and in a galaxy far, far away, or maybe as close as california, a star wars fan taking an obsession to a whole new level with a two story tall homemade death star. it's friday 13th. it's november. but don't fear. squawk box begins right now. ♪ >> it is a busy day ahead. check out the economic agenda this morning. coming up at 8:30 eastern time we have october retail sales and the producer price index. it's consumer sentiment and business inventories. in earnings central quarterly results from jcpenney around

7:30 this morning and after all we heard from the retailers, we know jp penny had better than expected comps a lot of the attentions after the big misses from macy's and nordstroms this week. but first a check on the markets this morning. yesterday was the worst day for the major averages since september 28th. the dow and s&p are on pace for the worst week in ten weeks. this morning things are looking flat but this comes after a decline of 1.4% for the dow yesterday down 254 points. and breaking news outside the world of business overnight. the pentagon says that u.s. forces targeted this islamic -- this isis militant known as jihadi john with a drone strike in syria. he has been seen in isis videos executing several western hostages including two u.s. journalists and an aid worker. the pentagon is assessing whether the attack was successful. we'll bring you the details as

they develop. >> we have more hints that the fed could start raising rates in december. speaking late yesterday, stanley fisher suggested u.s. inflation should rebound next year. this could be a sign the fed is less willing to let low inflation delay tightening. also loan tee po is postponing it's ipo citing market conditions. it was expected to price that offering up 30 million shares last night. at the top of the price range it would have been valued at $2.6 billion. and milan won't win it's hostile bid for perrigo. we should get news on that while squawk is on the air around 8:00 this morning. >> other stocks on the move today, you might want to watch, implied materials posting quarterly results in line with estimates and offering a solid outlook gain a boost from companies making smartphone and memory chips and shares trading

higher a little bit. almost 3% after hours. we'll talk to an analyst in a moment but shares are under pressure. earnings and revenue are both above consensus but the network equipment maker forecasting current quarter revenue and profits below estimates citing a slow down in order growth and this was a leading technology indicator many times and there's some warning signs. we will talk to an analyst in about 20 minutes and don't miss cisco's ceo at 9:00 eastern. usually we think john. >> he's still there as the chairman. >> yeah. but it's chuck robins and same store sales in china rising 5% last month. they're backing the china comps sales forecast for the 4th quarter. remember yum announced its spinning off it's china

business. >> and you'll talk nordstrom now but how many weeks until the fed? 4.5? 5? >> until the fed decision. >> 250 pounints yesterday. macy's down how much? >> 14%. >> nordstrom down 20%. china i saw some stuff about steel. how much they're shipping. >> do you think they're not going to be able to? >> no it doesn't take much. we have four or five weeks to go. 250 points yesterday. we're sure they're going to do it in december. we could be two weeks from now saying there's no way they're raising in december. >> the fed is a much tougher position. so many people wanted them to -- >> they're painted into a corner. >> but they also set up market expectations. if you want to keep your credibility at some point unless it's a sure sign that things are slowing down. >> they want to do it in 15. >> it's equally weighted scales at this point. >> what if there was a 10% break

in the markets. >> okay i think we would be looking at it. >> and some of these market guys think if -- >> you think that they're trying to break the markets so that they don't do it? >> i'm saying it wouldn't be beyond these guys to try to influence. >> manipulate. >> influence the feds decision on whether they raise or not and all the people that said it won't be in 2015. i have already put them in the wrong column. you're wrong, you're wrong, you're wrong. and they would all be right. >> they panicked. they have feet of clay. they're in this position because of their own doing right now. >> it is so much harder. >> part of why this happens is they're still in and didn't get out when they had a chance to get out. >> part of the consumer slow down. >> any of the weakness we've seen -- part of it recently is being attributed to the uncertainty of staying at zero. business people don't make

long-term decisions. who knows about consumers. what's ailing them? >> you would think, by the way -- >> isn't nordstrom in the northwest? isn't it cold out there? >> that's what we were talking about. maybe they could zig when macy's was zaging. >> could be that we shop differently. >> yes because everybody is buying apps and. >> buying things online. >> we'll talk about that now. more about nordstroms because the stock did take a big nose dive after lower than expected results. shares down close to 20%. how bad is the holiday season going to be for the retail sector across the board? here is rick snyder. here's the senior retail analyst. so is this a nordstrom nordstrom problem or everybody problem? >> it's a little bit of everybody but more nordstrom and macy's and becky said we may be shopping differently. i have one word for you, handbags. handbags -- >> i was going to say amazon.

>> handbags have been a big category for macy's and nordstrom. michael kors is 4% of overall sales. >> that's a function of. >> change in buying habit. we had a long cycle in handbags. about 4 or 5 years and nordstrom called out boots. high price point. so you have handbags are high price point. >> that make mess think there is an issue with the consumer. the high price point items they're concerned about. >> but jcpenney and kohl's put up good sales. they're offering are more basic. >> jcpenney was coming off of terrible numbers in declines. so putting up good comps off of bad comps is not as tricky. >> that's fair. >> but you're also saying the high end is going to start to

suffer and the low end is going to do better? >> i don't think it's a high end low end thing. it's just a shift in cob assumer preferences. >> we talked about it high end but the high end he was arguing to some degree was the foreign buyer who is coming to the united states hanging out here at the stores. how much of that is a piece of that? >> not necessarily for in ord nordstrom. >> the bigger idea that the luxury buyer is just not buying? >> they're moving away from the categories that have powered macy's and nordstrom comps. >> and so what do you think -- is there anything that nordstrom can do? is everyone going to have to shift their product mix? what does that look like? >> sometimes this just happens

in retail. >> consumers shift and they will shift their inventory. we may go through a year of bad comps and anniversary it and start to move on. >> how much of this is everyone buying apps or phones or other things as opposed to, this is the fashion accessory, not clothes. >> that's a big part of it. >> or that there's no new fashion. that's the other thing you hear over and over again. there's no new fashion. >> there's no new fashion and when we typically come out of a recession, this actually fashion cycle has lasted for a very long time, fashion is usually the first thing to turn because people start to feel better. i'm surprised this one lasted as long as it has. people are buying iphones and apps as fashion accessories but they'll eventually get it right but the high priced categories are slowing and it's hidden some

weakness in the other businesses. >> you mention michael kors handbags. i have a friend that told me something about handbags. you know they go for multithousands of dollars. they might be thousands of dollars. >> they have a collection -- >> is there a new one out or something, maybe it's chanel. they come out with something that's rare and some of them cost $10,000. >> he has a friend that shows him an amex bill every month. >> no, no, no. >> we see other people that might have -- i know you don't have a problem with this because you would cut that in the bud immediately. there's no way that's happening in your household. no way, right? >> yes. no. is where i'm going. >> there's no such thing as a $6 purse but there is. >> yeah. chanel bags go up in value.

>> you're interested in art. now you have to think about handbags. >> but when someone says handbags to us it's like what -- >> speak for yourself. >> yeah, you probably do know about handbags. you probably have a $6,000 man bag. >> thank you very little. >> you probably do. >> do you have one. >> a murse? i do in the green room, sure. doesn't everybody in new york? >> no, mine was a give me from a conference. >> is it a messenger bag? >> it is. >> thank you becky. >> let's get back to the markets and take a broader look at the futures today. right now things are flat lining but if you looked at yesterday with the dow down 254 points and the nasdaq down by 61 points and s&p down by 29. at this point all of the major indices are poised for decline of 2.5% this week. we'll see where today gets us. take a look at the early trade in europe this hour. right now it looks like there

are red arrows there as well. decline of about .7% for the dax and germany down by even more than that by about .3% in the cac and france. the ftse in london is down. in asia overnight you'll see that the nikkei was down by about .5%. declines in china as well. the shanghai composite down by 1.4%. oil was the big picture. down another 3%. but so far this month along down about 11%. >> let's look at the bond market right now. the yield is back below 2.3%. 2.296%. so maybe doubts starting to creep in about whether that hike will come. it's a lower yield. if you check out what's been happening with the dollar, right now the dollar is up against the

euro at 107.84. relatively flat at 122.58. gold prices at this point look like -- drum roll please -- up $1,084 an ounce. and joining us now with more on the where the markets are headed from here is bill stone. he is pnc asset management's chief investment strategists. he is the managing director and welcome to both of you. what do you think happened yesterday? is this about concerns about the fed raising rates? is this about oil? >> i think yesterday was probably more about oil and copper also hit a new low. so i think there's remaining concerns about growth and it's slow and we had this back and forth as good news or bad news and right now it seems to me the market is nervous about growth

and also that the fed may move and that may have a negative impact. >> but is good news actually good news and the only thing we're worried about is that the fed is calling it wrong because we're worried about the demand picture overall. >> good news is good news. we want to see an acceleration in the economy but that hasn't happened. we're still at that low rate and also on a global basis. growth is slow and there's tremendous concerns that china growth may be slowing further. >> does that concern you too? >> yeah, i think you see at least some part of that august-september in here where you are seeing the commodities trend down. you can see it move in a general direction. i hesitate to agree with joe but part of it is the fed that the markets are maybe rioting a little bit. not that you call this a riot but trying to shape that up a little bit though i think

they'll end up going in december as well. >> in terms of that, if they do raise rates in december, would you two be putting your money in stocks now? >> they're pretty close to benchmark and we have been for awhile. so we pull back aggressive positions. >> what is benchmark for you? >> let's say a 60/40 portfolio we're close and holding a little bit extra cash here. as the 10 year gets up much more than it is now i'd be tempted to buy 10 year bond futures so i think in an overall market where growth is slowing, the earnings growth in the united states will be close to zero this year. the stock market is roughly flat so far year to date. >> if you want to see acceleration next year you'll still be looking at relatively slow growth numbers. >> so there's nothing tempting about stocks at these levels? would you have to see a pull back of 5 or 10% before this is an attractive entry point. >> we're fair where we are.

you'll be dependent on earnings growth but that's fairly slow. this is still a bull market but in the latter phases of the bull market and the returns from here on will be weak. >> it may be interesting watching the ten year which is coming down in yield. >> and euro is going back up a little. i don't know. >> market is not sure if they'll raise rates. >> even if the fed raises rates there's a big issue in my mind about how high rates can get. >> if the fed raises rates, do you think they're going to get 25 basis points the next day more in your savings account? >> sure. >> i don't think you'll see the response to interest rate across the industry in a world where things are fairly weak and also earn a global basis. our rates are high. >> oil can scare these guys. not only does it scare them if it goes under 40 but they don't need to worry about inflation again and this morning i heard the iea said the supply was really high and then they said the situation could worsen.

see i think -- >> it's the oil producer. not necessarily the consumers. >> we like oil. >> it's not translating into sales where you would expect it. some of the retailers. >> but it is translating into auto sales though. >> sure. >> so i do think when you talked about the retailers earlier, the consumer is spending it's just finding exactly where they're spending. we can see the autos and you're right to point out amazon online move is definitely there. there's no doubt. >> that market cap, right? >> that has been a zero sum game taking it from traditional retailers and giving it to amazon. >> and part of what happened is there was a big shift not just in wealth but also in income from younger people to older people. so we have a piece we're working on now. there's been roughly an $800 billion increase in real incomes for people over the age of 55. >> and those are not the people shopping at the stores. >> that's an interesting point.

when you talk about where retail is, that's part of it. there's a big shift in the demographics. >> thank you both for coming in. >> thanks. >> coming up when we return, exploding. social media exploding this morning about a donald trump speech. you won't believe what he said about ben carson this time. his comments and carly fiorina's reaction on twitter. we'll talk about it when we return. plus talking tech, the order slow down that has cisco shares taking a hit this morning and analysts will be telling us if we should be worried about the whole industry. first, take a look back at this date in history. surprise!!!!! we heard you got a job as a developer! its official, i work for ge!! what? wow... yeah! okay... guys, i'll be writing a new language for machines so planes, trains, even hospitals can work better.

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welcome back. political news this morning. donald trump holding a campaign rally in iowa last night and he came out swinging. he used profanity describing his fight to strike isis and also going off on ben carson using his rival's ownords against him calling dr. carson pathological and questioning his life story. >> i'm not saying it. he said he's got pathological disease. he actually said pathological temper and then he defined it as disease. so he said he has pathological disease. now if you're pathological there's no cure for that folks. okay? there's no cure for that.

>> a lot of reaction. i mean, a lot of reaction on social media. carly fiorina posting on her facebook page the following, donald, sorry, i've got to interrupt again. you would know something about pathological. how was that meeting with putin or your self-funded campaign anyone can turn a multimillion dollar inheritance into more money but all the money in the world won't make you as smart as ben carson. maybe they should have an iq test or something. >> let's talk about business news. general motors could become the first auto company to import a chinese made vehicle into the united states. the buick starts planning to sell the mid sized invision suv here next year. >> cisco beating on the top and bottom lines but this morning the stock is under pressure on weak guidance. here to break down the results, the managing director, how long

ago was it when sis coe emerged doing a little bit better in the last two or three quarters? didn't it? and does this indicate another pending slow down globally? >> joe, you know, i think that when sis coe introduced a raft of new products about a year and a half ago we started to see really a build up of momentum in the top line in many ways that's still taking shape. we see the switching business for example accelerating over the last two or three quarters as you said and then i think there was an expectation that it would continue to do that into this quarter and into next quarter. the numbers they printed were actually very solid. >> for switching. >> for switching. >> in the software and the services up 36% or so. >> exactly. >> a great number in those but it was reuters, right? their old stuff. >> exactly. reuters have been weak for three years in a row now. it wasn't that much of a shot that they were weak. they were weaker than expected.

the deal that they announced will be pressing it and that will probably lead to a rebound of that business as well overtime but in the meantime we have seen the company sort of take a sideways step in their guidance for the next quarter. >> orders in china were much better than in previous quarters. 40% or something but what causes that? is there back up in at the hand? >> well, so china is a pretty small part of the overall stream overall. it's a nice bounce back to have. the brick countries in general grew 11% so after, you know, last year declining for quite a bit. we saw some inflection points that were real bright signs. u.s. enterprise is where i think the enterprise was. >> u.s.? >> u.s. enterprise macro. >> does that mean u.s. businesses are suffering?

we try to figure out everything about what's happening from the american consumer to what's happening to u.s. business. should that concern us on a broader level? >> some of your earlier guests also noted and you pointed out earlier that this is usually a leading indicator of cisco of ceo confidence and, you know, spending and you'll hear chuck talk about that as well. so when you look at them as a proxy for enterprise comfort and spending in cap ex that's something to take into consideration as well. europe slowed down today in the euro zone as you saw as well. that said, though, this company still has a product line that provides a tail wind. this company still has a new partnership that provides a tail wind and as you noted joe, deferred revenue which is people don't pay a lot of attention to are future revenues and those grew over 10% for them overall.

that's what we're looking at. >> we've been watching back in the old days -- >> yeah. their router business and even back then the new colors they came out with with the reuters, most of them were this tan generic color. >> ugly color. >> yeah. so i knew that they western innovating enough in terms of -- i don't know how they work or what's in them. >> remember the flip. >> the what? >> the camera. you remember that right? >> is that something -- >> they had a flip camera. >> you don't remember that? it was a digital camera. how much did they pay for that? >> it was a camera. >> it would work -- >> it would take digital pictures. >> oh. i remember the little flip video thi thing. >> it did high definition video. before it's time really. >> you might have one. >> my iphone is better. >> i think so. >> so i had a couple of them. >> you could have made a nice like midnight blue router and you decided that wasn't a smart product enhancement.

>> apple came out with a product -- >> do you remember the macs that were orange and green. this is not ridiculous. a lot of these things you think it's ridiculous. >> okay. >> as we decided these are fashion accessories. >> exactly. >> they did not have the kind of router i wanted. the right color. >> i think it's a piano player at nordstroms. that's what i think. or lack of piano player. don't forget to watch cisco ceo chuck robins to get more clarity of the issues we're just talking about. that could be good. >> a couple of great stories when we come back including this one. a google self-driving car pulled over by police for what we'll describe as a slightly embarrassing reason. we'll tell you exactly why when we return. plus al roker taking the nation by storm. he's on the last leg of his mission to report the weather from all 50 states in just seven days. al will join us live still ahead

but first as we head to a break a look back at yesterday's s&p 500 winners and losers. the future belongs to the fast.

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david hasselhoff recently changed his name to david hoff. >> he's hassle free so to speak. >> he's 63. there's rumors of a possible baywatch movie and people make fun of bay watch but he said i made a lot of money. >> he made more on baywatch than night rider, right? >> he has lately been in sharknado and he was in ted 2. i saw him. >> didn't he do dancing with the stars? >> he was also in sons of anarchy and played a former male adult movie actor. it was like a really good -- if you know what i'm saying, not in his acting but he was really good at what he did as an adult and then he turned into a producer. >> of the same.

>> he was a sleazey producer and he was great. you can tell he's a really nice guy. i think maybe he had seen the show or something. just really nice and nodded and i think i could have -- what? what's wrong? >> the lights just changed. >> the lights over there are -- i looked at a video. we looked hot yesterday. >> look at that light right there. >> we look hot in a bad way. but it's dark outside. so i don't know whether they cranked up the lights but you look like you've been drinking again. i look like a smoked a carton of cigarettes last night. >> good for you. we're actually pretty good looking people. i know you'd never know it. >> exactly. let me tell you about another story. this we talk about self-driving cars all the time. so google has a self-driving car that got stopped by a cop yesterday. >> it's capped at 25 miles per hour. >> because the car was going too slow. not too fast. 35 miles per hour zone.

car going 24 miles per hour. cop pulls the car over and there's an operator in the car because these are still being tested and so the cop questions why is the cop really pulling the car -- the cop is look at the car. obviously knows what's going on. >> that's what they're say as good the cops want to check it out. it's not illegal to drive it under the speed limit. >> why is it not illegal. you can't go over 30. >> because they cause accidents. >> they cause accidents all the time. >> there's some place where is they can give you a ticket for going too slow. >> i've seen minimums. >> but it's not on a surface street i don't think. >> just meaning a local street? >> yeah. >> on a highway i guess. >> anyways so they pulled it over. >> i'd pull it over for the way it looks. i'd pull over a prius for the way it looks. >> and just give a ticket. >> just for being suckered into buying one of those. but that is hideous. >> i don't believe those have steering wheels. >> you can't take control?

>> well, maybe the ones that they practice with. >> i would sue them if i were volkswagen because it's a beatle knockoff. pay for that emission problem with the big pocketed google. >> you'll be in one of these things within 5 to 10 years. >> i would never. i'll be in one of becky's minute have vans before that. >> did you see thursday night football? >> i know what happened. >> you do know what happened? jets and the bills played and it's part of the color rush they have on thursday night and it lead to issues. check this out. you'll see that the uniforms are all green for the jets, all red for the bills and they're shaking things up on thursday night. four more games toward the end of the reason where nobody is going to be wearing a white jersey. turns out though if you're color blind this is tough to see because red and green is the most common color blind issue particularly with the green of the field behind them. something like 10 million people

in the united states have issue with color blindness. red and green being the biggest one so there were many of them complaining about it last night. the former new york giant's kicker was one of the people effected. he tweeted last night if you're color blind like me this nfl game is going to be hard to follow. one of our producers really couldn't see. >> as long as the quarterback -- >> sandy in high school was -- >> as long as the quarterbacks aren't color blind. >> especially for people watching. in close they could see it but when they pulled out it was -- >> sandy is talking in my ear. i said his high school, the way he acted that does not cause color blindness. >> an ap sports writer with interesting stats of a number of people that would be impacted by the jersey, about 13 million americans are color blind. usually red breen. this is torture for us.

>> i have trouble with purple and blue. >> you do. you have serious issue with that. >> is this purple? >> that is purple. >> some reason to wear purple today. >> it was pancreatic cancer. >> i missed the memo on that. coming up, al roker live from the road as he wraps up the rokerthon. plus a private equity manager bringing his portd foil owe public and then we'll hear from jcpenny and a special guest in the studio. the head of the u.s. small business association joins us. stay tuned. you're watching squawk box first in business worldwide. a knack for predicting the future. reflexes faster than the speed of thought. can a business have a spirit? can a business have a soul? can a business be...alive?

at ally bank no branches equals great rates. it's a fact. kind of like ordering wine equals pretending to know wine. pinot noir, which means peanut of the night.

good morning to you. >> good morning. why are you selling? >> we're not macro economists but it's a challenging time to buy. we had a portfolio that transformed itself and got a lot of growth and found buyers willing to pay us a multiple in excess of what our expectations were when we did the deal and in excess of the valuation ranges historically. >> you're calling a top. was that a call for the top? >> i wouldn't say it was the top. we had a portfolio in good shape to seek liquidity and, you know, in this environment when it's hard to get things done on the buy.

>> it's hard on the buy side in terms of private equity deals because of what now? >> technicals are challenging. you have $700 billion in capital driven mostly by low interest rates and fed policy and specifically private equity. there's a lot of capital. corporate buyers are active and trying to figure out how to augment their growth and they have currencies to throw around to buy things and there's not a lot of high quality product. a lot has been bought by private equity in the last decade and we're not an easy group to negotiate with so finding good opportunities has been more challenging. fortunately we had a portfolio that had matured and transformed. >> is it getting tougher to take things back out at this point? there's been ipos pulled and questions raised about that. >> yeah, you know, i don't think -- i think there is a challenge in going public. frankly, the private bid right now is more attractive than

public market evaluations. >> secondary markets. >> because there's so much capital in our industry it's more attractive to sell to a strategic acquirer than it is to necessarily go public. when you're driving a lot of transformation in your portfolio doing that outside of the public spotlight, not having to deal with quarterly earnings and the regulations is an attractive strategy. >> peak private equity has taken place over the last five years. if you look at a private equity firm it was mch more resilient and better returns than anything else but so much money is poured into this space that it's unclear whether those returns are going to be able to hold up anymore. >> i think returns are probably coming down by virtue of the amount of capital coming but we're relative to the public markets and bond portfolios. that's the dilemma our customers have. they have an immense amount of capital and beneficiary tosser

vis. >> but the critique is if you levered the s&p or private equity firms you'll get to the same place. >> there's firms delivering that to that s&p equivalent. our approach is entirely management driven and we think that our managers are driving and exceeding what you would get. >> did you see the piece on the wall street journal about the high yield market and how tough and -- how it's drying up. how is that effecting you? >> i'd say that's one of the areas where you're starting to see shakiness in the capital markets. money has pulled out of the bank loan and the bond markets. the yield versus gapped out a little bit more and frankly, the -- that's probably going to be where private equity hits a little bit of a wall or a little bit of pressure is the fact that pricing in the bond markets

at -- in the bank markets at 90, so trying to issue a par will be challenging and probably back up in that persist. >> thank you for coming in. i hope you can come back and we can do it again. >> thank you. >> al roker is on a week long trip reporting the weather live from all 50 states and the district of columbia. al is wrapping things up and joining us live from stanford, connecticut. i have been watching you on the roper tracker map. how are you doing? you're almost home my friend. >> we are close. we got here into stanford last night at about 2:30 this morning so we are ready and willing and cannot wait to jump on metro north come into grand central and get into today show plaza. 50 states in a week. it's been a really great odyssey and we're trying to raise money for feeding america. so we asked people to go to

today.com/rokerthon and donate. >> that beard that you have been growing, is that movember or because you have been on the road so much you haven't had time to do much else. >> i know you're on the air on your show so you haven't seen ours but it's called no shave november and we're doing it to make people aware of men's health issues. so we're all growing -- all the men are growing beards and facial hair on the "today" show. >> all right. well, al congratulations. i hear your train whistle blowing. we know you have to jump on it. >> well, not yet. we're getting on the 7:25. so we're not ready to go yet. but we will be soon. hey, andy and joe. just want to say hi. >> hey there. >> thank you al. >> looking good. >> i think he looks distinguished. >> my kids say i look like a bum. >> love it. love it. >> you know, you can say that

al. we're obviously -- we think you look -- >> you were thinking it. >> handsome man. >> no, no, no. good luck. that is a great cause too. i'm glad he's home though. but he did say he got some great food tasting in all the different parts. with what little time you have. >> when you stop along the way. >> squawk box is going to come back. we'll talk to the ceo of planet fitness after his company posted a big earnings participate. that's straight ahead. ♪ (vo) me? i don't just wait for a moment.

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planet fitness beat the street, revenue rise iing 8%, a the ceo of planet fitness, not everyone knows of the business model, the planet fitness employs because we're fitness crazy, and you got things like new york sports club or l.a. sports club, and they are expensive with everything, just everything you could ever want. you take the other approach? >> the other side. we're nuts and bolts, treadmi s treadmills, circuit training, beautiful locker rooms, and just $10 a month whether it's manhattan or arkansas or alaska or new hampshire.

it's the same pricing. >> $10 a month? >> yes. >> what if you want a personal trainer? >> included. >> no charge? >> for $10? >> it's not one on one, but it's classes, educational instructions, weight selections, no charge. come in every month and learn new stuff. >> you said the same price in new york versus everywhere else. how does that work? >> we don't have the juice bars, pools, and the only variable is rent. the more dense, the more members. most clubs are open 24 hours, seven days a week. we have the occasional gym users so they are not in there for two hours, but 30 minutes two times a week. we can service more members in a community. >> margins work in new york because there's a more dense population? >> correct, exactly, yeah. >> some of the clubs have over 10,000 members. >> wow. >> one of the things in the

notes, you may have as many as 6,000 members, but the gym holds no more than 300 members at a time. how -- you actually don't necessarily want people to show up all the time, do you? >> no, that's not true. we know the main reason for cancellation is nonuse. we want people to use the clubs, hands down, you know, but the members are casual users, not in there. they come in two days this week, one day next week, 30 minutes, in and out, like table turnover in the restaurant. they are not in there for two hours, we service more because we turn them over. >> you got over a thousand locations. how old is the company? >> started in 1992 in dover, new hampshire, franchised in 1993, refining the model in the '90s, and we saw a model that took off, and it's that whole judgment free zone catering to the first time gym member. >> because you go after the first time user, do you have to

have the most state of the art equipment, or is this an advantage to get equipment that maybe a little lesser? >> you know, we're about value. so we, even though we are $10, it's the same equipment as in a club that's $100 a month. we drive value. there's no frills, and i hate that terminology, but we give a lot of value at $10 so the high price clubs can't outdo us. >> when you buy equipment. how many years do you plan on keeping it in service? how many years do you depreciate it? >> cardio is like a car, mileage, four to five years, strength is six to seven years. we have lack of cap x and upkeep. old ways, build the club, forget about it, club deteriorates, and these, we are in line to replace equipment every four to seven years. >> you have a sauna? >> nope. >> no sauna? >> you don't necessarily want

the -- i called them muscle heads, but you call them lunk heads. >> you're a lunk, aren't you? >> no. lunk is a behavior. >> he's ripped under there. i think he's ripped under there. >> you don't want lunks? gold gym wants lunks. i go to this place, lifetime, which is, like, i mean, it's the opposite. makeup hair place. >> everything, right. >> there's a huge restaurant with all the -- >> rock walls? >> yeah, rock walls and classes and personal trainers, and it's kind of a cool, a cult, but it's cool. it just depends, but at least everybody has something to pick. >> right, right. >> nothing ex-- >> lifetime's big. we have a lot of multigym members because we have 1040 locations today, if you travel, and also, convenience, you know, the lifetime fitnesses are beautiful centers, but you're not in and out of there in 30 minutes. that takes that long to walk to

the locker room. that's for the family, but you have us for the lunch break when you're in and out. >> as long as activities are more important -- >> the general wellness in the last few years, fitbits, whole foods, and general wellness is, you know, all tides rise, you know. >> i don't know if you saw andrew's pushup. >> yes. >> the pushup contest. >> do you have one nearby? he has to train. >> few in manhattan. >> i want a rematch. >> oh, you do? >> no, no, no, no rematch. >> i think i won. >> do you? >> i do. well, i do. that's typical of a lot of times you think you win, arguments, everything. >> you did 23. >> situps contest? >> no, i'm not doing situps. >> that's harder. >> let's do a plank contest. >> no. >> how long can you go for that? >> you know what, you want to challenge me to a downward facing dog yoga thing, i'm not doing that, it's pushups.

>> thank you. >> thank you. when we come back this morning, credit swiss predicts next year is a water shed in global economic history. we'll be back to talk about it. the future belongs to the fast. and to help you accelerate, we've created a new company... one totally focused on what's next for your business. the true partnership where people,technology and ideas push everyone forward. accelerating innovation. accelerating transformation. accelerating next. hewlett packard enterprise.

a catastrophic week for retailers. the retailer reports this hour, we have the numbers and analysis from wall street. >> a high profile ipo hitting the brakes. >> and you're driving along, la, la, and alled sudden, a truck tire's in the middle of the road, you hit the brakes, woah, that was close. >> tell you why loan depot pulls the plug hours before they were to go public, and why the appetite for ipos is headed for

a crash. >> help! there's a cliff! ah! >> and it's friday the 13th, talking market fear factors revealing cress suisse's top ten trades. we have the second hour of the spooky "squawk box" right now. live from the beating heart of business, new york city, this is "squawk box." welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe with becky and andrew, and stocks in asia falling overnight, traders citing commodity prices, which have fallen to six year lows. we didn't have a session yesterday in this country, and they are responding to that, asian markets to some extent. also, at least today, still for

today, rising expectations of a rate hike by the u.s. federal reserve, but we pointed out, it's 250 points yesterday, macy's and nordstrom's down 20% in a single session. >> macy's down 14%. >> down from 73 to 40. >> down, like, 45%. >> see what the guys and gals have the fortitude to raise rates. yesterday, speaking of yesterday, this guy, the vice chairman of stanley fisher, he might not be the problem, suggesting u.s. inflation should rebound next year, and some say it's a sign that the fed is less willing to let low inflation delay tightening, and you saw oil. oil threatening that, perhaps break under 40. on today's economic agenda, at 8:30 eastern, object retail sales, if there were any. also, the producer price index. then at 10:00, consumer sentiment and business invent y

inventori inventories. u.s. equity futures at this hour, wow, nay have turned around. i think they were indicated to rebound earlier, now down 36 points, keying off oil. have you seen it go by lately? where is oil? up a little. >> lightly, but it's oil year six and a half year lows. that move yesterday was a decline of another 3%. looking at wti, you see now, up by 38 cents, but still well below $43 at 42.13. couple other headlines in the news this morning. shares of cisco, and here's the problem. the stock falls and weak guidance, and the maker forecasts revenues and profit below estimates, citing a slow down in order growth. the cisco ceo is on "squawk on the street" don't miss that at 9:00 eastern time this morning. also, media news this morning, time warner seeks a stake in video streaming service, hulu, that's according to the wall street journal, this deal values

hulu at $5 billion, and right now, owned by comcast, parent company of this network and disney and fox. >> including all time warner's videos online too? >> unclear. there -- likely that there would be additional partnership in terms of what happens. >> right. >> by the way, that means that a lot of advertising -- i mean, this is the big question about hulu. a lot of the programs that are on networks that require advertising are now going on hulu ad free if you pay. the question is whether all the companies are effect eively training viewers to get away from their old model and what it means long temperature of term. some people believe they are canalizi cannibalizing their business. >> if you have more and more content aggregated in one place -- >> harder for netflix in the future to get access. >> netflix got popular. the stock. >> right. >> the netflix -- what do we

call them? net flickers? look at the stock. it hit a wall four months ago. it was everybody's favorite, everybody's cutting cords, and skinny bundle's coming, old media's going away. yeah, really? okay? what happened? maybe it starts again. >> right. >> could triple, but that's not where people have run running from old media. they have not run into netflix recently. >> there are murmurs, i have to say -- >> actual murmurs? >> below the surface -- >> are they whispering? >> do you know that? they are whisper. >> what are they? >> if you have the big five companies, the big five companies all involved with hulu, and they all sell content directly to hulu not at market prices. question is whether they are at market prices, and netflix, so successful in blocking the

comcast time warner cable transaction in terms of going to the government and screaming bloody murder -- >> will they complain again? >> correct. the whigs pers and murmurs within the media space, there are that -- this time warner has sort of deal has sort of spurred people. >> seems like a trickier argument. not selling to us because it's kept for themselves? >> what arms length this will be. >> that's the hawaeisman. >> you like netflix? >> i do like netflix. >> sounds dirty. >> like flickering fire flies. >> are you rolling dice? way are you flicking? >> dominos. >> it's not dominos. i think dominos pizza, taco bell brands boosting this morning, same store sales in china rose 5%, backing the china comp sales, forecast for the fourth quarter, announcing last month

it's spinning off that chinese business. >> and developing story breaking overnight, the pentagon says u.s. forces target rgted the isis militant known as jihadi john with a drone strike in syria. he's been seen killing several hostages, two western journalists, and a u.s. aid worker. at this point, they are assessing whether the attack was successful. we'll bring you details as they develop. back to the markets now, friday the 13th, and if you're superstitious, here's the markets. >> it's unlucky in the grand scheme of things for people who are superstitious, but there's an interesting story here if you look at the data. some traders, not saying people make investment decisions solely on what happens because of historical patterns, but some pay attention, and some watch cycles happen. if you look over the near term,

we asked the data partners to crunch numbers. since again, 1990, there's been 44 times overall when my friday the 13th has happened. generally speaking, the s&p, dow, and nasdaq are all up about, you know, maybe two-thirds of the time. we'll say. by two tenth of of 3%. marginal gains on average on 44 occurrences. longer term, though, it becomes slightly more dire. i say "dire" relatively here. howard over at s&p dow jones indexes, all kinds of numbers, looks back to 1931, just looking at the times when friday 13th happened in november. there's only 12 times. average return for the s&p 500 down .6% of 1%.

if you use these as part of the overall strategy or part of the color they use to make some decisions, that plays an interesting role for that. i mean, we would just say this, this is historical context for what happens, but friday the 13th may not necessarily be the worst day out there, but november will be the worst. i will say this, guys -- >> i love you. i love the way you act like you are excited about this. there's an idea, you looked at it, nothing happens, why go forward with it? >> turns out when friday the 13th happens -- >> i don't understand. who's idea was it in the first place? what's interesting? i got married on friday the 13th, march of -- >> your wife is lovely, by the way. >> thank you. lucky, and it was a lunar eclip eclipse, so i'm giving you something to sink your teeth into, other than the .2% up or down. >> what about the long term since 1931?

if friday the 13th happens in a november, it is actually the worst time for a friday 13th to happen. >> is it a news desk meeting? >> all kinds of meetings. >> oh, i know. >> if you're thinking the day is unlucky, dom disproved that. >> well, i mean -- >> told you the notion. >> like statistics, like, you frame them in different ways. >> what was the date of the "squawk box" 20th anniversary celebrati celebration, that huge party we had? >> 13th of october. >> 13th on thursday. >> of october. >> it was a wednesday or thursday. >> it was -- >> it was not friday. >> not a thursday or friday. >> 13th is a very, very good number. >> yes, but that is counter to popular concern. >> yes. >> you said yourself this morning it's a day. >> yes. >> none of that. >> i want to keep trying to make this interesting for you. also, there's a -- there's a term for being afraid of the number 13 and fear of the friday the 13th.

>> just take it back to the suits at headquarters. that's what joe is saying. >> the anchors are talented, they made it interesting. >> leaving you guys with this. i leave you with this, all right? >> okay. >> this, it does not happen very often we have three friday the 13th in one year. this is the third and final one we'll have. the next time we have three separate friday the 13th, not until the year 2026. >> oh. >> just a little, i mean, again, they are just numbers. >> numbers are fun. >> it's trivia. >> thank you for playing with us. >> thank you very much, joe. i appreciate it. >> you do. you try. good. >> a new report outlining expectations and predictions for next year. joining us right now to explain his top trade for 2016 is rick, the global head of fixed income and economic research, and, rick, you think the 2016 will be very similar to what we've seen this year, not a great year for those bullish out there.

at least when you look at the major averages. >> that is exactly right. it's challenging again. we're at the very interesting point in the global cycle where the united states is getting better. you know, the fed's in play. we can debate what they do, when they do it. the rest of the world's got challenges still. i think that -- that means you're going to have an unusual event. what happens is the united states gets going, with a leg, the rest of the world is going. this time, unemployment is high, europe and china with a bit further to run. it's going to be hard to trade and episodic. >> if united states is better, other nations struggle, great, invest in the united states, but when the central bank's become the biggest game in town, and our central bank is on the verge of raising, other central banks add liquidity, that turns everything on its head. one of the things you like is looking overseas at the european equities against the u.s. market? >> yes, so if you think about

equities. i mean, the u.s. market looks like it's fairly valued. you know, remember that market's rarely stop at fair value. there's upside. you know, if you're going to look at the best play, it's europe at the moment. we think the corporate earnings rebound, and there's going to be more qe. invest in europe rather than the united states on a hedged basis. >> i was going to say your top trade, really, it's the u.s. dollar making sure that you buy the u.s. dollar versus the euro and the bank, is that it? >> against everything. >> everything. >> european currencies, again, it's a world where the really big debate this year, to me, is not whether the fed gets going, but how far they go. really, that's going to depend on what happens in the rest of the world, and can the rest of the world drag the u.s. bank down? my feeling is it will not, the fed gets going, and you have a rate of 1% in a year's time. >> slow project ri?

a quarter point every three meetings? >> it's slow because, a, they are cautious, but, but, i think there's episodic storms when this happens. you know, you've had policy here, and, remember, the u.s. sets global monetary policy really. the u.s. drives pricing across the globe, and it's been the lowest it's been for the longest ever. taking that away is bound to cause some problems somewhere. it's hard to see where it is, but the most likely thing is that it will actually cause storms causing the fed to stop for a while, similar things calm down, and they go again. in the paper, we talk about the risks for next year, and, again, it's interesting everyone in the moment is focused on china. they are a risk. china's slowing down. there's a possibility, at least, investment collapses in china and there's a really big episode, but the one people are not talking about at the moment is inflation. what's interesting is if you look a a broad range of inflation measures in the united states, the only one that's really below 2%, current

inflation, is the pce deflator with distortions in there related to health care. as we go flu through 5% unemployment, you see inflations in the u.s. and markets reprice quickly if that happens and fed is on the case again. at the moment, everyone is worried about, is it a mistake to tighten? possibility is they tighten because europe is very weak, the long end does not move very much or do very much. >> right. >> in terms of the u.s. economy, and -- >> just to put a fine point on it, though, your favorite trade is buying the u.s. dollar over the other currencies, second is long european equities. >> that's right. >> people have to pay attention at home. you're not buying equities unless you hedge it. first thought is dollar is stronger and you need bigger returns in order to make up for it back in translating? >> yes, exactly. >> how do you hedge things? >> a currency hedge. if you're a retail guy, you know, buy one of these things

that people put out there, but it's really just about making sure there's not currency exposure. >> rick, thank you very much for joining us. >> thank you. coming up, america's contentious relationship with the federal reserve is nothing new. roger from the new york times is joining us on the legacy of the central bank from the times and everywhere, writing for years with a wonderful book out we'll talk about. also, a controversy to talk about as well. then mortgage lender, loan depot pulls the plug on the ipo. why they hit the brakes hours before the public offering and perhaps what it means for the ipo market at large. retailers under pressure, also, macy's down huge this week. take a look with jcpenney expected to report minutes from now. we'll figure it out, numbers and reaction from wall street straight ahead.

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welcome back to "squawk box," a new book looking inside the creation of the nation's central bank, a controversial institution these days, joining us, the author of the book, one of my favorites, roger, a contributing writer with the new york time magazines, other magazines in other place, and great to have you. >> great to be back. >> so when i say it feels like one of the most controversial institutions in america these days, was there ever an expectation when it was created it would be this controversial? >> well, yes.

it's been controversial since the beginning. this goes back to hamilton and jefferson. we had a central bank. they got rid of it. they got another. jackson got rid of it. we were the only industrialized nation without one because there were little rand pauls in history saying we don't have a government bank. >> this is exactly what history has -- >> this has been going on since hamilton and jefferson, taking a major bank run panic, a bavnkin freeze in 1907 for people on wall street to say this is crazy. >> the elder paul, ron paul was more outspoken on it, right? the pauls. >> rand has a better chance of being president, but tough on this. >> he was. >> do you agree with the chairs? who can the best and worst chairs over the years? >> paul volger the best, bringing inflation from 13% to very low, but you have to give

the second half of ben bernanke when from the crisis hit to stepping down. terrific rate. >> we don't know yet. >> look at the u.s. compared to europe, england. >> greenspan would have got a grade in 2006? >> i would not have given him a good grade. >> why not? >> too loose. he was, you know, he was the gidy markets. >> too loose? loose monetary? >> the guy who said whatever markets do is right. i mean, he was the guy who said we don't need derivatives regulation because if two private parties make a deal, it has to be sound. >> right. who -- when you look at what's beginning on now, the debate about raising interest rates, is there a good historical parallel with the exception of what happened after the great depression? >> well, yes. the -- the parallel is during the great depression, the fed -- was afraid to take a stand. washington board did not really control it. the banks -- individual reserve banks around the country all going their different ways. the big change now is the much

more unity in the feds so there's one strong body in washington. >> looking back now, having studied this. >> yeah ? >> if someone wanted to create a fed today, would it happen? >> they'd have a hard time, there's bills in congress, congress should make the monetary decisions, order the fed, they mean the interest rate decision should be made rather than open political theater. >> weren't -- >> do you think that happens? the taking the power away from the fed and putting it back in the house of congress? >> we got rid of two central banks. i'm not making it up. we got rid of hamilton's and jackson abolished the second one today. >> on the verge of that today? >> they have an acceptance problem, second to the irs in the lowest rating ofny federal agency out there. >> therefore, what happens? the end of wall street, but the end of the fed? >> getting rid of the fed? i don't know it goes that for,

but i think janet yellen has to reassert the fed's independence. >> what's that mean when you say "reassert," how? >> during the crisis, the fed goes hand in hand with the white house and with the administration. that's natural. it's time to step away, do things that lew and the treasury might not want like raise rates and reassert -- >> proving they are independent from either party? >> i want to change topics a second, but you look at what happens in december, they raise interest rates? w what joe said, terrible results from the retail space. >> she can't not do it now. >> 10% stock market rate? >> okay. hypothetical, but she said -- >> would they do it if the market is down 10%? >> ask me when it happens, but she's gone so far out on a limb saying she'll do it. >> did in september too. >> you can't walk back too many times or lose credibility. >> whatever's left of the credibility.

>> roger, i'm trying to think of what would be something that would actually assert their independence, and maybe that's raising rates substantially in a election year. >> yeah, i think that's it, but it's also a general mind set of the fed's not part of the government, but independent central bank and in wars and financial crisis, it walks hand and hand for obvious reasons, but it's important to break now. >> you know the topic, two hats in life. you're a journalist, but you're the chairman of the board of the director of the fund -- >> hoping you'd bring it up. >> there's a story laying out a rift at a firm, by the way, that warren buffet has been associated with for quite some time. >> who you know. >> becky, we all know well, and this is a rift over valeant, the stake that they have in valeant, a huge one, two of the board members resigned over the fact that this stake has become so con accept traited.

what can you tell us? >> well, stuart said if he said all directors raised serious concerns about the size of the stake, and that's true, and -- >> you have not resigned? >> i thought i could be useful on the board. when does the fund need you, if not now? >> do you think that valeant is a fraudulent company? do you think it's immoral as suggested, deeply immoral? >> look, bill ackman says coca-cola is deeply immoral because they sell sugar water to kids. >> people are still laughing. >> look at the figures, i don't know why people would laugh. >> coke coca, did you drink a coke growing up? >> it's a slippery slope. >> kelloggs too, laughing at tom brady. >> i don't laugh at brad di, he makes me country. >> the question is, do you believe -- as a board member of this firm, do you say to

yourself there's a moral issue that's been raised here about owning valeant? you could say maybe there's something immoral about owning coke, i don't know. you guys own berkshire. i don't know if you have a stake in berkstory, you own a big stake in coke. >> the manager used to say that if you have problems about various investors, what they do, better off to let the managers make as much money as they could use profits to donate or help who you'd like to. it's very tough to start weeding out companies in the basis of morality because everybody's definition of morality is different. mine is gun companies. >> do you feel like now that you're stuck in this investment you have to double down? >> i don't know about doubling down, but i never advise managers to sell a position they think is grossly undervalued, which is what they think now? >> more value by sticking

around, what do you do now raising the concerns? >> keep raising them. keep listening. keep raising them. they pick the stocks, but, you know, if we have concerns, we raise them loudly. >> thank you. >> roger, thank you. the book called "america's bank," go get it. thanks. coming up, mortgage lender, loan depot, pumping the brakes on the ipo, and we have the company's decision. time now for today's aflac trivia question. which u.s. interstate highway is the longest? the answer when cnbc's "squawk box" continues. aa-flac! 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!

now the answer to the trivia question. which interstate highway is the longest? the answer? interstate 90 which stretches 3099 miles. welcome back to cnbc, first in business worldwide, and among stories prompt and cementer tod, the close of trade, replacing the company aldrich being acquired. falling shorpt of estimates, hurt by short traffic, and cutting the same sales store

forecast for the year. fitbit's secondary priced at $29 a share. offering downsized to 17 million shares from 21 million. shares down 6.5%. >> nation's second largest nonbank len dder set to go publ day, but the plan is on the shelf today. >> that's right. loan depot gave us a statement it's, quote, withdrawing from the pursuit of ipo at this time, due to market conditions. the market did not do well yesterday, but there's more to it than that. lone depot needed a strong market to support target price of $16 a share, a pretty high bar to begin with, putting the company's value at 2 billion. it needed investors to support 30 times earnings a share based on what was reported for the first half of the year, and it also means banking literally on an awful lot of growth for the company. now, no question, the nonbank

lender has seen huge growth since launching five years ago, the second largest lender behind quicken loans, the biggest gains in the first nine month of this year at 142%. that's according to inside mortgage finance. 22 billion in loans under its various brands, and while business is good because the low rates, mortgage originations have weakened as rates have started to rise. nonbank lenders hit a disproportionally hard in 2003, and stone gate is closing dozens of branchs. this was a tough one to begin with. >> do you think this has something -- how much more broadly does it speak to the ipo market across the board, or really, you think, the issue is specific to them? >> oh, it's the ipo market opinion. >> yeah. >> in the entirety? >> how many more ipos drop? >> well, i don't know, i look at housing market, so i'm not going to talk other others, but it was tough to begin with.

you needed a really strong market, needed investors feeling this was a good ipo market in regime, and because as you know, we have not seen that. >> all right. thank you. >> we should tell you that retailer jcpenney is reporting right now. >> go ahead. >> jcpenney out with a loss of 47 cents a share on adjusted basis. the expectations were for a loss of 55 cents. that stock is barely budging now, but remember, we got most news two days ago when we heard from the company in an unrelated announcement saying same store sales for the quarter up better than 6%, better than the street anticipat anticipated, that's why there was a bump two days ago, looking at the short term version of the stock, but this is a company that struged mightily, talking about good news, but they lost 47 cents a share on adjusted basis. company's still expected by the street to lose over $1.20 a share, and it's expenditured to lose money next year too. again, this is a bright spot relatively speaking. >> all relative. >> with what you've heard from

the company in recent years, and kpirtively speaking in terms of the same store sales, compared to the other big retailers. >> stock already moved. >> down today. lost $137 million. you can't do that forever. sales 2.9 billion dollars, and that was a little bit above expectations as well. gross margins up, though, what people need to, i guess, are a little bit happy about. up 110 for 2015, gross margins seen up 110-150 basis points. >> right. they are taking down like expenses for the quarter, down 41 million. they are cutting. >> they'll get there. >> talking to an analyst later this morning, but a closer look at the week brutal for retailers and reactions from wall street. stick around. we'll be right back.

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welcome back to "squawk box," everybody. breaking down the jcpenney report and nordstrom after the

stock was slammed in late training. we have the managing director and retail analyst with us, and, robert, the numbers from jcpenney are not surprising. we got the news a couple days ago. what do you think about how the company's doing right now, just in terms of the turn around? >> well, i mean, jcpenney, they are making tremendous progress, you know, the business has stabilized, the sales continue to be above expectations, you know, i think that, you know, one of the things we look at off of today's results, continued progress on sales, gross margins, and sgna, and one of the big things in the retail market now is inventory levels and levels are high throughout many retailers, jcpenney's inventories up 9%, sales up 5, yet another retailer going with elevated inventory in the fourth quarter. >> is that a concern that the consumers will not show up? overplanning too big a holiday season, too much for the cold weath weather? >> i mean, i think it's the opposite.

the consumer will show up and there's been a lull over the last several months, but when you look at the macro backdrop and the consumer has a reason to spend money this holiday season, you know, think think that the consumer will show up. i think there's going to be a tremendous amount of, you know, clearance merchandise and markdowns and great bargains. >> is that a problem, then? we heard from macy's that they are going to be offering big sales because they need to move all this inventory, need to get it out the door, hurting them. if macy's offers discounts, you imagine it's everywhere. discounting too early? do the consumers show up anyway? >> one of the things you saw the difference between what macy's did against nordstroms is they took mark downs early united states of america and macy's ahead off taking more in the fourth quarter. the holiday seasons are promotional, discounting, very aggressive.

retailers are competing with amazon, the off price, the department stores. i think that really sets up to be similar to the last several years. >> is this a good time to own department stores or are things changing rapidly with consumer behaviors that you hold off? >> one the big investment thesis in department stores is strong cash generation. one of the solid things department stores do is work hard to have more competitive online businesses. they have slowed their square footage growth so when you run the business as a department store properly, and you're great with capital allocation, they are good stocks, like, the stocks are off the highs, you know, when we look at the kp expectations, expectations are very low right now, and depending upon your time horizon, you know, the free cash flow yields, the dividends stores offer are attractive. >> who is the best in breed? who do you buy first? >> we cover amazon so i think when you look at the world in where the consumer is migrating, amazon has figured that out sooner than the rest of us, and

they are in a strong kcompetitie position. >> they cracked the price to earnings ratio, putting it in a category by itself. do you think it's worth buying here? >> the retail segment, and you have a fast growing highly profitable aws business, the cloud service business, and so looking over the longer term, where the consumer's going, longer term we believe this is a a well positioned company. >> what's the favorite, and you said amazon? >> yeah. retail. >> any department store to buy right now, jcpenney, macy's, and nordstrom, would you buy them? >> they are doing a terrific job, and kohl's surprised the market yesterday surprising us in terms of results with another fourth consecutive same store sales so the companies can be

good companies, you know, when they are managed appropriately, and inventory management is one of the biggest met tricks that, you know, we think has to be done better than seen over the last several months. >> all right, robert, thank you. >> thank you. >> jcpenney back to where it was before it got the pop. >> yep. >> right? >> 811? >> under 7. where was it? went from -- okay. it was actually down to 7s which was -- has not been that low since back in august. it had a bump on the news that same store sales were better than expected, and, oh, yeah, they lost a lot of money. coming up, advocates of the tpp trade agreement say it will help level the global playing field for small businesses, and opponent say it pits small u.s. businesses against those with cheaper labor overseas. let's get the clarity. the small business ad min straiter joining us next. the future belongs to the fast.

and to help you accelerate, we've created a new company... one totally focused on what's next for your business. the true partnership where people,technology and ideas push everyone forward. accelerating innovation. accelerating transformation. accelerating next. hewlett packard enterprise. welcome back to "squawk box." an interesting debate, we might have to on air at some point. the futures, dow opening off 30

points this morning, nasdaq opening down as well, 13 points, and s&p 500 looking to open down around 4 points. couple headlines in the news, kfc testing fried chicken delivery. >> oh, fried chicken. yum. fried chicken. that'll kill you. >> partnering with a delivery service, door dash, and customers use the door dash website or app to order food. people are doing this in all different cities, but uber food to deliver stuff to your home. >> fried chicken. oh. oh. >> consider it a delicacy if you go once every now and again. >> oh, boy. >> if you eat a lot -- >> for the folks at home, we are largely debate what roger said. >> the debate of coca-cola. >> poison. only worse than coke is kelloggs corn flakes. that's true poison. everyone's living in the --

>> you do not believe -- i give him credit, but coca-cola itself is not -- the coca-cola itself is modulation is fine, but it's not good for you. in -- to be drinking every day. >> everything in moderation is okay. >> that's an aberration. >> it is not an aberration. it's an aberration when it happens to someone. it's not an aberration living to 84. everyone else dies who drinks two cokes a day? >> go to countries where it's caused obesity. >> oh, clearly. >> diabetes. >> no other factors in mexico that cause obesity? i believe breast milk causes heroin addiction. that's a nice cause and effect. that's a link you can show. let's get to this. the transpacific partnership awaiting approval, the first trade deal to include language on small and medium sized businesses with more on tpp's potential impact on

entrepreneurs, maria is the administration administrator of the u.s. small business administration, good or bad, bottom line for tpp for small businesses? >> well, this is the first time in our history that we're going to have an sme chapter, small medium enterprise chapter, seeking to inform small businesses about opportunities that are available. 95% of the world's consumers are outside of the u.s. with the advent of technology today, small businesses know that when they start up a business and they turn on their website, they are already engaged in international commerce. we have to provide systems and methods to protect them in the entrepreneurship journey. >> the biggest head wind for small business right now is not tariffs on going abroad, or do we have domestic problems for small businesses? >> this agreement reduces 18,000 tariffs between all the countries, the 12 countries involved, the kinds of taxes the

small businesses have to pay. we are removing thousands of tariffs on small businesses. i visited just recently a little business in cincinnati in the community saying she was incuring heavy tariffs to sell the product. this is the kind of thing we'll find is going to help small businesses. the economy now is global. small businesses know that they have got to take advantage of the opportunity. >> how many small businesses are global? i'd think not as many, are there? >> we have 28 small businesses in our jurisdictions happen how many you sell abroad? >> every day it's growing. >> how many sell abroad right now, would you say? >> oh, i don't know -- >> half, probably? >> some are value added products, some are selling, so it's both ways, right? some are bringing in products, others selling. >> the overall state of small business, how would you grade it? >> we've never had more confidence since we've taken office. we've just experienced 68 months of consecutive job growth, and you know that the majority of

the job growth came from small businesses. our lending -- we went back to congress just a couple months ago to ask for increased lending authority because we hit the maximum threshold. we feel good about what's taking place. in fact, consideratracting, the mandate of ensuring we compete 23% goal of contracting with small businesses. we exceeded it and got to 24.9%. small businesses are growing. >> regulations are not a problem -- >> well -- >> everybody's getting loans, no problem getting financing? >> here's the deal. that's what i hear in the country, there is regulation and they are worried about it. >> right. >> one of the things we've done, for example, is a program called startup in a day. we challenge mayors across the country to streamline regulation and to make it easier for small businesses to get permitting to allow them to be able to go online and get all the permits they need, complete them, and submit them all within a day.

then i think that's one more thing. at the sba, we've changed sops at least two dozen sops just in the last couple weekweeks. we do this all the time. >> what's the sop. >> standard operating procedures. when i got there, we had the situation where if you wanted to borrow for this, you could only use that as collateral. that made no sense to me. if it's valuable, why not let anybody use whatever collateral they have? those are the simple minded things that i think we could put in place to make it easier for small businesses. that continues to be an opportunity for us. >> thank you. appreciate you coming in today, administrator. >> thank you, but remember shop small saturday after thanksgiving. we have black friday and then shop small saturday before cyber monday. so we are here to remind everybody to shop small because there's more local churn when you support your local businesses. >> right. >> we encourage everybody to get

out after thanksgiving. >> what about supporting small businesses who have websites? does that count? >> yes, it sure does, of course, yeah. >> there's cyber monday. >> do it again, do it again. local jobs, there's more churn if you support local community, and you get a really nice e ecosystem that's more interesting than the national brands that you find all across the country and around the world. >> support the content. >> unique stories in the community. >> maria, thank you very much. >> good to see you. >> you too. when we come back, this morning's big movers, list of stocks to watch after this. 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.

let's take a look at the stocks to watch this morning. applied materials beating the street, and offering a solid outlook. helped by demand of the companies making smart phones and memory chips, and cisco weighing on company shares right now. the network equipment maker forecasted quarter revenue and profit below estimates citing a slow down in order growth. planet fitness raising outlooks following a benter than expected quarter. the shares of the budget fitness chain trading higher on the news. shares of fossil down sharply, the company cut the forecast after a big quarterly miss. lo chiropractic o lowering guidance with a big drop in the earnings hurt by slow down in sales growth. yum in china risie ining 5%, ba

the china comp sales forecast for the fourth quarter. you remember yum announced it is spinning off its china business. coming up, more on the struggles for retail rs and amazon effect, why they struggle to compete with e-commerce giants and breaking data ton the consumers, the government's october retail sales number coming up at 8:30 eastern. stick around. ideas are scary. they come into this world ugly and messy. ideas are frightening because they threaten what is known. they are the natural born enemy of the way things are. yes, ideas are scary,

and messy and fragile. but under the proper care, they become something beautiful.

it's friday the 13th. >> no! >> retailers are seeing their stock prices chopped. is there more pain to come, or is this the perfect time for bargain hunters to step in? we go inside the numbers and look at the amazon effect on the sector coming up. plus, stuff the stockings with tech stocks? paul meek says yes, and he is ready to name names. his bullish call on 2016 straight ahead. >> putting your vote where your mouth is. >> get in my belly! >> celebrity chef and restaurant owner is grading lawmakers on the issues affecting the food system from labeling, minimum

wage, we serve up what's cooking in washington. >> i want my baby back, baby back baby back ribs. >> as the final hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome to "squawk box" here on cnbc, first in business worldwide, i'm joe here with andrew and becky, less than 9 o minutes from the opening bell on wall street. the futures right now have got progressively worse as the morning has gone down, down 40 points, losing 250 yesterday, dow indicated five at the open, and nasdaq down 16, checking out the markets in europe at this hour, it likely is responding to the weakness we had yesterday, and almost a full percentage point loss in germany and on the

ftse and in france down a little over 1.25%, and now i -- when did we take greece off? >> yes. i noticed that this morning. italy -- >> we put it back on. >> italy all the time, but now we have four rather than five. >> we're ready. >> remember -- >> we're ready. >> we had it on, took it off, and put it back on, and in the last three weeks we put it on. >> i don't know why. >> michelle caruso-cabrera said it's coming back when you need it back on the screen. >> we should have it at the ready. the top stories today investors are talking about, it does not look like they will win the hostile bid, and probably won't, reports say not enough shareholders tendered the stock into the generic drug's proposal. that's seen as a big loss for y mylan because they thought it was a better deal, and now they don't have it. what do they do? we'll have to find out.

time warner seeking a stake in streaming video service, hulu, and the deal would value hulu at $5 billion, and they are owned in part by comcast, parent company of this network, disney, and fox, putting media giants together for one last piece of the puzzle in there. shares of streaming rival netflix falling on the nice of that report. also, cisco shares under pressure, topping consensus, but the bad news is the outlook was the issue this time. forecasted current quarter revenues and profit below estimates, citing slow down in orders growth. cis cisco's ceo is on "squawk on the street' at 9:00 eastern time to explain. more stocks on the move, lion's gate entertainment, secondary offering of 3.4 million shares over 39 dollars a share. the offering is related to the new investment in the movie studio by liberty global and

discovery communication, and fitbit pricing secondary offerings, $29 a share, and in this case, the size of the offering cut from the originally planned 7 million shares down to 3 million shares. interesting. retail stocks in a tail spin thanks to softer sales and warmer weather in september and october across the country. last night, nordstrom fell 20% after reporting numbers that missed expectations. this morning, jcpenney down big after reporting results 30 minutes ago. we have to report the good news from jcpenney we heard earlier this week, giving back some of the gains. we have the roundup of the retail wreck, and it's a difficult week for the retailers. >> reporter: to say the least, becky, good morning. jcpenney posted a loss of 47 cents a share, better than expected on revenue of 2.897 billion, beating consensus. gross margin improved, consensus fell, but a positive comp over last yearment like you said,

jcpenney told us same store sales were stronger than expected at 6%. it's been a rough week for retail, macy's kicking off worry tuesday, a guidance cut there, and kohl's surprised to the upside sending relief rally in many of the stocks in the sector yesterday, but it was quickly derailed after the bell when nordstrom and fossil reported. nordstrom reported earnings, and sales below expectations, revenue disapointed, and high end department store slashed earnings forecast. management explained the sales in traffic slow down started in august across nearly all categories, and as a result, nordstrom says they are forced to take increased markdowns on the merchandise in the quarter. macy's plans to slash prices in the fourth quarter the what's worse? they do not anticipate a measurable change in trends for the holidays. analysts say the retail pain is purely impact of the digital revolution causing decline of things like impulse purchases,

increased specialization, and shift from buying things to experiences. that's something we've talked about for a while, how we're just changing how we buy, what we buy, when we buy, and what we spend our money on. becky? >> all right, thank you very much. one company not feeling that downturn is amazon.com, new highs, 114% year today. morgan stanley put an $800 price target on the stock this week. one of the companies with a market capitalization. analyst joining us on the stock's performance and amazon's impact on holiday shopping. here with us u our own john ford. neil, starting with you want do you think this is a zero sum game where everything the other retailers are losing is picked up by amazon? >> well, amazon is definitely benefitting from the pain the other retailers are incuring. company growing at 20%, that's

very strong growth. they are showing a path to profitability and margins are steadily improving. amazon is moving into many, many categories, you know, they are moving into consumables, and moving into babies, diapers, expanding deeper into the categories and taking share from the traditional retailers. >> no question the revenue is impressive, sales growth impressive. you mentioned they are closer to profitability or being able to really jack up profitability, and that's been the story on the street for a long time, that if amazon chooses to, it can move a few needles here and there and really would be able to spike profitability. you think we're likely to seeing that happen? >> i think we are. you know, we've seen a few quarters where there are csoi, operating profit steadily improved. gross margins have been a big driver of growth. they are around 34-35%, and as

they start to do more with third party merchants, there's an ebay like model for amazon, and that's high profitability. moving away from the low single digit profitability model to double digits starting to drive up the stock price. >> john, we talked about the effect on retakers today, but what's the effect in the technology world from what amson is doing right here? >> well, what amazon figured out how to do with prime and now increasingly with fast delivery, these one-day delivery areas they are creating, is just create a new sort of advantage in the landscape. no longer is it about price, which it was the first time around. now it's about loyalty based on convenience. if it costs a little more, but i know i can get it in two days from amazon versus a week, i go with amson. now that the infrastructure is built, it's built out in other areas. the app is better than other people's apps because they

invested in customization early on. they know more about me, invested in technology allowing me to scan bar kocodes. other are racing to catch up. it's not hitting everybody equally. costco is better than others for instance, because they still have the old school convenience in spades, but, yes, amazon is taking share from a lot of people. >> what you hit on with the idea of getting it delivered, that drives me to amazon constantly. you know if it's prime, you get it there in two days, guaranteed. for the other retailers, a lot have great websites, built up, macy's points out they are the seventh largest internet retailer, but they can't promise two days. that is a game changer. >> yeah. you know, one thing that john touched upon is, you know, amazon with the two-day delivery, they have driven to get you products now on sunday, and before, you know, if you on the other handed a product on friday, you don't get it until

monday or tuesday. they are truly now at a two-day delivery model, and, you know, many markets now, like new york and san francisco and seattle, you are seeing prime now where you get the product in a couple hours, if not later that same day, so, you know, same day is the next montra for retail and amazon is driving that. >> is there a point where the valuation concerns you? >> you know, it is an exceptive stock, but, you know, there's a lot of growth drivers at amazon, and, you know, as long as they can continue to grow this business model at 20% revenue and can show steady margin improvement, there's a lot of room to grow for amazon. >> they have a powerful story right now in part because they started breaking out that cloud business. amazon web services. you can see at operating margins they are strong. for years they said, well, you know, we can make money if we want to, but now we can see, yes, they are an operating basis making money over here. we see they are investing that money in things like prime now delivering results and share

gains, so it kind of feels like as long as people pay a lot of money for any kind of stock, amazon's going to be right up there, netflix is another one, but we've seen, eventually, people start getting tired of paying a lot of money, you know, for expensive stocks and everybody is hit, right? >> that's the point. how immune is amazon to a market turn? >> yeah, i mean, you know, i think amazon wouldn't be, you know, extremely immune to an overall market turn, and they have high growth businesses, if that growth starts to slow, then, of course, i think there's a material correction, so far i think, you know, we're not seeing a pretty big down turn, so, you know, i think amazon's really benefitting from some of the woes that the traditional retailers experience right now. i expect the stock works, but at some point if tlhere is a big

market correction, they are not immu immune. that's the risk. >> neil, thank you, and, john, thank you. >> thank you. >> all right, coming up, a squawk platinum portfolio member says marissa has done all she can at this point to turn things around, but it's an impossible task. we'll talk to paul about that and get his latest platinum move, and, later, entrepreneur and celebrity chef turserving u dish for congress, that's just ahead. "squawk box" will be right back.

hi watson. annabelle, your birthday is tomorrow. i'm turning seven. what did you ask for? a princess. and a pony. you like things that begin with p. i like pink frosting too. will you have a cake? yeah. i was too sick to have one last year. the data your doctor shared shows you are healthy. are you a doctor? no. i help doctors identify cancer treatments. i want to be a doctor someday. i can help with that too. watson, i like you.

welcome back, everybody, futures this morning, already the markets on the worst week for quite some time. breaking a six week winning streak, looks like they are on average, down by 2.5% so far. there's another decline this morning with the dow futures down by 37 points. s&p down by close to 5, and nasdaq down by 14. >> does yahoo!'s problem go beyond marissa? the next guest says she did the best she can, but faced what we calls an impossible task to keep things moving in the right direction. to talk about that, the portfolio manager, good morning

to you. talk about -- >> good morning. >> talk about the situation at yahoo! is it ir reversibreversi this point? >> this is interesting. i was on your air in july of 2012 when she was brought on, and at the time, i did not get struck by lightning, but i didn't think christ himself could turn around the company. i think that's the case. she's made changes boldly as she could and the best leader the company's had in several generations of leadership, but that company's best days were last century, and when your whole business model is dependent on desk top based display advertising, that game is long over. >> and so if you're her or an invester in her company, how are you going to make, you know, turning lemons into lemonade? >> i don't know if it's possible. what i would do is if you're interested in that space, i still would go particularly with the acceleration in mobile ads

with either google or facebook. probably facebook with the most moment momentum. >> when you say "going with facebook," suggesting selling to facebook? >> pardon me? >> suggesting she sell the company facebook or and vester, you invest in the companies? >> excellent clarification. i think that as an investor you should switch. i don't know if google or facebook would want them. probably the worst decision that was made under former leadership was offered a pretty fair day's pay to be purchased by mic microsoft. they turned that down. >> at this point, it's independent 12 months from now? >> i think they probably will be, but i think they will be a badly struggling independent company. >> okay. getting to the pictures, swapping out cbs, what's the stock you're picking? >> sure, i like the pharmacy manager, cvs and express

scripts. they are front and center in the theme of lower drug costs, and everybody is concerned about that. the problem is even though the news about valeant and other accused captive pharmacies being controlled by drug manufactur s manufacturers, it should not impact cvs, but it does. it's just the headline news that's just too nasty, and in the meantime, i think it's a good idea to stay away. over the long term, you're fine. what i want to do, and, you know, i'm a tech investor, i want to replace it with akamai, an interesting opportunity. when they announced their quarter late last month, the stock went down 17% in the single session. they had weakness in their media delivery network business, which is 44% of their revenue, and that is the business, as you may know, where they have customers speed consent with server banks. >> we had the ceo of that

company on saying it was a cyclical issue in terms of the quarter, where things were, and in terms of how much stuff was over the wires, but don't take too much away from it. that's your view, i assume? >> that's my view. the business is lumpy. it had a real good boost with the world cup in brazil, occasionally, there's a boost with apple downloading the various ios over various devices. i don't know that it's cyclical. i think it's a secular growth business, it's just appetite for data, but it is lumpy with tough compares. in the meantime, 56% of the business these days is not the content delivery network. >> right. >> but particularly security growing very fast. >> how much do you think the stock is up 12 months from now? >> 12 months from now, i think the stock is up 20-30%. >> wow. >> i think the risk of the name is probably limited 5-10. >> paul, tell us, there's two others on the list that you're

sticking with, one is facebook. you mentioned that earlier when you were talking about yahoo! and 12 months from now, where is that stock? >> 20. >> another 20%? >> pardon? >> yes. i do think there's upside. what's happened in the most recent quarter, as you've seen, is that their lead, which you don't think between one, two, three, and four narrows over time, but it's widened, it's astonishing. >> finally, fleet core? >> that's a fuel card company. i do worry about 17% of the revenues tied to the spread, however, the company just posted a quarter, they have strong organic growth, lots of acquisition opportunities, domestic and abroad, the company's tightly managed, and just last night after hours, they reupped their british petroleum north american contract. >> for those in the audience that don't know fleet core well,

explain what it does. >> so what they do is it has a number of products, but the key driver is for commercial fleets, trucking companies, for example. they offer a fleet card you can use to pay for purchases allowing your employer to track expenses and track other items. >> a takeover target? >> i don't think it's a takeover target because what happens is they seemed to be quite inquisitive. i think they will be in a fragmented space buying more companies. >> okay, leaves it there, thank you, paul. appreciate it. >> yes, sir. >> remember you can get the latest information on the platinum portfolio on cnbc pro by going to cnbc.com. the holiday season kicking off in the big apple, a show underway across the street. google's self-driving car runs into a road bump with the lea. details after the break. the future belongs to the fast.

and to help you accelerate, we've created a new company... one totally focused on what's next for your business. the true partnership where people,technology and ideas push everyone forward. accelerating innovation. accelerating transformation. accelerating next. hewlett packard enterprise.

welcome back, everybody, annual holiday tradition kicks off today in new york city. the radio city christmas spectacular opens with the usual

fanfare featuring the rockettes, living nativity, and this year's christmas spectacular runs through january 3rd. that's from last year. >> okay. >> we talked about it earlier, but it's a story, google's self-driving car pulled over by the police because vehicle was traveling too slowly. the officer in mountain view, california noticed traffic backing up behind the vehicle traveling at 24 miles per hour in a 35 miles per hour zone. realizing it was a google self-driving car, the cop pulled it over, and they made contact with the operators to learn more how the car chooses speeds. they responded in a post explaining the speed of the prototype vehicle had been capped at 25 miles per hour for safety reasons. >> why is it on roads with a 35 miles per hour limit? if you're going to cap at 25, i get it, but keep it on roads that are also 25 miles per hour. >> but --

>> how crazy it drives you when they drive 24 in a 35? >> it's not illegal to drive too slowly except on highways with a minimum rather than a maximum. >> not illegal, but causes accidents. >> if you never go over 25 miles per hour, you should stay off the rest of the roads. >> call larry paige. the driverless vehicles are currently out on the streets of mountain view and austin, texas. >> man, last time i was stuck behind someone driving 20 miles per hour -- >> and in no one is driving, really upset. >> what about not turning right on red? there's no cars coming? they don't turn, but you don't have to, i i found out. >> how did you find out? >> it's a long story. >> these are pictures of fan dual, hosting a rally there, the company has not yet met with the attorney regime, and he ordered fandual and draft kings to stop accepting bets in the state, and

meantime, they hired david boies to lead the case. draft kings and fan duel will continue to accept bets in the state through the weekend althou although the stop operations have passed. they will do it anyway. okay. >>. when we come back this morning, we'll talk about a lot of issues including retail. it's been a big focus this week, minutes away from the government's read on retail sales, what's the numbers say about the consumer as we head into the holiday season? breaking down the numbers and get the market reaction just ahead. also, as we head to a break, look again at the u.s. equity futures. they are under a little pressure today. yesterday, the dow down pretty substantially, decline of 1%, and today, down another 29 points on the futures, and s&p futures off by 4, and nasdaq down by 14. "squawk box" been right back. ♪ [ girl ] my mom, she makes underwater fans that are powered by the moon.

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welcome back to "squawk box," jcpenney posted smaller than expected quarterly result, loss, rather, exceeding forecast, good news, retailer made positive comments about results earlier this week, and the shares had jumped at that time. seconds from retail sales and the producer price indexing.

the pp in there for me to read. producer price index. i'm not going to say itment but then i did. >> you did. >> rick santelli is standing buy in chicago. the cme. rick, i want you to give me a little drum roll. you got three seconds. >> how's that? just ready for that. like christmas vacation, wasn't it? retail sales month over month, up one tenth of one peshlgt. looking for three tenths. let's do the xs. autos up .20, half of what we looked for, autos in gas, meaning the amount of money brought in selli ining gas up . and that's right, and there was not any significant notable revisions other than the control room group, last month released at down .10 is now up .10, and

autos released down .30 is now down .40. ppi, same month, looking at october, ppi headline? down .40, down .40, a big one, and if you strip out all important food and energy, down .30. more dramatic than we looked for. no significant revisions. if we look at the year over year core, that is up.10 versus .80. these are light. look at energy, a lot of variables, and, of course, the big education variable, maybe policy, negative rate, all this contributing because it's hard to imagine that you're going to get great pricing action after you look at retail sales without growth action. yesterday, if settled at 231, i don't have a picture right now, but we are hovering in the area. we want to pay attention, of

course, to where the high water mark is, and the high water mark and most aggressive rise in rates was actually a flattening effect from five year note yields the day before the october fed meeting, they were at 135, 136, now at 170, so we want to continue to pay attention to what's moving the most, why they are moving, and maybe the most important fact we've seem to have found our high yield for the cycle. why? because the down equity prices seemed to have put a ceiling on the rise in rates. whether it holds or not, friday closes are always significant. joe, back to you, and i hope my drum roll mushed up, buddy. >> no, it was good. you needed more time, you had three seconds, but it worked. thank you, rick. bringing in jim of tjm institutional services joining us now. how are you doing, jim? anything in the numbers give us at least some consolation after

looking at macy's and nordstrom? >> no, the numbers are bad. what this is is that the question is, how many lukewarm to bad numbers will it take to wipe out that -- block buster number from last friday, and, to me, we're halfway there. the thing most curious of the numbers, the stock market was a two handled rally s&p, down 4.5 to 2.5. the knee jerk reaction, crummy numbers? okay, less to fear. funny thing is i don't think the market is terrified of the rate hike anymore. i think it rallied 13% from late september until a week and a half ago. that's a big rag lyrally in a s amount of time. they are scared of the rate hike, no catalyst to push us higher. to me, if we can change the rate hike talk from, you know, because it's started to gravitate towards, maybe not just one, but two different fed speakers saying there's more than one data permitting.

doesn't look like the data permits, and in my mind, that data, interesting and strong, is a one-up. there's a weakness in the stock market coming. >> so you say people are getting used to the idea? maybe they don't need to get used to the idea that the fed raises? >> but every time we hear the fed guys talk, it seems like it's become this psychological thing in their minds that they are not going to be bullied by a market. they want to tighten, and they will tighten. in august, what's fascinating, dropping 13% in a matter of days, the one significant fed speaker came out said, yeah, perhaps the case for tightening is less compelling. that's the blink. if the stock market cascades lower, grinding lower is one thing, but cascades lower, the fed rethinks tightening. they shouldn't, but they care about asset prices and they get the message from the stock market and back off tightening if things fall apart from the stock market, even if the numbers are okay. >> yeah. it's going to be interesting,

jim. four and a half weeks. >> four and a half weeks. >> four and a half weeks. do you know what can happen in four and a half weeks? >> a lot can happen in four and a half weeks. things change by the day here. if we get three more numbers in a row with this flavor to it, we'll forget about that number, that number from last friday. >> right. we may end up forgetting about the rate hike, more downs between now and there, go under 17,000 again, there's a lot of things that could get the guys to wimp out. >> absolutely. no question about it. go back and test lows from august, i guarantee you, willing to take anyone's bet, the fed says we shouldn't tighten to support the market. that's wrong, but i think they'll do it. they have done it before. >> enablers are all over the place on the left side of the aisle from summers to just every democratic politician, they got them all saying you are insane to raise rates right now.

total cover from half the country. >> no question about it. now, i'm -- i don't think they are insane to raise rates. i think i think they should to get the market used to it, but there is a case to be made. oil is taking a leg lower, copper is lower. >> i know. >> mario draghi went from real dovish, taking away from the tightening case as well. >> i know. the dollar, the euro's down, goes to 1.05, you saw the earnings, the manufacturing sector, and -- >> how tough are you then, right? then where are you? i agree with you. exactly. >> i'm wondering now, and you know what? that -- that's the big fear, everyone's always had, you -- you check in, you can't check out, and that's another month where we don't check out, and then it's election year. >> right. >> at the beginning of the week, i was sure of tightening, but with this number, i don't know. i think it's going to happen, but i'm not sure. >> roger said he thinks the fed needs to assert independence and can do that by raising rates in

the election year. >> okay. great. we'll see how that works out. >> not a guy i would quote, but anyway -- >> coke is poison too. >> colonel wants to deliver, plus, tom is spicing things up in washington when he's not running restaurants, grading lawmakers on the voting record on food policy issues. talking about that next, plus, the no tipping craze. in the holiday season, the nbc family is sharing stories of kind and small to spread the word. >> i got involved in haiti after the earthquake, took over an orphanage down there that was limping along, and very poor, and i've been there for six years, and i go down every month. it's a pure sense of actually doing something that really matters. that draws me back there, you know, month after month after month and will, i'm sure, for the rest of my life.

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welcome back to "squawk box." futures right now after some of the numbers we saw earlier now down 55 points, and colonel sanders wants to come to your home. he's the guy, norm mcdonald, is that him? >> yes, that one is. there's a couple different ones. >> that's a good one, calling, no, i work here, calls her, like, karen? lynn? amy? no. they will start delivering the buckets of fried chicken to

customers in two cities, the first time the chicken chain has delivered. los angeles and san francisco will be able to have food delivered, and kfc expects to expand delivery into houston by the end of the year and more cities may come later. >> okay. the new front burner project cooking, grading lawmakers on the position and performance when it comes to food issues. we have the founder of the growing groups of restaurants across the u.s. and food policy action. what's it mean, you are grading lawmakers on food? >> well, we have a score card, and we grade lawmakers on how they vote on food issues, whether it's labeling issues, whether it's protecting the environment, just various issues, water issues, and so our fourth score card is coming out in a weeks -- >> what is a great grade? who gets an f? >> well, it's 1-100, and there

are lawmakers that get 0s and some get 100. >> voting how? give us a need, for example. >> we look at a particular bill or amendment, and we decide whether it's good or bad food policy and agreed accordingly. >> what's a good example? >> the farm bill, there's a ton of various policies in the farm bill. we're looking at things as diverse as whether protecting our foot stamps or whether we make sure that there's extra dollars that go to creating farmer's markets, supporting young farmers, various things, a lot in it, labeling issues is important. >> i'll bring you, i think, may go in a bad direction, i apologize if it does, but there's a moral question we have. i don't know if you follow what's going on. >> i heard a little. i have heard. >> bill ackman was accused of investing in -- at what charlie monger called a deeply immoral company in valeant, a pharmaceutical company, and he

snapped back and said coca-cola, owned by berkshire, was a deeply immoral company. how do you grade that situation? >> so, i don't want to get into whether a company is immoral or not, but i think that -- at some point, we have to address the amount of sugar that kids are getting and whether or not we should be advertising sugar sweetened drinks to children. >> or cereal. >> or anything. >> what about alcohol? >> well, we don't -- >> it's not advertised, but it's in society. >> we don't advertise to children. >> kids still drink. >> cigarettes, we banned advertising cigarettes. >> pot or sugar worse? >> sugar. >> you're the msnbc guy, right? >> i am. >> i'm not so sure. alcoholic drinks against a can of coke? the harm to society. overall. not sugar, but just about looking at ways to -- i guess

mcdonalds would be immoral too. they are a bad place. >> i said it could get crazy. >> i don't think companies are immoral. >> what about mcdonalds, american icon. >> how about them? they are struggling right now. >> new stocks. >> people want healthier food. >> okay. >> is it okay to eat -- now you get an egg mcmuffin at 5:00 in the afternoon. >> so what. >> once a week okay? >> for what? >> it's fine, have the egg mcmuff fip. >> and a coke? >> yes. i have to point this out. this is what you get when you have a coke. >> i understand that. that's what you have. >> you brought this? >> that doesn't look like -- >> that doesn't look like a painkiller or meth to me. >> why one or the other? >> it doesn't have to be. warren buffet is 8 had years old, drinking two cokes a day, he's 84.

>> right. look at the obesity rates right now? >> that's from coke? >> it's from sugar. >> it's from lifestyle, fatty foods, from french fries, it's from across the board. it's not just from coca-cola. just talking about the immorality between valeant, which is, you know, god knows, we don't know the final story of valeant yet, but versus coca-co coca-cola? i think it's conflating the two. >> i'm not making the argument. >> but that's what's the argument is about. >> i'm telling you that's what you get. >> arguing for sugar for children. >> it's bad for everyone. >> butter? >> fats are fine. there's a new -- >> we used to think they were bad. >> we used to think they were bad. >> used to. salt? where is it? >> moderation. >> red meat? >> again, moderation, everything's fine. >> sugar in moderation? >> here's the problem -- >> sugar in moderation? sugar in moderation? >> why is that can of soda cheap? >> who knows p what about sugar in moderation.

you're the one who did not answer my question first! one can a coke a day, can i have that? >> sugar in moderation, then coke. >> everything in moderation is okay. why is the can of soda cheap? because we subsidize corn. tax dollars go to subsidize cheap food. >> bad choice, you give your kids coke and fast food, and it's leading to obesity and poor health. what's macheap? when you have -- low income, you buy cheapest thing possible because you have to fill them up. how do you make healthy food cheap? that's the question. >> argument is against tax incentives pushing people in the wrong direction? >> subsidies. we have a new plate. we used to have a food pyramid, now it's a plate. 50% are fruits, vegetables, 15% protein, and the subsidy program supports everything in the one corner. >> how do we make it cheaper to

get healthy food? what's the -- >> change the subsidies, that's number one, and this is what -- going back to food policy action, this is another thing we look for. right now, we have a base, talking about military preparedness, health care, things like that, talk about food. right now, you have 16 generals, group called military preparedness, actually, it's -- i'm getting the name wrong, but they are saying that kids showing up fight in wars are obese, out of shape, and it has a problem with mission readiness. that's the group. mission readiness. there's health care costs skyrocketing because of heart disease and diabetes. these are food-related. you want to talk about the economy and effects of poor health on the economy, talk about that. that's why we have to talk about sugar and amount of sugar kids get. >> okay. on that note, two other questions about the restaurant business. >> yes. >> indulge me. >> sure. >> you saw the announcement, the idea he's not -- there's no

tipping anymore? >> yes. >> are you following suit? do you think it's a good thing? >> i already started that october 1st. >> you did? >> opened for lunch, and we do not require tipping. >> why not lunch but at dinner? >> starting at lunch to sort of break into a much smaller piece of our business. i'm still not sold whether or not the public is ready for it. listen, i want a straight wage for servers. >> change the dynamic with the server? in terms of the service, do you think they are -- there's a better incentive for them to provide better service because they are hoping that they will actually get a bigger tip? >> absolutely not. >> there is. i used to be a restaurant, and i wanted good tips. >> that's fine. but i'm going to pay you as a server between $20-$30 an hour, and if you're not doing a great job, i'll fire you. number one, the amount of tip, there's studies on the amount of tip has nothing to do with service, but your language,

race, gender, and so why do i want a hundred people coming to make a determination to determine what my staff is paid. >> important thing is you make sure people are still insent vised. there's profit incentives that makes a difference. >> no one tips you at the end of the day. no. why is this the last industry, you know, few others, drivers, stuff like that, but look at uber, you can argue whether it's good or bad, but the idea of not tipping is a feeling. the the younger generation is sick of this. >> what do you think of bidding or charging for reservations? >> i'm not a fan of it. i'm not a fan. >> because? >> jury's out on that so far. >> because? >> i don't think the public's ready for that. >> i don't like it either. >> real quick, there's a story in the new york times, dine market, are you familiar? a software entrepreneur using technology to help restaurants design efficient menus? >> i have not seen it, but there is a app coulded bon app, you

talk into it, you did -- if you buy a product, say, whatever, whatever product, tells you the amount of sugar, and the sort of the ingredients and everything in it. it's a good app for people who are sugar and the sort of ingredients and everything in it. it's a good app for people trying to shop and watch the amount of sugar. >> tom, thank you for coming in. >> sure. >> when we return, stocks on the move this morning including a tough time for a watchmaker. >> and a programming note, tune in to "squawk box" on monday, glenn hutchens will be here, first starting at 8:00 a.m. eastern and we will talk tech, taxes, the fed and much more.

stocks to watch. party city's results missing the market. the company cutting same-store sales forecast for the year. shares getting slammed on the news. i guess down about 9%. fitbit's secondary offering was priced at $29 a share. downsized to 17 million from 21 million. and shares now down almost 8%.

illumina is joining the s&p 500. it will replace sigma-aldrich which is being acquired. and el pollo loco also down. applied materials beat the street, offered a solid outlook for next quarter, helped by demand from companies making smartphone and memory chips. when we come back, some of the stories you think we should be talking about. "keep squawking" is right after this. when you're not confident your company's data is secure, the possibility of a breach can quickly become the only thing you think about.

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except your budget. introducing comcast business enterprise solutions. with a different kind of network that delivers the bandwidth you need without the high cost. because you can't build the business of tomorrow on the network of yesterday. ♪ >> it's time for "keep squawking" stories that have you talking. google's self driving car getting buzz on twitter after a road bump with the law. the vehicle getting pulled over for going too slow. we asked you what you thought about the cars. one report estimating 10 million driverless cars on the road by 2020. hopefully going faster than 25 miles per hour. one squawk fan said i can't wait

until they're available. joe? >> general motors could become the first u.s. auto company to import a chinese made vehicle to the united states. the "wall street journal" reports that buick plans to start selling the mid-sized envision suv here next year. it's a buick but made in china. >> kind of interesting. a galaxy far far away may be as close as suburban san francisco. look at this homemade death star, measures two stories tall. the homeowner and his kids built this star wars space station for halloween and in anticipation of the december release of star wars the force awakens. the thing so heavy it had to be lifted on to the roof with the crane. campbells soup announcing a recall that's popular. spaghettios, some small plastic has been found in a number of

cans. the recall is for -- >> you're not choking -- >> i'm choking. >> but not on that hopefully. >> for 355,000 14.2 ounce cans that have a date of february 22, 2017 stamped on the bottom. i swear, becky did not just choke on that, but just coughing. some other news, time warner seeking a stake in hulu, that's according to a new report in the "wall street journal." the deal would value hulu at more than $5 billion. it would put most of the major media giants together as owners of that company. shares of streaming live on netflix falling on that report on worries that it would make it significantly more competitive. a lot of the over the air broadcast shows that traditionally have commercials have hulu and offer an advertising free version of it. be interesting to see how that dynamic plays out. >> a quick look at futures. the dow and s&p 500 and nasdaq

with all poised to end a six-week winning streak. looking at declines of over 2.5%, that's before you factor in the modest declines. dow futures are down 30. s&p 500 down by 4.5. nasdaq down by close to 12. next week we'll get the fomc minutes on wednesday. that could tell us a bit. >> this viewer wants me to next time tom is on, whether he drops the sugar packets on the table when one of those customers orders desserts. does he drop the ten sugar packets? join us on monday. "squawk on the street" is next. good friday morning. welcome to "squawk on the street," i'm carl quintanilla with kayla tausche, simon hobbs, david faber. cramer is off today. cisco's ceo will join us, talking about the quarter and the outlook. happy friday 13th.