Transcripts For CNBC Closing Bell 20161020

We have a market flash on at t. Take a look at shares of at t and time warner. Bloomberg reporting that Senior Executives at at t and time warner have been meeting to discuss various business combinations including a possible merger. It says the talks are in early stages but reportedly the talks of a combination and reported take over has been discussed. Shares of at t are lower but we are looking at timec warner higher on this report. Back to you guys. Here we go again. Thank you. The days leading up to final president ial debate have been packed with blows to both camps. The candidates took major hits. Eamon javers has more. Thats right. It was the third and final president ial debate. While millions tuned in to watch what hillary and donald would say next. It is what they said in the past that once again became center stage. The battle on the stage has officially concluded there is a different battle still plaguing the clinton camp behind closed doors. Newly released emails showing internal conflict on Trans Pacific partnership, something donald trump made sure to highlight. Now she wants to sign Trans Pacific partnership. She lied when she said she didnt call it the Gold Standard. When i saw the final agreement for tpp i said i was against it. I will be against it when ic a president. The emails show hillary advisers were concerned. An adviser for the Clinton Campaign in an email to Foreign Policy adviser says she has to be for tpp. She called it the Gold Standard of trade agreements. I think opposing that would be a huge flipflop. Sfwl i will be against it when i am president. Chief strategist joel bennenson emails clinton adviser. The reality is hrc is more pro trade than antiand trying to turn her into something she is not could reinforce our negative around authenticity. The Clinton Campaign has not confirmed the authenticity of the emails. In one of them clinton speech writer says a draft statement to others on the team and wrote it was a hard balance to strike since we dont want to invite mockery for being too opposed to a trade deal that shec once championed. It occurs that trade has been demonized completely in this campaign by both sides of the aisle. The tpp especially. Sanders hates it. Warren hates it. Trump hates it. Why is it so politically toxic . Do they explain why . It is about jobs and working class jobs and manufacturing jobs. A lot of those voters feel extremely frustrated with the way the economy has been going for them and trade is the issue they centered on. You can feel Hillary Clinton getting dragged away from her earlier position on trade and what is so fascinating about the emails is that you get to see her staff debating that in real time as they agonized about how to change her position. They knew they had to do it for political reasons and knew they were going to get hit as a flipflop for doing it and they decide to do it anyway. I think it is just should be some explanation. Why trade for it when you can pthats a very good question. 13 minutes left in the trading session. The dow is down 31 points. Consumer stocks have taken a hit but our next guest sees real value emerging in the sector. He will name names for us when we come right back. Hey gary, what are you doing . Oh hey john, im connecting our brains so we can share our amazing trading knowledge. Thats a great idea, but why dont you just go to thinkorswims chat rooms where you can share strategies, ideas, even actual trades with market professionals and thousands of other traders . I know. Your brain told my brain before you told my face. Mmm, blueberry . Tap into the knowledge of other traders on thinkorswim. Only at td ameritrade. A bunch of earnings microsoft will be a cheadliner josh lipton with a preview of what we can expect. Microsoft ceo likes to say this is a cloud first world so now we will find out how well he is capitalizing on that trend. Street will be looking foreps of 68 cents. Revenue of 21. 7 billion. One big number, revenue from the intelligent cloud division. That division includes microsofts answer to amazons Cloud Business. In that cloud says microsoft does have advantages of his own including long standing customer relationships, client support and a big established sales force. Thank you. Well be checking back with you. We have pay pal, amd among others. We have a good Cross Section coming out. Joining us david cas. A feeling that if rates go up you look to the financials. If rates are going down you look toc defensive issues like utilities. Technology goes up either way. Do you buy that . If business is Good Technology will go up. Things ni s need to be in place that would be better economy. We are not fearful of technology if rates start to rise. We came into the segment saying you like the beaten down consumer names. We are a little bit worried about consumer names they have gotten knocked down enough that we think they are viable again if you are looking for income and stability. We think from here it should be okay. A company like that, proctor gamble. Swept up into what bill was saying into whether the fed raises Interest Rates or not. Theyre considered to be an Interest Rate play and safety play. People are more comfortable with the economy they will chase things like financials or technology. We think you should have a balance in your portfolio with Consumer Product companies in case rates dont goc up as qui as some might think. Do financials look cheap to you. One of the cheapest areas of the market. For a reason, though . We think the psychology is why they are so cheap and under siege but the business has been good. They are having a very good earnings report. They are making a great deal of money even with zero Interest Rates. If rates start to go up we think financials can go that much higher. We would pick five or six we think we will do very well. Even wells fargo. We think we have a 12month margin. Talking about the election risk to markets. What about health care . Can you buy health care before the election or do you have to wait to see the outcome . Hillary clinton wins the election and the republicans keep the house or the senate. We think health care will be absolutely fine. There are Many Companies like giliad. You can buy them if there is an upset where clinton wins the election and democrats take the house andc senate it will be problematic for health care. We would not be nearly as upbeat about them. Always good to see you. We will take a break. We have about six minutes left with the dow down 17. After the bell we have a ton of earnings in instant analysis. Microsoft, pay pal, amd and many more. You are watching cnbc, first in Business World wide. Alpha seems more elusive today. Is it because so many go after it the same way . Chasing after short term returns. Instead if getting caught up with the crowd, the Investment Managers at pgim take a long term view, teaming specialized active investing with riskmanagement rigor, to seek out global opportunities. We manage over a trillion dollars this way, attracting many of the worlds leading investors. Partner with pgim. The Global Investment management businesses of prudential will your business be ready when growth presents itself . American express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. Find out how American Express cards and services can help prepare you for growth at open. Com. Find out how American Express cards and services i am benedict arnold, the infamous traitor. And i know a thing or two about trading. So i trade with e trade, where true traders trade on a trademarked trade platform that has all the. Get off the computer traitor i wont. cannon sound mobility is very important to me. Thats why i use e trade mobile. Its on all my mobile devices, so it suits my mobile lifestyle and it keeps my investments fully mobile. Even when im on the move. Sign up at etrade. Com and get up to six hundred dollars. A couple minutes left in the trading session with the dow down 16 points. Bob pisani joins me for the closing count down. Michael santoli highlighting how the market has hovered within 3 of alltime highs for the last 79 trading days. I want to see the longterm chart. You remember what happened after brexit we had the big sell off and then it came back and then it has been going side ways since that time. There is that chart. What ever happened to september being volatile. Now we are into october. We continue to flat line. There is nothing wrong moving side ways. I am not lamenting. Wti oil earlier this week, big rally putting us at highs we havent seen in over a year. Now we are coming back. So a 2. 3 declinec today. We were heading towards 53 two days ago. Now we are down. The earnings continue today. We have some heavyweights. We have microsoft reporting and then pay pal. As i mentioned good Cross Section of sectors coming out. The one that i want to focus on is general electric. I am saying this is really important. Im a little concerned by the comments we have gotten from a lot of big industrials. We had fairly uninspiring report. Another big global industrial. Look at ge. You see the slide down. Their guidance for the quarter was not particularly great. The stock has been down for a while. This Company Operates in all big areas, power and aviation and health care. Those businesses are growing. They are in oil and gas. Those businesses have been troubl troubled. This is one of the big industrials in the world. Im saying they are a bellweather for how industrials are doing. They report tomorrow cmorni. Thanks very much. Well see you later. 27 point decline on the dow as this narrow market continues. Tyler technologies ringing the closing bell here at the new york stock exchange. I rhythm ringing it at the nasdaq. Stay tuned for all earnings coming up on the second hour of closing bell. Welcome to closing bell. Im sareisen in today. Minor declines for all three major averages. The dow finishing lower about by 41 points. S p 500 declining by about three. The nasdaq closing lower by 4. 5 points pretty much on the flat line. It is going to be a busy hour for earnings. Josh lipton brings us the microsoft results. We have pal pals numbers and seema mody will bring us earnings from advanced c microdevices. Joining us on we have cnbc pro columnist Michael Santoli and tim seymour joins us. We had earnings. We had data and we had post debate analysis. What today ostood out to you . It wasnt that big a market mover. On the currency side we got a move. Within the range in the most part. Within the range is the story for all of these asset markets. I feel like the Corporate Bond market is Strong Enough to support stocks where they are. Earnings are good enough. You had basically the typical beat ratio but yet not necessarily a broad theme. It all makes sense. I think the big thing that i take away is people are getting frustrated. We see sentiment measure start to roll over and people saying they are exasperating. That probably set[ xou up. I dont know if you have to have the sharp drop first. Gut check as you pointed out earlier today. What are you waiting for in earnings . In microsoft you have a mega cap name that is performing and transformed the business on the fly like so many others in the tech world. Lets see if the multiple that they are trading at can be rewarded because right now in this market place it is about finding stocks that are giving you reasonable growth. We have seen anything close to a yield play and utility play really pulling back. Microsoft i think is very important for the tech sector obviously. Some sort of late day deal chatter heating things up. Got the bloomberg report that at t was said to raise takeover talks or idea of time warner takeover. Your thoughts on that . The market gave it credence. Time warner was up more than 5 and maybe settled back a little bit. It makes sense if you are trying to arrange the pieces. You have cvs and via calmc getting together. Time warner was unsolicitted bid. Also there were reports back in the spring that eddie q maybe raised the idea of apple. Why do we have this talk around time warner . It is the one Big Media Company that is not family controlled and out there. By the way, netflix was the subject of unsubstan cheeated takeover rumors. You get all of time warner for more than you have to pay for netflix. Not one that wants to own those big media actions. At ts part shares down almost 2 . Would you look at any of those companies . Time warner is very interesting. It has been cheap and a good performer. People say turner is under valued and hbo is a catalyst. We will see if that can be spun out of this eventually. It is aboutc content players. Time warner is one of them. I think that is a name that people are watching whether there is an event for these guys i dont think you need to own it for them. We are still waiting for earnings. We have breaking news on al kermes. Stock up 41 big surprise because earlier in the year the Company Released results from another study that werent positive taking the stock and it hadnt been fapositive since th. It plans to discuss a filing strategy. Up there 40 after hours sgrmpt had holy cow. There we go again. It speaks to the volatility in that sector. It is either up big or down big. It has always been that game. It seems we have had more of these types ofc clinical resul and new product announcements lately. It shows you the market will not price this in. A surprise here. Does this have implications for other companies . Not necessarily no. It was a program that a lot of folks had probably written off after january results. They were negative. The stock really suffered as a result of that. These results coming in much ahead of investors expectations. Really good news especially in depression. I am looking at Health Care Sector broadly. It finished the best of the Industry Groups in the s p. The worst performing of the year taking that spot from the financials and now the only sector that is actually negative. I guess a lot of people are waiting to see how this election pans out. That is absolutely right. People are just waiting on the sidelines until the election because of the fear that you were discussing earlier that potentially the democrats could sweep across different legislativec branches if they have that power in the house and senate and Hillary Clinton is elected president there is fear that more regulations could be introduced. We will keep an eye on it up 44 on the positive result for the depression drug. Do you Like Health Care here . At a time when people are looking for real earnings within the s p the Health Care Sector is one place you are getting 15 to 18 on valueuation. I think there is a lot of bad news in the stocks. I think regardless who wins in november i actually believe it will be a lut more difficult for some of this legislation to go through. These companies are earnings and have been oversold on the fear factor. If you looking to bio tech we have seen around 245. The top names are Free Cash Flow on a multiple basis and are very attractive. A couple are very, very attractive and there may be a reason for that. One reason we might be running in place in terms of the overall marketc is there doesn seem to be a wide agreement on what the fed is going to do. Yes there is more than a 60 chance priced in that the fed raises rates in december. It is not a high convection. You not seeing the ten year yield break out. There is a group that says they want to raise rates and a group doesnt believe them because Economic Data continues to be lumpy. Especially after bill dudley says there is a good chance they raise before the end of the year. Even past december if you grant we get one in december what does it mean for the rest of 2017 which maybe is one or two. I think there is a little bit of muscle memory about what happened last year. I think it is a trap to feel we are in for the same turmoil but i think it is out there. And the ecb got attention because they really could go either way. They could say we will extend or inflation is moving in our favor taper is a very scary word. We should mention American Express. I know you hinted it yesterday. Top performer in the dow. Finished higher by 9 cutting the year to date losses. It is down about 4 for the year. That is the kind of stock that would work off of earnings which i hated. Really nothing much expected for the next two years for earnings growth. They had better than expected numbers. We have more earnings to talk about. Pay pal is out. Well, it looks okay because they are in line with estimates. 35 cents a share expected coming in at 35 cents a share revenue a little higher than expectations 2. 65 billion was expected. Pay pals revenue at 2. 67 billion. Take a look at stock in after hours is down by more than 3 . This may be because since pay pal spun off from ebay in july 2015 it has beaten earnings expectations every quarterc so perhaps now that you are seeing it come in line investors are disappointed. Keep in mind this stock has been beating the s p 500 by nearly double this year up about 10 versus the s ps less than 5 . It has been doing very well. What is going to be important is we will jump on the Earnings Conference Call but we want to know about the deals that pay pal has made with visa and mastercard. We want to know what the margins outlook is like. Are those deals going to dilute its earnings or help it move forward, broaden its scale . That will be important to look at. We will be listening for indication. Pay pal coming in line with estimates 35 cents was expected. And the stock down 3 . Here we go. Microsoft the headliner is out. Josh lipton, how do they look . Microsofteps of 76 cents versus expectations of 68 cents. Revenue 22. 3 billion, expectation was c21. 7 billion. Beat on the bottom and top. Looking through the business divisions. Revenue and business processes, office products, 6. 7 billion. Microsoft saying office 365 consumer subscribers jumped to 24 million. Revenue and intelligent cloud to 6. 4 billion. Azure revenue jumped 116 . Revenue in more personal computing that includes windows that declined 2 to 9. 3 billion. Microsoft says it will get the outlook on the call. That call starts at 5 30 eastern and well be on it. Thank you very much. Stock up 4 . It is very much invogue to have muted expectations for microsoft. It certainly. I think that the stock was valued in a way that it needed a pretty big beat to get upside. Tim mentioned valuation. The forward multiple from 17 to 19. They didc do better than expecd in intelligent cloud. I think that probably makes a difference. I think it was not that they needed to do better but had to do better in the right businesses unlike some others that are transitioning where intel saw better results in pc. Maybe this would have been a different story. Do you agree . The business is growing. Up 116 . Office 365 growing close to 60 . These are what investors want to see. I do think that this Management Team probably gets a premium for high transparency, high quality and i think is one reason why microsoft as a mega cap name where people are looking for names that are trading at or in line with the market gets a benefit of the doubt. The fact that these guys steered business into the three parts of the cloud that they need to be in is very impressive. Let me go back to pay pal for a second. Maybe they are selling on the news but it is still a very, very competitive sector these days. Do you like that company or not . I like the secularc story. We know cash transactions are 85 of Global Commerce and therefore we know what is going on. The deal with visa and mastercard is something we need to hear more about. They are incented for more volume growth here. We are concerned about what the margins are. These guys have owned the transfer. Clearly emerging markets growth is where the guys are allowing vendors to leap Frog Technology and credit constraints. That is why they will grow faster. I think they have an edge. Just looking through some of the individual businesses within the microsoft report whats impressive azure revenue growing 116 , 121 in constant currency. That is the one that i think people are keying off of right now. It is essentially the one area that everyone agrees. You can have gaudy numbers that means microsoft again can return to being a growth company. I think people are willing to pay up for cthat, their positi. We are looking at alltime highs for microsoft here in the after hours. Not by as much as you think. This stock traded in the 50s in 1999. It was a long time in pergatory. Any thoughts going into tomorrow . What are you looking for . We have to continue to watch rates. We talked a bit about the ecb. I think earnings season has been a real surprise. I think the sectors you wanted to see outperform really are. Some show enough growth with a low bar this earnings season is enough for stocks to have ammunition to go higher if the macro is constructive. We are talking politics and fed. They have more volatility than less. I think earnings season is continuing to impress me. So far so good. Thank you. See you later. Catch him and the rest of the fast money crew coming up next hour. c media legend Peter Chernin with a rare exclusive interview. That will be at 5 00 p. M. Eastern time right here. In the meantime we are following microsoft move on earnings. It is spiking right now at a record high level. Well talk about whether you should buy in now. Two shareholders weighing in on results next. Hillary clinton and donald trump got into heated arguments about russia and Vladimir Putin during last nights debate. From everything i see has no respect for this person. Thats because he would rather have a puppet as president of the united states. Its pretty clear you wont admit. Youre the puppet. We will hear from both sides of the aisle on that issue coming up. Youre watching cnbc, first in Business World wide. We have another big after hours mover. Lets send it over to seema mody. Skechers disappointing report overall. Earnings of 42 cents. Wall street anticipating earnings of 46 cents. Revenue, too, coming in below expectations at 942 million. Weak revenue guidance for the fourth quarter. In the press release the company is bullish on International Business and says we believe our International Business represents the greatest Growth Opportunity. They point out china in specific. We are looking atc shares down about 15 after hours. Keep an eye on shares of sketcher. Schlumberger reporting earnings. Revenue slightly missing expectations at 7. 2 billion. The chairman says after calling the bottom of the cycle in the Second Quarter our business stabilized in the third quarter. We are looking at shares down just fractionally but still up about 18 due in part to the recovery that we are seeing in the commodity market. Maybe a turning point for the results. Thank you. Seema mody on earnings movers. The final president ial debate last night got heated between donald trump and Hillary Clinton. Tensions rose when the candidates clashed over Vladimir Putin and whether russia was involved in the wiki leaks email hack. She has no idea whether it is russia, china or anybody else. She has no idea. You have no idea. c do you doubt 17 military our country has no idea. He would rather believe Vladimir Putin than the military and civilian intelligence professionals who are sworn to protect us. I find that just absolutely she doesnt putin has outsmarted her. From everything i see has no respect for this person. Thats because he would rather have a puppet as president of the united states. Youre the puppet. It is clear you wont admit. Youre the puppet. Wasnt that fun . Joining us now is Jimmy Williams and a former adviser to the senator urban. He joins us along with susan dell purseio who joins us here. This campaign has just been off the rails for a long time. Now we argue about the role that russia plays in our own campaign. And its fascinating because vonald trump really had a really good issue to go after Hillary Clinton on on the Foreign Policy side. All he had to do was talk about the reset button that she did under president obamas watch. He could have seemed knowledgeable. This became like a food fight between the two of them. The fact that he wont recognize the intelligence reports that russia did commit this hack is really disturbing. Why wont he . Is it part of his National Security briefing that he got as a candidate . If so, what is the political strategy here . Susan is right about that . It was a squandered chance. When you are running for president and you give the nomination the sitting president extends Intelligence Briefings to those two nominees. They get three to four by the time the nomination up until election day and then they get them more regularly or the winner does. He is not taking the Intelligence Briefings, has admitted so in the press. So he goes into a debate stage and Hillary Clinton armed with facts saysr s agencies and say you dont know who it is. Neither does he. That was a massive squander on his part. I dont say that as a democrat or republican. You are nodding your head. I agree with what i previously said i suppose. It was a squandered opportunity as jimmy just said. Hes just showing he has the command over Foreign Policy that he could because if he just studied and went forward he knows some essence of it but is more intent to go after her and criticize her. We are getting caught in the personality like they did last night. The bigger issue is shouldnt be the role russia is playing in our own election here . Absolutely. There are several republicans who told the nominee and others be careful how far you go in criticizing and using these emails because it was the Democratic Committee first. Who is to say it will not happen wherec is the american publ on this issue . Where is the voter . Is it resonating at all . The homeland has to be safe. Do i think most Americans Care about whether wiki leaks or russia stole emails . No. It is not on the radar screen. But if something were to happen then this all comes into play. People like to be safe, like to feel safe and they dont like to feel like their leaders arent keeping them safe. That is the number one take away from that exchange. It was a political fall feasance. It was dumb. I give donald credit for coraling a large part of the electorate. I give it to him and the same to hillary. He is not prepare frg these debates. He knows he is going up against a person who has been in politics for a long time. She is as concentrated and seasoned as anyone i have seen before. He has to do better than this. That was his last chance and he squandered it and the election for all intents andc purposes over after this. Do you think Vladimir Putin wants donald trump to win this election . It appears the way these leaks are coming and we know this wasnt just someone from russia who hacked the system. It has been said it is the russian government that is doing this. The russian government are the people leaking or dropping these leaks every day. It certainly seems that it is the intent is to harm Hillary Clinton but more importantly show that they can play a role in our Domestic Affairs and that is terrifying. We have to go at this point. Thank you. Jimmy williams, good to see you both. Seema mody back again. We are going to stick with tech. Advanced microdevices. Revenue to beating consensus 1. 31 billion. We are looking at shares down about 1. 5 . We havec been keeping a close e on Semi Conductor space given the wave of consolidation we have been seeing. No doubt we will see you later. Amazon ceo says his company does not focus on competitors. What do they focus on . Hell tell us coming up. And elon musk promising that every new tesla will be autonomous and hopes to achieve that goal by the end of next year. Is this just big distraction from problems tesla has been running into lately . That discussion coming later on closing bell. Artup begins with a simple idea. But with growth comes complexity. Thats why so many innovators are on the ibm cloud. Like refinery 29, with nearly a billion views a year. Or runkeeper, a training app used by over 50 million runners. Or Game Developers whose popularity depends on launching new updates fast. Helping to keep a companys success uncomplicated thats what the ibm cloud is built for. If youre on medicare, remember, helping to keep a companys success uncomplicated the open Enrollment Period is here. The time to choose your Medicare Coverage begins october 15th and ends december 7th. So call unitedhealthcare to enroll. In a plan that could give you the benefits and stability youre looking for, an aarp medicarecomplete plan insured through unitedhealthcare. What makes it complete . It can combine medicare parts a and b, which is your hospital and doctor coverage with part d Prescription Drug coverage, and more, all in one simple plan for a low monthly premium or in some areas, no plan premium at all. 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Remember, medicare open enrollment ends december 7th. Call unitedhealthcare today about an aarp medicarecomplete plan. You can even enroll right over the phone. Dont wait. Call unitedhealthcare or go online now. Jeff besos sitting down with walter isaacton. The amazon ceo discussed how the internet giant stays competitive. The core of the company is Customer Obsession as opposed to competitor obsession. And that works really well for us. Its a i think the advantage of being customer focussed is that customers are always d dissatisfie dissatisfied. They pull you along. If you are trying to serve them they pull you along whereas if you are competitor obsessed, if you are the leader you can look around and see everybody running behind you and maybe slow down a little. You need to be nimble and robust. You need to be able to take a punch and you need to be quick and innovative and do new things at a high speed. That is the best defense against the future. You have to be leaning intoc t future. If you are leaning away from the future the future will win every time. Never lean away from the future. The future wins every time. We know that jeff bezos is leaning into the future. The other piece has always been the market permits him. What it takes to be that guy who leads into the future. Been out there for 20 years now. The analysts have been so skeptical about the future for the most part. Those that have the thousand dollar price target not withstanding because he keeps plowing the money back in. The aws business, the Cloud Business really does become a cash cow if you model it out correctly. Basically his customers finance his business. Its the old model. That is a piece that just works. I think he can spread that over a wider population. c the stock has had many 20 pullbacks along the way. It doesnt mean it goes nothing but up. He had provocative comments about donald trump and about the presidency. He said donald trump is eroding our democracy around the edges by doing certain things. In his capacity as owner of Washington Post which has been at war with donald trump as has the New York Times and other media. He has become one of trumps targets. He actually in some respects is an unlikely voice for that position. To be defending freedom of the press. Before he went to Washington Post i dont know that he would have been placed there. Trump has gone after him about taxes. Kind of an old issue, not a fresh one. Lets move on. We have a cnbc news update now. Here is what is happening at this hour. The u. S. Military confirming a bomb has killed an american soldier today in northern iraq. It is the first u. S. Death since the special operation began threec days ago to retake mosu from isis. The Syrian Military vowing to bring down any turkish planes entering its air space after turkey carried out air strikes overnight in northern syria. A hepatitis scare in detroit the Health Department is investigating two cases of hepatitis a. It may be linked to a whole foods location in detroit where the illness was detected in an employee and customer. Whole foods saying it notified the Health Department about the diagnosis. Met life is giving snoopy his pink slip. He has been the face of the ad campaign 31 years now. The move comes as met life spins off its u. S. Life insurance business. I love the company said they introduced snoopy 30 years ago because they wanted to be warm and fuzzy to thec consumer out there. Not cold and distant as Life Insurance companies seem to be. I guess it is okay now because you are going to the corporate customer. Good grief, charlie brown. What is next. Snoopy, youre fired. There will be one more on the jobless numbers next time they come out. Coal in their stocking. Were watching shares of microsoft. They are surging after quoting better than expected earnings. Why Cloud Computing is so important and what to do with the mounting pile of cash. Alltime high for microsoft. Might be 80 degrees and sunny in miami thmpt Real Estate Market is cooling off. The reason behind the price dive coming up. Ay, so you launched r banks app. Now what . How will you keep up with the new demands of todays Digital Economy . The fact is some believe they wont need a Traditional Bank down the road, so at cognizant, were helping banking and Financial Services Companies Think digital, be untraditional, and reimagine what the bank of the future can be. Our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. Were creating new platforms across channels so customers can effortlessly invest, borrow, lend, transactwhereverwhenever they choose. And were digitizing the way banks run, driving efficiencies and delivering new value for their customers in return. Digital works for banking and Financial Services. Lets talk about how digital works for your business. Welcome back. Lets take a look at how we finished the day on wall street. Stop me if you have heard this before. A narrowly traded day on the street. The dow down about 40 points. That is actually i think we were down 75 points. We headed near the lows of the session. S p down 2. 95 and the nasdaq which had been doing pretty well on the upside down about 4. 5 points. Microsoft shares hitting an alltime high in after hours tonight on the back of earnings report. Josh lipton is back with more details on that report and maybe why the stock is surging. Bill, you are absolutely right. Microsoft stock really cmuchbi here in the after hours. I call your attention to a new financial metric which microsoft started unveiling with this report. That is commercial cloud gross margin percentage which is so important to investors because it is really that critical window into the future profitability of what has become microsofts most important business. That number in q 1 clocked in at 49 . Just to put that in perspective last Time Microsoft reported on the companys Conference Call microsoft cfo said it was 42 . So that 49 i can tell you way stronger than the estimates i was seeing, the analyst i was talking to. You can see investors reacting in the after hours. Back to you. Thank you. Lets bring in two microsoft shareholders. Julie good ridge and tim lus co. Good to see you. Julie, have you gone through the report. I am looking at one other metric besides the one that josh pointed out. That is the onec investors wer looking for. Revenue at the cloud unit up 10 better than consensus. It was certainly a beat. Are you impressed . I was. I am impressed. What i am mostly impressed by is how the Company Culture is hopefully shifting away from leadership which was kind of stagnant and didnt get us anything to nadella who is hopefully embracing what it means to be a company of the future to include all different sorts of employees and all different kinds of engineers in top Level Management. Tim, what about you . You have been watching the business mix very carefully. The cloud is emerging as a better Growth Opportunity for them, dont you agree . I agree and i think this is what everybody has been waiting for. You have had pc business be a cash cow for them for a really long time. It is difficult for big Companies Like microsoft to turn and tack towards what is the future. It seems like they have done it successfully. As you see cazure or intellige cloud grow to more than 30 of the revenue of the business they can have tremendous earnings power going forward. We are pleased with the quarterly report. What do you think might happen to microsofts culture or the Growth Prospects with the linked in acquisition . It seems as if the stock has come through pretty well. How do you view the transaction . Well, i see it as a broadening. We are talking before about the future sort of seizing the future and opportunities in the future. I think one thing that linked in brings is a sense of who the work force is and who the future really is. I think that the more that microsoft can capitalize on that and the more that microsoft can move away from a Corporate Culture that was entirely sort of maledominated and stagnant quite truthfully. The better off they are going to be. I think linked in has a history of moving beyond that. That is really goodc news for microsoft. The story here is the cloud. We see the progress and the growth in that space. How far behind amazon are they at this point . We were just talking about amazon, web services clearly the market leader. Is that the next battle roal here . I dont think they are too far behind in the intelligent cloud where they are delivering high end Cloud Based Services rather than kmaudatized. Across the business it keeps getting cheaper. If you are delivering secure transaction based Cloud Services you can make a good margin on it. Im not worried about how much market share they have against amazon because amazon is willing to do it for less margin. I think they have really focussed on knowing their customers and delivering things that their customers want and get rid of buying things like nokia. The skype acquisition is far enough behind them that they are starting to focus onc what the customers want. I want to interrupt here for a second because one of the things that is really important in terms of recognizing what your customers want is understanding who your customers are. And who the customers are certainly is changing in this country and it is definitely changing internationally. So if you havent got women, people of color, people from outside the country in your top Level Management on your board you are going to miss opportunities. I think that is what was going on when balmer was involved with the company. I want to pivot you to facebook very quickly here. I think you own shares of them, right . Yes, we do. You have been no big fan of mark zuckerburg. Its the company we love to hate, actually. How about the memo he put out in defense of peter thiel who donated a million to donald trump and took heat for it. He is on the board there at facebook. Mark zuckerburg wrote you know we cant create a culture that says it cares about diversity and then excludes almost half the country just because they back a certain candidate. What do you make of that . I think it is kind of confusing logic, actually, because i understand that creating a culture of diversity is supposed to mean that you have different people with different opinions sitting down at a table together and making decisions as a group. But what they are talking about here is one out of six nonemployee Board Members making an incredibly outrageous statement about his support for a particular political candidate. Lets not forget that peter thiel may be gay but he is a white guy and has a lot of money. He has been on the board of facebook since 2005. This is not a guy who is bringing Something Interesting other than perhaps his past experience to the board of facebook. In fact, when you are talking about peoplec making good decisions about diversity, to have one of your six Board Members make such a play for a candidate, in this case, it doesnt have anything to do with party afail yigz, a candidate who goes against everything you say your Company Stands for, i think that is problematic. We thought you might have an answer for that. Good to see you. Thank you. By the way, we should note that julies best friend Steve Ballmer will be on squawk box tomorrow morning. Electric driverless car on a Cross Country trip sounds like a high concept movie. This is the real life plan of elon musk for tesla next year. We will ask if the plans are a distraction for real problems. Luxury real estate in miami and south beach taking a beating as of late and doesnt bode well for upcoming winter sales season. We will look at what happened to the heat of Miami Real Estate just ahead. Ahead. The Conference Call. The ultimate arena for business. Hour after hour of diving deep, touching base, and putting ducks in rows. The only problem with Conference Calls eventually they have to end. Unless you have the comcast business voiceedge mobile app. It lets you switch seamlessly from your desk phone to your mobile with no interruptions. Ive never felt so alive. Get the future of phone and the phones are free. Comcast business. Built for business. Comcast business. Hey, jesse. Who are you . Im vern, the orange money retirement rabbit from voya. Orange money represents the money you put away for retirement. Over time, your money could multiply. Hello, all of you. Get organized at voya. Com. Whats Critical Thinking like . A basketball costs 14. Whats team spirit worth . cheers whats it worth to talk to your mom . Whats the value of a walk in the woods . The value of capital is to create, not just wealth, but things that matter. Morgan stanley tesla announcing a driverless strategy. The electric car maker saying all new vehicles will be equipped with hardware that enables fully autonomous driefing. Adding it plans to have a vehicle drive itself from l. A. To new york by the end of next year. Is elon musk, is he diverting attention from bigger problems at his company . Joining us now is james alve alveartine. Is this a red herring . Thanks for having me. I think we are involved in a space race as it relates to driverless cars. I think tesla, ford, continental and others are trying to box out as it relates to setting a timeline to getting to level four and level five therefore fully driverless vehicles. Tesla is as prepared as anyone. This is something they have been working on as it rehates to the construction of the model s to include cameras and censors and other devices to enable these driverless features. They have been working on this for many years. So to hear them talk about this and announce it i dont think is a distraction as you put it. Shares were down 2 today and they have been down about 13 over the last three months. Is what is driving the idea that musk has to combine solar city . What is the case on tesla . Why do you think they are wrong . I think there is a little bit of right in thec bear case as relates to solar city. It was probably the wrong time to bring solar panel sort of thesis into an already complicated auto thesis. I think separately the issue with the timing is that we are in a gap period now between the model s, model x and model 3 which is due out late next year. So its already sort of a difficult period. There is very few auto catalysts that can offset the negativity. I think from that perspective it is really the issue. Seems to not let too much time pass before he comes out with some kind of announcement that he kind of pitches as a major technological advance. Does this qualify as that . I think the secondary question is, i canened why he wants to actually be out there and pushing the limits of what these cars can do, but its interesting given that the typical buyer of a tesla loves the performance as a driver. The 2 1 2 seconds to 60 miles an hour is kind of a selling point, its fun to drive. Its an interest contrast. Letsc think about what a model s is. And youre absolutely right. Its an i objencredibly fast fastest performing in the world. When you buy a tesla model s, there is reduced obsolescence risk provided by the fact that they can give over the air software updates, the latest this version 8. 0. What theyre doing, in a nutshell, what auto shows are to traditional auto manufacturers, last nights announcement was to tesla. Its a much cheaper, more efficient way to advertise and keep customers happy and keep the brand fresh intracycle, which the Auto Industry has never been able to do, let alone add monetization in the cycle. This is an 8,000 feature. Thats the genius i think of the recreation, tesla versus traditionali traditionalists. It got us talking about it, whichc is what ellon wanted. Next, well look at whats behind a drop in Miami Real Estate, next. Miles per hour. Eling over 200 to win, every millisecond matters. Both on the track and thousands of miles away. With the help of at t, Red Bull Racing can share critical information about every inch of the car from virtually anywhere. Brakes are getting warm. Confirmed, daniel you need to cool your brakes. Understood, brake bias back 2 clicks. Giving them the agility to have speed precision. Because no one knows like at t. This is my retirement. Retiring retired tires. And i never get tired of it. Are you entirely prepared to retire . Plan your never tiring retiring retired tires retirement with e trade. Im in vests and as a vested investor in vests i invest with e trade, where investors can investigate and invest in vests. Or not in vests. Sign up at etrade. Com and get up to six hundred dollars. Sunshine and sand used to be the easy sell for real estate in miami beach. Realtors might have to come up with a new sales pitch and pricing. Rob frank joins us to explain. Its one of the biggest declines since the recession. A report said the number of high end condo sales fell by 25 . Inventory of milliondollarplus condos is piling up. Theyre taking much longer to sell. There is now a threeyear supply of luxury condos in miami. In southc beach, even worse. Inventory is up 30 over last year. There is now a 4 1 2 year supply of luxury condos in miami beach. The market is likely to get worse before it gets better. Real estate experts are saying there are now over 15,000 condos under construction in miami. And with foreign buyers fading, u. S. Buyers are growing a little more cautious at the high end. The prospect of zika looming over the market, discounts are getting even bigger. Heres one for you, this 13 thousand square foot home in miami beach, it has eight bedrooms, a gym, three koi ponds, and water views. Now its 29 million, youre saving 3 million. You need three koi ponds . I know somebody is going to bring it up because they always bring it up to me, ten years ago when i was doing these road trips, we were in miami, two Real Estate Agents said to me, buy Miami Real Estate because prices never go down. It was at the handwritieight of condo boom. Miami is the ultimate boom and bust town. The developers are their own worst enemies. When things are good, they vastly overbuild, and then they have this huge supply. We saw that in 2007. It crashed, it came back quickly, now theyre at the edge of the same area again. The briazilian real has strengthened so much. It must be zika. Robert, thank you. That does play into it. It always gets back to the currency. One of the most important factors, right, robert . Absolutely. A few minutes away from paypals Earnings Call at 5 00 p. M. And microsofts at 5 30. What you need to be listening for on those calls, when we come back. You work at ge . Yeah, i do. You guys are working on some pretty big stuff over there, right . Like a new language for crazybig, worldchanging machines. Well, not me specifically. I work on the industrial side. So i build the worldchanging machines. I get it. You cant talk because its super highlevel. No, i actually do build the machines. Blink if what youre doing involves encrypted data transfer. Wait, what . Wowwww. Wow . What wow . There is no wow. Doesnt go on your wrist. Technology. The highly advanced audi a4, with classleading horsepower. Hey nicole. Hey i just wanted to thank your support team for walking me through my First Options trade. We only do it for everyone gary. Well, i feel pretty smart. Well, were all about educating people on options strategies. Well, dont worry, i wont let this accomplishment go to my head. Im still the same old gary. Wait, you forgot your french dictionary. Oh, mucho gracias. Get help on options trading with thinkorswim, only at td ameritrade. Youre watching cnbc, first in Business Worldwide. c announcer Johnathan Bush with immediate earnings insight and his take on the election. Squawk on the street, 10 00 eastern. I cant believe what just happened. Paypals call starts at 5 00 p. M. Eastern. Microsofts kicks off at 5 30. Microsoft, what are you listening for . A little more color on their outlook. They delivered their outlook, people will like what they hear. Stock is trading above 60. Alltime highs. For one brief shining moment, nobody has a loss in microsoft stock. Theoretically. Its a vote of confidence in satya nadella. See you tomorrow. Kelly is back here tomorrow as well. Thats it for closing bell. Fast money starts right now. Fast money starts right now. Live from the nasdaq overlooking new york citys times square, im melissa lee. Tonight on fast, media legend and former fox president Peter Chernin is with us about what he thinks the next big thing in media could be. Our traders separate fact from fiction and give you the best move. And stocks falling after a Bernie Sanders tweet. What other names could be in the