just buy more on the open market. >> right. >> is that something you think about? >> the again, it's dependent on the situation. sometimes it will be an acquisition that you -- like they have some capability or some skill that you want to bring into your core business. sometimes it's going to be a business that you actually want to continue to operate as a separate unit. >> ben, thanks so much. >> benjamin. >> benjamin. >> thank you, sir. >> i'm exhausted happy birthday, becky. didn't know. feel horrible. >> make sure you join us tomorrow it will be 364 days until becky's next birthday. "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cc

cramer and david faber. netflix surge. stocks open higher as a big beat. >> shares of goldman sachs are falling in the premarket despite what was an earnings beat. >> dropping plans to replace obamacare. what that move means for the rest of the trump agenda, issues like taxes and trade first up, netflix is poised to open at a record high. sub growth coming in much better than expected in the second quarter. that news overshadowing the earnings miss. reed hastings on last night's earnings call. >> anything notable beyond 5 million net ads in q2, all-time record for q2, up sequentially from q1. i think we're seeing the rewards of doing great content, focused on the quality of the service are paying off. >> more than 1 million added in

the u.s. alone estimate was for like 600 k. people are wondering whether or not the shows are pulling subgrowth demand forward we'll see. >> i have to tell you this is one where i really -- this was a joyous conference call it was a great presentation. i found myself uplifted. i come back after a hard day and get on this call and i just like it i like it, because it's about how they have figure d out a way -- you don't get to be thanked for nothing. facebook figured out how to use the internet to tell a personal narrative. google figured out the internet to be able to do youtube short form these guys figure d out the internet by being able to produce content that is loved in korea and loved in brazil and loved in europe and they have got this machine and then once you're in, it's all about artificial intelligence they have what you like. and they will continue to make what you like. and i just thought it was a tour

de force conference call there's a great moment in the conference call where they completely and utterly dismissed that it was like, hey, guys, stop stop it. it's a setup call. but what i liked about that they said cool it stop asking questions about our cash flow. it's not what the focus is the focus is how we keep signing up people. and then once they want to -- if they wanted to start making it so the five people on my account started paying, they could do it at one point he says, listen, $8, eight euros, everybody loves it that's what i like about a call. totally lacking in rigor and yet brilliant in so many ways. >> the fact that they did raise their free cash flow burn guidance for the year to $2.5 billion. >> you're just going to go there. >> anything you see in the analysts' notes, you speak to anybody about in the slightest

way. otherwise, everybody is -- >> they have pocket protectors these analysts this was about a korean movie i've got to go see buster cohen a reviewer over at the street i said i need these movies watched. they are doing production that makes you sign up. david, once you're hooked, it's opium. this is intellectual opioid. >> it's a good kind of opioid crisis. >> worldwide. >> not the horrible one that has a lot of people in its grips in this country. >> i didn't mean -- >> you brought us there. really you have to make a reference to that? >> it's a metaphor didn't you ever take that course >> couldn't you have gone somewhere else, something nice it's like milk and cookies for everybody? it's like chocolate milk >> did you even listen to it it was so beautiful.

about cash flow he said business as a whole is what makes us comfortable. we should continue to invest, be able to finance t debt to market cap is incredibly low and conservative more draw on free cash, negative free cash will be an indicator of what? this is a good question, mr. jeopardy head. negative free cash will be an indicator of what? >> future growth. >> enormous success! you can't beat this. right now they're in their graves talking to each other, whatever enormous success it's brilliant >> the only thing people wonder, it's not like they always had cash flow this negative. >> no. >> only the last couple of years. >> but, you know, to quote clark gable, frankly, my dear, i don't give a damn. i just love this we're doing amazing work in product, make it easy to use, fast, fun. in marketing we're just improving around the whole company, growing what we have. we're very excited about what we've accomplished but what's ahead is also super

exciting that's what -- >> i hear you. and your enthusiasm is being matched in the marketplace by investors. >> right. >> all those analysts who are taking their price targets up. a company that has, what, 104 million global streaming subs, reaction el rated its growth. >> now you're talking. >> a market value, by the way, that is larger than fox and viacom together. >> babe ruth versus, what? who is having a better year. >> and the only other question is do they pull forward because of the success of some of their new series do they pull forward some subscribers who otherwise would have shown up a little later in the year >> oh, geez. >> i'm just saying, man. >> you really want to go there, huh? >> i'll go there. >> just got to try. >> a bit of reality. >> stranger things have happened. >> ouch. that hurts. >> yeah. >> stranger things.

>> blow on it. each posting better than expected quarterly results, both reporting decreases in trading value. lloyd blankfein said a mixed operating environment persisted in the second quarter as conditions continued to support underwriting of m and a while constraining certain market making activity. >> lloyd, stop paying -- let's take them apart. they are making way too much money. same time i didn't think there was anything special about -- still got 180-plus book value. they need more volatility. in the same way i thought bank of america's quarter was a great, classic, grinded out quarter. i like that stock very much.

sure, that was because the long bond traded where it did i think bank of america distinguished itself as being a company that is 500 basis points of operating leverage of which i like to hear that. they are making more money per customer added a lot of mobile customers. there's nothing to dislike here. >> no. recent dividend increase, capital return plan being improved, warren buffet now, the largest shareholder. >> ibm, speaking of a buffett name actually, it's not really. you're way ahead of me way ahead of me. as for goldman what did they buy back they still bought back, what, 6.6 million shares at an average cost, about $1.5 billion of stock. they still trade above book. that roe for goldman was 8.7%. >> consumer bank, bank of america, goldman earns 90% of what the bank of america earns

goldman is great for -- but bank of america is this national juggernaut it keeps grinding. it's not going to overpromise and underdeliver brian moynihan has not come through the other side you get another 3 billion. >> you do but the concern this morning and the reason the stock may be down is they worry that -- >> you need the long bond to trade in wild directions intra-day for goldman to do well and you need the long bond for interest rates to go up for bank of america to do better. this is not like "orange is the new black. >> right it's no "house of cards. >> it is no "house of cards. glad you mentioned that. that was a "house of cards" share quarter and people don't get that. >> steepest decline of the big bank so far? >> no, it's not. the fixed income guys, if i were

there, i would be like, guys, i'm sorry. i didn't mean it equities did quite well. i was surprised how good equities were. >> meanwhile, yesterday, in terms of the markets, the weakest volume for a full day of the year -- >> is that true? >> just over 5 billion shares. intra-day range on the vicks was the smallest of the year the environment that they're discussing for the seventh quarter kind of rolls on, doesn't it >> almost like they have this markets group that does small loans since they got great growth. >> moving the needle for a long time. >> i feel like if you're goldman you just need a lot of activity. i would love goldman to have something that's -- i like bank of america that's got this giant deposit base doesn't have to do anything. you know that deposit, that's what's going to matter. >> merrill lynch, too. sometimes we don't talk about.

still significant contributor. >> the long chart also really good did not have a problem with credit cards some companies are having problems with credit cards a lot to like here brian moynihan himself is not that exciting. i don't really want an exciting banker i'm still reeling from the can cursing on the jp morgan call. why is that an x rated call? >> very upsetting to you, wasn't it affected you deeply. >> didn't need to curse. he had to make a statement because washington is everything that he's saying, right? >> speaking of which, there's some debate this morning about this health care bill. repeal and replace essentially is gone after moran and lee come out against that, straight repeal with a two-year delay now the spin is, well, they get that out of the way somehow tax cuts become more likely because desperate gop'ers want to win.

>> don't want to lose a lot of benefits so let's delay t i have an antidote for that. united health, a huge winner in this situation in the stalemate. >> how is the number >> it was beautiful. the whole thing -- >> medical loss ratio. >> it was a sweet quarter. it was a very, very good quarter. i think we're done talking about -- i like to rely on cheryl skolnick. raided their office she said buy, buy, buy. right call a really solid can quarter cash flow is strong. i just didn't see any holes in this one they trounced the quarter. nice, nice quarter. >> you like it. >> unless it's netflix. >> then you get so excited >> it was a great play the ice man cometh

i want something punchier. the producers. and netflix delivers the producers. funny. >> i am a tennessee williams fan, actually. >> oh, my. >> wait, the ice man cometh is -- >> o'neill. >> it's a terrible play. you have to read it in school. i think that netflix -- >> i saw kevin spacey in it, actually in "the ice man cometh." >> kevin spacey is very good in -- >> which brings us back to "house of cards. >> maybe he will win the emmy this time. >> so many nominations from netflix. but it's still an artificial intelligence story people don't understand, they're happy having you pay $8. once they have the info on what you like they can give you exactly what you want. 42 movies for me i have no other time than to

look at amazon to see that they still got these wing tips they want me to buy. >> erase $2.5 billion on market capitol somehow. >> amazon shirts, then i realized they were button down i like the french collar 35 bucks a shirt. >> speaking of retail, still to come this morning, ceo kevin mansell. we'll hear his plan for growing the retailer and battling amazon we'll get to harley with a pretty deep production guidance cuts, some misses in the furniture business take a look at the futures more "squawk on the street." ♪

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look at that fluffy unicorn! he's so fluffy i'm gonna die! your voice is awesome. the x1 voice remote. xfinity. the future of awesome. some pictures to show you. alibaba jack ma hosting the u.s./china business summit in washington we'll monitor that the mission here, they say, is to discuss economic issues of mutual importance to both countries. >> it's so interesting any minute we're waiting for the steel tariffs on making it a

national defense industry asset. >> jack ma has kind of reversed things and is seeking to empower the small and medium sized business here in the u.s. that wants to sell to the chinese consumer using the alibaba platform and he also got a nice new haircut. >> yeah, he did get a haircut. >> both those things going for him today. >> i was more focused on what he was saying you're absolutely right. after my netflix analysis, we have to default to things that are not necessarily earnings per share. i am concerned if this steel tarrive comes through, you are going to have major blowback south korea, our friend, trying to negotiate with north korea. it would be a blow against south korea and against china. >> there is reporting, not ours, that there is blowback in the white house about that gary cohn is against it but

wilbur ross, navarro and bannon are the proindependentponents. >> it's a big split. morgan stanley comes out today and says bumping second half steel prices, no way you can bump second half steel prices unless the government gives you relief this is all based on the fact that a lot of wall street thinks it's going to happen. >> speaking of manufacturing, it's made in america week, as you know the president was touring the cat machines and fire trucks yesterday. cuts their shipment forecast 241,000 versus 262 a year ago. >> that was disabling. a bunch of hogs on the white house lawn they tried to put a good face on that quarter there really wasn't anything to -- >> demographic story,

millennials -- >> i got a lot of blowback myself when i mentioned. my friend, michael hayley took me to their really fabulous store on route 10. i think i lowered the age of the people shopping. >> that's hard to do. >> i didn't need to -- >> it was meant to be self depricating. >> yeah. what did i say it was a joke. you're supposed to say oh, come on you don't say wow. >> you know i think you're the fountain of youth. come on. my god. >> still still. i just -- look, i just think that harley, in the end, is a story where we're going to focus less and less on it. just because it has a business that is aging. i'm not talking about that this is suddenly -- it's not like sunrise senior living. >> never even got to johnson & johnson. want to do that in the mad dash? >> we'll get deeper on jnj in a

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we are back now at the opening bell johnson & johnson also reported earnings a fairly large company we haven't really mentioned it as of yet. >> we've seen the same pattern over and over again with jnj everybody buys the stock up three, haven't looked through everything next thing you know, the stock is down. why? because people look through and say maybe the stock has run already in advance same thing playing out exactly again. the worldwide medical device, the division that i felt was really hurting, up 4.9%, very good new drugs are good, too. ons again, people get too excited. jnj then sells off it's like a drug take aspirin for three days and

then buy very solid quarter. >> you are happy with the leadership of alex gorsky. >> yes it ran in anticipation of a very good quarter and you got a very good quarter what happens when that happens is that people sell. then you buy in a couple of days. >> and valuation is okay for you? >> it's not that bad. >> how many other aaas are there? that's a trick question. aren't many left now. >> let me see. duracell >> all right so many other stocks to keep an eye on this morning. coming back to earnings shall seeing how things open this morning. that's about 4 1/2 minutes away. stay with us on "squawk on the street."

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you're watching cnbc "squawk on the street," opening bell in 90 seconds health care replacement bill essentially doomed in the senate a big day, jim, for currencies dollars now 8% below its january high. >> may 2016. we're back to that level in the

euro i think that the euro will continue to go higher, the most undervalued currency a lot of these guys i read are saying the euro is a crowded trade. are you kidding me when they start raising rates over there, now that you've got the banking -- you have the banking problem fixed in spain you have the banking problem fixed in france. vut banking problem fixed in italy. what more do you want? they're open for lending and open for business there. it's way too cheap i urge people to book their plans for this year because it's going to be really expensive next year. >> it's interesting you say that a look at global markets who have gained or lost market cap share since the election losers, china and the u.s. winners, france, germany, italy. >> absolutely. that's why my wife was smart enough to go over there and buy a place in italy at 104. she said, listen, there's no value in real estate here. you're not allowed to own anything

you made me sell everything. i'm taking the money and buying something. there you go there's a little marriage issue. little color in everything netflix color, marriage color. what else? >> let's get the opening bell and s&p at the bottom of your screen allianz global investors ringing bell at the nasdaq sg blocks doing the honors nvidia is in the news. goldman reiterates its sell call. >> you know, i happen to like amd. offering nvidia today. every time the knives have been out you have to cast them. nvidia has been related to bitcoin. we don't talk enough about bitcoin and its doppelganger but people are using these nvidia chips to mine bitcoin. there was a little too much hot money in nvidia.

that comes out. then go right back and buy nvidia it's an artificial intelligence play. >> look at bitcoin you're right fascinating. get a lot of questions about them do you i can't answer them effectively. block chains come up more and more often. >> i'm hoping that ibm talks about that tonight on the ibm call they have some big block chain business they don't identify it connected to bitcoin but it's really about block chain. and those are things that, yes, i'm asked about constantly i'm always hoped i'm asked about a common stock when i get really in the club -- >> demand for gpu cards, crypto currency demand is not sustainable. what happens if you have another 80% crash like you did in 2013,

'14? >> that's why i want that hot money out of nvidia. real money should come in because of artificial intelligence, machine learning nvidia chips, people are using nvidia chips using artificial intelligence where they have a much lower, much, much lower default rate than people -- do you ever read oliver sachs >> yes, the man who mistook his wife for a hat. >> one thing that humans have over everybody else, they have judgment nvidia is making you feel machines have better judgment than humans. if oliver sachs were alive, doing that book now, you would have to say maybe i'm wrong and that the artificial intelligence does have better judgment than humans when it comes to lending, when it comes to making important decisions, it keeps learning and learning and learning you go right back to netflix netflix learned what i like. they mine the datea. they don't put through -- i

don't watch "orange is the new black. i'm not bombarded by that kind of -- get much more the visce l visceral. >> do you think it can drive better than you? >> yes these machines do not trade. they don't get tired, have stamina. amazon needs that. we're going to run out of drivers. the thing we need more than anything else in this country is drivers. that's going to be the next shortage, drivers. >> but overall concern is, over time, autonomous vehicles will put drivers out of work. >> there's a gap space where we will need more drivers and then, yes. in the same way they'll put checkers out of business because you'll scan and that will be it. that's a lot of people. >> that's a lot of unskilled work or people who don't have the right skills for the economy. and that certainly, at least,

has been one criticism of the current administration's approach in terms of trying to bring a rebound in manufacturing when, in fact, the economy has moved on to a certain extent. >> well, there's still a lot of high-paying jobs i know this is not a skill -- an unskilled job that many people want there are still many high-paying jobs building pipelines. i know that is a manual job but you can make 70, $80,000. >> welders as well, a shortage that's been around for a long time math skills, quite significant math skills required for welding. >> speaking of production, oil is about the only thing working at the moment. chevron and exxon are leading the dow. goldman, jpm toward the bottom of the list today. >> look, at a certain point you're going to have to buy jpm. a lot of these are about what janet yellen, that dovish talk on the hill really has been --

they're going to make a lot of money. >> you were all jpm 100. >> i'm not keeping you on that. >> $9 away from it. >> it's going to go to 100 maybe it has to visit the 80s before they it does that i'm not abandoning jpm not with the balance sheet of 250,000 employees and $330 billion market cap and constantly getting bombarded. >> don't forget the balance sheet. >> i mentioned -- >> i'm kidding. >> just like bank of america, $3 billion left on the table if they don't raise rates they've got to raise rates it's their chance to raise rates. maybe they want to sell off the bond portfolio first that's why gary cohn i want him as the fed chairman. >> wouldn't they disappoint you if they didn't, say, hike this year they got to the balance sheet first and then saved another hike for next year

>> i would like that if they do that, that is the way to get out they have to get out you get gary cohn in there and he sells them off and issued a $500 billion savings bond for infrastructure all these can work gary listens to the show he knows this. he does. he listens to the show he knows this. >> we have a couple of things we haven't gotten to. lmt. record high today. >> she's so good wants no publicity, which is too bad. i want to give it to her. >> have you seen her on the list of possibles for the uber job. >> are you serious >> yeah. swisher saying the company is scrambling for a woman who understands logistics. the enterprise ceo. >> really? >> runs an $ 4 billion market cap company is going to go run uber >> wow, that would be such a fabulous hire. i would pay her anything

that would be a great hire she's really good. remember, a lot of people thought she paid too much for united technologies. she's taken that work. >> don't go out on a limb here and say she's not going to take that job just going to put that out there. netflix slightly off the highs but up almost 9% market cap comparisons it does put it in some perspective. same market value as time warner right now. time warner, the giant of media that is being bought by at&t, trading a bit below, of course, the implied price on that deal not going to close for a little while. >> present value of subs >> 104 million streaming subs around the world that's a superpower. >> and people have targets -- >> global superpower. >> they misjudged. look, it is so subjective, we

really can't make a good judgment about what we're going to do. they should get out of the -- they should entirely stop making any estimates. because if something hits in a given country, it turns on. >> kind of reminds you what musk has been saying about the stock this week. >> yes. >> you either believe we are going to be the biggest auto company in the world or you don't. and there's really not much in between. >> nochlt th this is a tech company that sells product where you can't go in against them. you ruin your gross margins. everybody would have their gross margins ruined if they came in against netflix because they give it away $8 how many people do you have in your account >> well, four, i guess four of us. >> i do, too paying $30 a month, would you do it >> 30? >> yeah. >> 30 could get a little tough. >> how about 12? >> oh, yeah. >> pay more for costco. >> talking price hikes at

netflix for how many years >> he doesn't watch the show. >> why bother raising if it's all going so well until one day that negative free cash flow starts to more concern people. >> a sign of enormous success. i keep trying to tell you that. >> that is a great line. free cash flow. >> in seasoned history large cash flow burn is a sign of enormous success. it's the smell of victory. >> i'm going to remember that if i ever launch a business and my investors come after me. enormous success i'm burning more cash than ever. >> great thing to say to the credit card companies. i'm not paying because we're having enormous success over here. >> proctor sb ger & gamble, dayo with that fight for a board seat undertake undertaken by nelson peltz 30% of shares are held by

retail that's tough if you're fighting a proxy fight and you want to reach them that could be hard you and i were talking before the show what is a top board at procter & gamble, why the company felt the need to hire four investment banks is beyond me, to advise them on one board seat fight that money might be better spent elsewhere. >> i love mcdirney. >> former ceo of boeing and 3m and ge top ravenked guy he has been around. >> easier to put him on, get him in the tent. but he is a total heavyweight. he's great this is not a board where you look at it and say, hey, come on they really need help. i do think that an outside guy, making some good sense can really help them. >> did you notice they moved up the timings of their earnings

call citing efficiency improvements in accounting and our review processes. >> that's good. >> an early attempt to push back >> that's a good one i keep hoping that the dollar -- they did a great discourse on the dollar and missed earnings two quarters ago how literally what they would be making if it weren't for the dollar i like the stock, with or without peltz. i think they'll do fine. they're not short of innovation. but they will triumph. i felt very long saying i liked it either way. sometimes it's okay to be alone. and i'm alone. >> you're never alone. >> no, i've got two dogs. >> the two dogs. >> nvidia. >> got the wife. tonight csx, ibm ibm, which is back to 152 and change, jim. >> there's no expectation there, let me tell you. i know that there was a note

yesterday saying will you please, please just bring down all expectations i will tell you another stock that there was no expectations going in and that was goldman sachs. when you have no expectations going in, sometimes you get a nice bounce. there's no expectations. and that's not bad that shows you that equities killed it. my old division crushed them let's go down there and make a few jokes. when muni screwed up, hey, guys, we got some xerox for you to do. >> not a good year in commodities. that's for sure. >> is there something you like that i can just talk about anything that you like >> anything that i like? >> the mets. >> it's hard to like the mets. >> coming back. >> little late but thank you. >> but there's something. >> my kids

that's about it. >> when do they report >> they haven't reported for a while. they haven't reported in either. >> if they bought -- give you an upside i'll endorse. >> thanks. my dogs are all right. not so bad. >> what's return on equity there? goldman return equity is pretty good. >> 8.7% isn't that good. compared to others it's not. >> you say one day -- i remember you saying that you felt 6.7 might be the new norm. >> i did there was a belief that below ten you wouldn't get above now you are. >> how about morgan stanley, what do you think they can do? >> a decent quarter. >> i do, too, that gorman can get the right -- he's at the end. you want to be at the end so you can say why you're not this and not that i think the story there is underarmour coming back. they are not in the mall they have a fabulous affinity program, great place to shop nike is doing well

i love my kohl's fortress balance sheet for retail. >> they do >> are you in the kohl's interview? >> i don't think so. >> it's in retail but they are doing so many things right i wish they would get some credit that yield is safe. >> under armour is under pressure this morning but your point -- >> yeah. for now. nothing is safe in -- amazon decided, if jeff bezos said i don't like kohl's. i'm going to open whole foods next to kohl's the reason i like it, it doesn't have food. target has food. target may have done better this quarter. if you have food, you have all these german companies coming in but they don't have food they need one more big brand kohl's needs one more big brand. may i suggest they need ralph lauren, big time not just the low-end ralph

lauren. >> what penjcpennepenney's has h sephora. >> look your selfie best, put together a consortium. you don't like this idea >> i like it you talked about that for -- not ulta. >> ulta is coming down they could do a deal with -- ulta has a lot of private brands i don't know i think kohl's is -- the world could be their oyster but they have to think big. they have to think big. >> let's get to bob pisani with the dow down this morning. good morning, bob. >> good morning. trouble from the banks this morning. sectors, energy modest start on the upside interest rate sensitive. reit, utilities slightly better on the idea of the ten-year being weaker banks moving down a little bit guys talked about goldman, bank of america

the regional banks are starting to report. those are the ones i like, like comerica reported today. that's no trading. the big thing is long growth, interest income and noninterest income there's comerica down about 1% their guidance, their 2017 guidance take a look at this, average loan growth up 1%. they had talked about 1% to 2% good energy book this is okay but not great that's the primary reason it's down, mediocre loan growth very sensitive to the short end of the curve that will help them out. it's not moving as much as they had hoped. noninterest income these are the fees everybody gets charged growing for years. 30 to 40% of their total revenue base now that's been growing. that's a good point. credit quality has been strong those are all good points. again the loan growth is the reason we're seeing a bit of weakness today stock was at an historic high a week ago low volatility everybody is complaining about

it td ameritrade. tim hockey, ceo, has been on our air many times since taking over the reins, said broadly engaged strong trading volumes with healthy trends in new accounts and institutional channel continues to break records for asset gathering. remember, they're closing that deal for stock trade as well little surprised about the trading volumes doing so well for them we're going into the heart of earnings season. the biggest complaint i hear somehow the market is overvalued i don't particularly see this right now. most important metric you can look at is forward earnings estimates, correlation with stock prices 2017 right now, this is 17 1/2 times earnings 20-year average is 16. slightly overvalue

you're having a rising earnings market, i don't think it's dramatically overvalued. they're complaining about tech stocks look at at group as a whole. right now they're 18 times forward earnings historic is 20 notably elevated, apple is trading at about 16 times forward earnings, 12-month numbers. that might not sound like a lot. apple traditionally the last five, six years, has been well below 16 times earnings. all the analysts' community has convinced everyone per apple that we were in the middle of this gigantic super cycle with the iphone they had better be right up 30% this year, everyone has bought into this gigantic iphone sale that's going to happen at the end of this year in september or october that better happen we need that to keep the price up on that particular one. that doesn't mean there aren't things overpriced. the most obvious one take a look at energy.

2017, 26 times that's enormous. 20-year average is 17. why has this happened? why has everyone gotten the numbers so wrong on the energy stocks because of this. take a look at oil everyone in the beginning of 2017 had $60 oil well, wait a minute. we didn't even get close to that we've been wrong no one has been able to get a forward price on oil not just six month, for years. everyone has been wrong on that. look at the xle. big energy etf all the energy stocks in one basket has been going straight down for months now because everyone realized that the analysts have been wrong, projecting the oil prices and they have to keep taking the numbers down watch with exxon, they've been taking the numbers with exxon down three months. carl, exxon is at 89 cents we were over a dollar a few months ago there you see a good example of where there are definitely indications that the market is not pricing in the real forward situation for energy stocks.

back to you. >> thank you very much, bob pisani let's get to rick santelli with the bond reports the ten at an all-time high. >> especially with what's going on with the dollar and the euro. two-year note yields, very sideways chart of one week of tens, there's a drift. one week of bunds, wow, 54 point basis close is quite important you can see that's the one low about the middle of the chart and unlike our ten-year, we haven't drifted below it yet, setting up that pattern. matter of fact, bunds are holding up better. how do we know that? when you take ten-year minus bunds, the difference is 171 it's the smallest difference since november all right. now let's have some fun here closing prices are very important benchmarks now, remember, we close at 244 this year. look at year to date chart of

tens first of all, first jump out at you at 213 low closie ining yield for the r last stock we had was shy of 240, 244 settlement. those tops are 242, 241 and just under 240. with a settlement of 244 you get what i'm saying? l let's go back another year close of 2015, we close at 227, which has always been a significant level ever since then dollar index, you ask? august 23rd and 2016 is the last time the dollar index closed at these levels as you see on the chart. you look at the euro, the biggest currency with regard to the waiting in the dollar index, you have to go back pretty much exactly an extra year around august 23rd of 2015, first of the greenback and still seemed to be technically on the move up let's see. carl, jim, david, the whole gang is here.

back to you. >> rick, thank you rick santelli. let's get to oil this morning. jackie deangelis is at the desk. jackie >> thank you saudis are considering cutting their exports by another million barrels a day. job owning, anybody? we talk about this all the time. a caveat to raising prices here. it's starting to trickle into the market as we've gotten to more depressed levels when we were hanging out around $45 a barrel doesn't mean they're going to do it market does react to headlines like this. the dollar index, being so low right now supportive of prices something to consider there. we've got inventories on deck tomorrow morning, department of energy supposed to report a 3 million barely draw. last few weeks or month or so you've been seeing these reports impact the market. finally, oil will react to earnings, as the stock market does as well, as a sign of demand back to you, carl.

>> jackie, thank you very much for that dow is down 51 on some weakness at the banks netflix hit an all-time high on pretty good vomelu, on pace for the best day of the year

time for cramer and stock trading. >> deutsche bank takes it up $66 to $80 on buy back they're financing. david always said this could happen and it's happening. they're taking down cheap debt and continue to buy back stock

some of the debt is not cheap. this million dollars of stock, ceo. we have the free cash flow to do this now, it is the best buyback i've ever seen in terms of the common stock. not so great if you're -- keep that in mind a battle royal. >> ethan allen having a much different day today. >> yes and gary is a guy who it's a hit or miss story, but if he gets it right, great cash flow if he doesn't, people buying it here are just riding the wave of the short squeeze. i don't like those stories typically as a short squeeze you can't tell people when a short squeeze is going to end, netflix being an obvious one with the enormous success of the negative cash flow. >> jim, what's tonight >> distribution center companies. hamid is a fabulous guy, the

backbone supply chain. this is where all the action is. e-commerce world, we need distribution centers, we need places to be able to get the stuff and those stocks have all been hot prologis is one of those from the crash. good show. nvidia see? right? where is nvidia? i woke up nvidia i have a dog named nvidia. everything that the dog does is in sync with the common stock. i don't know which is first. i woke up nvidia during the show. >> you woke up your dog and now the stock is up? >> how much? >> up 52 cents. >> there you go. he's a rescue dog. >> see you tonight, jim "mad money. when we come back, ceo of kohl's and mark mahaney on netflix.

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>> good tuesday morning. welcome back to "squawk on the street." sara is off today. markets down by disappointing metrics inside goldman's earnings banks aren't doing so well crude is doing all right, up a

percent. david? netflix is hitting an all-time high, surging as its subscriber numbers just crushed wall street's expectations house republicans unveiling their budget for '18 as republicans pull the plug on their health care bill what that means for tax reform and the rest of the agenda. >> how the ceo of kohl's is attempting to fight off amazon and also slowing traffic in malls. he joins us straight ahead. diana olick. >> june's reading was revised down as well the street was looking for 68. so this cis a big miss on the wells fargo. still in positive territory but the lowest reading since last november before the presidential election sentiment spiked after that as the home builders thought the

trump administration would give them deregulation in the market. they did get some of that in march and home builders sentiment spiked again following water deregulation the problem now, canadian lumber ta t tariffs, growing increasingly concerned over rising material prices, particularly lumber, from nahb chairman mcdonald. hurting housing affordablity even as consumer interest in the new home market remains strong current sales conditions down two points to 70 sales expectations down. fire traffic still in negative territory down one point sentiment was pretty much down across the nation, up one opponent in the northeast to 47. again, that in negative territory as well. a big miss on home builder sentiment. we get housing starts tomorrow morning at 8:30. back to you guy. >> thank you, diana olick. bank of america and goldman sachs both reported earnings before the bell this morning

conference call still going onment which will fred frost has been listening in to some of those calls. i did notice that stock at goldman had been up a bit, now down not sure if that's because of what mr. chavez has been saying on the call. give us the info we need. >> bank of america call still going on as well, both of them moving off the back of that. goldman sachs, another shocking performance in the income commodity business, down 40% year on year and quarter on quarter. therefore, trading performance was down due to equity trading overall trading down 18% year on year, worse than rivals, bank of america down 9%, citi down 7%. here is ceo marty chavez on the trading performance. >> low levels of volatility, sequentially lower in several classes negatively affected the environment. current backdrop has been

particularly challenging for our franchise. for example, we are a market leader in commodities. but it was a challenging environment on multiple fronts. >> fixed income commodities and currencies in trading with tough comps in the second half it doesn't bode well for the full year small beats in all other segments, ongoing trend of growth they've displayed 40% year on year growth this time around. the market focusing on that ficc number and lower share count, so shares trading down although the moment bank of america, consumer bank showing solid performance grinding out that. interest income, like jp morgan up only 9% but unlike jp morgan without a

cut to the guidance for the rest of the year. investors focusing on a couple of one-offs, like the sale of its nonu.s. car business overall, bank of america number without a clear negative as t goldman sachs. guys >> yeah. continued concern, i guess, overall about net interest income at bank of mencht w america. wilfred, asked about the volatilist of the business and how do dampen it, he said at a granular molecular level, we're working on it. that's pretty little so much, he says, is blocking and tackling and looking to see where there are gaps in their client coverage and the ability to on board new clients and serve them they'll be pressed on this, i would expect. >> they are being pressed on it. most of the questions -- you mentioned that client coverage because a couple of analysts focused on that saying i know you're saying it's down to low

volatility and commodities, in particular, of the fic & c but pushing on declined exposures and why are yours worse? he didn't have a clear answer for it yet i guess you've got to say, look, is this another one off or is it a bigger trend are they trying to take focus away from the trading business and put it into the lending business we've seen a bit of a trend there. they haven't given us an answer yet. >> goldman shares down about 5% this year and down a bit today wilfred frost, thank you. >> overall, too, when you look what's happening with yields today, falling again this is, you know, always what drives bank stock trading as well 2.4, 2.2 range every time we think this thing is going to break out. >> you want the spread between long and short to be as big as possible that's where they make the

money. >> not happening yet netflix shares hit an all-time high today. reed hastings talking about content creation on the call yesterday. >> anything notable beyond 5 million.net ads in q2, all-time record for q2s, up sequentially from q1. notable beyond that. i think we're just seeing that the rewards of doing great content, focused on the quality of the service, are paying off. >> stock gets an upgrade mark mah aney raising his price target to 210, joining us from aspen, colorado. nice work if he can get t morning, mark. good to see you. >> good morning. >> all right so, what explains the enthusiasm on the stock today >> well, this was kind of a clean quarter, domestic and international, outquarter

domestic and international the key backdrop on the stock in terms of the momentum, they're going to add more subs in the u.s., most mature market in 2017 than they did in 2016. you know, one of the bearish concerns has been nearing saturation that's not true. that's emphatically not true if you're adding more subs this year than you did last year. you still haven't reached that maturation level people are upping their international subscriber accounts as well this company is clearly surpassed 100 million. now we should be talking about whether 200 or 300 million in subs that's where the debate is on stock. that allows estimates to go up and price targets to go up. >> you raised your price target pretty dramatically, 210 what are the markets that drive that number? >> i think sooner rather than later we'll be able to look at it on a consolidated cash flow business for now, the business can swren rate $3 in earnings, we're willing to put a 30 multiple on

that for the international business, because we're still not there. kind of a mature profitability level, seven to eight times. so it's about half the value of the stock. little bit more than half is from the international side, which will have a lot more subs. that's how we get to $210. >> mark, those paying attention to cash flow we were joking this morning about whether they're just debbie downers, analysts with pocket protectors, looking past debt to equity or just the future for growth. how do you account for that in your model >> well, i think what this company is going to do is the more successful they are with international launches, the more negative the free cash flow is going to become because they're going to accelerate the rate of new market launches. look, this is a heavy tablestakes business in order to start in any market you have to put down 30, 4050 million just for the rights in that market. before you get a single paid subscriber in.

so it's expensive to ramp this thing internationally. that's what's driving the cost down investors should be able to look at the u.s. business, which has seen margins go from 16% to 40% today and have confidence that this business can scale. by the way, they're now finally starting to show profitability, similar profitability ramps. free cash flow will be negative. that turns in two to three years and can turn rapidly. >> you know, mark, they're calling themselves sort of a global superpower, content superpower who rivals them? who conceivably -- hastings has made the point that amazon, you don't necessarily see competition. they almost can work together in a market in the sense that you can subscribe to both. who is going to be a rival to this service if it does reach, what are you talking, 200, 300 million subs worldwide >> we look at amazon customers,

regular amazon customers, 50% of whom were netflix subs prime customers, it's almost like amazon prime customers were a leading indicator. they have about a 70% skew to subscripti subscriptions. amazon probably isn't a threat the bigger issue, the bigger trend is the dying of the fat bundle and consumers across the globe are a la carte picking their entertainment options. amazon is still going to there long term. i don't know who will be spending more on content in five years. the single biggest buyer of content globally will be netflix in five years w that will come a lot of leverage to improve the terms they get with the studios and allow those free cash flow dynamics to switch. >> they're already the biggest, aren't they, mark? already the biggest spender right now, right

>> they're darn close. getting at some of these budgets is tough it's hard to make that definitive statement david, you're right. they're awfully close. emphatically clear that they're the biggest buyer, call it three to five years. >> good news for content creators mark, thanks so much see you later. mark mahaney. >> thanks. >> we'll talk to the ceo of kohl's, kevin mansell, about retail and fighting off the amazons of the world chairman of the largest utility vehicle manufacturer in india is with us, his take on the trump white house and global manufacturing. speaking of which, shares of hog getting slammed after lowering their four-year t rehedae. guinc lomo aad stay with us

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reform to major changes in popular entitlement programs like medicare and food stamps. it does include increased fund ing for defense, $621 billion in total for next fiscal year it also includes $203 billion in mandatory spending cuts. diane black calls these crucial. house budget calling it a pathway for tax reform that's why it's so important obviously republicans want to pass a budget so they can keep the government running you need a budget before you can get started on taxes right now it's unclear whether or not republicans have the votes to get this through the house. on one hand you have the conservative house freedom caucus that says we want to see more aggressive cuts to mandatory spending programs and n the moderate tuesday group

saying $200 billion in cuts is already too much even assuming that this can get through the house, the politics will get even harder once you reach the senate in order to pass a budget through the upper chamber. guys, if they don't reach a deal, tax reform will be dead before it can even get started back to you. >> holy grail that the market keeps waiting for, tax reform. now john harwood with more on what to expect on the agenda going forward. the move from mcconnell and the president is a full-on repeal vote, john if they couldn't do health care reform in the senate now, will they ever get a clean repeal vote >> no, they're not this will let mitch mcconnell put a puncture wags mark on the end of the health care debate, at least for now at some point he said he will get back to it but one of his advisers told me last night it's

a little soon for that can you stop the clock on this debate by having the vote to try to take up a clean repeal. i expect that vote will fail but if they do take it up, that is also likely to fail then the question will be how do republicans reconcile the problems they've got right now with governance? a weak president, who is historically unpopular, who hasn't shown a great command of the policies he's seeking to enact. you've got a republican congress, which is ideologically very conservative, committed to lower taxes and smaller government but their base right now is very much committed -- on election day their base disproportionately includes blue collar voters who rely on government who think that the tax system is stacked against them whether they can produce policies that match their base, that's a big if. >> when you say punctuate, in

other words, they could take a vote, put health care to bed, even if it's a failure, and then move on. the market is just very much focused on can they get to tax reform and until they decide to do something, anything, when it comes to health care reform, they can't take the next step, right? >> right. >> this has to come to an end in some form or fashion >> right with each budget you pass, expedited procedures called reconciliation they're now trying to do that on health care. once they finish that, they can pass a new budget resolution that's what ylan was talking about. not going to be easy if they pass that budget resolution, they can take up tax reform doesn't make tax reform easy but at least they can try. we'll have to see whether or not it will be a big increase in the deficit or they'll make it deficit neutral. of course, the problems with the border adjustment tax indicate

that deficit neutral will not be easy very, very tough not much easier than health care reform but tax reform is something that president trump values, that the republican leadership in congress values and now they're going to take a stab at that. >> markets do. that's why we talk so much about it. >> we thought it would be an interesting summer now it may be an interesting fall, john. >> that's right. >> we'll find out later. let's get over to courtney reagan, sitting down with the ceo of kohl's, kevin mansell hey, court. >> good morning to you, carl that's right i am here with kevin mansell, ceo of kohl's. we're in clifton, new jersey, in the heart of what you do every day. a lot of your competitors are closing stores kohl's has 500 more stores than macy's you all look at them as assets not liabilities. you'll have to make the case there. a lot of people are confused about why that's different for you than others. >> sure. number one reason.

we're not in malls, off-mall stores 90% of our stores are not in traditional malls. as we move to an omni channel world -- and we are there -- we are looking to be a best in class omni channel retailer. one way to do that is to leverage your store base for the convenience, inventory asset that it has in it to make the customer shopping experience much, much better. from a four wall perspective, we have very, very few stores that are negative cash operating profit almost all are positive. we're not stressed from a cash perspective to make those decisions. we spent a ton of money in our stores over $1 billion to update, improve our stores, invest in new technology we spent over $2 billion from a technology spend standpoint. a lot of that is in our stores we believe in leveraging our stores we believe it's one of our

biggest single assets. >> as these other competitors close stores nearby to where there is a kohl's location are you aggressively working to try to capture that traffic and that customer, that opportunity that may exist? >> for sure. we definitely have a plan. as you know, there's a significant amount of store closures happening this year, both in the mall anchor space but also in the mall specialty space. beginning with back to school, companies that go after those in a meaningful way market share shifts as a result of those closures. our objective is to get more than our fair share. we're pretty optimistic on that. we've had experience with that with other mall anchors. as they close we picked up in those trade area. >> new shoppers or shoppers that kohl's had previously? >> we're always going to get a mix of both, of course

i think probably generally i would say it's more spend with existing shoppers as a percentage of the total. >> amazon is a big gorilla in the room for all retail, capturing a lot of share in all categories and now they're going pretty aggressively after apparel with their own brands and other prime wardrobe program. what are you going to do as a ceo of kohl's to make sure you're still getting shoppers convenience price and value, something that amazon really does offer >> i think we're really well positioned there to be honest, as i said at the beginning, our focus,best in class omni channel we have a physical presence. they don't we have to leverage it, do a better job of earning that customer dollar by leveraging it think about it from a balance sheet perspective, courtney, we're very different than many of our competitors we have a really strong balance sheet and used that balance sheet to our advantage, to make sure that from a technologies standpoint we have convenience aspects, for the customer engagements that needs to happen to really take advantage of

that we feel good about it and think we're starting to see that. >> under armour launched earlier this spring. you said it exceeded expectations now that some time has worn on, how has the customer been responding do you know yet if you capture aid new customer coming in to buy under armour >> definitely new customers, no question about that. we know that for certain t continues to be exceptionally strong we put a stake in the ground some time ago to be a leader in active and wellness and under armour is certainly underpinning that effort. that business is growing for us. in the first quarter alone it accelerated to a double-digit increase i expect that to continue throughout the course of the year it's broader than that apparel, footwear, wellness aspect of the business part of a larger strategy as

well. >> women's is a very significant part of your merchandise mix i believe it's 30% for apparel, 10% or so for accessories. that's been an area that has been difficult for kohl's. turn that around, some analysts say we can look at an upward trend after five quarters of negative comps are you seeing any traction toward the positive side yet >> for sure. no question about that we are seeing improvement. women's apparel business, our private brands distort very highly i think the benefits of our speed initiative in terms of sourcing women's apparel more effectively, more quickly, getting more relevant merchandise on the floor, more timely basis of paying off i think you are going to see improved metrics in women's, no question about that. >> so a lot of folks look at department stores right now and say this is a department store doldrums things are not so great for the department store it's a dying format in retail. do you think that's a fair statement?

>> couldn't disagree more. department stores are not all equal, right we just touched on a few things. our balance sheet, much different than our competitors store portfolio, newer, updated, invested in. value platform we have the best loyalty platform, combination of kohl's charge business, best in class 30 million in both of those camps. our product as well is really, really important. >> last question, we talked a lot about consolidation and retail and some changes in the way that some of these retails around nordstrom. interested in going private. would kohl's ever do that? >> we review that on a regular basis with the board capital access one of the most important ones and our perspective is we'll keep going down that road gl. >> kevin mansell, ceo of kohl's. thavengs for sitting down to

talk to us about the business. >> you got it. >> thank you, courtney, for bringing that to us. when we come back, the chairman of the mahindra group with us. massive indian conglomerate investing in the u.s. and other places why he's calling out ilan musk

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i'm scott wapner firefighter burning in maripos county has grown to 11,000 acres. hundreds have been evacuated fire broke out in one of the famous book-shaped skyscrapers in central moscow, starting on the seventh floor and engulfed the area of about 2100 feet. 60 firefighters fought the blaze. no one was injured fights broke out in taiwan's parliament during a budget meeting for infrastructure

development plan members of both sides could be seen tackling each other there you go, to the ground. shoving, throwing water at each other. wow! the duke and duchess of cambridge visiting a world war ii nazi german concentration camp in poland on the second day of a goodwill touring that underscored britain's intent to maintain good relations after it leaves the block. >> using royalty for diplomacy, as they always do over there thank you very much. president trump calls for focus on growing america jobs and making america goods, mumbai looking to hire roughly 5,000 people locally joining us now is mr. mahindra

it's made in america week. is that why you're here? >> absolutely. this is serious business i'm here for the formula e in brooklyn hope you got time off to go and see it. >> the electric car race. >> electric car race this is the future. >> this is the future, right we want to talk about that in a second first, you're going to open a factory in detroit, right? is that the big news here? >> isn't that a wonderful twist of history indian automotive factory opening a factory in detroit part of the renaissance of detroit. >> what are you going to make there? >> off-road utility vehicles i'll not describe it any more to you. we need to keep a little suspense in there. >> for viewers who may mot know you produce tractor, third largest marketshare in the united states. >> in the u.s. >> for mahindra tractors. >> largest in the world in terms of volume, around the world, we're number one. >> why manufacture in detroit? >> well, you know, it's

interesting. detroit, we went in there to really hire u.s. engineers some time ago when detroit was laying off people so the best talent in the world, which was being laid off -- the most experienced talent was actually in detroit. now we are being poached from because the situation has changed. we actually have 120 u.s.-based engineers sitting in detroit in the mahindra north american technical center apart from this off-road utility vehicle they have designed and developed our next minivan for global sales, an american team sitting here so it's actually india outsourcing to theu. a story you haven't heard before. >> what do you pay them, on average? >> i'm not sure what the average is i would be giving you a wrong figure i think we pay well because we have no problem hiring people. >> the other big business you have in the united states is i.t. services. how concerned are you about h1b visa restraints that the

administration is talking about? >> not at all. i think the h1b, in a sense, is focusing on skilled balance coming in. we have plenty of that i think people don't really know but we have, in fact, hired 2,300 people locally that's u.s. citizens and greencard holders. and our plans over the next five years are to double that number. this year alone we might hire over 1,000, 1,500 right here, not h1b visa people. >> give us the overall numbers how much have you invested in the united states? and you expect that number to grow how much? same with employees. >> invested roughly $1 billion up to now. we expect to double that over the next five years. we've got 3,000 employees now and expect to double that in five years just doubling. >> sounds like your hiring plans are untethered to any change in immigration policy. >> no. >> you're hiring locally >> we hired these,000 even before the current administration came in so we were thinking that going local is a good thing in any

case and we were moving up market in the value chain and taking very high-quality engliineers. >> why is the overwhelming notion that the u.s. is having to go to india to find, say, smart engineers? >> i think there is -- look, we do turn out a lot of engineers the needs of america, growing rapidly, again, are high as far as i'm concerned, we are planning to localize here. that's our business. we are looking to hire engineers as well and continue to look at h1b, which do afford us to get people from india still. >> a lot of global companies have been making their case in the states about how many people they employ here in part because of continued discussions around trade. very hard to ascertain exactly where things will come out are you concerned at all in terms of what you hear from this white house when it comes to the potential for tariffs and other changes in trade agreements? >> not really, david you know, i actually studied here i've been in this country of a

while. i look at it as a continuum. america is a democracy, like india. you don't make business decisions based on one regime. very free market oriented country. i don't think it will get derail ved quickly from some rhetoric other hand, let me give credit to president trump his rhetoric may, in fact, be expediting some people who are teetering on the edge about setup. there's no question that those kinds of decisions may be expedited. >> ilon musk, you called him out on twitter specifically, if we can bring it up and show people, about his lack of sales in india what message were you trying to get to him with this tweet >> prime minister came here, met him, invited him to india. he said he would then he was making some noises about india on twitter all i said to him was -- >> you time you got out here,

elon you don't want to leave that whole market to mahindra, do you? the more the merrier and greener. >> it would increase awareness of electric vehicles, the size of the pie that's aye meant what i said that's not tongue in cheek >> fully electric or hybrid? >> fully electric. we're not going to take the halfway measure. >> the board is set to vote, is it later this month or later this year about whether or not you're going to go full-scale luxury, take on tesla directly for a luxury vehicle with your tourin based design company? >> i hope you know the company they used to design ferraris we have access now to a high-end brand within the group and so whether we take on tesla or not, that's a matter of positioning. it is, in fact, a very high-end brand. we think it's time to use that kind of brand to go in for a very high-end, luxury electric vehicle to offset the other end of the market, which we are presently in, low-end commuting

market we intend to strive in both areas. >> investors believe their head start is wide, the moat is wide and all this attention from you, volvo, the big three, it will take them years to develop that kind of brand in engineering. >> what do you think the market thought of tesla when he first came on? they said tesla who? things change very rapidly tesla wasn't known it was a glint in elon's eye a few years ago. we're in a very rapidly growing market i'm confident at some point in time people will be saying that about mahindra. >> are you envious of his $53.2 billion market value and do you think it's justified >> envy, i'm told by my doctor, is bad for your health you have to keep looking ahead and grow fast. that's how we work, david. >> do you think that's justified by the market opportunity? >> you guys are the experts in the market i have no clue what is justified. all i know is that we were a $68

million market cap in '91 when i joined and $25.4 billion today as long as that trajectory continues i won't be jealous of anyone. >> thank you for being on. come back any time you're in the united states. shark tank host daymond john will join us, senator tom coburn will join us as we're getting comments from mcconnell and others jnj, four-year forecast above estimates. stocksermu o vy chn the flat line dow down 87.

where's jack? he's on holiday. what do you need? i need the temperature for pipe five. ask the new guy. the new guy? jack trained him. jack's guidance would be to maintain the temperature at negative 160 degrees celsius. that doesn't sound like jack. actually, jack would say, hey mate, just cool it to minus 160 and we're set. good on ya. oh yeah. that's jack.

>> now to the cme group and rick

santelle with the santelli exchange good morning, rick. >> thank you, michelle i like this guy. former senator, now just dr. tom. tom coburn, thanks for taking the time this morning. >> it's a pleasure to be with you all. >> all right now, we have four minutes here first half i want to talk about the american health care act of 2017 i know that in the past you've expressed reservations, and many have you said you would vote for it it has m rochlt rphed a little bit. today doesn't seem to be good news give me your opinions on the ultimate fate of this bill. >> you're going to see a defining moment of how many people in the republican party put out press releases, saying they would vote to get rid of obamacare and then won't vote for it so, you know, what you're doing is you're kind of whittling the

freshman four who said they would stand up and do what they said they were going to do then you have the basis to actually start fixing things the reason you can't get past -- the reason you can't get the votes for the -- this bill in the senate is because it goes against what the senators have been saying for seven years. and so you're going to have a fraction that won't move off of that let's have this vote and define who was telling the truth about what they would vote for and who wasn't there's no problem in changing your mind. there's no problem inmoving things down the road to try to get a deal you're not going to get the perfect -- that's the art of compromise that's what politics is all about. we have such factionalization in our country today, even within the republican party, that it's hard to get anything done. so, what's going to ultimately happen on health care is private enterprise is going to introduce market forces. it's happening right now i was in chicago last week,

rick i'm seeing stuff that is going to blow your mind. the big hospital chains are going to get their lunch eaten and we're going to see a lowering of prices for the average person in this country by about 35%. >> man, that sounds great, tom we both talked about this in the past i don't understand how some of these monstrous bills can address price. when you go into the doctor -- i defy many of you out there try to nail down prices of anything, procedure. i understand it's not like buying a car you almost can't get an idea let's switch gears for the remaining amount of time, 2018 budget resolution. looks like it's coming forward i don't know if you've had a chance to look at it a little bit. but do you have any thoughts moving forward, understanding that social security needs to be addressed or not addressed that was trump's promise they are looking at disability they are looking at things like medicare, food stamps. trying to nip at the edges your thoughts on the whole

package thus far. >> it's a good package $202 billion in terms of mandatory spending reform is just a drop in the bucket. i did all the oversight on the disability problems. it's 50% of it is fraud. what that doesn't mean is that you shouldn't help people that have disabilities but you should not put people on disability who can actually do a job. that's one thing social security disability is already bankrupt it's going to be very much sooner than social security will be bankrupt. so why should somebody like me continue to get the full benefit of social security in the next tw years i probably will have drawn out everything i ever paid in social security somebody with a higher income ought to have a lower benefit or pay higher tax on their continued earning. that's what's fair to people who will actually need social security. >> tom not only do you make a great point there but the

federal government in this instance needs to lead by example. case in point, chicago and illinois all these pensions, promises people who will enroll in programs some of these issues with regard to long-term underfund ed abilities. we are out of time, tom. i really thank you i'm going to have you back as we watch the budget and potential health care new legislation move down the pipeline. thavengs again >> you bet. >> we'll go to david faber. >> all right rick, thank you. shares of goldman sachs this morning. not that long ago, almost positive to flat, let's call it. conference call has ended. not necessarily testy.

but they were challenged by a number of the analysts, at least we had at least 14 questions we were able to tabulate, dealing with what happened to fixed income currency, commodities, particularly commodities, where there seem to be a great deal of questions. why? in part because mr. chavez said a leading commodities business, and it was a challenging backdrop for commodities brendan hawkin was on yesterday saying it had been as little as -- about 8% of overall ics revenues what is it now and mr. chavez responded, we're not going to break it out further except to say that out of the 73 quarters we've been a public company it was the worst quarter for the commodities business that does seem to be concerning people asked them follow-ups by the analyst on what he meant by blocking and tackling in that

particular business, what it meant for the execution that they had that seemed to be the focus as it went on the stock has weakened we'll see. michelle, just another challenging quarter to a certain extent for goldman in terms of at least this particular area where they had weakness. >> so be, i assume overall volume in commodities is down but sounds like they also lost marketshare. are they not providing best execution? >> or not doing as much activity as they had done previously. it's actually a larger portion percentage wise of the overall business there had been previously when that activity died down dramatically, it resulted in a big hit. >> interesting to see their private equity stakes, right this little odd part of the business that i wasn't quite convinced -- obviously you can't do in-house trading but the big investment banks would be doing less of that kind of thing, right? >> yes. >> that's tha bolstered their

bottom line. >> they did okay in terms of that overall part of the pie as you say, small. >> very small. >> very, very important and clearly the focus. >> goldman klein as 2.5, not as bad as the bank index down one the dow down 140, the biggest drop since swrul 6th for all the major averages chipotle this morning down on some reports the company has temporarily closed a location after a customer fell ill. stock was down 6%, recovering just a bit here. executive tells business insider, quote, we are working with health authorities to understand what the cause may be and to resolve the suaon aittis quickly as possible. be right back.

tap the future kicking off the live pitch towards tonight in new york city in a cross country search for the next great start-up for more on this, we're joined this morning by the host of the event, shark tank shoest and fashion entrepreneur damon john

who is back here tell us about this >> there is my fifth year in the competition. it is called miller lite tap the future we're hitting five cities. each city, someone will win $20,000 and go on to the big prize, compete for $100,000. i see better stuff on, you know, on this program than i do even on shark tank. this is every day american pitching their idea right there. and they're getting the money right there on the spot. and miller doesn't take a dime >> what kinds of projects have you usually had success? >> you know, one of the companies i believe sold for about $27 million and that was called text pride. can you text or emoji your giants or the knicks or i'm not saying just new york people, but, you know, ideas like. that they sold for $27 million year one >> are we at peak pitch format there are so many of these traveling shows where you show up i went to one in miami it's like the concerts of the

1980s. lines out doort so people could do their tech pitch. >> you know what i think it's just starting, really because nowadays people are saying, you know, to the major companies, not what you're doing for me, what are you doing for anybody? i'm starting to see most of the major corporations have some form of giving back. and it empowers people and creates jobs unlike the concert we used to go and have a good time and go home now people are being able tone ploy themselves and families. >> do you it this entrepreneurs, their vision is to one day sell because there's no chance they're ever going to be as big as amazon? or something like that >> you know, most successful entrepreneurs that i've ever met were trying to solve a problem and they had a purpose if you start a company with the idea of just selling, it's like driving forward looking in the rearview mirror. i don't want to invest in a company like that but as it grows, entrepreneurs do see there are ways to take in the funding and raise capital. but they normally want to solve a problem. >> i mean, we talk about the giants >> yeah. >> they're just giants and the idea that you're ever going to get that big is looking

less -- more and more remote. >> or you may get acquired right? so these giants are all acquiring brands now because some of the big corporations now, they can't keep fostering innovation in the organization so go acquire do what kodak should do instead of create the own digital platform. >> you are going see retail and figure out how to pick that lock we had decent guidance from target the last couple days. >> i'm not i'm seeing the retailers are struggle they're going off the credit card base. they thought that is the only thing that was going to keep them alive if they're not creating a live style for people to come into the store, there is no reason for anybody to come into the store anymore. the kids aren't coming in there looking for the next boyfriend and girlfriend they're on instagram everybody -- a woman who knows her size, she's going online and visit delivered to her door. >> my particular grouping or area that you expect to seat most entrance from this upcoming contest? >> no, really it is spread all as krot board. i've seen people with small

franchise. people with technology and people with service industry businesses so we've seen them all they all come through the door you know what? if you don't win the competition, just prepare yourself for the next competition. hopefully win. >> you created a company if you were to create a new brand today, what would do you differently? >> it would be a digital platform it would be a way to deliver some form of technical aspect of clothing you have to just keep topping everybody else now just to make it and something that you just look good in is not good enough anymore. >> except the guy who startd sowing caps. >> i would have to find somewhere it measures your blood and makes you jump higher, feeds your vitamin or something like that >> daymon, gaulz to see you. can't wait to seat results from "tap the future. when we come back, a lot more on the growth at netflix. that stock up better than 11%. that's an all time high today. we'll talk to the partners

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welcome back to "squawk on the street." markets are low we are health care standing out as one of the worst performing s&p 500 sectors to far this has the late aest tempt to overhaul the u.s. health care system lost some momentum. pharmacist stocks add together declines here. you have mallinkrodt and mylan the laggers. managed care taking a hit. humana down 2% as well that sector overall still up about 15% year to date so keep an eye on that sector overall as health care stocks and the etfs move around health care legislation now that does it for this hour of "squawk on the street."

let's send it back down to the new york stock exchange for the start of "squawk alley." back over you to, carl >> dom, thank you very much. good morning it's 8:00 a.m. at netflix headquarters in california 11:00 a.m. on wall street. and "squawk alley" is live >> good tuesday morning. welcome to "squawk alley." we're at post 9 at the new york stock exchange this morning. john broad joins us, co-founder and president at confide and roger mack in a my go m