Skip to main content

tv   Squawk Box  CNBC  November 13, 2014 6:00am-9:01am EST

6:00 am
2014, and "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. a big scare for youtube front man bono. he was flying from dublin to berlin yesterday when the back door of his private jet fell off and plummeted at least 15,000 feet to the ground. the plane landed safely. the pilots say the only thing they lost beside tess door were two suitcases from the luggage apartment. but holy cow, try recovering from from something like that in the midair. there was no loss of pressure in the cabin. so far, the door has not been found. on today's market agenda, we have a key read on the state of employment in the economy. weekly jobless claims are due at 8:30 eastern time. this is the first significant economic report we'll be getting all week long. the consumer dominating earnings central today.
6:01 am
before the bell, we'll be hearing from retailers walmart and kohl's. and the bulls are hoping today's earnings and economic news can give stocks another boost. the dow snapped its three-day winning streak. out to the futures this morning, you'll see at this point there are some strong moves in a positive direct. dow futures are up about 60 points above fair value. the s&p 500 up by eight points, the nasdaq up by almost 20 points. while we were sleeping, asia closed mixed. take a look at what happened with the nikkei. it was up another 1%. a lot of speculation out there that the prime minister shinzo abe may have decided to call an early election. also thoughts that they would be putting off the planned hike in sales tax. if they put that off, that would be another positive for the economy. industrial production rose therein than expected last
6:02 am
month. shanghai was down 0.3%. retail sales falling slightly below estimates. if you take an early look at what's been happening in europe, some strong upward movement there, as well, with the dax up by about 1%. the cac up by about 31 points. the ftse up by 25 points. andrew, i will send it over to you. can you imagine? i know you're a nervous player like i am. being on a plane, the rear door falling off like that. >> it's like a movie. >> they didn't lose pressure. >> the real question, i'm looking at a here jet, 60b-cgeo. and not a lot of people still fly here jets. >> that's what it was, a leer jet? >> a leer jet. bono is loaded. he needs someone to clue him in. he could even get a citation 10
6:03 am
or something like that. >> something tells me he might be in the market today. >> well, sure. do you remember what -- payne stewart, unfortunately. >> that was a leer jet sn? >> that was a leer jet. they have global express or even a hawker or a cessna. not a leer jet. you have to upgrade, andrew. can he call you? >> you will put him in touch with my dealer. >> all right. let's talk about today's top corporate story of the morning. i assume you have children so we've talked about this. hasbro in talk toes buy dreamworks animation. the toy company buying the hollywood studio. the toymaker would pay a mix of cash and stocks. an exact price has been been set. jeffrey catsenberg is looking for more than $30 a share. i would tell you from the people
6:04 am
i've talked to inside the room, there's a suggestion that he would like to have as much as $35 a share, a $35 number i should tell you was reported by the deadline hollywood site. that was be a huge nugget, a 56% premium. i do not know if they get there. just a month abdomen, dreamworks fell out of talks with softbank. dreamworks animation is hollywood's smallest studios. but among its blockbuster hits have included shrek and kung fu panda. the other side is it has been a mixed picture for dreamworks animation to pull it up mildly. i was talking to one analyst who said this is a company that doesn't make -- >> it's hard to be film
6:05 am
animation studio only. to have the sex of hits and not hits. it's expensive to make more than a couple of them a year. you would have expected them to go to a media company or something. >> well, brian goldner has been enamored with hollywood. they've tried to build franchises, transformers is one. they also tried to build a tv network called the hub. >> oh, yeah. >> it would have been watched in past tense the hub because it was a -- >> it was a joint adventure with discovery. they -- it was a failure and have now rebranded it as discovery family. >> okay. >> so hasbro has had its own mixed picture. disney, for example, does not make its own toys. it licenses its toys to hasbro.
6:06 am
hasbro just got the frozen mandate. they also do star wars and marvel. >> but i understand the concept that you can't be a stand alone studio. teaming up with a toy company is a novel approach. >> and i talked to analysts last night. if you're a toy analyst, you're anxious because you know that -- you know mattel and lego have tried to do things that you've never really modelled out a company that looks like that. >> dream works is such a strong practice. it's not like they do stinker movies. maybe not everything goes straight to the moon, but it would seem like the toys with that constant -- >> but the question that you're asking, if you're an investor in a toy company, it's a different
6:07 am
business. >> do you remember "the hunting"? i have actually starred in some hub properties and blake was actually -- my daughter was in the the haunting hour. i played a bus driver. you go to wardrobe and they did put you in graves and i was loading the very beginning -- and penelope .my son went in the beginning, too. >> they pulled up in the car, right? >> we had to go shoot in vancouver where a lot of people shoot. >> do you think this is crazy or brilliant? >> i am more excited about -- changing the subject, i am more excited about the bronies. >> my little ponies? >> they're going to make some movies based on "my little pony" which i think would be huge because of the billings. >> but that would have happened irrespective of this transaction.
6:08 am
the question is do you want the toy company owning the studio? >> i just want the pony movies. >> of course. >> and it's not just that they like the ponies. they like that tv series or whatever it was that ran. so the movies might be huge. >> it is an intriguing idea. i have not thought of the idea that you would be in a position where you owned a toy company and all of a sudden -- >> by the way, depending on how this deal is structured, you would own a -- if you owned a tv and film studio, all of a sudden you would own a toy company which is its own issue. >> it's its own challenge. >> and then the other issue is the chairman of the company, he would not be the ceo. you want want to make sure that jeffrey katzenberg stayed around for a very long time. >> ride. >> how are you going to incentivize him to do that? at least the deal from what i understand in terms of the stom
6:09 am
stock cash mixed would be in stock. so if you think that's a good thing. i think this is a deal that over the next several weeks will sheikh out and shareholders will vote as to whether this happens or not. katzenberg and jeffrey will be getting lots of calls saying this is crazy. >> dreamworks shareholders love it right now pause of the premium. >> it's 5 bucks, right. it's thrilling. if you're a hasbro shareholder, we will see if everybody wins. >> there's an argument to be made that hasbro shareholders have gotten on board because it's moved in that direction. >> and they loved the deal with disney over frozen. >> and if you could actually build out these different toys. that is the question, whether it's -- or not. >> among early morning movers
6:10 am
today, cisco posted better than expected quarterly results. but the network equipmentmaker did forecast current quarter earnings below consensus. among the reasons, weak sales in emerging markets and capital budget cuts. we're going to talk to an analyst about cisco in a couple of minutes. and then don't miss ceo john chambers on "squawk on the street" later this morning. in other tech news, beta storage equipmentmaker netapp warning its current quarter profit will fall below expectations. the so-called oem. and jcpenney posting an expected lower quarterly loss trimming its full year sales cost, also. the dow snaps a six-day winning streak. the s&p 500 also stalls, but is this a welcome pause? joining us now is jim dunnigan.
6:11 am
and then covering the number numbers, we have maury harris what are you expecting? >> well, the unmroim claims may do up slightly. but they're still depending to stay under $ 00,000. what to keep your eye on is these so-called jolt numbers, the job turnover data. what they're showing is an unusually high number of openings. your job openings, as high as they've been recently, it tells you the demand for labor is strong to the supply. they can't find all the people they need to sell these job openings. so i think looking at this data, putting them together, you're probably going to have a picture that is still pretty well -- the
6:12 am
labor market as has been portrayed in the recent up employment numbers and payroll numbers. >> what you're talking about, if there is more demand than bod s bodies, that leads to wage growth. we've been waiting for that for quite a while. you think that's on the horizon? >> wages have been up 2% this year. i think they'll be up 275% next year. 3% the following year. we've already seen in small businesses more pervasive reports of wage increases and classically that has been a leading indicator of what can happen with the big picture statistics. >> jim, let's talk about the markets. yesterday closing just below these high levels that they've been sitting at. what is this, just a pause to kind of see where we stand later today, what's happening in the economy, what's happening with the consumer? >> i think so, becky. good morning. we've had quite a rebound, as
6:13 am
you know, from the lows we saw in october. the fears in the market, some near panic in there. so it's not unexpected at these levels as we continue to make new highs here that the market takes a -- you talk about earnings certainly supporting where we see current valuations. i think probably the upside -- the buy to the upside, this market sees some difficulties in gaining some down side momentum. as we head into the end of the year, we'll probably drift higher. we don't see it as going appreciably higher in the near term. but in general, against that backdrop, it's pretty positive for the equity markets. >> it's been an unbelievable three or four years watching what's happened. every year, you look at that year long turn of the dow, the s&p. and it's a straight shot up. you think that will continue next year? and when do you think that actually starts to hit a little more resistance? >> certainly as we look at the earnings going forward, we continue to see a positive earnings environment, probably
6:14 am
we will start to see some expectations get ahead of the curve. so we'll see some disappointments, the higher levels from here. we'll talk about the market, aging as a whole, whether we'll see a correction of 10% or more. that's probably likely. inner year corrections or inner year declines are probably average in that 14% areas. we haven't seen that in a while. it will be some disappointments from higher levels here. but i think the general bias and the economic backdrop will support higher equities. so i don't think the bull market is dead, but we'll probably get some periods of consolidations and pause as we move forward. >> let me ask you, if you were waiting to the last 10% decline for a time to buy in, you were not even buying at the lowest levels of the year. so you kind of missed your opportunity. are we going to see a similar move like that? like go ahead and just pile in now because by the time you get the 10% correction, we'll be more than 10% above where we are
6:15 am
here or not? >> it depends on where you are. we pile all in here, but i have a plan to work my way into the markets. if you're fully invested, i would say invested. ill all depends on where you are as an investor. i think these are fully valued here here . okay. maury, let me ask you about some comments that were out. the head of the new york fed, he made some comments that suggested that we would be okay leaving rates lower for longer, that it's not a bad idea to have an economy run hot for a little while. do you think that is the dominant view of the fed at this point? >> i think it's the dominant view for probably another quarter or so. but i believe as unemployment comes down further, they're
6:16 am
going to talk about raising rates in the summer. so i think talking about the here and now, it's the next say two committee meetings. not going very far out into next year. >> thank you both for joining us this morning. coming up, just a little bit later, the insideide line on twf the morning's most important stocks. they are cisco and jcpenney. plus, some scary moments from some window washers rescued from one world trade center. "squawk box" returns with that and more in just a moment. ♪
6:17 am
for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more.
6:18 am
6:19 am
one world trade center in new york, you might have seen this yesterday. firefighters rescuing window cleaners stuck 69 floors above the ground. the workers were taken through a hole cut in one of the glass windows. that's how they had to actually get to them. this was on the 69th floor to one world trade center. we have a conference coming up on the 63rd floor. and then i looked at that. how much do you think these guys should get paid to do this job? >> way more than they're getting paid. >> what do you think? >> after watching this. >> it's normally pretty safe. window washers, if you're on the fourth or fifth floor, all buildings need to have their windows washed. >> you are a man who is afraid of heights. >> i am afraid of heights. we put a delay on and she
6:20 am
explained why we put a delay, in case something bad happened. but later in the day, i was watching -- i think it was channel 7. is that abc? the local news. and they were -- channel 7 broke this story and i'm like, you broke the story? what, someone looked up and called you and said there's a -- you know, you don't break -- wow. that's great, channel 7. you broke the story because someone looked up and told you that there was a problem with the scaffolding. but they'll say anything to try to take advantage of it. broke the story? when you break a story, don't you -- you have to do something rather than someone calls you and you go, wow, look up there. >> if you were the first person out with that story and nobody else is paying attention, it's possible. >> anyway, that's just luck. >> but i just want to tell you, some of these guys only get paid $20 an hour. >> that know is this an inequality thing? >> no. i thought to myself, if i'm going to be up on one of those
6:21 am
things at $20, $30 an hour -- >> there are bold, brave people. >> it's a tough job. >> do you think you would like to be -- >> i think it's part of the window. >> but how about the one world trade center. guys walking along, and you see pictures from the antique pictures building. they're just, like, eating a sandwich and they're -- hey, barry, what's going on? how's the wife? >> stronger constitutions than any of us, i will say. >> they do. if it's safe, it beats digging ditches, andrew. a little zeegy. >> we heard about it, but do you know how many windows are cleaned every year in the city? one of to have a disposition for not being afried of heights. i'm not ready to pay them $200,000 a year, either. now to the weather and the brutal cold hitting much of country. alex wallace joins us from the
6:22 am
weather channel. it was colder this morning, alex, but nothing really here. the real significant stuff is, what, tomorrow and saturday? cold? >> i don't know if it will be significant for you guys. you guys are pretty much used to this cold stuff. colder, but it's not going to be bone chilling, no doubt about it, as this cold high pressure digs in now from the middle of the country. that is where a big chunk of the coldest air has been. but it's sort of bleeding and oozing its way east. it is going to be chillier with those northerly winds that will make you feel as cool, as well. highs, 10 to 15 degrees below average. again, tolerable, but colder. now with that cold air coming over the lake waters, that sets the stage for some lake-effect snow. we'll see some of that piling up here. also here in the western lakes we'll see some snow. a couple of ditches. expect the higher totals in northern portions of lower michigan. i also want to talk about the system moving into the west coast. this is driving in. of course, with the cold air that's in place, guess what that's going to mean? snow issues. we could be talking significant
6:23 am
snow through the oregon cascades. one to maybe two feet out there. guys, back to you. >> all right. alex, it's winter. not really, it isn't, is it? >> not yet. >> when does winter come? >> december 21st. >> i'm predicting -- >> cold? >> no, december 21st. i'm predicting winter will come on december 20th. anyway, cisco, revenues rise 4% to 7% compared to an expected 8% rise. shares of can i say cisco currently are weak on the disappointing guidance. joining us now with his reaction is mike giminese. a senior analyst at mkm partners. and in recent years, we've seen, you know, some good, some bad. it's almost like been a tale of two cities off and on, mike. what went better in the most recent quarter for cisco? >> well, this quarter went
6:24 am
better. but when you pull back the covers, it wasn't a better quarter. lowering price targets from $28 to $24. 4% to 7% growth is fairley aggressive. i take issue with that. it looks aggressive and the reason is because orders only grew 1% year over year on the quarter. they've been stuck there for the last three quarters. u.s. markets are very weak. they turned 1% negative year over year for the quarter. so you put all this together with orders up only 1%. stls more going on here than meets the eye. i think secular trends and networking are working against them here. really, the quarter wasn't as good as it looks. >> break down what businesses
6:25 am
they're involved with at this point. some of these providers have said, look, we're going the wait on building out some of these stuff to see what the fcc does or how this plays out with tom wheeler. at&t said we're not going to jump head long in there, extending more fiber, depending on what happens with net neutrality. can they sell into that? >> yes. their business got much worse this quarter. overall, cisco has 25% exposure to the service provider market. a lot of that was in the u.s. there is a pause going on here and the question is is that typical, is it something more secular? my argument is yes, there's both a cyclical element and a secular element. but this net neutrality issue is an issue that is causing others to pull back on spending, even more than they would otherwise. even marveging the issue and pricing to routers which are really going on. right now, they're able to blame
6:26 am
that neutrality. i believe net neutrality would be very, very bad for telecom. we had at&t yesterday that said let's pause for some clarity here. uncycle lar, secular and all heading towards 25% of business. really, i don't know when it's going to km become. i have no expectations anytime soon. >> we get some -- you know, we were punching back. so we'll see. i don't know what happens, either. i don't know. there's so much politicking going on, as well. how much do they sell into the cloud? 25% goes to things that will be affected by net neutrality. >> right. and most of the other businesses, enterprises or into the red, everything we would materialize with cloud. since its out with new products that are supposed to be on this new software define networking path, they seem to be doing well, particularly in the u.s. and the small and medium term.
6:27 am
but this new company is taking a lot of their share at the high end of the market with financial services and the big providers. so, really, i think things are pretty tough here for cisco. and once the comps stop getting easier, this 1% is going to come back and haunt them. so they're not going to be a 5% revenue growth company. this is really a 1% revenue growth company here. >> what are the other things that are -- so i can use that, they were part of the cloud? everything else is part of the cloud, the other 75%? >> yeah, for the most part, it's enterprise or cloud and every other price has some kind of hybrid cloud strategy. >> no kidding. i think i -- is it implicit we knew that, but anyway, mike, thank you. >> thanks, joe. >> programming note, tune in to "squawk on the street" for a first on cnbc interview. he's really happy. i don't know which quarter that was with cisco's chairman and ceo, john. that's at 9:35.
6:28 am
whenever we interview him, he says call me john. so i just -- john will be on with "squawk on the street." >> it's too early for him to come on our show? maybe. >> it is a west coast company. it is pretty early. >> tech guys stay up all night. we can think about it just sort of on my way home. let's talk about jcpenney because they report a smaller quarterly loss than analysts had expected. it was a 12% drop in expenses boosting margins. same-store sales were flat compared to forecasts of a gain. joining us now to talk about the struggling retailer, alex ferman, senior research analyst. can we still call it struggling? struggling is not unfair, right? >> i think that's an understatement. >> how bad is it, then? >> it's pretty bad. i mean, the company is doing everything they can do in terms
6:29 am
of reducing clearance inventory and expenses. the overall loss is a little bit smaller than we were expecting in the third quarter, but the reality is that at this stage in the turn around, comp needs to be up at the high single digits for the next few years if this company is going to return to profitability. it is much too early in this recovery to see it petering out with flat comps, negative comp store sales in the third quarter and the guidance were just 2% comps in the fourth quarter which is below what we need to see as comparisons get more difficult. so i think we're going to need to see significantly higher sales growth if this company has any chance of turning around. >> did you see that as a possibility? i mean, when you -- >> strategically, do you see to yourself, there's a chance this actually worked? >> the reason i think it's unlikely that that will happen is that as e-commerce is evolving now, you're seeing the best brand going right to the consumer. they're either vertically integrating or seeing the consumer online or flagship stores or increasing the partner more with a retailer like kwfk
6:30 am
or hsn or shophq. to help build their business through other channels. they're selling to pennies more often than not cannibalizing their other channels. you have jcpenney sitting on leases and they don't have anything good to put in those stores. i don't think that's going to change over the next few years. >> alex, even if they're not doing what their investors might be hoping, is it possible that they're doing well enough that they're taking away from somebody like a macy's? macy's reported yesterday or lowered its guidance for the year. >> well, i think given that penny's is flat in the third quarter and just up in the low single digits, i don't think any other retailers are at substantial risk of losing shares. given the easy xafrsones for jcpenn jcpenney, if they ever can get their act together on the emerging side and comp up 5% to 8%, that could be a risk, but for now, i don't see that as a risk for other retailers. >> alex, i know i like deals, but is this a company that remains independent? >> i think it does just because i don't see anyone else would
6:31 am
want to buy out the equity of this site. and when you look at the total valuation of the enterprise value, if you even think they could hit the pie in the sky numbers, about doing $1.2 billion in ebitda, even on that basis, this is a fully valued company relative to its profitable, successful department store. i don't think it gets bought out at this price. for right here, i don't see who would want to buy the equity here. >> okay. >> do you know alex? do you know him? >> we don't know each other personal le very well. >> oh, you do. you know each other now. you know appeared rue likes deals? >> he watches the show. >> okay. i didn't know that. >> i hope he watches the show. i mean, you know, i'd like to think -- >> everybody knows you like -- >> i assume they watch the show. maybe it's a bad assumption. >> i think it's a good assumption. >> three hours straight, so they better. >> they miss some good stuff.
6:32 am
>> yeah, you will. when we come back this morning, some surprising new details on how much one actress was paid to play the lead character in the bloft buster "frozen." we talk about the dollar but what about old fashioned supply and demand? the world gold council unveils its quarterly report next. right now, as we head to a break, take a look at yesterday's s&p 500 winners and losers. (receptionist) gunderman group. gunderman group is growing. getting in a groove.
6:33 am
growth is gratifying. goal is to grow. gotta get greater growth. i just talked to ups. they got expert advise, special discounts, new technologies. like smart pick ups. they'll only show up when you print a label and it's automatic. we save time and money. time? money? time and money. awesome. awesome! awesome! awesome! awesome! (all) awesome! i love logistics. this guy could take down your entire company.h? stay with me. on thursday a hamster video goes online. on friday it goes viral - a network choking phenomenon. why do you care? he's on the same cloud as your business. the more hits he gets, the slower your business may get. do you want to share your cloud with a hamster? today there's a new way to work. and it's made with ibm.
6:34 am
sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities.
6:35 am
cme group: how the world advances. ameriprise asked people a simple question: in retirement, will you have enough money to live life on your terms? i sure hope so. with healthcare costs, who knows. umm... everyone has retirement questions. so ameriprise created the exclusive confident retirement approach. now you and your ameripise advisor.... can get the real answers you need. start building your confident retirement today.
6:36 am
good morning. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. hollywood news will have you doing a double take today. disney's blockbuster "frozen" grossing a record 1.2 billion. production costs were $150 million. now the daily mail is reporting the 15-year-old actress who voiced teenage elsa in the film was paid only $926. >> what? >> less than $1,000. her contract was filed in court. it entitled her to a one-day guaranteed payment. what did -- who called her something totally different? >> something totally different?
6:37 am
>> volta. >> right. >> i wish the -- i truly could remember everything, i would have used that name. anyway, the one who portrayed adult elsa probably made more than $926. >> but, again, it isn't just the teenage years which were part of the movie, but -- >> yeah. but do you get -- we did the scale when we do something, don't we? >> right. it was considered for a day rate actor, the day rate actor, there's no back end. you literally come in for the day, you get paid for the day and you leave. >> it's a pretty good thing to have on her resume, i think. >> she was happy. she got the role, she was thrilled. >> they'll probably get more work from it, too. i would assume. i would assume it would bolster her resume. >> she got paid more than the window guys, andrew, right? >> i don't know, they were hanging up there for quite a while. >> what i don't understand,
6:38 am
hypothermia is now -- >> how long are they expected to be up there? >> that's what i understood, too. it was only partial hypothermia. maybe part of it is you go into some shock, maybe the blood snow knot quite ago good. i was trying to figure that out myself, why you would have partial hypothermia. >> it's like you don't move for that long. it's one thing if you're moving around. it's another thing if -- >> did you see the temperature outside the branson plane when the guy ejected, did you see what he ejected into? minus 70. so he ejected into minus 70. we've never felt minus 70. i don't know if you even do feel that. i think it's just like things stop. >> yeah. >> okay. let's talk a little bit about world demand for gold in the third quarter. it was down 2% year over year. that's according to a new report from the world gold council. gold prices are down more than 11% over the last three months. joining us now with more is
6:39 am
marcus grub, director of investment strategy. marcus, it's been a rough ride for gold investors. >> yes, it has. these figures i think show the markets getting its feet back into the balance after what happened last year. but i think what's interesting is gold was up 15% in early august and gold mining shares were up 26% in early august. and what had happened since then. i mean, we know qe has ended, but that was well telegraphed ahead of time. we know the fed is going to raise rates. sentiment is changing on when and by how much. and yet now gold is down on the year and gold mining is significantly down on the year. so we've seen a lot change in only sort of eight weeks. >> when you look at the small periods of time, you can look at some big ups and downs. if you take a step back and look to where goal was before 2008 and the financial crisis, what happened during that time frame and where it's come since then, it raises the question, was this a rush to gold because the world was so panicked at that point
6:40 am
about what was going to happen with the economies around the globe? have we gotten past that and does that mean that gold is not nearly as brought of an investment as it had been? >> i agree. i think we are past that point. and you've seen some investors come out of gold, those who did buy it as a credit hedge, a hedge against the potential failure of the financial system. i think, though, what you're now seeing is the market returning to fundamentals where the consumer buying of gold is going to drive the price in the longer run. and that still looks very positive, especially in india and china. >> but are we talking about closer to $1,000 to $1200 versus $2,000? >> well, i think looking at it from here, you know, we're down 40% from the all-time high. you know, some gold mining shares are trading where they were in 2000 when gold was $300 an ounce. you know, many investors i talk to think that gold is pretty much bottoming out here and that the fundamentals are what's going to drive it from here. >> they've been saying that it's been bottoming out every $100 down from $18 hurn.
6:41 am
>> gold is one of the top performing assets since 2000. >> you have to go back 14 years for that? >> i'm talking about the bull run we've seen in gold -- >> no, i understand. but that's the last five years and everyone missed it that has a vested interest in gold going higher. >> i understand the arguments that you make. you see gold really only as a catastrophe hedge. therefore, gold is definite lay short and get out. but there are appearance in that last 15 years. >> it almost seemed like it went up. because we knew that we would have to take all that private debt from the crisis and turn it into public debt and it was going to be through money printing. but now that we may have -- we may be over the hump for that and you saw it in the dollar, you've seen it in gold, maybe some of the rest of the world is coming to the party now. but as the biggest, you know, part of that equation, we're headed the other way now and it seems like you can explain all
6:42 am
these moves sort of based on a screening -- not draining, but at least not adding. >> dealing with the debt. i think two things i would say there. one is the debt problems have to be ultimately solved. i agree. my own portfolio, i believe asset prices will go up. >> we really have -- >> it will go up, too. >> you have? >> yeah. >> i'm thinking -- i admit it and i've got a safe fingerprint. >> utfs need it, though. i'm going to go to the border guard and say, i swear i had these etfs somewhere. >> by your own admission, that scenario is looking less and less likely. >> exactly. >> we see the issue that over the next five years, you're going to need to find a couple thousand tons more gold just to satisfy the consumer. >> yeah. >> for jewelry, exactly. so that is your problem. mine production is dropping into next year. recycling sound. most analysts i talk to think mine production will fall next year. >> so we're getting back to a market that's in deficit, purely
6:43 am
as gold as a consumer good. even if the hedge investor doesn't come ba in because equities are buying, the world is looking better. >> what about bitcoin? >> we have to go. that was a lot of fun. >> a lot of financial money in gold, too. >> there's a lot of financial money in there, career money, that was a thousand tons of redemptions we've seen. >> i'm still afraid, so maybe this should be it. >> so many things appear. >> there are. look at the geopolitics. >> no. russia, there was a -- i heard a -- i looked up what i thought was a russian plane this morning. it wasn't, thank god. >> inflation is starting to come back in a few areas, too. not yet, but -- >> beheadings. >> all of these are reasons to buy gold, but i think the fundamentals are saying, look at india this quarter. a big rise in jewelry. it's a classic example where an economy that is doing well, the equity markets up 30% in india this year. and they're buying more gold at the same time.
6:44 am
t not a catastrophe hedge for those kinds of consumers. >> but the music, we're talking catastrop catastrophe. we'll stick with the catastrophes. >> marcus, thank you very much. >> markets going down, bombers flying over us. beheadings going on. still to come on "squawk box," the ceo of gogo. this is you, right? >> the nation's -- >> i'm a gogo. >> i'm going to look up that website. i'm going look that up. >> why fly on an airplane? >> the largest provider -- oh! soems like wi-fi, a must see for every road war yar. then at 7:40, the latest gadgets that are revolutionizing everything from setting your thermostat to opening your front door. i can do that. i don't need anything. you know? you just twit and pull. then at 8:30 eastern, activist
6:45 am
investor david winters. "squawk box" will be right back.
6:46 am
6:47 am
6:48 am
gogo, the biggest player in in-flight wi-fi. most road warriors would say it's a vital service, do investors agree? down more than 25% in the year, but up more than 15% in the last week. we'll talk about what's behind all that. the company's ceo will join us in just a moment.
6:49 am
now that the elections are finally over, it's time to get to work fixing our long-term national debt to help build a stronger economy. with a solid fiscal foundation, we can create more jobs, invest more in innovation and infrastructure, and make america more competitive, giving our kids a better future. a bipartisan solution to our long-term debt means more growth today, more opportunity tomorrow. and the time to start is now. boy: once upon a time, there was a nice house that lived with a family. one day, it started to rain. the house tried to keep out all the water, but water got inside and ruined everybody's everythings. the house thought she let the family down. they just didn't think it could happen. they told the house they would take better care of her... always. announcer: protect what matters.
6:50 am
get flood insurance. for tapping into a wealth of experience... u wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit
6:51 am
to find out more. ok, if you're up there, i coulsmart sarah.elp. seeking guidance. just like with your investments. that sets you apart. it does? it does. you're type e*. and seeking another perspective is what type e*s do. oh, and your next handhold... is there. you don't have to go it alone. e*trade gives you the support and guidance to make informed decisions. are you type e*?
6:52 am
welcome back to "squawk box." gogo having a crazy week in the stock market. first the company reported an earnings miss on monday. the stock plummeted. but then at&t announced it's pulling out of the in-flight wi-fi market which it recently said it was getting into and the stock skyrocketed. it's up now about 15% in the past week. joining us to talk about this and more is the ceo of gogo michael small. i use gogo all the time. i love it in theory.
6:53 am
when it works, it's fantastic. when it doesn't work, we can talk about it. nonetheless, let's talk about what happened this week. you did have the earnings miss. most analysts seemed to think things were going to be fine but the stock did come down a bit. then at&t gets out and everybody loves you again. >> right. i think we had a very good quarter. . we made massive progress in our international expansion and seen great profitability in the u.s. we actually had some-store sales which is our -- in an aircraft is our store, it was up over 20% year over year. >> what do you think it says that at&t wants out? they never really started is really what happened. >> yeah. i'd say they didn't get far. i'd make two points. this is not for the faint of heart. this is a challenging business to get in. it's global. you can't just be a telecommunications provider, you have to have global reach and you have to cater to the very
6:54 am
specialized needs of aviation. we've been at this for 20 years starting in the business aviation side and we're still considered newcomers in the aeromarket. it takes a lot of specialization. >> you said that was a good quarter. the street didn't think so. what did they see that surprised you? based on your earnings, the street sold off. >> the street did sell off. as you know, it's been a new concept bringing the internet to the sky and some people think it's going to be a great business and we're the leader, our position. others are still skeptical. for me it's unimaginable if the internet changes the world on the ground that it's not going to change the world in the sky. we love this business. >> you said it was strong same store sales. what did the street see that caused them to sell the stock? >> i think there was two issues they saw. our installation rate of new aircraft and we just announced a bag log of a thousand additional aircraft to install. huge number. but we went down a couple many
6:55 am
the quarter. just a quirk of when the installs happened. that worried them a little bit. we also saw a little bit of softness in the margin of the aviation market. but i -- you know, business is still growing like a weed and we're thrilled with it. i think those are the two issues. >> here's a consumer question for you. it relates long-term to the viability of the company. explain this to me. and we were talking about this before you came on. i was saying this is one of those companies i love it in theory. when it works for me, it is a brilliant business. >> right. >> but oftentimes and to the -- and there are times now i actually don't even try to log on. i think becky might have the same situation. where i've been so disappointed in truth where i signed on, had e-mail for ten minutes early on in the flight when nobody else connected. then everyone else connected and i can't get on. i've already paid my 25 bucks to
6:56 am
get across with wi-fi i'm not getting. no real way to get a refund. no real way to communicate because you're up there. and then now i'm also seeing on flights like united and other airlines technologies, they have super fast service. explain what goes on. >> first, you can always reach us. there is a chat line. and whether you bought a session or not, you can get us. and that's unique to gogo that we have that capability. when gogo introduced its service, it was revolutionary. no one will bring more band width faster to the market than gogo. we have a technology road map. we talked about our technology just coming into the market. it will arrive in 2015. that will be about ten times as fast as what we have today. it will take us to the next level. >> it will, okay. so we won't have to wait any
6:57 am
longer. next year we should look for that. >> it'll start rolling out next year. >> thank you. when we come back, we have quarterly results from walmart. stick around. there was no question she was the one. she reminds you every day. but your erectile dysfunction-that could be a question of blood flow. cialis for daily use helps you be ready anytime the moment is right. you can be more confident in your ability to be ready. and the same cialis is also the only daily ed tablet approved to treat symptoms of bph, like needing to go frequently or urgently. tell your doctor about all your medical conditions and medicines, and ask if your heart is healthy enough for sex. do not take cialis if you take nitrates for chest pain, as it may cause an unsafe drop in blood pressure. do not drink alcohol in excess. side effects may include headache, upset stomach,
6:58 am
delayed backache or muscle ache. to avoid long-term injury, get medical help right away for an erection lasting more than four hours. if you have any sudden decrease or loss in hearing or vision, or any symptoms of an allergic reaction, stop taking cialis and get medical help right away. ask your doctor about cialis for daily use and a free 30-tablet trial.
6:59 am
7:00 am
the king of all retail ready to report. walmart's quarterly results on the way. is the stock a bargain ahead of black friday? consumers enjoying crude's crumble. but while oil prices have grabbed headlines, other commodities have been on the move swrel. what happened to silver and sugar? it's all in today's trading block. and the ceo that will do almost anything to sell his products. >> whatever you need, andrew. all for you on national television. a good foot rub. >> he returns with new products
7:01 am
and why we don't need a robot butler. >> hey, buddy. >> the second hour of "squawk box" begins right now. ♪ welcome back, everybody. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with joe kernen and andrew ross sorkin. we're waiting on results from walmart. in the meantime, let's take a quick look at the markets. you're going to see the dow futures up about 50 points above fair value. also s&p futures up about 7 points. despite the slight setback we saw yesterday, markets still on track to end with gains for the week once again. you got the walmart numbers now? >> i do. walmart is reporting continuing operations of $1.15 which is three cents above what wall
7:02 am
street was looking for. and then it's always fun doing sales at walmart. $118.1 billion in a quarter and it's not even a christmas quarter. $118.3 billion is where the street was. u.s. stores say fuel was up .5%. that net number that the company actually earned in the period, $3.71 billion. this has the stock trading higher. i think an all time high was 87.1. and it's just off that. $81 the market cap now about $255 billion for walmart. so all in all, none of the sort of the angst that we saw in some
7:03 am
of the -- macy's numbers ended up fine. it was at least trading higher after it initially sold off. i don't know if the guidance is going to be important. >> the u.s. same-store sales. excluding fuel up 0.5%. i think it was better than the street had been expecting. i think they were looking for flat. >> so the guidance had been 110 to 120. so they earned 115. last year it was 114. okay. walmart updated its full year guidance from 492 to 502. and it's 499 is where it is. so that's the analysts numbers right in between the number -- and it does include the negative impact of closing some -- the future closing of some stores in japan. three cents a share related to
7:04 am
that. the previous guidance was 490 to 515. it's now just a ten-cent range. they narrowed by 15 cents. fourth quarter net is now seeing between 146 and 156. and that includes the three cents we were just talking about. and 1.57 is the estimate. >> there's some interesting comments from charles holley, the cfo. he points out they're looking for a few things. here's a shot across the bowel for every other retailer who needs to listen to this today. they're assuming several important factors including what they call a highly promotional holiday season. if you thought walmart was going to come back and not come at you with everyday low prices and low prices throughout the holiday season, think again. means they are coming at this and definitely looking. this guidance is assuming they're going to have a highly
7:05 am
promotional service. also he goes into extended comments about monitoring the progress in congress with the respect of extension of income tax legislation that expired at the end of calendar year 2013. they go on to say if this is not passed, it could drive their tax rate towards the high end for the full year. this is something you'll hear from more companies. congress has not gotten its act together at this point and it does limit the visibility these companies have. as long as congress has not settled on that, that's going to be something that's outstanding. >> you know how big this company is. you know, we always hear that red herring that companies don't pay taxes. it's 32% to 34% is what they're expecting the tax to be. 32% to 34%.
7:06 am
our full year effective tax rate. much higher than the rest of the developed world. >> right. let's talk a little more about these numbers. chief research officer and adviser, dana, your thoughts on first blush about hearing some of these numbers? >> i think overall the numbers we're hearing from the retailers yesterday or today, same store sales you mentioned before. it is going to be a promotional season. temperatures are trying to manage their inventories but the consumer know what is the price is. retailers are getting out there early. it's no longer black friday, but black friday starts weeks earlier. and stores are opening earlier and if you don't get the best deals, consumers just won't bunch. there's a greater share for the consumers' dollar and greater demand for the consumers' dollar. >> although there's more consumer dollars around when you watch what's happening to oil prices and prices at the pump. so the consumer is going to be
7:07 am
more flush. who do you think benefits the most from that? >> i think what we're seeing in terms of who's benefitting, i think limited is benefitting certainly with victoria's secret. i think anything athletic is benefitting. i think some of the accessory companies are benefitting like kors and tiffany. i think basic apparel is where the tough time is being had. >> dana, walmart says they are anticipating a highly promotional holiday season. walmart is good at getting low prices for consumers and being able to handle that with their margins. when walmart says it's going to be highly promotional what does that mean for other retailers? >> it means they have to be competitive also. as sharp as sharp can be is what everyone is going to need to be. companies are managing their margins and events. it's like day-to-day events in order to grab attention.
7:08 am
>> so if you're looking at potentially buying stocks in this sector, if you look at walmart, who would you bet on? >> i think overall when i think about the discounters out there, walmart certainly will be a good bet given the fact they are the biggest in terms of being able to get at the lowest price. the rebound in target if there can be any improvement there, canada is still at target. that's one to watch. and the dollar stores. i think the dollar stores. i like the off pricers. >> dana, thank you for joining us today. >> thank you. >> walmart's up $1.40 right now. that's helping the industrials which are now up about 50 points. >> we're also going to talk about the deal of the morning. deal or no deal. we'll see what happens.
7:09 am
toy maker would pay a mix in stock but an exact price has not been set. looking for $35 a share. probably something that begins with a three. we will see. $35 will be a premium. dreamworks had held talks with soft bank. so mr. katzenberg putting that company on the block looking to sell it. let's talk more about this potential deal. joining us now is a senior at variety. and our own julia boorstin. is this crazy? does it make sense? brent, i'll start with you. >> i think it makes a lot of sense. if you look at dream works and what's happened in the past few years, it's struggled with being a mini major and a landscape
7:10 am
that's dominated by media juggernauts. they've had three writedowns in the two years. the stock has certainly been a roller coaster every opening weekend that they have impacts their stock price. it's a very difficult thing for a company to be in. that's the reason why there aren't many majors right now. it's really just lions gate and dreamworks animation when it comes to publicly traded companies. this makes a lot of sense in it allows them to diversify by teaming up with hasbro. they have some cushion there. they're not as dependent on their films they produce annually. >> right. julia, i see it in the context of why jeffrey katzenberg would want to do a transaction like this. does it make sense for hasbro? >> well, look, we've seen that hasbro is increasingly seeing
7:11 am
itself as an intellectual product. whether they sell it as a video game, tv show, or movie. they just want their brands out there. hasbro has this deal for a tv network and it did not work out so well. they sold the majority of that to discovery. so it's clear that they really want to be an entertainment business. transformers, a massive hit. hasbro is a producer of that. some of their movies have been big hits like transformers. some of them have not been such big hits. their issue is they really want to figure out how to make the most of their very valuable i.p. i think they see this as a way to team up so they're not handing the lions share of the profits from their movies over to someone else. >> julia raises an important point about handing the e lions share of the profits other. the risk profile goes higher
7:12 am
when you're making the movies opposed to just licensing your name. disney never got into the business of make ting their toy. they license their stuff to hasbro. >> absolutely. you're right. i mean, certainly the upside is there and you get to own more of the profits. you get a lot more of the profits in success. but in failure, you're left holding the bag. and that is a risk. and not every toy property makes it into works. so it's not necessarily a sure thing. >> would you imagine they try to get it into more of the live entertainment space? >> in terms of broadway shows? >> things like that. and by the way, just live action movies. even away from the animation piece? >> i'm not sure. i'm not sure that's exactly what jeffrey katzenberg brings to the table. i would imagine they would not rule that out.
7:13 am
that's what hasbro studios has focused on. but what katzenberg offers is perhaps the deepest knowledge of the animation industry going right now. i mean, this is a guy who transformed disney and brought us shrek. >> and katzenberg -- >> go ahead. >> he sees the problem in just releasing a couple movies a year. he knows how volatile that makes his company. he's made a big push to expand into digital content. they have a deal with netflix and have tv shows. he has a deal with china. they have partnered with the chinese government to have a studio there to produce both live action and animated content. >> guys -- >> he's one of the smartest media guys in hollywood. >> we've got to go, but quickly, do either of you think he ends up staying for a long time at hasbro? when you sell your company, traditionally you stay for a couple years and then you leave.
7:14 am
he will be the chairman of this company, by my sources, but is that a long-term play for him personally? >> i think it depends on what his other options are. his name is always thrown out there when you say who are the smart guys in hollywood who are being underutilized. people think he has more in him than running a small animation studios. it depends what its potential is in china. >> okay. we're going to leave it there. brent, thank you. >> thanks. >> julia, thank you. appreciate it, guys. coming up next, we'll have the latest moves in the markets. 120 on the euro and yen. plus giving your smartphone more control over what happens in your home. quirky ceo giving andrew a full colonic today. >> he gave me a foot massage last night. maybe he will do the shoulders. could use a little back here.
7:15 am
>> hot holiday trend. he'll show us also some cool gadgets that are all under $100. first, though, we talk about walmart. kohl's also posted moments ago. earnings and revenues in this case fell short. as a result kohl's is down over a percent. >> maybe he could do acupuncture. when change is in the air you see things in a whole new way. it's in this spirit that ing u.s. is becoming a new kind of company.
7:16 am
one that helps you think differently about what's ahead, and what's possible when you get things organized. ing u.s. is now voya. changing the way you think of retirement.
7:17 am
7:18 am
♪ it's snowing in chicago. >> that's the binge r. >> yes, it is. bing crosby. >> velvety voice. welcome back to "squawk box." futures right now are being helped by a nice gain in walmart after walmart had good numbers and good outlook. i'm told the all-important christmas season is within sight now. it's 40 days -- >> 41 days, i think. >> let's take a look at the dollar index. it's up nearly 10% over the past six months while the dow is up 5% over the same period. i think if you had both, let's get a breakdown of currency moves and what's ahead for our
7:19 am
next guest. noneny, boris, you can talk about 1200 or whatever it is. they're both at key resistance. i'm talking about key support. it depends what side your looking at. but the euro at 120 and the yen at what? >> 120 yen to the dollar. the trait seems to be what everybody is -- >> is that what they're calling it? >> that's what i'm calling it. >> okay. >> it seems to be what everybody is focusing on. it's clear that we have a policy divergence here with the fed moving closer to tightening. the boj is clear in increasing its accommodation. and the epb on the side line. spl the only question right now open on the table is how fast does u.s. tighten? that's going to be the factor how fast we get to those levels. i think it's still going to be on the question. today's numbers are encouraging. if that's a proxy for the
7:20 am
consumer to spend, it suggests that finally the increase in wages are catching up. and growth in the u.s. is going to pick up. that going to give more to want to raise rates sooner rather than later. >>. >> in the meantime, what's ironic is we're in a lull right now. while everybody is waiting for the new to occur, a lot of money going back to the australian dollar. it's high yield and people are picking up in the currency market. if you think that everything is sort of going to be relatively stationary pre-holiday until basically policy makers make up their minds, people are trying to pick up the extra yield for the time being.
7:21 am
>> so if we see steady numbers in the u.s. data, then people think we could get a rate hike. >> if it's q1 and it becomes convinced, then i think you see the rally begin to pick up momentum and pace. and the answer to that as always to me is going to be in a fixed income market. always the smartest market amongst the capital markets. you're starting to finally see the 10-year stabilize here, start to pick up a bit of yield. until we get to about 250 and hold there, i think that's going to be the telling point as to what occurrences go. >> to delve into total nerd land, there's another story. that's the euro versus the swiss franc. it's 120 as well. and what dynamics are we
7:22 am
watching there? with the swiss national bank? >> so the story with euro swiss is it's been the single greatest intervention in the history of the land. they have been able to hold the euro swiss rate above 120 for more than three years by threatening the market that they will just buy everything in sight if the market tries to bring it down what we're seeing now is only 18 points away. and the market is really trying to test and see how serious they are going to be given the fact that europe is very weak. given the fact that dra gee wants to print more money. i think they want to print at this point. >> everyone in the world is a currency expert. if you ask someone, how many currencies are used in the european union at this point, boris? >> in the european union? >> just give me the number. do you know? and you're an expert?
7:23 am
>> are you talking about the eurozone? >> no. european union. >> all right. so -- >> i'm going to tell you. there are 12. >> okay. >> 12 different currencies. and i know them all now. >> i came close when you asked me that question. >> czech republic has their own. finland uses the euro. sweden does not, but the netherlands do. >> netherlands is the euro. >> you've got romania. >> everybody else knows apparently all the smug -- >> you know what? that was a good question, actually. i focus so much on g-10 that i actually didn't know. >> all right. thank you, boris. >> my pleasure. >> your hair seems grayer like you're worrying about these support levels too much. getting a little speckled there? >> you know -- >> were you on the wrong side of
7:24 am
those? we've got to go now. >> see you later, boris. coming up, the king of all art auctions. find out how much warhol's elvis took on last night at the auction. and is the world ready for "duck dynasty" the musical? that story when we return. (receptionist) gunderman group.
7:25 am
7:26 am
gunderman group is growing. getting in a groove. growth is gratifying. goal is to grow. gotta get greater growth. i just talked to ups. they got expert advise, special discounts, new technologies. like smart pick ups. they'll only show up when you print a label and it's automatic. we save time and money. time? money? time and money. awesome. awesome! awesome! awesome! awesome! (all) awesome! i love logistics. i research. i dig. and dig some (trader more. search. because, for me, the challenge of the search... is almost as exciting as the thrill of the find. (announcer) at scottrade, we share your passion for trading. that's why we rebuilt scottrade elite from the ground up - including a proprietary momentum indicator
7:27 am
that makes researching sectors and industries even easier. because at scottrade, our passion is to power yours. up next, the other
7:28 am
commodities that were on the move while the world was obsessed with the price of crude. and quirky ceo ben kaufman unveiling new products that could be in your home by this christmas. more "squawk box" in just a moment. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. e financial noise financial noise
7:29 am
financial noise financial noise you know how fast you were going? about 55. where you headed at such an appropriate speed? across the country to enhance the nation's most reliable 4g lte network. how's it working for ya? better than ever. how'd you do it? added cell sites. increased capacity. and your point is... so you can download music, games, and directions for the road when you need them. who's this guy? oh that's charlie. you ever put pepper spray on your burrito? i like it spicy but not like uggggh spicy. he always like this? you have no idea. at&t. the nation's most reliable 4g lte network.
7:30 am
7:31 am
on november 13th, felix was asked to remove himself from his place of residence. that request came from his wife. deep down he knew she was right -- >> yes, yes, today is november 13th and that makes it national odd couple day. national odd couple day. >> just for you two. >> oh, wow. it's very nice. >> you can show the tv odd couple or there was the movie odd couple which was pretty good. walter mathau and jack lemon.
7:32 am
tony still getting it done. just had a kid or something. >> look at him. >> so who's tony randall? >> just to throw a wrench -- you think i'm a cigar chomping backwards baseball cap wearing person. i'm not. i'm very neat and meticulous. >> your desk is incredibly neat upstairs. props for that. >> i'm sorry. i think maybe you just need to be that guy. tony randall died. forgot about that. >> but he had a child very late in life. >> that is what i was talking about. and also -- they're checking right now. he's dead too. he was quincy. you need to check constantly on icons. because you never -- and when they do pass, you don't remember. >> i get it now. it's hard to keep up. >> and time is flying so quick
7:33 am
now. i remember seems like just a couple years ago tony randall was getting married to -- i don't know how much younger she was. but they had a child. >> yeah. i'm going to look it up. i think he was in his 80s. he was 80 or 90 when he had the baby. >> god bless him. >> okay. while becky's looking that up, we're going to tell you a bit about our top stories this morning. walmart beating estimates on both the top and bottom line. also hasbro in talks to buy dreamworks animation. the toy maker would pay a mix of cash and stock but an exact price has not been set yet. jeffrey katzenberg looking for as much as $35 a share. hasbro over $30 a share but there's a difference on where they're going to land. also viacom's earnings beating the street by three cents. recent box office winners including ninja turtles and transformers boosted results. .
7:34 am
so there we have a little bit of the news of the morning. >> so procter & gamble was duracell right? berkshire hathaway buying duracell. did you say this already? >> no. but there was a story before -- >> you broke the story of the e window washers. >> $4.7 billion. procter & gamble -- p&g shares -- >> berkshire had a large number of shares. they're trading in for duracell. they'll get duracell and about $1.7 billion in cash at the closing. the shares that are currently held have a current value of about $4.7 billion. so i guess you have to do $4.7 billion in cash. >> that is something he'd like, isn't it? >> batteries? yeah. a business he could get his head
7:35 am
around and understand. we're talking about warren buffett. there's a comment from him saying i've always been impressed by duracell as a consumer and as a long-term investor. >> so you remember gillette bought duracell, this is 1996. they bought duracell. at the time bought them for $7 billion in stock. >> wow. and that stock went up from there. >> went up from there. because then they were able to take gillette and sell that to procter & gamble. >> so the shares that were -- so that was a $7 billion trade? >> it was announced september 13th, 1996. >> so $4.7 billion in stock they're giving over for shares. but they get not only duracell but $1.7 billion in cash. down from what was a $7 billion transaction back in 1996. >> right.
7:36 am
at the time it was kkr on this. i think they sold it. didn't they sell it to gillette? >> that's right. so duracell was owned by kkr at the time. when they sold it to gillette. and of course the argument was you would sell batteries in the front of every store right next to the razors. that was a distribution play at the time. so it'll be interesting to see what it looks like as an independent company. i'm not looking at that note that's just crossing the wire. i don't know if they discuss that or not. interesting little story. we'll have to -- >> a.g. saying we thank duracell for their business. i'm confident the new ownership structure will provides future growth plans. >> here's a question. do you put batteries in the category of technology? >> i don't know.
7:37 am
in terms of -- i wouldn't put the standard batteries in that category. but i guess if you're looking at an elon musk type of battery, sure. >> the only reason i ask is warren buffett has reticent to buy technology companyings. >> where they are right now it's not high-tech at all. at duracell. >> batteries have been very slow to evolve. >> and there's -- you know, the new ones are not just like duracell. i think it's a different -- you know. >> lithium ion batteries. but i wonder is in ten years from now if someone actually does come out with -- because batteries have not evolved. if batteries do evolve, what that means. >> duracell is not the place that are evolving all the new technology. >> investors are getting a buzz, says here, from surging sugar
7:38 am
prices. thanks to a sharp drop in brazil, the price has dropped. but on the precious metals front, silver prices plummeting to a four-year low. why are investors choosing to put money into this. joining us now is a market analyst at price futures group and author of "morning grains" and on silver we have a precious metals strategist at rbc capital markets. mostly silver follows gold and gold can follow the central banks and whatever is happening with the dollar. maybe not so much with sugar. but that's the way silver moves, isn't it? >> i used to trade both. as a matter of fact, i was on the sugar cotton board at one time. but i spent 30 years trading the special metals and that's my specialty. by the way, today i'm wearing my silver cuff links.
7:39 am
i want you to notice that. bull and bear silver cuff links because i believe silver probably has a very good chance of out-performing next year when we start our inflation march. >> what is the typical ratio of gold to silver? >> usually somewhere between 50 and 60, but lately it's been running about 74. and that's kind of high. and i think we've had an awful lot of money flowing out of silver futures at some point. because gold moved to equities. gold moved to fixed income. and so as the money flowed out of gold, silver followed. but now there's a lot of different things going on. for example, in india, it's interesting that the new government has not eliminated
7:40 am
the gold tax. so silver is starting to catch on. silver i think is really catching on with people looking down the road long-term worried about inflation after all this comes to an end. and europe starts to recover. so that's where we are. >> all right, jack. so what causes -- sugar just trades with sugar, doesn't it? i mean, what is it correlated with? it's very specific. it could be weather. it could be what's happening in sugar producer regions. >> well, generally that's true. the big producer, of course, is brazil. and number two is thailand. but the focus is really on brazil right now. and the news came from the brazil sugar association. they said that the production was significantly less in the last half of october. down like 17%. so that caused a lot of buying
7:41 am
that you've seen during the course of the week. that seems to have subsided. they're citing the drought that was in brazil last year which also affected coffee prices this year. might threaten the soybean prices if it continues. but seems like it's raining now. and the iso kind of chimed in. they cut their surplus production estimates for the coming year by quite a bit from over a million tons, close to a million and a half tons down to right around half a million tons. so there's been a change in the fundamentals there. of course we do also in sugar to a lesser extent corn keep an eye on the crude oil market. both are used. there is some effect there as well. >> what do we do now? over the years there's been, you know, people complain and harangue about the u.s. propping up sugar prices. are we doing now? is that still part of the equation? >> oh, yes, it is.
7:42 am
in fact, we're in the midst of a negotiation with mexico who is quite a big sugar producer as well. not nearly on the scale of brazil or thailand. but still produces around 4 million tons or so of sugar. and they do try to get into the united states. and there's been a big fight going on and a lot of negotiations between the commerce department and the mexican version of the commerce department over just how much will be allowed into the united states. it's still a very protected and controlled market. >> trying to figure out anything about price when it's so protected and controlled. gentlemen, we appreciate seeing both of you today. >> i want to thank you very much for having me because i watch you guys for years. i think andrew and you and betty you guys are great to explaining to a lot of people who call me all the time about what does this mean and that mean. i point to you guys.
7:43 am
you really do a great job. so i really appreciate you. >> that's nice of you to say, george. thank you. >> we used to have a joke on the floor that how can you be long sugar when they give it away in all the restaurants in the world. >> true, isn't it. i know. i take a lot of that home with me too. we've never had to buy sugar. >> are l? >> no. i have brought sweet n low home before. >> i carried it in my purse before. if you have iced tea before. >> don't act like you don't do this stuff. >> i'm stuffing the desserts in my pocket. okay. coming up next, my personal foot masseuse is here, everybody. why you don't need a robot butler in your life. quirky rolling out new products to manage your home. ceo ben kaufman plays some show and tell. i'll be taking my shoes off. we'll be back in a moment. >> and your pants off. (vo) rush hour around here starts at 6:30 a.m. - on the nose.
7:44 am
but for me, it starts with the opening bell. and the rush i get, lasts way more than an hour. (announcer) at scottrade, we share your passion for trading. that's why we've built powerful technology to alert you to your next opportunity. because at scottrade, our passion is to power yours. ♪ there's confidence...
7:45 am
then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more.
7:46 am
welcome back to "squawk box." did you know 83% of american adults are considering smart home technology? quirky paving the way to make that technology available. the crowdsourcing engine teaming up with general electric who
7:47 am
spin out related to the home. ben kaufman is this ceo of quirky and my personal foot masseuse. >> you're never going to live that down. >> that's okay. there are worse things to be known for. >> tell us. you brought some of these -- i was going to call them toys but that's not fair. >> we have real products. >> and you're trying to revolutionize the home. you're trying to get ahead of it and the price point is lower than other folks. >> with ge on tuesday we announced seven new products. all bringing the jetsons future down to an affordable level. we looked at everything from making switches and outlets that not just allow you to control them with your phone but truly understand your energy usage. >> for example, that -- so how much does that cost? >> this is like 50 bucks. >> and how much would one not digitally connected cost? >> it depends.
7:48 am
anywhere from a few bucks like six bucks with some limited sort of smart energy monitoring, you're looking at 50, 60, 70 dollars. >> how's that connected to the internet? >> using a wireless radio. >> so it's all wi-fi. >> it's all wi-fi, bluetooth. the best thing about this product is when you plug an appliance in, you know how much that is costing you. >> if you were going to be building a new home, for example, or renovating a home, yould you install those throughout the entire home or just for certain types of places where there's certain appliances you're attaching? >> i'll give you a good example. for new home construction, we announced this tuesday as well. this is the death of a thermostat. this kills thermostats in the home. all you need is a series of senso sensors. this is called norm. it sort of takes the temperature in different parts of the home and will understand exactly how
7:49 am
to sort of set your environment. you know when you walk into one room and it's cold and the other room is warm. >> but that is also assumes that you have zoned heating and zoned air conditioning. >> no. with a network of sensors, we can just be smart about how we turn on and turn off your single or double zoned hvac. >> for example, i have one room in my house that's constantly freezing and another that's constantly burning. and i can't figure out a way to -- because unfortunately it's on a one-zone situation. >> so there are ways to do that. smart vents are going to come into play. all these technologies are starting to emerge. the problem with the smart home category is it's complicated and expensive. our work with ge is to -- >> these are marketed under the brand of quirky? ge? how does it work? >> the products are co-branded quirky and ge. and our platform brings together our products and all the big
7:50 am
brands like nest and those guys, that platform is called wink. >> how much do you worry you're too far ahead of true adoption? when you came on during the commercial break, i was saying to myself, it may take ten years for people to actually start generationally both to renovate homes, build new homes, where people are putting all this technology in their house. >> i know we're ahead of the game. on one hand it's scary. on the other hand it's an opportunity. what we are trying to do over the holiday season is tell the world the future doesn't look like the jetsons with robots and so on. it's actually much simpler. it looks like all of the products you're familiar with in your home. >> what is the price point of this the you have? where dough d.o. y you buy this? is this sold at a best buy? is this the technology category? >> it's home depot and home
7:51 am
products and technology at best buy. you can buy stuff at >> but where do you plan to sell most of it? mostly straight retail channel? >> you buy outlets and switches at home depot. i think it'll end up there. >> do you have this in your home right now? >> i do. i have all this stuff. >> and you control it all with your iphone? >> i actually don't pull out my phone every time i want to turn on a switch. but when i open my front door, my lights go on and automations are easy to set up. this guy is way too quiet today. it's scaring me. >> you know, i said earlier i'm pretty good at opening my door myself. you have something that would open the door for me. i twist, i pull. >> you can still twist and pull. >> really? >> yes. the question is what will happen for you when you twist and pull. >> and my other thing was i was disappointed when you said it's not going to be like the jetsons. that's what i was thinking about. >> right. you want a robot butler. >> sort of. i like the flying machines too.
7:52 am
you're right. we don't have those. i like the way the cities look. i like judy. >> judy's nice. we have a character we like to call robot butler, it's weird. imagine having a robot butler in your stuff every day? >> but there will be one some day, won't there? there's a robot vacuum cleaner. >> there is. the roomba, yes. >> good. >> so robot vacuums are okay. >> do you guys have a robot vacuum? >> we do not. >> are you thinking about a robot vacuum? >> not yet. it's a community of investors. >> real quick on the thermostat, why is this one better than nest which is the market leader at the moment for this particular type of device, i think? >> two reasons. nest is $250. this will retail for $80. that's one reason. second is nest only takes the temperature in one location in your home. this is a series of sensors in every room.
7:53 am
when you have situations like your home where you have one room that's hot, one that's cold, this can start to understand the average temperature and control your environment accordingly. >> i think we're just about there. we can close down the patent office. i think everything's been invented at this point. >> he owns all the patents. >> i know. but we've basically done everything, don't you think? >> i think the patent situation needs a good looking at, yes. >> we always feel that way but we have no idea. you know what i think. once you let machines start figuring things out and their knowledge is algorithms -- >> completely agree. and most is going to happen on the data side. as a product company, our job is to make it simple to use. >> you're serious that something needs to be done with the patents. >> oh, yeah. >> because it's too hard or too
7:54 am
easy? >> a little bit of both. it's easy to get a patent for things that don't matter, hard to get one for things that do matter. we talk to investors every day and they have this knee jerk reaction that all they need is a patent. >> you should come back. we should have a longer conversation about this. >> i'd be happy to. >> thank you. when we come back this morning, david winters taking aim at coca-cola's board again. why he thinks shareholders are getting a raw deal. "squawk box" will be right back.
7:55 am
7:56 am
7:57 am
coming up next, eight years ago the world thought google was crazy to pay $1.6 billion for youtube. well, who is crazy now? also created a group of youtube millionaires. find out how to get on that list when "squawk box" returns.
7:58 am
7:59 am
8:00 am
hasbro looking to give shrek is new home. >> all right. what's the catch? >> the toy maker in advanced talks to buy dreamworks and looking to bolster its line of products. more on this developing story ahead. forecasting 2015. credit suisse out with its 2015 forecast. why they say the s&p could see a 200-point move by the middle of the next year. plus activist and investor david winters in a first on cnbc interview. why he says coke's compensation plan doesn't do enough to rein in pay. the final hour of "squawk box" begins right now.
8:01 am
welcome back to "squawk box" hire on cnbc, first in business worldwide. i'm becky quick with joe kernen and andrew ross sorkin. the futures right now are indicated up about 43 points for the dow, s&p futures up by just over 5 points. not the highest levels of the morning morning, but a significant amount. berkshire hathaway is acquiring the duracell business from procter & gamble. duracell will have $1.7 billion in cash when transferred to berkshire. you back that out, looks like a $3 billion deal. andrew you pointed out duracell was sold to gillette for $7
8:02 am
billion in 1996 all in stock. >> i forgot about this. p&g had announced last month they were going to spin off the duracell business. and what i don't -- but what's surprising to me about this is that there wasn't -- i don't know if there was an auction. usually when these things happen, warren buffett sort of swoops in or it's done privately before you get to that point. >> such an easy transaction. >> my guess is this is a tax benefit transaction. you're getting back your shares and they're getting rid of shares. it's probably tax advantages. >> did you remember speaking of whether this is technology, b k berkshire likes that. >> they owned a lot at one point. i don't know if it stands now. we went over there to look at it. >> and they make now battery mats for your phone and cases for your iphone. i was just looking -- >> what's a battery mat? >> so you don't have to plug in your phone.
8:03 am
you just take your phone and drop it on the mat. and it charges. the other big deal we're talking about isn't done yet. toy maker hasbro set to be in talks to buy dreamworks animations. joining us is an analyst at piper jaffrey and julia boorstin. explain. does this make sense to you? crazy for a toy company to own a film and tv company? >> it's a great question. hasbro has been in the business for many years since the 1980s on a small basis. they've been forthright about wanting to get into the movie making business. they've been flirting with it. it certainly would put them in the game. i think what's interesting about it is you mentioned in your opening statement that there are some characters here. and what hasbro has done in their analysis is that character-driven sales in the toy industry is working.
8:04 am
if you're looking at content driven prospeperties, there's a demand curve here that hasbro is looking at. certainly interesting to see. >> julia, if you were going to handicap it in terms of percentage terms, do we actually think this deal happens? you know, it looks to me like jeffrey katzenberg has been trying to sell this company for some time. having spoken to soft bank as recently as a month ago. >> clearly when that deal fell threw, he was looking at other options. all these deals come down to price. one thing that's going to determine hasbro's decision on how much they're willing to pay is what the implications are of this deal for other licensed properties. they have a big deal with disney. handler points out in a note this morning that hasbro makes a lot of money by selling disney licensed toys whether it's star
8:05 am
wars or marvel toys. they have a deal coming out for the princesses franchise. so the question is would partnering with dreamworks or owning dreamworks hurt their chances of continuing that big valuable relationship with disney. i mean, that would put them in direct competition. >> the other question for steph goes back to the margin issue. traditionally toy companies have licensed their products to others. and takes a little bit of the risk out of the business. this is doing the opposite. do they need to do this? >> well, you're right. from a margin perspective, dreamworks business is a lower margin profile. from a content evolution and what we're seeing in the industry, this would provide them the capabilities to be more competitiv competitive. i think it's a balance. disney would need to sign off or bless this deal. it is too big to put that at risk. >> disney actually has a right
8:06 am
on this? >> i just think in fair play it would be in hasbro' best interest to make sure -- the business is tied up in the partnership with disney. it would actually change the ebita. >> whether one of these companies says i need to own lego when you start thinking about the grounds. >> that's an interesting question. how do you make sure if you're disney that your characters get the front play and they're not favoring other characters over yours? >> guys, we got to leave it there. but thank you. fascinating deal. >> i hadn't even thought of that angle of it. >> the competitive landscape of everybody else who's in bed with different licensing deals. let's also talk about walmart. shares of walmart out with results this morning. beating estimates by about three cents and better than expected revenues as well.
8:07 am
and the stock this morning has been trading higher on this news. joining us now is david strasser. obviously, david, the stock market likes what it sees today. what do you think? >> yeah, i mean, listen. it's just a sign that maybe the worst is behind them. maybe some of the -- for the first time in a long time maybe those consumer tail winds and gas prices are going to make them stabilize their business a little bit. and they start the snap cutbacks from last year. maybe that'll help them keep force. i think it's a little bit of that. maybe the worst is behind us. >> the guidance that we got from the company today takes into account what they are expecting to be a very promotional holiday season. does that mean for other retailers who have to compete with walmart? >> you know, last year we were petrified at what walmart did when they brought in this one-hour guarantee. you know, this year it feels like a lot of more posturing than real incremental hits to the promotional environment.
8:08 am
you know, i've been actually out the last two days in stores and everything and talking to a lot of people. we're still going through it and stuff is still coming out. last year at this point i was much more worried about the promotional environment than i am this year. >> so you would say to buy the stock even though it's up better than 2% this morning. >> you know, seems like every other retailer beat earnings. this one is coming close to it. it probably gets there. at the other side of this, too, you also get some defense. it was a decent quarter. there's still a lot of problems out there with the consumer. the consumer's not spending. for every good number out of walmart, you saw a lot of bad numbers across retail. kohl's, pennys, all of it. at least here you get some defense if it turns out the consumer is not coming for the holiday as well. >> thank you for your time this morning. >> no problem. >> we wind down the year, financial institutions are beginning to figure out what 2015 might hold for global
8:09 am
growth, market strength, fiscal proposal. here global head of income at credit suisse. 70 pages of thinking. is it you? it's a lot of people? >> it's a lot of people. i just put my name on the front page. >> a lot of stuff. volatility returns and we've already seen it in the macro sense because we had seen it sort of masked by the fed in this country. >> yeah. >> now it's back. just because of the end of qe and it's here to stay. >> what we saw was this year, it is very predictable. doing the same amount every month. things now are much more contestable. the other thing happening is you've got different economic circumstance in china, europe, japan, and the united states. we think that there will be a tax cut from oil.
8:10 am
you've got rates in the united states. that means the u.s. economy keeps picking up. but if you look at the other side of the atlantic, they're worried about deflation. the fed will be tightening by mid-year. and we think -- >> tightening by mid year. all right. so there's a lot of trades here. you think the euro, you can short that to 1.15. >> personally i think that you look at the u.s. dollar over a longer run, it tends to move in really big cycles. i think we're at the bottom of one of those. >> the s&p mid-year gains goes to 2200 as the fed starts to tighten, then things become harder and comes back down. >> again, the first half of the year is about the economy. you've got good nominal growth coming through. with oil coming down, you'll get good real growth. that helps things go to the mid-year. >> you might like stocks or equities more in other parts of the world because of central banks. >> exactly.
8:11 am
so as you hit the second half of the year, fed's in action. the s&p probably pulls back a bit. will have to add more. so we like the topix. >> and you short -- you wouldn't be buying short paper, short bonds, right? >> no. >> what about long? are they okay? >> again, i think the short end is more vulnerable. if you think about the u.s. curve, we know what we think that the fed is going to be in play. move up to 2% by next year. the problem with the long end is the u.s. yield curve is a global yield curve. that keeps it down. >> so you wouldn't buy gold. >> i think gold gets toasted. >> gets toasted. will it go under a thousand? >> our technical guys are looking at gold falling to 950 in the next 12 months.
8:12 am
they think there will be a breakdown. as the fed comes into play and the technicals working in that direction, the risk is you get a breakdown. >> any currency other than the dollar that you would buy? >> no. i think the dollar goes up against everything and it's just picking where to kind of hit. >> as it should. thank you. we're going to end it there. actually, it's more than 70 pages, isn't it? i'm just looking at it now. that's how many i got through. >> i'm glad somebody read it. >> i know. we got it this morning. thank you. appreciate it. >> thank you. >> i got to hand it to credit suisse. you're telling us exactly what's going to happen. >> it's all under control. don't you worry. >> thank you. coming up, it's been eight years since google bought youtube. a look at how everyone from video gamers all the way to coca-cola is using the site and making serious money from it. as we head to a break, a quick
8:13 am
youtube question for you. which video on youtube is the most viewed ever? it's not that crazy gangnam thing is it? we'll have that answer when we return. so ally bank really has no hidden fees on savings accounts? that's right. it's just that i'm worried about you know "hidden things..." ok, why's that? no hidden fees, from the bank where no branches equals great rates. what does an apron have to do with car insurance? an apron is hard work. an apron is pride in what you do. an apron is not quitting until you've made something a little better. what does an apron have to do with car insurance? for us, everything.
8:14 am
how in argentina,rass change engineering in dubai, aluminum production in south africa, and the aerospace industry in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 70% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. so i can reach ally bank 24/7, but there are24/7branches? it's just i'm a little reluctant to try new things. what's wrong with trying new things? feel that in your muscles? yeah... i do... try a new way to bank, where no branches equals great rates.
8:15 am
8:16 am
♪ welcome back to "squawk box," everybody. before the break we asked you what is the most watched video on youtube? well, if you still haven't figured it out yet, it is psy's "gangnam style" video. it's been viewed over 2.1 billion times. that's right. that was billion with a "b." if you're wondering who's in second place, it's justin bieber. but he had half that many views. i'm not sure that was for a music video or for him egging his neighbor's house. >> craziness. we're going to continue the craziness. when google paid $1.65 billion for youtube in 2006, youtube was the biggest video site ever.
8:17 am
it still is, but people thought that was a little crazy back then. with more than a billion unique visitors watching over 6 billion hours of video monthly, the company is considering a paid subscription model for all videos. the site's created a lot of millionaires as well. check out the top three moneymaker. sweden's peydiepie. pulls in as much as $8 million a year. that's after youtube takes 45% cut. he has nearly 24 million total subscribers. then there's number two, blucollection. this channel gives reviews of toys they make over $6 billion a year. and coming in third, is disney collector br. they're all about opening assembly and play with disney toys. the haul for them $5 million a year. are folks willing to pay a subscription to watch all these videos and what does the future
8:18 am
hold for youtube? joining us now is an expert from epic signal doing digital consulting with stars on the site. thanks for joining us. >> thanks for having me. >> so the numbers are staggering in terms of how much money some of these folks are making. let's just talk about the subscription fees first. do you see that happening? which we think they're going to. do you see that being a success? >> yeah. well, so, there's two subscription services that's been announced. there was the music subscription service. tackling that first, i think youtube is well positioned to do well with that. obviously people aren't buying cds anymore. they're buying subscription services and youtube has a competitive advantage. it's the -- for teens it's the number one music discovery
8:19 am
engine. more than radio, more than mtv, et cetera. so they've got the audience and then parallel to that they've got the artists, all the content. every artist is using it as a marketing tool. >> and are they buying that instead of spotify? >> instead of or complimentary too. i believe the announcement was $9.99 a month. i think that's competitive with the spotify premium. >> are people going to use that on mobile? how are they watching these videos in your mind. >> mobile is huge with youtube already. it's 50% of all viewership. in terms of the premium subscription service, they're going to be able to stream music on mobile which currently you can't do that with youtube. just normal youtube. you'll be able to use other apps and have your music playing just like you can with a spotify
8:20 am
premium. >> do you ever see a day when youtube is broadcasting live, for example, sports? >> yeah. >> we've always wondered whether that is the ultimate game changer in the world of digital video? >> well, live is huge in general. we saw amazon bought twitch tv which was a live streaming gaming. so i think live will continue to play a role. youtube ultimately has the consumers and viewers of the future. so whatever they want, they're going to build into that. you know, teens right now aren't watching tv anymore. they're all spending their time on youtube. >> what do you make of what yahoo! is trying to do in the video space, what facebook is trying to do in this space, aol is trying to do in this space? >> so there's a lot of money in video ad dollars. right now tv adds generate something like $56 billion in
8:21 am
revenue each year. currently digital video is something like 6 billion. so, you know, as the trend is -- as consumers are going more and more towards digital, the ad dollars will follow. so there's $56 billion effectively that everybody's competing for. right now youtube has a leg up but everyone wants a bigger piece of that. >> some of these creators making millions of dollars, why are they doing it on youtube? if they have such a following and audience and they're giving away 45% of the money to youtube, you'd think they should do it themselves and holding onto more of that margin. >> yeah. and to a certain extent, that's happening more. right now there are youtube networks that are properties to do just that. they've got to give 45% off the top to youtube. but if they can build their own property, they can own all that revenue. and that's something i think youtube is struggling with.
8:22 am
and i think in part that's a reason they announced the ad supported subscription model from a couple weeks ago. they're trying to supply creators more and more revenue streams to keep them on youtube. >> who do you see as the biggest competitor to youtube? >> that's a good question. you know, i think it's in mobile. everybody's trending to mobile. whether or not it exists today, i'm not sure. but it'll definitely be a mobile play. vine and instagram definitely have audiences. it's not nearly the scale of youtube. so whether or not it's them or some other platform, it's going to be somebody competing in mobile. >> okay. we're going to leave it there. thank you. >> thanks. coming up, a hangover at s.a.b. miller. details next. and board of coke, cec of wintergreen advisers says coca-cola falls short and doesn't do enough to the people that get paid like kings.
8:23 am
it doesn't do enough to rein in the excessiveness or reduce its size. that's what he says. he's going to give us his latest thoughts and tell us why the board must go in a bit. a look at shares of coke over the last few months. "squawk box" will be right back. financial noise financial noise financial noise for tapping into a wealth of experience... for access to one of the top
8:24 am
wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more. open port twenty-two-oh-one-seven on the firewall for customer db access. install version two-point-three of db connector
8:25 am
and ensure verbose flag is set in case of problems. (clapping sound) isn't the cloud supposed to make business easier? get the one that can connect to the systems that you already have. today there's a new way to work. and it's made with ibm.
8:26 am
brewing giant s.a.b. miller says the profits were down due to poor weather in china. earnings basically flat compared with the same period a year earlier. looking ahead, they expect trading conditions to remain challenging for the rest of the fiscal year. you know, weather -- i don't -- too hot? too cold? you couldn't transport? i don't know what they mean. it's complicated. >> or is it just the deliveries themselves. >> maybe that's it. coming up, breaking economic news. is that today? jobless claims? is it thursday? >> yes. coming up in three and a half minutes. >> and even more than that, we have a forecast from jpmorgan's chief u.s. economist right here on "squawk box." then mutual fund adviser david winters talking about coke, where he's finding value other
8:27 am
places, and his bet on energy stocks. as we head to break, look at u.s. equity futures which have come down a little bit. still indicated up, but only 27 points right now. opportunities aren't always obvious. sometimes they just drop in. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances. it's in this spirit that ingu u.s. is becoming a new kind of company. ing u.s. is now voya. changing the way you think of retirement. [time warp explosion] yes! where have you been?
8:28 am
the future! and it looks bright. but we need to upgrade our network power protection. no problem we're working on a smart ups system from apc and cdw. gonna keep our network powered and highly available. did you just alter the space-time continuum? we gotta go back. we can't. it's broke. uh oh...
8:29 am
8:30 am
these better be good with that music. we are just seconds away, yes, from initial jobless claims. check out the futures. we're up a little bit. now even less than we were before. rick santelli standing by. rick, the numbers. >> and the numbers are 290,000, which follows an unrevised. it's unusual. unrevised 278,000. so we'll call it up 12,000. close enough, right? and 2.392 million on continuing claim versus 2.356 million. so that moved up just a bit. but as everybody was talking about, continuing claims, initial claims, pretty low levels at least based on where they've been since the credit crisis. yields, we think this is going to be the 13th session we will have. and i'm being wild here
8:31 am
considering we're at 234 right now. we will settle between 230 and 238. pretty amazing considering almost exactly a month ago for about that long we were trading at a 1.86 yield. back to you. >> okay. rick, thanks. let's get reaction to these numbers. joining us now is chief u.s. economist at jpmorgan. good morning. we just had a lengthy discussion with one of your competitors. prospects for 2015 actually and beyond. these numbers don't, i'm sure, throw any doubt into some of the decisions you've already made or the forecasts you already have. why don't you summarize where you think the u.s. economy is right now. >> yeah. i thought today's numbers, a little higher than expected. but basically in line given the normal volatility there. in terms of what we're looking for, for this quarter we believe
8:32 am
it should come in around 2.5%. next year we're looking for a little better. what we've seen in the second a of this year which is growth somewhat above trend, that should continue on into next year. we remain relatively optimistic about the prospects for the year ahead. >> when does the fed move? first quarter? by the first half? >> we have a june rate hike which we think is consistent with everything we've heard from important fed speakers recently who continue to generally signal next year. >> is europe -- is it as bad as we -- the ecb seems like they know something maybe we don't know. what's the problem over there? do they need rounds of qe like we did? are they where we were three years ago? >> they definitely need aggressive monetary policy. we think they're making steps in that direction. it's taking awhile i think given the fragmented decision there. we do think they're moving in the right direction. in terms of the u.s. economy, we think we can continue to grow at
8:33 am
a decent clip even with europe doing poorly you only have to remember back to the first a of the '90s when europe was in recession. so we've done it in the past. we think we can do it again. >> so with all this, we also -- i know you're not a stock strategist, but is this move in equities getting long in the tooth? can it stand this rate hike you're talking about in june? >> i mean, we've had a pretty nice move here. we do think it can stand with -- withstand rate hikes. initially they're going to be slow. so it's going to be awhile before we get to restrictive territories and interest rates. so we think stocks have some room to run here. >> so we got lower oil prices. we've got lower unemployment. we've got maybe corporations responding to some increase in demand even though it may not be gang busters. maybe they start spending some money. we got a republican senate.
8:34 am
so got that going for us. >> yeah. i mean, overall we think the economic background looks relatively favorable right now. we don't have the -- the government isn't retracting. >> you're happy that the government is not contracting. there's got contractions and bad. >> yeah. i mean, for the last five years we've seen cut back in a way. that was probably a drag on the economy. >> maybe we're spring loaded now. thank you, appreciate it. see you later. up next, wintergreen advisers ceo on calling out coke's board. and later, we get the results of a closely watched report on debt levels for college kids. "squawk box" will be right back.
8:35 am
8:36 am
8:37 am
welcome back, everybody. fund manager david winters is back in the news again with harsh words for coca-cola's board. they revised their plan after winters and others put pressure on management. but the changes aren't enough for winters. in a statement he says coca-cola is simply reshuffling the deck and shareholders are still getting a bad deal. if the board cannot take steps to restore trust, it should be replaced. david joins us on set.
8:38 am
he is the portfolio manager at wintergreen advisers. they have $2.2 billion in assets under management. thank you for being here. >> great to be here. >> you came out with harsh words even after coke tried to take steps to revise its policy. tell us about that? >> they came out with something called the guidelines. we went through the guidelines carefully and we realized it essentially pays management the same amount of money. it just changes the split between cash and stock. so we think the new guidelines are all fizz. and it really doesn't address the fundamental problem that was raised that it was excessive and we believe it is now still excessive and potentially worse because of all this cash that's going to be coming out of shareholders' pockets. >> the cash incentives that are set up are now much more based on performance though. versus just some of the grants
8:39 am
that would have been there before. i thought that would have addressed some of your concerns about it. >> well, there's been a lot of discussion about performance and how people get paid. certainly as we all know, coke has not done well. and the management has not performed. but the cash is still coming out of shareholders' pockets. which means that the dividend is potentially at risk with the results coming down. and also the earnings are at risk. so in fact, we believe what coke's done is potentially make the situation not better but it could actually be worse for the 2 million-plus coca-cola shareholders. >> you know, david, i was actually surprised that you weren't more swayed by some of the things that coke did. you had people like warren buffett who have come out and said this is something that addresses their concerns. you seem to be more and more standing on your own on this. and to not have support of other
8:40 am
shareholders. >> you know, we've had massive supported. we started with very little support and then massive support. we just came out with this yesterday. you know, buffett has on your program called this plan terrific. five times. but if you look at the numbers, the numbers still aren't in the favor -- it's still a bad deal for coca-cola shareholders. >> what do you think people should be paid? >> i think people should be paid well for their job. >> this is a specific example. what do you want them to be paid relative to what you think they are paying themselves based on the estimates you have made? put it out on the table. put the numbers out there. >> i think they should be paid a small fraction of what they're being paid. >> no, no -- >> let's say they were getting paid $6.5 billion depending on how you do the numbers on the original plan. on the equity plan proposed in
8:41 am
march. >> hold on. can i say something? you said $6.5 billion. when you first came out with your report, you suggested it could be as much as $14 billion. in retrospect, was that hyperbo hyperbole? >> no. >> i have been on your side on this for a listening time. however, this new plan seems to address so many -- i would have thought so many of the concerns in part because now you're saying $6.5 billion. >> the numbers are pretty much the same. the key thing is -- no, listen. they've gained the system. they basically said instead of, you know, the top tile of stock issuance, it will be the bottom. >> that's a lot less money. >> however, if you read not only the lease of the company but the release that warren buffett has said is they're not going to pay
8:42 am
them any less. which means they're going to get topped up in cash. so if they get topped up in cash, the cash still comes out of shareholders' pockets. >> but it's only if they hit performance metrics that show that the company is performing. i mean, you believe in pay for performance. >> well, but over time they've moved these the same group of people have moved the bogeys around. but these guys have always gotten paid. >> let's say it's not $6.5 billion. what should the number be? >> i think, you know, this is a simple company. this is a company that's been around a hundred years that has basically missed every major trend in beverage business. it's a billion dollars. it's $2 billion. it's a lot less and it should all be based as you would say that if they produce and coke begins to grow again and all shareholders win, because the way this plan is set up the only one who's winning is top management. you know, we think that mutar
8:43 am
has proposed two plans that don't benefit the shareholders. >> my question on that, if it is -- they cut the pool of people receiving this by about 80%. if they've tied even the cash compensation to performance, i don't understand the problem unless you think the system is gamed. it also sounds like you would not be happy unless they got rid of management and start fresh. >> there's a couple levels. they're still issuing a lot of stock, just over a longer period of time. it's four years to ten years. and then you have the cash component which has gone up which comes out of the pockets of the shareholders which puts the dividend at risk. it puts the earnings at risk. and really the question is are the bogeys tough enough. and are these guys just going to get paid which they have been and they haven't done a great job. >> david, you understand it
8:44 am
sounds like there is almost no constructive criticism at this point. it sounds like the only thing they could do is fire everybody and start from scratch to make you happy. >> well, it may be -- >> honestly, you sound like a sore winner. >> thank you. i appreciate the fact you believe we've won. but i believe there is an issue at management. because management basically didn't execute. they missed. and the idea of giving them another four years and having, you know, a lot of the cost cuts accrue to management and not to the shareholders. and the way the guidelines look, the shareholders don't win. and that's what it's all about. at the end of the day, the shareholders have to win. if the shareholders win, management wins. so far it's management wins, shareholders lose. >> we get into the pay for performance. i wasn't sure if i was going to
8:45 am
go down this path, but i looked at performance for the wintergreen funds. if i look at your performance, 7.1% annualized since the investment date of the shares. >> right. >> if i was just to invest in the s&p, that's 8% annualized. you charge 185 basis points. i could get that for 20 basis points if i invest elsewhere in just the s&p 500. >> the thing is we have an excellent long-term record. the numbers are influenced by what's popular. and we really own a lot of unpopular securities. takes a lot -- >> that's since inception of the fund. >> but that will change as what we own comes back into popularity. you know, we don't own alibaba and we don't own a lot of that. but we do set the -- we take risks down and we've been able to over time out-perform. and i think that, you know, i think the future is bright for
8:46 am
the winter green fund. because we're accumulating things that people aren't talking about today. >> what things? >> like oil. everybody hates oil today. you know, we love canadian national resources in canada. it's very undervalued. we think there's a lot of upside. it hurts our performance in the short run. in the long run it will create. we like coke. we think coca-cola is worth $90 in a takeover. >> who would buy coca-cola? who do you see as a potential? >> you know, we'll see. there was an article in the omaha world herald a couple weeks ago of the possibility of a berkshire takeover. >> although they said it will never happen. >> it could be the joint venture with abi. you know, things can happen. and as a value investor, the most important thing is -- and what we get paid to do -- is
8:47 am
really do the work. and at coca-cola, we're the one who is figured it out. and we're the ones again despite your skepticism who have looked at the guidelines and said that they've rearranged the allocation between cash and stock. >> let me ask as a valued investor in coke cola, if coca-cola came out again and said we are going to change the plan again because we want to truly placate david on this issue, are you convinced the stock -- how many points in the stock just on the comp plan itself? because i'm not -- the question is are investors going to look at this and somehow give them even more value than they've given them based on what they've done? >> well, i think the comp plan, if they made the comp plan, now this hugely rich comp plan and they made it so the performance numbers were easy to understand -- >> so you have a problem with the performance -- >> yeah. the fact that in the proxy statement there were bonus
8:48 am
shares that were not disclosed in the proxy. so there's a lot of issues here. and i think if it was clarified and there was a sense and the results that coca-cola was really -- >> are you communicating with coca-cola? >> you know, we try. >> are you talking to either their investment relationship people? muhtar a calling warren. i don't know if he's calling you. >> he's not calling me. >> do you call had him? >> we had a nice call with him early on. we haven't really heard from them. >> if they could rekindle growth and you say it's a simple company, i don't know. i don't know what i'd do with coke right now is i worry about the sugar side of things, big gulps. andrew, you can't drink that sugary stuff. they say that's worse than cigarettes. then you worry about aspartame. then do they overpay for these things, vitamin water. i don't think it's that easy to run. so if they started to rekindle growth and it started to work, i
8:49 am
figure you'd be happy that people made -- you know, if they were able to do it, you wouldn't care they were compensated for it. if they hit those numbers because it hasn't grown for awhile. i don't know. >> here's two elements of it, joe. first of all, if they focused on operational excellence which they have not done and the margins are a lot less than abi and sab, that would help tremendously. if you didn't have this massive draining off -- >> it's only massive if they rekindle growth, isn't it? >> no. they've been getting paid anyway. >> but it's tied to performance. >> we don't know that. it's not clear. >> what's yur total stake? how many? >> we own $100 million worth of stock. >> you're long the stock. you haven't hedged your position? no short position on the stock? >> no. and i think this is a very good company. i think there are a lot of good people in atlanta. there are good people on the board. we think this can be resolved.
8:50 am
but to go to joe's question which is the central question, how do you fix coke. first of all, you've got to have incentives that they only get paid if they do a good job. and you've also got to have a focus on margins. you know? and you've got to have the right corporate governance. the governance here hasn't been there. i think it's a business that if they had a coffee and they had, you know, other things, energy drinks that had worked, we think coke can be a superstar again. it's these issues of results and compensation have dominated the way the business worked. >> david, thank you very much for coming in. >> thank you. >> when we come back, still to cook, jim cramer from the new york stock exchange. ♪
8:51 am
there's confidence... then there's trusting your vehicle maintenance to ford service confidence. our expertise, technology, and high quality parts means your peace of mind. it's no wonder last year we sold over three million tires. and during the big tire event, get up to $140 in mail-in rebates on four select tires. ♪ (receptionist) gunderman group is growing. getting in a groove. growth is gratifying. goal is to grow. gotta get greater growth. i just talked to ups. they got expert advise, special discounts, new technologies. like smart pick ups. they'll only show up when you print a label and it's automatic. we save time and money. time? money? time and money. awesome. awesome! awesome! awesome! awesome! (all) awesome! i love logistics. so ally bank really has no hidden fethat's right. accounts?
8:52 am
it's just that i'm worried about you know "hidden things..." ok, why's that? no hidden fees, from the bank where no branches equals great rates.
8:53 am
let's get down to the new york stock exchange. jim cramer joins us now. were you listening, jim? >> i was astonished that mr.
8:54 am
winter put on a face that was, frankly, sanguine despite the fact becky asked some of the toughest questions i heard in a long time. i found the answers unsatisfying. coca-cola up 3%, pepsi up 17%. why do you have to be a corporate governance executive? you're in a performance business. don't justify coca-cola trying to make the pay plan better. sell coca-cola, buy dr. pepper, is it that hard a game? >> likes being in the -- likes to be able to talk about it. it's not a lot of money, $100 million. >> it's great to talk, great to debate corporate governance. great to make money. go to university. >> how about walmart? not everybody is doing well. walmart, same store sales growth. >> doug mcmillen, these are prerecorded calls, but it was
8:55 am
masterful. reminds me of the old sam walton, going to stores, checking out what's going on. a lot of categories doing well. i liked everything i heard. >> you did. >> really solid. >> okay, jim. say hi to john. >> will do. he'll be on in a couple of minutes. >> thank you. when we come back, a quarter of millennials say they think their student hoens will be forgiven. tomorrow, tony robins will be our special guest.
8:56 am
♪ for tapping into a wealth of experience... for access to one of the top wealth management firms in the country... for a team of financial professionals who provide customized solutions... for all of your wealth management and retirement goals, discover how pnc wealth management can help you achieve. visit to find out more.
8:57 am
look, i love the way he controls abthe lightsbutler. and unlocks the door when i forget my keys... it's just that... i feel like he's always watching us. yes, that is why we should use wink. ...look, it can monitor and manage our house but it won't start to develop human emotions. hey buddy. control your entire home with one simple app introducing wink it's like a robot butler, but not as awkward.
8:58 am
new data this morning on student debt. scott cohen joins us with more on san jose and that story. >> we've been saying since we first started reporting on this crisis four years ago, two keys to solving it are jobs and getting tuition increases under control. there is encouraging news on both fronts. it comes too late for some. more than 2/3 of students are coming out of college with debt. in six states average student loan debt for the class of 2013
8:59 am
tops $30,000. new hampshire, delaware, pennsylvania, rhode island, minnesota and connecticut. >> the fact six states have crossed the $30,000 line is just an indication not only is borrowing becoming more common, but more people are borrowing more. >> that's the bad news from the oakland california based institute of college access and success. as we said there is some good news. college board says the first time since the '70s, in-state tuition is slipping below 3%. the report says tuition is rising over twice overall inflation. the job market is improving for college grads whose unemployment is roughly half that of young people without a college education. the market not before it was before the recession. one more bit of encouraging news, the level of borrowing for
9:00 am
students still in school is falling. that's encouraging. >> thank you, everybody, for a wonderful program. >> tomorrow's friday. happy pre-friday. >> jolt is coming out at 10:00 a.m. >> "squawk on the street" begins right now. good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber is on assignment. cisco john chambers coming up this hour. buffet buying duracell, walmart earnings and a lot more. futures looking to rebound after yesterday's relatively flat action. the ten year up to


info Stream Only

Uploaded by TV Archive on