don't want your employer having access to your facebook account in any way you want to keep them entirely separate -- >> you would think maybe they'll allow you to eventually keep them separate in some way. i always thought to myself, they would be able to turn this feature on -- >> i guess it's bad enough that employers are looking at that stuff. >> what about my myspace >> they look at that for you. >> i'm thinking about joining -- >> we're out of here good-bye, we'll see you tomorrow it's time for "squawk on the street." ♪ >> good monday morning, i'm carl quintanilla, david faber is back at post nine and futures are study as a busy week takes shape. netflix tonight and yellen sounding hawkish over the weekend and thursday marks the 30th anniversary of the 87 crash. europe is mixed and oil bouncing

as iraqi forces advance on kir kuk. road m as we kick off a busy week for earnings. >> plus a win for workers, the white house pitching the tax cut plan countering democratic criticism and seeing middle class americans would see incomes rise. >> eye on subs, netflix after the bell and is expected to hit another record today stocks are looking to hit record highs, dow and s&p 500 coming off five straight weeks of gains. yellen saying the ongoing strength will warrant a gradual increase in rates. meantime oil prices are higher this fighting between iraqi and kurdish fighting escalating and wti up almost a buck. >> 600,000 barrels in play and you also have to believe the area being destabilized has made it at least for a couple of days

you get over 50. i've got to tell you, i've got at least a dozen oil companies i monday ter that will be in there selling again today. they have to sell because they are exceeding their cash flow. so when you see 52, you need to see a breakout to like 56 to realize they are all through or that they really finally just feel we're making enough money in the cash market, we can do okay most of these companies are not getting 52 in permeon because it's land locked there's a lot of pipe but not enough i think oil can break out but there has to be a bigger event than kirkuk. looking at the companies that did well last week, the stocks, it was -- anything cloud, anything at all related to block change, i mean it was just -- then you go over and it's everything related to housing,

housing. then everything related to the rails, there was a rail downgrade today. it's like one group after another is great except for food and retail those look terrible. amazon makes up for all of them. >> all amazon's fault when it comes to food and retail, nobody else to blame, that's it. >> any time amazon is resumered to be moving into another market, immediately market down the stocks -- >> the stock about sportswear. >> nike. we had an excellent ichbt interview with lulu in china what happens if amazon does private label? the answer is you sell nike because nike is not doing that well, not because of amazon. i keep thinking about what happened to people who sold home depot when they did the exclusive tie-up with sears. that was exclusive exclusive to what i don't know i do have news out on nordstrom,

they do need to file a -- we've been wondering about the potential buyout and the stock is reacting. on october 13th, representatives of the group advised a special committee and remember it's the nordstrom family along with private equity partners trying to make a bid to buy nordstrom and you have to go through a special committee to receive this offer potentially that was coming they said that they are having difficulty in light of difficulty obtaining financing the current retail environment prior to the holiday season, they have suspended active exploration for the possibility of a go positive transaction there you have news on the potential buyout of nordstrom, which indicates difficulty getting financing and therefore they are stepping aside for now. they say they are going to -- the group representatives also advise special committee and plan to continue efforts to

explore the possibility of making a proposal for going private after the conclusion of the holiday season and no assurance given that that proposal would be made after that time. you see shares down -- >> it was at 40 before they made that announcement that they are thinking about doing it so they should go below 40, september -- surprisingly weak month for a lot of retail with the exception of the dollar stores and home depot. dollar stores are doing incredibly well. >> we did get ruby tuesday -- >> how do you like -- oh, my. >> that is going away. >> people have been averaging down on that and averaging down and the guy who bought it on friday is doing good how about that salad bar they used to have killer salad bar. >> the white house releasing its first economic analysis of the tax reform plan projecting a 20% corporate tax cut would be a windfall for workers boosting average middle class incomes by four grand a year. democrats argue it will

primarily help the wealthy chuck schumer says, president trump complains about fake news, this fake math is as bad as any of these so-called fake news he has complained about and there is real debate, guys over the impact of this package tax policy center has much different views than the cea. >> i woke up on saturday saying when are we going to read the story that says tax reform has been pushed back by the new health care plan, that the president put out. i think tax reform is -- how many times can you declare something dead on arrival? we're going to go back to health care you have to, it's going to be -- if you get rid of the subsidies no one will write, jack the price up. >> there is potentially the bipartisan effort now, alexander -- >> bipartisan and murray trying to come up with a bill to get bipartisan support on health care in terms of firming up the exchanges or -- >> but that fails but does take a huge amount of our time away

and nothing happens. look, anybody who -- anybody the subsidies, you need the subsidies to get the companies to be in there or they going to raise the rates -- >> i think to this central argument in terms of lowering the corporate tax rate and benefit for workers, this debate is going to rage for a while i remember when we asked gary cohn about it and he didn't go there in terms of saying it would increase wages he said it will benefit their pensions >> yeah. it doesn't matter. it's off the table >> you're saying yet another diversion -- >> they've got to talk health care, it's way too big because you get the disparity of income, you can't -- any republican from jersey and new york and california is running for their lives, connecticut you go back to doing health care and get nothing done but at least you try to save something. they can't leave health care the way it is without executive decision it's right, think it was legal

because it was a decision by obama -- >> sure. >> but they've got to go back and start talking about it again. >> when is tax cuts coming when's it been pushed back to? >> will they have to work through christmas as speaker ryan says they will? >> inconceivable they would ever work through a holiday remember when you first started out and had to work on thanksgiving and christmas they should go back to where they were when they were like 22 yeah, you're the new guy you're working christmas eve how is that treating you these guys ought to make some pledge because health care is going to be front and center by mid week. >> you think so. >> yes, has to these sub sid zis are too -- there's -- nobody knows what's going to happen in the system. >> pelosi -- i mean we mentioned schumer, pelosi over the weekend said we're a little far down the road when asked about would be bipartisan cooperation between the white house and dems >> i think they definitely fail.

i think it gets back on the agenda because there's too many people going to be complaining. >> then the entire year will have been spent trying to deal with health care and failing is what you're saying >> yes. >> to the exclusion of virtually everything else? >> but the market is up $5.2 trillion since president trump was elected. i got that right off of twitter. it doesn't matter, the health care thing -- these are intractable issues we keep thinking tax reform is easy i've gone over what all of the different brackets if you use a million dollars for the new bracket at the top, it's not a break for the rich it's not it's mutual for the rich and some states bad for the rich why can't people admit that's the case it's state by state. >> okay. >> did you see a little cost to buy a gallon of milk >> no, i didn't. >> down two bucks. >> a gallon? >> yeah. just pointing that out >> that's -- watch, the cpi was

not a barn burner on friday by a long shot. >> this is what people are thinking about, they are thinking about the -- i'm not kid, after listening to wells fargo -- bank of america, jp morgan, they are worried about the consumer they are worried that the consumer could be strapped because of health care and rents gone up. worried. it cost a lot of money to just like get up in the morning and put your clothes on and get the car payment going and -- >> i'm with you, there's a lot going on. >> consumer confidence just hit 100. >> i know, but you go over those bank quarters and they are increasing -- three increase the reserves, there's no more drawdown reserves. >> trying to pay the wireless bill and cable bill. >> we'll talk about in the next segment. >> i'm saying it's a strange thing when you read quarters, you think the consumer is strapped you look at the car ads -- i mean, could there be more car

ads? >> no, it's incredible. >> i was urging my wife to go out and buy a car so i don't have to watch this commercial. >> maybe they'll stop. >> they were amazing. >> let's come back let's make sure people got the headline on nordstrom. take a look at the stom again as we head to break there buying efforts have ceased until after the holiday period if they come back at all is what the indication has been from the family trying to take nordxstrom private again in a filing this morning. wanted to make sure everybody understood that because we were out there first having read that filing for the market to fully digest. >> we broke the story. >> we didn't break it. just read a filing. >> you got it right how about that. >> and early. >> when we come back, the road ahead for netflix, earnings of course after the bell tonight. also also this morning, the uk chancellor is here on the challenges his country faces as these brexit talks are at the standstill, dow and s&p are on track to be up for both september and october.

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. netflix to open at the new

all time high, due to release results after the bell another strong increase in subs. what are the lines in the sand this time? >> i've got to tell you, they've got to show both acceleration in domestic and acceleration international and may actually be able to do it put through the price increase, trying to say, this times x equals and there's very little skepticism whatsoever about netflix's quarter which leads me to believe they'll be up big tonight or down then up tomorrow. >> put netflix price against the media companies and whether it's fox or viacom -- >> 6 billion. >> and the discrepancy in terms of one goes this way and everything else goes the other way. >> they thought about the wasted buy backs and when i look at netflix and look at their scaleable model, people continue to think how can this happen only be valued at $80 billion

it's going to be your worldwide cord cutting play. >> that's what . >> to that point, we've got continued negotiations at this point between viacom and charter. you were here when viacom put out this publicstatement sayin they are committed to building strong relationships with the distribution partners but despite efforts, continue to insist on unreasonable extreme terms totally inconsistent with the market that being for a new carriage agreement the old one expired yesterday, but interestingly they have haven't gone dark. they continue to negotiate at least for today and often times when we see that and when they extend, even if it's for 24 hours, they do end up getting a deal done. the question for viacom shareholders, what would that look like if they do get it done how many backwards is charter trying to get them to take their rate for the key viacom networks how do you get a number that everybody can live with and when

they announce these things if they do get to an end result, everybody tries to have optics that look good you never know what the deal is. they don't reveal that but this is an important battle here perhaps prestaging what's to come which is so many of these distributors in cable land, just saying nah, we're done we're going to be broadband providers for the most part, the proliferation of these over the top -- which keeps happening more and more giving consumers more choice and we're just going to go a different way in terms of paying you what you want. we're not going to do it disney did prevail most recently in that negotiation. this is an important one and viacom does no have the market power of a -- >> did you look at discovery -- >> it's been a xadisaster. >> it's at 19. unrelenting. >> since they announced the scripps deal it has not done what it anticipated it would the idea behind the scripps deal

to strengthen discovery both domestically and internationally where it has an important business and enable it to offer some sort of perhaps direct to consumer offering of its own of its channels that it will have that's where everybody is going. that's where viacom may want to go one of the key questions in these negotiations with charter, if you're going to offer -- bring a skinny bundle of your own channels and others to the market, why don't i let us also be able to do that at charter, use your networks in a skinny bundle we would offer our own consumers. we're at the key point here where i feel like, watching it last week, not being here but sort of -- >> we are. >> in terms of the real -- the disa disagreggation of the bundle and falling off dramatically directv now doing well but -- >> netflix can earn a dollar you have 200 times earnings and you have these -- a lot of these media companies selling at

almost automobile like and i just sit there and think, okay, netflix, again, like i always like, spotify, they have a worldwide business model doing fabulous in every country they go to. why do we limit them to an $80 billion market cap it's worth more. not per share earnings though. >> the company guide for subs is 4 ht 3 million and they exceeded their own guidance 12 of the past 15 quarters and we know that of a lot of names they tend to move a lot post earnings. >> narcos 2 drove numbers up because of international and i'm wondering -- you do look like pena. >> i do not. >> you look like pena -- i watchwatc watched o zark. >> going to be a driver of international subs, it is. >> before we end our little media roundup, it is worth mentioning our parent company

comcast because it's got its defenders today. defending saying we stick with our $45 price target and citi who has a pretty good following puts a report out this morning on comcast saying listen, even if they were to lose -- 150,000 potential subscriber losses in the third quarter is what they pointed to, if you say they keep doing that quarter after quarter and they were going to annualize that and lose 600,000 a year, the market is already priced in 15 years worth of that erosion in their point of the video business going on to go through the math and saying, if you got rid of the entire video business at comcast, that 27 billion in revenue but there's so much cost associated with it 13.8 billion of programming and 40% of technical support costs go away. 50% of customer service cost would go away. without the video business, you would have $7 billion, a third of cable would disappear but

your top line would go up. your growth rate would accelerate and cable margins would rise to 55%. what's the point these are broadband companies and they would not suffer that much of the video business disappears entirely. >> somehow in the narrative after the at&t, that disappeared. initially moffett came in and first -- when they said we have storm problems, don't worry about the upgrade. but the att number, there was more than storm. >> i know. >> right that was a storm field. >> it was directv. satellite doesn't have broadband. >> is it nfl is it nfl? >> we'll talk about that in a moment, not to mention -- >> i know. not to mention other calls this morning on citi, deckers, bmy, cramer's mad dash and unt wncodo to the opening bell in a minute.

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excited, haven't done a mad dash in a few days. >> this morning goldman has a piece, not that much -- i don't want to say there's not much meat to the bones but goldman goes, takes ulta beauty off, sepphora, is this the level you want to come in and do that? but the company itself is being challenged by amazon. >> what? i thought they were unamazonable >> well, there's nothing that's amazon -- if you're selling

product, amazon wants to be -- it's a little like walgreens you notice they are going down gigantically we like the ulta market and sepsep hh sephora has been very hot. you can't very any companies that self-in the mid 20s if amazon is gunning for you. ulta would say we're doing unbelievably well and i would agree with that. i say the downgrade itself is much more like we're not going to pay up -- >> conviction by to buy -- >> a lot of our viewers are trying to say, what happened at ulta and the answer is nothing but the business -- anybody who is in retail and you can wake up and a amazon is -- >> nothing is unamazonable. >> if they put headquarters to

generate excitement, that could be something that is not zero sum for amazon if it's good for amazon, it's bad for everybody else let's get to an opening bell a few minutes from now we're right back on "squawk on the street." i think it's terrific.

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>> we're watching "squawk on the street squt. the opening bell in a minute on this monday morning. earnings season will heat up netflix tonight and goldman, verizon and ge later on in the week nikkei up ten days in a row. oil -- copper at a three-year high. >> the commodities are all in bull market mode and we keep getting the same story, china is very worried about air pollution. it's all coming together for alcoa for free port, there's other issues looking good it's the rails that have been beneficiaries but we caught these downgrades today of the rails, downgrade of csx and norfolk southern, they've been incredibly hot stocks as a way to contemplate commodities and then boom. downgrade. wells fargo.

>> let's get to the opening bell at the big board it's blackberry celebrating its transfer from the big board to the nasdaq. we'll talk to the ceo in about an hour. the ticker goes to bb and at the nasdaq, exela technology enterprise information management jim, in terms of downgrades today, citi, deckers, adobe, crystal -- >> they have an analyst meeting coming up. downgrading ahead of that analyst meeting, i think very tough stuff. but what deutsche bank is saying, look, we've got to move the sidelines. they are going to guide down i don't know they were very specific in saying this was going to be a tough quarter in the last conference call. i don't know how much gravitas there. all of the things they want to do are good but no real impact for years. the society, citi, i don't know

they did a lot of work and it ran a lot. if you decide all that matters is credit cards and listen, we're going to have a few people who will not pay, big percentage but then a huge percentage will pay and that's where -- you can take citi down but you're selling it right to them they are in there buying the heck out of it. >> and what about bristol-myers? >> because it's up >> on valuation. >> downgraded. that's what's research right now. >> take it down? >> you can do to that for 490 stocks. >> you could. >> that's up a lot let's just downgrade it. >> we've got to do something. >> we're sitting around watching the game two-minute warning why don't i downgrade lilly, i'll take merck off?

>> i take it you do not believe they are value added moves. >> i'm taking those two down honestly what are you going to do, go buy valiant, it's not my fave. >> yeah. >> shares of nordstrom not reacting too badly to the potential buyout group walking away from any attempts to take the company private, at least through the holiday season the warning shot here may be a broader one for retail at least when they say in light of the difficulty of obtaining debt financing in the current retail environment in the filing that company -- letting the investing public know that they are no longer focused on a buyout at this time but may try to start again after the holiday season perhaps, no insurance they will. the norstrom family owns 31.3% of the shares. when you see something like that, the difficulty of

obtaining debt financing in the retail environment. >> what does that mean for like a sears? >> i don't know. i don't know debtor in position financing is easier to come by, when you're loading a company in retail up with debt, you might imagine that presents a risk that some lenders might not want to take on, having a lot of turns of leverage on a company that is in an area that is very amazonable. >> that's -- look, nordstrom guys are unbelievable in saying we've got to get more technology they've been saying it now for a half dozen years you can't keep up in terms of technology when it comes to amazon and i remember the nordstrom family saying amazon has the best customer service. we have to catch up. i remember when i used to like -- remember you used to return things like old shirts at nordstrom, turn craftsman hammers to sears, i'm tired of it, give me a new one.

these are two companies known for service. i'm not sure about the sears service. >> even joe was complaining about sears service in the last hour. >> yeah. >> stanley black and decker really took it to them when they bought the name plate. >> speaking of investments in troubled business, colony capital is taking a stake in weinstein, an investment in the weinstein company, just announced a few moments ago. we're -- barrack says we're pleased to invest and move it forward. we believe the company that's a substantial value in growth potential. look forward to working with the company's critical streak distribution and production partners after a tough week for weinstein, ousted from the academy over the weekend. >> david, you probably have the most to say about that of anybody? >> lots of nothing to say. i mean, what do you say. i don't know very significant fall, very quick although long in coming and that has been i think one of

the key questions -- >> how about that -- >> how about that ge actually? i'd like to go to. jim, i haven't listenedto all of your commentary as i watch the stock trade. >> last week i was holding my own sword. >> they add ed garden to the board and stock does nothing but go down. they get rid of a lot of old management and announce their departures is it -- you know, even though i was out much last week, you can't help but people e-mail and call and want to talk. people are worried about the debt level that's what i guess i picked up because i was of the impression stock might react positively to the moves of last week. >> you can't break up the company because it doesn't have the cash flow to cover the break-up. >> what about the dividend >> it's a priority it's top priority. i think that the most recent

accusation, proving to be really bad. >> when we look at the history of jeff immelt, my boss for many years. >> mine too. >> you wonder about his buying and selling of assets. it doesn't appear that many were bought many were bought at the top and sold at the bottom. >> but they insisted that you're always wrong when you say that they'll come on and say, it was really good. what do you do i don't even know where to go with that. they sold ge capital multiple -- >> like one times and now financial assets trading at higher multiple to book. >> in the old days when i was at harvard, you know what we used to do? we called these things stupid. i'm not at harvard anymore. >> is that a technical term? >> now it's indifferent or sub optimal, right ill advised is another term that

we get to use about ge when you say that -- how did they do that -- we didn't do it wrong, you just don't know your holding -- you're holding it upsidedown for heaven's sake, it's really like this. >> there are people who particularly many investors out there who own it for the dividend, a lot of retail. they may look to you and say what do you think now? >> i think it's -- you go to -- go to 21 -- cutting the dividend. >> which do you think is possible >> i do not hear -- i asked them last week, listen, the board should issue a statement saying we have no problem paying that dividend at the current level and they didn't. that's what i asked for on air, if you guys really mean it, give us the board issues a statement and we did not get the statement and that was critical to me. what that said, hey, you're out there all by yourself saying the dividend is fine. >> that's your bear case, dividend gets cut, goes to 20 --

>> then flannery does his magic and there is magic to be done. the problem is they are in the wrong industry except for aerospace. these are locomotives, not a great business, power turned out to be not that great health care, flannery fixed that it's a decent grower but you know -- >> that's his home. >> yes, he did a very good job there. >> that was originally an amateur acquisition, actually his first major -- over paid for that one too. >> overpaid a lot. they've done -- they got out of that big -- remember they had the bulgarian credit card business and mexican home business >> yeah. >> they got out of those how about the celtics tickets? ge -- >> i think all weekend i beat myself up about this and last week i was saying that you know, you missed it but i said when i was

trapped in what we called the dumb class, that's how i feel i'm bad. i'm trapped and it's okay to just admit you're completely wrong in believing in a company. >> right. >> that's what i'm admitting >> another big company guys that i know we all covered last week but was the obviously the outcome of the proxy fight with p and g but we don't know the answer checked in with a number of people, the registered shares of p&g and people typically in a big company even, most people don't hold their stock certificates at home you have a much better read. 5 to 6% apparently of the shareholder base had their stock certificates ats home. it's a different process doesn't go through -- >> broad ridge, so everybody knows immediately, we're going to get today from p and g telling us what they saw in terms -- they were the blue card, right? but this thing is going to be not decided for quite a while.

>> really? this is going to be a hanging chad >> it could be a hanging chad where you have to go through and review everything. but we'll get -- this is important today. i'm told it was at least close as .4% and p&g did declare victory. we'll get a number from them. >> why didn't they say it's too close to call if it's a hanging chad situation >> i don't know the answer. >> i'll bet if you were here they couldn't have gotten away with it? >> i don't know about that either. >> he's registthese register sh make it difficult. you don't know how many registered. >> that's true. >> these are on paper, literally. >> you took down the -- cartel and -- he looks so much like pena. >> my hard down maybe more, i've got to change my hair style. >> let's get to seema modi on the floor. >> good morning, carl.

record highs for the dow nasdaq and s&p 500, particularly strong session with the dow already up about 46 points on the day we start with an interesting deal in the food space, food supply i should say, buying food and supply's company for a total of $2.35 billion it is 55% owned by hotel operator marriott. shares of marriott down about .3%. the big earnings after the bell will be netflix. netflix has been the big outperformer over the past three months, up about 23% compared to facebook which is up only 9% over the past three months tomorrow we hear from big blue, two big financial names, morgan stanley and goldman sachs and focus will be on trading revenues and net interest margins as rates continue to climb. a possession so far for the banking stocks with oil rallying on iraqi and kurdish tensions, look at the notable movers in the energy

space, specifically oil and gas. chevron up 1%. and devonn energy up as well in china, the communist party congress kicking off on wednesday. it happens every five years, key cabinet selections will be made by president xi, expected to help him consolidate his power the announcements and appointments made could have global implications, that's why inl investors will be watching closely. speaking of china, if you want exposure to chinese tech which has been on a tear this week, take a look -- this year, take a look at jd.com, the number two online retailer in china it trades at a discount to alibaba. gaining 25% more from here lastly look at ruby tuesday, a deal in the food space with nrd, an atlantic private equity firm. >> talk to you soon. let's get to the bond pits and check in with rick santelli at

the cme group. >> good morning, carl, if you look at the two day of tens you can see what's going on. we gave up a lot when cpi didn't measure up to the nervousness associated with the day before whether it's employment or inflation, had a lasting impact. even though rates are up a bit, they are up a bit but still haven't come anywhere near overtaking some of the drops we had based on friday's early morning data if we hold a may 1st for the following chart, interesting how it's developing. if we look at tens, you can almost see that this market is really prone to trying to go into a range the only part that many traders are deciding now is if the bottom is going to be the 2.27 close from 2015 or drop down a bit. it's not nearly as volatile or nervous when he was much closer to 2%. you can see the differential continues to widen if you look at 10-year yields

versus 10-year bund yields pound versus dollar, many talk about all of the issues that seem to be cloudy regarding brexit and relationship of the divorce going on between the eu and uk but the pound, you know, it's not at its highs but it's definitely pretty feisty looking on the chart euro versus dollar lost a good chunk of volatility and seems to be hunkering in a range close to three points from 1.17 to 1.20 a lot like treasuries, dollar index seems range bound since august the problem is it's range bound at the level that's on the weak side carl, jim and david, back to you. >> rick, thank you very much still to come, shares of blackberry are up almost 70% so far this year rebounding to multiyear highs, we'll talk to john chen about his growth strategy in the tech landscape as they move over here

netflix after the bell tonight, here's ena from narcos, it's the great actor pedpro pascal. >> i'll get the sunglasses and change my hair and we'll see if i actually do look like him. i'm not sure i do. >> he's my hero. >> "squawk on the street" continues in a moment. impossible to ignore.

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>> tesla fired 400 workers last week according to multiple reports. it did dismiss workers after a company wide annual review but did not specify the number a lot of that 400 figure guys came out of reuters but no confirmation. >> it's one of the stories that came out there and those of us that follow the stock said how much is it going to be up on this comes out and says what i did, i fired bottom 10% or bottom 1% and suddenly you've got -- did it again

i think elon musk is hard to pin down. >> he's hard to pin down in general because he could be on a flight to mars and could be going intercontinentally between new york harbor and london. >> within seconds. >> and hyperloop somewhere. >> deep under neeng the earth's crust. >> branson on the hyper look train. >> i thought branson, it could happen with branson. that could really -- that's going to happen. >> he could be a simulation himself, elon musk he could be. one thing i think he is is necessary. you need somebody trying to do -- >> something more than beat the quarter. >> yeah, you do. you need inspirational figures. >> you think so? >> i do. and either -- at least he's going for it >> with other people's money but y yes. >> a lot of those guys do manage to do that he has some of his own in there too. >> you have to hand it to them some of the best and brightest, goes to work there. >> launching rockets, coming

back down. they are reusable. when was the last time you did that >> i wonder what he would have said about the jet call. wouldn't he have artificial intelligence and figuring out whether that was a touchdown or not? you think he would just look -- no, he would take whether it was a call or not. they could use a.i. in the head office because that call was the worst of the year. >> overreach artificial intelligence indicated that was the correct call >> don't joke. eventually, we might -- the zeeb rays might be replaced too >> everybody will be gone. >> umpires also. we don't need umpires. >> we have spectrometespectrome. >> we could call balls and strikes much more proficientily. >> early in the turnaround story, specifics are light they say they think the impact that he would bring would be somewhere in 2019, 2020, meaning

they think 18 estimates are too high >> that was just brutal. i read that. that's probably true work has to be done. cheap stock gets you nowhere versus gm that just, just caught the fancy of wall street, so ford, not happening soon enough. just not ford, it's really interesting because when i go back over ford, i never thought that gm and ford were that far apart i knew gm was better at electric, but it's really something. speaking of something, the bank stocks we're supposed to have not liked, doing okay. just get the rates up higher >> jpm is getting close to your $100 target. >> i'm not changing my target. i'm sticking with $100 >> amex and visa not playing today. >> what was up three points was envidian now it's coming in i'm urging people to understand what it is it's not my dog. it's not crypto currency

it's a semi-conductor currency >> people still digesting diamond's and fink's rants on bitcoin on friday. >> the bitcoin, you say something negative about bitcoin, look out. >> okay, i won't then. >> we'll get "stop trading" with omt.in a men don't go away. i can't wait for her to have that college experience that i had. the classes, the friends, the independence. and since we planned for it, that student debt is the one experience, i'm glad she'll miss

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>> people are desperate for plays, they have taken caterpillar all the way up, coal all the way up so yes, they're going to come back to wynn resorts there's a really good note today that i thought told a very good tale jp morgan, talking about, just saying, i'm sorry, deutsche bank saying the palace, this is what is really important. the palace pickup, if you go back over the quarter after quarter, will they unleash the palace to me, that's where the chinese

gamblers are going i think this stock takes out its 150 high i think it keeps going this should get the highest global and there's a tragedy that happened at mgm, so people are selling that stock lvs does not have good assets in macao, and the deutsche bank, others are going to join there are a lot of other guys who are on hold. >> purchases a while back looking smart. >> and by the way, if you go back, i know what i'm doing, i'm not buying high. he really said please buy it these are not idle buys. and you got a triple >> jim, what's tonight >> i'm trying to find any bank that will give us the story, great quarter, i love the regional banks they are fantastic by the way, i like the way citi acts on a downgrade. citi should downgrade society

general more get a couple guys sitting around saying i have to take that off the bye list there should be more to it thanthet >> we'll see you tonight, mad money. >> when we return, the uncertainty surrounding brexit an interview with the uk chancellor philip hammond in a moment dow is up 67 with advanced safety.

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trade and travel surge between emerging markets. everyday our 1,100 investment professionals around the world search out opportunities for alpha. partner with pgim, the global investment management businesses of prudential. welcome back to "squawk on the street." on the new york stock exchange, due doing well, led by big banks this morning earning season going to heat up with netflix tonight oil as well is a story as the iraqi troops advance on kirkuk >> the s&p, nasdaq, and dow

hitting record highs earning season gets ready to heat up. we'll discuss where you should put your money to work >> oil prices on the rise. iraqi forces launch an operation for oil held by the kurds, and a new all-time high as well for netflix as it gets ready to report results after the bell. what can you expect, straight ahead. >> first up, straight to the markets. all three indices in the green, hitting record highs dow and s&p coming off five straight weeks of gains. for more on this, we're joined by ubs head of investment strategy geropy, as well as david rosenberg. gent gentlemen, good to have you back david, we talked about risks mostly to the overall economy in the next year, year and a half, but does any of the recent commentary from the fed or the way the markets are reacting ahead of earnings allay your concerns >> well, no, not really. i think that one of the former

big was eric rosen gren, and he was interviewed overnight in "the new york times," and he seems pretty bent on reaching rates further, and what's interesting is his comments weren't really about consumer inflation, it was about asset inflation. there's built-in lag, and we haven't seen the full brunt of what the fed's already been doing, and starting to unwind the balance sheet as well, which is a new experiment. i would say keep your eye on the yield curve. if the fed does what they say they're going to do and the bond market just trades in a range like it has been doing, you're talking about some time in the middle part of next year the yield curve inverting and we'll talk about a recession again by the time 2019 rolls around i know that probably seems like an eternity to a lot of folks but my sense is this is very much hope based and liquidity based rally. i don't see that the macrofundamentals are as strong as a lot of my competitors think right now. >> jeremy, do you agree with that view?

if so, is there a disconnect between what earnings and the economy are telling us versus the stock market >> we have a different perspective. i do think that the fact that in this global synchronized expansion, almost every part of the world is seeing very positive economic growth, has led to very strong earnings results this year. so i think that the market really isn't driven by the improvements in both the macrodata but more specifically the earnings environment if you think about this year, the s&p is up 16%, but valuations have expanded by 6%, from 17 to 18 times trailing earnings the bulk of the rally we have seen in the u.s. and global equities has been driven by the tact the earnings picture and getting better >> to david's point about rosengrin, who sees not just december, but three to four within the year following that, when you talk about the yield curve, the impact of balance sheet runoff, which we're not aware of, what is your reaction? when will we feel that >> look, i think that the best part of the investment year is

behind us. we have seen, like i mentioned, 16% gains u.s. 24% ex-u.s. gains in the market. it's been driven by the fact that growth has been surprising to the upside and inflation has been surprising to the downside. we have been in what i would call a super goldilocks environment for prices specifically, and that's likely to get tougher going forward i have some sympathy to the view that yes, we're likely to see a bit more of a hawkish tone, particularly relative to what has occurred over the last several years but it doesn't mean that interest rates are going to go to the level that it will start to curtail economic activity i think the fed and also global central banks are going to remain remarkably pragmatic. they're going to normalize interest rates at a gradual pace and i don't think we're likely to see a recession over the next 6 to twefrbl months and perhaps longer than that >> i was at the imf world bank meetings over the weekend and last week.

there were a lot of bankers there. we had a lot of discussion about this path to normalization nobody's in a hurry. they're keeping an eye on the fact that inflation is a missing ingredient they're flexible not sure why the chatter has heated up that the fed is going to be too aggressive i know that you are one that is expecting a misstep in this direction. and i'm not sure where you're getting that based on the fed's track record here. >> well, i'm basing it, sara, off the fed's track record we have had, you know, 13 fed rate hiking cycles some have been gradual, some have not 13 in the post-world war ii experience, and ten of them landed the economy in a recession. and the question is -- >> but how many have there been since this economic recession? it's been pretty slow and steady >> well, i mean, the recession right now is inevitable. it's really -- recession expansions are joined at the hip. my point is that, sara, can you tell me a time when a fed tightening cycle ended with the

economy accelerating no, they all end with the economy decelerating you get a soft lending growth or a recession. i don't know what the soft lending looks like i'm told the economy is doing fine there's some economies in europe doing fine, they're in a different point of the cycle than the u.s. is right now i'm not seeing any break out in trend, and growth has been roughly 2%, and all of the lag from what the fed has done and what it says it's going to do haven't kicked in yet. even if we get a soft wlending economy, what does that look like in the context of real growth, still running close to a 2% annual rate to me, that's the big question so i would say that, you know, the commentary is about what is the stock market doing i can point to barrens over the weekend showing the big money poll that 87% of portfolio managers who are bullish are betting on there being tax reform we have a trade going on, but it transcends what the economy and earnings are doing the multiple has been expanding,

so this is, again, one of those hope-based rallies to a large extent based on inflation and trump tax reform, which looking at what's happening in the senate and the relationship with the white house may or may not happen i would say hot is the bond market telling you stock market going to record highs. why is the ten-year keynote yield refusing to break above 2.6%, let alone 3% when is it below 2.3%, telling everybody else who is banking on the inflation trade being sustained for the next several months >> that has been the question for what feels like forever, jeremy i think back to what bill gross said about 2.6 being the imaginary line we couldn't crack. it would have said something, he argued back then, if we could have what is the answer to david's question >> i think that the answer is why bond yields are so low is inflation has undershot everyone's expectations and there are structural reasons for

that we still have a high level of debt around the world. many economists have difficulty understanding and quantifying the impact of technology on inflation. and the fact that we have so many goods and services that have transparency and greater utilization rates because of technology has been a disinflationary force. that actually doesn't concern me as an equity investor. that only makes me more positive because if you have reasonably healthy growth, it's driven by technology and it's keeping inflation low, it means you'll have a long period of this mix >> one last thing. people were circulating a note of yours from a decade ago this in november 28th, '07, where you said recession adds were close to 60%. you obviously ended up being right not too long after that. safe to say you don't feel as nervous as you did back then >> i wouldn't exactly say that i'm overly bullish and i wouldn't say overly bearish. there's other parts in the world

i'm more bullish than the u.s. stock market is right now, but back then when i was talking about 60% recession, i didn't realize it was a month away. you know, i'm just saying, you know, as my grandmother always told me, forewarned is forearmed. i'm just saying we're late cycle right now. cycle high consumer confidence cycle low, unemployment rate inflation already peaked for the cycle. we already had inflation cycle that's rolled over everything is telling me that we're late cycle, flattening the yield curve. everything i'm talking about in terms of the storm clouds coming in are really not one or two months away, but it's something to start thinking about over the course of the next couple quarters do not extrapolate today's earnings backdrop into what is going to happen in the 96 six, 12 months. the people who did that in that same stage in 2007 got their hat handed to them in the course of the next 12 months i'm not bearish, but y i'm saying we're classic late cycle

and we're going to adjust the portfolio in conjunction with that >> thank you for that good discussion jeremy and david >> we are following a developing story in the oil market. both crude and brent moving higher this morning on news that iraqi troops have seized parts of oil rich kurdistan. jackie deangelis joins us with more on the story. >> good morning. that's exactly right this is the type of event that can move the market. iraq is opec's second largest producer remember, prices have been driven by supply and demand dynamics a loss of iraqi supply definitely would move the supply needle lower, but there's no evidence that could happen just yet. these tensions have been building between the iraqis and kurds since late september after a vote for independence. over the weekend, iraqi forces launched an operation in northern iraq to reclaim territory administered by the kurds. it also happens to be where some of the country's most important oil fields are located the iraqi oil ministry has said

that oil and gas operations are proceeding normally and there's an understanding that fighting shouldn't take place in the facilities but still, the market is on edge and watching closely just under a million barrels a day comes out of the kurdish region iraq's production, according to opec's latest monthly report, is about 4.5 million barrels a day. it's not just this news, though, pushing crude prices igher president trump's refusal to certify iran's compliance with the nuclear deal has also drawn some attention many questions on what happens next and if any iranian supply will be threatened as well crude oil up more than a percent today. more than 5% in the last month and more than 12% in the last three months carl >> quite a move. thank you very much, jackie. >> when we return, blackberry's john chen is with us he's going to weigh in on techunder fire, nafta, and a lot more a big push to jump start brexit negotiations is under way. we'll hear from the uk's chancellor of the exchequer in a

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one u.s. participant telling cnbc that the u.s. has taken a political not pragmatic approach to the negotiations. in order to please an audience of one president trump. the market is now pricing in the possibility that the deal falls apart. that's one reason you have seen the peso sold off in the last week and the dollar rising, making u.s. exports more expensive. but that might not happen this week current and former trade officials say any withdrawal would likely happen in a later round and reuters is reporting that the group of three nations is discussing additional dates for talked in early 2018 one tea leaf that may suggest they will move forward now, take a look at what this would do for jobs. ripping up nafta would not only preinstitute pre-nafta tariffs and have a material effect on all of the economies, but take a look at what this would do nearly 256,000 jobs would be lost in the u.s., according to a new study from impact econ mexico would lose nearly a

million jobs boston consulting group in another study in conjunction with one of the auto manufacturing lobbies says 50,000 u.s. jobs would be lost in that industry alone congress, which would need to approve any new deal before it takes effect, is on edge one gop aide says if the u.s. brings to lawmakers the deal it's currently negotiating, it will go the way of obama's tpp that is, it will not get passed. it will go nowhere a "wall street journal" editorial today says the america first demands, quote, are growing more bizarre the u.s. proposes to increase economic uncertainty and raise the incentive for businesses to deploy capital to more reliable investment climates. of the policies that would lead to more american content in autos, the "wall street journal" says mr. lite he'ser needs to get out more we'll hear from him himself tomorrow, and we'll await any update on the negotiations >> yeah, i'm sure investors are eager to hear a status check with so much economy and jobs at stake. kayla, thank you

blackberry, speaking of canada, moving from the nasdaq after 18 years, now trading here at the new york stock exchange reuters reporting that the tech company's patent licensing director has decided to leave the company. that's also news today in the second key patent official to depart in the last few months. joining us, blackberry ceo john chen nice to see you. welcome. >> nice to be here >> to kayla's reporting, as a canadian company, clearly intellectual property and software is part of these negotiations how would it impact blackberry if the deal fell apart >> oh, the best thing to do is no change. no change has been the best so far. and it depends on what the negotiated outcome is going to be it could -- it could be, you know, very damaging for us if the things go more protective, so it's hard to tell but i have been watching it almost like constantly also.

>> when you say damaging, what do you mean? give us some specifics >> i think it all started with the pharmaceutical part of the equation you know, the pharmaceutical industry is arguing that the protection of ip, for example, in canada, it's much shorter in duration than in the united states so they wanted to change how ips are being managed, valued, arbitrated, resolved conflicts and so forth and i.t. has always been in good shape. and i thought, at least. so i don't want to lump them together, but i think the u.s. posture is that i.p. is i.p., and they're lumped together. there's so many different noise about it out in washington, it's very, very hard to follow. >> hopefully you'll talk to us as we get some type of advance on these discussions speaking of i.p., i mentioned

the reuters report about one of your licensing top executives leaving. can you confirm that >> i can confirm that. first of all, we have over 80 people in that group, and very senior people. number two is all our ip licensings are managed by myself, the cfo, our legal counsel, and the head of the president of the group so i think for some reason this particular reporter chose something a little weird, a little off track >> it doesn't signal anything about your patent strategy which has been key for you in terms of some of the turnaround at ba blackberry, right? >> not at all. i'm confident. i'm on top of those. >> i have to ask you why the migration to the nyc >> a couple reasons. this is a much stronger marketing platform for our company at this stage. this is nothing wrong with nasdaq i don't want them to write me an e-mail and yell at me. we had a great time at nasdaq.

i think as i change us more into enterprise focus, beyond just the consumer side of the equation, and all my customers are here, all the banks and all the health care and law groups so they're all here. we want to get closer to the customer and we want this marketing platform >> let me make sure i understand you said alt this stage. this stage being you're an enterprise company you have always been an enterprise company, haven't you? >> always an enterprise company, but we very much market to the consumer, the individuals. when we're talking about a pager and a cell phone you used to have a lot of them >> yes >> and i know some still use them >> i think bill griffeth still uses it, our colleague >> it might come back, by the way. it might come back but today, we're really focusing on cybersecurity whether it's for the cars, for the enterprise of things, for bank systems and so forth. this is why i need to get closer to the customer. and i need a platform that's more global. >> you just mentioned cars, of

course, which leads me to one of my favorite subjects, autonomous vehicles there's a lot of concern when we get there, whenever it is, and i'm curious when you think it will be that we see them on the streets, there's a security issue. that they'll all be networked and the idea that somebody could hack is frightening. >> this is the dna of blackberry you all have been blackberry users before reliability and security and privacy are the number one things in fact, you could argue that because of our focus on privacy, we have lost a market of mark marketing to the consumer because we didn't use anybody's data, for example. so this has been something that we transport into the car. the interesting thing about a car, everybody talks ibt cars. not too many people had too much revenue on a car yet that's a different topic all together, but we're very much into connected cars. we embedded a lot of software into the actual car itself for example, auto ford sync 3 is

all blackberry today >> how many more partnerships can we expect. you have one with ford, with delphi >> well, so, we have business with lg and denso and panasonic and ford delphi and everybody else and all the car manufacturers. so you should be able to see a lot more partnership going forward. >> i hope you won't mind a question about hardware in general. a call on apple, a price target increase, but it is an upgrade on more aggressive market segmentation, right? i wonder if you think that's important right now. >> i can't speak for apple, right? the other fruit company. i can't speak for them but i think it is important. apple would need to move to the high end, to enterprise, because the asian producers are going to get the lower end of the market. so this to me is quite sensible. >> speaking of the stock, since you switched here to the nyse,

looking at a long term chart, a long way to go, but i don't know if most people realize it's up about 50% over the last 12 months i know you have been repairing the balance sheet. where are you in terms of convincing investors this is no longer a phone company >> first of all, we are no longer a phone company only. we license our phone what we have done is get ourselves out of spending the capital to build these phones. and other people are building the phone and we get a royalty check for it so the revenues are down, but the stocks are up. part of the reason the balance sheets have been repaired and income statements are getting better the margin is better, and we're more profitable. that's part of the reason. >> how should investors think about the self-driving unit? how much of a chunk of revenue is that going to be? >> for >> for blackberry, self-driving cars >> as i said to you, self-driving car, the revenue is not going to come that immediate. it's really more about design

wins we won the design with delphi, with panasonic, with nvidia and the list goes on when they start shipping those cars, we're going to get good revenue and there will be almost real margin, not exactly, but almost real margin have to have a little patience on that point, but we will make progress on securing and the enterprise of things and cybersecurity stuff. i'm comfortable in where the company is at today. >> when will we have fully autonomous vehicles on the road? >> everyone thinks it's 2021 i personally think the time you and i will buy one, maybe you're one of those car guys. >> i don't know if i'm going to buy one. >> maybe lease one or rent one i think it's probably ten years away thing >> ten years from now? >> i believe so. >> john chen, a lot to get through there. thank you for joining us after moving from the nasdaq to the

nyse >> when we come back, we'll talk to the uk chancellor philip hammond on these challenges with brexit talks president trump, and a lot more. dow has given back some of the early gains. up 28. we're back in a minute

uk prime minister theresa may calling on german chancellor angela merkel to end the european union's standoff on the brexit talks ahead of the summit this week. i sat down with the minister of the exchequer to ask him about the behind the scenes diplomacy that is happening right now to break this impasse >> well, i wouldn't call it an impas impasse. we're at a critical phase in the talks. there's a big meeting of european leaders this week and one in december. that will be the critical phase of negotiation to line up a transitional deal as we leave the european union and to start to talk about our long-term trade arrangements with the eu it's vital that we talk not just to the european union but also to the leaders of the 27 european union nations

>> you had to apologize after calling the other side, the brussels side, enemies clearly, tensions rising, emotions are high. how would you describe the dynamic right now and how would you describe the negotiators on the other side, if you don't call them enemies? >> actually, the relationship is very constructive. i talked to my european counterparts all the time. what i was doing rather clumsily in washington was trying to make a reference to the infighting on our own side that we need to leave that behind and we need to remember that we all have a common purpose in getting the best possible deal in our negotiations with our partners in the european union. that's what we're doing. but the relationship is good it's a positive relationship >> is the biggest sticking point right now the divorce settlement, the actual payment from the uk for brexit >> so, the biggest sticking point at the moment is process the european union have decided on a process to follow, and it's become apparent that that process isn't going to facilitate the most effective negotiation. i think there are people on both sides that say let's break out

of this. let's just get around the table and start looking at what the options are to move forward about a transition period, about a long-term trade deal, rather than being locked in this ridged sequence that we have to setal one thing before we start talking about the next it's really about process rather than substance at the moment >> it's all very complicated has the probability risen of a no-deal scenario >> personally, i don't think so. i think you have to look through the rhetoric you have to look through the process at what the real interests of the parties are it is so blindingly obvious in the best interest of both the uk and the european union 27 that we do reach a deal so that we can carry on trading together, carry on allowing the supply chains that run across the continent of europe to operate, carry on working together on security this isn't just about trade. it's about regional security as well it's so blindingly obviously in the best interest of allof us

that i'm confident we will get to a deal. >> yet, it's so technical and so difficult. in the event of no deal, is that something that parliament would have to put to a vote? >> well, it depends how we get to that eventuality. look, our very strong preference is to do a deal with our european neighbors so that we go on working closely together. but of course, we're going to be prepared for the eventuality of not reaching a deal. >> what does that look like? >> it looks like we have to be ready for a hard customs border. we have to be ready for tariffs on our trade we don't think it's going to happen but we will be ready by march 2019 just in case that's the outcome. >> what would you tell the folks in brussels or the pro-eu folks whosay why can't britain negotiate and compromise further? isn't it a big risk that businesses will already start to move out at the risk of having no deal? >> we're ready to negotiate. we're absolutely ready to negotiate. the problem is the process that's been laid down, which says we can't start talking

about the future and our future relationship until we have settled the question of the budget contribution, what we're saying is we can only settle that budget contribution question in the context of knowing what our future relationship is. and this seems like a rather silly thing for us to get hung up on. if we could just have a talk about this around the table, i'm pretty sure we'll unstick it >> how high is the trading relationship on your list of priorities >> very high >> number one? >> the economic relationship, protecting british jobs, british prosperity, must be my number one consideration as chancellor of the exchequer we have a very important trading relationship with the european union. it's also very important to the eu 27. we import huge quantities of manufactured goods, farm produce, from the european union, and it's in everybody's interest that we sort this out so that the supply chains across europe can continue to operate as they do now >> what about keeping london as

the financial hub, the financial center of the world. how are your conversations going with bankers as they ponder whether they want to send employees and market making activity outside of the uk >> we understand financial institutions in london have to make contingency plans because of their boards of directors, their customers, their regula r regulators we're working with them to make sure it's done in a nondisruptive way. most of them intend to keep the vast majority of their staff in london and the bulk of their business in lundening. eu business is only a fraction of london's total business and we're very confident that the uk, london, will remain a global financial center >> all of this have haveing an impact how much more economic pain do you see? we haven't even gone through brexit yet >> we always knew during the process of the negotiations, there would be some uncertainty and we would have to absorb that right now, businesses are

waiting to see what the outcome is postponing noncritical investment decisions if they can. maybe delaying hirings while they wait to find out what is happening. so all of that is having a short-term impact on the economy. but the underlying uk economy, the fundamentals of the uk economy are strong our deficit is down by three quarters employment is at record levels unemployment is at a 30-year low. we've got a vibrant tech sector, the world's second largest traded services sector we're in a good position to go as soon as we have cleared this short-term uncertainty around the brexit negotiation >> i also asked him whether the government still felt that no deal was better than a bad deal, which he sort of dodged. i did ask about uber he eced prime minister may's comments that they do not agree with the decision. says london has to be open for business with tech companies and he expects there to be an agreement reached there. as far as the u.s. and uk trade deal, there has been some hope

about this and the trump administration has said there's a priority, he said there's bipartisan support, he has himself met with congress, but technically, they can't start to negotiate and lay out this trade deal with the u.s. until after they exit the eu >> i made a fair amount of news in that one interview. >> the pound has started moving on these brexit talks. at first, it crashes after brexit, then it sort of came back and was stable. and everyone just thought a deal would get done he said there's no impasse but it increasingly looks like there's an impasse, whether it's process or the budget bill and so clearly, people are paying attention >> let's get to sue herera, get a news update. >> good morning, carl. good morning, everyone here's what's happening. search crews looking for a missing man after an oil rig exploded on a lake north of new orleans around dawn. there is speculation cleaning chemicals sparked that blaze seven people have been injured, so far, no immediate reports of deaths >> ophelia is battering ireland, but now as a tropical storm.

it was downgraded overnight. ophelia pushing 30-foot waves into the country's southern coast. authorities reporting a woman was killed by a falling tree this is the worst storm to hit ireland in half a century. deadly wildfires not just hitting california at least 27 people are dead and dozens more injured in portugal. officials are blaming unusually high temperatures for the fires there. >> and japan also dealing with a natural disaster an active volcano. authorities expanding the no-entry zone around the mountain which is near the southern tip of that country it spews gas and ash nearly 7500 feet skyward on saturday you're up to date. that's the news update this hour i'll send it back to you, david. lots of natural disasters in the news update this morning >> certainly are unfortunately, lots in the news update over the last couple months as well >> when we come back, netflix hitting an all-time high right fresh this morning that ahead of of course their

earnings report. we're going to break down what you can expect to hear from the mpy xt i've always wanted to create those experiences for others. with my advisor's help along the way, it's finally my turn to be the host. when you have the right financial advisor, life can be brilliant. ameriprise 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.

i want that song to keep going. netflix is set to report earnings later today with the stock hitting an all-time high this morning many analysts expecting a strong quarter. stock up more than 60% this year for more on what we can expect, let's bring in michael morris, media analyst at guggenheim securities i didn't even know they raised prices that's how sticky i am are most people not going to care >> i don't think many people will at this point we were very positive on the approach that the company took they have obviously done a couple of price increases in the u.s. over the past half decade,

with i would say mixed results, to put it politely we felt like they are a compelling value to the consumer they made the price increase this time. they were unapologetic, i think a dollar increase is not something by any means out of the realm of the value that they deliver. so we feel pretty positive about it >> eah, last quarter, of course, they blew away assumptions in terms of subgrowth, both here and certainly overseas where are you in terms of expectations as we head into the reporting of the current quarter? >> our expectation, our estimate for the quarter is pretty consistent with the company's guidance at this point so it's very difficult to call these quarters on subscribers. we're very focused on what we view as a long-term value proposition. we completely understand and respect that the stock will react on earnings day on the subs but i feel pretty confident that they will at least meet the guidance they put forth for the third quarter. >> when you get to valuation, you're still using a dcf model,

going where, to a few years out to get back to a number you feel is justified in the stock price? >> yeah, we do we have like a five-year dcf that we use for the valuation, but i think when you're looking at a stock like netflix, you really have to kind of boil down the complexity into a couple things i think there's two things we're looking at we're looking at the value proposition of the consumer and a tremendously underpenetrated global market. when i take those two things and we break down into details for investors and show them, but look at the international marketplace alone. half a billion broadband house hls right now outside of the u.s., and they're in about 10% of those at roughly $8 to $12 price point, it's incredibly attainable in terms of pricing for the global consumer and the penetration has tremendous amount of runway ahead of it >> explain to viewers then how important u.s., the domestic subs are tonight, if at all. >> they're still important

the u.s. business, which is clearly the more mature part of the business and half of the subscriber base, and all of the profitability at this point, is viewed at the template for what can happen in the global market. so investors, while the enthusiasm about the long-term upside to the stock is really around the global expansion, the u.s. is still a very -- it's a critical component of analyzing how much people are willing to pay for the product, how much they engage with the product, and what the profitability can look like. so it is absolutely critical for the company to continue on a strong path domestically but they are moving from a pure subscriber growth phase to a subscriber growth but the importance of incremental profitability phase. >> michael, how about the eye-puffing number they're spending on content. it's hard to pus a price on shows like "stranger things" but $7 billion this year $6 billion last year $5 billion in 20 -- the year before that, 2015, i guess can investors expects that

number to go up by a billionary year is that going to be okay >> i think it is going to be okay i think they can expect that it could possibly even go up by more than that when we look at it, this is about really solidifying the value proposition to the consumer something that's very interesting, we work with a partner who tracks subscriber usage data both in the u.s. and abroad about 8 million subscribers. what we have seen is in the countries that netflix is localized, so countries like israel and south korea in the last year where they made market specific content, the engagement and utilization of the product has gone up dramatically with that type of success in terms of consumers moving to the product when you spend and what's important is that those consumers remain sticky, which was brought up earlier that is why they're in the phase of spending right now. growing their spend by a billion dollars to try to penetrate, further penetrate a half billion dollar global broadband marketplace seems wise in our

opinion. >> michael, finally, your coverage universe includes the likes of disney and fox, viacom, cbs, and our parent company, which is the only stock of those that i just mentioned that is actually up and not up as much as the broader market. do netflix gains continue to come at the expense of the rest of your coverage universe? >> absolute lay. there's no two ways about it i think it's not just netflix but it's going to be other new entrants as well amazon is really starting to step on the gas in terms of the way they want to monetize their content. facebook is in the early phase of spending on their content when we look at the channels in the bundle that you and i pay for, i assume you and i, but not as many millennials, so much of the value in being able to negotiate price increases in sports so we look at the companies that still have the sports rights, and we think that they're going to be must-carry in these packages when we look at general entertainment, and the ability to spend and the ability to meet the consumer increasingly where they are, which is not in a video product that has an $80

entry point, the pressure will continue to come, and these companies that aren't carrying the legacy baggage of being part of a bundle are taking advantage of that. >> yeah. of course, viacom and charter's current negotiations come to mind story for another day, though. michael, thank you appreciate your time >> thank you when we come back, lululemon's big bet on china what the retailer's ceo told us in an exclusive interview. we'll take you to beijing next record highs across the board as the dow and s&p are going r t of 5 back in a minute well, it's earnings season once again. >>yeah. lot of tech companies are reporting today. and, how's it looking? >>i don't know. there's so many opinions out there, it's hard to make sense of it all. well, victor, do you have something for him? >>check this out. td ameritrade aggregates thousands of earnings

estimates into a single data point. that way you can keep your eyes on the big picture. >>huh. feel better? >>much better. yeah, me too. wow, you really did a number on this thing. >>sorry about that. that's alright. i got a box of 'em. thousands of opinions. one estimate. the earnings tool from td ameritrade.

i think it's going to be very important to figure out what congress learns from the investigation and if there's a desire in congress to take real legislative steps. >> are you concerned that the u.s. is watering down some of those financial crisis regulations? >> short answer, no. it is also consistent with an internunci international effort to look at the rules. >> keep it healthy, do not take risks of any magnitude there i worry about deregulation in this stage let's get over to the group in chicago rick santelli with the santelli exchange on a monday morning rick >> thank you, sara i would like to welcome my guest, daniel ocereio. thank you for taking the time today. >> thanks, rick. good to be here. >> okay. we had the regional elections in venezuela on the 15th. and the final returns certainly

look as the mudaro administration is going to keep their grasp, getting 15, potentially 16 of the 23 governorships. tell us about the election, pay particularly close attention to fairness was it legitimate, and what does it mean? >> yesterday's election was, as you say, for 23 governorships. the opposition and early polling said they would win 18 of them it looks like the government is claiming credit that they have now won 18 of them, more or less, so this is being considered the greatest fraud in the history of venezuelan election cycles. >> what does that fraud mean for the u.s. in particular with subsets of bond holders, energy, the relationship with the respect to foreign relations with china and russia and how it may impact other scenarios we seem to intersect with those two countries in >> right, in the next couple of weeks, next three weeks, venezuela has about $3.5 billion in bond payments to make, u.s.

dollar denominated bonds they will not be able to make without the help of russia and/or china. i do suspect they will help. but that makes venezuela that much more dependent on those two countries. so, you know, as bonds that are mainly held in the u.s. and andn western europe, we're seeing the largest oil reserves in the world, jarring venezuela indebted greatly to russia and china. >> you know, indebted to russia and china makes me think maybe they need to transact more of these in dollars is there any way to get more u.s. dollars there and we constantly hear how owning dollars by foreigners can be a dicey proposition we're getting close to a fed that may raise rates and make dollars more expensive what are the choices here, specifically, what does it mean for their own currency, the bolivar, and its sustainability? >> right, well, i think as russia and china have increased

influence on venezuela, we have to wonder in this hemisphere what happened to the monroe doctrine i think monroe and his doctrine must be rolling in their graves. we have two questions in venezuela, first is, what is the political future of venezuela, that can only be decided by venezuelans, and how do we help in this humanitarian crisis? so we cannot parachute dollars in we cannot wire dollars in, so i suspect the only way to really get money into the hands of the average venezuelan is through the bitcoinization of venezuela, get that money to the venezuelans. the private sector can help, u.s. can help, regional governments can help >> excellent >> put the money back in their hands. >> we're just about out of time here bitcoin is an interesting conversation to have in this context. we will have you back. thank you for taking the time. david faber, back to you >> thanks, rick. >> okay, thank you, rick now over to john fortt and a

quick look at what's coming up on "squawk alley." john >> david, the first chief technology officer of the united states is going to join us to talk about this increasingly complicated relationship between tech companies and the government hey, and our democracy that's coming up on "squawk alley" ...it starts a chain reaction... ...that's heard throughout the connected business world. at&t network security helps protect business, from the largest financial markets to the smallest transactions, by sensing cyber-attacks in near real time and automatically deploying countermeasures. keeping the world of business connected and protected. that's the power of and.

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lou lieu lemon making a big bet in china joining us now from beijing, what did the ceo tell you? >> thanks so much, sara. lululemon has six stores in china and plans to open five more and is china's fourth largest market, but they plan to change that by reaching out to more young chinese this is what he had to say >> it's a global citizen, it's an affluent rising middle class. you think about 415 million millennials in this country, and more and more of them wanting to live an active lifestyle, it's really, really important >> timing might be right because of the trends on the ground. chinese are becoming more health conscious and in the big cities

like beijing and shanghai, more people are hitting the gyms, as well as doing sports since 2008, gym membership here has doubled to 6.6 million yoga has also gained popularity, growing from 4 million practitioners in 2009, to 10 million today. so lululemon's ceo says the company is building brand awareness here by going online >> we actually see the brand awareness growing to our digital channels, so whether it's through our offline/online events, through social media, we see awareness growing in those cities and that's what really drives our presence. >> and one of the challenges is copyright infringement, but lululemon's ceo said right now they are not worried it's not going to affect their growth plans carl >> eunice, thank you very much for that, eunice yuan in beijing. when we return, the white

house releasing its first economic analysis of the president's tax plan we'll talk to kevin hassett first on cnbc next don't go away. another day at the office. why do you put up with it? believe it or not you actually like what you do. even love it. and today, you can do things you never could before.

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welcome back to "squawk on the street," i'm dominic chu a rise in energy stocks lifting the markets higher, trying to, at least all among the biggest gainers, this as oil jumps on mideast tensions despite the energy gains, sector is still negative for the month. that does it for this hour for "squawk on the street. let's send it downtown for the start of "squawk alley." back to you. >> good morning, it is 8:00 a.m. at amazon headquarters in seattle, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪