>> thank you for having me. >> it's ban loteen a lot of fun today. >> even though your sisters were the ones in cincinnati i think it's rubbed off and you turned out very well. >> thank you. >> is that you? >> yeah but you tell everybody. >> be sure to join us on monday. "squawk on the street" starts right now. >> good friday morning and welcome to "squawk on the street." i'm david faber along with jim cramer. carl quintanilla has the day off. let's give you a look at futures as we begin this last trading day of the week. you can see a mixed bag there after a not particularly good day if you're on the market yesterday and more painful than many thought from the numbers themselves. how's the ten-year note yield? we'll show you. there it is.

2.25. and oil, as you see, still below 50. a move made this week as we watched the commodity complex come down across the board. the road map starts with amazon overtaking walmart in market cap after reporting a surprise second quarter profit. the shares up 20% in the premarket. star bucks shares also higher ahead of the open. the coo told jim last night. and anthem agrees to buy cigna. the price and the release is 188 a share. in reality, it's a bit less than that. we'll get to that deal. we begin with amazon reporting a second quarter profit of $0.19 a share while wall street was expecting a $0.14 a share loss. sales up 20%. that was up by strength in web services. shares of amazon surging in the

premarket putting the market cap above that of walmart and making founder and the ceo about $7 billion richer. that's right. $7 billion more just from the move up. that's a side show. the main show is the numbers themselves. this company getting rewarded perhaps like no other for revenue growth. most people would look at a $92 million profit and say why is that worth a 20% increase in market cap? >> because they could have printed any number they wanted. the margin expansion here the growth the love for prime. this is just like netflix. this is just like google meaning that when you exert some financial discipline and you have this level of growth it's kind of -- it puts the shorts to shame, the whole negative story is out the window. the company changed when they decided to break out amazon web

services. that's when they realized they knew they had something. their conference calls are brief and they don't like to tell you a lot. they showed their skirt for a second on india. just india, just saying we could double down in india. a lot of people there. and what they're really saying is we can train our guns on whatever area we want. people love our product. we can deliver it when you want it at a very efficient price. david, the fact that they added so many people and the margins went up look -- >> they're a major employer now. not that they weren't but they added many people for the warehouses which they continue to build out. it's an important component of their service, being able to get you things within one or two days. during my documentary, the idea being within hours. they're meeting that in some markets already. >> i remember watching your documentary and my daughter said

there's no one that can stop them. at the end he said there's no one who can stop them. i said pop, they're losing money. he said you don't understand. do you see what they're doing? there's no one. they can deliver faster. he was in retail all his life. who is going to stop them? >> and they've not been stopped in the stock market. there have been stalls if you will, but never a stop and, of course, now we're watching just a resurgence of the company's stock price and the business to a certain extent. maybe to the uninitiated who might say i look at wall matter. in a quarter, i believe they earn more than amazon has earned in its entire 20-year life as a company. how can i make sense of that? how is that fair to walmart that these guys basically have a multiple that's almost infinite. >> i could tell you life is unfair or tell you the man who built costco said they don't

play fair because the market rewarded them with so much. or i could say that like netflix, they offer a bargain that worldwide people recognize, and in the end, people love bargains. that's what amazon is. >> it's a bargain when you're paying them for a loyalty program? you're paying them. that's just genius. >> it's genius. >> david, it's a business model. i know if you're doug mcmillen, first of all you're watching. hi. i know you watch. you're saying to yourself i can't believe that they're not saying walmart is worth far more than we are. what i am saying is that when i see the kinds of things like when they create this day prime day. prime day. what is that? that's even more stupid than singles day. and it's bigger than black friday for them. prime day. you know what? super prime day. choice day, chuck day.

t bone day. >> t-bone. sell a lot of steak. >> and by the way, you know what they also said in one thing, i ordered a book called "blood brothers". right now they're saying what push i push to cramer? the algorithmic knowledge of what they are thinking in your brain right now, i don't know -- i don't want to see some of that. >> places i don't want to go. >> but they are sitting there thinking, they have a machine. at one point they said no people. we have machines that figure out what you want and they know more what you want than you do. >> and they have been able to benefit from robotics in the warehouse. they use an awful lot of manual labor. the dock is hard work, and they pay fairly well. >> in your documentary, they work people at a level that is -- >> it's very hard. >> costs are not going up.

>> the shorts never underthe leverage of the molds. meaning how much more they can make on the additional sale, and the most important thing is i keep coming back to the fact it's a giant algorithm. and amazon web services they only started to break it out recently, and it is growing at an extraordinary rate. now we can see it on paper, what the numbers are. >> right. the operating margins for that thing is incredible. and they use the things you hear from all great companies, fly wheel. when when you studied physics, it seems almost impossible. that energy can generate more energy but it's happening with this. the free cap is an extraordinary number. i loved this call. it wasn't well orchestrated like star bucks like the sound of

music. it was more of a documentary call, but it worked. it worked for me. >> and it is a seminole moment as we watch amazon's value pass that of walmart. walmart trading just below $75 but nonetheless, quite a moment 20 years into its history, now the largest market cap retailer. >> it turned out that everybody was wrong. well, it turned out that all the really smart people that said it was just kind of like a ponzi scheme were wrong. when they finished their infrastructure, and by the way, he'll tell you that they're not. >> they never will. they always say they're going to keep spending at an enormous rate and they may have a loss the next quarter. the fourth quarter is usually good for them. but he's gotten everybody to believe. >> it's worth spending the time on it because one of the things

you realize, this is fang facebook amazon netflix, google. >> i know. i'm well aware of that now. >> the issue with the companies is they don't want any other company to live. this is all winner take all, loser take none. every one of the companies. porat at google that's it. at walmart, amazon is thinking we'll take walmart down. >> let's talk about star bucks. getting a lift. revenue jumped 18%. some of the top line growth numbers are amazing. star bucks also added 50 million shares to the buyback program. they're going to buy back an additional 15 million. last night the coo spoke to jim about the company's digital strategy. >> we're seeing about 20 % of the tender in the u.s. is paid

for through the digital experience and now we're seeing rapid adoption of the ability to order your food and beverage items from your mobile phone and have them paid for for pickup. in the next quarter, we'll start piloting delivery. the digital experience we're evolving for our customers is every bit as important as the in-store experience. >> it's funny. we talk about amazon. i keep making something of mmc mmc mcdonald's market cap versus star bucks. >> they happen to sell coffee. i say that because -- they're talking about the notion of currency. you can go to lift and get the stores which are redeemed. and every company wants to be in this star bucks funnel.

it's touchy. this is an eco system. some people argue starbucks is a bit of a nation. >> 18 % top line. 18 %. >> china, i know everyone is worried about bridge water. david, maybe when the stock market crashes you drink more coffee because the china acceleration is extraordinary here. we may be all -- i know everyone is worried about china but they're not selling copper at star bucks. they don't sell iron oar at starbucks. they serve coffee. they took over japan. they are doing things with mobile and digital that are making it so the throughput is amazing. the delivery is going to start soon. i love the arc of the quarter, and howard spread the credit all

over the place. adam broton is i'd say the single smartest digital mind in the country right now. don't you think that kevin johnson, the noted technologist is doing the call. they're doing premium coffees now. 18 % comp in u.s.? remember when we thought they were out of room in the u.s.? >> how much is just raising prices on people? >> not as much as you think? >> no? >> coffee, coffee is 10%. actually unimportant. what really matters is this notion of day part that every -- i was trying to get from these guys, like every minute they are serving more than they did before, the number of customers per -- 80 million through per week. star starbucks, it's pinky and the brain. they want to take over the world. >> and finally, m&a business. it's official. anthem agreeing to buy cigna. $188 a share.

as we told you yesterday in cash and stock. 55% cash. the remainder in stock. $52.4 billion. covering about 53 million members. when you do the math this morning based on anthem's stock price you get a deal worth about $183 a share. i'm not sure why they didn't just change the release. but there is a lot going on here. >> since you added better than they did, they listened to the show and said well we can't use exactly what david said because then it sound like we're copying david. don't you think that happened? >> no. but what is now about to happen is a significant regulatory review as we've talked about in the past whether it be aetna's acquisition of humana and now the new deal between anthem and cigna. the ceos of the aforementioned not going to join us.

what we also will be focussed on is okay, how is the affordable care act affecting the anti-trust review. what you'll hear from those who believe both will be approved is the landscape is different than when you were in the street. 85% of the medical loss ratio has to be 85%. if it's below that they have to repay companies, basically. >> the government agencies that basically keeps -- sets medicare and medicaid services numbers, they can reject increases. you've got $250 million that was spent for rate reviews at the state level by the aca. you've got private exchanges because here, remember, it's commercial. humana aetna more about person.

you have private exchanges that are gaining traction and by 2016 people say that's a real opportunity for employers to participant in that gives transparency. these are the counterarguments. they'll tell you it's really six to four because don't forget the nonprofit plans in so many markets. >> look i remember -- i know the airlines are not regulated the way that this business is. and absolutely affordable act did change things but whenever you see five to three, it makes you pause when staples and office depot -- what's being challenged at&t right? at&t, t-mobile. there's so much competition in that business. john legere, we should get in later on. he reacted quizzically to one of

my -- he emoji'd himself. >> coming up a different type of wireless war. ceos of phone companies tweeting. our futures are not up. a lot more "squawk on the street" after this. ♪ ♪ ♪ it took tim morehouse years to master the perfect lunge. but only one attempt to master depositing checks at chase atms. technology designed for you. so you can easily master the way you bank.

at&t is out with earnings. it was a beat last night adding post paid customers. average revenue per user came in higher than analysts were expecting. during the conference show john legere going into a twitter spat. quote, go back to the kiddie pool. and photo shopping the faces of at&t and print on a dumber a dumber poster. that's verizon. verizon and at&t are dumber a dumber. >> i asked john. i said john i think this at&t

quarter looks pretty good. he says jim cramer lose 300,000 postpaid phones. no basically schooling me and then four more tweets including emojis about what he really had to think about my, yo cursory analysis of at&t. >> i spoke to stevens who we talked about subscriber base and he particularly i asked him particularly about those criticisms saying well is it higher margin or lower margin. he says lower margin. we're losing feature phone customer. it's the old phones the old nokia in your pocket. and we're adding premium, prepaid subscribers. 600,000 over the last year is what he says. and that's like talking about well over $60 a month. the fact is the numbers are being received well by the

investor base here. in many ways the conversation about at&t seems to have changed also in a more positive context about the acquisition of direct tv. it's going to close any day now. the fcc has more or less signed off on the deal. we said it will give a lot of support to the dividend and help the free cash flow coverage. and certainly a more positive sort of sounding analyst community when it comes to that deal. >> yeah, and i think that direct tv is a winner. i have it. it's fabulous. there is a read through to give our viewers. game stock, gme. paul rains said watch what we do with at&t and the stocks should be at 60. at my old hedge fund i do not trade now. i would have said game stop is a

secret weapon. >> wireless extraordinarily competitive and many would say that was a good reason not to allow at&t to buy t-mobile. >> is ledger mets pitching and at&t is the st. louis bats? >> i don't know. up next the mad dash. hopefully he won't mention the mets as we count down to the opening bell. quals overshopping. here at td ameritrade, they work hard. wow, that was random. random? no it's all about understanding patterns like the mail guy at 3:12 every day or jerry, getting dumped every third tuesday. this happens every third tuesday. we have pattern recognition technology on any chart, plus over 300 customizable studies to help you anticipate potential price movement. there's no way to predict that. for

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gave you guidance for a drug they thought could grow 14 to 16%. they're saying now it's only 6% to 8%. that's a rohorrendous buy down. >> they already had preloaded the talk about their alzheimers drug. my work says even if it goes well it's 2018ish. there's a big gap. to get them historically has been a big mistake but this is a shattering series of gaffes to the people who have loved this stock. this is one of my big four horses. they have to come up with a whole here. regeneron is going to come up with the winning anti-cholesterol drug which is on the verge of approval. it's the biotech to focus on. yesterday was celgene. gilead is going to buy someone.

>> can i share one fact with you? do you know what has the most debt capacity of any pharmaceutical company? >> even more than triple a j&j? gilead? >> correct. >> that was supposed to be in the form of a question. >> what is gilead? >> it is a free cash flow machine with no debt. we have so many other things to talk about including looking at biotech. opening bell coming up next.

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you're watching "squawk on the street." we are live from the financial capital of the world. the opening bell is going to be ringing in about 40 or so seconds. thankfully we haven't spent a lot of time talking about greece. that's been nice to have that fade but we'll continue to talk a lot more about china. >> the china market was down last night so the futures were down regardless of the fact that every company last night had an up side. remember when that meant the futures will be up. on the conference calls, all you

hear about. how is china's business? everyone is worried, david, about the paper tiger. >> there's the opening bell with some nice cheering and screaming. who did the honors in bluerock residential residential. you can see the s&p. over at the nasdaq. hennesey acquisitions. let's continue the discussion of the broader market. yesterday on the face of it looked not like a great day but in speaking to at least a number of my hedge fund guys who i talk to every day. more painful. i was hearing more pain. some names, under the surface, kind of a grindingly bad day. >> if you're an international company and not involved with

facebook goggle netflix, you were killed yesterday. it did not matter. the super freakin' strong dollar annihilated a lot of the blue chips. people are selling everything that's not nailed down. it doesn't matter what they make. people feel like they sell to china and it's so good. there were technology companies falling by the wayside managed to res recollecturrect themselves. >> iron oar. are these miners suicidal? >> i don't know the answer to that? >> i think the answer is yes. the free port quarter. it's almost back to where it was in the great recession. the caterpillar quarter. >> utx. >> why not? they gave away sakorsky at the

beginning of what is a hot war. >> look at the turn in the stock. look what's happened to that thing. >> they're selling defense to keep h vac and elevators at a time when others sold more anti-missiles than it's done. everyone's rearming because we're no longer the world's policeman. everybody is rearming around syria, and they need choppers and anti-missiles. it's lockheed martin. gold stream could be bad because in a conference call they said the coronet jet market is like sold. it's very bad in china. i'm telling you, that lockheed martin what an unbelievable quarter. you have to arm yourself because we're not going to protect you. in asia we won't protect you. in lithuania, nato countries, is russia going to go after -- every country on earth is worried about their military.

and sikorsky they sell si course can i? >> yes. >> playoffs in they can't even win a game. >> visa talking about a stock that is up yet again, another name that -- had a very good year. >> 12% growth. people are looking for much less than that. they're still not seeing the money at the pump going to savings. charlie scharf this man is another one of these guys he's in the back coining money. does he want to come on tv charlie? no. at the end he lays a blast on fifa on the soccer and it's basically like guys listen, we're in charge of world soccer too. clean your act up or we're out of here. >> can we do a visa versus american express? they're having chart issues.

whenever i want to ask there's a chart issue. >> if you talk to visa behind the scenes about american express, they think diner's club. >> they say that. >> dinee in a sor? >> international growth was extraordinary. they didn't even realize themselves how much earnings power they had and charlie scharf just sits back and basically another guy who says there's no other room for any other credit card company. china, they threw out china. they gave us a little bit of leg on china. it's going to be amazing. it's going to be amazing. there were so many guys last night saying china was good. you would think china and visa it's not in the numbers. will you look at that? will you look at that? >> by the way, that's just six

monltd months. when you look at that chart you're looking at the philly's versus the yankees, and now look at the yankees. look at that diversion. american express, people are leaving home without it all the time. >> i want to circle back to biotech. we talked about biogen. is there a bleedover affect? i look at celgene with a great run. incredible. more in market cap than it costs them but it's down. >> the -- nothing seems to be getting hurt that badly other than biojeb itself. >> but the etf factor it's like the leg bone connected to the knee bone. we can't mention gilead enough in terms of the cash. any minute that cholesterol drug is going to become the number one cholesterol drug for

those who can't tolerate statins. >> there's a look at gilead. when i talk about debt capacity it means how much debt can you put on their spread sheet. this company doesn't have much debt if any at all, and they generate so much free cash flow from their cure. >> not a maintenance but a cure. >> it costs you $84,000 but it's a cure. >> you live. >> yeah you do. >> now, that's up to an them and cigna, right? these these, they are going to say to gilead you can't get away with it. and the customer is going to say i want that product. >> anthem is down 2% and cigna with a 3.5% loss. we told everybody exactly what the numbs would be yesterday but they were basing that number off

of an exchange ratio and a stock price that seemed to be a few days earlier. i guess they wanted 188 in print but not in reality. these are going to take so long to get done that we'll be talking about them in a year from now in terms of the regular a lori process. these are long-term plays. you're not going to see the spreads tighten up for some time. >> does walls greens have gooding? something? >> i don't know. it's a valid question. >> i have to tell you i think walgreens is inquisitive here. >> the stock, by the way, year to date is up 82 %. the market value as we told you

earlier, eclipses $260 billion. that is above walmart which has been for so long the largest market cap retailer. 20% top line and an unexpected profit of $92 million. >> that biogen is pulling things down. it's pulling down the high multiple stocks. people it took their breath away. biogen is a good company. >> google a week ago added $55 billion in market cap. amazon adding enormous amounts of market cap this morning. we've had interesting and strong numbers and yet other parts don't seem quite as good. there seems to be a still lingering concern about revenue growth and that's why you seem to have so many people running to this small group. >> they're running --

>> they're running to nike and underarmor. the growth there is amazing. and there's spending a lot of time trying to figure out defense stocks. go pro and ambarella, they like. the fortune brands and whirlpool. people like that theme and these are all themes that are working in a constrained environment. now, cameron, you'll see that cam, they call the bottom, in deep water oil. core labs says it's a v. they say u.s. oil production they know more than anybody. he said u.s. oil production peaked in april. we'll be in supply demand balance by the end of the year. he said it's going to fall and now he's calling a bottom. it's not like other people who called the bottom. he called it yesterday saying the supply and balance by 2015.

that fund has got to be revealed before this thing bottoms. >> that's an interesting piece of information in terms of his call. all right. let's get to the broader market as well and get bob in on this. he's on the floor. >> reporter: very mixed open. consumer discretionary is strong. what an ugly week it's been for the dow. everything that's important that's reported this week has been a mess and it's dragged the dow down significantly. united tech at the open down 9% for the week. ibm down 6%. general electric reported last week. united health reported last week. down about 4 %. it's been ugly. get me out of this week. the saver has been amazon. put up the consumer discretionary. that sector is up. amazon is not a tech stock. it's a consumer discretionary stock. that's where it's list d and that's helping that whole sector and so is starbucks.

here's something interesting. johnson controls is also positive. this is one of my favorite big multinational companies. car interiors, they're in many dozens of country. 60% of their revenues are outside the united states and look at the impact the dollar has. i have emphasized this but if you exclude the impact of foreign exchange their revenues were up 5% in the quarter. if you include the impact of the strong dollar, their revenues were down 2 %. these are statistically significant impacts on their revenues and earnings for multinational corporations that have been doing this for two quarters and it's been a real quarter. johnson controls sells around the world. they've been under pressure for the last couple months. we are essentially not far from a new low for the year on that company. let's move on. i want to show you china overnight. we did have a very disappointing

numbers on the manufacturing numbers, the pmi. it was a 15-month low. although we're up for the week shenzhen and shanghai were up. depending on who you talk to, anywhere from 15% to 20 % of the market is still closed in china. let's move onto moving the markets overall. an important thing about amazon. they have been tripping over themselves to increase the numbers, the estimates on amazon for this year and next. the key is understanding web services and the core -- people are who are participating in amazon with prime. amazon membership is up 81%. here's the question on prime. they don't break out the numbers so all the estimates are all over the place, but the numbers i hear are typically they'll have 40 million members by the end of 2015. they're going to spend, the

numbers are all over but people will spend twice what a typical shopper spends. it's $56 billion in revenues. their sales estimate for 2015 is $100 billion. half of their numbers are going to come from a loyal members in the prime group. that's why everybody is so enthusiastic. if they can get to the $40 million. half of their membership is supporting them. that's why they're enthusiastic. amazon is up. dow, however, is down 11%. >> thank you, bob. let's go to rick santelli in chicago now. >> reporter: thanks. i could talk about china or some of the data out or how their markets are lower, how are at love european things are lower but the best thing is with the following chart. may, 2009 crb index.

that's the last time we were trading at these levels. whether this is an accurate picture of global demand is up to you. but china and commodities are linked. they were linked on the way up. they're linked on the way down and based on the way markets move, you heard jim cramer talking about it isn't right that all markets get painted with the same brush but that's kind of the way we went up and it's most likely the way we'll go down. if you look at april 15th of 2015 look at the dollar index. that's taken the crb to the next level in terms of why the dollar and the fed and central banks are so important. the dollar isn't at the highest levels but it's certainly at lofty levels. now, let's look at something else. let's look at the 30-year bond and why is this so important? well, first of all yesterday was the lowest yield close since the first day of june. we're going to start at the end of may. take a look. it's down two on the day.

it's down 13 beeps on the week but look at the picture there. now let's look at the same start date for a two-year note. it's not the highest on the chart. the curve flattened. is it giving us an idea of the fed? i think this week tells you no what it really is is the curve is flattening because global growth at least the perception of commodities is somewhat week. the long end is giving it up. the curve is flattening. there's a lot of combinations on how the curve can move. this one is most likely a growth demand story more than a fed story. let's look at the bund. if we look at the bund starting this early may, we could see is pattern is like a lot of fixed income markets. the fact that it's now hovering below $75 is significant. and if we want to pay attention to how much, look at the relationship for the last couple of months when we take our ten-year note rate minus bunds. it's in a very tight range.

it means pick either market. if you get one right, you'll get the other one right as well. back to you. >> thank you, mr. santelli. let's go look at oil prices. >> reporter: good morning. we're seeing prices up about $0.11 right now. a little buying the dip mentally. key level of resistance to the up side, 49 .15. the high for the day was $49.03. traders are seeing we're probably going to stay under the 49 range. we could turn negative because brent has been moving back and forth between positive and negative. i want to talk about gas prices. the national average according to aaa. 2b $2.73. in california i know things are not great in terms of the gas prices but we're talking national averages. switching gears were a moment i

want to mention gold. down more than $10 today. this goes back to the china story. some weak data out last night concerning everybody trading all the metals. copper, gold silver. back to you, david. >> thank you, jackie. we have some other stocks to bring you up to date on. we're back after this. to folks out there whose diabetic nerve pain... shoots and burns its way into your day, i hear you. to everyone with this pain that makes ordinary tasks

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welcome back to "squawk on the street." a couple of thingsings we wanted to mention. capital one stock down. a 10% decline. what happened? >> provisions for losses went up 21%. david, we haven't seen provisions for losses go up in a long time for banks. these days i always thought the only way you could get a loan from a bank is if you didn't need. obviously, capital one is an aggressive credit card company.

this took people's breath away. we haven't heard a provision go up in so long we don't even know what it sounds like. it's bad. i don't want to sugar coat it. i like the ceo. i think he's terrific but to see them go up in order to grow it took our breath away. >> that's a significant loss for a fairly large market cap company. and an auction, ncr, stocks down a bit. can i tell you this morning another private equity firm is taking a look adding the number now to three. kkr sources tell me has entered the process. bids many thought were due next week. black stone is in there and kkr taking a look at ncr which could be one of the bigger private equity deals done if they get anything done having three potential bidders in there maybe raises the chances that they do have something to do there.

but private equity when we talk about m&a, has been absent from any of the buying going on. >> is that bill driving that? >> there was also activist in there pushing them to explore that. >> he's a good guy. company has had a tough hand. remember bunch? >> yeah. >> ncr controlled data and honey well. >> up next stop trading with jim. "squawk on the street" will be right back. with fidelity's new active trader pro investing platform, the information that's important to you is all in one place, so finding more insight is easier. it's your idea powered by active trader pro. another way fidelity gives you a more powerful investing experience. call our specialists today to get up and running.

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it's time for a friday edition of stop trading. >> i have a lot of friends who are pressing their short side. this is friday. the stock is work is sky works solutions. a master full call talking about masterful things. and trying to say china is really good. sky works was at 106. it was at 101. if it goes to 106, it's a good day. below here not a good day. they have to be careful. the real main case is china and china is bad. >> we don't get a great deal of

transparency when it comes to china. i have auto registration data here. people sent me it on bmw, audi tesla. things are slowing. >> it's free port, fsx. but people are worried about the party. >> do you think they've really lost control? >> i would never mess with the chinese communist party. it's a dictatorship. it's a dictatorship of rich people who run china. i think that's part of the problem. >> that is. what do we have coming up on mad tonight? >> one of the companies lost in is rider. i want to find out, they have a great call on business itself. again, be careful on both sides. wild trading today. don't get confident. don't press shorts or longs.

people are going to be on the cannon ball to the hamptons. or the train that runs every 30%. or blade. >> blade. >> amazon. >> amazon blade. amazon is going to have a drone that will fly you. have a great weekend. >> you too, partner. >> all right. coming up breaking news on new home sales and jim stewart talks about jeff bazos on a big morning for amazon.

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good morning. welcome back to "squawk on the street." i'm sara eisen along with david faber. carl quintanilla and simon hobbs are both off today. let's take a look at where we are in the markets. the dow is pretty much flat. so is the s&p. a down week for stocks. if t the fourth in five weeks. wti crude getting a little bit of a rebound. still hovering in the $48 a barrel region. we have breaking news on home

sales. rick? >> reporter: once again, sometimes you get good numbers. sometimes you get not so good numbers. this is the latter and it's not good by a factor of down 8.6%. it would put it at par with some of the best levels since early '08. takes a reversal goes down under 500,000. it's 482,000. it's the worst number of the year. it takes you to a comp of november of last year and last month which would have been the best number since '08 was downgraded to 517,000. now let's go to dianna. this number is a surprise. what do you see in your crystal ball? >> reporter: this this is not good rick. we were expecting a slight bump up but not only do you have a

big jump down but also a pretty big downward revision to the may numbers. like to remind folks this number is based on signed carrots in june. those are folks out signing contracts and shopping in june. now, you remember at the beginning of may that's when mortgage rates pop up but people jumped off the fence on existing home sales. here home rates down and the price pricing did come down. that's down from $287,000 one year ago. we heard from a ceo yesterday that the builders do still have significant pricing power but the rest of the market buyers are seeing sticker shock and backing off. we saw that in a report yesterday saying demand was falling off because of sticker shock and pricing. i guess the only positive is the supply of new homes is up to a 5.4 month supply.

it's high from a year ago. the month supply comes down. we're still not seeing enough homes being built. you remember the june housing starts number was a disoi point. dingl single family starts were down in june. this is a big disappoint. >> new home sales, supply has been one of the big problems. at least we're seeing a little bit of move there. amazon now worth more than walmart. the company is stunning investors for the current quarter. the jeff bezos, his net worth is up. the stock is up 16%. neil it took 18 years but amazon has capped walmart in terms of market value but it has an infinitesimal part of the share. >> they had a strong inflection

quarter. revenues reaccelerated to 27% year over year. strong gross margins. one of the highest we've seen and really the profitability on the income side hit 4.6%. the highest since 2011. small in terms of total retail market share versus walmart, but we think in the next three years, for every dollar that's spent on e-commerce amazon will get about 20% of 245that. >> to think about when the company saw a 38 % rise in head count and a $1.4 billion impact from foreign exchange and cash and marketable securities went up by $6 billion. what do you attribute the bulk of that performance to? >> yeah. they're definitely investing in future growth areas but we like the fact that they're investing around their core retail business, aws and the

marketability. they're not investing in driverless cars and rocket ships. they're investing in prime. as they get more people to sign up, people are shopping more at amazon. >> fly wheel has been the buzz word. we heard jim cramer mention it several times last hour. where do you see this company going from here? is this a one- two-time olive branch or can they continue to operate at this level? >> they've been investing pretty heavily on driving shipping costs down and that's driving margins up. aws is one of the key jewels for amazon. this business itself is on about a $8 billion revenue run rate and contributed over 30% of amazon's total operating income. so a small piece of amazon's business but high margins and we think aws could potentially spin out and become its own business

and own company. >> i guess the only concern here is if you've been on the sidelines, is this move too much and what happens next looking at a 17% dip higher. it was one of the best consumer discretionary names of 2015 and how do you justify a valuation from here? >> it's not a cheap stock. but i think it's a good time to be in large cap internet and amazon is really inflecting in terms of revenue reacceleration. very few companies can say they've reaccelerated their revenue base growing almost 27% on a base of $23 billion of revenue. i think investors are hungry for growth. amazon is a place to find the growth. >> neil is there a large part of the valuation that is predicated far hoped for spin out of the aws unit? how much is that worth? >> in our valuation, we're not

accounting for a spin out of aws. that alone, we think could be worth billions and billions of dollars but we think from a core fundamental basis, amazon is currently trading around two times sales. we think there's room for multiple expansion. two and a half expansion gives you to a stock price where we think the stock has room to run in the next 12 months. >> we saw a hand full of analysts push their price beyond $700,000. what keeps you from going into that territory? >> we want to make sure that amazon continues to deliver profitability, and we now have two data points that starts to create a trend line. if they can show continued profitability into q 3, that could justify even greater opportunity for price expansion. >> well the guidance so far, neil looks good. we'll see what they can turn out

o. thanks to you this morning. >> thank you. >> amazon clearly the winner in the s&p 500 right now. it's broadly flat. the nad dak alsosdaq heading for a loss. earnings front and center along with a steep slide in commodities ahead of next week's fed meetings where should investors be focusing their attention? we have a cnbc contributor and a president at wells fargo. joe, we have to get your reaction to this disappointing home sales number. >> i'm going to push back because it's the one series that's been really weak. a lot of other things the permits, builder sent. pending home sales. the fact that banks are easing standards, it's all positive. new home sales, the government says there's about a 13% plus or minus monthly band on what's considered statistically significant.

anything plus or minus 8% is noise. this is probably the worst series the government produces. >> let's talk about the market action. amazon visa nice beats from earnings but it doesn't seem like enough plus a $50 billion health care deal to get investors in a better mood. why is that? is it global economic concerns? >> i think you hit it. certainly where thethe slow down in the global economy has been weighing on investors. you would have thought after greece was somewhat resolved, the cyclical sectors would have taken off. we actually think as you look into the back half of the year that investigators should tilt the portfolios more toward the cyclical sectors. you want companies that have pricing power and the ability to grow the top line in the back half of the year. the dispersion in this quarter's earnings numbers are starting to show us you look at the growth

of the health care sector and the decline of the energy sector, the dispersion of one sector to the other in dispersion. -- >> it's hard to get a real read on the consumer. amazon has to be the fastest growing retailer. what's your sense? >> when we talk about the equity market and the consumption. the things we measure retail sales are only 20 % of consumption. most of the consumptionsales are consumption consumption. the job market general ri speaking is pretty healthy. consumers should be okay. >> joe, china seems to be slowing and i'm curious as to how you measure that in terms of your macro outlook. >> we talked about this a few weeks ago. china is more important than greece but the u.s. is a

relatively closed economy. exports are only about 13% of u.s. gdp. u.s. exports to china are only 7% of exports. china is 1% of u.s. gdp. the indirect effects are probably help. . lower commoditity prices are tax cuts for house hold and businesses. we're still a big importer of energy despite the shale oil boom. >> but generally inflation certainly very tamed. does that say -- >> it certainly makes the fed's job more tricky and it's another reason why the fed can wait and delay hiking. it's like never a good time to go but on the positive side david, falling inflation, good job market means rising real incomes which is good for consumption. longer term good for the economy. >> i'm looking at the ten-year yield. the fed is going into a two-day meeting next week.

the bond market is not telling us they're expecting an imminent rate hike. >> i would agree. even after yellen's comments last week. again, whether it's settlement or december i don't know if that makes a lot of difference. it is important that the market is not pricing that in and i think could set itself up for a little bit of a surprise here. i know a lot of people are concerned and joe's comments are good about inflation. certainly the headline numbers have been ugly but when you look at core inflation, year over year it's running almost 1.8 pktd1.8% which is not that far away from the fed's 2% target. i still think they have the ammunition to do what they want to do. >> we'll see. they have a lot to talk about behind closed doors. we'll see if they drop any hints. thank you to you both. >> up next thanks to a revamped

menu and new digital initiatives, starbucks delivered a gain. hear what the company's coo had to say about the quarter ben "squawk on the street" comes right back. a powerful new dell 2-in-1 laptop and durable new stellar notebooks, so you're walking the halls with varsity level swagger. that's what we call that new gear feeling. you left this on the bus... get it at the place with the experts to get you the right gear. office depot officemax. gear up for school. gear up for great.

my name is jamir dixon and i'm a locate and mark fieldman for pg&e. most people in the community recognize the blue trucks as pg&e. my truck is something new... it's an 811 truck. when you call 811, i come out to your house and i mark out our gas lines and our electric lines to make sure that you don't hit them when you're digging. 811 is a free service. i'm passionate about it because every time i go on the street i think about my own kids. they're the reason that i want to protect our community and our environment, and if me driving a that truck means that somebody gets to go home safer, then i'll drive it every day of the week. together, we're building a better california. welcome back to "squawk on the street." we're in new york with details of the capital gains tax proposal that hillary clinton is

going to announce at the nyu school of business this afternoon. specifically, she wants to raise capital gains taxes for assets that are held for less than six years as a way of trying to encourage long-term investing to grow the economy. specifically, right now the top capital gains rate is 39.6. she would double that period to two years that would apply the ordinary income rate for those top bracket taxpayers. then you have a sliding scale that goes down in 4% points up to six years. if you hold the asset for six years or more you pay the current rate which is 20% plus the 3.8 % tax through the affordable care act. that's how hillary clinton is hoping to refocus investment. this is a plan that is backed by people like larry fink who we had a debate at delivering alpha last week with carl icahn, the

activist investors are trying to push for more rapid returns for investors. some in corporate america want a longer term view. that's what hillary clinton is trying to push. there are other proposals to do that. those will be rolled out and this is happening on a day where hillary clinton has seen headlines about the criminal referral for an e-mail investigation to the justice department about the handling of her e-mail. she's hoping that this speech will overtake those. we'll see how that develops later today. >> thanks very much. john reporting from new york. interesting. sliding scale on capital gains. shares of starbucks getting a boost today. the president and coo was on mad money last night and he had this to say about the third quarter. >> i think this was the strongest, most remarkable

quarter in the 23-year history of being a publicly traded company, and i think the growth we posted and the comps we posted, i think they all support the company. it's executing on all cylinders. >> new menu items and a strong digital strategy a major reason for the big beat. here's what he had to say about digital. >> what we're seeing how is about 20% of all tender in the u.s. is paid for through the digital experience. and now with mobile order and pay, we're seeing rapid adoption of the ability to order your food and beverage items from your mobile phone and have those paid for for pickup. in the next quarter, we're piloting delivery. the digital experience that we're evolving for our customers is every bit as important as the instore experience. >> coffee prices also i think have been going down but they've been raising prices. >> they raised a little bit last year. >> the mobile ordering and

payment system is a stand out here. a lot of fast food restaurants and nobody is moving this fast on technology as starbucks and they have it in 4,000 stores around the country. that was a stand out. the other one i thought was interesting was the strongest region for star bucks, asia. up 11%. >> jim said earlier china was strong and he said they may not be using iron oar but they're drinking a lot of coffee. >> exactly. they're capturing the chinese consumer. >> overall, same store sales up 7 %. there are a lot of companies that would kill for numbers like that. interestingly, when you talk about the mobile app, i would say starbucks is very good at loyalty and reward points. actually bringing you into the app and giving you a reason for not only doing your transactions through the app but coming back and being a repeat customer. >> does it increase throughput? do lines move faster and

everything else? >> have you been to the prototype store across the store. >> i have. >> the mobile stores people can order on their phone and just come pick it up. that's the next step. i think it says something that starbucks and amazon were two of the best discretionary stocks and both are reacting positively to earnings. >> and the price increases are expected to hit this month. we could see that in the current quarter but certainly a stellar quarter for starbucks. when we come back crude oil coming up. down 20% in the last month and it's at levels half what it was a year ago. is this the bottom or is there more downside to come? "squawk on the street" will be right back. it's a fact. kind of like shopping hungry equals overshopping.

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at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good? not being on this phone call sounds good. it's not muted. was that you jason? it was geoffrey! it was jason. it could've been brenda. watching the price of oil up a bit today but u.s. crude entered a bear market today. prices below $50 a barrel. trading as a 5 1/2 month low. let's bring in a strategist.

i guess what's different about this leg lower was it wasn't in isolation. we saw commodities across the board get hit including precious metals at multiyear lows. is that part of the story here? >> i think the driver behind that also is the sail windtail wind behind the u.s. dollar. and a lot of the uncertainty around oil production and supply growth. everybody is focussed on the iranian sanctions being lefted and there are estimates out there suggesting that we could see a third to a half a million barrels a day of additional production starting early next year. we're a little bit different. we're even more concerned. we expect a little bit more iranian oil to enter the market and we think oil in saudi arabia is going to remain flat. a lot of the issues we talked about, we think continue. >> i was looking at some of your recent forecasts. you were expecting lower oil

prices. were you expecting them to break $50 a barrel and if not, where does the target happen next? >> well the two things that surprised us i think we were directionally direct but the nag magnitude of the drop and when it fell. you could say the market tried to factor in the information as effectively as possible. the concern for us going forward is not necessarily incremental downside from here even though we think it is possible but i think the bigger concern is the duration of the downside or how long the trough lasts. >> yeah. people now talking about this longer period of oversupply. give us an update on u.s. production. we've seen these falling rig counts week after week and production remains steady. >> well, production remains steady for a couple reasons. number one, i think you've seen the economic incentive for the producers change. technology enhancements through

the drill bit have helped and also going horizontal has unlocked a vast hydrocarbon potential and we've been able to get more out of the ground quicker and cheaper. so the economic incentive in some areas like west and south texas is still there. even looking at the current commodity price environment. everybody really wants to see on second quarter conference calls, this discussion about decreasing production and a bottoming in production, and i think there's a big question mark there. we don't think this is a short-term correction or this is a problem where incrementally lower north american oil production fixes itself in three or six months. we think this might be a longer structural problem that might last into next year. >> what are we going to see in terms of the earnings quarter? another cycle of cost cuts and are these cash flows at risk? >> well i think cash flows are going to have to come down based

on come vumvolume declines. i think you'll continue to see producers and midstream providers try to trim variable extension. that's important. i think you'll see more focus on balance sheets. >> as you speak, wti crude goes negative again trading in the $48 a barrel range. thank you for joining us. >> stragd aheadight ahead amazon. and jeff bezos becoming the fifth richest person in the world. what is he doing right? more on amazon after the break. can it make a dentist appointment when my teeth are ready? ♪ ♪ can it tell the doctor how long you have to wear this thing? ♪ ♪ can it tell the flight attendant to please not wake me this time? ♪ ♪

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he's your news update at this hour. louisiana authorities have identified john russell houser 59 of alabama as the expected gunman who opened fire killing two and wounding nine others. he's been described as a drifter whose escape plan was thwarted by police. he killed himself. a major power outage at la guardia this morning. power went out at 4:30 this morning. a contractor accidentally cut to electric feeders.

ash carter making an unannounced visit. kurdish forces have emerged as one of the america's strongest forces in fighting isis. he met with a president. and police launching raids in 13 provinces against turkey detaining about 200 people. the office says it's determined to fight all terrorist groups without distinction. that's your news update thris hour. back to you. welcome back to "squawk on the street." shares of amazon up almost 16% this morning. the e commerce giant posting unexpected profit. it earned $0.19 a share for the quarter. sales boosted by web services and amazon prime, and the sales up 20%. the stock surge gives amazon a market value above that of walmart, and jeff bezos is about

$7 billion richer. that's just on the day. and joining us now, jim stewart. costs also jim, were less than had been anticipated. >> absolutely. >> and your clololumn deals with google's new ceo. she was embraced and the stock was because they were focussed on cost. same here. >> i think this is a trend. the cfos are becoming the new stars of the technology sector. i mean, when can you think of another name of a cfo from a silicon valley company that's a household name? not many. this is changing. ruth porat moving to google huge credibility on wall street but the symbolism, amazon has a relatively new cfo as well and the minute they use the word discipline, the lights go on. this is a language that wall street understands and loves. and they have never heard it

from the leaders of these companies before. suddenly that's coming in and then i think the s shows these companies are maturing and growing up and coming out of their adolescent phase. now they're picking people who understand the language of wall street and it's sending the message, guess what? we do care about what wall street thinks and we should. their biggest currency for their employees is the stock, and when you see the stock soar i'm an employee of google and my stock goes up 20 % in two days, i'm going to think twice about making the jump. >> it's a competitive market for talent. and these are controlled company able to focus on the long term, but your point is important. they need to compete for talent and getting the stock price up is a key part of it. >> the talent is something that didn't get as much attention. we tend to focus on numbers.

but i don't know that that 7 billion the important to jeff bezos as the $7 billion that is farther down the talent ranks. somebody who's going to stay who might have considered levering. >> the stock based compensation is eye popping and wall street has allow themd to strip it out last quarter. do you think the accounting for that needs to change? >> well it would be nice to see it including so you see the impact on it but it is -- you can figure it out. and i think that -- proof in the pudding is really the bottom line. and that's another reason why i think people are so excited about am don.azon. they've shown they actually can make a profit. i think the compensation thing, look it's incredibly competitive for talent out there. but i think it's one of the best

investments they can do. >> jim, amazon's market value passes that of walmart. they are just numbers but nonetheless, i think that is symbolically, an important moment. >> i was also thinking about the pace of change thanks to technology the fact that microsoft wrote off virtually the entire value of the nokia acquisition. this whole innovative destruction that's going on. walmart isn't going to be wiped but. but that entirely new technology can rise and surpass walmart with this speed is a breathe taking part of the culture today. >> i think there's something to be said for founder led companies. google, facebook amazon. i mean the ceos are the founders. and these are the companies that are driving growth not just discipline on costs. >> absolute lutely.

i think something people loved from ruth porat is she revenue and innovation are the most important, but you can have innovation and you can have some discipline on costs. they have do not have to be exclusive. there is a discipline and a strategy. there is a way of looking at return on capital that can make sense and support innovation and i think that is music to investor's ears. >> is that too lucrative a call for people at wall street. can they retain ceos -- >> well if a few years ago you told me there was a brain drain from wall street firms to silicon valley innovators i would have said you were out of your mind. now suddenly i think you're saying what i refer to as a

maturing of this industry and a recognition that their interests are aligned. i think we're going to see more of this. wall street people they have credibility with the wall street community and that's what silicon valley companies want. >> depends on who is looking for a cfo. air b and b, a lot of people were talking about the fact that they're raising around 25 billion and they were doing it without a cfo. uber has a bunch of former goldman sachs employees in-house. they're doing a lot of their financing via those employees. drop box went for a long time without a cfo as well. these companies were able to operate for a long time without it. >> and another one that went over to twitter. >> i think it's a golden edge for the cfo. >> jim j we've talked many times throughout the year about adult supervision at google. it's not as though this isn't the first time i've heard it.

there have been other cfos that have imposed discipline. do you think she's different? >> i think so. first of all she's from california originally. she's on the stanford world. she knows the world. she's not of that. she did not grow up in that and also she's 57. she has been around. she's seen a lot. i don't want to see she's old but she's in her prime. she's mature and i think that is a welcome edition. it's funny that when erik left he said no more adult super vision needed. but it touched on a raw nerve. the perception is unfair but occasionally bjorn outorn out that leaders can be a little bit reckless and they don't care about wall street. i think she brings reassuring balance. >> jim, thanks for being here. >> jim stuart. >> have a good weekend, jim.

coming up biogen stock is tumbling today. it is down almost 17%. almost as much as amazon is up. the company missing sales expectations, cutting the outlook as well. is there something in the pipeline to give investors hope? we'll discuss. and later on squawk alley an exclusive with the ceo of youtube. hear what she has to say about keeping up with the competition. we'll be right back with "squawk on the street." but to get from the old way to the new you'll need the right it infrastructure. from a partner who knows how to make your enterprise more agile, borderless and secure. hp helps business move on all the possibilities of today. and stay ready for everything that is still to come.

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around this morning. take a look at shares of stan corp. financial. the stock up a whopping 48%. on this after japan's third life life insurance said it would buy the company. they will buy the oregon-based snuner insurer at a 50% price premium. >> meanwhile shares of biogen getting slammed today. we are look at hq with the details. >> reporter: it's a really rough morning for biogen. following a rough earlier week when they reported data on the alzheimer's drug but coming in ahead of estimates today. they missed on revenue. at $2.6 billion for the quarter versus estimates of $2.7 billion. they lowered their full year guidance. growth at 7% to 8%.

compared to the forecast of 12% to 14%. that comes as growth is slower for the big multiple sclerosis drug. it was growing quickly but they're saying a safety issue with the drug this rare brain infection that they saw with another drug may be spooking some doctors and switching their patients over to oral therapies. they're also running into pricing and reimbursement troubles in europe. so at love questions on the call about where growth is going to come in and pressure mounting about m&a. biogen says they're going to cut costs and still reinvest in their pipeline. >> not doing much for the stock. down 17%. worst performer on the s&p. let's go to chicago with rick

santelli. >> good morning. scary. i'd like to welcome mitch. it's always good especially when you're in person. all right. you know, i still remember all the issues regarding the last election, gm delphi auto parts and one of the reasons that these companies have made it and i'm oversimplifying, is that they shed a lot of legacy costs. instead of servicing the generations in the rear-view mirror they have to take care of today. is that applicable in chicago and illinois. >> absolutely. we need to look at pension costs. instead, what the governor and the mayor want to do is raise taxes. who wants to come to illinois when taxes are going up. the progressives want to hike the income tax and there was a study that said property taxes need to go up by 50%. who can afford that.

>> let's forget the percentages and say i'm somebody who lives outside of chicago. it's a great city. you decide maybe you want to move here and you don't even mind paying high taxes. i'm going to get new infrastructure and great city services but that's not what the high taxes are going for, are they? >> 90% of property taxes are going straight in to pensions. they're not going to support the schools. they're not going to support roads. they're not going to support anything but existing legacy issues. >> when we talk about, and this is a hot button word. redistribution. if there's redistribution on a federal level and people vote for people that like it that's their prerogative. it's a free country but you can't escape that on a federal level, right? but when it comes to the city of chicago, if they're redistributing to pay for previous obligations versus new infrastructure and new services happy feet can elude this whole

issue. >> they can't. the city can't restructure because the state of illinois unlike california does not allow municipalities to go bankrupt. >> let me stop you. viewers, when you were here last, you said they needed to address its. >> they have not. and look at all the other problems. >> since you were on last they didn't address that and then other things. >> there's still no teacher's union contract. and no budget for the state of illinois. illinois is 4 billion in the hole. and the teacher's union borrowed $1 billion to fund pension plans. meanwhile chicago pension plans are come $27 billion in the hole and to support the ongoing teacher's budget, someone hatched a plan to borrow half a billion dollars of that back to

fund ongoing needs, and people wonder why big is going deeper into junk status. >> next time you get out, we're getting a table, a ping-pong ball, and we're going to play chicago, illinois politics. thanks for taking the time today. >> pleasure to be on. >> thanks so much. up next, air b and b wants to change the world of business travel. about a biologic this is humira. this is humira helping to relieve my pain and protect my joints from further damage. this is humira helping me reach for more. doctors have been prescribing humira for more than 10 years. humira works for many adults. it targets and helps to block a specific source of inflammation that contrubutes to ra symptoms. humira can lower your ability to fight infections, including tuberculosis. serious, sometimes fatal infections and cancers including lymphoma have happened, as have blood

liver and nervous system problems, serious allergic reactions and new or worsening heart failure. before treatment get tested for tb. tell your doctor if you've been to areas where certain fungal infections are common, and if you've had tb hepatitis b, are prone to infections, or have flu-like symptoms or sores. don't start humira if you have an infection. talk to your doctor and visit humira.com this is humira at work. when you're not confident your company's data is secure the possibility of a breach can quickly become the only thing you think about. that's where at&t can help. at at&t we monitor our network traffic so we can see things others can't. mitigating risks across your business. leaving you free to focus on what matters most.

welcome back to "squawk on the street." i'm phil lebeau with breaking news from fiat chrysler. the company is recalling 1.4 million vehicles in the united states to do with the software that needs to be updated in vehicles built between 2013-2015. on monday there was a report in "wired" magazine a couple of hackers showed in how they could get in through the you-connect radio system and remotely control the vehicle. and after that fiat chrysler said we're going to do a software fix. they're formalizing it by announcing a recall of 1.4 million vehicles. no vehicles have been known aside from that the one report

no known to be hacked because of this software problem. but fiat chrysler is formalizing that it is going forward with that software fix that it announced on wednesday. again, 1.4 million vehicles. they will have updated software installed in them. guys, back to you. >> looks like the stock moving a bit lower on the news. thank you. airbnb announcing a major expansion of the business travel initiative. it is now expanding the service with a centralized expenses and booking system for employees and hr managers. mark mccabe leads business travel for airbnb thanks for joining us. >> good morning. thanks for having me. >> talk us through what the new plan does. how you're going straight to hr departments to steal these business travelers. >> yeah absolutely. well we think airbnb is an incredible solution for business travel. whether you're looking for extra

space or maybe a kitchen 0or a washer/dryer, place to wash your clothes while you're on the go. people are using it for extended trips, group travel. so we want to provide tools that are going to make it easier for businesses to manage. >> i know you said you've signed up 250 companies, i find it hard maybe with new york with the corporate environment here to see business travelers staying at strangers' apartments. why is this a good solution? >> well you know business trips are the trips you have to take. not necessarily the ones you want to take all the time. this gives people a way to make the most of the trip and have an exciting experience. if you're going to singapore for the first time you want to have a truly authentic experience regardless of whether you're traveling on business or leisure. we offer these travelers the opportunity to do that now. >> you but also need an assurance that you are not going to run into an unsavory situation, i know they are on

your platform they are still a risk. recently i was traveling in europe for work. the town we were in were all sold out of hotels we considered an airbnb but we thought we can't afford for anything to go wrong. we waited for a hotel to open up. i'm wondering what kind of assurance you give to business travelers like myself who has concerns. >> we have 1.5 million hosts all over the world. who are providing incredible experiences for 40 million guests so far. they're very good at what they do, and people who have used our product and are familiar with it, know they can rely on it for business as well. >> how do you compete with the point system? a lot of business travelers go to marriott or a hilton or starwood because they get the points and they don't have to pay for it. >> absolutely. you know i think that that's an important thing for road warriors, not necessarily for every traveler. some travelers going for three-week stints, they need to have a bit more space and some of the amenities of the home.

in those situations there's a trade-off. but they use airbnb and have incredible experiences. >> what percent of the overall business are you getting from corporate clients? and where do you want that share to be? right now, about 10% of all travelers in airbnb are traveling for business. we're looking to grow that right now. and this tool set, which is on airbnb.com business is the first step in that. exciting that businesses large and small from google down to sound cloud are getting a lot of utility out of it. >> on what end of the spectrum are you seeing the most uptake for the business traveler offering? small businesses large businesses? >> it's a blend right now. i think it's more about the type of travel you take. and you know whether you have a lot of team travel. people collaborating and working in spacesing too. more depends on the type of travel that the companies are

doing. any company that travels can offer this and have extra options, extra inventory and access to our incredible hosts all over the globe. >> just in terms of cost. what's the difference between let's say a corporate, if they get some sort of deal if you go to their hr department however does it save them on the expense side to go with abnb versus a big hotel? >> it's hard to compare. it's not really apples to apples you get more space in some of the amenities of home. sometimes it can be more affordable. we see that a lot of the businesses we work with save money by using airbnb. >> thank you very much for joining us to talk about it. mark mccabe of airbnb who leads the corporate travel section. coming up a ceo of youtube who will weigh in on competition from facebook and the future of original content. it's a fact. kind of like shopping hungry equals overshopping.

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a. good morning, it is 78:00 a.m. at amazon headquarters in seattle, washington. 11:00 a.m. here on wall street and "squawk alley" is live. ♪ ♪ ♪

♪ ♪ good friday morning, carl is out today, joining us from san francisco is our own jon fortt who has been there all week. joining me for the hour at post 9, david faber pulling extra duty on a friday afternoon. we start with what else but amazon shares continuing to soar after the company posted a profit. and gave upbeat guidance for the current quarter, revenue rising 20% helped by strength in web services and amazon prime. the company's market cap surpassing that of walmart. it's been a good year for amazon shares up about 80% in 2015. jon fortt, the company has been telling us for over a decade it