>> good morning. it is 8:00 a.m. at google headquarters. it's 11:00 a.m. on wall street, and "sidewalk alley" is live. ♪ ♪ welcome to "squawk alley" for a tuesday. welcome as always.

jon and kayla. kale aa having just interviewed john stone -- ed lee joins us as well, managing editor of re/code. busy day. markets getting a little volatility. we're getting auto sales all through the morning. right now we have breaking news from toyota. phil lebeau has that in chicago. phil. >> carl, tale of two automakers. let's start first with toyota. an increase in november auto sales. well above expectations. up 12.4%. the edmond's.com estimate was for an increase of 4.9%. the best black friday sales in eight years for toyota. that's what was driving strong numbers last month. meanwhile, we've also gotten a peek at what november was like for volkswagen. we knew it would be bad, but i'm not sure people were expecting it to be this bad. sales plunged 24% last month. more than double what most people were expecting in terms of a decline. what was driving it? a drop in pasat sales. up more than 60%. all of this tied into the stop sale order on those tdi diesel

vehicles. those versions of those vehicles. carl, one last thing. a lot of people have said, look, you've got these vehicles. can't you throw more cash on the hood and sell what's in the showroom at volkswagen? well, if you don't have vehicles to sell, you can't put out greater incentives. there comes a point where you are going to start to see sales drop, and that's what we are seeing with volkswagen. >> stunning numbers from vw. an interesting number all through the day. phil, thank you for that. our phil lebeau in chicago. next up, a record day for on-line shopping. adobe is now projecting that cyber monday sales just shy of $3 billion. that's up 12% year-on-year making it the largest on-line sales day in 2015. wal-mart says 70% now of its on-line traffic coming from smartphones and tablets. meantime, am sflons the record weekend for its devices, sales up more than three times year-on-year. however, according to idc worldwide, tablet sales are down over 8% versus 2014. the category has been troubled

of late. pretty encouraging news on cyber monday overall. >> it is. i think it's more encouraging that it might seem on its face, of course, yesterday we had the ceo of fanatics, the sports retailer, saying that his audience over indexes toward mobile, more than 60% of buyers there were on mobile devices. the retailer that is are able to figure that out and get a bigger basket, a bigger share of wallet from that growth consumer on mobile is doing better than that 12%. i also think it's more than just about the sales numbers here. it's got to be about loyalty. i mean, just because you can sell something for cheap doesn't mean there's going to be margin in that for you. are you able to pull out what amazon has been able to pull off so far with prime? getting people to be just predisposed to buy from you. >> to get that reflex action. i need something? oh, i'll go to -- i mean, typically people say amazon now, but others are trying to get into that space.

if a retailer doesn't get their act together on mobile, no one is going to buy them. you're going to end up on amazon by default. >> interesting to watch target where heed. inaccessible for much of the day, although target now saying that their volume was two times the previous record. i mean, how do you model for that kind of stuff? >> they're actually -- because on-line shopping is such -- part of the mainstay in terms of how people shop altogether, target was throttling their traffic on-line, which means they were slowing it down so not everyone can get in. they had really good deals. it's equivalent to having a line at the door. right? they need to basically staff up for that the way they would staff nup a retail store now. i think that's another element to on-line shopping a lot of

retailers have yet to figure out. >> the one thing that we're not -- >> traffic was up three times, and how do you account for returns? people will take advantage of the very steep discounts, order things just as a hedge just in case they don't get their shopping done at another time. perhaps it comes, and it doesn't meet the description. it's not exactly what they wanted or they find a better deal. then they return it to the retail store. we're seeing a lot more of that happen, and you won't really know until the end of the season how much of that activity actually takes place on the back end. >> interesting. we'll watch that, of course, as we head even deeper into the holiday season. next up, fidelity made headlines a few weeks ago after marking down the estimated value of its stake at snap chat by 25%. you probably remember that. it appears fidelity now changing its tune. a new report from fortune finds

that after that markdown fidelity marked back up the value of its snap chat shares by nearly 15%. fidelity also upped the value of other start-ups like drop box and roku. this is really hard stuff to do, jon, to know exactly what these are worth at any given moment. >> now you have the issues of the fidelitities of the world marking you down and up. you have to conserve cash in this environment because there are all these other pressures on investors. it makes me wonder if we're going to see more companies going public because it's not as safe to be private as it used to be. >> or as, you know, it's not just a matter of public versus private, but what kind of money are you taking? you know, if you are going to take investment from fidelity, you have to understand, well, they're going to have some public statements about their

investments. >> it's going to force you to think about going public earlier, and they want more visibility into your company. otherwise, you have weird, wonky reports about what the value of their statement is. >> even though the markdown, the markup, we still don't have a lot of visibility into the businesses themselves despite these statements. >> no, and traditionally we wouldn't get that sort of thing, carl. the investors are provided with that, albeit limited, as part of their disclosure when they're considering investing, and they get regular quarterly reports. it's important to note that there is a corporate governance, and that's a chinese wall that's between the portfolio manager and a committee that is responseible for remarking these private investments. that assures that perhaps will's contra fund which $111 billion

under management, he made comments to reuters that he will be more cautious about investing against unicorns that he is not vul valuing the companies differently against another company at fidelity. it is interesting to see. i think it's ultimately a good thing that these companies who will eventually become public get a taste of the public market. they want to eventually woo a company and investor like fidelity. they're going to have to deal with a little bit of volatility in the meantime. >> yeah. welcome to the club. >> apple would include headphones that plug into the charger.

more people could use wlu tooth headphones. people don't know him as well as tim cook, but he was as powerful as you can get at samsung. >> very powerful at samsung. not quite chairman level powerful, but heeshz the guy who preceded over the era in which people said that samsung copied am. certainly the era in which samsung brought out the bigger screen phone that apple eventually copied. many would argue. right now they're on the rebound. in a way it's higher volumes of cheaper phones. it will be interesting to see if they can defend that because they have the components business. >> what do we get in return for giving that up? is it going to be worth it? if they fumble that, it's a huge

miss. everybody understands a headphone jack. it's been around longer than i've been alive. >> whatever they end up going with it, it better get adoption. otherwise, it's another flop. >> have we reached peak thinness. this could take it down by almost a millimeter, i understand it, according this blog post. apple is always going to try to get it thinner, and i think it's partly an exercise in engineering and design creativity. once you have it thinner, you have choices. you can make the battery bigger if you decide to, which they just did with the ipad. can you do so many different things. if you stop trying to shrink the space that something goes into in technology in chips, in anything, you start to lose out. now, there is a danger here. again, it's what do you get for

the thinness. it can't just be thin for thin sake. it will be a piece of paper with all of this. >> let's check in on the markets right now. the dow up 116. we were up -- yum getting a nice upgrade. firm says the coming spinoff of china will focus optimism against the perform wrans of taco bell. we'll watch that. meantime, a news alert from capitol hill today. we go to eamon javers in washington for that. >> what we're monitoring is a press event from senators widen and grassley. announcing the results of their 18-month investigation into gilead sciences, and the marketing and pricing around their hepatitis c drug. the company ultimately priced that drug at $1,000 per pill. the members of congress in their preprepared statements, wrovl, you can see the event hachkt started yet, but the members of

congress calling that a controversial decision and saying that ultimately it cost medicine carry and medicaid a lot of money to market this hepatitis c drug. s as a result of these pricing decisions by gilead, ultimately a lot of patients were not able to get access to this drug. here's from the prepared statement from ron widen saying gilead pursued a calculated scheme for price and marketing its hepatitis c drug based on one primary goal. maximizing revenue regardless of the human consequences. gilead knew these prices would put treatment out of the reach of millions and cause extraordinary problems for medicare and medicaid, but still the company went ahead. now, carl, no one is going to be surprised to know that a pharmaceutical company got the highest possible price it thought it could get for its drugs here. we've reached tout the company to ask for their comments. we'll bring it to you as soon as we have that. meanwhile, we'll monitor this press event for new details from this investigation. carl. >> all right. an issue that's definitely creeping into the political cycle. thank you very much. >> that's right. >> when we come back, according

to four square, about a quarter of black friday shopping actually happened on thanksgiving day. ceo dennis crowley will join us with a full roundup. plus, putting the alpha in alphabet. a top analyst makes the bull case for google's parent company. and victorious in this first hearing on his mental health, but the fight still has a long way to go. what happens next, and what that means for redstone and viacom when squawk alley continues in a moment.

getting breaking news. let's get to sue herrera who is back at hq. sue. >> carl, we are monitoring a still developing story out of istanbul. there are wlikting reports right now whether or not an explosion at an istanbul metro station was the result of a transformer or whether it was the result of a bomb. turkey's private ntv television says that the explosion at the istanbul metro station has caused some injuries and the state-run agency is now saying the explosion occurred at an overpass near the metro station. not in the station. it remains to be seen at this point whether or not the explosion was at the metro station itself or slightly above it at an overpass. there is one report of a death and one report of an injury. it is unleer at this point whether or not this is a transformer explosion or whether or not it was a bomb, so it's unclear as to whether it is a terrorist incident at this point. however, we are monitoring what

is still a developing situation in istanbul. the entire metro system has been shut down at this point. we will keep you posted. john, i'll turn it back to you. >> an important development, sue. thanks for keeping us posted. moving on, shares of alphabet are up today. a couple percent. our next guest says alphabet's share price could reach $1,000 a share. let's bring in mark mahaney, senior analyst at rbc capital markets. good morning, mark. i notice from your note that you say that the clarity around the profitability of alphabet's core business, google, is going to really help these shares, but why isn't the inverse true? where isn't it true that investors will get a look at how much google is spending on all the other things that aren't as profitable and get down to the dumps about it? >> so i think both things are important, john. the reason that we've identified this, this new segment reporting, is the most identifiable near term catalyst, positive catalyst, in the internet space is that you are

going to get greater disclosure. we'll see how profitable the core google business is, and finally most importantly in terms of valuation, people will be able to do a sum of the parts, take a sum of the parts approach to the stock. if you do that, you will get the discount that the shares provide today. >> what's the biggest risk? the biggest one that i see to going the to amazon and facebook. amazon, if i'm looking to buy something -- facebook. google can't access to that data to get smarter. how long before we know whether those two forces in particular are a near term threat to google's growth and the quality of its earnings future? >> those are the two biggest fundamental risks. probably greater as amazon if you think about where google makes money.

it's from commercial searches, not, you know, searching for vacation packages on google. that's commercial. that's profit. the facts you have this retail search engine called amazon that's gotten bigger every year, that's probably the biggest single negative overhang out there related to google. the one thing that helps google is that amazon at best accounts for 15% to 20% of retail sales worldwide. obviously a lot of people have got to compete for the rest. by the way, amazon is competing for that 15% to 20% by buying on google. it does have some hedges. those are the two biggest competitive risks long-term. >> there's also the added wrinkle, mark, that it's such a bohemath that it tends to be, how would you say it, politically clumsy, visa have i regulators, especially in europe. how big of a factor is that? >> there's regulatory risks and there's all of these investments. john set up the question earlier by asking whether investors are going to be dpis appointed by the amount of the operating losses at other bets.

the non-google core business. i think actually investors are going to be very tolerant of that if they see very high margins at the core google business and if they get the picture out and explain the story about what these other bets are investing in, and if you believe that autonomous vehicles could be a super large opportunity for some companies and google has got as good of a shot as any, you'll be willing to tolerate those losses. you have a cfo that's in place that's much more efficiency focused than prior cfo's, and the returning cash to shareholders. it's a really great package for most investors. >> mark, when you see diane green off in alphabet's board, staying on the board, apparently, and also taking an operating role at google. running cloud and the infrastructure business behind it. does that factor into your valuation, anywhere positive or negative? are you waiting to see exactly what she gets done? >> well, the challenge that google has there is that they are extremely far behind two players in the industry. microsoft with the zur, and amazon with aws.

no, we don't ascribe much value to google cloud. i think that's a long shot. it's hard to be number three in a distant number three in a business as dynamic as that. i think there are other businesses, though that, are probably still fundamentally underappreciated at google. you its tube has got to be one. it's reached the materialality threshold, and the other is google play, which has enormous revenue opportunity if they execute well just looking at the apple comp. how much revenue that apple generates off of its evening wroe system. that kind of potential value is there for google given how strong android is worldwide. >> mark, i tell you. it's mind-boggling to me given the size of google's infrastructure in data center, in fiber. google docs that they haven't done more with cloud as a business. mark mahaney from rbc. thanks for joining us. >> thanks, john. >> up next, round one between sumner redstone and his ex-girlfriend is over with both sides claiming victory. we'll sort out the latest when "squawk alley" comes right back.

>> first hearing between 92-year-old making nat sumner redstone and his ex-girlfriend is over with both sides claiming victory. our julia borstein is live in l.a. to sort this out for us. >> the judge found that he had no urgency in manuel's request for an immediate medical evaluation of her ex, sumner redstone. this freezes effectively the process, considered a win for redstone's camp, along with the fact that the judge says that he will hear a motion in january from redstone's camp to dismiss the case altogether. his lawyers saying "we are pleadsed that the court today expressly rejected her claims of urgency and granted our request to stay discovery pending next year's hearing on our motion to dismiss." manuela herzer said the reason there's no urgency is because they put the -- saying that anyone that sees redstone will see what bad shape he is really

in. >> the real problem here is that sumner redstone is tragically incapacitated, and we think when we take his deposition, that will be very evidence to the judge in the world. >> while herzer does not own a stake in viacom, her attorney himted the potential implications of this lawsuit for both viacom and cvs, which redstone controls. >> there could be a domino affect if the court agrees with us that he lacked capacity and for some period of time and the board of directors and the management of viacom knew about that, there could be implications with the securities exchange commission with the shareholders. yesterday's decision by the judge on how to proceed may have been an early win for redstone. john, this case is far from over. back over to you. >> we'll see how it progresses. thank you very much, julia borstein. >> let's get to the close. more red than green today, simon. >> that's absolutely correct, carl. that's partly, of course, because we're two days away from what the ecb will do, and that's a huge event risk in a market

that's still at three, three and a half month highs. the data in europe didn't disappoint today. manufacturing pmi confirmed 52.8. it's a strong expansion from italy and spain. looking at the data you're getting from germany, jp morgan concluding that the industrial sector there is broadly unscathed from the vw emissions scandal. it's interesting that unemployment has fall tony record low today of 6.3 3erz%, and then you start seeing a lot of the anomalies for setting one interest rate policy across the whole of the euro zone. you actually have now negative yields on german bonds going out for seven years. this is the picture for the whole of the euro zone as can you see. the unemployment rate there at a three-year low within. what you can't see is the rate of job creation has declined to 13,000 a month. that's the lowest three-month figure you've had all year. therefore, it opens the way to the ecb moving again on thursday. kind of all leads all roads lead to rome or in this case

frankfurt. the euro back above $1.06. it made me thinking that they've gone far enough hfd the ecb. we'll come back to that later in the week. in the meantime, i just want to tell you that the bank of england gvr mark carney came in with the stress test today on the banks. before the banks, he told them there will be no new capital requirements. this is an environment where the banks were lobbying hard not to get more, and, of course, hsbc was threatening to leave the u.k. there is a counter cyclical buffer that comes through. it's $15 billion in all, but they think that they'll find that broadly from other parts of the balance sheet. let's have a look at where we are on the u.k. banks. all seven of the major lenders actually came through and passed the stress test. albeit, with two of them standing a chance at an rbs midway through that process. red flags being raised, and a suggestion they have to do more. they're on board now so everybody gets through. that's where we stand in europe, guys. back to you. >> simon, thank you very much. simon hobbs. when we come back, some new data from four square on just how

many people went shopping in stores this black friday. ceo dennis crowley will join us to break it down in a moment. dow up 111. but what if you could see more of what you wanted to know? with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.

good morning once again. i'm sue herrera, and here is your cnbc news update at this hour. secretary of state john kerry is in belgium for a meeting with

nato foreign ministers. diplomats say nato is expected to invite montenegro into the military alliance despite russia's objections. the formal announcement will come tomorrow. house speaker paul ryan says last week's shootings at a planned parenthood clinic in colorado shows the u.s. needs to reform its mental health care system. he says the common theme with recent shootings is mental illness and it is not something to be ignored. migrants struck at the border between greece and macedonia protesting against macedonia's proper entry requirements. they held up placards reading "we are not terrorists" and chanted "help us, we are very cold." the odds of getting hiv can be dramatically reduced by taking two pills prior to sex and two more after. that's according to a new study published on-line by the new england journal of medicine. it releases in conjunction with world aids day. it's called truvata, and it's made by gilead. ur you're up-to-date.

let's get back to squawk alley. kayla. >> all right. thanks so much, sue herrera, back east at headquarters. earlier today john stumpf joined me for an interview. he says the biggest threat still comes from abroad, and that global weakness shouldn't stay the hand of the fed. >> the debate has become bigger than the rate. i think there's a 75% profit or probability that they'll raise, and i think they will. i think after that on the short end it will be much more data dependent, so -- when we say lower for longer, that's probably more on the long-term side. long-term rate side, which has much more of a global impact.

>> i asked him about that and what it does to make the system safer. take a listen. >> we're a large company. it's what we've been asked to do. i think that we have enough capital the way it is, but if capital is required through debt, we're going to raise it. we'll be able to manage it. i can't tell you sitting here that i thought that was necessary. >> pretty colorful response on that. wells is a lender primarily. it makes more than half of its revenue on income from interest payments on loans than it makes to customers. stumpf said a small bump in rates would actually be enough to stall consumer demand for mortgages and for auto loans, but he said don't expect consumers to spend what they're saving from lower gasoline prices. >> consumers are saving more today. 7% or 8% of their paycheck. you're right, a lot of the gas savings has gone into their pocket. they're just a bit more cautious. >> a bit more cautious, guys.

that's not going to be music to the ears of many retailers who are hoping that consumers are spending those gas savings in their stores. perhaps we will see that sentiment play out through black friday. carl. >> kayla, i wanted to ask you. you brought up with him wells fargo's culture around this issue of cross selling basically the fed is looking into the possibility that they tried too hard to upsell customers and to perhaps services they didn't want. how did you feel about his response to that and wells' wroefr all response to the idea that its culture was too hard-charging when it came to pushing employees to sell more? >> well, it's hard to know, john, at this point how advanced the investigation is and what new facts are under consideration from the san francisco fed. a big investigation by the l.a. times uncovered the practice. at the time wells said that it was relegated to a team of about

30 employees that were since let go. from 2013 until now, it's unclear whether there is still an issue, whether there is still this cultural contagen, and whether there is pressure to upsill products. this is a statistic that wells fargo has been boasting for some time. it has a better cross-sell average than many banks. certainly the pressure needs to come done wrush it will be unclear, though, how much has changed until we see how the investigation plays out. it was a very interesting response. >> the average kurm spent five hours -- a quarter of the shopping was done on thanksgiving day. an overall retail foot traffic this year, down 2% compared to last year. with more on four square's findings is dennis crowley,

co-founder and ceo at four square who joins me live here in san francisco. it's great to see you. >> thanks for having me on the show. >> what is your take on the numbers that you guys saw this year? >> well, i mean, we see the numbers pretty much in line with last year's numbers. it's a little bit down. i think the thing to look at is everyone talks black friday, black friday, black friday, but really the spending and the shopping extends throughout the entire holiday period. >> we are now more familiar with the fact that as much if not more happens on-line and mobile as it does in stores. what can foot traffic tell us predictably about how business is going right now? >> we always talk about how 93% of commerce actually happens in the real world. not on-line. we look at the data that we have in our unique predictability to tell where people are going, where they were right before, where they were after. it's very valuable to marketers. marketers that are trying to

figure out, hey, where should they spend and strategize about the marketing and also for financial institutions that are trying on get a little bit of the leg-up in trying to figure out, hey, which stores are performing really, really well, and how can we play the markets in that way? >> dennis, three stores in almost five hours seems like not a lot. is that because people are in traffic? are they going out to eat? are they going to the movies at the same time? are you able to get signal outside of these traditional, you know, retail locations? what people are doing with all that time? >> yeah, sure. i think we want to dig into that more. i do know that our data is only shopping data. we remove the movie theaters. do we remove the food courts, and we move the restaurants associated with the malls. i think what's interesting is you start to see, hey, there's three different places that people are going to. what are those places? how are they linked to one another? what can we do with that data that's going to help other marketers figure out how to best spend and how to best plan? >> dennis, for a retailer, the

whole trick is you get them in the door, and then you have to keep them there in the hopes that they end up buying something additional to the reason they came in. what's happening to the average time spent for lack of a better phrase in that store? >> yeah. it was interesting that we saw some of the big box retailers. those numbers are actually a little bit lower than they were last year. we saw stores like jc penney and best buy, those numbers were actually significantly higher than they were compared to a normal day. i think, you know, you are starting to see a little bit of a shift away from maybe the big box stores into some of the spesht stores. >> what's the data that tells you that and what it means? >> we can look at the amount of phones on a regular saturday, on a regular friday, regular week day. we look at the black friday and holiday traffic. from that we can see that, hey, on those days we're seeing four times as much traffic moving in

and out of the stores. >> does that mean more sales, though, for best buy and jc penney or perhaps more showrooming? >> we don't violent sales data, but i would guess that it does lead to more sales. maybe more showrooming as well. >> does store traffic drop off significantly and go back to normal level brz ramping up the week before christmas? what did you see last year, and are you expecting to see the same thing? >> yeah. i think you see some ebbs and flows around the traffic. especially around the weekends. you know, the big thing we ended up seeing, the big insight for us is the biggest shopping day of the year isn't black friday. it's actually the super saturday, right before the christmas holiday. you know, i think everyone thinks black friday all the time, but really we're seeing that big bump there and so that's probably the day to get really excited about or the day to really go out and avoid the malls. >> some of the data that you had from last year, though, showed that the saturday before christmas is actually the most

popular or the most high traffic day to go shopping. the fact that we saw traffic down slightly this year, do you think that just pulls more sales forward towards christmas, or do you think that we'll see overall flatness? >> i think you only see it down just a little bit. i think it was 2%. i would expect the numbers to be almost the same as they were last we're. i do think it's interesting to observe the number of people that are actually going out for black friday that are spreading their brick and mortar shopping out through the entire season, and then, you know, to see how many folks are doing it on-line instead. stroo did you brave the traffic of black friday? >> we went to the movies, but we didn't actually go to any of the shops. >> that is brave in and of itself. dennis, thanks for bringing this to us. dennis crowley, the founder and ceo of four square. carl. >> we're getting a news alert on the story of gilead. eamon javers, in washington this morning. >> weave been monitoring this press conference on capitol hill with senators widen and

grassley. they are calling into question gilead science's decision to price its hepatitis c drug at $1,000 per pill saying they did that regardless of the human consequences. well, now we have a statement here from gilead sciences saying they respectfully disagree with the report. in a statement that was sent to our meg terrell. they say we stand behind the pricing of our therapies because of the better than fits think bring to patients and the value they bring to providers and our entire health care systems." obviously, guys, this controversy over pricing and where the appropriate price will be for customers, the government, and private insurance companies is not going away any time soon. >> yes, indeed. thank you. >> up next, why the fed is looking for a lot less from the job market before deciding whether to raise interest rates? but, first, rick santelli, what's on your mind today? >> manufacturing. that's what's on my mind today. the ism took a bit of a

nosedive. slowest since 2009. first time under 50 since 2012, and the last several times that happened we didn't look forward to a tightening in the market. we're going to talk about all that after the break. eligibility? ching medie you may think you can put off checking out your medicare options until you're sixty-five, but now is a good time to get the ball rolling. keep in mind, medicare only covers about eighty percent of part b medical costs. the rest is up to you. that's where aarp medicare supplement insurance plans insured by unitedhealthcare insurance company come in. like all standardized medicare supplement insurance plans, they could help pay some of what medicare doesn't, saving you in out-of-pocket medical costs. you've learned that taking informed steps along the way really makes a difference later.

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call now, request your free decision guide and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ >> up with, we're game planning december with a fund manager that has $6 billion under management. plus, despite its weak performance lately, one analysts it's time to jump into yum brands, which is why we've made

it our call of the day. amazon eating everyone's lunch in the retail space. however, we're going to debate some of the names jim cramer says cannot beat amazon. all that and more, carl. see you in 15. >> let's go to the cme group and get to rick santelli in the santelli exchange. >> hi, carl. you know, this morning we had an ism manufacturing that came out at 48.6. that is the first time we're below 50 since around thanksgiving of 2012. it's the lowest level since june of 2009. boy, 2009 was a wild year. 2008 was a wild year. we have some charts for you. let's look at 20 charts in both manufacturing, like the ism we received today, and then let's look at the bigger part of the economy, the service sector. nonmanufacturing. obviously as you look at the two charts, you can see they look very much the same. the service indicator which

we're going to see tomorrow has moved a bit higher. it's moved a bit lower. last time we had this divergence was in 2004. now, how will it turn out this time? i can't tell you. what i can tell you is this. we often talk about comer as a sentinel commodity. if you watch copper, it's in cars, houses. it's important to manufacturing. it will give you a glimpse of the future at a time in the past that used to be correct until a country like china started stockpiling it and use it as collateral on loans and creating a demand in a price structure that was not tethered to the actual output of the global economy. in this instance i still think that it is -- manufacturing is a sentinel compoen ebt to pay attention to. now, look at what we're sittings on. we're looking at a median on the 16th of december. last time we had numbers like this, they resulted in quantity takive easing. how do we rationalize something

that goes in die metrically opposed directions. we and more stimulus are tightening, and all the experts we have on cnbc, they all have the same refrain. the refrain is listen, i've looked at all the tightening cycles of the past. stocks do better. everything. this is a good thing. >> i can't even rationalize how they're going to sell this as a data dependent tighterning or look to history, but all the good things that were going on when they tightened, it's not the same this time.

carl, back to you. >> we're going to find out a lot more in a couple of weeks here. rick, thank you very much. speaking of the fed as we look ahead to jobs friday, the fed could be looking for a lot less from the job market before raising rates. our steve liesman is back at hq with more on that. >> good morning. what is the level -- what is the level of job growth needed in order to keep unemployment either stead where i or falling from that 5% rate? let's take a look at where we are before we get into what the numbers are that are being bantyed about? you can see the blue line is the declining unemployment rate over the past several years. up near 6% above -- almost 6.3% back in 2014. has come all the way town to 4%. we've done that with job growth as range you can see here from, say, a low of around 150 to just the upper 200s near 300,000 that's been the range with an average of 233. that's been sufficient to bring it down. many wall street economists think the number to stay at 5%

or to go lower could be a lot lower than that. john williams from san francisco in a recent speech said his range for steady state job growth and unemployment 60,000 to 100,000. loretta mester from cleveland, 75 to 120. kaplan, our new dallas fed president, 100 to 150. then jim bullard from st. louis coming to 130. trau a line down. a kind of median here. 100,000. or half of what wall street considers to be strong job growth. what goes into forecasting this number? you have to where the job growth will be and what work force growth is going to be. as well, you need to forecast participation rate. krishna over evercore isi looked at a more xliblgt complicated chart. just work with me. you can see all that goes into this. what you have to figure is you have to figure the participation rate.

think about it, guys, in the 100 on the low end to 150 on the upper end of what's needed. bottom line is that it's a lot lower than wall street thinks is strong job growth. the fed will be happy with a lot less to hike rates and maybe keep rates going into 2016. john. >> all right. thank you, steve liesman for a look at those numbers. up next, let's talk weather. meteorologist expecting the most powerful el nino pattern in 50 years. volatility sometimes a good opportunity for people to make some money. we'll see if it is this time. up next.

sfwro i know what i want for christmas. i'm at sur vooifrl vooifl products. people are buying rain water barrels. not just for residences. a big company up in the bay area has spent boying a system to capture water landing on the roof. won't be portable, but it could off set a huge cost for cooling and flushing toilets. >> during a drought year, which is defined as 6 inches of rain,

that's 240,000 gallons. a normal rainfall year we would expect to see about 750,000 gallons. >> the rain water catchment association tells me that the epa rules are forcing more cities and companies to capture their storm water, keep it from running into the drain and bringing pollutants into the system. that's turning an estimated $100 million industry into something a lot bigger. >> we just provided a system for a very large fortune 500 company that cost about $350,000. >> we've carried 50 products on-line. now we carry over 200 products on-line. >> what's the biggest project you've done so far? >> hmm, probably six million gallon hospital, six million at the gates foundation. >> of course, guys, it has to rain for the investment to pay off.

back to you. >> we're going to be watching that one too. thank you very much, jane wells. we've been waiting all day for headlines. we if with the big debt payment thing coming due today. kay kelly back at hq. sfroo we just learned from the puerto rican government that they are making all scheduled outstanding debt service payments today. the total that we were expecting to see was about $355 million, and based on a statement from the government development bank, which was responsible for the payments, it looks like they're meeting them in full. however, they continue to use somewhat dire language to describe the island's fiscal situation saying that their financial situation remains tenuous. if congress does not provide them with some measures for relief, probably an alugs to chapter nine capabilities which they do not now have, this could turn into a humanitarian crisis. that's their words, carl. meanwhile, a senate judiciary committee hearing on the topic of puerto reek wroe and the fiscal crisis continues on capitol hill. >> this is not -- the payment has not been seen as any kind of

relief in my way. that's the bottom line. >> i think it's a relief for creditors, and importantlily creditors are in conversation with the island and its officials about working out some new debt covenants perhaps. perhaps taking a haircut on what they're owed in order to make this a more sustainable payment path for puerto rico. that's key, and you know that bonds tied to these gdp payments were up a little bit today, although keep it in perspective. they're only at about 27 cents. the market sees at least some short-term relief, but bigger picture, still pretty bad. >> thank you very much. that's it for "squawk alley." the fast money half comes after the break.

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