this was a mistake with an upgrade system and a glitch that went through that. it started with crowdstrike but went through the microsoft system. and that's what we've been watching so closely. now it's down by less than 12%. we'll be continuing to follow this throughout the day right here on cnbc. have a great weekend, and at least it's a friday, right? >> there you go. >> right now, it's time for "squawk on the street." ♪ it is being called the largest i.t. outage in history as this operating defect at sk crowdstrike does hobble airlines, banks, mass transit and municipal services all around the world. i'm carl quintanilla with david faber, sara eisen here at post nine of the new york stock exchange. we are going to talk to crowdstrike's george kurtz in just a few moments with our own jim cramer about the outage and the timeline for fixing it. first, though, we get to meagan casela this morning with

breaking news. >> good morning. the biden campaign is now holding firm this morning and saying that president biden is remaining in the race for his re-election. a long new campaign memo out this morning outlines that despite widespread concerns, the party has "no plan for an alternative nominee." the campaign's battleground states director acknowledges the uphill battle ahead, saying they have their work cut out for them, but he shares some internal research finding that the voters the campaign cares about the most are still planning to vote for biden in november. i want to read you a full quote. "joe biden has made it more than clear he's in this race and he's in it to win it. moreover, he's the presumptive nominee. there is no plan for an alternative nominee, and in a few short weeks, joe biden will be the official nominee." now, this sort of internal research and reassurance about a viable path to victory, this is what democrats have been craving from the campaign, but it's definitely not clear at this point whether this will be enough to fully put to bed all of those calls from democrats

for president biden to step aside. just in the last hour, a 25th member of congress, representative sean kassen of illinois, came out asking biden to bow out. democrats were saying there is no path to biden staying in the race, that we were at the end of the rope here. there was fresh excitement among donors and strategists about starting to plot out a new path forward. obviously, this memo will quiet some of those calls and plans, but the question becomes by just how much and whether president biden can continue to stay on. we'll stay on this and see if he can make it through the next few hours, the next few days. back to you guys. >> megan, yesterday was adam schiff and senator tester going public with their efforts to try to get the president to bow out of the race and there is some reporting this morning that suggests more democrats may go public next week if the president weren't to change his mind. >> absolutely. this is becoming almost a fistfight here. what we're hearing is as lawmakers come back into washington next week, that more and more of them might start to come out publicly. they'll be speaking together

again. we can assume there will be more caucus meetings and that sort of thing, but it's almost as if the biden campaign is sort of daring them to come out publicly. many, many democrats here out of respect for the president really wanted a lot of this to stay behind the scenes. they wanted him to get to this decision on his own to step aside. they thought that would be the best path forward for him, his legacy and the party. they're not getting that and it just continues after three weeks. we're continuing to have to watch to see if this will get even louder and if he'll ultimately get pushed out of the nomination. >> the turmoil is not helping the re-election efforts, one would imagine, broadly speaking, for the party. megan, there were reports about former speaker nancy pelosi having a conversation with the president and his key advisor, mike don lan, sharing her own insights from polling that she was seeing saying there was no -- virtually no path, and that down ballot would be a bloodbath as well. those are my words, not hers,

but you know, what are they seeing? do you have any sense in terms of what biden's inner circle sees versus, what, for example, the former speaker sees? >> the biggest question here has been exactly what polls the biden inner circle is looking at. this memo starts to hint they're seeing something that supports it. we'll hear from campaign manager jen o'malley dillon this morning, and a lot of democrats are hoping she'll have those numbers to share, but the concern has been they're sort of burying their head in the sand, not looking at the polls that everyone else is looking at. former speaker nancy pelosi has, for her whole career, been very savvy, very good at this, always understanding the political impact of different events on her caucus. for her to be warning like this, she's really saying she's telegraphing that she's seeing something that she's worried the campaign and especially biden himself is not seeing. they're trying to argue that this isn't just about you and this white house anymore. this is about the entire party and all of the policy that they've been working for.

>> i know dillon is going to be on "morning joe" in a couple moments. we'll listen for that. certainly as pelosi was quoted as saying, put donalan on the phone as to whether or not these polls can be believed. megan, we'll come back to you later today. thank you. let's get to this massive i.t. outage impacts businesses all around the world. our steve kovach has been all over this from the very early parts of the morning. >> yeah, here's what we know so far. this was an issue with the cybersecurity firm crowdstrike. the company pushed an update that caused the outage. that's what it says. company putting out a statement earlier this morning saying, "crowdstrike is actively working with customers impacted by a defect found in a single content update for windows hosts. mac and linux hosts are not impacted. this is not a security incident or cyberattack. the issue has been identified, isolated and a fix has been deployed." really important there. they are saying this is not some sort of hack or cyberattack

incident. but it is still unclear when things will fully recover, but earlier this morning, microsoft's technical support page said some customers have been able to restart their systems. we're getting reports from some airlines and other impacted companies saying they're rolling back on line as well, but here's how this worked. the outage caused windows pcs managed by crowdstrike security to reboot and show that so-called blue screen of death. it took down operations at just a slew of companies across the world, from tv networks like our own to airlines like delta and united to banks, 911 call centers, hospitals, we've been seeing. microsoft is also involved in this. and they're putting the blame on crowdstrike, saying the crowdstrike update forced those windows devices to get stuck in a reboot loop. in the meantime, shares of crowdstrike and rival sentinel one and palo alto stocks are popping. we're waiting for updates about when everything is expected to be fully back online, and more importantly, after everything's

working again, what went wrong. there's just some big questions here for mr. kurtz here in a couple minutes, guys. >> yeah. thankfully, we're going to be able to ask them. we'll see what kind of answers we get. steve, we'll be back to you. let's turn now to phil lebeau, get a closer look, of course, at how this massive outage has impacted airline travel worldwide. phil is in the uk, and has the latest for us. >> and david, we saw it hit early in this morning. here in europe, there were cancellations, long lines. look at what we've seen over in the united states. long lines as people have shown up at airports like in newark, and they see, look, most of the flights are at a minimum delayed if not canceled. flight aware is reporting more than 1,200 cancellations so far. that number is going to skyrocket from here. so, here's where we are in terms of the three large airlines that had a ground stop early this morning. at about 5:30, 5:45 this morning, american lifted its

ground stop. about an hour later, we heard from both delta and united, saying that they have resumed some flights, though neither airline has told us exactly how many flights have been resumed. they both say that they expect disruptions to their schedule throughout the day. bottom line is this, guys. you are going to see this have a ripple effect throughout the day both in terms of delays and also cancellations. it's going to take a couple of days for the people who are at some of these airports, who can't even check in because of the software issues, finally get on their flights over the next couple of days. >> phil, thank you for that. we'll talk more about why you're there and ge aerospace in a little bit, but certainly important to have phil give us a sense of what's happening. let's get to our jim cramer this morning with a very special guest. hey, jim. >> thank you, carl. yes, we have to speak right now to george kurtz, the ceo of crowdstrike, a company that has

a stellar reputation, but we want to know what this will do to it. george, thank you so much for coming on "squawk on the street." >> thank you, jim. thanks for having me. >> all right. george, i know your company very well. our viewers know it too. how did this happen? >> well, first, jim, let me start with, i want to personally apologize to every organization, every group and every person who's been impacted by this. and we understand the gravity of the situation. and let me explain a little bit more about what happened. this was not a code update. this was actually an update of content, and what that means is there's a single file that drives some additional logic on how we look for bad actors, and this logic was pushed out, and caused an issue only in the microsoft environment. specific to this -- this bug that we had.

we identified this very quickly, and rolled back this particular content file. obviously, many organizations are impacted, and many of them are beginning to recover. many systems can be rebooted, and we've fixed the issue so the systems are coming up and running. some systems may not fully recover, and we're working individually with each and every customer to make sure that we can get them up and running and operational. but to be clear, it was not a cyberattack. it wasn't anything related to that. it was a content bug or update that we sent out, that we identified, and we rolled back. >> why do many different users find themselves with the blue circle of death, and how do i.t. people get in which with who is down? are we talking hours or are we talking days?

>> well, many of the systems are quickly coming online because they're able to be rebooted and the problem goes away and is fixed. some systems are going to take more time. you know, could be hours, could be a bit longer, but we're working with customers that if the system doesn't fully recover, we're working with them on this specific fix for that. so, essentially, we are providing guidance through our tech support, through our blogs, everything that we know we want to be as transparent as we can and get that out to our customers. >> george, this is crowdstrike we're talking about. is this falcon, which is your best program? and i need to know why did you not phase this in? why was this done all at once? that seems to be, to me, irresponsible. >> well, it traditionally goes out in a phased approach and goes through, you know, what we do is we've been doing this a long time, testing throughout

the life cycle of any of these updates. so, it initially went out, and we started to see some issues, and then pulled it back. not all of our customers are impacted. windows and linux are not impacted. as soon as we saw this issue, we rolled it back, and you know, now we're dealing with the impact of systems. >> i want to be sure about this. this did or did not get to azure, which is microsoft's cloud, because if it did, maybe that would explain things, but maybe they're separate. >> well, azure can run -- customers running azure and they can run our software there. if there was a customer that was running in azure that had our software, it could have been impacted, but that's the extent of what i know specific to microsoft piece. >> you do not know whether this is impacting azure or not? >> well, when you say azure, it

has impacted customers that are running in azure. that's what i know. >> all right. now, let's talk about liability. you offered an apology. to me, an apology means that you are culpable and you will be sued, perhaps by airlines, networks, banks. let's talk about the liability to crowdstrike. >> well, we have to sort out what that all looks like, jim. obviously, from our perspective, and i wanted to jump on the air because it's all about our response and getting our customers back up and running. we'll do the hot wash on how this happened and ensure it doesn't happen again. i think past that, we'll deal with -- my goal right now and my mission is to make sure that every customer is back up and running, and providing the protection that they've come to rely on from crowdstrike. >> do i believe that the ones that have not come online yet perhaps have to be hand fixed, which would stretch every single

i.t. department of everybody who is a client who you sent this update to? >> well, we're working on the automation. many times, this can be automated to be fixed. it may take more automation than just simply rebooting the system. that's what the teams are working on right now with customers. but we have been in contact with -- >> go ahead. i'm sorry. >> we've been obviously in contact with customers working through the fixes and many of them, again, are coming back online. >> i'd like to turn this over to my colleagues, david and carl. maybe you want to ask george something. >> yeah, jim, thank you. and george, thanks for being here. to jim's point, i think right here, i know on the ground at the new york stock exchange, our cnbc computers are going to require somebody to come and do an update manually. again, this could take some time, couldn't it, for organizations that are going to require somebody to actually manually update code or whatever it may be to be able to successfully reboot? >> yeah, there could be some

manual steps involved, and certainly, we're looking at ways to be able to automate those manual steps, and depending on the system and the computer brand and the network and how it actually works, it's different in each organization. many systems can be rebooted and the fix can be done automatically upon a reboot that's specific to the hardware manufacturer. so, we have to work through that, but there's a manual fix for it that can be employed, and again, we're looking at ways to automate those sort of fixes so that it isn't as manual as -- >> understood. you know, you mentioned, obviously, some updated content, the issues with the microsoft environment solely, but to what extent is microsoft or in the past have they been able to identify something that might cause a problem? i'm curious to understand if there's any culpability here in terms of microsoft as a result of what's occurred.

>> yeah, we're trying to sort it out on our end exactly the interactions, and as you might imagine, the operating system, and this is what we're talking about, microsoft operating system, is robust and complex, and if you have a negative interaction based upon our content update, that caused the issue. or can cause the issue. so, we've got to do a hot wash and figure out exactly what systems were affected, was it a particular operating system version or a patch level? we don't have all the details on that yet, but that's what we're going through right now. >> george historically, because you have been on "mad money" multiple times, you have had less than complimentary things to say about microsoft and cybersecurity. is that impacting your ability to work with microsoft this morning to get this resolved? >> we know what the fix is, and we've already rolled that out.

so, you know, specific to microsoft, again, i think both us and microsoft are focused on customers and customer health, and we want to make sure that customers get up and running. >> let's talk about reputational risk, because again, cnbc, i have to believe that crowdstrike has a black eye. i'm not sure exactly what that extends to. have you already had customers who have just said they're fed up and don't understand why you did this? >> i think many of the customers understand that it's a complex environment and staying one step ahead of the bad guys requires -- requires these content updates, and i think what we've seen before and what we see now is that customers are understanding that we are doing everything that we can to get in front of it. this is why i'm on your show, jim. you know? >> of course. >> we want -- we want to be able to say what we're doing. we want to keep people updated. we want to be as transparent as we can, and be front and center

with our customers, standing shoulder to shoulder, to make sure they get them up and running. some things are out of my control. what i can control is our response. >> we appreciate you coming on and being straightforward, but again, we have to understand, i believe that best practice is when you roll things out is to do things region by region, so impact is limited. it sounds like you did this all at once all across the globe. >> these are staged in terms of the actual rollout. it doesn't just roll out all -- to every computer that we have under the globe. it rolls out in a kascascading fashion. when we saw the issue, that's when we were able to roll this back so that the entire customer base was not impacted. >> george, hi, it's sara. you know, what's so remarkable about this is the size and the scope. it's almost difficult from mcdonald's stores in japan to 911 emergency services being affected to, of course, we've

been talking about the airlines. it feels like we're pretty vulnerable to this sort of thing. i mean, what can we learn about what made this happen, why it's so interconnected, and how vulnerable are we going forward? i know you're supposed to protect against the bad guys, but -- and this isn't related to cyber, but now they know how easy it is. >> well, it's an interconnected world. our customers are still protected from the adversaries, and this is, again, what we do for customers day in and day out for, you know, well beyond the last decade. but again, i think it shows the complexity of the technology environment and how interconnected the digital world is. >> i have to admit, george, i'm confused. some customers have between 10,000 to 50,000 windows machines. i want to know how much is going to need to be done manually

reset versus something you can do at your headquarters. >> it depends, jim, on each customer and how their systems are configured. some customers, it's simple as a reboot. other customers, they can automate the reboot process, and delete the file that was the offending content file. others, it may be more manual. it really depends on each individual system. it depends on the hardware manufacturer. depends on how they have it configured. each customer is bespoke in how they have their own operating system and i.t. configured and we're working through the various ways to bring them back online. >> obviously, we're more concerned about first responders and 911. how many are back on? how many are in the dark about what's happening? >> well, we're communicating through our customers through various channels. our blog and our tech support portal. and obviously, we're going through the number of impacted

customers. i don't have the exact details for you as we go through them, but as you might imagine, we're working through, you know, each customer through our customer support, and we're being proactive in letting them know what's going on and the potential fixes that are available to them. >> george, it's david again. just to follow on sara. i mean, this morning, when i woke up and my app that tracks the subway trains that lets me know what time they're coming in didn't work. i went to a city bike and tried to retrieve a bike, and that didn't work. i think a lot of people say, my god, if this can happen just from a simple update of content, what in the world could our real adversaries, such as the chinese, do to us? how do you answer that? >> well, this is the challenge with cybersecurity. you know, when you look at infrastructure and you look at keeping the bad guys out, i mean, there's incredible capabilities that the chinese government has. and this is one of the areas, again, why we focus on being able to protect against these

sort of attacks. obviously, it was an issue that we're dealing with, but the sophistication of the adversary shows how vulnerable we are, and it's a function of the interconnected world. you like using your app. you like the speed and ability to get on a subway or call a car service or what have you. everything is interconnected. everything is connected in the cloud. and this is why these systems need to be protected. >> all right, george, i want to be able to give you your due here. i want to say this could happen to anybody. this was a glitch. this was not something which says that crowdstrike should not be counted on when it comes to cybersecurity. >> that's right, jim. again, we've, i think, built a stellar reputation on protecting customers. i've been at this for a long time. i'm personally involved in making sure that we get every customer up and running. and from my perspective, it's how we respond to this and how

we get customers up and running. there are many companies that have issues and bugs and different thing that may impact the system. this is just part of software, part of the interconnected world. i want to be here, and i want to talk to you directly and the audience to let our customers know that they're protected. we're working through this issue. we have identified it very quickly. we've rolled it back, and now, we're bringing our customers back to health. and that is our promise. that's my promise. >> apropos of what david and sara are asking, i'm struggling with this automation part. if a machine is frozen, george, it will not respond to anything. automation requires the machine to be alive. >> well, depending on the system, again, jim, some systems can be simply rebooted because their power cycle. other systems can be rebooted from the network.

other systems are virtual. and once the virtual machines are all updated, or rebooted, they come back online. so, there is a high level of automation that can be done just by simply rebooting the system. now, there are some systems that may not come back, which may require more manual intervention, which we're working through. >> right. you're watching the show right now, and you're saying to yourself, i can't get on my computer, what should these people do? what can you do if you're, let's say, an airline terminal this delta and you're someone trying to put something through, can that person do something, or is that person just down? >> that person, it's really going to be up to the i.t. department of the company that has the impact. so, that's not something that a consumer can actually fix on their end. and we're working through this issue with the i.t. departments to get things rebooted, and deal with the offending content update that was pushed out. >> understood.

george kurtz, crowdstrike ceo, we greatly appreciate you coming into us and telling it straight about what is happening with this massive outage. thank you, george. >> thank you, jim. >> all right, back to carl and david and sara. >> jim, i don't know if you have to run, but i'm curious about your thoughts after what happened with at&t the other day, the car dealers, which that impact is still ongoing. i wonder if you think this will force some would-be customers to slow down their automation plans in general. i mean, we've seen car dealers go back to pad and paper. >> it's a great question, carl, and i don't have to go anywhere. what concerns me is that we have become so digitized, and all we do is digitize and digitize, that maybe we have lost some control to the machines. i listened to george, and what concerned me, and remember, crowdstrike is really -- crowdstrike and palo alto are the best. what concerns me is that the lack of knowledge about what you can do in digital versus if it were by hand, if it were by

hand, you would just walk our way through it. but carl, it's so out of reach of everybody who has a screen that i begin to wonder, don't we lament that we have no backup by hand? it's almost as if we have turned over ourselves, as humans, to a machine, something david talks about a great deal, and surrendered our autonomy, because if someone at qantas or delta is down, that person doesn't have a clue. we can all say they should just do x or y, but humans seem to be left out of the loop. i'm not sure if you guys agree with that. that's the way i feel. >> we're glad we had you on the desk for a little bit. we'll talk next week about sentinel one and the fallout. >> greatly appreciate that george called in. there is reputational risk. the kpacompetitor is palo alto,d i'm going to go to the garden. >> see you, jim. have a good weekend. jim cramer bringing us kurtz today. a lot more on tap this

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. let's take a look at the opening bell here and the cnbc realtime exchange. at the big board, it's a credit company celebrating its recent ipo, and at the nasdaq, dessert shop glace celebrating national ice cream day as we see markets react to the i.t. outage, although the picture, not as dire as it was earlier today. still some moderate losses, sara, in europe today. yields up just a touch. >> some of the airlines got hit on the disruptions. not clear what the specific market implications will be of this, as we just heard from george kurtz, the ceo of crowdstrike, the fix is on, and he said should be immediate in some places and could take hours or more in other places. so, when you're thinking about economic impact, hopefully,

potentially, it's not as severe as what could be, but obviously, exposes a big vulnerability, david, which we were trying to figure out. it's pretty widespread. >> yeah. i mean, it is just a reminder, i think, and we certainly indicated that of what our adversaries conceivably could do. of course, it's interesting listening to mr. kurtz, whose company is used widely to prevent those same adversaries from causing such outages, but it does remind you how interconnected we are, as he indicated as well, and just going about your daily life, how many things you do rely on that you may not even realize are connected somehow to microsoft in some fashion, for example. >> well, i mean, one stock that is being big-time affected is kr crowdstrike, which is opening down about 14.5%. dan ives published already on the name. wedbush likes crowdstrike, but as jim used the phrase, reputational risk is real here, and that is crowdstrike becomes

a household name across america and the world today and not for the right reasons. that could open up a competitive advantage, and it is a competitive marketplace for these services. for instance, palo alto was up premarket. that's a big competitor on the cybersecurity space, and we're looking at some of the others as well, higher on the day. >> we took note this morning of the atlantic analyst who cut crowdstrike yesterday to sell for reasons completely unrelated, but it's helping out names like sentinel one, up almost 9% here as we'll start to talk about potential shifts in market share. mike santoli is here to talk about either this or the fact that the dow is on track for the best week since may. >> it is. definitely getting tested, i think, in general, on the dip-buying reflex all week. the market has been dealing with this forced rebalancing for about a week, meaning, we all knew this was a lopsided market, we all knew it was very concentrated, everyone was begging for a broadening of the market and now it's like, maybe

not this way where it was essentially massive short squeeze, massive wrong-way positioning creates these huge churning moves under the surface. now, it nets out to not very much. the s&p, down 2% off its high. i do think earnings are going to be an interesting kind of input to all this just because stocks have been, you know, the majority of stocks have been ramping into this period, whereas the big bellwether stocks have been coming off the boil. 5% pullback in the nasdaq 100 a month ago, people would have said, give me one of those, i want to buy it. now, the question is, do we give credit to the market for this massive breadth momentum surge, because that sometimes buys you some time and it has some good forward implications, but usually, you would want to see that happening at the end of a cycle. we keep saying this. it's not really in step with what you would normally want to expect. one final thing i'll note is i think it's giving some people comfort today. goldman-sachs data on just how much hedge funds have derisked in this period by basically a

record pace. everything happens fast in this market. we overshoot in the short term, and it seem as if this kind of squeeze and the sort of sharp drop in some of the most crowded positions at the top of the nasdaq have cleaned up positioning a little bit, which was getting, i think, a little excessive. >> which means what? >> which means maybe there's a lo lower vulnerability out there. >> it's pretty stark, mike, 3% for the nasdaq, russell is up, and it was up even more before yesterday, and we're still asking whether the small cap rally is the -- small caps are the place to be, given low rates, market very confident in a september rate cut, and more following that. given soft landing, the data's coming in a little bit weaker, but still pretty okay. given the trump odds have gone up, and small caps are more insulated from tariffs, trade war, they benefit from lower rates. they benefit from lower corporate taxes, and these are all the reasons we've been talking about all week. >> these are all the reasons,

and i think they all hit at once, and i think that explains, in part, the dramatic angle of this move in small caps. i worry, as i said earlier this week, about getting to a point of a little too much certainty about all those great things you mentioned, sara, and what it actually translates into in terms of what types of stocks ought to work. we'll have to see if earnings substantiate this. i still think that because of the extreme underperformance of the small cap indexes relative to everything else, the extreme underperformance of value versus growth, you have to sort of give room for it to just be kind of a mechanical reversion to the mean, nobody expected this stuff to work, we weren't positioned for it, and you got forced into it. i do think it makes sense when you look at the historical tendencies of this type of a move in the russell versus everything else, has good things to say about what we get in six months, let's say, from the russell. but the part of it that i can't

calculate, the iwm, the russell 2000 etf, it took, like, two days for it to basically become a meme stock, to become, like, top three on reddit in terms of what people were buying. there's just not that much market cap there. you can't just rotate out of the mag seven and find a home for it in small caps. and you know, it's like, is this the moment to bet on low-quality companies? even if they are having a little bit of an earnings rebound, at least on paper, in the next couple quarters. >> jim has made that point in terms of low quality that you made as well. >> yeah. >> mike, when you look through, you actually see what you're owning, so to speak, it's not the greatest stuff. >> it's not the greatest. it's the kind of thing where you say, well, this economy's been in trouble. it's getting rescued. the fed's cutting. we have a cyclical rebound accelerating out of here, and these companies can ride it. that's usually what that means. now, i don't think that same thing applies to the equal weighted s&p or where it's

essentially big, better companies but financials are getting relief. that makes a lot of sense on a bunch of fronts, and then a little more of the cyclical year companies within the s&p that got some -- got a little boost. >> and to sara's point about the election and sort of economic policy and isolationism, whatever you want to call it, you would to stick with names that are domestically focused, right? >> you would want to. that's the playbook. people are going to execute it. i still think, how many things do you have to get right in sequence for that to play out the way you think? you have to bet that the probabilities not only are correct today about the election but that they're not going to waiver along the way and knock that trade off balance. you have to bet that the election happens that way. the policy prescription happens as expected all the way through. sure, it works. and by the way, you've got one of these in late 2016 after trump was elected the first time. it wasn't -- it didn't set the tone for four years. it was like three months. you know? and you have had another one of

these, you know, small cap outperformance rallies in 2020, and then we gave way quickly to f.a.n.g. and mag seven. i think it's tough to extrapolate how these things go. >> speak of f.a.n.g. and one of the winners on the s&p this morning, though to a fairly muted response, nextflix. the company reported earnings after the bell yesterday. stock up a little less than 3%. typically, we do see bigger reactions in netflix, whether up or down. the numbers were pretty good. eight million subscribers overall. that was above many of the estimates. ad-supported, you see right there, up 34%, though frankly, there is a belief that there's still a lot to come yet when it comes to the ad-supported tier in terms of the growth. they did talk as well about the introduction of a new in-house ad tech platform. they're going to test it in canada this year and launch more broadly in 2025.

global average, revenue per month for the subscribers, $11.65. obviously, far higher here in the u.s. and canada. lower in other regions. so, you get to about $11.65. some interesting charts as there always are in the earnings released, including time spent and percent overall of engagement and screen time. 40.3% is streaming now, versus 27.2% for cable subscribers and 20.5% for just over the air broadcast. but youtube is still the biggest winner. in fact, it's 20% more in terms of engagement or usage than is netflix, and it's growing faster. again, it gets back to this idea, given the response in the marketplace, strong quarter, with expectations of significant growth, although more muted when it comes to subscriber additions. by the way, we're going to, at some point, not get those subscriber numbers anymore from netflix. so -- >> next year. >> next year.

so, here we are with the -- perhaps the next growth leg, especially as they lap the additions that came from the password crackdown being what will the ad-supported tier look like? >> it's trading and in all respects looks like a pretty mature company at this point. now, definitely a faster growing one in terms of earnings because they do have pretty good operating leverage at this point. it is interesting in terms of the ad traction and maybe they are kind of saying they're taking it slow and trying to get the ad serving algorithms right, but david, i wonder about the hours watched by a ad-supported subscriber relative to premium subscribers. it's hard to get the data on it. netflix in the up front said that 70% of ad-supported members watch at least 10 hours a week. that sounds light relative to the typical netflix subscriber, so i just wonder if there's not a ton of inventory and not a lot of inventory concentrated in any one place and time like tv tends to be. and so, you know, you have to be

smart about how you're actually -- how much you want to load up with ads and to whom, and yeah, obviously, they can afford to take it slow. >> they can. and when it comes to being able to introduce new technology that is going to optimize, you would have to believe netflix is probably going to be fairly successful in executing as they do roll out that new ad tech platform. of course, amazon does come to mind now in terms of what they have been able to do, obviously on the website itself but also with prime rolling out significant ads. i mean, there have been $49 billion worth of ads at this point at that company. it's unbelievable. and i mentioned youtube as well. it's just good to keep in mind the overall landscape, given how important youtube is in terms of overall at alphabet and the usage and the viewership there is incredible. >> also been following some of the updates they gave on the live front, which is a new growth area. i mean, the roast of tom brady garnered 22.6 million views, and showed the power that they can do this sort of event-style

programming, which is sort of new foray for them. they've got some wwe programming starting in 2025. in may, the nfl deal. they're going to have the christmas game and exclusives, option to pick up another one there. so, i think that that's also a thread that investors are following. look, mike, the lack of the big move in the stock that we typically get for netflix, it was a winner in the run-up. >> huge, yeah. >> up 30% or so. >> oh, yeah. >> year to date. >> i think from the low in october, it's up like 80%. so, you know, you're almost back to the old 2021 highs, which is around $700. it's a mid-30s forward pe. it's obviously kind of fully valued in that nasdaq 100 stock type mode, you know, in general, so there's no doubt it's already priced in some good stuff. >> yesterday, the chat was around, the breakoutfreakout, b called it, and the street got

over it. will that rear its ugly head? >> they're still reporting. but that's what you trade. and it was hilarious yesterday in the previews to the numbers where some of the desks were saying, we're hearing buy side estimates as much as 9 million net sub adds, but those serve responses are coming from the bears. people who want to get against the stock want to bet the expectations are too high and it's going to have one of those sell the news responses. it didn't have that. very strong sub number. >> eight million, the highest in history, and they raised the revenue margin guidance and expect the sub growth to continue into q4. >> you have to keep in mind, when the base of subs is that much higher, it's nice growth but a smaller percentage growth. >> some of the pushback was that the sub growth came from the asia pacific regions, particularly india, which is considered lower quality growth. that's something that -- >> right. it comes at a much lower price. >> yeah. of course. but netflix looks like it's going to eke out a win. another one i was going to mention as an earnings mover this morning is american

express, which had another good quarter and also raised its guidance because they continue to see good spending. steve squeri said, "we continue to attract large numbers of premium customers as seen in the consistently strong new account acquisitions and 24 consecutive quarters of double-digit growth in card fee revenue we've delivered." clearly, amex customers are ones of the higher credit quality, mike, higher income level, and are continuing their spending. they talked about a little bit of softness in t&e, which is business travel and expenses. >> feels like the weakness is about the marketing spend. they do guide to an increase as much as 15% this year on the call. they said it's not -- the increase in marketing spend is not related to worries that the consumer would be spending less. but i don't know. maybe that's part of the general pushback. >> i think they have a certain sense of urgency they've expressed before about making sure the franchise lives in a vibrant way among younger

consumers. that seems to be working, but maybe they have to keep up the pressure on that. another stock, it's been a big outperformer relative to the other consumer lenders, let's say, over the last two years, it's got -- it's at 18 times earnings. that's kind of high for american express over the course of its history. it's also an interesting one. $180 billion market cap, but you know, buffett owns 21% of it so there's less stock out there for everybody. it's not as much of a core bellwether name as you might expect it to be, given it's in the dow and it's, you know, this longstanding kind of blue chip of finance. >> also, the profits were a beat. the revenue was a slight miss. >> they do put in perspective, saying in terms of year-end revenues, 2021 revenues have grown by nearly 50% since the end of 2021 and sharing this on the call. card member spending is up by almost 40%. >> that's amazing. that's amazing. >> that's a big number. >> yeah. >> think about beneficiaries of experiences and travel and

everything that -- >> and inflation. >> and inflation and higher rates. >> for sure. >> ultimately, on the net interest income, which also affects a company like american express. nasdaq's up. barely. >> there you go. >> little bit. nasdaq 100 at least. >> mike, thanks. mike santoli. as we go to break, dow is down 180 here. check out treasurys. got two voters on deck today, bostic at 1:00, williams at 10:40. of course, the blackout window does begin on saturday for the fed speak, so we'll be without it for next week. right now, ten-year, highs of the session here, 4.24%. stay with us.

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buttigieg. let's turn back to this global outage of a lot of

different technology platforms and talk about the impact on the banking sector. leslie picker is monitoring it, has the latest for us. what do we know? >> yeah. david, so the banking sector facing some sporadic disruptions from the global technological outage based on many, many conversations i've had this morning. it sounds like the dpglitches a largely limited to log-in issues with notable exceptions. some employees at jpmorgan have been experiencing log-in issues this morning, particularly with computer desktops, but the log-in issues are not ubiquitous and haven't wiped out capabilities for entire groups. say if a certain trader couldn't log in, he or she could seek out help from other employees who can. the firm did not lose operational capabilities from the outage and i've heard other banks have had similar log-in issues. i'm waiting for additional confirmation before sharing those specific names. however, a person close to goldman told me they haven't experienced any major impact

from the outage. now the focus turns to branches and atms specifically. my understanding there are manual work around for tellers inside branches usually, but there may be atms that aren't working so keep an eye out on that. stay close to your bank for potential diversions to other atms that are working. there are some end cases i've seen on twitter that smaller banks and credit unions in the u.s. are having difficulties with their mobile banking but we are chasing that down to confirm. i've reached out to the banking regulators and waiting to hear back from the fdic and o kr, cc but the fed says its critical systems are operating normally. >> we made this point earlier this can occur from a content ruso to speak, one has to wonder what our adversariesle really could do. put it in perspective, jpmorgan

what they spend on defending their own networks and spend on making sure, you know, their customers safe. the numbers are enormous. >> the banking system spends billions of dollars on cyber security. i believe that jamie dimon has said repeatedly how that is something that truly keeps him up at night, often, the potential risk for a cyber security attack. so this is something that is very top of mind for bank ceos and i have to admit, david, when i saw the headline earlier this morning, my first thought was, oh, no, because of the critical infrastructure and because of the importance of the banking system, that i'm happy to hear that this was not a cyberattack. however it does show you the ultimate kind of interconnectivity the banking system has with technology and just that this glitch and this bug can ultimately have such a large impact. >> it reminds me of the comment

when i was talking to jay powell and asked him, what was the biggest headache, keeps him up at night the most as far as a risk potentially for the economy and the unknown, and he said cyber. >> that was a really interesting moment when you asked him that, and he just answered it first of all. >> yeah. >> and unexpected and then he also said finding the right balance between unemployment and inflation. and i think it comes from talking to ceos, and ceos of banks, leslie, who maybe not as much on air but on a lot of our conversations off the record and in background, they do talk about what a major priority this is and what major maybe not vulnerability, i feel like the banks are in the best shape because they get attacked a lot and have had to spend so much money beefing up their defenses. >> exactly. this is not something that is kind of newer in the past few years, a new focus for them. this has been a focus for a long time. i think it explains, i've talked to people who kind of run technology divisions within the

banks to talk about their ai rollout plans, and it explains kind of why we're seeing this lower rollout of ai use cases at banks because they have to number one, make sure that that ai rollout is secure before they can make it kind of more of a thing throughout the entire organization and so it's ever critical for this industry. >> leslie, we'll monitor it today as the world tries to get back on track. leslie picker an important story. more on crowdstrike and the global outage in just a moment.

good friday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber. we are live as always from post nine of the new york stock exchange. as for stocks this morning, a little changed. we are heading for an up week for the dow and the russell it,000 index of small caps, down

week for the nasdaq. the s&p little changed right now, but you do have sectors that are working. health care, communication services, energy, utilities and industrials are higher. materials are giving some of the gaps back. consumer discretionary lower as well. s&p barely positive. netflix is a winner although barely compared to some of these outside moves we seen on earnings. microsoft under pressure and nvidia and amazon and crowdstrike which we will talk about. take a look at treasuries briefly here holding near the low end of the range even though they're firming up a little bit. 4.249% on the 10-year, below 4.2 yesterday. it's been a tren of lower yields. two-year 4.5%. the fed goes into the blackout quiet period ahead of the july 31st meeting. breaking news overnight, and into this morning, a software update by crowdstrike wreaking havoc on computer systems around the world, grounding flights, hitting sectors from banking to health care. the update affecting customers

using microsoft windows operating system. crowdstrike ceo george kirsch joined us with jim cramer in the last hour. >> let me start with i want to personally apologize to every organization, group and person impacted by this, and we understand the gravity of the situation. >> we're going to have much more from that interview, the impact far and wide later this. >> we've got wall-to-wall coverage as the fallout continues to impact a wide range of communities, cities and businesses. steve kovach, phil lebeau in europe, dom chu to break town the latest. steve, we begin with you. >> here's what we know with this big i.t. global outage here. this was the issue with cyber security firm crowdstrike. it caused windows pcs managed by crowdstrike security to reboot and show the so-called blue screen of death. taking down operations at just so many companies from tv networks like our own to

airlines like delta and united and banks and 911 call centers, ups and fedex and so many more companies and industries impacted here. but most importantly, crowdstrike saying this is not a hack or a cyberattack. what happened was crowdstrike pushed an update that caused this outage. the update has been rolled back and a fix has been deployed. some are already seeing their systems recover, but it is unclear when everything is going to be back online. crowdstrike's ceo george kurtz said in an interview with us last hour not everyone's system is going to fix automatically. you may need individual i.t. workers to manually reboot systems. we're seeing that in the cnbc newsroom behind me. our i.t. workers are going at it. kurtz says it could be many more hours before everything is totally resolved. microsoft also putting the blame on crowdstrike here saying on its support page, the crowdstrike update forced those window devices to get stuck in a rebooting loop. department of homeland security told us in a statement it's

working with crowdstrike and microsoft to assess the outages and national security counsel also told us it's monitoring the situation. president biden has been briefed as well. meantime shares like century nall one and palo alto are up. shares of crowdstrike down 10% or so. waiting for more updates from crowdstrike and microsoft when everything is going to come back online but we're looking after that what went wrong and how this can get prevented again, guys. >> how widespread crowdstrike is deployed and/or obviously microsoft, of course, is widely deployed, or could we expect something similar to have occurred with one of the other cyber security firms in an update if it had gone awry? >> it's hard to tell. you choose one platform to go with, david, and un if something happens on that the entire system cascades and goes down. we're learning today there are a

lot of crowdstrike customers out there and, of course, corporate america and corporations just tend to prefer using windows pcs over mac and alternate operating systems. i will note that crowdstrike is saying that customers that use mac or lynx are just fine. this is for windows. windows is the market leader here within corporate america, and that is why we're seeing such a collapse here across so many systems, david. >> steve, we mentioned the goldman report where they stick with their $400 target on crowdstrike, refer to the okta breach a couple years ago where they argue the result really in terms of client base, was clients taking time elongating the sales cycle but the churn wasn't that dramatic in the end. >> that becomes a question of where you go. microsoft, does operate its own cyber security services. i mentioned some of the other names rising today on the hope

that maybe they'll maybe take some business away from crowdstrike, but it's really unclear. i will also note it could have been worse, that note that you mentioned could have been worse if it was, in fact, a hack was that is what crowdstrike is supposed to do, pro tet against these cyber security -- protect against the cyber security events. that's not what was happening here, this was a mistake, a bad mistake, but it shows what could happen if a nefarious actor did get in and able to get into the systems and cause damage. >> yeah. that's the worry, steve. thank you. david, talking to some of the cyber security sources and experts in my life, i'm told crowdstrike is unique. >> experts in your life. >> you need cyber experts in your life, crowdstrike is unique in their operational impact on the world. apparently they have their agents on a huge portion of the industry, which i don't know what exactly that means but the firewall companies like competitors like a checkpoint, for instance, or a whiz, it's not exactly the same thing when they push updates.

it's not the same kind of vulnerability as what with saw with crowdstrike which explains the size and scope here. dom chu has been tracking the action when it comes to the impact for other cyber security names. >> i'm going to put numbers around the price action we are seeing in the value i guess assigned to some of these cyber security names, because the decline that you're seeing in crowdstrike today has led to what's amounting to an $8 billion loss in market capitalization, just in the last day because of what happened. so again, $8 billion in market cap loss from crowdstrike because of the price moves that we are seeing so far today. with regard to the biggest players and the reason why we're watching some of these names right now, if you look at the overall scheme for some of the biggest pure play type cyber security names out there, the reason why it's important is because we are seeing that kind of maybe directional price action for some. sentinel one standing out, 4.5%.

palo alto networks is one a lot of folks are focusing on right now mainly because it is by market cap the biggest pure play cyber security firm out there. the current market cap to put numbers around it is around $106 billion. take a look at that. fortinet, some of the names also in play as well, so palo alto and crowdstrike are the two biggest ones. by the way, the reason we highlight this, if you look at the bigger cyber security etfs, one in particular, the nasdaq cyber security etf is down about two-thirds of 1% and one of the reasons why the single biggest weighting in this particular etf is crowdstrike worth about 9% overall. crowdstrike is a big, big weather in many of these cyber security etfs which is the reason why, david, there's a huge focus there. i'll send things back over to you. >> thank you. >> more on the impact for the year. phil lebeau, he's at the heart of wales this morning.

phil. >> and, david, we were here at the ge aerospace engine services plant doing some stories focused on ge aerospace when the outage hit in europe, and it hit hard. we heard about long delays in berlin, also at gatwick airport in england, so there's no doubt that as it started early in the morning it was going to hit the u.s. and here's the impact or the three large u.s. airlines that asked for a ground stop from the faa about 2:00 in the morning. cancellations so far, we should say that they have gbegun fully or partially for united, american and delta operations in the united states this is according to siri which tracks all of the aviation industry, the airline business, and you've seen the pictures of people standing in line at the airport that's because in many cases they could not check in online. they had to go to the airport and even now, we're seeing long lines. more than 1200 flights have been canceled. expect that number to rise throughout the day. the impact for american, delta

and united, not huge. but what you're noticing, guys, this is one of those issues it will have a ripple effect over the next several days. those people who had flights canceled or will have flights canceled today what you're going to see it's going to take a couple days to get them on flights. not as though the industry has a ton of excess capacity waiting around to take care of people as you take a look at newark airport. laguardia. one indication of what it's like right now. guys, back to you. >> a pain in the neck if you have to fly today. i feel like the airlines always have system outages and this one is unique because it's affecting other industries, but do we know what is being disrupted? the bookings? air traffic control? >> it's everything. all interconnected, sara. all interconnected. there are reports here in europe, ryan air was telling its

customers, do not come to the -- if you can't check in at home come the to airport, get there three hours in advance because it's going to take that long to get you checked into the system. i know that people will say the airlines have these kind of issues. keep in mind the security aspect that goes into air travel these days. it adds a level of complexity whether it's checking in or going through tsa screening or boarding the plane. there is the extra level of security which slows things down even more. >> phil, at some point we'll talk ge. good stuff with larry culp earlier today. phil lebeau in wales. our next guest is the former chief technology officer for the united states, he was the first person in that role and served from '09 to 12 and wrote the book "innovative state how new technologies can transform government," joins us this morning, arcadia's chief strategy officer. great to have you. i wonder after years of worrying

about the threat of hacks, do we need to start worrying about updates? >> well, you're describing really the challenge of the dependency on single points of failure and we saw that earlier in the health care sector with the outage tied to change health care part of united. . so the same planning and incident response that you need to protect against an attack needs to be applied in areas where your single point of failure f a system goes down for other reasons outside of an attack. it's a wake-up call for sure because we're heavily dependent on digital connections and that comes with these risks. >> are we at risk of becoming over digitized or is there even such a thing? >> well, i think what we need to do is learn a lot of the underlying challenges around how we mitigate the single point of failure problem. in some cases there's an opportunity to have an open and competitive mark place so i don't know all the details as to how crowdstrike managed what are

called the library of all of the potential factors but if there's a mechanism to update libraries in an open and competitive way there might be pressure to make sure that is done in the manner that has i "i"s and "t"s dotted. i believe in general we have the chicken and egg problem when reliant on the connections to the internet and we want to protect those connections. that is a sensitive place and we have to evolve to a world where we understand threats will occur, be attacked, not in this case, but in general, being able to be resilient is as much an issue as to protect from the attacks in the first place. >> there is a role, for, i don't know, government or so sort of system wide regulation to make sure that companies like a crowdstrike are doing the proper checks and the proper rollouts, given how much damage can be

caused? >> for sure there already is a role. we do have a bipartisan commitment that on issues of critical structure and this idea of systemic risks, homeland security is engaged. it's a voluntary resource to companies to figure out how they can earlier and share. certainly threats, cyber security threats, but in this case understanding how systems that are dependent on others can work better together. our country relies on public-private collaboration, on technical standards. that's a hallmark of the united states and so further improving ways in which we can work together whether it be improving competition, strengthening accountability, dependent i.t. systems, all of that is today thankfully bipartisan and often technical and we have the places, the mechanisms in place to do so. now certain industries like you saw the airline industry or energy sector or banking sector in my background health care they have separate regulations to go above and beyond the

general e-commerce internet. we'll likely see reactions in the regulated sectors that may be slightly different than what the general economy will see and that's a healthy thing. >> aneesh, if this can occur from a simple content update, shouldn't we be even more concerned about what bad actors with bad intent and deeply embedded in our networks such as china could actually do if they wanted to bring harm? >> well, everyone is aware of those threats and the challenge we faced as a society is how do we basically build bigger motes. i think one of the most challenging briefings i had received unclassified from our friends in the d.o.d. was the reference to cyber security as asymmetrical warfare. you only need to write a few lines of code to attack but to defend you have to have a bloated system that identifies every potential factor and blocks it. we thneed to think about next

generation cyber security responses and the comment about mitigating the risk when attacked is the posture we have to move towards and we're starting to get there. assume the systems go down, what's our plan b? we're going to see a lot more scenario planning, any organization that's got risk management responsibility this is going to be job if not one, certainly one, two or three. to make sure we have those scenarios outlined in our respective organizations when we're dependent on digital connections for customer support and so forth. >> finally we're trying to read this through a wall street and stock lens. it doesn't sound like this is something you would expect to create major churn among clients and vendors? >> well, this is the challenge of competition policy. if you have an organization that's sort of evolved as the market leader like in the case of change health care, there was no decree to give change in monopoly in health care data sharing but it evolved to the

point where the network effects were strong we may need to revisit competition policy when network effects are stronger and that often competition has been the american way to drive greater accountability beshgs product enhancements and so if there is an opportunity to spur more competition, there will be an opportunity for having that conversation. i don't know enough about the end point content library update market to again whether that is right for more competition, but that's always on the back burner and thinking about these problems. >> interesting to see how that might fold into a regulatory conversation down the road. aneesh, really appreciate the help as we try to understand what happened this morning. thank you. >> thanks for having me. >> after the break crowdstrike's ceo george kurtz joining us earlier to respond to this global i.t. outage. we'll share more from that interview coming up as shares fall down 8.75%, though they were worse earlier. big show ahead on "squawk on the street." don't go anywhere.

welcome back to "squawk on the street." tied to a software update from his company. apologizing for what's become wide ranging discussion that's affected airlines to hospitals to 911 services. take a listen. >> this was not a code update.

this was actually an update of content, and what that means is there's a single file that drives some additional logic on how we look for bad actors, and this logic was pushed out, and caused an issue only in the microsoft environment. specific to this -- this bug that we had. we identified this very quickly, and rolled back this particular content file. obviously, many organizations are impacted, and many of them are beginning to recover. many systems can be rebooted, and we've fixed the issue so the systems are coming up and running. some systems may not fully recover, and we're working is individually with each and every customer to make sure that we can get them up and running and operational. but to be clear, it was not a

cyberattack. it wasn't anything related to that. it was a content bug or update that we sent out, that we identified, and we rolled back. >> why do many different users find themselves with the blue circle of death, and how do i.t. people get in touch with who is down? are we talking hours or are we talking days? >> well, many of the systems are quickly coming online because they're able to be rebooted and the problem goes away and is fixed. some systems are going to take more time. you know, could be hours, could be a bit longer, but we're working with customers that if the system doesn't fully recover, we're working with them on this specific fix for that. so, essentially, we are providing guidance through our tech support, through our blogs, everything that we know we want

to be as transparent as we can and get that out to our customers. >> george, this is crowdstrike we're talking about. is this falcon, which is your best program? and i need to know why did you not phase this in? why was this done all at once? that seems to be, to me, irresponsible. >> well, it traditionally goes out in a phased approach and goes through, you know, what we do is we've been doing this a long time, testing throughout the life cycle of any of these updates. so it initially went out, and we started to see some issues, and then pulled it back. not all of our customers are impacted. windows and linux are not impacted. as soon as we saw this issue, we rolled it back, and you know, now we're dealing with the impact of systems. >> i want to be sure about this. this did or did not get to azure, which is microsoft's

cloud, because if it did, maybe that would explain things, but maybe they're separate. >> well, azure can run -- customers running azure and they can run our software there. if there was a customer that was running in azure that had our software, it could have been impacted, but that's the extent of what i know specific to microsoft piece. >> meantime, the sell side starting to weigh in with what little they know. ubs putting their buy rating under review, says down 13% premarket felt pretty appropriate given what may end up happening to their reputation and their client base. they say what's going to be important how they respond to customers in the coming days and weeks. >> the response is a clear theme. that's what the analysts want to see, and to kurtz credit he came out, he was on the tropical storm, -- "today" show and on cnbc app gazing first, saying they fixed it. the remediation will be

interesting. some answers jim to the from him but not all, as far as how much would be fixed automatically and immediately and how much would take hours and potentially have to be manually fixed which could take as much as days i'm told. >> that's what we're waiting here waiting for our i.t. guys dealing with that before they get to our station here. >> manually remove the faulty file. >> that's what's going to happen. >> busy day for i.t. departments and that guy george. seems like he hasn't had a lot of sleep. >> george will not be sleeping a lot. >> check out the laggards on the s&p. crowdstrike is among hem. by far much more on the global computer outage this morning thheowow22wi t d dn 0. hear me n? can you hear me now? can you hear me now? (dj) can you hear me now? (runner) stay with me now!

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welcome back to "squawk on the street." some developing news out of the biden campaign. meghan cosell la in washington with the details. >> hey, sara. there are a lot of moving pieces to this biden story. nbc news reporting members of the biden family have been discussing what an exit from the

campaign might look like. this is according to two people familiar with the discussions saying that they're discussing an exit on biden's own timing with a carefully calculated plan in place. they say they're weighing a few different considerations and making any plan including the impact on his health, family and the stability of the country. this does not mean any decision has been made for biden to step aside. they're talking about a plan in case it's needed. this is a major development for a president who has for weeks unwilling to consider possibility of bowing out of this race even as pressure for him to step aside has risen. many democrats including close allies believe biden will be stepping aside but in a signal of how influx things remain, the biden campaign was out with a memo saying, quote, there was no plan in place for an alternative nominee, biden was in it to win it and he would become the official nominee in a few weeks. we'll monitor this as it

develops. increasing signs the president could be considering an exit here. guys? >> i mean, every hour it changes and it's all -- so many leaks and people familiar with the matter. get on with it. we've heard from a lot of prominent members of congress from his own party. what about the donors? have any of them come public? putting pressure on him? is he losing money in this process? >> a whole lot of money. we've been hearing from the donors. many have come out publicly, a lot more of them are doing things privately. nbc was reporting yesterday that the biden campaign is now expecting their money from big donors to come in at roughly one quarter of the level they had been expecting for july. that shows you the money is drying up. i'm hearing from people daily who say things are frozen, that the fundraisers reaching out are getting crickets. a lot have stopped reaching out. one interesting development yesterday when the calls were reaching a fervor pitch, calls for biden to resign, there was optimism that i was told about,

about sort of starting to chart a new way forward. i talked to one fundraiser who said his phone had been blowing up all day yesterday from people who weren't supporting president biden anymore, staying on the sidelines, but hearing developments and saying hey, if this happens, call me. i'm in. i want to support whofb is the next candidate. the donors are playing a big role here. >> aren't they running out of time at this point? >> they sure are. so there was a lot of back and forth this week in the democratic party about just what the timeline would have to look like from here. they did delay one step that was going to lock in biden's nomination as soon as next week because there was so much pushback to that. they delayed that step. but they're holding firm to this date of august 7th. that's the date by which they say they will lock in any official nominee for this party, whether that's biden or somebody else. they wan to have them locked in by august 7th ahead of the convention doing a virtual nomination to ensure that candidate can get on the ballot

in all 50 states. it's been more than three weeks we've been going through this, and that gives us a few more weeks. >> two and a half more weeks. until that day. thank you very much. meghan ka sella. still to come, transportation secretary pe btieg tkiteutgialng about this wide ranging i.t. outage and so much more. don't go anywhere.

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and advanced security, all from the company with 99.9% network reliability. so now they can focus on doing what they do best for the next five years. that's a lot of bread. you got this. the comcast business 5-year price lock guarantee. switch today for a limited tim. welcome back to "squawk on the street." about an hour into trading and we've seen stocks moving a little bit south throughout the morning. a few sectors higher, communication services and health care the only ones, everybody else selling off. materials, information technology, at the bottom of the pack. consumer discretionary also weaker. this is adding to losses for the nasdaq this week which are now about 3.75%. the s&p this week down 1.5% and the dow higher by 1%. the russell 2000 index small caps up 2% which shows you the divergence we've been talking about with money into more

cyclical small cap stocks and out of the big tech winners that have been ruling the day. nvidia, tesla and microsoft, crowdstrike all hurting. obviously, crowdstrike is in focus today getting crushed on this global outage. the stock down 10.25%. to bertha coombs who is tracking the fallout. bertha. >> it's impacting everything, sara. the white house says president biden has been briefed on the widespread i.t. out annual causing numerous problems across the globe today. according to white house officials he is in touch with crowdstrike and other impacted entities and standing by to provide assistance as needed. meanwhile, hospital systems across the country are dealing with the fallout. mass general in boston and the harris health system in houston cancelling a number of elective and nonurgent surgeries, and penn medical and medical procedures and appointments today are being canceled. the university of miami health

system said its facilities are open, but warned it may be seeing delays due to computer records being unable to be updated. meantime fedex is experiencing substantial disruptions tied to the outage. the shipping company says it has enacted contingency plans but potential delays are possible for any packages that were due to arrive today. on the other hand, competitor ups says the outage is impacting some of its systems but its air transport is operating and drivers are on the roads. still, there could be some service delays. sara, back over to you. >> i'll take it. thank you. bertha coombs. as bertha said, delivery companies, airlines, all feeling the impact of this outage. they're not the only piece of the transportation system seeing the fallout. ports were knocked off line as well. the director of the port authority of new york and new jersey telling cnbc two terminals were impacted and unable to open at their scheduled time this morning.

union pacific says there have been processing delays in customer shipments. joining us the transportation secretary pete buttigieg, along with our own morgan brennan. good morning. >> thank you. secretary buttigieg, great to have you today. you're joining us, given the fact that you did just announce a groundbreaking for the port of long beach this week. we'll get to that. sticking with the news of the day, the i.t. out annual that impacted so many companies and industries, including airlines and including some ports, including some delivery companies. what's the latest? where do we stand? >> we're tracking all of the various impacts in different forms of transportation. the one that i think the most people are likely to experience directly is those airline cancellations and delays. if you're planning to fly today, you definitely want to check with your airline, get the latest information, find out what's going on in terms of the ground delay programs affecting many hubs and possible cancellations. we have reminded the airlines of their responsibilities to take

care of passengers. if they experience major delays. but what we're expecting is over the course of the day the issue has been identified. it's really a matter of the ripple or cascade effects as they get everything in their networks back to normal. these systems, these flights, they run so tightly, so back to back, that even after a route cause is -- root cause is addressed you can still be feeling the impact throughout the day. we have no impact to our own systems in terms of faa's operational systems like air traffic control or most systems within the u.s. department of transportation, but as far as the airlines themselves we're going to definitely be expecting more there. meanwhile, other systems often what you'll have is a small issue that turns into a big issue. you mentioned one of our ports where the ships, the cranes, all of that was operational, but there is an issue at the gates which meant the trucks couldn't come in or out and led to a delay in that port being up and running and open for business

today. we've seen transit systems where the transit system is running but their website is down. last i heard from mta in new york, the trains were running on time but the monitors that told you when to expect them, those were not restored. i think we're going to continue to see a number of spot issues across different systems, as everything moves back toward normal during the course of the day. >> okay. given those ripple feeffects, h long do you think it will see the delays work through? >> the issue has been identified quickly. the challenge is we have such tightly wound and interdependent systems the ripple effects can carry on. it does seem as of now hour by hour the issues are being addressed, resolved and smoothed out. we're hopeful we will get to something much more resembling normal by the time we get to tomorrow. >> this wasn't a cyberattack. one company pushing one bug

content to another company could take down so much of the global i.t. infrastructure does it raise questions? you know, any time you see how a small thing can turn into a massive thing, it raises concerns, both about nonnefarious and nefarious risks to our systems, andyou think about any transportation system today, it is more digitized, it is more dependent on software than it was a few years ago and that trend is only going to continue. now, on the whole, that has made our systems radically more efficient over the years, but as these vulnerabilities open up, we've got to make sure that players are on top of them, especially because most infrastructure is in private and/or local hands and that means any critical infrastructure owner from a regional airport authority to a port to an airline has to be on top of their own cyber

responsibilities. so we're continuing to engage din infrastructure players on those issues. if you think back to early in this administration's term, the colonial pipeline issue was an example of how an issue from one side of the house can cascade into another that cyberattack wasn't even on their operational systems. it was more on the administrative side of that pipeline an wound up making it necessary for the whole thing to shut down. we're in a new era in terms of these risks an there will be a huge amount of after action assessment after the dust settles and things get back to normal. right now all of the infrastructure players we're engaging, transit systems, railroads, airlines, their big job today is to get back to normal as quickly as possible. >> we talk about physical infrastructure and even coming out of the pandemic, knowing while you're joining us today with this $1.5 billion rail expansion project at the port of long beach we talk about the physical piece of this, but do we need to be looking closely at

the digitalal piece when you talk about the resilience of supply chains then? >> increasingly you can't separate them. the digitalization in technology has brought massive benefits, but every technology has its downsides, has its vulnerabilities. i think part of what we need to understand is that the systems side of things, the software and digital, this can't be a specialty concern that you have an i said discipline within the system called i.t. this is core to every part of every transportation system that's only going to become more true over time. you don't have to be a coding expert to become versed as anybody managing a transportation system should be in principles around security, around the different kinds of architectures for authentication and other things that can help keep us safe and, of course, resiliency and redundancy more important than ever. >> i want to shift gears to other news of the day.

bloomberg reporting that some cabinet members have discussed whether it's time for president biden to end his bid for re-election. have you been involved in those discussions? >> no. >> okay. you spend time with the president. do you think he would be fit to serve for the next four years? >> i have been so proud to serve under president biden's leadership and every time i have needed him for a decision, for guidance, to do the things that cabinet secretaries need from their president, he has been there, and i think there's no better example of the quality of his leadership than what's gone on in the transportation and infrastructure space, an area where other presidents have promised and failed to deliver massive infrastructure improvements, and he got it done in a bipartisan way and part of why i'm so excited to be in a place like los angeles and long beach i've been spending the last 24 hours going from one infrastructure improvement to another breaking ground, marking funds coming here, is directly a

result of president biden's leadership. >> nbc a short while ago reporting the president's family has started discussing had his possible exit from the race. your name floated as a prospective candidate. if you are approached would you consider it? >> so campaign law prevents me from even discussing campaign and election issues while i'm here as secretary. i've got a job to do. i'm very focused on that job. >> okay. secretary buttigieg, thank you so much for joining us. >> thank you. guys? >> all right. thank you for bringing that. of course we're going to stay on the subject of infrastructure. brookfield renewable the financier behind the construction of electricity generation around the world and seeing a major tailwind from the growing use of ai. brookfield recently signing deal with microsoft to invest over $10 billion on renewable energy capacity to power the data centers that microsoft is putting up. joining us is connor tess ki,

brookfield power and transition ceo and president of brookfield asset management. if you don't know that's a global alternative asset manager, about $925 billion in assets across renewables, real estate, credit and more. would revenue to start off on the subject of the day. you heard the secretary of transportation talking about infrastructure. you certainly are financing and putting up a lot of, for example, electricity power generation. how much do you think about it, and give me your thoughts about today's outage as a result of this content upgrade, so to speak, from crowdstrike? >> today is great example of our world is getting increasingly more digitalized and more interconnected and that is fueling a major investment theme across our business, which is the huge amounts of capital flows that are going towards increasing the resiliency of supply chains, onshoring of

critical goods and services, this is an investment theme we've been investing in for years at scale and one that we think has years to run going forward. shocks like today enforce that point. >> yeah. well, i want to talk about something we have been mentioning many times here on air, which is the growing need for increased electricity generation as a result of ai usage and growth of data centers. put it in perspective for our viewers. how much demand more power is there going to be for ai around the world? what kind of numbers are we talking about that's going to be needed to help build the grid? >> so let's come at it from this perspective. today as brookfield, as one of the largest owners of data centers around the world, and one of the largest owners and managers of renewable power generation, we have a unique vantage point into the capital flows and the growth

opportunities in providing critical inputs as the largest tech companies around the world look to grow their ai i and cloud services businesses. the demand we're seeing is tremendous. it's demonstrated by our transaction with microsoft, where we'll look to invest $10 billion to build out low cost, clean power for them which will directly provide input and growth runway into data centers that will be used to grow their ai capabilities. and it's really the scale that should jump out. we're seeing demand from tech companies for green power increasing at a run rate of about 50% a year right now. >> yeah. a lot of those companies such as microsoft have significant carbon reduction targets, but i wonder, are they not going to only be able to not only meet those targets but will you be

able to and the industry to meet the demand given that it seems unprecedented over rates of growth over a period of time. >> the important thing to recognize here is that the growth that we have seen in renewables over the last four or five years and the growth that will continue into the future, is primarily driven by the fact that renewables are the cheapest form of bulk electricity production around the world. they are the cheapest ways to produce input growing in demand. the fact that economic option is also the clean option, throws additional support behind that growth trajectory. so we will continue to see as much renewables be built across global grids as possible because that's driving decarbonization, driving lower cost energy, driving energy security all at once. but the limitation is going to be things like grid connection and permitting. that being said, we continue to

see the growth trajectory accelerate. 2024 will be bigger than 2023 and so on and so forth. we see the capital flows only going one direction. >> yeah. but again, i guess i come back to will they be enough. some people throw out a $100 trillion number that's period o time that needs to be invested to meet this demand. is that a number that makes sense to you? >>. >> that is a number that makes sense to us. that is the scale of opportunity here. what's important to recognize frommed stat you just shared is the amount of capital that needs to go into these trends of decarbonization, digitalization, it, in many cases, outstrips what is available from public markets or even governments. and, therefore, it is a real opportunity for scale providers of private capital to step into that void and deploy at scale and at very attractive returns.

>> something else we are talking a lot about and will in the coming weeks is the coming election. right now it appears former president trump is poised to win that presidency again. who knows. things can change. also with the potential trump presidency comes the possibility of rolling back some provisions of the ria. you're in renewables. you're spending an enormous amount of money there. there are benefits that have been attributed to the rai. how concerned about that are you? >> the important thing is here today across our business, what we see is the demand for green power, the demand for other decarbonization solutions, the energy transition is more of a corporate pull than it is a government push. what we like to say is the trend line on transition is being driven by corporate demand. the ebb and flow above and below that trend line is driven by

government policy. therefore, regardless of which party is in power in the united states or other core markets around the world, we do continue to expect just an acceleration of capital and continued growth in this space. we do expect the impact to be relatively marginal. >> you do? even if provisions get rolled back? i mean, i can also imagine the c.h.i.p.s. act. you've been a key financier of fabs for intel which is beneficiary of the government's attempt to bring home and create more of a domestic chipmaking industry. you're not concerned? >> no. i go back to this point that it is really corporate demand driving the need for these inputs and the need for growth in these industries. regardless of who is in power, corporate demand for clean, low cost electricity is going to continue to increase. it is a critical good that is going to be increased in quantities regardless of who is

in power. because it is the low-cost player, it will be able to grow and preserve that primary solution position. >> yeah. back to sort of the bigger question that we have been entertaining here, do you think the continued construction of data centers to power the new chips that power generative a.i. will have to slow in some way as a result of not being able to have the power available they need? >> there is no doubt that at one point the growth in data center demand was limited by data center capacity. and today the most pressing bottle neck is securing power to support the growth in those data centers. the market is reacting. our business, for example, is increasingly tilted towards providing that power under long-term contracts to the hyperscalers, those large, fast-growing tech companies around the world.

are we going to see data center demand slow down and data center demand -- construction demand slow down? we don't think so. we think this is a trajectory that has years and, perhaps, decades still to run. >> all right. we'll be watching it closely. certainly appreciate you taking some time. thank you, conner. >> thank you for having me. >> it has been a volatile week for the chips. smh below the 50 day since may. let's get to seema mody for the breakdown. >> the sector down 2% today, carl. a number of strategists weighing in on the selloff in semiconductors. evercore isi chalking it up to the selloff of 2023 winners and uncertainty around the elections with growing bipartisan support to crack down on chip sales to china. those two positive earnings reports from asml and taiwan semiconductor failing to provide a lift to the broader chip

stocks. that was a telltale sign. wedbush writes the trump is not big on the thesis. nvidia's price target is $120. it follows a report last night that openai is in talks with broadcom to develop a new a.i. processor. some analysts, though, finding opportunity in this rec. morgan stanley upgrading arm holdings from $190 to $107. shares are up 2.5% right now. next week we'll hear from nxpi, texas instruments, among other semiconductor stocks. carl? >> seema, yes, thank you very much. next week is going to be very busy, whether that's southwest or the airlines or 3m or gm and some others. a number of eshings movers on the move today. netflix, travelers, axp, we talked about earlier, which was not responding well to numbers. actually, adding to some losses here this morning, sara. >> yeah, we're down 4.25%.

didn't express a ton of concern when it came to spending at american express but analysts on the -- we're expecting more on the revenue guidance, even though they did take up the profit target. i was looking at netflix as well because it's up 1.2%. 8 million subscribers added represent growth. they saw growth in every region. it was led by asia-pacific. and generally, most analysts, david, are taking their targets up on netflix this morning. >> yeah. and the stock is reacting ever so slightly in the positive direction. again, the questions about growth from the ad-supported tier and how much that's going to pick up. the new ad-tech platform they say they're testing in canada and will introduce and roll out in the u.s. next year. i mean, they are the dominant provider when it comes to streaming, there's no doubt about that, but there are some questions, as mike brought up earlier in terms of the multiple and the growth rate you would expect, of course, from a fundamental perspective, investors are thinking about. >> he called it mature. it's also been an outperformer

on the year so there were high hopes going into the quarter on netflix. netflix shares up 1%. we'll continue to have updates all morning long on today's global outage. still ahead on "money movers," as we dive into the netflix quarter, we'll also talk to the ceo of fifth third bank on rngs l tt ahead. stay with us.

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it's piled high with tender beef that's slow cooked and smothered in tangy memphis style barbecue sauce. it's no fuss, no muss. just tons of flavor. the best barbecue beef is only a togo's. try one today. . the major outage impacting flights and banks. we will have more. what we learned from a strong netflix quarter after a major increase in subs and a big boost for ad-supported tiers. regional results close out a busy week for the banks. the ceo of fifth third is up next. first up on the markets, we are seeing stocks off a little bit here, down about a quarter of 1%. most of the sectors are down. materials ar