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tv   Squawk on the Street  CNBC  October 4, 2013 9:00am-12:01pm EDT

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13 points after the official squawk jobs report, totally unofficial in terms of the government. thank you to our guest hosts. all three of them are very serious and they did well to remind us that we don't need an orson wells. it wasn't a real number but it was -- >> the most fun i've ever had on "squawk." >> it was fun. peter, greg, thank you. >> mark, thank you, too. >> i already thanked mark. >> have a great weekend. right now it's time for "squawk on the street." ♪ ♪ normally on the first friday of the month we get the big employment report but that is not the case today. that has been postponed as the government shutdown reaches day for. carl and jim have the day off
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today. after what's been a rough week, we are looking for a positive action. let's take a look at the 10-year yield. are we around 2.6, somewhere in there? 2.64. and let's head to our road map now as well. where does it start? where would you expect? twitter filing for $1 billion initial public offering. the ticker symbol twtr. the filing reveals the company not yet profitable. so is it worth an investment. >> and without job support today, markets will have to watch washington to see whether there's any end in sight for the government shutdown now in its fourth day. >> and look out apple. samsung predicting a a record profit for the fourth quarter as it releases its new galaxy smartwatch in the u.s. and a massive spread in "usa today," which we'll get to later. >> let's start with twitter, of
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course, which has unveiled its highly anticipated initial public offering plan. julia boorstin is outside twitter headquarters in san francisco. ooh, the wind is blowing, your hair looks very nice, julia. take it away. >> reporter: twitter headquarters happens to be in the middle of a wind tunnel. twit are filed to raise $1 billion with the ticker twtr. we don't know the valuation yet because the can't hasn't revealed how many shares it will off or price range. its 2012 revenue grew by to $317 million but twitter is still not profitable. it did make progress as its net loss decreased by 38% but in the first half of this year, a number of acquisitions drove up
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its net losses 41% higher. now, behind twitter's growth is mobile. that's really the key thing to stress here. three quarters of twitter's users access the service from a mobile device and that accounts for over 65% of twitter's ad revenue. that's what the company continues to grow and it's also in sharp contrast to facebook's zero mobile revenue when it filed for its ipo back in the beginning of 2012. but twitter's 215 million users are tiny compared to facebook. they disclosed 845 million active users. one key stock investors watch, revenue per users. now twitter says it needs to grow internationally. it's just a quarter of its revenue but three quarters of its user base. it also wants to partner more with traditional media companies to bring on more content and
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also to improve ad targeting and formats. who will cash in on twitter ipo? its bigger shareholder is evan williams, board member peter fenton himself a 6.7% stake, jock dorsey 4.9% and current ceo dicks cou dick costolo. and dst global also has a stake. >> thank you, we'll be following this all day long and anxiously awaiting before the news goes public. and sotheby's is really under attack by investor dan loeb.
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no big surprise there. the poison pill will expire in 12 months unless reapproved by shareholders. it kicks in at 10%. that would not leave a lot of room for mr. loeb, who if memory serves is at 9.3%. but the damage has been done perhaps for a company that's going to be under siege for these next few weeks and months. a proxy contest could loom down the road for sotheby's but right now it's just dealing with mr. loeb, a four-page letter that attacked the company and its management and suggested many things would could happen but would prevent him and others from buying more. >> the activist comes, in the company strikes back. as you point out, the damage largely done to sotheby's at this point. >> if you wanted to be really be
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effective, you might have put it in before his ability to go from 5.4 to 9.3. only about a $3. -- let's go back to twitter. who prints out an entire s-1? >> this has been a fascinating one to look through. we don't have the jobs report today so we have to have something to look through this morning. a lot of interesting little pieces in here. julia hit on several of them. a lot of people focusing on the balance sheet. first of all, how much money are they making, are they profitable and, frankly, what is going to be the importance of mobile and the company's ability to monetize mobile as they hope to avoid a repeat of facebook's ipo. >> that's the whole thing, the comparisons with facebook. you see them right from the outset in the amount of revenue they're generating per user. it's at least $1 below what
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facebook is doing. even the billion dollar raise compared to facebook's $16 billion, i think they are trying to get as far away from facebook as you can possibly get at this point. >> some of the key growth metrics that investors will focus on may not look as good as you might hope for a company that is entering the public market in terms of adding new users or even revenue growth, though we don't have the comparisons there, not profitable obviously, spending a great deal on r & d and sales and marking. more to your point, scott, percentagewise than phase certainly was it and had multiples of the revenues that twitter does when it went public. >> its r & d spend for a company with only 2,000 revenue, they're spending 44% of that. i'm not sure spending on research and development, especially in early stages, is all that severe. >> the platform is a very
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powerful one. no doubt about that. >> it's still a business in its relevant infancy. the street saying revenues were below expectations and expenses were higher than his expectations as well. you're going to hear a lot of commentary coming from the sell side on the street about what this all means. >> it seems the way facebook has performed over the last quarter has changed fundamentally the view, i think, on some of these investments. if twitter had tried to do this in the first quarter after facebook listed, my god, what a difference a year makes. >> yeah. well, let's talk about the government shutdown. now in day four, still no solution in sight. president obama is calling on house speaker john boehner to let a clean funding bill come to the floor for a vote. chief washington correspondent john harwood in the station's capital with the very latest. good morning, john. >> reporter: good morning, scott. i'm having a series of
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conversations with people trying to figure out what a potential area of compromise of agreement moving forward. based on a conversation i had with a veteran member of congress yesterday. with one of them is potential escape hatches. focus on budget issues, which is the core what government funding and the debt limit are related to. the second thing is they're not going to have substantive negotiations and they couldn't possibly make a substantive agreement between now and october 17th when we're going to hit the debt limit, but they could agree on a process for negotiating, target and timeline for negotiating. all those things are possible. how do you get around government funding and debt limit? on government funding, you could simply reopen the government and on debt limit republicans set a precedent earlier this year of just saying we're not going to
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enforce the debt limit. we're not going to raise it but we're not going to enforce it. we've been operating and that for more than six months now to get to this point. so, kelly, that is a series of ways in which they could come to some sort of agreement given the line the president has drawn saying no negotiations until you do both the things that we have to do, reopen the government and raise the debt limit and republicans saying we need to get something. these are ways they might be able to get there, kelly. >> and, john, just a quick question. yesterday evening in particular we started to hear more people talking about the prospect for looping all of this into some grand bargain, which while it sounds great, has been one of the most difficult things for washington to do. are you hearing the same thing, to raise the debt limit, open the government, it will have to be part of some grand bargain? >> well, grand bargain means different things to different people. it would be a grand bargain at this point just to reopen the
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government and raise the debt limit. is it possible to have the originally conceived grand bargain, long, large entitlement cuts, revenue increases, all of the things you would need to really bring these two major national parties together on a long-term fiscal foundation? no. but could you do a mini version of that? paul ryan has been talking for months about a down payment deal. even though republicans have resisted a formal negotiating process with the senate on their rival budgets, palm ryan and patty murray, the chair of the senate budget committee have been having some discussions not too serious but ryan's talking about a down payment. that's the kind of thing they could do before the end of the year. >> all right. we will hold our breath, john. thank you very much, john harwood, this morning. some of washington's heavy hitters have been weighing in on the gridlock. black rock ceo larry fink
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expressed optimism washington lawmakers will get their act together before the debt ceiling deadline. >> it will be resolved very rapidly. but i think the most important thing that we must understand, the united states is a standard bearer of the world. people look to the united states as a country that lives by principles. and just the notion and just the conversation of a potential default is just unacceptable. >> on that note let's bring in john manley and john hogan with lazard capital markets. good morning. >> good morning. >> are you as sanguin as larry is? >> i certainly hope larry's right. the middle ground seems to be
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opening up to, as you pointed out, a larger deal, wrapping both the debt ceiling and continuing resolution together. but talking about things that have to do about the budget and walking away from the debate over obama care. if there's going to be a middle ground, it's going to have to be struck next week. they're going to have to talk about some things that are substantive to the budget and have nothing to do with obama care. the clock is running out on that. we'll have to see some action next week. >> the dow is down, we've given up 15,000. would you be a buyer here or a waiter, thinking you could buy lower if the gridlock goes on in d.c. and the dow keeps falling? >> i would be a buyer here. i think it's important to distinguish between a lot of risk to the market and a little sk tmarket. there's no question there's risk to the market. we have to feel some pain and that pain has to be transmuted to congress and then they'll fix
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it. but i think the process is working as it should work, believe it or not, and i think we come out of this probably with more agreements and the parties knowing exactly what they can get away with and what they can't. >> john, what do you mean working as it should? you said the process is working as it should. what do you mean by that? >> this is supposed to be an adversarial process. people are supposed to disagree. at least they're not beating people up in the senate ante chamber these days or having duels across the hudson. i think they will come to an agreement. they're very much aware of the fact they have to be reelected and don't want to conflict harm on their constituents. at the end of the day before it causes a lot of damage to the stock market, i think they reach an agreement. >> i don't know, john. the founding fathers may be turning in their graves looking at what's happening down in d.c. >> well, a few of them shot each other. mr. hamilton was lying on the
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ground not too far from here because of disagreements. we've become a little more civilized. yes, there are disagreements and they really believe in these things and they're fighting for what they believe in, both sides. but at the end of the day they know the majority, the constituents, the people who send them back to washington or don't, doesnn't want to be hurt this and they'll find a way through it. >> we ended the third quarries e -- quarter recently. what are your expectations? >> as we look at this the start of earnings season is going to be happening hopefully at the same time we've come to some resolve in washington, at least in the near term. if not, we won't focus on the fact that the s&p 500 is probably going to see 3.5 earnings growth on a year over year basis. that's down from where we started the year. i think the market has
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successfully priced in that type of earnings growth. to the external earnings get any growth whatsoever, we can think -- if we can get this next hurdle behind us, i think the earnings season could act as a positive catalyst here. >> art hogan and john manley this morning as we wait to see how markets open on day four of the shutdown. >> can samsung's new watch overcome poor reviews. and also just ahead, potbelly going public. we'll talk to the company's ipo and hearing from him directly. as we head to break, the dow is poised up 12 points.
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samsung announcing it expects record third quarter earnings. that -- also their glassy gear smart watch, which has been panned by several tech reviewers, is going on sale today. it doesn't earn quite as much money as its chief competitor, that being apple.
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samsung with a much longer share of the smartphone business. there is pressure building on samsung to return an ever-growing pile of cash and potentially to figure out a way to list here to access the u.s. capital markets, at least give more exposure to u.s. investors who might want to get involved in the name. it's fairly difficult to do so now. >> speaking of piles of cash, they're spending it because they took out a ten-page ad, ten full pages in "usa today." >> interestingly rates are higher on a friday and today is a friday. for color full page, $242,000. we're talking 2.5 million for those ten pages. >> the bigger issue is what david said. their smartphone growth is slowing. talk about the chips, you can talk about the smartwatch. who knows how that's going to sell. >> what about the tvs and laptops and whatever. it's really about mobile. >> it's about mobile as they compete with apple. and if that's slowing, that's a
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major problem. >> but the whole space is slowing. this has been consistently the case. there's no winner here. everyone is losing steam. they have to at least maintain their market share or guard profit margins. if they don't, what's the investment case in. >> they're having a decent time doing that, i think. the more production there is, the lower the margin costs. what's the next iteration? it will be interesting to watch. particularly shareholder activism in south korea, this is half the -- not half but an enormous part of the south korean economy. >> where's dan lobe wheb when y need him? >> sony didn't go that well for him. in terms of pressuring other markets, it's not the easiest thing to do. >> i think someone would have appreciated more pressure from blackberry to keep them from the collapse they're seeing. >> what's first and foremost on
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art cashin's mind this morning? he'll be here at post 9 straight ahead as we await the opening bell. take one more look at futures. the dow is losing steam. can it still be a positive open? up 6.5 points. we'll be right back. the ocean gets warmer. the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon.
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♪ just got paid, it's friday night, party hunter, feeling right ♪ >> welcome back. we're about five minutes away from the opening bell on this friday. let's bring in art cashin, director of floor operations at ubs. welcome as always. what are you going to be looking for in how the market trades? >> i think they've been down as
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you pointed out earlier, 9 out of 11 sessions. it's time for a little rest and consolidate. washington will remain the key. i think everyone will be looking at if they can firm up the boehner pledge of no default. the cynics here think we're going to go through the weekend without resolution because the gossip is both sides are getting donations pouring through the window, as partisan this and partisan that. so why do the people's business when money's coming through the door? so we think it will last into next week. >> what about the boehner thing, art? if that's true, were aren't we up more? >> i think people are hesitant. yesterday when it came out, it was alleged to have come from only one source. i don't have to tell you, you're in the news business. it's usually the confirming second source that gets it on. >> the "times" did choose to go with it, big headline.
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>> the stock market bought it halfway and we came halfway back and said now let's wait for confirmation. here we are 18 hours later anyway and we don't have any more flesh on the bone. so they're going to wait and see. >> all right, art. we're going to wait and see for that opening bell here on a friday. thanks for joining us. wall street paying close attention to an election that's one month away. we'll talk about the race for new york city's mayor. we'll have a live interview with candidate joseph lhota. the opening bell on this non-employment report friday just a few minutes away. (vo) you are a business pro.
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[ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ]'ll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ you're watching "squawk on the street." the opening bell set to ring in about 40 seconds from now. normally by now we'd have the labor report. we'd have the secretary of labor. we're without that data. important? >> absolutely. everybody is going to say it's
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only one month. it doesn't matter. it will get interfered with for next month and it will be much more difficult at a time when the fed is thinking about paring back to figure out what the trend is. [ bell ringing ] >> those opening bells, if you're watching the s&p 500. here at the big board ringing the bell was oci partners, celebrating an initial public offering today. at the nasdaq, it's the potbelly also celebrating its ipo. we're going to speak with the company's ceo a bit later in the show. scott, it's been kind of a rough week. i was talking to art about should we have expected more of a rebound with this idea at least that boehner is not going to allow one part of his coalition, so to speak, or one part of his party to pull us past the debt ceiling?
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>> i think the market is really cynical right now. it's more like show me, don't talk to me. as you said, david, we're down 9 of 11 days. let's see if we can recapture 15,000 on the dow today. we're about 5% or so away from the september 18th highs. today the stocks that are leading, exxon got upgraded today. >> across the treasury markets, people are focused on the longer end but it's really the short end where we're seeing disruption as we approach the mid-month deadline. here's what's happening with the one-month t-bills. look at this yield. while it's usually extremely low, near zero, we've seen a significant backup. this is one that will start showing signs of credit market stress or people shying away from the short term u.s. treasury market.
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>> it's been surprising that the 10-year has barely budged through this whole thing? maybe that's the greater tell has to how the markets truly feel and the pressure that may be put on these folks to truly do something. >> maybe, maybe not. what we've seen in the past -- we're not talking about just a downgrade in the u.s. credit rating. we're talking about any action that would mean either a hit to credit markets or to the economy, if there's a government shut down. those make the market rally. on the other hand, people questioning any full, faith and credit worthiness of the u.s. government, which would cause a bit of a selloff. that's what's keeping us in this range right now. >> perhaps fierce and taper talk buying down one would expect may be beneficial to certain areas of the economy, particularly housing. we got the biggest decline in the 10-year treasury yield after
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that meeting where bernanke decided to hold stead and and now the process with all of this happening seems less likely. >> the president told john hardwood that wall street should be concerned, that this time it's different. it certainly looked concerned yesterday and there was a completely different feel toll market right out of the gates yesterday than anything you get to today. >> you've got an ipo here, another ipo up town as the nasdaq, you wonder how the reaction is really going to be. the immediacy and the urge sen. >> but washington and the obama administration need a sharp selloff here to push their own agenda. that's what had people troubled by some of the rhetoric yesterday. >> jack lew and the treasury
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itself has been out with dire warnings of what it would mean were we not to extend the debt ceiling and start down that road toward an eventual default. as for stocks today, we haven't mentioned microsoft. shares are not down by much, a little less than half a percent. but steve ballmer was awarded 79% of his target bonus this year for the latest fiscal year at least. you know, $550,000. now, ballmer doesn't have to worry, he's a billionaire. he may become the largest single holder of microsoft stock in the not-too-distant future as bill gates and the foundation continue to sell. but it's a tenure that has been a difficult one and one that is coming to an end within the next 12 months or left. >> isn't it amazing the news flow around microsoft over the last six weeks? once it became clear that ballmer is going to be out, you've had the nokia deal, you've had this chatter that two or three of the top 20
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shareholders want gates to say bye-bye. now we're talking about ballmer's bonus. a lot of chatter about this company lately. >> the most important thing will be the decision the board makes about his successor, without a doubt. and that we don't know. we keep hearing some names, mulally is the one that keeps coming up. i have no insight into it. my understanding is whether or not bill gates is, there which he most likely will continue to be as chairman, he's not seen as an impediment to the ceo such. we got to check tesla. i saw the associate today. there they are. they're up a little bit. >> bill: a little bit of a rebound. we'll talk to phil le boy about this very issue, with the car fire, battery fire and what we know. >> open table got upgraded today.
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that stock is doing really well. it's up 3% this morning. >> bob, i think you heard your name. i heard some applause. i don't know if that was an open on that ipo. but we'll send it over to you for what's moving this morning. >> that's what it was. oci, priced $17.5 million at $18 and opened at 17 1/4, just a tad below that opening price. the biggest one that they're waiting for is potbelly. the price start for that one, $11 to $12. cherry hill just opened as well. i cannot see the opening price. >> 18 and a half. let's talk about the market here. health care is on the upside. energy, telecom also on the upside here. the biggest result before two weeks get out osh ten days
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before the october 17th deadline. the idea here repealing obama care is being pushed aside in favor of what greg, my friend at potomac research has called a down payment on entitlement and tax reforms. everybody thinks a deal can be made around those issues. the s&p is only down 0.8%. we're 2.7% from the historic high we hit just a couple of weeks ago, i believe it was september 19th. before anybody gets complacent, a number of people sent me e-mails remember august 2011 and we couldn't agree and we dropped about 10 portion on the s&p 500. complacency is really high here. if but they a in in the event that we have some problems in
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the debt ceiling because there were problems with people trying to withdraw cash the last time. it's a silly idea but that some banks are considering stocking up on cash is an indication that some people take this seriously. where are we at right now? let's forget about the extension or dealing with the shutdown. nuchl one here, one obvious point, the fed is not going to taper in october. number two, mario draghi has indicated easy money will continue and noum four. they'll end with 5% to 6% increase in earnings. the market should be up but in the fourth quarter things can blow up very easily. from twitter, we got a lot of data on that s-1. where the heck are they going to list? no comment.
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i called nyse, no comment. we still don't know if it's going to be here or at the nasdaq. guys, back to you. >> yes, the guessing game will continue. bob pisani on the floor. thank you. >> bertha coombs, we're expecting potbelly to start trait traiding in a little bit. >> reporter: we are expecting trading. the big caps are looking for a bit -- looking at a bit of a loss, down about.4%. apple gets a price target increase target at just over 500. chips have had a fairly strong week, among them the leader sandisk. and you guys did check on tesla.
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shares are actually leading the nasdaq 100 this morning on the bounceback following that video that had a lot of people concerned about a possible fire. and as bob mentioned, the big question for a lot of us from that s-1 of twitter, got a little hash tag -- not a little hash tag ash long hash tag, that will be the one today, where will they list? we know the last big tech list being was facebook here at the nasdaq and we all know how that went. back to you. >> thanks very much, bertha coombs. a little bit of news today. dell, carl icahn, then i want to get to apple. the new about icahn involving del, it is really over. he's not even going to be seeking appraisal rights anymore. previously he voted against the deal, had a right to go to a court, this would take potentially years that what was fair value, the court will
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decide and it's possible that mr. eye cannes could have paid more to put the capital. now he's going to get paid out with everybody else. so no appraisal rights. that deal, by the way, is calmed down. ets call it november 1st is the actual are close on the leveraged buyout of del. >> as for the other news involving mr. icahn this week, well, it was apple. to look back and think a little bit about his request for a $150 billion buyback and borrowing of a similar amount, it is a staggering ask one would have to at least surmise here. i mean, take a look at all of the investment grade issuance that's been done of any size over the last, i don't know, many years. if you add up the nine largest bond issuances by investment
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grade companies, the nine largest, and that's including the one that just took place at verizon, you still don't get to $150 billion. i mean, i know the bond market is over for business but that would be -- size is not even -- it's hard to contemplate something of that action, not to mention going into the market where you're successful in raising that amount of money in one fell swoop or short amount of time and trying to execute a buyback of that type. the stock might run on you. the largest there ever done, microsoft's at $20 billion. so we're going to see dialog dialogue -- the size of his ask here is stratospheric. >> i wonder what's going to happen, right, whether apple gives icahn the heisman and then what does carl do? what does he really do?
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because, i don't know, it seems to be a long shot, right, david, that apple is going to do anywhere near the size of another buyback that carl wants them to do? >> maybe they increase things a bit in the new year. that ask was so far above than what people considered realistic -- -- >> but isn't that the point? you ask up here and you get everything to that level, it's p put. >> look, he told thus week i'm not going away. so he's going to be around and this is going to play out for a while. they're going to speak again in three weeks. we'll see what happens. maybe they need to have another dinner. >> i think they're done with dinners. >> he did say it got a little testy at times. maybe dinners are done.
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let's check out the action in commodities. sharon epperson is at the nynex. >> good morning. everyone is watching tropical storm karen. that is certainly hoping to support oil and natural gas prices right now. keep in mind about 19% of the u.s. oil production is in the gulf of mexico. about 6% of natural gas production and about 40% of refining capacity is in the gulf area. and so they're watching this storm very carefully. right now it appears to be in the middle of the gulf of mexico. they're watching to see whether the track will go eastward toward some key oil and natural gas platforms. we're watching what's happening there as it's about 60 mile-per-hour winds and perhaps to strengthen over the weekend. we'll see whether it reaches hurricane status. we are seeing a number of oil and gas companies deciding to take nonessential personnel off of its rigs. we'll continue to watch and
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monitor what the oil and gas companies are doing in the region. right now in the energy world, it's all about watching the storm. back to you. >> thanks very much, sharon epperson. here it's a lot about watching ipos. coming up we have david menlo on twitter's new filing. and we'll talk with potbelly's ceo. stay with us. when we made our commitment to the gulf, bp had two big goals: help the gulf recover and learn from what happened so we could be a better, safer energy company. i can tell you - safety is at the heart of everything we do. we've added cutting-edge technology, like a new deepwater well cap and a state-of-the-art monitoring center, where experts watch over all drilling activity twenty-four-seven. and we're sharing what we've learned, so we can all produce energy more safely. our commitment has never been stronger.
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♪ i got to testify, come up looking extra fly ♪ twitter is in focus this morning after unveil be its ipo details in an s-1 yesterday. it's been a busy week for the ipo market in general and a pretty good year. let's get more from david menlo. you and i have been talking for more than i care to say but you're holding up well. >> for 92, it's great. >> it's back in business, you're
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back in business. let's talk twitter. what did you glean from the s-1? >> i think a lot of the media, obviously not cnbc, has the wrong take on the stock. it's not going to be a billion dollar worth of stock. if you take a look at potbelly this morning, they had a 40% expansion from what they originally thought they were going to bring in size for the filing until they actually came public this morning. so it's going to be a lot more. and also the amount of shares outstanding is being completely misred. it says 470 -- >> i was looking at that, too, 472 million. but then you've got enormous footnotes with all of the different stocks held in various ways. what's the fully diluted number? >> i think you're maybe 25 million short of the 700 million in total. >> almost 700 million. that's the number we want to use to try to figure out how this thing is going to be valued when it does go public?
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>> exactly. as was mentioned morning, you the a $20.62 for restricted unit stock valuation. it's a month old. >> $14 billion almost. >> exactly. 14 is your floor. with the demand into the marketplace, you're going to see easily 20 plus by the time this gets out the door. >> yes. >> any idea where it might list? bob pisani was talking about it. does that matter to these guys? >> absolutely. i believe, i haven't spoken to anybody, this is my feeling, they do not want anything remotely similar about what happened with facebook. they want to get away from nasdaq because this don't want to be the next problem because of the big chunk of problegoing through and they don't want to be morgan stanley. >> now with facebook near 50. >> goldman will handle it much better than with facebook.
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>> has goldman completely changed the ipo market, the way the company goes public, the floats they do, internet companies that are compared to facebook? >> i don't know that facebook itself was a determining factor. i think all of the peripheral issues around it -- i don't usually like to speak poorly about an underwriter but we're not affiliated with anybody and i really believe morgan stanley was laying down prostrate for this deal, said we'll do anything you want. the way the price range the structured, they narrowed it instead of expanding it to the upside to show there was demand. not a good set of steps. this will be handled differently. >> you and i talked throughout the 90s -- >> 1890s? >> yeah. we've seen so many quality. is it still pretty high. >> all the investors around for
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this one are going to say not this time, not again. we'll give you a little leeway but this is a healthier market, balance sheets are astoundingly good so the deals coming to market look much stronger. >> david menlow, thank you. >> the best way to keep twitter from ending up in the same ipo boat as facebook is blank. >> "squawk on the street" is back after this. mine was earned in djibouti, africa. 2004.
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it's hard to believe but this weekend will mark two years since the death of apple co-founder steve jobs. jon fortt has a look at the breakthroughs and challenges since then. >> reporter: tim cookout with an e-mail commemorating the date to apple employees. here in silicon valley where time gets measured in product cycles, two years counts as an eternity. two years ago apple had just shown off siri for the first time. innovators, dreamers, friends and family mourn the passing of
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an icon. so many of the questions centered on what would happen to apple. the stock price tells part of the story. the first year stockwise, apple was a rocket. iphone 4s sales were off the charts, despite criticism of how siri worked. but in the leadup to last holiday season, bear attack and analysts began hearing buzz that apple was ordering fewer of the upcoming iphone 5. apple's margins took a hit. samsung began gobbling market share with larger screen phones and am zone gained steam with kindle tablets. and then this run. the stock is up 25% from those lows, just when it had become
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conventional wisdom that the iphone growth was done, apple turns into a staggering 9 million iphone 5s and 5c weekend. where do things go from here? tim cook and his crew seem determined to show they can still innovate, maybe on much bigger screens on the wall or much smaller screens on the wrist. >> thank you, jon fortt. well, simon has a report. simon? >> we have alexis ohanan, co-founder of reddit and mayoral candidate lhota will be with us. (vo) you are a business pro.
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>> plus day four of the government shutdown and the debt ceiling is now front and center. find out what all this potential uncertainty will mean for the market. >> and wall street playing close attention to new york city's mayoral race. the election only one month away. republican candidate joseph lhota will join us at post 9 in just a bit. >> twitter publicly filing its s-1 thursday evening, revealing among other tidbit it is has not made a profit. kayla tausche joins us with more details. >> reporter: many investors were surprised at how light revenue was and how high its costs were as it plugs earnings into research and marketing. that's driven the company to a net loss in the first half thor year, $69.3 million. it's a greater loss than last
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year yet the company said it's going to use proceeds upwards of the billion dollars it will raise to cover some of those costs and expenditures and employees stock as well. that's something when most media companies said when they went public, too. but twitter has key differences. it has no mention of a key man, somebody who if the company lost would do great harm to the stock. former executives had a lot of stock but none has a majority of voting control. no shareholder can have more than 15% without board approval as part of a takeover defense, as twitter prepares for an activist or hostile takeover. >> finally, no executive director or investor will sell their shares. that's supposed to indicate that for twitter the best days are yet to come. with a unique offering comes unique risks. among them the business model is still unproven. it may never reach profitability.
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it can disclose less because it's a still emerging growth company. the valuation may exceed its valuation as a public company. its private valuation has been as high as $12 billion. the company lost shares in august at $22.62 a piece. >> day four of a government shutdown with seemingly no end in sight. cnbc's chief washington correspondent is there with the latest. john, give us an idea of what may play out over the weekend. >> reporter: well, right now there are no substantive talks go on. there is no end in sight, as you mention mentioned. we have an end date, october the 17th.
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john boehner has indicated he won't let the country go into default. how you get there is the question. i would expect posturing, no substantive negotiations. today in gridlock we could call it. president obama at the white house is in private meetings. there are no public statements for him scheduled. that could change of course. john boehner meeting with republican leaders to try to figure out who to get out of this box and harry reed at 10:30 will give some remarks on the floor. a senate leadership aide said there is nothing going on right now, no movement. this aide was saying the only way this ends is with the speaker conceding on passing a clean c.r. to reopen the government and raising the debt ceiling and pointed out that john boehner had been asking all summer before he was steamrolled by the tea party faction wanting
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to delay/defund obama care, which was something boehner was ever holding out for, that boehner had lobbied for a two-month extension that democrats have now proposed at the spending levels democrats have proposed. the point of the aide was boehner can't take yes for an answer given the caucus he's controlling or trying to control right now. >> did you want to come in there? >> no, no. >> i was just going to say it is possible here, john, that boehner's tactic is to say inside with you, rebel conservatives, let's do what we can and when he came out of the meeting with obama he's like he's not negotiating, nothing's happening, we have to change our tune. that could be the strategy and the degree to which they're willing, as you said yesterday, to negotiate beyond the lig lightning rod of obama care to the fiscal issues to which they could get some deal. >> i think the key point on
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that, simon, is there is no strategy at this point. this is day-to-day, hour-to-hour strategy to figure out an approach. i was in a long conversation with a republican members of congress yesterday who was expressing some nervousness about how this was going to go and attributed it to a lack of strategy. he looked at me and some other reporters in this briefing and said let me ask you, does this look like a planned out operation to you? no, it isn't. >> john, we'll leave it there for the moment. thank you very much. john harwood there live from washington, d.c. the markets are clearly paying attention to what is happening in the d.c. and government shutdown and of course the fight over raising the debt ceiling. stocks are positive. we're up 31 points now on the dow but they are on track for a losing week. let's bring in president and ceo and r.b. kelly.
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good morning. >> good morning. >> tom, for how long will the markets believe there will be an 11th hour deal on both the government shutdown and the debt ceiling or, tom, at some point do we start to wobble on that? here's an interesting way for me to answer that question. i've been traveling around the last few days meeting with accounts. what's interesting is no one started ot asking about what was going on in washington. i think that goes to show you where their heads are at. it's sort of indicative of market action that we've seen over the last few days. the one thing i would amplify that john harwood, a point he made earlier, speaking with some guys down in d.c. over the last day or so, what's interesting is they've been telling us is that the gop doesn't know what they want to get out of this. there seems to be this real lack of strategy as john pointed out. we're getting the same sort of
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color from folks down there. this is sort of a perverse idea but the longer this goes on the better. what i mean specifically is there is a hard stop on the debt ceiling. the debt ceiling we think can go to the end of the month. but the closer you get to that, the greater the odds are that we wrap one day deal into a big deal. you get a budget deal and debt deal at once. >> in the meantime -- as we go through this game theory, the fascinating positions of both sides, on the one hand you have the president and the secretary treasury telling the markets they should be worried, more worried than they are. on the other side, you have speaker boehner who is trying to reduce the effects of the comets they're having on the markets, promising initially through the "new york times" that he would not let this country default. >> the administration would love for the markets to be down quite a bit right now to amplify their point that this is an area we
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shouldn't be playing in and the spot the markets don't want to see us in. the markets have seen through this. it's only going to last for a couple weeks. it's not going to affect the economy. underneath all that is a stock market that is still getting its legs from a five-year, really rough spot in the entire world economy. that's what's sitting underneath this. a bunch of investors went into the year with cash they need to commit. that's what you're seeing this week in spite of all those warnings and headlines out of washington washington. >> tom, it's one thing to say there's not a meltdown in washington and there's another -- it's not a great outcome if you consider that if
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we were marching forward toward a real, mother sustare sustaina recovery, it's clearly the better outcome here. >> there's no question about that, kelly. you and i have spoken about this before and we're very much on the same page. while this can hit confidence to some extent, the bottom line is from an actual gdp perspective, this is a marginal impact at best, the government shut down. the debt ceiling is a completely different animal. the government shutdown doesn't change our forecast that much. a lot of those folks can actually collect unemployment insurance. two, they'll probably -- probably get their back pay. and, three, keep in mind one thing, gasoline prices have actually looked pretty good over the course of the last several weeks. in fact, even compared to last quarter, they're actually down. if that continues, that's a net add to economic activity. so net-net from all the nonsense
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that's going on in d.c. we don't see a big hit. you're right, we're still not on that trajectory we're desirous from, 3%. >> sorry to interrupt. potbelly is open for trade persian gulf. >> wow! >> that's quite an endorsement of the initial public offering. >> that is so in keeping with the performance of how these food and restaurant names have done this year. the two best were sprouts and was it annie's the other one? >> annie's was very strong. >> that's going to vault potbelly's into third place. >> did i hear you make the cash on the sidelines argument as your bullish case? i mean, come on. jerry, are you there still? >> yeah. >> can you do any better for me on a bullish case than just cash on the sidelines? >> i can make a much more bullish case. stocks at these levels of inflation and the comment on gasoline is right up that alley. stocks at these inflation levels need to trade somewhere between
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17 and 18 times earnings. that's based on a hundred years of history. we're somewhere in the 14 to 15 multiple range right now, which means there's still a lot of skeptici skepticism, there's still a lot of fear that stocks have some kind of down side risk ahead of them. if you look at the economy today, there's more upside risk event there is. there's much more pent-up consumer demand, much more pent-up capital spending. if the world continues to recover in this start-and-stop manner that it's doing, can you see much bigger earnings acceleration, particularly in 2014. if you have earnings acceleration and cheap valuati n valuation, it's still quite a bit of up side ahead of us. >> jerry castellini, thank you
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to our guests. >> noodles and company up 1.39. now potbelly adding to triple-digit gainers on their first day of trade. we'll get more coming after. samsung's smart watch goes on sale today. it's been panned by critics so far but the question is will consumers give it a chance. we'll go live to see if anyone is buying. and samsung is also working on a deal with tesla. more as "squawk on the street" continues. we route your order to up to 75 market centers to look for the best possible price -- maybe even better than you expected. it's all part of our goal to execute your trade in one second. i'm derrick chan of fidelity investments. our one-second trade execution is one more innovative reason
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choose the doctor that's right for you. find your perfect match at and thrive. in is in keeping with this year. if you're a noodles company, you're up 100%, if you're sprouts farmers, you're 102%. now potbelly trying to get its way up there. >> and we have guys trying to cozy up to the capital desks. many have taken these companies public to get as large an allocation as can you so can you immediately flip it and get your lunch money, so you can buy some
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potbellys. >> we've seen the gain and loss since the ipo for sprouts and noodles. is the next buyer getting fooled? no. sprouts up 155% since then and including that obviously. noodles and company up 139% and it was up 104 -- >> they maintain that first day gain and then some. >> in the meantime, the samsung smart smartwatch is going on today. it's been panned by critics but will consumers feel differently? dominic chu is live at a store to see how are the sales. good morning. >> reporter: good morning. i'm not just at an at&t store, i'm at the at&t flagship store here in manhattan. we were looking for some kind of activity. this store has been open since 8:30 morning but as can you see here, no line.
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the best we can see, they have sold some models of the galaxy note3. that's the new smartphone that samsung is releasing physically today. but to the best of our knowledge, not one samsung glasglas galaxy gear watch has been sold yet. this is just one store out of many across the country that are selling this particular watch and this particular phone. remember, you need both of these items together to make that watch work and we're not seeing a lot of activity. you kind of juxtapose that to any time you see apple release any kind of a product. when they had their 5s and 5c smartphones released, you saw lines out the doors from stores and outlets. this was supposed to be the first mover advantage going to samsung. they were supposed to have the first watch and there was supposed to be demand for it but we're not seeing it just yet. preorders are a factor.
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that's going to be an issue. david pogue wrote a scathing review. he'll be on in the next hour of cnbc. >> besides the watch, samsung is reportedly talking to tesla about its electric battery supply. phil lebeau joins us with more. >> reporter: this is not surprising tesla is discussing battery supply with samsung sdi. tesla needs more battery supply. the entire electric vehicle market needs it. tesla did confirm it's in discussion with samsung sdi and other companies about battery technology. it needs more batteries as model s sales pick up. right now model s battery cells are supplied by panasonic.
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elan musk told news august they could face a battery cell short and in the future. here's what he had to say about the need for more battery cell supply. >> we're working with our primary partner, panasonic, as well as talking potentially to other suppliers like samsung and lg. but actually even if we were able to use -- even if we use up all of their battery factories, it still limits us to a few hundred thousand cars a year. we're trying to think long term to say what do we need to do to ensure that battery factories are being built? >> as you take a look at shares of tesla, keep in mind we are coming off of the worst two-day performance for tesla since july 16th. the stock is basically flat today after being down basically 11% over the last couple of days. i think a lot of people are going to be watching tesla to see if it plateaus here in this
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172, 173 range. >> of course honda led for a long time, warren buffett had an investment in china. are these batteries becoming to cars what semiconductors are to the smartphone? do they have to have one supplier or a battery leader? >> i don't think there has to be one. there are a number of suppliers that supply the cells. that's the key, the cells. there's a limited capacity for battery cells. elon musk told us they're looking at building a mega factory. this is a matter of the market and demand catching up with the market and matching up with each other. >> phil, people are still talking about the fire we saw on the tesla earlier this week. there was some talk about the
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fact that perhaps the national transportation safety board would be able to investigate this but was actually shut down right now so we're not getting a lot of information. >> keep in mind that nhtsa, which does all vehicle investigations, all of those investigations start with a consumer complaint. so if you have a problem say with your chevy malibu, kelly, you would file a complaint with nhtsa. if there are enough complaints and it's warranted as serious enough, they'll open a case and may lead to a recall. if this person who owns this tesla, if they doesn't file a complaint, it may never get to nhtsa. >> fascinating stuff. phil lebeau with plenty of information forrous o us this m. thanks. >> coming up, we'll talk to a man who knows almost every in
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and out of internet and social media. he's the cow founder of reddit and he's coming up. ♪ [ male announcer ] the parking lot helps by letting us know who's coming. the carts keep everyone on the right track. the power tools introduce themselves. all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. ♪
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welcome back to "squawk on the street." we're taking a look at shares of union pacific, the nation's largest railroad, down slightly after saying it will come in below expectations, expecting earnings of 2.45 and 2.48 a share. analysts were looking for earnings 2.56 a share. it's down just about .9%. simon, back to you. >> mary, thank you. straight ahead we'll take you live to twitter's headquarters in san francisco. plus we'll hear from a big tech investor who says he plans to buy shares of twitter as soon as it goes public, despite all the concerns that many have. we're back in two. the job jugglers.
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♪ i'm walking, i'm walking on air tonight ♪ good morning. if you just joined us, we are now almost an hour into trade. here are the stories that we're talking about heading into the weekend. 7:29 on the west coast, 10:29 on wall street. a sizzling wall street debut for potbelly shares of the sandwich
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chain, more than doubling their ipo price. but it's a different story for cherry hill mortgage and delta dollar tree trading below their asking prices. >> twitter bringing back memories of facebook's ill fated ipo initially. julia boorstin is outside of twitter's headquarters. i'm sure they're sick of comparisons to facebook at this point. >> reporter: absolutely. twitter and facebook are the two social media giants so comparisons are natural, but these two companies are very different and not just because twitter filed for a much smaller ipo. twitter is really a much smaller company with 215 million monthly active users.
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facebook had 845 million when it filed to go public back in the beginning of 2012. now facebook has 1.15 billion monthly users. to its credit, twitter is growing very fast, revenue tripping in 2012 and doubling in the first half of this year but less than 1/10 of twitter's revenue when it filed to go public. plus facebook was profitable when it filed for its ipo while twitter isn't profitable. twitter's big advantage is in mobile, where three quarters of its users access the service and count for 65% of ad revenue, which is in sharp contrast to facebook which had zero mobile revenue when it filed to go public. the companies have totally different ownership structure. twitter has no controlling shareholder with special voting
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rights. the largest stake holder is evan williams, while chairman jack dorsey has 4.9%. facebook is controlled by mark zuckerberg who has 57 of the shares. both acknowledge that spam is a risk for both of their companies. >> so should you be a buyer of twitt twitter's ipo? thanks for being here, eric. >> thank you, scott. >> you should just answer that question. should you be a buyer? >> for sure. it's a buying opportunity in my eyes. i love the fact that there are so many people now whose knee-jerk response is that this thing's not profitable, it's not
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growing that fast sequentially, it's kind of sloping down, maybe this isn't a real business. this is a utility, we're going to use it for a decade plus and i will be a buyer. >> what jumped out at you most out of the s-1? >> i think the biggest positive is that this is a company that had zero revenues four years ago. it's going from zero to probably they'll do 600 million this year. 65% of that revenue, as julia just mentioned, is coming from mobile. this has always been a mobile business the first tweet from jack dorsey was sent from a mobile device. they're signing partnerships left and right with the nfl and other networks. tv is huge for them. so i think the story is just starting to play out from an ad perspective. >> why isn't it overhyped, eric? if you mention all the things you do, the revenue per user is below what a lot of people thought. their overall revenues are
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below, their expenses are higher. why isn't this overhyped already? >> well, i mean, it's a big deal obviously. it's a big ipo and we're going to be talking about it until this thing goes public. but, i mean, this is nothing like what we saw in the leadup to facebook. that thing was like the super bowl. the thing finally went public. and there were no negative chattering people about facebook leading into that thing. very few. it was universally positive. there's a lot more skepticism on this deal and i expect that will continue. so i think that twitter is actually going to follow more of a linkedin or yelp model. i think it will slowly and steadily build over time. >> let's see where they price in. i wish carl quintanilla was here today.
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he did a documentary on twitter. when kelly and i went to the audience, they had a panel there and you could not get bigger fans of twitter. at the end of the panel carl turned to them and said do you think we'll be using it at five years and they said i'm not sure, somebody else may have come along. if that is what the fans -- the devoted blogging fans are saying about twitter, how can that possibly be a long-term success on the stock market? >> i wouldn't say that's a universal view among the big twitter bulls. i think twitter is more likely to morph and change and in fact become more of a service where you consume media within it rather than kind of going off and doing that consumption of media elsewhere. you know, you can think about these app handles, whether it's yours or carl's or mine as new channels in this new media landscape we're building. the thing will change.
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it won't be kind of the straight gray 140 character text in five years probably but i believe we will still be heavily using the service and a lot more people will be using it, not just the core devotees in that audience watching that screening. >> what about valuation? it's going to have 675 million shares out fully diluted. it's obviously spending a large proportion of sales and revenues on sales and marketing. how are you going to approach that when this thing goes public? we don't know where that number is going to be on the first trade. >> my guess is it prices somewhere around 10 billion or 11 billion. i think it could be up to 14 billion, 15 billion when this thing finally gets out the door, over $20. i think david menlow mentioned that earlier on your show. i definitely could see that happening but i don't see kind of a tripling or ipo scenario. >> the, a bear stearns
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deal, by the way, take us both back to 1997 or certainly like that? wow. see you later. >> mayoral candidate joe lhota joins us here later and what he thinks of the government shutdown. you won't want to miss it. "squawk on the street" will be right back. man: do other golfers transcend themselves outside of the golf world into the business world? well, i think golf course design, for jack nicklaus, for arnold, for greg norman, for people like yourself, nick, really opened up a lot of the world of business. yeah, i'm very fortunate, i have a genuine interest, a passion for it, which i've managed to turn into a business. the newer golf courses that i really like are those that look old. well, that's the greatest compliment we can get, when somebody says, "wow, has this been here for 50 years?"
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wall street is paying close attention to new york city's mayoral race. with one month to go until election day, the polls show the
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democrat bill de blasio holds a 50 point lead over his opponent joe lhota. how do you keep morale up with numbers like that? >> the people who would overwhelmingly want to keep joe kelly, i do, bill doesn't. they like charter schools. bill wants to close them all down. on all issues, people are on my side. >> stop and frisk also? >> stop and frisk also. >> so you're not getting your message out? >> there's a spillover effect. i've separated myself as much as i can. i also have some really progressed social views money. >> you have to if you're going to run as a republican in new york city. let me ask you about the budget itself. $71 billion the budget of the city of new york.
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pension costs now about $8.3 billion. fringe benefits, not even sure what that is, $8.8 billion. these numbers have come up dramatically over the years. i don't care who the mayor is. it seems if these numbers continue, you're busting the budget, they're unsustainable. >> mike bloomberg received a budget of $34 million, it's 76 million. it's grown at a rate of 56% of inflation. it's being driven by the pnensin costs. we need to think about it. our pension is funded much better than other pension systems. it's required to do that because we balance our budget based on
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general accepted accounting principles. no other minute unicipality or does it. >> so what are you going to do? mr. de blasio was talking about raising taxes on the highest earners in the city. we already have a high tax rate, roughly 13% of our wages. what are you going to do to address this? >> i said this, bill is wrong about raising taxes. it's the highest taxes in the country. quite honestly, the taxes will raise less than 1% of the entire city budget. when i was budget director for rudy giuliani, i used to find 4%, 5% savings, finding efficiencies, doing more with the dollars given and create efficiencies. i gave mayor giuliani, a time to
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influence programs. es that's not being done in the city government now. any money coming in is being used to spend it. we need to put the spending of the budget of new york on a diet. i did it as budget director. i'll do it again. >> you're preaching to the choir here on wall street basically. a lot of people around here are going to sigh that souay that s. but the race is not going to be won here. it's going to be won in brooklyn and queens. you're massively behind with blacks, latinos, women. forever you'll be the guy that raised public transport fares at the mta. that's what they talk about on the phone interviews. how do you reach out to blacks, latinos or whites. the hotels are brimming at 85%
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okay pa occupancy. >> that's just a minute part of what my campaign is. i've been spending my time in african-american -- what are we going to do about reforming the public school system? our public school system is failing and my opponent wants to go in the complete opposite direction of what i think is progressive policy. charter schools work, they're educating kids better than they've been educated been. he wants to end them, i want to double them. and on the issue of public safety, bill de blasio's answer to everything is we need better communication between the community add the nypd.
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no kidding, everybody believes that. what do we do about the fact that we have shootings going up and just over the last month alone, rapes in new york city have gone up 24%. we're seeing this increase and that's what the issue -- >> but as a matter of politics, how can you win over blacks and latinos if you take that stance on the nypd and stop and frisk? don't you have to be a republican that plays politics to win, otherwise you're out of power? >> there's a real skism in the african-american community. when you talk about elders, they're afraid to walk down the street. it's african-american men shooting other african-american men. two weeks ago we had a 1-year-old child in a stroller get caught in crossfire and killed. >> we haven't elected a democrat mayor in 20 years.
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you have to be a liberal republican to run. shouldn't you have tried to run as an independent? >> i've been saying all along i'm an independent. i guess the name republican may be tagging me. i do think in the long run, at this point in time mike bloomberg was behind 30. i keep thinking back to the fight about rocky balboa and apollo creed. it going to go down to the last end. i'm going to make sure they continue that way. we're fighting every single day. it's important for new yorkers to know where i came from. i wasn't always as lucky as i am now. my parents struggled significantly when i was a kid. i was able to pick myself up. i want the same thing for all the children. >> and you're a fan of new york teams. joe lhota, thank you. >> thank you.
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>> coming up, a contrarian call with the cruise industry. and potbelly surging in its ipo this morning. the ceo will join us to tell us why he chose the nasdaq and what he thinks about going public in the middle of a government shutdown. we'll be back after the break. with fidelity's options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens, and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades
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all right. welcome back. the other shoe has dropped in the battle between new york yankees' third baseman alex rodriguez and major league baseball. a-rod is now suing major league baseball and commissioner bud selig saying they violated the collective bargaining agreement in collecting evidence in relation to the biogenesis clinic and he is seeking compensatory and punitive damages for intentional and malicious conduct. he has been suspended for more than 200 games, and he was appealing the suspension, and this is taking perhaps a more ugly turn as the battle between a-rod and major league baseball gets a little bit more contentious. simon? >> well, speaking about
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contentious things, we have clear calls on the cruise industry, and we have a sell, and perhaps the only analyst who has a call on the sell from morgan stanley, patrick skulls joins us, and from simon humphrey, and why are you so negative of corn val aarnival ag it massively lower than expected. >> even though they do a study, we do a detail and comprehensive forward looking pricing survey, and what we see in the pricing survey is negative to the tune of 4% for the next 12 months, and the street is not correctly pricing it in. >> they have to keep cutting the prices and slashing the costs to get people on those ships? >> yes, and also the european ship
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ships as well. >> and the brand -- and what is target on carnival? >> it is $26. the lowest on the street. >> okay. and the upside, you are the clear buy rating on the norwegian and how high on that one? >> well, $46. >> $46 for them? >> yes, correct. >> why that strong opinion? >> well, we have seen on the opposite of what we see in carnival, we are seeing the strong pricing for more wee jan up 5%, and most of it is from the new ships coming online with 20 to 25% pricing premium. when i model it out, i just don't see it that the street has modeled it correctly, and we are subsequently much above the street. >> and interesting. why are the people, and norwegian able to raise, and are they raising the prices, yes, and not only the premium, but raising prices. >> well, it is a small fleet to start with and then you are bringing on a num bber of ships and the ships raise the whole average and it is really the new ships come online. >> and the third big stock before we go is royal craribbea
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and that is a neutral? >> yes, it is. the positives for that is that they have an aggressive cost-cutting program where the costs could be decreasing next year unlike carnival where the costs are going to go up 2% to 4%, 4%, and that is the positive for royal, but the negative is prici pricing. they seeing the negative to slightly 1-2% pricing down. >> good luck out there selling that idea about. patrick scholes, thank you. we want to get over to michelle cabrera caruso with breaking news out of italy. >> yes, and the italian parliament is stripping silvio berlusconi of his seat. you have to mark this moment which is a huge comingdown from the man who has dominated the italian politics for so long, who came literally back from nowhere in the election to almost win this election despite the numerous convictions he has
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faced in the past, but it looks like now he may have to serve a sentence for tax fraud evasion. and this is a man who got parliament to change the laws so he would not have to go to prison. once again, the italian senate is stripping silvio berlusconi of his seat. back to you. >> thank you. he is looking increasingly isolated. and keep the tweets coming, and twitter is filing for the $1 billion ipo and how do you keep twitter from ending up in the same ipo boat as facebook is -- blank. and we will get the first on cnbc interview with alexis ohanian coming up next. the co-founder of reddit. because only national lets you choose any car in the aisle...
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all the bits and bulbs keep themselves stocked. and the doors even handle the checkout so we can work on that thing that's stuck in the thing. [ female announcer ] today, cisco is connecting the internet of everything. so everyone goes home happy. profits yet in the $1 billion ipo, and now our next guest has some insight on how users use teblg nolg and the internet. reddit is a website that explains content and links, and it is difficult to explain reddit, alexis ohanian, for
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those who don't use it. any thought of going public? >> well, it is a ipo that a lot of us in tech are waiting for, but the question stands, is this another facebook? i hope it is not going to be and we have learned some lessons, but it is exciting, because if it goes well, it is going to usher in a lot more dot-comes looking to ipo. >> and is reddit next? >> well, speaking as a board member next, and the ceo has no plans to take it to the public markets. so not any time soon. we are enjoying being privately owned. >> and a lot of the people, and i think back to the journal write, you know, keep the twitter weird as it goes public, and people are pointing to facebook saying, we don't want to become something for everyone, and red ddit is certainly not something for everyone, and can you explain the appeal of the site, and is it the unique sites and tom hanks comes on the other day, and says, i'm tom hanks, and ask me your questions, and how important to keep it in place?
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h. >> well, the consumers are looking for companies that can still feel accessible and human and it is more important on the web, right? because the relationship that we have with the customers is through a browser. i don't care how pretty that laptop is that you are using, it is solace, and a machine, and it is important. it is something that i think about as an executive everyday, because keeping that dose of humanity really, really builds a relationship between you and the users. >> alex, we should mention that you have a new book out, and a big tour, and 150 stop book t r tour. >> yes. >> and what do you think that social media and technology can do for a nation of 314 million people? >> well, you know, i'm specifically interest ed ined i 75 universities they 'm going to be visiting, because the way i think of is that tom friedman was wrong, because the world is not flat. i have checked, and it is not. but the world wide web is. and the idea that twitter can be started by a bunch of friends in a small office in san francisco and the fact that facebook can
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be started in a dorm room and r reddit can be started in an apartment room means that entrepreneur entrepreneurs can start things faster than before, and that is great for the economy. >> we want the next to be our own david favober. >> and whatever inane mshma is, want it. thank you. on the morning we are learning about twitter going public, thank you, david, for being here. >> thank you. and we will do it together. mamma? >> okay. have a great weekend. here is what we will get to if you missed and are are just turning into "squawk on the street." >> welcome to "squawk on the street". here's what has happened so far -- >> you can live with the government shutdown for a while. even that after a week and a half or two weeks or so gets to be a big problem, but the debt
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ceiling can have catastrophic results, so that has to be resolved. and september nonfarm payrolls released and the unemployment rate, we don't know. and the average hourly earnings, not released and you have to forgive me but for going through the better pat of 15 years, i'm going through data withdrawal right now, and the government is not going to give me a rehab program to get over it. >> and a lot of people are focussing on the balance sheet, and how much are they making and are they profitable, and frankly, what is the importance of mobile and the company's ability to monetize mobile as they hope to avoid a repeat of the facebook ipo. >> and the opening bell -- >> the debt ceiling can go to the end of the month, but the closer you get to that, the greater the odds are that we wrap one deal into the big deal. so you will get sort of a budget deal a and debt ceiling deal at once.
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>> pop belly is open for trading, there and that is quite the endorsement of this initial public offering. now, we are waiting on speaker of the house john boehner, and you are looking at live pictures from washington where we are expecting him to make remarks about day four now of the government shutdown and the prospect for any resolution on the shutdown, and perhaps wrapping it in with the looming debt ceiling. as we wait to hear from the speaker, let's bring in john harwood with a little bit more this morning. john, what's the latest state of play in washington? >> well, we are about to find out from john boehner, and he has been meeting with the republican leaders and they hold the key of how to figure out how get to the extension of funding and reopening the government, and the zero debt rating ceiling, and those are thing ths that have to happen. right now the leadership has indicated that they are going to
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continue to vote on partial government funding bills, and those are going nowhere in the senate, and rejected by harry reid. one question is that with the speaker having said so firmly that the united states won't default, and how does he make good on that promise? will he try to move the debt ceiling up? accelerate it? some conservatives have urged him, go ahead and give them a clean debt ceiling increase, and then we will fight our ground on the government shutdown, because government spending is something that is traditionally more of a winning issue for the republicans. but we will see, and the speaker, i expect, he will give us some hints of the current thinking. they have been making this up, kelly, and day by day, and hour by hour and this has not been a well thought out or long planned out strategy, and the speaker opposed the strategy that he ultimately adopted but he was not able to stop it, because of ted cruz and the conservatives within the caucus who overran the leadership positions, and
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he's got to figure out how to get out of it. >> and john, yesterday, the market immediately moved higher as there was word that john boehner in order to not default on the debt may reach out to the democrats to get something passed here. are you expecting any statements that he will make right now to indicate that position he is moving towards? >> he will be asked about it and the aides were certainly asked about it as soon as the story came out, and sourced to a congress person who was not named in the story. but the speaker's aides put out a statement yesterday saying that, well, there is no change in the position, and he has said that we won't default on debt. there is precedent for him working with the democrats, but they weren't announcing any shift in position or move to do that, to accomplish that position, because of the speaker really has taken sort of contradictory positions, and one or, not contradictory, but the conflicting positions, and one is that we won't default on the debt, and the other is not to raise the debt limit unless we get the concessions, and the administration has said they
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won't get any. >> john, which wing of the republican party is the most important to watch? the tea par ty conservatives wh are trapped in their own echo chamber of fox from the judge's report, or those on the left who might defect into a broader deal with the democrats? >> the latter. the latter in conjunction with those who are not called on the republican left, but you would call them mainstream republican s. remember, there are probably 170 or 180 republicans who want to go ahead and end this shutdown and reopen the government with a spending bill and raise the debt limit, but they are not going to move until the leadership is willing to tell those hardliners that we are going to do this without you. that is the moment that we are waiting for. >> john, as well, people are focused on whether the republican position will continue, and in the meantime, to try to push these peace miele funding issues forward and whether there is increasing
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pressure on the democrats to go with the president even though two have been intransigent on the front? >> well, the longer the shutdown goes on, there is more pressure on the resolution of some kind, including on those bills. the democratic stance is harder to sustain the longer it goes on, but it is all relative, and it depends upon who is getting beaten up more in the press, and what members of congress will tell you, and advisers to the president is that we are all sitting and watching who is beaten up more in the process. and the one that is getting pummeled right now is the republicans, and we will see if it stays the case, and the one that is pummelled is the one who is likely to buckle and change the position and get it behind us. >> okay. john, as we await john boehner, let's break off and discuss the markets and clearly come back to the speaker as soon as he walks up to the microphone. we want to bring in scott wren, senior strategist at wells fargo, and also with us is
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the -- oh, the speak ser about to speak, so bear with us, guys, as we all have a listen. >> good morning, everyone. you know, when we have a crisis like we're in the middle of this week, the american people expect their leaders to sit down and try to resolve their difference s. i was at the white house the other night, and listened to the president some 20 times explain to me why he was not going to ne goesch yat. sat there and listened to the majority leader in the united states senate describe to me that he is not going to talk until we surrender, and then this morning, i get the "wall street journal" out, and it says that we don't care how long this lasts, because we are winning. this is not some damn game. the american people don't want their government shutdown, and neither do i.
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all we are asking for is to sit down and have a discussion and to bring fairness to the government and the american people under obama care. it is as simple as that. but it all has to begin with a simple discussion. >> good morning. you know, this week the americans, the american people have seen once again that obama care is not ready for primetime. dysfunctional website is the least of that law's problems. and we have asked as the speaker has said for basic fairs on the the american people, and no special treatment for anyone under the law. and we are continuing to ask for that no special treatments for us, and no special treatment for special interests. now, the president continues to refuse to sit down with us republicans and sadly, that is a hallmark of his presidency. in divided government, the
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americans expect us to work together to solve problems. this week the house passed legislation to open up marks and memorial, and reopen the clinical trials for children with cancer, and to allow the district of columbia to be locally funded, and to fund veteran services and the national guard. today, we are going to vote to open fema and the national weather service as we witness a growing storm in the gulf, and we are also going to vote to provide nutrition services for women and children in poverty. we plan to also later, next week, open up head start, and tomorrow, we are going to vote to ensure that all furloughed federal employees know that they will receive their pay once this shutdown is over. now 57 democrat s has have join this week to make sure that some of the critical functions of government are operating while we in washington are trying to
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work tout differences. i want to thank them for that. i'm hopeful that we can see more bipartisanship, and start talking to end uncertainty, and restore the confidence in the economy and the faith in the government. >> this morning i read how the president cancelled his trip to asia, and it is a perfect opportunity now that he is here to begin the negotiations. as the speaker laid out, the senior white house administration says it doesn't matter how long we are shutdown. i believe it does. i believe that the 57 democrats who joined with us on passing the legislation to open government baung believes it matters as well. now is the time that we get into the room, and settle the differences and move this country forward. >> we continue to hear from the president that the way out off this shutdown is to basically give him everything that he wants. you heard there from the house majority whip kevin
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mccarthy and from the leader of the republicans eric cantor and the speaker of the house john boehn boehner. and john boehner kicked it off with a terse emotional statement to some extent where he briefly said to quote him, "this isn't a damn game" and called on the president to open up negotiations with both members of congress, and back out to john harwood and to what we heard from speaker boehner and eric cantor and the rest. this appeared to indicate no softening of the position. >> that is what we call a nothing burger press conference. they came out and just reiterated the position to put pressure on the president. it is not a very promising strategy, and what you heard the republicans saying is that they are expressing concern about the shutdown, and saying that the president is not bipartisan enough, and not reaching out and not talking with us, and the problem with the strategy if you look at the polls, and the polls
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reflect a common sense analysis of the situation, the president is seen as the american people, and we have seen it over and over in polls as being more reasonable and able to work out and reach out and deal with the republican republicans. >> john, sorry to cut you off, but we want to see more of the q&a session. >> you won't get it in this one either. yes, sir? >> mr. speaker, through the next couple of weeks what we are hearing about the conference that you are focusing on -- and is that true, and b, to what extent would you be willing to look at a temporary debt increase given very little resolve on the issues. >> listen, the issue right now is the continuing resolution to open up the government. we are ask for harry reid to appoint conferees to have a conversation to get to the fairness of the american people, and reopening the government. >> and you are quoted as saying
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that you are not wanting to default, and the democrats are saying that at the 11th hour when the president negotiates, you will want to extend the debt ceiling bill, and can you be telling us where you stand on this. >> well, you have heard me saying this going back over the past two to three years. our goal was not the shut down the government, but our goal was to bring fairness to the american people up der obnder o care, and we should not default on the debt and it is not good for the country, but after 55 years of spend morgue than you take in, something has to be addressed. this year, more revenue than the history of the country, and still have a nearly $700 billion deficit, and the american people expect that if we are going to raise the amount of money that we can borrow, we ought to do something about our spending problem, and the lack of economic growth in the kun tcou
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>> but mr. speaker is this shutdown, and the showdown about the affordable care act or the budget deficit, and why is the government shutdown? >> we sent four bills to the united states senate. four different positions trying to soften our position to get the senate interested and in keeping the government open and bringing fairs on the the american people under obama care. it is as simple as that. >> last question. >> mr. speaker, we have seen a number of reports how there are personality problems between you and the democratic leader and the president -- >> no, no, that is not true. that is just not -- listen, that is not true. now, most of you have dealt with me for some time. i might have sniped at luke once or twice, all right, but i have very good relationships with all of my colleagues across the aisle. listen, it is me. in maintaining these relati relationships is critically important. all i am asking for is let's sit down like the american people
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would expect us, and talk to one another about g getting the government open and dealing with the significant problems that we face. >> and what about the grand bargain? >> harry reid said that you care more about your job than -- that was speaker of the house john boehner respond ing to the the questions there, and just to recap, no surprise perhaps, but this is quickly appearing to be e vol volving f the near term shutdown of obama care to showdown on spending and rev revenues, and what john boehner said after 55 years of spend morgue than we brought in, we need to raise the amount, and if we raise the amount that we are borrowing, we ought to do something about the spending problem and lack of growth in the country as well. john harwood back with us, and some say that address the first option of growth is to reopen government as we are appearing to be in a cat-and-mouse game. >> well, the first way is to restore the debt limit, because we could be plunged into a
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recession. you see the speaker in a vice grip. squeezed on one hand by the members asking for unraealistic demands of him and the president, and the pressure from wall street and the business community, and pressure from public opinion and polls saying, why are you allowing this government shutdown, and you know, i was talking before a as he started speaking that all of the polling is showing that the public appears the president of the united states to be more willing to reach out and compromise with the republicans and the republicans are more intransigent, and the speaker has to cope with all of the pressures, and he doesn't have a way out of it yet. i still belief he will find one, but we have a ways to go. there is nothing in the news conference that gave any suggestion that we have a solution around the corner, but on the other hand, sometimes in politics, it is darkest just before the dawn. >> and it is interesting, john, because he came out and
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delivered this sound bite. and play the sound bite again. this is the sound bite that will run tonight on the evening news across this country. >> this morning, i get the "wall street journal" out, and it say s that we don't care how long this lasts, because we are winning. this is not some damn game. the american people don't want -- john boehner, and that is kind of the point of it. these two sides are locked in a very public campaign, and yesterday, john, of course, it was about the markets with both the treasury secretary and the president telling the markets that they should be more worried about what was happening, and boehner came back in "the new york times" saying that i won't let this country default on the debt obligation sobligations, a very, very public battle that doesn't appear to be going anywhe anywhere. >> right. but here is the problem with the quote of the speaker that he was reading. now it is inan proep yat, and no question -- inappropriate for
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anybody in the white house to be dancing in the end zone or celebrating a government shutdown, but be clear, the republican party is the engine behind the shutdown. that is obvious to everyone. so for the speaker to stand up and say, that the shutdown is terrible, and look at the white house being so happy about it. that is not going to get him very far if the public looks at john boehner and the party and says that you are the reason why we have this shutdown, and that is in fact what we are seeing in the polls. >> i hope it plays like that, john n the degree that you say it does and that people understand it to that degree. it is still, as you know, being a tv journalist a powerful stateme statement. john, we will leave it there for the moment, and talk to you throughout the day, but in the meantime, the sandwich chain t potbelly is looking to expand but can it compare with chipotle and panera? we will talk to the ceo in a moment. and the samsung watch goes
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on sale today, but is it a flop? jim cramer sounding the alarm on the device yesterday. >> remember the days when "the new york times" used to close a play with the bad, and this is a disaster. >> and vincent, camby, and -- >> even austin fritch, well, the curtain close odd on this device. >> curtain closed. >> that watch will be here at post 9, and we will review it, and david pope will be here next.
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does the shutdown affect the vetting of your nominee. >> this is one of the most important appointments i make, to the supreme court, and no it is not slowing it down. it is important to help with the things that make the economy grow. this constant crisis
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welcome back. the era of the smart watch is upon us. samsung's galaxy smart watch goes on sale today across the country, and let's get some insight from the highly regarded tech columnists who tried it out. we have on the cnbc newsline david pogue with us, and also d ed, what is your thought on it? it is expensive, and $300 and you have to have a companion phone, and that is going to cost you $300, and it is hard to use, and the battery in my testing was not great. a lot of problems here. >> and david, you are not a fan either to put it lightly. >> yeah, i did experience the same thing. it is a difficult challenge to put a computer in a watch. i mean, there's no screen, and there's no mouse or keyboard,
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and it is incredible challenge, and that is why everybody is so far requiring the use of a phone to talk to it wirelessly. in this case, it is just a interface disaster, and you to tap with two fingers to do with this and tap once to do that, and nobody could use this thing. >> and david, it is the first of a new category, and nobody seems to doubt that the wearable computers are one of the new t categories that we are all going to get used to moving forward. where does it leave samsung as a company the fact that they were able to get it to market in an environment that the profits they have come out with are really buoyant. >> well, i'm not sure i'm convinced. so far the two wearable computer examples are google glass and it is by no means certain certain that will take off, and these watches. it may turn out that the watch is just too difficult a challenge. maybe it is like the helicopter car that we were supposed to have by now or the jet pack for
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individuals. it might just turn out to be one of the fantasy technologies that nobody can ever perfect. >> or it may turn out to be the walkman to apple's ipod. >> well, it is certainly possible, and apple is also rumored to get into the space, and there is talk of an iwatch. so far, and samsung is not the only company here, and there are sony who has been in the game for a long time, and a bunch of the startups, and pebble, which is a kick-starter darling, but i agree with david, it is a big challenge. >> who will buy this product? >> not many people who will, but a few early adapters and wow, it is cool, and i can take a picture from my wrist. >> you understand what teenaged children buy? >> i think. so. >> you would say they, too, won't buy it? >> right. >> just because it is new and cool. >> well, there is interest in the category, and wearable computers and there is use
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pedometers and fitness bracelets, but the watch at least in the current it ration is not there. >> and ed baig and david pogue, thank you for sharing the thoughts on the smartwatches we are calling it today. have a good weekend. >> sure. >> sure thing. and potbelly is debuting today, and the shares were above $14 and that was the expected range and they doubled fon open. and now joining us is the president and the ceo of the company, and good morning and congratulations. >> thank you very much. it is a pleasure to be here. >> it is a pleasure to have you, and the first thing that we want to know is where is the growth that is fueling the performance today, and what are the future plans for this company, and where can we see the potbellys popping up? >> well, 300 units in north america, and you can expect us to continue to come to the neighborhoods in north america. we are promising our investors that we are going to grow about 10% units each year, and we
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believe that we have a long white space to grow. >> and alden, you are very experienced executive, and holdings of kmart and 13 years at yum and 13 years the ceo of pizza hut, and how do you feel about this process coming to market, and for those who got the stock and bought the ipo price above what we thought it would price, and double at the open, they have made a lot of money at the short amount of time, and good for them, but others say it is therefore mishandled or mispriced and are you surprised about the open? how do you feel about the process and the way the bankers have led you there? >> we had b.a. golden who were great book runners for us, and the goal was to become a publicly traded company, and we have a great story. and we weren't trying to sell a story to a group of investors, but we were telling the story that we have.
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we have a great product, and we have a strong management team, and we have tremendous economics, and we have a lot of white space to grow. stock prices are going to to be the stock price, and it is hard to predict. obvio obviously, you are happy when something like this happens, but the bottom line is that we have to perform under promises that we have made over the last couple of weeks to investors. it is a good -- >> go ahead. >> it is a great outcome so far, but it is the first day. we are long-term thinkers on this thing, and we want to earn the right to continue to do what we are doing. >> and the sandwiches are popular with the guys down here on the floor, and a lot of people i speak to, they have their favorites and breakfast is one area of of the menu that is getting more attention, and you may be rolling out the breakfast in the washington stores, and is that something to expect across all of the stores in the future? >> no, we are a lunch business. 60% of the business from 11:30 to 2:30, and we will continue to
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the grow. breakfast to us is opportunistic, and we have it in 70 units, but it is not a strategy to roll out for all of the units. everything that we do in the company is to make money, and so when we do things wreshg trying to make money in doing it. we are a grow-to-cash type company. take that cash and invest it in great new units, and get a great return on that investment, and then that is the model we are running. >> and i think that obviously as new entrance with a fresh look and the new products, and you are growing rapidly and you made that point earlier, and is that sim pli because it is a low price point, and kind of easy -- and easy to switch where you buy the lunch or something bigger about the problem that darden is having with red lobster or the olive garden, and have you understood something in the consumer that others have not? >> well, no, listen. we give you a terrific experience. we hire personalities, and the young men and women that we have, they bring the
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personalities to work. we have a terrific product, and it is customizable, and easy to order. we are a neighborhood sandwich shop, and we want to grab the customers to treat them right to come back again and again, and we are operators, and we spend a lot of time in the field, and i do personally, and blessed to have a great management team that has been together for about five years. we were bless ed in getting handed a great concept by brian could who is the founder. and we have a good mouse trap, and the key is the daily intensity to bring to running the business. >> alwyn whose company takes the best performer on day one. >> pleasure to be here. and we will be right back with more "squawk on the street."
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heading into the weekend, the europeans are at it first and this is the close around europe today, and negative territory for the week, for a second week in europe, and there are notable standouts. other news in europe is that the swiss regulator is looking into whether there was some currency manipulation there and barclays
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came through. and you will look and see that we are offf of the lows, and of all, a reasonable amount of green across the screen for most of europe. the standout today is really italy which is leaping forward as the italian banks are very much at the helm of that. a lot of the italian financials have jum ped and this is the weekend in not only has the italian coalition survived with the no confidence vote, but now the vote in rome with the senate subcommittee against silvio berlusconi, and remember he has been convicted of fraud, and therefore the senate subcommittee has voted to kick him out of the senate which has to be ratified by the full senate, but berlusconi losing for the moment his political life. and the flipside of that is that italy as a coalition is certainly stronger and therefore of course, you move forward without having to have necessarily the early elections and so for the week, very big jump in eye titalian stocks, an
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4%, and spain is outperforming, and the flipside of that is that the bond markets are rallying so that the yields are coming down, and the other big development this week is that we had the ecb news conference which mario draghi was optimistic that the cheap money that the banks were sitting on could be extended beyond the present deadline of three years. >> plenty to watch this weekend and over the week. shar sharon epperson is the live at the nymex. >> well, it is all about tropical storm karen which is what the traders are watching here, and we are looking at the tropical storm that has gotten waexer since we spoke, and it is not expected to be a hurricane, but it will reach the sep tral gulf area saturday. we will watch the impact on oil and gas platforms and that is what the traders are watching as
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well. part of the reason that we are seeing the bid here in oil and natural gas prices, but the prices are off of the highs and now that it appears that the storm has weakened a little bit. still, we are looking at what is happening as well in the refined products in terms of the gasoline and diesel and those prices have come down, and now a little bit lower again, as it appears that the storm will not hit the refineries in louisiana and the path is going on a slightly different track. still, many oil and gas companies are continuing to watch the situation, and monitor it carefully. exxon mobile, and marathon and bp is among the companies to say they have evacuated the nonessential personnel from the platforms, and dar coe has shut production on four key platforms. and if the storm has passed monday and no real impact, the little fundamental data in oil and natural gas to keep the prices supportive many believe so we may see the prices fall at
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the beginning of the week. back to you. >> thank you, sharon. let's bring in bob pisani for where we are on the stock market, and currently up 22 points now. >> well, good news and bad news. speaker boehner clearly indicated that the debate is shifting to shutting down obama care which is not happening to the spending issues, and he didn't give any indication of a deal, so that is how we came down off of the highs, and some say, why haven't we gone down more. it is not dramatic, but the market believes some deal is going to happen at some point in the future. what you want to watch is what is going on overall in the 10-year, and that is the one that everybody is watching and it has been 2.6% virtually the entire week and stable here. if that thing goes crazy, then people will worry, but the 10-year is telling people that some deal is going to happen down the road. and markets are not sensing an imminent danger from the shutdown yet.
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and the market is on the upside with the materials and the financials and the consumer discretionary, and these are the cyclical names on the upside and health care having a good week is on the up. and one other thing, the sector group of having a tough week, and most of the banks are down with the interest rates being stable, but they are not. generally down throughout the day and the week here. and hmos, this is a big winner for the week. they are doing well, and aetna and health care and the other hmos are continuing to hold up well. you can remember that these are largely competition for obama's health care inti -- initiatives but they are holding up. the market even though disappointed is not showing a clear path out for representative boehner and i i
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still don't believe there is an imminent danger of the default. just watch the 10-year. >> thank you. bob. >> day four of the government shutdown, and which companies are going to be hit hardest? we will talk to hartford's ceo next on the program. (vo) you are a business pro. maestro of project management. baron of the build-out. you need a permit... to be this awesome. and from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. (aaron) purrrfect. (vo) meee-ow, business pro. meee-ow. go national. go like a pro. but it doesn't usually work that way with health care. with unitedhealthcare,
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[ male announcer ] more destinations than any other airline. [ thai ] which airline do you fly? [ passenger ] united. [ male announcer ] that's great, big world friendly. ♪ this morning i get the "wall street journal" out and it says that we don't care how long this lasts, because we are winning. this is not some damn game. the american people don't want
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their government shutdown and neither do i. >> and with that, speaker john boehner made an impassioned plea within the last hour to renegotiate or restart the negotiations with the white house saying that president obama should be talking to house republicans in order to get a deal. it is obviously on day four of the shutdown lawmakers are clearly not being as polite -- well, polite at all in many senses, and deal seems as far off as ever. how are the businesses around the country being affected? let's bring in leah mcgee, chairman and president and ceo of hartford financial, one of the nation's largest insurers, and welcome to the program, sir. from your advantage point, how is the economy doing at the momen moment? >> thanks, simon, for having me back, and this is the third annual survey of small businesses and entrepreneurs and the most extensive and the largest of the type, and so what they are saying is that optimism
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about the future of the u.s. economy is rising, although i must admit that the last few days may have impacted it slightly, their conservativism and caution about ip venvesting moving forward is on the rise. they are not going to take as much risk as we probably need for the economy to grow. more than 2/3 said they have not hired and won't hire going forward and so this uncertainty cannot be helpful to what is a risk diverse group of entrepreneurs. >> did you ask them if they are risk diverse? >> yes. while the highest things that ri concerned about, fewer of them are really focused on them stay there. ed a dapted to the new normal, if you will, and they know that growth is going to be less than
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we'd hoped. many of the taxes are already higher. it is all about uncertainty. when we talk in focus groups to them, they say that still the impact of the financial meltdown has pronounced scars and the current environment of almost daily uncertainty in the crisis is to say that they don't want to get out ahead and potentially make a mistake. >> we showed the results of comparing this year's responses to last year's, and liam, what jumps out is that people are less anxious about the concerns across the board. and you mentioned, this what has happened in the last couple of days ash and the small business administration is not guaranteeing loans right now is my understanding, and this could put some of them in a precarious position. >> it could, kelly, although it is a matter of a few days. what is striking about the survey results in this, our third year, most of the
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entrepreneurs believe that they are quite successful, and so they are optimists by nature, and if the shutdown to the nature is prolonged and credit which is already difficult for them to get, and increasingly difficult to get, because of the sba shutdown, the credit issue could be more pronounced for them. >> mr. mcgee, it is good to see you, sir. liam mcgee, chairman and president and ceo of the hartford company. >> and now down to steve liesman who is going to take a closer look at the we do hit the debt ceiling on or about october 17th, and huge issue for the markets right now. >> yes, this is what happens the treasury secretary for the wealthiest nation on earth is going to have to balance his checkbook like any struggling american family. at that point when the debt ceiling equals spending, and it has to equal cash on hand, and revenues. so it is estimate ed thd that t
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spending will be cut by one out of every $3 appropriated or 32% or $108 billion. how do you figure out how the cut? two choices. prioritize and pay some bills and not others, but the treasury says that the computer payment system is not prepared to prioritize it and no legal basis for making one decision over another, and every appropriated amount is the same. and another is day by day. wait for money in a bank to pay the full day's bills, and if you get payment delays running up to two weeks initially and vary widely and lengthen through the year. show you that if you prioritize and you can pay the debt on the medicare, and medicaid, and social security and all of that stuff at $22 billion, and the paid to the defense and the food stamps, and the following, the department of justice, and doe, and no air traffic controllers and no tax refunds or veterans
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benefits or federal salaries. what if you delay it? this is another way the look at it, social security in the first month, and two days delay on the checks, and p five days on the medicare and medicaid, and food stamps/defense, and social security and veterans and military pay could be inactive by 15 days. when i talk toond ed to an expe the bipartisan center, he said that you have to prioritize laws, and you will be breaking some laws someplace to make the decisions he needs to make if indeed the government can't br row. >> okay. steve, i want to change the subject and talk about the fed -- >> well, there is always time, simon. >> and it is interesting to see the fed speakers, because lockhart came out, and they have a decision at the last meeting not the taper, and look, it is a government shutdown. assume they have resolved something around october 17th
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and we get the data back. today should have been the employment report, and we don't have that and so they don't either, and at what point do they have enough data and con vick shun to start to taper? >> well, october is increasingly out as a possible. they gave us three tests. the government shutdown, and they told us about the weakness of the economy, and the c confidence of going forward and the third one was interest rates. interest rates are down, and if you make the assumption that the government gets the act together, and remove the threat of a shutdown and the debt ceiling reach, that is 2 of 3, and then you have the wait for the data to come in, and for the fed to become more confident, but it seems that december is the third possible taper, but i will have to say i was wrong the last time away and it is like early 2014 for earliest taper. >> all right. steve liesman back at the headquarters and thank you. we want to go over the mary thompson for a quick market flash. >> well, kelly, this is a case
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of mistaken identity, and check out the shares of the tweeter home to day. this is a microsoft stock that is on the trade of 100,000 shares a day, and today trading over 100 million and according to the tape, and most of it believe it is twitter stock, but it is on the pink sheets, and remember that twitter has yet to go public, and a lot of people are buying the shares, because they believe it is twitter, but it is not. this is a case of the mistaken identity, because it is a retailer of home audio systems. >> well, there are people with the shares with eyes falling out of the sockets. thank you, mary. gridlock in washington has shutdown public parks and bureaus, but did it affect our daily lives? jane wells will bring us the "week that was" and give us the "week that wells" when we come
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back. it found out the doctor we needed was at st. anne's. wiggle your toes. [ driver ] and it got his okay on treatment from miles away. it even pulled strings with the stoplights. my ambulance talks with smoke alarms and pilots and stadiums. but, of course, it's a good listener too. [ female announcer ] today cisco is connecting the internet of everything. so everything works like never before. [ female announcer ] today cisco is connecting the internet of everything. (announcer) scottrade knows our and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) ranked highest in investor satisfaction with self-directed services by j.d. power and associates.
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does the shutdown affect your vetting of the fed nominee? >> this is one of the most important appointments i make besides the supreme court, and so no it is not slowing down the vetting. it is important to invest in the things that will help the economy grow. this constant governing from crisis to crisis and we have to stop doing that.
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♪ it's been one week since you looked at me ♪ ♪ cocked your head to the side and said you are angry ♪ >> and we have been talking all week about who is impacted by the government shutdown, but a lot of the americans and in fact, most are not impacted yet. do they even miss the government? jane wells asked that very question in the week that wells as it makes the debut. over to you, jane. >> well, kelly, i hate to disrupt the narrative and maybe
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because i am out here on the other side of the country, and for a lot of people, this friday is like last friday and perhaps the 401(k)s are lighter than a few days ago and some people are in limbo, but more people are not yet, and since the americans like to crack wise about almost everything especially government, i asked on twitter, what do you miss about government? frank cortez says he misses being spied on. this one, people acting with restraint when it comes the leaving tags on mattresses. >> and then there one sen forefor disease control and prevention, won't be missing their instagrams. >> and jeff jacobs wonders if area 51 is shutdown, who takes care of the aliens there. but wait, there is more. maddog tweets he is going to
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miss quote bovine methane studies. and this one, she has noticed that the tsa pat-downs are not as heart felt as they have been. who could have prevented this? >> and this never would have happened if it were a mac, and so this was hit on the head, and what does he miss since the american shutdown? "breaking bad." me, too. and some people are take advantage of the situation, and loss and clark, aka copy writer said, i shot an eight, a bald eagle. i think that he is kidding. >> is that a weekly thing, jane? >> well, i hope that the "week that wells" and i hope it was not the last. >> okay. a lot of memories. than you, jane wells, there with
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life from the west coast. and fighting for the $1 billion ipo in the last 24 hours, so how can we keep twitter from ending up in the same ipo from facebook is what? your responses are coming up after the break. ♪ [ male announcer ] more room in economy plus. more comfort, more of what you need. ♪ that's... built around you friendly. ♪
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welcome back. we will close out with the question, the best way to keep twitter from ending up in the same ipo boat as facebook. and this one, they should offer it to limit the trades to 140 or less, and should offer ipo shares first to twitter account holders based on the number of tweets that the posters get, and also, is by not holding a surprise wedding the same day as carl icahn takes over. >> yes, and as speaker boehner came out saying he does not want the shutdown either, but they want to negotiate on obama care which is a lightning rod for the white house, and we are deadlocked on the idea of
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reopening the government, and more importantly sourcing out the debt ceiling. >> yes, people are wondering if there is too much complacency here on wall street, and that buy nor boehner is not willing to negotiate or offer something to the dems, and he came out swinging again and the market shrugged that we have moved higher since hearing from the speaker this morning. >> and startling ipo today for potbelly. >> and if you are haeaded to th potbelly sandwich company, you won't believe what happened on the day bu of the trade today, because they are poised to be the best performing ipo of the year. they are up 130%, and priced at $28 and now opening at $48 and trading at little higher of $32 and that is in keeping of other food companies. >> it is remarkable that the ceo is completely unphased that
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those who were able to get the stock at the ipo price have doubled the money in half of a trading session. >> they like the headlines and the positive grow glow. >> and he said that the fundamental business is growing and growing strongly on the top and the bottom line. that does it for this edition of "squawk on the street", a," and all of of the team, than you for watching throughout the week, as we hit noontime on the east coast, we will get to the fast money halftime report. right to it. thank you, simon. welcome to the halftime show, and here is what we are following from post nine. bubble trouble, and have surging social stocks gone too far too fast? and will twitter's ipo ads add to the fear? and traders are fighting over where the stock will go next, and that means another debate coming up, but the top story is is the shutdown showdown is now in the fourth day. if you believe what you hear out of washington, d.c., the two sides are no closer to an


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