welcome to "squawk alley" for a monday morning, john ford along with seema modi, also joining us today, roger, great to have you as we kick off october and the fourth quarter. we begin with tesla this morning posting its best sales quarters ever, reporting double the same quarter last year. the new numbers suggest the fatal crash in florida regarding the autopilot feature did not have much of an impact on sales. tesla is still in the midst of a merger with solar city, but you're in tesla country out there, roger. how much of an affirmation is

this about their production schedule? >> well, you know, i think, carl, that everybody out here cheers for tesla. i think that the notion silicon valley could revolutionize the automobile industry is something that i think people out here take great pride in, and i think everybody cheers for them. i think the challenge really comes next year, because next year is the year that the old guard, which is to say general motors and other major manufacturers really come into the electric car market in size, and i think they are going to come way down market from tesla and that's going to change a lot of things, and i'm not quite sure whether tesla is ready to handle dozens of competitors with products at much lower price ints, but it's going to be fun to watch, because in my experience at least, tesla has built one of the finest brands i have ever seen, and i think the story that you mention with the fatality really proves that point, that, you know, the customers want to believe in

this brand, and that's a really unusual thing. >> roger, one thing that's got me raising an eyebrow over the last couple days is this report about tesla's targets being kind of aggressive and perhaps some employees offering discounts where they weren't supposed to, elon musk putting out a memo we don't want that. here's my concern about that, he set some delivery targets that seem impossible, and these tesla cars with their autopilot and some of the other technologies can have life or death implications. couldn't we have, potentially if things don't go right here, a combination of wells fargo if he doesn't get realistic about what the targets are, what he can expect from employees, and manage that really closely? >> so, carl, i think you're pointing to one of the core sort of founder issues that we have in the culture, not just in silicon valley, but really in american industry, this notion that we have a handful of titans who by force of will can bring

miracles to reality. and, you know, i think elon musk has a well deserved reputation for innovation, but also a reputation for being extremely hard on the people who work with them, and, you know, one hopes that there are no calamities that result from this, but i do think they are a sub scale company in an industry where scale matters a lot, and i think it's going to be a big challenge going forward for them if the expectations internally don't map to what their capabilities are and so i think you've picked the right issue. my fingers are crossed. i really hope they are going to come through this okay, because i love the notion of what tesla is. and i want them to be successful, but i do think it's going to be a tough year for the shareholders and potentially a tough year for the company, because of the issues you're talking about, more importantly, the competition that makes those issues more relevant to the stock. >> either way, it is, of course,

as you point out an impressive quarter for tesla, but can this one quarter alleviate the laundry list of challenges that tesla is facing when it comes to production, capacity, cash flow, and its acquisition of solar city? >> for at least 90 days, right? then we have another quarter and they have to do it again. they are suggesting it would be about the same kind of thing next quarter. if it is, that's actually a tremendous accomplishment, but again you're going to have people coming in next year whose expectations are going to be ten times the unit volume tesla has been doing at much lower price points, and i think that's going to change the way wall street looks at the electric car market. to me, electric cars are one of the great triumph of this period that we're living in right now and it's about to get real. and tesla can take credit for all that, but like apple in the early '80s, they are at risk of being outflanked by people who are prepared to operate at a larger scale. >> interesting.

makes you wonder what we're going to be telling our kids in ten or 15 years about how cars used to be. moving on to google, hosting hardware event tomorrow where it expects to launch branded phones bearing its logo. htc rumored to be the hardware maker. separately, the e.u. orders alphabet to stop the android practice, accordg to reuters. back in april, said the android case was a high priority. take a listen. >> the thing that has concerned us is that in some markets android has become very, very big, and we have had people coming to us with concerns saying there is a risk of timing, that you can only have the operating system if you also have a full suite of google apps, and, therefore, it becomes a one-way street. that we are investigating and, of course, making it a high priority, because these are fast moving markets. >> i wonder, roger, most google

and apple have had lingering e.u. regulatory shadow over them. how's that weigh on them in silicon valley? >> i think this is really hard, because they are being accused of being good businesspeople, right? this is a philosophical -- no, i'm serious. >> no, roger, they are not. they are not. they are being accused of giving their own products unfair priority in the search engine where they have monopoly power. that's not -- come on. >> i'm sort of sitting there going, as a share holder, what is your problem with that? obviously, they have been -- >> well, i'm not a share holder. >> bundling all these things together is something they perceive as being in customer interest and customers get to make a choice to buy their phone, not buy their phone. i think what's really difficult about this is globalization for years was based on trusting people to do a great job across markets, and the assumption that unleashing the whole world as a market would produce adequate competition. we've now reached a point where

at least in the tech markets there have been a lot of winner take all situations, so people are having buyers remorse, and i think in europe there is a philosophical conflict and american companies are going to have a challenge because we are not in this country -- we do not share that same level of concern about monopolization, and i don't think there's a great defense. >> i've got some sympathy here, roger, isn't the danger that once you get huge in one area you can expand that dominance into other areas and don't have to be that good? you don't have to be the best at local. you can stomp out yelp using your search engine. >> no, no -- hang on, i totally agree with you, carl. >> this is john. you don't have to be -- carl would never speak to you this way, roger. >> john, of course, carl would never do that. >> but that's the argument, isn't it, they are mediocre in certain areas, but they can still win and stomp out the best, because the best don't

have the strength that google does. >> so, john, i think you're completely correct. the point i'm trying to make here is, in the united states, we have tolerated that kind of behavior. in europe they are no longer tolerating that kind of behavior, and that conflict, i don't think, can be resolved by google or by apple successfully. i think it's a place where they are going to have a real problem and it's going to be an issue for the stocks. and the question is, is europe going to come down hard on these things, and so far the answer seems to be yes, and i just don't see a way around it, because that is the way these companies do business, and the truth is, they've gotten to a scale where some of the products they make are mediocre. >> at the end of the day, roger, do you think the regulatory headwinds, these fines from the eu will be enough to rethink the european growth strategy? >> well, i think they are going to be forced to over time. in the short run, no, because the reality is, the ecosystems in each of these companies is

still very successful and they don't need to have all this bundling t remain successful. i think much as we saw in the '80s with microsoft, this is going to be a drag on them, make life more difficult, but i think they are better positioned for it than microsoft was in the '80s, so i don't expect the earnings to be hurt as much here, but it is going to mess up their strategy. these guys obviously want to bundle and take shortcuts and want to, with all due respect, they want to ship products that aren't the best of breed and leverage the things they already have. that is their business strategy. >> i tell you, carl, if they want to buy twitter, this is a big reason why that could be difficult, right, if the eu is putting pressure on them. imagine the breakup you'd need as twitter. >> way back when we were playing the twitter acquisition game, somebody said that the eu would remain not a disqualifier, but if you were putting them on the list, pushing them down toward the bottom as opposed to the top. one more thing here, roger, facebook is launching a craigslist and ebay competitor,

the new product is called marketplace, lets you buy and sell items with nearby users. the social network is piloting in the u.s., uk, australia, new zealand. up to 450 million people already use facebook to buy and sell used goods every month, ebay is under pressure on that. how committed do you think facebook is to something like this? >> so i think it starts out as an experiment. if there's any traction at all, they are going to get very committed very, very quickly, because to some exte, you know, it doesn't matter whether they make any transaction fees, they are initially not charging any. what they want to do is get more of the attention of all of their members, and i think this is likely to work really well. notice, carl, that in this case they are doing it on a mobile-only product to start. that is actually a pretty significant departure for facebook, continuing a trend of finally getting mobile apps, slow to get on it in the first place. the feature i'm looking for is

whether you can do the transactions without making eye contact, without talking to another human being, can you actually meet face-to-face and do a transaction entirely on the web with two people staring at their phones, that's the real test for facebook going forward, but i think initially it's just an experiment. i expect it to work, and i expect to actually be a big deal and you'll see them going to transaction process and things like that. >> the danger, isn't it, whenever you're dealing with real people using their real names, real locations, and actual money, you know, we've seen this on craigslist and other places, there are going to be criminals that seek to take advantage of that and you hope facebook has that in mind, because the stakes are higher in a way. craigslist your identity isn't as much at stake. people don't know who you are and your friends, but there's the possibility of that at least in a facebook transaction platform. >> john, don't you believe that

facebook's argument, which is to say that in facebook, identity is real and not phoney, does, in fact, provide some form of protection against that? >> i think it raises the stakes, roger. i'm not sure if it provides protection if somebody, you know, is bent on doing something criminal. but they actually know who you are, they potentially know where you are, and they know that you've got money, so even if that person isn't the actual person that shows up, if they tip off somebody else who shows up and robs you, it's still pretty darn dangerous. >> john, i think we're close enough to digital exchange, which is to say, you know, things like apple pay, payment systems that don't require you to use cash, i think we're close enough to that, that one could easily imagine that kind of payment system being enabled and empowered by what facebook is doing here. the way that paypal, you know, grew on the back of ebay, i think you're going to see somebody provide a cashless

transaction system to support this, because if 450 million people are actually going to go into this marketplace more or less right away, that's an even bigger business opportunity than ripping people off. >> a note out this morning saying you could use oculus to help people do discovery on products, a whole bunch of fly wheels in there. >> for sure you don't have to look at anybody when you do that. heaven, right? >> roger, always good stuff. i like the back and forth with john, too, that was good. see you next time. all right, let's check in on markets as the fourth quarter kicks off. markets are looking for some direction here. the s&p is off by 8 points, dow jones down about 76 and the nasdaq lower by around .2 of a percent, but a lot of focus on tech and consumer tech. take a look at netflix shares having their best day in nearly two months, higher by around 4% or 5%. shares of wynn resorts up today on positive numbers from mckou

gambling revenue and also chinese manufacturing data that helped shares in asia close higher. when we come back, the latest gopro cameras on sale over the weekend, bnick woodman joins us next. he made his fortune as a 21-year-old hungarian immigrant, now the founder of interactive brokers is backing donald trump. we're going to find out why and what he thinks about the tax turmoil. later, best ipo debut of the year, nutanix on a stellar opening day. does that mean opportunity for others in the pipeline? all that and more coming up on "squawk alley".

gopro releasing the latest cameras this week, most powerful and easy to use ever, featuring a waterproof exterior, voice controls, and extended battery life. nick woodman joins us live from san francisco in a first on cnbc interview to talk about that and the company. nick, good morning. >> good morning. thanks for having me. >> nick, in a way i'm more excited about the potential behind the cloud tie-ins you have with this product and the effort to manage video on the back end, make it easier to get that edited and then in a shareable form. is this the product on the back

end that you've been talking about for years now, saying you're going to make it easier for people to actually work with that gopro footage? >> it is, john, gopro plus and the hero 5 lineup finally make it easy for our customers to go out and capture their life, and when they come and plug their hero5 in to charge, it can automatically offload their photos and videos to the cloud, making it easier to access the footage later using their phone and doing a quick edit, share that experience, and quickly move on with their life and get out and have more fun, so we've finally made it easy. >> how long do we have to wait before we know what i imagine is a fly wheel effect you're working for is working, which is how long before we're seeing the products of these cameras out there, people are saying, wow, how did you do that, i need to get a new gopro, as well. is that one quarter, two, are we looking at, say, february, after the holiday season?

>> i think it's going to be exciting fourth quarter for gopro and for all of our fans and investors as we see our customers adopt gopro as a new easy story telling solution. i think the proof will be quite evident in the fabulous stories that we see people share, and i think after christmas we can expect a very nice post-holiday uptick in the amount of stories being shared as everybody opens their gopros and shares their experiences now with this easy solution. >> nick, if we look at the market overseas, there's been a lot of focus on dgi, the chinese fast growing camera drone player, does it make sense for gopro to partner or work with dgi in order to expand gopro's footprint outside the u.s.? >> i think that we have a very strong vision for our future in drones and, frankly, beyond drones. aerial perspectives are just one

part of great story telling, and one of the things we're doing at gopro is creating an end to end story telling solution that starts with the camera and then includes fabulous accessories like karma, but, you know, karma is much more than a drone. you can remove the stabilizer from the drone and plug it into the hand grip that comes with karma, and we find that we actually use the hand grip even more than the drone, because you can use the hand grip anywhere and there are some restrictions where you can use drones, and everything folds into that one backpack and is there easy to take with you during any activity. we think karma is going to weave itself into people's lifestyles really conveniently and we're not done yet. there's a lot more innovation coming from gopro. >> tell us, how do you look at the drone market and the pricing structure? right now we're starting to get drones around $1,000 like yours and cheaper. i'm quoting that $1,000 figure, if you also have to buy the camera separately, but is there

going to be a strong profitable market at $500 and below, and what's the model going to be? is there kind of a maintenance program that you expect? because people are going to crash these things no matter how good the intelligence is in them. how do you make money long term? >> well, the drone market is in its infancy, so you're still seeing a lot of tip of the spear products out there at high prices, we think too high. karma is priced at $799. if you already own a gopro. and if you don't own a gopro, you can get karma for $999 or $1,099, depending which hero5 you bundle it with. you're right, drones will continue to be less expensive as technology improves and it's important that gopro make this incredible experience accessible to consumers, and that means keeping prices accessible and

making this a solution anybody can use. >> you probably aren't going to play at the lower price point when drones do hit that point you're saying? >> well, i can't share too much about our road map, but gopro is a story telling solutions company and if we can't make our products accessible to you, the consumer, so we're focused on making gopro very accessible and i think that as people begin to capture and share experiences the way they can now with gopro, i think that story telling is going to become more habitual and share itself in this new way, so we're really excited about it. >> exciting times indeed. we'll see what kind of a holiday season it is for drones. nick woodman, founder and ceo of gopro, thank you. when we come back, keeping an eye on deutsche bank shares as new reports surface as a possible settlement with doj. how that's impacting the overall

european markets when "squawk alley" comes right back.

welcome back. we are coming down to the close of the uk and across europe coming off a 4% gain in the third quarter. european stocks are mixed to start q4 amid positive news on the uk and euro zone pmi. germany is closed for a holiday. 15-month high as the pound falling to a three-year low, this after the prime minister set a march deadline to begin the brexit talks process, speaking sunday at the conservative party's annual conferenc conference. as a result of the prime minister's announcement, citi is

advising clients to sell the pound against the turkish lira, believing investors would be tempted to use the pound as a funding currency and trigger further weakness. london listed henderson group surging. the combined firm would manage more than $320 billion in assets. and interestingly enough, the ceo of janice will be a guest on power lunch today at 1:00 p.m. eastern. we'll also be keeping a close eye on u.s. trade for deutsche bank and whether or not it can strike a settlement with the doj. it's down about 13% over the past one month. carl, the question or story this week will be whether deutsche bank can renegotiate with the doj in washington and also talk about whether they can reduce their balance sheet risk. >> big issues coming up. stl to come, buzzfeed reporting major trouble and violence at a blue apron plant. the reporter who investigated

those conditions. and from 21-year-old immigrant to billionaire, why thomas says he wants to make america great again. and a quick check of the markets as q4 kicks off. dow and s&p both down about a third of a percent. more "squawk alley" is next.

here's your cnbc news update

at this hour. u.s. attorney general loretta lynch will announce new justice department grants to help hire police officers. $119 million in funding will go to major cities across the country and is meant to increase community policing. retirees chanting "shame on you" took to the streets in athens, greece, to protest a new round of government pension cuts. police were forced to fire pepper spray to contain the crowd of more than 1,000. no injuries were reported. investigators are still unsure what caused a commuter train to crash into hoboken, new jersey, terminal last week. the engineer behind the control says he has no memory of the impact. meanwhile, the first of two black boxes onboard the train were not working at the time of the crash. there's a new record for most expensive baseball trading card, a rare 1909 honus wagner selling for just over $3 million at a weekend auction. it's believed to be one of just 50 copies left in circulation. your cnbc news update at this

hour, carl, back to you and "squawk alley." sure wish i found that in my attic. >> thank you very much, courtney reagan. trump's big tax bomb shell over the weekend reveals the presidential candidate could have paid no federal income tax for over two decades. our robert frank is going to look at that -- looking at the wealthy, good morning, robert. >> good morning, carl. we heard a lot of political discussion about that tax loophole, but we haven't heard much of a financial explanation about exactly what this loophole is and how it works, so we're going to tell you. the provision is called net operating losses, or loss carried forwards. the times say trump reported a net operating loss of $960 million in 1995, which could then be used to erase up to $960 million of income over 18 years. first enacted in 1918, but at that time it applied to only two years of income. over the years, thanks to lobbyists, it's been expanded. in 1995, the time trump took that law, it was 18 years. now you can apply it to more

than 20 years of income. the idea behind this was to help companies ride out economic cycles. you can only apply it to companies that you own or control like llcs. not to be confused with investment losses, which a lot of our viewers are familiar with. those can only be used to offset capital gains and only reduce your personal income by a maximum of $3,000, but real estate developers like trump have found ways to turbo charge the nol provision, so real estate professionals like him can deduct interest payments on building loans and depreciation of real estate, so they can report large paper losses even while making huge income. now, the use of nols is not uncommon among the wealthy, but the magnitude of trump's losses are almost unheard of. i talk to a lot of tax accountants who said they hadn't ever seen an nol larger than $100 million. the big question still to remain

is how he generated the $916 million loss, given the fact he's said he's not releasing his taxes, that's a question we may never get to answer. guys, back to you. >> in the coming weeks they'll tell us. our next guest is a billionaire and immigrant from hungary who is backing donald trump. joining us this morning, great to have you back, good morning. >> thank you very much for having me. >> i want to talk about the broad reasons you're backing trump in a minute, but first, give me your reaction when you read "the times" piece over the weekend. >> well, i don't think there is anything unusual about a business losing money in certain years, and, obviously, he could not carry those losses forward, then few of us would be in business. right? >> so broadly you're an immigrant, you're a billionaire, a lot of discussion about trump's tax policy will apply to you. what do you like about his

candidacy? >> well, the trump tax policy will apply to everybody. as far as his economic policies are concerned, trump is going to reduce taxes, eliminate loopholes, and simplify the tax code, in addition to renegotiating trade deals. on the other side, mrs. clinton wants to increase taxes, increase the minimum wage, increase government spending, and so it appears to me that mrs. clinton's plan is going to have a dampening affect on the economy, while trump's will boost the economy. also, they both want to create new jobs, but as democrats often forget, new jobs can only be created by private enterprise and not government. all government can do is to

create an environment for private enterprise to prosper and grow, and, therefore, hire more people. >> thomas, if trump is better for the economy, why are international markets and markets here in the u.s. reacting -- or seeing hillary clinton as better for stocks? >> well, i think many people misunderstand who the personalities are. i do not think that this election is about the personalities of the two candidates. let's face it, neither one of them, the broad majority of people do not like either one of them, so it's not about their personalities. it's about the consequences of their policies. >> mr. peterffy, i'm wondering from the perspective of the person on the street, seems you argue this nearly $1 billion loss from mr. trump, carrying that forward is normal for the course of doing business, it helps to ride out economic cycles, and yet when folks on the other side talk about

raising the minimum wage, that's bad for business, bad for the economy. is there a bit of a contradiction there? i mean, a billionaire not paying taxes, good for business, good for the economy, lower income people not getting a raise, minimum wage, bad for the economy. >> i did not say that. everybody should pay taxes. i do not think there's any allegation he did something illegal. i'm saying that if you are in business, you sometimes lose money. you have bad years. now, if in good years we have to pay a tax and in bad years we couldn't offset the bad years, then we would possibly pay more taxes than our net income over several years, and that would finish our business. right? >> have you given the campaign any feedback on the relatively rough week they've had about campaign strategy, about how to win florida, about strategy

going into the next debate, any of that? >> let me make it clear, i'm not connected to the trump campaign in any shape or form. i am doing this on my own. i -- this is how i feel. i'm not being given anything to say. >> some have looked at the potential market impact of a trump presidency. there was a piece in "the times" over the weekend looking at various studies, take them for what they are worth, obviously, but arguing the market could fall 10% to 12% on his election. what's wrong with that? >> i tell you, frankly, i wouldn't give two cents for what "the new york times" has to say about this election. obviously, they are very biased, and they are in the democrats' pockets, right? >> thomas, we hope to have you back in the next few weeks. it's certainly good to talk to you.

maybe next time talk some global markets and market structure, as well. thanks. >> would love it, thank you. thank you. coming off a stellar opening day, nutanix is officially the most successful ipo of 2016. we'll look at what can be next. first, rick santelli, what are you watching today? >> well, seema, even though a lot of countries are closed, germany, china, australia, we're still watching the fallout from deutsche bank and how it affects the markets. remember, and we've learned this lesson many times, stabilization isn't necessarily reform or return to profitability. that's what we're going to talk about right after the break.

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you can even enroll right over the phone. don't wait. call unitedhealthcare or go online now. ♪ as we head into the fourth quarter, but is it the right strategy? we'll debate. plus, a four-star tech fund manager tells us the names he's buying right now. and wynn, deutsche bank, cabela's, and more. wow, i get to toss back to john ford. can you believe that, john? that's a switch. >> i can barely believe it, it's going to be an exciting show for sure, thanks, joe. now rick santelli has the santelli exchange. rick? >> thanks, john. wow, that sure resembled joe

outside 'squawk box." listen, we're also tuning in on a market where even though germany's closed, deutsche bank is an epicenter on many people's screens, not because they necessarily have a position in it, although it did have a bounce, given a little bit back. when you open the chart up year to date, maybe you get a bigger dose of reality. even though the market's closed, of course, we have the adrs trading, but also the five-year credit defaults trading, and the default swaps for senior debt are up close to 4, 232, always higher, zeroing on 500. the reason i bring these up, not that you're going to pay that much attention to them, but the notion of stabilization, believe me, bail in, bailout, taking advantage of various programs to get cash on the balance sheet, working capital, working to potentially settle the $14 billion fine by the department of justice, all those are moving

pieces and one of the big reasons with germany closed at the credit default markets are more expensive today, reflecting more nervousness is due to no deal, but that's not what i'm concentrating on. even when they get it worked out, what have we learned in the credit crisis? we can stabilize. of course, we can. stabilization doesn't mean an immediate reform on all the issues that are creating headwinds for deutsche bank, and there are many, but the biggest issue on the back side of this is finding profitable business lines. and that, of course, impacted by mario draghi. talking about central banks, you know, it is political season. never fails to amaze me how big story working within the tax law seems to be a criminal event these days, but that's the way it is. things are weird during election cycles, and one thing in particular that i like to talk about, and i think we need -- i think there should be three questions on this. at the next press conference, by the way, of course, janet yellen

hinting last week that the notion of adding to the buying, we've already seen buying of securities and quantitative easing, other countries have experienced with buying equities and corporates and it's the latter two janet yellen thinks ought to be studied, but no matter what conclusion she comes to, in the end, they'll probably have to have permission from congress. let me see now, political season, think congress might have any type of inkling about which companies to buy or sell their stocks or securities for? of course, they would, and that's what's front with danger on the intersection of those topics, and we all need to talk about it a lot more. because if it's being studied and it's on the table, that is a slippery slope, indeed. seema, back to you. >> rick santelli, central banks likely to dominate over the next three months. thanks so much. new report from buzzfeed calling what it calls violent and unsafe working conditions at blue apron. "squawk alley" will be right

back.

nuks went public on friday and now a lot of analysts are saying we can expect more tech companies to follow their lead. aditi roy is live with that story. hey, aditi. >> that's right, nutanix closed up 131% and today those shares were up around 9%. nutanix was the first ipo to double in its first day since

august of 2015, when global blood therapeutics debuted. it comes during a slow year for tech ipos, but some analysts say that could change. nutanix followed another company which went public last month, its shares are up 136% since last month, and twilio's stock has skyrocketed nearly 330% from its ipo price. analysts say success in its debut could be a harbinger of other enterprise companying going through the ipo pipeline. some protect q4 and q1 will be busy, even if they are still operating at a net loss now. >> company like snapchat would, obviously, get people very excited, but in the interim i think you'll see a lot of enterprise tech ownerships, companies that people can get their heads around, they have huge market categories they are going after and most are

approaching profitability by the time they are going public. >> another company to watch out for is kupa software, which helps companies manage their spent. it's expected toright, thanks. now on to another potential ipo that's taking some heat today. blue apron is the subject of a new buzz feed record. it found health and safety violations, incidents of violence and arrests in the packing facility. here is blue apron's response to cnbc. in parts of 2014 and 2015 we experienced it difficult with several temporary staffing agencies in richmond that did not meet our performance standards and provided workers who did not always abide by our policies and procedures or share our values. as a result, blue apron quickly ended its relationship with these agencies. carolyn, buzz feed's tech reporter who wrote the story, joins us on the phone now. thanks for being with us,

caroline. >> thanks for having me. >> for starters, this explanation from blue apron ring true based on your investigation that these were temp employees brought in who maybe weren't screened correctly and that blue apron quickly addressed those issues? >> from the beginning of the story i had heard that the temporary employees were part of the problem, and they did hire a number of temps as they were scaling so quickly and they saw an incredible demand for their product. it seems clear they did have a number of temps around. i reached out to all of the temp agencies, and they were not interested in commenting on the story, so it's hard to say exactly what happened with that relationship. i also know that they do i don't

know if they were the same temp agencies or not. blue apron, as far as i know, does do pretty tribl background checks for the employees it hires directly. the problem is they were not able to oversee how the temp agencies were doing their hiring. whether they were doing background checks to the same degree was the problem, i think. >> caroline, taking a step back. it seems a bit strange in that blue apron's clientele reasonably upscale. they're targeting mostly urban professionals, but the working conditions as described in your piece sound worse than what you would expect to find at most grocery stores where just everybody shops. is there some breakdown in the business model here? are they not managing that correctly? do you think it's mostly an issue of growth? does this have implications for this whole just in time economy that's swallowing up a lot of jobs potentially? >> well, i think when we think

about blue apron and the product they're selling is we think about how they market it. i think that that's something people are interested in. bringing that more produce and food supply to people's homes and kitchens, which is great and interesting. you have to acknowledge that in between those farms and people's doorstep, there is a system in place. there has to be a system in place in which the boxes are packed, and what we wanted to know more about is exactly how that happened. we compared their health and safety record to other meal kit companies. plate it, hello fresh, chefs, and in the story we sort of found that while some of those companies do have a few violations here and there, none had as many as blue apron. then we compare them to perishable food manufacturing in the state of california, and we found that they were among the worst there. i wouldn't necessarily say that

they are worse than the food you would find in the grocery store. they were worse or as bad as some people in those two categories. >> caroline, blue apron has a reported valuation of around $3 billion. it's expected to potentially go public over the next year. did you get in the investor reaction -- they do have some well respected investors in their company, including box ventures and bessemer. >> the people i was talking to about packing boxes and what was happening on the floor didn't necessarily have a good sense of the ipo or the valuation at all of the company, unfortunately, and the story only came out yesterday, so i haven't talked to any other investors as of yet. it's hard for me to say. i do think it's interesting that the ipo news came so close to the publishing of the story, so i would be interested to follow and, of course, we're going to continue reporting and following the story. >> fascinating story. reminisce ent in some ways of t amazon warehouses. you wonder if they'll be able to get this under control. tech reporter at buzz feed.

thanks for joining us. >> thank you for having me. >> when we come back, one of last year's top apps is calling it quits. that and a lot more when "squawk alley" comes back. they may want the latest products and services, but they demand the best shopping experiences. they're your customers. and by blending physical with digital, cognizant is helping 8 of the 10 largest u.s. retailers meet their demands with more responsive retail models... ones that transcend channels and locations, anticipate expectations... creating new ways to engage at every imaginable touch-point. it's a new day in retail, and together, we're building the store of the future. digital works for retail. let's talk about how digital works for your business.

one of last year's star apps meerkat is finished. the creator tweeted we just removed meerkat from the appstore bittersweet moment. house party is the firm's latest endeavor where they can group video chat with friends and other users. meerkat was the much talked about live streaming app, competitor to periscope, that caused a splash at last year's south by southwest, although it feels like a lot longer ago than that. >> it does, carl. the irony here is that twitter itself was created out of a pivot out of odeom, which i understanded -- ended up failing. he is tweeting the death of meerka it and house party. it's a group messaging app. there's nothing wrong with being second. meerkat was first.

maybe house party will work. >> first strike advantage doesn't always work in tech. >> my space. >> exactly. other reports about amazon. read code saying -- essentially a hiring freeze looking for -- looking for engineers to artificial learning specialists. amazon has set i series of all-time highs. obviously still in growth mode. >> i believe it's out with a report saying the home wi-fi connected devices that you'll speak to will be a market in the hundreds of millions in pretty short order. not yet on the scale of the smartphone or even the tablet. we'll see if there's real money to be made or the services behind it. >> valuation a big part of the discussion. technology seeing a 12% gain in the third quarter. amazon, as you point out, still a record high territory. will the rally continue? that's the question. >> q4 essential possible. >> meanwhile, we're keeping our eye on netflix. best best day in a couple of months, i think.

4% gain on net flex back. almost to 103. reports over the weekend about the percentage of shows that are going to be original over time. some of those goals very ambitious eventually half of their content they say being original. let's get to a very special half with joe. back at hq. ♪ >> welcome to the halftime report. everybody is being so nice. it's really great. i'm joe kernen in for scott wapner. top trade from defense to offense, as the fourth quarter kicks off, a big rotation is underway as traditional defensive sectors seem to have lost their leadership position. heard from mike santolli earlier on ""squawk box"" about it. i've got some comments. is moving into offense the right strategy with big events like the election and the fed looming, or a lot of times you see them move like this, it's already happened. i'm