Benefit more under his tax proposals. He will lower the pass through, and that will lower the Capital Gains so thats Utter Nonsense thats reform. Jim, nice to see you today. Its 8 00 a. M. In seattle, 11 00 a. M. On wall street. Squawk alley is live. Welcome to squawk alley, im Carl Quintanilla with kayla. The dow has gone positive for the week. A big day for bank earnings. Jpmorgan moving higher. Profit down year on year, but the company saw record income in commercial banking. Citi in the green after earnings and revenue topped expectations. Fixed income a bright spot, up 35 on year on year. There is wells fargo, despite the drop in income days after chairman and ceo john stumpf resigned. Plenty more on wells this afternoon, the cfo will join closing bell at 3 00 eastern time. Goldman is leading the dow. Some of these metrics if you look elsewhere, other than wells, pretty good. Even things like expenses working in their favor. Settlements, reserves, acting more like a tailwind instead of a headwind. Were not seeing the massive amounts of money banks had to sock away for potentially bad oil loans. Margins are in focus but people know what theyre buying. I will say jpmorgans 15 loan growth is something people will be talking about. Citi group loan growth there about 2 . They do have the costco benefit, cars and loans getting a huge benefit. Analysts are writing about the rampup in how many cards they were able to sell. Jpmorgan doing cross selling sales practices, saying there are no systemic issues at jpm. Total assets up 4 year on year, and discussion about whether theyre too big now. Jpmorgan several years ago had a settlement in its Asset Management unit that it was pushing some Mutual Fund Products that were jpmorgan proprietary products that were less well performing, so they had the introspection a couple years ago about what products should we be selling to consumers . What is fair . What should we be doing . I think the street is commending them. Talked a lot about banks. Well pivot in this hour to some tech. Big tech story this morning. Vmwares cloud will now be available on amazon web services. How will amazon and vmware working together impact the space . Pal gilsinger is ceo of vmware, and pete jassis join us from one market. Guys, good morning. Good morning. Good morning, john. Good to talk to you. Andy, big hybrid cloud announcement from you guys, one of the knocks on amazon is that you guys were not used to dealing with fullfledged enterprise work loads with all the guarantees, flexibilities that customers wanted. Are you going to do more of these types of partnerships like this one with vmware, big player in the enterprise space . Is this part of your strategy for continued growth at aws . We have a very big enterprise business. Most of the big hybrid implementations you see out there are built on top of aws. The announcement we made together is a real win for customers. Because aws and vmware were not well integrated, customers were forced with a binary decision to make of either continuing to use the vm software they like but not really be able to use it on aws in the public cloud well, or use aws in the public cloud and leave behind vmware software. With the announcement customers dont have to make that binary decision anymore. And they get to use the vm software on aws and do so without buying additional hardware. Pat, whose customer is this . It will be sold and serviced by vmware, will amazon get information to help them access those customers and expand their business . Is it going to be you thats perhaps expanding the relationships even if theyre amazon customers deciding they want to use more vmware on premise . Yeah. John, what it is, it really is the coming together of amazon and vmware for this best of class hybrid cloud service. What were finding is these are already our joint customers. Thats what really makes this announcement powerful. Andy and i were driven by customer demand. Huge vmware footprints used by essentially enterprise are taking advantage of amazon. This creates a seamless hybrid experience. The specific offering is a vmware offering bringing vmware cloud on amazon. It will be sold, supported and offered by vmware, available on the amazon marketplace, but us bringing the vm software stack, combined on the global dynamic infrastructure of amazon, with Amazon Services which are rich and broadly available giving a best of both worlds experience for customers. Most people are zeroing in on microsoft as the biggest challenger to this hybrid vision youre putting more meat on with this announcement. How does this change the competitive dynamic between you and microsoft . Again, i think that its a really differentiated offering for customers. The vast majority of the Worlds Enterprises have virtualized on vmware. Theyre used to using software, thats what they want to use as they move to the public cloud. This is the only offering that allows you to use the same software on vmware on the public cloud. Also people want that concision tent, seamless experience when they run in hybrid mode but doing without buying additional hardware this allows you to do that. Pat, you already had a deal with ibm. Why do this . Ibm, and that relationship is going well. Were delighted with the momentum were seeing from the ibm customers, the vmware offering were doing with ibm is having great momentum in our joint customers and in the marketplace. However, bringing together the leader in public cloud with the leader in private cloud, as we said, was driven by our joint customers. Those customers were looking for the seamless hybrid experience. Some customers will use cloud a bit. Other customers are saying i want to be out of the data center business. A lot of them are in between those two worlds, wanting to take advantage of this overall capability. This is what we announced with the cross cloud architecture, giving all of our customers the ability to take advantage of many clouds. Inside of that, this is a pillar offering, something that allows us to present a unique hybrid cloud experience from the leader in public and private coming together. A year ago one of the themes was having oracle in the cross hairs, taking them on in database, you talked about data migration, making it easier for customers to get data into your cloud. How is that going . Taking it to the traditional enterprise juggernauts who are also trying hard to compete with you in cloud. How would you score your performance over the past 12 months . The business is growing really fast. The last financial numbers we released, its 11 billion revenue run rate business, trailing 12 months basis growing 58 year over year. The business is growing by leaps and bounds. What were trying to do is enable enterprises and companies to run all of their applications on top of our Technology Infrastructure platform. It turns out that database is an area they care a lot about. For the last 30 years they had relatively little freedom in the database space because they have been beholden to the older guard database spaces, with punitive licensing terms, thats not what customers want. Given the nature of that, we launched aurora, which is the Fastest Growing service in the history of aws. Since january 1st of this year, we had 12,000 database migrations away from prior databases into aws. Its because customers want that database freedom they get with the cloud and awi. Do you think youre part of the reason for oracles new Software License business not doing so well . Its hard for me to say whats influencing Different Companies results. Our business is growing so fast in the database side and on the analytic side, its exciting for us. I think its exciting for customers because it allows them to get much more done, much more cost effectively and quickly. Pat, as far as how you go out and you sell this relationship with amazon and also the other priorities that you have, alongside that, are you going to be needing to put more feet on the street in order to attack this cloud opportunity and sell this relationship with amazon, given that, you know, once you talked about amazon as a threat and the enemy. It was, as you said, binary in the other direction. What weve seen in the marketplace over the last several years, john, is customers taking advantage of the public cloud. In many cases going faster than andy might have expected three, four years ago. Thats a clear expectation on the part of our customers. Further, the private cloud, us building this automated experience that allows them to have that cloud experience in a private way. Customers have pushed us to come together. That really is, you know, the exciting thing about this. Customers will be accelerated it their cloud journey with a richer set of tools to accomplish that. I believes that will accelerate our business and amazons as well because were taking away friction from customers on their cloud journey. Vmware is growing, were expanding investments, sales forces, doing joint sales activities with amazon, both investing in this offering in the marketplace. Overall thats something when customers are pulling us, its an easy thing to sell. Andy, traditionally q4 is a big quarter for retail. A lot of transactions take place. Thats when people need the excess capacity they turn to the cloud for what are your expectations for how this quarter will shape up cloudwise . Similar to the seasonal pattern weve seen in the past, perhaps even more so based on some trends weve seen in the Macro Economy . Were expecting continued growth in the quarter for our cloud business. The amount of demand for our various services continues to surge. We have so many customers where q4 is such an integral part of the year, and they scale in a way thats unusual. We have to make sure we services them well. We expect this to be a growth quarter for our business and customers. Cant wait to see those numbers. Certainly an announcement thats reverberating throughout the cloud world. Thanks for joining us. John, always a pleasure. When we come back, more bad news for samsung today, expecting to take a multibillion dollar charge over that exploding smartphone recall. Airlines also taking precautions to protect fliers from the fiery phones. And apples ceo tim cook weighing in on virtual and augmented reality. And Hyperloop One landing the excfo and a new round of funding. Well talk to the founder and cfo in a moment. Theres a lot of places you never want to see 7. 95. [ beep ] but youll be glad to see it here. Fidelity where smarr investors will always be. If only the signs were as obvious when you trade. Fidelitys active trader pro can helpou find smarter entry and exit points fidelity where smarter investors will aays be. 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 , not just wealth, but things tt matter. Morgan stanley the samsung losses keep coming. The company expecting another 3. 1 million in losses from the smartphone fires. Joining us is re codes executive editor joining us from d. C. Hi, kara. How are you doing . How do you make sense of this, and what it does for apple, google, chipmakers . For samsung, its terrible. Think about the airlines, every day, every time i get on a plane, an airline is talking about how bad samsung is. Dont put them away, turn them off, put them in a bag. On a marketing perspective, its over for these phones. Obviously it questions whether all phones will have issues. For other phones it brings to mind the idea these things can be unsafe. Right now its linked pretty much only with samsung. Theyre the ones suffering for it but it creates appall over the market for sure. What do you expect the launch of the galaxy note 8 to look like . Who will buy that . Apparently theres Foldable Technology in the samsung 8, or theyre pulling back on that, they have to sort out what happened here first before they move forward with over phones. They cant act like business is usual. They have not explained why these things explode. They had these issues with the replacements, everything else. This is just a completely tarnished brand, the entire brand. And the question is where do they go from here. I dont think introducing a new phone is the answer. Ive been surprised to see the samsung fans that i know are Still Holding out for whatever their next phone is. In their minds its very isolated to this one particular phone. Is it possible, if theyre able to get their ducks in a row and release another couple phones that dont have problems, is it possible this is a onetime hit . Or did the fact we saw the recall and then the botched reissue show an organizational issue that is likely to crop up again . Either organizational or they dont know the reason for why this is happening. Initially i thought they handled it well and transparently. Right now with the second part of the recall, and another phone having a problem, they havent been able to answer it adequately. You know, they have a lot of fans. A lot of people love these phones. The issue is are they safe . If youre like flying any airline today, it gets mentioned in the terminal, on the flight, you know, thats a lot of people hearing a message thats not a great thing. The question is can they will they recover and call it Something Else . Release other phones in but its its a damage all the way around until they explain whats happened here. Well have to wait and see the fallout there. Next, verizon, now may renegotiate its deal with yahoo . The top lawyers saying the massive hack of emails could justify reopening discussions. This was discounted early when it was reported. What do you make of it now . No, absolutely it wasnt discounted. They have been in talks for weeks. Its always being handled by the general council. Some of the reports have Tim Armstrong doing the negotiations, hes not doing them. Its done by their legal council, who i just recently met. Terrific guy. I think theyre all surprised. And i think the issue is they are not getting much information out of yahoo yahoo cant give information because of lawsuits now occurring because of this hack. Its a confusing situation for verizon. They have to answer to shareholders. And the problem for yahoo if they go back and negotiate, its not like other bidders wont have these questions. All the other bidders i talked to said they didnt get information about this. Im doing a lot of reporting about when did the yahoo management know about this. I think its earlier on a lot of these problems than people have been reporting. What do you think its worth . 4. 8 billion deal. I know were not in the negotiating room, we cant put a fine point on it . 100 million . A billion dollars . Bigger. You cant determine what the damage is yet. These are legal damages, should verizon take responsibility for them. Verizon overpaid by a factor of 5 500 to a billion dollars. Everybody else was way under. The question does it come off . Where does the liability go . Its a complex issue. Again, they have not even gotten to the bottom of just like samsung, they dont know why. They dont know the particulars. Verizon certainly doesnt know them because yahoo cant tell them that because theyre not merged companies. It creates a problematic and thorny legal situation. Kara, you think this is a watershed moment from here on you the there will be some hacking provision in these m a deals . You better disclose as much as you can to us now or theres a penalty or all bets are off . What have you . Thats a good question. I think some problem with yahoo they had an email problem, if you recall, right before these hacks happened. They were using very old equipment and things its a longer and more complex story. I think in yahoo s case, some of it is preventable. And thats one of the issues, antiquated technology. I do think Going Forward everyone will have to be aware of these issues, and then probably build in these ideas, if hacking occurs, this occurs, a whole new area of law. More lawyers, i guess. Might have to have a digital blood test before marriage of these companies. Amazing how hacking has infiltrated the election process, m a, personal lives. Where does it stop . Thats the problem. It is. Its a really big problem. In this case, a lot of issues may be on how yahoo management reacted. Theres another layer to this. Its not oh well, it happened. Other companies do not suffer in this way. Thats another question verizon has and a trust factor with yahoo management. Ive heard that several times, the trust factor is broken. Kara, thanks for your time. Up next on squawk alley, tim cook on virtual and augmented reality. No whos gonna help cover the holes in their plans . Aflac like ring copays and deductibles. Aflac or help pay the mortgage . Or child care . Aflaaac and everyday expenses . Aflac learn about one day pay fl. Com boat bllbrlblrlbr audi pilotless vehicles haveonquered highways, mountains, and racetracks. And now muchf that same advanced t thnology is found in the audi a4. With one notable difference. The highly advanced audi a4, with available traffic jam assist. In case you missed it, tim cook loves augmented reality. Apples ceo saying in an interview with buzzfeed that hes excited about the implications of augmented reality enhancing the himeuman experience. Cook has previously stated apple is high on ar. He did add there is no substitute for human contact. Awe. Not that revelatory. Have been a big headline had he said otherwise. It also places them interestingly opposed to samsung, which is invested in vr, the partnership with oculus, the head set. He seems to be saying were not interested in catching up to them, we want to do something different. Asia had a good session overnight on the back of the chinese cpi number. Seema is back at post nine. Thats right. European stocks eniding on a higher note. For the week, european financials underperforming the european benchmark as investors keep a close eye on the health of Deutsche Bank. You can see the banks also underperforming the s p 500 as well. However, one standout sector for europe are the miners, which continue to move on chinese data. Yesterday lower on export data, today the micners are higher on inflation prices, headed higher for the first time in almost five years. It goes to show how reliant miners are on supply and demand from china. Higher by 2 . Good news for the auto industry. European car sales hit a new record high for september, Passenger Car registrations up 7. 2 from a year ago. Italy up more than 17 . Spain posting a 14 gain, fol