good morning, it is 8:00 a.m. at stitch fix headquarters in san francisco, 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪

good tuesday morning welcome to "squawk alley." i am carl quintanilla with courtney reagan, jon fortt at post 9 morgan is off today. joining me, kneel a patel and ed lee. dow is up 73 39 points from a record. busy day for retail. >> very busy day big news out of amazon this morning as the company raises its minimum wage to $15 an hour for all u.s. employees amazon says that the raise impacts 250,000 full time, part time or seasonal u.s. employees. it is effective november 1st employees in the uk get a boost higher the retailer average wage was about $11 an hour, though many locations paid more. last year amazon said median

annual wage was $28,446. the online retailer says because employees prefer predictability and immediacy of cash, they are changing the stock program to direct purchase program when the raise goes in effect the net effect of higher wage is more compensation. >> we think it is the right thing to do for the long term for the company, customers and employees. we feel good about costs we are investing in this, and that will be discussed in our earnings call later in the month of october. >> why is amazon doing it now? the company says the federal minimum wage is too low for too long some speculate there's some political pressure from politicians like bernie sanders on the retailer's pay. a number of reports of poor working conditions at amazon and holiday hiring time, and tight labor market >> attrition rates are down this

year over last year which we think is great we so far, all our hiring needs have been able to fill through the course of the year we think we give a great employment experience, have a high quality work environment, so we have been very successful at hiring folks, so no issue hiring seasonal employees for the holiday season. >> $15 an hour puts them above other retail competitors walmart is $11 an hour, target is 12 with a path to 15 by 2020. >> fascinating this is london, too, right >> london, too, they're not quite as high. london gets a higher wage than the rest of the uk, but wages are going up over there. >> well, let's bring you in. when you look at this, a lot of feedback i get from people out there, criticizing amazon, it is not just the pages but it is about working conditions do you think this has an impact

on how amazon is perceived by consumers now that we're in a critical q4 and by workers and prospective workers themselves >> yeah. i mean, amazon is taking a lot of flack for working conditions in warehouses. they employ a lot of people. a lot of people actually know what it is like to work in an amazon warehouse, a lot of people are thinking about sustainability of a huge company getting bigger, it keeps getting bigger and bigger and bigger, and thinking of buying locally and sustainably. but i think there's a darker side to the story which is amazon is raising its wages in a tight labor market, they're increasing the amount of automation and pushing for that minimum wage increase. they're basically raising costs on their competitors as they push more automation into their own workplace to lower their own costs. pretty saddening move.

walmart did this, you can see amazon running that same play. >> walmart is a good contrast, trying to avoid a walmart scenario for years they were tagged for the same issues, that they're a sag on local infrastructure, on sort of medicaid benefits or local infrastructure costs, that basically governments are footing the bill nasrallah what bernie sanders is going after amazon for calculated move politically as well as regarding the move toward automation. same time they probably had to do it anyway because of the tightening labor market. you heard him say attrition slowed down. if it is slowing for them, it is slowing for everyone else. fewer people to get workers from, the higher wages was necessary anyway >> i wonder when you go to an amazon fulfillment centers, they're not often in population centers, they're off the beaten path, don't have a big community to draw from when labor conditions get

tighter, doesn't it get harder how many employees are going to move far or move families for that wage. >> some of them work several part-time jobs to make ends meemeet that, plaurs -- the spot worker as needed. i think closer they move to full time employment for most employees, the better everyone will be, but that's a cost we don't know what the cost of this will be it will increase we don't have that figure yet. >> they don't give us that your point of having no choice is a good one. all we ever do is talk about other companies having to spend on e-commerce to match amazon's distribution scale now they basically say we will give you a two front war not only keep up with us on scale and labor market >> as you go into the holiday period, amazon knows they have to deliver on time

pepsi was saying i can't get drivers. there's a huge amount of logistical work, amazon keeps pushing up costs, winning and winning and saying we're definitely going to deliver presents for you on time walmart might not be able to >> delivery is a huge part of the e-commerce game. used to be you have a website, you can buy stuff from it. that's not the linchpin. the linchpin is can i get it in a time frame >> and costs could get higher when tariffs kick in january 1st, additional layer of tariffs of 25% now retailers are potentially paying more for items or components that go into them, paying more for drivers, investing in e-commerce, maybe matching minimum wage. what does it mean for the broader environment when we talk costs and pricing? >> costs and pricing, interesting enough, acquisition of whole foods was a nice boone

for amazon amazon was at a 2% margin or negative now $2.5 billion in profits because of that. as they diversify business, requires other businesses with higher margins like media, that might be a way in. >> i think you'll see individual categories hit by tariffs that people rely on amazon for that they never thought of. power supplies who doesn't buy a battery. that price will rise with a tariff on it >> whom are they raising costs when it comes to competitors seems like a lot of amazon's low wage workers are more warehouse workers than main core worker. so is this really pressuring walmart to raise above 11 and $12 an hour where the base wage is now is it pressuring ups or fedex? who is it pressuring who has the

equivalent worker? >> anybody trying to operate a massive distribution platform. walmart is the first that comes to mind, if you look at them saying bernie, you want $15 an hour minimum wage, let's get it. walmart now looks worse because they're not pushing for it. >> unless they change the law or advocate to get it changed. >> look like they're on pace of law or just ahead of it to look out front. >> would you expect prime subscription price to go up? when does that discussion happen >> i think it has to they just raised the price but that's only going to go up as you get more folks that are subscribing. you have to pay workers more i don't see how it stops going up when, a year maybe >> there's no tariff on aws. jeff bezos wants to reduce margin on aws to offset. >> there are levers to be pulled within the business. >> walmart doesn't have a piggy bank like aws to play with

>> every retailer needs that >> that was the gift that kept giving look at all of the extra money, i can expand into other areas. >> few tens billions sitting around, build your own thanks for being with us >> you bet. starbucks founder, former ceo plans to travel the country promoting his new book from the ground up, a journey to reimagine the promise of america. the tour adding to speculation that howard schultz could run for president in 2020. this is interesting, given speculation about other would be candidates the relative speed with which schultz has moved. getting out at ceo, getting this book out, writing op-eds in the times and more. >> the trump presidency opened up so many vistas of possibility for corporate ceos this politics thing is hard though is he going to run as a liberal and democratic party that's gone further to the left with some

core, in the black community, for example, that still maybe has questions around that bathroom issue in starbucks, that's going to come up. does starbucks want to go through the meat grinder of him putting that brand front and center on the political stage, could be tough. >> bloomberg, another interesting possibility. >> we're going to watch to see which dates and cities that book tour includes. >> yeah, very interesting. feels like a campaign, doesn't it. a big show still ahead stitch fix slammed after missing the street's expectations. ceo katrina lake joins us exclusively in a few minutes. inusand later, nasdaq chairman jos

dow closing on a record high, only four points away as the russell is underperforming s & p. mike santoli is post 9 watching these. >> that's the story, it has been split a few different ways small caps seemed like the haven. since june that's not the case i think you can quibble with the makeup of the market but the fact that big cap has stayed calm, more or less staying in slow, orderly up trends, it is hard to have an edge and say this is the critical weakness that i've identified there's no doubt you can't get away from the fact the bank is weak, smaller stock is weak. what to make of it is the big

question. >> oil is a component to some of this, right? >> it is getting retail hit on a couple of different things. oil doesn't help oil stocks are doing well, underperforming commodity. that's kind of helping you can see oil and banks trade like a see saw it is an odd relationship. it is all thrown in the mix. and people have called for more wholesale protags, s wholesale rotation and that hasn't happened it is spotty in terms of that activity. >> in europe it doesn't seem like italy's budget worries are bleeding into u.s. markets, least not the last several days. >> not yet exactly. seems like it is sort of sequestered. i'm looking at credit stress indicators, stuff that suggests it is filtering through capital markets into our markets i would say not yet. although maybe you can attribute

some u.s. bank weak nness that european banks can't get off the map. >> change the lower third. we got that record high on the dow. not quite for the s & p, have to get up to 2940 >> you know, it is sort of interesting. anything you would kind of slice up in terms of data to say what are the indications for fourth quarter should be, they all net out to probably leaning to the up side, but none of the market action seems like it is geared up to accelerate from here >> look at the russell versus s & p, back to that for a moment, is there anything in particular that's made larger stocks better able to weather some effect, whether it is concern about tariffs, something with currency, trade issues, i don't know anything in particular you see >> honestly, i think first of all it is interesting. year to date basis, russell 2000

and s & p have been the same amount a weird cadence of one rushing ahead and falling back to the pack i think cost pressures are going to hit smaller companies harder. also russell 2000 is more weighted in financial than the s&p 500. so there's a sector of faangs. you don't have dominant companies that overpower a lot of aggregates in the s&p 500, so all of that is working against smaller stocks at this point >> if you look into the nasdaq, leaders are chip names, intel up there higher by more than 4%. >> a bounce it seems like. that's one of the questions. when chip stocks and equipment stocks roll over, does that tell you about the cycle or is it another one of these stealth corrections of one group that will resume the up trend at some point. >> looking at the last five days, boeing up 5.5% intel up 5%.

goldman, down 3. boeing tells you a lot what the dow is up to now, and i think if we're going to declare trade peace, those are the stocks that work goldman, the investment banks, money setter banks, asset managers, they just are kind of being entirely left out. maybe you can make the case that banks because they're holding so much more capital are less levered to a good domestic economy than they used to be, don't give you the bank because leverage isn't there, but hard to know what the market is saying. >> thanks very much. appreciate you keeping us honest amazon is not the only one in the headlines with a wage hike, it is also ad week julia boorstin is there. >> reporter: good morning. with facebook here, apologizing for last week's hack, the latest in a string of stumbles,

agencies and brands at advertising week are looking at other ways to reach consumers. amazon projected to be the third largest digital ad platform behind facebook and google reportedly working on a free ad supported video service they could announce this week amazon is one of the new options in focus for the ceo of ipg. >> amazon obviously is a critical new player in the business hulu, spotify, amazon prime, these are all ways to communicate with the consumer that's other than facebook and google, and frankly we view that as a positive in that we have options to present our clients with in terms of how they reach the consumer >> another alternative to facebook and google which together dominate 50% of u.s. digital ad dollars at&t's new ad tech company is

boasting premium brand safe content, reaching 170 million direct to consumer relationships. >> xandr is what they said when they made the acquisition, it was about advanced advertising analytics and opportunities. >> reporter: in response to digital options from traditional companies, facebook and google are offering more premium content options to reassure advertisers about brand safety as well as fake news guys, back to you. >> all right julia boorstin, thank you. as we head to break, look at shares of stitch fix the stock dropping sharply after the company saw revenue from subscription service fall short of estimates shares are currently down 30%. stitch fix founder and ceo katrina lake joins us exclusively after the break. back in a moment

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stitch fix reporting fourth quarter sales that missed the street, the stock is down about 30%. katrina lake, ceo of stitch fix joins us for an exclusive interview. good morning >> good morning. >> so questions about growth here the street went from doubting stitch fix, i remember seeing it almost 11 months ago around 16 bucks a chair to getting excited about growth prospects how much impact did it have when you shut off tv advertising during the quarter do you think you would have hit the street's expectations if not for the tweaks to data that you were doing >> so i mean to be clear, our revenue this quarter was on the high end of guidance we shared to your point on earnings and eps, they were both above expectations we deliver 25% year over year

growth on a client perspective full year delivered 25% year over year growth on the year, and that's exactly what we kpli committed to i was sitting here about a year ago at the ipo when the stock went at $15. we talked about the range of 20 to 25% and that's exactly what we delivered. >> so you're saying this is a case of the street getting ahead of itself versus your expectations that you set. i wonder how you are approaching the holiday. stitch fix is apparel, a big category but the model is different it is about the individual picking what they want how much of a gifting effect should we expect and are you changing anything ahead of the holiday season, enhancing anything to put gaps behind that perhaps? >> yeah. if you look at our annual patterns, holiday is not the huge revenue ad that a lot of

retail sees. a lot of retail heavily depends on holiday to make their year, and that's not true about our model to your point exactly. stitch fix is so much about personalization for one self rather than the gifting element. gift cards are part of the business, however, we see a lot of that redemption in the new year in january and february, so i think the past years and quarterly flows of past years are the best way to see what expectations are, but for us we don't have a big play during holiday and for us we will expect a similar pattern to what we have seen in years past >> i want to ask you about international expansion. you gieuys announced you're heading to the uk. you talk about components, things you have to measure, amount of time investors should expect before they expect to see that market mature the way some of our other markets have, not just geographical, heading into men's and started into kids.

what are things you need to put in place in the uk >> we're super excited about heading to the uk and to your point what we have seen in men's gave us confidence as we think of a new client base, new set of inventory. with men's we are coming up on two years of men's and now that the business is more matured, contributing more to the business, you can see in gross margin, we have the highest gross margin this quarter than the last six quarters, so you can see how the businesses mature and to add kids and now to add the uk, we're excited about planting those seeds with the uk, it is so important in the business of personalization which ours is to understand each client and understand what each client is looking for, so there's a lot of investment in localization, stylists, bringing merchants that understand the market and buy from brands that clients in the uk will expect all of that localization

requires a little more work, but we think sets us up for greater success. >> katrina, this is courtney reagan i understand personalization helps you drive that annual revenue per client higher, it was up 3% quarter over quarter to $447. so is that an area where stitch fix can continue to expand say maybe the street is focused on user growth of slowing somewhat, but is this annual revenue per client an area that personalization can help drive higher and if so, how much higher >> absolutely. we're excited about seeing revenue for client higher. what that means is we have clients that are spending more with us, clients that are high quality clients. that's an element of the business we're excited about now is a great time to see that. men's is getting to a place we see greater maturity, and kids, our newest business hasn't blended into client numbers yet, so internally i would say

figuring out how we can capture more wallet share, how we can be sure we get more of what clients love and capturing more revenue per client, that's a big area of effort and an element we're excited about with the business now. >> can you talk about customer acquisition. i thought it was interesting on the call you talked about how tv did prove to be an important channel for you guys, and you seem to imply not just to get people aware of the brand but also interacts with other channels that you use to sort of activate consumers how is the runway for customer acquisition maturing as people become aware of the brand, and are secular trends that are influencing how quickly people sign up? >> we are early in the journey we learned a lot the last couple years, we brought channels in-house, we are diversifying

channels, and tv, in the last quarter, tv off for 10 of 13 weeks which helped us to understand regional impacts and really understand how much tv is adding directly. but also to your point, i am helping other channels and we already knew tv was an important part of the mix, but this validated a lot of learnings and helps us plan going forward. that being said, even on the tv front, there's still a lot of opportunity as we think of diversification and tactics. we haven't done a lot of today, haven't done any to date brand marketing. we have a cmo in the role three or four months, as we are able to hone that marketing muscle, learn what's working and not, brand marketing will be another tactic that will be really helpful not just activating and generating awareness, driving reengagement and retention i think we're part way on the

journey on the marketing front but still really early there's still a lot of addressable market awareness on the unaided side is low, so we're excited about how much more opportunity there is on the marketing front >> katrina, it is carl curious how you think of some macro issues we talked about labor costs and amazon is a big story today, oil, transportation costs, cost to goods in the face of tariffs in general, is there a sense within your company or others that you know that you're bracing for '19 from a cost standpoint >> we have always -- it has been part of our culture to be sure we pay competitive wages to make sure that we are close to what's going on in the market side and proud of what we've done the tariff side, we are watching like everybody else. i think the most recent round of tariffs really don't effect us

or the categories that we sell, but at the same time we know these things are very quick evolution, so we're staying close to partners to understand what impacts it could have on our business overall in our business, we have seen more leverage on the cost side in the last year or so, so we are optimistic that can continue >> i want to talk about expectations the stock is reflecting today one sort of mismatch in expectations, but a lot of investors are effected by the amazon effect. every time amazon says it is moving deeper into a category lately, seems to be a stock reaction they have scout. they're trying to get more into this personalization area. they could get more into fashion. my question for you is what are the metrics, the data, evidence that you think people should watch to gauge whether amazon or stitch fix or any other company

is having success in the market you're operating in. >> apparel, there's a wide range of categories. firstly, apparel is almost $400 billion market where nobody, not even amazon, has more than single digits market share so amazon has 8% market share in this category and there are categories within apparel where cheapest, fastest is the proposition. the hard part with apparel, figuring out what jeans fit me great, the dress right for this occasion, and that discovery element is something that we excel at we don't see anybody else approaching at all, and not in a way that combines data science and humans the way we do so we look at what are the categories where we are successful at, what are categories others are successful at, what are brands in the other categories, and we're a strong place. we are able to help people solve the hard part of apparel which

is finding the clothes that they love and not necessarily ones that are functional and cheap. >> katrina lake, founder and ceo of stitch fix, the stock taking a beating, but the strategy seems to be the same thanks for joining us. >> thank you for having me let's get over to sue herera for a news update this morning good morning, sue. >> good morning, carl. good morning, everyone here's what's happening at this hour at least 13 people were killed and more than 40 injured in a suicide bombing at an election rally in eastern afghanistan the attack was the first since campaigning began last week. officials say the death toll could rise as some of the wounded are in critical condition. indonesia's president leading a moment of silence to honor earthquake and tsunami victims. more than 1200 people are confirmed dead with hundreds more missing or trapped under rubble. 17 people camped out monday at senator joe manchin's office in charleston, west virginia,

urging him to vote no on brett kavanaugh's supreme court nomination nine people were arrested inside the office fortre trespassing. and melania trump is on her first solo international trip as first lady she handed teddy bears to some of the children. you are up to date guys, back downtown to you >> sue, thank you very much. when we come back, what amazon's new minimum wage means for its bottom line and the stock price, backing off all-time highs we hit on the dow a few moments ago, dow up four days in a row. first record since september 21st, boeing with its own all-meigh viti hhang a big influence on that. "squawk alley" back in a minute.

dow-jones industrial average hit that record high a few moment ago, hovering below at the moment bob pisani is watching what's moving >> we are at a record. what happened awhile ago was a modest buy program came through. let me show you the dow. basically flat and all of a sudden the s & p lifted five or six points dow-jones lifted 60, 70 points overall. that brought us into record territory. if you're asking what happened, looks like it is a lot of trade related names. look at the industrials that

moved. boeing, new historic high. caterpillar moved up, united technologies moved up, 3m moved up this is associated with these three or four names. other industrial stocks that moved up, tended to move up. fluor, deere moved positive as well the banks, we talked about this this morning, a number of reasons, not a lot of loan growth, flat yield curve morgan stanley, 52 week low for them most important thing, q3 earnings may hit 25% 20% plus earnings the last three quarters, haven't seen that in a long time, and it is not just tax cuts only a third of that 21% is due to tax cuts. we're getting close to 8 and 10% revenue growth

that's powering the market, firing on all cylinders. back to you. amazon is raising minimum wage for all u.s. based employees to $15 an hour new wages benefit more than 250,000 amazon employees this includes part time and temporary workers. joining us with what it means for the stock, jeffries analyst brent phil i asked dave clark how much is this going to cost amazon, he said we're going to talk about that in our earnings call, but it suggests to me maybe it's not material or wouldn't they have to tell us up front? >> we think it is a modest impact, don't think it will have a material impact on the bottom line amazon has so many initiatives we think it is a great move. amazon is cheering this move other retailers are crying over this we think the pros will outweigh

the cons, you'll reallocate resources from issues that amazon is going against to fuel this this is obviously very critical in the holiday season. the second point is the other retailers don't have high margin businesses like aws and subscription business. in two years, these businesses will drive value on revenue and strong margins that other retailers do not have. so they have this other engine of growth and profitability offset moves bottom line, we think it can have an impact on the bottom line can have 30% growth and amazon delivering, continue to believe they can grow over 20% growth rate the next couple years >> you bring up good points about other businesses

i have to harken back when they announced increasing wages over several years, a dollar each year for employees many of us underestimated the impact that had on the positive side for sales, for stores seems like while hard to quantify that employees were more motivated, they did a better job serving customers do you think there's a multiplier effect like that for amazon that eventually will come to fruition in the stock price it is not moving much on this now. >> we do we think there's a lot of goodwill built obviously a lot of criticism around how hard the job is for what they're doing and the cost associated with it we think this will have a great impact over a period of time short term it is hard for us to put this into the model and say it will have x, y, z outcome

because there are so many other businesses they can effectively let up investment on you've seen that what amazon does is they fail fast when they go into businesses, they get out i think the biggest criticism of amazon is they're in too many businesses now so perhaps they have another play book that we all vice president -- haven't seen where they pull off for additional expenses bottom line, focus is on the top line among investors you look at the faang names, this clearly has the best margin improvement over the next three years. we're still big fans we still see a pathway to $3,000 a share in amazon the next two years. >> got it. thank you so much for your perspective. appreciate it. and we are talking tesla with former nasdaq ceo in a few minutes. "squawk alley" back after a quick break.

i am scott walker. we are following the dow's record run today and do you own shares of general electric or thinking of buying we debate where that stock goes from here, analysts are making surprising calls oil's big moves means a name is about to surge, that's what someone on wall street thinks. our call of the day. time to hold traders feet to the fire, picks that hit, those that missed we have that quarterly report at

noon see you in less than 15. >> looking forward to it. still on "squawk alley," bob greifeld with his take on the elon musk settlement and tune in for power lunch when howard marks joins that program at 1:00 p.m. eastern still up, more "squawk alley" ahead

i believe that investors would benefit if there were best

communications, couple weeks ago there were none, stock was up 12% in a week. i think the sec will benefit from the settlement also, not just for tesla shareholders but for sec. the sec wants to have some kind of control over what ceos or businesses are social medi to their investors >> chairman and ceo ron barron talking about tesla's deal with the s.e.c. and elon musk's habit for tweeting joining us this morning former chairman and ceo bob greifeld, a cnbc contributor good morning good to see you. >> good morning. good to be here. >> it sounds like you think there's fault on both tesla and the s.e.c. side. >> yeah, i would describe it exactly that way i think you have two wrong decisions and then we had the right decision i think the first wrong decision was elon turning down the deal with the s.e.c that deal allowed him to remain as the ceo which, to me, was the

most important factor. then after he turned it down, the s.e.c. made a subsequent wrong decision in that when they brought the lawsuit against elon they expanded or backed off their deal which was proper posturing but not in this context where elon would have to step down as ceo i understand the posturing from a legal point of view, the negotiating point of view, but the s.e.c.'s first mandate is investor protection. and by threaten to go remoing t elon, they should have eliminate that had posturing the good news, they came to the right decision elon remains ceo he had to pay a penalty. he did not handle the requirements properly. and we go on >> but what do you do, bob, when you have arguably a company where you have vision coming out of your ears, right, vision to

goaround and execution is always just trying to sneak enough in to make the quarter. what do you do in a situation like that? >> well, first you have to make sure you understand it's the purview, the responsibility of the board, to look after that. clearly tesla is a company with great vision they have great execution, we don't know that's the purview of the board. it's not the purview of the s.e.c. clearly that's for the tesla board to think about and really act upon >> bob, what grade do you give the tesla board thus far in dealing with the situation they seem to struggle to rein elon musk in when it comes to his tweeting they didn't seem to be able to get him to take this settlement the first time around. now they're about to get a couple new independent directors. backward looking on this incident, what grade do you give them >> i certainly think with respect to the decision to turn down the initial settlement that was an "f. that settlement should have been taken. elon would have remained as the

ceo. with respect to what pressure came after that and the quick response we saw on saturday, you'd have to say the board sprung into action i don't know but clearly that was a quick response and driven obviously by the market falloff on friday. >> but, bob, it seems some lessons have been learned by tesla, by elon musk. they filed an s.e.c. filing as a result of an e-mail mr. musk sent out that was the first time phil lebeau remembered them doing that, being responsible to their shareholders >> well, that's positive progress people can learn and regfd is a real problem for public companies. >> bob, i have to get your take on ge. flannery out culp is in we got the noncash charge on the power business withdrawing the guidance, and then today moody's putting them on watch for a down

grade. how do you view them >> one, ge is a battleship and 13 months to turn around a battleship seems like a very short period of time now we obviously don't know what went on with respect to the execution, so that's an outside looking comment. the other comment i make is i have a fundamental issue with board members stepping in as the permanent ceo. it really kind of perverts the role of the board member to provide advice and counsel to the ceo. what's remarkable to me, we talk about the 13 months the ex-ceo was in place, the new board members and lead independent directors were there for seven months for them in that seven-month period of time, seeing exactly what's going on and a board member to say, yes, i can run this whole thing, seems a little unusual to me. and i think you want ex-ceos on the board, but in a real sense those ex-ceos should say i'm not here for the ceo's job and make

a commitment to do that. once that elephant is in the room, it's a different dynamic and it's not the proper dynamic between a ceo and its board. >> interesting but given the urgency regarding the restructuring, what would have been the better alternative? bringing in an outsider would have taken longer to get up to speed. would you have gone with someone from within? >> we're not on the inside, so i hate to make these random guesses. i think outside the ge, when you have a large company, when you hire a new ceo, it's going to take a while for them to change that organization around they do not have a magic wand. i have no inside information what happened at ge, but 13 months on the outside looking in seems a very short period of time and for a new board member, seven months in, to properly discharge their responsibility to the ceo in that period of time, that seven months seems incredibly quick to know the organization, know the ceo and

say, okay, i should take over. my biggest point, though, board members should not try to become ceos because then they cannot, in that period of time, effectively function as a board member and provide advice, counsel, and guidance to the ceo. >> so, bob, it seems like the cases when this happens are quick ceo ousters. i think of hp, meg whitman coming in. i think of james hackett coming in for mark fields etsy recently. do you think the succession planning or perhaps plan "b" should be further developed so that they don't feel they have to pull on somebody they know from the board to step in? >> yes when you look at the responsibility of the board, they get to hire and fire one person that's the ceo with that power they have to know that they have to have a succession plan in place so the nasdaq board to give them great credit in every meeting, pressured me to make sure my

successor was being trained. you see the phenomenal success as deena took over so the board always has to be in a position to, one, have the confidence in the ceo and have active development plan for the successive ceo >> bob, good stuff thank you very much for that bob greifeld when you're looking for answers, it's good to have help. because the right information, at the right time, may make all the difference. at humana, we know that's especially true when you're looking for a medicare supplement insurance plan. that's why we're offering seven things every medicare supplement should have. it's yours free just for calling the number on your screen. and when you call, a knowledgeable licensed agent-producer can answer any questions you have and help you choose the plan that's right for you. the call is free and there's no obligation. you see, medicare covers only about 80

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the dow near session highs let's get over to the judge. i'm scott wapner the dow setting another new record as we come on the air this hour. are stocks now prime for a big fourth quarter run it is noon and this is "the halftime report. can general electric regain its glory? as shares fall back today, we debate the best move for your money. plus, a big call on big oil. one analyst tells us four reasons why chevron will outperform in the months ahead and the quarterly report a look at which of our traders picks hits and which ones missed "the halftime repoth