reason i bring this up is janet yellen yesterday based on what she said, what sam fisher said last night is we are going to be the one central bank in the world doing ying while the rest of the world is doing yan. >> that's in the markets. when is the next fed meeting? >> in december. >> december what? >> '15, '16. >> so we get two more. we get friday and another one. >> jobs report? >> yeah. they could definitely be derailed. >> for sure. >> but if we get 150 above 150 both times they should go, don't you think? >> okay. >> they faked us out in october. they shouldn't do it again. i don't think. >> but if you get more and more stimulus from the europeans and the chinese in the face of us not doing nearly as much doesn't that push the dollar higher. >> no. >> no? >> all right. >> i have to do this microstuff.

>> stocks to watch, whole foods under pressure. same store sales drop by .2%. the company has been losing business to lower cost options such as traditional grocers. this is music to my ears and rivals like trader joes. >> why is it music to your ears? >> the whole pc, preservative free, gmo free, you know, people have no idea whether this stuff is actually better for them. they'll pay twice as much for it because of what they -- you know -- >> isn't america great. >> yeah. pay twice as much for stuff that probably has a better chance of making you sick because it's not preserved properly. anyway, shares of fireye getting slamd. >> i have a special place in my heart for whole foods. >> i love him. he grew up and actually read some things and went from a total liberal idiot to someone that understands the way the

world works. >> you remember his op ed when he wrote about health care options. >> it shows there's hope for everyone if they just educate themselves. >> i just want to put it on record. >> we're making it -- >> going to move this network. >> oh my. >> shares of fireye getting slammed. citing a lower demand for its products as china as the u.s. crack down on cyber spying. and qualcomm also under pressure right now. the current quarterly forecast falling well short of consensus. blaming strong competition from rivals in asia and delays in new licensing agreements in china. andrew, facebook is worth more than ge. is that right? >> that's true. >> don't say anything bad. >> that's true. >> what do you want to say? >> pick another company that you like a little more. >> i was joking. >> but 300 billion.

>> 300 billion market cap. in the dot com error. >> free market. that's why they're doing so well. >> that's true. >> i want to put something out there. >> they're growing. >> they're growing. we like that. >> in the old days during the.com bubble faber would do annoying comparisons. aol is worth this much and find three dow components and you could buy all three. >> he called them or you did. >> in terms of breaking news and stuff like that. >> there's worse people to copy. >> i very much would like to follow in his footsteps. very happily. beating the street on both the

top and bottom lines the social networking site reaching $1.55 billion -- 1.55 billion monthly active users, rather. take a look at shares in this hour trading up in the premarket now. >> keep in mind they're not in china. >> and they're not in china. that's a big number. >> this is really making america great. i just want to say. and over the last two years, they have more than doubled. >> no, this is an amazing thing for the country. and then all the tax dollars. >> and when they get to china they'll be able to have pictures of two children now rather than one. >> yeah. >> we're tying it all together. >> tying a lot of things together. let's bring in james -- >> right out of the gate. >> senior analyst -- >> this is going to be tough. >> so how high can the stock go and is it now so built in that the expectation is so high going

forward? >> you have to understand what the big picture is and investment in facebook is. advertisers want data. they want audience, $1.5 billion users and advertisers want the ability to target on a demographically segmented basis. and when you think about the add market, companies are either going to one, brand advertising or direct advertise chg is google. here's the secret sauce. the fact that they can do both and that's a very rare value proposition and rare read and they're only 3% of the add market today. when you talk about can it get bigger? absolutely.

>> is that a secular shift or they're offering more products. >> there was a time when we had big stories about companies that didn't want to advertise on facebook because they didn't think they were achieving anything by doing so. what's happening now. >> it's accelerating. up 54% and the reason it's happening is users are growing, yes but at the same time they're able to extract greater share because they're able to tackle the full barbell of advertising brand and direct response. so you're going after dollars that were historically on television with their video and now up to 8 billion daily views per day. you're going after dollars that were predominantly searched with new product adds and get them to engage with them with sufficient roi. with things like that coming together and the fact that

you're only 3% penetrated and the dollars are flowing in that direction. where else are you going to put your money? google or facebook and facebook definitely has much more of a balance. >> if you look at the multiple on facebook relative to the multiple on google, either facebook is too high or google is too low. >> well, facebook is also growing a lot faster and actually i did something rare in interview, i changed my multiple to a pe multiple and the reason i did that is because now we're earning real dollars. we can get $4 per share in 2017 and this is real dollars with 60% plus margins so i think that, you know, the companies earnings are going at 30% plus so i they you can really make the case with a fundamental valuation that this stock is reasonably valued even at these levels. >> what's google growing at? >> google is growing in the high teens, 20%. >> one gets 20 and one gets 30.

what are the relative multiples now? >> those usually aren't good. >> yeah. >> and they also don't factor out. >> what do you have the multiple of google at right now? 20. >> it's around 25. >> 25. >> >> facebook is around 30 or 35. >> what is your sense about what this says about everyone else in the business? is this where facebook gets it all or shows how much business could get to a twitter? >> it's a good question. we actually like twitter for a turn around perspective but we're seeing their weaknesses. we have more transparency to show what facebook is doing right. the ability to cater to small businesses. 2.5 million advertisers compared to twitters 100,000 and the fact that they are able to grow their advertiser base at the same time and these are with the analytics

component so when you think about it, there is a place for twitter but it's going to be more niche. facebook i think the runway at the 3% penetration has hay long way to go. >> i get mad when i have an add from twitter. i assume that people on facebook welcome the customized stuff they get. they don't feel violated when an add comes across facebook. with twitter i use it for a reason. i'm not using it to find something to buy. i'm using it as a news stream or something like that. how are they going to final laid ver tiez without making users angry that they're getting sold something. >> joe doesn't use his facebook. >> do you get upset with facebook ads too? they're suited to you, aren't they. >> they're sneaky. >> i don't like any of the ads because they're all so sneaky. they're sneaky because they're attached to something i have done in the past week or two. >> or ten of your friends liked the following. >> what kind of weird products -- i don't even want to know what they're trying to sell

you. >> ten of your friends liked this and it's in your stream. >> i went to the tommy john website and now all they're trying to do is sell me tommy john underwear. >> avoid the other sites. >> kale chips and things like that, right? >> chardonay. >> sprouts. >> all right. >> facebook's ads are the gold standard of the quality ads. it's difficult to replicate that but the thing to keep in mind in facebook and to your longer term opportunity question is this company has more on tapped growth levers than any other company out there. instagram, messenger, what's

app, oculus, they're zero today. when you think about the multiple and growth rate, the headlines are reading that expenses are growing so fast. once that starts to kick in next year the financial profile is going to look more attractive than it is today. >> thanks. i like all the dumbbells. >> i got that from tim armstrong. >> did you? >> yeah. the barbell strategy. >> direct response. >> all right. anyway, do you want to thank andrew? >> well, you're great. >> i'm grateful that you're here. i'm grateful for america. >> right. good. >> we're going to think big now. we're going to go macro. >> i tried to start big picture. >> you did. >> thank you. now to the broader markets joining us, and covering the economic angle we have jim

o'sullivan. are those the most important indicators that will help make the decision in december? >> presumably. ultimately their key preconditioning for tightening is what they called some further improvement in the labor market. but they look at the weekly claims numbers and other numbers but no question they're key. >> is 150 enough? both numbers? >> i would say so. i think it depends on the details but ultimately 150,000 a month is more than enough to keep the unemployment rate coming down. >> the criticism was last time that maybe they wanted to go but they hadn't told the markets clearly enough they were going to go so she seems this time to be more outspoken. she is saying things like i'm going to do it, right? >> no, the presumption now is they probably go unless we get weak numbers really at this stage or there's more turmoil in the markets, et cetera. but there's still a lot of time between now and december 16th but we're getting there in term of the numbers right now. >> now you don't have anything

to say? >> no, i was going to bring up yesterday she sounded like she really wanted to hike. so -- but let's move on to the previous discussion we were having then which is the dollar moved sharply because of what she said. how long do you expect that to last if in theory it's only one hike. >> it won't be one hike. if they do one the expectation is more than one. >> hold on. i thought we said one and then done for a long time. >> they never said that. absolutely never said that. there's no point to doing one. >> no. >> i mean, they keep emphasizing it's the whole trajectory that matters and we expect to be gradual et cetera but under no circumstances are they saying they're doing just one. >> i remember you not being as bullish all yearlong and you have been right because we're just flat. we're just finally up again. has that changed at this point? >> i'm usually bullish and i have been a little bit more cautious so far this year and i'm still a little bit cautious

and we look at the numbers. so earnings growth is here, pretty much flat. when we look at next year, the expectations are for 9% growth but analysts are always optimistic so that will fall down to 2, 3, 4, something like that. so i think we're still in a bull market and you're still going to see a rising trend. i love that we had such a great rally starting in october when we get the last bad jobs report, i think we're fairly priced here and fairly balanced in our asset allocation. >> so at the beginning of the year were you a 6 or 7% overall equity gain for 2015? we may end up there? >> that's more or less the pace we're on. one or two good or bad days will make a difference. >> that would be so logical and so many people would be right. can that happen? to get here we've had quite a ride. >> i really think october was a great month and a lesson of the stock market because i think actually the caution that hi was pretty widespread and then bad news became good news again and so that bad jobs are what

sparked the rally because it pushed back expectations. >> how did we miss the bottom? we kept asking people trying to figure it out and never thought it was there because everybody said we have to retest the lows and no one ever range a bell did they? >> no, no. >> he did. ramon james. >> when he shaved his mustache? >> no, he came on the air and said he had a model. remember this. >> but we already bottomed, hadn't we? >> no, he told us within days prior, two or three days later we're going to be it and then he has a new model if i remember correctly that suggests we're going to be near the top again. >> it didn't strike you that morning when the dow dropped a thousand points that that could have been a moment of panic. >> that was a mini-flash crash. >> mini, it was huge. >> but it lasted a very short time. if it was buying that morning at 9:31 those prices were not real. >> okay but still in retrospect

look back at that moment and that was it. >> if you're going to get 2% on your treasury bonds you'll do well with stocks. >> that always happens with you here, doesn't it. >> i'm sorry. >> people at home, they don't know -- what was that? >> either my microphone or -- >> you don't have a belt. >> no. wear a belt. >> but he has -- >> pants at least. >> sorry. >> next year gdp get out and go to 3? >> at this point if we haven't seen it yet i don't think it will happen. 2 or 2.5% gdp growth is enough to bring down the unemployment rate. >> or a mature western developed economy that doesn't deserve more or we have policy -- >> a lot of it is secular slowing and labor force growth. overtime product activity can do

better. realistically you don't expect it to explode at this point in the cycle but overtime it can do better. >> we have to move on to these other issues. thank you, gentlemen. >> switching gears, the search for bodies in the wreckage of the russian jet that crashed in egypt is supposed to wrap up this afternoon and now a new concern. it's looking like a bomb may have been the cause. tracie potts has the latest from washington. >> no hard evidence. they're trying to verify that but it's a strong suspicion by the united states and great britain and russia's air safety regulators decided to ground the rest of metrojets flights while they check for safety. this is new video we just got last night. debris still smoking two hours after the crash. now a u.s. official tells nbc it's likely a bomb may have brought down this russian jet. possibly planted by a baggage handler at the egyptian airport where the plane took off. >> we can't rule it out but it's

premature to say that this is the cause. >> great britain suspended flights to and from that airport calling the bomb theory a significant possibility. perhaps retaliation by a wing of isis in the sinai peninsula. >> russia has recently increased it's presence in syria and so the fact that isis may want to respond is not unlikely at all. >> giving an explosive device on to an aircraft in this region is a real game changer for security. >> but not a huge concern in the u.s. experts say where security makes it extremely difficult to get explosives on board and it's still possible this plane suffered mechanical failure. >> no matter what happened, our hearts go out obviously to the families. >> 224 people died. the plane's black boxes will tell more. one is damaged but so far, no evidence of a bomb has been found at the crash site. >> so they're still looking for that hard evidence. one thing that we do, u.s. satellite images picked up a

heat flash in the very area where the plane was last believed to be but that could also be as a result of mechanical failure. so strong suspicions now by the u.s., by the british based on communications, circumstantial. they're still looking for hard evidence on the ground. >> thank you so much. we appreciate the report. when we come back, big swings in the currency market and why some say the u.k. central bank could lift off before the fed. plus a cnbc exclusive with elton john. the music legend has strong words for vladimir putin and the queen. but first here's a look back at this date in history. ♪

a special guest on set with us this morning. wilfred frost. all the ladies in the office are on twitter because you're so tall. >> facebook. nobody's ever a took but they're a twitter. >> the height has been mentioned everywhere i've been. maybe british people are taller than americans. >> there we go and worldwide exchange anchors perhaps. >> bank of england later this morning. >> yeah, it's in ten minutes

time t decision and things are shaping up in the u.k. similar to the u.s. we almost have the data there ready for a rate hike. i don't think we'll go before the u.s. but we have blowout manufacturing pmi on monday. that was a 16 month high. services pmi which is more important in the u.k. unemployment on most counts has been low for awhile. the issue really remaining for the u.k. is inflation and don't forget the bank of england has a single mandate, just inflation and no unemployment in that mandate and really the inflation issue is down to the euro zone because it's a high correlation between euro and sterling and domestic inflation in the u.s. and what's happening at the moment is we're importing deflation from the euro zone so that means we don't get a hike yet but probably start to see more hawkish tones because expectations are pretty far out in the u.k. and he'll want to start to bring back the opportunity to bring it in but sterling has been remarkably resilient. >> i was going to say. that was the currency in the wake of the u.k. being on the

verge of doing what it's doing and the ecb talking about more qe in december. >> one issue to bear in mind is the current account deficit of 5.1% is huge. should that be weighing more on the currency than it is. the other is brexit. >> i was going to ask you. we're all fascinated by it. but that would be britain leaving the european union. >> over the summer sentiment has really shifted. it's now a real threat we might leave. the latest poll that came out the 28th of september put 40% on exit. 38% on stay. that was a 6% swing since early summer. two big issue over the summer have seen sentiment change. one the greek crisis and two the refugee crisis. the refugee crisis having a bigger impact. no doubt about that. for me the greek crisis has had a bigger impact. this is a sovereignty question. they're wondering does

parliament or westminster make our laws or brussels. >> right now it's brussels. >> and there's too much coming probably from brussels and i think the greek crisis, aside from the crisis itself, what it highlighted and struck that tone is is germany dictating and the rest of greece's creditors dictating on greece where they have to go next and is that starting to happen to britain. >> that explains nigel's rise over there? i interviewed him in front of the parliament and he said what do these people do in this building? nothing. this is a show body now at this point which is his message over and over again and people want to know they have their own lives. >> it's a big sovereignty question. there's two other parts to it. there's the migration crisis, the refugee crisis. >> you never were in anyways. you never adopted the euro and you were only half in anyways. >> yeah, the pound, it does mean

we remain slightly separate. >> slightly, yeah, big. >> on a big level on that terms. on the economic front there's still a big question how big of a swing might this lead to in the long-term for britain's future if they were to leave and the one thing that we can be certain of is there would be a lot of short-term uncertainty and market weakness around a potential vote when we get it confirmed and longer term will it have a big economic impact, that's tough to call. >> it is. there's so many historical overhang -- overhanging issues across europe so if germany is controlling greece or brussels and all of a sudden germany is dictating where we're going in great britain that's not going to go over well given that the history of the last 60 or 70 years -- >> put that in perspective. >> these are unelected bureaucrats. >> they're elected. >> this is the british empire

and now you have unelected bureaucrats. >> parliament is elected but all the minions aren't. >> but they come through the ranks. >> not from the u.k. >> well, we have mpes but you're right and that's it. it's -- but i wouldn't say it's -- at the moment it's not front line policy. people are worried that it is starting to shift. at the moment it's more things like red tape and regulation. too much that we don't control in term of our own issues. the other economic question that remain thoes remains though is if we were to leave would we negotiate free trade deals or would brussels put up walls? we have a trade deficit with the rest of europe so we have a -- 21 of the 28 country versus a surplus with us. why would they want to stop trading? overall we have a deficit. >> i think people can come to our capital building and say these people here -- it's the

same in front of parliament or the house and the senate here. maybe nothing here either? so we have no control over our future, right? couldn't he say the same thing standing on the steps of the capital? >> the spirit of this statement was different but a agree. there's parallels there. i prefer they do almost nothing actually. coming up, the more they do, the worse it gets. coming up, big fears about the state of the art -- thank you wilfred it's so nice to have you in the office. let's talk more about the state of the art market. >> on twitter, facebook, google. >> last night's fall auction kicked off. robert frank brings us the highlights and tells us if the nervousness ahead of the auction season was warranted. the future belongs to the fast.

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>> welcome back to squawk box. opening the fall auction season last night. we're joined with the details. a little bit of concern. >> it is warranted. more than $2 billion worth of art sales will be auctioned off. it started last night. the auction householding the first of four sales from the collection which they have guaranteed for 500 murder in the second degree. the results were mixed. the $377 million total was just above the low estimate of 375. let's look at what sold. the top lot went for 42.8. well above it's $25 million estimate. a colorful abstract, there it is, went for 25 million. just making the low estimate and two went for bargain prices at least, untitled lavender and

green went for 20 million and the other for 26. both were estimated at 20 to 25. buyers were really selected. it failed to sell as did seven other pieces but the auction house will earn back most of its $500 million guarentee. >> because of premiums on top of what everything sold for? >> there are three other sales left for the collection. it ends next year, actually. >> so you talked about these guarentees and all the back channelling. so when he says most, how much money will they make or lose in this instance? >> we don't know. they still have a lot more stuff to sell. they're at 7377 now. >> they have to get to 500 million. >> what they paid to promote it. last night was a huge lavish affair. and there was red carpets. woody allen was there.

everyone was in tuxedos and they sent this art work around the world so they have a lot to make back but for them they look at this as an expense. but it's unlikely they're going to make back the full 500 million. >> what does that tell us about the rest of the season? >> not off to a great start but it might be the work and not the market. >> this isn't the beginning of the crack. >> we don't know. >> ten days. >> i bet the korbel was flowing, wasn't it? >> all the best. >> nevermind. maybe not. $8 a bottle. then you know the market is cracking. >> yes. coming up the ceo of cancer drug maker will talk industry consolidation, inversions and the controversy over pricing. stay tuned, you're watching squawk box on cnbc. we're first in business worldwide.

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big pharma to find growth. our next guest argued research and development will suffer the most. he's ceo and in an environment. kind of a dangerous environment for all life science companies. you have a couple of bad actors. don't need to mention any names but poison the wealth of the rest and start having people question whether the notion that it costs so much to develop an important drug means you need patent exclusivity for however long and now we think there's gouging. what can the industry to do overcome that perception? >> the reality of the drug business is it has dynamics that no one else really has. we have the time and capital

intensity of utilities but the odds that's five times worse than las vegas so the risk factors and the time and effort it takes to create these drugs creates cost structures in the 2 to $5 billion to create the first pill. and the world doesn't understand that risk factor but on top of that you have people out there trying to take advantage of this drug business and everything i have seen in term of policy is different from true investors in rnd from the arbitrage folks. >> it's a politically charged environment obviously and hillary clinton has her own issues with bernie sanders but it gets dangerous when you hear that much rhetoric about we need price controls, does it worry you? based on a presidential candidate's tweet.

>> i think this is a short-term thing because everything i've seen in term of the policy discussions are different between the innovators. people investing in rnd versus those that are take advantage. they're not investing in rnd and not creating medicines. >> one of the great frustrations i think for americans is that we pay more than the rest of the world and that's because we're footing the bill for the rest of the world. all of these other countries demand and because they have socialized medicine they can stuff it to the drug companies. at some point, why aren't we fighting back with the world trade organization to say what you're doing isn't right, your citizens are wealthy. you need to invest in rnd or 20 years from now we don't have innovation. especially if we're defending it and gives up. >> we're already back in nato and protecting you from all foreign press. you can develop a few drugs, right? >> i agree. we're creating the world's

medicines. we're investing in it and the biotech industry as a whole is net negative. there's not a price gaujing situation involved there. >> but the tomato industry and everybody and their mother -- >> the government bias all the drugs. >> the government buys all the drugs. we're the largest buyer of drugs and we allow this to take place. you don't think that the u.s. government as the largest buyer should use it's leverage to put pressure on some of these prices? >> you're talking about a system that if you don't invest in rnd you don't create medical innovation and medical innovation comes from the investment in medical rnd. think about asthma. the average asthma patient was in the hospital multiple weeks a year. out of work multiple weeks a year. now they're not at all. when medicine work they transform our health care costs and that's what is at stake here that the medical innovation in rnd is the one thing that we

have to transform. >> the question is they're trying to make us like everybody else and you guys need to start working with the u.s. government to tell everybody that you need to be more like us and spread the cost around the world so that everybody has access to innovation in the future. >> the long-term solution is changing the innovation paradyme. to invest to create a new drug is not sustainable. you have to create sustainable innovation at the rnd level and that's where investments in early stage companies is really the key to building new innovation approaches that can actually transform this so that we can get much less expense in building new drugs and much better theory. >> stay tuned. we'll have the ceo in studio and we'll have to talk about the same issues in the next hour i think. anyway, thank you. >> coming up when we return, business round table president is going to join us. he speaks for the nation's top business leaders and is here to

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heading into an election year, the business community is focused on the next commander in chief to tackle job growth, taxes, trade, and immigration.

joining us for his views in the 2016 election, former michigan govern governor, now the president of the business round table, sbogo to have you here. >> thank you, michelle. >> what's the issue with the terms of the view point of the business round table? >> slower economy under performing against trend, 1.5% gdp growth last quarter, tax reform at the top of the list. you had rob portman on yesterday talking about inversions, what needs to be done. we have to get competitive there. when you got 12.5% irish corporate rate, 15% in canada, it's 18% in britain, and our 35% rate stands out. that needs to be fixed. the new chairman, kevin brady of the ways and means committee, the new speaker, paul ryan, they understand this. i actually think there might be an opportunity to get something done before election. >> can it get done under this leadership? >> everybody says no way, no possibility. i hold out that the economic reasons to do this are so compelling that we shouldn't

wait. >> what is amazing and frustrates the american people so much, on both sides, we need tax reform, and it's not getting done, though supposedly everyone agrees on it. there's a weak treasurely department at this point, and as a result, there's not been -- in '86 was the last time this was done, before internet, was the last time this was done in this country. jim baker was treasurer, you had packwood, real leadership. ryan actually, i think, is going to be in a better position to help advance the cause of tax reform as speaker of the house than chairman of the ways and means committee. paul talked about it, understands it better than anyone in congress, and brady's first statement after being chosen by the house last night was tax reform. >> big issue you face is on one side of the aisle, there's a idea of morality, what do businesses owe. you heard it.

how dare you suggest -- look at all the things the united states has done for you, be happy to pay the taxes and stay here. how do you push back against that attitude? >> try to remind them there's a lot of pensioners who work for unio unions, a lot of schoolteachers in pension funds, average americans who have 401(k)s, the real owners, and under those systems, they are entitled to good returns on investment, and today, their own government is really locking them into sub par returns compared to what they could have if we got competitive, and this is about job creation. everyone rings hands over income inequality. that's slow growth driving that, and i would say poor education work force is another piece of that where we got 5 million jobs today that are opened where people do not have skills aligned to meet the needs. that's why i'm in new york today to talk about work force issue, but the tax thing is if we want headquarters of companies, and i

do, in the u.s., because i think that's good for investment here, good for job creation here, we got to get competitive, and so taxes, throw in regulation, other things, i mean, but the tax question is right at the top of the list. >> on the other side of the aisle, trade, tpp. >> trade and tpp. the text is out today. i think that's going to be helpful. i mean, there's literally hundreds of taxes that get cut. it's a tough environment. you got people like bernie sanders an hillary clinton in their party, donald trump in the republican primary, all trashing this. they've not seep the text yet, but they've jumped in with their opinions. i saw an ad from trump today saying, i'll negotiate a great trade deal. i don't know what he means by that, but i do know that we only have less than 5% of the world's population living here. we have to figure out how we're beginning to sell goods and products made in america elsewhere in the world. >> we should underline it's significant to see the text

because there's complaints this is negotiated in secret, nobody knows what's in it, leaks the day it was announced, leaked in other countries about what was going on in, for example, in certain biotech sectors, et cetera. this is big news for some industries. >> we think there's going to be pleasant surprises and affirmation that some of the early indicators -- we know the ag sector is pretty happy. >> because? >> there's real markets getting opened up in barriers coming down. it appears there's a pretty good reaction in the tech community. that's a bunch of votes right there in the tech community. you've got people in the democratic caucus says i'm a tech supporter. well, here's your opportunity to prove it. step up on the trade deal. i think for financial services, big benefits as well. that's important for new york, money sent money, there's great things, great manufacturing advantages. it'll be picked apart.

pharma will be interesting to look at. >> yeah, sure. >> they got gains, but not everything they wanted. >> michigan-ohio state, ready? >> michigan state. the spartans are poised there, no. 7, can't figure out why f u we have to win it out on the field anyway. >> michigan. >> michigan state. wolverines, you know, play 60 minutes right. >> my husband told me to ask that. >> i want michigan to win. >> michigan plays rutgers? >> i think they do, as a matter of fact. i think becky is in trouble in that one. >> i know. i know. you know they wanted to move to this conference. i don't know why. i hope the money is worth it. as football players, i say that, i would call in sick. if i played michigan or ohio state, you're for rutgers, listen, i can't. you know? >> well, it's going to be a great fall for football, for sure. >> governor, thank you. quickly become the only thing you think about.

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facebook shares spike, after the company likely trades today with a market cap above $300 billion. details from facebook's report straight ahead. the squawk ceo calls in session,s bayer joins us on set to talk health care, m&a, and the company's latest quarter. >> the big business of baking. celebrity chef of food network's "ace of cakes" is on set, talking about the journey from artist to cull anywhere superstar. the second hair of "squawk box" begins right now. ♪

live from the beating new ys is "squawk box." >> welcome back to "squawk box" this morn on cnbc, first in business worldwide, imichelle caruso-cabrera is with us today, and becky is off. we have posting of earnings of 57 cents a share, beating estimates' analysts, and revenue topping expectations for facebook, and stock rising. a stock prize above 186.84 putting that market cap above $300 billion with a b, joining the likes of apple, exxon, and microsoft, and analysts say it could go higher. facebook now has 8 billion video views a bay from 500 million people. as of the end of september, facebook had 1.5 billion monthly active users, and 1.4 billion use it on a mobile device, and

ad revenue grew. here's what sheryl sandberg told us yesterday about the strength in advertising. >> we're feeling pleased with the ad business and strength of demand across the board, and that's what you see in the results this quarter. going into the holiday season, we know how important this season is for clients, and what we work on with them is focusing on business results. we want to be the best dollar and the best minute they spend on ads so we can drive the highest roi, and we want to measure roi not just with the traditional ad metrics, but moving products off shelves, cars off the lots. we're going to dig through the report with an analyst at the top of the next hour. among other top stories, expedia bought home away for $3 billion in cash in stock. this is the largest acquisition in the company's history, and comes just a year after expedia bought orbitz and traveloscity.

expedia chairman barley diller is joining us at 8:30 eastern time. whole foods under pressure, quarterly results short of wall street estimates as same store sales dropped by .20%. here's walter rob last night on "mad money." >> it was a tough quarter, we own it, but any way you slice it, they are not what we wanted or expected, and we outlined steps today to move it forward. >> whole foods lost business to lower cost options like traditional grocers and rivals like trader joe's. shares of whole foods, as you see, was hit hard. stepping up cost cut, plans to close seven stores and layoff 2600 employees in north america in addition to the 2500 job cuts announced less than three months ago. classic moves of the equity

buyers. >> the nasdaq 100 continues to hover in record territory, but last night's earnings report from whole food markets highlights divergence between members. in the case of one of them, the gains today could put shares in a very exclusive club. dom chu has more. >> put it in perspective. all earnings headlines drive the action, and for large cap nasdaq stocks, the reason we are at closing highs, but not record ones, has to do with larger cap names in the news. take a look at the nasdaq 100 overall. you see here up 11% year to date. the orange line is facebook. the green line is whole foods. you can just see that gap kind of growing here between the two. facebook has a lot more of am impact on the overall index because it worked so much, and there's a point now to put the chart in perspective, giving you that per special circumstancetive of the landscape for market caps throughout large cap stocks in america. the largest publicly traded ones

as you see here are pretty big -- at least in terms of market caps, in the peers. apple is 680 billion as of last night's close. now, they are the biggest by far. alphabet at 510 billion. mic microsoft 543, and excon at 260 billion. quietly, amazon, with the double of stock prices worth $300 billion, joining the rare group above 300 billion. facebook 293, johnson and johnson 282. if facebook holds the gains like you said, it's going to be worth over $300 billion, leapfrogging ge right there with amazon. not that many companies can boast that market capitalization, guys, but facebook joins that elite club for a company public new for a few years. over to you. >> thank you. all right. you know you miss a lot when you're -- you listened to what?

the pulse? >> i don't have sirius. my car is ten years old. >> short skirt, a long jacket, cake. >> oh, because we're having cake boss on. got it. >> you miss is lot. >> i would be listening to cnbc if i had sirius. >> there you go. spl serio >> seriously, i would. >> that song is ten years old. >> is it really? >> bayer? can i say bayer? i say -- >> whatever you want. >> pretend i'm smart. i know the german bayer is bayer, but american is bayer. >> it's a matter of pronunciation. >> okay. >> it's a matter of pronunciation. >> who is this man, we wonder? >> i want to sound like european, so i'm going with bayer. >> perfect. >> bayer lowered sales outlook despite 19% increase in health care sales. joining us now on the company's quarter in the increase in health care, m&a, which i'm sure andrew wants to talk about.

we have other things to talk to you about, and it's great to see you. we go way back. >> way back. >> thermoscientific. >> yep. >> the first thing, i mean, talking off camera about innovation because you saw the interview with the ceo, and is it not overstating it to say that innovation is hurt on the continent in europe by price controls? you need to get -- you need are recoop the investment costs to -- otherwise you won't do it. >> it is clear, it's expensive to do rd, a high risk business, and you always see the winners. you neefr see the losers, right? because winners get to market and sell the product, and, yes, with significant price control,

and it's a cycle that's 10-12 years long that's uncertain, you know, it becomes more and more of a risk investment to invest billions. >> tread lightly over here although the rhetoric is heating up? >> we instituted price controls here. the last bashtan of defending research and development, what do you sell in 15-20 years? nothing new. >> it's harder, and fewer people are going to take the risk. i'm convinced of it. it -- you -- the u.s. is a leader in promoting science and valuing science, and, therefore, drug prices here are on average higher than in many other countries, particularly also in europe. it's what leadership is about. >> do you talk to angela merkel all the time in. >> all the time. >> shouldn't be doing price controls?

they do. >> it's a social speedometrespo, right? i think what is good about the system to say we are willing to pay, but only for truly innovative drugs. there is an assessment, is a drug really innovated? is it something incremental over what's already out this? the process of judging that is, of course, very hard. >> your social responsibility in germany is negative social responsibility for the rest of the world. >> that's right. >> you're protecting german consumers at this point, but everybody does that collectively, ultimately, the world has fewer, better drugs down the road. >> yeah. >> it's not socially responsible actually to not pay for what things cost. >> and we touched on gmos for a second because you're in the center of the misguided controversy of gmos, and it's rampant here, and people that

know nothing about the science have really strong opinions. it happens in a lot of fields, actually, but gmos is one in particular. you would never take a modified drug, but all the advances we make in cancer is the same with food. >> it's more controversial because when we do gene editing, we take genes out that are bad and replacing them with good genes, basically going to do gmo on people. >> right. >> and we're afraid to eat a piece of meat that might have had grain fed to the animal that might have had resistance to some pesticide. >> the issue in europe is signs, sure, respected, but there's the precautionary principle that's part of the law in europe, and precautionary principle is if it doesn't feel right -- all the signs say it's safe, but it doesn't feel right, then we can

still be against it or still be, you know, having laws against it and there the u.s. is more advanced with respect to accepting science as a data point. >> got to be good science, though. >> some science shouldn't be accepted. >> i want to go back to drug pricing. if you were to look, and i ask out of ignorance. look at the top five or ten drug companies that do business in the united states, what would be their average profit margin annually? >> i would say 25-30%. >> and what percent -- >> everything that costs money out -- >> and if you were to look just strictly regionally and say, how much of that margin comes from the u.s. versus everywhere else? i'm assuming every else is a loss? they lose? >> no, i would not go that far. >> i'm not against profits, but trying to understand -- >> a little maybe.

>> no, no, trying to understand the dynamic. >> reasonable profits. >> bayer profits. >> no, because our guest in the 6:00 hour said in the biotech industry, across the board, they never make money, but that may be true, but you make profits, so there is the profit that effectively does come out somewhere. i'm just trying to figure out if we try to build the perfect system, how do you do it? you have to know the numbers. we never have a real conversation about what the numbers are. >> well, the point is that, you know, pharma companies do not pay hugely more dividends than say utility companies or other companies, so somehow the money, the profit that is being made gets reinvested. it's reinvested in drugs to market than others you have to pay. that is the business model. there's companies that do not play according to the model, recently, but that's why we get better drugs, yeah. that is what you disturb when you start saying, oh, prices

need to go down, profits need to go down. it's such a high risk business scenario, people are going to refuse to then make the big investments up front. we spend 2.2 billion euro before we got the drug to the market, 2 billion euro, tested on 70,000 patients, you know, before we sold the first pill. >> yeah. that's a lot even before the euro came down. [ laughter ] now it sounds better. at the time time -- >>. [ laughter ] >> and, no, i can't go yet. i just got -- are you now looking at u.s. companies because of your tax rate at this point? i mean, can you -- can you offer more to buy something you want here than a u.s. company? >> yes, of course, we bought otcs business last year, which is, you know, a good match for our product, and what we wanted to, but, of course, also from a text point of view.

beneficial, and vice versa for american companies to go to europe. as we do across here on acquisitions -- >> are you here to buy something else? is that why you're in town. >> no. i don't have any money anymore. >> you spent it all. borrow for nothing right now, especially in germany, things are great. >> the serious answer, of course; we always look at opportunities. >> yeah. >> how much is the tax advantage important? when you calculate it, sit down, you think, 20 years ago, i couldn't have done this acquisition? >> it's very significant. in the billions on a deal that would be say 10-15 billion in purchase price. >> wow. significant. >> meaningful. >> writing this down. >> i'm taking mental notes. >> our company -- >> you're in the epicenter, and then you is, you know, the refugee crisis. >> we got it all. we got it all. >> volkswagen. >> volkswagen, we got it all. >> maybe you should have been the guest host. >> all right, thank very much. coming up, markets in focus,

the fed is looking for every excuse to hike rates in december, joining us next, and senator pat toomey weighs on yen's testimony. later, ace of cakes is here to talk about the business of baking. take a look at u.s. equity futures at this hour. dow to hope up at 62 points higher, back in a moment.

welcome back this morning, reactions to yellen's speech on a rate hike. we have the lindsey group and d cnbc contributor. you must have woke up on the right side of the bed thinking she said all the right things. >> it was interesting. so they got this out of her saying, please, don't raise interest rates, and every time that yellen agreed with the point that she made, she always said, but, but things are getting better, but inflation is transitory, and we have to raise interest rates. the problem is that they keep lowering standards that meet a rate hike. last year, we averaged 260,000 jobs a month. now we're slightly below 200. we had two prints now below 150, and now there's a reason to

raise interest rates. >> that's the question. is she likely to do this because people like you and others have made the case, and she now feels, dare i say, bullied to do it, or doing it because the numbers, because she believes in the numbers and believes in whatever case made prior? >> well, if they were truly data dependent they would have raised last year, but now they are emotional dependent stuck at 0, and god forbid recession next year. >> are you happy so you don't care? >> there's no easy way out of this without having pain, economically speaking, asset price speaking. we have to start the process. zero interest rates is mop tear fantasy land, it's not real word. we have to get to a level where the cost of money is something higher than zero. >> i was surprised to see the yield curve move because we've been talking about it flattening, you know, people told me they would invert if they raise, et cetera, but now we got a surmg ge in yields.

>> caller: the ten year back to a whopping 2 20, but it's flat. this morning, it was up to 83 basis points, higher than september 16th. >> different than seen in the past, raising rate, and the long end fell, right? so maybe the market things we're finally maybe ready for it? >> yes. i expect the curve to fly. the u.s. economy is now raising with job growth slowing, cap exmediocre, consumer spending outside of auto, okay. >> had to be that way. >> a blip. >> so, yeah, i expect the yield curve to flat p when she hikes. >> if they didn't, they had the chance. >> they had their chance. >> when things were -- >> a year ago. >> right. >> november, december last year, printing 300,000 jobs a month, and now two below 150,000, and now she needs to raise interest rates. >> when she does not if, but when in december, what happens to the bond leverage in the market?

>> because of the timing being mid-december, who knows what happens in the last couple weeks. the market's celebrating now, higher interest rates after celebrating, oh, they did not raise. >> what's the right play? >> well, i'm, obviously, i'm of the case that the fed boosted asset prices well above who what i think they should be valued at, so now if they raise interest rates, that's going to impact asset prices. >> by how much? what we talking about here? is there a 5% premium in the market, 10%? >> i'm in the camp that in the target overall, we have to have a bear market, months ago, this is a bear market rally. >> come on, guy. this is just all -- >> what's important here? >> what everyone has, they all stink, it doesn't matter. you're a bond guy. >> no, i'm a real stock guy at heart. >> at heart. >> thought we were in a bear market. >> miller's been in the entire market long.

>> he has been long, but could switch on a dime and says he's ready to. >> he switched on a dime and switches back on a dime in the last year. >> when we put that one year chart up, you think, what? i mean, we just erased that whole august swoon has gone away, like it never happened? it's coming back? are we flat in. >> look at the small caps, the russell 2,000, the s&p mid cap 400, and, i mean, it's only gotten back half of its drop. this is just a megacap bounce predominantly. >> how long is the market overrided? three years? in your case? >> starting in 2013 when qe3 and 4 started, that's when asset prices separated from the economy. >> saying you expected this for a long time. >> i got away when the fed ended qe. >> good to see you, peter. >> as always. >> listening to bill gross about stocks. >> oh? >> outside thousands? >> long. >> all right. coming up, cnbc exclusive

with -- good to see you, peter, cnbc exclusive with sir elton john, strong words for putin and the queen. right after the break. time now for today's aflac trivia question. into what sports hall of fame was fashion designer vera wang inducted in 2009? the answer when we continue aflaaac. aaaa-flaaaac. someone's sandbagging. i'd be tired too. he paid my claim in one day when i got hurt. one day? serious hustle. serious duck. in just one day, we process, approve and pay. one day pay, only from aflac. ah!

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. now the anxious to today's question, into what sports hall of fame was vera wang inducted in 2009? the answer? the united states figure skating hall of fame. who knew. ohio voters rejected recreational marijuana this week, but mexico's supreme court gave it the green light. the court rules that prohibiting pot growth for personal use is unconstitutional. the ruling does not legalize the sale or use of marijuana in mexico, but opens the door for advocates of legalization for further legal challenges. >> huh. >> go south of the border, meet friends there, growing it in the backyard. >> so you could get drugs from

mexico? that's a whole new concept. isn't it? >> yeah, yeah. >> coming up -- >> i just have been watching narcos. it's good. >> heard it's great. >> i didn't love the first episode, but the second one, it picks up. >> thinking of getting netflix just for that. that's the idea, right? >> i'm not crazy about "homeland" -- >> oh, what? i have not seen it yet. >> i have to binge a lot of it.

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welcome back to "squawk box" this morning on cnbc, first in business worldwide, and stories front and center at this hour, the united states denied a request by transcanada to pause the review of the keystone xl pipeline, expected to lead to the prompt's rejection. women in the united states are paid less than men in equal work in all industries, according to pay sale. men's salaries increase until the age of 50-55 and women's

wages plateau between 35-40 years old. >> don't look at me. >> i'm just wondering if anyone wants to comment. no comment for you. okay. i don't know. >> i think a lot -- there's a lot of flaws in the studies. i think women generally speaking make different choices than men. we had the conversation before. what do we know in our experience? >> that's true. michael stepped down as chief executive officer of insys therapeutics. did i mispronounce the name? >> you're like skiing, the moguls coming up, you see them coming, right? >> well -- >> and thin isys. >> i want to correctly, but it's complicated . >> when i started working if you -- >> you don't help. >> when i started working with

you, you said the trick to the program was never to read the script. you remember that? >> well, now you see why. >> we have to tell you all this is detailed on cnbc.com, and msnbc.com reports the company was urn investigation regarding the sales and markets of the primary product, a painkiller, an oral spray, and they centered on that prescribed for unintended uses, but it's not mentioned in the these release with the exchange. >> you could be on the nightly news, if you have the script, if you pause -- >> they look down. >> so scary if they have the slightest stumble. better to not be under that pressure. >> i feel no pressure. >> i know you don't. >> except you. looking at me. >> you can feel me looking. >> i can. >> yellen before the financial house services committee to talk supervision of the central banks and commented on the chances of a december rate hike. >> what the committee has been

expecting ask that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labor market and to return invasii infashion to our 2% target over the medium term and if the incoming information sports that expectation, then our statement indicates that december would be a live possibility, but importantly, that we've made no decision about it. >> senator president toomey is a member of the budget finance and banking committee joining us now with more on the credibility of the fed. good morning, senator. thank you. >> good morning, joe. thanks for having me. >> i was, yesterday, kind of complaining that president obama has not filled the position of vice chair to oversee, you know, dodd frank with the fed, and that's bad that he has not, but

that gives you an opportunity to get chair yellen to offer, you know, comments on monetary policy, so in that regard, at least that -- the transparency is actually increased because she's there for one reason, but she can answer questions about the other reasons. that's good. >> you know, joe, she comes before congress a couple times a year, comes before, more than one committee that i sit on, and, unfortunately, it's the same story all the time with these sort of surprise little changes in nuance that sort of gets the markets awfully jittery. look, we had the conversation before. i think this has been extremely dangerous, very irresponsible policy. they ought to normalize interest rates years ago, literally years ago, and now we wonder, does it begin in december or not? i don't know that we know anymore than we did before she testified. >> like all things washington, there is a huge disparity and

who agrees and who does not, senator. >> yeah. people say inflation's zero, and the rest of the world is in, you know, in a very loose easing mode, and any time we go against what they are doing, the dollar gets too strong, we can't export anything, and that slows the economy. people do not agree, a lot do not agree with what you just said. >> oh, i know that. i got friend here in congress who want to keep cheap money forever. somehow, it seems to me that many years after the crisis has passed, maintaining crisis level interest rates is probably not a good idea. >> rights. >> negative real interest rates -- >> your friends want to do it at least to the next election. >> absolutely. you know, you can look at things today and say, okay, it's a fragile recovery, if we can call it that, very slow growth, the rest of the world is not great, maybe now is not the time to raise interest rates, but on the other hand, begin we have at least some growth, should we really have zero interest rates? i think we need to normalize, get our -- get these distortions

out of the market so we can have stronger growth. >> could do more harm than good. >> think if there's a sin tell la of truth that zero causes th. >> self-fulfilling, economy is weak, you don't raise. >> here's another thing, joe. chairman yellen and chairman bernank er bernanke before her, the most this policy can hope to do is move forward economic activity that would be happening in the future anyway. >> right. >> it's a timing shift. what's that tells about when they do normalize? what about the future? it's terrible. >> so the budget deal itself, you know, once again, not everybody agrees one way or another on this. you are glad it's done? you think -- >> joe, look, we spend too much

money in the town of the it's not broadly agreed to either. i'm convinced of it. a $450 billion deficit, and the only discipline in years is the spending caps. what did we do? busted the spending caps. the offsets are not reductions in spending, but various other sources of revenue, and we gave the president unlimited borrowing authority when we already have a debt level that's, i think, dangerously high, so, no, i don't think it was a good deal. >> what should republicans, i mean, you're watching this play out, we're all watching this play out. t a little surreal at times, nominating process for the republican candidate. you is just overall comments on the way it's proceeding? probably not ready to endorse anyone today, although senators have been doing that recently. >> a couple colleagues have. you know, i think this is still relatively early, right? we're a couple months before votes start getting cast, and so this field will widdle itself

down, focus on economic growth, how to get there. i'd like to have rigorous debate about tax policy, regulatory policy, and monetary policy because i think those things are holding us back today, and i'm confident we'll have a condition dat that emerges that can become the next president. >> so you think -- you think that how many of these guys could beat hillary clinton? all of them? some of them? what kind of candidate has the best chance of winning the presidency? >> yeah. i think the candidate that makes the most compelling case for economic growth and national security. those are the two front burner issues that dwarf everything else. there's a lot of the folks on the stage that are capable of winning the general election. >> so we also have a new speaker. >> yeah. >> were you -- you're happy about that? does it mean tax reform can get done? we had rob portman on yesterday. he was funny. said i got a bill that i sponsored, and he said, with of

all people, chuck schumer, and how he said it was funny. he was the irony of the alliance, it was not lost on him either, but it -- is there a chance of that with paul ryan now in the speaker? >> there's a chance. paul ryan gets the urgency of tax reform as well as anybody alive, understands it extremely well, and he wants to do it very much, but, honestly, you know, house republicans were not the obstacle to doing what we needed to do on tax policy. we have an administration with a massive tax increase as their condition for doing any really broad tax reform. that's why we've backed ourselves into this little corner of trying to narrowly focus on the international piece, arguably, the most egregiously flawed part, but it's hard to fix that in isolation -- not impossible, but hard -- i'm and hoping there's democrats who will actually agree to putting something on prepare so we can actually work on this specifics. obviously, it's hard to do without presidential leadership,

but we shouldn't give up because this dynamic is making us so uncompetitive. >> they go in december, aren't they, senator? >> i'm sorry, what's happening in december? >> yellen's going in december, going up a quarter. she's crazy. nuts, insane. a quarter point. how will resurvive? i think she's going to do it. >> look, i think the markets are about giving it a 50/50 probability, is that right? >> two jobs reports between now and then. never a good time to raise, that's the problem. >> exactly, moving the posts for years now. >> we started at 6.5%, unemployment was to be there. oh, it is good at 5%, but it's not. i'm so confused now. i don't know if it's a good employment number or not. >> yeah. every's been confused. moving the goalpost, i think their credibility is damaged, backed themselves sinto a corne difficult to get out of. just start normalizing.

>> you know, the imf, making a speech. they can turn money, right? probably million dollars to hear that. anyway, senator, thank you. >> thanks for having me, guys. >> okay. >> okay. coming up, choppy seas for the shipping industry, what's behind the slow down in shipping next. so what's your news? i got a job! i'll be programming at ge.

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despite the strong start to the year, the shippi inping conr industry is hitting rough seas, here's more. >> we've called it the shipping slump. they are slashing jobs, halting deliveries of new vessels after a surprise profit warning last month. operators report losses or down beat outlooks, and here's why. over capacity. megaships that are coming online this year with shipping association calls, quote, the heightest inflow of new capacity ever. couple that with slowing growing economic growth, particularly in china, slower growth in europe, and shipping rates plunge with the benchmark.

shanghai containerized index at multiyear lows now. it's wor we sm. this is peak season, the busiest time of year for this business, and it's something to watch. it could be potentially an indicator that we would be seeing a softer holiday season here in the u.s. as well. it's something to watch. >> ripple effect throughout the economy. don't move. we want to talk more about the shipping industry because while the seas are choppy as said -- >> do not move. >> choppy seas, i can't help it. >> she said don't move. no, no, it's okay. >> okay. >> i interrupted, go ahead, sorry. >> the ceo of c-span, the biggest leaser of shippers in the world. everything is bad for business, is it not? >> well, yes and no. we're in a different type of business in a sense, and 95% of

contracts are long term, and so we have very little expose to the short term ups and downs, and we are very confident in long term prospects of the industry, and the industry has gotten much bigger and much m e more, and the operators know how to navigate through the ups and downs, and demand has been there for certain trait trade, but north american trade is very, very strong. >> how long are leases for on average? >> about 10-12 years, designed for going through ups and downs, and we're in the long term business. we're not in the short term up and down. >> if things get really bad, can't they demand restructurings or maybe they don't pay, or maybe the companies go bankrupt? how convinced are you even though it's a ten-year lease, aif rates fall, at some point, something's got to give, right? >> in common sense, yes, but for our business, we've been doing

this for last 15 years, never had a default situation, depending what customers deal with, and in 2008-2009, we had zero default. >> restructuring? >> no. >> never discounts? >> no discounts, no restructuring. all contracts honored for the last 15 years. i expect the same to happen for the contracts. we're very, very happy with the relationships with our customers issue and at the end of the day, it boils down to your relationships with the customers. our ships are the flag ships for customers like costco, the japanese, and, you know, chinese, and others. you have very, very important for them, okay, and, frankly speaking, our contracts are very tight with them. >> give us your overall picture. you mentioned north america's strong. tell us, looking at shipping around the world, what's that say about the world economy? >> well, you know, i think

china's going to slow down, quote on quote, 7% in my opinion, is phenomena. >> slower than before r, right? >> but the economy is bigger. >> so absolute volume is still high? >> absolute volume is still growth, but it's 10-15%, we're looking at 4-5%, but the pie has become bigger, so we are very happy, and at the end of the long term contracts, 95% of the revenue is under long term fixed contract gives us the protection. >> let's go back to this overcapacity situation because i know they called this over capacity crisis, analysts say there's 30% more vessel supply than is needed. i realize you have long term contracts in place, but at what point does there need to be a correction in terms of the amount of vessels that are out on the ocean, and what does that do to the business long term? >> long term, obviously, if you have a long term over supply, it is a big concern, but i believe the over supply situation we are

experiencing is short term. we experiencing some new deliveries of new vessels, big vessels, container ships coming to new services, but over the next two, three years we see much more reduced supply of the new vessels coming to services, so over the horizon of three, four, five years, things even out. generally speaking of a long term basis, it's fairly balanced. >> great to have you on set. >> thank you very much. >> marine week in new york? >> absolutely. >> thank you. thanks, morgan. >> my pleasure. so you've been to the christmas show? >> i have. >> guess what. >> did you wonder, how do they get the camels in there? >> i saw them just walking -- a line of camels just walked, real camels. >> so exciting. >> i looked over, and said, oh, camels. >> did you ship camels? >> we ship camels. >> you do? >> livestock is part of the cargo. >> that's what we should have talked about.

>> we just saw them arrive. >> elspecially designed shippin boxes. >> where do they want to move the camels? >> i don't know exactly. [ laughter ] i mean -- >> when you -- >> is it the same box for the one hump versus the two hump? >> i don't know, i don't know, but we standardize. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

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reality tv star and baker,

duff, promises easy recipes leaving out the pomp and circumstance. think and bake like a pro at home includes classics like nutter butter cookies, remake of twinkies, and not so classic recipes like bay coop jalopeno biscuits. >> woah. >> banana bourbon cream pie. >> that's what i want. >> right? >> award winner, ace of cakes, here on set. >> good to be here. >> why did you do the book? >> people came up to me in the airport, love what you do, love watching you on food network, i love to cook, i can't bake. i can't bake to save my life. too much physics, chemistry. >> it's precise. >> it is. >> you can blow it opposed to just saver ri cooking, too much salt, not a problem, but in baking, horrendous. >> rules to follow, but at the same time, it's not that hard, i mean, i can do it. >> you were an art iist.

>> i was. >> how did you end up in a field, conventionally a womanly thing, baking, into a manly thing? >> i got arrested a lot, so my mom, parole officer, and art teacher said you have to be constructive. i started cooking and welding. i was a sculptor, and i went to culinary school, the cooking and sculpting got together. >> what got you to culinary school? >> i started working in a restaurant in baltimore city, and the chef had me baking corn bread and biscuits. that was it. i got into mabaking because i me the best in the city. they were great. i got so good at it, this what i want to do for a living. >> and then architecture, when you say you were a welder, the cakes have a lot of architecture in them. >> they do. >> to make them stand up the way you do, they can fall over, can be really messy. people don't realize how hard it can be. >> some of the cakes we build are huge.

we did a life size elephant, it's not all cake, there's structure in there to hold it together so you understand how they are put together. there's mechanics. >> can i switch to a sad topic, or you tell me, baltimore, how do you feel? going to recover? >> that's my town, i love baltimore. >> must have hurt to see what happened. >> it did. baltimore's in pain right now. you know, it's getting better and better all the time, and baltimore's an amazing city, incredibly resilient. >> what do you think should be done? >> oh, i don't know. >> have you thought about it in. >> lying on you all kinds of questions you did not expect. >> people need to eat more cup cakes, you'll be happier. >> what do you have here? >> one chocolate chip cookie left. >> the staff ate them? >> they ate everything. >> that's all i got. >> that was not supposed to happen. >> you can have chocolate chip. >> you want it? >> no, no. >> buckeyes. >> this is based on ohio? >> oh, yeah, yeah. >> okay. >> peanut butter -- >> why ohio? >> because of the buckeyes.

>> it's a tree. >> no, i know, but -- okay, good. you're not from ohio? >> no, no. i don't like ohio at all. at all. >> that's okay. that's a good place to be from. >> i'm a ravens fan, right, and -- >> oh, that's why. >> yeah. >> i think the bengals lose. >> oh, my god. >> you think? >> i do. they disappoint me. i don't follow them now. >> what about these in. >> in is so delicious. >> snickerdoodle. >> what's that? >> a cinnamon cookie. >> i don't have to choose. >> future reality in food. media question, what happens? >> it's not slowing down. >> seems to be so much of it. is there too much? >> too much? there is because there's a lot of stuff that's bad. proliferation of reality tv in general, what is happening is people are -- they are asking regular people to act. it's, like, we're not actors, so, when you get a reality show where they are not producing it,

it's a good show, like ace of cakes, but a reality show, and they are, like, forcing drama and things -- >> scripted, unself-incriminacr approach. >> like, americans are not dumb. they get it. you watch a kardashian show, people enjoy it, they like it. i don't know. i don't know if it's -- >> taking a shot at kardashians. thank you. >> no, no, not at all, man. >> thanks for coming in. >> we go to break. the m&a story of the day, expedia buying home away, and barry diller joining us at 8:30. e nose. but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours.

the race to 300 billion, soaring above the megamarket cap after earnings beat, but jeff beat stuckerburg to the punch as they close above the market for the first time. we're going to talk all things tech straight ahead. >> plus, breaking economic news. tomorrow, the big employment report, but today, we get weakly jobless claims and productivity and labor costs. numbers about 30 minutes away. >> a tough mudder, tougher competition, big business names in extreme sports. fifteen hour of "squawk box"

kwie begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." welcome back, michelle caruso-cabrera is with us as becky is enjoying time off. if the office is crowded this morning, it's because it's bring in your parents day. yep, take mom and dad to work with you. we'll talk about that movement launched by linkedin in a buiit this hour. right now, less than 90 minutes from the opening bell on wall street, and take a look at the futures. dow looks like it opens higher, 66 points higher, and s&p 500 up about 6.5 points, and nasdaq up 13 points, and, michelle, a piece of breaking news. >> tell me! >> i need to congratulate my sister who just had a baby boy

moments ago, rob, they are in denver right now, congratulations, guys, they watch cnbc. >> uncle andrew. >> second boy. >> congrats. >> second boy for the family. that's my breaking news. but you can be -- >> name? >> i just got the text, name to come, as will picks. i did not get the full on. >> what's your other nephew's name. >> grahm. >> andrew is available. >> there's a couple options. i don't want to geoff away the story. >> is andrew one of them? >> no! congrats, guys. >> other than andrew being an uncle, here's the stories today, expedia is buying home away for 3.9 billion in cash and stock, this is the largest acquisition in the company's history and comes just a year after expedia bought orbitz and travelocity. barry diller is joining us a half hour from now, and u.s. layoffs dropping 14% in october. this according to global

outplacement firm challenger gray and christmas. a quarter of the cuts blamed on falling oil prices. in other news, the ceo of insys therapeutics stepped down. as detailed, the company is under investigation regarding the sales and market the of the primary product, a painkiller, delivered as oral spray. they centered on doctors prescribing the drug for unintended uses. that investigation is not mentioned in the news release announcing the exchange. >> ross, what about ross? everyone loves ross. >> a lot of rosss. >> "friends" -- >> that should be the name of the nephew? >> ross is my -- the credit card hackers out there -- ross is my mother's maiden name. that's how i got it. >> i know. >> my son, harry ross, there's a lot of ross, chester ross, author ross. in fact, my sister used to be suzi before she took sussman as

a name. >> all right, now i want to go to stocks to watch after that. that was a lot. anyway, earnings and revenue at sea world entertainment short of estimates, pointing to weather related park closure, higher legal expenses related to reputation initiatives all from that movie, right, andrew? >> yeah. >> sea world, all from that -- what was it? killer whale? >> i don't remember the name. it was -- >> noodles and company results also falling short. the restaurant chain sees flat to negative same store sales for the full year, and another food chain in the news, raising full year guidance on improving sale. go daddy with a narrower than expected loss, the web hosting company helped by increasing international market revenue and southwest pilots rejecting a tentive agreement with the airlines. southwest says it expects talks to resume in the spring with a mediator presiding over the

negotiations. do we have a wait? how many pounds was it? 7, 6? >> i, you know, looking, i don't have the full details. >> is that a segue from luggage and -- >> just wondering. >> just wondering. i don't have the information. we know it's a boy. >> among the other stocks on the move this morning, whole foods under pressure, quarterly results fell short of wall street estimates as same store sales dropped by .20%, and they lose out to competitors and rivals like trader joe's. shares of fire eye slammed. this security company cutting the full year revenue forecast citing a lower demand for its product as china and u.s. crack down on cyber spying. think it would be the opposite around. qualcomm under pressure, forecast well short of consensus as they blame strong competition from rivals in asia into ways and new licensing agreements in china. >> wait a second. there it is. >> oh, look! the camels.

>> on the street. walking down -- what are we on? sixth avenue. >> 51st street. >> wow. >> to get to -- >> this is a seasonal -- this is not normal. i mean, i looked out, and i looked back, and i did not think about it, but that normally -- >> we are not dubai. >> that is not something you see. >> nope. >> there's sheep over there, i think, too. >> all -- it's not new zealand. >> because of the -- you know, we should have known because you go in there, they don't live in radio city. >> christmas show. >> you go to the show. >> the camels and sheep on stage, they get there. >> that's in front of brooks brothers. isn't that logo a sheep? >> a piggy. >> happy coincidence. >> sheep or pig? >> that looks like a sheep. >> llama there too. >> i feel 15 years old this morning. >> the llama. >> it's the squawk zoo. >> penguins. >> oh, all right. and then there is facebook. results beating the street, revenue rising on the strength

of mobile advertising, gaining 60 million new users this quarter, compared to competitor, twitter, adding 3 million users in the same period. here's facebook's coo, sheryl sandberg, talking about roi, return on investment. >> caller: feeling really pleased with our ads business and strength of advertiser demand across the board, and that's when you see in our results this quarter. going into the holiday season, we know how important this season is for clients, and what we work on with them is focusing on business results. we want to be the best dollar and best minute they spen d on ads to be the highest roi, not just measured with traditional ad metrics, but moving products off the shelf and cars off lots. goinged inside with victor, the price target to what? >> 126. >> 126. >> woah. >> there was a long time we had constant -- can facebook

monetize mobile, right? that question has now been officially put to bed. it's over. we don't have to worry about that. >> problem solved. >> problem solved. keep going from here? >> it can. up believele how well it's going now given the stock three years ago. everywhere i go, every, you know, sporting games, bus rides, everything, everyone's on facebook. they are usiing it more, reflec the in the numbers last night. >> everywhere. >> advertising revenue growth and user growth accelerated reflected in the revenue growth, the expansion you saw, free cash flow growth you saw, that continues. >> worried about the expense level? >> yeah. well, they took down the guidelines for 2015. they did not speak about 2016 expenses. i think they may ramp up expenses again for guidances. >> that's the headset? >> correct. >> yeah. so that may cause, you know, some pause with investors, but i think ultimately, you have not seen instagram really, really be

reflected in street estimates, not what happened or begins to be monetized. they have not made its way in street numbers yet. messages have not monetized, so that multiple differs eyes in the fire leads to multiple years of revenue and profit out performance. >> twitter was not the facebook killer people talked about early on, right? >> right. >> but, still, when there's so much obvious pie out there, when there's only 3% of advertising revenue at this point and can, obviously, grow from there, there's other people out there thinking, god, how do i get a piece of that? is there some upstart out there that threatens the company? >> none that i see. right now, google and facebook likely the two infinite companies that consolidate all the advertising. there's others, you know, companies like the bank rate, yahoo! tries to make a go at it. it's tough. you may see some, you know, snapchat is another good example of a company that could potentially take market share

and take advertising dollars as well. right now, google, facebook, and twitter are less extent. they are working through it, and those two companies, i think, are really just consolidating what you're seeing with that advertising shift over to the digital. >> how long does it take to get to 126, you think, in your opinion? >> that's for year 2016. >> okay. so over the next 12 months. >> you know, if they execute, sooner than i think. >> what's the biggest risk? >> biggest risk is competition. you have, you know, snapchat, twitter gets their act together, they could, i think, siphon dollars that potentially goes to facebook. google is more dominant in the space in terms of mobile advertising as well. youtube is becoming a lot bigger competitor in terms of video advertising. competition is the biggest risk. just user fatigue. i hear about, you know, facebook users, you know, wanting to jump off the platform, but they come back. user fatigue is always an issue that you have to watch. >> oh, victor --

>> that's sad. they try to drop off, and they are pulled back in. >> like the mob. >> addicted. that's sad. >> they all come back. every single time. >> they can't escape. they are addicted to that, this -- >> they like it. >> it is addicting. >> what about a real relationship with someone, see, sit, and talk in. >> funny you said that. i went to a college reunion years ago, and the participation rate was at an all-time high. they were worried facebook kept people away, but, actually, it actually brings people -- oh, i really want to see that friend because i saw her on facebook. >> right. >> when i join, sell. [ laughter ] >> you have not joined? >> no, he has not. >> okay. >> we'll give you that as a high sign. >> there's times when i want to go on, but i'm not allowed. >> you're not a member. >> no, right. >> god to be a member. >> i don't want to join. i don't want a join a club that has me as a member. >> nay are waiting for you. >> they are. >> thanks, victor. >> thank you. >> coming up, did you know that one in three parents don't know

what they kids do at work? today might be the day to change that. suzi is teaming up with linkedin to talk about bring your parents to workday. details next. next, squawk sports with a twist, the ceo of tough mudder and see how the company is changing course for the brand new partner. that's straight ahead.

at ally bank no branches equals great rates. it'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.

can you talk me through my typical working cay? >> oh, basically you cook stuff. >> you check facebook. go through your paperwork. >> do i do any work or just check e-mails and go to meetings? >> oh? >> forget about helicopter parents. it's time for lighthouse parents. today is bring in your parents day, event driven by networking site, linkedin, research shows more than half of parents of young adults have no idea what their kids do at work.

author and mother of four, suzi welsh is here, and it means you had to have your kids at a young enough age to where they are in the work force -- i hope i see -- i hope i get to visit my kids at work someday. >> oh, you're a healthy young man. you will. >> you will. >> if you have them in your 40z, it's different -- >> don't you work out in. >> can't you tell? [ laughter ] it's different. yeah. your kids are in the work force? >> they are. all are. >> jack's kids, some of their kids are in the work force. >> that's right, grandchildren looking for jobs, it never stops. never stops. actually, given what the economy is like today and how much harder it is today about getting a job, the gig economy, people move between jobs, you're giving more advice than it used to be, you launched the kid from college, got a job, and they were on their way, and now with the complexity, the speed, the change, they are, you know, they are in an out of your lives a lot. >> fortunately, parents ride in with their kids because they

leave the house they moved back into. it's easier. they can car pool. >> it's not that bad. >> why should we want our parents to know? >> legitimate question. you know, we talked to a lot of people about what we do all day, we talk to our kids, and your parents who know you really, really well may not know about the content of your work, but they have life lessons about all sorts of things, and the research, the linkedin research shows that parents stop giving advice, most parents stop giving advice after the kid has their first job, but 66% of adult children wish their parents kept talking about them about their work. >> what about the parents who come to work? my mother is in denver with the new baby, but if she came to work today, she would tell stories and things about me as a child to other people. >> you fear that? >> yeah. i -- >> okay, all right. >> i feel and fear that. >> the whole idea is more that at of day they come to work with

you, they can have conversations, for instance, i asked one of my sops the other day, talking about his job, he's in seattle, and i said, are you taking enough risk? he's in the gaming industry. i don't know exactly what he does. i really don't. i taked to him a lot about it, but i couldn't do his job, and gaming, i don't get that at all, but talked to him, are you authentic? learning? taking risk? are you -- is everyone a mentor to you? what does over delivering look like in your industry? putting that thought in your kid's head, that a service parents play. parents, in general, like their kids to avoid risk, and so i know i hear what you're saying. >> that's interesting. >> if i bring the parents in, are you sure you got this? they are generationally averse. >> my father said, business trips, you lose money, forget receipts, whatever you do, don't make it, don't fake it, it's why people are fired. >> that's great. >> don't ever do it.

no matter what. even if you think it's okay because i lost the $10 receipt. >> great advice. he said, don't lie. don't fudge it. >> right. >> maybe you knew that intuitively, but what do people know at 22 and 23 that they can't hear again and again. >> wait. that's the thing, and that's the old saying, that when i was 20, i couldn't believe or 19, i couldn't believe how ignorant and dumb my parents were, and at 35, like, wow, they got really smart. >> they have life lessons. >> they do. i'm thinking i play this role at times here. >> right. >> here. >> right. >> we have parents at work every day. >> i know. >> here's the weird thing. the research shows 45% of parents have an opinion and withhold it. they think, well, the kids are too smart, they don't want to hear it. you can invite your parents into your lives and say, well, what do you think about this, even just to hear yourself think through a problem, i mean, they have your best interest at heart, don't they? who can you trust more? okay, not going there, but

typically you can trust your parents. >> best interest for sure. >> best interest. the idea of bringing your parents into work, into your life is something at least just to raise the topic. >> when this becomes a phenomena -- >> yeah. >> people now bring kids to work. >> that's right. >> in the last decade and a half, that's a real thing. >> look how that's taking off. why shouldn't your patients be also involved? what a great thing to talk to your parents about rather than what you typically talk about, how's the health, how the kids doing, talk to them about the content of your work. it's just another mentor. >> next year. >> okay. >> it's done. >> i'm, like, i might see if you plant it a little bit, a little bit -- >> it's just one day, joe. >> they have a role too. you can do that. that's -- oh my parents are gone. late for me. >> e knew it was a tough subject. i didn't want to bring it up. >> it's not tough. >> think about it with your

kids. i describe you and penelope as drone parents involved in the kids' lives. >> what's helicopter mean? >> very, very involved. hovering over. >> we're hovering. >> a drone parent? >> i call myself a drone parent because i'm -- >> modern. >> helicopters are so pass se. >> we're close. right in their face. >> you can help, actually. >> yeah. >> even asking the right questions, just engaging with them about what they are thinking, why not? because this -- the -- the economy is so complicated, moving so fast that maybe just to let them talk about what their questions are is a real service you can have. i think it is the next -- it is the next frontier is bringing your parents into your life at work. >> okay. good. how's jack? >> great. >> good? >> watching. hi, jack. >> why didn't you bring him to work? >> we are never not at work together.

[ laughter ] >> that's nice. all right, thank you. >> thank you. >> this was fun. >> yeah. >> i think we have a new day. >> did you see these? >> from the ace of cakes guy. this one in the middle. >> bring it over. >> those are so yummy, creamy, delicious. >> that there? >> yep. >> go for it. when we come back, more to do, barry diller on the big deal to take on airbnb, and cnbc's exclusive interview with sir elton john, what the music legend said to putin and queen of england. back with barry and elton after the break. you're watching "squawk box" on cnbc, first in business worldwide. opportunities aren't always obvious.

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welcome back, colleagues in europe catching up with elton john today, announcing a partnership with the emergency plan for aid relief. the rock star says his goal is to open access to medication for people with hiv and aids in countries prejudice towards lesbian, gay, transswegender communities. >> we can change minds. that's the purpose of this, to change people's minds and say, listen, this is just not hum humanitari humanitarian, but a health issue and economic one at that.

>> he could petition the queen to force commonwealth countries to revoke anti-gay legislation and looking forward to meeting president putin after the russian leader extended what he called an olive branch to him. >> to be a fly on the wall in that meeting. >> yep. >> i've recently gone to another elton john phase because of apple music, all the way back. did you listen to that? >> years ago, but i have not there back then. >> you were not there. >> i have not moved to the apple music. >> i remember when rock was young -- that's my favorite. >> that's later. >> later? >> but he's bona genius. they don't make many like him. >> are we playing this for real or is it in my head? >> it's out loud. >> coming up, breaking news in productivity and jobs, and the deal maker of the morning, barry diller on the company's acquisition of home away. later, we're getting dirty with the co-founder of the popular

obstacle race tough mudder. a new sponsorship deal joining us to talk about it.

we are just seconds away from jobless claims and third quarter productivity data. rick santelli is standing by, but we have the ten year yield, rick, at a seven week high, 2.4% ahead of the number. what are the numbers, rick? >> we are up, up 16, 016, 260 unrevised, now 276,000, 2.16, 3 million on continuing claims, up a bit from 2.146. let's get into preliminary third quarter, up 1.6, a much better number than expected. we expected a negative number, last month revised from 3.3 to 3.5 so we can see 1.6 better than expected, and sequentially,

about half of what we were looking at last time, and productivity is the magic bullet that's been missing at least in large part in the recent recovery. unit labor costs, productivity is up, what happens to labor costs? usually they moderate a bit. that's the case here, 1.4, much less than 2.5 we looked for. from last months it makes sense. all things considered, this does not move the needle, but show what happens at the end of the year, seems, though, the isms would be an inventory build awaits. maybe that's true. cycles have a lot to do with the gdp with, you know, kind of fits and starts, which really is the epicenter, as michelle pointed out, highest yields i believe, on a closing basis since the 16th of september. don't forget a week after that, we're comping the last time we had 3% closes in a 30-year bond.

michelle, nice to have you, back to you. >> thank you, rick. good to see you. showing the ten-year year now, intra-day, high of 2.35, now 2.38, high compared to what we've seen. rick highlighted productivity numbers better than expectations, and, steve, expectations up 1.6% on top of last month. >> there's a term for that called whoops. >> in terms of everybody getting it wrong? >> yes. >> we're used to that. >> trying to figure out when the mistake was made. maybe it's the increase in hours worked expected. >> bottom line, nothing in this number says that you won't raise in december? can i jump that far? >> oh, you know, it might be a little bit prohike in the sense that -- >> right. >> in that -- >> did i misspeak? >> well, i thought you were talking about the negative side, won't raise. >> exactly what i meant, but --

>> in the following sense, there's concern at the fed about the productivity slow down and reasons for it. does it have to do with the zero interest rate policy, something that miller and spence criticized on the fed, anything to do with no capital investment going on, and has to do with the fact they hire people and give the hours now because the price of labor came down, making it a competitive with machinery, and any way, whatever it was, the fed was worried about it, the idea we did 1.6 after upperly revised to 3.3-3.5. >> okay. that's good, don't worry about that. yesterday, yellen on the hill combined with dudley later in the afternoon have started a conversation out there which is how high is the bar for raising rates in december? the notion saying, the bar's not

high. that this economy continues to chug along at 2% economy. yesterday, we put out the first cnbc rapid update. 2.5% quarter after a 1.5%. >> on these things, right, i watched you yesterday, and i said, this woman desperately wants to hike rates. >> yeah. >> am i wrong? am i over reading it? >> the word "desperately" is overstated. she'd prefer to do that. that's the default position. she'd be easily knocked from that if we got, like, 79,000 in jobs tomorrow. i think if we do 150, 160,000 in that area, i think that's okay. we're going to have to repeat that again in december. it needs to be okay. the numbers we talked about yesterday on the show, he says 125 is enough to bring down the unemployment rate. if we do 5%, i think that's -- and, by the way, what you want to see is you want to see oil stock declining so that they get a sense that inflation could move back.

>> oh, keep going. the situation in cypress, hopefully that doesn't come back. oh, man. >> you know, joe, they backed off that, and i think they implicitly acknowledged the mistake by over emphasizing it, which is not to say they today you were right, but it's like saying you were right. >> but we know the margin of error in these crazy numbers, and we know that we're talking about, you know, adding so many jobs, losing so many, and we have the net number, and sometimes it's off by 100,000, and seasonal revisions, if they get 79, not do it, revised later, and it was 150, it's so arbitrary. i can't believe -- >> i'm scared how right you are, joe. i spent a lot of time looking at the data from 2005, and it's plus or minus 60,000. any time you get revised up plus or my news of 60,000. >> we have barry diller on the phone. >> oh, my god, cut me off. no one told me. >> turning now to the m&a story of the morning, expedia bought home away, shares soaring on the

news, and joining us as we mentioned on the squawk newsline right now first on cnbc is barry diller, chairman of expedia and good morning, barry. >> guest: morning. >> help us -- >> caller: how are you? >> great to hear from you this morning after you announced the deal. help us understand the everyonetoimpetus of the deal and how much airbnb may be, i don't know that it's true, inspired you to think you needed to own another business like it? skb >> caller: i don't think it was that, but i think it was the fact this was an area we were not in. we are in every other area of travel, and so this, we've been looking at home away for years now, and we have always thought this was an area that we should get into, but, you know, over the last four years, expedia's kind of transformed itself since

if you look at expedia, when we spun off trip -- before that spinoff, expedia was worth $of billion in terms of market cap. today, if you combine them, it's 30 plus the internal growth as well as the acquisitions that expedia's been making, got us to the point where we could take on a very large acquisition. this is the largest acquisition. >> so, explain, though, the strategy shift. i have to read you something, had is a website that covers the travel industry. three or four years ago when booking.com was winning quarter after quarter, you wondered why the expedia ceo had a job. now they are in a big time role, a rollup that's unprecedented in online travel. was that a decision to use this as an acquisition vehicle? >> no. actually, what we did was we

ended up massively in technology over the last really six, seven years, and that is what got us to the place to serve the different platforms, as we improved the service, we also bought expansively all over the world taking opportunity wherever we could find it. it was not actually, like, a go forward strategy of saying, let's roll up, let's do this. it was just one step in front of the other, executing on all the technological challenges, enormous in the area, and taking the opportunity where it came. >> in terms of the consumer behavior, though, and airbnb is part of it, people being much more willing and open to effectively representing for an evening and a week, and homeaway is focused on veighuation homes opposing to leaving the home for

a day, representing it out, but there's a significant shift in behavior. what does that mean to the lodging business broadly? meaning what's it mean to the hotel business? does all of this get disrupted in a way we have not fully comprehended yet? >> well, no. i think we are comprehending it. it is more competition because if you got more supply and this is new supply, this supply has existed for a long time, but between home away and certainly air bnb, it's expanded supply pretty enormously, let's say, all over the world. that does have an effect, but i do not think it is in any way going to invade the hotel experience, either the commercial business or travel hotel, leisure hotel business. >> barry diller, it's michelle

caruso-cabrera here. thinking about the question, uber is disruptive, the taxi medallion owners of the world fighting it wherever they go, you actually have a piece of both businesses now if we talk in parallel terms, right? you got the disrupter, and you also got invested interest in making sure hotels do as well. we are seeing pushback from the hotel industry. do you think that's appropriate on their part? should they welcome competition? are they going to act like vested interests in the future and try to really retain the protective positions at this point? >> as you know, no incumbent likes competition and tries to draw a circle wagon whatever they can, and they usually fail at it. incumbents usually don't get into the disruptive businesses or the disrupting of themselves. we've always believed at ise and expedia, the smartest thing to

do is disrupt whatever we can, including our own businesses. at expedia, you have cross competition with the sites expedia has, and our attitude with that is they each compete fully, and whether they take business or create new business is in material to us. >> i don't know if you can speak to it. i know match.com ipo is coming up. is there anything you are allowed to say about that at this point, or is this a quiet period on that issue? >> i'm actually not allowed to say anything ever. so -- [ laughter ] >> so we've seen that a lot. >> by the way, even though i'm not allowed, i kind of, you know, i get away with some. no. it's, we start a road show, i think, in week or ten days, and all of the process that you have to go through to get yourself up to date to do an ipo and looks

like we'll be out with it in two, three weeks, something like that. >> right. >> real quick, back on expedia in a second, this question. given the acquisition strategy and sort of the acquisition, i mean, it's not a roll up, but there's been so many, if you were to think about to the extent you think there's still missing pieces in the puzzle, you could name names if you'd like, but just even how to think about it, where would you go next? >> well, we are actually strategically complete now. this was kind of the last area or piece along -- i mean, i suppose we'll get into mars travel and whatever when all that gets together with rockets. >> you said mars, right? >> i said mars, but what i mean -- >> you don't want to own lyft? >> no. look, that would be more, let's say in the ise category. we don't consider travel to be,

you know, point to point taxis, but we're strategically complete, but that does not mean in various countries of the world where there are still opportunities for us to purchase in-country on line travel businesses that we will not do so, but, again, we are strategically complete now. >> okay. we're beginning to leave the conversation there. >> but i guess i never say never about anything. >> thank you, barry, thank you, again. >> pleasure, bye bye. >> the ceo of home away is joining the folks on "squawk on the street" at 10:00 eastern time. >> there's a line in there, you complete me. >> yes, jerry mcguire. you complete me. show me the money. >> okay. when we return, the booming business of outdoor fitness, in particular, the tough mudder competition, the co-founder of

the obstacle race company joining us with the newest sponsor, the footware company stamping their brand all over the course. that's next. 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.

when we return, the business of extreme sports, plus, jim cramer, on a similar vein, jim cramer from the new york stock exchange. here's the futures right now. we'll be right back.

"the year of spieth comes to a close...

tour championship winner...and he does indeed take it all."

let's get down to the new york stock exchange. jim cramer is joining us now. i'm fascinated by what andrew was just talking about, with

barry diller, fascinated by if you used all excess splee in the world, we could double our combined net worth. there's so much. you know, that's why uber works, why >> well, i had brian on the show many, many times, ceo of homeaway. and i felt it was one step away from greatness. i've used the site. it's a way to be able to rent your place out. it's great for rental managers. but it's a cumbersome site. airbnb is a much easier site to use. brian said it's not like airbnb and it's not because they're different. but i would say this. expedia's got great technology. into what it couldn't be. to be able to make it the way it has to be. >> what are we missing, jim? me and you. >> what are we missing? >> at any given time most cars are just sitting there not being

utilized. any any given time they're not utilized. how could we start some start-up worth a billion dollars a piece? what have people not thought of yet? >> i'm going to rent my house out through pga. i don't know. >> you should market. get a look at that. we have these middle market auction guys on the other day. >> mexican food too. that's my other idea. he's got it all. you already did everything. >> there's not -- not everything in life is coming up with a billion dollars. >> on this acquisition, i know the ceo is going to be on at 10:00 on your show. they're apparently going to leave him alone in austin to do his own thing. >> why did they give him the money? brian has to spend a lot to make things better. he's always kind of -- but he's very good. and expedia is such great technologyist that he'll be able to make it.

go to the site. it's cumbersome. airbnb could be both homeaway and airbnb without a problem. so take a look. you'll recognize why they need to spend more money. >> so buy time warner? buy media stocks on weakness like yesterday or no? >> facebook. i'd buy that one. >> okay. all right. >> thank you. >> we'll see you in a bit. coming up, the big bucks and bigger business names behind extreme sports. the ceo of tough mudder emphasis on the mud and its new sponsor when "squawk box" comes right back.

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welcome back to "squawk box." obstacle courses aren't just for the thrill seeker anymore. extreme sports are going mainstream. showing that annual participation in intense racing circuit has now topped traditional marathons. tough mudder a leader in the space, the military style challenge has had more than 2 million people get down and dirty including myself, by the way. now announcing a deal with merrill and ending partnership with under armour.

here's the owner of tough mudder. we're going to keep moving this. and jim gable, president of merrill. i'm holding a shoe. >> you are. >> congratulations. >> thank you. >> kevin plank, is he happy or sad you've taken this? >> i think kevin understands it. one of the most important things for you to enjoy at tough mudder is having the right footwear on your feet. one of the things we saw is some people weren't having fun at tough mudder because they had the wrong shoe on. >> under armour did a branded shoe as you know and it was not a great shoe. i told kevin that. >> explain why it's crucial -- >> here's the deal. i'm now going to have to get one of these. i have a pair of solomon. it makes a good shoe for this but i think this might be better. the trick is you're in mud. not just mud, in water. there i am. you're in water the whole time. so you need this shoe to be able to drain and be light. >> and not get sucked off your feet. >> otherwise you're sinking. this is pretty good.

did you look at the solomons? >> we looked at everything in the marketplace. >> how did you decide you wanted to be part of this? >> well, when you look at the space not only in the united states, indicated it's the fastest growing space in the marketplace right now. we looked at the 135 countries we operate in. this is a natural fit for our brand. making products for this type of challenge. it's part of -- >> how many races are you now doing? >> it's not a race, it's a challenge. >> i know. it's not a race. it's a team thing. by the way, because we were coming at the end if it was a race. >> you focus on the finishing. >> that's right. getting through together. so we have 60 full tough mudder events around the world. >> 10 to 12 miles each. >> that's right. now we have the tough mudder half. no ice and no electricity. so a middle market. >> in the half. >> that's right. >> joe is asking about the electricity. at the end they try to

electrocute you. it's a bit of a gimmick. >> we do try to electrocute you. doing a tough mudder is being physically and mentally tough and overcoming something that scares you. it's not dangerous. it's very safe. but it's intimidating. >> sometimes you hear the zap and they go down to the ground. >> that's right. it is a little scary. but our engineers have designed it so it hits you with a lot of volts but not enough to any way hurt you. >> putting this guy through hell for 31 days. saying i'm going to a ritz-carlton and lay in a thermal tub. after watching these last two days. >> look at the video. people really want to do that? >> people want to do it because when they finish it they have this great sense of accomplishment. >> it's a team thing. >> it's amazing. >> you going to monetize this in any way? >> i get asked this question all the time. >> while you're here on cnbc. >> we're here to talk about

merrell and the new tough mudder half. we have so much to do. we've got international expansion, new products, great partnership. and not any time soon. >> for merrell, does this change the game? i know merrell as a shoe that's great for hiking. i know you make sneakerlike things. are you big into -- prior to this into racing? >> well, our performance part of our business has two major pillars. hiking, backpacking, trail riding. we think this is a legitimate third pillar for this business. the concept of nature's gym. if you look at what's happening with cross training indoors. now many is moving outdoors. so this is really a platform for us to move into a nature's gym, bring an athletic development. >> what about selling the rights to a tv network? >> you know, we get asked all the time about doing a tv show. >> spartan's got one. >> it has. it seems not many people are watching it, but they do have it. >> oh. slap there. you sports guys.

you always talk trash. >> you know who they do spartan with? you know what i'm saying. okay. thank you. congratulations. i'm going to have to get the shoe now. we appreciate you being here. >> thank you. >> thanks for your time. >> three seconds to burn. what you want to talk about? make sure you join us tomorrow. "squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street." i'm carl kiquintanilla with jim cramer. today the bank of england holds steady. six fed speakers on the docket today. china up nearly 2% overnight. shanghai now 20% over the august lows. 10-year around