higher ahead of tuesday's fed meeting. citigroup, charles schwab, e-trade, as well certain a sector to watch. that does it for this hour of "squawk on the street. let's send it back downtown for the start of "squawk alley," guys back to you. >> thank you very much good morning it's 8:00 a.m. at hulu headquarters in santa monica, california, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ ♪ >> good monday morning, welcome to "squawk alley." i'm carl quintanilla at post

nine of the new york stock exchange joining us this morning, kara swisher. kara, good morning to you. pressure continues this morning on facebook and its role regarding russia's interference in the 2016 presidential election just yesterday the social network said it shared new findings about ad sales with fbi special counsel robert mueller, this as house intelligence ranking member adam schiff is calling for not just facebook, but google and twitter to testify to hand over new information. >> we are requesting more information from facebook and have received some information, but there are a lot of unanswered questions frankly i'm distressed that it's taken this long to be informed that the russians had paid for at least $100,000 in ads to try to influence our electoral process. >> of course, that follows revelations last week that the social network allowed ads to target people that expressed antis

anti-semitic interests do you think overall it's being over or under characterized? >> well, i have a lot of unanswered questions from congress i think that's not a good thing for facebook to hear from them obviously, they can pull, you know, executives from facebook in to talk about it, also twitter and google and others, but facebook seems to be the one that's getting the most attention because it's the most important social network, and it's the place where people get their news, where this activity seems to have happened, and it's the one that looks good for the cameras for these various politicians. and so i don't think it's a good thing when politicians are saying i have a lot of unanswered questions i just don't not for facebook and definitely not for silicon valley >> you have good intel in silicon valley have you been able to see the ads, what have they been about, what do they influence >> obviously, they are trying to get people to meet or, you know, a lot of them, the russian ones were anti-hillary clinton or

maybe anti globalist and things like that. you know, it's not just designed to win an election i think that's a little bit overreported i think it's designed to sow unhappiness or, you know, create tension within the system. i think discord is a good thing, not a good thing for us, but that's a good goal for these -- for these ads and different things like that but a lot is around confusion and discord and creating an unstable system and using these tools, which we invented in this country, which is amazing these tools are being used so deftly by the russian government and russian hackers. so i think that's really the goal, but i suspect there's going to be a lot more things that facebook and other companies are going to have to give to investigators as they move into this >> kara, investors don't seem

too worried about this the stocks still near all-time highs over the last couple weeks, but how do you think facebook and social media writ large is going to have to change going forward because of these kinds of revelations it's not just russia, as we mentioned. it's the way ads might be targeted it's also taking responsibility for content, which is something historically silicon valley hasn't liked to do >> yeah, you know, john, ai've been on this issue it's not a benign platform and they need to take responsibility i've said this for months now in terms of what they are doing i think they look at themselves as this benign platform where things are being exchanged, but they have a greater responsibility around the targeting of anti-semitic stuff was very clear they need to be clear what's going across their system and how it's being used. these are tools they are providing to advertisers, users, consumers, and they've just got to really monitor it better, and it can't just be via algorithm,

as you know. the ones that were anti-semitic were algorithm based and what they do is scrape the entire system and come up with categories that people might be interested in. unfortunately, people on their profiles have really unpleasant and in this case anti-semitic stuff. it's not big, but it gets noticed. so they have to really sit and think hard about the tools they are providing and what the result of those tools are, whether it's bullying on twitter. by the way, don't let twitter off the hook bullying on twitter, google has sort of been in the background, but was it used, was youtube used, and you have to think really hard about these platforms, because they are so important in the way we get information now. >> well, as far as congress is concerned, kara, there's a debate about whether or not this is a big popular issue they can blow up, at least on facebook, which has better penetration here in this country others argue, you know, consumers love the product and they are not -- they won't be happy to see that product

attacked same argument as with amazon regarding antitrust. do you believe that? >> yeah, there's amazon, too you can come after amazon. i don't think consumers -- listen, remember when jerry yang went up in front of congress over the chinese dissidence? that wasn't good for yahoo!. or can you imagine mark zuckerberg or carrool sandburg n that picture in front of congress no matter how you slice it, it's not good they'll do it if they are compelled to, and i think they'll present a very good face, but i don't think consumers rally around facebook or google. i don't know i just don't think -- i think congress will make as much as this as they can, because it's a great political issue of what's happening on our social media platforms, just the way in the older days they might have done newspapers or television stations or things like that but in this case we're getting our news from social media and, therefore, social media has to

take responsibility for some of it not all of it. it's very difficult. i don't think it's not difficult. i think it's an incredible, you know, it's humanity talking to itself >> is the risk here they end up having to deal with the same way television networks do when it comes to campaign finance laws, et cetera? >> yeah, yeah. the risk is more regulation. of course, it is again, when microsoft, you know, went up against washington, who won in that situation? not microsoft. i don't know if washington won, but microsoft certainly didn't win during the monopoly trials and stuff like that. i mean, i think you have to self regulate before regulation gets to you and, obviously, they are facing much stronger headwinds in europe and elsewhere in the world. so, you know, it may be time for them to think hard about how they want to deal with some of these issues again, they are not going to be able to monitor every single thing. what is it, 2 billion people on facebook 2 billion people talking to each other on facebook, and they are going to say some very bad

things and act in some very bad ways and the tools are going to be used the question is, what kind of control can they exert over this and what kind of control should they and that's going to be debated and it deserves to be debated. they are an important part of our society now. >> absolutely. kara, on a much lighter note -- >> not lighter >> it was a big night for hulu with handmaid's tale now the pressure is on to continue to deliver content so that people don't migrate back out. how important is this stuff? >> handmaid's tale is not a happy story. i love handmaid's tale i interviewed the show's producer, he loved it. he felt more free, obviously, if you watch the series, which i absolutely recommend to everybody. it's really incredibly well done elizabeth moss is astonishing.

it's, obviously, based on a fantastic book by margaret atwood, but i think he felt a lot of freedom working with them and felt like he could take chances and do things, and, obviously, consumers love it -- critics love it, at least. i think it's a great move for them to have done this and take a risk, because it's very risky material if you watch it, and i think it says a lot about what consumers are interested in, which is compelling content, wherever it's created, and they are willing to watch it and actors are willing to go there, as long as it's really great >> kara, but does it signal that we've entered a new era in the streaming platform wars? at first a win, just let people know, hey, this is a real service out there, maybe you should check it out. now seems maybe the conversation has moved to turn. people will pop in, pay for one month, binge something, then pop off again. is this a big deal for hulu if they can't hold people

>> well, everyone pops off of abc, nbc, cbs, too come on. i watch -- i'm watching right now designated survivor not on abc, i'm watching on, i think, hulu, i think i'm watching it on i don't really care where i get my content or how i get it or the way i watch it i think everybody is now operating on this system disney is putting out its service. i mean, i think it's what's on these platforms, whether it's amazon, google, whether it's net li flix, hulu, so i think it's going to be really competitive and that's a great thing, as far as i'm concerned as a consumer for sure >> it's getting more fierce, that's for sure. >> great show, great show. great show, watch it it's very depressing, but watch it >> see you next time when we return, new all-time highs for the dow and s&p. what's going to knock this record breaking rally off track. then warning signs at equifax leading up to the massive hack

attack later on, new note on netflix today. the bold case for that stock with the dow up 75 don't go away. not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. can we at least analyze can we push the offer online? legacy technology can handcuff any company. but "yes" is here.

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this stock has tripled over the past 12 months it's up today on analysts' upgrade, particularly bank of america saying this can get to 210 per share. it's a rocket. >> it has been >> i think the average american, we talk about ceos and big companies, you think anybody can name the ceo of nvidia >> aside from us >> exactly, exactly. >> i remember when nobody wanted to talk about nvidia wow. >> let's talk about the broader markets, still positive as the dow and s&p hit new highs. dow is up for seven straight sessions as investors await the fed meeting this week. let's bring in jim paulson jim, good to have you here >> good morning, michelle. >> this is now officially the second longest bull run on record more than 3,000 days of 270% without a major correction

and that's despite north korea, major storms, sometimes chaos out of d.c where do we go from here >> well, you know, i think michelle that we're kind of in a sweet spot here in this cycle where we're able to grow decently 2.5%-ish and we're growing more broadly with more countries around the country participating, but we're not so far aggravating inflation or interest rate pressures. and as long as we can continue to do that, i don't think we'll do it forever, but as long as we can continue, i think the market keeps going higher if you can produce real growth without interest rate inflation pressures, it's hard to know what the ultimate upside of the market is. every recovery in post war history has ended with some semblance of overheat. that is some resource shortages, pressure on input and labor costs, pressure on profit margins, reassessment of

inflation expectations and a need to reset rates. i think we're going to eventually head to that, but right now if we have some inflation evidence, i think it would be a bullish indication that the economy is doing well, that we're still going to produce 2% inflation that might even make the market go higher for at least a period of time. >> that would be interesting okay, so the broader market can go higher, just should your clients buy the s&p 500? buy the spider what should they do? >> well, i think from here on in, i think the international markets, michelle, are going to outpace the united states. most of those economies are in a younger part of their recovery it's going to probably take longer for them to produce overheat pressures as much as we might have here in the united states most of those markets are more undervalued than ours. particularly the emerging market is going to benefit from a rise in inflationary undertones like commodity prices, which they have been here in the last year, so certainly i'd have a more of

a major overweight towards international markets most developed and emerging and then i'd like at overheat sectors, if you will i'd focus on the sectors that benefit from some sense of moving towards overheat. that would be materials and energy stocks, the capital goods stocks like industrials and technology, and those that benefit from rising yields like financials some of those are already doing fairly well, surprisingly well no one thinks inflation is an issue. material stocks this year is the third best performing sector year to date within the s&p 500 and energy stocks are starting to do better, as well. i would focus on those areas >> also joining us here at post nine is chief investment strategist at oppenheimer who braved the u.n. traffic to get here >> it's brutal, isn't it >> first time on cnbc without a tie. >> welcome, welcome. >> so, mr. paulsen here is

pretty sanguine on the markets, likes the international markets better than the u.s., but second longest bull run in history. anything that can keep going >> fundamentals keep getting better and it's not a too rapid a pace it's a slow enough pace so it's likely to let the federal reserve be able to do its job at a moderate pace, not disrupt the equity market. cause some pain for the bond market, naturally, as interest rates rise, but overall not much more than a speed bump for the economy, if that occurs. the other side of this is related to international most of the gains in international, whether you're looking at efa, emerging markets, or frontier, are from currency gains so the international markets may have much further to run particularly if the economies keep improving globally. looks good for equities. >> our friend david rosenburg likes to point out 10 of the

last 13 recessions were sparked by a tightening cycle. why is balance sheet not considered a shadow tightening >> i think because it's very much a core process to what needs to be done in the process of a normalization, and because inflation, due to low wage growth globally is contained, it's likely that that normalization process, as it relates to the fed balance sheet, may also be able to be done in a slow enough pace >> less disruptive >> watching paint dry. >> less for yield. so when the fed puts paper out there, they are going to come up there like fish, koi fish in a hotel pool ready to be fed >> thank you so much, good to have you on. and still to come, manhattan, the city of new york, the latest city to throw its hat in the ring for amazon's headquarters 2 we're going to speak with the opal's deputy mayor about this pros later in the hour

"squawk alley" is back in a moment not rebalancing your portfolio. focused on what you love, not how your money will last through retirement. we make it easier to plan for retirement with day one target date funds from prudential. look forward to your 401k plan. if only the signs were as obvious when you trade. fidelity's active trader pro can help you find smarter entry and exit points and can help protect your potential profits. fidelity -- where smarter investors will always be.

equifax continuing to feel the heat over its massive data breach we spoke with washington, d.c., attorney general carl racine about the breach last hour >> it's clear that it's not treating consumers like clients. it's treating the data that it aggregates like a commodity that it can then repackage and sell in various ways. and so i think a lot of what's going to come out of this investigation are discussions around the duties owed to consumers, whether or not one views them as a client or not. >> at one market in san francisco with more, aditi >> hi, john, a lot of news for the company this morning as the department of justice is reportedly investigating equifax in a criminal probe over selling of shares by three executives following the breach

equifax has lost nearly $6 billion in market cap since the breach was made public late friday the company announcing the retirement of two executives those execs are chief information security officer david webb and chief security officer susan malden webb had been with the company since 2010 malden raised eyebrows recently when her linkedin page showed she majored in music in college with no apparent academic credentials in computer science or cybersecurity both positions will be filled in the interim by in-house employees. in other developments, carson block told cnbc this morning he's suing equifax over the hack and said his firm does not hold a short position in equifax. the company also releasing more details about the timeline leading up to the announcement of the breach. equifax believed the hackers accessed information between may 13th and july 30th according to equifax, the thieves took advantage of a vulnerability in the software

the company was using to run its web applications equifax noticed suspicious network traffic on a web app on july 29th and on july 30th, as well that's when the company took the application offline and patched it up before bringing it back online on august 2nd they brought in cybersecurity firm mandiant. it's still unclear why the company waited until september 7th to make the breach public. one of many questions being asked, carl. >> aditi, thank you very much for that, aditi roy out in san francisco. when we come back, we'll talk to mark mahaney, get his reha for netflix, which is up mo tn a buck today dow is up 77 "squawk alley" continues in a moment

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♪ good morning once again, everybody, i'm sue herrera here's your cnbc update at this hour hurricane maria just upgraded to a category 3 hurricane, churning through the caribbean. meanwhile hurricane jose is making his way up the atlantic seaboard while it is not expected to make landfall, it is whipping up dangerous surf and rip currents as it moves northwards the storm has maximum sustained winds of 85 miles per hour and

forecasters say a large stretch of the east coast into new england could be affected. we'll keep an eye on both of those storms for you a powerful typhoon reaching hokkaido this morning. up to two inches of rain is expected, but officials are warning of flooding and high waves. it ripped through southwestern japan on sunday. three people killed after a new york city bus and a tour bus collided this morning in queens. a small fire also broke out when one of the buses slammed into a building the cause of that crash is under investigation. and toys "r" us could be headed for bankruptcy just before the holiday shopping season that's according to "the wall street journal." nervous suppliers have tightened their turns for the retailer and such a move would underscore the distress of retailers of all sizes as consumers increasingly turn to online shopping. that's the news update this hour back downtown to "squawk alley." michelle, back to you. now we're watching maria and jose >> a lot of them this year

it's been incredible thanks, sue. >> difficult, difficult year so far. >> for sure. facebook under growing pressure to reveal details of russia's interference in the 2016 presidential election julia borstin joins us now with the latest julia? >> political scrutiny is growing. adam schiff, ranking member of the house intelligence committee just yesterday calling for facebook to testify about russian interference in the election facebook disclosing a week and a half ago the russian purchase of at least $100,000 of targeted ads on the platform. representative schiff saying, "they need to be fully forthcoming and i'm confident they will. i think, frankly, they need to come and testify before congress, because there's a lot we need to know about this." this comes as facebook has handed over to special counsel robert mueller copies of the ads and details about the accounts that bought them in the targeting criteria used. now, this is more detail than facebook gave congress reportedly just showing congressional staffers examples of ads and leaving them with

just their notes facebook saying, "we take our responsibility to protect the integrity of elections seriously and built teams devoted to this purpose. going on to say, "we are providing information to special counsel. so why isn't facebook making detailed information publicly available? a source familiar with the situation says because of federal law and ongoing investigations the company may face certain limitations these latest revelations are certainly quite a turn, considering mark zuckerberg's comments immediately following the election back in november he refuted concerns about fake news on facebook influencing the election and said overall he was proud of his role giving people a voice in this election certainly be interested to hear how his perspective has changed as a result of all these revelations. guys, back over to you >> all right, thank you, julia and the emmys this weekend shedding light on an ongoing tug of war between traditional tv and streaming players, with "the

handmaid's tale" taking home best drama mark mahaney is an analyst with rbc capital markets, he has a new note out on netflix. mark, is there an emmys effect we used to suppose this caused sign-ups, but does that accrue to hulu or streaming in general? >> it's heaard -- of course, there's an emmys effect. we look at the emmys traction, if you will, for netflix over the last four years, and this level, the number of emmys they got this year was 2x what they've gotten in the past maybe that's what perspective and it does feed together the number one reason why people turn on and turn off and turn back to netflix is content, it's not price. so the better of the content, that's reflected partly in emmys, better it is for net lflx and their subs >> which is the turn effect?

last week we were talking to les moonves about that he seemed to think it takes true tent pole content to keep people coming back. what causes people to turn off these services and how damaging is it? >> yeah, so again we've run this survey in the u.s. for 24 straight quarters. that's six years, and we consistently ask people who've turned off the service and churned back, churn backers, why they did what they did, and very consistently the number one reason is they didn't find the content that they wanted frankly what's interesting to us is over the last five years, it's still the leading issue, but less and less of kind of a pain point or reason people churn off. and we know churn rates at netflix itself have gone from as high as 10% a month five, seven years ago to 3% to 4%. it's not disclosed by the company, but that's our best guess. the most recent show we've seen skew up high is "ozark" by

netflix. all that does is keep people more likely to stay with netflix or sign on to netflix because they've heard about a new show their friends are talking about. >> you also surveyed the uk and brazil, and what occurred to me, and they are doing very, very well, and i think those two countries for years there was no choice, right, there was bbc 1, 2, and 3, and brazil was dominated by global. i wonder if in certain countries of the world where there's been so much less choice compared to the united states netflix really is something that they enjoy so much, because it gives them an option that they didn't have >> i think that's absolutely true and i think that's one of the most important things we came out with look, we saw record high levels of customer satisfaction in the uk, record high levels in brazil we've run this across a half dozen international markets. netflix is a global story. they have 104 million subscribers, half in the u.s., but half are outside the u.s it's only a matter of time before you're going to have 3/4 of the subs outside the u.s.

the financial markets assume netflix can't be as successful in international markets as they have been in the u.s., but our survey actually shows higher satisfaction for netflix subs outside of the u.s., and why would that be? the entertainment industries and every market aren't as competitive as they are in the u.s., so netflix, u.s. equivalent for $10 a month is a stronger value proposition in international markets. the financial markets may have this wrong it may be netflix does better outside the u.s. than in the u.s. if that's the case, this stock can go up from here. it's why it's one of our top three picks. >> all right still with the bull case, mark mahaney from rbc, thanks very much, talking netflix. >> thanks, john. markets in europe closed a few moments ago. seema? >> european markets at a six-week high led by portugal. last friday standard and poor's became the first to raise

portugal back to investment grade, citing improvement in the country's economy and public finances portugal had lost its investment grade rating back in january 2012 at the height of its debt crisis the portuguese stock market up 1.5% today that's the psi 20. meanwhile portugal's ten-year yield bond hitting lows not seen since january 2016 and on track for its biggest one-day decline since february last year over in germany, expecting to continue strong expansion path in the third quarter than with somewhat less momentum, currently yielding 10.46%, but it was trading at a high last week this all ahead of the german election on sunday recent polls show that angela merkel is the favorite to win a fourth term at chancellor, but far right party afd has now moved into third place and could become the biggest opposition

party in parliament if merkel were to win. but keep in mind that populist momentum in europe has largely dissipated in 2017 with emmanuel macron's victory over marine le pen in france back in the spring we finish with the stock of the day, moving lower on news it is cancelling hundreds of flights across europe due in part to a shortage of pilots as a result, ryanair could face 20 million euros in compensation claims that stock down just about 2%. michelle, back to you. >> all right, thanks, seema. when we come back, new york city makes its case to host amazon's planned headquarters number two we'll speak with the city's deputy mayor next. plus, as we head to break, another day of record highs for y vedow and the s&p. anmo higher today is yet another record risk of burst pipes and water damage... soon, insurance companies won't pay for damages. that is, not if they can help prevent damages

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shares are now sinking he'll join us live two big name shoe stocks under fire on wall street today. we'll debate them both it's our call of the day half-time report, noon eastern carl, see you in about 20. >> thanks, scott new york city making a pitch for amazon's second headquarters for more we're joined by the deputy mayor of new york city,

alic alica glen, who leads the city's economic efforts good to have you, thanks so much >> thanks for having me. >> why new york? >> i think any company like amazon, their number one asset has to be talent, their human capital, and i think we're really well positioned to make the argument you're going to have the best and brightest workforce in new york city we attract the best workers, kids want to work in new york city, and because we have such a diverse economy, we have some of the greatest minds than all the other sectors that are now very much part of amazon's business, whether it's the film business, media business, advertising business, even the fashion business so for a company like amazon that's looking to diversify their work, having the most diverse workforce and the most exciting vital city in the planet is a compelling argument. >> biggest knock can be cost of living sure, you can live far out, transportation, but neighborhoody feel is big these days how do you counter that in a proposal for amazon? >> look, we are never going to

be the lowest cost alternative, but there's so many other things going for new york city that we think we can overcome that perception first of all, there are so many diverse neighborhoods in new york city and many are still affordable, particularly for people having really high quality middle class jobs. we're also, as you know, building more housing than ever built in the city before, really making a dent in affordability, we're seeing rents leveling off for the first time and our schools are improving and our cost of transportation is the lowest of any metropolitan area in the country, so when you put all of those together, the sort of perception of affordability, versus reality of affordability will stack up well also we're part of a region, right, so there are going to be folks who work at amazon headquarters who may want to live in the adjacent counties, as well as kids who want to live in new york city, so i think it's the diversity of our neighborhoods and region that are going to make us very, very compelling >> you mention human capital when it comes to infrastructure, as part of the proposal, do you suggest where physically this

would be >> yeah, sure. we're evaluating a series of options. one of the really big strengths we have going into this competition is amazon is already an urban company, right, they have not been in a suburban office park like many of the other high-tech or innovation companies, so we know they have an appetite for being in a city to really understanding what it's like to walk between buildings, to be part of a neighborhood, to be part of a more diverse economy, so we think we're going to put on the table a series of options, which will allow them to grow organically within the city's fabric >> including manhattan and elsewhere? >> we're looking all across the city again, one of the great things is we have so many options so i think we're probably going to suggest more than one option, because we do want to be responsive to the various ways in which they are going to approach the search. >> many forget, amazon has a unit, audible, that's in newark, right across the hudson. does that play into your calculation at all because a lot of those employees, some of them live in new york already are you aware of how happy they

are with that arrangement? >> well, i think you're raising one of the real strengths, we think, of our bid, which is that we are a region and newark is literally 17 minutes from downtown manhattan by two really good forms of transportation, in to penn station or into the world trade strrks so the fact amazon has already recognized the value of being in the new york region, i think, is a good indication of how well we're going to compete i don't know whether those folks who work at audible are happy or not happy. i know what's going on in newark is extraordinary and, again, we see this as an opportunity to build on the strength, not to cannibalize efforts newark is doing, as well >> many say don't ask about father on mother's day, but when you look at other cities, chicago, indy, minneapolis, detroit considering it, where do you think the fiercest competition will be from >> i don't like to handicap those things i like to focus on why new york is going to be the best bid. i think it's fair to say that having amazon having an east

coast presence is going to be a competitive advantage. i think, again, having the university city, the diversity of economy, the neighborhoods, the ferries, city bike, everything that makes new york city so fabulous, no offense to the other cities you mentioned, but i don't think there's any other city that can compete in terms of what it feels like to be growing a career anywhere in the united states. and i think that if you put that package together and we're going to put together some extraordinary real estate opportunities for them, i just don't see how those other cities can compete, you know? >> the mayor of cincinnati gives an awful lot of personal attention. you got as many companies and as many headquarters as new york does, do people feel left out? >> do people in new york feel left out >> do the companies feel like maybe they aren't getting as much attention as they would moving to some place smaller. >> i think it's true we're not a one-company town, but i would argue that's our strength. the mayor and governor made very clear we are serious about getting amazon to new york and i

think the fact we are putting together such an extraordinary bid and asking all the developers and business community to join in that effort shows that we want amazon in new york do we need amazon in new york to be successful for the next hundred years? no, but that's not the calculus. we're a pro growth, pro business city, and we have more to offer amazon, i think, than any city in the united states and i think our good will speak for itself >> deadline's the 19th >> deadline's the 19th >> we hope you'll come back and talk about more when we learn what it is >> looking forward to it >> alicia glen of new york city, thank you. >> thank you straight ahead, european regulators setting their sights on big tech when it comes to takz we're going to speak with robert mcdowell about the political pressure on silicon valley plus, my ierewntvi with brian krzanich on "closing bell" today. we'll be right back. " is here. the new app will go live monday? yeah. with hewlett-packard enterprise,

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that's up to 16 times faster than slow internet from the phone company. say hello to faster downloads with internet speeds up to 250 megabits per second. get fast internet and add phone and tv now for only $34.90 more per month. call today. comcast business. built for business. the eu is out with a new plan to tax tech giants like amazon and google. deidre is on the story hey, deidre. >> morning, carl europe is trying to raise taxes for them as their revenue grows, as does their influence on the continent. internet giants have been accused of paying too little in taxes by booking profits in low tax rate countries like ireland and luxembourg, so finance ministers met over the weekend and discussed a french-led proposal to tax on revenue rather than profits. now, you guys spoke to the commissioner about an hour ago and he said that it's not just

about the biggest tech companies like google, facebook, amazon, but the entire digital economy that should be taxed as the rest of the economy >> some countries, companies like booking.com they don't have an establishment in europe or even a boutique in europe we don't know precisely where they operate from hand they make huge profits in europe with european contents. >> we reached out to airbnb and booking.com and didn't immediately make a response. he also spoke to many so of the challenges he said the eu is leading the major move into this tax code and even at the eu level the plan is facing skepticism, while nearly a third of of bloc states backed the french initiative smaller members like denmark and luxembourg, they warned of the economic impact from taxing online giants more the eu hopes to reach an agreement among all members by

the end of the year and draw up legislative proposals next spring he also said on our air that this was driven by the need to change the tax system for a modern economy the question is how to proceed and how to get everyone to agree. guys >> deirdre, that will be tough to do. thank you. deirdre bosa, and for more we're joined by analyst michael pacter and commissioner roger mcdowell. michael, i want to start with you. how do you handicap the chances of this tax on the revenue french proposal? seems pretty far out there. >> pretty low probability. former tax lawyer and former registered tax lobbyist as well. you know, i -- taxing revenue, they already do that with the value-added tax and the problem is if you tax revenue companies with high costs of goods, selling somebody a television for $1,000 that pays 800 and google if they make $1,000

in search their cost of goods is very, very low so it's an unequal system they already do it with value-added tax and an income tax system is typically based upon net income so revenue minus all your costs to generate that income i would say a very low probability that this happens. >> but robert mcdowell, we are in a different economy it's not about moving physical goods around manufacturing physical goods as much it's information it's content what's the right way to do this? >> first of all, this is another thunder clap in this gathering storm globally of more regulation and taxation and the whole internet ecosphere, and we'll see more taxation, maybe in europe, could be in the united states and we're sewing growing cries from both sides of the aisle, as your last segment just pointed out earlier, about both republicans and democrats looking at some of these companies with a new way of thinking, so what this

ultimately could do is drive up costs for consumers. whether it's more regulation or more taxation. those are always hidden costs and what is now free on the internet might end up costing consumers something, and also if it's a gross revenue tax of some sort, even if it's a low probability now. some day it may happen, but that can actually harm startups more. they don't show a profit maybe for years. thee venture-backed companies. these startups, but they do have gross revenue and they are trying to grossy it so they can grow their countries this can boomerang back on the european europe and the mice that are roaring like ireland and denmark and luxembourg and they may be able to keep this genie in the bottle of right now their economies are doing quite well in the digital space, precisely because of their tax and regulatory posture, so that's something for europe to emulate, not to crush. >> right michael, i'm surprised a bit i mean, you're famous for having a bearish thesis on some famous

names, and even though you say this is a low probability, why not incorporate that more into your mod snell why is it not a threat to revenue down the line? >> i'm a bear on netflix and fortunately for netflix they don't make any profits internationally, so they can tax 1,000% it won't make any difference obviously if there's a tax on revenue, netflix gets hurt badly. that really would be unfair. once they are making a profit, i understand trying to get a bigger piece of the pie, but, no, and i'm not bearish on facebook or amazon i have buys on both. i don't yet cover google i will soon. but, no, the guys who don't make money shouldn't be paying more money. facebook and amazon are quite profitable in europe so i understand them being targets. >> robert, with all the potential changes, which companies are most at risk is it the amazons, the facebooks? based on business model, what do you think? >> actually i won't comment specifically on companies because i think it affects the entire space there's a ripple effect.

whether you're a startup or established incumbent, making lots of money right now, so what this does is opens the floodgates to more regulation and more taxation in the space you've had had the international telecommunication union for years in which i've been speaking out and writing about this for the better part of a decade and an arm of the u.n. talking about economic emulation of the entire internet it's very real ten years ago it was the unanimous international consensus to have light touch or even hands off the space, but now that a number of companies have become very profitable, it's probably no coincidence they happen to be american companies, many of them, and there is cash being, you know, stored overseas because of the u.s.' high corporate tax rate, that's too delicious for many tax collectors to resist and there's a lot that can play into this brexit plays into this and britain if it plays its cards right could be a taxing haven and if the u.s. can get tax

reform accomplished and get that repatriation measure done and bring back some of these monies to the united states that could positively affect those companies, so there are a lot of moving parts here, and there's both the downside and an upside. >> all right we'll leave it there gentlemen, much more on this i'm sure michael pachter and former fec commissioner mcdowell thanks. >> "squawk alley" continues after the break. whoooo. you're searching for something. like the perfect deal... ...on the perfect hotel. so wouldn't it be perfect if... ....there was a single site... ...where you could find the... ...right hotel for you at the best price? there is. because tripadvisor now compares... ...prices from over 200 booking... ...sites

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♪ markets making some solid gains after cracking 2,500 on the s&p on friday. the dow is up almost 80 points nice to have boeing and caterpillar in your corner, the two leader for the dow day ubs takes caterpillar to a buy and takes their target from 116 to 140 that's going to move the needle. >> indeed, and cisco, a big name, announcing some news john chambers, longtime ceo, now executive chairman, not going to stand for re-election. that's big news. chuck robbins is going to take the chairman's title as well

some tension a little bit between those two. john chambers, the closest you get to a founder without being one but end of an era coming. >> of course, we'll watch inindividual crashing the fed meeting later in the week, the president tomorrow and you talk to krzanich later today. >> at text crunch disrupt. we expect some news around the mobile eye unit. we'll have it here on cnbc. >> sounds good let's get to judge and "the half." and welcome to "the halftime report." i'm scott wapner semi surge chip stocks on fire. why the sector's breakout could keep the nasdaq's rally going. also joining us on set is jim cramer, the host of "mad money." the dow is coming off its best week of the year but it is the nasdaq that continues to be the outperformer index up 20%, showing no signs of slowing