good wednesday morning. it's 8:00 a.m. at space-x headquarters in california, it's a 11:00 ap on wall street and "squawk alley" is live.

good wednesday morning. welcome to "squawk alley." i'm carl quintanilla with jon fortt. joining us is seema mody. good to have you back. busy, busy day, markets have gone into the red. we continue to monitor janet yellin testifying on capitol hill. in fact, on that front, let's get back to steve liesman on capitol hill. steve? >> it's a scintillating issue here on the issue of bank regulation and dodd frapg, trying to be a little sarcastic, but she was asked about monetary policy and said there's no timetable for raising rates. she expects the unemployment rate to fall further and that most of her colleagues do expect a single rate hike this year. she was grilled on this issue of politics at the fed. scott garrett talked about

something that i have not heard before, and we're trying to run down this issue. i'm going to repeat it, brainerd and the clinton campaign. but anyway, she said there's -- yellin responded, there is no politics in the decision-making at the federal reserve. a lot of this coming from comments from donald trump that the fed decided to keep interest rates unchanged, because of an effort to help the clinton campaign, a charge for which i have yet to see any evidence. carl? >> doesn't mean there won't be more questions, that's for sure, steve, thank you. our steve liesman. meanwhile, according to reports, walmart is in talks to invest as much as $1 billion into flip cart, sometimes called the amazon of india. amazon stepped up investments in india recently, with jeff besos, and that comes a few months after amazon bought ecommerce site, jet.com for about $3 billion. joining us this morning with more, megan quinn is general partner at spark capital. it is great to have you on the

show finally. welcome. >> thank you. good morning, carl and team. >> we continue to spend this ecommerce story around and around. amazon up today at 820, as another analyst comes in with an aggressive price target. how are you thinking about their potential versus walmart's and all the ancillary tools that they have at their disposal? >> absolutely. so, jeff besos is committed to spending at least $5 billion in india building out amazon in the market. so it's very hard to see -- to not see, i should say, this rumored investment by walmart in flipkart as an reaction to that. amazon has developed an amazing playbook in the united states, developing a deep moat with consumers. starts off by having the greatest customer loyalty program in the history of retail, with amazon prime, and goes all the way to having a distribution network, whereby in the united states, over 45% of all americans are within 20 miles of an amazon distribution center. >> and seema, you reported from

india for a while and you watched this space. walmart has had some struggles in india. they have retail locations there. meanwhile, amazon's doing pretty well. they had some struggles in china. by investing in flipkart, does that get walmart potentially some infrastructure they could need to push ahead ecommerce efforts >> walmart for a long time has been trying to expand into india. they have some stores there. but partnering with a local partner seems to be a viable strategy, because there are a lot of regulatory headwinds that foreign companies face when trying to enter india. right now the multi-brand sector, which includes wall math, can invest up to 51% of a stake in an indian company, but about 30% has to be locally sourced. there are a lot of rules and regulations that a company in america has to go through to get exposure to this booming market. >> and megan, you have a lot of experience in transactions at retail. you were at square and google before that. there seems to be a lot of

acquisition activity right now this this space. walmart trying to throw a lot of things at the wall. does that make it more or less likely that they're going to succeed in this latest effort in ecommerce, globally? >> i don't think you can ever count out amazon, but looks like walmart was a little bit late to the online party, but they're ready to dance with these kinds of investments. >> you know what, megan, this push from walmart into india follows amazon, besos upping their investment in amazon to $10 billion. tim cook taking a recent trip to india to demonstrate apple's commitment to this market. what i do you think technology, the leaders in technology, are suddenly seeing india as a big opportunity? does it have to do with the slowdown in china? >> no, i think it's actually the fact that there's just this is massive audience of very hungry consumers that are coming online via mobile and ready to make a lot of ecommerce purchases. you also can't count out as alibaba's significant investment in snap deal, which is still the

third largest ecommerce player in india, as well. >> and of course, the fundamental story is just so exciting. $1.2 billion people in india, half of which are under the age of 25. and carl, a very young digital savvy audience, i have to say. >> yeah, tricky, though, as we all know. a lot of missteps have been made in the past. megan, moving on to another topic, elon musk, of course, outlining his plan to travel to and then caolonize mars. yesterday at an event, he showed a video of a space-x rocket that could take passengers to the red planet. estimated that the rocket could cost as much as $10 billion and take off as soon as 2024, but tickets could cost as much as $500,000 a person. this was always tough, megan. people have canted a about and then he found a way to reuse a rocket. is there a point at which his ambition exceeds his potential? >> you know, elon musk is a dreamer, an inventor, and then an entrepreneur, and in that order. he has great ambitions for the world and mankind across energy,

transportation, intergalactic travel, and he seems to have figured out a way to build real businesses around each of these dreams. so i think you can never count out elon in this regard. >> but this strikes me as the sort of venture that very few if any vcs would put any money into. colonizing mars? how long do you have to wait to get your money back on that type of investment? >> well, i don't think i would be around to get me money back. but i think he's noted this would involve some sort of private/public partnership in terms of financing. >> it's an exciting, bold idea from elon musk, but doesn't it raise some ethical questions about whether humans will contaminate or disrupt life in mars? >> i think it's too soon to tell. i think we actually have enough challenges here on earth. but by putting a framework in place to actually move on to a new planet, even if he doesn't reach the colonization goals he has around timing or price, he's really moving the ball forward

for science. and i think that's something we can all applaud. >> yeah. i think -- i mean, there's the colonization angle, but whether it's musk or besos or others, maybe more practical is the discussion of, i don't know, moving manufacturing into a frictionless, gravity-less environment, right? that could make heavy-duty industrial work a lot easier, if you found a way to efficiently move it off the planet. >> exactly. and we believe that there are great resources outside of earth. and so perhaps that's the angle, before actually putting people on mars. but you have to applaud the ambition. >> so, as you look at this happening, what do you think are the opportunities surrounding it? if you've got a couple of billionaires, looking to potentially reach mars, colonize mars, put heavy industry into space, we know jeff besos has said he thinks the best planet in the solar system is right here, so we should work on this one, but are there businesses that you see surrounding this space exploration that will have perhaps faster returns?

>> absolutely. so space-x is a picks and shovels kind of business. it's tools that enable a much, much larger market. we're looking at a lot of different businesses that fall in that same category. there are a number of different types of objects that need to go up into space, whether it's satellites or getting infrastructure up to the space station, and there's lots of new companies that are merging able to do that at a low cost that has not existed previously. >> you've got to remember, things like satellites we take for granted now. at one point, those were unthinkable, too. megan, it is such a treat having you on the show. we hope you'll come back. >> absolutely. thank you for having me. >> megan quinn joining us from spark capital today. >> and i'm sure mark zuckerberg hopes elon musk gets better at getting satellites into space before we get to mars. moving on, blackberry has confirmed it's going to start making its own smartphones, moving away from hardware, focusing on software. the company reported better than expected erparnings, despite a revenue shortfall.

so what can we expect going forward? john chen is the ceo and chairman blackberry, good morning, john. >> good morning. >> i want to start off on this hardware shift that you sort of telegraphed a while back. you said that if by september, you could not see a path to long-term profitability in hardwa hardware, you would get out. now you say you're getting out. now my question is, what's blackberry's revenue picture going to look like after peeling off hardware? the way i look at it, it was about a third of gap revenue in the current quarter, and that seems relatively stable over recent times. how's revenue and revenue growth going to look after hardware gets shaved off? >> well, first off -- thank you for the question, but first off, i need to clarify one thing. we're not going to build the hardware. we're not going to design the hardware. we're going to have partners to do it. so we will still have a hardware business. but the hardware business is going to be very much tied to

the royalty factor. by licensing our software and licensing our brand. so in my calculation, that segment market -- that segment, the revenue, will go down a little bit for a short period, a while, then when the new phone starts being shipped, it will kick back in, up. so the whole idea is not only to make it profitable on a long-term basis, but see a long-term growth in revenue. >> so to clarify, you're going to have a royalty and licensing business, but you're not going to have any costs associated with hardware. is that right? >> that is correct. we will not have inventory, we will not sb spending the capital to build these expensive equipments or to build new hardware. >> okay, so more of a royalty business. how much is blackberry going to save and how quickly, when you take into account existing inventory, severance costs for

employees that are perhaps going to get let go as a part of this. is this a case where you're peeling off a third of your revenue, but more than a third of your costs? and how quickly will we see that get cleared out? >> we won't be peeling off revenue. we'll be peeling off, in the short-term, quite a bit, like you pointed out, but we're going to peel off a lot of costs, especially in cash required to fund the business. if you look at our balance sheets today, they're probably on average about 100 to $150 million a quarter. it's tied to the developing of the software for the devices. so you will see that go away in relatively short time. probably at the end of this year, which is two more quarters. and the severances, we have been working on this for a while. like you said, telepathing, or whatever the right word was. so the severances aren't really going to be that huge. we already roll out a lot of the fixed assets and the inventory and so forth, so i think you would see the financial quite

stable and within a quarter or two. >> so ways your strategy for the hardware and design packs that were surrounding the phones. you have this royalty and licensing business, where there are going to continue to be blackberry-branded hardware out there, you're just not making it. are you even considering selling off some of those patents, perhaps some of those design rights now that's no longer your core business. or are you determined to keep that in order to keep this royalty stream going? >> i think right now, my plan is the to keep and it keep the royalty stream going. >> john, i hope you won't consider it poor form if i ask you about wells fargo, you've been on the board for a decade, we have stump going to the house tomorrow. any clarity or guidance about how the board viewed last week's testimony and what they're thinking about this week's? >> well, you know i can't comment on that. i mean, i know you have to ask,

but i made a policy not to comment on a board that i'm on, so, unfortunately, i can't answer that question. >> as long as we understand each other on that front. appreciate you at least trying to answer. >> well, i guess we won't ask you about disney buying twitter, then. but, hey, you can tweet from a blackberry and blackberry software. what's your sense of social media and twitter's position right now given the strength in facebook, given the strength in snapchat emerging? >> i am not going to comment on the disney part of the question. you know, twitter, of course, is a partner of ours. it runs on our devices and our software. you know, it's a pretty big volume and it's a kind of a news consumption vehicle. you know, we do well with them. >> i want to ask you about the smartphone market overall and mobility. given that you made this run at trying to make a profitable

business out of hardware and have decided to go in a new direction. is there still room for significant innovation, in the hardware piece? or is your judgment that software? working through android, working on security, going back to blackberry's basics, perhaps, in enterprise, as well, is where the value is going to be over the next three to five years. >> absolutely. i think the market, i think i'm just a leader of the market. if somebody is going to tie to the hardware only as a differentiator, i'm doubtful that they could make a profitable business and stay in it for very long. this is not about a blackberry comment. and i really believe in -- i mean, i heard recently, we said in our team, we said, we're really more worried about the smart of the smartphone, not about the phone, but the smart part of it, and you will see that, you know, in an industry rally around it, our mobility, it's really about the intelligence, artificial intelligence, the smart intelligence, you know, the

connected things and all that's going to come together. the session-making software. so i just want to get ahead of it. and be able to participate in it early on. i actually believe the money is in the smart. it's in the software. >> all right. well, we'll see how those profits shape up, now that you are getting rid of the hardware cost and responsibility, keeping the royalty revenue. john chen from blackberry, thanks for joining us. >> thank you. >> all right, we want to get a check on markets right here. we're looking at the dow down about 40 points on the day. the s&p lower by 7. and the nasdaq off by 17 points. this as fed chair janet yellin testifies at the house of financial services committee. we're also looking at oil pairing gains as that opec meeting in algeria is underway. one stock in focus is nike. shares falling after the company said future orders were only up 7%, below expectations, however,

profit and revenue did beat expectations in the latest quarter. we're looking at shares down about 2%. coming up, a cnbc exclusive with imf's director, christine lagarde. plus, mossberg taking a look at a new product that lets mac users use windows apps and vice versa. he'll tell us if it's any good. and new details on the massive hack at yahoo!. the full story on that when "squawk alley" continues. ok tea, what if 30,000 people download the new app? we're good. okay... what if a million people download the new app? we're good. five million? good. we scale on demand. hybrid infrastructure, boom. ok. what if 30 million people download the app? we're not good. we're total heroes. scale on demand with the number one company in cloud infrastructure. hewlett packard enterprise.

narrator:kubo: est place come on, this way.e... narrator: ...is in the forest. kubo: wow. narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: it's beautiful. narrator: visit discovertheforest.org to find the closest forest or park to you.

some breaking news out of washington. let's get to eamon javers in d.c. hey, eamon. >> fbi director james comey is testifying on capitol hill this morning before a house committee. he's underscoring the fbi's concerns here against the hacking threat of the u.s. election this fall. he's saying here ultimately that the fbi is spending a lot of time on trying to figure out who is behind these hacks. here's what he had to say this morning. >> any hacking in connection with this nation's election system is something we take extraordinarily seriously. the whole of government. so it is something the fbi is spending a lot of time on right now, to try to understand. so what are they up to and what does it involve and what's the scope of it. to equip the president, to decide upon the appropriate response. and so that's one of the reasons i have to be very careful about what i say about it. that work is ongoing. >> carl, he didn't say what the president might decide in terms of the ultimate appropriate

response to that hacking threat. and comey made a distinction between hacking attempts, trying to get at voter registration data itself, names, addresses, and that sort of thing, and hacking attempts designed to manipulate the election outcome, or at least obfuscate the election outcome. so there's some new information this morning here on capitol hill, carl, and we'll bring you any new details as we get them. >> a eamon, thank you for bringing us up to speed on that. eamon jafferers in washington. for more information and to register, go to cnbc.com/cybersummit. >> carl, i would just mention, this is not the first time that russia has tried to influence global politics. there was confirmation actually earlier this year that putin was funding the nationalist party in france. there's also reports that he's doing similar works in eastern russia -- excuse me, eastern europe. anyways, it's an interesting story to follow. russia and its role in global politics. >> indeed.

walt mossberg is in. this week, he's taking a look at the latest version of parallel software that can run windows 10 on a mac and toggle between the two. walt is the executive editor of "the verge" and joins us now. >> good morning, carl. >> it's john, actually. >> john. >> but this morning i want to take this in a slightly different direction right off the bat. >> i know that carl and i sound alike. >> and sometimes look alike. >> i can't see you from here. >> i want to ask you about the windows 10 experience. so in a way, it's remarkable that you can get things like sirsi siri and cortana integration between the operating systems, the operating systems acting like apps, but it's also remarkable to me that windows 10 ran so well on older generation hardware, apple hasn't upgraded in a while. what's that say about this upcoming holiday season when we see notebook demand in the channel starting to look stronger than expected?

>> well, i think it's interesting that it's looking stronger than expected. as you and i have discussed many times. the laptop replacement cycle has stretched out by maybe even a whole two years in the last few years, as people have invested their money in smartphones and even in tablets. and have not been using their laptops quite as much as they once did. but they still want their laptops, so, i guess on the one hand, it's not surprising that some of these laptops are breaking down, but i've got to tell you, this was windows 10 running in a sort of emulation, a virtual machine, on a 3 1/2-year-old macbook air, not even the most powerful mac laptop. and it was running fine. so if it did that, i imagine it must be running fine on a lot of

3 1/2-year-old or 41/2-year-old specially built pcs. it could that people want a touch screen. that's the main thing i can think of. >> walt, do you think the seamless integration of windows on mac is actually a bigger win for apple than microsoft? >> yeah, sure. obviously, it helps microsoft in that people have to -- you have to buy a copy of windows, and a full copy, not an upgrader copy. they were giving it away for free for a while, windows 10, so you might have got an free. but if like me you didn't, because i just stupidly forgot to do it, i went for the purposes of this review and spent 120 bucks on windows. so they get that. but the main point here is to keep you using a mac and to not feel like you're missing

anything if your company says, you got to use this thing we wrote in house and it only runs on windows, for instance. >> well, it's shaping up to be an interesting holiday season to watch for the pc market and companies involved with inventories and components and demand looking a bit stronger than usual. and this latest version of parallels will give people more options. walt mossberg from the verge, thanks for joining us. >> thank you, john. up next, a new report raising big questions about yahoo!'s ceo marissa myers equipment to security in light of that massive hack of 500 million users. we've got that full story. plus, imf managing director christine lagarde will join us l'ouv live in a cnbc exclusive interview. she's on stage with our own sarah iszen. "squawk alley" will be right back.

this is judy. judy is 65 years old. her mortgage payment is $728 a month. that's almost $9,000 a year now judy doesn't think that she'll be able to retire until her mortgage is fully paid off. this is mike. mike is also 65 years old. his monthly mortgage payment was $728 a month. now mike thought he would have to work for another 12 years until his mortgage was paid off. and then mike heard that a reverse mortgage may help him. he called one reverse mortgage to get the details. mike retired immediately after getting his one reverse mortgage loan. maybe you too can benefit from a reverse mortgage.

call one reverse mortgage now and find out if you qualify. they'll send you an information guide that includes all the details and the stories of mike and others. a reverse mortgage... is a mortgage with no required monthly payments. it was created for homeowners 62 or older so they can continue to afford and own the home they love. many one reverse mortgage clients find they can retire sooner, do more the things they love, or simply put more money in the bank. a reverse mortgage could change your retirement, and your life. i examined my finances and i said, there is no reason why i shouldn't retire today. 10, 12 years earlier than i had anticipated. in the first year, his cash flow savings totaled $8,736. after 5 years, it will be over $40,000. it really is worth a call to find out if a reverse mortgage can

help you too. call one reverse mortgage now and ask for your free guide. yahoo!'s ceo, marissa mayer under fire this morning, this time for reportedly not making the cybersecurity a top priority during the early days of her

time as ceo. according to "the new york times," former and current "new york times" employees say mayer and her kpesk team put encryption on the back burner, instead focusing on improving video and search options. she says mayer hesitated to boost cybersecurity for fear of users leaving the platform, despite warnings from her chief technology officers and industry trends. the argument being, guys, that there were fixes you could have made, that would have been perhaps confusing or more work for users, that could have pushed them off at a critical time. >> well, yesterday, the line was growth covers a multitude of sins, talking about facebook and this video counting controversy and how people say it's not a big deal. yahoo! doesn't have growth. so there's no cover for these sins. so marissa mayer is going to get blamed for everything. why did you focus on growth and mobile instead of cybersecurity? well, yes, everything that goes wrong everywhere is going to get you blame if you don't grow. i think that's the lesson here more than anything.

>> i'm just surprised with all the different companies that were looking at yahoo! as a viable buyout target, that through due diligence, this didn't come up. >> certainly paying the price now, and the time lag from the event until now is certainly helping matters. >> these hacks can be really hard to find. it's like going back to your house and trying to figure out if someone's broken in, when you think, i had a phone on the nightstand and now it's gone. sometimes it takes months to figure out who's been in there. >> makes sense. we are now counting down to the close for europe and the uk. stocks on the rise, in fact, in europe, with banks rebounding here. deutsche bank shares in focus. the ceo of deutsche bank telling german newspaper "build" that the bank did not need a capital increase for government assistance despite the prospect of that multi-billion dollar u.s. fine. cryon also saying state aid is out of the question, saying, quote, at no point did i ask the chancellor for support.

neither did i suggest anything like that. but, of course, concerns over the health of european's financial sectors sending investors into bonds. the german ten-year yield back into negative territory. one stock in focus in the uk, shares of sans barry moving lower. reporting another drop. its rivals, tesco and morrison also on the rise. finally, ecb president mario draghi set to address the public in berlin after holding a closed door meeting with lawmakers. participants in those markets telling reuters that the ecb needs to be certain it's doing the right thing when ending low interest rates. otherwise, negative yields would outweigh the benefits and would yield to more easing. members have blamed dragi's lose monetary policy for fueling populism in the eu. i think central bank credibility still a big question when looking at europe, carl. and it's so evident in the markets, europe still down about

6% year-to-date, whereas we're looking at the s&p higher by 5%. >> yeah, credibility not just an issue in europe, when it comes to to the central banks. coming up, with imf managing the director christine lagarde will join us in a cnbc exclusive interview you don't want to miss. we're back in just a moment. hey gary, what'd you got here? this bad boy is a mobile trading desk so that i can take my trading platform wherever i go. you know that thinkorswim seamlessly syncs across all your devices, right? oh, so my custom studies will go with me? anywhere you want to go! the market's hot! sync your platform on any device with thinkorswim. only at td ameritrade

good morning once again, everybody. i'm sue herrera. here's your cnbc news update at

this hour. congressional leaders have apparently reached an agreement on a spending bill to keep the government funded until december. that deal comes just three days before the midnight deadline. the deal is said to allow a vote on an amendment to the house version of a water resources bill and provide funding for the flint, michigan, water crisis. an underground mine explosion has killed 19 people in northwest china. officials blame illegal mining activities for that explosion. representatives of the companies that owns the mine are said to be in police custody. two miners did manage to survive the blast. the father of a muslim boy arrested after taking a homemade clock to school is suing commentator glenn beck and a texas mayor. last september, 14-year-old ahmed muhammad was charged with having a hoax bomb. those charges were later dropped. he was also suspended from school for three days. the lawsuit alleges several false statements were made in the event's aftermath. the family now lives in qatar. and martin shkreli sure has now

angered a lot of people. well, now here's your chance to let off some steam for a good cause. last year, as ceo of touring pharmaceuticals, shkreli raised the price of a life-saving drug by over 500%. now he wants to give people a chance to hit him. he is doing it to raise money for the son of his public relations manager, mike coolic, who died on saturday. the money will reportedly go into a trust fund for the 6-year-old who, himself, survived cancer. so far, more than $5,000 has been raised. your up to date. that's the news update this hour. back downtown. carl, back to you. >> all right. we're going to see about the demand for that auction. >> i'm sure there will be quite a bit of demand. >> sue herrera. let's hop over to rick santelli and get the santelli exchange. >> thanks, carl. all or none. maybe it's a good order, but it's bad policy and bad politics. all or none.

100 or 0, all or none. those used to be orders in the pit. some electronic platforms let ewe used use them. all it means is, if you don't get all 100, you don't get any. that is used in politics. we hear it in the political season all the time. think about it, regs, this side doesn't want regs. or when it comes to terrorism. we don't want any terrorism. or, when it comes to immigrant, we don't want any immigrants! trade especially. we're going to tear up the trade deals now? the world should be afraid. those are strong arm arguments. it shouldn't be all or none, it should be finding the best one. you don't want more or don't want all of them, you don't want none. straw man should be knocked down, bad way to run a government. especially, especially when it comes to some of the big, big

themes that i've just discussed. think about it, we need policy tune-ups. how often has nafta been tuned up? i'm not saying it needs to be, the, but the consideration to have that should not be in a straw man argument. i'm not saying i disagree or agree with either candidate. both seem to have some misgivings about trade policy. whether they have the same misgivings after election day may be a question that we need to discuss as well, but in the end, policy tune-ups really should be embraced. anybody who's ever had a car that wasn't run right, you use a whole lot more gas. the car doesn't run correctly. so basically, it's energy lost. efficiency, growth can be achieved whether it's a car or the economy or a variety of various cottage-related topics to that, by getting things tuned up properly. and i think that when it comes to the election, many people that aren't in the weeds with many of these topics just can't

discern that we're putting a straw man argument. or we're creating a condition that isn't real. they don't want any regs! of course you need regulations. it isn't a question of whether you immediate a ton of regulations, you need the right regulations. another issue that doesn't quite apply as cleanly, but it's the same. look at all the things that the federal reserve is trying to do. in many ways, to prevent recession. listen, we're going to have one. and it isn't necessarily a horrible thing. what's horrible is, if you prevent them for an extremely long time, they are going to be much bigger, much deeper, and take the economy much lower. watch out for straw man arguments. carl and the gang, back to you. >> rick, thank you very much. rick santelli, getting some news this morning, reuters is reporting that national amusements is preparing to call on cbs and viacom to explore a merger. national amusements, as you may know, is the controlling shareholder of cbs and viacom.

our david faber is working the phones and he'll update us in just a few minutes. when we come back, an exclusive with the imf managing director, christine lagarde. she'll join us next live on "squawk alley" with sara eisen in a moment. the experts at cdw t i.t. orchestration to a global outerwear manufacturer, allowing them to handle the recent popularity boom in fanny packs. it's pretty fly. unless being '90s is your thing. well, cdw and hpe services gave them the flexibility they needed to scale up their scale up their cloud resources, making sure supply meets demand. poser! [ classic ringtone ] what's crack-a-lackin'? hey, did you remember to set the vcr? increased flexibiilty by hpe services. i.t. orchestration by cdw. narrator:kubo: est place come on, this way.e...

narrator: ...is in the forest. kubo: wow. narrator: so grab your loved ones monkey: don't even. narrator: and explore a world of possibilities. kubo: it's beautiful. narrator: visit discovertheforest.org to find the closest forest or park to you.

coming up today on the halftime report, the analysts behind the only sell call on alphabet is with us live on why he thinks those shares are about to tank. plus, chips are having their best quarter since the financial crisis, but we're going to talk

about which stocks still have room to run. and nike is now the worst performer in the dow, year-to-date, but a new call says it is a great time to buy. all top of the hour. seema, we're going to see you in about 15. >> sounds good, scott. meantime, janet yellin still answering questions on capitol hill. let's get back to steve liesman with an update. and steve, we know the topic is financial regulation. are interest rates being discussed? >> just a little bit, seema. she was asked about the raising rates and she said most of her colleagues, as we reported around the meeting, just recently have been forecasting a rate rise this year. on the issue of wells fargo, it's come up. she said, we will hold the largest organizations to exceptionally high standards of risk management, internal controls, and consumer protection, after which congressman sherman interrupted her. what she was going to say, in addition, and talked about whether or not wells fargo ought

to be broken up. so that idea is in congress right now during the testimony. it's been discussed. a lot some question about yellin discussing this issue about whether or not there's been a broader review of the biggest institutions. so wells fargo on the table, monetary policy, a little bit on the table. john, back to you. >> steve, yes, let's take the hearing hear as the conversation has flowered from regulation to politics and rates. >> but in terms of your role you are the primary regulator for the bank for wells fargo holding company, right? >> we're the primary regulator for the holding company, but these abuses occurred in the bank. >> i understand. >> and the controller of the currency and the cfpb have short and they're the ones who brought these alaskas, we weren't -- >> and i give them great credit for that, as well as, i think the l.a. -- the los angeles authority was involved, as well. is there anything that you can do, looking at -- looking at

what happened here, this is why it spread. this was a disgrace, really, what happened. 2 million fraudulent accounts. and the low-level employees who were fired you know, didn't just think this up themselves. they obviously had incentives that were put in place and any ideas from your standpoint as what might be done as a regulation or as legislation to prevent this from happening again? >> well, the controller of the currency and the cfpb have demanded in their actions that remedies be put in place. we are now have initiated a broad-based review for all the largest banking organizations of their compliance regimes -- >> okay, let me just ask you. this is a huge, huge thing here. again, 2 million fraudulent accounts. can you think of any circumstances where a bank might

be required to admit guilt? there was no admission of guilt here, at all, by the ceo or the bank itself. there was no admission of guilt. i mean, if it didn't happen here, how can we even imagine ever that a bank might be required to take responsibility for what they're doing? and i think by doing this, you know, by continually letting the banks off the hook and nobody has to admit guilt, you actually build a perverse incentive for this stuff to happen. and i just -- it blows my mind that they're getting away with this. and they're paying a little slap on the wrist fine that's not bothersome. and the ceo the other day said, well, it was only 5,000 employees. we've got 100,000 employees and 5,000 did this. and sort of, you know, just blowing it off. it just -- >> well, it is -- i think it is very important that senior management be held accountable. and that when there are

individuals, identifiable individuals who have been involved in wrongdoing they -- >> yeah, i know they're all lawyered up, but i think there's value in just getting after them. just getting -- i don't care if you get a conviction or not. just get after them. and make their life hell. we've got to create a disincentive in this system at some point for the ceos to do the wrong thing. they completely, you know, they completely ignored any of these safety and soundness and just basically responsibilities here, and i would like to see somebody held accountable for that, at some point. let me ask you, it's a very clubclub y environment, the banks. and i would be amazed if this practice were just limited to wells fargo. i think it's probably the practice that a lot of banks -- there's a lot of cross-poll

cross-pollenization going on. are we looking at any other banks doing this thing? >> yes, we are. the cfpb are in all the largest banks and we have undertaken, we are undertaking a look, comprehensively, not only in the consumer area, but compliance generally, because there have been a very disturbing pattern of violations, they occurred in the mortgage area, in foreign exchange trading, in many different areas. sanctions violations, libor, and we are taking a comprehensive look at the biggest banks -- >> okay, thank you, i have 17 seconds. i just want to say, in closing, what a wonderful job the occ and especially cfpb did on this. this is why they are there. and i very seldom hear great things about cfpb. >> janet yellin, the q&a continuing in front of the house financial services committee. and in the meantime, ahead of the imf world bank meeting, the health of the global economy is clearly in focus.

let's get to our own sara eisen, who's live with the managing director of the imf. hey, sara. >> hi, good morning, carl, good to see you. we're here at the kellogg school of management at northwestern university, with madame lagarde, who has just given a speech on the global economy. i'll let you sum it up for us ahead of the big meetings next week and a widely anticipated forecast on the global economy. sort of weak growth. >> i would call it modest, we have modest growth. and we have modest growth, because there are modest policies. we are very strongly advocating for more vigorous growth, more inclusive growth, and to do that, we need to set off more vigorous and determined policies. it's doable and it requires a bit of political determination and better coordination between the players. >> some of what's been holding back growth has been uncertainty and here in the u.s., the biggest is the coming election. do you see that as being harmful

right now to the u.s. economy? >> you know, one of the basic principles that we advocate as well is do no harm. and do no harm begins with trade. trade has been historically a major driver it has moved the needle many many ways, but to now hurt trade, to restrict trade in our view would be an economic malpractice. we are very strongly advocating for the two sides of trade support it, protect the trade, but protect also the people who are at risk because they risk losing their job, because they -- the supply chain is going to be modified in the course of time. there has to be active policies on those two fronts. protect trade, protect those people who piet be affected by trade. >> we're hearing the opposite on the campaign trail. both hillary clinton and donald trump are against tpp, and

there's a real concern about the workers that have been left behind on wages, have seen their jobs move overseas. how do you make the economic case for the benefits of trade when that's how americans are feeling? >> it has to be inclusive. in other words, it cannot be only good for consumers. the reason we are consuming so cheap goods around the u.s. is also because of trade over the course of the last two decades. it has left some people in some areas out of a job because the supply chain has changed, because some jobs have been removed, because some industries are relocated. for those people, there has to be policies to help them, protect them, equip them and it cannot be about let's bring back all the industries of the past because you don't rewrite history. you have to anticipate. you have to equip. you have to educate. you have to have a social safety net where people feel although their job is gone, they are going to be equipped, they are going to be looked after,

they're going to be helped. >> is the tpp an inclusive trade agreement? >> you know, i don't have the details of all the tpp at the top of my fingers because i've not negotiated tit, but i know some trade agreements can be made good not only for growth but also good for people. they have to be balanced. they have to look into tariffs, regulatory environment, services as well as goods because there are many more services now flowing around the world when it comes to information, when it comes to traveling, when it comes to those things that we consider as part of day to day life. there has to be a specific concern that has not been around enough about those people who lose out as a result of trade and -- >> on that note what would ripping up nafta and going back to renegotiate it do to the u.s. economy, to the mexican economy, the canadian economy? what would be the damage?

>> it's impossible to predict, but what we can be certain of is erecting more barriers rrks preve -- preventing the flow of goods and services would cause losses, damage in various countries, and would certainly not boost growth, and what we need at the moment is actually more growth, not that modest growth that i was talking about. you know, trade, as i said, has been a major engine for growth. if you look at growth over the last few decades, it has 3.7%, 4%. trade? 8%. it was double the growth rate, which means that it has supported growth. we just need to make sure that it is also inclusive. >> a lot of people see the trade parallels, the anti-trade in the brexit vote, which we saw over the summer. you had come out and strongly warned against voting for brexit. that it would hurt the british economy, that there could be a severe reaction in the market. now that the economy and the markets have bounced back

relatively well, were you wrong with that warning, or is it just going to take a little bit longer than expected to play out? >> we saw an immediate and bankrupt reaction. markets went down. the pound went down. it's not recovered massively from that, by the way. we think that there will be consequences. there will be down side effect as a result of anything that will come, and we're still not sure when the negotiations will begin. famous article 50 has not been triggered where, it will open two years of negotiations. if that is not called uncertainty with a big u, i don't know what is. >> do you see rising euro skepticism in other countries ahead of key german and french elections next year as a result of brexit? >> you know, there will be the typical electoral debates with its successes and abuses as we see always in any election around the world, but i would hope for myself that it will

reinforce the determination to pull together in a coordinated way because this is what we strongly believe in. if people move together on a differentiated basis, it's not going to be one size fits all, but if they coordinate their action, we will all get more bang for the buck. that is for sure. >> there are renewed concerns about the health of europe's banking sector. deutsche bank is trading at a record low level. there's legal worry about whether it has enough capital. have you spoken to chancellor merkel about deutsche bank and the needs of the german banking sector? >> well, we completed back in june, actually, a fj sector assessment of the german banking system, and it is a system that is critically important with some system ic players. deutsche bank is certainly one of them. we all have a stake in making sure this situation is addressed, that the right measures are taken, that we

don't fall into over dramatization either. i trust that these measures will be taken. >> do you trust that the german government would step in if capital is necessary? >> this is something that they're going to debate amongst themselves. i don't see -- >> would you recommend it? >> i don't see that particular institution as at a stage where state intervention is absolutely called for at the moment, and i would hope that the right measures are taken internally so that the whole financial sector in germany is solid and that systemic players strengthens. it has recovered a bit today, by the way. >> yes, it has. do you see it as a global systemic risk? >> deutsche bank is a systemic player. let's face it. because it has a lot of -- a lot of relationship with many other banks around the world, and it is an international player as well. it's important that it be consolidated and, you know, it

has a solid base. let's also be realistic, but it needs measures. >> we just have been watching janet yellen, who is back on capitol hill. do you think it's time for the fed to raise interest rates again? december perhaps? >> i think they are best equipped to look at the data, to look at unemployment numbers, to look at unemployment, to look at infrags. they should only do what is needed when they have total certainty that those numbers are heading in the right direction and getting to the stage where it really warrants a move. we really hope that this is done carefully -- >> do you see that -- last september you warned it's too soon. sfr . >> if they're not seeing at the moment, we're not seeing it ourselves. they have much more granular details about the u.s. market, and they didn't do it in september. if and when they do it, we certainly encourage that move to be based on very solid

information that will give a strong message that it's anchored and employment is solid and inflation is moving, you know, very well forwards the 2%. >> can the rest of the world, can global markets, especially emerging markets, handle it? last time -- last december there were certainly suburb leturbule followed. >> the turbulence was worse when there was a word that it might happen, remember, and i think a lot of the emerging market economies are better equipped today than they were in those days and they anticipate and they know that it will be coming at some stage. i think their reaction will be better rehearsed, but it doesn't mean to say that it will be soft and stable and smooth. there will be capital movement. >> donald trump told 84 million people that the fed is just being political and keeping interest rates low to help

obama. >> around the world we think it's critically important that central banks be independent. certainly we have not seen the fed not being independent in its decision making process, in the way in which it is governed. we don't see any lack of independence there. >> thank you. madam lagarde, thank you, who i know tries to stay out of being political. back over to you, carl. >> sarahizen at northwestern. if you are just tuning in, the imf managing director taking a cautious view as we're now used to of the global economy. sarah asked her whether or not she has seen data firm enough that would make sense for a rate hike. in her words we haven't seen it ourselves. what's been a busy hour for news. national amusements calling on cbs and viacom to explore a merger. janet yellen in front of the house financial services committee saying they're seeing a disturbing pattern in terms of

compliance at various banks. put it all together, it's been chockful of news. >> the comments on the european banking sector interesting. deutsche bank being in focus throughout the day. >> dow is down 12 points. let's get over to wapner and get the half. welcome to the halftime report. sell alphabet. that is the big and controversial call today that one firm is making the analyst is here live to defend that move. with us for the hour today, joe terra nova, jim, it is negarian brothers, and carrie firestone, the chairman and ceo of arias asset management. we want to begin with alphabet. downgraded to underperform. james dicks is the analyst who made it. he is here with us on set live. it's good to see you. >> thanks, scott. >> you knew