♪ ♪ >> welcome to "squawk alley" for a tuesday. managing editor ed lees. john fort, kayla are back. all is well with the world. markets doing okay here. s&p 20-20 is the level that we're going to keep our eye on for sure.

it officially announced -- jack dorsey writing in a letter to an employee saying "it isn't easy, but it is right. the world needs a strong twitter, and this is another step to get there." >> it's hard to get engineers. a lot of up and coming companies, a lot of fast-growing start-ups, they'll hire ennears like a land grab for talent. that's how you get in these situations. if you don't make use of them in the proper way, then you are just bloated and fat, right? >> at what point do you look at the head count and you say this is our productive head count and the less productive head count.

would you argue that twitter hasn't been doing that for the last few years? >> i would. >> we haven't seen too many products coming out of their shop. we're all on twitter and active will he engaged with it, but, you know, it hasn't changed all that much where. see that. given the amount of talent and gin the amount of staff that they had, they should have been pumping out a lot more things. >> it's not just the amount of product they're pumping out from my perspective. i remember weeks ago on this program we were talking about the danger of growing revenue and some of those core metrics. i think they sort of run into that danger. maybe they need to retrench and have fewer people. when people do layoffs and revenues are growing, that looks bad, but in this case i think they have eventually those revenues will hit a wall if they don't grow core mau's and some of those core metrics at the

same time. >> does it mean that mau's are following or rising in tan dem with that, or is it pricing or ad load? is it something else? >> or what you are getting per user. the user growth is flattening or slowing down. >> if you are on twitter, you are seeing more ads. they have have to monotize it. >> next up, speaking of twitter, the social network suspended accounts for two prominent sports web sites last night. did spin and sb nation. this comes after the nfl complaint that those accounts were showing game video and highlights that violated copyrights. for years the companies have embedded clips from live sports, but this is the first time in a while that major ones have been taken down. we should note that -- also a sister site of read code both owned by box media. i love these things.

i understand watch any game, and they say rebroadcast without express written consent of the nfl is a no no. >> espn really started on that. espn was highlight reels and it still is. it attracted a big audience. now there's twiter and facebook essentially filling that role. >> that's understandable that they are saying hey stop. this is the fefrt they've acted on it in a significant way. we're going to see there's going to be more formalized relationships coming down. you'll have to see that happening more. >> there's not a lot of down side here in the league cracking down on this sort of thing. i think you have to wonder if

this was going to happen eventually. they pushed it as far as they could. >> the nfl has a direct line into twitter. anthony is the former cfo of the nfl. now, of course, the rfo of twitter. it is interesting because we have this conversation about what happens to copyrights, how you go through the trial and error of this process. he said it's early. we're learning as we go. we think twitter is a company that we're learning as we go. we don't have express rules for what our users can share. there are -- we have the youtube example. youtube for years has this issue, and they've created a whole system to take down when one violates copyright. i think twitter and now facebook are entering that realm for having to figure it out as they go along, as they said, but, you know, these content owners, they're, like, look, we've again going through this with youtube. there's a model. use that. you have the technology. you might as well enjoy it. >> the timing, i mean, coinciding with dorsey being

named permanent and moments which is heavily video sent rick. >> it's very video sent riccent. >> according to him, we are in a golden age of television. take a listen. >> are we spreading those too thin? probably. at the same time i think we are in the gloelden age of television in that every person in america could pick out ten great shows that they watch often. >> one of my favorite lines from him this morning is he says people don't know that the big bang they're where i is on cbs or that "scandal" is on abc. the brand of network as we used to think of them is gone. it's now the content that's the

brand. >> it's been separated out and unbundled from the network in a lot of ways. we have digital now. just want the show. you don't remember where it came from originally. >> in some cases netflix, hbo, show time to some extent, those are networks where the brand has become important. arguably because of how they ino vated and the types of content that are pushing out that are different than what came before and the way that is they are embracing digital. that probably sends a message to the old guard if you want your network brand to move something innovation and content, innovation and technology. >> networks, friend and foe to these networks. he said god bless netflix. they've given up $2 billion in revenue in the last few years, but they are still a competitor. does that line get canceled out? >> he can say that because cbs ratings are still doing pretty well. if you look at a place like viacom, their ratings are hurt spshgs a lot of it is they've been selling stuff to netflix. it depends which side of that you are on. your ratings are hurting, and you are not fond of netflix. if they are doing well, then great, extra money for me.

>> all three agreed that cable, broadcast over the top, words like that, are going to disappear as essentially we all drink from the same internet pipe, whatever that looks like. >> right now the challenge is going to be for consumers and for the people providing it, whether it's netflix or a cbs for that matter, can it -- is it visible? can they find it if it happens? if i'm making a content that they like, i want to make sure that they can find it, and that's going to be the next thing for these guys to figure out. >> good to see you. >> yes, thank you. >> getting word that shares of fortress, fig, halted for news pending. of course, it comes after some headlines that they did have to shut a $2 billion macrohedge fund. last indicated 543. >> thanks, carl. in the meantime, let's get a check in on the markets. a decided turn for the dow, which was down as much as 97 points earlier in the session. now it is positive by 30. s&p and nasdaq positive as well.

the nasdaq is in the green. up more than one-third of a percent. meantime, shares of jetblue falling after getting downgraded overweight at jp morgan. currently down nearly 7%. >> $104 billion. it's the filth biggest merger ever. the stocks seeing a nice gain on the move this morning. ab inbev up 2 1/3%. we wonder whether we're getting a little topee. david faber says we are. people on twitter say wait until sales force gets bought. maybe that will be the top. >> david said there could be more to come. we'll keep our eye on that. linkedin co-founder reed hoffman on regulating the internet. plus, vm ware falling again as

shareholders trying to figure out what the dell-emc deal means for that company. we'll talk to the company of vm wear to get answers. this company is being called the netflix of india, but it has one major advantage over its u.s. counterpart. the ceo range the opening bell today, and we'll explain. don't go away.

once again, shares of fortress investment group halted for news pending.

the last indication there right around 5:45. we'll get you an update on that. in the meantime, s&p 2021 is right at the level we last saw on the fed day in september at a level that found firm resist wrans. we'll see what the day ahead brings. >> yes, indeed. meanwhile, another rough day for vm wear stock. still falling on the heels of that $67 billion deal between dell and emc majority owner of vm ware even though the deal is expected to go through. it could leave vmware and its shareholders in limbo. patrick is the ceo of vmware. always great to see you, pat. >> good morning, john. great to see you as well. thank you. >> let's dive in. from where vmware fits in this dell-emc potential deal that's evolving, it looks like you're being used as an atm to help fund this deal. like there are going to be a lot more owners of the stock who may or may not want it and won't have voting power, and investors

seem to be bummed out by that prospect. is there a different narrative that you can tell about this? >> you know, obviously to us the deal is about growth and having dell and emc come together in a larger entity, you know, accelerating the growth, we think this is a huge opportunity for us in the mid and long-term. obviously a deal of this magnitude, john, there's volatility around it. there's questions around how that will work, but ultimately we see that increased liquidity of vmware in the marketplace will be a good thing. allowing us to attract a much broader set of shareholders over time, but as we move past this period of volatility, the growth starts to become very apparent in the marketplace. you know, we believe ultimately it will be a very good thing for the market for vmware, for our employees and customers in the medium and long-term. we're xwit excited about it. >> when did you hear about this deal? what concerns or hopes did you raise about it? >> yeah. this discussion has been going

on for about four months, and i became part of the conversations pretty early on, john, and as we began to work on it, it was very much how can we drive the growth of vmware? michael and joe are highly committed to gmware being the crown jewel as they describe it in the family, and that really is seeing that growth potential, and you might have heard as we described on the call yesterday, john that, we expect that we can drive over the next few years $1 billion of additional growth to vmware across all of the business areas, across for data center, business, across our cloud business, our end user, computing business, and it's the sales engine that dell brings to the table. we're quite excited to see you motivated accelerating our growth. >> patrick, if it really is the crowned jewel and you're expecting a reacceleration in licensing revenue, and you're going to stop losing customers to amazon, why wouldn't they want all of you? >> obviously being able to keep that public entity in the marketplace is to them a huge

activity to drive growth. the dell-emc combination focused on cash flow, the vmware entity focused on growth, and, you know, clearly not a consolidation, not a spin-out. it's the benefits of both worlds as we described it. michael, joe, very committed to continuing to deliver that presenting that independent ecosystem into the marketplace, that growth potential for a shareholder, and really having the crowned jewel being front and center to the deal long-term. >> would you say, patrick, that investors who have taken some $5 billion off your market cap in just the last week are misunderstanding something about the structure or the strategy going forward? >> well, clearly there's a lot of short-term, you know, short trading that's going on that's driving this volatility. you know, this is the biggest ever tech deal in history. that volatility isn't entirely unexpected. we think as we get past that, people understand the mechanisms that are being laid out with the

tracking stock. how is t will one for one match the underlying equity of vmwear. we believe that trading could be very small between them over time. ultimately, it will be about the growth potential as presented to the marketplace. this is sort of sprung on the marketplace very quickly as the deal complete just sunday morning and now as we present it to the marketplace go on a road show, explain the value, we're quite confident in the longer term picture that we'll be able to present and get people quite excited about that and the market as well. >> pat, i keep hearing anecdotally that vmware are increasingly coming under pressure from open source virtualization providers. there's word out there that apple might be moving away from vmware to adopt an open source option. what is your message to your customers who are used to vmware meaning virtualization writ large who might be considering other options? why are they going to stick with

you in growth here? >> well, vmware -- many things have been challenging us over the decade and a half of our history, john, and we successfully have been finding ways to continue to ino vat and continue to embrace those new technologies. our open stack offering in the marketplace is being very successful. we just announced our container offering in the marketplace called photon. that's gotten very good response from the marketplace. as these new technologies, some of them open, some of them closed emerge, we're embracing them and being able to present them to our customers in a rock hard enterprise solution into the marketplace. it's not about those threats hurting us. it's about us embracing those threats and expanding the value proposition to our customers who are navigating those challenges well and we're excited about them. >> all right. well, certainly a lot of change for you to navigate. both structurally and technology-wise. pat, ceo of vmware.

thanks for joining us. sfroo all right. coming up, make sure you stay tuned. an exclusive interview with linkedin co-founder reid hoffman coming up a little later on this hour. jp morgan picking on black bear in its latest round of cost cuts. we'll explain in just a moment.

welcome back. jp morgan's latest round of cost cuts is going after blackberry. according to the "wall street journal", the company may eliminate support for blackberry devices next year and mandate some employees pay for their own devices. blackberry's clients still include some of the largest banks in the world along with many top government agencies, but it continues to see concede ground to apple. it's unclear what percentage blackberry work force still has a blackberry. in this byod world, many have shifted. it is still interesting that for a company that touts its enterprise client base, that

this is a cost cut that's even on the table. >> blackberry -- >> stronger with ios. having a client base among those. you know, a lot of the banks have shifted to iphones away from blackberries and now john chen and blackberry has an opportunity with good technology. >> plus, we'll gate closer look at somewhere p morgan's costs overall at earnings after the bell this morning. they already axed some employees' voice fail mail lines earlier this year. we'll see exactly what the cost picture looks like. >> tonight is going to be interesting. for some other big names chshgs we'll talk about in a bit. in the meantime, europe is about to close in about six minutes. simon is here at post-nine with red arrows. >> it's noticeable that european markets have reacting to a sense of the data that we got overnight. the dpat data in europe isn't

great. you got u.k. inflation unexpectedly dipping below zero. investor confidence finally getting hid. it's china that seems to have gone down. i mean, big deal is coming through. fa miller, of course, is a yes to that take-out offer from inbev. i wanted show you a two-year hart. it's true to say that as the acquireee, you have seen them jump 35% since the deal came through. the long-term performance of ab inev, and remember that's a cash offer, it's clearly shown over twot-year chart. in the meantime, the u.k. has managed to execute on its biggest ipo so far this year. world pay, which processes arched 30 million transactions a year -- a day, forgive me, in both the u.k. and also in the united states has managed to rise to a valuation of just

above $8 billion overall, and a lot of conversation about the fact that swred stanley, who ran jp morgan's investment bank, according to so many reports now is about to become the ceo of barclay's. >> it's an american investment banker that's run down the investment bank, or is it -- does it signal a u-turn from where we are. >> faebl the u.k. supermarket up into tesco. this may be followed through from the announcement that they have going to have a price match. >> i kind of got through that.

>> when we come back, one-on-one with the co-founder of linkedin. reid hoffman is with us in a cnbc exclusive. quack squawk alley will be right back. opinions. there's no shortage in this world. who do you trust? whose analysis is accurate? how do you make sense of it all? a simple, unbiased stock score consolidated from the opinions of independent analysts... is that too much to ask? nope. equity summary score, powered by starmine, will help you execute your ideas with speed and conviction. and it's only on fidelity.com. open an account and find more of the expertise you need to be a better investor.

good morning, everyone. i'm sue herrera. here's your cnbc news update at this hour.

at least 13 people, including at least six children were killed and several others injured following a landslide in the southern pakistani city of karachi. witness saz some of the victims are still buried under the rubble as rescue work continues. a palestinian astabbing an israeli man on a busy street in the city north of tel aviv. the man was moderately injured, but the attacker was apprehended and beaten before he also was taken to the hospital. amtrak now allows pets on select trains along the northeast corridor. travellers can take either a dog or a cat in a carrier on regional trains between six cities including new york, washington, and baltimore. only five pets are allowed per train, so reservations are going to be made on the first come first serve basis. comedian tracy morgan back on the stage for the first time since he was seriously injured in a car crash 16 months ago. he tweeted that photo of himself at the comedy seller at new york city last night. he will host saturday night live

on nbc this weekend. it will be great to have him back. that's our cnbc news update. back to squawk alley and carl. >> thanks so much, sue. tech companies like appear zon, uber, and facebook are meeting in menlo park with the internet association today. our julia borstein is live on stage with reid hoffman. julia, good morning. >> good morning, and thanks so much to you guys there in "squawk alley." thank you for joining us today. >> my pleasure. >> here in silicon valley there's been a lot of debate recently about the valuation of private companies. we talked about this several times in the past six months. what's your outlook right now on whether or not there's a bubble? >> it's only slightly more advanced than when we last talked. it's an internet work world. some companies grow at amazing speeds creating amazing businesses, and those companies in retrospect always look cheap. whatever price you invest in. what happens, of course, is many companies are essentially valued at that level, and that's when

you have what you look at as overinflation. that being said, generally speaking we're being very cautious. there are so many companies being valued at that level, with uncertain -- whether or not they will actually include a benefit from the kind of network economy as a way of doing this. we, you know, were being extremely -- >> it sounds like you are more cautious now about when we spoke, say, in april? >> yes. >> what's your opinion about the ipo market and how is that impacting your decision? >> generally speaking, most venture investments you are making five to ten years before liquidity. sometimes you do it a couple of years in advance. most of the time it's so long they actually, in fact -- it's misleading to be taking the current ipo market as an indicator for what kind of investment you should be making. >> but what about your investment that is are further along? are you concerned about the opportunity to exit by going public? >> well, generally speaking, the

strategy that we do and i do is build transformative companies that will transform industries, and which year it goes out doesn't actually matter. it's more a question of is it sustaining? it's a very long time and has an impact on the community. graylock is in its 50th year this year. when you have that long of a history with your lp's, people have a lot of patience in terms of seeing results. >> so what types of companies are you most interested in investing in right now? i know you have two bit coin companies. you have invested in air b&b. are you interested in investing in the sharing economy companies? >> anything that's a network, either communications or coordination or marketplace transactions, so marketplace is in some sense a form of network,

that can scale to millions or hundreds of millions of people. those things fundamentally interest me. those are part of what transform our economy and also our society. those are what i can proactively look for. the other thing frequently in investing is something that's really bold, new, and contrarian. i'm always a little cautious about what i say and you are only looking for those and not for other are aedicly new thing. >> any new investments in companies that we should be looking out for that represent some of the new trends that you are watching? >> i have. unfortunately, they're stealth. >> when are you ready to tell us. what with artificial intelligence? >> one of the things that a lot of folks in silicon valley have been thinking about, and i think they're right that it's an interesting area. applications from driverless cars to transforming medicine, to, you know, helping in financial markets, is essentially a new way of machine learning artificial intelligence. frequently people talk about this as generalized artificial

intelligence. you think an independent robot and these kind of things. that's interesting. i think that's still a ways off. i think what's more interesting is i think we will see more and more specific kinds of applications of artificial intelligence. like one of the ones i'm most interested in, the tri-quarter, an ai for diagnosing disease and other human ailment better than your average c doctor, which you can see coming. it's visible. >> elam musk is concerned about art michelle intelligence. where do you come down? >> well, so hopefully this is the intelligence of both perspectives. i think it's rationally smart to be concerned, and i think it's also a great opportunity. it's worthy of a lot of attention in order to essentially steer it to a very positive result. >> i want to ask you in china. i know you have traveled there often. linkedin has been expabding there and seems optimistic about the potential in china. what's your outlook? >> so china is always the largest market of professionals

in the world. in order to succeed in global professional network, it's critical to also succeed in china, and a lot of china's cross border trade too and that sort of thing. global network is extremely important. there's a lot of things that accrue positively from a global network. sharing business information, kind of best practices, how do you grow companies, you know, kind of like what sorts of technology trend should you pay attention to in transforming industries. we're very optimistic, but it's very early days. you know, ten million people is tiny. right? and -- >> apple shut down its news application in china. how problematic is government sensorship and regulation there? >> i don't actually know much in this story on the apple news thing. he saw the headline too, and i haven't actually read or dug into it all. you know, i think it's important that you always fit the culture of the local market.

i mean, people always talk about china as sensorship, but the sensorship in every country. you know, france and nazis and all that. it's a pattern of what is acceptable content in a number of different countries. for business content and information, it's not challenging. >> you're not concerned there. here, of course, with the internet association day, the big topic is regulatory issues. what do you think the biggest regulatory issues are that are facing growth in the internet industry. is it the categorization of workers as uber as contractors versus employees? >> so i would say the biggest issue in terms of the global scale is the possible threat of fragmentation of the internet, and i think it's extremely important the u.s., you know, do such things in a format to say, look, for example, europeans have key privacy and other kinds of protection under u.s. law

just like u.s. citizens. i think that's important in order to have a global internet. i think that's probably most. i do think it's also relevant to say that we're going to have the internet creates all kinds of massive increases in productivity by rearranging how work can be done, what kind of services can be done. that will obviously transform a number of different jobs. it creates new ones as well. hopefully it creates substantially new ones. that's -- there's always uncertainty in transmission. >> we have a live tv interview here. thank you very much. back to you. >> a good amount of time. thank you very much, julia borestein there. we get to kate kelly. live on these factors and headlines. kate. >> that's right, carl. the stock has been halted for a little while now pending news and they have just put out an announcement to say they're announcing the closure of the

fortress macrofund. a lot of talk about this in the last 24 hours. this is a fund originally founded in an earlier version in 2002. >> he will retire by year's end, and it also says the repurchase of shares at a price of $4.50 will reduce the dividend paying share count by 13% related to all of this. three important components there. confirmation that a key fund is closing. mike novogratz to retire at year's end, and one can assume the terms of that departure are affecting the dividend of the company. we're likely to see a strong reaction in the market i would guess, carl. >> let's bring in our own eric.

we're going talk about a number of things, but, first of all, eric, you used to work at fortress. what's your reaction to these headlines we're seeing out of that? >> well, it's a sad day for someone like me because i used to work there and i used to sit right next to mike where are i know a lot of the people there that will end up losing their jobs. that's a tricky thing for me to talk about. the clais place there was the smartest people i ever worked with. these guys are really on the ball. they didn't put up with bad performance. it's not surprising that when you are down 17% after being down a little bit last year, your high water mark is so far away, they were maybe never going to get that number back. >> it wouldn't be surprising if he comes back as a financial sector that we've been seeing him in the last 20 years. >> we have seen some executive movement at fortress. of course, wes the ceo. now he is the co-chairman of the

board. fwloo it was a private equity firm. there was a liquid macrofund, and then there was pete's business, which is a specialty distress debt type of business. >> the stock will probably be fine in the long run because of this. >> eric, we brought you in to talk about. you can talk about anything. our thanks to you. eric, discussing fortress and the headlines there. kate kelly has a little more of a -- on fortress as well.

kate. >> hey, thanks so much, carl. i want to is add language from the press release from principals of the company, including mike novogratz. co-chairman and the ceo saying we are obviously disappointed in this outcome. we are grateful for mike's many contributions. while we regret lowsing a fund that has been productive in the past, we also recognize the market's reluctance to ascribe value to this strategy, even in its best years. that's a very strong statement about the market's attitude towards macro investigating. it includes currencies, commodities, equities, and bonds. what apparently really hurt this fund in weeks and months was a set of bets they made on brazil on both the royal and the rates and the big low that was hit on september 23rd was very damaging for the fund. they really couldn't recover from that. finally, a couple words from mike novogratz here talking about the closure of the fund. this was a difficult decision given my confidence in both the research positions we hold and

the talent of our team. we have had an extremely challenging two years. i do not believe the current environment is conducive to achieving our best results. there, again, that's a strong statement on the macrotrading environment right now. >> we do have some sound of novogratz discussing brazil. let's take a quick listen to that. >> the story in brazil has gotten so bad brazil is entering a recession. we're kind of making a bold call that, you know, dilma is going to lose the election come october. the alternative has already pledged to make our -- as finance minister a reform agenda again. i think the bet there is stay long brazilian equities and brazilian interest rates.

the central bank and the rate hike cycle will start cutting rates again, and as the polls shift to dilma losing, i think big chance you continue to see outperformance in the brazilian asset markets, even in a time when their economy is gone to hell in a hand basket. >> wow. those comments from july at delivering alpha. it really does bring into sharp relief just how tough september has been. ever since we started to get real movements in currencies and rates in emerging markets. >> carl, absolutely. i'm glad we played that clip because that is a case in point of the type of issue that mike novogratz has had in the last couple of years. particularly, i don't know if we have a chart handy, but if you take a look at it from that july period where he made those remarks until now, it's been a downward trajectory. he got it exactly wrong on that. he was bullish on chinese equities back in may right before we saw them take a huge tumble. he was predicting a rate hike in

september. people make bad calls all the time and they move beyond it, but it's been a very difficult run for him with a series of wrong way trades and the brazil trade, i they, was the most recent issue that they just couldn't get over. in some ways i think that those at hedge funds and on the street, this is not a huge surprise, but it is a significant and symbolic move both for the industry and for fortress. >> we'll certainly when you are dealing -- it's not a coincidence we're talking about a macrofund, kate. in a macro strategy you have to make fewer calls, but a lot of them are just outsized because of the importance. it's like taking a college course where the entire grade is based on two tests. >> well, and the volatility right now, carl, in emerging markets, in commodities, it's just astonishing. i mean, you know, the "wall street journal" had a great story today about andy hall, the oil bull, who i believe is down 20% year-to-date, and he has lost about a billion off his aum as a result of that. you know, the old adage, the market can stay irrationale longer than you can stay

solvent, that may be very relevant for some of the hedge fund managers this year, and i'm hearing other rumblings of competitors to the fortress macrofund that are having issues too. if you look at hedge fund reports as sort of the bottom ten performers, you see a lot of commodity players at the very top of that list as well as some of the macroplayers too. >> all right. great reporting and great insight, kate kelly. thanks so much. zirnkts coming up, shares of intel in the green as the company gets ready to report after the bell. a lowers look at what to expect. we'll be right back.

coming up on the halftime show, will a flurry of earnings in just hours keep the rally going? we'll stop stocks in their tracks. we have an exclusive interview with gm ceo mary barra. can sales keep running on all cylinders as global growth stalls, and our all-star analyst week continues today. the top name in gaming gives you the stock you should be betting on. carl, we'll see you in about ten minutes or so. sounds good, scott. thank you very much. fortress has reopened. fig. you can see over here one of the posts, the last before the halt was 5:45. up just a touch. this is going to be a 4% gain on the day as they close their macrofund saying while we're obviously disappointed in the outcome and we're grateful for mike novogratz's many contributions, we're regretful to closes a fund that's been product i in the past. you got any more on this?

>> i think the key here is really what it tells us about the macrotrading environment right now, and, again, at a time when there are a lot of dislocations and you would think there are a lot of interesting opportunities. i mean, you look at others who manage money. mary ernest from vp morgan asset management. she's at this conference i'm at right now. she thinks that the unwinding that may occur as a result of deceleration in hooin and the stock market setbacks in china could provide a terrific opportunity to take advantage and do opportunistic investing around the world. >> you don't have the resistance levels and the ceilings that you have on the technical side with

a lot of stocks in commodities. i mean, people might disagree with me, but i this i that the down side potential is sometimes greater with these macrostrategies. >> although, kate, you mentioned mary saying that they might be opportunistic about chinese equities, but that's different than making a major long chinese equity bet. the fortress press release uses the word reluctance. i'm wonder if anything you think we will see some of the funds being much more reluctant to take big bets given this environment? >> i think that's certainly possible, but you have to have a view, right, kayla? you have to have a thesis on u.s. equities and emerging markets and, you know, you don't have to play it every single sphere, but that's sort of the nature of it. i guess it depends how much leverage you're using. those are key issues as well. >> thank you for being there on this. our kate kelly on the news out of fortress today. dow, meantime, los to the flat line. s&p 2017. let's get to santelli and get the santelli exchange.

rick. >> good morning, carl. you know, i want to stick with this topic for a minute. when you look at fortress, and you consider all the volatility we have in the markets, a couple of things should jump out at everybody. first is, the free market with regard to hedge funds and profitability takes no prisoners. only the healthiest survive. keep in mind, there were many years post-2009 where easy money policies as they spread around the globe made the job of trading a little easier. it's easy to pick a horse in the race when they're all running record times because they're juiced up. now is more dicey, but the system works. we should emulate on how the hedge funds sink or swim in all industries. let's look at something. overseas, we see that obviously europe has issues. not that some of them haven't corrected themselves over the years.

now let's go to a year-to-date of ten year. you can clearly see, and this is fascinating. outside of that whole move in april, since the end of april, we've only had two tests, two tests, of 2%.

>> traders tell me there's a lot of issues that move rates, but you want to continue to monitor the european curve. why? because it is making it very difficult to keep the market under 2%. the spread tells you that, but should we start to trade above the top of the range around 70 basis points, all bets are off. it dragged us down in terms of yields, and now it's keeping us pirched in a range along with other issues. keep a close eye on the boon ten-year spread. kayla, back to you. >> all right. rick santelli in chicago. rick, thanks. up next, with more than 30 million users, this streaming service is being called the netflix of india, but it might be v a major leg-up on its u.s. counterpart. the founder will join us to explain in just a moment.

our next guest company has been called the netflix of india and has about 30 million users on its streaming service, but one big difference, it already owns most of its content, including hugely popular baliwood films. joining us now is the founder and chairman of eros, which is

kicking off its first u.s. investor day. also fresh off the opening bell here at the nyse. it's fwood to have you. >> thank you very much. >> your symptom has multiplied many fold. obviously, bollywood hugely popular in india. what's the story for u.s. investors? >> i think you can look at india with 1.2 billion people in india, 400 million in middle class. 40 million joining every year. le three big things is movies, cricket, and religion. the movie industry is part of the movie industry. that means there's no music industry -- and that's where the whole focus is. we are the largest studio of india with a dom nabt box office share of market shares above 40%, and disney bought -- fox, viacom, and other big players, that are going into i understand india, and that's wonderful because it is first, the content production, which we have, and there are 27 different dialects in india.

how do we move from hindi and produce more content? that's what we have been doing the best all across so many years. then we launched eros now. eros now is just not the netflix. it's a combination of you can imagine spotify, itunes, and netflix put together in one syllabus. when they started streaming in 2007, if disney and warner came together and had a 40% market share and started netflix, that's the kind of combination you should think of. >> a lot of people wish we could bundle like that here in the states now? >> why not? >> the content creation, better to do it yourself, or is it better to buy the rights from somebody else? >> we not just do it ourselves. we have our core production partners. we work with the top production houses. we produce movies with them. we've worked with the talent, and that's what we have been doing the best since last 40 years. it's not -- if you want to scale the business, you have to work with the partners, and that's what we have been working with. >> tell me about the streaming. what are people mostly going to

be viewing on? is it on phones? how do you handle the cost of band width for people? is there a way around that as you seek to grow? >> yeah. very good question. india has 150 million smartphone users, and they have 900 million mobile users, and the way we are going to look at you will have about 500 million mobile users in the next five years, and the e-commerce will go from $20 billion to $300 billion. you have off line experiences. you start with the music content. short form content and then the movie content. >> we hear the same story from flip card, who obviously is trying to capitalize on mobile as well. we have just about 30 seconds left in our show. tell us what happens when netflix enters india next year. >> excellent. netflix is not concentrating on indian content. we have a large market share on indian content. they have a lot of hollywood content. we are the gate keeper of the indian content to the world, and we want to be the gate keeper of the foreign content to india. >> we appreciate you being here. this is just the first that we are learning about your story. ticker eros.

come back soon. >> thank you so much. in the meantime, we're watching the market. dow almost perfectly flat, and the s&p is back to 2016. oil up 61 cents. that's go sg to keep your eye on. that's it for us here on "squawk alley." let's go to the headquarters and scott whopner and "the half." ♪ all right, guys. thanks. welcome to "the halftime show. let's meet our starting lineup for today. joe is here along with stephanie, pete, and dan greenehouse. btig's chief global strategisst. mary barra live. she's with us exclusively today on whether the sizzling sales pace in the auto biz can stay revved up. all-star analyst week. the street's top gaming guy is here on which stocks could hit the jackpot in the months ahead. we begin with the markets. stocks in a bit of a fight. mixed right now ahead of a flurry of earnings in just a few