Weaker looking at europe this morning, the early trading taking place, at least at this hour things are flat there the dax is slightly higher, the cac and ftse are slightly lower. Spain up by a tenth of a percentage point crude oil prices were up yesterday to a twoweek high, up at 51. 87 this morning those gains continue with wti for november delivery up by 21 cents to 52. 08. Wow dow component United Health is reporting. Stock has been on a tear for years, right in fact, the stock getting close to a new high, 1 186 billion market cap, almost 1 187 billion market cap reporting 266 a share. Thats tencents above expectation. For the year, they see 2017 adjusted net at 10. Medical loss rates, they call it Something Different now. They call it medical care ratio, 81. 4 thats like the inverse of profit margin. Revenue, 50. 32 billion you cant necessarily compare apples to apples, i like the earnings per share or the earnings increase. 26 . 26 earnings increase. That is what do you do with that that means youre if you get a market put multiple, its 26 e earnings that warns 26 times earnings they do make comments about the aca, whats happening. They say employer and individual Third Quarter 2017 revenue of 13. 1 billion was down 1 197 million year over year because of the effects of the previously disclosed aca individual market withdrawals. And the Health Insurance tax deferral commercial risk space Group Benefit offerings and rate increases. 50. 32 was in line 50. 368, 50 billion in the quarter. Thats a dow component thats the hoeadline from me. Lets get you caught up on other headlines. Or you can comment on United Health. I dont have anything to say about United Health. Okay. Thats a rare occurrence lets talk about uber this morning. A deal between softbank to take a stake in uber is likely to occur within the next week thats according to ubers board member, Arianna Huffington speaking at a wall street Journal Journal event she did not disclose a price tag on the deal but said softbank could end up with a 14 stake. Recode reporting that softbank is in early talks to raise a second fund. They already upended Silicon Valley by making bold investments across the tech sector with its existing 93 billion fund we often call it a 1 100 billion fund some sources tell recode the new fund could be larger than that facebook acquired tbh, an app popular among teens. Its an app with an acronym for to be honest it allows users to anonymously answer multiple choice questions about friends who receive the poll results as compliments, at least when they are only plyments they say more than 5 Million People have downloaded the app and sent a billion messages in the past few weeks financial terms were not disclosed. Airbus says that it will acquire a majority stake in Canadas Bombardier. We like bombardier . Yeah. Like noah, our friend that was on yes, of course. Hes the expert in all things. Bombardier, their cseries jet program will be acquired for zero dollars the deal gives airs because 50. 01 interest in the cseries limited partnership which manufacturers and cells those jets airbuss ceo, tom inder, says the deal will improve the appeal of the cseries passenger jet which has struggled to find customers. Some of the planes will be built at airbus alabama plant thats key because the move would allow bombardier to dodge heavy u. S. Taxes the u. S. Threatened to impose a 300 duty on bombardier imports claiming the company is fairly subsidized by the canadian government boeing blasted the deal saying this looks like a questionable deal between two heavily state subsidized competitors to skirt the havent findings of the u. S. Government, our position remains that everyone should play by the same rules for free and fair trade to work. Air sbus the news of yesterday afternoon, perhaps this morning, netflix posting blockbuster Third Quarter results. They beat in a big way joining us now to break down the numbers is will powers, Senior Analyst from r. B. Barrett and company. When you see the ceo wearing an ugly sweater like that on that call, i think it means he has been given permission to do basically whatever he wants what did you make of the numbers . You are right they were going for the ugly sweater, christmas sweater contest. The Stranger Things sweater. Right yeah with the light bulb colors, all that strong numbers netflix, as we all know what been a juggernaut in terms of subscriber growth. 5. 3 million new subscribers. The u. S. Slightly better, the story was international which beat by a more substantial margin looking at the q4 guidance, that looks good its as simple as the number of new hits latest season of narcos, shows like ozark, and in the Fourth Quarter you have another set of lineup that will propel those numbers into the yearend. How have you changed both your expectations on the stock but also your expectations for growth well, thats a good question. There are two pieces to this a, we raised our revenue forecast to really align with the price increases announced a couple weeks back. Theres no question that helps on the revenue side. Interestingly most of that is being absorbed by higher content costs and marketing costs. To give you flavor around that, theyre forecasting 7 billion to 8 billion in content spent in 2018, thats above the previous forecast of closer to 7 billion. The cash cost, what theyre going to pay out in cash is north of 11 billion next year. Just on content. Thats probably less of a surprise to investors even though its a big number across the industry the thing that surprised us last night was how much theyll increase their marketing spend that will grow as a percentage of revenue, which does raise some questions on leverage, but i think ultimately whats going on, theyre throwing gas on this fire they want to extend the lead while they can with competition starting to creep up just explain the distinction for those uninitiated. They talk about the 8 billion headline figure. Youre talking about it being 11 explain. Effectively what happens, as you shift to more original programming, they have to pay more cash up front theres a disconnect between what actually runs across the income statement in terms of cost and what they have to pay out in cash. Thats one of the reasons theyre running a significant Free Cash Flow deficit they have guided to burning about 2 billion, 2 2. 5 billion i cash despite being profitable on an income statement basis. That number we think will get bigger in 2018 ets f going back to the leverage point youre making, is there ever a point where you think theyll be able to grow without having to continue to increase this spending on either content or marketing at the level that they are well, thats a good question. We dont have the evidence of it yet. If you did, you would see it in the u. S. , because thats where they already got 50 penetration, north of 50 million subscribers. So that piece of it is a bit disappointing to us. They are betting to be certificate than they will see that leverage. Certainly see it on tech and development, r d and those areas. Ideally you would see it in marketing, too when you look at this marketplace for video, whether its svod, or how ever you want to look at the market, do you believe theyre stealing market share from somebody else is there a lose ner thr in this or is the market expanding we see it in all households with kids, the viewership around youtube, netflix theres got to be some lost share from Linear Networks i dont think that would surprise anyone. As you look at internetproduced tv, thats continuing to grow as a category thats got to be taking some share from traditional media. Will, appreciate it great to see you good to see you next time wear an ugly sweater. Ill see what i can do. We have a couple of nose we do i think my wife made me throw mine away. I still have it. On the wall street agenda import prices out at 8 30 a. M. Eastern time followed by Industrial Production at 9 15 at 10 00, the monthly home builder survey Patrick Harker will be speaking this afternoon on the earnings front, results from Goldman Sachs, Morgan Stanley, j j and ibm. Green this morning, though single digits. We are joined by our guest, mark freeman and savita are you still friendly towards stocks theyre the best game in town . They certainly are. I think this is how bull markets end. Thats my view what were in now is this euphoria around stocks thats been missing for this entire bull market. People are buying the dream that stocks can go up youre starting to see a Broader Market how long can that last . So this is what i worry about. Its not the age of the bull market bull markets dont die of old age, but things were looking at are late cycle leverage ratios are at cycle highs. Companies are starting to slow down their buyback programs. So a lot of the drivers for this bull market, like levering up balance sheets, doing buybacks, those are slowing down, maxing out. What really worries me, if you look at earnings season for last couple quarters, theres been no reward for earnings beats which is weird you would imagine that stocks that surprise to the upside on earnings go up after they announce this quarter and last quarter, nothing is happening stocks are slightly underperforming when they announce really good results which means the bar is getting higher, investors expect good news let me drill down on the euphoria stage of the market when do you date the euphoria as having started it sounded like you were saying in the last month or so. No, no, no. I think it started i guess the way i would typify it, there was building optimism sometime around last year mid last year, and the election throu threw a bunch of fuel on the fire for most people it through water on the fire. The election. Donald trump was met with skepticism, consternation, 5,000point down markets but the market rallies. In the face of a lot of disbelief and skepticism im wondering when did the euphoria is powerful, a melt up ive seen these single digit moves. Do you think were seeing complacency or euphoria . Do you think we see skepticism or euphoria . I think were seeing septemb skepticism, everyone still hates this market. Thats not what you tend to see. You tend to see this when everyone loves it. I dont see the love thats why i dont know if were in the middle of what you would call a final stage euphoria heres where i see it. If you look at the average equity strategist like me and my counterparts, their allocation to stocks have moved up five points to 60 or 65 to like, 56 . Close to 0 . If you look at cash balances on the buy side, theyve been dropping investors are getting more and more invested in the market. Cash balances were 5 a year ago. Of these metrics that drive risk taking how about that . I think you are seeing money get put to work. Ultimately we come back to the pain trade i refer to it as the pain trade is still up as opposed to down when i talk to people and how theyre positioned they are more defensive. Theyre taking money off the table, maybe being more cautious but the market is moving up. If you try to keep pace with that, its a challenging thing to do. What we touched on this morning, ultimately we think earnings will dictate the course. So far so good on that front what do you think about the fact there is absolutely no reaction to earnings . I find that unsettling the fact that fundamentals are not driving the bus. I think fundamentals are still playing a role, but you make a great point there typically thats what we would see. We go into earnings season earnings would beat. Stocks go up you get an upside surprise, that has become less and less some people may speculate the market is becoming more and more efficient, i dont know. Were looking at the absolute numbers from an earnings standpoint they move higher. I think its difficult for the market to move in the opposite direction of Earnings Growth if earnings continue to move up, then there has to be another type of catalyst that will counter that so, i guess weve done a bunch of work on earnings. The number one driver for the market is not Earnings Growth but the surprise factor. Its how much earnings eclipse what is expected what i worry about is next year analysts are forecasting 12 Earnings Growth. And i think thats hard to get against the backdrop of 2 gdp growth you know, limited Inflationary Pressure so i think that the next phase might be driven by downward revisions. Let me counter to that point in terms of what is perhaps if the market is not underestimating the actual earnings report, what is it underestimating Going Forward . One thing were starting to see i know youre seeing this, too. Ive seen your work there. Top line perhaps are we seeing the return of top line growth something missing forever . I think also the fact with the dollar being flat to down, perhaps the strength abroad that were seeing thats a catalyst and then you have the fiscal element. I dont know how you would handicap that. The market is thinking about that in terms of what comes through. I think tax reform might happen that would be a big boost to earnings. If that happens, we would change our call, but its still up in the air. That could add as much as 6 Earnings Growth for next year which would be which would get you to that 12 number i dont know i look at the market, the internals look fine, sales growth is healthy, but a lot of late cycle signals i want a lot more euphoria. Where do you sell to be honest with you, it was funny, mark, you were a sophomore in high school during the crash . College i was like i was under my desk i was so petrified and scared of everything he was in the peace corps in togo yeah. We were just talking about togo last week. Thank you for that. Savita, thank you. My point was in the all the time in the market, i have never been right about a top ever. Bottoms bottoms you can sometimes feel the blood, theyre easier tops, i have never been able to see a good indication of when one is there i always want more euphoria. When we come back, the search for the net fed chair President Trump will meet with janet yellen this week well look at that story and what you should be watching today in washington. Thats straight ahead on squawk box. Your muscles look good, but we should be seeing more range of motion. Im fine. Okay, well lets see you get up from the couch. Im sorry, what . Grandpa come. At cognizant, were uniting doctors, insurers and patients on a collaborative care platform, making it easier to do whats best for everyones health, every step of the way. You may need more physical therapy. Ugh. Am i covered for that . Yep. Look. Grandpa catch grandpa duck woah ha there you go grandpa. Keep doing that. Get ready, because were helping leading companies see it and see it throughwith digital. President trump will reportedly meet with janet yellen on thursday this is part of his search for candidates for her position. She will be interviewed herself. A white house official said trump met with Stanford University economist john taylor last week. The president also met with former fed governor kevin warsh last month other candidates are Jerome Powell and gary cohn, but you get the sense this answer will be coming sooner rather than later. Ben white said that taylor was like the hot the it boy of the moment. I saw that on a mark grant piece that they had a really good personal rapport. Trump was very impressed with him, but hes the opposite of what you would think trump would want, rulesbased. Knowing he wont keep rates low. Not subjective decisions, but wow, rules would dictate we raise rates. That may not be what he wants. I dont know yellen, i dont know id be surprised her husband is so far to the left i guess you could be a madeline carvel thing. Sure. This is the president s choice, whoever he sits down with and strikes his fancy, whoever he feels most comfortable with. We heard who was pushing Mnuchin Mnuchin was pushing powell hes worked with him on some regulatory issues. He feels comfortable with him. We will know soon i wonder what percentage of the country is on the edge of their seat realistically. 1 . You think 1 . Not even. But the markets are i wonder, as we obsess a larger percentage should. As we abscess obsess and draw in viewer, i wonder what the actual percentage it matters. 0. 1 . Maybe 0. 1 that could name two candidates andrew they cant even name the Vice President half the time. 0. 1 how about the collision between two neutron stars . How about that that was cool how about that . Thats where you get gold, all of these things. They have the mass of the sun and the size of manhattan. Did you see i read it, it said it produced all the silver and gold i thought they meant the colors, they mean gold the high atomic number elements are produced by this collision look, there it is the amazing thing is, like everything that we see, since it takes a light year to get here, this happened 130 million years ago, even before Global Warming started. But 130 million years ago when that happened. You saw gravitational waves, and you saw the curvature of space time the fabric is it space or time its a wrinkle in time. What was the segue in your brain between the 1 who would know who who would know who Jerome Powell may or may not be a more important 1 i see just trying to follow how i got that . Its okay i was trying to think of Something Else random that nobody would know about . That a small percentage of people would know about. I was hoping you were part of that 1 , but you really werent. It was a test i knew what you were doing this was a test. You were talking about unicorns not the neutron star eamon javers is in washington eamon may be excited about the star this is my kind of show you have the space time continuum, the fed ch