[closing bell ringing] scarlet: u.s. stocks soaring today. european stocks surging to a two month high. all of that after mario draghi says the banks can be ready for more stimulus this year. scarlet: but the question is "what's you miss?" we will break down the results for alphabet, the first result since changing its name from google. we also have earnings from microsoft and more. 's cash burn.bia the oil nation may run out of assets needed support spending within five years. but we begin with the markets. a banner day for stocks not just in the united states after mario draghi said they were looking to expand qe.

he did not say to knows exactly where it, but if you read between the lines, that was the basic message. alix: if you look at the dow futures, you can see that turn at 8:00 before mario draghi started speaking. that kind of rally sustained us throughout the entire session. it certainly did. one analyst said the obvious question is what does it mean for asset markets? need to look at the european debt market. driven italian 10 years, the ,pread between knows fell showing investors are pricing and less risk, demanding less of a premium to own italian bonds overdrawn bonds. will the european sovereign yields revisit the lows of 2015 and will is convergence continue? alix: amazon earnings are crossing, one of the many companies we will get today with billion,ing in at 25.4

stronger than estimated. amazony below what forecast on the high end but better on the top line. a cap$.17 a share, not loss, but i don't know if that's comparable to what we were expecting. of operating margin, that's what this company trains on -- trades on. earnings of $.17 a share is comparable to that loss. that is a huge beat on the top and bottom line. also the majority of units shipped are expected to be prime. amazon'skey driver of growth. alphabet reporting key earnings as well. right now, the numbers that

matter are adjusted earnings per share, higher than the consensus. revenue, when you back out the revenue passed on to partner 15.1 billion dollars, slightly higher than what were looking for. of aggregate slips, was for-- the consensus less than 19%, so on this measure, google is doing better than anticipated. the cost per click is down 11%, which is what analysts had been looking for. in the second quarter, costs per click declined 11% as well. alix: even though you see google a shares trading after-hours, that is alphabetic. it's such a change -- the first time we are reporting there. also more news trickling out from amazon -- the company

giving forward guidance, saying they expect record -- a record holiday season. fourth-quarter sales on the high and, coming in at 36.70 5 billion, above what analysts had estimated. it sees fourth-quarter operating income coming in on the high end. i'm trying to find the read on cloud computing. amazon web services is really what we are looking at. we were expect inc. 71% growth year on year. i have not been able to find that number yet. that's the big thing we are waiting on. scarlet: they only recently started to break that out. certainly that's the one point everyone is looking at because that is where amazon's margins are a lot fatter. at&t cause earnings are crossing right now and it looks like a miss on the top and bottom line.

revenue coming in at $39.1 billion. a little light from what analyst had been expect -- analysts had been expecting. we have not been able to break out what the net adds were, basically the phones that you pay every month, with those numbers will be. neverscription ads, you thought you would be looking at that when it comes to at&t. scarlet: it's a much different company than it had been in the past five years. we just got numbers from microsoft and first-quarter numbers, the fiscal first order them operating earnings per share of $.67, higher than the consensus estimate. analysts had been downgrading consistent -- consensus estimates. it came in lower than the consensus estimate which had

already been reduced over the last four weeks. first order getting revenue as well. i'm trying to find right comparable number, but it looks 24 billion. it was a beat if you compare it to the consensus estimate. alix: this is the first time they are reporting under their new structure with a breakout cloud, personal computing and business processing. this is the first time microsoft is doing that after they restructured their business. i should point out that first-quarter unearned revenue came in higher than estimates at $24.39 billion. that's revenue they cannot look revenueue yet but it is they will get in the future. scarlet: it is a leading

indicator to be sure. in terms of how stocks are acting after-hours, it is a list reading. amazon getting eight .6% on those results and alphabet, google up at than 7% right now. the initial read is investors like the results. alix: joining us now is paul sweeney who's going to help us break down these numbers. in four minutes, we've got for companies that reported. paul: amazon and google -- i'm going to go at the old name. they've continued to put up some amazing numbers and this is the third order where they have delivered profits for shareholders. the amazon story has been about extraordinary topline growth. we see jeff raises and the management team defer near-term possibility -- rough ability but here, they put up some topline and bottom line results.

on the google side, strong results on the top line and bottom line. still some issuigrating from the desktop to mobile devices in terms of cost per click. up fore more than making that in the search queries. scarlet: julie hyman bound the number we are looking for -- amazon web services. up 78% from the same time a year ago. in terms of operating income, 431% from the same time one year ago. you have to imagine google and microsoft are sweating when they see those kinds of numbers. paul: now they have a business that is solvable he profitable. income5% operating

margin. the issue for amazon knew theers, we always cloud business was huge and growing quickly as we saw 78% rose. but investors were not sure about the profitability until amazon started breaking out for investors. it's a quite profitable business despite the pricing cuts we see as they race to gain shares. not toocrosoft is shabby. they were breaking out the three areas of their business and pcs were better than estimated. their cloud revenue business coming in better than estimated. the business process segment was a little bit light that pc

gaming and cloud gaming has to be good news for microsoft. scarlet: you have to wonder if you are seeing a resurgence in pcs. people keep talking about the death of the pc, but we don't see it in that people estimate things to get a lot worse than they actually are. : the tablets we saw coming out of apple seem to be a category that's fading a little bit. if you think about microsoft, windows 10, we had not had an impact on windows 10 roll out which was expected to be a benign quarter. scarlet: is there a seasonal factor for the rollout? paul: it is a solid product refresh coming out. scarlet: that would suggest satya nadella is delivering.

paul: i think investors want to see execution, blocking and tackling, and they know there is a story there as it relates to the cloud business. toward: google plus approved a buyback of up to $5.1 billion in class c stocks. this is for class c -- a buyback of $5.1 billion. alix: this is the first time. they haven't been a buyback or dividend of this is a huge bone to shareholders. paul: probably the second leg bone the new ceo has given to shareholders. the first being better disclosure and a better feeling that they are going to control costs. at some point, they have to start returning cash to shareholders. to have so much cash flow on the balance sheet and what this interest rate environment, they can leave that much cash on the

balance sheet. scarlet: you can only get so much return sitting there on your balance sheet. alix: paul sweeney will be sticking with us to break down more earnings. we did get more information in terms of at&t -- post paid net adds, total ads in terms of phones and tablets coming in at ones came in at 466,000, so some difference there. to point out that domestic tv subscriptions coming in at 26,000. they are not going into negative or losing scriber's, but they can slowly stabilize and move forward. , there's some stabilization there and net adds , 622,000 including tablets and

phones. they are increasing their earnings guidance. lots of interesting to its coming out. are going to check in with cory johnson on amazon. he has a couple of a gets to share, next. ♪

alix: let's get to mark crumpton with first word news this afternoon. mark: on capitol hill, house benghazi committee has taken a second recess following day long testimony from former secretary of state hillary clinton. her republican detractors on the

panel sought to portray her as unaware and unconcerned about the severity of the security u.s.at the compound where ambassador christopher stephens and three other americans were killed in 2012 when the building came under attack. sendlinton: those requests issues related to security were right meandered -- rightly handled by the security professionals in the department. i did not see them. i did not approve them. i did not deny them. mark: ms. clinton told a panel the u.s. needs to mats to advance american interests around the world, even in dangerous places. at least one u.s. soldier was killed in the military operation in northern iraq that freed about 70 kurdish cap is the pentagon believes would have byed imminent mass execution islamic state militants. the rescue effort was carried out overnight in an islamic state stronghold. u.s. safety regular say they still do not know the root cause of terra-cotta airbag ruptures

but no longer believe a manufacturing defect is responsible. and president obama has vetoed a 612 ilion dollar defense policy bill. the white house says the president did not like how the bill was funded in the measure would complicate plans to close the prison at guantanamo bay, cuba. that is your first word news. back to you. scarlet: now for a full breakdown on amazon has earnings. we are joined by cory johnson. you have been looking through this and julie came up with the numbers for amazon web services and noted profitability had increased and revenue had jumped as well. talk about how the possibility of the cloud business compares with the rest of amazon. ask you a question -- what do you think amazon web services was as a percentage of

overall revenues? of revenues. what do you think it was as a percentage of operating profits? it was 52%. ofy 8% of revenue, 52% profits. it shows you how different the amazon web services businesses from the rest of amazon, not just in what it does, which is provide computing for the entire the waychnology, but in it works and the way amazon looks at profitability. amazon is hell-bent for a lack of profits in gross revenue. they are all about no profit, we're going to grow the top line and be the dominant retailer in the world. wall street looks at this and says i want to own the biggest retailer in the world except there's no profit. maybe someday, deep in the brain

of jeff a's as, there's a secret desire for profits. that is what wall street believes when they look at this stock. so easy and amazon web services is a desire for profit. and it is most the profits amazon reported this quarter and that is intriguing. percent ofyou say a revenue, what does that wind up growing to be in the next five years? cory: that is the question. because they have been so arson own he is about information, they have not given us all the results even going back to last year. i can seerst time, what the actual number was in terms of revenue and profits. the slide they put on their website is hilarious. they just put a our chart without a number on top so you can't put it in your model. they are being very parsimony old about the business --

parsimonious about the business. we do know that it is growing about 80% year-over-year, which is stupendous for this business. if i look at my model, year over your number growth is over 70%. really growing at about an 80% clip year-over-year which is fantastic and important because it is a profitable business for amazon. why is it that amazon is so parsimonious? to scream thatt from the mountaintops and make a bigger deal about it with investors? i think amazon does not want to tell us anything about anything, but they are compelled to tell us about some things. i don't think we should look at their secrecy around web services as different from anything they do. scarlet: corey is going to continue to look through these numbers. shareholders did want

profit. we thought they were fine with losses. they do want profits. scarlet: they also like buybacks. alix: speaking of google, we will break down those numbers. they are keeping numbers under control. a pretty good quarter. we will discuss. ♪

alix: i'm alix steel. "what's you miss?" paul sweeney is still with us and years and you may have missed in alphabets, google's report. part of's a very small the market cap, but what it does

is highlights the fact that the new cfo has really listened to shareholders. last quarter, she talked about reining in cost growth and that was well received by shareholders. for thisy pushed alphabet structure whereby they will give better disclosure about their businesses and number three is returning cash to shareholders. those are probably the top three things investors were concerned about with google. she came in as kind of a new sheriff in town and she has really executed well and is probably one of the more favorable cfos on wall street these days. scarlet: she knows what investors want, given her tenure at morgan stanley. some people think of google as an advertising company because of the paid ads. what does it mean as far as paid clicks increasing but the cost per click still down 11%?

a function of moving from the desktop to the mobile device. where you are finding across the internet is pricing per at is down. scarlet: no one is exempted from that. paul: they are just not as rich on the mobile devices as they are on the desktop player. but they're making up for it by volume. the number of clicks up over 20% --in in what is obviously what is arguably a mature market. put it all together and it comes up to strong to midteens revenue growth. alix: what kind of growth rate do they need to see to offset that transition to mobile? we will have to see the pricing start to improve and it will come from better advertising. x in a mobile environment whereby the google advertising group can go out and

try to raise rates for mobile ads and i think they will. there's a lot of new products in the market and google is probably leading the way, but a lot of other companies, whether facebook or linkedin, those companies are pushing rate higher, so that is probably what investors are looking for. google cane vehicle use is youtube. how important is that going to be going forward? is a big business. it's probably five or six billion dollars of run rate revenue and its growing very quickly. totuber read is there way kind of get into the netflix is this, if you will. the subscription is this. ice -- i suspect it will be added to this growth story. youtube is still an advertising driven story. the fastest growing area of internet advertising is online ,ideo and google, three youtube

is a dominant player there. the third leg on this stool is controlling costs. what did you learn on that? paul: this is a company that's going to spend a lot of money every quarter. principally on hiring. it's all about hiring engineering talent and that doesn't come cheap. google glass, some of those speculative issues -- i think all this suggests to the street that the expense growth will grow but it will be moderating, and that's all investors needed, a sense that there was some operating leverage in the business that might be enhanced. alix: quite and earnings bonanza in the last half-hour. scarlet: coming up, we speak to ian shepherdson and what they

mean for check firms -- what these numbers mean for check firms. ♪

scarlet: i'm scarlet fu. "what's you miss?" let's get to mark crumpton for news. mark: is really officials say two palestinians stabbed a boy at a bus stop. it was the latest incident in more than a month of violence. last night, soldiers killed a jewish man, thinking he was a palestinian attacker. the israeli premise or, benjamin netanyahu, discuss the crisis today in berlin with u.s. secretary of state john kerry. mr. kerry says he will present plans for defusing the violence this weekend.

another step closer to becoming the next speaker of the u.s. house of representatives. republican study committee of 170 house conservatives is offering its endorsement. that means he's locked up support from three major house republican groups in a bid to replace john boehner. the leadership election is next week. 10 victims of former subway pitchman jared fogle have been paid -- haven't paid a million dollars in restitution. each were hand-delivered $100,000 checks. he has agreed to a plea deal on child per not if he and sex crime charges. el niño is back in a big way. its effects are just beginning in much of the world but it has not yet unleashed its fury on north america. experts say it could be one of the three strongest el niño weather patterns since nine teen 50 and widespread drought and flooding are possible.

that is your first word news. back to you. scarlet: let's get a quick recap on u.s. stop -- u.s. stock market. it was a and her day with the dow ending at its highest levels and august 18 and a 320 point increase, biggest gain since early september. alix: it started around 8:00 once you had the ecb meeting and mario draghi's press conference, saying we are committed to some kind of stimulus and they're looking at all possible solutions. really helping stocks throughout the morning and continuing to grind higher all day. tumbling on euro that announcement and the dollar strengthening as a result. the dollar having its strongest day since july of 2014 -- of 2015. we have some huge tech company

news in the dollar will be affecting them going forward. scarlet: just to sum up those blockbuster earnings -- it was all beats in terms of the google, a company known as out for bet, higher than anticipated with revenue pretty much in line with the consensus estimate. what was groundbreaking for google is they announce $5.1 billion in share buybacks, incredible given that they held onto cash and did not return to shareholders. alix: microsoft coming in at $.67 a share. at 5.9 alieng in above estimates. on 110 10 is running million devices, so the cloud business boosting microsoft

stocks as well. scarlet: amazon web services saw 78 or send growth in sales to 2.09 billion dollars. 59%on web services makes up of their profit ability, allowing them to report an unexpected profit for the quarter. alix: at&t looking at about $15 billion in cash, that was above estimates, and it has increased the high and of its earning range for the full year and is overall looking at prepaid net at 466,000. that was a big boost, as well as directv subscribers. not want to see them bleed subscribers, so a big earnings day. scarlet: as the fed considers to raise rates this year, the most

important figure is an improving labor market. so we bring in ian shepherdson. does the current data point to the federal reserve raising interest rates in december? doesn't, does, some unfortunately, that's why we don't know what they're going to do. we have falling jobless claims, which is great. since 1940 eight, they've never been lower. most of the hiring indicators as long as you're not looking at manufacturing, are superstrong. but it could just be that the numbers are wrong and they are going to get devise -- get revised or maybe the pool of employable labor has shrunk so far that companies cannot find the people they want to hire. great point to make. we've never seen jobless claims this low and have private payroll growth be this low as well. we are sub 200000 and you've

never seen that kind of correlation before. ian: we have a lot of surveys and things apart from payroll numbers telling us about the labor market, and they are all off the charts strong except payroll numbers. something is wrong somewhere. scarlet: there is an anomaly that needs to be sorted out. here's a question with regards to jobless claims. are they a valuable indicator of an early stage of a downturn or do they lagged behind mark ian: if you are looking for a downturn, is probably not the place to look. maybe hold back on hiring and only when things like that you search you let people go. i would be looking at hiring indicators, but they are all off the charts except manufacturing. strengthening,s which the survey says it is coming got no problem except

those numbers are weak. we take a look at the jobs that are hard to fill at near record levels. payroll growth has slowed. this doesn't mean we are ever going to see wages actually snap back because we see the labor mismatch. wages are going to snap back and probably quite soon. things like the atlanta fed have their own measure it's a great number. -- it's own measure, and it's a great number. note to prize in real wages if you look at the right place. worried that the fed is missing what is actually going on because i talked to a lot of employers and labor market is tight and they are having to pay more. scarlet: so what are they looking at? ian: i wish i knew.

maybe they are looking at slower payrolls but i think this payroll numbers are telling us the talent pool is just not there anymore. this is a deeper issue than what the fed looks lack -- what the fed it looks at. ian: when you get to that position, the fed does nothing. the default position is just to say we're not going to do nothing -- to say we're going to do nothing. the danger is the people who are holding them back are looking at the wrong thing and that labor pool is shrinking and the wage pressure is there, then in six months, they will turn around and say we are way behind again. the market thinks the risk of that isroughly zero and what frightens me. i think the risk is quite take. scarlet: the fed is divided at how it looks at labor data.

but are they divided on what actually helps the economy? ian: not anymore. little one liar toward the end of the minutes said a rate hike might spur rather than restrain growth. saying thaters are it might be better for the economy to raise rates. the zero rate sends a signal that the economy sucks. so why would i do anything for my business when the fed is telling me it's terrible? send of thinking about where to invest your money in a real business, you just think i will buy vintage cars or fine wine is every thing is going up. productive thing to do down the road. maybe that is why we have low connectivity growth. if you play this argument for keynesians, they will punch you. i was with you when the economy was in a disaster area, but

seven years later, maybe not. alix: aren't we looking at a new normal? you're either going to have to have employers did for someone else in the labor pool and pay them to get from another labor pool or you have to pay less for workers who are not that qualified? that could be a new normal. ian: we don't know at the moment. employers are saying actually they have to pay more but if you look at the headline earnings, it's not there. maybe that's a flaw in the earnings numbers. next six to nine months, we'll find the answers to these questions because as the unemployment rate drops to the floor, we are at a tipping point. the fed still seems to think it is a way away but looking at the business surveys, they are saying it is right here, right now, so we will know soon enough. scarlet: ian shepherdson, thank you for joining us today. up, saudi arabia is

risking draining its financial assets in five years according to the imf. we will discuss whether that's actually a buying opportunity. ♪

scarlet: i'm scarlet fu. "what's you miss?" it's time for a look at the biggest is the stories in the news right now. shares of gnc holdings falling after a lawsuit claiming it -- it sold supplements with unapproved ingredients. gnc says the claims are without merit. alix: federal health officials are warning patients and doctors at to hepatitis drugs from

abbvie could cause cancer in patients with advanced forms of the disease. to addll require abbvie medicationsits about its risk for patients with advanced liver damage caused by hepatitis c. and mazda is recalling the eccles worldwide. ignition switches can overheat. basically put too much greece on the contact switches when the cars were being made. that is your bloomberg business flash. alix: saudi arabia's the world biggest oil exporter and has been hit quite hard by the fall in oil export prices. it has been burning through cash as oil has fallen off the cliff. the saudi's are planning spending cuts in an effort to trim the budget deficit.

specializes in geopolitics and oil. he joins us from london. inc. you for staying up late for us. the imf says the country may run out of financial assets and five years. do you agree with that? emad: if they keep the current rate of spending, sure. but that's because they are in a position of plus 100% net cash to gdp and are running a 20% gdp budget deficit after huge spending this year. -- this is a country with pretty much no debt. so it would suggest to -- it might need to change its current policy. doesn't need to institute a new tax policy or privatize state assets? slowly think they are

going to decrease of other military spending. they'll will keep spending on salaries to keep their social contracts, and they will start issuing debt. that will start to develop a yield curve and there will be some level of privatization because there are some key industries they could bring to the market, particularly as the saudi american stock exchange -- saudi arabian stock exchange comes online. part of the rhetoric when talking about saudi arabia as well as other big oil exporters tonot only are they having shed their fx reserves, but the money that they put in two other financial assets, they can no longer do that. that some kind of quantitative tightening? emad: you can see that from the reports a few months ago -- $17 billion pulled from equity markets.

they are withdrawing into themselves in creating a more liquid will to address the current spending. i think we will see less spending in private equity from his gulf states but you could see an increase in real estate spending. this is something that is relatively liquid and will give them a higher yield. saudi arabia has at least $200 billion in t-bills that yield almost nothing. why not deployed in something that returns slightly higher thanthat eschewed mark -- that? scarlet: how is the diversification effort going? i think you can see that. we talked about record saudi arabia production, 10.5 million barrels a day. but exports have been flat year on year. these projectsed

where they are diversifying downstream. ones aredifficult secondary and tertiary industries. has gone down before they hit critical mass. i think what they need to see is .ome level of taxation come in you cannot rely on hydrocarbons forever, even if i'm quite bullish on it. scarlet: going back to saudi arabia perhaps issuing debt, i assume that would mean more foreign investment. what has the kingdom learned in opening up its stock exchange to foreigners that would apply to opening the rest of its capital markets? emad: it has been very cagey about opening its markets.

you can invest directly but only if you have 5 billion dollars under management. you cannot buy property in the holy cities. the local banks are quite over capitalized. going forward, i think they will need to open up to the foreign world and what you have is most government support their debt spending or interest-only debt spending because they never really repay the capital, from income tax receipts. saudi arabia and their neighbors hydrocarbon. they still make 7 million barrels a day. 200 billion or $300 billion from oil. their breakeven is that low. emad: the oil costs three

dollars to get out of the ground. in two years. but if you bring up the chart and have a look at it, it looks like that. if things continue the way they are, but will they continue the way they are question mark i don't think so. this year, you have had a new king and he's spent a lot of money to make everything as smooth and table as possible. it's all part of that social contract. emad mostaque will stay with us. alix: and you don't want to miss this triple digit will call. ♪

alix: i'm alix steel.

"what's you miss?" .e are back with emad mostaque he has the boldest call i've ever heard on oil. you see $130 oil prices? when? in about 2017. will deftly be up to over $100. alix: why? emad: we were one of the biggest bears and said a double dip after the rally. if you look at the current structure, the back and of the curve, three year oil is below where it was in 2009, but none of the spending is going in. $20 per barrel on average, barrels or 5ion million barrels that will disappear. iraq is falling over and kurdistan is falling apart. iran and weeled to

are advising some of the big funds out there. it's not going to happen. arabia, they maintain their exports and they will be below 10 million barrels a day. and u.s., shale is going to catch up. it's like wiley coyote running off a cliff. sure, riggs do not produce oil productivitye numbers. it's all going to catch up next year or the year after. forlet: given that call $130 brent, what markets do you like best? emad: unfortunately, the russian market, which we hate on structural governance issues that it is an oil call at the moment. you are buying dockets of enp names and playing enp over refiners. markets, i've met shoot

-- i've mentioned the debt issuance, they will ease up on liquidity massively and last time that happened, the saudi arabian market went to five times book. do you want to buy saudi arabian stocks or are there other places that offer more opportunities. iran will be fantastic year, but if you look at abu dhabi and saudi arabia, these are quite safe markets. fallen alonghas with the emerging markets index. abu dhabi is only down 6% from its highs of the year. even notice a massive oil producer. season are companies -- these are countries with nice risk/reward. but when they start doing this that issuance, they will explode. scarlet: emad mostaque, thank

you for joining us today. alix: when we come back, what you need to know to gear up for tomorrow's trading day.

scarlet: i'm scarlet fu. "what's you miss?" more earnings tomorrow -- american airlines reporting tomorrow along with doctoring gamble. both of them out for the bell. alix: and from american airlines, you have the fuel prices and what benefit is that going forward? -- picking up some eco-data we are looking for it to come in so the same theme, a little slowdown in the manufacturing heart of the economy. take a lastneed to

look at how the tech companies are performing after hours. 9% on that $5.1

john:, good evening sports fans i am john heilemann. kansas city royals champions-- we can't tolerate the idea of a canadian baseball team in the world series. we will be interviewing ben carson, heading to iowa for a jampacked weekend of presidential politics. first, it's hillary clinton on the hill day. we have a big benghazi-heavy. lineup since00