good morning. netflix shares soaring on strong earnings and subscriber growth. >> ibm under pressure. the stock trading lower this morning despite what looked better than expected quarterly results. we'll hear from the company's cf. >> weak pound means big sales for burberry but that may not be enough. shares down sharply in europe today. it's tuesday, october 17th, 2016. "worldwide exchange" begins right now. ♪ >> good morning and welcome to

"worldwide exchange". i'm sara eisen. >> i'm wilfred frost. >> let's check in on the global markets this morning. some strength early in the pre-market action after yesterday couldn't hold the gains. dow futures are up nice 80 points. s&p futures up 13.5. nasdaq futures are up 41 points. ten year treasury note yield falling some disappointing numbers on industrial production an ahead of the consumer price index. ten year yield backing off from that 1.80 level. 1.77. we saw a jump in yield in the past month or so but off those june highs. >> in europe uk inflation tick up to the highest annual rate since november 2014. european shares trading higher significantly as you can see over 1%. we were down yesterday by about three quarters of is% so a little bit of a bounce back there. uk inflation data something to

dive into more deeply when we see the currency moves. asian trade also strong, started off a good risk on trade for the day as a whole. hong kong and shanghai up 1%. 1.5% in fact. >> let's go the broader market picture and show you what's happening with oil. wti stronger back above 50 after it sold off a bit yesterday of almost a full percent. brent is trading just assembly $52 a barrel. gasoline higher as well. the dollar backs off a seven month high in early trade right now. the euro is stronger goes above 1.10, is.1016. we'll talk about this strong dollar impact on earnings. there's a new report out. dollar is stronger against the japanese yen hovering under that 1.04 critical level and pound gets a half a percentage relief. british inflation numbers are out. and that's a big factor

there. it's raising the prospect of whether there can be more easing from the bank of england when inflation is ticking pup. of course that's the big question does inflation pick up and is it that kind of unwanted stagflation that hamstrings the bank of england as opposed to perhaps genuine inflation. let's get to the big corporate story of the day. netflix shares are soaring on better than expected earnings and revenue. the streaming service adding 370,000 domestic subscribers in the last quarter. that was against expectations of just over 300. a massive 3.2 million international subscribers compared to its own forecast of 2 million international subscribers. the ceo on the conference call last night talking about the company's competitors. >> we've had a great couple of

years at these price points and there's a lot of competition entering the market. what we're focused on is how do we increase value to the consumer by having more spectacular shows so that people watch more of netflix and over time that will take care of itself. but we don't want to get over confident because we had a good couple of years. >> joining us is the senior analyst at fdr capital markets. good morning. 20% or so these shares are up in the pre-market. is that down the international subscriber more than anything sfels >> yeah, i think the international subscriber number was the big upside variance. not just what they did in the third quarter but their outlook for the fourth quarter was better than we were fearing and many others. the reason they said this is happening, which i think is very encouraging for the bulls which is they said their original shows were driving greater engagements interest in the service.

they are ramping up thierj. so you had a perfect set up against very low expectations. i think the difficulty for the stock is that from here the bar is set much higher and much more difficult for them to do better than expectations but certainly a great, you know, report last night and great set up near term. >> we're looking at 370,000 ads in the u.s., 3.2 million internationally. how much longer can those massive blow-out millions of additions continue on the international side? >> well that's really the fundamental kind of question about netflix. you know, we're thinking that these guys can add over 10 million international subscribers per year for the next year or so. you know, even with that, they are not beating expectations. i think that, you know, for these guys to be beating and raising from this point you got to be adding, you know, 12 million plus subscribers which if you look at their penetration

of available broadband homes and you think it will be aspen at any rated internationally as it has been in the u.s. you can make that argument. but if you think netflix will be somewhat less penetrated because incomes are lower and people are less interested in tv internationally the content exports maybe not as well internationally could be difficult to that it target. we like the business. we think that the bar is set so high that we're a little bit leery of a stock trading at 246 times pe this year, need to grow earnings by a hockey stick to get up to our estimate of 22 by 2020. that's consistent where the stock is trading right now in a rose colored glass scenario. >> not to mention the sentiment has swung so widely. last quarter they couldn't even forecast their u.s. subscribers correctly. this quarter that was a beat. the international was a big beat. is there a visibility problem when it comes to the company's own forecast of subscriber

growth and what are investors supposed to do with that. double digit moves in either direction off of earnings. >> i don't know that these guys are bad. i just think it's impossible to forecast at that precisely quarter to quarter and that stock giving that earnings multiple that it just described is incredibly sensitive to variances up and down. in my mind the risk-reward is the debate. you want to endure this volatility to make the bet on netflix today. right now we're a $100 price target. we're not there. i can understand why others are. but it's a real gut check every time you go into the quarterly report. right now we're not there. and, you know, i think as people have to ask themselves that when they look at this stock. >> you mentioned original content that netflix really focuses on. you specifically inned in any

shows coming up, there's quite a few he singled out on the earnings call. >> it's such a great question and such an unanswerable one. we don't have great data on how much people are watching these shows. we can't tell you how much of their subscriber growth was fueled by stranger things last quarter versus the get down. they called it out and said it helps drive subscriber growth. it's a black box. a lot of the stuff is very watchable for certain segments, not every segment but a lot of people are talking about these shows, not everyone. so i wouldn't call it any one show driving it but what they are doing seems to be resonating. >> they talked about growth specifically in latin america. some questions about how you grow this business internationally, how you get content in various language, how you deal with regulatory pressures. did this quarter prove those

worries had gone too far or should investors still be concerned about that in the long run if international is the real growth story here? >> there's no doubt that these guys are putting together a service that resonates in many countries. just that it has to resonate at a very high level to buy the stock here. but, yes, they called out the other two titles that are highlighted but calling them out is hard to square the circle. what does it mean in terms of subscriber growth and their ability to do better than high expectations. that's the difficult thing to ponder with this business. as you scratch your head about these things, the alternatives are getting better. amazon is much better. youtube is much better. paid tv services are getting better. there's a lot of things to worry about and to continue to make the stock volatile, you know. >> reed hastings himself apologized for the volatility. he did so last quarter when the stock was down and he noted it

again on the call last night. thank you. >> one other show he did call out as well was "the crown." speaking specifically about hitting his target of 60 million subscribers and "the crown" when you watch that show those numbers will be achievable. >> price targets raised all over. the question is good story though you have to pay up. your willing to pay that nose bleed valuation. shares of ibm an earnings story tumbling after its earnings report. the numbers did mark big blues 18 straight quarterly decline. the firm invested heavily. spent 5.5 billion on acquisitions compared with a little over $8 million last year. pmi cfo addressing the purchase on the conference call. listen.

>> we are getting good returns on the investments we've made. we bought now 25 companies since the start of last year. we still see some technologies and things that have some appeal to us. in fact just a few weeks ago we announced the acquisition of a financial company that has expertise in regulatory for banks. we'll take that and put it in watson and teach watson how banks need to abide by and comply with the myriad of regulations. >> the firm saw growth in its newer businesses including the cloud executing business and artificial intelligence division. you heard him talk about watson. they are dealing with slower growth and 2% der klain in marg. >> some big movers there aftermarket and more earnings coming out today. we'll hear from companies like

blackrock, goldman sachs, johnson & johnson intel to name a few. on the data front we have reports such as the consumer price index out at 8:00 a.m. eastern. housing market is released at 10:00 and treasury international capital at 4:00. >> i love that one. >> tic data. >> we mentioned johnson and jump first major health care company reporting third quarter results. landon dowdy joins us with three things to watch. >> good morning. the street is looking for johnson & johnson to report earnings of $1.65 a share on revenue of $17 billion. here are the three things to watch. first the arthritis medicine is johnson & johnson's drug. but remicadee. tail winds could end. so you want to listen for any commentary on future sales of

that. second medical devices growth in this segment has been subpardue to increased competition and management highlighting accelerating growth in the second quarter thanks to product launches. the third thing to watch a new product. investors want to know whether the new pharma products show good momentum and if over-the-counter products are helping to boost margins. johnson and jump is outperforming the s&p. back to you. still to come. a flood of corporate news this morning. we'll bring you more of the stocks you need watch including these shares dropping on the word that the ceo is leaving. we'll tell you why and what to expect moving forward. you're "worldwide exchange" on cnbc.

. welcome back to "worldwide exchange". let's get you up to speed on market. the dow up 81 points. s&p 13. nasdaq 41. we were down about a third of 1% yesterday on low volumes but asia and europe particularly strong. oil prices soaring very quickly. they are up about 1% just shy. 50.33 wti crude. >> stocks to watch today, visa

ceo charlie scharf who oversaw the company's reunion of its european affiliate is stepping down and be replaced by former amex president. in a note to employee he said he needs to spend more time with his family. >> we need to be on the east coast more than we're able and, therefore, i don't feel like i can spend the time necessary in san francisco to do this job properly. >> speaking on a conference call there with investors and "forbes" has a nicing write up about his success as a ceo. visa stock surged 130%, operating income rising 26% between end of 2013-2015 outperforming other credit card companies at a time american express faced a lot of challenges because of competitive pressure with visa and europe visa integration as touted as one of the big ones. new ceo could face challenges.

they are competing in a broader world where there's paypal. >> absolutely right. face challenges in relative price point performance. so he has his work cut-out. he says it's very much just personal reasons. shares did sell off a little bit on fears it could be something else. or the company will lack his leadership. quite a nice story. >> we did learn they will focus much more, the new ceo spending more time in california. united airlines third quarter profit fell but still beat forecasts. however the carrier says cheaper air fares and higher wages from new labor contracts will squeeze results. united ceo will be on "squawk box" today an exclusive interview coming for you at 8:00 a.m. eastern time. boeing's new suppliers of seats for its 737 jet has signed its first two customers.

reuters says it will allow the company called lyft to begin production. boeing will buy seats from a supplier guaranteeing that they will arrive this time on time. >> more stocks to watch. ford will shut down its production of its f-150 pickup truck and idle three other plants. it will affect 13,000 workers and comes after seams of the s series pickups fell 3% last month. shares up half a percent. investors poured $30 million orders from sprint. the bond which is backed by sprint's spectrum is expected to boost the company's liquidity. goldman sachs was sounding out appetite for the five year note at a yield of 4% to 5%. burberry trading low in london follows disappointing second quarter results. the luxury chain says it's seeing strong demand for tourist

and domestic customers in the uk but as we said sharply missing estimates and down almost 9% in london trade. >> coming up the countdown to the financial presidential debate now just one day away. the latest from both campaigns on a busy day straight ahead. >> here's today's national weather forecast from the weather channel. good morning to you guys. ready for another day in the 80s. we got it new york city. 81 degrees today. a lot of warmth a lot of heat and some humidity considering it's october. we'll feel it all across the northwest, northeast. a lot of spots flirting with records. record to beat at central park is 82 degrees. in the meantime a very strong front coming down knocking down temperatures. dodge city, kansas, we saw 101 degrees yesterday. our hottest so late in the season. first 100 degree day of october for dodge city. and we have dropped about 57 degrees thanks to a front that's

on the move today and we'll feel that and see with it showers and storms possible across the midwest. that's your forecast. "worldwide exchange" continues after this. what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create,

not just wealth, but things that matter. morgan stanley this man creates software, to protect this customer, who lives here and flies to hong kong, to visit this company that makes smart phones, used by this vice president, this little kid, oops, and this obstetrician, who works across the street from this man, who creates software.

they all have insurance crafted personally for them. not just coverage, craftsmanship. not just insured. chubb insured. welcome back to "worldwide exchange". now to today'sle top political news. presidential candidates preparing for their final debate tomorrow. edward lawrence joins with us the latest. >> you will hear the word quid

pro quo a lot over the next few days not only is donald trump saying the election process is rigged but also new emails show corruption. donald trump says newly released state department emails show a scandal he calls worse than watergate. >> the fbi documents show undersecretary of state patrick kennedy made the request for altering classification as part of a quid pro quo. in other words a deal. this is felony corruption. >> reporter: in one exkwhaeng fbi the under secretary asked to change the classified label on one of hillary clinton's emails when she was secretary of state. the state of department would reciprocate by allowing the fbi to place more agents in countries where they are presently forbidden specifically iraq. the fbi and state department deny any wrongdoing. >> no quid pro quo. no exchange. >> reporter: as part of trump's latest push his wife went on cnn

blame being billy bush for trump's lewd comments. >> he was led on like egged on from the host to say dirty and bad stuff. >> reporter: meanwhile senator bernie sanders tried to reach out to trump supporters playing off his rigged election claims. >> the system is rigged in favor of the wealthy and the powerful. think about voting for hillary clinton on this issue alone. >> reporter: and hillary clinton has not commented on the e-mail controversy. she does not have another public event scheduled until the debate on wednesday. >> thank you very much for that. on a programming note democratic vice presidential candidate will sit down for an exclusive interview with kelly evans. tim kaine. you can watch that this afternoon 4:00 p.m. eastern time. >> hopefully he won't interrupter happen. to sports in the baseball playoffs cleveland indians headed north of the boarder to

take on the blue jays in toronto last night. cleveland was up by 2019 bottom of the ninth but the jays were threatening with the tying run at the plate. indians sabmecond baseman makes throw. now one victory away from going to the world series. >> disappointing cubs fans. in sports business news under armor strike acdeal to be the exclusive provider of uniforms of make league baseball. the company will be taking over from maestic athletics starting with the 20 season. terms haven't been disclosed but under armor is teaming up with fanatics. underarmor fighting back here for the sponsorships looks like they will get the mlb.

>> from baseball to football, those the new york jets flying out west to take on arizona last night. the cardinals dominated jets thanks to the plagiarize running back david johnson rushing for more than 100 yards. arizona beat new york 28-3 to pull their record to 3-3 on the year. jets just 1-5 now. disappointing. cardinals good form last night. >> still to come this morning's top story and a complete round up of the big earnings report. plus a look at the conferency impact. wolfgang koester joins us to reveal his firm's impact studies. you're watching "worldwide exchange" on cnbc. gilman: go get it, marcus. go get it. ...coach gilman used his cash rewards credit card from bank of america to earn 1% cash back everywhere, every time. at places like the batting cages. ♪ [ crowd cheers ] 2% back at grocery stores and now at wholesale clubs.

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. good morning. the tale of two tech names netflix shares soaring ibm shares declining. we'll tell you why. >> markets now futures are pointsing to a higher open. today's test more earnings report and more economic data. >> a return to space and/ orbitl rocket successfully lifts off. you're watching "worldwide exchange". ♪ good morning and welcome back to "worldwide exchange" on cnbc. i'm sara eisen. >> i'm wilfred frost. good morning to you from me as well. let's get straight to the market

action. yesterday a third of a percent delines for the main indices on low volume. today we're bouncing back. 85 points gained for the dow in the pre-market. 14 points for the s&p. 43 points for the nasdaq. this is largely driven by gains elsewhere in the world. europe up over 1% for the most part scrubbing out yesterday's three quarters of a percent decline. we're seeing over 1% and for all five major indices. ftse up 1%. germany, france best part of 1.25%. asian trade was also strong particularly hong kong and china where we got 1.5% of gains for hong kong. the nikkei up 0.4%. >> united continental with the beat, netflix blowing away estimates with the stock surging 20%. the banks having another successful quarter driven by fixed income trading no matter what you call it, it was a beat on bottom and top line wouldn't

you say? so far we're off to a good start. >> there's something pretty similar for each of the quarters with banks. low expectation. they gate q1, q2. the big difference coming in to q3 they already performed well. august and then september they pause a little bit. early october they perform well on rate hike expectations. they came into this with fuller share price so they did get beating on the line. we've seen them slip a little bit from those initial gains. >> hard to please. >> as for the broader market picture oil is stronger helping lift the stock market overall. wti back above 50.34. up a .10%. brent trading below $52 a girl. gasoline higher as well. the ten year treasury note yield is higher as well at 1.77.

we're off that high we hit on friday of about 1.80. higher for the month still lower. we'll see what cpi, consumer price index looks today. the euro is stronger this morning at 1.1013 but the there are is maintaining its strength against the japanese yen. as for the pound getting a boost higher inflation number out of the uk this morning. >> boost for the wrong reasons. >> showing that they may have some policy difficulties. >> cpi up 1%, the target is 2%. not there yet. certainly to see a market tick up in september because of imported inflation is something for the economy to be, you know, the bank of england and people to be very worried about. if the pound continues its fall it will hurt. >> gold prices quickly. let's show you where they are trading. they've been hurt by the stronger dollar over the last week or two. stronger today up half a percent watching that euro strengthen

against the dollar. netflix shares soaring on expert than expected revenues. adding 370,000 domestic subscribers in the last quarter. but the real highlight was that 3.2 million international subscriber growth. reed hastings on the conference call last night talking about the company's competitors. listen. >> a snapchat, youtube, facebook video, all of that takes a lot of hours. probably much more so than amazon. but there are so many competitors out there for screen time and we have small percentage of total screen time that moves by specific competitors are unlike try to have a material effect. >> that subscriber growth is so important especially internationally because the u.s. stock market considered a bit more saturated and then he says there's more "room to grow" there because the content costs are piling up into the billions

of dollars, paying for original series like "stranger things" which is an excellent show and some other content deals that they are doing with other networks. if they can keep up with the subscriber growth they can field that. >> "the crown" out november 4th, most expensive show. they are pouring money into it. it delivers these type of numbers that's fine. their own guidance was for 2 million. they killed their own number by a huge margin. as we said so many time the last two quarters to the down side this quarter to the upside. numbers for netflix are extreme. their multiples are 250 times earnings. goldman sachs, morgan stanley raised estimates for the stock. we talked to an analyst who says

great story, great growth story can't pay these high expectation. shares of ibm less expensive this morning. they are falling after its earnings report to the tune of 2% in the pre-market. helped by growth in the firm's cloud and analytics business but numbers marked big blue's 18 straight quarterly decline. >> revenue was roughly flat in total but the quarter played out really what we said it would. we had good growth in our strategic imperatives so up 15% on a constant currency basis and that's what we're looki ing for for that business. watson business within that is part of our cognitive solutions business. it's obviously growing and cognitive solutions in total were up five and within cognitive solutions the software solutions space was up eight. good growth across the watson platforms. >> the firm also said it saw

growth in its newer business including cloud executing and artificial intelligence division. >> visa ceo charlie scharf who oversaw the company's reunion with its european affiliate is stepping down. he'll be replaced by former american express president and visa board member alfred kelly. scharf said he needs spend more time with his family and that's the reason he is stepping down. shares of visa under pressure on the news yesterday down a percent in the pre-market era. back to earning season now. we've been hearing from market experts who say currency impact excuses aren't about to die down and joining us now with the results of the survey saying how strong those headwinds are, wolfgang koester. thank you for joining us. you put out some new numbers today when it comes to the impact of currency swings on u.s. corporate earnings for second quarter. so this is the last quarter

round. what did you see? >> what we saw is that the numbers were not quite as bad as we expected them to be because of brexit obviously happening at the very end of june and the cut off date being june 30th. we expected that the brexit numbers would actually increase the impacts, negative impacts for both u.s. and european corp operates. it didn't come up as bad as we thought. just under $10 billion. not a great number especially the average earns per share of the companies were impacted by impacted by five cents which is a large number when you think about currencies in today's age can be managed to the point much less than one cent per earning share. but not what we expected. we expect the outflow to come more in q3 where people are reporting more accurately on the numbers. >> this is right now just to be clear. q3 is what we're going through now. you're expecting that to ramp up. >> yes, we do. one of the thing we saw in q2 that a lot of companies

typically quantify their foreign exchange impacts did not. so you had a ge and some of those companies not impact -- have the impact shown as much as possible. you did see an ibm. we talked about them getting hit and they took a hit from foreign exchange. >> we've seen the dollar pass some significant levels, 1.10, 1.04 with the yen. those levels start worrying companies in terms of their earnings impact? >> they really do. it seems a little bit counter intuitive but as you know a stronger dollar is not good for earnings when companies do a lot of their business abroad. so if there's more revenue abroad they get devalued. right now i think you're seeing actually the dollar leading some of the stock indices. you have a stronger dollar stocks come off and vice versa. today you see stock strength you see weakening or stengthensing of the euro and weakening of the

$. >> what's the time frame. dollar is at a seven month high. does that mean this current quarter will be a big headache when it comes to international revenue growth or does it hit more with a lag? i don't think that investors and companies have figured out exactly how to track the dollar moves with the direct impact on their business. >> you typically have somewhat of a lag but some immediacy too. the way companies look at it they have balance sheets that they manage which is a shorter term cash and monetary asset liabilities where investors should look for foreign exchange gain or loss line which comes below the net operating income and above the net operating in come going into earnings per share and then revenues and expenses that obviously are looking out towards the cash flow for about 12 months out. threw see more of a lag. you see more immediate impacts coming from the balance sheet and longer term over two, three, four quarters. but, what's interesting about this, they can be managed today.

the leverage technology and that's why we track these companies. the leverage technologies actually manage that currency. they need to understand it better. one of the problems we saw out of q2 when i talk to cfos and board members they ask questions what did brexit mean. people are saying we're still trying to figure it out. our customers knew that night what impacts were, what exposure they had. you can definitely manage that today. so you're going to hopefully see and hopefully we're part of that is helping people lessen the impact of currencies on their financial statements and on their results. >> we'll see what this quarter brings. thank you for joining us. wolfgang koester. the sky in virginia was lit up last night by the launch of an unmanned robert. the rocket is ownby orbital atk and load with equipment and food bound for the international space station. this is the first flight for orbital since a rocket exploded two years ago.

nasa says the capsule is expected to reach the space station this weekend. next trending story dozens of hollywood and broadway a-listers performed at the st. james theater last night to raise money for hillary clinton. tickets went for as much as $10,000. acto actors took to the stage urging people to vote for hillary clinton. apparently hillary wasn't there. bill and chelsea were. >> 10,000 a ticket. wow. trip advisors has revealed its list of the best restaurants in the world. topping the list was martin berasategui in spain. that looks good. i think it was in north of spain. second place went to mais maison lameloise in france and

third l'auberge de l'ill also in france. nothing in new york. >> one that always gets plenty is 11 madison clark in new york as the best. i like blue hill. that's my favorite. >> three uk restaurants did make the list while only one restaurant in the u.s. landed at number six. >> in chicago, alinea. >> they have the tasting wines. >> one that came with the balloon dessert the helium filled apple staffy. which one is the tasting one. >> that one. coming up today's must read stories. let's check european markets this morning. seeing strength and green across the continental europe. uk, ftse 100 up 1%. pound up as well 1% inflation numbers in the uk. stay tuned you're watching

"worldwide exchange" on cnbc.

. welcome back to this morning's must read stories. my pick in the "financial times" for a change is titled a distracted america in a dangerous world. the author running through really the tough, tough situations there are all around the world at the moment and going through them and how america may or may not be dealing with them and perhaps

how their approach is changing since the past. his conclusion there was to be a reset that would lead to better relations with russia. there would also be a newer closer working relationship with china and to end the war in the middle east. none of those policies have come to fruition. instead mr. obama will be fortunate if he can negotiate his last three months in office without presiding over a major crisis. likewise in british elections this election going back really just to domestic policies. that's what we're focused on. when you look at the issues there are around the world i suppose it's a little bit worrying there's not more focus on foreign policy. it's key and something that defines the early days, early years in office of the new president. >> distraction is the key word. i would say that some of the issues are being discussed and i think are being high liked in ways they haven't been before like trade. might not be the most productive way in terms of the international community.

you point to sort of the view from the outside world looking into america on these trade issues but it is something we clearly need to work out and does get discussed. >> i think that's definitely, trade and immigration. but what america is doing around the rest of the world is not. it's something that defines geopolitics. we've seen putin's growth and strength, issues in the middle east. >> a long to-do list for the next president. we're approaching the top of the hour that means the team is getting ready for "squawk box". andrew ross sorkin joins with us a look. >> a must read. what day is it? >> it is -- >> it's tuesday. >> right. we were saving it four. >> what goes on tuesday. >> on tuesday we get -- >> if you put it on me it becomes self-promotional. >> did you notice, andrew, we only did one today. >> thank you. there's a column in a little new

york paper about hillary clinton's emails it's worth reading. it's covered in the business section by a guy i know. let's leave it there. the point of the column, which i just want to talk about for a second, i went through all of those clinton emails over the weekend not just the speeches which everybody is focused on but more of the emails between the clinton staffers and i have to say this conventional view that she's going to be so easy on wall street seems to fly in the face of the type of conversation language that so many of her staffers and maybe you can just call them staffers but people around her seem to be using around wall street that i think we may have to shift our view about what she's ultimately going to do. yes she will be pragmatic, she's not a fire breather like bernie sanders and she's not going to be taking out a revolver when it comes to dealing with people on wall street. but on the other hand, i would venture to tell you that i think based on those emails that there's more coming to wall street when it comes to financial regulation than we may

know. >> especially on those risk fees that you point out. >> yes. >> thank you, andrew. >> let me tell you we have a huge show coming up. when i say huge i'm not trying over sell. we have a number of huge, i'm not doing a donald trump thing, larry fink on the show from blackrock. ceo of eli lily. ceo of united airlines. ceo of hasbro. and prince of luxembourg will join us as well. >> great stuff. "squawk box" starts in ten minute time. . >> coming up here earnings season in full swing. we'll talk about what investors want to see and hear with our special guest steven wieting. you're watching "worldwide exchange" on cnbc. into it, but you can still move around. and now that i have a tempur-flex, i can finally get a good night's sleep. buy the most highly recommended bed in america

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what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com. >> busy day for earnings and economic data. joining us now steven wieting.

steven, very good morning to you. thanks for joining us. we've seen trading in the last week or so, very low volumes yesterday. earnings or fed policy. >> global bond markets. the fed is a big part of this. the ecb, just understanding what's happening. you've been in a trend where bond markets have been achieving ever lower rates getting below zero for key sovereigns and now moving above. this trend is for mark. we can finally get above zero mark and have a decent outlook for the coming year assuming no shocks. but dealing with the bond market is very important key topic for all asset classes. >> david tepper yesterday on the "halftime report" was talking about how central bankers want to see steeper yield curves and therefore he's not buying bonds. he didn't say he was shorting

bonds but insinuating that's the message he's getting. >> take a look at japan more of a deliberate effort. in the united states when janet yellen talked about having a high pressure economy, in other words running the economy hot in order to achieve a faster potential growth rate, long story there. that might have been the message that markets heard. i'm not sure that's the message she intoned. clearly here when you had long term yields in key sovereigns like germany, or switzerland dip as low as negative 60 basis points that's hard to sustain in a world where you can still have zero yield cash. that's the difficult part. that's what's going on beneath the surface in markets. utility stocks having a full blown correction. financials moving up. but it's really key right now across all asset markets where correlation has jumped towards historic highs across every

region and asset class that even these 25 basis points moves we've seen in very expensive bond markets had big ripples. >> i suppose it depends on what the driver of the correction in bond markets is. we saw some inflation data out of wuk. could that be the first domestic developed market where we see a really worrying meaningful correction in bonds. >> the one thing that's key here and the reason it hasn't been easy for smashts to get through all this is there haven't been strong upward economic surprises. you take a look at the united states, we're growing but there hasn't been a growth driven move up in yields. again, how central banks abroad are approaching policy now and having some difficulties implementing qe to the extent that they have. that's the reason why this is happening. or simply that inflation is moving up. more difficult for markets. in the united states we would expect headline inflation to move up.

the federal reserve looks through this to a good extent. central banks we think will lag behind. so in the end i think that this is going to be a self-limiting move in bond markets if i want holds back growth we'll find central banks will drag their feet. >> what do stocks do? >> we do okay. that i think the larger part of this recovery sad to say is over with after looking back seven years particularly on the earnings front, having nearly tripled from a lows. that's been leading the recovery. but i think we have more to go and it certainly depends on avoiding a few shocks, avoiding real and unusual political developments. u.s. elections, one month later we'll have an italian referendum. we notice if you maintain a recovery, and you realign a gain in earnings, we're going to have a better return in equities than fixed income. >> steven thank you. ten seconds what your

watching? >> ten year yields. bonds abandoning. >> goldman sachs, blackrock due to report shortly. "squawk box" coming up next. arid things about the network. all the networks are great now. we're talking within a 1% difference in reliability of each other. and, sprint saves you 50% on most current national carrier rates. save money on your phone bill, invest it in your small business. wouldn't you love more customers? i would definitely love some new customers. sprint will help you add customers and cut your costs. switch your business to sprint and save 50% on most current verizon, at&t and t-mobile rates. don't let a 1% difference cost you twice as much. whoooo! for people with hearing loss, visit ntrelay.com.

good morning. netflix soaring in pre-market trading up nearly 20% on strong earnings and subscriber growth and right after that "wall street journal" piece yesterday that now seems so precious. a flood of quarterly results. we'll bring you reports from united health, blackrock, johnson & johnson and goldman sachs. plus inflation data that's due this morning could provide some clues about what the fed does next and whether there's a rate hike. we'll tell you what to expect tuesday, october 18th, 2016. "squawk box" begins right now.

>> announcer: live from new york where business never sleeps this is "squawk box". good morning. welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen and michele carus caruso-carbrera. anthony clemente our guest says it's wrong. netflix added 370,000 domestic subscribers in the last quarter and 3.2 million international subscribers. the company announced it will increase its spending on content to $6 billion from $5 billion this