Transcripts For CNBC Squawk On The Street 20161018

Uk cpi hits 1 , the highest in almost two years. As for our own core cpi, 2. 2 is just a shade light. Netflix shares soaring. Reid hastings said it will double down on original content next year. Goldman sachs beats both the top and bottom line. The shares, get this, theyre up in the premarket. Visa ceo Charlie Sharf resigning, saying he can no longer spend enough time in San Francisco to do that job effectively. Netflix surging after blowing past expectations. Quarterly subgrowth of 3. 6 million. The company also out with betterthanexpected earnings. Reid hastings last night on the earnings call. Its time for me to apologize for the volatility again. You know, this time its good a good direction. But i think more and more investors are able to look at the multiyear picture and they see the patterns emerging. And so then it would be less and less about our guidance. Stocks on pace for the fifth biggest gap on earnings. I wonder if hes going to apologize for the volatility this time . They have handpicked analysts that do the Conference Call. The Conference Call is really hilarious, frankly. And i want to say, i want to be picked next, i really do. I want to be on the hastings call, because the way this call should have within set up is, okay, let me just ask you, how much do you love tata and how much do you hate pablos mother. Im not giving away any stories because its very clear that narcos drove international. It was unbelievable. Stranger things drove domestic, but narcos is incredible. I so much want to give away but i cant. I want to talk about the fact that pena is coming back and that gives away everything. It is so clear that this is a hitdriven company. And the analysts keep talking about Free Cash Flow and bound by the four walls of the spread sheet. What they should be talking about is how there it is, you see it . Steve is back, pena is back. Judy is probably gone. But this is about content and how much they love it in turkey, how much they love it in poland, how much they love it in latin america. This is a content play and he cant forecast other than the fact when he told me narcos was a combination of breaking bad and scar face. Its all algorithmic. They said they dont know whats a hit and whats not. But they do. If you like breaking bad, youll love narcos. This is literally this guy and his partners coming up with stuff that we want better than everybody else. They have a second and a third. They keep they are able to have noncancellable shows. I cant believe how good they are. They dont cancel them. We dont really know what the underlying numbers are. The show runners know the ratings. So you can argue all you want about if you like, they will like, but they can produce whatever they think is going to work and say its working. Theres no doubt house of cards drove the initial subs here in the states. It caused a shortfall in the second quarter. House of cards 4 was a bust. I agree. And now narcos, the ads was well above where the estimates were for analysts. The bernstein analyst said we cant figure it out because we dont know how much is going to drive viewership. So they will get to 100 million subs in the nottoodistant future. Here in the states and internationally theyre adding so many more. But they still have a long way to go. I thought it was interesting when he pointed out video internet companies, facebook and youtube, video internet companies. Right, right. The key line in the whole darn Conference Call. People people are begging them to say when are you going to stop spending. And finally reed gets sick of them and says, no, well keep investing in growing the contents. We see the ability to continue to please customers with a wide range of contents. So i think if youre trying to model a business, which is all these analysts try to do, if youre trying to model a business long term, you should think of content, hours viewed and brand love. I am raising numbers. Heres what im doing right now. Narcos 3 raising numbers. Im raising numbers right here. Raising numbers pena. You know as well as i do thats a harder game than it looks. But not them. Any primetime chief of a Major Network can tell you, you dont know whats going to be empire and whats going to be i do. I really i dont know if i think that anymore. I think these guys are machines and they have learned. Theyre the only guys but they have a lot more programs than just narcos and not all of them are doing as well. 6 billion, 6 billion on programming in 2017. Excuse me, 6 billion in 2016, 1,000 hours in 2017 so even more. Brand loyalty per share is incredible here. Im not arguing. Youre just getting very excited about it. Theres nothing wrong with i love lucy. Youre like a thursday night football guy. I am thinking big and she is thinking small. I have not watched a network show in years. I still have no idea what was going on by the way, but i enjoyed it. As did the rest of the family. How much did you love tata . I dont know what that is. Tata for now. They are, even as theyre spending more in original, theyre pulling in the number of other titles in their library, so there is that. Eventually it will be more about what they bring and not whether or not you can see godfather 2. Its hbo. But you take them at their word that they make more money on these. Up front they dont. Okay. Okay. You dismiss me with faint praise. They are a powerhouse. They are going to be a part of our lives and everybodys lives in the streaming world for a very long time. They are helping to change this environment that we talk about so often and accelerate the cordcutting that is taking place now at a rapid rate. It is starting to pick up bigtime. Were going to be talking about it a lot in 2017. I think doueutsche is still a sell. Web bush takes their target from 50 to 60 this morning. There are some nonbelievers out there. Yes, theyre spending a fortune on programming, but theyre very good at programming, okay. I think one of the things that came out about this quarter is, once again, the more the merrier. Bring on more. We dont really care about the competition. Its the competition is great for us. I really like that. A lot of people do have two or three services. Oftentimes if you have one, youre more likely to have another. If you have hbo youre more than likely to have netflix and hulu. Why dont you join these people with the 60 price targets . I think you ought to sit down with Reed Hastings and listen to him. I would like to meet and talk to and spend time with mr. Hastings. When you sit down and talk to him, the greatest comment is im going to raise 9numbers novembe 4th. Why . Because he is saying the crown about Queen Elizabeth, the most boring person in history, im raising numbers crown per share right now. Jim cramer, content programmer. Im interviewing him next time. The world got tired of frank and claire underwood. But november 4th is going to be so huge. Do you really care about elizabeth ii . I dont. But this guy will make me care. Im going to care about Queen Elizabeth ii. We also care about goldman. Yes, im moving on. What a transition. Lloyd blankfein . Goldmans earnings released, blankfein said we saw solid performance across the franchise that helped counter typical seasonal weakness. David will have an exclusive with blankfein tomorrow. Get out we cant wait for that. Equity up 22. Investment banking revenue not so good. Down one. But they got their care share o ipos. They did. Investment banking was perhaps the least impressive part of it. Fixed income currency and commodities. And when you take out the dva from last year, its up 49 year over year. And i think a lot of the analysts are looking at that number. So youre going to see a number of notes this morning that say this was the best report weve gotten from it was so far not bad. Jpmorgan sitting pretty good. B of a yesterday, fine. This one does look to be the strongest. Theyre looking to be keeping expenses in control. Theyre 39 comp rev for that quarter. Staff down 5 . Yeah. And the lowest share count they have ever had. Yeah, they buy back a lot of stock. Decreased by 1. 8 for the quarter to a record low. They should just keep buying. Thats what theyre doing. Its an impressive quarter. I remember when david said theyd never get above 6. I said 10. How did you get the blankfein interview . 7 a year ago. Roe above 10 is impressive. Can they keep it there . I dont know. You have to interview him and ask mr. Blankfein. Look, the banks have been good, okay, other than wells. Wells wasnt horrible. I mean they obviously have a little transition problem there. But there is without a doubt one more group that nobody likes that is doing well, the banks. Bank of america was a really good quarter. If we get this fed rate hike that everybody keeps saying were going to get, youre going to wish you own this group. They did have a lower than expected tax rate at goldman. On the stock performance, weve watched these things fade every day. They cut your heart out. I know. They open nicely and then they fade, as we say. Is that going to help with goldman today . Remember, goldman has a window. They start selling stock and that always gets people down. Its not i watched bank of america yesterday open up big and just sell off. At one point it was down. Thats just crazy. It was such a good quarter. 17. 40 book value. But theyre not allowed to be in there the government tells you how much you can buy. Do goldmans results make it less urgent to get into more consumerfacing businesses . I would think so unless its at home. I mean im crafting a world for tonight on mad money where you never leave your house. You play war craft or candy crush for you, david. Thank you. But you order dominos pizza. Do you have your vr goggles on at all times . You will. You will. Because you want to know who is real and your a. I. Assisted robot helping you . You watch netflix where they are in your head and they are telling you you like this, you like that. Youre ordering on amazon and youre going nowhere. Youre literally going nowhere from now on. Bad for ulta. Yeah. You still, if you do go out, youve got to look great and thats mary dillon ulta. People will be walking outside with their goggles on. Bad enough they walk like this all day. Now theyll just have gaug els. That could be. Theres nothing wrong with that. The mall is going to look better in Virtual Reality than it is in real life. Youll be ordering away. You know, in the middle of dinner the other night, a box from rulala came to my house. Just point that out. Weve got to get to dominos, speaking of home delivery. So get this. Do you want to do it after the break . No, no, we have to obey the programming gods. Narcos 4, raising numbers, crowned. Queen elizabeth ii. When we returning, the list of ceos stepping down is growing larger. Details on why visas Charlie Sharf is leaving. Take a look at the premarket as earnings are coming in above estimates. Squawk on the street in a moment. 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. The es and es hybrid. Its your daily retreat. Get up to 5,000 customer cash on select 2016 models. See your lexus dealer. Visa announcing that Charles Sharf will step down as ceo effective september 1. He will be succeeded on the job by former American Express executive and current visa director alfred kelly. Scharf. Whose family members reside on the east coast said, quote, i love working and running this great Global Company and i am sad to have reached the conclusion that i should step down, but running a San Franciscobased company just doesnt work for me personally right now and wouldnt be fair to visa. Jim, you broke this last night. Yeah. This is a tough one. And the internal memo is very clear. You know, a lot of people resign to be with his family. Yeah. Theres some issues that he wants to deal with at home. Hes an honorable guy. You notice hes staying on until december so theres obviously nothing untoward. Ive met his successor, whos a terrific guy. But this is one where life is precious. Balance doing what you need to do with what you want to do and that is what Charlie Scharf is doing. Charlie scharf is good at what he does but theres issues. And some people do have issues. When they have to address the issues, they do the honorable thing and thats what hes doing. Its interesting to see somebody who says spend more time with my family. Hes only 51 years old. He was a very young guy when he got the job, hes still a young guy. I dont know much about kelly, whos taking over, 58yearold member of the board. I met him when they put the super bowl together, he was big in putting the super bowl together in new york. An important guy at American Express. Very strong. But obviously charlie i think was one of these guys, he came in, was technologically backward. Visa is always very smart, very sharp guy. I wish him well. We should wish him well. I think that hes some people have real issues and they have got to go do things and its not like hes spending time with his family because visa wants to get rid of him. Believe me, no one at visa wants him to leave. So youre not drawing a line through any of those . I dont know i mean doug i thought was doing better. A savage piece in the journal yesterday. Obviously doug is gone. I will tell you that they would beg to keep charlie but charlie has to spend some time in new york. Sometimes things are as they seem, and the internal memo is what it seems. I just hope everything is good for charlie. There was a fourth too, im trying to remember, another ceo. It is interesting to see how boards respond here to try to figure out when the board has proactive or when they are in the case of scharf being presented with a situation where they have to figure out succession quickly. If you go over the internal memo that i got, its pretty clear that this is not something he wants to do but he has to do. Hes been the stock has gone from 30 to 80 under him and hes done a remarkable job and he loves his job. But his family is new york, hes back and forth and back and forth. He does want to spend more time. They dont want him to spend more time with his family, they want him to do what is right, and what is right for him at this point is to do this. He deserves privacy. But i can tell you that this is his own decision, not visas. Thats very clearly not visa. Not going to stay on the board because then he would be looking over the shoulder of kelly. But hes got a lot of things, hes done a lot of public servgs a service. Hes a tough guy. Sometimes i have said something good about some of his competitors, but hes a compassionate man and lets just take it as it is. Those who say that it isnt as it is, im happy to explain to them that thats not the case. Very nice. Jim has good insight. Well get cramers mad dash, count down to the opening bell and take a look at the premarket. A lot of earnings of course. After the close tonight weve got intel and yahoo . A busy day ahead. Dont go away. What powers the Digital World . Communication. Like centurylinks Broadband Network that gives 35,000 fans a cutting edge game experience. Or the network that keeps a leading hotel chains guests connected at work, and at play. Or the it platform that powers millions of ecards every day for one of the largest greeting card companies. Businesses count on communication, and communication counts on centurylink. Whoa. Whats going on here . Oh hey allison. Im val, the orange money retirement squirrel from voya. Val from voya . Yeah, val from voya. Quick question, what are voya retirement squirrels doing in my house . Were putting away acorns. You know, to show the importance of saving for the future. So youre sort of like a Spokes Person . No, im more like a metaphor. Okay, a spokesmetaphor. No, im. Youre a spokesmetaphor. Yeah. Ok. See how voya can help you get organized at voya. Com. Weve got seven minutes to get to the opening bell. Lets get to our mad dash. Were going to talk a little big blue. They changed the name. Its called Rodney Dangerfield inc. They get no respect for the big change of this Strategic Imperatives that they moved up to, david. Now represents 40 of ibm. Each time the annual lists come up with new reasons. Tax rate a little lower, Gross Margins werent that good for the cloud, this time cash flow. Did they overproduce cash flow. So no matter what they seem to do, people dont like it. I would point out that the analysts thats because they have no organic growth, jim. Oh, so okay, yeah go netflix. I talk about narcos, thats fine. They dont. They dont have enough. They obviously have the businesses you described growing very quickly. The rest is but the rest is falling off. Im not going to disagree. If you read the questions, the analysts are very skeptical. These guys have delivered on how much should be cloud. They do produce a good deal of cash flow and return a lot to shareholders. But you know what, david, this is like charlie and the tuna. We dont want tuna with good taste, we want tuna that tastes good. They offer a big dividend. Most growth, investors dont want a big dividend, they want solid they want service now, work day, they want salesforce. Oracle is doing a similar transition, okay. Oracle, theyre a little bit more boisterous. If you go out against them on the Conference Call, you often feel like you feel the lash. Theres no lash here. But ive got to tell you that the analysts just dont like this company. They just dont. And it controls the narrative. Its a little like proctor, when they didnt like the ceo of proctor. So i feel like ibm is a little snake bit. Would i sell it down here . Probably not. But theyre not giving the analysts what they want, theyre giving Warren Buffett what he wants. He wants that stable cash flow and he wants that dividend. And so what happens is that they please one large shareholder whos already in the stadium, but they cant get others to come in the stadium. So it is what it is. They should ask watson what to do. I think Watson Watson had bob dylan in the act. You cant find him. Nobel cant find him to give him his award. Is that true . Yeah. Maybe hes on highway 61. He might be. Weve got the opening bell about four and a half minutes from now. Stay with us. Jake reese, day to feel alive jake reese, day to feel alive jake reese, day to feel alive youre watching cnbcs squawk on the street live from the Financial Capital of the world. The opening bell in about 60 seconds. Busy tuesday. In fact the busiest day for earnings season so far. Weve gone through ibm, weve done goldman, netflix. Dominos is not nearly as large on a market cap basis, but these kaump comps, jim. Oh, geez. A twoyear stack of 23. 5 . This is an amazing, amazing quarter. Fortunately, ive got patty doyle on whos very selfeffacing. But 13. 8 same store sales growth. Theyre executing at a very high level. Remember, theyre a technology company. I dont know those of you who order through their handheld, but its a remarkable company. Theyre getting it. Technological reinvention, recipe reinvention which happened a while ago but people forget. I remember when he asked me to do a taste test. When doyle asked me to taste test and it did taste more like corrugated than cardboard. Suffice it to say if you order a pizza from there and do it on your credit card and you do it on your handheld, it comes if they made a mistake, its your fault. Theres the open. Just a few components in the red at the big board. It is north american utility fortis celebrating its listing on the nyse. O organ ovo. Medical care up 4. 9 is one of the hot spots, along with housing up 2. 7. We dont talk enough about the budget deficit in the united states, but holy cow. Even if the country does better, the budget deficit is too high and health care is too high. Entitlements. You want to talk that . We could be here for the next day. I dont think people would want to listen, but they should. It did spike higher recently for the first time in quite some time, although as a percentage of gdp, its still not that worrisome. Even though United Health did have a good quarter, remember, they are now out of the 34 states. They have dropped will be dropping 34 states for the exchanges. Optum is doing a very good job which is their consulting business. You know, we look at health care, j j, i know meg is on that Conference Call. Ive got to finds out more about why that stock is down but that seemed like a decent quarter. Health care costs are higher. I saw val yangt valiant yesterday. I dont know, im waiting for one more tweet from some politician saying that health care is too high and get another hit down. Dont forget when you talk United Health care, of course youve got anthem cigna, man mana aetna. We may not get that consolidation if one or both of those deals is turned back. Unh is the topperforming dow component. Second is goldman, which we touched on at the top and of course setting up an interesting bar for Morgan Stanley to climb. Geez, i dont know. Morgan stanley does a lot more personal wealth management, which was very good for bank of america. But this fixed income trading is really good for goldman. Morgan stanley still has a significant presence in fixed income. They do. Currency, although its back and forth with Morgan Stanley. Some quarters have been great and other quarters not good at all. I know theres statistics that show earnings have not come in so well, but in the last 24 hours, i mean these earnings have all been pretty great. Theres not a lot that its still early. Its still early. We dont have caterpillar. Im still reeling from that changeover there at the top. Boy, that was just kind of glossed over, weasnt it . Dougs out. Doug came on tv a lot and i felt they were making a comeback. The stock didnt even glance, the stock didnt go down. I think tech is having a good run here today and nothing has really happened to tech other than f. A. N. G. F. A. N. G. Is back. Is netflix back in . Yes. Remember f. A. Was a long, long way to go . Reed hastings, house of cards cutting numbers. The crown raising numbers. It is that simple. Why dont you ask Lloyd Blankfein tomorrow when you get to interview him. Stock picking is dead, the wall street journal point out again. Active management, of course, on the run as index funds rise. I reference blackrock of course this morning also reported numbers. The largest money manager in existence, passes the 5 trillion under assets under management mark. Passive versus the trows. Eps 5. 14, that was above some estimates. They did have operating income that was a bit lower than some had anticipated, but stock not its actually doing quite well. Stock is doing well. I regard them as guys, im not talking about f. A. N. G. Time in back energy. People like buying f. A. N. G. No, stay focused. Whats the point . Did you go to fab, facebook, amazon, alba bet. Ive got a scrabble board here. Ive got a double word thing. Triple letter, david, jazz. You know, jazz when you start to id say thats a lot of points. Two zs. Quiz is good. Quiz is good also. We havent done chipotle. Ray jay comes to an underperform. They say the sales drop could be more permanent than they thought. Stocks back below 400. 18 months from your last incident is when they turn. And we are the last incident was in december, so it is too early to turn. I dont think the stock will have a big decline here. The company has bought a lot of stock, just a lot of stock. Keeping it under 400 has been hard to do. Look, and theyre believers. I remain a believer of chipotle around the 400 level. I just think that this is a company that is doing a lot of things to try to get things right. It costs a lot of money to be able to be the Gold Standard in health, and they did have some personal stuff that went on that wasnt so hot for one of their execs. But when you look at this United Health, they are making a fortune off the Health Care System and their medical loss ratio is very low. Theyre a very good company. They are one of the insurers that we use, i believe. My plan here at comcast. And its great, because they dont pay anything. Really . They dont pay for anything. Anything at all. Everybody is healthy. Cash. Family of four. Just i always go to the end of the statement and it says you owe. Its exactly whatever they charged. Thats how they make their money. Some of these guys, i had xrays repeatedly on an ankle which everyone said was fine and they didnt want to give me the mri and i finally got the mri and ive got a broken ankle. But thats okay. Their job is to deny. No, Health Care Costs have gone up a great deal and more and more is being born by us. Weve got to go to the right doctor i know were not allowed to be stock pickers anymore, but if you look at your personal and what you do is you buy United Health against them denying you. Theyre not denying, theyre just saying were not paying that. Oh, were not paying that. You pay. Hows your copay . Its 100 . I dont know. He must be on a Different Health care plan. I have a good plan, man. I have a dynamite plan. Were not. On netflix, guys, just quickly, worth noting stock up for the year now. It had been down. A 50 billion plus market value exceeds fox again. Just interesting to look at the landscape when you talk about media companies. Cbs is far larger, three times as large as viacom and not even that far from time warner. Have you seen cbs is making a show out of candy crush . I saw that. Just announced a few moments ago. Look, ive got to tell you, i like take two. It just unveiled a new game. But if you listen to that hasbro call and hear about all the different programming thats directed toward hasbro toys. But nerf is their biggest seller. Hasbro doing very well. People didnt believe them last quarter that they had all this great programming. Take two was up 2 yesterday and this is a new game that they have. I think that they have done a remarkable job there. These are companies very well run. Very well run, the gaming companies. I just really think that they are superb. An i think that you cant beat the fact of this confluence. People are playing video games, theyre ordering pizza, theyre watching netflix. Thats it. Thats all theyre doing. You are absolutely right. Zuckerberg talks about multitasking. Theyre watching while theyre ordering and picking stocks. No, they dont do that anymore. One last thing, hog doesnt change their forecast. They meet ual beats boy a nickel, but guides look lower on nunoz was on squawk box earlier. The problem with the airlines. Youve got a strong dollar and a lot of competition coming in underneath and you do have terrorism that has been a problem for the transcontinental. And then did i mention the home thesis that i have, like youre ordering pizza and youre watching netflix. That means youre not traveling. Look, i know theres a secular increase in travel, i think a lot of it from china. But in this country there is a secular increase at staying at home. Im talking about 70inch screen. I got you, babe, dont worry. Im with you. Just wait until a. I. Takes over all things and then well sit home. Youre really hung up on that. Your driverless car and a. I. I am completely focused on the next 30 years and whats going to happen. Im focused on the next 30 minutes. Okay. There you go. Im thinking the next 30 seconds, as we get to bob pisani. Good morning, bob. Good morning, carl. We have got a great start to the morning. Were talking 10 to 1 advancing to declining stocks. Take a look at the sector leaders. Banks are leading. I love that because theyre in the earnings picture right now. Consumer discretionary up. Retail is having a good morning. Techs, Market Leader for a while. Oil is back over 50, so energy up. Nice start to the morning here. We are getting into the heart of earnings season and away from the Big Money Center banks and into the big regional banks. Now, i like regional banks because thats when you see away from trading action, they dont have big trading desks. They have loans and they have fees, and thats how their business works. Comerica, dallas based, a huge business lender. Interest was a little higher, the shortterm rates were higher, loan growth down 0. 5 . This is part of the problem. Commercial industrials, c i loans down 1. 2 quarter over quarter. Their guidance for loans next quarter, stable. Thats their exact words. So lets call it fair but not great. This is the lone growth in the commercial side weve been talking about. A lot of companies not investing because theyre deciding not to invest in Capital Expenditures overall. Lets take a look at regions financial. This is arkansasbased. Kind of the opposite. This is a big lender to personal business lines of credit. So not so much in the business area. Average loans down 0. 8 . This is the hard for regions. Up 1 , business down 2 . Again, the same problem theyre having overall. Take a look at the numbers and the stock. Comerica at a 52week high. Regions down a little bit and goldman on its numbers separately. Great number to goldman, theyre up about 2 . Let me move on because there are very nice numbers over in europe. We gaaped up in europe and stayed up. So were having a great day in italy, spain, germany, france. Theres a couple of things going on here. There was some talk from a uk government lawyer saying that parliament had to approve brexit and maybe some were taking heart maybe this is a thing not being done. I dont believe it personally. Another one is reports from a norwegian government commission, which is very interesting, about their Sovereign Wealth Fund. They are recommending that that Fund Increase its equity weightings globally to 70 of the right now its at 60 . You might say who cares, this is 10 . They are far and away the biggest Sovereign Wealth Fund in the world. They have nearly 900 billion in overall assets under management, 900 billion. China said, abu dhabi, kuwait are after them. If you actually break those numbers down, take 60 of 900 billion, what norway has, and youre talking about 550 billion in equities around the world so theyre proposing adding 88 billion to that. They would have mid 600 billion in equities. The Global Equity market itself is only about 69 trillion so norway owns about 1 of all the equities in the world and theyre proposing to increase that. Thats enough money to actually move the dial. I know this is a proposal, its not actually happening right now, its a proposal. Theyll have some discussion on it. If it does, i think its important and obviously i think it had some influences on the market. Right here in the united states, were up 106 points in the dow. Carl, back to you. All right, bob, thank you very much. Lets get to the bond pits as well. A busy morning in chicago with our rick santelli. Hey, rick. Good morning, carl. Its fascinating to listen to what bob is talking about. Lots of discussions about that on the floor. You know, when brexit votes first occurred, there were many that said it doesnt really counting. That has morphed into what may is trying to do with triggering article 50 versus parliament. Many believe that that isnt going to be the way it turns out either. Its parliament or brussels, the people have spoken. You really have to ponder what that means or what it doesnt mean in the long and medium term. One week of twoyear note yields, theres a drift lower, okay. That drift lower wasnt changed by anything perceived as hawkish by vice chair stan fisher. If you look at the tenyear since june, maybe yields are down a little bit today, they were down a little bit yesterday, theyre coming back up to that 180. Stubborn longend yields, you can see it on tens minus twos. Getting very close to 100 as you see on this june 1st chart. Then theres the currency dynamic of this. If you look at a chart since the beginning of march of the euro versus dollar, look at some of those key bottoms. A bottom in july of 109. 77. A bottom around midoctober, not many trading sessions to go, 109. 72. Now lets go backwards. Notice the intraday lows from sunday night were below both those levels. We didnt get the close. But if we do get the close, thats technically significant. Give it a little sludge there, call it 109. 50. If we look at the pound versus dollar, theres definitely some stabilization going on even though it is only a month to date chart. Many are watching because of the historic drop of how thats translating to a somewhat historic change in price action. Carl, back to you. When we come back, New Territory for under armour and its quite big. Well fill you in on that. As bob said, stocks up 104 led by unh and goldman. Were back after a break. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. Great, thats what i said. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Comcast business. 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 looks like a breakthrough for under armour. Some published reports say the company has reached a deal with Major League Baseball to outfit all mlb players beginning in the year 2020, replacing majestic. This would mark under armours First Partnership with a professional league in the u. S. Trying to do the math on the number of jerseys. Each player gets four or five, youve got away jerseys, but regardless, its the marketing. Oh, its big. Nike would tell you that their deal with the nfl has been incredibly valuable. Its a big deal. I think kevin fine is doing a lot of things right. The stock has been down a lot. Some of it is because of sports authority. Some of it is because lulu has going down because people think athleisure has had it so i think its a smart move. A very smart move. He needs the visibility. You want to see that visibility in more than just a couple of colleges. Very smart. They have got good traction in basketball, obviously, with curry. Yes. Trying to think about athletes they have procured in baseball. Nothing comes to mind at the moment. No. Boy, they have done a lot of right picking in golf. You know, kevin did in china hes doing incredibly well. Hes a very competitive guy. Its harder to think who the preeminent ballplayer is. Is there one name right now the way that a steph curry stands out or lebron stands out in the nba. Kershaw . Maybe kershaw, but hes not that big a profile. You do want guys who play into the postseason, which hes doing. Yes. Hes an animal, that guy. Hes amazing. Maybe one of the greatest ever, kershaw. Yeah, doesnt get talked about enough. But baseball doesnt have that following that it used to either. I still cant get over this jets game last night. That was if you have johnson, who just tore it up. Its really great being a jets fan right now. Its enjoyable. I dont know what happened. Thats a total breakdown. You know, revis island is like gilligans island. Its a total breakdown. Total breakdown. It is a total breakdown. Its too bad because nice guys, good guys, but wow, the running game anyway, what are we doing . Fitzpatrick has got as soon as the game is over, fitzpatrick is like back, back. By the way, look at this. Scott wapner has a special fiveyear anniversary. Bryce harper is a u. N. Guy and hes got a fifth anniversary and bryce harper is a guy who might regard was being pretty amazing. Very nice. I watched that redskins game from the stadium there. That was a beatdown. Didnt look like it. You guys are in it. Youre in it. Im in it to what . Youve got a shot. Youve got a quarterback youre going to have the next 15 years. I dont want to hear about it. Were a young team. Its not our year. Were a young team, were taking no prisoners. Im talking about the philadelphia eagles, tnp, take no prisoners. We will get now that weve covered sports, well get stock trading with jim in a moment. Unh adding about 50 points to the dow, but ibm subtracting about 40. Recently, a 1954 mercedesbenz grand prix race car made history when it sold for a record price of just under 30 million. And now, another mercedesbenz makes history selling at just over 30,000. And to think this one actually has a surroundsound stereo. The 2016 cla. Lease the cla250 for 299 a month at your local mercedesbenz dealer. Mercedesbenz. The best or nothing. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. And i am a senior Public Safety my namspecialist for pg e. My job is to help educate our First Responders on how to deal with natural gas and electric emergencies. Everyday when we go to work we want everyone to work safely and come home safely. I live right here in auburn, i absolutely love this community. Once i moved here i didnt want to live anywhere else. I love that people in this community are willing to come together to make a difference for other peoples lives. Together, were building a better california. Did you know your business doesnt have to suffer from slow internet . Comcast business now offers blazing fast internet speeds up to 250 mbps. Over 6 times faster than dsl. Get internet for as low as 59. 95 a month. Call today. Comcast business. Built for business. Did you know sharing wifi with your customers could leave your business exposed . Only comcast business offers wifi pro. Two separate networks one thats private for you, and one thats public for your customers. Upgrade to wifi pro for only 19. 95 a month. Call today. Comcast business. Built for business. Time for cramer and stop trading. Its one of those upon further review, its starting to catch a bit. Phil lebeau, i was surprised united wasnt moving up. A lot of people are saying this is the last bad quarter for the airlines. I thought deltas quarter was fine. What really does matter, if these companies are truly not adding capacity, then you truly will have better numbers next year. The multiples are so low, theyre acting as if theyll be worse. I think the groups a buy. United cited the dollar, right. Yeah. Fewer surcharges and obviously and youre getting a little bit better as the months went on. Again, look, you cant blame terrorism for heaven sake but there is a belief if you could get that transkaucontinental better, its been horrible. What tonight . Dominos. Its unbelievable. Anyone thats used the app knows this is one of those that as they added things to the app, they were able to cut costs and make it so that people just order very easily. Its been an amazing story. Remember, this stock was 10 when patty doyle took over. Look at that, and theres a dividend too. I think if you tried one, david, i know i got a lot of heat. People say, listen, you live in jersey. We always order dominos because theres a no cheese option, the banana peppers are great, it comes really fast and you can pay and never have to talk to anybody. Thats nirvana for millenials. If millenials never had to talk to anybody, theyd be thrilled. Look, they text me, theyre in the house and text me. Theyre in the house. A viewer is going to order dominos and watch narcos because of you. The biggest day for ever for dominos is november 4th because Queen Elizabeth ii, the crown. Also a big dominos fan, the queen. They cant stop the pizzas from coming. Dominos, take two, you dont go anywhere. Honestly. They never leave the house, they never talk. Were learning a lot about millenials, they never talk, never leave the house, your verizon bill is big, theyre amazing. They take over the world . These people arent doing anything. Well see you tonight at 6 00 p. M. Eastern time. When we come back a lot more on this netflix rally up almost 19 . Dont go away. Good tuesday morning, welcome back to squawk on the street. Stocks in a mild rally mode here as virtually every s p company that posted earnings this morning comes in ahead of expectations, at least on the bottom line. Six of 11 beat on the top line. Well watch that along with oil, relatively flat. Our road map for the hour begins with netflix. Shares surging after the Company Reported over 50 more subscribers than expected. The ceo says it will double down on original content. Financials in focus. Goldman and blackrock both reporting earnings of the well dig through the numbers. And were just 21 days from the election and things are certainly getting heated. Where do the candidates go from here . But we start with netflix, thats the showstopper of the morning, soaring after blowing past earnings expectations on those Strong International subscriber numbers. The stock this morning is up almost 20 . Joining us on the phone is web bush senior securities analyst, Michael Pachter who raised his price target to 60 from 50. Michael, youve been dead wrong on this stock. What surprised you most about these results . I mean dead wrong on the movement of the stock. Absolutely right on the cash burn. So id say actually the Biggest Surprise for me is that their cash burn doubled to over 500 million. Im even more surprised that investors seem not to care at all. Reed keeps giving investors what they want, which is subscriber growth, and props to them. Theyre buying subscribers at a clip of negative 2 billion a year. If they dont make money, i dont understand the share price at all so i guess i just dont get it. Jessica lessen also gets us, editor in chief of the information. Jessica, there was some skepticism going into this one, not just about the cash burn which michael alluded to, but about how fast they could grow that International Number and netflix delivered. Investors trying to figure out if that is sustainable. What do you hear . Its hard to tell. Obviously it was buoyed by International Subscriber growth. We saw continued the same kind of slower pattern in the u. S. Reed also talked a lot about, you know, pulling back and not investing as much in china, which is obviously a Big International market as well. So i think the growth for netflix and subs is a question of beating the expectations or not. I agree with michael. You know, a billion and five in cash burn a year, 6 billion on content may be going back to the debt markets. Thats what im looking at and thinking about as well. Michael, isnt the idea that, yes, theyre spending billions on content, but if they continue to deliver that, thats the Competitive Edge that keeps the subscriber growth growing and eventually if you believe Reed Hastings will lead to profitability next year internationally. Yeah. I mean sara, i defy you to name a single original on netflix that they own other than Stranger Things that they called out yesterday. Every single show youve heard of is licensed, they dont own it. So they are making a big bet that they are better than hbo and hulu and amazon and fx at developing this stuff and yet i think they completely lack the internal expertise to compete. Their chris rock deal shows that theyre willing to pay crazy numbers, 40 million for two comedy shows, two comedy episodes. I think theyre just burning cash. Its going to have virtually no value in the future. So reed is building his future on his savvy on picking compelling content. He hasnt proven that he can do that yet. I think investors are foolish to give him that pass. Jessica, he did get a question about competition. I think the specific question on the call was about amazon video and he said snapchat, youtube, facebook video, all of that takes a lot of hours, probably much more than amazon so weve got tons of competition for screen time. But he says we win such a small percentage of total screen time and were focused on our exceptional content. Did he make a convincing case . I dont think so. I think amazon is a force in video. Weve got a story coming out today with an interview with one of their senior executives, and theyre winning in a lot of areas. Theyre getting theyre a formidable competitor, particularly on the spending front. A spending war isnt a competitive mode around a business and thats the reality were in in this ott market right now. So, michael, i mean you did raise the target to 60 from 50. Walk us through your evaluation. Are you looking at some of the parts and why it differs so much from goldman at 140, morgan at 130, ubs at 119, suntrust at 115. I mean youre almost half that target price. Yes, we are some of the parts. We value the domestic business at 49. You know, were burdening their contribution profit with tech spending, which the other guys seem to be overlooking, so the profitability is actually pretty thin. Were giving them a dollar for the dvd business and 8 for the international business. And were just kind of throwing out a number on international because theyre losing money on every single sub, so theyre making up for it in volume. I think the biggest limiting factor is exactly what jessica said. Amazon is serious about this. Bezos was sitting at the Golden Globes table. He cares. Theyre spending as much as netflix next year. Theyre catching up. Theyre going to offer monthly prime this holiday. If consumers dont notice that amazon is cheaper and offers a better value proposition, theyre pretty foolish. I think they split the market and we have much Slower Growth for our price target than competitors do. When i hear you talking about netflix and amazon, it is somewhat reminiscent of some analysts who spoke about amazon 20 years ago at this point or maybe 15 in terms of very strong top line growth but always questions about their ability to deliver on the bottom line. I know there are differences amongst the two companies, but will you admit that they did eventually make it work and start to deliver on the bottom line as many people think netflix will too . Amazon has 130 billion in revenue and is spending about 5 or 6 billion on content. Netflix has 12 billion in revenue and is spending more than half of that on content. Amazon can outlast them forever and bezos is a tough guy. He is dr. Evil, he intends to take over the world. Hes going to succeed. Well leave it there. Michael, thank you very much for making your case here. Michael pachter of webbush with a 60 price target on netflix. Jessica lessin, well look for your article out. Dr. Evil, hes going take over the world. Blackrock reporting earnings of 5. 14 a share. They have been looking for a flat 5 a share. Revenue was a bit below what was anticipated, 2. 84 billion. Larry fink spoke this morning on sidewa squawk box. Its a tough environment because its really tough for our clients. As i said, low Interest Rates, lowering expected returns. People are lowering their longterm return targets. So youre going to see many Pension Funds in the course between now and year end lower their return from probably a 7. 5 to 7, maybe even in the 6 handle. They did exceed 5 trillion in assets under management at blackrock. Take a look at Goldman Sachs shares, up about 2 . The company handily Beat Estimates on both the top and bottom line. Quarterly profit rose 47 . Revenue up to 8. 17 billion from 8. 16 billion a year earlier. Goldmans strength particularly in fixed income, currency and commodities. If you take out a dva from last year, in other words, an adjustment in terms of the value of debt, they were up 49 , guys, year over year. That was at least by many measures the best performance weve seen year over year in what has not been a bad quarter thus far for financial institutions. Jpmorgan, citi, even b of a yesterday all reporting very respectable if not strong trading, particularly in fixed income. But that had not been enough to sustain the shares of any of them over the course of the days in which they reported earnings, having begun those days up only to end down. Is it that investors have been through this dance before. Theres good quarters and the tenyear yield peaks out at 180 or whatever and the fed is on hold even more and they get burned, regulation. Given all the fwatalk about december hike, banks in particular. But they were strong, no doubt. Roe, returns on equity about 10 . First double digits since early 15, believe it or not. Its been a long time. Coming up tomorrow we are going to speak exclusively with Goldman Sachs ceo, Lloyd Blankfein, first opportunity to talk to him after those earnings from this morning. When we come back, the head of the largest real estate platform in the world, blackstones Global Leader Jonathan Gray is with us after the break. My hygienist said the most random thing. She said i should think of my teeth like an apple. It could be great on the outside not so great on the inside. Her advice . Use a toothpaste and mouthwash that strengthens both. Go pro with crest prohealth advanced. Its uniquely formulated with Activestrength Technology to strengthen teeth inside and is better at strengthening the outside than colgate total. Crest toothpaste and mouthwash makes my whole mouth feel amazing. Advance to healthier gums and stronger teeth from day one. My checkup was great. Crest. Healthy, beautiful smiles for life. With more than 100 billion under management, blackstones real estate arm has grown more than 30 just over the last two years and has solidified its position as the largest real estate platform in the world. John gray is the global head of real estate at blackstone and joins us from boston. At forbes 30 under 30 conference. John, you are a young man, to be sure, but you are not under 30, so why are you there . Yes, i definitely dont qualify, david, either for age or my outfit, which certainly isnt hip enough. Im here on behalf of the Blackstone Charitable foundation, whose sole mission is empowering and training entrepreneurs. We brought 20 groups of students from around the country and ireland to come here to learn to compute, to network, and some of the ideas are incredible. One of them is a mobile app to help produce drunk driving. Another one separates dirt and water from petroleum. A third one innovates with new shoe laces and were here to help them. People are negative about the economy and the world. You spend some time at a conference like this with kids like this and you feel very optimistic. Well, ive not known you to be particularly negative and have been rewarded for not being negative but lets start on your view of the world. You guys bought stivis not too long ago, one of the largest complexes here in new york city. Rates are going higher, that is Interest Rates, and rents seem to be stabilizing if not falling a bit in new york. Is that concerning to you when you see flattening rents here in new york and does it actually have ramifications more broadly . Well, i think in new york there has been a little bit of a burst building in terms of the apartment sector, but mostly at the high end. What weve seen at stchivis is pretty strong demand. In new york city new supply is not an issue and thats pretty similar with the rest of the country. We have an economy growing sort of 2 a year, new supplies only growing about 1 a year and thats why across the board were generally seeing rising occupancies, rents and cash flow. So were later in the cycle, but some people i think are starting to get a bit too negative. They are. Why are they getting a bit too negative . Well, i think theres a lot of focus around Interest Rates, and theres a sense that owning real estate is the same as owning a bond. The two are actually different, right. Real estate like stocks can see earnings grow and thats what were seeing because of growing incrementals. In the mid2000s, all periods when rates went up, real estate did okay. We dont expect to see the growth in value the same as the last four or five years but we dont expect to see a sharp decline in the near term. It occurs to me you may have a decent view as well sort of of the nation as a whole given Invitation Homes, the company that owns more Single Family homes than any company in the country. What are you seeing there in terms of peoples ability to pay, in terms of the rental market overall for these homes, so many of which you bought over the last lets call it five to seven years . Yeah. Well, the Housing Market is definitely a bright spot in the u. S. Today were only building about a million one homes. We probably need a million five or six to keep up with population. As a result of that, youre seeing rising rents, youre seeing rising home prices. And we expect that to continue. I think that will be a positive for the economy going forward. Yes, there are challenges in terms of affordability and access to credit, but overall, the shortage of housing is forcing rents and home prices higher. We expect that to continue. We own about 100,000 either multi Family Rental homes or Single Family homes for rent. Across the country were seeing strength in that area. What is the future for Invitation Homes . Are you going to take it public next year . I notice amh is up about 25 , that being the stock this year. It would seem to me that it might not be a bad time to monetize some of those investments. Yeah, i cant talk about the specifics on Invitation Homes but i can say weve said publicly in the past at some point we will look to exit and with a company like this, the Public Markets i think would make sense. I wanted to ask you, jon, about a different part of the world, the uk. I know you took some markdowns earlier in the year on the portfolio after brexit. What is the uk and european environment look like now . And are we at the point where theres some interesting opportunities as a result of that massive depreciation of the pound . Yeah. Well, the uk has definitely taken a hit. I think when you look forward, were longterm positive on the uk but i think growth will be a little more challenged over the next couple of years. When you think about the impact particularly to Financial Services firms and a lot of companies who are being more hesitant, that has to translate into a little abit lower growth. On the Positive Side you pointed out the pound coming down, Interest Rates coming down in the uk. Thats been helpful. So i think its a story where growth will be slower. If opportunities emerge, we would definitely look at them. Right after brexit we bought a bunch of logistic assets we thought were priced attractively. Were looking for things there and the next couple of years i think could be a little bumpy in the uk. We could go a lot of places with you, jon, so the next one would be hospitality. Hilton, youre still a very large shareholder, that being blackstone. I think the last time you sold the stock was close to 30. Are you guys not selling right now . Because there are a few who believe, at least, that fundamentals in the lodging business are starting to deteriorate. Well, again, im not going to talk about specifics when were selling buying. I think weve shown ourselves that when we believe in a business, we can afford to be patient, sell when we think were getting appropriate value. In the case of hilton, both the short term and the long term i think are pretty positive. You have a split coming up into a time share, an Ownership Company and an operating business. I think that will be helpful. And when you look at the growth of the business over time, its pretty powerful. Today hilton represents about 4. 5 of the hotel rooms in the world and it represents close to 20 of all the hotels under construction. We think this is a business with a bright future. Of course as we do with all things in our closed ends funds, when we feel the price is right, we will sell. Some say theres a lot of new supply coming into the market, theres a slowdown of corporate travel, youve got the likes of airbnb which is taking a small percentage but not insignificant percentage of business travelers right now. Why is that a good landscape . Well, its not a great landscape in terms of, yes, weve seen Revenue Growth in the industry slow from call it 6 , 7 , to 2 , 3 . So theres less growth than there was. But, david, the stocks have reacted to that as you pointed out, so the industry has seen the stocks decline 30 , 40 . So the Market Expectations i think are much lower for these companies and it is possible that at these valuations they could outperform lowered expectations. Thats when you look as an investor, its not only are the prospects for an industry good, but whats priced into it. Id say investors today are pretty sober around the lodging industry. Jon, theres always so of other things to discuss but were out of time this morning. Always appreciate you taking some time to join us. Thank you. Jon gray. Thank you, david. Take care. As we head to break here, take a look at shares of united continental. Theyre up about 2 after the Company Reported earnings that beat the street. Youll hear from the ceo straight ahead when squawk on the street comes right back, with the dow up about 60 points. No one speed. No one way of driving on each and every road. But there is one car that can conquer them all, the mercedesbenz cclass. Five driving modes let you customize the steering, shift points, and suspension to fit the mood youre in. And the road youre on. The 2016 cclass. Lease the c300 for 369 a month at your local mercedesbenz dealer. Mary buys a little lamb. One of millions of orders on this companys servers. Accessible by thousands of suppliers and employees globally. But with Cyber Threats on the rise, marys data could be under attack. 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Plus, there are no networks, and virtually no referrals needed. See why millions of people have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. Dont wait. Call now. United airlines reporting earnings and revenue that beat the street. Our phil lebeau sat down with an exclusive interview with the ceo, oscar nunez and were looking at all of the airlines doing quite well in todays trade. Theyre all moving higher and this started with delta last week who said theyre going to pull back a little on their capacity. United following through with that and in the earnings last night basically saying we can improve that passenger revenue and were moving towards breakeven passenger revenue. Thats why when you look at the Third Quarter performance, yes, they beat on earnings. They also had better than expected revenue. What stands out is the fact that that passenger revenue, while it was down 5. 8 , they are improving and moving towards breakeven passenger revenue. Like delta, theyre not committing to an exact time frame for when that will happen. That pretax margin of 15. 8 , thats an improvement but they still lag some of their competitors. We talked with oscar about that today and they said overall theyre moving in the right direction in terms of their financial performance. Theres been a lot of push to accept the fact but we dont adhere toblgt policy. I have a new Leadership Team thats outstanding and to unlock our potential in essence has been our terminology, we see the possibility of being the best airline in the world across all facets. And that means driving higher revenue, part of the reason they brought in scott kirby to work on that specifically. Thats a big part of improving those margins. Take a look at united versus american versus delta. What you notice here over the last year, thats united in white there. They have had the best performance and i know people will look at this and say, look, theyre still down and this market is up overall. They have come back along with the other airlines, sara, fairly substantially since july. And the belief in the industry is once they can hit break even on passenger revenue, then they believe that the shares will start to move even higher. Phil lebeau, a busy morning. Thanks so much, phil, talking some airlines. When we come back, election day 20 days away. Were going to hear from some top advisers about what moves the candidates should make ahead of the debate this week. Take a look at where stocks are trading. The dow is up now just 56. Back in a minute. Guess what guys, i switched to sprint. Sprint . Im hearing good things about the network. All the networks are great now. Were talking within a 1 difference in reliability of each other. And, sprint saves you 50 on most Current National carrier rates. Save money on your phone bill, invest it in your Small Business. Wouldnt you love more customers . I would definitely love some new customers. Sprint will help you add customers and cut your costs. Switch your business to sprint and save 50 on most current verizon, at t and tmobile rates. Dont let a 1 difference cost you twice as much. Whoooo for people with hearing loss, visit sprintrelay. Com. When youre on hold, your business is on hold. Thats why comcast business doesnt leave you there. When you call, a Small Business expert will answer you in about 30 seconds. No annoying hold music. Just a real person, real fast. Whenever you need them. Great, thats what i said. So your business can get back to business. Sounds like my rides ready. Dont get stuck on hold. Reach an expert fast. Comcast business. Built for business. Good morning. Im susan li and heres your cnbc news update. A major battle is under way in the fight against isis. American forces are helping iraqi troops take back the city of mosul, which has been a stronghold for the terror organization. The offensive is expected to last weeks or longer and the u. N. Says the fighting could drive a million from their homes. A new Class Action Lawsuit has been filed in connection with the flint water crisis. In a release, the michigan aclu says that its seeking damages on behalf of flint families. Hundreds of other lawsuits have already been filed, including one against the states governor. 65 million americans are going to see a small bump in their Social Security checks next year. The government is raising benefit payouts by 0. 3 of 1 which is just around 5 for an average retiree. Recipients saw no costofliving increase this year. Yes, tupac shakur, one of naen artists up for sbukz ininductio the rock n roll hall of fame. The inductees will be announced in december and frankly its just about time. Thats your cnbc news update for this hour. Back to you. All right, susan, thank you very much. Exactly three weeks from today polls will finally turn into votes. Gop nominee donald trump continuing to cast doubt on the election process, pushing that rigged election rhetoric. And in wisconsin last night stepped up attacks on Hillary Clinton over the wiki email leaks. Take a listen. This magnitude is worse in my opinion and in the opinion of many people in law enforcement, this is worse than watergate, whats going on with this. And what does she get out of it . She gets to run for the presidency of the united states. Explain that. Explain that. But were going to put an end to that on november 8th. Were joined this morning by veteran political strategist kristi setser who served as a Senior Advisor to the al gore, howard dean and chris dodd campaigns. Also former romney advisor and advisor to governor mike pence, phil russer. The sustained drip of news from wiki, from the fbi documents, how much does that at least dampen enthusiasm for clinton or maybe push some progressives to the likes of a jill stein . Im not sure that it does. Look, to the extent that all of the Media Attention for the last at least week has been on donald trump and these allegations of sexual misconduct, i think that what that means for the Clinton Campaign is the spotlight is not on them and so people really cant hearing so much about wikileaks. To the extent that it might matter, honestly i think she has coalesced a lot of that vote that might have gone to Bernie Sanders before and might be thinking about jill stein. I think at this point shes got Something Like 90 of the Democratic Base vote. Those arent people that are going to go i think anywhere else but her right now. Phil, you make the point that whatever is in those documents that weve seen or will still see, that voters have almost become numb to shock. Things that would have been shocking are just not shocking anymore. I mean the right quid pro quo in government emails would of its own light in any normal year be an october surprise of enormous magnitude, right . Were just not seeing that because of the daily drip, drip, drip of both wikileaks, the Trump Campaigns pronouncements du jour, so its hard to break through. But the Trump Campaign would be wise and i think they are to really focus on this issue because this is an opportunity to pivot and point out the rigged nature of the system as opposed to going to the electoral vote process where theres no evidence. And then pivot it to lay out kind of the core argument for trump on how hes going to make America Great again. If he can prosecute those two fronts tomorrow night, that will likely be the foundation of what will be an important last chance for him in front of the american people. Then, phil, why the emphasis on fraudulent registration, right, telling voters to beware of fraud at polling booths. No matter what Kellyanne Conway says or today what Chris Christie says. To be totally honest with you, carl, im not sure thats where the focus should be. You know, if i were advising donald trump on a daily basis, id be focusing on Hillary Clinton and the wikileaks and the quid pro quo issue and be using that to pivot to talk about his economic agenda and how hes going to help all americans. I dont think theres the evidence to support claims that the election is rigged. And it seems to me out of sequence. Does it resonate at all, christy . The sbintegrity of our Voting System . Theres the potential for voter fraud, for ballot counting. Weve seen this in the past with florida. Right. Its extremely, extremely, extremely overblown. We talk about words like vote fraud of Something Like one billion votes cast, theres maybe been 31 instances of inperson sort of voter fraud. So this is basically really a solution without a problem. The real problem for donald trump in bringing up this talk is of course that it depresses the very people who he wants to bring out to the polls. If you think the election is rigged, then why in the world would you come out and vote for someone . So hes actually very much at odds right now of course with his advisers. Im sure that if phil were advising donald trump, he would tell him to be focusing on those things and im sure that he would be just as frustrated right now as im sure Kellyanne Conway and some of the other trump advisers are, because he clearly seems to not be focusing on the messages that might in fact make him much more competitive. Right now clinton is in such a dominant position that shes frankly more likely to win texas than trump is to win pennsylvania. Its not even a fair fight right now. If youre talking to someone who is literally counting chads in 2000 in florida on this show right now, i was there. You know, Election Fraud is important. It does matter. But it seems to me to be out of sequence. We have a bunch of time to go. Frankly most of america, about half of america will have voted by november 8th. Thats an important fact to realize. Well start to understand with more granularity what those trends and details look like in some of those swing states. But the fact is donald trump remains very, very close to Hillary Clinton in a lot of swing state polls. Frankly the downballot right now is completely schizophrenic. Theres separation between how people are viewing trump and how they are viewing republican members of the house and senate. I wish there was an etf for holsthol pollsters, id buy it. So much has been written about clinton trying to keep her schedule light, trying to avoid unforced errors. Are dems nervous about the next 20 days . No. I think for once theyre playing it exactly right. They have really been in the cat bird seat for the last few weeks here. I think what youre going to see tomorrow night is some combination of what she did in the first debate where she was a little bit more on the attack and in the second debate where i think she pulled back a little more and sort of let america see donald trump in all of his glory. I think youre going to see something in the middle there. Shes probably right, right now to keep a lighter schedule and let the focus be on trump because i think the calculation there is that the more people see him, the less they like. Look, im from suburban philadelphia. Thats a swing district within a swing state. Thats where bill clinton is actually campaigning today. And i think, you know, the vote there, theyre the people who are for whom when they see trump, they dont necessarily like him and that is whats helping clinton right now. Christy, phil, thank you, guys. 20 more days and then well talk about something else, perhaps. Were ready. Make sure to tune in today 4 00 eastern time, well be joined by democratic Vice President ial candidate, tim kaine. Tomorrow night well have coverage of the third and final president ial debate at 9 00 p. M. Eastern time. Sticking with politics here, our john harwood sat down with senator Chuck Schumer and got his take on immigration, infrastructure, tax reform and much more. John joins us now. Good morning, sara. With three weeks to go odds favor Hillary Clinton and democrats recapturing the majority which would make Chuck Schumer the Senate Majority leader. I asked him about things after this very acrimonious election that he might be able to work with republicans on and what happens if he cant. The two things that pop to mind because schumer, clinton and ryan have all said they support these are immigration and some kind of International Tax reform tied to large infrastructure program. If you can get overseas money to come back here, even if its at a lower rate than the 35 it now comes back at and you can use that money for major constructive purpose such as infrastructure, if you did an infrastructure bank, for instance, you could get 100 billion in equity in the bank and get a trillion of infrastructure. A permanent lower rate, not awe holiday rate. Yes, you cant do a oneshot deal. If you encounter a situation where you cant get 60 votes for a Supreme Court nominee for a president clinton, would you consider changing the rules . I hope we wont get to that and ill leave it at that. Now, theres still some business that might get done in a lame duck session of Congress Later this year, especially important to the Business Community is president obamas priority of the transpacific partnership. I asked him if that could pass. Theres only one person who will decide that, just one, Mitch Mcconnell. If he puts it on the floor, it could get done. Merrick garland, do you see the republicans if Hillary Clinton wins the presidency going ahead and putting him up for a vote and him being confirmed . Again, i dont know what Mitch Mcconnell will do. But ill tell you this, a lot of it depends on the election votes. If hillary gets its more likely hell do it than if she wins by a narrow margin. He wouldnt do it if trump wins or he has the majority, either one. Heres one thing that is not likely to get done from Chuck Schumers comments and that is a grand bargain on the budget. I asked him if democrats would ever go along with curbing entitlement programs. He said as far as cutting benefits, im not interested a bit. Guys. Yeah, the democratic position. John, which senate races are the closest right now . Which ones are you watching as Hillary Clinton maintains her lead here against donald trump . Democrats need four seats to get a majority. If Hillary Clinton wins, five. If trump wins, we believe that ron johnson in wisconsin and mark kirk in illinois are likely to lose. Thats two. Then youve got pat toomey in pennsylvania trying to hold his seat and kelly ayotte in new hampshire. Theyre both in trouble. Those are potential pickups. Then you have richard burr in north carolina. That is where where he is in danger in whats traditionally been a red state. Even roy blunt in missouri has a real challenge on his hands, so democrats have some possibilities. The one possibility for republicans to pick up a seat is the seat of retiring Senate Democratic leader harry reid, who Chuck Schumer would replace. Joe heck is running for that seat. Hes a congressman and hes got a good chance to win. All right, thank you, john. John harwood. As we head to break, take a look at shares of Harley Davidson reporting earnings in line with estimates, but the motorcycle maker also announced the reorganization and job cuts to deal with what it says was slowing sales. Plus tomorrow, dont want to miss well have an exclusive interview with Goldman Sachs ceo Lloyd Blankfein. Of course that Bank Reporting earnings this morning and its stock is still up. In fact about 1. 5 . Weve got a lot more on squawk on the street. Stay with us. Guys, whats happening here . Hey nicole, this is my new alert system for whenever anything happens in the market. Kids a natural. But thinkorswim already lets you create custom alerts for all the things that are important to you. Shhh. Alerts on anything at all . Not only that, you can act on that opportunity with just one tap right from the alert. Wow, i guess we dont need the kid anymore. Custom alerts on thinkorswim. Only at td ameritrade. A classic Investment Strategy has paid dividends this year but may not work out so well going forward. Find out why. Welcome back. Markets are higher although losing a little momentum but health care is standing out as the best performing s p 500 sector. Ensure United Health group adding most of the gains. Shares are surging more than 6 on the heels of that strong Third Quarter profit report. Other leaders include illumina, anthem and endo international. Nearly every member of the sector is positive but health care is negative for the year, down about 3 . The worst performing sector in the s p 500, sara. Back over to you guys. They have been hit especially hard in the last few sessions. Now lets get over to the cme group. Rick santelli. Good morning, sara, and thank you. Id like to welcome my special guest, judy shelton. Were going to have a little time delay so im going to frame up the first question. You know, democratic outcomes are not in vogue. Whether its voters in this country or voters on the referendum they called brexit, the imf, the fed, the ecb, the u. N. , they all tried to address the credit crisis and a healthy environment thereafter. It hasnt succeeded very well. Now theyre blaming the fact that voters just dont know how to deal with this, its their fault. Its the trumps, its the brexit voters. Democratic outcomes. Judy shelton, whats going on here and why is this blame all of a sudden transferred when that growth never materialized that all these entities have promised . Well, the whole point of democracy is that people are able to register their feelings about how things are going and to choose a better path. And what were finding is, and i think donald trump deserves a great deal of credit for this, is that a very important aspect of our poor Economic Performance is a result of the Monetary Policy that the Federal Reserve has been imposing, and its been great if youre a wealthy investor or a corporate borrower or big government, but it has been very hard on everyday workers who find they get next to nothing on their savings and their Pension Funds are now in danger. Now, when i look at todays news, and theres a lot of these stories out. Mp try to railroad brexit in debate about second referendum. In the beginning it was this referendum doesnt matter, may really insisted it did. This is the same dynamic whether its the tea party, whether its trump, whether its brexit. This is the same vein of discontent, is it not, judy . Well, i think that what people resent is this idea that seems to be held by what i will call the Global Financial elite that they know better than voters. They know whats good for them. And i think people resent that this group of central bankers and the finance ministers of the advanced countries and the wall street titans and the big banks, they all seem to know what they want and things have worked out pretty well for them. They have access to very cheap funding. But those benefits have not really trickled down. If you just are an entrepreneur and you want to get a loan at your local bank, you dont have access to that cheap money. It has really been a form of monetary favoritism. And mr. Trump has focused on it and hes dared to be critical of Central Banks and particularly our Federal Reserve. 7. Judy shelton, thank you for being our guest. This isnt an endorsement of one candidate or another, but it definitely shows that voters have an opinion, and i think some of the politicians they put in office should respect that. Thank you for taking the time today. Sara, back to you. Rick, thank you. Now lets send it over to john with a look at whats coming up at the top of the hour. Well, its official. Stranger things have happened. Netflix up 18 on betterthanexpected subscriber numbers. Well dive further into that. Also ibm earnings and what intel is coming up, and that stock is at a tenyear high. Youve heard of uber and lyft but have you heard of juno . Well have that and a lot more coming up next. I was diagnosed with parkinsons actually in early 2013. It took awhile to sink in. We had to think a little more seriously about saving money for the future and for the kids. The income of airbnb really helped to mitigate the stress. But we have that flexibility of knowing that if you know things get worse, we have this to help keep us afloat. So thats very, very important for us. 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. Reviews for googles first phone, pixel, is out. Wire says you should get a pixel. Tech crunch labels it androids best ambassador. Joanna stern, wall street journal and usa todays personal tech columnist. Best Android Phone on the market . Definitely. In large part thanks to exploding note 7s. Makes you wonder what would have happened otherwise. It would have been a close call. It looks exactly like an iphone. Good for iphone users. But the hardware design is great, right . This is what google was really trying to do here, take away any other arguments about getting an iphone. Make the hardware just as good as apple does and focus on the software experiences. Try to bring over those people who love using Google Software experiences. They do a really good job of that. Well talk about the ecosystem in a second. For the hardware alone, ed, whats your take . Its a winner. Terrific camera phone. Iphone 7 plus is a terrific camera. Samsung galaxy s7 had a great camera. So did the exploding note 7. We know what happened there. It feels like a premium device. A lot was made, joanna, at the announcement about assistant, ai thats built in. How did that stack up . Siri looks pretty stupid today. I think siri looked pretty stupid yesterday. She looks stupider today, or he. No sex assigned. What about alexa . A different type of assistant and google will go after alexa with the google home products. Its on the phone and is with you. Alexa makes it more comfortable for to us talk to alexa. Shes always listening, very fast to respond. Google has done a lot of that here too. Fast to response, quick to respond. Understands what youre saying. Your argument for what youre not i message is the reason youre till . Apple system. I love this poen but its really hard to go to this phone when all my other friends and family have iphones. Right. Where is the wall now . Whats keeping people within a system when we know the retention is still so high . I think you hit it. You get sucked in on a particular feature or the ecosystem broadly. Google photos. You can have the pictures on your iphone on google photos. We have our pictures there, music there. Or your family. Or your family. Thats right. Its hard to get that inertia, i can get it over here but im comfortable over here. Its the hardware, too, right . Apple has the apple watch, mac products, apple tv. This whole ecosystem of devices. Google is trying to do the same thing, wifi router, chrome cast, google home speaker. The decision well start making as consumers is not what phone do we have in the pocket. Its what system do we have around us, what Services Connect all of those . Joanna in your piece you sort of ask an interesting question. That is why now . Why is google making this pixel now . What sort of opportunity does it see . It seems late to go after the iphone in such an aggressive way. Did you figure it out by playing with the phone . A couple of things are at play. The services. Google has always been best at services, software. They see now we have to control the hardware because our partners dont do it well enough. Right . Take aside the samsung blowing up. Its been their leading partner. Its good but its not been great. When you sort of look what samsung sells the most of, its more lower end phones. Clearly apple wanting to go after the iphone and a higher end part of the market. You have to look what happens to apple. Apple says every year or every Quarterly Earnings that theyre getting a lot more people coming from android. That is a threat to google. Isnt the larger lesson here, hardware is being xhodize icom, right . Artificial intelligence. Vr. Day dream, the upcoming vr system that google has coming. That will compete against samsungs gear vr. So, yeah. Its a new ball game. Its not just about hardware. Fascinating. Good to get your take. Ed, thank you so much. Joanna. Joanna stern and ed baig. Does it come in rose gold . It doesnt. It comes in blue. Thats interesting. That does it for us on squawk on the street. On squawk alley, netflix driving up the stock nearly 20 . Plus a great guest, vice chairman of lionsgate, michael burns. all right, be cool. 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